In 10-12 months we will capture 10% of Indian logistics market to our platform
In an exclusive interaction with Indian Transport and Logistics News, Karan Shaha, co-founder and chief executive officer of Vahak talks about the Indian logistics industry, potential to change it using technology, the story behind Vahak, solutions they provide and utilising latest investment and future plans.
August 12, 2021: Vahak is an online transport marketplace for road transport businesses and individual commercial vehicle owners (trucks, trailers, containers, Hyva, LCVs) co-founded by IIT graduates, Karan Shaha and Vikas Chandrawat in February 2019. In July 2021, Vahak raised $5 million pre-series A funding led by RTP Global with participation from Luxor Capital and Leo Capital.
In an exclusive interaction with Indian Transport & Logistics News, Karan Shaha, co-founder and chief executive officer of Vahak talks about the Indian logistics industry, potential to change it using technology, the story behind Vahak, solutions they provide and utilising latest investment and future plans.
Give me a sense of the Indian road transport market. What is the potential of technology in this market and how it has been evolving in the last five years?
Indian transport is approximately a $200 billion market and it is growing rapidly due to increased government spending and pressure from the e-commerce side. In the last two or three years, we have seen some major changes. The first reason is that the low cost of data and smartphone penetration. With the advent of Jio, more transport companies and more lorry owners are now having a smartphone and access to the internet.
Apart from that, GST, demonetization and UPI payments growing rapidly are changing the mindset of our users. In 2016, when we used to visit transport companies and lorry owners, they were really reluctant to come online and do business with someone they don't know. But now they're doing UPI payments to multiple vendors and are happy to come online. Due to Covid-19, digitization has been accelerated rapidly. So on our platform, we see a huge surge of lorry owners and transport companies.
The market is expected to grow to $300 billion by 2025. So it's a massive opportunity. We are seeing that the government is spending a lot on transportation and improving the quality of roads, the roadside assistance. Multiple logistics parks are coming up. There is a huge scope of improvement in the industry for the better.
Why was Vahak created?
Both of us Karan (Shaha and Chandrawat) graduated from IIT Kanpur in 2015. And right after college, some of my family members, who have some rice mills in my hometown Raipur, introduced me to the problem of transportation booking. So they told me that booking a truck from the market is a very big hassle. The rates are continuously fluctuating and it's very difficult to find trusted transport companies. So we started our own transport company in 2016.
When we started as young graduates, we didn't know much about transportation. We knew that there was a big problem but we didn't know what the deep-rooted issues were. To know that, we started our own transport company and also started providing GPS solutions to small lorry owners to track the lorry on the move.
We did this for about two and a half years and generated about ₹1.5 crore of revenue. We met more than 1,000 transport companies and lorry owners. And then based on the knowledge on issues, we launched Vahak in February 2019. Vahak at its core is empowering lorry owners and transport companies.
More than 70 percent of lorry bookings in India are done on the spot market and the players in this market are small lorry owners and small transport companies.
How far Vahak has penetrated the market in terms of the number of clients, partners, competitors and geographical reach?
The overall transport market is divided into two parts. The first part is the contract market which is highly organized, where the shippers and transport companies are very big and this is where the majority of the players are acting. Blackbuck, Rivigo, Porter, all these companies are catering to the contact contract market, where the bookings are done in bulk and the rates are fixed.
But more than 70 percent of lorry bookings in India are done on the spot market and the players in this market are small lorry owners and small transport companies. The vision of Vahak is to help these companies grow and we don't want to cater to large businesses. We are becoming a marketplace of these small players. We have already captured more than 1 percent of the market. We already have more than four lakh transport companies on the platform along with lorry owners.
At this point in time, we have no direct competition. We are the largest and the fastest-growing marketplace. We have already reached more than 10 to 12,000 locations across the nation. We have presence in every single state of the country.
Can you give me an idea about your team? How big is your team? Do you have an in house technology team?
We are a pure technology company and that is why technology and product are the two major important departments for us. In total, we are a team of about 34 team members. The technology and product teams are about is about 20 team members out of them.
How Covid-19 pandemic affected the market and your business?
Covid has been a huge unpredictable slowdown for the industry as the transport market has gone down 20 - 25 percent. But at the same time, we are seeing a huge push towards the online and the digital part of it. Vahak has benefited from a Covid-19 because we see a surge of users and we are a digital option for our users.
What are types of trucks available on your platform?
We see a mix of all types of lorries. The demand on our platform is generated by transport companies who are connected to shippers. The majority of the lorries that are booked on our platform are large, heavy commercial vehicles, like trucks, trailers, containers, but at the same time, we also see bookings from light commercial vehicles as well.
How Vahak helps connect lorry owners and transport companies.
As soon as a transport company receives an order from a shipper, it calls 15 to 20 vendors and lorry owners in an hour to book a trip. Vahak is a huge group of more than four lakh lorry owners and transport companies. You can create a free profile, make connections, get ratings, reviews, get your documents verified, and create a brand for yourself. As soon as you enter your load, it is broadcasted to more than lakhs of lorry winners in a matter of seconds. This hugely increases the overall performance and the efficiency of the lorry owners and saves a huge amount of money and time for them.
Our users who were earlier been able to run their trucks only for 13 to 14 days in a month, now, with the help of Vahak, are able to run it for 25 to 26 days.
Can you put into perspective your latest investment?
We have already captured about 1 percent of the market. In the next 10 to 12 months we will look to capture around 10 percent of it and onboard about three to four million transport companies and lorry owners to the platform. At the same time, we are looking to create a very robust technology. Product development is a very important aspect of our business. So we're looking to grow as well as develop a very strong technology and develop the team alongside.
How intelligent is your technology or platform and how efficient it is?
It's very efficient as many of our users who were earlier been able to run their trucks only for 13 to 14 days in a month, now, with the help of Vahak, are able to run it for 25 to 26 days. And this is the efficiency that we are able to provide to our users and they're able to earn a lot more reducing their dependency on finance.
Tell us about your financials and how you make money?
At this point in time, we are at a pre-revenue stage and we don't make any revenue, but we are seeing a huge surge of transactions on the platform. On monthly basis, we have recorded more than ₹100 crore of transactions through our platform and in the next 10 months, we are looking to 10x this number and facilitate about ₹1000 crore of transactions on a monthly basis.
Going forward in the next five, six months, we are looking to launch a whole payment infrastructure based on escrow and insurance and we will start generating revenue. The marketplace is meant to be free for and we are looking to make money through financial services like short term working capital loans.
What more we could expect from you in the next one to two years?
In the next two years, we will democratize and revolutionize this industry with the power of technology. We will develop good standardization and payment infrastructure for these communities. We will take the uncertainty out of the market. Right now everything is being done through personal connections through telephone calls. In the next two years, Vahak will become the largest marketplace and the majority of the Indian market will be on Vahak, using the huge technology and the network.