The Logistics-Tech Landscape in Nepal

Ecommerce Business

Author Raskin Maharjan Publish date : 7th March 2022


The Logistics-Tech Landscape in Nepal

The Logistics-Tech Landscape in Nepal 

Logistics-tech refers to the use of technology or tech-enabled innovations in the logistics of goods. With the involvement of detailed plannings, execution, granular coordination and movement of goods, there is no doubt that logistics is a complex activity. Nepal, an import-based economy, purchases goods worth approximately 30% of GDP which inadvertently signifies the importance of logistics in the economy. World Bank, on average, estimates the logistics costs make up to 13% of GDP[1]. The countries with efficient infrastructures will have this cost up to only 8% of GDP whereas the least efficient countries could see the cost as high as 25% of GDP. With these heuristics, it can be estimated that Nepal’s cost in logistics could be anywhere between USD 4 to 7.7 BN (14 -25% of GDP). 

With such a significant market size and the rising use of mobile, cheaper data and the internet, inevitably, the Nepali market will also observe the development of the logistic-tech sector. This logistic-tech sector can be classified into three broad categories. 

i.               Trucking Tech 
ii.              Fulfillment 
iii.             Hyperlocal Delivery 


Trucking Tech 

The trucking tech essentially comprises the technology that efficiently transfers bulk goods within a city or inter-city. This tech, therefore, can be broadly categorized into Short Haul (intra-city) and Long Haul (inter-city). The tucking tech sector is fairly new to the Nepali market as the existing state of trucking is significantly unstructured and have a high entry of barriers. There are limited tech players in the short-haul section and close to no tech companies in the long-haul section. 

Short Haul (Intra-city): The short-haul includes a single day transfer of goods or cargo, usually within the city. The tech-enabled players are usually the aggregators that connect consumers with drivers or fleet owners. Usually, pickup trucks, mini trucks, and delivery vans are used for the consignment. The intra-city logistics is unstructured and manual where the drivers usually wait in certain designated hubs around the cities and wait for customers for the order via phone or in-person. Although limited in market size, this sector has seen few tech-enabled aggregators such as Upaya City Cargo and Dropmandu. Since the Nepali market is itself unstructured and small, the first mover having easy to use UI, optimum technology and efficient operations may dominate the short-haul trucking. 

Long Haul (Inter-city): Given the terrains and limited infrastructure, everyone knows the challenges of intercity logistics in Nepal. Moving goods between cities are more complex than moving people as it involves matching demand and supply so that trucks do not move with empty load or partial load after delivering the certain consignment. The complexity is added even more when the transfer of the goods requires special kinds of vehicles such as refrigerated vehicles. The brokers, at present, manually match demand and supply to make the optimum use of carriers. The fleet owners and drivers generally must wait in line for the demands to come so that they don’t have to return with partial or empty loads. To solve such an issue, there is an opportunity for a tech-enabled platform or online marketplaces which can aggregate consignment demands and supply of trucks. The Nepali market is yet to observe such players entering into the syndicated unstructured marketplace. Rivigo and Blackbuck from India are prime examples of successful long-haul trucking tech. 



The fulfillment segment requires end-to-end fulfillment services and delivery which should include first mile, line haul and last mile along with the reverse logistics. The first mile refers to the delivery of goods from merchant to warehouses or fulfillment centre while line haul refers to moving of goods from fulfillment centre to destination city hub. After the line haul, the last mile requires the delivery of the package to the end customer. In the Nepali market, we can observe two types of logistics-tech that offer full end-to-end fulfillment. The first one is e-commerce's in-house third-party logistics (3PL) which is responsible for the first mile, line-haul, last mile and reverse logistics. The second is the international 3PL brands mostly responsible for international and national package transfer. The tech-enabled players in fulfillment are typically asset-heavy with a significant investment in warehouses, hubs, vehicles, and sorting/packaging areas.  

3PL in-house: Most of the e-commerce players have developed their in-house logistics with the scheduled first mile, line-haul with multiple warehouses and hubs, last-mile delivery and a provision for reverse logistics. The fulfillment section of e-commerce is operation complex, time-sensitive, and demands efficiency in the overall operation. It is therefore essential to categorise top e-com players having their 3PL as logistic-tech fulfillment. Daraz Nepal and Sastodeal, although they have their in-house 3PL logistics, may need to outsource the fulfillment to operate in all parts of the country. The fulfillment services, as one of the major cost component of e-commerce, needs to be efficient to be the top player in the e-commerce market. 

Third-Party Logistic (3PL): The international 3PLs such as Aramax, TNT, and DHL have a presence in Nepal and are focused on the international and national delivery of packages. 


Hyperlocal Delivery 

The hyperlocal, as the name points out, is the logistic tech online deliveries that are involved at the local level within geography. Usually, the hyperlocal deliveries are engaged either into first or last-mile delivery in addition to B2C. This hyperlocal delivery can be segmented into 3 sections: B2B, B2C and On-demand delivery. 

B2C: The B2C hyperlocal delivery firms are the ones that aggregate offline merchants, riders and consumers. They interact directly with consumers who uses the platform. The food-tech platforms such as Foodmandu, Bhojdeal, Pathao Foods and Foodmario can be categorised as B2C hyperlocal deliveries as they aggregate consumers and restaurants. With the prominent market size, the B2C section has seen most of the growth in the overall logistic-tech sector. 

B2B: The B2B hyperlocal provides services directly to businesses or may provide its service to B2C hyperlocal companies. They aggregate only the drivers/riders and connect them with the SMEs and institutional clients. Upaya City Cargo, with its 2-Wheeler riders, is providing such service to SMEs and Businesses. 

On-demand: The on-demand is mostly related to first mile and last-mile deliveries. It sometimes can be overlapped with B2B hyperlocal as on-demand hyperlocal can be ordered by the end customer or by businesses delivering goods to its customer. The companies such as Nepxpress, Puryau, Zapp and Upaya City Cargo provides customized on-demand delivery services. 


Way Forward 

In the last decade, logistic-tech has transformed how the whole world's logistic industry works from trucking to fulfillment and hyperlocal deliveries. It's evident sooner or later the same trends will be followed in Nepal, which is just a matter of time and actions of risk-taking entrepreneurs. It however will not be the same particularly because the Nepali market size and characteristics are different. There are a few trends in logistics-tech that the market may observe in future. First, the market could see the existing players entering the different logistic-tech sectors. For instance, Patho may serve hyperlocal deliveries and at the same time act as the 3PL to the e-commerce companies. Since the market itself is limited, the logistic-tech platform will be encouraged to have a presence in multiple segments such as trucking-tech and hyperlocal. Secondly, the industry may expect someone to enter into the long haul segment of trucking tech making the existing logistics efficient. Lastly, as the e-commerce market grows in all the corners of the country, there could be the emergence of 3PLs that will get outsourcing jobs from the e-commerce players. 


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