In a country that perpetually stays in the news for its insecurity, the logistics sector depicts a stark contrast and offers several lucrative opportunities.
Despite a heavy presence of established players, new entrants are upbeat about exploiting the country’s $33 billion transport, storage and communication market.
Far from saturation, the market offers a huge room for growth to every player and may even attract more investors, says Moonis Hashmi, Director Business Development and Systems at Connect Logistics (CL) - a subsidiary of Sanaulla Group of Companies.
A relatively small player, Connect Logistics is upbeat about growth opportunities in the country’s logistics sector, which doesn’t have many companies that can provide modern or professional warehousing facilities - services that, according to Hashmi, have a very high demand in the market.
Hashmi’s optimism seems to be driven by exponential growth in the company’s business during the last one and a half years.
CL has more than tripled its turnover to Rs20 million a month at the end of fiscal year 2014-15 compared to Rs6 million a month as of December 2013. This (more than 300% increase) is a staggering growth when compared with the sector’s overall performance.
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Road transport and storage grew 3.75% and 3.24% respectively in FY15, according to the latest Economic Survey of Pakistan - transport, storage and communications is a sub-sector of the services sector and accounts for 13.4% of the country’s $247 billion GDP as of FY15.
The public sector’s failure to develop efficient logistics infrastructure - freight trains, modern warehousing and port facilities for example - left the goods manufacturer with the expensive alternative of trucks. However, the increased participation by the private sector seems to be changing the equation.
Professional warehousing reduces delivery timeline, ensures inventory accuracy and helps in batch management - a main requirement of MNCs - and inventory damage control, according to Hashmi.
However, despite all its benefits, not everyone can join the logistics bandwagon, Hashmi says, adding it is a capital-intensive business and requires some background in the relevant field.
In fact, the very background helps Hashmi and his partner Jaffar Zaidi manage the business they joined after their supply chain consultancy firm J&M was acquired by Sanaulla Group in 2013 - making them partners in CL.
The growth story
When Hashmi and Zaidi joined, the company had two warehouses of 2,000 and 4,000 pallet positions respectively in Karachi’s SITE Area - the pallet position is the unit of measure for a warehouse storage capacity.
They sold old properties and constructed a bigger storage facility of 14,000 pallet positions on the main State Avenue Road - a premier location for logistics business. They also introduced in-house software for warehouse management allowing customers to check their inventory status online.
This modern warehouse gave them the extra capacity to accommodate more stocks while its location made the movement of goods hassle-free and more secured, thus earning them more business.
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CL, which was already storing Unilever’s entire stock of raw and packaging material as well as finished goods, also got the contract for logistics of their stocks and as a result bought a fleet of 35 vehicles that now dispatch goods all over Karachi.
Moving on, the company introduced value-added services - such as pasting stickers and repackaging - within their warehouse, which helped them start a relationship with National Foods, which turned into a bigger contract.
This was followed by another contract from the importer and distributor of Dabur, an Ayurvedic herbal products company based in India.
After initial achievements in Karachi, the company set up a new warehouse in Lahore exclusively for S Abdulla & Company - one of the biggest importers of tiles and sanitary material.
All this growth has come in the presence of established players, such as Agility, DHL, Emirates and e2e, Hashmi said, adding when more local companies move to modern warehousing, the market will grow further.
“Unlike past, local companies have just started outsourcing their logistics and warehousing to third party. So a lot of growth has to come from local players,” Hashmi said.
Published in The Express Tribune, June 23rd, 2015.
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