With advanced technology and usage of AI tools, the warehousing sector is witnessing a revolution. To support expansion, better transportation networks, large storage facilities, and advanced logistics hubs are essential. Inclusion of technology should be maximised to boost operational efficiency, reliability and safety and crucial issues such as land acquisition, linkage, skilled manpower must be addressed urgently.
Ritika Arora Bhola
It seems with the development of Multimodal Logistics Parks (MMLPs), DFCs, cold storages, and commercial warehouses and fulfilment centres across India, the warehousing sector is poised for a substantial growth in the coming years. The progress being made under the government’s growth initiatives such as National Logistics Policy and PM Gati Shatkti among others, and the budget allocated to develop Grade A Warehouses and MMLPs, has given the much-needed boost to the sector.
Post-COVID, deployment of advanced technologies to track the shipments and provide end-to-end visibility has not only improved the overall operational efficiency but also transformed the sector. Focus has also been laid on developing world-class infrastructure for ensuring the safety and security of products stored in a warehouse, especially chemicals, perishables, automobiles, pharmaceuticals and dangerous goods.
According to IBEF reports, the warehousing, industrial, and logistics sectors are projected to be crucial for attaining India’s vision of being a US$5 trillion economy by FY25. The warehouse and logistics industry has benefited the most because of the growing shift from discretionary to essential internet buying during COVID, the e-commerce industry became appealing and attractive.
As per CREDAI and CRE Matrix reports, the industry is projected to surpass 300 million square feet by the fiscal year 2025 from the current 216 million square feet. According to JLL report, the warehousing sector has grown significantly in the past four years. Supply is primarily driven by institutional Grade A warehouses taking the total supply of warehousing in top eight cities to 381 million square feet in Q1 of 2024, projected to reach 595 million square feet by 2027.
The rising demand is driven by 3PL players as most firms find it suitable to outsource non-core logistic activities; 3PL is a significant 43 per cent in Q1 2024, outpacing all other sectors in warehousing demand. Manufacturing leases have taken centre stage post-COVID, given the advantage of faster time to operate and pre-approved status for many manufacturing industries. Sectors that have taken advantage of this are auto, FMCG, FMCD, electronics and the like. Manufacturing leasing has seen growth of 65 per cent CAGR since COVID to reach 14 million square feet in 2023 and projected to touch 16 million square feet by 2024-end. e-commerce growth is tapering down rapidly from 3 per cent in 2023 to 1 per cent in Q1 of 2024, as smaller companies are outsourcing logistics to 3PL players and optimising white spaces in existing warehousing has been their focus, adds JLL.
Need for highly skilled workforce important
Anamika Jain, CEO, AAJ Enterprises
Surge of startups is one of the key growth drivers in India. Global companies manufacturing in India demand resilient supply chains to support them. The rising middle class has also contributed, leading to penetration of supply chains into tier II and III cities thereby expanding the reach and efficiency of warehousing sector. The government’s focus on the development of supply chain plays a role in propelling the sector forward. To boost warehousing competitiveness, need for trained workforce is essential. Investing in indigenous tech and robotics manufacturing is necessary to lower costs and improve reliability.”
Firms adapting technology leading e-commerce boost
Arif A Siddiqui, VP, WAI & Founder & CEO, Coign Consulting
GST implementation has led to increased efficiency. Many businesses have started to consolidate their warehouses to leverage cost of operations and space. Construction of highways, ports, and airports and the like has resulted in reduced transit time, it has increased demand for warehousing facilities near transportation hubs. The other factor is the changing consumer preferences. Firms are turning to technology to improve their warehousing operations. This has led to a boom in e-commerce. The foreign investors are investing in the warehousing industry, attracted by the country’s growing economy and favourable government policies.”
Inefficient layout can often result in delays, risks
Ajit Jangle, Managing Director, FM Logistic India
One of the most prevalent issues is a lack of warehouse space. With the growing demand for storage, warehouses must optimise their space and manage their inventory effectively. An inefficient warehouse layout can cause operational inefficiencies, resulting in delay and a risk of errors. Organisations should plan training programmes, while working on reducing attrition. Accessing data from multiple systems consumes time and does not give real-time information and causes inefficiencies. Furthermore, warehouse management
platform should provide real-time inventory visibility to stock locations and order statuses.”
Automation minimises workplace accidents
Jinali Gandhi, Business Head, Global Growth & Expansion, Gandhi Automations
We recognise the transformative impact of automation on the warehousing sector. Growth drivers include increase in e-commerce and just-in-time inventory systems, demanding faster, efficient loading and unloading processes. Our advanced entrance automation and loading bay tools, such as high-speed doors and dock levellers, enhance operational efficiency. Automation improves not only speed, accuracy, but also minimises workplace mishaps thereby ensuring a safer environment. Inefficient loading bay ops and manual processes slow down the supply chain. Integration of these technologies with workforce training is a must in order to overcome challenges.”
