The road transport industry is not a very comfortable place to be in, especially to start with. The industry can be quite intimidating with a new problem cropping up every now and then, and before you finish tackling the first one, there is already another one knocking on the door. But the cautious father introduces his children to the problems gradually. The huge difference that the industry is seeing currently is that youngsters who wish to join their father's family business of transportation are coming in equipped with rock solid education. Gone are the days when children would complete probably their X or XII and join the family business. At the same time there are youngsters who look up to other companies for inspiration and set their targets accordingly. However there are some youngsters who raise the bar for themselves and wish to emulate international companies. The above kind of sums up the journey of Archit Agrawal so far.
Archit joined the family business at Globe Ecologistics P. Ltd. in 2012 after completing his graduation. However that was not the end of the road for Archit as far as his education is concerned. After completing his BSc Management with specialisation in Operations and Finance from Purdue University, Archit went on to do MSc in Oil and Gas Enterprise Management from the University of Aberdeen. It may be noted that Archit's company is into Logistics as well as oil field services. Archit made sure that he had the necessary qualification to handle both the businesses and share the responsibility with his father. However after post graduation, Archit focussed primarily on the transportation business since he felt that this business had a wider scope of exploration.
Incidentally the story of Globe Ecologistics is just like any other age old transport company. The company was started by Archit's grandfather with no men and with no truck either. The first truck was purchased a few years later. Currently Globe Ecologistics has over 400 trucks and provides employment to over 500 people. Globe Ecologistics provides services all across India and specialises in Full Truck Load cargo as well as Over Dimensional Cargo, the latter being a highly skilled job.
Archit's initial days in business were quite challenging. While he had to understand the nature of operations at the ground level, there were also external challenges, which were taking a toll on the overall working environment. However Archit made sure that these initial challenges were overcome to ensure a smooth working environment.
As mentioned earlier, Archit's journey was grafted by his father he made sure that Archit was gradually exposed to the various facets of the business. While Archit's mentor is his father, he looks up to companies like Amazon for inspiration. Archit says, “My inspiration is more from a global perspective from someone like Amazon, where they are always working towards increasing productivity from the same resources using technological advancements’.
With a strong hold on the business now, Archit has a clear roadmap for the future of the company. He says, “We plan to evolve towards a complete solutions provider from a pure trucking company where we have additional facilities of warehousing and other value added activities ina3 PL format”.
While Archit has his company and it's future sorted, the industry on the whole doesn't seem in the best of shape. Archit feels that the industry is facing challenges in two domains related to manpower - administrative as well as drivers. Archit feels that the industry does not have good educated manpower at the administrative level. At the same time shortage of drivers is also an issue that needs to be addressed. He says, “Both these need to be addressed in a significant manner otherwise this industry will never be able to evolve in to a more productive one”.
Archit further adds, “The government rules and regulations which concern their evolution along with technical developments and also implementation of the current ones need to be taken up in a transparent manner so that corruption is reduced at all levels”.
Commenting on the impact of GST on the transport business, Archit says that GST has been implemented in a partial manner only as far as road transport is concerned. He adds, of the partial implementation, the benefits have not been felt in the industry as per the aims announced or targeted by the government after implementation of GST. It is very important that petroleum products be brought under GST. Secondly, there needs to be a single uniform mechanism across the industry and I would suggest a uniform FCM mechanism for the same. Without these changes, the industry would not be reaping much benefit from GST, especially in case of core operations.”
Speaking further on GST, Archit says, “The challenges we are facing in case of GST is primarily due to the multi faceted nature of our activities of road transportation, material handling, warehousing, etc. which makes it difficult to comply due to multiple GST rates, which leads to a lot of confusion. Rather than consolidating, spreading the business across various firms is the better option. However I believe that this is not good for the economy in the long run.”
The road transport industry, just like other industries, has been under severe stress and rising costs and inadequate freight is not making life easy for the transporters. So how are Archit and his company dealing with these pressures? “We are trying to focus on productivity to offset the cost increase as far as possible. At the same time, we are also trying to diversify into other associated activities to compensate for the drop in margins.”
One of the major decisions taken by the government was to increase the axle load of truck, which too has had a considerable impact on the road transport industry. Archit feels that this is also one of the significant factors for freight rates not increasing. Archit says, “The nature of implementation, in a populist manner, did not allow any transition period for the industry to adjust or understand. We are now re- evaluating our vehicle purchase due to this since in case of some clients we do not need additional vehicles as the load can be carried with the current fleet and at the same time vehicle configuration needs to be re- analysed for optimum utilisation.”
The other big impact for the industry is going to be the transition from BS IV to BS VI. While the manufacturers have been doing their homework and I'm sure they'll launch as per the timelines specified by the government, the challenges for the transporters too is something that we'll have to prepare for. It is very much certain that the cost of the vehicles will rise considerably and hence in the medium term there is going to be a significant challenge for transporters with new vehicles to compete with transporters having older vehicles. This will also lead to longer payback periods. I am afraid this phase of transition will be a critical time for the industry.”
While the auto segment will be moving from BS IV to BS VI - the fastest ever transition of its kind in the world, there is also a buzz that the government may come up witha scraping policy for old vehicles, including trucks. Archit supports the scrapping policy and says that it will help in reducing pollution in the long run. Also Archit feels that removing older trucks from the system will make the industry safer and reduce the number of accidents. He further adds, “Scrapping is also needed to improve the service levels which is being ignored due to price pressures, generally by the smaller players”.
Road transport has always been ignored by the government and we have always seen a lack of adequate and effective lobbying from the industry. So are road transport associations doing their job well? Archit says, “The associations do serve a purpose but their effectiveness is patchy due to the fragmented nature of the industry. It is impossible to get majority people on board for any decision or have their views considered. Hence they do their work as they deem best, which is mostly in the larger good of the industry. But I definitely believe that with the technology available today, it can be structured in a better manner so that the functioning improves significantly with clear communication flowing upwards and downwards - something which is not happening currently.
Commenting on the attitude of the government towards road transport Archit feels that the road transport ministry needs to be separated from highways. He says, “Once this happens, the ministry will actually focus on the road transport Industry. There is major lack of focus on transparent implementation of existing laws and evolution of laws in a logical manner, which keeps up with the technological progress.”
While road transport is struggling to keep its profits intact, Railways has been making inroads into the segment of cargo movement. Archit feels that railways is definitely going to be a big competitor and will impact long haul road transportation significantly. However he adds that waterways has a limited scope of impact in terms of presence and feasibility in a few stretches only. As far as Globe Ecologistics is concerned, Archit says that the company is exploring options to align with railways in the future.
Archit has always been open to the idea of learning and hence he did not hesitate to hop on to the programme by Mahindra Trucks & Buses at IIM Ahmedabad. Talking about the programme he says, “IIM-A was a great experience, which allowed me to rethink the approach to business and divert from the traditional ways. It also gave me an opportunity to network with transporters from various Segments within our industry.” Further emphasising on the learnings, Archit added, “The one thing that impacted me most was approach ona minute level on customer analysis and implementation of the same helped me a lot’. Archit thinks that this was a great initiative by Mahindra, which only further strengthens his belief that this industry desperately needs to improve the standard of knowledge to evolve further.
