Bigcargo Logistics - In Business for the Long Haul

Dilip Phargade, Managing Partner, Bigcargo Logistics, shares with Lifting & Specialized Transport, the managerial strengths and competencies of his company, which have placed it amongst the biggest in the industry.

Big Cargo

Dilip Phargade
How do you see the prospect of the Indian Logistics Industry in view of the current focus on infrastructure development, Make in India, mushrooming e-commerce business, and implementation of GST?

The presence of a robust logistics-related infrastructure and an effective logistics management system facilitates seamless movement of goods from the point of origin to that of consumption, and aids an economy's movement to prosperity. The progress of the logistics sector holds immense value for the Indian economy as well; as such an advancement would increase exports, generate employment and give the country a significant place in the global supply chain.

The Indian logistics sector provides livelihood to over 22 million people and improving the sector would facilitate a 10% decrease in indirect logistics cost, leading to a growth of 5-8 percent in exports. As per reports, the worth of Indian logistics market would be around $215 billion in the next two years compared to about $160 billion, currently.

The boom in the next couple of years is expected largely due to the implementation of GST, as all transactions are now recorded and shown in the accounting system and there is no way these can be avoided. We have moved India from the African peer group in terms of tax compliance to the Asian peer group, by implementation of GST.

The GoI is giving a strong boost to Make in India, however, there is little disappointment in the Logistics sector as the speed of implementation on this very important issue is very slow. However, once it gains speed it will have a large direct impact on growth of the logistics industry, especially on the road transport sector. Our country is geographically very big and requires a lot of road movement across all regions for movement of raw and finished goods. Exports would also grow in equal measure and lead to large volumes of cargo getting exported, and we can see the freight forwarding industry growing here.

The e-commerce business has now become part of our daily life and is another good step for growing the small load deliveries within small distances. The customer today, wants delivery on the same day, which is increasing the number of trips of vehicles, and, thereby, increasing the transporters' business. With the option given by e-commerce retailers to return goods, consumers tend to buy more, which is again increasing reverse logistics.

A lot more can be done on the e-commerce platform such as: Driver allocation, booking of trucks and trailers, and booking of project cargo. All these are untapped areas and can reduce cost of logistics.

What are the major challenges, issues and inhibitors in the sector?

Although, Logistics Performance Index (LPI) of India has improved from the earlier 54 to now 35, as per the World Bank, in terms of "overall logistics performance", there is still tremendous scope for a further jump in India's rankings provided the infrastructural requirements and cost inefficiencies are addressed.

The first and biggest challenge is to make the industry "organized". The Logistics sector is largely in the unorganized realm because a large educated and skilled set of people do not want to become part of this sector due to its lack of professionalism, though, of late, they have started to see its potential.

The other factors hindering growth are high investment in initial capital, high operating cost, underdeveloped material handling infrastructure, fragmented warehousing, presence of multiple regulatory and policy making entities, lack of seamless movement of goods across modes, and poor integration with modern information technology. These challenges, particularly the ones pertaining to procedural complexities, redundant documentations and involvement of several agencies and statutory authorities at our ports and borders, severely dent the Indian logistics performance in international trade, resulting in about 70% of the delays.

Big Cargo
To ensure ease of trading in the international and domestic arenas, steps must be taken to build the sector in an integrated manner by harnessing emerging technologies, bringing in investment, creating human capital, removing bottlenecks, improving intermodal transport mix, bringing automation, single window clearance system, and simplifying procedures.

The need of the hour is to formulate an integrated logistics policy. Today, the stakeholders have to deal with multiple government agencies at the union, state and local levels, which result in delays. An integrated policy would go a long way in streamlining and consolidating multi-department requirements, besides facilitating corrective action, effective monitoring and prompt grievance redressal. Along with it, a mechanism needs to be created to measure the sector's performance at regular intervals against the set benchmarks, thus, providing evidences to the policymakers so that a favorable policy environment is created.

What is your view on the government's mega Bharatmala and Sagarmala projects?

Do you know that the average truck in India runs about 280 kms a day compared to the 700 kms that an American truck runs? An average American truck driver spends about 8 hours a day behind the wheel whereas the Indian counterpart spends an average 12 hours.

We have to ensure that our trucks move fast so that we are more competitive and more efficient. But we must also have better roads, a better traffic management system, better traffic discipline and more advanced trucks. Bharatmala and Sagarmala along with GST will be answers to this.

The Government has announced ₹5.35 lakh-crore investment under the Bharatmala Pariyojana project to construct 34,800 km of roads and under Sagarmala Programme, 577 projects, at an estimated investment of approx. ₹8.57 lakh crore ($130 billion). These have been identified for port modernization and new port development, port connectivity enhancement, port-linked coastal economic zone industrialization and coastal community development for phase-wise implementation over the period of 2015 to 2035.

In my view, most of the funds for these projects will come from Private Partnership, so funding will not be an issue. Now, the entire focus should be given to land clearance, which I think the GoI is working on implementation of "Challenge Method". These two projects will largely benefit the Logistics sector, boost economic growth, create jobs, and they will showcase the country's progressiveness. The projects will increase cargo volume in the market so that everyone has their share of business and they will reduce cost and time of transporting goods, thereby, benefiting industries and export/import trade, and transforming India's coastlines as gateways to India's prosperity.

Bigcargo Logistic is one of the most renowned names in logistics and specialized transport services. Please throw some light on the progress of the group since its inception.

Big Cargo

This company is run by my elder brother Gopinath Phargade, who is the company's mentor, and myself. I oversee sales and marketing and the day-to-day operations. Bigcargo was set up in 2012, and at that point of time, it employed a lot of rural youth, who were not so well educated. The initial period was quite tough as starting a heavy lift/ODC transport company requires high investment and high working capital. We were very selective in picking-up jobs and would take only those that could make advance payments; this way, we were able to reduce our working capital requirement.

