A strong logistics system is fundamental for Nepal's economic transformation, industrial growth, and export diversification
Nepal's logistics ecosystem stands at a defining point, shaped by its landlocked geography, high dependency on transit through neighbouring countries, and limited domestic infrastructure. Despite being strategically positioned between India and China, Nepal has not yet translated this advantage into trade competitiveness. Instead, procedural inefficiencies, fragmented supply chains, and policy gaps continue to raise costs and reduce reliability.
A strong logistics system is fundamental for Nepal's economic transformation, industrial growth, and export diversification. Yet the current setup remains expensive, unpredictable, and disconnected from global supply chains.
More than 95 per cent of Nepal's trade depends on Indian ports such as Kolkata, Haldia, and Visakhapatnam. The existing transit process requires multiple documents, inspections, and handovers, which increase dwell time and cost. Cargo movements often face delays at Indian ports, congestion at border points, and slow customs procedures.
Once shipments enter Indian territory, Nepali traders have limited control, as cargo remains under the custody of Indian clearing and shipping agents. Without a time-bound delivery mechanism, importers and exporters struggle to guarantee lead times or calculate accurate landed costs. For time-sensitive or perishable goods, this unpredictability becomes a significant barrier.
Trade routes through China offer potential but remain constrained by seasonal closures, infrastructure limitations, and complex cross-border procedures. Weak supply chain linkages and frequent disruptions have prevented the northern corridor from becoming a reliable alternative.
Nepal's logistics industry is fragmented and dominated by small-scale operators. Most freight forwarders specialise in either air cargo or surface/sea-linked transport chains. Few provide integrated multimodal services that link production centres to global markets.
Due to limited capital, many operators lack modern IT systems, compliant warehouses, fleet modernisation, and international accreditation. Coordination among transporters, forwarders, warehouse operators, and customs brokers remains weak, restricting the country's ability to offer efficient end-to-end logistics solutions. As regional supply chains become more technology-driven and interconnected, Nepal risks falling further behind.
Freight forwarders and transport companies in Nepal have limited negotiation capacity with regional ports, shipping lines, and logistics alliances. Domestically, structured mechanisms for policy dialogue and advocacy remain weak. Capacity gaps-ranging from human resources to technology adoption-limit the sector's ability to meet modern logistics standards.
A stronger institutional presence is essential to enhance Nepal's position in regional logistics networks and ensure the private sector is adequately represented in policymaking.
Nepal's National Logistics Policy (2019) was a major milestone, but implementation remains slow. Critical components-such as a multimodal transport law, warehouse regulation, and logistics performance monitoring-are still pending. Overlapping responsibilities among government agencies further delay progress.
The absence of a dedicated logistics authority weakens coordination and slows down reforms. Nepal needs a unified legal and institutional framework to align logistics, customs, and transport policies, ensuring efficiency and accountability.
Logistics infrastructure remains inadequate and poorly aligned with the needs of the industrial and export sectors. Key infrastructure gaps include: Warehousing: shortage of modern, temperature-controlled, and compliant storage facilities; distribution networks: weak linkages between production clusters and consumption centers; road transport: poor road quality, unsuitable vehicle types, and limited multimodal integration; digital systems: low adoption of tracking tools, automated warehousing, and cargo management systems.
A national Industrial and Logistics Master Plan is urgently needed to align dry ports, industrial zones, and transport corridors into a cohesive system that supports domestic and cross-border trade.
Nepal's trucking sector, still influenced by syndicates and cartels, remains one of the biggest barriers to logistics efficiency. Freight rates are often rigid and non-competitive, adding unnecessary cost to supply chains. The fleet is outdated, fuel-inefficient, and poorly maintained. Training in cargo safety, scheduling, and digital operations is minimal.
Reforms must focus on open competition, digital freight-matching platforms, incentives for vehicle modernisation, and stronger enforcement of safety and service standards.
Transforming Nepal's logistics ecosystem requires coordinated action across policy, infrastructure, and operations. Adopt a transshipment model for international air cargo and selected trade corridors to reduce delays and strengthen Nepal's control over cargo movement; develop an Industrial and Logistics Master Plan that integrates industrial zones, dry ports, and distribution hubs; operationalise logistics-related laws, including a Multimodal Transport Act, Warehouse Act, and Logistics Act; promote digitalisation and capacity building among freight forwarders and transport operators; strengthen public–private dialogue through a National Logistics Coordination Council; improve infrastructure by encouraging private investment in warehouses, cold chains, and modern trucking fleets; enhance regional connectivity with India and China through digital documentation, transshipment facilities, and partnerships with accredited service providers; expand risk-based customs systems and improve cross-border data sharing; incorporate environmental and social safeguards to ensure sustainability, community benefits, and gender inclusion.
Logistics is the backbone of Nepal's trade competitiveness and industrial development. By modernising infrastructure, strengthening institutions, and improving policy coherence, Nepal can reduce trade costs, boost export reliability, attract investment, and position itself as a vital connector between South and East Asia.
Sharma is Secretary General, Nepal-India Chamber of Commerce & Industry (NICCI)
