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As the government gears up to roll out the Goods and Services Tax (GST) in July, most logistics companies will remain in the ‘wait-and-watch’ mode, but the demand for long-haul transportation is set to increase, feels Truckola, a start-up in the long-distance segment.
“Our opportunities are increasing as long-distance needs are expected to increase,” Truckola founder Raghav Himatsingka told Businessline.
“GST is going to last 30-40 years. Companies are saying it is better to wait 6-7 months instead of jumping in immediately,” said Himatsingka.
Meanwhile, logistics firm Ecom Express is looking to expand in Kerala post-GST, according to TA Krishnan, CEO, Ecom Express.
Explaining why the demand for long-distance transportation is likely to rise, Himatsingka said that at present, manufacturing companies do three kinds of distribution. “Say a firm is located in Maharashtra and selling within the State. Such manufacturing units will now have an opportunity to sell outside their States, which will increase demand for long-haul full truck load deliveries.”
Companies manufacturing in one State and with depots in other States are consolidating to 4-5 warehouses, which will again increase long-haul transportation. Also, consumption centres will increase.
Several States now have electronic bill concepts and have squads to check the paperwork of trucks. “If you don’t stop, a penalty of ₹10-15 lakh can be imposed,” Himatsingka said.
Himatsingka also expects the geographical demand for trucks to change. Data from 64 per cent of all heavy vehicles are registered in seven States. Once the GST is implemented, the distribution network should evolve and be evenly divided.
With efficiencies getting built in, there could be some drop in costs. “Layers of transportation add to costs. Courtesy the fulfilment centres, there won’t be demand for so many warehouses.”
Ecom Express, which has services in 28 States, has fully covered delivery in all pincodes of 12 States, the latest being West Bengal, Bihar, Gujarat, Maharashtra and Punjab, Krishnan said.
The company, which has received investments from Warburg Pincus, said it expected to capture the latent e-commerce demand.
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