Demonetization: Transportation Kumbhakarna will now wake up !!
February 20, 2023
For 15 years nothing happens. India Shining, Financial crisis, Modi government, Tech startups - nothing seemed to move the Kumbhakaran of Transportation. If you were put in Cryo state in year 2000 and now wake up in a transport office- you will not miss much.
Yes, computers are more flat, everyone is on mobile in place of landline, may be a fire extinguisher is in place. Rest remains same !!
This is an industry that breathes, eats, sleeps cash !! Real estate generates stuff- transportation launders stuff.
Then comes Demonetization Bolt from the Blue.
Over 2 million vehicles are estimated as stalled on road waiting for cash, choking supply chains- effects of which will be felt after 15-20 days.
But once dust settles down, what can we expect to change? Some predictions-
- Windfall for toll tags, fuel cards: Road transportation is over USD 150 bn industry, assuming 50% of costs are paid in cash- they will need to replace it largely by electronic modes. So you have a USD 30-50 bn windfall for toll tags, fuel cards and online driver payments
- ATH/BTH using ePOD: As brokers and owners start (forced to) accepting online payments- the practice of POD discounting will give way to payment after getting mobile based e-PODs.
- Smart Transporter: Online payment and e-POD will also force smart phone adoption, already in progress (see Rel Jio article). This will lead to improved visibility, real time delivery status and help track vehicles using Mobile GPS.
- Paytm at Dhabas: Huge opportunity Paytm Karo at Dhabas, bringing them in formal economy and attracting better players to provide service to drivers
- Reduced RTO stoppages: No Paytm Karo here- so RTO payment will have to go wholesale- though it may revert to old practice in a year or so
- Smoother GST adoption: After Mike Tyson blow of demonetization, GST pain will feel like feather touch !! Easier to convert a whiter sector to GST.
- Better valuation for logistics: From start ups to logistics companies, we will see better valuation for the sector as it becomes cleaner and attracts serious money
Many of above may still turn out to be false dawns. But if Demonetization cannot wake up this Kumbhakarna to its roaring best, nothing ever will.