Even as Covid and the lockdown shook up the warehousing business, throwing provide lines into disarray, the sector’s development story remains intact as expanding demand from segments like e-commerce, retail and FMCG is top corporations to concentrate on provide chain danger mitigation and resilience, as effectively as more quickly final-mile delivery.
A current study by consulting firm Praxis Global Alliance mentioned that in pre-Covid occasions, Grade-A and B warehouse in India grew at 18% CAGR more than FY 2018-2020. Going ahead, e-commerce and retail are anticipated to push demand for Grade-A and B warehouses, which are anticipated to develop at a considerably more quickly pace among FY 2018 and 2025.
It forecasts that demand for Grade-A warehousing is probably to develop at a CAGR of 25% from 107 million sq ft (MSF) to 325 MSF among FY20 to FY25, whilst demand for Grade-B warehouses will develop at 20% CAGR from 167 MSF to 419 MSF for the duration of the period beneath evaluation.
Praxis Global Alliance’s report projects that warehousing stock for e-commerce is probably to develop from 56 MSF in FY20 to 227 MSF in FY25, whilst retail warehousing is anticipated to develop from close to 60 MSF to about 205 MSF for the duration of the similar period.
Besides, demand from FMCG segment is projected to hit 44 MSG by FY25 from about 17 MSF in FY20.
“FMCG, FMCD, retail, and pharmaceuticals have great potential for investment opportunities like automation in warehouse operations, racking optimisation and growth of full-stack logistics,” the report pointed out.
Praxis Global Alliance SVP (transportation & logistics), Savio Monteiro mentioned, “Grade A warehouses are expected to grow at a CAGR of 25% over the next five years on back of robust demand from e-commerce, retail, FMCG and other sectors. Private equity has evinced significant interest in this sector with huge investments during the pre-Covid period. We expect this trend to continue post-Covid too, as the economy comes back to full steam.”
Praxis Global Alliance domain leader (transportation & logistics) Rahul Mehta explained that essential emerging trends in warehousing development more than the next handful of years across these finish-use industries variety from warehouse automation, expansion to tier-II cities, racking options, complete-stack logistics, multi-logistics parks, and so on. The seven essential industries are e-commerce, retail, FMCG, FMCD, manufacturing & engineering, pharmaceuticals and auto & auto ancillaries.
Logistics options big DB Schenker’s CEO (cluster India and Indian sub-continent) Vishal Sharma notes that the sector played a important function for the duration of the nationwide lockdown by continuing the movement of essentials and medicines and will stay at the core of the Covid vaccines method in 2021.
“Additionally, the increase in domestic warehousing and supply chain demand will help businesses to return to pre-Covid levels this year (2021). The expected growth will be fuelled by various factors including strong government support with positive policies that will promote domestic production, development of multimodal logistics parks (MMLPs), progressive infrastructure, increase in adoption of digital technologies such as artificial intelligence, blockchain etc, digitisation of supply chain operations for contactless delivery and development of omni-channels,” he added.
Analysts also point out that India lags behind created nations in terms of per capita warehouse space, which signifies that the sector has enormous development possible. The report by Praxis puts India’s warehouse space at about 2.4 sq ft per capita, compared to 43 sq ft in Japan, 37 sq ft in US, 20 sq ft in Singapore, 19 sq ft in Australia, 6 sq ft in Honk Kong and 4 sq ft in South Korea.