Waresix Strategy Maintain Positive Growth Trend After Pandemic

Startups logistics tech integrator Waresix claims to be able to maintain the growth trend revenue positive increases 2x every year, this achievement was still achieved even though it was affected by the pandemic. This breaks the opposite condition that has befallen a number of other local logistics startups that need business efficiency.

in medium briefing organized by Waresix yesterday (13/4), Waresix Group President Eric Dharma explained several strategies carried out by the company, one of which was revenue diversification to target clients to sectors that had positive growth, including commodities, mining, agriculture, and consumer goods, away from the construction sector which had slumped at the start of the pandemic in 2020.

"We are aware of the importance of business diversification, we enter into business sectors that have a large GDP and a large economic impact. On the positive side, before Covid-19, this company's clients were not interested in using Waresix solutions, but after that they were very open," said Eric.

In fact, during the pandemic, the B2B logistics business in Indonesia, according to the research he obtained, was recorded to have fallen by 20%, or nearly a quarter of the entire business. Unlike logistics last mile which thrives. "But we are still growing double, amount headcount also growing but still maintained.

Although not detailed with specific figures, Eric said that Waresix's revenue grows twofold every year, always oriented towards two things benchmarking main: income and profit, and does not provide subsidies. As a result, Waresix was claimed to have it economic units positive ones.

Waresix's business model is asset light (no truck/warehouse assets), offering integrated logistics solutions, from land transportation, warehousing, to island-wide delivery. Monetization is carried out through periodic contractual agreements with corporate customers, where Waresix will assist in terms of management and technology.

Now Waresix has managed more than 50 thousand trucks, 150 thousand square meters of warehousing area, and has been trusted by more than 1.500 corporate customers as users of Waresix services. These clients come from various industries, company names include Sinar Mas, Wilmar, Unilever, P&G, and Kino.

Because technology is so backbone main Waresix, then innovation in this sector is also strengthened. One thing that has been launched is presenting smart matching number of loads by truck size with AI power. However, this needs to be supported by a complete database regarding the size and type of trucks that are partners.

Waresix maps customer needs and matches them with a number of transporter partners who have the capability to make deliveries. In this way, these partners get the appropriate load on the truck more quickly. They can also be helped in reducing the potential for losing customers which is usually caused by a long process of confirming truck availability.

Logistics issues in Indonesia

Eric explained that the biggest problem in logistics was poor delivery planning. Some examples are:

1. Uncertainty of availability and arrival of trucks,
2. Often the capacity for loading and unloading goods is not suitable, so that arriving trucks have to queue for days, so that the trucks become mobile warehouses which has an impact on low truck utilization,
3. Inaccuracy of orders, such as the truck that arrives is not enough to carry the load because the size of the truck box in Indonesia is not yet standardized,
4. Lack of access regarding truck orders resulting in trucks being idle or returning with empty loads,
5. Trips are less efficient, for example, many trucks have to move even though their load is not full, which has an impact on long delivery times and increases fuel consumption.

This low fleet utilization has an impact on the high operational costs of truck entrepreneurs. In fact, they often suffer losses because they have to pay fixed costs, but their income is not sufficient. Sometimes, to get around this, they have to increase the rental fee to cover the fixed costs. "As a result, shipping costs will be higher."

According to the Indonesian Truck Manufacturers Association (ATPRINDO), the average truck in Indonesia only covers 50 thousand km per year. This figure is very minimal compared to Thailand which can reach 120 thousand km/year, and Europe which reaches 200 thousand km/year.

Other data revealed by the World Bank in 2018 shows that logistics costs in Indonesia are the most expensive in ASEAN, namely 24% of GDP. The world average itself is 11%. The second most expensive position is held by Vietnam (20%), Thailand (15%), the Philippines and Malaysia each (13%), and Singapore (8%).

Waresix as an integrator can increase utilization by making truck trips more efficient with the load consolidation solutions offered. This can reduce the number of unnecessary trips and reduce congestion, so that potential losses due to fuel consumption are reduced.

Waresix's internal data shows that the utilization of trucks from partners dedicated to Waresix recorded an increase of 32% during April 2022-March 2023. If you compare it, this figure is the same as four truck trips a week.

Over the past year, Waresix doubled in size with 70 thousand transactions or trips and 20 million metric tons transported.

It was stated that Waresix had pocketed the funding for $50 million in April 2022 from a number of investors, including Tiger Global, East Ventures, and Temasek. Companies also become one of the investors for funding for agribusiness supply chain startup Gokomodo in September 2022.