New Technology Puts India’s Truckers Back in the Driver’s Seat
The Nelamangala Truck Terminal in the Indian state of Karnataka. © Bryan Satterly/IFC
When researchers at the Center for International Development at Harvard University (CID) declared earlier this year that India is the new economic pole of global growth, researchers also predicted that the nation would retain its distinction as “fastest growing economy” for at least another decade. According to CID, the diversity of tacit productive knowledge in a society—or its collective “know-how”—powers India’s economic growth.
“Know-how” was key to how BlackBuck’s three founders conceived and built India’s most successful online marketplace for businesses with shipping needs to connect with truck owners.
Since its 2015 launch, BlackBuck has been transforming a market that used to be decentralized, unorganized, and inefficient. In those days, it was so difficult for shippers to connect with truckers that vehicles in some locations remained empty while others faced too much demand to fill customers’ needs. Shippers had to navigate—and pay fees to—several layers of brokers to find truck owners for each job. The supply chain suffered, and so did the economy.
But BlackBuck saw the untapped potential of the freight transport market—especially the long-haul, full truckload model where customers book an entire truck for intercity shipments.
The company’s online platform enables truck owners to find shipping jobs and bid for them. The technology has helped BlackBuck quickly scale up to reach a wide base of 350 shippers and over 80,000 truck drivers since launch. Existing investors include large, global venture capital firms as well as local strategic investors with expertise in technology, such as Accel Partners, Tiger Global, and Flipkart.
IFC’s $10 million investment in BlackBuck, announced earlier this year, is helping the company expand operations in India and continue to develop its technology platform. This is IFC’s first transaction supporting a technology-based logistics service provider in India. It promotes inclusive growth by empowering small truck owners to access orders and price quotations—eliminating information asymmetry in the market and enabling truckers to improve their income and more effectively utilize their vehicles.
Putting Individual Truckers in the Driver’s Seat
India’s trucking industry has historically been highly fragmented with most trucks owned by drivers themselves, or by micro-entrepreneurs with fewer than five trucks. Before BlackBuck was created, shippers found it challenging and inefficient to source trucks in a market with scarce visibility on truck availability, several levels of brokers and intermediaries, and limited partners of scale. Transporters that aggregate trucks are also inefficient because the lack of connectivity and information exchange between shippers and truckers threatens availability of loads for the truckers, and has led to low truck utilization.
To transform this outdated system, BlackBuck has pioneered real-time demand aggregation and pricing transparency, making it possible for truck owners to find shipping jobs without depending on brokers. Its technology platform enables shippers to source truckers from a massive network of independent truck owners, and its smartphone applications give micro-entrepreneurs and individual truckers access to more loads.
BlackBuck is also developing other services to improve truckers’ quality of life. Its fuel card program enables truckers to purchase fuel at a discounted price, because of its group buying potential. This is based on a negotiated agreement between Blackbuck and large fuel companies such as Indian Oil and Bharat Petroleum. Enabling a card-based or mobile phone payment service for fuel reduces the need for the trucker to carry large amounts of cash—especially helpful against the backdrop of the country’s recent demonetization.
BlackBuck is considering additional financial inclusion products for its truckers, such as insurance and financing, and is consulting with the Ministry of Transportation on electronic tolling initiatives.
Fueling National Growth and a Better Climate
Besides improving India’s competitiveness, BlackBuck’s technology platform addresses concerns about climate change. It increases truck utilization by reducing trips when trucks travel empty or only partially full, effectively reducing carbon emissions. This is especially important in India, where trucks have 33 percent average utilization—implying that they are either standing without stock, travelling empty, or are only partially filled for most of the time.
IFC’s investment in BlackBuck fits our strategy for the transportation and logistics sector. We focus on projects that can reduce transportation costs, relieve bottlenecks, speed up trade, and create jobs through efficiency upgrades and modernization.
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Published in October 2017