Logistics clusters play a vital role in supporting regional and global trade by facilitating the movement of goods across supply chains. Basically, logistics clusters are a group of logistics companies and institutions that work together to enhance the efficiency of the supply chain. However, landlocked countries with mountainous terrains like Nepal have specific characteristics that need to be taken into consideration while managing the logistics cluster.
To have efficient logistics clusters, transportation infrastructure needs to be tailored considering the landlocked nature and mountainous terrain. Developing transportation hubs and integrating intermodal connectivity using different modes of transportation is also essential to overcome geographical barriers. It is because, efficient border crossings, collaboration with neighboring countries, and streamlined customs procedures are vital to reduce transit times and costs. It has been proven time and again that mountainous terrain requires specialized equipment and infrastructure to navigate the terrain.
All stakeholders including the government need to consider that inland ports or dry ports can be connected to neighboring seaports or international trade corridors through efficient trade routes and corridors. Similarly, while developing logistics clusters, the unique ecological features of the mountainous terrain should be taken into consideration. Having efficient logistics clusters is beneficial to landlocked mountainous countries like Nepal may in terms of their engagement with neighboring countries, regional economic communities, and trade blocs to enhance connectivity, harmonize regulations, and facilitate trade and logistics operations.
Role of LSPs
Logistic service providers (LSPs) can play a big role during humanitarian emergencies.
LSPs are equipped to rapidly mobilize and deploy resources, personnel, and infrastructure to affected areas during emergencies. LSPs can scale up their operations based on the evolving needs of the humanitarian response. They can provide guidance on optimizing supply chains, reducing bottlenecks, improving efficiency, and ensuring the smooth flow of relief items.
- LSPs have expertise in transportation management, which is critical for moving relief supplies from point of origin to distribution centers and ultimately to beneficiaries.
- LSPs can set up and manage warehouses and storage facilities to accommodate relief items.
- LSPs employ tools for route optimization, real-time tracking, and data analytics to enhance visibility and control over logistics operations.
- LSPs can develop risk management strategies, implement security protocols, and provide contingency planning to ensure the safety of personnel and the continuity of logistics operations in volatile or challenging environments.
- LSPs often share best practices, transfer knowledge, and provide training in areas such as supply chain management, warehouse operations, and transportation logistics.
The stakeholders
The stakeholders of the logistics clusters in Nepal include various entities involved in planning, implementing, and overseeing logistics activities.
Government agencies at the national, provincial, and local levels play a significant role in logistics management in Nepal. This includes the Ministry of Physical Infrastructure and Transport, Department of Transport Management, Ministry of Industry, Commerce, and Supplies, and other relevant departments. The private sector, including logistics companies, transportation providers, freight forwarders, and warehouse operators, are key stakeholders in logistics management. Private sector bodies such as the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Nepal Freight Forwarders Association (NEFFA), represent the interests of the private sector and provide a platform for collaboration, knowledge sharing, and advocacy related to logistics management.
International organizations, including multilateral institutions and development partners, are also stakeholders in logistics management in Nepal. Similarly, non-government organizations (NGOs) and international non-government organizations (INGOs) actively participate in logistics management, especially during humanitarian emergencies and relief operations. Academic institutions and research organizations contribute to logistics management in Nepal through research, education, and training programs. Local communities and community-based organizations are important stakeholders in logistics management, especially in rural areas. Likewise, customers and consumers of goods and services are essential stakeholders in logistics management. Their demands and expectations influence logistics strategies and service quality.
Stakeholders’ roles in forming responsive national logistics cluster
Nepal has faced multiple humanitarian crises in the past decade such as the 2015 earthquake, the economic blockade, and the Covid-19 pandemic. Each of these emergencies posed a different set of challenges that required strong stakeholder collaboration to mitigate the impending risks. A look into the ways the stakeholders have worked together to face the challenges in the past can provide some insights in this regard.
