Académique Documents
Professionnel Documents
Culture Documents
I N D I A R E P O RT
LOGISTICS INDUSTRY
REAL ESTATE'S NEW POWER HOUSE
INDIA LOGISTICS INDUSTRY - REAL ESTATE'S NEW POWER HOUSE
R E P O RT
A RESEARCH PUBLICATION
CONTENTS
EXECUTIVE SUMMARY
The Indian economy has witnessed fast-paced supply and prolonged outages also meant low
growth over the last decade, making it one of dependence on technology. India's archaic
the preferred investment destination for warehousing system was detrimental to the
multinational corporations and a recognised growth of almost all sectors, especially sectors
manufacturing hub to the world. This, in turn, has like food and food-processing that requires
resulted in increased demand for world-class modern warehouses and investments in cold
logistics and warehousing services in India, chains and allied machinery.
leading to the growth and transformation of this
With increasing demand (from both MNCs and
sector. The logistics sector has been growing at
Indian companies) and growing requirements, the
an impressive rate of 8 to 10 per cent per
Indian logistics industry has expanded its
annum since 2002 to touch revenues of $100
bouquet of services to now include warehouse-
billion in 2007 - 081. The World Bank's 2007
related activities as well. Interestingly, the role of
Global Logistics Report ranks India 39th amongst a warehouse too has transformed – from a
150 countries in terms of logistics performance traditional storehouse to a place where the
during the year as well as its future potential. inventory is efficiently managed, with greater
Further, the Indian logistics industry is expected emphasis being laid on value-added services, such
to grow annually at the rate of 15 to 20 per as packaging, labelling, bar coding and reverse
cent, reaching revenues of approximately logistics.
US$ 385 billion by 2015. The accelerated growth
of the logistics industry, coupled with an All these factors have led to the rapid growth of
increasing trend to outsource warehousing the organised warehousing industry in India.
activities, has made India a vast and untapped Growing at the rate of 35 to 40 per cent per
market. annum, the warehousing industry is capturing the
imagination of various logistics players, both
For most domestic players logistics has for long domestic as well as international. Warehousing
been restricted to the basic transportation of activities account for about 20 per cent of the
goods. Traditionally, warehousing – which is an total Indian logistics industry2 and offer
important constituent of the logistics sector – tremendous growth potential. This market
has been dominated by small players with low segment is estimated to grow from US$ 20
capacities and poor deploying, handling, stacking billion in 2007-08 to about US$ 55 billion by
and monitoring technologies. Erratic power 2010-113.
1. ICICI Direct report on Transport Corporation of India
2. ET Knowledge Series 2002
3. Report on ‘Skill Gaps in Indian Logistics Industry’ by KPMG
INDIA REPORT | AUGUST 2008 1
INDIA LOGISTICS INDUSTRY - REAL ESTATE'S NEW POWER HOUSE
R E P O RT
A RESEARCH PUBLICATION
Over the next five years, approximately 110 projects and modernisation of over 37
logistics parks and 45 million square feet of operational airports will increase India's handling
warehousing space is expected to be developed capacities, thereby enhancing logistical
across the country by various logistics performances.
companies. This upsurge in the logistics and
This report identifies the key growth drivers for
warehousing industry will in turn boost real
India's logistics sector – such as increase in
estate activities in key locations across the
foreign trade, outsourcing of manufacturing
country.
activities and the emergence of organised retail –
While the India logistics sector holds that are necessitating the growth of warehousing,
tremendous potential, it forms a very small supply chain management, cold-storage and
portion of the total global market for logistics at transportation. This study has also undertaken a
Logistics cost in approximately 2 per cent of the estimated US$ SWOT analysis of various modes of freight
India is fairly high 5,000 billion global logistics industry. transportation – viz. roadways, railways, ports,
- at around 13% waterways and airways.
of GDP, which is Despite the impressive growth rates, the
much higher than logistics sector in India is fraught with many The findings of this report suggest that logistics
that in USA (9%), inefficiencies. Logistics cost in India is fairly high and warehousing activities are heavily
Europe(10%) and – at around 13 per cent of GDP, which is much concentrated in western India. However, the
Japan (11%). higher than that in USA (9%), Europe (10 %) and report also highlights the fact that logistics
Japan (11%). According to a recent report by activities are fast spreading to other parts of the
FICCI-Ernst & Young (E&Y), the average time country, and more importantly to tier-2 and
taken to clear import and export cargo at ports tier-3 cities. The report's location attractiveness
is about 19 days in India, against three to four analysis is aimed at identifying established as well
days in Singapore. As compared to the European as upcoming centres for this sector. These
countries, rail transportation in India is almost centres have a direct bearing on the concomitant
3.5 times more expensive and the average real estate developments in and around such
transit time by road is three times higher. These locations.
