There is a notable shift in warehousing demand towards Tier 2 and 3 cities.

Hemant Prabhu
Chief Operating Officer, Greenbase Industrial & Logistics Parks

How do you view the current logistics and warehousing market trends in India?

The Indian warehousing & logistics sector is on a growth trajectory, driven by burgeoning ecommerce market and technology-driven transformation. The industry has evolved from being a transport and storage-driven activity to a specialised function, covering end-to-end planning and management of goods, value-added services towards last mile delivery, predictive planning and analytics, among others.
India’s logistics industry has achieved remarkable progress, highlighted by the country’s rise of six spots in the World Bank’s Logistics Performance Index (LPI). This improvement is credited to various factors, such as technology innovation, data-driven decision-making, and policy initiatives aimed at facilitating world-class infrastructure. Given the pace in demand and increasing government support across several aspects, the sector may well be set for strong growth in the next few years.
The logistics sector is already growing steadily at a rate of 10-12% YoY, contributing 14.4% to India’s GDP and employing more than 20 million people. The warehousing storage sector is growing even more rapidly, projecting a CAGR of 15.64% and a market size of USD 35 billion by 2027.

What are the key factors driving the growth of warehousing and logistics?

Government initiatives: Introduction of reforms such as GST and e-way bill are driving industry growth, consolidation and efficiency. Initiatives such as Production linked incentive (PLI) scheme, Make in India, Atmanirbhar Bharat, and Skill India, are already driving growth in this segment.

New-age start-ups: Emergence of new-age tech logistics start-ups are strongly penetrating this space and causing great disruptions.

Global manufacturing base shift: Global companies shifting manufacturing focus to India, leading to more demand for warehousing options and logistics services, India is now looking to reap dividends of China+1 strategy.

Booming e-commerce: Emergence of Direct-to-Consumer (D2C) brands seeking end-to-end logistics services has created further room of expansion. Also, omni channel retailing further boosting demand for multiple warehouses to serve the end consumers.

What are the key modernisations and innovations happening in warehousing facilities?

Automation: Warehousing and logistics ecosystem is evolving, with major push towards automation across processes such as storage, retrieval and relocation of goods. Increased throughput requirement of sectors like ecommerce is expected to increase technology adoption. Automation and robotics technologies, including automated storage and retrieval systems (ASRS), conveyors, palletizers, sortation systems, autonomous mobile robots (AMRs), automatic guided vehicles (AGVs), for streamlined operations are used extensively in modern warehousing facilities. The application of autonomous mobile robots (AMRs) to deliver everything from intricate picking fulfilment to managing space efficiency by moving pallets and large payloads not required immediately to remote/free locations is also a by-product of modern warehousing innovation. Automated storage and retrieval systems, as well as advanced warehouse management systems, will help to ensure accuracy and free up staff to focus on higher-value tasks. 

Big data and predictive analytics: In warehousing, predictive analytics consists of applying a set of techniques and technologies such as data analysis, artificial intelligence and machine learning to optimise logistics processes, understand customer behaviour and anticipate market changes before they occur. Predictive analytics enables organisations to forecast the changing demands of the supply chain. With predictive analytics, companies can predict consumer behaviour and organise storage and order picking tasks in advance, among other functions. Predictive analytics can be applied to inventory tracking to predict demand patterns and help make better decisions about what to order and when. This removes the need for manual ordering and increases efficiency. This technology can also be used to track and predict future workforce needs, which can help managers make better staffing decisions. Additionally, predictive analytics can help reduce energy costs through efficient energy use, as well as identify any inefficiencies in warehouse operations. 

Warehouse management systems: Warehouse management systems (WMS) optimize warehouse flow by analysing the best use of floor space based on the task and material characteristics. In the WMS implementations, the use of space and floor plan analysis is used to determine how space should be best used and provides opportunities for reducing waste – waste of premium floor space and waste of time for locating product. This will also lessen potential cost resulting from excessive material movement, time consuming placement, and retrieval. By considering the best locations to store products, as well as materials or equipment, a warehouse can lower its operating expenses. WMS solutions can also help maintain material rotation, whether through first-in, first-out (FIFO), last-in, first-out (LIFO), or first-expired, first-out (FEFO) practices. Using a warehouse management system will also provide visibility of accurate, real-time inventory levels. Warehouse management systems work in conjunction with the enterprise ERP and planning functions to provide demand to forecasting functions by sharing precise information about how certain products are performing. 

