The market is expected to de-centralize to mitigate future disruptions.

The possible exodus of companies from China may be a blessing in disguise for India.

- Pratyush Pandey, Warehousing Industrial Logistics (WIL) ANAROCK Property Consultants

ANAROCK is one of the leading real estate services companies in India with diversified interests across real estate value chain. It catalyses growth with innovative, technology-driven solutions to real estate and its growing business teams account for over 1800 real estate specialists with operations in all major Indian and GCC markets. Construction Times reaches out to Pratyush Pandey, Warehousing Industrial Logistics (WIL) - ANAROCK Property Consultants for his views on the trends in the logistics and warehousing sector. Excerpts from the interview…

How do you assess the transformation of the Indian logistics ecosystem with the emergence of Logistics 4.0 and what are the factors driving this transformation?

While the nationwide lockdown to contain the spread of Covid-19 severely impacted businesses across the country, the warehousing and logistics sector proved to be the lifeline of the country. Supply and delivery of essentials remained largely undeterred.

Government's incessant efforts to build multi-modal logistics parks across the country and grant 'industry' status to the logistics sector has boosted its efficiency by leaps and bounds. Setting up of industrial corridors will further promote development of manufacturing clusters as they get connected to ports and consumption hubs via roads, railways and inland waterways.

What do you think the investment scenario for the past couple of years and what do you expect the trends in investment in the coming years?

In terms of funding, as per ANAROCK research, PE funds have pumped in more than USD 1.5 billion into logistics and warehousing sectors between 2017 and Q1 2020 and USD 7 billionworth platforms have been created in the warehousing sector since 2015. In June 2020, Singapore-based Mapletree Investments invested USD 41 million in KSH Infra Ltd.'s logistics park in Pune. Going forward, we may see a rise in interest from investors with logistics and warehousing sector entering into a high-growth mode in India.

How do you assess the emergence of supply chain as an epicentre of digital enterprise and what are the key technology requirements?

Relevant automation and technology adoptions have significantly transformed the logistics sectors in the last few years. Some of the key technologies making their headway into India's logistics sector include:

-  Blockchain is making a considerable difference especially since documentation and its verification has been one of the biggest hurdles for the logistics companies. This includes cases such as transportation management, procurement, order tracking and customs collaboration.

-  AI & Machine Learning for optimising supply chain: ML is being used by logistics players to automate, optimize and streamline the entire supply chain and gather insights from data that are directly or indirectly related to tracking, internal functions, etc. It is not just cost-effective and time-efficient but also helps to enhance consumer experience.

-  IoT for tracking - RFID tags, GPS, and specialized sensors help to monitor packages. Other features like geo-fencing, geo-tagging, and proximity alert are also helping to eliminate issues within the supply chain.

-  Augmented Reality (facial-recognition technology) is also paving the way for secured deliveries within logistics operations. Last-mile delivery is also improving with building-recognition and indoor navigation.

What are the major bottlenecks in moving towards digitalized supply Chain?

Rather slow adoption of technology is one of the major hurdles. There is lack of awareness about the economic benefits of using digital technology. As a result, the logistics ecosystem is fraught with operational inefficiencies and poor asset utilization. Lack of technology systems and insufficient technical knowledge are an added issue.

What do you think the strategic imperatives for a healthy growth of the Indian logistics ecosystem, including policy and reforms?

India's logistics ranking has improved significantly during the past few years - from 54th in 2014 to 44th in 2018. Physical infrastructure development of roads, and enhanced connectivity via rail, road, and sea has improved the country's logistics performance index over the years. With an average logistics cost of 14% (of GDP), India fares well compared to China which has 15% and EU which has 13%. The policy reforms undertaken by the government aims to reduce it to 9-10% making India highly competitive across the world.

What do you think some of the top trends in warehousing?

Warehousing, a subset of the logistics sector, contributes nearly 1% to the overall transportation sector's total value added to the economy. Consolidation of small warehouses into large and concentration into one place was an emerging trend post GST and pre Covid-19. However, with the enforced lockdown due to Covid-19 outbreak, the consolidation of warehouses is expected to slow down, and we may again witness the rise of deconsolidated small warehouses in India. The market is expected to de-centralize to mitigate future disruption, ensure business continuity, and ease operations. To contain the cost and maintain social distancing norms, the rise of automation is expected.

What are the trends in leasing space for warehousing? What is scope and potential for floating lease space for warehousing?

As of 2019, top 8 cities in India accounted for nearly 77 millions of warehousing stock in India with a rental range of USD 0.18- 0.32/sf/month. Considering that e-commerce is bound to flourish in the post-Covid regime even further, there will be a rise in the online businesses which may lead to a surge in new warehousing demand along with a rising trend of multi-level warehouses within the city limits.

How do you foresee the future trends in the logistics space?

The WIL sector undoubtedly faced supply and demand constraints during the past few months due to the forced lockdown. However, as things spring back to normalcy, manufacturing operations restart and the businesses come on track, there will be a rising demand for WIL, resulting in growth of this sector in the future.

While at this juncture, the world is reeling under the crisis brought in by the Covid-19 outbreak, the future is likely to be transformed significantly as the sector is positioned to change the course and is set on a new growth trajectory. The possible exodus of companies from China may also be a blessing in disguise for India and we may see a surge in the entry of manufacturing businesses.

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