Mahindra launches SmartShift to connect cargo owners, transporters
3 min read 20 Oct 2015, 01:57 PM ISTCargo owners can access the SmartShift service through a mobile app available on Android, the website or a dedicated call centre to connect with transporters
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Mumbai: Mahindra and Mahindra Ltd, part of the $16.9 billion Mahindra Group, on Tuesday announced an online platform to connect cargo owners and transporters. It’s one of several start-ups that the company plans to launch as it seeks to tap the burgeoning e-commerce space.
The venture, named SmartShift, will be a technology-enabled load-exchange platform, the company said at a press conference in Mumbai.
Cargo owners, both businesses and individuals, can access the SmartShift service through a mobile app available on the Android operating system, the website or a dedicated call centre. They can then connect with transporters in a manner that will save cost and time.
SmartShift is a digitally enabled, value-added service that will benefit both cargo owners and transporters, said Pawan Goenka, executive director, Mahindra and Mahindra.
The service launches in Mumbai on Tuesday and will be extended to 26 towns and cities over time.
Goenka added that SmartShift will operate as a separate business (Orizonte Business Solution Ltd) and that the Mahindra Group will invest in the company as a venture capital investor. He did not rule out outside funding for the venture in the future.
“The goods transport industry in India is a fragmented market. A platform or marketplace that connects load owners and transporters can bring significant efficiencies," said Anish Shah, group president (strategy) at Mahindra and Mahindra. Shah added that the platform will be for load transport within cities.
Manish Saigal, managing director at Alvarez and Marsal, a specialized advisory firm, said Mahindra is now acting as a master broker who is doing the match-making for transport operators and cargo providers. “It is the right step to begin with. But more than value addition, the biggest risk in this aggregation is taking the responsibility of cargo transportation. Mahindra needs to take responsibilty for the cargo that is handled by operators like Uber and Ola take responsibility for a trip," Saigal added.
According to a McKinsey and Co. study, inefficiencies in logistics infrastructure cost the Indian economy an extra $45 billion, about 4.3% of gross domestic product (GDP), every year. Freight traffic will multiply 2.5 times by 2020 from the 2010 levels, further straining India’s infrastructure, the study had said.
Kausalya Srinivasan, chief executive, SmartShift, said the need to bring in traceability and timeliness in the transport goods sector is a lot more as compared to the passenger segment. Companies such as Ola and Uber are experiencing a boom in demand for their cab services in a country where the transport infrastructure is still creaky and safe public and private commuting options are few.
Like cab aggregator firms do not own the vehicles their customers use, Srinivasan said SmartShift will also be an asset-light, marketplace model. The company’s core target group, she added, will be small and medium enterprises.
To be sure, the cargo aggregator market though still in a nascent statge, is not an unexplored one. It’s gaining traction slowly but steadily and has been drawing investor attention.
On 8 October, Mumbai-based logistics company Vonken Technologies Pvt. Ltd, that operates as Quifers, raised ₹ 2 crore in a round led by the Indian Angel Network (IAN) with the participation of Smile Group, an Internet group focused on consumer Internet and the media.
Quifers aggregates light commercial vehicles to provide its services to consumers and enterprises. Currently, 200 vehicles are listed with the company, and 40-50 vehicles are added each week. It charges 15% commission on the total transaction. Quifers aims to touch ₹ 1 crore in revenues, fulfil 500 orders a day and list around 500 vehicles by December.
Another firm Porter raised $5.5 million from Sequoia and others, Shippr raised $500,000 in seed funding, while Trucksfirst raised ₹ 62 crore from SAIF Partners and Singapore Post. Other start-ups in the space include names like Moovo and Karrier.
For the Mahindra Group, the SmartShift venture is part of a broader move towards digital commerce and the digital services ecosystem. “This is just one of the start-up ideas we have internally," Shah said. Mahindra will provide seed funding for all the start-ups in the initial stage up to Series A, he added.
Last month, the Mahindra Group said it would launch an e-commerce venture called M2ALL.com, which would offer the entire range of Mahindra products and services. It would be operated through a separate wholly-owned subsidiary called e-Marketplace Pvt. Ltd.
