KOCHI: For a fast-evolving global economy like India, a sophisticated logistics, and warehousing system is a key driver for consistent growth. The Indian warehousing and logistics sector is estimated to attract nearly $10 billion investments over the next 4-5 years, with an addition of around 200 million sq. ft. of warehousing space, across major ports, airports, and tier 2 cities.
Further, while this capacity is expected to double by 2020, the average size of warehouses in the country is also estimated to increase from around 20,000 sq. ft. to 2-3 lakh sq. ft. in a few years, thus putting the entire sector on an accelerated growth track.The shifting trend of warehousing from a commoditized expense to a smart asset is changing not just industry perceptions but is also transforming the old ‘godowns’ into well designed and ‘smart’ warehouses. Some key trends to measure this transformation can be listed, as under:
Use of Technology
Technology advancements have disrupted several industries while positively transformed others. The logistics and warehousing industry has also come a long way since the bar code reader of 1950s. Adoption of Warehouse Management System (WMS) and other IT-driven solutions have resulted in increased efficiency and competitiveness in the industry. Considering the cost-effectiveness and easy adaptability, the sector has been prompt in adopting these technology innovations that are facilitating optimum utilization of resources and seamless distribution of cargo.
Outsourcing Opportunities
As logistics and supply chain management assumes the function of a profit driver instead of an ‘overhead cost’ for industries like manufacturing, e-commerce, etc., many businesses are opting for outsourcing a significant part of their operations to warehousing companies. Just-in-Time techniques have put a large responsibility on warehouses of maintaining optimum efficiencies thus enlarging their role.This has led to the efficient management of resources and cost-effective ‘smart’ warehouse services that are managed by one contract manager.
Strategic Infrastructure Development
2018 witnessed a 22 per cent Y-o-Y growth in total stock in Grade A & B warehousing space while the absorption clocked an unprecedented growth of 60 per cent Y-o-Y, to nearly 32 million sq ft in 2018 from around 20 million sq ft in 2017. The robust growth in absorption further reflects that the demand for warehousing is outstripping the supply significantly, with vacancy rates dropping below 10 per cent, for the first time ever! As a result, alternative construction systems like pre-engineered steel buildings are becoming more popular and feasible.
Value-added Services
The current warehouse industry comprises of three categories - the traditional warehouses, the leader warehouses, and the niche warehouses .With the advancement in technological and physical infrastructure, more and more ‘smart’ warehouses are evolving to offer specific value-added service that can be customized to suit the needs of high-end clientele. From specialized temperature sensitive storage requirements for pharmaceuticals to value-added ‘kitting’ services for Automobile manufacturers, modern warehouses are evolving to meet the versatile demand of the global economy while retaining a ‘customized’, client-focused, service approach.
--- The author is the director of Robinsons Global Logistics Solutions(The views expressed by the author are his own)