CauveFLEET can help manage your fleets more efficiently

Staff transportation is a very common facility provided by most of the IT and manufacturing units. Usually this is an outsourced activity which is handled by private bus operators on behalf of the respective companies. In view of the current recession in the IT industry and the overall downturn in the manufacturing sector, companies are looking at ways and means to reduce the cost and improve efficiencies.

Staff transportation being a key component of cost, clients are now asking for data for the last few years from service providers to assess the efficiency of service. Considering the city traffic conditions, even a normal delay of 30 minutes of a bus carrying 40 employees amounts to 20 man-hours of work loss for the company.

As companies tighten the belt and start asking for these reports, bus operators are in a fix. Most operators don’t have organised systems and procedures resulting in inefficiencies in the system. The same phenomenon holds good for cargo transportation as well. But this is bound to change in the next few years with many of the fleet operators realising the need to get more organised.

India is a huge population of unorganised fleets and identifying an opportunity in this segment, Cauvesoft has launched CauveFLEET, a dedicated transport management system which will help operators manage their business better. Irrespective of whether the fleet size is 30 or 10,000 vehicles CauveFLEET addresses most of the business bottlenecks. CauveFLEET is a web-based easy to use solution which can help manage the fleet operator’s business efficiently from anywhere the world.

Cauvesoft was started in the US by Mr. B. Swaminathan in 2004. The company has its off-shore development centre in Chennai. Mr. Swami says: “In 2006 we started looking at the Indian market and found that there was huge requirement for introducing IT systems in the transport segment. The products available in the market are not serving the exact requirement of fleet operators. Hence we started studying the requirement of fleet operators, identified their challenges and requirements and developed a product which will suite their needs best”.

CauveFLEET is an integrated system which will help fleet operators prevent costly unexpected breakdown in business due to neglected vehicles and equipments. It also serves as a ready reckoner to understand the fleet usage, maintenance, fuel economy, driver management, human resource management, accounting and finance management, maintenance system management, spares/inventory management, vehicle information management and all the necessary expenses associated with operating a successful fleet business.

Cauvesoft’s first major customer was SBLT, a major player in the staff transportation business with a fleet of 500 buses. Typically the problems faced by fleet operators are, tracking the vehicle, the driver, fuel cost and fuel average of vehicles, daily log providing the departure and arrival timings, periodic maintenance, replacement of spares and obtaining FC. These are some of the issues required to be addressed by the operator on a regular basis.
CauveFLEET web-based vehicle management system provides complete solution for all these issues. The system can track & manage vehicles, provide third party vehicle data, comprehensive reporting on the status of vehicle, staffs, collaborative suite for performing day-to-day tasks, tracking of vehicle transactions and availability, vehicle information, including the position of vehicle, type of vehicle, contract information, maintenance information, etc., driver information including the driver’s daily log of activities, advances, payments, salary and loans.

CauveFLEET integrates seamlessly with a broad range of finance, operational, maintenance and management information systems to form the entire part of an enterprise wide solution exclusive for fleet owners.

Vehicle Management module

Vehicle Management module provides a collaborative environment for performing day-to-day tasks. Vehicle Management module covers Daily Vehicle transactions including the positioning of vehicle, type of vehicle, customer information, vehicle contract information, etc., Average fuel consumption for different type of vehicles are captured, definition for tolerance limit for different vehicles can be prefixed and variance can be recorded and reported. Vehicle management module is linked to HR, accounts & finance, vehicle maintenance & master data module.

It also helps manage the entire RTO regulations, capture mandate RTO expenses such as counter permit renewal, fitness certificate, taxes, national permit renewal, permit taxes and insurance expiry information until it is renewed.

Cauvesoft has carved a niche for itself by looking at the transport segment which has been hitherto unaddressed by IT majors. “After the successful implementation of CauveFLEET in SBLT, we are now talking to many other fleet operators for implementing our software. The response has been very positive and we look forward to some significant breakthroughs in the immediate future”, adds Mr. Swami.

