Tempo aggregators in Chennai face stiff challenge from non-partner owners
- Shruti Sundar Ray
- Nov 2, 2019
- 3 min read
Lynk and other mini-truck aggregator apps have a long way to go before they penetrate the logistics market in the city as many truck owners refuse to partner with them and still remain competitive
The mini-truck and tempo business in Chennai has been able to retain most of its customer base despite competition from online app-based aggregators such as Lynk, Porter, WowTruck and TruckEasy that have gained prominence in recent years.
The apps, which operate in both the business-to-business (B2B) and business-to-consumer (B2C) spaces, make it easier to book small trucks and tempos for transport of all types of goods, including at a short notice. They are able to bring down prices by ensuring two-way bookings, made possible through map-based matching with customers while non-partner truck owners are unable to bring down their prices similarly.
Despite this competitive edge in pricing, the app platforms have not caused a major disruption in the logistics market. “We have regular customers—mostly local businesses—who trust us to provide quality and timely services,” said Yogesh, who works as an accountant for Janakiraman Tempo Service in Mylapore. He explained that while the bulk of their business has been unaffected, online orders on their website and through JustDial, an online business-listing local search engine, have plummeted.
In contrast, Lynk, one of the popular aggregators in the city, has over 30,000 unique customers accessing its platform every month, as per a report by The Hindu Business Line. Lynk’s business model involves paying drivers on a per-kilometre basis, while charging customers based on time, thus nudging customers to cut down on loading time and enabling drivers to do more trips. It has over 1,500 registered mini-trucks.
While many truck owner-cum-drivers have bought into the aggregator model, Adyar-based Lokanadhan found it unfeasible for tempo owners like himself who employ drivers. “With the apps, I will get less than ₹400 per trip. I have to pay ₹600 salary to my driver and ₹400 for diesel every day. I can’t make more than 2-3 trips in a day, so I will not be able to afford it,” he said.
While there are plans for expansion, most trucks on the app platforms are in the 750 kg to 1.5 tonnes payload capacity. The pricing for larger tonnage trucks is also imperfect, as claimed by PT Ramaras, President of the Anna Arch Van Owner Association, which prohibits its members from partnering with aggregator apps. He added that the business of larger truck owners has not been affected due to regular customers, usually local enterprises, who are loyal to them.
Despite maintaining that usage of the app was growing, Prasanna Rajendran, Talent Acquisition Specialist at Lynk said, “It is a complex market. Disruption to a 20-30 years old model of logistics is not easy.”
The B2C market has mostly been retained by tempo owners who have not connected with the aggregator apps since individual household consumers often rely on word-of-mouth referrals for bookings.
Many tempo owners have also benefitted from locational advantages as customers looking to hail a tempo can find them at hub spots around the city known to locals, including at KK Road in Virugambakkam, the Thiruvalluvar statue in Mylapore, the Anna Arch Road in Anna Nagar and more, where tempos can be seen parked in large numbers.
Apps like Lynk have made some inroads with larger FMCG companies such as CavinKare and Hindustan Unilever, for whom they have begun to transport consignments.
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