Porter: Revolutionizing Intracity Logistics in India

In FY-2023, India spent more than 14% of its GDP  on logistics costs. And for context, this number   was 10% in the case of China and 7-8% in the case  of developed countries like the US and Japan. This shows how inefficient and expensive  the Indian supply chain is when compared  

to more productive nations. Even countries  like Vietnam and Thailand rank better than   India when it comes to the Logistics Index,  and this sometimes makes these countries an   attractive option for companies to  do business in, compared to India.

Now, it's not that the government  is not doing anything about it,   the current government had, in fact, launched  a national logistics policy in 2022. And one   of the aims of this policy was to reduce  India’s logistics cost from 14% to 8%,  

something that will help India  compete with developed nations. Now the government can only make policies, it's  up to the private sector and startups to make use   of them and build businesses, and in this video,  I want to talk about one of the fastest-growing  

logistics companies in India. A company  whose founders were inspired by Uber,   and how it organised a heavily unorganised  sector of taxis. And Porter is trying to do   the same with the last-mile logistics in India.  It is going after a 200 Billion dollar market  

and in this video, we will talk about it  origins, struggles and big future ambitions. To understand Porter, we first have to  understand the problem it is solving.   Intracity Logistics. It is basically  the transportation of resources inside  

a city. So if you as a business  owner, or a regular customer,   need to send a package to someone inside the  same city, it is called Intracity Logistics. And the thing about logistics is, it  determines how efficient an economy  

is. So the cheaper and faster it  is to move goods inside a country,   the more productive it is going to be. Something  that I talked about earlier in the intro. In 2024, 90% of India’s logistic sector is  still unorganised and this situation was even  

worse 10 years ago before two college friends  from IIT Kharagpur decided to start Porter. And the problem they were  trying to solve was this; Let’s say you are a small business owner in a city  like Bengaluru and you want to ship your product  

to your customer. The first thing you would do  is pick up your phone and dial all the logistics   companies in your area to get a quote. Now,  many of these delivery guys won’t be available   and if you get someone, they will charge you a  bomb. And the reason for this is that, because  

the sector was so unorganised, these delivery  people would only get 1-2 deliveries a day,   and hence it became expensive. You then  negotiate with them and agree on a price,   but then there is another issue. Tracking.  Since this arrangement is just over the call,  

you will have to continuously call  the driver and track your package. So,   firstly it was hard to find a driver, then the  rates were too expensive and on top of that the   delivery was mostly not on time. This is what  you had to deal with as a small business owner.

And the story is very similar  if you are just a customer,   and want to move any package to  your friends across the city. Companies like Delhivery tried to solve  this problem for intercity logistics,  

but no one solved it for intracity. And, this problem which I just explained,  was very similar to the problem of cab   booking at the time. You had to go through  a similar process before Uber came in. And  

this is precisely what inspired Uttam Digga  and Pranav Goel, the founders of Porter. In 2013, Uttam and Pranav worked as  analysts at JP Morgan in Mumbai. This   was when they had first heard about Uber.  The fact that how a startup used technology  

to solve the inefficiency of the entire  ride-hailing industry really inspired them. See before Uber came in, the ride-hailing sector  had the same problems of non-availability of cabs,   higher fares and no quality checks.  And Uber, by building a marketplace,  

connected both drivers and customers on  a single platform, and so now customers   got cheaper cabs much more easily, and  drivers got more rides on a daily basis,   and Uber out of it got a nice  commission, a win-win for everyone.

Uttam and Pranav were so impressed by how  Uber had solved the problem of vehicle   underutilisation that they wanted to find  other industries where they could do the   same - increase asset utilisation  to decrease costs for customers.

One day, Uttam on his way to the office  saw many small trucks or light-commercial   vehicles parked on the side of the road. He  realised that there was a problem here to solve. The founders then talked to more than  500 truck drivers. They then realised  

that these truck drivers and small  business owners were facing the same   issues the drivers and customers were  facing in the ride-hailing industry. These drivers were only getting 1-2 orders a  day when they could do 4-5 orders. Basically,  

they were only at 30% utilization  of their vehicles- this was highly   inefficient and this inefficiency  was leading to higher costs. They wondered - “If Uber  can move people efficiently,  

why can’t we move goods efficiently?” -  which was actually an even bigger problem.   This idea led to the birth of Porter. Both Uttam and Pranav quit their jobs   and started Porter to create a marketplace  to connect truck drivers and their customers.