Shriram Transport: The messiah of small truck operators

“Arul Ratnam worked in a small garment factory in Tirupur and had to toil for his living. He did just about anything like packing and loading and even delivered goods as a truck assistant. Today he owns a fleet of trucks that meets the transport needs of not only the garment unit where he worked but many other companies. He is now thinking of setting up his own garment business. All through this journey, there is one company that has stood by him and financed all his needs right from the very first truck, and that is Shriram Transport Finance Company (STFC). Arul Ratnam is one among the thousands of customers to whom Shriram has made a world of difference. The company's marketing and sales efforts have penetrated the grassroot level in many regional markets, including solid customer alliances.”

Shriram's business mission is to finance the credit-starved segment of transporters and build long-standing relationship with them. The company has been successful in achieving this objective in several regional markets. There is still a huge market left untapped, and hence the company is expanding its distribution network.

Shriram has managed to build a workforce of over 10,000 people who are virtually the face and the backbone of the organisation. What it has managed to achieve has huge social impact and has helped in raising the living standards of its customers. The company has proved that a corporate can achieve excellent returns for investors from a business that is all about transforming lives and social uplifting.

Mr. Sridhar, Managing Director, Shriram Transport, says that initially his company entered this unique business segment which was perceived to be risky with a limited flow of resources from banks and institutions. “We were aggressive in raising retail resources during this period for carrying on our activities. We have proved to the finance industry that this business is a high growth and profitable one. Today with increased confidence in our unique business model, banks and financial institutions are willing to channel their funds to small truck owners and pre-owned trucks by routing it through us”.

Shriram is the market leader in financing used commercial vehicles with a market share of over 20 per cent, which it aims to double in the next few years. The main objective is to make cheaper credit available to the credit-starved segment of small truck owners.

Tracing the history, Mr. Sridhar said: "When we started lending to small truck owners to buy new vehicles, we found a mismatch between their aspirations and ability. The truck operator was not capable enough to support the credit levels required to buy a new truck. Hence we decided to think out of the box and fund pre-owned trucks. This was the biggest decision we took, and the results followed. From driver to owner, even if only of a pre-owned truck, and from pre-owned truck to a new truck, we have been with him in his journey of prosperity. What we have done is nothing but backing a small trucker whom we call the unsung hero of the Indian economy”.

STFC was established in 1979 with the objective of offering funds for small operators to buy trucks. As distribution of truck ownership was scattered among a large number of individuals, this very important group was missed by the institutional radar. It is estimated that 80 per cent of trucks in the country are in the hands of individuals.

Mr. Sridhar says: "We are financing unbankable people, namely, those who don’t have any banking habit and are in the grip of the unorganised sector. We are the only organised credit provider to these unbankable customers. In a way we bring these customers out of the unorganised segment and provide them cheaper credit. For Shriram, the credit-worthiness of the small truck owner has always been an article of faith. This faith has guided our journey from our pioneering days in financing small truck owners to the present-day leadership. Today Shriram is the leader in truck finances. We are also India's largest asset-based non-banking finance company”.

With a current network of 500 branches spread across the country, covering 91.3 per cent of truck owners, the company plans to extend operations to reach 100 per cent of truck owners. Shriram employs nearly 10,000 people and has assets under management (AUM) in excess of Rs. 18,000 crores ($4.2 billion), with live contracts of more than 6,00,000 customers. It is targeting expansion of its customer base to one million by 2010 and is now looking at developing an integrated business model by financing other segments like three-wheelers, tractors and passenger commercial vehicles such as buses and vans.

Mr. Sridhar observes: “We are not just financing the vehicle but we also understood the truck owner’s requirement for working capital and financed them by providing different loans like tyre loan and engine replacement loan. Another pioneering initiative is providing credit card. None of these small truckers have been provided credit card so far. We have tied up with Axis Bank and provided credit card for about 25,000 to 30,000 customers. We have also tied up with Ashok Leyland in the transport exchange initiative through which we will be able to offer bill discounting facility, which is otherwise done through money lenders in the unorganised segment”.

Today, small road transport operators own 70-75 per cent of the trucks on roads. Though they account for an indirect contribution to India's economic growth, the credit support to them is expensive, inequitable and exploitative. Banks are unable to evaluate their credit-worthiness due mainly to lack of proper documentations. Consequently this business segment is flocked by private financiers catering to over 70 per cent of the used truck market. As a result, truck owners are subjected to exorbitantly high interest rates.

