FUTURE OF INDIAN WAREHOUSING SECTOR

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FUTURE OF INDIAN WAREHOUSING SECTOR


Warehousing could be among the first real estate segments, to recover from the shock of the Coronavirus pandemic. The factors which are likely to boost the demand for warehousing in medium term:

  • Increasing demand for the Third-party logistics
  • Multifold increase in ecommerce creating large demand for warehousing everywhere including tier II and tier III cities
  • FMCG and pharmaceuticals sectors are expected to drive the demand for warehousing
  • Warehousing segment stands to gain as several countries consider moving their manufacturing facilities out of China

According to India Warehousing Market Report – 2020, Knight Frank India had estimated that existing land committed to warehousing across the top eight Indian cities had the potential to add 193 million sq ft of new warehousing supply. Despite the economic slowdown and the pandemic, the warehousing market has remained largely resilient, recording growth of 44% CAGR in the last three years.  Indian warehousing market is projected to grow to $ 19.5 billion on account of the ongoing modernization and advancements in the warehouses.  Additionally, warehouses have now started offering several value-added services such as packaging, sorting, processing, among others. This in turn is expected to fuel the market growth in future. Furthermore, supportive government policies such as establishment of logistic parks and free trade warehouse zones is expected to spur the market growth through 2025.

Besides, technological advancements such as advent of AI, IoT, 3D Printing, among others, in the warehousing industry is further expected to create lucrative opportunities over the next few years.

Refrigerated warehousing:

According to government estimate approximately 5400 cold storage facilities are available as of now in our country. The total capacity is about 24 million tones which is just 11% of what is produced. As such the refrigerated segment is also expected to witness significant growth owing to the rising demand for such warehouses for storing perishable food items and ensuring food security & safety.  Implementation of new agriculture reforms will also boost the demand for cold storage facilities.

Around 60% of the organized warehousing capacity in India is concentrated in the top six cities of Ahmedabad, Kolkata, Bangalore, Chennai, Mumbai, and National Capital Region (NCR).  The warehousing industry in India is highly fragmented with several unorganized players operating in the market. Organized players in the industry account for only 10% of the total market, whereas around 90% of the warehousing space in the country is controlled by unorganized players who manage small-sized warehouses with less/no mechanization.  Technological advancement in warehousing has been increasing rapidly day by day as people are preferring now modern warehousing which are providing value added services.  This shift in customer’s preference will increase the share of organized sector immensely, opening up vast scope for the segment.

However, lack of infrastructure is one of the biggest hurdles in the warehousing market in India. India has the lowest warehouse capacity with modern facilities when compared to the rest of the world.  Additionally, poor road conditions, bad connectivity, inability to handle high traffic density and insufficient air and sea port capacities contribute to the increased cost per transaction in the country's logistics sector.

Major players operating in the warehousing market:

  • Container Corporation of India Ltd.
  • Gati Ltd.
  • Mahindra Logistics Ltd.
  • Transport Corporation of India Ltd.
-Rajendra Jhanwar

 

 

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