Ubiquitous on Indian roads, the importance of trucks spans far beyond just goods transportation. Contributing around 4.5-5 per cent of the GDP, the Indian trucking industry is a valuable economic player, especially for the logistics sector. Also comprising the third largest market in the world (0.6-0.8 million new units per annum) after China and the US, the sector, notwithstanding its fair share of challenges, is expected to reach a market size of more than $16 billion by 2023.
The rapid rise in e-commerce sales, urbanisation, and disposable incomes, along with the changing lifestyle profile of rural customers parallel to the growth of the SME sector, will push the demand for trucks in terms of both ownership and rentals. Though the government has taken several initiatives to promote the growth of road transport, and enable trucks to move faster and hassle-free across domestic borders, the sector’s problems persist.
While fuel consumption accounts for 45 per cent of the cost, and directly impacts freight rates, cost of rentals and price of goods, the industry needs proper utilisation of its resources. It was also slow to adopt technology, but, the scenario is changing fast. The Covid-19 pandemic has further accelerated the implementation of new-age technology and innovative operational models are replacing unviable traditional practices to take the industry to new heights.
A new technology-driven trend that is making waves these days is online truck or load booking through a digital marketplace. Joining the bandwagon is Vahak, a live transport market app for online load/lorry bookings, which connects road transporters and individual truck/lorry owners (trucks, trailers, containers, Hyva, LCVs) and allows them to make 100 per cent commission-free deals at their convenience.
India has a humongous need for freight and special goods transportation for different types of cargo. However, millions of trucks remain idle at any given point of time due to operational inefficiencies caused by lack of technology. This leads to huge monetary losses for truckers and the logistics sector on a daily basis. Vahak aims to harness cutting-edge technologies to weed out such inefficiencies and help transporters optimise their vehicle utilisation through online load booking.
With its online network is built on the back of cutting-edge technology, Vahak doesn’t own or operate its own fleets, but uses an auction marketplace app which allows customers to directly connect with trusted transporters and truck owners across India and book trucks, trailers, and loads on shared vehicles etc. The marketplace also helps transporters to create an online brand for their business, generate leads by leveraging a pan-India network, and increase their revenue generation by enabling them to run their vehicles for most days in a month.
Co-founded by IIT graduates, Karan Shaha and Vikas Chandrawat in February 2019, Vahak has developed a network of more than half a million truckers covering over 8,000+ locations across the country. The platform is growing at over 100 per cent quarterly and already manages more than 10,000+ daily active loads.
The network covers major transport and logistics hubs across India such as New Delhi, Mumbai, Ahmedabad, Pune, Kolkata, Chennai, Visakhapatnam, Raipur, Bhilai, Bhopal, Lucknow, Bengaluru, Kochi, Chandigarh, Vapi, Surat, Nagpur, Patna, and Indore.
“The trust gap currently present in the Indian road transport market highly limits the business potential and expansion for transporters, agents and lorry owners. This is where Vahak steps in to leverage technology and help the stakeholders connect with each other seamlessly. We believe that online brand creation coupled with a huge network can bring in wonderful growth opportunities especially for the small and medium scale transport businesses,” says Shaha.
THE INITIAL JOURNEY
From Raipur to pan-India, Vahak’s journey has been full of learnings that have culminated in this one-of-a-kind marketplace for all stakeholders.
It was just a few months into their jobs as business analysts and consultants that the duo understood the hassles of booking trucks for transportation through relatives in Raipur. They spotted an opportunity and to understand the market at the ground level, they started a transport service called Epictus Solutions in Raipur in late 2016. This venture helped logistics businesses with GPS and transportation solutions.
In the two years that they provided transportation and fleet management services in Raipur, they also understood the deep-rooted problems faced by the traditionally unorganised transporters and lorry owners in this huge industry.
As Epictus grew, the co-founders came to a realisation that Indian transporters needed more than what their venture offered – they needed an extensive platform that would let them digitise all their day-to-day business operations
And so, after trials, errors and lots of learning, Vahak came on to the road and is today the biggest online transport marketplace community with over 4 lakh+ Indian transporters on its platform.
The founder says that they aimed to be more than just a product, seeking to revolutionise B2B transportation, and ensure no hassles for users.
Vahak has been well backed by investors. The company received its seed funding from Leo Capital in a round that also included prominent angel investors such as Amit Gupta, Founder Yulu Bikes; Abhishek Goyal, Founder, Tracxn; Ramakant Sharma, Founder, LivSpace; Harsh Pokharna, Founder, OkCredit; and Archana Priyadarshini, Angel investor, and ex Unicorn India Ventures Partner.
“Before investing in a startup, we primarily lookout for tech leverage and the ability for significant scale-up. Vahak founders have a deep rooted experience of logistics at the ground level which enables them to understand and speed up the technology adoption for these businesses. For us, Vahak met all our criteria. Logistics is a booming sector and there is a huge need for a marketplace like Vahak especially at a time when the Covid pandemic and resultant economic downturn has necessitated the resumption of inter-state business activities,” says Dinesh Singh, Investor, Leo Capital.
Gupta, founder Yulu Bikes and InMobi, adds: “The logistics and transport sector has been traditionally unorganised and Vahak has successfully created a platform that is connecting various players in the logistics chain. With the government’s recent push to go local, Vahak is a classic example of a homegrown startup that is bringing solutions to on-ground problems.”
In July 2021, the startup raised $5 million in a Pre-Series A funding round led by RTP Global with participation from Luxor Capital, Leo Capital, and other marquee investors including Kunal Shah, Founder and CEO, Cred; Jitendra Gupta, Founder and CEO Jupiter; Vidit Aatrey and Sanjeev Barnwal, Co-Founders, Meesho; Mohd Farid, Co-Founder, Sharechat; Amrish Rau, CEO, Pine Labs; Harsimarbir Singh, Co-Founder, Pristyn Care; Rohit and Kunal Bahl, Co-Founders, Snapdeal; and Ravish Naresh, Co-Founder and CEO, Khatabook.
“Vahak is offering a service that addresses a universal human need in the transport of goods, in one of the largest and fragmented logistics markets in the world. By building an asset and working capital light auction-style marketplace, the team has displayed low operational intensity, ability to scale and business quality we look for in category defining companies. We’re excited by Vahak’s potential to become a mission-critical logistics player in India,” says Yousif Al-Dujaili, Venture Partner at RTP Global.
Vahak plans to use the funding to strengthen its team and technological capabilities, and expand its customer and network base.
The Covid-19 pandemic has raised fears about a near-certain global economic recession, and the investment ecosystem in India has not been very bright recently. However, investors are bullish about startups that are making a difference and providing tech-based solutions to overcome the crisis on various fronts. The funding to Vahak also comes in light of this and underscores the huge potential of logistics in the current scenario.
A study by the India Brand Equity Foundation (IBEF) pegs annual investments in the logistics sector to reach $500 billion by 2025. The sector is already witnessing technological disruption with innovative B2B logistics startups employing cutting edge technology such as robotics, automation, data analytics, and Internet of Things (IoT).
Vahak claims that it has grown 10X in the past year to over $100M annualized GTV run-rate on only $800,000 raised.
The startup aims to create a stronger nationwide presence by bringing more than 3 million truckers to the platform and reach $1 billion annual GTV (gross transaction value) in the next 12 months.
The company is also looking at leveraging AI and ML technologies for superfast matchmaking and algorithm improvements.