Mumbai has played a pivotal role in the growth of Warehousing & Logistics industry in India due to its strategic location as the gateway to India’s EXIM trade, high consumption and being the major focus point of one of the country’s most industrialised state. The city stock has grown at a steady pace of 9.2% CAGR over the past 3 years (2016 – 2018).

Interestingly, in the JNPT- Panvel vicinity, including locations such as Khopoli and Khalapur, we witnessed faster growth during this period due to the strong focal on infrastructure seen in this region. The stock stood at almost 4 million square feet at the end of 2018, with a CAGR of 11.8% during 2016 – 2018.

INFRA PUSH IN JNPT VICINITY

Growing Industrial & Warehousing Demand in the Vicinity

JLL Industrial Research predicts that approx. 400 hectares of land is required in the larger geographical area of Mumbai and Pune to accommodate upcoming industrial requirements. Considering the volume, storage and throughput requirements of different commodities, over 20 million square feet of Grade A space would be required in these two geographies.

With existing supply being inadequate for industrial and warehousing sectors, there is likely to be a demand-supply mismatch in the short term. Meanwhile, with the growth in all major transport modes including road, rail, air and sea, the industrial and warehousing dynamics in the JNPT region is likely to see increased momentum.



Future Outlook

JLL Industrial Research predicts that with sustained and continuous demand arising out of large consumer base and expanding port capabilities, the mid to long term potential of the JNPT vicinity looks strong and favourable.



IndoSpace at Mumbai

IndoSpace is one of the leading contributors to the Grade A stock in Mumbai. With 2 industrial and logistics parks at Khopoli, the inventory of Grade A space under IndoSpace is around 1.4 million square feet (0.1 million square metre) spread across 76 acres.

IndoSpace industrial and logistics parks at Khopoli are in the vicinity of NH48, a key national highway that seamlessly connects the site with Gujarat and Karnataka. They are located close to the four major industrial areas of Khalapur, Taloja, Rasayani and Kalamboli.

Major industries in the region include Mahindra Ugine Steel Company, Uttam Galva steel, Bhushan Steel, Ispat Steel, Colour Labs, Wartsila India and Alta Laboratories. Godrej has recently set up its facility here as well.

The much-awaited India Logistics Policy will transform the Indian Logistics sector by creating a single point of reference for all logistics and trade facilitation matters in the country. The resulting seamless, efficient, reliable, cost-effective and technology-driven system is expected to bring down logistics cost from 14% to 10% of GDP. Ministry of Commerce and Industry, GoI initiated formulation of the policy, which is being finalised after stakeholders’ consultation and people’s feedback through the MyGov* portal.

Synopsis of the Draft Logistics Policy, 2018 and its impact on India Warehousing is as under:

*MyGov is an online platform for Citizen’s engagement towards good governance in India
**MSME share ~50% industrial output and ~40% export

End-user customer expectations on service and delivery have changed; they expect same day or next day deliveries for their purchases. Earlier same day shipping was an exception, now it is a rule. As accuracy levels required are much higher than they were 4-5 years ago, to execute such a requirement end-to-end, from order to delivery - supply chain and logistics must synchronise.

Accuracy and speed are also crucial for B2B e-commerce which is characterised by complex ordering processes and elaborate back-end systems, large order volumes and recurring demand. Increased usage of mobile platforms for app-based solutions, development of artificial intelligence and machine learning algorithms to identify buyer behaviour and segmentation of categories, and lastly, social media marketing and analytics are driving user traffic and increasing user penetration across different market segments. These are some of the major drivers propelling B2B e-commerce growth in India.

The growth and reach of social media also put a huge responsibility on 3PL service providers to pay attention to how their warehousing and supply chain management services impact their brand and that of their customers.

3PL Service Providers Warehousing Needs

In the last 3-4 years, 3PL players have been able to take advantage of scale and efficiency through a technology-first approach globally, meaning Integration among network with real-time value, which directly addresses the root causes by bringing greater visibility. Some of the ways in which logistics services can meet these drastically increasing requirements are:

In a nutshell, through creativity and willingness to try different approaches, 3PL players gain competitive advantage in warehousing services.

Disclaimer: This newsletter has been produced solely as a general guide and does not constitute advice. We have used and relied upon information from sources generally regarded as authoritative and reputable, but the information obtained from these sources has not been independently verified by Jones Lang LaSalle & IndoSpace. Whilst the information contained in the newsletter has been prepared in good faith and with due care, no representations or warranties are made (express or implied) as to the accuracy, completeness, suitability or otherwise of the whole or any part of the publication. Jones Lang LaSalle & IndoSpace, their offcers and employees shall not be liable for any loss, liability, damage or expense arising directly or indirectly from any use or disclosure of or reliance on such information.