ukaid logo

Groundbreaking Digital Portal Transforming the Logistics Industry in Nepal: The Case of Upaya City-Cargo

Nepal is headed towards a digital disruption along the lines of post-Jio scenario in India and the dot com boom in the United States. Internet penetration is on the rise and the use of e-commerce is growing at an impressive rate. Promising startups are creating a mark in ridesharing, payments processing, food delivery, and e-commerce space. The hugely promising potential for a ‘Digital Nepal,’ a vision shared by the Government of Nepal too, was devoid of a critical pillar of the e-commerce ecosystem: tech enabled logistics providers.

Until 2019, market inefficiencies plagued the logistics sector. A significant information gap existed between the vehicle owners (who were working with large fixed costs particularly, large loan payments, and relying on their in-network client for a pay-per-use trip basis) and the customers who were unable to find reliable, secured, and professional logistics service for their middle-mile and last-mile delivery. For drivers/vehicle owners — mostly migrants to Kathmandu Valley in search of opportunities — this meant an everyday struggle to find regular trips and secure a steady flow of income. It forced many to even migrate to the Gulf countries despite awareness of the ‘risks’ faced by their fellow migrant Nepalis.

To fill these gaps, in April 2019, Upaya CityCargo, entered the market with a tech-based on-demand, intra-city logistics service. To better understand the vagaries in the market and build a tailored, evidence-based service package, Upaya CityCargo conducted a robust market survey prior to introducing its unique value proposition. The team collected information on the issues and challenges faced by about 300 customers and drivers/vehicle owners. Five key issues and challenges surfaced on the customer side: i) clients had to bargain for price on each trip; ii) unavailability of service when needed; iii) inability to track the delivery of the products; iv) lack of security of products; and v) lack of a transparent billing system. Similarly, on the driver side, there were three main challenges, i.e. i) lack of sufficient trips to make a decent living because of lack of information on customer demand; ii) skill gaps in areas of digital literacy, digital payments and soft skills such as customer relations; and iii) barriers to entry for new entrants.

While internet penetration stands at 83 percent and is growing at a rapid pace and mobile penetration is almost 130 percent, digital literacy stands at 31 percent in Nepal. “Nepal is transforming digitally. Semi-literate and illiterate youth should not be left behind,” explained Suman Rayamajhi, Managing Director and founder of Upaya CityCargo. Digital literacy is necessary for driver-partners, who will rely on a newly designed and streamlined Upaya CityCargo app to take orders, make payments, and execute transfers of goods, etc.

Upaya CityCargo’s system aggregates logistics demand and closes information gaps; when a trip is requested, Drivers nearest to the customers—tracked on a real time basis using geolocation—are assigned the trip to ensure quick turnaround. Training is equally imperative to give drivers the tools and the confidence to better navigate a new way of conducting their jobs and access the unique opportunities presented by digital platforms. Upaya City Cargo revolutionizes this specific segment of the logistics industry with innovations such as instant order matching, GPS vehicle tracking, 24/7 services and driver ratings; fulfilling customers’ delivery needs and at the same time helping drivers optimize their idle time. “People think that using mobile data from the likes of NTC or Ncell to conduct such services costs exorbitant amounts of money. But that is no longer true,” added Rayamajhi.

Upaya City Cargo Joins Hands with UKaid सीप to Expedite and Expand Progress

In 2019, Upaya CityCargo and UKaid सीप began discussions to explore opportunities to strengthen Upaya’s business model, its reach beyond Kathmandu (to underserved geographies and populations), and augment its Sworojgaar (i.e. self employment) program for job seekers in Nepal. In 2020, as COVID-19 accelerated the trend of companies that realigned their product/service supply to adjust to the changed market context, Upaya City Cargo witnessed unexpected, and unprecedented growth. Between March-October 2020 when the first lockdown started to April 2021 when another lockdown to control the second wave of COVID-19, the demand for Upaya City Cargo’s delivery service grew by 200 percent.

After a series of consultations, in early 2021, Upaya City Cargo and UKaid सीप launched its partnership. For UKaid सीप, Upaya City Cargo presented a digitally-powered intervention to spur the growth of e-commerce, address systemic logistics gaps in the supply chains for various sectors like agriculture and manufacturing, build digitally literate workers, and transform self-employment pathways for drivers and other worker groups. Upaya and सीप’s partnership is designed to speed and spread the Sworojgaar program through market-aligned skilling in conjunction with other productivity-boosting and market-creating interventions.

The training that has been developed by Upaya with other local partners is job seeker- and market-centric. It has been tailored to help prepare the participants (i.e. underemployed drivers and new drivers) to successfully join and reap the benefits of the digital economy. Training is delivered via a blended medium—class-room, online, and on-the-job—and features a four-part module covering digital literacy, financial literacy, customer relations, and vehicle maintenance and road safety.