inefficiencies of the Indian logistics industry can
Case studies on established logistics hubs in
be attributed to factors such as a complicated
India, like Mumbai and Kolkata, along with similar
tax regime, fragmented market structure and
studies on tier-2 and tier-3 cities where logistics
inadequate infrastructure.
activities are gathering pace – such as Nagpur,
While there are several factors that go against Indore,Vizag and Kochi – are aimed at providing
India's logistics industry, however there are many a better understanding of how the sector is
growth drivers that suggest its rapid transforming.
transformation. While India lags behind major
Today, the biggest challenge before the logistics
global logistics hubs like Singapore, Germany and
industry is to increase efficiencies and become
Japan, factors like the changing tax regime,
more cost-effective, thereby increasing India's
increasing trade and the emergence of organised
overall cost arbitrage. The report also examines
retail will lead to accelerated growth in the
steps that can help India achieve that increased
sector over the next five to seven years.
efficiency and ensure a more balanced and
Infrastructure developments like the railway-
planned growth of the logistics sector.
dedicated freight corridors, road development
1. Global logistics industry report by Global Coalition for Effective
Logistic
A RESEARCH PUBLICATION
16
and reach revenues 12
US$ Billion
% Growth
300
of approximately 12
8
US$ 50 billion 200
385
by 2015. 8
4
100 155
2005 2006 2007 2008 E 2009 E 2010 E 100
65
GDP Pharma 0 4
Retail Consumer Durables 2002 2007 2010 2015
The future of the Indian logistics and warehousing exports and 17 per cent in imports. India's
industry is currently governed by three key factors: current share in global trade is around 0.8 per
cent and is expected to increase to 1.6 per cent
a) Burgeoning domestic demand
by 2012. Robust growth in foreign trade will
Emergence of organised retail: Globally, increase the demand for good quality and timely
retail has been a key growth driver for the logistics and warehouse services.
logistics industry and India is no exception to
India becoming a manufacturing hub: The
this phenomenon. Organised retail in India has
world over, India is being recognised as a
been growing at over 30 per cent year-on-year.
destination for outsourcing of custom-based,
The total retail industry in India is expected to
high-technology manufacturing activities.
grow from US$ 320 billion1 in 2006 to US$ 421
According to Confederation of Indian Industries
billion by 2010.
(CII), India will emerge as one of the global
The growth of organised retail has created 'manufactured product' outsourcing hubs and
demand for specialised logistics services, wherein reach revenues of approximately US$ 50 billion
every retailer relies on strong logistics and by 2015. In order to remain cost-competitive,
warehousing infrastructure for the success of its contract manufacturers will be required to
business. This changing business environment provide integrated logistics solutions that will
should give further impetus to the logistics sector bolster the cost savings potential of the
by generating increased demand for high-quality outsourcing initiative. The increasing trend of
and efficient logistics and warehousing services. outsourcing will, in turn, drive strong demand for
logistics solutions in the country.
Increase in foreign trade: In 2007, the Indian
economy witnessed a growth of 13 per cent in 1. Retail in India - Getting organized to drive growth, A T Kearney
A RESEARCH PUBLICATION
A RESEARCH PUBLICATION
sector. Better connectivity to small towns and Preferred modes of cargo movements
cities is another area planners need to work
upon. Air
A RESEARCH PUBLICATION
88% ?
The UAE-based Swift Freight has forayed into
the Indian market.
94%
?
Blue Dart Express is planning to add 1 million
square feet of warehousing space to develop 58
warehouses across the country by 2010.
?
The Future Group plans to develop 3 million
6% 12%
square feet of warehouses by 2010.
?
National Bulk Handling Corporation plans to
Unorganized Sector Organized Sector
set up 200 warehouses across the country by
Source: Cushman & Wakefield Research 2012.
*The above section captures samples of publicly reported plans of logistics firms
A RESEARCH PUBLICATION
logistics players.
