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India's Allcargo Logistics plans to build an Uber for shipping
ALLCARGO Logistics Ltd is emulating Uber Technologies Inc to boost its business of sharing marine containers.
A unit of the Mumbai-based Allcargo, ECU Worldwide, which aggregates orders from clients, plans to use Uber's model to make it easier for clients to book marine freight.
Allcargo, which reported a drop in profit in four of the past five quarters, is betting on technology to revive volumes and take on overseas rivals such as DHL Worldwide Express in Asia's third-largest economy. The time may be right for the company as India's logistics infrastructure improves. The country jumped 19 positions to 35 in the World Bank's logistics performance including infrastructure, customs and timeliness.
"Internet companies like the Ubers of the world have successfully converted their aggregation model with robust technology infrastructure," Allcargo chairman Shashi Kiran Shetty said in an interview last week
"The idea is to help its customers to make it simple to conduct their business with ECU Worldwide, from any corner of the world through their devices."
Allcargo - which claims to be India's largest integrated logistics services provider in the private sector - has seen its shares fall 31 per cent this year, while profit dropped about 30 per cent in the three months ended December. ECU accounts for 80 per cent of Allcargo's revenue.
"The Uber modelling in consolidated cargo logistics is an ambitious and innovative move," said Mathew Antony, managing partner of Mumbai-based Aditya Consulting, an advisory firm specialising in infrastructure, logistics and real estate industries. "But the challenge will be on the ease of transaction in the export-import trade where there are many regulatory check points, which is in third party control, compared to a direct business-to-customer model of Uber."
ECU Worldwide is a traditional non-vessel operating common carrier, where the company does not own a ship but owns slots for cargo, a business model similar to Uber and other ride hailing companies. After Uber's strikingly high valuation, companies are trying to build information technology infrastructure to its potential e-commerce opportunities. BLOOMBERG