Syed Ershad Ahmed, Expert on Supply Chain Management and Logistics Industry

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The Missing link

How do you think a Logistics company can provide services to their customers?
If you have a business, which requires managing the supply chain of raw materials or finished products, and wants to improve the supply chain processes, you should consider working with a Third-Party Logistics (3PL) service provider. These companies work as an all-in-one solution for every aspect of the supply chain, from sourcing to assembling, to picking and packing, to warehousing, to distribution, to shipping, and to delivering goods to end customers. By working with a flexible 3PL provider and having strong network coverage around the world, you will be able to better manage all kinds of logistics regardless of size, weight, distance, or speed. While a 3PL provider handles domestic or international logistics, you can focus more on building and growing your core business, and communicating with your customers.

If you need help managing the shipment of your products and benefit from saved time, money, and work, you should consider working with a 3PL provider. By using a 3PL provider, you will be benefited from volume discounts on shipping, as well as shared warehousing facilities. A 3PL provider can consolidate and move more products in a safer, more efficient way, to reduce damage and recovery time. Many 3PL providers also use the latest technology, so you can track, monitor, report, and secure the movement of your products.

Owning and managing a warehouse on your own means your management strategy needs to be resourceful and highly organized. Since the fulfillment process also includes picking, packing, kitting, and assembly, it may be too much to handle on your own considering involvement of huge additional expense. Instead of using your own space and bringing in products to prepare for shipments, you can work with a 3PL provider. These companies have all the resources and personnel necessary to manage every aspect of the fulfillment process and working with them saves you from managing the costs of your own warehouse. They can handle the storage and logistics using their connections and resources.

Working with a 3PL provider allows you to have your logistics strategy implemented by professionals and makes sure that your shipping strategy and planning is properly handled. Reputable 3PL providers can help you boost your shipping strategy so that you can better serve your customers, save money in the long run and make sure your shipping process works safer, faster, and more efficiently.

Your 3PL partner has the resources and latest technology necessary to adjust and improve each link in the supply chain. They will meet your needs, using the fastest, most efficient, and cost-effective methods. They are able to restructure the supply chain using their resources, as well as use technology to make sure your goods are moving in and out of your warehouse when needed. They can analyze and monitor practices to eliminate inefficiencies early enough to prevent delays and problems.
Managing the operations of your business may be too great of a task to handle alone, so outsourcing to a reputable and successful team will save you the trouble so you can focus on other important areas of your business. If you want to benefit from maximized profits, reduced wait times, and top-notch customer service, you require a reputed and reliable 3PL service provider to manage your supply chain.

How would you say the logistics sector has changed? What are the challenges that Bangladesh needs to overcome?
The SCM and Logistics industry has undergone enormous changes and seen unprecedented growth over the last few decades. With growth has come challenges and most SCM and Logistics companies have adapted accordingly. For Bangladesh, I see a promising future with a growing trade and an increased flow of Foreign Direct Investment (FDI). As per the data, export in FY 2018 rose by $6.90 billion to $36.67 billion from $29.77 billion in FY 2014, and import also rose during the same time by $17.89 billion to $54.46 billion. This can be attributed to the greater range of goods being exported from Bangladesh and the increased efforts and strategic initiatives by the government to boost export.
But further work needs to be done to facilitate this trade. The Customs Act of 1969, is extremely backdated and needs to be updated. We often hear leaders of logistics firms requesting the government to update it time and again as this has reduced our capacity to move goods effectively. But the challenges can be broken into three major parts: infrastructural, procedural and management problems.

Chittagong Port has been the main port for containerized goods and operates at maximum capacity. What are your thoughts on the new terminals being developed? Will they ease the pressure on Chittagong Port?
The Chittagong port handles 90% of the total containerized good in the country. In the past 5 years, the container flow has increased at a rate of 13-14%. There will be little increase in the containers per vessel so we can expect a similar growth in the number of container ships arriving. However, the number of container vessels docking in Chittagong port in the next five years will more than double. And with the current infrastructure, it would be impossible to accommodate the increased flow of vessels. Fortunately, we can develop the growth of other ports to manage the flow of traffic. Patenga Container Terminal and Bay Terminal will definitely take the pressure off Chittagong port.

Patenga Container Terminal is a 600-meter long terminal which will be completed by the end of 2019. The terminal will be equipped with 4 berths, 3 of which will be used for containers and the remaining one has been named the Dolphin Oil Jetty. Bay Terminal is expected to be three times bigger than existing Chittagong port and would allow 12-meter drafts and any long-range ship can easily be switched. The new terminal will allow 35 ships with up to 5000 Twenty-foot Equivalent Units (TEU) containers. Mongla Port can also be a busy port as the government has already taken steps to speed up its handling capacity and necessary infrastructural development are taking place including a customs office in the port premises to ease the documentation process within a short span of time hopefully.