Around 3,500 acres Rapid growth of the warehousing sector
of land will be Fuelled by the increasing trend of outsourcing,
developed into coupled with the rapid growth in the Indian The role of a warehouse has also transformed
logistics parks at an manufacturing sector, 3PL is estimated to grow from a conventional storehouse to an
investment of US$ at about 30 per cent annually and become a inventory management set-up with a greater
1,000 million by US$ 30 billion industry by 2010. emphasis on value added services. Warehouses
2012. now provide additional services like
Investment Details/ Plans consolidation and breaking up of cargo,
Firms (2007-08) (in US $ mn) packaging, labelling, bar coding, reverse
DHL 250 logistics etc. It has emerged as a critical
TNT 115 growth driver, leading to large investments
Gati 200 by logistics companies for the development
Shreyas Shipping and Logistics 350 of warehouses and logistics parks. Warehousing
Above section captures publicly reported information and related activities currently account for about
The entry of large third party logistics (3PL) 20 per cent of the total logistics industry.
carriers – like Federal Express (FedEx)and DHL However, it is estimated that by 2010, this
– and network expansion by the existing proportion would increase to approximately 35
domestic players (such as Gati and Shreyas per cent.
Shipping) have also contributed to the The traditional concept of establishing
transformation of services and the business warehouses in the proximity of manufacturing
practices across this sector. facilities and raw material sourcing centres is
Value added services like inventory management, also undergoing a transformation. Today, there is
warehousing, packaging, labelling, tracking of an increased trend of relocating warehouses
shipments etc have witnessed huge demand near consumer markets.
from the corporate sector. The end-users of Currently, the organised warehousing industry
3PL services include major players from the in India has a capacity of approximately
retail, auto components and the electronics 80 million metric tonnes (MT) and is growing at
industry. 35 to 40 per cent per annum. An investment of
The organised 3PL market in India can be approximately US$ 500 million is being planned
categorised into three major segments – public by various logistics companies for the
sector, private sector and foreign entrants. Some development of about 45 million square feet of
of the major players in each category are as warehouse space by 2012.
illustrated.
A RESEARCH PUBLICATION
Logistics parks – One-stop shop for logistics A logistics park is a notified area that facilitates
needs domestic and foreign trade by providing
services like warehousing, cold storage, multi-
The concept of a consolidated logistics centre
modal transport facility, container freight stations
can be traced back to the Foreign Trade Policy
etc. This area also acts as a place where a
of 2004, which led to the development of Free
company can unload cargo for distribution,
Trade Warehouse Zones (FTWZ). While FTWZ
redistribution, packaging and repackaging.
were aimed at facilitating import and export of
Majority of these logistics parks will be
goods, the need for a one-stop shop that could
developed in the proximity of established and
additionally cater to the domestic market led to
emerging industrial hubs in the country in order
the development of logistics parks as a part of
to tap their logistics needs.
the infrastructure industry in 2005-6.
Majority of logistics
parks are located Logistics parks versus Free Trade and Warehousing Zone SEZs
around SEZ for Logistics parks Free Trade & Warehousing Zone SEZ
ensuring better
?
A logistics park is a special area that has warehouses, ?
Free Trade & Warehousing Zones (FTWZ) are Special
supply chain including a cold chain for perishables, and an area Economic Zones (SEZs) with a focus on trading and
management. earmarked for automobiles and containers. These parks warehousing. They mainly cater to the international
focus on the domestic markets. markets.
?
Minimum area requirement for FTWZ is approximately
?
No specification laid on minimum built up area.
40 hectares.
?
Being part of the infrastructure industry, the incentive
includes 22% tax exemption on income for continuous ?
Incentives are the same as those given to SEZs
operations of 10 years.
?
FTWZs offer tax benefits to both developers and
?
Logistics parks offer tax benefits only to developers.
tenants.
?
Majority of logistics parks are located around SEZ for ?
FTWZ is a special category of SEZ and is governed by
ensuring better supply chain management. the SEZ Act.
Planned logistics parks across India By 2012, around 110 logistics parks,
spread over approximately 3,500 acres,
are expected to come up across India at
an estimated cost of US$ 1 billion.
Ambala
Majority of the upcoming logistics parks
Chandigarh 1 2 are being planned in close proximity to
Sonepat
4 state capitals. However, availability of
large land parcels at relatively low cost,
1 Kanpur
Jaipur
2 3 connectivity to multiple markets across
3 Guwahati
Ahmedabad Muzaffarpur - Hajipur states and proximity to industrial
1 1 Bhopal
5
Rachi 1
1
clusters has led to the emergence of
Gandhinagar 1 Indore Jamshedpur 4 Kolkata
1
some tier-2 and tier-3 cities as favoured
4 Raipur
Mumbai 8 1 Nashik Nagpur destinations for the development of
5 1 Vizag
logistics parks and warehouses.
