Transforming India’s Warehousing Infrastructure

Indian economy is witnessing growth rate of over 7 per cent for past two years, since the new government has been formed at the centre, and is expected to grow by 7.5 per cent for next three years. This GDP calculation is driven by three main areas – agriculture, manufacturing and services, with services accounting for more than 56 per cent of the GDP’s share, followed by agriculture and manufacturing each contributing 28 per cent and 16 per cent respectively. The services sector has grown rapidly over the last 15 years due to easy availability of skilled manpower, thereby, resulting in reduction of percentage share of agriculture and manufacturing to Indian GDP.

Warehousing – A Vital Chunk
Emergence of India as one of the fastest growing economies after China resulted in higher FDI inflows and a number of multi-national companies setting up their facilities to meet the rapidly growing Indian consumer demand and take advantage of cheap labour, thereby, giving a boost to the Indian manufacturing sector, but, was much lesser than the growth of services industry. This has also resulted in development of back-end infrastructure which consists of logistics segment with warehousing forming an integral part of this segment. The logistics industry consists of many other components such as transportation, warehousing and other services out of which transportation is a major stakeholder in the industry in India and then followed by other services and warehousing.

The logistics industry is one of the largest industries in India as the logistics framework development accounts for more than 13 per cent of the GDP as compared to less than 8 per cent spent by the other developing countries. Indian logistics market has witnessed buoyant growth and is expected to grow at a CAGR of 12 per cent by 2020 driven by the growth in the manufacturing, retail, FMCG and e-commerce sectors. The current logistics industry is worth over US$300 billion. This growth is also based on the implementation of GST which will enable logistics companies to setup larger warehouses as per the region’s requirement and then easily transport from these warehouses to the different manufacturing plants, retail outlets, wholesale outlets, etc.

Most of the logistics companies are integrating IT and technology by investing in automation in their day-to-day activities to bring efficiencies in their operations and meet the increasing customer demands. The industry as a whole has moved from being just service provider to the position where they provide end to end supply chain solutions to their customers. The logistics market in India is largely unorganized as several local or domestic transporters with a very small fleet size accounted for more than 65 per cent of the total fleet size for road transport in India. The scenario is undergoing change because of quick delivery and tight service level agreements witnessed over last 3 years because of e-commerce boom.

Kirby – Pioneering the Innovation
Warehousing forms a crucial link in the overall logistics value chain. It accounts for approximately 5 per cent of the Indian logistics market and is growing at an annual rate of 10 per cent with the size pegged at INR 560 billion excluding inventory carrying costs. Warehousing also plays an important role in the logistics segment as storage of any type of material whether it is raw material, semi-finished goods, finished goods after production and goods stored at different locations require proper infrastructure in place. This is fulfilled by setting up of right type of warehouses and Kirby Building Systems India (Kirby India) is a pioneer in providing a complete warehousing infrastructure solution. The company is transforming the nation by partnering with all the leading logistics companies, 3PL, individuals, etc. in setting up their warehouses across India and changing the landscape of country’s warehousing industry.

Corporate – Shrewd Planning for Growth
Improving domestic economy has encouraged many foreign firms to set up their manufacturing base in India, which in turn has given a boost to the industrial and logistics segment. The main demand drivers were third party logistics (3PL), e-commerce, fast moving consumer goods (FMCG), automotive, pharmaceuticals, agro industry, etc. Most of the leading corporates are setting up their own warehouses across different regions of India to cater to growing needs of Indian consumers and cut down on the delivery of the product. They have become a central part of function for many industries as they act as a storage place for all the materials starting from raw materials to finished goods spread over entire life cycle of any product.

This significant growth in warehousing would be due to the major growth in the organized retail industry, commodity markets, and growth in industrial manufacturing and development. Many of the organized players are in the process to set up their base through the FTWZ and logistic parks which have warehousing as their key component. The cold chain industry is rising as a fast-growing logistics segment in India with major advancements and growth in the food processing sector, organized retail and government initiatives driving the industry forward.

The growth in warehousing in India is primarily being driven by the following factors:

• Growing manufacturing activity
• Rising domestic consumption,
• Increasing international trade
• Emergence of organised retail in the country
• Increasing private and foreign investments in infrastructure
• Easing of government regulations

Indian warehousing industry is segregated based on their percentage share of occupancy – Industrial / Retail warehousing (55 per cent), Container Freight Stations (CFS) / Inland Container Depot (ICD) (14 per cent), Agri warehousing (15 per cent) and Cold stores (16 per cent)

3PL, e-commerce logistics and cold chain are the 3 biggest segments in the logistics and warehousing industry in India based on future growth. The pressing need for time-sensitive delivery has reshaped the logistics industry as many traditional logistics players are now diversifying their services portfolio to make space for e-commerce logistics.

Based on the rise of QSR market in India, cold chain market is also witnessing remarkable growth. The increased foreign trade has led to the CFS/ICD segment of warehousing industry to record impressive growth rates in the recent years and is expected to continue the same for the forthcoming years. It would not be wrong to say that logistics could be the defining factor for success of e-commerce companies in retaining their customers.
PEB – Leading the Warehousing Construction
In earlier days, warehouses were constructed with traditional brick and mortar construction which was followed by steel building with trusses and other types of sections. But, with the advent of sustainable construction, Pre-Engineered Steel Buildings (PEB) technology came into limelight in the warehousing segment and Kirby India is the torch bearer for introducing this technology in India. Kirby’s warehouses buildings are customized to meet the unique demands of the customers. As a result, today Kirby has become synonymous with PEB warehouse buildings in the Indian market mainly because of its unmatched speed of construction, quicker delivery, highest quality and commitment, excellent customer service, good safety practices, future expansion, etc. Today PEB technology has become one of the most preferred modes of construction for warehouses being setting up across India.

