This article is part of Inc42’s Startup Watchlist annual series where we list the top startups to watch for 2018 from industries like Blockchain, Logistics, Fintech etc. Explore all the stories from ‘Startup Watchlist’ series here.
The line between disorder and order lies in logistics.
This quote by Sun Tzu, the author of the book The Art of War, might be an old one, but its relevance is still intact. Ever since the middle ages, logistics has been a crucial part of winning or losing any war. Now, in the millennial generation, the logistics startups are fighting this war on multiple fronts for different industries.
In India, logistics startups majorly gained their foothold after the onset of the ecommerce industry. As players like Flipkart, Snapdeal, Amazon gave way to their in-house logistics services, a number of startups started tapping other areas to support the existing supply chain solutions or to fill the gaps in the otherwise fragmented and unorganised Indian logistics industry.
And the difference is widely visible in the last 10 years. As per a June 2016 report by World Bank, India has jumped 19 places in the Global Logistics Performance Index, from 54 in 2014 to 35 in 2016. Not only this, recently, in November 2017, the government also gave Infrastructure status to logistics, clubbing it with transport which means that in near future Indian startups can sell their goods in global markets at much better competitive prices.
A clear win-win for the Indian exports sector.
A significant role here is being played by government initiatives such as Make In India, geared towards improvements in the country’s infrastructure and increased domestic consumption. But at the same time, the Indian logistics startups have also paved way for heavy investment into the sector.
As per Inc42 Datalabs funding report for H1 2017, in terms of the amount being invested, transport and logistics took the third and fourth spots, respectively, with $528 Mn and $271 Mn in funding. In total, the logistics startups received over $271 Mn funding across 18 deals in H1 2017.
Apart from small ticket size fundings ranging between $1 Mn -$10 Mn, there are startups like BlackBuck which secured over $90 Mn funding this year. Then there is Rivigo, which after raising $75 Mn in November 2016, has now become a potential contender to enter the Indian unicorn club, as Softbank has set its eyes upon the company to invest $200 Mn-$400 Mn.
As we are about to unfold another exciting year filled with unexpected deals and strategies, here are seven startups to watch in the Indian logistics sector. The Inc42 Data Labs team have selected the startups after a careful analysis based on their existing business model, traction, funding raised (below $30 Mn) so far.
Indian Logistics Startups To Watch Out In 2018
LEAP is the brainchild of Sunu Mathew, an IIM Calcutta alumni and ex-Director, FMCG at CHEP. In 2013, when the Indian logistics was considered to be a largely fragmented industry with only a few major players, Sunu realised the need for a pallet and container rental provider across India.
Pallets are said to be the power behind any supply chain mechanism and without it, the supply chain could not function. It not only reduces transportation costs but also the quality of pallets can affect loading and unloading time, safety and delivery time.
LEAP India deals in returnable packaging and pooling of different types of equipments, namely wooden pallets and boxes, plastic containers, metal wire mesh catering to all sectors that work with these products to store or transfer goods from one site to another.
Its clients include Tata Motors, LG, Bluedart, Abbott, Carlsberg, All Cargo, etc. As per recent media reports, LEAP India is currently eyeing a market share of 60% with a turnover of $93.6 Mn (INR 600 Cr) by the end of 2022.
The logistics startup has 14 manufacturing centres and 22 warehouses across the country to manage inventory of 100K pallets at any given point of time.
The current size of the pallets market in the country stands at $780 Mn (INR 5,000 Cr). As per Vikram Godse, Managing Partner of MF Advisors LLP, with the onset of GST, the size of warehouses will only get larger. In order to bring efficiency in the supply chain, scaling up these large warehouses seems difficult without the use of pallets. By leasing pallets to customers, LEAP is ensuring a faster proliferation of pallets across India’s warehouses.
As per the regulatory filings of the company, with over $20 Mn funding, it is currently growing at an average rate of return (ARR) greater than 100%, indicating a fully viable, sustainable and profitable business model.
Besides this, as claimed by the company, its revenues will touch $15.6 Mn (INR 100 Cr) this fiscal compared to $5.77 Mn (INR 37 Cr) logged last year. Also, as stated by the founder of the logistics startup Sunu Mathew in an earlier media statement, the company has entire exports market to tap and in near future LEAP India can also expand its services to other markets.