AI, IoT make supply chain operations efficient
Rajesh Jaggi, Vice Chairman, Real Estate, The Everstone Group
The warehousing sector is experiencing a transformative phase, driven by a surge in third party logistics, and retail activities. This has risen the demand for warehouse space. Firms such as IndoSpace, which is at the forefront of this change, has built modern, large warehousing facilities that meet global standards. The forewign direct investment (FDI) in logistics has attracted investments, fostering the development of warehousing solutions. Integrating cutting-edge technologies such as IoT and AI revolutionises supply chain management, making operations efficient. Adopting smart park operations through solar panels, EVs, digitalisation, and circular economy practices enhances operational efficiency.”
Manufacturing leases may touch 16 mn sq. ft.
Chandranath Dey, India Head, Operations, Business Development, Industrial Consulting & Integrated Logistics, India, JLL
The rising demand is driven by 3PL players as most firms find it suitable to outsource non-core/logistic activities. 3PL share is at a 43 per cent in Q1 of 2024, outpacing others in warehousing demand. Manufacturing leases are at centre stage post COVID. Sectors that took advantage of this include auto, FMCG/FMCD, and electronics. Manufacturing leasing witnessed growth of 65 per cent CAGR since COVID; it is projected to touch 16 million square feet by this year-end. Land acquisitions are hitting the sector hard as getting the right parcel at right location is tough. e-commerce growth is tapering down from 3 per cent to 1 per cent in first quarter of this year.”
Development of road infrastructure crucial
Sanjay Sharma, COO, Coldman Logistics
Emergence of e-commerce and q-commerce has improved industrial expansion and consumer demand thereby creating a surge in the need for efficient storage and distribution facilities. The development of large industrial parks coupled with enhanced road infrastructure has provided a conducive environment for the expansion of the warehousing sector. The increased investor interest has led to establishment of high-quality warehouse parks thereby driving growth. The sector faces challenges coming from the market’s cost sensitivity and compromised quality compliances. This often poses difficulties in achieving satisfactory Return on investments (ROIs) within the logistics sector.”
Warehouses must address sustainability concerns
Mohit Kapoor, Chair, Projects & Events Committee, WAI
Rising real estate costs, energy costs, and technology investments can put pressure on warehousing operations. Environmental concerns are becoming increasingly important, and warehouses need
to address sustainability issues such as energy consumption and waste management. Warehouses are vulnerable to theft, damage, among other risks, so ensuring security measures and risk management practices is significant. Addressing these points through technology adoption, workforce training, infrastructure improvements, and planning and the like can help increase warehousing competitiveness.”
Urbanisation has lessened space for warehouses
Sandeep Chadha, Founder & CEO, Warehouster
The ‘China plus 1’ strategy, the impetus and growth of EVs, and the government’s Production-Linked Incentive (PLI) schemes have given a boost to manufacturing, which has driven growth in the warehousing sector. The industry faces significant challenges despite its growth. A major obstacle is the availability of highly skilled labour, leading to inefficiencies and delays in operations. Growing storage costs, driven by high demand, necessitate optimised space through multi-storey facilities and better layouts. Further, urbanisation has reduced the availability of affordable land for warehousing development.”
Regulatory bottlenecks can slow down operations
Amrutesh Reddy, Director, NDR InvIT Managers
Ensuring standardisation and developing quality infrastructure are critical for maintaining consistent and efficient operations across the industry. Standardisation streamlines operations and improves interoperability across various warehousing systems, while technologies such as automation, Artificial Intelligence and IoT enhance efficiency, accuracy, and productivity. Quality infra, characterised by modern facilities, is essential for efficient handling of diverse and high-volume inventories. Regulatory bottlenecks such as complex compliance can slow down operations and increase costs.”
Warehouse must be close to consumption area
Sunil Nair, Chief Executive Officer, Snowman Logistics
While discussing warehousing, several factors need attention. The first is the location of the warehouse. It must be strategically situated based on the industry’s specific products and services. For example, if it is an extension of a manufacturing site, it should be close to the manufacturing area. If it serves as a last-mile delivery (LMD) set up, proximity to the consumption area is crucial. There is no one-size-fits-all location for a warehouse. Understanding the growth trajectory of the industry and staying abreast of global trends in storage and related systems is essential.”
Use of large spaces for expansion to be explored
Sandeep Kulkarni, Chief Operating Officer Allcargo Gati Limited
Operational delays and increased costs are caused by labour shortages, which persistently challenge the company’s ability to run effectively. In urban areas, space constraints particularly make it difficult to expand thereby pushing the rental prices up, therefore, efficient use of space and construction of new premises also needs to be explored. High initial expenses alongside an extreme lack of expertise slows down the adoption of sophisticated technologies. Furthermore, navigational complexties exist because of regulatory and environmental compliance bottlenecks.”