The success of PEB concept in warehousing has now become a widely accepted solution with proven benefits for construction in the Indian environment. Some of the other natural advantages related to the success of PEB in the warehousing segment include factory controlled fabrication on CNC machines, most optimized design due to usage of standard design software, large scale material procurement by Kirby India thereby lessening the costs, reduction in manpower costs and time because of supply of material without any delay, accident free installation with the highest safety and many such factors.

Green Thrust – Eco-friendly Construction of PEB
Also with eco-friendly construction fast catching up the growth curve in the Indian market, PEB is the most viable construction solution as it is a green product with very little impact on the environment. PEB is also perfect fit for developing warehousing sites because of the recyclable nature of steel used in construction of these buildings as it has a re-sale value when the building is dismantled and sold as scrap in comparison to RCC construction which has to be completely demolished and cannot be re-used. Kirby India buildings are designed and installed as per the green building norms so that the customer can reap the benefits with this eco-friendly construction.

PEB come in virtually any size with options for exterior features and are customized to suit specific clients, i.e. an end user, size and geographical location. Kirby India provides warehouse buildings with options to incorporate aesthetically appealing features such as stone facade, aluco bond panels, etc. along with structural integrity and durability. Kirby India has constructed many warehouses and cold storages for all the reputed clients such as ITC Ltd, Indospace Logistics, Hindustan Lever, TCI, All Cargo Logistics, KSH Distriparks, Shree Shubham Logistics, Container Corporation of India and many small and medium enterprises and individuals across India. All these buildings are in different sizes with mezzanines and multi levels and are being used for storage of wide range of products across all industry segments.

Trending In – Modern Warehouse Infrastructure
Demand for modern and sophisticated warehouses has witnessed a tremendous increase in last few years because of influx of multinational companies or manufacturers which has attracted many private equity firms to invest in the warehouse infrastructure. Most of the warehouses are standard box type buildings as the design and other infrastructure for any warehouse depends on the storage requirements. Kirby has always taken care of all these requirements right before starting the design of the building. Also, the trends in technology along with innovations are further giving impetus to the PEB technology in the warehousing segment.

In current market scenario, more than 80 per cent of warehouses are being built with PEB which has taken over the conventional mode of construction mainly because of its various advantages such as cost savings, faster return on investment, quicker delivery, faster installation, single source responsibility, low maintenance, flexibility in expansion, earthquake resistance capability, superior quality, etc. which have become vital for any type of warehouse construction.

Warehousing plays a very vital role in promoting agriculture marketing and ensuring food security in the country as more capacity is required for storing all major crops highlighting the huge demand-supply mismatch. All the warehousing space owned by government agencies lack in optimal size, adequate design, ventilation facility, inventory management and storage system as they have been built following the traditional norms.

This is where demand for modern warehousing infrastructure has witnessed rapid growth and other dynamic market requirements have made it imperative for Indian warehousing players to overcome challenges, as well as maintain, improve and sustain competitiveness. The Government has also eased FDI norms and is promoting PPPs to pump in more investments in warehouses. Cold chain industry is also being given special incentives as it is vital to upgrade the food processing industry. Despite its strategic importance in the Indian economy, the Indian warehousing sector faces several challenges and need to be overcome with collaborative efforts of all stakeholders.

Need for large scale warehousing or dedicated logistics parks is fast catching up in India as it is mostly fragmented and unorganised industry dominated by many small players. This will enable companies to have larger warehouses supplying the distributors in the region, thereby enabling them to invest in better warehousing infrastructure and technology which will lead to increasing demand for PEB.

Kirby – Meeting the Warehousing Demands
Warehouses are increasingly addressing specific requirements for its customers such as offering bare storage, storage with crane facilities, food storage, storage with multi-level stacking and open storage. Kirby India provides a package solution for these types of requirements with its new concept of Rack Supported Warehouses based on the end use of that warehouse. It is the only player to offer such packaged requirement and has already supplied such buildings to leading logistic companies. Kirby is present in both in PEB and Storage Solutions and it becomes strategic for the company to provide end to end solution for increasing demand for such type of requirements in the market.

PEB technology has become the centre of attraction across India especially in the agro and food & beverages industries due to series of measures announced by the government to provide proper warehousing and cold storage facilities for fruits and vegetables, food grains, etc. Lack of temperature controlled warehouses close to farms and transportation of same in temperature controlled vehicles has become a major concern as they preserve the quality, integrity and longevity of the product. This has given huge opportunity to logistic players to set up temperature controlled warehouses or cold storages as the industry is estimated to grow rapidly over the next few years. This will give further boost to the PEB technology as the building part of these cold storages can be done by this technology.

Kirby has already executed such type of warehouses and is in the process of creating a separate packaged solution citing the increasing demand for cold storages. A well maintained warehouse also increases the life of the product and PEB technology acts as a major contributor to this because of its environmental friendly nature apart from the temperature control environment. Most of the modern warehouses coming up nowadays have multi-purpose functionality i.e. they can maintain various temperature levels at the same time for different variety of products as all the temperature controlled warehouses or cold chains built over 4-5 decades back does not have this facility.

To conclude, Kirby is the only PEB manufacturer in India that is capable of supplying a packaged solution for all warehouse requirements maintaining international quality standards. Today, Kirby has become a generic name in the PEB market in India and has maintained its market leadership through its innovation and vast experience. Its buildings have stood the test of time, time and again against all odds – manmade and natural.