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Experts long foresaw the transport and logistics industry as a chief benefactor of the post-GST world. The newly implemented national tax – just two weeks old today – is already reducing truck transit times by 24-36 hours and saving businesses as much as INR 5000-7000 per trip. What looks like an unprecedented foray towards optimised road freight movements is the cumulative result of two simultaneous and seemingly paradoxical market forces – 1. Fewer delays and 2. Fewer trucks.
Fewer regulatory delays for Indian road freight transporters
Earlier this month, Chattisgarh became the first of 22 Indian states to abolish highway check posts. In accordance with GST requirements, 73% of the nation has formally opened its borders to hassle free interstate transport.
Serpentine queues at serial check posts would extend total transit times by 15-20%, costing transporters between INR 9 and 23 billion a year in truck operating costs alone. The checkpoints also served as breeding grounds for ‘facilitation fees’ – an unofficial surcharge disguised as octroi or VAT that was commonly exchanged to circumvent regulatory requirements. These peripheral costs fueled by corruption cost the country an additional INR 9 – 72 billion each year.
With the GST roll out rapidly sweeping the nation into a centralised tax canon, these cardinal delays could be rendered nearly obsolete by the end of the month.
A recent survey by ASSOCHAM found that transit time from Delhi to Mumbai shrunk by 24 hours from 4 days to 3 days. Similarly, the 6.5-day Delhi-Chennai stretch can be covered in just 5 days, saving 36 hours of human labour, fuel and vehicle maintenance costs. Drivers and transporters around the nation are already revelling in condensed transit times, while manufacturers and consumers anticipate the trickle down benefits of value-added cost savings across their own supply chains.
Fewer non-compliant trucks dare to cross GST governed borders
There is a reported 40% decline in bookings for vehicles carrying taxable parcel consignments. Non-compliant transport agents that cannot produce licensing or tax documents fear the consequence of trespassing GST supervised state lines. At an octroi naka in Dahisar, the usual line up of 500 trucks dropped by 80% to just 100 trucks at the immediate outset of GST parameters on 1 July.
While a decline in the number of trucks moving across state lines may signal commercial dampening, it is a hallmark of cascading efficiencies discounting disorganised and non-compliant entities. Smart supply chains possess the nimbleness and transparency to spread across this market vacuum to corner newly under-served segments and push their disorganised counterparts towards niche or intrastate sectors. Ultimately, the transposition of disorganised logistics providers will further credit aggregated benefits for optimised road freight networks.
The impending e-way bill, contingent on its structure and implementation, will deepen supply chain visibility through digitised documentation processes that auto-verify compliance checklists and safeguard the seamless movement of goods across India. Similarly, RFID scannable FASTags will automate, organise and expedite toll booth checks. Road Minister, Nitin Gadkari, reports that, in the near future, toll plazas will incorporate weight sensors on bridges to flag overloading, thereby replacing RTO inspections altogether.
Increasingly automated processes in conjunction with fewer disorganised transporters will continue to abet the ongoing decline in transit times. As highway reparations and infrastructural renovations come into play, GST and automation driven efficiencies will soar even higher. India’s foray into optimised freight transport is manifest but these immediate results, as compelling as they may be, are only precursors to a tectonic shift towards molecularly organised and optimised logistics networks.
To learn more about how your fleet or transport business can apply tech enabled solutions to automate compliance requirements, oversee moving assets and track dynamic metrics in a changing logistics landscape, contact Numadic. We build smart sensors paired with analytical dashboards designed to surface anomalies and mitigate risks unique to the Indian market.