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HCCB Project Report Paper

This has emerged over the years as a major external impediment (in terms of a number of dimensions) to the effective growth of the trucking industry in India. This is a matter of concern especially when viewed in the context of an emerging globalizes competitive economy. Moreover, structure of the road freight transport industry in India is highly regimented, with 75% of the industry being accounted for by the unrecognized sector consisting of small truck operators having 5 or less vehicles.

The industry broadly consists of players who provide the transportation services, intermediaries (transport contractors/booking agents) who offer haulage services, brokers supplying equipment, drivers for commission and the consignors constituting the ultimate demand for the services. These layers are intermingled with each other such that only one interface I. E. Mega transport players is exposed to the buyers and rest all just serve as a feeding littoral. Transporters are the primary interface with shippers. They take all the responsibilities of shipment of consignments including loss of cargo and damage claims.

Transporters may have their own fleets of trucks and use them for shipping. However, since requirements always exceed availabilities, they have to rely on small truck operators for supply of trucks. The role of brokers or agents, who come in been transporters and truck operators, is to match demand and supply, I. E. They receive requirements from transporters and try to match them with trucks available in the market. Also, there are various kind of business relations existing between these service providers.

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One contractor might be serving many mega transporters and might also be procuring trucks from many small truck owners. However, a big transporter might have contacts with few transport contractors 41 page and agents. These kind Of business inter relations give rise to complex pricing mechanism, profit sharing and business support services. 3. Objective In the backdrop of the above mentioned dynamics of the road transport industry, this report is primarily focused on understanding the unimpressive working of the road transportation market in India.

Main objective has been broken down into four major components and are listed below: Capacity & Capability How are the lane(source to destination) specific rates determined -? day, week, month level How is the capacity of a market for a given lane/ sector determined Do transporters work on a buying model or a hiring model What are the prevalent truck types and direction of movement in truck types next err as seen by Memos as well as transporters and suppliers Transport Mankind Where are the transport mantis

What are the factors which determine location of transport mantis How do the transport mantis work Demand & Supply Centre What are the centers of demand and supply How do they effect the transport service availability Transport practices & procedural activities How does the buyer and supplier of services get in touch What are the unbundled components of transportation rates Who are the major players -? organized, unrecognized in the market What are the components of transport rates and how do they change Primary focus will be on the specific domains to which transporters cater which are FMC, Consumer Durables, White Goods, Foods &Beverages, Automobiles, Apparels, Pharmaceuticals, Books & Stationary.

Few industries have been kept out of scope due to their specific transportation requirement. These industries are: Companies involved in project engineering Companies involved in mining, oil & gas, heavy metals Alternative fuels other than diesel 5 | page 4. Business Model: Business model of transport sector especially road transport is hierarchical in nature and the number of levels involved is dependent on the kind of industry transporters are serving, business requirement in terms of volume, urgency of requirements. To develop the operating business model, all types Of existing players in terms of their size (small, medium and big), role (broker, contractors, agencies, and agents) were interviewed.

Following set of information was compiled after discussion with transporters who worked for companies in industries like oil, FMC products, pharmaceuticals, pipes, garments, electrical equipments, machines and high tech engineering including transporters catering to particular industries like milk companies, government ALP distribution. Others were agents who served as a feeder to egger transport companies like TIC, Western Roadsides, Associated Road Carriers etc. Main asset of a transport company is the fleet of trucks they use for business. They buy or hire truck as per the requirement of the buyer or the industry to which transporter is serving.

For example, a transporter serving a pharmaceutical buyer will have closed or refrigerated trucks due to the sensitivity of the goods transported. Small transporters had a fleet of 5-40 trucks which they either used directly for doing business with clients and earning profits or they worked with intermediaries or agents who got them equines from bigger transporters. Bigger & medium transporters primarily work directly with the client companies and maintain annual contracts for conducting business. Business at this level is formalized as transactions are recorded, maintained & contracted. There are exceptions like few transport companies are a collaboration of different truck owners, called as a co- operative society. One such Penne based society had 40 members, each having 3-4 trucks.

User needs specialized or general vehicles to transport goods & represents the demand side of the market User/Buyer Intermediaries Company ices/Booking Agents (including fleet agents) Brokers/Transport Suppliers Transport Operators (Small & medium operators) Collecting, forwarding, distributing goods & haulage Ensures supply of trucks to the transport companies & booking agents Providing haulage Fig 2: Pyramid of the transport sector 61 page – Various levels and their roles Apart from the above mentioned working model, business of transporters overlap on the basis of geographical areas they serve which are divided into zones depending upon the distance. For instance, transport market of Iambi has been divided into three geographical areas as shown

Local Market (Small operators) Intra-city Upton 400 SMS from city (Small & Medium National market more than 400 SMS (Medium & National operators) Fig 3: Region wise divide of transport business market & their overlap Small players focus mostly on local market or the city market. Their business model does not overlap with the other bigger players as they are present at the bottom of the pyramid. Business within the range of 400 SMS from the city is the highest overlapping business region which is the business region of small & medium players both. Big transport agencies mostly work in the national market. As far as getting new contracts or business is concerned, it comes through contact with the transport managers who in turn get to hear revive,h. ‘s from “word of mouth” testimonials, newspaper ads and inter-transporters relations.

Old transporters get business mainly by their past track record, and through their existing customers. Sites like Just dial do not play major roles for them, they help new transporters primarily. Buyers in most of the cases conduct business with already known players. Also, there is a perception in the market that companies choose transporter based on their track record, eke timely delivery, trained drivers, preparedness of transporters in unforeseen circumstances. Thus business runs on lot of trust and relationships. There is a lot of variability in demand seen by transporters, which makes their position risky in terms of retrieving operational costs. Above mentioned inter-transporters relationship also helps in managing this risk.

Moreover this cultivates a buying-hiring model in which hiring of trucks is a widely prevalent practice so as to not lose business from the customers. In this model, smaller transporters either conduct business by giving trucks to he bigger transporters or do their own business. Companies doing business with the buyer companies work under certain clauses setting standards for the delivery terms & conditions. Few of them are mentioned below 7 | Page 4. 1. 1 Time penalty: Transporter has to deliver the products in a stipulated time range, which 41. 2 is usually calculated on the basis Of an average lane speed (30 Km/ hour for services near Penne).

Time range consists of acceptable deviations from the normal time considering deviations in transport conditions like accidents, traffic blockage etc. Accidental damage: Rapport of transporters with the errs helps in determining the share of losses which will be incurred by both parties. Most of the consignments are insured by the buyer/client. In case of an accident, transporters would ask company representatives to visit the site and assess for themselves the damage, reason and its appropriate cost. These spot surveys are done by the insurer of the goods from the buyers side. These surveys assess the damage and the reason of misshapenness.

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