“Having an empty warehouse is the most important thing,” Rubal Jain, managing director, Safexpress
Synopsis
India’s surface-express industry is going through significant changes, including improvement in road infrastructure, consolidation, adherence to compliance, and the use of large trucks for operations. Jain, who is leading Safexpress when it is expanding warehousing capacity much faster than before, talks about the current trends and the road ahead.
Safexpress, India’s largest B2B (business-to-business) surface-express company, has consolidated its business to close FY23 with INR3,200 crore in revenue. As the company gears up to meet the increasing demand for logistics, Rubal Jain, managing director of Safexpress, spoke to ET Prime about the current trends in India’s surface-express industry, which is going through significant changes, including improvement in road infrastructure,
( Originally published on Jun 26, 2023 )
Safexpress, India’s largest B2B (business-to-business) surface-express company, has consolidated its business to close FY23 with INR3,200 crore in revenue. As the company gears up to meet the increasing demand for logistics, Rubal Jain, managing director of Safexpress, spoke to ET Prime about the current trends in India’s surface-express industry, which is going through significant changes, including improvement in road infrastructure, consolidation, adherence to compliance, and the use of large trucks for express operations. Most important, Safexpress is expanding warehousing capacity much faster than before, since a number of small developers and HNIs (high net worth individuals) with land parcels have entered the sector to construct warehouses for the company. Edited excerpts: You have seen a spurt in logistics demand in the last financial year. What are the few big changes you have done at the organisation level to handle this growth? This has been our philosophy for the last 15 years — we pre-empt, plan, and build new warehouse infrastructure ahead of time. The world looks at our warehouse and asks, ‘Why is it empty?’. In our mind, having an empty warehouse is the most important thing because, A, that means operations are smooth, which means the customer is happy. And B, that is how you will grow. Let’s say I have a hotel with 100 rooms and all of them are full. Then how will I grow? So, we are constantly adding capacity. 101260679In the last three years, the speed of capacity creation has gone up significantly. The reason behind that is there are three or four big players making large logistics parks now. That was not the case five to seven years ago. But because of them, there is a growing bunch of small companies or HNIs who own land and are willing to invest in building a warehouse for a company like us for the long term — 20 to 30 years. They know we are not running away, and they will get their rents on time. Our warehousing need is different. The design is different. We don’t need warehouses to store goods. It is like a railway platform where goods are constantly moving. Because of these factors, our speed of warehouse development in the last three years has gone up 5x. This has given us room to grow faster. We have had to take calls. For example, there was a time when our old hub at Raipur was all filled up. We took a call to stop booking more business for Raipur because we wouldn’t be able to deliver. But the day we managed to shift to a new facility, not only did we open up Raipur, but also decided to market Raipur quite a bit. In a year and half, our business from Raipur went up 3x. What is the sort of capacity addition you have done in the last one year? We have added close to 1,500 trucks in the last one year. We have launched about 10-11 large-format logistics parks of 50,000 sq ft and more. We have added several delivery centres and upgraded many small ones to a bigger size. 101260682How has the technology play changed for you? We have made big changes. For us, technology has had a little different play than assumed. We look at technology as an important tool to pre-empt failure. We are constantly upgrading technology to track every package in the system. All of this is for internal consumption, not for customers. Customers in general are happy if you consistently give them the service they want. In B2B, they are the same customers again and again. If they have partnered with you, they will give you 500 or 10,000 boxes a day, whatever the shipment size is. They do not track every package because this is something they would have to do in a non-reliable situation, not if they are working with a consistent service provider. It has taken us years to build that level of reliability. They expect us to make sure that we deliver on time. If there is going to be a delay, we will talk to them early enough. We have been working on technology not only to digitise everything, but also to use more data insights to take decisions. Say, a truck from Delhi to Bengaluru has a capacity of 10 tonne, but I am about to get 12 tonnes today. What do I do about the 2 tonnes left over? Do I wait till tomorrow, or get an instant understanding of hubs and routes to find out if another truck can accommodate these 2 tonnes so that the loads can be combined and another truck can be sent to Bengaluru today itself. What are the big changes you have seen in the surface-express industry in the last one year? Compliance is becoming more and more complex for logistics companies and a big-cost item, whether it is generating e-way bills, generating Part A or Part B of e-way bills, GST filing, or income-tax filing. Your own billing has to happen on the GST portal. We have taken a call that we cannot be running behind on compliance. We have invested massively in compliance with the idea that this is now part of life. Wherever possible, we will have to integrate with the government’s tech platform via APIs or manually. Customers are already moving from unorganised non-time movement to time-definite door-to-door movement. That is a huge shift and is making their business relevant and scalable. So, more and more customers want to work with organised logistics players. However, compliance is becoming hard for a lot of unorganised players, and they want to operate without these complexities. Traditional companies are saying, ‘We know how to operate a truck; we will become your vendor. These are the customers we work with; you manage the whole thing around GST and e-way bill’. There is consolidation happening. In the last four or five years, we have seen quite a few players of varied scales disappear. This has solidified the position of a few players in the express business. However, there is a long way to go for organised players. At our level, we are still not even half a percent of the market. However, it is not to say that unorganised players will be gone. India is too large and deep a market with an extremely diverse geography for just a few players to operate. Consider this: Even in Delhi, if we were to get all the logistics business in Okhla Phase III or Chawri Bazaar, given the huge volume of loads flowing, all our capacity will be exhausted. It all rests on whether you have the capacity to keep growing and investing in technology to manage operations. If you are good with compliance, you have a better chance of growth than others. There will be enough companies that will stop growing. They will say, ‘I have 50 trucks working with five customers and I will continue to do this’. It is just like kirana stores. They will stay in India forever. 101260693Safexpress has been largely focussed on road express. Any plans to get into multi-modal logistics, rail, and shipping? We have no plans to get into multi-modal logistics. The reason is that rail and shipping are largely suitable for movement of commodities or bulk goods. We largely move packages, say, a 20kg package from a factory to a shop in Agra. To move it through a train network is not a feasible option. Moreover, India’s road network is expanding faster than any other network. We are nowhere close to a point where we can find alternatives to road. Roads are getting built fast, making movement quicker and easier. Also, in road logistics, it is not as if growth is becoming a challenge for us. Your competitor Delhivery is building a fleet of tractor-trailers for express logistics. Do you have any plans to deploy these huge 40ft trucks? It is the network design of the business model that dictates whether you need smaller or bigger trucks. We started the company with 20ft container trucks, then moved on to 24ft container trucks. Now, the standard trucks deployed across most of the country are 32ft. For middle-mile operations, we move across 2,100 routes across India on a daily basis. Of these, about 1,700 to 1,800 routes largely deploy 32ft container containers. If you are going to run fewer direct routes, consolidate loads more, and run largely on a hub-and-spoke system, you need bigger trucks. If your warehouses are designed in a way that you can move only five trucks at a time, you have a restriction on the number of destinations to which you can send material. You will send more and more material to the same location, say Patna, for further distribution to surrounding areas like Jamshedpur, Ranchi, or Kolkata. In this case, it makes sense to use a bigger truck to carry loads to Patna. In our case, our network design is such that our trucks from Delhi go directly to Patna, Ranchi, Bhubaneswar, or Jamshedpur every day. Since we are moving more direct trucks from Delhi to other locations, I would rather send two medium-sized trucks than a single large truck. So, our network design requires us to use smaller, and speedier trucks that go across the country. Having said that, all our warehouses are equipped to move tractor-trailers because 10 years down the line, our volumes may require us to move there. Several other logistics companies do not have the kind of scale that would require large trucks.(Graphics by Mohammad Arshad)