In the beginning, it was just Uttam and Pranav  and so they divided the roles between themselves.   Uttam would go on to the field to onboard  truck drivers and Pranav would get on the   call with small business owners and anyone  else who needed trucks to move their goods.

Once Pranav would get a lead from the  customer, he would connect him with the   truck driver. And in the early days, they were  doing this just with a phone and Google Sheets.   There was no app or algorithm, which matched  the drivers with customers. But once rows in  

the Google sheet started getting longer, the  founders realised that it was not sustainable,   and they needed a third co-founder,  who would build the tech for them. And so the duo brought in Vikas Choudhary as their  

third co-founder. Pranav had met Vikas when  he was in Kota preparing for his IIT exams,   later while Pranav went to IIT Kharagpur,  Vikas had gone on to IIT Kanpur. And so now, Vikas was tasked with  building their technology platform,  

and Uttam and Pranav continued to build the supply  and demand side of Porter. What’s interesting   is that when they started Porter, their only  pitch was - “book from us, we are 20% cheaper”.   And this pitch worked. In less than a year,  Porter had more than 500 business customers.  

They processed more than 3,000 bookings a month  and had a monthly revenue run rate of 30 lakh   rupees. And all this without any app, they just  had a basic website and a phone number to take   orders. This shows how much the industry  needed a solution like Porter's. In fact,  

even the company Delhivery was using Porter to  do intracity deliveries for their customers. This early traction helped the company  raise 500,000 dollars in their seed round   and then 5.5 million dollars in their series A  round in just a span of a few months. So now,  

their idea is validated, they had money in the  bank, and all they had to do was focus on growth. By 2015, almost 1 year after their start,  Porter’s app was ready. They had money in   the bank and the founders felt like they could  do no wrong. But the company at this time,  

started suffering from something  called ‘too much money’ in the bank. You see, many young startups,  once they raise a lot of money,   they open a lot of verticals to grow fast,  and this ultimately becomes a reason for  

their demise. Ed-tech companies during  the pandemic are a great example of that. Porter at the time, did the same. They were  available only in Mumbai and the NCR region at   the time and hadn’t figured out their existing  intracity model properly, but they jumped the  

gun and also started doing intercity logistics. A  sector that was already crowded with big players. This was the time of the funding boom in 2015,   and the founders realised that they would  continue to raise money in the future, so,  

they hired 50 new employees for their upcoming  intercity logistics vertical. But, things   didn’t turn out as planned. Before they could  start earning revenue from their new vertical,   the markets had turned bad, so raising money  became difficult. And so, to survive, Porter  

had to shut down their intercity logistic vertical  and let go of all the 50 people they had hired. Their next trouble was the stagnation  of growth. Remember their initial   pitch, “Book from us, we are 20% cheaper”,  well this pitch wasn’t working anymore.

It did help them get an initial  set of customers, but now,   the price advantage wasn’t enough to bring  in new users. Porter had to up their game. To make the experience for their customers  better, the first thing the founders made  

sure of was that the truck drivers were  reaching the customers on time. Next,   they made sure that the deliveries  were being done on time too. By now, they had an app, and so they were able to  track the movement of every truck driver through  

GPS and this information was available to  their customers as well. On top of that,   Porter’s team would constantly check  in with the drivers to make sure there   were no delays and in case there were  delays, they’d assign a new driver.

Next, the company focussed on customer  efficiency. Since the industry was highly   unorganised and drivers were known to  be late, the customers too were not   incentivised to be on time either, and this  led to longer loading and unloading times.

So to fix this problem, the company  started charging a per-minute charge   at the loading and unloading stations,   so now if a customer would take longer than  expected, they would be charged for it.

