Showing posts with label Logistics Industry in India. Show all posts
Showing posts with label Logistics Industry in India. Show all posts

Tuesday, May 5, 2020

The impact of Covid-19 on the India Warehousing Industry: Ken Research

The government decided to extend the lockdown to the 3rd of May, and this period has brought out the incapacity of supply chains in India to deal with a crisis situation. The warehousing industry is facing the problems of lack of availability of labour, lack of demand from the non-essential goods, and an overall slowdown in growth prospects. In such a scenario, the investments are expected to take a hit and so are the revenues.
Overall Economic Impact on India
FY21 Growth Pegged to be the Slowest Since LPG Reforms in 1991
The pandemic has struck at a particularly unfortunate time when India's economy is slowing down. Growth in FY20 is estimated to be around 4.8%-5%, and according to the South Asia Economic Focus report by the World Bank, the economy is expected to grow 1.5%-2.8% in FY21. In fact, multiple international bodies have forecasted a slowdown in the growth of the Indian economy. During the lockdown period, a less than quarter of the Indian economy is operational. 53% of Indian businesses have indicated an impact of COVID-19 on business operations, according to a FICCI survey. Around 42% of the respondents said that it could take up to three months for normalcy to return, after the lifting of the lockdown. The major sectors impacted are transport, hospitality, and real estate.
Foreign Trade to Take a Massive Hit
Exports in the country are expected to suffer massively as demand dies in trading partners of India who are the hardest hit by the coronavirus, countries such as China, Spain, Italy, Japan, South Korea, the US, and Iran. Exports to these countries are now limited to only essential commodities with exports contracting by 34.6% in March 2020. China reopened its manufacturing units after temporarily shutting them down, providing a bit of relief to industries that are dependent on the country for imports of raw materials.
Lockdown’s Impact on Warehousing Sector
Lockdown to Delay Further Investments; Leaving Many Warehouses Underutilised
Investments to Dry Out
According to Knight Frank Research, over $ 6 billion have been invested in the warehousing sector by PE funds, pension funds, and REITs, since 2017. The investment was only expected to increase in FY21 prior to the pandemic, with the warehousing sector seen as something of a diamond in the rough of the real estate sector in India. With the country reeling from the lockdown the investment prospects are looking bleak. Institutional investors are likely to monitor the situation and assess the profitability of their current portfolio before making further commitments. The ban on construction activities, the lack of availability of manpower, and imported construction materials means that the market may still be dampened even after the lifting of the lockdown. The resultant loss in business may force domestic and foreign institutional funds to lend at 19-20% post COVID from the current 15-17% to cover the same. This will undoubtedly adversely affect the capacity addition in the warehousing market, with the rate expected to behalf during the period FY19-FY24 as compared to FY14-FY19.
Revenue Realisation to Take Major Hit
The government only allowing the transportation and logistics services related to the provision of essential commodities is forcing many warehouses to be underutilized. Occupancy rates are the major factor of revenue the realization of a warehouse. With the ban on the storage of non-essential commodities, the revenue realization of warehouses is expected to undergo a major hit. The government has declared that logistics services for non-essential goods and e-commerce will be allowed from 20th April but the situation is not expected to get better till H2 FY21, due to the many factors like low EXIM, and the slowdown in manufacturing immediately post the lockdown.
