Warehousing players must up their ante to serve booming demand, attract investments

The Indian warehousing and logistics sector is expected to attract nearly $10 billion investments over the next 4-5 years.

Warehousing players must up their ante to serve booming demand, attract investments
As large distribution centres proliferate, the demand for 'last-mile' warehouses could increase, with same-day delivery expected to become the new standard for the industrial and logistics sector.
  • Ankur Minda

Warehousing is a critical link in the logistics value chain. The modernisation, technological advancement and process optimisation of the warehousing sector is undoubtedly the key driving force behind the growth of the logistics sector. From nondescript four-walled godowns, the warehousing sector in India has rapidly evolved into technologically-equipped spaces capable of handling modern-day storage requirements. As warehousing is fast becoming an integral part of integrated logistics network due to technological advancement and the reform-led policy measures by the government (like GST, Infrastructure status etc), the warehousing players need to up their
ante to service the growing demand, increase efficiency as well as attract investments.

In fact, there are reasons to be optimistic about the future of warehousing sector in India. As per Knight Frank report, the warehouse space leasing registered a growth of 77% year-on-year during FY2019. A JLL India report says that the total supply of warehousing space is likely to almost double by 2022 with the addition of around 200 million sq. ft. The Indian warehousing and logistics sector is expected to attract nearly $10 billion investments over the next 4-5 years. So, the sector is throwing up immense growth opportunities.

The domestic warehousing and logistics space in India has started attracting a lot of investments from the private equity players and international players. The investment cycle is on an uptick due to the positive developments like GST, E-commerce boom, Improving Infrastructure and freight corridors. The rationalisation of corporate tax rate cut will, on the other hand, in all likelihood positively impact the demand of warehousing space in India. Although one shouldn’t expect immediate results of the corporate tax rate cut as the global economy is currently going through a recessionary phase, the measure has created a prospect of increasing investment in manufacturing in near future which will lead to the growth in the movements of raw materials and finished goods in the country.

Needless to say, warehousing is going to play an important role in channelising those movements. Add to that, ever-increasing network and business of the e-commerce players which is continuously redefining the rule of the warehousing game.

With both the supply and demand side of the warehousing space looking promising, the warehousing players must focus on creating the right value proposition. They must explore ways to introduce more customisation facilities to bring in more value for their customers. The key here is to enhance the throughput efficiency of the warehouse through technology integration and manpower rationalisation.

For instance, as competition is getting intensified day by day among e-commerce players to reduce the buy-to delivery time-span, the warehousing players should show value to such clients by opting for international best practices such as Flow, Accessibility, Space and Throughput (FAST) as well as more efficient warehouse design.

Large automobile players usually prefer customised warehousing space as the focus is more on throughput efficiency, Just in Time system (JIT) and less on storage and to cater to such demand, the design aspect of the warehouse should be looked into seriously.

The warehouses across the globe are fast morphing into high-velocity distribution centres banking on advanced technologies, superior order customisation, reduced lead-time, controlled labour costs, etc. On the technology front, new-age warehouses are leveraging automation big time to facilitate automated retrieval and placement of cargo. However, in India, building a fully automated warehouse requires a huge amount of investment. So, warehouses in India can opt for partial automation to enhance efficiency. Technologies such as Pick to Light, a handheld device which scans products and upload the data in the stock statements can be used in the warehouses to facilitate better stock management. Developing flexible rental arrangement is another way to offer value to
the clients.

So, the warehousing players, if they wish to leverage the growth prospects, should work towards to innovate ways to offer integrated services and customised solutions. That’s the only way forward for creating value proposition.

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