And just focusing on these key aspects,  Porter was able to make their operations   efficient. Their customers were now getting timely  delivery and trucking partners were happy too. This level of efficiency was unheard of in the  Indian market at the time, and so Porter saw a  

huge growth in their customer base. And now that  the number of customers increased, Porter was able   to solve another key problem. They now started  enabling truck drivers to get deliveries on their   way back, making sure their trucks didn’t return  empty. In fact, Porter claims that 80% of their  

drivers now get deliveries on their return trips,  which increases the driver’s earnings by 20-30%. This is beneficial for both the drivers  and the customers - for customers,   it means lower costs and for drivers, it  means more orders leading to higher income.

Porter was offering premium quality service to  its customers at low costs. In 2018 in fact,   Mahindra Group decided to merge  their own logistics platform   SmartShift with Porter and invested  10 million dollars in the company.

After becoming the biggest  player in truck deliveries,   Porter launched their two-wheeler parcel  delivery service in 2020. And in just two   years, they had beaten Dunzo in Bengaluru, a  company that had been in business for 8 years.

Since then, Porter has raised another 100  million dollars in their series E round   in 2021, relaunched their intercity  delivery service and expanded their   presence to 20+ cities. In FY23, they  earned 1,750 crore rupees in revenue.

And despite this huge scale - what’s truly  impressive about Porter is their quality of   service. Just look at their ratings on Google  Play Store - more than 6.5 lakh people have   rated their app and they have a 4.8 rating. The  experience of people is overwhelmingly positive.  

We did a short about them a while back, and the  comments were full of positive experiences of   people who used their service. Sure, there could  be some negative experiences but for a company at   this scale - the quality of their service is truly  something for other Indian startups to strive for.

Now Porter’s founders haven’t said  much about their future ambitions,   but they have a massive opportunity  ahead of them. Intracity logistics   industry alone is a 40 billion dollar  (3.3 Lakh Crore Rs) market in India and  

their current revenue of 1,750 crore  rupees is just a drop in that ocean. Next, as I mentioned earlier, they have  relaunched their intercity service,   and that’s a much bigger opportunity. It  is worth over 200 Billion dollars in India,  

in fact, more than 87% of India’s logistics  spending goes to this intercity logistics   space - so it’s not surprising that  they want to enter this market. For Porter, their USP is cost-effectiveness and  timely service, and these are the most crucial  

factors to succeed in the Indian market. Right  now, India spends 14% of its GDP on logistics,   but as India moves towards becoming a developed  nation, this has to become more efficient. Porter with a well-established intracity model,  

will try to replicate their learnings  in the intercity logistics market too. Along with being efficient, Porter is also  getting clean. I mean their deliveries are   getting clean. They already have 1000 EVs in  their fleet and had recently signed a deal with  

OSM to add another 5,000 EVs to their fleet. And  what’s interesting here is that Operating an EV   is cheaper than operating a petrol vehicle.  So this is great news for the company too.   Next thing that I feel could be a  great opportunity for Porter is drone  

deliveries. And before you dismiss  the idea, you should hear me out. Drone deliveries are already  becoming a reality in countries   like the US - Google’s Wing has completed  more than 350,000 deliveries and another  

startup Zipline recently completed a  million deliveries. Even though India   is at an early stage in the drone delivery  business, we still have a lot going on. Just recently, Zomato-owned drone delivery  startup TechEagle completed a 47 km long  

journey to deliver medicines in just 34  minutes. This was done is the secluded   hilly regions of Uttarakhand - a journey  that would have taken 4 hours by roads. We’ve been talking to the founders in  the Northeast regions for our videos  

and one complaint they usually have is  the lack of road infrastructure which   leads to longer delivery times in these  regions. And for companies like Porter,   this is a big opportunity to put drones to use.

In the end, I just want to say that the  journey for Porter has just started. As   the GDP of India grows, logistics companies like  Porter will be the direct beneficiaries of it. And   someday I want to see, an Indian company in the  leagues of logistical giants like FedX and UPS.

Let me know in the comments what Porter needs  to do to get there. And also, what has been   your experience using its services? Good or bad,  write it down, and I will see you in the next one.