In the last few years, e-commerce players have held and completed mega sales on their platforms with clockwork precision. Goods worth thousands of crores have changed hands through their supply chains and have eventually reached the final customers. Behind this seamless transfer of goods stand large and technology-enabled warehouses, which ship goods from one corner of the country to another in less than 72 hours.
Warehouses are not a new concept in India, and urban areas have had warehouses since time immemorial. Remnants of a warehouse have even been found at Lothal in Gujarat, an Indus Valley site.
Several ancient and medieval temples in Southern India have warehouses for storing grains. In the past, these warehouses or temple granaries served as insurance against the ravages of floods and famine, and they fed the needy during crises.
The Sri Ranganathaswamy temple in Srirangam, Tamil Nadu, which dates back to the Chola period, has five granaries. The granaries were used for storing paddy, pulses, species, nuts, and other crops. They still stand tall, despite the passage of time.
Like ancient India, the Romans also had storage spaces called Horrea to store grains, but they developed and took it to the next level by storing oil, wine, food items, clothing, and even marble. Many Horrea were built across the Roman Empire.
In modern times, the storage spaces in India have evolved from standalone structures of brick and stone with minimal ventilation to state-of-the-art warehouses located inside logistics parks, where IoT devices and RFID tags track the movement of every package.
Over the years, large warehouses in the Country were built in proximity to seaports for faster import and export of goods. The older Indian seaports have vast areas dedicated to warehousing, even today. With the advent of Indian Railways, warehouses spread further inland, where they had access to much larger sites and easier last-mile distribution of goods by road transport.
Until the 1990s, warehouses were traditional brick and mortar structures. But in the last two decades, India has made significant progress in the warehousing sector by building the infrastructure required for the logistics business. National flagship programmes such as Pradhan Mantri Gram Sadak Yojna, Dedicated Freight Corridors, and Sagarmala are further pushing for the growth of logistics and warehousing.
In the Indian warehousing landscape, ambient temperature storage is still the most significant business driver. Temperature-controlled warehouses are still minuscule as all-weather roads, stable electricity supply, and well-developed peripheral infrastructure is still lacking. The B2C is not at all developed, as it lacks market demand. But due to rapid urbanisation, this sub-sector is expected to be developed in the future.
The B2B business is well established in advanced economies for ambient and temperature-controlled warehouses, thanks to good roads, continuous electricity supply, and market demand. They have also taken the lead in the B2C business due to demand for containerised and self-storage space.
Indian warehousing- The forward march
The rise in manufacturing of industrial goods, economic stability, expanding international trade, and the emergence of organised retail players have given a significant push to the warehousing sector in the Country.
Since 2017, the sector has undergone rapid transformational change due to the implementation of the Goods & Services Tax (GST).
Before implementing the GST regime, companies used to set up multiple small warehouses across states with the singular purpose of reducing the tax burden. The new GST regime helped companies refocus on efficient supply networks and optimal warehouses in select locations.
Due to the rapid penetration of retail and e-commerce businesses, there is also an increased demand for Grade-A warehouses even in Tier II and Tier III cities. Omnichannel retailing is also helping in optimising inventory holding.
Such a retail strategy also pushes up the requirement for more warehousing space. India’s potential as a manufacturing powerhouse is attracting foreign investment and fuelling the demand for new warehousing facilities.
The State Governments providing incentives such as unencumbered industrial land parcels, single-window clearance, and rebates on interest costs and utility costs have also built traction for the warehousing sector. The Union Government classifying warehousing as essential infrastructure has also led to private and foreign investments in the sector.
A new warehousing policy has been proposed to create dedicated warehousing zones in the public-private partnership (PPP) model to strengthen the warehousing sector further.
The zones are expected to bring down logistics and transportation costs in the Country. The warehousing zones and multi-modal logistics parks (MMLP) would be set up by the National Highways Authority of India (NHAI). The NHAI would also undertake the policy formation.
The MMLP would be set up along the highways and expressways by using large land parcels belonging to the NHAI. About 35 MMLP are expected to be developed in the Country and serve as a nodal point for highways, railways and inland waterways, where the cargo will get distributed most efficiently. The MMLP are expected to organise the logistics sector further, reduce costs, and efficiently distribute cargo.
The investment trend is also expected to continue, especially considering stable annuity cash flows from this asset class, coupled with demand contraction in residential and commercial real estate.
It must also be noted that there is a rapid expansion of consumer demand in the e-commerce sector, especially in segments such as groceries, fruits, and vegetables. New and more secure ways of digital payments are further adding customers. The cumulative effect of these factors is a more rapid expansion of e-commerce businesses and its cascading impact on higher warehousing demand. The requirement for in-city warehouses for faster deliveries to the end customer is also gaining importance.
New trends in warehousing construction.
Traditional warehousing companies in India build their facilities with an eave height of 8 to 10 meters, but some companies, which are ahead of the curve, are designing with 12 meters heights. Higher eave height coupled with floor strength of more than 5 tonnes per square metre helps their clients store a much higher number of goods in terms of volume.
In simple words, such companies offer much higher volumetric space supported by superior floor strength to their customers. The eave height is measured from the floor to the point where the sidewall and the roof intersect.
In such warehouses, floors can take the additional weight of the goods without cracking, and higher eave height allows extra stacking. The customers using various stacking methods, including pallets, can store a higher volume of goods.
The rise of the pioneer.
With deep insights into the warehousing business, TVS Industrial & Logistics Park Pvt Ltd (TVS ILP) began its journey in 2005 by setting up its first warehouse in Chakan, Pune. Seventeen years ago, it was a bold step to venture into a largely unorganised business by building a Grade A warehouse. In an industry dominated by independent and family-owned enterprises, TVS ILP brought in a professional approach, which led to the construction of its first logistics park in 2006.
It was followed by creating an industrial park at Vaipoor, Tamil Nadu, in 2007 and is still in use by the Japanese Industrial giant Bridgestone as Corporate Office, Storage Facility, and Manufacturing Unit for its division.
By the end of the first decade, the Company expanded its facilities to all major geographies across the Country, with marque clientele including the likes of Godrej, Kubota, Amazon, Flipkart, Ather, Alstom, with most of the clients looking to expand association at upcoming locations.
At TVS ILP, ethics, quality and state of the art construction and innovation have always been core values, reflected right from procuring land with fair business practices to building all the warehouses with uniform width approach roads and setting up warehouses with industry construction standards and best materials.
TVS ILP has delivered complaint facilities with advanced technical specifications & aesthetics to create a safe, efficient, and sustainable workplace. TVS ILP is a joint venture of TVS SCS, a part of the T.S. Rajam family, and Ravi Swaminathan & Family and is the first corporate in the industrial and logistics space in the Country. TVS ILP is the largest player in India’s organised logistics and warehousing market.