Short Term Impact on Business in the Warehousing Industry
Industry Anticipated to Feel Stressed till Manufacturing Picks Up
The warehousing industry is anticipated to fuel the stress of the lockdown until the time the domestic manufacturing is not returned to pre-lockdown levels. The warehousing industry is expected to contract by around 15% in FY21 due to lack of demand in H1 FY21, and the slow pickup of non-essential items sectors such as automobiles and auto ancillary, cement, consumer durables, and engineering. The industry will also be impacted by the reduction in foreign trade, especially in Indian exports, and the slow return of normalcy of EXIM levels. With the lockdown being partially lifted on the 20th of April, and trucking and logistics services being permitted for all commodities since 30th March, the warehousing industry is expected to reduce its losses a bit during this period.
The situation is anticipated to get better with stimulus packages by the government, regaining of consumption demand at large due to positive consumer outlook, and restoring of manufacturing production to pre-lockdown levels. The industry is expected to pull off a moderate recovery in H2 FY21, with the regaining of growth starting in FY22.
Key Segments Covered: -
Freight Forwarding Market
By Revenue by Mode of Transportation
Road Freight (Volume and Revenue)
Rail Freight (Revenue)
Sea Freight (Revenue)
Air Freight (Revenue)
Warehousing Market
Space by Business Model
Industrial/Retail
CFS/ICD
Cold Storage
Agriculture
Warehousing Space by Region
NCR
Mumbai
Bangalore
Pune
Chennai
Kolkata
Hyderabad
Ahmedabad
Others
Space by End User
3PL
E-Commerce
Retail
Engineering & Manufacturing
Electronics
Others
Cold Chain Market
Revenue by Service
Cold Transportation
Cold Storage
Revenue by Temperature Range
Freezers
Chillers
Ambient
Snapshot on Co-Packing Market in India
Companies Covered
TCI
Agarwal Packers and Movers
Varuna Group
Gati
VRL Logistics
Blue Dart
DTDC
Safexpress
NTC Logistics India
KerryIndev Logistics
Stellar Value Chain
Shree Shubham Logistics
Central Warehousing Corporation
Avvashya CCI
Rhenus Logistics
Avanthi Warehousing Services
ATR Warehousing
Snowman Logistics
Coldman Logistics
ColdStar Logistics
ColdEx
Gubba Cold Storage
Crystal Group
Key Target Audience
Freight Forwarding Companies
E-Commerce Logistics Companies
3PL Companies
Consultancy Companies
Logistics/Warehousing Companies
Real Estate Companies/ Industrial Developers
Time Period Captured in the Report: -
Historical Period – 2014-2019
Forecast Period – 2020-2024F
Key Topics Covered in the Report: -
Indian logistics industry analysis
Major Road Freight Companies in India
India Logistics Market Size
India Transportation market Growth
India Warehousing Market End Users
India Cold Transportation Market
GST Rate on Warehousing and Road Transport Services
Road Freight Industry Operations in India
India Exports Volume in Percentage
Technology Innovation in Logistics Market India
Operating Cost of a Truck in India
Impact of BS-VI Norms on Trucking Industry in India
Business Models in the Warehousing Industry
Digital Aggregators in Warehousing in India
Price of Chiller Cold Storage in India
Price of Freezer Cold Storage in India
Number of Pallet Positions in India
India Freight & Logistics Market
COVID-19 Impact on Indian Trucking Industry
Agarwal Packers and Movers Market Share
For More Information on the research report, refer to below link: -
Related Reports by Ken Research: -
Contact Us: -Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249

