This Start-Up Is Transforming India's Unorganized Trucking Sector
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“Our thesis was that transformation cannot happen unless you take a step back and take a view of converting the entire unorganized sector to organized,” says Anjani Mandal, co-founder and chief executive officer at business to business logistics start-up Fortigo.
For Mandal, having worked in different companies across sectors, the idea behind starting something like Fortigo was to solve a problem that was large enough and would add value to the ecosystem.
Founded in 2015 by Mandal and Vivek Malhotra, both IIT Kanpur graduates each with over 20 years of experience, Fortigo creates a seamless experience between the supply side consisting of fleet owners with customers who want their packages delivered.
Journey So Far
One of the earliest decisions that the company made in its aim to transform the sector was to digitize all payments. To make it happen, the company partnered with the likes of Indian Oil Corp (IOC), several banks among others and integrated them on its platform.
The digitization also helped in other ways: the company was able to get discounts from these partners for their services and pass it on to the fleet owners after keeping a margin.
After creating the first batch of solutions for the truckers, Bengaluru-based Fortigo went on to build a freight exchange as a platform for both buyers and suppliers to transact.
“Looking at that, large customers said I like your idea of supply chain visibility and said you provide us services, we said we are not yet ready we will come back to it,” says Mandal.
In 2018, Fortigo started providing solutions for the end customer as well. Mandal claims they work with almost all large corporates today, including some of the biggest names in the fast moving consumer goods sector. The company’s platform is used by more than 18,000 fleet owners and 1,20,000 trucks.
Over time, the company has also received investments from illustrious names such as Nandan Nilekani and Accel Partners. It last raised a $10 million round from investors in 2017.
How It Works
The company has officers across the country who help onboard fleet owners. Fortigo asks for and verifies all necessary documents to ensure that they have all requisite permissions and licenses as an individual and company.
“One of the fundamentals of tech improving productivity is that you have minimal number of persons of high caliber across all the locations in the whole country,” says Mandal, explaining how they don’t need to have fancy offices all over in order to run their operations.
Once they have registered, the truckers then provide their preferred routes. Ideally, they choose three-four, says Mandal. Then Fortigo works with the buyers and has a matchmaking process where the fleet owners get notified of possible loads on the routes they had opted for.
On the buyers side, Mandal says Fortigo makes sure that they only work with companies that are credit-worthy and everything is done on a case-by-case basis. So far, all the end customers that the company has are either INR 500 crore-turnover companies or are at least part of group companies of a similar size.
With the help of GPS fit into trucks and their partnerships with toll booths and the IOC, they give the buyers an interface where they can check if their loads are on track.
“In business people don't like seeing fancy maps, they just want a listing,” says Mandal.
Other than convincing truckers who already had successful businesses to use technology, were there other challenges for Fortigo?
Mandal says trust is an issue. While they were lucky in terms of the companies and investors they had partnered with, he says “that trust deficit does not go away.”
And so the company decided that all payments would be made on time and in full. “And all his statement of accounts from the first transaction they have done to date, including the current which may be ongoing is available to them by 24/7 on their app or their computer or whatever they want.”
Into The Future
Mandal has ambitious plans for Fortigo going forward.
By the time the current fiscal year ends, the company aims to have an annual run rate of INR 300 crore in revenues. Mandal says they are also very close to breaking even, which he expects should happen by mid-2020..
The company is also dabbling in the credit space with a strategic investment in a non-banking financial company. Over time, Mandal hopes they would be able to facilitate credit to the truckers on their platform.
The company is planning to raise a fresh round of founding as well. “To be able to do justice to the company potential, I would need within the next 15 months north of $50 million,” says Mandal.
He says the intent is for the company to grow 10x over the next two years.