The delivery of goods cannot be completed without the involvement of a transport agency, and cement is no exception. In the cement business, 35 per cent cost is attributed to distribution, out of which around 15 per cent is towards transportation alone.
The demonetisation exercise put the trucking business, one of the largest unorganised, cash-based sectors in the country, in great difficulty. Operators had no new cash to pay drivers, while clients were finding it difficult to pay transport operators in the new currency.
The use of cash on a daily basis is generally for local taxes, buying fuel/CNG and other consumables, payment of road tolls, salary and wages for loading and unloading of goods. That is the reason even the government compromised on the deadlines announced for toll payment and buying of petrol during the note ban. One must appreciate that this is one of the largest and most important sectors depending fully on cash transactions, and the cement industry is highly dependent on transport companies.
After the demonetisation announcement on November 8th, while many decided to look for ways to acquire accepted currency, truck drivers, single operators and many in the business found themselves at the receiving end. Hardships in getting the money exchanged quickly at fuel pumps or banks further added to their woes. Most end users passed on the discontinued notes to transporters.
At times, transporters were forced to accept old notes or give up any chance of getting their costs reimbursed. Many big transport operators also paid their driving crew and staff two months' salary in advance.
'One has to understand that plastic money penetration in India is at a minimum. We cannot expect drivers to indulge in cashless transactions at one go and neither will they understand how to make use of it all of a sudden. The question remains whether petrol pumps, food joints or truck repair centres in interior areas will have facilities for accepting card payments,' says Manjinder Singh, Secretary, Maharashtra Tank and Lorry Owners' Association.
The Way Forward
A Digital India is the smart solution for driving the logistics industry to go cashless. The demonetisation move has pushed the logistics industry towards accepting digitisation as a smart and safe mode of payment. The industry is now exploring payment options like online transactions, debit and credit cards, and leading mobile wallet choices like PayTM, PayPal, Freecharge, and Buddy, etc.
What is equally important is to develop fully-functional mobile based apps. For example, like Ola or Uber, there can be a truck aggregator customised to the requirements of a truck service user, the truck company and the truck driver. When an organisation looks for a lorry load booking and transportation of products to designated destinations, the truck booking app can be well-equipped to track the route and distance from a pick-up point to the destination and calculate the cost estimate accordingly. When the organisation selects the type of truck required, lorry loading point, destination and other necessary parameters, the truck and driver is allotted based on current availability.
Next, the app will display the estimate and the payment options available. Online transaction options displayed on the screen of the device ensure a safe, instant and hassle-free payment mode, apt for fighting the cash crunch post-demonetisation. These kinds of innovations will lead to cashless transactions in the transport sector. A new age logistics company like Rivigo (https://rivigo.com) is in the process of setting another benchmark It is a technology-enabled logistics company that aims to deliver reliability through its network and provide transparency to clients. The company claims to have a unique model for delivery where drivers spend less time away from their families.
The CEO of Rivigo, Deepak Garg, says that making road logistics cashless has a potential to reduce the Indian economy's cash needs by 40 per cent and can drive demonetisation forward and revamp the entire sector, by making it faster, reliable and more efficient. Operations in the trucking sector can be made entirely cashless through use of E-POD (electronic proof of delivery) to get direct payment transfers from customers, automated bank transfers with the breakthrough same-day settlement for brokers, integrated payment solutions with fuel companies for dealer payments and toll payments through the NHAI initiative on FASTag through RFID tags and wallet solutions. Also, fleet owners can remunerate truck driver wages, reimbursements and incentive payments directly through the relevant Jan Dhan accounts.
Transporters, along with oil companies and manufacturers, will have to come together to drive cashless transactions for the transporter community as a long-term solution. However, we do not see that happening in the near future.