It is a challenge to get and sustain drivers, and more difficult to get highly skilled drivers. Having skilled drivers are advantageous as it helps save fuel and reduce accidents. Frequent defensive and behavioural training is the need of the hour, says Umesh Shetty, Executive Director, Allcargo Logistics. Excerpts from the interview...
How many trucks (including heavy-duty trucks) does your company possess?
We have about 700 trailers.
What are the factors you look into while purchasing trailers?
We generally look into factors such as loading capacity, fuel economy (overall low operating cost), reliability, aftersales support, and duration of requirement.
How far cost plays a role in choosing the brand vis-a-vis technology?
We do not purchase trailers based of brand value alone. Technology, operational cost and aftersales service plays an important role as well. As on today, Tata is our preferred OEM. Technology also plays a crucial role in aftersales and efficient management of services.
The sales pattern has been undergoing a radical change. How this has helped you take advantage from OEMs?
Due to intense competition and prolonged slowdown, the challenge is to get market competitive prices from leading manufacturers. There are many prominent players wanting to enter into lease/opex module to capture the market.
What is the current freight-cost scenario? How have you been able to sustain the pressure?
The freight cost is increasing by 12 per cent annually, however the freight rate is not increasing. We have improved our processes to bring down the cost through internal processes and efficiencies. Ours is more towards specialised transportation wherein we provide services globally, and transportation is part of a larger service offering. It can be called as 3PL logistics. If companies like us have superiority in managing logistics part then customers are relived and can concentrate on manufacturing and operations.
For a logistics company, it is an added advantage from the customer. The trend is moving more towards this model to reduce the freight cost. With the issue on getting trained trailers, vehicles with higher capacity are preferred for movement from hub to hub.
How do you compare the heavy-duty trucks from Indian manufacturers with that of global manufacturers?
In case of heavy-duty trucks, global manufacturing has about 40 per cent of additional cost (some percentage is raised due to import duty) over Indian suppliers. But technologically, global manufacturing is far superior in terms of engine performance, ease and comfort to drivers, and reliability of vehicles to longer years. Having said, it is observed that we are not able to leverage this advantages in terms of more productivity due to road congestion across India. If this situation improves, companies will procure more high-capacity global heavy vehicles.
What are the value additions you expect from OEMs?
We expect good aftersales service, technical upgradation to workers, and cost effective and longer life parts from the OEMs. Fuel is one of the major operational costs. OEMs should introduce more fuel-efficient engines in the market.
How challenging is the availability of finance?
Availability of finance is becoming a critical factor to run a business smoothly. This is mainly due to increased debtors as it is difficult to recover money during slowdown.
Are you planning for further investment this fiscal?
We are focusing on optimising existing investment for maximum business opportunities and for delivering best-in-class services.
Being a leading logistics provider, what are the challenges you face?
Challenges are more to do with overall macroeconomic environment, ie, lack of adequate infrastructure and seamless documentation processes to make the maximum use of these services for our customers.
We are focusing on optimising existing investment for maximum business opportunities.