Logistics industry: Warehousing looks to shed its baggage

It’s a sector associated with inefficiency, with logistics costs accounting for 13-14% of India’s GDP, as against 7% in most developed economies.

While 15% of the industry deals with agriculture and horticulture products, cold storages command 16% of the warehousing space.

It’s a sector associated with inefficiency, with logistics costs accounting for 13-14% of India’s GDP, as against 7% in most developed economies. This scenario is set to change, with technology and investment transforming warehouses from godowns to IT-enabled depots that can ensure seamless distribution.

In the process, the average size of a warehouse has increased from around 20,000 sq ft to 2-3 lakh sq feet. Cumulatively, the total warehousing space is estimated to grow from the present 900 m

sq ft to 1439 m sq feet by the end of 2019. Says Prabal Basu, CMD, Balmer Lawrie & Co, a mini-ratna PSU, “the Indian warehousing industry, estimated to be worth around `50,000 crore at present, is growing at an average 10% per annum.”

While 15% of the industry deals with agriculture and horticulture products, cold storages command 16% of the warehousing space. Industrial and retail players account for 55% of the space and inland container depots (ICDS) and container freight stations (CFS), dealing with export-import goods, enjoy a 14% share, according to a CII logistics report.

In an indicator of the sector’s potential, annual investment in warehousing has averaged `17,000 crore in the last five years. A PSU like Balmer Lawrie, slotted for privatisation, is redeploying its land assets to streamline operations. Under a plan prepared by PWC entailing an investment of `250 crore, it is developing two more cold storage chains and three temperature-controlled warehouses and three general warehouses – each with 3,800 tonnes of storage facility—besides a multi-modal logistics park at Visakhapatnam, Basu points out.

Technological upgrade is a part of such investments. It is innovations like automatic identification and data capture (AIDC), Real Time Locating System (RTLS), and Radio Frequency Identification that have allowed the rise of e-tailing in India and the creation of a value chain that extends from raw materials to consumer satisfaction.

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