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Business News/ Money / Road transport exchange looks to reduce bottlenecks, lead time
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Road transport exchange looks to reduce bottlenecks, lead time

Road transport exchange looks to reduce bottlenecks, lead time

 On the high road: (from left) Nitin Gupta, Ankur Tripathi and Saurabh Gupta, co-founders of the India Road Transportation Exchange. Kedar Bhat / Mint Premium

On the high road: (from left) Nitin Gupta, Ankur Tripathi and Saurabh Gupta, co-founders of the India Road Transportation Exchange. Kedar Bhat / Mint

Mumbai: Three entrepreneurs who graduated from the Indian Institute of Technology, Bombay (IIT-B), have started a road transportation exchange, offering a platform that cuts down the time required to get cargo moving to its destination by three-fourths.

On the high road: (from left) Nitin Gupta, Ankur Tripathi and Saurabh Gupta, co-founders of the India Road Transportation Exchange. Kedar Bhat / Mint

India Road Transportation Exchange (Irtex) eventually aims to cover the entire logistics industry, expanding its initial focus on road freight and becoming an online exchange where truckers can trade their services to transport cargo in a transparent manner.

“The idea is to bring all the stakeholders?of the road freight industry like shippers, booking agents, transport houses and the companies on to a common platform. This is an approximately Rs5,00,000 crore market in India," says Ankur Tripathi, chief operating officer and one of the founders.

Limitations in the road transport ecosystem, such as the limited reach of transporters, logistics managers and booking agents, lack of authenticated information such as truck records and absence of easy freight and fleet availability for mid-size and small companies, prompted the founding of Irtex in January.

Tripathi and co-founders Nitin Gupta and Saurabh Gupta—who graduated from IIT in 2006—quit their regular jobs and worked on the idea for a year before getting Irtex off the ground. One of their key value propositions is that Irtex helps cut down the time required to arrange the movement of cargo from as long as 24 hours to just 6 hours.

Gupta, who is also Irtex’s chief technical officer, explains how the exchange works. Suppose a shipment is lying at the airport and a service provider is looking for a truck to move it, he says—it may take 12 hours to arrange the transport through an agent or broker.

Now the service provider has the option of going to the Irtex website, filling a form with details such as the type of cargo, the route, destination, day and time for the cargo to be moved. The user’s needs would be matched with the list of agents/transport houses registered with the site. The user can then choose the most suitable agent.

Apart from a website, Irtex offers a cellphone-based service and operates a multilingual call centre. “It’s a multi-technology product since we have to cater to different kinds of people like local brokers and truck drivers who are not well versed with technology," says Tripathi.

Such freight exchanges are common in developed markets. Teleroute.com SA is a leading freight exchange in Europe, handling upwards of 200,000 real-time daily freight and vehicle offers and initiating around 1.2 mt daily deliveries.

According to Vishal Sharma, founder and chief executive of logistics-focused private equity fund Tuscan Ventures Pvt. Ltd, Irtex holds promise but faces several challenges in becoming a true exchange where individual truckers can actually buy and sell freight loads in a transparent manner and get better prices. “It has to do two things—one is to improve the transparency for truckers so that it gets them better prices, similar to the way it has happened with the farmers, who get better prices with the commodity exchange," he says.

The other is to ensure that truckers are able to get return loads faster instead of having to wait for days together or returning empty from the location where they have delivered a shipment. Return load is the cargo trucks?carry?while?returning from the delivery location.

While Irtex’s revenue model is subscription-based, in the next three years it plans to introduce a system requiring users to pay a brokerage fee per deal executed. It has signed up 25 subscribers, while 200 are taking its service on a trial basis. It has started earning revenue but not broken even yet.

Irtex is not the first attempt at a transportation exchange. Rahul Mehta, also an ex-IITian and currently CEO of Infreight Logistics Solutions Ltd, a subsidiary of TVS Sundaram Finance, took a shot at the concept in 2001. “My idea was to create a neutral platform. There were others like large transportation houses who tried creating this, but then that was biased as they themselves were in the business."

After the dot-com bubble burst, Mehta folded up the exchange and became a 3PL (third party logistics) player. He tasted success by forming a joint venture with TVS Sundaram Finance and eventually it became a subsidiary of the firm. “Road transport is a low-margin and low-cost business. The existing players have very low margin themselves," says Rajesh Samson, partner, infrastructure, real estate and government practice, Ernst and Young Pvt. Ltd. For new entrepreneurs that provide such services, to get good margins will be tough.

Mehta has a word of caution to add. “Even today you can’t expect overnight success," he says. “There is no large player in this segment which can drive change, so the effort to make people adapt to the exchange will be enormous."

shraddha.n@livemint.com

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Published: 12 Apr 2010, 08:52 PM IST
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