Reducing Freight Costs For MSME Sector

The Covid-19 pandemic wreaked havoc on global supply chains. Tech-enabled logistics gained traction during these times. However, for the MSME sector where the adoption of tech-enabled logistics planning has been relatively slower. The rise in logistics costs during the pandemic period worsened the situation for them. For example, the increase in truck EMIs and service maintenance pushed to cost of road freight.

Abhijeet Sinha, National Program Director EODB and National Highways for EV dwell upon the challenge of high freight costs for the MSME sector and the urgent need to reduce them to put these companies on the global map. “For the entire MSME sector, it’s very important to reduce the cost of freight be it through land, water or rail. Otherwise, when we are competing with an international product particularly from our neighbour country like China; It’s not only the cost of the product which we are going to sell but also the cost which is involved in, carrying that production from its origin point to the shipment point,” says Sinha.

Sinha believes that if steps are not taken to reduce these costs, then we’ll never be able to develop a robust supply chain network and compete with export-oriented countries. He also stresses the need for digitalisation in the whole process to reduce the cost.

“All the necessary information related to the package, consignment or maybe a container is can be into a form of digital tax with the provision of digital signature and right from the place where the seller has dispatched and the buyer is expecting, at all checkpoints where you have to pay central excise, custom or any type of tool or clearance; the same reference number and ID number or the package can be accessed and can be paid online. It reduces the role of agency, a broking agency which has a different type of arrangement,” says Sinha.

The globe, according to Sinha, is a market for these industries and reducing the freight costs should be the next target for us to put the Indian product in the global market and eCommerce.

Sinha also highlighted the importance of rating and certification of services by the SME sector as according to him some great innovations and solutions by this sector are not always coming in the form of a material that has to be dispatched or shipped. Rather they are mostly coming as services and hence their ratings and certification is of utmost importance.

“The rating system for the services should be consumer and feedback oriented. Trust has been a large issue for these services and we have to overcome this challenge of developing a coherent mechanism of their rating and then shift our focus on the implementation of the service contract,” adds Sinha.

The speaker was present at the Emerging Business Summit & Awards by BW SME World.