India's Volvo Eicher is debating whether to switch from truck-on-truck to using ‘jockey’ transport for moving its commercial vehicles.

To drive, or not to drive, that is the question facing Volvo Eicher’s Vivek Dange. More specifically, the question is whether to move finished commercial vehicles on specialised carriers, rather than driving them to customers on their own axles. Tata Motors has already started moving on carriers, as has Ashok Leyland, who between them make up close to 90% of the heavy commercial vehicle market in India. Even India’s newest entrant, Daimler Commercial Vehicles, which has so far moved about 1,000 trucks, is finalising a business plan for managing its in-plant yard and transport across India that will also resolve this particular dilemma.

As Volvo Eicher Commercial Vehicles’ head of sales planning and logistics, Dange has yet to make up his mind as to when this 50:50 joint venture between Sweden’s Volvo Group and Eicher Motors of India will move to the much-discussed truck-on-truck format. “It is not as simple as we all think,” admits the veteran logistician, who is in charge of pushing 70,000 heavy trucks and buses out of his in-plant yards in Pithampur, 570km from Mumbai. Volvo Eicher currently still moves trucks in the traditional ‘jockey’ style that has characterised the truckmaker’s outbound logistics – and that of most others in India – since its first vehicle left the factory back in 1985. However, with a 100,000-unit total in sight, the issues around driver shortages, quality and protecting the environmental are not likely to subside.

Ever since heavy vehicles were first made in India several decades ago, normal sales practice has been to put a ‘jockey’ in the vehicle chassis (rather than the fully built-up bodies) and command him to drive, usually in a makeshift seat, to the nearest dealer point and subsequently to the door steps of the final customer, often covering several thousand kilometres in doing so. Until recently, such jockeys drove without even a canopy over their head to protect them or the vehicle from rain or shine. Today, such cover has become mandatory under India’s Central Motor Vehicle Rules (CMVR).

An approach well suited to jockeying
Volvo Eicher might appear to be resisting what is widely accepted as a benchmark of quality in the commercial vehicle logistics sector but Dange points out that there are specific operational and cultural reasons why the method might currently be less suited to his company when compared to Tata or Ashok Leyland.

Firstly, it is worth examining the general Indian distribution model. Given the country’s complex tax structure, businesses transfer stock to their own regional sales offices (RSOs) or depots in almost in all state capitals until the vehicles are sold. This process eliminates the need to pay taxes at every single interstate border. When an order is placed and payment received, a vehicle is released from the nearest depot to the buyer and tax is paid to the relevant state.

While Volvo Eicher has 27 RSOs around the country, it has more of a built-to-order approach than Tata and Leyland, both of which tend towards higher inventory levels at various depots. “We have a tough concept. We don’t believe in inventory-keeping,” s ays Dange. “We have our own aggregate level planning. Receive an order and then make [the vehicles].”

Such a format frees up working capital by avoiding inventory pile-ups at RSO/depots. But it necessitates the quick movement of vehicles once built, since they already have a customer assigned to them. A truck-on-truck concept, however, might slow down the release processing as trucks wait to build full loads prior to dispatch.

Will the customer pay more?
As well as potentially longer lead-times, a study carried out by Dange himself earlier this year didn’t convince him that truck-on-truck delivery would lower costs. He calculated that the average cost per vehicle delivery by jockey was about Rs.17,000 ($313). Also, this method means Volvo Eicher doesn’t have to worry about compensating its transporters for empty hauls – jockeys drive the trucks to their destinations then take a train or bus back the plant.

Dange believes that the truck-on-truck mode will lead to a rise in empty backhauls, since it requires customised equipment that cannot necessarily carry other cargo. He also sees issues should the transport provider be ready for dispatch but not the vehicles, and vice-versa, since the service level agreements (SLAs) Volvo Eicher has signed with logistics providers carry huge penalty clauses for delay on either side.

Volvo Eicher at a glance

Plants: Pithampur, Madhya Pradesh
Production: 70,000 units per year
Depots/RSOs: 27
In-plant yards: 3
Yard capacity: 500 vehicles (all sizes)
Transporters by region: Railroad Logistics, Pune; Ashok Garage, Mumbai; Agarwal Packers & Movers, Delhi; All India Transport Agency, Mumbai; Kamal Transit Lifters, Ahmedabad

Any delays to the end customer could also lead to lost sales or compensation. “I love the truck-on-truck concept and the [idea of] mint-fresh vehicle delivery to my customer. But at what cost?” he asks.

Perhaps the biggest argument in favour of truck-on-truck transport is the benefit of delivering ‘zero-kilometre’ vehicles. After all, the customer deserves nothing less than a ‘factory fresh’ vehicle. But Dange points out that it’s rare for any vehicle, moved by truck or not, to be delivered with ‘zero kilometres’. Even trucks carried on trucks are usually dispatched from manufacturing sites to depots and from there a jockey drives them down to dealers. “Therefore, the promise is not fully met,” he points out.

Dange also says that feedback from Volvo Eicher’s own customers suggest that the final delivery is less important to them than cost. “The response is they are not willing to pay a premium for zero-kilometre service,” he reports.

India is not the only place where the jockey method is still preferred in many cases. Many commercial vehicles in Europe are also moved by the jockey method for similar reasons to those named by Dange.

