How logistics tech became an unexpected gainer in the Covid economy

Start-ups in this space have made strides in modernising logistics with real-time tracking of cargo, algorithm-based route optimisation and big data in addresses

In the pandemic months, all sorts of digital services boomed. Everything from e-learning to videos and social media and even e-commerce registered handsome growth. However, there has been an unexpected gainer, and that is e-logistics.

E-logistics is a start-up sub-sector occupied by companies that use technology to solve legacy pain-points in business-to-business transportation.

Over the past few years, several tech-enabled solutions and providers have come up. These have made strides in modernising logistics with things like real-time tracking of cargo, algorithm-based route optimisation and big data in addresses, among other innovations. The early success was on the back of start-ups like BlackBuck, Rivigo and Delhivery, which attracted funds from some of the top investors in the world. Now, a new breed of early-stage start-ups is taking shape.

This year to date, three start-ups bagged funding. Shipsy, a software platform for enterprises to manage their logistics, got selected in Sequoia’s Surge programme and raised Rs45 crore last month. In May, Loadshare, a logistics aggregator focussed on small firms, raised Rs 100 crore from Stellaris and Matrix, while electric vehicle logistics firm Euler Motors bagged Rs 20 crore.

Not only the funding, business at some of the niche logistics start-ups showed uptick. LetsTransport, a logistics aggregation company, saw 100 per cent revenue growth to Rs 178 crore in FY20, despite the pandemic.

“The pandemic had slowed down the country for a bit, but I think that it will work as a catalyst for almost every industry which was delaying digitisation of its operations. The same is expected with the logistics industry as well,” said Pushkar Singh, chief executive officer and co-founder at LetsTransport.

“It has forced logistics companies in India to drive towards digitisation and opting for paperless modules in no time. The growth was a little slow in the last quarter, but things have now started taking some speed”

The tech-logistics landscape is now expanding. The first set of start-ups came up to solve the demand and supply problem, said Arvind Singhal, founder and chairman of consultancy Technopak Advisors. They connected firms seeking to transport their load, and truck operators that are often spread across small cities, on e-commerce-like platforms. Start-ups also began to create special solutions for long-haul, last-mile and hinterland delivery and some of them came to be successful.

“Last-mile start-ups entering the market with more traditional modes (such as scooters, vans, and trucks) are most successful in the Asia–Pacific region, especially in India, where players, such as Delhivery and Xpressbees, have built a completely new parcel network and collected hundreds of millions in funding within a few years,” McKinsey and Co noted in May report on the sector. “These developments show that the traditional parcel players’ offerings have not sufficiently addressed these markets.”

At least two trends have emerged their after that. One is that a slew of start-ups building software that give its users (clients) complete control on their delivery fleet. These tools are heavily useful to optimize routes, pre-empt break-downs, and also manage digital payments for tolls and fuel.

The other trend is the adoption of electric vehicles. In the absence of a consumer market, many electric vehicle OEMs (original equipment manufacturers) have begun offering their fleet on rent to e-commerce firms for last-mile deliveries. In time, they say, a model will emerge where only EVs will be used for deliveries--and that will be dominant market for EV players.