Hyderabad
3
3 Chennai
Bangalore
Note: Figure indicates number of
upcoming logistic parks
Kochi 2
A RESEARCH PUBLICATION
INDIAN LOGISTICS INDUSTRY – A the retail sector along with the fact that these
REGIONAL PERSPECTIVE states have several industrial clusters of textile,
pharmaceutical, engineering and automobile
Industrial clusters in India can be broadly divided
industries will favourably impact the logistics
into four economic zones, based on the
sector in this region.
concentration of key industries like
pharmaceuticals, auto and auto-components, Zonal attractiveness for logistics
textiles, machinery and electronic goods. The
Upcoming
presence of these industries is likely to Warehousing space
? East: Orissa and West Bengal In western India (Maharashtra, Gujarat and
Western India (Maharashtra, Gujarat and Rajasthan), approximately 30,000 acres of land
Rajasthan) has emerged as the most prominent has been notified for the development of non-
destination for the logistics industry. Upsurge in IT/ITeS SEZs. This should lead to increased
demand for logistical services in the region.
Important manufacturing hubs of India
Southern India (Andhra Pradesh, Tamil Nadu and
Karnataka) is a key automobile and auto ancillary
manufacturing market. Several SEZs are
expected to come up in this region, including
multi-product, automobile and textile SEZs. The
presence of a booming pharmaceutical, auto-
component and agro-input industry along with
the presence of seven ports facilitating
international trade are likely to give fillip to the
logistics sector in southern India in near future.
Northern India (Haryana, Himachal Pradesh,
Delhi and Punjab) is a well-established market
for organised retail. Over the next two to three
years, maximum supply of retail malls in the
country will come up in northern India. Apart
from textiles, the region also has major clusters
of consumer goods and food processing industry.
In addition to the Golden Quadrilateral,
Automobile infrastructure development projects like the
Machine Tools Delhi-Mumbai Industrial Corridor, Kundli-
Textile
Manesar-Palwal Expressway and the Taj
Pharmaceuticals
Expressway have led to the development of
Minerals / Mining
several warehousing hubs and inland container
Source: FedEx and Cushman & Wakefield Research depots by the logistics sector.
A RESEARCH PUBLICATION
Kolkata
Chennai
Hyderabad
Kochi
Bangalore
Gurgaon
Nagpur
Indore Ambala
Vizag
Jamshedpur Ahmedabad
Alwar
High Low
A RESEARCH PUBLICATION
A RESEARCH PUBLICATION
Raniganj Jhenida
NH41
NH5 Haldia
Baripada
Egra
Jaleswar
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
Bhiwandi
Bhiwandi
Badlapur
Thane NAVI
Creek MUMBAI
MUMBAI Kalamboli
Panvel
Shedung Chinchavli
JNPT Kolkhe
Village
Village
Dronagiri Khalapur
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
Pudur
Gundla-
Kandi pochampally
NH9
Secunderabad
Serilungampalle Trimulgherry
NH202
Bharat Ghatkesar
Nagar Colony
Lalbahadur
Nagar
Osman Hyderabad
Uppal Kalan
Sagar Kapra
Moninabad
Chevella Himayat NH9
Sagar Nodrigul
Koheda
Anajpur Malkapur
Maheswaram
NH7
Palamakul Ibranhimpatan
Shahabad Thimmapur
Kothur Ameerpet
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
Pulicat Lake
NH205 NH5
Pakala
Puttur
Ponneri
Nagari NH205
Kakinada
Tiruttani Tiruvallur
NH4
Chennai
Sriperumbudur
Katpadi
NH46 Madras EPZ
Walajapet NH4
Kanchipuram
Walajabad Nandivaram-
Kalavai
Guduvancheri
Arani
Uttiramerur NH45
Peranamallur
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
NH7
Ring Rd Sidharth
Nagar
Ring Rd
Nagpur
Kachimet
NH6 Ram Nagar NH6
Gondakhairi
Jawahar Chitnis
Nagar Nagar
Parsodi
Badil Kheda
Ralpur
Mihan SEZ
NH7
Parsodi
Gumgaon
Jamtha
Wagdara
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
A RESEARCH PUBLICATION
Peddagantyada
Steel Plant
Colony
Gangavaram
Desa
Pathrunipalem
Diddapalem
Atchutapuram
Simhadri Power
Plant NTPC
Nakkapalli
Chipurupalle
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
Bawana
Sampla
NH71
NH10
Bahadurgarh
NH24
New Delhi
Dallupura
Najafgarh
Jhajjar Village
Noida
Badli
Basai Road
Pandawala
Okhla
NH8
NH2
Gurgaon
Udyog
Garhi Harsau Vihar
