Allcargo Logistics is investing over Rs 1,000 crore to set up four logistics parks at key locations over the next two years seeing larger opportunities as the economy moves on at a faster clip, said its chairman. Allcargo, which is the global leader in LCL consolidation, will utilise its land banks acquired in the past few years in anticipation of GST implementation as well as growth expected in the domestic logistic business.
The city-based company, which is celebrating its silver jubilee and is present in over 160 countries, nets over 80 per cent of revenue from overseas, and also plans to launch an airfreight logistics service shortly, founder-chairman Shashi Kiran Shetty told PTI in a recent interview.
Shetty is bullish about the Rs 2,000-crore airfreight segment and to better focus on the new venture, the group, which the largest private sector integrated logistics operator in the country, will be floating a new company to steer this business.
According to him, the domestic air cargo business is a larger pie with around Rs 10,000 crore in annual revenue. The FY18 Economic Survey has forecast the domestic logistics industry at around USD 160 billion and is likely to touch USD 215 billion by 2020 driven by GST, clipping at a CAGR of 10.5 per cent.
The proposed logistics parks will come up at Jhajjar in Haryana on an 180-acre land and will be ready by next March with a built-up area of three million square feet; 2.5 million square feet in Bengaluru; 1.5 million square feet at JNPT and 0.5 million square feet in Hyderabad, Shetty said.
“We will be pumping in over Rs 1,000 crore over phases as we sign up long-term contracts with our customers,” he said. Allcargo has formed multiple SPVs to set up these parks. Currently the company has about five million square feet of warehousing space at Nhava Sheva (JNPT), Mundra, Dadri (NCR) and Chennai. It already owns around 450 acres in these locations apart from 70 acres in Nagpur. By 2020, the company hopes to have a logistics park capacity of 15 million sqft, he added.
The first phase should be ready in the next two years, and around 30 per cent of the built-up space is likely to be usedfor the requirements of its own captive customers who are manufacturing companies and retailers, he adds. Beginning operations in January 1994, Allcargo is now the largest private sector player and the largest Indian multinational in the segment with close to USD 1 billion in topline. A string of overseas acquisitions ensured that it has been on a steady sail with the Belgium-based ECU-Line in 2006 being the biggest and then 11 more since then. It has focussed on LCL (less than container load) consolidation services and was also the first logistics company to go public in the country.
In 2016, it consolidated the non-vessel operating common carrier (NVOCC) business operations under the brand name of ECU Worldwide. Shetty believes now is the time for the company to establish as a strong domestic logistics player in addition to being the market leader in LCL business globally with big plans to grow the FCL and project transportation business in containers.
Allcargo today provides services to exporters and importers, e-commerce logistics, contract logistics for companies as well as coastal shipping with it’s two subsidiaries–ECU Worldwide, and Avvashya CCI.