What are the latest developments in your warehousing and infrastructure facilities?  

At Greenbase, we have a team of excellent professionals working on ground, beginning from land aggregation/acquisition to project execution. To grow our portfolio of offerings, we are attaching great importance to the design, the layout, and infrastructure around the buildings as these will become increasingly important in the times to come. 
Also, with the change in demand-supply dynamics due to Covid-19, we believe that automation in handling systems including palletization of cargo, conveyor systems, robotics, drones, dock levellers, drop boxes amongst others to play a vital role in our offerings as these will improve warehouse efficiencies. These changes are imminent as customers will not be taking up space in warehouses which do not offer this.
As much as we have been focussed and driven to deliver the best infrastructure and facilities to our clients, we have also been compassionating towards the safety and well-being of our climate and environment while achieving those objectives. 

With India’s warehousing space poised to grow, what opportunities do you look forward? What could be the key challenges?

Regulatory measures, including the GST Act, National Logistics Policy, and warehouse standardisation, will further strengthen the logistics and warehousing sector. Technology interventions have improved procedural efficiencies, and there is a notable shift in warehousing demand towards Tier 2 and 3 cities driven by 3PL and e-commerce players. 
Furthermore, businesses are adopting green logistics initiatives, creating opportunities for renewable energies and contributing to India’s target of achieving a net-zero carbon footprint by 2070. Logistics players would focus more towards deploying energy-efficient EVs and alternate fuels. This could increase usage of biofuels, hybrid EVs and hydrogen fuel cells which in turn will create demand for industrial and warehousing segment. 
The government has also been framing policies for cleaner technologies, and hence, investing in greener cold supply chains and solar-powered, temperature-controlled warehouses would be a focus area too. Lastly, drones are gradually becoming popular, aiming to eliminate manual effort and increase efficiency in areas where deliveries are difficult. This would create an opportunity and could pave the way for faster deliveries, higher profitability, and substantial reduction in carbon emission. 
The two key challenges that are plaguing this sector for pretty long time are:
Extremely high land prices: Logistics and warehousing developers are facing a growing challenge of ever-increasing land prices and unavailability of clear land parcels. Increasing competition for a suitable land parcel with several complexities around non-uniform regulations is further adding to uncertainty. 

High logistics costs: Even though India has climbed up the ladder of World Bank’s Logistics Index report at rank 38, but still the overall logistics cost has not come down below 10% of the GDP. Driven by high transportation cost, this can be attributed to low efficiency, under-utilisation of trucks, skewed modal share, and obsolete technologies.

How do you visualize the future of Indian logistics and warehousing sector? What are your expansion plans?

In my opinion, Tier 1 and industrial cities remain key markets, however, it is imperative to make inroads into secondary markets, given the increasing prevalence of tier 1 & 2 cities, especially with growing ecommerce and modernisation of infrastructure which is opening up opportunities for growth in new markets. Utilising newer concepts of warehouses, including dark stores, micro fulfilment hubs and on demand warehousing would be key to success, driving efficient last mile deliveries.
Rise of ecommerce has created room for growth in the form of evolving formats such as omnichannel retail, quick commerce and other models such as Buy Online, Pick up in store (BOPIS). It will be critical for logistics and warehouse companies to strategize and manage their operations with changing landscape, to tap into these opportunities. Also, it will be necessary to adopt technology across logistics cycle, including transport, storage and management of goods. Companies implementing new technologies to reduce manual effort, IoT and cloud for real time insights and predictive maintenance, and blockchain for supply chain transparency could receive plethora of benefits in the longer run.
Greenbase Industrial & Logistics Parks currently has active parks in Chennai, Pune, Nashik, Mumbai, Bengaluru and Durgapur with a total developmental potential of approximately 15 million sq ft. We are looking to expand this to 30 million sq ft in the next five years’ time with additional land banks being added to our portfolio. We genuinely feel that with growing population and rapid digitalization, the expansion of our portfolio into strategic Tier-2 markets will hold great potential in future.