Addressing the Warehousing & Logistics Woes

Epc World|February 2020

Addressing the Warehousing & Logistics Woes
Budget 2020 gave the warehousing and logistics sector the much-needed oxygen through monetary support and supportive policy measures, explores EPC World

The Long-haul of the Logistics sector got a major boost in Budget 2020. Giving it the much-needed push, the 2020 budget allocated ₹ 1.7 lakh crore for the transportation sector in 2020-21, ₹ 19.6 lakh crore for roads, ₹ 13.69 lakh crore for railways, ₹ 1.43 lakh crore for airports and ₹ 1.01 lakh crore for ports, promised 100 new airports by 2024, flight & railway cold chain for farmers to transport perishables, electrification of 27,000 railway tracks, more private trains to tourist destinations, corporatization and listing of at least one port, completion of National Waterway-1 and announced the launch e-logistics market. Given that transportation, contribute to a significant operation cost of logistics, if the infrastructure challenges are addressed, India’s logistics and warehousing sector will see significant growth, and foreign capital will remain an integral part of this.

Prime Minister Narendra Modi lauded the initiatives introduced and upgraded in the Budget. He shared in a video message, “Modern infrastructure is crucial for modern India. The infrastructure sector is also a large employment generator. The 65 hundred projects at a cost of 100 lakh crore rupees will increase employment opportunities on a massive scale. The National Logistics Policy will also benefit the three sectors of trade, business and employment. The target of developing 100 airports in the country will give a new height to the flying experience of ordinary citizens, and a new impetus to India’s tourism sector. We will boost the youth energy through start-ups and project development in the field of infrastructure.”

In the latest report by JLL India Industrial Services, 2019 witnessed a 15% y-o-y growth in total net absorption in Grade A & B warehousing space in top eight cities. The Delhi NCR region followed by Mumbai and Bengaluru remained the top three cities in terms of warehouse space absorption in 2019. These three cities together account for more than 20 mn sq. ft of absorption. Interestingly, other cities such as Kolkata, Chennai and Pune continued their strong show.

The market has also witnessed 3PL (third party logistics) emerging as the largest occupier of space as the sector received two pronged growth: one from the sector’s self-expansion and other from demands transcending form other sectors who are shifting to asset or less liability or asset light model of leases through 3PL players.

Warehousing is an integral part of the booming logistics and supply chain industry and is expected to be worth215 billion dollars by 2020. Logistics, retail, e-commerce, omni-channel commerce and ancillary industries have propelled the expansion of the warehousing industry at an unprecedented rate. Warehousing operations have evolved over the years. Today, value added activities such as kitting, packaging, sorting, cross docking and shipping have become part and parcel of warehousing operations.

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February 2020