The warehouse sector is witnessing a revolution with the entry of 3PL (third-party logistics) that are transforming the definition of warehousing in India. Manisha Almadi Midha tracks down logistics companies which have state-of-the-art warehouses, providing complete logistics solutions to various verticals including textile, apparel and fashion. However, the private players do have a few concerns which they want to be addressed, for further growth of the organised warehousing sector.
The warehousing sector in India, valued at ₹745 billion in FY 2013, has been growing at 15 per cent for the last three years. It is estimated to grow at 18 per cent to about ₹1,440 billion by 2017. According to global real estate consultancy, Knight Frank, India's warehousing requirement is expected to grow at an annual average rate of 9 per cent to 1,439 million sq ft in 2019 from 919 million sq ft in 2014. The additional demand for warehousing space, estimated at around 104 million sq ft till 2015 will entail investments of ₹15,000-16,000 crore per year. The return on investment in the sector is around 12- 20 per cent.
The foray of 3PL
The warehouse sector is witnessing a boom in India's logistics industry. "They are increasing their capacity, expanding their network and adapting new concepts to match up with international standards. The steady growth in India's economy and globalisation, increase in foreign direct investment (FDI), government initiatives in terms of economic reforms and infrastructure, growth in different sectors like retail, manufacturing and automotive, and the changing business dynamics are some of the reasons as how the 3PL (third-party logistics) in the warehouse sector has changed the face of the four-walled, small, dingy warehouses," says Aakanksha Bhargava, CEO & president, PMR (PM Relocations).
Akash Bansal, business head at Delhi-based Om Logistics, explains, "As end-users are increasingly outsourcing their warehousing services, warehousing players are recognising the need to be a part of the customer's logistics chain, as against being a landholder leasing out space. The warehousing sector in India has been evolving rapidly from being traditional "godowns", a four-wall and shed with suboptimal size, inadequate ventilation and lighting, lack of racking systems, poor hygiene conditions and lack of inventory management to warehouses with modern set-ups such as storage and handling points where raw materials, intermediate and manufactured goods are collected, assorted, stored and distributed to the point of consumption /sale."
Until about 2003-04, warehouses lacked the necessary infrastructure, safety norms, truckheight loading docks, etc. The closed-down manufacturing units were used as "godowns" to dump goods. "However, these have given way to transformed, modern warehouses, constructed according to international standards which provide heavy-duty floor, vertical racking, proper insulation, temperature control, high roofs, fire & electrical safety, and most importantly, a quality structure for employees to work," remarks Balaji V, COO-Contract Logistics at Allcargo Logistics.