You have mentioned that our infrastructural system is rudimentary. Can you elaborate on this further?
Infrastructural underdevelopment has been a problem for us in the SCM and Logistics industries. The Hazrat Shahjalal Airport in Dhaka has been operating at maximum capacity for several years now even with increased traffic. Around 90% of the import and export cargo is transported through the airport. Lack of adequate facilities, insufficient manpower and improper handling of cargo translate as huge delays and financial loss. Releasing importing goods is a major problem as there is insufficient space for storing them and they face the danger of being stolen and ruined by the elements. Scanning goods in the cargo area are really slow without the help of a gantry scanner. This means greater cost and more time wasted in loading the containers after scanning the cargo.
Chittagong-Dhaka highway is the lifeblood for the movement of containers in Bangladesh. The flow of containers is only expected to rise for this highway. We estimate total traffic flow will grow by 60% in 5 years and by 155% in 10 years. At present, the average speed is 20 km/hr for a 15-hour trip or 25 km/hour for 12-hour trip. This is absurdly low for the most important highway in the country. A reasonable target to achieve would be 50 km/hr. The solution would be to assign more traffic police, and installation of traffic lights to the highway will also help move the flow of traffic more smoothly. It will reduce the incidence of trucks and vehicles parked on the side of the highway which causes accidents and traffic which are avoidable. Banning slow moving vehicles such as CNG, pedaled rickshaws and electrical rickshaw would further help the situation.

Bangladesh also needs to invest heavily in rail infrastructure. It is high time to focus on developing railway infrastructure and connectivity to overcome all existing constraints so as to make rail a reliable and profitable transport means for the movement of cargo. Bhairab is one of the biggest intersections in Kishoreganj district, which slows down train movement towards Chittagong and Sylhet routes. If the railway takes a parallel line, the problem might be solved soon. It also needs to run high-speed trains between Dhaka and Chittagong with extended service to Sylhet, Rajshahi and Payra seaport.

How do you think the managerial and procedural issues affect the Logistics industry in Bangladesh?
There are several hindrances in transporting cargoes via river routes due to inadequate vessels, loading facilities and so on. As a result, road and rail transport are still the major routes. But road infrastructure, traffic system, and the mindset to obey traffic rules are yet to be developed. For rail routes, the container depot is located in the heart of Dhaka city at Kamlapur which takes a long time to load and unload as it has a limited capacity. Several Logistics firms have voiced this frustration and requested that the location is changed to Gazipur or Savar. The shifting of major industrial units to the outskirts of Dhaka means the factories will now have faster access to raw materials and the shipment of goods will be expedited.

Streamlining of government procedures will also help the companies immensely. Collaboration between different agencies and government ministries who are involved in developing infrastructure and implementing policies is crucial for development and sustainable growth of the country. The inclusion of the private sector and stakeholder will help guarantee a positive outcome.

A Public-Private Partnership (PPP) would be the key to raising investment for improving the infrastructure system and overhauling the procedural problems. PPP for airports and river ports do not require any outlay from the government other than providing the land for the project and connecting the infrastructure. Furthermore, allowing private operators to work alongside state-owned companies means greater competition between the companies and thus more dissemination of technology and innovation.

We need to motor through the managerial issues too. The multiple red-tapes that the companies have to work through adds to the lead time while also increasing the costs. For air cargo containers have to be stuffed after scanning and there’s insufficient equipment for weighing the packages. To remove this problem, the government can introduce bonded Container Freight Station (CFS) facilities where export air cargo can go through security checks and move into the airport under customs control when it is called for loading. Another way to ease cargo pressure is to allow logistics service providers to keep and handle bonded cargo in their own warehouse for consolidation before delivering to the airport.

What does the future hold then for the SCM industry in Bangladesh?
I am highly optimistic about the SCM and Logistics Industry in Bangladesh and believe that with the current pace of growth Bangladesh is heading towards an efficient SCM and logistics system which will only add to our benefit. A highly efficient connectivity system is needed for the growth of regional trade as well. Connectivity is essential for any business to thrive. This is why if we aim for more regional or global trade, we must ensure a highly efficient connectivity system aided by skilled manpower and adequate technological support together as a backbone. Only then we can ensure a world-class integrated supply chain for the smooth movement of goods of people who have entrusted their faith in us.

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