What to know about freight liquidation in the Bay of Bengal

With warehouses packed, containers full and fuel in short supply, some companies are taking matters into their own hands.

This week, the Bengal Freight Liquidators Association said it will launch a pilot project that will allow freight companies to liquidate excess stock in warehouses, a service that has become increasingly popular in the last couple of years.

The association, which represents more than 20 freight companies in the region, said it has seen a 40 percent increase in liquidation requests in the past six months.

The service allows companies to take inventory at warehouses where there are vacancies and to sell off excess stock to buyers looking to buy more of the same, which could be worth hundreds of thousands of rupees ($1,100). 

“The demand for this service is growing due to the shortage of liquidity in the market and also due to a significant rise in the demand for other services like e-commerce,” said S.M. Sharma, president of the Bengal freight liquidator association. 

“We believe that this service can help increase demand for e-Commerce companies in this market.” 

The service, which is still in its early stages, has been in use in the city for the past three months and is expected to be rolled out across the state over the next three months.

“The pilot is only going to be used in a limited amount of warehouses,” said Ashish, a spokesman for the association.

The demand for the service is also growing due the shortage in liquidity in this sector, said Anant, a spokesperson for the Bengal government.

The industry, which employs nearly 3,000 people in the state, is also struggling with an increase in inventory turnover and a sharp drop in demand.

The shortage has led to a rise in inflation, especially among the younger segment of the population, who are being hit hard by rising prices.

The increase in turnover has been particularly high for retailers, who said that the demand was growing in line with the surge in the price of goods. 

But the demand is not being matched by the availability of warehouse space.

“A lot of warehouses are overcrowded,” said Ramachandra, a sales executive at a Mumbai-based e-tailers company.

“If we had an option to liquidated stock we would do so, but it is very difficult to get liquidity.” 

 The association is planning to offer a service in Bengal, India’s largest state, as well as in the rest of India.

It will also start offering a pilot in Mumbai and the rest, starting next week. 

A pilot will allow companies to sell excess stock, said Sharma, and also to offer loans to buyers, to help reduce inventory turnover. 

For now, the association is not expecting any shortage of freight. 

It said it expects to take a 25 percent stake in the service and that it will sell out inventory to a buyer in case of an emergency.