INTRALOGISTICS MARKET INDIA I SPECIAL 03 Growth projections for India’s ever increasing warehousing requirements after Modi roared to the tune of ‘Make in India’, the FDI in India has grown by 60 % to $ 35 billion in 2015, from $ 21 billion in 2014 (statistic source: Nomura, Japanese brokerage firm). Also the entry of 3PL that has brought new technologies, automated material handling systems and has intensified competition for logistics providers. This is seen as one of the major growth driver. But the most impactful factor is the rise of e-commerce and organized retail. E-commerce Currently the e-commerce and organized retail sector is on fire. This sector rose from $ 15.5 billion in 2009, to $ 41 billion in 2014 and is set to cross more than $ 94 billion in 2019. The number of modern retail stores has already increased by a factor of 6 and number of supermarkets, shopping malls already by a factor of 17 in the last 10 years. This rise has had a tremendous positive impact on the logistics and warehousing sector. The leading e-commerce companies are making large investments in building large filling centers and warehouses, downstream parcel and sorting centers, equipping these nodes with technology and modern practices promoting viability across the entire logistics chain. The warehouse businesses in Asia and particularly India are very unorganized and fragmented by small players and small capacities. The total share of organized warehouse space is a mere 8 %. To improve the supply-distribution network, logistics parks are being planned. Optimal locations for logistics parks depend on strategic advantages like multi-modal connectivity, proximity to industrial hubs, proximity to demand-supply hubs, infrastructure development in that area and availability of large packets of land. Based on the above parameters the future locations for setting up of logistics parks have been classified into primary and secondary hubs. The primary hubs include: Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR-Delhi and Pune. These are the most urbanized locations in their region with the presence of a 30-40 million populace demand base in their proximity. Several major logistics parks are currently under development across the country around these primary hubs. Various rail linked and multi-modal parks are also being developed. The secondary hubs include:Ahmedabad, Surat, Goa, Chandigarh, Mangalore, Ludhiana, Nagpur, Vizag, Kochi, Indore, Alwar and Guwahati. Secondary hubs are those locations with sizeable catchment of urban and rural population coupled with good connectivity and infrastructural development and hence they serve as attractive emerging locations for logistics. With a catchment demand base of 5 to 8 million, these secondary hubs serve as regional industrial hubs and are important locations in terms of access to markets and manufacturing companies. Issues and Challenges Even though the numbers are quite impressive from the growth perspective, it is very important to address the issues that India’s warehousing sector is facing. Without resolving these issues, success will be marginal and limited to a few areas. n Logistics and Warehousing is a very fragmented and unorganized business in India. Most of the transport and truck operators are small players with 3-5 trucks and are unable to contact directly with clients. As a result mediators come into play, consequently increasing the cost and reducing the transparency. All this further downs the operational efficiency. n Another factor is availability of land. Acquiring land at strategic location at affordable prices with clear titles is a big big challenge. This is further bogged down by presence of bureaucratic procedures and middlemen. This makes the process slow, corrupt and unattractive for investors. n The lack of standards related to safety and design of the warehouses, shortage of experts and well trained manpower is a serious drawback of the Indian warehousing scenario. Majority of the issues are the responsibilities of the government, but the private sector will play and equally important role in the achieving the targeted growth rates. Photos: Lead photo: Fotolia, B. Thomas-Meyer, graphics 01 – 03 Sushen Doshi VIDEOIMPRESSIONS The f+h editorial staff attended Intralogistica Italia – International Trade Fair Materials Handling, Intralogistics and Logistics – with a video camera and captured some impressions along the way. Video sequences can be accessed via the link: https://vimeo.com/140067548
