Exponential growth steering India’s warehousing and logistics sector to the fast lane

In the 1990s, a 10,000 square feet warehouse considered large but now even one lakh square feet warehouses are considered medium size. Its credit goes to GST and hub and spoke distribution. MNCs prefer ‘A’ grade warehouses as they meet international standards

The logistics sector, which includes railways, shipping, airline, and road transport, is in the fast lane today, thanks to improved infrastructure, increased emphasis on digitalization and a greater focus on sustainable businesses. These are aligned to the evolving business landscape in the country. This has contributed to the exponential growth of the country’s warehousing and logistics sectors, in line with the Centre’s efforts to achieve net-zero emissions by 2070.Some of the notable trends that have boosted the sector’s growth include progression of 3PL warehousing, demand for sustainable supply chain and adoption of new-age technologies. However, there’s more to it.

Talking to Bizz Buzz, Nikhil Agarwal, President, CJ Darcl Logistics, says, “As India’s economy grows, the progress of e-Commerce, retail and automotive sectors have paved the way for logistics and warehousing to flourish. There is a significant demand for both not only in metros but also in Tier 2 & 3 cities. This can be gauged through the immense requirement of grade ‘A’ warehouse facilities that are shaping its growth potential. A recent study by India Brand Equity Foundation (IBEF) stated that the Indian Warehousing market is all set to grow at a CAGR of 15.64%, in order to reach $34.99 billion by 2027. In addition to this, the logistics sector is looking at a strong 10-12% y-o-y growth rate, with the government’s primary focus being on reducing logistics and supply chain costs.”

Moreover, with the economy returning to the growth path post-Covid, the boom in e-commerce, retail, automotive sectors, among others, ensured a spurt in growth and increased profitability among logistics and warehousing companies.

CJ DARCL Logistics Ltd, a prominent player in this landscape and a part of CJ Logistics, South Korea, is at the forefront of this growth trajectory. Their comprehensive service offerings in warehousing and distribution encompass a wide spectrum of tailored solutions to cater to the diverse needs of businesses.

Understanding the potential of the logistics and warehousing industry and the stupendous growth of the sectors, the government has introduced numerous policies.

As Agarwal mentions, ‘With initiatives like PM Gati Shakti and National Logistics Policy (NLP), the Union government has encouraged enhancement of infrastructure by expanding road network and investments in dedicated freight corridors. This not only led to the economy’s expansion but also boosted investments from foreign companies to set up their manufacturing facilities in the subcontinent.”

Given that India is positioned strategically amidst the major international trade routes, it makes the country a viable option for warehousing. This has largely strengthened the sector to enhance and improve supply chain operations and reduce costs. Agarwal added, “CJ DARCL Logistics specializes in multi-user warehousing facilities all located in strategic locations, encompassing a comprehensive suite of services. This includes not only storing products in warehouses but also preserving the shelf life of products, product mixing, packaging, cross-docking, bar-code scanning, order fulfillment, and various ancillary services. These services are thoughtfully categorized and differentiated to suit specific requirements. This is enhancing the overall productivity and efficiency of supply chain management.”

Furthermore, he added, “We offer a Warehouse Management System (WMS) that provides end-to-end inventory visibility, ensuring accuracy and productivity in all operations. This system seamlessly integrates with clients' ERP systems, streamlining processes for optimal efficiency. We excel in network optimization, warehouse design, and cargo loading optimization,” stated Agarwal.

Sachin Haritash, founder of Mavyn said, “Warehousing space has changed from landlord to companies to corporates to investment fund houses, especially in terms of square feet to capital investment. In the 1990s, a 10,000 square feet warehouse considered large but now even one lakh square feet warehouses are considered medium size. Its credit goes to GST and hub and spoke distribution. MNCs prefer ‘A’ grade warehouses as they meet international standards. Especially e-commerce and multi brand retail stores demand for warehouse pushed warehouse developers to supply different sizes of warehouses from distribution hubs to dark stores. In future virtual warehousing will be taking over many small retails demand by offering use and pay for storing materials and services. It will create a new market segment in the warehousing sector.”

A Mavyn spokesperson added, “This is the decade of logistics as all industries move around it. It is innovating with new services to reduce cost or improve operations. Drones are new niche areas for logistics when it comes to offering services to hospitals and on hilly terrains to the army. Road deliveries have become as fast as trains thanks to MoRTH for developing new express highways.” “The future of logistics and warehousing industry looks promising, with the key stakeholders - the government, industry players, public and private players, etc., working in tandem with the constant advancements in the sector. The industry players need to focus on addressing the demand for specialized services in the warehousing sector and further attract investments”, the Mavyn spokesperson said.