Losses Factors For Transport Industry

Roads

The first and foremost thing that serves as a bottleneck in the growth of the Indian transport industry is the poor condition of roads. Indian transport system largely depends on roadways. Despite huge dependency on the roadways, the condition of roads in the country remained poor. Such conditions not does affect the industry financially but also on safety grounds. 

According to The Economic Times, India incurred a huge annual loss of $21.3 billion based on delays and extra fuel consumption due to pathetic road conditions and frequent stops. This is the reason why the scope of multi-modal transportation is limited. 

This is just the loss in numbers; the loss of lives cannot be overlooked. The road conditions are better to some extent in urban areas but it’s terrible in the rural areas. Every year, a large number of drivers depart for the last journey due to improper road infrastructure.

The whole scenario of the Indian transport industry can take a turn if Government focuses on the road conditions. The transportation and Logistics sector contributes majorly to the GDP. Therefore, the government makes some effort to support the industry, then this industry will be able to support better to the country.

Fuel Prices

The ever-hiking fuel rates are another major factor of loss to the Indian transport industry. For transportation of goods, heavy-duty vehicles are predominantly used by the companies. Such vehicles need diesel to run. We all can witness the pace at which prices of fuel are going up. It leads to an increase in the operational costs that eventually cut down the margins and profits of the trucking companies. 

The fuel price hike would also result in overloading by the companies to maximize income, resulting in reduced vehicles’ efficiency. Organized transportation companies could have the power of offloading the rate differential onto the consumers. 

In both cases, the operator has to bear the loss. In the first case, the operator has to incur the cost of increased fuel prices, which will force them to sell their old vehicles. In the latter case, when the operator shifts the price differential to the customer, the cost of goods transportation would increase, leading to overall increased logistics cost. 

The companies have to bear more loss if the transportation route goes through terrible roads, rural areas, or multiple checkpoints. All these factors call for increased fuel consumption.

There is a need for a sustainable option for this industry such as the introduction of new vehicles in the industry like EVs.  

Competitive Rates

Nowadays, there are so many transportation and logistics companies that customer gives a damn about. Global transportation and supply chain companies are operating in the market with better services. They provide outstanding and ever-wanted services to the customers like 1-day delivery, etc. With such services, international companies enjoy monopoly and customer loyalty. It happens because the Indian transportation industry is yet to develop fully to the international level. At this point, the domestic transportation industry suffers losses. 

Even if Indian companies try to provide their customers with international-level services, their operational cost will go up, which eventually lead to an increase in service cost for the customers. Here also global giants get an opportunity as their service prices are highly competitive. 

Several factors need to be improved so the Indian transport industry can also give competition to these global giants. 

Shortage and Leakage

Up next, the shortage of operational staff is a major cause of loss to the domestic transportation industry. Every logistics and transport company in India has a common problem of employment and retention of the delivery personnel. First of all, trustworthy drivers, pickers, and packers are available without so much hassle. Even after they get employed in a company, it is hard to retain them due to several reasons like payout, work pressure, etc. 

The sudden resignation of employees tends to transfer the entire workload on the remaining workers of the company, leaving them exhausted and overworked. This scenario further ends up in taking uninformed leaves and day-offs by the workers. Sometimes, companies have to hire drivers, pickers, and packers at the last minute at the higher cost to complete the order. It minimizes their profit margins as in-house personnel is not available.

Hence the shortage of labor creates a challenge for the logistics provider as he is unable to fulfill the requirements as well as expectations of its customers. 

Business Management

Inefficient business management is one of the main factors of losses in the Indian transport sector. When you are unable to anticipate the potential risks in the business, you bear losses. If you need to make your transport company a major player in the industry, you need to do SWOT analysis properly, predict potential threats, and keep a back-up plan for unfavorable times.

According to us, setting up deadlines in the transportation business is the biggest mistake because it leads to work pressure on the staff and yourself. It may lead to workflow disturbance. Therefore, you should always have room for unexpected conditions like delays.  

You should have pre-defined time frames such as transportation, picking, packing, loading, and unloading. There should be a proper system that allows you to work smoothly even when you have multiple bookings.

Apart from this, several things need to be looked after, including fleet, payroll, loads, etc. Managing all these activities manually is a complex task. Either you could hire individual managers to handle your operations department, accounts, etc. or you can deploy an all-in-one transport management system like Bharat TMS system and do everything by yourself. Getting a TMS is a one-time investment while you have to pay on monthly basis to your managers.

Other Expenses

Apart from the above factors of losses, several expenses take down the margins of the Indian transport businesses. The loss of productivity is directly proportional to the loss of money in any business. The productivity and smooth workflow are hampered by frequent stops for different reasons. Vehicles are being detained by the officials for RTOs and police officers.

Detention of carriers is done for RTO checking that includes checking of important documents like registration copy, permit, driving license, and more.

Vehicles are also stopped for checking the payment of sales taxes and other commercial taxes. When drivers violate the traffic rules or the truck is overloaded then they get penalized. Challans happen in almost all cases where violations of traffic rules, unavailability of documents, and tax receipts are witnesses. All these additional penalties make for reasons of losses. 

It happens most of the time that several halts of the carrier by the officials lead to delay in delivery of goods. This tends to disappoint the customers and develop a negative point of view for the company. 

All these expenses incur losses to any logistics and transportation company in India. Therefore, every company in this industry should have an efficient TMS that will keep a record of all its documents and processes in a detailed manner. 

Conclusion

So, these were the top six factors of losses to the Indian transport industry. In the end, we would like to throw light on having business control to minimize the scope of errors and losses in the company. You can gain comprehensive and deep business control with the Bharat transport management system. 

You should keep your business processes flexible for better workflow, have a back-up plan for downtime in your business, consider satellite navigation for transportation delays, and efficiently manage your working capital.

By careful business planning, management, and realistic objective setting, you can overcome these business challenges and survive and grow in the Indian transport industry. You may give tough competition to the global giants in the transport sector.