Logistics firm Rivigo builds a long-haul trip with drivers

When Deepak Garg was doing his homework before setting up a logistics start up, he discovered that trucks drivers are branded as the 37th caste (he wasn’t aware that India had 36 castes). 

“I heard about it (the 37th caste) in Jaipur, and then in Hyderabad, in Vapi and also in Baroda... You may be financially underprivileged and blame your fate. But nobody would want to take up a career that makes him socially outcaste,” said Garg, who quit McKinsey in 2014 after a nine-year stint.  

Logistics seemed an interesting space to Garg as it lacked the application of technology. “Gradually, I understood that it is not just about technology but also about the people,” he said. 

He travelled to transport hubs, met drivers, and accompanied them on long-haul trips to find that most of them spend almost months away from homes in a rickety truck. “Many of them are infected with HIVs with no family life. Many do not get brides,” he said.

Pointing to the boom in the commercial vehicle sales, Garg said India needs an additional million truck drivers every year, but not many are becoming drivers.  Estimates show the country may end up having 482 drivers to every 1,000 trucks by 2022.

Garg says his firm, Rivigo (name derived from river on the go), can flourish if he can improve the lives of the drivers. Rivigo initially ran trucks for logistics firms such as Gati before launching its own platform, which had Amazon as first client. 

Rivigo, backed by Warburg Pincus and SAIF Partners, has around 8,000 drivers (Rivigo calls them pilots) on its contract to run its fleet of almost 5,000 trucks. It has Maruti Suzuki, Hero MotoCorp, ITC, Flipkart, and Sun Pharma in its list of 2,000 clients. 

Garg, the founder and CEO, resorted to a relay model for running trucks. “A truck driver would hop on a truck to take it from Delhi to Jaipur, usually a four-hour trip. He will spend an hour resting and then bring back another truck that is coming from Jaipur to Delhi. In total, he may be on the roads for around 10 hours before going back home,” said Garg. The journey from Jaipur to a next stop is under a second driver and so on.

Rivigo has set up pitstops, a place along the highways where one driver hands over the truck to another for further journey. There are about 70 pitstops. Drivers live close to the pitstops, mostly at the city outskirts or in rural areas because the cost of living is low. According to Garg, on an average a truck driver earns Rs 24,000 a month.  

A fundamental change is happening in the drivers’ lives, said Garg. “A driver now looks healthier, shaves every morning and steps out in uniform. He is more responsible towards his family,” he said. Garg facilitated the drivers with a health policy that offers a family coverage of Rs 500,000 at a monthly expense of Rs 250.

Rivigo used technology to roster duty at pitstops, schedule pick-ups and deliveries, and bring unscheduled stops and fuel theft to an end. “There are multiple things... If all of these come together, the network can work successfully. We did not have a parallel anywhere that we could replicate,” he said. 

Country’s largest carmaker Maruti Suzuki uses Rivigo to ferry spare parts and in-house production parts. “Rivigo’s approach to bring down driver fatigue and overall driver safety is quite satisfying. With the relay driver system in place the trucks can operate up to 22 hours a day and their turnaround time is better,” said a company spokesperson. 

Rivigo has raised $150 million in funds to date. Business is expanding and Rivigo plans to add about 2,000 trucks every year. Sector experts like Rivigo’s business model but think that scalability can be an issue as procuring trucks is very capital intensive. The company clocked Rs 4 billion in revenue during FY17 (up 170 per cent YoY) but losses multiplied from Rs 55 million to Rs 1.37 billion. Garg says some parts of the business are profitable and the rising loss is on account of investment in expanding the network. He claims that by June the monthly revenue will be at Rs 2.5 billion and double to Rs 5 billion by December. 

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

He said freight rate was not the determinant for getting business. “The reliability of transportation is very poor in our country. A vehicle can take three days to reach from Delhi to Mumbai. Our system builds reliability at a lower transit time. This helps a client’s market share, brings down inventory, and working capital needs. Clients are now thinking of new business models as we enable them to cover the entire country in just three days,” he added.