Driving Digital Financial Inclusion for Pakistan’s Truckers

Speaker A: Foreign. Hello and thanks for tuning in to our final episode of Fintech for the People Season 8. Fintech for the People is brought to you by Axion Ventures, a, uh, global early stage investor in inclusive fintech startups around the world. As always, I'm Ami Parbhu, your host and and managing partner of Accion Ventures. In this season, we've been talking to fintech founders about embedded finance and in particular bringing those financial services in a more contextualized way to small businesses and traditional industries, whether that's construction, manufacturing, agriculture. As we've talked with the founders so far and today we bring logistics into the mix. In this episode, we'll have a chat with Sheryar Bhawani, co founder and CEO of Trucker. Based in Karachi, Pakistan, Trucker is a technology and finance platform serving Pakistan's $35 billion road freight market. By pairing logistics software with verticalized embedded finance, Trucker helps small owners improve cash flow, reduce downtime and scale their businesses, advancing both the efficiency and financial inclusion across South Asia's crucial trucking industry. Welcome, Sheryar. Thanks so much for being with us.

Speaker B: Yeah, thank you. Thanks for having me.

Speaker A: Before we dig into what you're building at Trucker, tell us more about your background and what sparked the idea of building a tech company in the trucking sector.

Speaker B: So before I got into tech and trucking, I did banking in a couple of places. One both in the west and the east. And then a few years in, I didn't want to do that anymore. I moved to Pakistan and I started, uh, a trucking company. Most people thought I was a bit crazy because why would you go start driving the trucks? And so that's what I did in 2012. And then myself and my college roommate, he's one of the co founders at Trucker, we started this trucking company. We built it from a small intra city trucking company to a national trucking company in Pakistan. We exited that business in 2019, we sold it and during the time that we ran the trucking company, we basically identified some of the pain points that truckers face as well as the pain points that the companies, the shippers, the corporate shippers face. We felt that the industry was ripe to sort of digitize. Previously it was all pencil and paper approach and very non digitized. There was a lot of lack of trust between shippers and carriers truckers because there's no visibility and it was a very undeveloped space. So we basically set out to solve those problems and that's how Trucker came into being. I consider Myself lucky because it wasn't planned that I did banking and, um, then I did trucking. And then. So trucker is really just a mix of the two. It's literally a combination of the two things. So that just happened. That wasn't something that I had planned,

Speaker A: just worked out perfectly. You mentioned pain points for both the truckers and the shippers. Maybe. Can you elaborate on that? What are some of those core pain points and how is trucker going about trying to solve them?

Speaker B: There's pain points on both sides, right? And you can solve all the problems. But for us, creating a, uh, digital transport ecosystem solved two problems on each side. So for the shippers, as I said, it was transparency, visibility, and the ability to manage their logistics was a pain. If you've got a logistics supply chain person in a company, got to plan thousands of trips a month and he's got to use, go into the trucking market, which is get on the phone, source the trucks. That's one segment. And then once you source the trucks and actually dispatch the cargo, then you have to monitor it, make sure that your customers are, uh, getting the deliveries on time, all of that. And customers are getting angry because they don't know when it's coming. And then there's also security issues. So all of that. And then finally the third leg is once a trip is done, delivery, confirmation, invoicing. So all of that was a manual process.

Speaker A: All of that was manual. Uh, so today that's people managing from the shipper side on the phone, uh, on the phone.

Speaker B: And then paper invoices, physical and phone verification that the truck has reached. You'd have to keep calling the driver, where's the car, where's the vehicle, all of that stuff. So we set out to create the TMS product of ours, which basically digitizes the whole space. And then on the other side you have the carriers, the truckers, what is their incentive to be on the platform and what is their pain point? They don't necessarily understand the benefit of digitizing off the back because to them it's, we can't stop for 10 minutes or half an hour or one hour, just hang out and waste time, right? Because now efficiencies are being measured. So for them, the biggest problem was financial services. When we were truckers, we were always broke because we basically didn't have money to run our working capital cycles because all our expenses are, uh, upfront. And our payments would come in a month or two, 30, 60 days or 90 days after the service is done, because that's Just how corporates pay, the bill comes to them and they pay when they feel like. To be honest, even if they've got defined days, it's always going to be bill plus 60 days or something. So the biggest pain point for truckers was the fact that they didn't have access to capital. And in a market like Pakistan where the trucking community is so fragmented and not developed, they just didn't have access to traditional bank capital. Right. So for us we felt that the embedded finance approach, where we have a platform, we're doing the sort of, the invoicing on the platform, it made sense to attach the financing angle into it. Right. Because where we started off as just a technology platform, it was not until a few years later when we went and got our NBFI license and became a fintech because we saw that gap.

