Global logistics firms bet on warehouse leasing for growth

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New Delhi, 25 Sep: Global logistics and supply chain majors like Kuehne+Nagel, Panalpina, and APL have flagged warehouse leasing services as one of their key growth areas in India. “The warehousing vertical will see maximum growth in the next two to three years. We have 17 warehouses in the country now. We plan to double the number by the end of next year,” said Volkmar Mueller, managing director, Kuehne+Nagel, which provides sea freight, airfreight and warehousing services.

The Switzerland-based Panalpina, which is involved in movement of specialised cargo like rigs and other mega equipments, is also bullish on warehouse leasing. The company expects to double its revenues in India to Rs 800 crore within three years.

“We are looking at expanding our base in the smaller cities like Ahmedabad and Nagpur. We will provide all the services including supply chain management, cargo movement and warehousing in these cities. We have 12 warehouses in the country now, which we plan to take up to 20 by the end of next year,” said Kurt E Breinlinger, managing director, (South Asia), Panalpina.

Kuehne+Nagel and Panalpina, which are asset-light companies do not invest in physical infrastructure like construction of warehouses, as they provide only the services in co-ordination with their partners. They take the facilities like warehouses and trucks among others on lease and use the facilities to house their goods or rent them out. Because of the small capital base of trucks and warehouse operators, the capacity utilisation level in India is lower than international benchmarks. The warehouse leasing business is part of the domestic logistics and supply chain business whose growth rate has been pegged at around 20 per cent annually. Total revenues of the logistics industry could touch $385 billion by 2015, according to a Cushman and Wakefield report.

Kuehne+Nagel, which has a presence across 21 locations in the country, also has plans to foray into aerospace logistics in the country. In 2007-08, it added 11 locations, including Amritsar, Bhadoi and Nagpur.

“New verticals are coming up. Airports are being built at huge investments. Building an airport requires a large-scale logistical support. Aerospace logistics has a vast potential and we are planning to tap this new vertical,” said Mueller.