4tigo was launched in September 2015 by IIT Kanpur alumni Vivek Malhotra and Anjani Mandal (former CEO at Manipal Technologies Ltd). 4tiGo Network is a technology platform for fleet owners, truck owner/drivers, brokers/agents, transporters, and transport companies to look for onward loads to next destination and/or place loads to find matching trucks with best rates.
The company has representatives present across all districts, transport hubs and industrial estates in all the six states of South India. They place the entire load requirement received onto the platform. Then these loads become visible to all the trucks that are near (100 kms or around) the load pick-up point. The truck then chooses the load that best suits their destination and price expectation.
Further, 4tigo also takes care of all driver expenses en route such as payments for fuel, toll etc. The drivers are provided with a card with which they can withdraw money instantaneously from any ATM in case of emergency. The company also claims to have made upto 25% increase in earnings of fleet owners.
Till July 2017, the logistics startup claims to have about 10K trucks and are currently building a payments platform for the logistics industry and are also helping small and medium-sized fleet owners in getting on the Goods and Services Tax Network (GSTN).
In 2017, the revenues from truck rent and lease in India amounted to approximately $509 Mn. This number is further expected to increase to $542 Mn in 2018. This shows that there lies a widely untapped market for 4tigo in the truck rental industry.
The trucking industry plays a vital role in fulfilling the rising demands of India’s 1.3 Bn population and with industries like automobile, agri-produce, FMCG, etc. further gaining traction, the truck rental segment has a plethora of opportunities to grow further.
As per an October 2017 report, the GST rollout impacted the truck rental industry significantly, showcasing an increase of almost 1112% in truck rentals. It is expected that, with GST as well as the growing importance of electronic payments in business transactions, the 4tigo Network will play a significant role in transforming the unorganised and fragmented transport industry.
As India’s only freight exchange enabled with transactions, 4tigo also provides electronic payments at primary as well as secondary levels, thus posing as a potential contender of the existing market share in the current trucking industry in India.
The founders, with their experience from companies such as DHL, EdgeVerve, and Amazon, decided to building an asset-light, app-driven, logistics and distribution company and that’s how ElasticRun came into existence.
ElasticRun technology allows its customers to run the transportation and supply chain systems in an asset-light model. The team has devised a disruptive operating model and technology to deliver supply chain services to its customers. The team further claims that with their solutions, the customers don’t have to spend capex on building fixed-capacity logistics setups.
This allows the brand owners to focus on core products and do away the concerns about managing the variability in demand.
The founders also aim to aggregate transport vendors, logistics vendors and space providers on Elastic Run platform, and create a virtual logistics network for its clients. The startup offers services to industries across pharmaceutical, online retail, food products, automotive and hospitality sectors.
The startup founders, having worked at companies like DHL and Amazon, have a network-centric approach. With the help of technology, they are optimising the path of goods as they travel across different touch-points.
While the startup has a strong leadership team, the last mile delivery segment in itself is growing at a fast pace. According to Vinculum’s 2016 report, the last mile delivery startups are poised to drive the global ecommerce sales to $2.48 Tn by 2018.
Also, while a large share (as much as 50 percent) of the ecommerce logistics market is commanded by in-house logistics players, the other 50 percent is controlled by third-party logistics (3PLs) service providers including traditional Logistics Service Providers (LSPs), ecommerce focused logistics providers and India Post. Thus opening up a number of opportunities for ElasticRun to expand and grow.
Founded in 2015 by BITS Pilani and IIT graduates Nishith Rastogi and Geet Garg, Locus is a machine learning startup focused on simplifying logistics. As Nishith told Inc42 in an earlier interaction, “Previous tracking solutions only told you where your truck is, Locus is going to tell you where your truck should be.”
The logistics startup aims to solve problems such as scheduling, tracking, and managing an on-field fleet in the on-demand and hyperlocal industry. The company helps traditional logistics businesses with services like hyperlocal delivery, intra-and inter-city logistics, automated smart dispatches, tracking and fleet visualisation, geocoding, and route deviation engine. It manages everything from dispatching, route optimisation, and real-time driver tracking to managing on field workforce to sending SMS alerts to customers.
Locus primarily extends its services to startups, enterprises, and brands across various sectors like grocery, furniture, pharma, and consumer electronics. The startup has over 25 partners in production, with several others in the pilot phase. It also works with some market leaders such as Quikr, Urban Ladder, Licious, Lenskart etc.