Speaker A: Maybe walk us through from a trucker's perspective and from a shipper, I mean for the entire ecosystem, what does it look like today using trucker?

Speaker B: Now as I said, companies who signed up and so far we've signed up over 150 corporates. So right now we're focused on larger companies. They've got thousands and thousands of trips. So for them it's like they don't want uh, to, they can't live without it. Now because I see the feedback and I see the difference that it's made, the efficiency. There are two ways to measure how it looks. One is that it's made supply chain at companies more efficient because now there's complete visibility and that visibility has led to a lot of data. So that data is now very powerful for analytics. So now a uh, company can see for example if they've done a hundred trips, who's actually sitting and logging in, what was the loading time, what was the unloading time. Now when that data gets aggregated, companies are starting to see the value of that data that they're getting and that data actually translates into operational efficiencies and gains. So that's something that is pretty unprecedented because while paying a subscription fee to us, they're now been able to extract a lot of efficiency gains, bottom line savings and that's why they're actually comfortable paying for the product. On the other side, we've built a legitimate financial services system for the truckers who've never had that access. The truckers have been previously going to loan sharks or unofficial lending which are uh, which is pretty high exorbitant rates, borrowing at ridiculous rates like 60, 70% APR. So this gives them a way for Them to get financing from us on the platform and also for us because we sort of rank transporters, truckers, uh, based on their performance on the platform. So they also have a way to strive towards doing better because they know that they do better then they'll have more access to finance. If they have more access to finance then this more is better for them. Their business can grow. So it's actually improved the whole trucking system in Pakistan. And you see it on the ground because while we're not so big yet, we've got 150 clients but we want to get to 2,000. But it's a really good start because if we're doing about 100,000 trips on our platform a month, that's a good number. It's enough for people to start. There's a lot of buzz in the market now that you know this is the way to go. Digitize uh, your supply chain.

Speaker A: Uh, what adoption hurdles on either side of the market are you still working to overcome? And how are you overcoming that? And something we talk a lot about in these industries that are traditionally very manual used to a certain way of operating. And now you're trying to introduce tech and financial services in a new different way. Have you faced adoption challenges like some

Speaker B: of the big corporates? When you go to them, a lot of them are running historically famous ERPs like SAP, Oracle. When you go to them first there's this trust issue. Okay, who's trucker? Is their platform stable? Is it safe? Is my data going to be safe? Those are the things, those are questions that they ask. Obviously having done it at uh, a bunch of customers helps, but still every company has their own security parameters because that integration that we do with their existing ERP is a one time thing. Once the integration is done then there's a seamless data flow between them and us. That's something that needs to be done seamlessly. It needs to be coordinated with the company because that's the key. Once that integration is done then the system runs very smoothly. So that's one of the challenges that we face on the side when going to corporates. And the other thing is of course when you're selling SaaS, how much do customers want to pay for SaaS in this part of the world? If you were to ask me, customers don't want to pay anything, they want it for free. You know, initially maybe we spent, we give them a trial for a couple of months to keeping that trial limited. So it translates into a uh, paying customer is very important. Right. Because and making sure your service levels are up to the mark so that the customer feels that it's worthwhile. So those are just things that we have to focus on. And especially in these markets, Pakistan particularly where customers are very price sensitive.

Speaker A: Have you seen, has there been one or two aha moments that translate for one of your clients to say, oh yes, this SaaS is worth paying for? What's that data point or proof point that helps make the case for you.

