How Porter Became a 8000 Crore Rs Logistics Company? (Startup Case Study)

Summary

In FY-2023, India's logistics costs were over 14% of its GDP, compared to 10% for China and 7-8% for developed countries. This highlights the inefficiency of India's supply chain. The government launched a national logistics policy in 2022 aiming to reduce costs. Porter, a logistics company inspired by Uber, is addressing intracity logistics inefficiencies by creating a marketplace for truck drivers and customers. Despite early challenges, Porter has grown rapidly, integrating technology and expanding services. With plans to enter the intercity market and adopt EVs and drone deliveries, Porter is poised for significant future growth.

Takeaways

• 📈 India's logistics costs are significantly higher than those of developed countries, spending over 14% of its GDP compared to 10% in China and 7-8% in the US and Japan.
• 🌐 Countries like Vietnam and Thailand rank better than India on the Logistics Index, making them more attractive for businesses.
• 🛑 The Indian government launched a national logistics policy in 2022 with the aim of reducing logistics costs from 14% to 8% to improve competitiveness.
• 🚚 Porter is a rapidly growing logistics company in India, inspired by Uber's model, aiming to organize the unorganized intracity logistics sector.
• 💡 Intracity Logistics refers to the transportation of goods within a city and is a critical factor in determining an economy's efficiency.
• 🚫 The Indian logistics sector was largely unorganized, leading to high costs, inefficiency, and poor service quality.
• 💼 Porter's founders, Uttam Digga and Pranav Goel, were inspired by Uber to create a marketplace connecting truck drivers with customers for efficient goods movement.
• 📊 Porter started with a simple website and phone orders, offering a 20% cheaper service, and quickly gained over 500 business customers.
• 📉 The company faced challenges with rapid expansion and had to shut down its intercity logistics vertical due to market conditions and focus on intracity services.
• 🛠️ Porter improved its service by ensuring timely deliveries, using GPS tracking, and implementing a per-minute charge for loading and unloading delays.
• 🚀 The company's focus on efficiency and customer service led to significant growth, with Mahindra Group investing and merging their logistics platform with Porter.
• 💰 Porter has expanded to offer two-wheeler parcel delivery services and has re-entered the intercity logistics market, aiming for a larger share of a 200 billion dollar opportunity.
• 🔋 Porter is also investing in sustainability by adding electric vehicles to its fleet, reducing operational costs and environmental impact.
• 🚀 The potential for drone deliveries in India presents a future opportunity for Porter to further innovate and improve logistics efficiency, especially in challenging terrains.

Q & A

What percentage of India's GDP was spent on logistics costs in FY-2023?

In FY-2023, India spent more than 14% of its GDP on logistics costs.

How does India's logistics cost compare to China and developed countries like the US and Japan?

India's logistics cost of over 14% is higher compared to China's 10% and the 7-8% spent by developed countries like the US and Japan.

Why is the Indian supply chain considered inefficient compared to more productive nations?

The Indian supply chain is considered inefficient due to its higher logistics costs, which are more than double the percentage spent by developed countries.

What is the aim of India's national logistics policy launched in 2022?

The aim of the national logistics policy launched in 2022 is to reduce India’s logistics cost from 14% to 8% to help India compete with developed nations.

What is the concept of Intracity Logistics mentioned in the script?

Intracity Logistics refers to the transportation of resources within the same city, such as sending a package from one location to another within the same city.

What problem did Porter aim to solve in the logistics sector?

Porter aimed to solve the problem of inefficiency and high costs in the intracity logistics sector by creating a marketplace to connect truck drivers with customers, similar to how Uber organized the taxi sector.

How did Porter initially operate before developing an app?

Initially, Porter operated with just a phone and Google Sheets, manually connecting customers with truck drivers without an app or algorithm.

What was the initial pitch of Porter to attract customers?

Porter's initial pitch to attract customers was that they offered services 20% cheaper than the market rate.

How did Porter address the issue of truck drivers not getting enough deliveries?

Porter addressed this issue by creating a platform that allowed truck drivers to get more deliveries, increasing their vehicle utilization rate and earnings.

What was the impact of Porter's focus on efficiency and timely service on their business growth?

Porter's focus on efficiency and timely service led to a significant growth in their customer base and allowed them to offer premium quality service at low costs.

What is Porter's current status in terms of revenue and market presence?

In FY23, Porter earned 1,750 crore rupees in revenue and expanded their presence to over 20 cities, with a strong focus on quality of service as reflected in their high app ratings.

What are some of the future opportunities and ambitions for Porter?

Porter's future opportunities include expanding in the intracity logistics market, relaunching their intercity service, and potentially exploring drone deliveries. They also aim to increase their electric vehicle fleet for cleaner operations.