SPECIAL I INTRALOGISTICS MARKET INDIA Logistics in motion It’s the country where cows are holy and Mahatma Gandhi left his mark in the sand. And it’s the country where languages are as manifold as the people who speak them. The reference is to India – a land of many faces and a culture that numbers among the oldest in the world. vices and line feeding all the way to outbound logistics. However, BLGP not only performs domestic services in India for its customers. The logistics expert is also located at the major port of Chennai. The city with a population of 4.6 million is situated on the east coast and is India’s sixth largest city and a factory site for many carmakers. The port of Chennai is the second biggest in India. There BLG provides such services as taking over the vehicles in the plant at the end of the assembly line, moving vehicles from the assembly section to the Vehicle Distribution Center (VDC) / the storage area, maintenance and preparation of vehicles for truck transport as well as vehicle movements in the storage area. The economic center and, at the same time, the most important port in India is Mumbai with a population of 12,500,000. With its highways, overland bus terminals, port, air and rail connections as well as two seaports the city constitutes a major transportation hub. Moreover, it is the main hub for traffic to southern India. BLGP not only has its headquarters there, but also offers a number of services that include consolidation / deconsolidation, on- site logistics, transport and distribution, customs clearance, sequencing, value added services, line feeding, aftersales logistics and car parts logistics. At its five locations in India BLGP provides comprehensive services in the field of However, India has a lot more to offer. According to the German Foreign Office, the country is one of the most strongly expanding economies on the globe and will, in all likelihood, even be the most populous country on the planet by the middle of this century. The land at the foot of the Himalayas has undergone drastic changes in the past years and has opened itself to foreign countries more and more. Logistics, too, has profited from this development. In 2008 BLG Logistics successfully took the leap to India by establishing the joint venture BLG Parekh Logistics Pvt Ltd. (BLGP). Today 600 employees work for BLGP in India. 40,000 square meters of storage space are available to such clients as Fiat, BMW and Bajaj, the leading producer of two-wheeled vehicles in India. Since its establishment BLGP has been operating at five strategic points in India. In addition to its headquarters in Mumbai, it operates, among other things, a site for managing in-house logistics in Alwar and is present in Chennai. 90 percent of all Indian automotive suppliers are located at the latter location. The city of Aurangabad with a population of around 1.2 million in the western Indian state of Maharashtra is the headquarters of major companies in the automobile and two-wheeler industry and for BLGP a location with such services as storage, preassembly, packaging and outbound transport. Aside from Aurangabad, BLGP is also located in Pune, the second biggest city in the Indian state of Maharashtra and the industrial center of the region. The joint venture performs all plant logistics services at an automobile plant 50 kilometers outside the city. The tasks encompass consolidation / deconsolidation, sequencing, other value added serindustrial logistics and thus responds to the needs of its customers, which have undergone great changes in the past years. The development of the logistics sector was boosted to a considerable degree by the growth of the Indian economy. Factors like changes in the tax system, the growth of major industries and the emergence of an organized retail trade have given an impetus to the Indian logistics industry. In the meantime the logistics sector forms the backbone of large key companies in the automotive industry, retail trade, pharmaceutical sector and eCommerce. To be able to focus on their specific core business and at the same time ensure smooth procedures, more and more companies are putting their logistics processes in the hands of specialized enterprises. “Nevertheless, in spite of all these positive developments, the basic conditions for smooth logistics are not yet perfect,” states Thomas Leiber, Director Overseas East at BLG Logistics. “There is a lack of infrastructure: Expansion of the road and rail network as well as modernization of the ports and airports are of decisive importance for further development of the country and of logistics. In the course of globalization the transport volume has risen significantly, but expansion of the Indian transportation network has not been able to keep pace with this rise. Based on the pending national tax reform, we hope for better conditions for our clients in the automobile industry and thus, of course, a further boost in growth for us in the logistics sector.” Precisely for this reason, India as a growth market offers the logistics sector a broad array of development opportunities. A large number of logistics companies have therefore decided in the past years to become much more active in this market in future. Photo: BLG Logistics www.blg-logistics.com About BLG Thanks to its worldwide locations, the expert for automobile, contract and container logistics has developed into a global logistics specialist in the past 18 years. The clientele includes the leading German automakers as well as strong brands in the retail trade. Through its logistics solutions the BLG Group, headquatered in Germany, is an important interface for the success of its customers. And the company is growing. Today it provides around 16,000 jobs around the globe.