Locus has also created a consumer safety app christened, RideSafe which is powered by their Real-time Route Deviation Detection (R2D2) engine. The algorithm aids the user’s safety by mapping the route automatically by taking into consideration set of acceptable routes, traffic and other factors. Locus has been a part of Microsoft’s eighth accelerator batch and works on a pay-per-transaction model, with no overhead costs.
Logistics has always been Achilles heels when it comes to Uber for X startups and the full stack solution from Locus seems to be the best way forward as it automates the entire delivery process and also takes care of the deviations.
As per Locus founders, in India, the freight industry is estimated at $100 Bn and contributes to 6% of the GDP. A bulk of this is inter-city logistics. The company is working towards its goal of automating all human decisions in dispatching a package from Point A to Point B by 2020. It is also working in the direction of supporting situations such as iffy networks, inaccurate addresses as well as club orders via real-time rerouting.
Keeping that in mind, logistics startup Locus looks to be in a position to crack this market further by creating high-end algorithms and systems and carve out a competitive space for itself.
LogiNext was a part of the first batch of GenNext Innovation Hub, an incubator set up by the Mukesh Ambani-led Reliance Industries along with Microsoft Ventures. LogiNext is a B2B cloud-based optimization company using machine learning and data analytics to suggest the most optimized delivery routes and beat plans (schedule for sales and service professionals) to ensure maximum resource utilization in terms of cost savings and an uber-like customer experience.
LogiNext caters to the e-commerce, retail, consumer goods, express transportation, utilities, food & beverage, and other logistics-intensive industries.
Ground-level execution requires constant tracking and analytics of multiple service level compliances such as service time, safety, merchandise quality, distance traveled, variable costs & feedback capture. LogiNext helps these industry players track their Service Level Agreement (SLA) compliance.
The organisation follows a SaaS-based pricing model for its software or resource-based pricing, typically selling one license per resource. A resource could be a delivery associate, truck or any vehicle used for delivery.
LogiNext serves around 200 enterprise clients globally. LogiNext has four products: Mile (last mile delivery optimization); Field (field workforce optimization); On-Demand (On-Demand delivery optimization); and Haul (inter-state, cross-border transport, long haul and line express tracking and optimization).
In February 2017, the company opened up its SaaS platform to 100 overseas markets and has also set up offices in Singapore, Jakarta, Dubai and the US apart from India.
According to the Breakthrough Innovation Report by Neilsen, 2016, to expand in new markets, companies should invest in technology that could streamline their ground-level logistics movement up to localized perfection taking into perspective traffic and weather patterns of the different routes used for deliveries.
Recently LogiNext partnered with IBM which will now become pre-integrated with IBM cloud, IBM Order Management, IBM MDM MaaS 360 and IBM Weather Company. LogiNext is also in talks with IBM to use more machine learning APIs of Watson.
Though financial filings of LogiNext for FY-17 filings are not out yet, as per data available for FY15, the company clocked INR 1.28 Cr in revenues, growing at 400% since FY-15. But since LogiNext`s rapid growth and international expansion coupled with tech innovation towards building automating logistics, , we believe it will be worth watching what new options unfold for this logistics startup in 2018.
Shadowfax is an on-demand delivery service that takes care of delivery requirements of local businesses. Due to its hyper-local delivery network and logistics technology, merchants can deliver to their customers in a cost-effective and hassle-free way.
It offers features like automatic rider scheduling, seamless app communication, instant feedback, geo-based tracking, and location-based rider allocation. It also ensures 100% product delivery assurance. The company charges its customers on a pay-per-delivery model based on distance and required service quality. Few of its merchants include YoChina, Chaayos, Dana Choga’s Kitchen and Pind Baluchi.
Moreover, Shadowfax has a strategic tie-up with NSDC’s training partners to enhance skills of riders and provide customised training. Its key focus areas in delivery are food, grocery, pharma, and ecommerce related shipping. It is an exclusive delivery partner to clients such as Amazon India’s grocery and fresh delivery platform Amazon Now in Bengaluru, as well as BigBasket and Grofers.
Recently, in October 2017, the startup acquired the assets of NuvoEx Logistics, the parent company of the now-defunct egrocer PepperTap. Shadowfax is now looking to expand its presence across 75 cities and also increase its daily transaction volume to 90,000 along with an extensive countrywide network of more than 7,000 personnel and 400 minivans. Prior to this, it also acquired rival Pickingo in November 2015.
