February 20, 2023
The murmurs about impact of Logistics Tech has now grown louder- with The Economic Times officially declaring trouble.
We have some exciting new Logistics companies and even more exciting Logistics Tech companies- most backed by blue chip investors such as SAIF, IAN, IDG, Nexus, Paytm among others.
BUT is the ground shifting? My take- temper your expectations- we will still be India (Actually more Bharat than India) even after 5 years. A better one for sure. But we are not about to leapfrog and become Germany by 2020.
So will logistic tech be used in a big way? I will say- YES and NO.
YES- because as people on ground use smartphones more- every driver has one now, thanks to Mukeshbhai !!- they are really cutting down communication gap and innovating.
NO- because salary level, education level and training are not changing. Thus- the capability to ABSORB HIGH TECH and drastically change operations is missing and unlikely to be industry wide.
There are of course exceptions- a few companies, a few hubs and a few managers. But all combined with less than 2% impact. When you want to \"change the industry\"- 2% is not enough.
SO how to make a difference?
Deploy BASIC technology BROADLY for small improvements- what I will call BROAD TECH rather than invest in HIGH technology in a few locations- call it HIGH TECH.
Incremental change- improve many areas by 5%-8% each year, rather than look for BIG BANG reforms.
This will require a HORIZONTAL approach and BASIC technology. Take a tech initiative, deploy in 75% of network- only then take next one.
Now this may not be very exciting from a TECH point of view, especially for investors looking for exponential sales in 2 year time frame.
All tech is good and HIGH TECH will some day become BROAD TECH- but will that be in time to justify many valuations of Logistics Tech companies?
Well- that calls for a separate discussion !!