'Soonicorns': Rivigo on the road to emerge a unicorn in logistics space

Deepak Garg, a former McKinsey executive, found multiple gaps in the Indian logistics space: It was devoid of technology, delay in delivery was the norm, and, most importantly, the working conditions of truck drivers were deplorable.

“I went to a lot of truck mandis, met drivers, and joined them on road drives to understand their lives. They spend months away from homes in rickety trucks. A large number of them have HIV and many don’t marry. As a country, we need a million truck drivers every year and I don’t think many are becoming drivers,” Garg, 36, told Business Standard in a recent conversation. He quit McKinsey in 2014 after a nine-year stint to start a new journey.

Rivigo (a portmanteau word, formed by combining “river on the go”) was set up to address these gaps while bringing technology to ensure deliveries took place quicker. When asked about the company’s valuation, Garg said the paper valuation was “immaterial”. Based on the last funding round, however, the start-up is estimated to be valued at $900 million and could soon hit the $1-billion mark, becoming a unicorn. Garg doesn’t read too much into these numbers. 

“I will be running the company I live...this is a long journey”.

Improving the lot of truck drivers is key because the second generation of drivers do not want to remain in the same profession. A number of drivers in recent years gave up their jobs to join cab aggregators such as Uber and Ola. “See the boom in sales of commercial vehicles. As a country, we need additionally one million truck drivers every year and I don’t think many are becoming drivers,” said Garg. Estimates show the country may end up having just 482 drivers for every 1,000 trucks by 2022. The rising trend of e-commerce and higher consumption of FMCG and consumer durables is adding to the demand. 

Rivigo, backed by investors like Warburg Pincus and SAIF Partners, has about 8,000 truck drivers (Rivigo calls them pilots) on its contract to run its fleet of about 5,000 trucks. And it now counts names such as Maruti Suzuki, Hero MotoCorp, ITC, Amul and Marks & Spencer in its list of over 2,000 clients. E-commerce major Amazon was its first customer.

Garg introduced a relay model to improve the lives of drivers. This means that a truck driver will drive a vehicle from point A (say, Delhi) and hand over the truck to another driver at point B (say, Jaipur). That translates into a four-hour trip. While the next driver will take the truck to point C, the first driver will get a truck that needs to go from point B to A, bringing him back to his own city. His work hours would in that case be about nine-ten hours before he comes back to his family every day. Rivigo has set up pitstops (a point to meet and greet) across various routes to facilitate handing over trucks. Rivigo’s drivers earn Rs 24,000 a month and they, Garg says, look healthier and happier. 

To obviate medical emergencies, Rivigo has facilitated for them health insurance that offers a cover of Rs 500,000 for the driver’s family with a monthly premium of just Rs 250. Besides improving the drivers’ lot, Rivigo uses technology in a big way to schedule pick-ups and deliveries and put an end to unscheduled stops and fuel theft. Garg said the reliability of the Indian transportation system was very poor. A vehicle can take three days to go from Delhi to Mumbai and can end up taking 10 days. “Our system builds reliability in a lower transit time. This helps a client’s market share, brings down the inventory and working capital needs, and expands efficiencies.”

Rivigo also wants to address the perishable products market, which has not grown because of the limited cold chain infrastructure. “The quality of refrigerated transportation is very poor in India. Usually, a driver will switch off the system to save fuel. The dairy products you use may have melted a couple of times before reaching the store. This is one reason why finer chocolates are never launched in India,” said Garg.

Rivigo says it offers temperature integrity throughout the trip through a dedicated IOT (Internet of Things) solution. “The customer has control of the storage temperature through a mobile app. It can pre-programme it,” he said.

The company’s express cargo business is now covering over 10,000 pin codes and is expected to double to 20,000 by year end. Rivigo also has a marketplace where it used technology to connect small fleet-owners with customers. The marketplace has 30,000 operators with a fleet of over 100,000 trucks. “It saves time for both owners and customers and dealing is transparent,” said Garg.