Logistic Industry – Market Trends

Logistics spend in India is 13% of GDP whereas globally it is in range of 9% to 10%.

As India’s nominal GDP could grow from $1.8 trillion currently to $3.6 trillion by 2020, the overall export-import cargo at Indian ports is projected to increase to around 2,800 million metric tonnes (MMT) by 2020 from approximately 890 MMT now.

“India has the capacity of only 30 million tonnes of cold storage and it requires another 62 million tonnes,” the former bureaucrat said.

Every retailer relies on strong logistics & warehousing infrastructure for success of his business. Robust growth in foreign trade, (Imports and Exports) demands availability of quality and timely logistics and warehousing services.

The current economic loss due to poor logistics infrastructure is $45 billion, which is 4.3 per cent of the GDP and is expected to increase to $140 bn -- over 5 per cent of the GDP by 2020.

Both domestic and foreign investors focus on logistics infrastructure (aviation, road, rail, port) through public private partnerships.

The contribution of ports situated in TN and West Bengal is set to increase significantly. 

Material Handling Industry – Market Trends

The world market for material handling equipment and systems is projected to increase more than 5 per cent per year and exceed $120 billion (including price increases).

A recent study reveals that the Indian MHE industry is expected to grow steadily. The improvement in the Indian economy will result in accelerated demand for goods movement and create opportunities for suppliers of goods handling products and services of all types.

Chennai is emerging as a key market for material handling equipment with a spurt in the number of warehouses and container freight stations in and around the city.

In Chennai there are over 100 large warehouses and a few more are to come up in the next few months, according to sources in the industry.

There are around 15 CFS in and around the city and a few more are expected to come up with Chennai Port emerging as a major container handling port. This will, in turn, boost the demand for MHE like forklifts, pallet trucks, stackers, order pickers and reach trucks.

The need for MHE is directly related to the amount of cargo and freight traffic. India will see a major pull in the demand for these equipment’s.

Material handling plays a crucial role in the overall success of project execution.

Modern MHE plays a vital role in bagging PSU and government tenders.

With a wide production capacity base, India is perhaps the only developing country, which is totally self-reliant in such highly sophisticated equipment.

Generally, healthy economic conditions will support gains in global material handling demand, especially in rapidly developing countries like China and India

Globalization is propelling competitiveness and driving the development of newer and efficient material handling technologies in the market.

The common trend in the material handling industry today is to build material handling equipment that is smaller yet smarter.

Economic trends and the performance of the construction, power and manufacturing sectors are major factors affecting the dynamics of the material handling systems market.

In order to reduce complexity in material handling operations, warehouses are deploying integrated warehousing that is capable of handling thousands of varieties of stock keeping units, while reducing the overall complexity in customer delivery and distribution.

Warehousing Industry – Market Trends

Total warehousing space requirement in India expected to grow at a CAGR of 9% from 919 mn sq. ft. in 2018 to 1,439 mn sq. ft. by 2019

  • Manufacturing will continue to remain one of the biggest demand drivers of the warehousing sector with an annual requirement of 61 mn sq. ft. of incremental space between 2018 and 2019 
  • With the government’s renewed focus on incentive's the manufacturing sector, the logistics market will reap the benefits in the coming years

Investment in warehouse can provide an opportunity of realizing returns in the range of 12%-20% per annum to investors willing to explore this sector