Mahindra Logistics renews 2×2 Logistics to advance outbound logistics for the automotive industry

Mahindra Logistics, a leading third party logistics provider in India, is in the process of transforming the operations of its subsidiary 2×2 Logistics. The goal of the redesign is to strengthen the company’s automotive outbound logistics business, which caters to the four-wheeler and two-wheeler industry.

The transformation includes a number of initiatives, including renewal of 2×2 Logistics’ vehicle fleet, dome remodeling, increasing the average running time of vehicles and overhauling routes, new technology solutions and strengthening customer relationships.

2×2 Logistics provides logistics and transportation services for Original Equipment Manufacturers (OEMs) to move finished automobiles from manufacturing/assembly sites to storage yards or directly to dealers using purpose-built vehicles. The company owns and operates more than 150 vehicle transporters. Mahindra Logistics, which owns 55 percent of the company, partnered with Indian Vehicle Carriers (IVC) to form the company in 2014.

Prasanna Pahade, vice president of auto and agribusiness at Mahindra Logistics, said Autocar professional that Mahindra Logistics has started to get the fleet back on the road since last year, when the automotive industry was expanding. Since the business was practically non-existent, most of the company’s vehicles were left on the streets. The company therefore first got the drivers on the bikes and took care of the maintenance of the vehicle before it could go on tour, taking loads off the customers and then increasing the mileage per month. During the fourth quarter of fiscal 2023, the company also completed some dome remodeling mandated by the new standards. The Department of Road Transport and Motorways issued a notice in mid-2020 amending regulations on motor vehicle dimensions in line with international standards. The amended regulations also stipulate that truck trailers used by car manufacturers may transport motor vehicles/construction machinery with a closed body.

Third, the company has decided to add some new vehicles to its fleet as most of its fleet is now a bit outdated. The company hasn’t given any concrete details on what it plans to phase out and replace, or what the net gain would be.

“So both demand and execution – both things are a little further north now than they were last year when they were significant parts of it and we’re confident that business will be much, much better,” Pahade said.

In his opinion, the slowdown in 2×2 Logistics is a testament to the headwinds the automotive transportation industry has been experiencing in recent years. The sector struggled shortly after peaking in fiscal 2018–19 due to the liquidity crunch caused by the infrastructure leasing and financial services crisis in 2018 which impacted liquidity in the economy.

The disruptions caused by the transition from Bharat Stage IV (BSIV) to Bharat Stage VI (BSVI) emission standards exacerbated the problem in fiscal 2020, which saw COVID-19 emerge later that year.

In FY 2022-23, 2×2 gross revenue decreased by 13.65% and totaled Rs. 20.81 crores from Rs. 24.10 crores in the previous financial year. The after-tax net loss of 2×2 narrowed to Rs.3.86 crores in fiscal 2022-23, compared to a net loss of Rs.5.88 crores in the previous fiscal year, according to the company’s latest annual report.

The redesign of 2×2 Logistics is therefore a positive development for Mahindra Logistics, which aims to become a Rs 10,000 crore revenue logistic service provider by FY2025-26.

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