Kargo: Technology Solving the Highway to Logistics Hell

By Ben Roache

Coordinating the logistics of trucking goods around Myanmar should be a nightmare. And for foreign firms, or even new companies, it is. Unsurprisingly, this industry is highly inefficient, outdated, and unorganised, plagued with many of the same issues that face other industries in the country, such difficulties in credit and finance, communications, job posting and OTHER. In other words, the industry is a prime candidate for technological disruption, a la Uber/Grab. Alex Wicks, an Australian, has started Kargo, a start-up based in Yangon, to apply the lessons learned from the disruption of the taxi industry, and is applying them to the trucking of goods here in Myanmar.

By riding on the coattails of a rapid adoption of smartphones and 3G/4G networks, Kargo is creating a technology platform to pair truck drivers with companies who need their goods moved around the country. Their platform is improving truck load rates and saving, while improving pay and efficiencies felt throughout the industry.

Why is it so challenging?

To understand why Kargo’s platform is worth building, it’s important to understand what is so challenging about logistics in Myanmar currently. There are a couple of major issues experienced by both drivers and customers, this is a fragmented market with mass individual ownership of trucks, unorganized ordering/job finding, and traditional cash driven payment culture.

Firstly, Myanmar doesn’t have many/ANY large logistics companies. DHL isn’t very active in the pulses/rice shipping business. Instead, the moving of agricultural, hardware and other goods is mainly done by individuals or small groups of drivers, with usually less than 5 trucks. Jobs in these groups are organised largely on a whiteboard or in the owner’s head, and passed out through calls/messages to individual drivers. Individual drivers end up calling around for jobs, hoping to find recurring business. Difficulty in finding these jobs means that trucks passed each other on the highway with empty loads driving to their next job. It’s hugely inefficient.

This is a similar issue for larger companies, who can’t find a logistics provider to scale with their larger orders. Instead, they’re faced with the challenges of dealing with multiple individual or small-scale driver operations, which gets more challenging the larger the order. Add in cultural quirks that see drivers want ever-increasing pay rises for recurring business, and large-scale logistics is quickly a huge issue for larger businesses.

Foreign companies also face further issues in payment, which, like the rest of the country is usually in cash. That’s fine if it’s being delivered to the company HQ, but for transport in the other direction, supplying drivers with cash on delivery is even more challenging.

Origins

Kargo began life as a kind of furniture removals company. Users could use the app/site to order a truck to transport their stuff in less than an hour around Yangon. Kargo aimed to improve customer pain points of the Myanmar market, such as booking with drivers who can’t speak English, and removing dependency on unanswered company hotlines. Pricing is uniform, transparent and payment is done on delivery.

Kargo’s platform allows drivers to bid against submitted orders, which are then presented to the customer, ensuring fairness, low costs and quality assessment are built into the ordering process. According to the Kargo team, it takes less than 20 minutes from submission to pairing of customer and driver. For its efforts, Kargo takes a small commission on the customer side.

 

Pivot

The company inevitably reached a natural plateau when dealing with the small high-end/expat focused removals industry of Yangon. By looking at other applications of its software, Kargo pivoted, taking their truck-driver user-base into something much larger: B2B logistics. The driver app needed few changes to go from moving a consumer’s couch, to transporting a farmer’s annual lentil crop. Sure, the loads are larger, but the system is essentially the same. Building a more comprehensive online dashboard system allowed corporate customers to manage multiple orders, with transparent pricing, easy booking, load tracking (a revolution in its own right, thanks to the embedded GPS in every phone), digital administration, and enhanced accounting reporting abilities.

The bidding and pairing system allows for increased efficiencies on both sides; drivers take more trips, spend more time driving, and less searching for work, thereby earning more. For the customer, goods can be transported when they’re ready, and prices are cheaper for the end customer due to the competitive nature of the bidding system. Companies know they only need to talk to one company to get trucks on demand, allowing easy scalability for huge loads or smaller ones.

 

Nailing payment

Of course, Myanmar has long been excessively cash-dependent. As previously reported, many Myanmar people don’t have a bank account, and as Grab and Uber are finding, collecting your cash-based profit margin back from drivers is a complex exercise in itself.

Kargo’s system is simple. As part of the driver onboarding process, Kargo signs up all new drivers for a KBZ bank account, allowing a broad network of cash-out points for drivers. An added benefit: as card payments grow in acceptance, drivers will be ready to pay for fuel and other expenses with an MPU or Visa card.

Increased power, increased responsibilities

If Kargo can continue to develop their business, and is able to scale as their user numbers grow, their influence over the country’s logistics market will grow. Similar to Uber and Grab, they could become the middleman for logistic transport between point A and B for many different customers seeking an easy, scalable solution. But keeping drivers happy will be a challenge for their predominantly foreign management team, as will the global threats of Uber and its similar Uber Freight product, currently only available in the US.

So what do drivers think of this new entrant? We spoke with a driver of a 22-wheeler Sino who travels a huge 6500km per month in 5-6 trips. Owning over 4 phones, he is in constant contact with other drivers and suppliers, looking for and planning future jobs. The idea of finding jobs in a centralised app like Kargo appeals to him, and he doesn’t see any difficulties in using another app, but he hadn’t heard of it yet. That will be a challenge for Kargo going forwards, in ensuring they can get enough drivers on the platform to satisfy demand for all customers at short notice.

And what about safety on Myanmar’s infamously dangerous roads? A Top Gear special dedicated 10 minutes to the hair-raising experience of driving on Myanmar’s dangerous highways after sunset. Almost non-existent lighting, erratic driving and bad road conditions create a dangerous environment for everyone on the road. We think that as more trucks use the service, Kargo will have a growing responsibility to ensure that their trucks meet certain safety standards in areas like road worthiness, crash safety and lighting.

But if these roadblocks can be navigated as well as their initial pivot, Kargo looks to be headed in the right direction. Furthermore, the data generated by their operations will only increase in value as the company grows, allowing further improvements to efficiencies for both drivers and customers. We could imagine an Uber Pool style solution that pairs drivers with suppliers so well that trucks are almost constantly engaged in transport of something or another.

About the Author:
Ben Roache has a Bachelor of Laws/Bachelor of Arts (Double Major: Asian Studies & Japanese) from the University of Adelaide. This article was written as part of a research project on the technology and transportation sectors in Myanmar that he was involved in while at Consult-Myanmar, a Yangon-based consulting firm.

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