In a story for Times of India, Mr.Vineet Agarwal, MD – TCI shared his insights on the current warehousing scenario in India, the growing demand and how the logistics industry is working towards fulfilling it.
Warehousing - Current Scenario
In 2021, India witnessed a 21% y-o-y growth in total stock in Grade A & B warehousing space in top eight Indian cities. Growth in supply of Grade A spaces over the years is due to high demand for spaces with high specifications and introduction of new players in the market. 3PL has remained to be the largest segment based on warehousing space demand over the last 5 years. Space demand due to E Commerce has gained traction as E Commerce penetration has increased manifold, especially during the pandemic; turning warehouses and distribution centers into mega fulfillment centers. Many e-commerce categories such as retail, grocery, pharmacy, and food delivery are expected to grow even further, as people make a behavioral shift from making offline purchases to online ones and moving from “just in time” to “just in case”. The Indian E-commerce Industry is estimated to reach USD 188 Billion by 2025. (Source: JLL Logistics & Industrial)
This rapid growth of E-commerce & support from policymakers for logistics infra development, many global and domestic investors have invested with warehousing developers and operators to expand their reach, regional footprint and diversify portfolio. If we look at the recent statistics, the investment in the logistics and industrial sector for the Asia-Pacific Region was USD 48 Billion in 2022 which was almost a 50% upsurge from the previous year. This investment represented nearly 27% of total real estate investment in the region, reflecting a superior performance when compared globally.
Other growth drivers include, i) the innovations in supply chain due to the increasing prevalence of D2C (direct-to-consumer) landscape, ii) expansion of Omni-channel retail and government’s push for it (by easing FDI policies in India, and launching initiatives like ‘Make in India’ & GST reform), iii) special cold storage models for FMCG and pharmaceuticals, iv) increasing consumer interest in dark store concepts/urban logistics. Major global E-Commerce companies and e-grocery companies are occupying in-city warehouses in Tier 1 cities including NCR Delhi, Pune, Bengaluru, Kolkata etc. which are also the major distribution hubs in their respective regions.
Though the industry has come a long way from having dilapidated buildings called godowns back then to now having well-built state-of-the art modern warehouses; there still are some pitfalls. Rentals costs have gone up, putting pressure on developer’s profitability. Warehousing is not a demarked area in a town plan. This makes most warehouses farther from the point of consumption, hence increasing the delivery cost as well. In addition, having human diversity is a problem because of safety concerns in remote areas where most warehouses are currently located. Another challenge faced by Warehouse Service Providers is the poor demand forecasting.
TCI's Warehousing Service - In brief
TCI has been one of the foremost service providers for warehousing solutions managing 13 million sq ft of space across multiple verticals along the length and breadth of the country. Continued trust of its customers and TCI Yodhas helped the company win the National Logistics Excellence Awards by the Government of India, Ministry of Commerce & Industry under the category of ‘Best Warehouse Service Provider’ & ‘Cold Chain/Refrigerated Service Provider’ in June 2022.
To read the full story, click here:https://timesofindia.indiatimes.com/blogs/voices/significance-of-large-scale-modern-warehousing-to-drive-growth/