Speaker B: When it comes to clients who are taking for example our marketplace bidding module, they're seeing an immediate gain, a price gain of 2 to 5%. That's what we've seen in our market. If they're saving 2 to 5% of the entire logistics bill, which can be substantial, that's enough for them to say this is worthwhile for me. Because now they're getting price discovery because our platform also does something which is a price discovery mechanism. So that's a big saving. So that moment came a long time ago. And then now we've added modules, Ascent, that are actually having operational efficiency gains and customer engagement. Customers are happy because now our customer can use our platform to link their customers and their customers can also have, uh, updates on when their car goes arriving so their customer can plan better. So when their customer plans better, they're happy. So they'll give good reviews to our guys and our customers, our customers happy. So this whole chain, this whole happy chain, for lack of better word, is there. It's crazy because like any system, sometimes you might have a little outage or some technical issue. When that happens, how outraged people are that why is it not working for 20 minutes? That moment shows you how attached they've become to it because they don't even want it to be down for 20 minutes.

Speaker A: You're so critical now to their operations. You can.

Speaker B: And if it wasn't the case, if that wasn't the case, then no one would care. Helpline customer service wouldn't be going crazy when there's an outage because that means people are engaged on the platform.

Speaker A: I'd love to turn more to the driver side. This season we're really talking about these industry specific financial services. And in industries like logistics, we've looked at construction, agriculture, these are all very manual industries with cash flow challenges and with lots of small businesses, in your case, truckers operating in them. Um, what impact has the financial products you offer had on driver earnings on trip reliability? Maybe you can talk more to the financial services element of your offerings.

Speaker B: If you take a trip to the truck Stand in Pakistan. This is a very low income segment for some reason, even though it plays a very critical role in the economy. There's a lot of ethnic groups in Pakistan go towards trucking. I mean one person who's a truck driver aspires to be a uh, truck owner. He takes his savings together or he borrows from his family or a bunch of family members pull together and buy a truck. So they've basically really scraped by starting their trucking business, so to speak. When you do that, it's very natural to be very tight, to have a very tight cash flow cycle. So coming into that market where you're solving that issue, you're almost like a rockstar. You get sort of rockstar status, to be honest, because they don't have that access. The guys who they've had to borrow from before are uh, the kind of guys where you borrow from them and you don't make your payments, there's trouble knocking on the door. So that's what it was. And now where they see an option because we're present in the trucks and not only are we doing lending, we're also doing community based building activities. We've also added like an insurance product recently for truck drivers, which is accident and life insurance, micro insurance product that we've attached to the platform, to the financial services. It's a few dollars a year, so stuff like that. We view it as a community building sort of product to engage the community. So what it's done is that it's given them a partner for financing which they didn't have. It just didn't exist.

Speaker A: There ah, are lots of other, I'm sure, financial services providers that are in these communities, whether they're microfinance institutions or other kind of banking players or informal financial institutions even. What is it about being industry specific, really targeting truckers and understanding their cash flows that gives you a leg up. Is that part of the advantage here for what you're building?

Speaker B: Industry specifically has advantages because the biggest issue. So microfinance doesn't touch trucking because in Pakistan microfinance has certain lending limits and those limits are too low for what the trucking community. So microfinance is completely out. So that leaves banks. And banks don't want to touch trucking because banks in Pakistan are lazy. They want to just lend to the government number one. Number two, they want to be more secure in their lending. So they want to play where, you know, they've got hard assets or collateral or lend to corporates or businesses. Trucking generally hasn't Been a place where they've really wanted to focus. So that leaves a gap in the market for a player in the middle. NBFI can give higher sort of lending limits to truckers. And obviously as a fintech, you may be able to have a little bit of a different risk tolerance than the banks. Because the way I see it as a banker, uh, as an ex banker, the risk, it's a new market. So there will be certain risk associated

Speaker A: with going into a new market, maybe turning to products. You mentioned insurance. But as you think about your product roadmap through this sort of embedded finance lens, what else are you thinking about? What else could add value for particularly your drivers, your truckers over the next few years?

Speaker B: The roadmap, the natural attachment is truck financing. That's something that every single truck owner wants to have a second truck and a uh, five owner fleet wants ten. Right. So that's really the sort of most natural product that we have actually looked into. And then obviously there's these ancillary products which I talked about, like insurance, building on that sort of insurance system. But we understand this is the mentality of the trucking community is very simple. They need working capital and they need truck financing. You want to stay focused on the products that are required and grow those because the industry has a lot of space. It's quite a large industry. So I think there's plenty of room to focus on, to stay a little focused on those.