Moreover the market penetration of organised players is restricted due to the necessity of a strong local presence, efficacious customer evaluation tools and a well-established network.

In the emerging situation, the truck financing industry is left with huge untapped potential. With the modernisation of aging trucks on the anvil, the average age of the national fleet is expected to be reduced to seven years, in the next five years. This would speed up replacement of older trucks. As per McKinsey report, truck financing is emerging as a profitable business opportunity unveiling a potential of Rs. 45,000 crores. Demand for pre-owned truck financing alone is estimated at Rs. 22,500 crores.
Shriram prides itself on a perfect understanding of the customer and his needs. Each product or service is tailor-made to perfectly suit his needs. It is this guiding philosophy of putting people first that has made it the preferred choice for all truck financing requirements amongst customers. Most of the retail lending by banks/financial institutions is information-based. Credit evaluation, vehicle delivery and dues collection posed huge challenge in truck financing. Unlike others, Shriram does not believe in outsourcing these functions.

The truck financing industry is of course a lucrative business. Shriram can take credit for having brought about a revolution in the institutional mindset. Today, Citigroup, UTI Bank, ICICI Bank and other leading banking institutions are proud associates of Shriram in financing pre-owned trucks.

Dealing with small customers has its share of risks. But Mr. Sridhar is always positive. “Historically credit losses for the company have been very low, at around two per cent. This particular industry is quite stable and reliable. We have a team of over 10,000 people, and we are the only organisation wherein there are no intermediaries between us and the truckers. We are in touch with our customers on a direct basis and finance them without the involvement of intermediaries. We interact with our customers on a day-to-day basis and we sanction nearly 1,000 to 1,500 loans every day. All these loans are sanctioned without taking any major security or post-dated cheques since most of these customers are not familiar with banking. The whole process is relationship based.”

According to him, the next few years will witness exponential growth in business. Shriram has covered only 20 per cent of the total business, and there is still a huge market which is left untapped. The challenge will be in preparing itself to manage this growth. Hence the company emphasis on building its HR capacity.

In order to widen its network, the company is developing partnerships with local private financiers, who manage around 75 per cent of the pre-owned truck financing market. By giving them access to competitive finance, Shriram plans to increase penetration into more widely dispersed regions of the country more effectively.

Mr. Sridhar was extremely confident that, “The initiatives we have taken today will be massive in size and volume in the next 10 years time and we look around and see not many companies who are interested in catering to this segment of customers. Its a nation building activity and fundamentally its a social service to a community which has been denied credit and in the process we also make profits”.

With the soaring interest rates, Shriram has deliberately moved away from the high-cost retail finance mobilisation to comparatively cheaper band and institutional finance. This has enabled it to absorb to some extent the effect of rising interest cost. The market opportunities for commercial vehicle finance business are tremendous, and even in the case of a slowdown in the vehicle industry, the company’s operations won’t be affected.

Shriram will continue to focus on relationship-based lending even as it reaffirms its commitment to extending vehicle finance to small truck operators.

Effective fleet management in transport industry

- By Sameer Malhotra, Country Manager, Ritchie Bros. Auctioneers



Transportation companies are no different from companies in any other sector: most of them are focused on improving their profit margins by reducing costs and maximizing revenues. Transportation companies have little control over business costs, including labour and fuel costs, but have significant control over the cost of maintaining their truck and equipment fleet. Around the world, trucking companies are recognizing the importance of effective fleet management. Buying and selling the right trucks at the right time – and through the right channels – can have significant impact on the bottomline.

The most efficient fleet is one that is operating at maximum productivity with minimum cost. So the most important decision is what kind of truck to buy: new, late model or older? Buyers pay a premium for brand new trucks direct from the manufacturer or dealer, but truck values depreciate fastest in their first few years and thus lose their resale value.

A 2007 model truck is relatively new in the middle of 2008, but as soon as the 2009 model trucks are released, the 2007 model is effectively two years old. All of a sudden, buyers aren’t willing to pay as much for that truck as they might have been just a few months earlier.

