4 Emerging market trends to boost growth of warehousing in the post-COVID era
Even before the pandemic hit India,
warehousing property was turning out to be a promising investment opportunity for investors. With various significant factors such as implementation of GST, government focus on building industrial corridors, infrastructure status to logistics industry including warehousing, increase in manufacturing and the anticipated increase in the Indian demand has enhanced the investment prospects of the country’s warehouse sector. According to market reports, during the period of 2016 to 2019, the sector has attracted investments over $6.5 billion. Moreover, warehousing demand or the leasing activity has also risen rapidly in the same period, increasing from 13.9 mn sq ft in 2016 to around 40 mn sq ft in 2019.
However, with the ongoing pandemic situation, warehousing sector may undergo many changes. Various trends in the post-COVID era are going to redefine the warehousing in India. Scroll down to uncover four emerging market trends, which are going to boost growth in the warehousing sector
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1. Shift towards multiple warehouses- The concept of consolidating warehouses at a single location is expected to be changed. With the COVID-19 situation, this maybe a possibility soon as occupiers and supply chain managers are now contemplating if it is better to own multiple warehouses at different locations instead of a single large regional warehouse. In future, if there is lockdown or any other kind of disruption, then occupiers can still operate through other warehouses if others are not reachable, this will further increase the demand for warehouses.
2. Companies will keep higher inventory to avoid any future problems- To keep in check inventory carrying cost, companies across the globe were following just-in-time (JIT) system for inventory management. The lockdown of China had disrupted the supply chain across the globe and caused significant problems to companies employing JIT. For example, in India, many pharma companies had faced challenges due the disruption in supply of Active Pharmaceutical Ingredients (APIs) which is a key ingredient for pharmaceutical products majorly manufactured in India. In the near future, companies would prefer keeping higher inventories over JIT, therefore, further driving the demand for warehousing space.
3. E-commerce boom will increase the demand of warehousing- E-commerce delivering essentials, fresh food and grocery have witnessed a surge due to the Covid-19 induced lockdown. With the convenience of doorstep delivery e-commerce offers and the fear of contracting Covid-19 in public spaces, people may still avoid going out for grocery shopping at malls post the lockdown ends. With strict social distancing measure, big retailers opting for e-commerce and home delivery, there is an imminent increase in the e-commerce activity. With these changes, there will be an increase in demand of warehouses due to the rising demand from the e-commerce segments.
4. Shift of manufacturing units from China to India- Warehousing industry is also expected to benefit from the shift in manufacturing units outside China. Many companies globally are thinking to diversify their manufacturing units to other locations to de-risk the disruption in the supply chain during adversities. India is a foremost choice for many and even if 1/6th of them come to India, the benefit for the nation and the industrial and warehousing sector would be immense.
The warehousing sector will witness renewed interest and immense growth as these emerging trends start to unravel.
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And, platforms like
India Warehousing Show, which has been the focal point of industry leaders, experts, live-demonstration, product launches from all facets of logistics, warehouse infrastructure, material handling, storage, automation and supply chain is going to be an ideal marketplace in the current scenario. .
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