Bulk will bring the inevitable
In spite of his concerns, Dange admits that truck-on-truck transport is the inevitable future for Volvo Eicher. The potential for tax reform and the introduction of a Goods and Service Tax (GST), which would eliminate taxes at state borders, is expected to change the distribution model in India to one of larger distribution centres that would serve multiple states, and which would likely favour the bulk movement of trucks on transporters.

The company is already in negotiations with a few truck-on-truck operators that service the likes of Tata and Leyland. Rajeev Khurana, director of Agarwal Packers & Movers, one of the five jockey driver providers to Volvo Eicher, says his company would be willing to offer this service.

“Why not?” asks Khurana. “For the past three years, we have provided jockey drivers to Volvo Eicher and it has been working fine. But since we handle Leyland’s truck-on-truck delivery format also, it is not a new business for us. We are ready, as and when Volvo Eicher asks us.”

It is an issue that many in the industry are concerned about. According to Sunil Chaturvedi, chief executive officer of India’s Automotive Skill Development Council – set up by the government to look into all skills aspects – on current production estimates, India will require around 5m heavy commercial vehicle drivers by 2015. “That’s a guesstimate, honestly,” he admits. “We might need much more than that.”

Driver quality issues are already Volvo Eicher ’s b iggest challenge for vehicle logistics, concedes Dange. During a visit to Volvo Group’s headquarters in Gothenburg, Sweden, executives proposed the idea of replicating Vo l v o’s global yard and transport management in India. “It got stuck on the issue of drivers,” he reveals. “The quality of drivers and their sense of responsibility or ownership has a long way to develop.”

Driving is 'A Jungle Raj'

It’s fair to say that drivers in India lag behind global benchmarks when it comes to quality, productivity, pay and safety metrics. The country lacks training institutions, while the living and wage conditions for most drivers are, frankly, terrible. “It is a jungle raj,” says Rajeev Khurana of Agarwal Packers & Movers (APM). 

However, no manufacturer can do without drivers to move its material or products. That’s why the selection of transport providers is so important, since they manage and develop drivers directly, says Rajkumar Jain at Volvo Eicher Commercial Vehicles. The company has recently grown its stable of transport providers from two to five, with plans to sign up more as volumes rise.

These partners bring in their own drivers, take delivery of finished vehicles at the factory gate following their own predelivery inspections, then allocate drivers for the long journey within a stipulated timeframe and pre-fixed route plan.

On paper, such tasks appear simple but in reality it is no easy operation. Drivers are hard to control and have been known to take in roadside passengers for a fee, ferry extra freight, or indulge in diesel theft. At times, fuel adulteration is attempted by mixing diesel with kerosene, thus impacting fuel injection parts on delivery. “The temptation to make an extra buck on the sly is irresistible for drivers,” says Khurana.

Driver initiatives
Meanwhile, Jain and his boss Vivek Dange underline the need to change the behaviour of drivers. “Otherwise, we are heading for a big crisis,” Jain warns. While Volvo Eicher is involved in a number of training initiatives, he says that it is up to transport providers to compensate and motivate their drivers. “Ultimately, driver management is part of their business, not ours,” he emphasises.

Transport companies in India often pay drivers for each trip rather than hiring salaried drivers, which leads to low levels of loyalty. However, Agarwal Packers & Movers has hired more drivers. “We have more than 200 drivers on our rolls full-time with all benefits.

Otherwise, honouring SLAs [service level agreements] would be impossible,” explains Khurana. Volvo Eicher is also providing more training about the vehicles the drivers will operate, holding a half-day course on best practices such as fuel saving and safe driving. Drivers who commit theft or other illegal activities on the job, meanwhile, are blacklisted and their names circulated among all transport companies that serve Volvo Eicher.

The measures appear to be working. Despite all the challenges, Dange proudly states, Volvo Eicher’s on-time delivery rate is 98%.

Better days ahead
Although the Indian economy has sputtered recently, the potential for huge growth remains and a company like Volvo Eicher needs to be prepared. Interestingly, the commercial vehicle maker appears to be having an easier time producing trucks and buses than it does delivering them. “Producing vehicles is a lot easier than procuring the services of drivers,” says Jain. Dange amdits that, up until now, vehicle movement has been the most significant lag in the company’s supply chain. But thanks to the cooperation of transporters and plans to upgrade depots, he is hopeful of better days ahead.

Jain optimistically points to a list of on-going improvement projects: the truckmaker is debating whether or not it would be beneficial to introduce clearing and forwarding operations at depot level; it is also exploring how to reduce damage and improve jockey’s return journeys. Other projects include determining how it might be possible to achieve true ‘zero-kilometre’ delivery. Rail delivery has also been discussed, although so far the risk of damage en route has been a significant deterrent.

Finally, although Dange has reservations about putting control of Volvo Eicher’s outbound logistics in the hands of a 3PL – which could be just a “transfer of responsibility or headache” – he nevertheless accepts that as passenger carmakers move in this direction, commercial vehicle manufacturers will follow.

With all these projects and developments in mind, Volvo Eicher, like one of its trucks lumbering down a congested Indian motorway, is mov ing slowly but surely towards global standards for vehicle logistics.