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Vineet Agarwal, MD – Transport Corporation of India Ltd.

A warehouse which in many parts of the world is called as a BOX. However, a lot happens INSIDE THE BOX,  whereas OUT OF THE BOX is quite literally and in MAKING THE BOX. We believe that today’s Warehousing  Industry has witnessed a paradigm shift. 

The temperature inside a Pataudi (National Capital Region-NCR) Warehouse has risen substantially.  Workers have come in for the second and third shifts. HVLS (high volume low speed) fans are ensuring  fresh air, large exhausts are flushing in fresh air thrive in an hour. Along with conventional storing, consolidation and breaking up of cargo, packaging, labelling, bar coding, checking product quality, colour testing, reverse logistics are some of the activities being carried out effectively. With general safety  ergonomics like ‘industrial floor mats with impact-absorbing’ and ‘alerts for endurance limits’ being in  place, the warehouse is full and operating on almost triple the size of its actual carpet area, every inch of  volume is being utilized. 

This is the paradigm shift in the Indian warehousing industry moving away from dusty, cramped, poorly  ventilated godowns which were the preferred choice for keeping inventory. Modern warehousing in terms  of construction and operations are here to stay. 

Today efficient Warehousing Operations demand for large space with adequate interior space for Material  Handling Equipment (MHE), ancillary activities (like repacking, knitting), special storage (cold storage,  hazardous goods, etc.), good amount of space surrounding the warehouse for parking to facilitate the  proper loading and unloading of goods. The modern warehousing and supply chain industry, which is the  backbone of manufacturing and burgeoning e-commerce industry is evolving fast with both, the nature  of the business and technology driving it. 

Today the warehouses are made in record time of 9-12 months once the land has been acquired. The PEB  structures have flame containment technology. Water Sprinklers and Fire Hydrant systems as per NBC  (National Building Code) defined standards is usual. The construction quality is world class today and the  attraction of the industry is quite evident by the advent of large corporates in the warehouse construction  business.

In 2021, India witnessed a 21% y-o-y growth in total stock in Grade A & B warehousing space in top eight  Indian cities. Growth in supply of Grade A   spaces over the years is due to high demand   for spaces with high specifications and   introduction of new players in the market.   3PL has remained to be the largest segment   based on warehousing space demand over   the last 5 years. Space demand due to E  Commerce has gained traction as E  Commerce penetration has increased manifold, especially during the pandemic; turning warehouses and distribution centers into mega  fulfillment centers. Many e-commerce categories such as retail, grocery, pharmacy, and food delivery are  expected to grow even further, as people make a behavioral shift from making offline purchases to online  ones and moving from “just in time” to “just in case”. The Indian E-commerce Industry is estimated to  reach USD 188 Billion by 2025. (Source: JLL Logistics & Industrial) 

This rapid growth of E-commerce & support from policymakers for logistics infra development, many  global and domestic investors have invested with warehousing developers and operators to expand their reach, regional footprint and diversify portfolio. If we look at the recent statistics, the investment in the logistics and industrial sector for the Asia-Pacific Region was USD 48 Billion in 2021  which was almost a 50% upsurge from the previous year. This investment  represented nearly 27% of total real estate investment in the region, reflecting a superior performance when compared globally. 

Other growth drivers include, i) the innovations in supply chain due to the increasing prevalence of D2C  (direct-to-consumer) landscape, ii) expansion of Omni-channel retail and government’s push for it (by  easing FDI policies in India, and launching initiatives like ‘Make in India’ & GST reform), iii) special cold  storage models for FMCG and pharmaceuticals, iv) increasing consumer interest in dark store  concepts/urban logistics. Major global E-Commerce companies and e-grocery companies are occupying  in-city warehouses in Tier 1 cities including NCR Delhi, Pune, Bengaluru, Kolkata etc. which are also the  major distribution hubs in their respective regions.

As we know that ESG has become a priority for all industries, and focusing on environmental & social  issues along with business profitability is the way forward. For sustainable warehousing, the following aspects should be   adopted: 

– Distribution centers close to cites in order to reduce the   carbon emissions & costs 

– Usage of green materials for development of modern   warehouses, pollution-free environment 

– Use of LED lighting & HVLS fans for regulating   temperature 

– Cool roofing of warehouses (light-colored reflective   materials) & Solar Power Panels 

– Good drainage system (waste-water treatment plants &   rainwater harvesting)  

Though the industry has come a long way from having dilapidated buildings called godowns back then to  now having well-built state-of-the art modern warehouses; there still are some pitfalls. Rentals costs have  gone up, putting pressure on developer’s profitability. Warehousing is not a demarked area in a town  plan. This makes most warehouses farther from the point of consumption, hence increasing the delivery  cost as well. In addition, having human diversity is a problem because of safety concerns in remote areas where most warehouses are currently located. Another challenge faced by Warehouse Service Providers  is the poor demand forecasting.  

TCI has been one of the foremost service providers for warehousing solutions managing 13 million sq ft  of space across multiple verticals along the length and breadth of the country. Continued trust of its  customers and TCI Yodhas helped the company win the National Logistics Excellence Awards by the  Government of India, Ministry of Commerce & Industry under the category of ‘Best Warehouse Service  Provider’ & ‘Cold Chain/Refrigerated Service Provider’ in June 2022.  

To conclude, the Warehouse construction companies, suppliers, clients and service providers all have to  think out of the box to strike the right balance between the physical aspects, technology and human factors to maintain this momentum and develop an effective and futuristic ecosystem.

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Views expressed above are the author's own.

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