Speaker A: One of the things we've watched is the surge of truck tech platforms across emerging markets. I'm curious your thoughts on the industry, the tech industry in this space more generally. And where do you think of trucker having an edge over other regional and global players?

Speaker B: That's a good question because we also often try to place ourselves, are we a financial services player, are we a tech player? And we took a big risk by doing both at a time when you were uh, at one or the other. And now this embedded finance team has become more and more especially when it comes to these trucking platform. Because the simple sort of Uber for trucks doesn't really work. There's a bunch of those from 2021. There was an explosion like everybody was looking at these platforms, people, they're very simple. Oh, let's just, it works for Uber, let's do it for trucks.

Speaker A: And by that you mean an app, uh, to be able to find drivers to go take your shipment.

Speaker B: On a very basic level, that's what you know. The reason why that doesn't work in trucking is because in Uber, when you do a trip, you pay for it immediately. When it's done, that's not the case. So there's a big financing requirement. And the second issue that it's a little more subtle, is that trucking is a very small portion of trucking deliveries and demand is actually spot, which is on demand. The rest is all planned. So a simple solution, which is I'm just going to connect drivers with shippers, doesn't work because it doesn't take into account all the complex planning that goes into production planning and all the way into delivery. So if you don't build a platform that takes that into account, your platform is not going to be able to pass the test of what the market demand is. So that's the reason why I think a lot of these companies didn't make it. And I'm talking about not only in the region, but in Pakistan. You know, we had six, seven people in the market doing this. It didn't work out too well because they were focused more on, on a purely marketplace kind of model. I've seen a lot of, even some of the big companies like Uber Freight look into this sort of embedded finance model for the trucking side of the business because it makes sense, you know, and you've had companies like Convoy, who are, uh, traditional brokerage sort of companies that you've seen them struggle. They're massive. Right. But at the end of the day, trucking market is challenging. I think you have to really solve the problems for the corporates rather than just focus on spending a brokerage fee.

Speaker A: Makes sense. And I think it's so true in these industries where there's just complex cash flow challenges, complex set of operational processes, you've got to be able to solve what really matters. One last question for you, Sharia, and this has been really great conversation. Tell us more. Just looking ahead, what's your vision for trucker and how do you think Pakistan's trucking community will change over the coming years?

Speaker B: Uh, our vision is very simple. We want to be the trucking ecosystem in Pakistan. So because we're not brokers, we want every trucking transaction to go through our platform. We want to be the ecosystem. Our platform allows for shippers and carriers to transact on the platform for free. They can connect to each other. There's no cost to that. Where we monetize is through financial services and through charging our customers for the product. And the more people that use our platform, if all the trucks in Pakistan use our, uh, platform, then we're happy. We've made a difference to how the trucking industry actually operates. Our system would have made the trucking industry more efficient in a pretty big way. So that's the difference that we think our platform can make. Obviously between now and then, there's a lot of work to be done, but the start is promising because we've seen good traction. Now it's all about executing, executing and scaling. When you scale a large technology platform, there's certain unique challenges that that's good that are going to come. We really focused on those kind of matters. But the vision is that we want to be the trucking ecosystem for the country.

Speaker A: Incredibly exciting vision and we're really proud to be partnering with Trucker as you build the company. Thank you so much, Sharia. This has been a, uh, fantastic conversation. Really appreciate you coming on.

Speaker B: Thank you so much. Appreciate the time and thanks.

Speaker A: This wraps season eight of Fintech for the People. I want to thank all of our guests this season for sharing more about the exciting businesses that they're building. And I want to thank you all for joining us for this deep dive. I hope it's been a, uh, helpful look into what we're seeing in embedded finance and the power of this type of financial services across many traditional industries like construction, agriculture, manufacturing and logistics. We are incredibly excited about the power of embedded finance to bring financial services to overlooked small businesses. Whether those are construction contractors, farmers, factory owners or truck fleet operators, all of them have one thing in common. They need access to working capital and they need financial solutions that work for them and their businesses. Really excited about the value of this technology to help include them in the financial system. We look forward to having you join us again on our next season of Fintech for the People. So please stay subscribed for more content and news. We'll talk to you again soon.

Speaker B: SA.