According to ASSOCHAM, India spends around 14.4% of its GDP on logistics and transportation as compared to less than 8% spent by the other developing countries. The Indian logistics sector is set to reach $307 billion by 2020. In India, road freight accounts for around 63% of the total freight movement across the country. Gurugram-based Rivigo is a logistics startup that utilizes data and technology to make logistics human, faster, safer, and cost-effective.
Rivigo was founded in 2014 by former McKinsey consultants Deepak Garg and Gazal Kalra. Rivigo initially ran trucks for logistics firms such as Gati. It then launched its own platform and landed Amazon as its first client.
Rivigo uses a driver relay model for reliable long-haul freight deliveries that reduces turnaround times by 50-70%. Rivigo’s platform streamlines and co-ordinates roster duty at pitstops and schedules pick-ups and deliveries. To deliver a single shipment, several drivers are used. A driver takes a shipment from designated point to another within a few hours and relays the truck to another driver at a pitstop. He then returns to his origin pitstop. Drivers typically live close to the pitstops, which are usually on the city outskirts. With its model, a driver ends up spending around 10 hours on the road, a far cry from the terrible working conditions and long hours that drivers have to face currently in a traditional model.
For the relay model, Rivigo uses its own tech-enabled fleet of 5,000 trucks and 8,000 drivers on contract for a network across 150 Indian cities. While owning its own fleet is capital intensive, Rivigo believes that it enables it to control the delivery process and increase reliability and efficiency. It claims that it reduces the delivery time by 50%-70% and there are no unscheduled stops or fuel theft.
Rivigo also offers a relay-led trucking and freight marketplace. Its express cargo business now covers over 10,000 pin codes. Rivigo Freight is India’s largest digital trucking marketplace where clients can post their requirements and get the best spot rates. The marketplace has 30,000 operators with a total fleet of over 100,000 trucks.
Rivigo’s clients come from various sectors such as e-commerce, retail, auto, cold-chain, and FMCG for which logistics is a game-changing element. It has over 2,000 clients including Maruti Suzuki, Hero MotoCorp, ITC, Flipkart, and Sun Pharma. Rivigo competes with well-funded startup BlackBuck that has raised $135 million in funding as well as Gati, 4tigo, TruckSuvidha, and TruckMandi.
Rivigo’s net revenue jumped 77% to INR 721 crore (~$101 million) in the year ended March 2018 (FY18). Losses, however, doubled to INR 245 crore (~$34 million).
Rivigo has so far raised $216.2 million from Warburg Pincus and SAIF Partners. Its last round of funding for $35.6 million was closed early this month at a valuation of $950 million. An earlier round in January 2018 had valued it at $900 million.
Rivigo plans to add about 2,000 trucks every year. While analysts are impressed by its business model, they are concerned about scalability as procuring trucks is very capital intensive.
My take is that the logistics sector in India requires a complete overhaul, and some of this capital investment needs to happen for the country to improve its logistics flow. It is great that the tech-enabled logistics sector is able to attract adequate capital to catalyze this much needed change.