Mr. V Ramaswamy, CEO Cargowings Logistics Ltd shares end user perspective on CV industry encompassing value proposition for customers, buying behaviour while selecting cv, telematics and much more.

Q. What is the fleet size of Cargowings and how many are owned Vs Sourced from third parties? 

Mr. V Ramaswamy: The fleet size is around 298 and every vehicle is owned by Cargowings. We don’t source anything as of now. Primary reason being we do not want to compromise on the value that we offer to our customers . We believe sourcing trucks from third parties impacts the kind of value that we promise to our customers.

Q. Do you engage directly with end user companies or become exclusive transportation contractor to 3PL companies which then in turn engages with the end user?

Mr. V Ramaswamy: The majority of (around 70- 80 %) of business is directly with OEMs like Maruti, Mahindra, Tata , Hyundai & TAFE as we primarily deal in supporting OEMs in transporting finished products i.e. cars & tractors.

Q. How do you manage the efficiency of your fleets?

Mr. V Ramaswamy: Since, all our trucks are owned by us, we have 100% visibility on the movement of vehicle. We plan appropriately and time the vehicle movement in such a manner that the loading of the vehicles takes place only in the entry time which is afternoon. Most of the OEMs have big logistics parks within their production plants so the vehicle moves in the park and exits at such a time that it leaves minimum impact on the movement of city traffic and also keeps the utilisation higher.

Q. In case demand is particularly high during the festive season; how do you fulfil that demand for additional trucks?

Mr. V Ramaswamy: Yes, In the festive season demand increases, like last year demand increased even in the non-festive season. There was lots of movement in the transport industry. Primarily all the OEMs have good visibility on the production cycle and they are able to collaborate with us in a much informed way to ensure faster turnaround.
Normally any automotive company or OEM works on a broad concept called share of business. When someone is not able to do the SOB, only then it goes to another. This industry works in a manner where demand and supply is equally met.

Q. Under what circumstances decision is taken to buy a new truck?

Mr. V Ramaswamy: When I joined Cargowings back in 2015-16 as the CEO, we had a combination of 70% old vehicles and 30% new vehicles. This combination works for shorter distances. However, we were also targeting to move vehicles over longer distances in the coming 3 years. For example: If you have to cover a distance of 1000 – 3000 km you will need to buy new vehicles for better utilization of resources. So, we started investing in the new vehicle. In the year 2015-16 we had around 200 trucks, where old trucks were used for shorter distance or local movement and new trucks for longer movement. For longer distances you need a vehicle which is able to do more number of trips and at the same time earn good revenue. When you are making a trip from Chennai to Delhi, which is around 2400 km, there was a time when we were able to make 1.5 trips, but when we added a new vehicle in our fleet and we were able to make one extra trip which makes 2.5 trips. So, we decided to phase off all the old vehicles from our fleet and kept adding new vehicles. From Nov 2015 onwards till last month we have added 215 new vehicles and pushed out old vehicles from our system. Each new vehicle roughly lasts 10 years.

Q. How do you choose to decide which truck to buy and which not to as the end user demand from the industries are fluctuating and there are no long term contracts?

Mr. V Ramaswamy: I shall share one fun fact here, the drivers from north India have interest towards Tata Motors vehicles and the drivers from south India like Ashok Leyland. The reason is because psychologically drivers feel they are more safe in Tata or Ashok Leyland. There is no empirical evidence of region of the nation vs the safety of the vehicle thus I say it as a fun fact.
In 2014-15 we had majority of Tata vehicles and from 2015 onwards when we started inducting new trucks we researched the market along with support from all the OEMs and decided to give a shot at changing the composition of the fleet. In the beginning we started using more of Ashok Leyland vehicles. In the year 2016 -18 we changed the combination and ratio further. Now we have 59% tata vehicles, 32% Ashok Leyland Vehicles, 5% Mahindra Vehicles and 3% Daimler. Appropriate analysis in terms of the cost of the truck, route they shall ply on, load bearing capacity, service and road side assistance and finally the return that we would make determines which vehicle we shall buy. All the OEMs are coming up with excellent innovations and they are involved in the decision making process. It’s very difficult to sit in isolation and decide. The process has to be driven by co-creation.

Q. Is there a dedicated asset team within your company that looks after the overall asset management?

Mr. V Ramaswamy: We have our internal team supported by third party technological suits to provide fleet management system. They provide all the data which we required like accounting and maintenance and thorough visibility on the asset

Q. Do you engage directly with the OEM or how often OEM directly engages with you for the product instead through its local dealership?

Mr. V Ramaswamy: It’s an ecosystem – we, OEM and local dealership. All the elements are important. In our case, yes, we directly engage with the company. We meet with company employees and share our requirement. The marketing and BD team comes to develop better understanding of our requirement. In last 3 years we bought 215 trucks as we were able to give them a clear forecast. We are very happy with the recent Mahindra trucks that we have acquired.

Q. What is your expectation from OEMs in terms of dealing with the large key accounts such as yourself?

Mr. V Ramaswamy: We always focus on after sales service. In case of breakdown whom should we approach for the maintenance and what will be the cost to fix the vehicle and how fast they are coming to fixed the vehicle, cost of the spares etc. You have to understand that we carry sentiments on our trucks – there could be a father of a bride who wants to gift a specific colour car to his daughter on her wedding. What if we are not able to deliver that to the dealership on time. So we not just carry cars we carry sentiments.
Our clients also want to have a total visibility as the cargo is time sensitive. Recently, Tata and Ashok Leyland came up with new telematics system, this is really helpful for the companies like Cargowings. The other GPS companies were only giving limited data like where is the vehicle and how far is it from the destination. The new system is able to improve the performance of the vehicle by giving some additional information like harsh braking or speed limit. This new series of information every month helps us in also training our drivers.
For the first time I have witnessed that suppliers to OEMs are directly getting in touch with the end users. Cummins supplies engines to Tata and they recently invited key stakeholders/end users in Chennai to understand how we use the vehicle and what is our requirement. They also ran us through the engine features as technology is fast changing. So these are very exciting times for the CV industry and whoever is associated with it.

Q. What role do transport brokers play in the transportation value chain

Mr. V Ramaswamy: As far as the automobile transportation is concerned broker play is not much as transportation is directly handled by OEMs themselves. When it comes to goods carrier lot of brokers come into the action. In coming 5-6 years you will find that the brokers are becoming lesser and lesser because of the technological advancement. Due to technological development there will be lot of transparency in the system and brokering will be only 20 – 30 % in fleet management system.