Press Release: 10 January 2017
Indian economy is witnessing growth rate of over 7 per cent for past two years, 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 andmanufacturing 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 labor, 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 backend 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, warehousingand 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 dayto- 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.
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.
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. 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.