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02 October 2017

Logistics startups crusade for adoption of e-POD to release blocked credit in the Indian freight industry

MUMBAI: Logistic startups in India are crusading for the Electronic Proof of Delivery (e-POD) to release blocked credit for transport providers in the freight transport industry.

Even though the central government notified rules for the E-way bill on August 30, a move aimed at providing a framework for the transport of goods under the GST regime, the transporters are still woeful owing to huge amount of funds being locked up as credit because of the prevailing system of producing a "proof of delivery" in hard copy.

In the current system, post the delivery of a consignment by a trucker to the consignee, the consignee gives the trucker a proof of delivery in hard copy, which when brought to the transporter, helps him generate an invoice of the total expenses which he can then send to the consignor.

The transporter pays close to 90-100% of the total cost of the trip upfront to the truck driver before the trip begins, and the remaining is paid when the proof of delivery is produced.

The fault in this system according to freight logistic players is that it often takes a long time for truck drivers to return to the transporter with that POD, stretching to 2-3 weeks.

After the transporter issues an invoice, it takes further a period of 30-60 days for the payment to come through which results in mammoth amounts of funds being locked in. At present more than $30 billion (Rs 19,000 crore) is the corpus of unpaid cash to transporters across the country due to delay in PODs.

"We want that along with the consignee registering on the GSTN, if at the same time an e-POD could be generated then we can cut down the cycle of payments by a huge margin and the cash can be received that swiftly," Manmohan Agarwal, founder of the logistic aggregator Truxapp told ET.

"Transport is almost 5% of the GDP and if you can bring in the cash-flow efficiency in that 5%, it will affect the entire economy positively," said Agarwal.

While Truxapp has been trying to get the government to act to include the feature of e-POD on the GST Network (GSTN), another logistic aggregator Freightbazaar that acts as a mediator between truck suppliers and users has a feature on its app that lets consignees generate an e-consignment note or an e-POD to quicken the cycle of payments.

"Along with the e-way bill, e-POD should be made an acceptable format and the government should encourage companies to adopt it," Bhaven Shah, co-founder of Freightbazaar.com told ET.

Even though the logistic aggregators have a feature of signing the proof online, the need for a government acknowledgement of the technology stems from the challenges that these aggregators face both from the side of the consignees as well as consigners in trying to push with the electronic version.

Raghav Himatsingka, founder of Truckola, another logistics aggregator said that all parties in the transaction, right from the shipper to the consignee needs to know that the aggregator will not tamper with the information that the consignee has stamped and this suspicion makes things difficult for them.

"If the government gives the step its stamp then nothing like it, but acceptance also has to come from all parties to the transaction," Himatsingka said adding that with GST and increasing digitisation, it is likely that the acceptance of this technology will come about in 2-3 years.


Source : http://economictimes.indiatimes.com/articleshow/60529718.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst