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How logistics-tech startup Vahak is reducing entry barriers for small players in transport industry

How Vahak is reducing entry barriers for small players in transport industry
Vahak Co-founders: Karan Shaha and Vikas Chandrawat

Business

How logistics-tech startup Vahak is reducing entry barriers for small players in transport industry

Vahak, one of India’s fastest growing online transport marketplace, is leveraging technology to empower small lorry owners and transport companies providing them access to its huge network of transporters and shippers. Founded in 2019 by by IIT graduates Karan Shaha and Vikas Chandrawat, Vahak aggregates transport service operators from all over India and enables them to connect with truck owners, brokers, and other transporters.




The online platform recently raised USD 5 million in pre-Series A funding round led by RTP Global with participation from Luxor Capital and Leo Capital. The latest round was preceded by a Leo Capital-led seed round in June in which the aggregator raised an undisclosed amount. The platform is catering to almost 4 lakh transport companies and has developed a service provider network of truckers covering around 8,000 locations across the country. The platform manages more than 10,000 active loads on a daily basis and the network now covers major transport and logistics hubs across India and is aiming at reaching $1 billion annual GTV (gross transaction value) in the next 12 months. The company’s co-founder and chief executive officer Karan Shaha tells Plunge Daily about Vahak’s journey so far and its role in reducing entry barriers for small players in the transport industry

1) It’s been more than two years since you started this platform. So, please take us through your entrepreneurial journey and emergence of Vahak as one of India’s leading transport market places.

Vahak was launched in February, 2019 but we have have been operational (Shah and Chandrawat) in transport industry since 2016. One of our major goals was to become an online community which should drastically improve the efficiency of overall transport marketplace. In such a short span, we have seen a very good traction, our entrepreneurial journey started from Raipur, my home town. The first 500 transport companies were onboarded by us through personal meetings in Raipur. Then, we observed a massive surge in referrals. In the first six to seven months, more than 10,000 transporters onboarded the platform. This was a turning point for our business and we decided to take this across the nation. Then, we moved our operations to Bengaluru and head-quartered the platform to Singapore. We are currently catering to almost 4 lakh transport companies and have presence in around 8000 locations across India.

2) Vahak offers tech-based solutions to help its customers connect with trusted transporters. Could you please explain how a truck driver or a lorry owner can benefit from its services.

So, the major customers for Vahak are the lorry owners and transport companies. Currently, the lorry utilisation rate in our country is abysmally low. An average lorry owner is able to run his vehicle for just 15-16 days a month. For the rest of the days, they keep waiting for their next load. Since they are connected to two or three transport companies and there is also a huge trust gap in the market. Due to lack of options, the lorry have to wait for 3 to 4 days to find their next load. This has huge financial implications because they usually have to pay Rs 2000-3000 on a daily basis as finance cost for their trucks. Now, Vahak has created a platform where a lorry owner can connect with lakhs of transport companies and shippers. Using our services, a lorry owner can easily find a load for his vehicle and is able to run it for more than 25 days in a month. This drastically improves his business and also gives better prices to the shipper.

Small transport companies on an average spend more than five to six hours on telephone calls daily to find lorries for shippers. With Vahak, users are able to leverage the power of network and technology that we have created . As soon as a transport company posts a load on Vahak that gets broadcasted to lakhs of registered lorry owners within a matter of seconds. Alo, the transport companies are able to get better rates . It saves a lot of time and effort and benefits both lorry owners and transport company.

3) As we know, Logistics in India is not only unorganised but also a vastly complex industry. What, according to you, are the biggest gaps in the sector that require immediate attention?

Logistics is a complex industry because of the nature of players. More than 80% of the transport companies and lorry owners in India are unorganised. Due to their small network their is a huge inefficiency in the flow of information. There are more than 20 million transport companies and lorry owners operating in this nation and almost 90% operating on telephone calls. This is the biggest gap, which has been created due to the lack of proper communication infrastructure in the industry. We need to upgrade in terms of transport infrastructure as well because roads at many places in our country are not in great shape. Trust deficit is another big challenge. In the transport industry, transactions are very valuable. A lorry owner carries a load worth Rs 20 to 30 lakh from a shipper and the charges for renting of trucks runs in lakhs. So, it’s not possible for players to deal without personally knowing them. So this drastically decreases their network and reach.

4) COVID-19 has provided a fillip to the entire e-commerce industry including the logistics business. Could you share with us the challenges you faced in the beginning of pandemic and how those were turned into opportunities.

As soon as the lockdown started, we saw a huge surge in activities on our platform. To be honest, covid accelerated the digital trend in the logistics sector. With covid-induced curbs at place, it became difficult for the transport companies and lorry owners to meet their connections and reach out to people through their professional network. As days passed, they became more desperate to find their next business. A combination of these factors played a crucial role in getting these players online. So I can say, we did not face business challenges rather we saw a huge surge in daily active users and our time matrix also started increasing.


Also Read: Why Investors are so bullish about India’s startup ecosystem


5) There are scores of tech-driven startups in logistics and online transport landscape. So, how do you see the sector changing after 5-6 years?

We are hopeful of a strong change in terms of technology adoption in coming years. Events like demonetisation, introduction of GST, launch of Jio and covid-19 have accelerated the push towards digital. There is a huge pressure from all the other industries on transport sector to perform well. If transportation faces problem, other sectors will be affected as well. So, this pressure has pushed a lot of transport companies and lorry owners to adopt smart technology and join digital aggregator platforms. So we are expecting more transport companies to join the digital bandwagon not just to find business but also to manage their internal operations and street management. So, there is a huge amount of optimism in the market. Digitisation is at its peak , data cost in our country is currently lowest in the entire world. More and more lorry owner are coming onboard and trusting online apps and opting for digital payment methods, which they distrusted a few years ago.

6) India never really had a uniform approach to logistics as a subject of public policy. The national logistics policy is in docks for last two years. From your experience, how do you see government’s role in making this sector more uniform?

To make the sector more uniform, government should oversee the organisaion of transport businesses. Many transport companies and lorry owners are not registered with the government, they don’t have their gst document or even company registration papers. This creates a huge trust gap in the market. So, the digital push (from the government) is very important. It increases the trust factor and makes every single transaction more uniform and transparent.


Also Read: Vahak raises USD 5 million in Pre-series A round led by RTP Global, others


7) Vahak has seen multiple rounds of funding since its inception. Please tell us what makes your investors so confident about you.

Most of the large-funded transport companies like Blackbuck, Rivigo are operation-based companies . They are acting as transporters and competing with the local transporters in the market. We as a platform are partnering with these small transport companies and empowering them to perform better. Being a tech-driven platform, we have no limitations with regard to scalability. We have the power of infinite distribution. We are just a 32 member team serving more than 4 to 5 lakh transport companies For onboarding our user we have no person on the ground. Every single user comes to us organically. So, I would say, our vision to empower every single lorry owner and transport company of this country is the major reason, investors are so bullish about us.


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