Coordination: The government established the National Emergency Operation Center (NEOC) after the earthquake and Crisis Management Co-ordination Center (CCMC) on the wake of the Covid-19 pandemic to coordinate and oversee the disaster response, including logistics operations. These centers served as the central coordination hub. Private sector bodies such as Associations such as FNCCI and NEFFA acted as platforms for coordination and communication among various stakeholders involved in the logistics response. They facilitated regular discussions to ensure effective coordination of logistics operations. Likewise, INGOs and donor agencies actively participated in coordination mechanisms established by the government, such as the NEOC, CCMC, NDRRMA, and the logistics cluster. They shared information on their logistics capacities, available resources, and planned interventions. Meanwhile, NGOs actively participated in coordination mechanisms, such as the NEOC and the logistics cluster, to share information and coordinate logistics activities.
Resource mobilization: The government mobilized financial resources and international aid to support the logistics response. It worked closely with national and international partners to secure financial assistance, relief supplies, and equipment necessary for logistics operations. The private sector associations worked to mobilize resources, including financial aid, logistics infrastructure, and supplies, to support the logistics response. INGOs and donor agencies provided significant financial assistance and relief supplies to support the logistics operations. They also brought in specialized logistics expertise to support the coordination, planning, and execution of logistics operations. Similarly, NGOs contributed transportation assets, including vehicles and helicopters, to support logistics operations; they played a significant role in transporting relief supplies to remote and hard-to-reach areas across the country.
Infrastructure support: The government worked to clear and restore damaged transport routes after the earthquake and built warehouses during the Covid-19 pandemic. The government also coordinated the use of military and civil aviation assets. The private sector bodies utilized their network and resources to provide logistics infrastructure support. This included making warehouses, storage facilities, and transportation assets available for storing and distributing relief supplies. INGOs and donor agencies made their warehouse and storage facilities available for storing relief supplies; they provided access to transportation assets to transport relief supplies to remote and inaccessible areas. NGOs made their warehouses and storage facilities available for the storage and management of relief supplies.
Advocacy and policy support: The government streamlined customs procedures, provided exemptions or fast-tracked processes for relief supplies, and ensured the smooth movement of humanitarian assistance. The private sector associations organized training programs, workshops, and knowledge-sharing initiatives to enhance the capacity of its members and other stakeholders in logistics management. Meanwhile, INGOs and donor agencies worked with the government and other stakeholders to address regulatory barriers, customs procedures, and other logistical challenges, whereas NGOs advocated for policies and measures that facilitated logistics operations and the delivery of humanitarian assistance.
Capacity building: The government conducted training programs, workshops, and knowledge-sharing sessions focused on logistics management, inventory control, supply chain coordination, and disaster response. Private sector bodies such as FNCCI provided guidance and assistance on business recovery strategies, access to credit, and financial support to help businesses navigate the post-disaster challenges. INGOs and donor agencies conducted training programs and provided technical support to local partners and government agencies involved in logistics operations. Likewise, NGOs brought in specialized logistics expertise and provided training on best practices and tools, and contributed to the development of local capacity and sustainability in logistics operations.
Enhancing the responsiveness of Nepal’s logistics cluster
Given the landlocked and rugged terrain of Nepal, specific measures are needed to enhance the responsiveness of Nepal’s logistics cluster. Developing alternative transportation routes is important to identify and develop alternative transportation routes that can bypass congested or geographically challenging areas. Improving intermodal connectivity can strengthen the connectivity between different transportation systems and can facilitate the smooth movement of goods and supplies. Investing in infrastructure for last-mile delivery should be a priority. Strengthening regional and international cooperation can help streamline customs procedures, improve border management, and establish transit corridors that facilitate the efficient movement of goods and supplies. Leveraging technology and innovation such as the use of drones for delivering essential supplies to hard-to-reach areas, implementing digital tracking, and utilizing mobile applications for information sharing among stakeholders is helpful. Strengthening the capacity of local communities, organizations, and government agencies shall amplify the efficacy of the logistics cluster and enable them to play a more active role in responding to emergencies. Investing in climate-resilient infrastructure is crucial so that the infrastructure can withstand extreme events and natural disasters, ensuring the continuity of supply chains even in challenging environmental conditions. Promoting public-private partnerships shall help leverage their respective strengths and resources. Finally, Conducting comprehensive risk assessments to identify potential hazards and vulnerabilities specific to the varied terrain and developing comprehensive disaster management plans is also essential.
Sharma is a logistics expert and a consultant.