Post-training, self-employment is enabled through an attractive financing package developed in partnership with the Kumari Bank to support the trainee driver partners (those without vehicle ownership) in buying their own vehicles. Returnee migrants and other job seekers who are interested in being self-employed are able to buy pickup delivery vehicles directly from the authorized distributors like Sipradi Trading—distributor for Tata vehicles in Nepal. These vehicle owners then access secure market demands (jobs) through Upaya’s logitech (logistic tech) platform, where the vehicles are enlisted. Upaya’s system aggregates demand for transporting bulk goods and helps ensure that each enlisted vehicle receives enough trips—to enable the driver partner to earn enough to make a living while also servicing the loan taken for the procurement of the vehicles.

Harnessing Strategic Partnerships

सीप and Upaya’s partnership is designed to optimize the value of Upaya’s logitech platform by strengthening critical components of the ecosystem through deeper, meaningful collaborations. “Our model is anchored in technology and collaborations, and not dispersion,'' highlights Rayamajhi. Upaya City Cargo has entered into partnerships with sector leaders to provide access to finance, access to markets, and access to industry led skills development--the three key hurdles to employment generation, especially after the COVID pandemic.
  • Sipradi Trading Pvt. Ltd. to make pick-up vehicles available at discounted rates to drivers registered on the CityCargo app; for new drivers to access Sipradi’s skilling facility in Naikap, Kathmandu, and its well-equipped ‘Skilling on Wheels’ vehicle for delivery of mobile skilling for driver partners at the ‘driver hotspots’ in Butwal, Pokhara, and Kathmandu; registered drivers receive maintenance and servicing discounts at Sipradi’s service centers.
  • Shikhar Insurance Ltd.: for COVID insurance and other insurance programs for the driver-partners. Also, fleet insurance and customer insurance programs.
  • Kumari Bank: to make concessional financing scheme available for a low EMI base: minimum down payment, lower interest rate, higher financing period.
  • Khalti Digital Wallet: to co-develop training curricula that’s based on tested digital literacy materials. 

Agri-business expansion—Integrating e-logistics and e-skilling to improve market access for farmers

Collaborations are key to enabling sustainable and scalable growth of skilling-based jobs and enterprises. UKaid सीप’s partnership is also helping propel Upaya’s foray into agriculture. In 2019, Upaya made a strategic investment in DVExcellus ("Kheti"), an online marketplace for farm products and provider of end-to-end solutions for farmers and small agri-enterprises. Upaya’s integration with Kheti will connect farmers directly with consumers (eliminating the need for middlemen), bringing farmers into the fold of e-commerce.

Through सीप’s support, Upaya City Cargo is developing and delivering a similar skilling model for farmers (as with driver partners) focused on digital literacy, digital payments, and customer service. We’re also working together to evaluate and refine Kheti’s farm management tool for efficient supply chain management through use of data, by Kheti and farmers both, to better manage farm produce and predict output and harvest quantities. These predictions can enable better connections to B2B customers. At the same time, UKaid सीप’s partnership is supporting integration of agri-logistics platforms such as cooling boxes and load pooling mechanism that can greatly improve the supply chain for perishable agri products and help the farmers avail a fair price.

Impacts: Tackling Job Entry Barriers and Digital Skill Gaps
Through its tech-based online marketplace for intra-city logistics, Upaya City Cargo is connecting a growing number of businesses with driver partners and ensuring transparent, reliable, and hassle-free delivery of goods while also enabling access to skilling-based reliable jobs for job seeking driver-partners. As a logistics service provider, Upaya CityCargo is at the center of the digital ecosystem. It can support and strengthen the stakeholders and system—empowering people to use digital technology to gain access to a much-needed service, engage with each other, and pursue economic opportunities. Over the last three months alone, Upaya has onboarded more than 1,000 customers, including industry clients like Prabhu Digital, DHL, Himalayan Brewery, Vianet, and Subisu and nearly 500 driver-partners. 

Driver partner onboarding process

  • Drivers register on a separate app. After receiving training on digital literacy, soft skills such as customer relations, financial literacy, vehicle maintenance and road safety, and documentations; they are officially onboarded. Their on-the-job training and monitoring and evaluation continues on an on-going basis.
  • When a trip is requested, drivers that are nearest to the customers are assigned the trip to ensure quick turnaround. Drivers are tracked on a real time basis using geolocation.
  • Drivers are brought into the fold of the formal economy by formalizing their revenue streams through VAT collection and income tax payments.
  • Drivers receive health insurance. They have been recently provided with COVID insurance coverage.

