Future of Warehousing in India: Trends and Innovations Unveiled
The warehousing sector in India is experiencing atransformative phase, heralding a future of rapid growth and technological sophistication. ‘The Indian warehousing market’ witnessed a record high demand of 4.8 million sq m (51.3 million sq ft) in FY 2022, maintaining similar levels in FY 2023 despite reduced e-commerce sector demand.
This dynamic evolution is backed by a combination of factors, including technological advancements, policy support, decentralisation of manufacturing from China and a focus on sustainability, positioning India for major advancements in warehousing and logistics in the coming years.
Indian Logistics Market - An overview
The Indian logistics industry has evolved from being a mere 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. While the sector is predicted to grow at CAGR -10-12% from 2021 to 2025, it is still a largely fragmented industry with several small and unorganized players in the market.Greater allocation to modernising the railways and the ports have significantly improved the cargo handling capacity, reduced turnaround time and improved efficiency. The interim budget 2024-25 allocated ‘Rs 2.55 lakh crore to the Indian Railways’, a 5.8% increase over the previous year.
Key highlights that shape the warehousing industry trends
1. Greater adoption of 3PL and express logistics
2. Increased warehousing space in Tier 2 and Tier 3 cities
3. Greater manufacturing activity
4. The logistics costs are still high as compared to global standards.
5. Skewed modal share towards road transport, surging land prices, and lack of adequate infrastructure are hindering the growth of the sector
6. A push towards digitization, better planning, and a balanced modal mix strategy might address the above issues
Emerging Trends in Warehousing in India
Technology Integration and Automation
2024 is anticipated to mark a significant surge in technology adoption within the warehousing sector. Automation, data analytics, and artificial intelligence (AI) are set to redefine supply chain processes, enhancing efficiency and accuracy while minimising errors and operational costs. This technological leap will ride on the national push for digitization and the continued focus on ease of business and bringing the logistics costs to global standards.
Adoption of Sustainable Practices
Sustainability is becoming a cornerstone of logistics and warehousing operations. With an increasing focus on eco-friendly practices, and the country’s race towards achieving the sustainability goals, 2024 too will see a growing impetus on sustainable logistics as a whole and warehousing in particular. This includes eco-friendly packaging, energy-efficient warehouses, and the transition to electric vehicles (EVs) for short-distance distribution. Similarly, focusing on alternative fuels to power the warehouse and the vehicles will be important.
Expansion into Tier 2 and Tier 3 Markets
The demand for rapid deliveries and the rise of manufacturing and e-commerce are driving the expansion of warehousing facilities into tier 2 and tier 3 cities. The fact that having warehouses closer to the buyer also helps businesses achieve their ESG goals is something that is taken seriously by the businesses. With ESG reporting growing in relevance, expanding into Tier 2 and Tier3 locations is not only cost-effective but also strategic in nature. It helps businesses tap into new consumer markets, increase the reach of organised warehousing and logistics sectors and thereby contributing to the broader economic development of these regions.
Growth Expectations for the Next 5 Years
‘The Indian warehousing market,’ valued at INR 1,248 Billion in 2022, is expected to reach INR 2,271 Billion by 2028, growing at a CAGR of 10.49% from 2022 to 2028. This growth trajectory is supported by the increased demand for quality warehousing space and the evolution of the sector into a highly sophisticated warehousing and logistics system. The average size of Grade A warehouses has doubled, and their volume has tripled, indicating a substantial enhancement in warehousing capabilities.
Notable Movements and Future Trends
Global Investors
The Indian warehousing market is attracting significant interest from global and domestic investors, especially in the logistics and industrial sectors.
Technological Advancements
The rise of large Grade A warehousing facilities is underscored by advancements in technology and automation.
Growth in tech start-ups for logistics
Apart from the organised sector, a wave of startup’s looking to digitise the logistics sector are here to disrupt the status-quo.
As we look to the future, the logistics landscape in India is expected to become more dynamic and efficient. The revamping of policies and investing in infrastructure is a testament to the potential of logistics as a cornerstone of economic growth. Greater strides in digitalization and upskilling of manpower to make logistics a robust and top notch service, is necessary in the coming years to keep the momentum going for the sector.
Quick Technology adoption will lead the way
India seems to be ready to rapidly adapt automation, digitalisation, dark warehousing and drone technology to improve logistics experience.
Holistic Warehousing Solutions
Instead of being a place for just storage of goods, the warehouses will increasingly be seen as a hub of value added services.
As India strides towards becoming a key player in the global logistics landscape, these emerging trends underscore a future where efficiency, sustainability, and technological integration form the pillars of the warehousing sector.