The vital connection between warehouses and business infrastructure

Amitabh Singh, chief growth officer, Stellar Logistics Solutions, on what awaits the warehousing sector

How is the Union Budget 2023 enabling the growth of the warehousing sector? The Union Budget 2023 has announced several measures that are expected to enable the growth of the warehousing sector. The enhanced capital investment outlay of Rs 10 lakh crore in infrastructure development, including roads and railways, is likely to have a significant impact on the logistics and supply chain industry. The proposal to build centres of excellence for artificial intelligence and roll out Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 4.0 is expected to facilitate a large-scale rollout of smart logistics powered by data-driven technologies. The proposal for a Rs 35,000 crore capital investment outlay to achieve energy transition and the net-zero goal is also likely to help the logistics and supply chain industry reduce environmental impact and adopt green mobility.

What kind of growth do you see for the warehousing business, especially for 3PL? E-commerce initiated the need for faster delivery of goods especially during covid. This also meant that 3PL (third-party logistics) sector had to realign itself to manage the new shift. This spelt substantial growth in the warehousing business as part of the overall supply chain management solutions. The demand for 3PL services is expected to persist, and the organized 3PL segment is projected to expand at a rate of 35%, while the overall warehousing business is estimated to grow at 15%. The cause of this growth is the increasing demand for scalable, flexible, and technology-enabled supply chain solutions, which can reduce the cost of the overall supply chain. Therefore, many businesses are exploring the possibility of teaming up with 3PL companies. Furthermore, 3PL players who possess a comprehensive understanding of the process, a strong pan-India team, exceptional execution capabilities, technology-based solutions tailored to specific industries, and knowledge acquired from operations across various sectors are expected to increase their clients’ supply chain efficiency and productivity, which would reduce their overall expenses.

What are the challenges and opportunities that you see in the cold supply chain? Cold supply chain presents both challenges and opportunities that can be addressed with the latest technological advancements, such as refrigeration, tracking systems, and better packaging solutions. The growing demand for perishable goods in the dairy, meat, poultry, fruits, and pharma sectors shows immense potential for the cold chain Industry. Although India has faced challenges with a fragmented market, high power costs, power disruptions, and high transportation costs, there are opportunities to provide multi-temperature warehousing and transportation solutions, particularly in dairy, pharma, e-commerce, and grocery segments. Moreover, the government’s Pradhan Mantri Kisan Sampada Yojana aims to promote integrated cold chain projects, paving the way for improved infrastructure and reduced food waste. With continued efforts and advancements, the cold chain Industry has the potential to grow and positively impact the economy and the environment.

The warehouse has been recognized as a fundamental part of business infrastructure. How has the warehouse model handled the surge in demand during the pandemic and after? The pandemic has had a significant impact on the global supply chain and the logistics industry, with disruptions caused by factors such as container shortages, delayed deliveries, and microchip shortages. However, the logistics industry has responded to these challenges by implementing new measures, such as increasing automation and adopting new safety protocols, to ensure that the flow of goods is uninterrupted. Furthermore, some disruptions have created opportunities for the logistics sector, with many companies looking to increase their production in India, which has been a positive development for the industry. Despite the challenges faced by the logistics industry, it has shown resilience and adaptability in the face of adversity.

With the perceptible boost in e-commerce, how has modern warehousing prepared itself to meet this growth? How can multi-story warehouses aid in this? With a projected compound annual growth rate (CAGR) of almost 40%, the D2C market is expected to expand from its current value of $12 bn to $60 bn by FY27. As a result of this growth, there has been a significant increase in demand for warehousing spaces from e-commerce and D2C businesses. To meet the specific needs of these businesses, modern warehousing solutions have been developed that incorporate advanced technology. Among these solutions, multi-story warehouses have become popular due to their ability to maximise storage capacity while using less land, which can be particularly advantageous in urban areas where land is scarce and expensive. Additionally, racking and shelving in warehouses offer flexibility by allowing businesses to allocate different floors based on their operational requirements. This cost-effective and efficient approach has made modern warehousing solutions such as multi-story warehouses becoming popular in meeting the demands of businesses in the e-commerce industry.

With India’s quest to become the global manufacturing hub, how can warehouse developers aid in this? Warehouse developers can aid India’s aim to become a global manufacturing hub by providing customised, flexible, and efficient warehousing solutions. This includes implementing automation and digitisation to enhance productivity, offering on-demand and shared warehousing services, and creating specialised warehouses for specific industries. As the overall warehousing industry is expected to grow at 15% and organised third-party logistics (3PL) at 35%, the demand for high-quality warehousing services is increasing. 3PL players like us provide scalable, flexible, and tech-enabled supply chain solutions, reducing the overall cost, saving time and enhancing service levels for our customers. Partnering with 3PL providers can be an excellent option for businesses looking to expand their operations and take advantage of India’s growing manufacturing sector.

What are the industry’s expectations from Grade A warehouse infrastructure? The logistics industry expects Grade A warehouse infrastructure to meet the necessary safety requirements, provide ample parking space and turning radius for vehicles, have FM2 flooring with dock levellers, provide thermal insulation, have advanced fire safety control systems such as sprinklers and fire hydrants, and offer a height of 40ft/12m at eaves along with at least 6 air changes per hour. It is believed that Grade A warehousing will play a significant role in reducing storage costs while increasing cubic capacity utilization. There is a growing demand for Grade A warehousing, which is expected to increase to 400 million square feet by 2026.

How important is it to integrate green logistics and green channels for supply chain management into warehousing? Achieving sustainable growth through green logistics and supply chain management is an exciting opportunity for businesses to demonstrate their commitment to environmental responsibility. By integrating eco-friendly practices, such as energy-efficient lighting and equipment, renewable energy sources, and green packaging solutions, into warehousing, companies can significantly reduce their carbon footprint and contribute to a healthier planet. These green initiatives not only help organizations comply with regulations and enhance their reputation as socially responsible enterprises but also enable them to meet India’s goal of achieving net zero greenhouse gas emissions by 2070. To make this goal a reality,

warehouses can implement measures such as solar panels, high-efficiency lighting, rainwater harvesting, and roofing insulation. Additionally, the adoption of electric vehicles for transportation can further reduce emissions, and the government of India’s FAME program is a great initiative to encourage this transition. As a logistics company, we are excited about the opportunity to make a positive impact on the environment and are committed to implementing all necessary measures to achieve our sustainability goals.