Onboarding customers through the CityCargo app

  • Customers use the CityCargo app or call-in to the call center to request trips. Trips are booked using a standard operating procedure. Customers sign-up through a quick onboarding process and then request their trip by filling out the trip details. For long-term contractual clients, a separate customized modality is designed so they do not have to manually request everyday.
  • Instant delivery: with a large pool of drivers scattered across 32 load points within Kathmandu Valley and pairing customers with the driver nearest to them, Upaya CityCargo can guarantee quick and efficient delivery.
  • Cheap and fixed price: prices are system generated and around 20-25% cheaper than the market prices removing the need to bargain for price.
  • Tracking & security: customers can track the whereabouts of their drivers/delivery in real time.
  • VAT bills: Upaya CityCargo provides customers with VAT bills so they can claim their expenses.
  • Load/goods insurance options to customers are currently being explored with insurance partners.

The logistics sector is in the midst of rapid transformation globally, and Nepal is no exception. “E-logistics holds tremendous job creation potential—but it’ll require innovative approaches, collaborations, and progressive partners. At सीप, we’re proud to be supporting Upaya City Cargo in its efforts to seize the benefits of digital and leapfrog technology with a value proposition that works,” shared Baljit Vohra, Team Leader of UKaid सीप.

Upaya’s efforts, through catalytic support from सीप, are already bringing a greater number of drivers into the formal digital economy and making supply chains more efficient and transparent; this support is essential for the growing network of 400 plus e-commerce players as well as for an increasing number of brick and mortar businesses that are moving online for sales post the COVID-19 pandemic.

Efforts to ramp up job creation, more critical now given the losses post-COVID, have been bolstered through Upaya City Cargo’s move outside Kathmandu. The firm now has offices in Pokhara and Butwal to serve firms as well as job seekers in the Lumbini and Gandaki Provinces. Another intervention that is bringing both firm and employment growth is Upaya’s entry into the two-wheeler market segment, which has firmed its ability to rope in biker-partners for small-package deliveries, and cater to the last-mile delivery.

Before the second COVID-19 wave hit Nepal, Upaya City Cargo had a network of 1,500 driver partners, of which the active driver-partners conducted an average of two daily trips. The active and regular driver-partners earn an average of NPR 36,152 per month, which is higher than the industry average. Despite the raging pandemic, Upaya CityCargo has managed to maintain a capacity utilization in upwards of 30 percent despite being limited to delivery of core essential goods only. The surge in Upaya’s popularity, based on the inquiries they have received during the lockdown, suggests likelihood of a dramatic rise once the lockdown is lifted.

In addition to establishing a strong industry-aligned skilling system in ICT with private sector partnerships, job assurance, and access to finance, सीप and Upaya and सीप’s partnership will also facilitate productive use of remittance of returnee migrants—by addressing the three key gaps returnee migrants face related to access to finance, re-skilling/upskilling, and access to markets. Majority of the pipeline of interested buyers at Sipradi Trading are returnee migrants or those looking to return back home and want to secure a viable self-employment pathway for themselves. Last year, despite lockdown for the majority of the year, Sipradi reported its highest sales ever for its small commercial vehicles and pickup categories.

Committed to easing entry barriers for women and People with Disabilities, Upaya has also developed a targeted inclusion framework. Meetings have been held with organizations such as the Blue Diamond Society, National Federation of Disabled – Nepal, Maiti Nepal, and AMKAS Nepal to identify areas of collaboration, with tailored support to attract and create a more inclusive industry.

Pursuit of ‘green actions’, encouraged by सीप, has been an imperative too for the company. Although currently most of the fleets are IC engines, Upaya is planning to onboard electric fleets for greener mobility/ e-mobility. Upaya has already started and tested an arrangement with two electric vehicle companies: Eco Infinity and TheeGo. The team at Upaya is elevating the discourse for green e-mobility promotion in Nepal through continuing engagements with the likes of the International Finance Corporation as well.

Through its partnership with the Kumari Bank, Upaya City Cargo is systematically driving up adoption of digital payment solutions too. In March 2021, Upaya City Cargo launched a QR code payment system for its driver-partners alongside the Bank. This allows drivers to conduct transactions using QR code—to go cashless, and, for many, it marks their first entry into the formal economy. Launched in the presence of key market actors that are promoting Nepal’s transition to a digital economy, such as F1Soft, Sipradi Trading and others, the event called for stronger collaborative actions to accelerate the movement to a digitally literate digital Nepal. Speaking at the event, Amir Rana, Chairman of Kumari Bank and a prominent industrialist in Nepal remarked, “I see a giant in the making,” recognizing the transformative potential of Upaya City Cargo.