To have the right mix of skills, we began to employ experienced, qualified people, and began training our employees by sending them to Volvo Driving Center, besides giving them in-house and onsite training, with a focus on safety. We made our employees work as partners in our journey and each job estimation is prepared in consultation of them. This gave them immense job satisfaction, and our open-door policy with a flat organization means that any employee can talk to us anytime, which leads to faster resolution of any issue.

What are the managerial strengths and competencies of Bigcargo?

To run a business requires a larger purpose; we at Bigcargo, are driven by a passion to create employment. Running a logistics company requires courage and good coordination with various stakeholders. You can sustain your business only if you have the conviction of "I can do, and I will".

The other vital things are good knowledge of finance, people management and technical competency. We are excellent in people management, and with our technical competence, we are able to provide innovative solutions and on-time deliveries.

Initially, we had to deal with financial problems as we would not do due diligence of clients, but we bounced back by developing financial and technical know-how. So, as per my experience, management of Finance, People and Technical matter are the core competencies of a business, along with good leadership, with courage, conviction, confidence, persistence, patience, and passion.

Now, once we receive an enquiry, we prepare a brief activity-based costing, and in the event of winning the order, the entire execution is divided into smaller groups who are competent in their respective areas like obtaining permissions, preparation of axles, client coordination, management of crews, en-route planning and execution, civil works, cost control and overall monitoring. Once the task is assigned to respective leads, then pro-active follow-ups will convert into results.

Please tell us about one of the most challenging and critical projects undertaken by Bigcargo Logistic.

We have undertaken many challenging projects for Reliance, IOCL, HPCL, ONGC, and Delhi Metro. For Reliance, we transported a 56 m long Process Column from a Godrej workshop in Mumbai to Reliance Dahej. Godrej was advised by all the transporters it had contacted to make use of water transport, which was 6 times costlier than our proposed transport by road. We found a route via LBS Marg via Western High to Dahej, which was in the opposite direction to the conventional route. We had to make some modifications along the route, but we proved to Godrej the route's safety and suitability by making a mock run of our axles. The equipment was delivered to the site within the committed time and at a competitive cost.

Big Cargo
Big Cargo Logistics honored by the Planning Commission as the Best Company in SME Sector
Another job required transportation of a 54-m long equipment to the Adani Dahej port - a mammoth challenge that we undertook successfully.

We have transported more than 100 metro rail coaches to the Delhi Metro project and more than 500 Over Dimensional Consignments (ODCs) to various oil companies.

We have also represented MSME (Micro Small Medium Enterprises) to the Government for its "Inclusive Growth in Nation Building" and we have been honored by the Planning Commission Dy. Chairman, Mr. Montek Singh Ahluwalia, and HDFC Bank Chairman, Mr. Deepak Parekh, in the presence of Assochem President and Yes Bank Chairman, Mr. Rana Kappor, for "Best Company in SME Sector".

For ODC movement, productivity, reliability and safety are quite important factors; how do you ensure this?

In the business of ODC transport, we carry very large and critical equipment of very high value and long lead times which require 15-24 months to get manufactured. The entire project depends on them to start up. So, you can understand the kind of safety we need to focus on along with reliable and timely delivery.

It is of utmost importance that we use a high-quality, dependable modular trailer; in fact, the transporter and module trailer manufacturer must work together in a project. They must jointly train the people for the desired skill sets; provide innovative solutions for specific jobs in the shortest possible time; undertake technical supervision; ensure timely availability of spare parts; and provide regular maintenance of their equipment.

We at Bigcargo have set safety policy to follow for each and every job being executed. The following steps are taken to ensure safety (i) No overloading of axles (ii) Ensure lashing of equipment properly (iii) Ensure safety display of equipment on rear & front side (iv) avoid night movement unless its really requires like within city limits (v) Ensure crews members are taken enough rest (vi) tool box meeting everyday before start of movement (vi) Prior to any movement conduct route survey to establish its suitability unless selected route has its proven track record (vii) no diversion of route is allowed unless its approved by home office (viii) consult associate transporters to establish quick suitability of route if sudden diversion is requires due to unavoidable situation, if in-house knowledge is not available.

Big Cargo

What are the technologies transforming the supply chain business?

Transporting special equipment requires a lot of permissions; however, digitization in many departments like the Ministry of Road Transport and in the Regional Transport Department is making the process a lot easier. Road permits that use to take a month, are now available online.

GPS tracking of vehicles is creating confidence in clients. Being able to track their equipment on real time enables them to plan their activities at construction site such as mobilization of the crane, rigging teams etc. This has reduced our standby time of 7-10 days at the destination, and we can use the saved time to transport other cargo, which helps us increase our per axle revenue.

Volvo has introduced a lot of in-built technology in the Pullers for a detailed analysis of the kms run by the vehicle, fuel consumption, present location etc. Digitization in the banking sector has helped us provide debit cards to drivers, which they can use at petrol bunks and to pay toll en-route, and it has eliminated fear of theft on road.

What is Bigcargo's current fleet size and plans for 2020?

Presently, we own 46 VMT axles and 6 Volvo Pullers, while our associates own 300 axles and 36 Pullers. The key to our success is working with associates within a family-like environment, where delivering and commitment are our top priority and money/price are the by-products.

Bigcargo plans to create four times the employment in the next 7-8 years, which means that our investments will be four times the current investments being made. By 2020, we plan to double our product strength and sales will automatically double. We have also started diversification in other manpower-driven areas like construction, where we can create more job opportunities, and we are considering entering the Agro products business.

Lifting & Specialized Transport — July - September 2018

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