Freightwalla’s failure exposes the truth about home

Once considered the darlings of well-funded global fund managers, India’s digital trucking companies – or technology platforms built by start-ups – seem to be losing their luster as the shippers themselves have injected more technology into supply chains.

The demise of Mumbai-based Freightwalla suggests more than just a funding crisis, even if the money is no less relevant or significant to the context.

The proliferation of logistics technology startups in India’s historically fragmented cargo space began around 2015 when they highlighted price transparency and shipment transparency as their particular strengths over traditional players.

But a lot has happened since then.

Industry leaders, who asked not to be named, noted that the Indian freight industry remains deeply ingrained in a culture of relationships and that these loyalties can often influence business decisions.

“Shippers or other cargo stakeholders still prefer traditional carriers over digital players because of the huge skill gap between them and moreover, not everyone is open to adapting to new solutions,” said a Mumbai-based veteran freight forwarder.

According to the source, digital carriers have had to contend with targeting MSMEs (micro and medium-sized enterprises), which typically do not have sufficient volumes to deal directly with large carriers.

In view of the rising operating costs, such low-volume contracts leave little room for high brokerage premiums.

“A customer can compare rates with different carriers and switch to another carrier that offers a better deal,” the carrier said.

“As a digital carrier, you need service contracts with preferential rates from the more active carriers to adequately meet shipper requests,” the source added. “Unfortunately, since demand is unpredictable, digital carriers have to negotiate rates on a case-by-case basis when the customer requests a quote.”

The lack of behavioral change towards digital freight platforms or online shipping remains the sticking point of what has been playing out for stakeholders, according to sources.

“We offer digital trucking services, but customers want us to meet them in person before signing up,” said a start-up executive. “They still serve themselves through phone calls or text messages when there’s a platform for automated services.”

That’s not all. Most carriers have implemented instant quoting and other end-to-end visibility features on their websites, and are increasingly promoting drop ship contracts, marginalizing carriers.

In addition to so-called digital forwarders, there are broker-enabled software providers or software-as-a-service (SaaS) rental platforms, e.g. B. ClickPost and Locus.

“Our platform is no different or superior to any others on the market and in plain language there are many better and more advanced platforms on the market,” admitted the managing director.

Alongside Freightwalla, names such as Shipwaves, FreightCrate and Cogoport led the wave of native freight forwarding startups in India. RAAHO, Trukky, 4Tigo, GoBOLT, and GoComet (now headquartered in Singapore) are some of the other well-known players in this tech cohort. Cogoport has also developed a specialized international logistics offering for reefer cargo to differentiate itself, but has not seen its business improve, according to sources.

However, Wiz Freight, which was founded in Chennai in 2020, claims to have become profitable in the past fiscal year thanks to raising significant venture capital funding, including about $35 million from US-based Tiger Global.

However, the pace of India’s shift from traditional freight forwarding practices to the fashionable digital mode has undeniably not lived up to estimates that tech entrepreneurs or investors had predicted, despite the “new normal” and mandatory social distancing benefits recently brought about by the pandemic.

“Perhaps digital adaptation was too early for this industry in India,” said a technology solutions provider.

Now that the market is severely oversupplied and significantly short of demand, the clouds are darkening for everyone.

Given the admittedly conservative characteristics of India’s freight industry, most agree that attracting more shippers into the tech path will remain a sticking point for struggling start-ups, and it remains to be seen who will drop out of the race next .

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