Transportation and Logistics
Emerging trends in warehousing segment across end-user industries
12 Feb 2021
The warehousing segment
under the logistics sector has witnessed a phenomenal run in the past few years.
Warehousing has witnessed investments from private equity, real estate players,
and other new entrants, who have invested large sums in this segment.
The demand for Grade A
warehousing grew at a CAGR of 20 percent between FY18 to FY20; while demand for
Grade B warehousing grew at a CAGR of 16 percent between FY18 to FY20. While
the start of 2020 witnessed issues such as labor availability, increase in
order fulfillment time, etc., there were no other major issues faced by the
segment. These issues also improved as the lockdown restrictions started to ease.
Warehouses witnessed more traction towards the latter half of 2020.
Further, assessing seven
key end-user industries across India, the growth in warehousing demand is
chiefly attributed to the top 2-3 end-user industries such as retail, Ecommerce,
and FMCG. These sectors witnessed robust growth over the past few years which
has propelled warehousing demand to clock an overall 18 percent CAGR between
FY18 to FY20 for both Grade A and B warehouses.
Going ahead and backed
by this buoyant growth in these seven end-use industries, the demand for Grade
A and Grade B warehousing is expected to grow at a CAGR of 25% from 107M sqft
to 325M sqft between FY20 to FY25 and 20 percent from 167M sqft to 419M sqft between
FY20 to FY25 respectively.
Warehousing demand for
key end-use industries such as FMCG, retail, Ecommerce, and auto & auto
ancillary is expected to witness a 2.5 to 4x growth from FY20 to FY25. This
demand is on the back of robust growth in these industries. Apart from the
existing trends, future trends are emerging in the warehousing segment. These
trends are expected to be implemented with a short term (3-6 months), medium-term
(6 months to 1 year), and long-term focus (about 5 years).
The key emerging
trends witnessed in the warehouse growth over the next few years across these end-use
industries range from warehouse automation, expansion to Tier-2 cities, racking
solutions, full-stack logistics, multi-logistics parks, etc.
A snapshot of the same across end-use industries is captured below:Authored by
Rahul Mehta, Domain
Leader, Transportation & Logistics
Savio Monteiro, Sr Vice President, Infrastructure, Transportation & Logistics