A good, well-maintained truck is a viable alternative to a new truck, offering similar benefits in terms of reliability and cost of operation, but without the initial depreciation. The key point is to look at the condition of the truck rather than its year model since it gives a better indication of its true value.

When to sell

The next most important decision to make is when to sell. An increasing number of companies recognize that an idle truck that generates no income is actually costing them money. Keeping an idle truck in your fleet does not make economic sense. You want to have enough trucks in your fleet to get the job done, but not so many that you have equipment lying idle.

At the same time, keeping trucks and other transportation equipment beyond their useful life makes just as little sense. The longer you keep a truck in your fleet, the greater the cost of maintenance added up. Ongoing maintenance to keep a truck in running condition, wear and tear, storage, insurance, licensing and interest on outstanding loans are all costs that can be minimized if you sell your old trucks at the right time. If you wait too long, your truck will have little or no resale value at all.

Transportation companies that are committed to maintaining an efficient fleet look carefully at the cost of maintenance of their trucks. They take into consideration the purchase price, the cost of maintenance and the potential resale value after one, two or more years, and then decide on the ideal time to sell. Many companies have discovered that the key to successful fleet management is planning ahead, rather than waiting until a truck has passed its useful life and can no longer be sold.

Another major consideration for many transportation companies is environmental regulations. Laws intended to reduce the impact of emissions from trucks and cars are in force. As a result, transportation companies are turning over their fleets more frequently than in the past, in order to keep their fleet compliant to emission standards. That means more used, late model trucks on the market, and a significant opportunity for buyers in regions with less stringent regulations in place.

Efficient channels

Timing is an important consideration in effective fleet management. But how to buy and sell trucks is probably the most crucial decision that a transportation company can make. Whether you are selling trucks as part of a fleet upgrade, or in an effort to reduce the size of fleet, you want to make the best deal possible, regardless of whether you’re selling one truck or a few hundreds.

Trucking companies have several options when it comes to selling their trucks: they can sell them privately, sell them to a used truck dealer, use the services of a truck broker or send them for auctioning.

Selling privately is one of the most popular methods. Many people assume that this is a cost-effective means of selling, but the opposite is often true: the seller is responsible for cleaning and preparing the truck for sale, making any necessary repairs, advertising, meeting with any prospective buyers and then taking care of the financial transaction. The entire process can take weeks, even months, with no guarantee of a sale at the end. You are limited to the local region for potential buyers and any time spent on selling equipment is time spent away from your core business.

Used truck dealers advertise and show your truck to potential buyers; they can usually do repairs and arrange financing and some type of warranty for the buyer. Dealers will either charge a commission or buy the truck outright and keep all proceeds over and above what they paid you.

Brokers act as a go-between for sellers and buyers, and can facilitate a relatively quick sale. They take a commission for matching you up with a buyer, but won’t assist with things like title transfer for financing.

Used truck dealers and brokers take a lot of responsibility for the sale away from the seller, but both charge a premium for their services.

Unreserved auctions

An increasing number of people are discovering that auctions – specifically unreserved auctions – offer one of the most efficient means of buying and selling trucks. At an auction, a wide variety of used and unused trucks and other equipment from a number of different owners is gathered and sold in one location, providing a convenient “one-stop shop” for transportation companies intending to buy equipment.

There are generally two types of auctions: unreserved auctions, in which there are no minimum bids or reserve prices, and auctions with reserves, in which the seller sets the minimum selling price. Unreserved, or absolute auctions are one of the fastest and most efficient channels for buying and selling trucks and other industrial equipment.

When they choose to sell by unreserved auction, owners know that their trucks and equipment will be sold on a certain day. This enables them to plan ahead and manage their fleet more effectively by maintaining the optimal number of trucks at all times. They can also focus on their core business and let the auction company advertise, market and sell their surplus assets.Buyers come to an unreserved auction knowing that every item would be sold to the highest bidder on auction day, regardless of price. They know that if they are the highest bidder, they will have a new truck or piece of equipment they can put straight to work as soon as they have paid for it. Best of all, they know that they are paying fair market value for the item – not the price set by the owner or his agents. That is why unreserved auctions typically attract a number of potential buyers.