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
HH4
Kolar
NH4 Yelahanka
NH48
NH 207
Kunigal
Malur Bangarapet
Bangalore
NH 209
Hosur Kuppam
Ramanagaram Anekal
NH219
Channapatna
Maddur Kelamangalam
Bargur
Mandya Krishnagiri
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
Kalani Cloth
Nagar Indore
Market
Chhatribagh Chhavni
Nai Duniya Anand
Nagar
Sudama
Betma NH59 Nagar Indra Puri
Colony
Dhanvantri
Nagar
Bypass Road
Pithampur
NH3
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
A RESEARCH PUBLICATION
Gurgaon Dadri
NH71
Sikandarabad Jahangirabad Bahjoi
Bulandshahr
Pilani Faridabad
Mahendragarh NH93
Taoru Sohna Dibai
Rewari Khurja
Chirawa Khushkera Palwal Jewar
NH8
Narnaul Tapukra Atrauli
Tijara Khair
Bahror Hodal Aligarh Soron
Sikandra Kasganj
Chhata
Kot Putli Rao
Kaman
Hathras
Alwar Vrindavan Etah
Nh18 Mathura
Dig Jalesar
Nagar Sadabad
Shahpura NH2
NH93
Manoharpur Kumher
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
A RESEARCH PUBLICATION
Pollachi
Anaimalai
Dhali
Indira Gandhi
National Park
Valparai
Irinjalakuda
Eravikulam
National Park
NH17
Mathikettan Shola
National Park
Kalamassery
Perumpavur
Alwaye
Puthuvypeen NH49
Vallarpadam
Muvattupula
NH49 Virapandi
Cochin
NH220
NH47
Kombai
Existing Logistics Park/ Warehousing Upcoming Logistics Park Existing / Upcoming / Notified SEZs
Source: Cushman & Wakefield Research
A RESEARCH PUBLICATION
A RESEARCH PUBLICATION
About Research & Business Analytics Group Cushman & Wakefield is the world's largest For more information on
Cushman & Wakefield is committed to collation of high privately held commercial real estate services firm. Cushman & Wakefield, contact :
quality base data and assembling detailed statistics for Founded in 1917, it has 221 offices in 58 countries Anurag Mathur
the major India markets on a regular basis. This and more than 15,000 employees. The firm Joint Managing Director, India
commitment to quality research provides a strong represents a diverse customer base ranging from Tel: +91 80 4046 5555
foundation for all of our services. Customized, small businesses to Fortune 500 companies. E-mail: anurag.mathur@ap.cushwake.com
analytical reports are also developed to meet the
specific research needs of owners, occupiers, and It offers a complete range of services within four
primary disciplines: Transaction Services, including Sanjay Dutt
investors. Joint Managing Director, India
tenant and landlord representation in office,
Through the delivery of timely, accurate, high quality industrial and retail real estate; Capital Markets, Tel: +91 22 6657 5555
research reports on the leading trends, markets and including property sales, investment management, E-mail: sanjay.dutt@ap.cushwake.com
business issues of the day, we aim to assist our clients in valuation services, investment banking, debt and
making pertinent and competitive property decisions. equity financing; Client Solutions, including
integrated real estate strategies for large
In addition to producing regular reports such as global
corporations and property owners; and Consulting ©2008 Cushman & Wakefield
rankings and local quarterly updates available on a
Services, including business and real estate All Rights Reserved
regular basis, Cushman & Wakefield also provides
consulting.
customized studies to meet specific information needs
of owners, occupiers and investors. A recognised leader in global real estate research,
the firm publishes a broad array of proprietary
For more information:
Tanuja Rai Pradhan reports available on its online Knowledge Center
Associate Director - India at cushmanwakefield.com/knowledge.
Research & Business Analytics Group
+(91 124) 469 5555
tanuja.pradhan@ap.cushwake.com
Author of the report:
Satish Tiwari
Senior Associate
satish.tiwari@ap.cushwake.com
Disclaimer
This report has been prepared solely for information purposes. It does not purport to be a complete description of the markets or developments contained in this material. The
information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not
guarantee that the information is accurate or complete.