Logistics & Warehousing Market in India Outlook Update Q2 2020

Supply Chain has been disrupted all around the world due to pandemic Covid-19. India too has not escape the wrath of the virus. Warehousing Demand Shaken, but Recoveries Could be Quick. 3PL, e-commerce & FMCG for essential goods / services & Pharma likely to recover the quickest.

As the imposition of the lockdowns and the spread of Covid-19 disrupted the manufacturing facilities worldwide, the supply shock triggered the ripple effect on logistics and warehousing segment across the globe. Moreover, India too has not escape the wrath of the virus and affected the logistics segment. Notably, overall container volume slowed down to 3.5 per cent in Feb-April as against 11 per cent growth in the corresponding period of FY19. In addition, Railways incur INR 450 crore loss as movement of passengers has been suspended. Also, the freight corridors impacted due to shutting down of manufacturing industries. Furthermore, the largest hit sector is aerospace sector as Indian aviation industry could face INR 24,000 crore revenue loss. On the other hand, the warehousing segment is likely expected to grow quicker than other segments as investment deals of almost USD 600 million are underway in the warehousing space owing to greater attention to local sourcing in order to reduce the imports majorly from China.

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Key Investments

The Government of India’s has decided to promote domestic manufacturing of critical Key Starting Materials and Active Pharmaceutical Ingredients (APIs) in the country. The approved scheme will promote Bulk Drug Parks with financial investment of ₹3,000 crore in the next five years.
India could witness deals of nearly $600 million in warehousing if present-day negotiations go to plan. Manufacturing, third-party logistics and ecommerce companies have signed over 3 Mn sq. Feet of new warehousing contracts across six locations in the April, while land acquisition of 3,000 acres for construction of new warehouses is currently under various stages of closing.

Key Trends

The warehousing and logistics asset class could be among the fastest to recover from the coronavirus crisis. Warehousing and logistics industry will grow at 35% in 2021 compared with the earlier industry demand forecast of 25%.
Online grocery platform bigbasket is looking at hiring 10,000 people for its warehouses and last-mile delivery to clear pending orders quickly and meet the spike in orders on account of the nationwide lockdown.

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