Post NuvoEX acquisition the company is doing 80K orders on a daily basis, claims founder Vaibhav Khandelwal.
Shadowfax, presently, operates in Delhi-NCR and Mumbai and is also piloting ecommerce and reverse logistics to optimise its fleet.
Over time, the B2B logistics segment has gained attention from both investors and corporates. Today, the B2B logistics market is being eyed by giants like Mahindra and Mahindra, who launched SmartShift in 2015, a digital marketplace for intra-city, cargo logistics.
In a considerably small amount of time, Shadowfax has achieved a good scale, as evident from its acquisitions of NuvoEx Logistics and Pickingo.
The company also currently claims to be clocking 30,000 orders per day with an average cost structure of INR 55 per order across categories and with a delivery fleet of 2,500 personnel on its platform. The association with biggies like Amazon, Myntra, Bigbasket further hints towards upcoming opportunities for the startup.
Founded in 2013, FarEye aim to solve the complicated last mile delivery issues on a mobile platform. Through FarEye’s automation software, companies can schedule and dispatch jobs, monitor execution and analyse performance—all in real time—making enterprises more effective and streamlined.
As a carrier-agnostic SaaS platform, it also helps businesses become more responsive, customer-centric and profitable. The logistics startup has designed the world’s first BPM Engine for the modern-age logistics function, enabling companies to become agile and reduce their go-to-market time.
As mentioned on its LinkedIn profile, FarEye executes more than 500 Mn shipments annually and has helped in increasing first-time attempts by 25%, reducing the fuel expenses by 28% and increasing the custlomer visits by 66%.
Its clientele includes over 75 large organisations across 15 countries such as Ecom express, Gojavas, Holisol, DTDC, Blue Dart, Safe Express, Bajaj Capital, Hitachi, Zalora, ACommerce, Sephora, MarkaVIP, etc.
The startup was also recognised in the Deloitte Technology Fast50 list in November 2016 and claims to be a profitable venture with organic growth.
Plagued by operational inefficiencies and high costs, the $60,000 Bn logistics industry provides a huge opportunity to FarEye.
As organisations become increasingly conscious of their efforts towards environmental sustainability, FarEye enables businesses to cut down their carbon footprints by automating their end-to-end logistics operations and eliminating manual repetitive tasks. FarEye is further turning software into a human experience and thus trying to integrate more creative solutions with minutest details as is the current need of the hour.
It further has the opportunity to capitalise on its logistics management expertise and expand its operations globally. The company is also aligning with new age technologies and is continuously working to gain expertise in domains such as IoT, drone tech and more.
In recent years, the Indian logistics sector is slowly and steadily breaking apart from age-old traditions and is adopting new age technologies to rise up to the global standards. Be it cold chain logistics, warehousing, trucking industry, or any other sub-segment, the Indian logistics startups are moving their way out of challenges that are plaguing the industry, such as poor manpower skills, inefficient fleet utilisation, fragmented last mile delivery infrastructure and more.
Amidst all this, road freight is moving at a much faster pace than the other transport modes including railways or ships. According to Novonous market research, road freight is the largest transportation segment in India, constituting around 63% of the total freight movement.
The sector is currently valued at $140 Bn. Inter-city logistics accounts for a massive 95% of road freight movement and, by 2020, freight transport market in India is expected to be worth $307.70 Bn.
Not only this, the sector is also attracting foreign funds and players too. For instance, in October 2017, Macquarie-backed Logos Property Group and Singapore’sAssetz Property Group formed a joint venture to invest up to $800 Mn in Indian logistics sector to develop and own logistics facilities in Indian cities including Delhi and the surrounding region, Mumbai, Pune, Chennai and Bengaluru.
In comparison to earlier years, 2017 has gone quite well for the Indian logistics industry as a whole. Termed as the backbone of any industry, we believe these Indian logistics startups will continue to reap available opportunities in 2018 as well.
While these were the Indian logistics startups to watch out in 2018, stay tuned for next edition of Startup Watchlist, where we will be featuring blockchain startups to watch out in 2018, click here for more stories!
[The startups mentioned above have been selected on editorial discretion, our interactions with the startups and other industry veterans.]