Ritchie Bros. auctions

An increasing number of transportation companies are using unreserved auctions to facilitate effective fleet management – and thousands of them are turning to Ritchie Bros. Auctioneers, the world’s largest auctioneer of trucks and industrial equipment. It has 50 years of experience in the auction business, a global network of offices and auction sites, an annual calendar of more than 350 unreserved auctions, and a proven record of conducting fair, transparent auctions, with no reserve prices and no buy-backs.

A Ritchie Bros. auction is unlike any other auction in the world. At each industrial auction, an average 1,400 lots for the transportation, construction and other industries are sold. The large selection of equipment and the knowledge the bidding process is fair and transparent attracts hundreds, even thousands of registered bidders on the auction day. Bidders are willing to travel a long way to attend an auction, and the auctions have become known for the large numbers of international bidders they attract. This helps sellers achieve global fair market value when they are selling their valuable assets.

If you’re looking to manage your fleet more effectively, contact Ritchie Bros. to find out more about the benefits of buying and selling trucks and other transportation equipment at an unreserved auction. Check out the large selection of transportation equipment items available in upcoming Ritchie Bros. auctions around the world at www.rbauction.com/transportation. Ritchie Bros. Auctioneers is the world’s largest auctioneer of transportation and industrial equipment, having sold more than $3.18 billion worth of equipment at more than 350 unreserved auctions around the world in 2007. The company sold more than 17,000 used and unused transportation units during the year, including truck tractors, trailers and related equipment.

Ritchie Bros. has more than 110 locations in over 25 countries, including India. The company conducts auctions at its 38 full-service auction sites, including sites in Singapore, the United Arab Emirates and Australia, as well as many offsite auctions. It intends to conduct its first unreserved industrial auction in India before the end of 2008.

For details, contact: Sameer Malhotra, Ritchie Bros. Country Manager, email: smalhotra@rbauction.com

Punj Lloyd buys used trucks at Ritchie Bros. auctions

Headquartered in New Delhi, Punj Lloyd Ltd. is India’s second largest engineering construction firm, with operations in Asia, the Middle East, Eastern Europe and Africa. As Punj Lloyd’s President of Plant and Equipment, Mr. Sandeep Garg is responsible for ensuring that the company has the right equipment to support its global operations, which entails purchasing equipment worth millions of dollars each year. For most of Sandeep’s 17 years with Punj Lloyd, the company relied on two sources for its equipment needs: manufacturers and dealers.

“India’s used equipment market is not mature,” explains Mr. Sandeep. “The construction and infrastructure industry is booming, so people aren’t selling their equipment – they’re using it. That makes it very difficult to find good quality, used equipment in India.”

Mr. Sandeep was accustomed to sourcing used equipment from outside India, but did not attend his first unreserved Ritchie Bros. industrial equipment auction until 2003.

He says: “I had never considered buying equipment at an auction before. I attended a few Ritchie Bros. auctions as an observer. I wanted to understand the bidding process and to ensure that the operations were transparent, with no insider bids. I wanted to make sure that it was a real market scenario, with the price being set by legitimate bidders. Only then did I register to bid.”

Mr. Sandeep placed his first bid in 2003 at a Ritchie Bros. auction in Dubai, and has since purchased millions of dollars of equipment at unreserved Ritchie Bros. auctions around the world. He now attends three or four auctions per year, most often in the Middle East and Europe. What keeps him coming back? The fairness of the bidding and buying process, and the knowledge that he can find the equipment he is looking for – and put it straight to work.

He observes: “Ritchie Bros. auctions are amazing. The selection of equipment is incredible, the pace of the auction is fast, and the whole process is very fair and efficient. I know what equipment will be sold, I can inspect it before the auction and, if I am the successful bidder, the equipment is available right away. That is of critical importance to a construction company like Punj Lloyd. If Ritchie Bros. has the specific equipment we need, I would certainly buy through them rather than from a dealer or another auction company.”

Although he is willing to travel a long way to participate in an unreserved Ritchie Bros. auction, he is pleased that Ritchie Bros. has opened its first sales office in India, with the aim of conducting its first auction in India sometime in the country soon.

“India’s construction industry is growing at a fast rate, and there is a great need for good quality used equipment”, Mr. Sandeep adds.