Friday, April 24, 2020

India Logistics Market Outlook to 2024: Ken Research

The report titled “India Logistics Market Outlook to FY24–Driven by Government Infrastructure Push, New Age Logistics Startups and Technology Innovation” provides a comprehensive analysis of the status of the logistics sector in India. The report covers various aspects including the current logistics scenario in India, its components viz, freight transportation, warehousing, CEP, VAS, and cold chain industries, the issues and challenges, major growth drivers, investment in infrastructure, tech disruptions and innovations, and competitive benchmarking. The report concludes with market projections for the future of the industry including forecasted industry size by revenue.
India Logistics Market Overview and Size:
India has been ranked at 4th position in the world in railway freight traffic after China, the US, and Russia. Under the land freight corridors, 65% of domestic freight volume carried through the road; high compared to ~50% in developed countries. India Logistics Market has witnessed an average CAGR during FY14-FY19 due to favorable policy reforms from the government continued investment in infrastructure by both the government and the private sector; the influx of foreign players in the market in recent years, increasing consolidation, and investing in innovative technologies has stimulated growth in the market.
India Logistics Market Segmentation:
Freight Transportation
India’s transportation market forms the largest chunk of the logistics sector with over 50% share in terms of revenues during FY’2019, due to relatively higher traffic congestion & lack of flexibility in other modes, and comparatively low barriers of entry in road freight. Small fleet owners dominated industry (70% of all fleet) operating at a margin of 8-12% and average transaction days of 12-15 per month. These SFOs primarily operate on Spot bookings while MFOs and LFOs working on LHAs. A slowdown in the economy, especially the core sectors is adversely affecting demand. Excluding November, IIP has fallen during Aug-Dec 2019, (largest fall of 4.6% in Sep) Capital Goods and Consumer Durables’ production declined by 18.2% and 6.7% respectively.
In the future, IR and GoI are actively making efforts to make rail freight competitive with road freight.  Eastern and Western DFCs are expected to be fully operational by 2020, and 4 more corridors are in the pipeline. IR is also looking to rationalize rail freight rates.
Warehousing
Warehousing Industry in India is home to 200+ organized players and numerous unorganized players. India’s warehousing market has shown steady growth over the last few years on the back of continued institutional investment, ever-increasing demand, and consolidation in the industry, especially after the passing of the GST Act. It has been estimated that around 90% of overall warehousing space controlled by the unorganized sector. Unorganized players offer prices ~50% below the market rates as compared to organized players but offer only storage. More than 20% of warehouse space is concentrated in 8 major cities: Mumbai, NCR, Pune, Hyderabad, Bengaluru, Kolkata, Chennai, Ahmedabad. Industrial Warehouses form the largest share of the warehousing space in the country, with a Grade-A warehouse becoming the new benchmark for quality. Investment has been rising in the sector owing to 100% FDI allowance, higher cap rates around 150-200 bps1 greater as compared to commercial assets and approval and funding risk for greenfield investments
Cold Chain
It has been estimated that about 40% of the food produced in the country (67 million tones) valued at ₹92 billion is wasted in 2018 at all levels from harvesting to the end stage of consumption. Of this, 4.6-15.9% of food wastage happens in fruits and vegetables, 5.2% in inland fish, 10.5% in marine fish, 2.7% in meat, and 6.7% in poultry meat. Owing to this, the cold chain market in India has shown a robust growth with a CAGR of 10.1% during the period 2014-2019 in terms of revenues. The growth was primarily due to the growing production and storage of frozen products. It has been observed that more than 60% of the total cold warehouse capacity only suitable only for storing potato. The cold chain industry is highly fragmented with 3,500+ cold storage and transportation players.
Competitive Landscape of Major Players Operating in the India Logistics Market
Road Transportation Market:
The road transport market is extremely fragmented with more than 70% of India’s overall fleet being held by Small Fleet Operators (SFOs), accounting for a majority of the volume of goods transported. Major companies operating in the road freight market include TCI Freight, Agarwal Packers and Movers, Varuna Group, Gati, VRL Logistics, Safexpress, NTC Logistics, KerryIndev Logistics, V Trans, Om Logistics, Sical Logistics, Bluedart, and DTDC. The road transport industry is highly competitive on the basis of price, type of fleet, delivery/transit time, and value-added services.
Warehousing Market:
The warehousing industry in India is fragmented with the presence of both organized and unorganized players in the market. Location and price are the key parameters for the selection of a warehousing partner in the country, with the quality of services, increasingly becoming important as the industry undergoes a shift from unorganized to organized players. Major companies include Safexpress, Stellar Value Chain, KerryIndev Logistics, Shree Shubham Logistics, Central Warehousing Corporation, Avvashya CCI, TCI Supply Chain Solutions, Rhenus Logistics, Avanthi Warehousing Services, ATR Warehousing, and North West Carrying Company.
Cold Chain Market:
The cold chain industry consists of companies offering cold storage and cold transportation services in the country. Under the cold transport, Organised players are few in number and operate on a pan India basis, using a hub-and-spoke model for operations. Major companies provide cold chain services include Snowman Logistics, Coldman Logistics, Gubba Cold Storage, Gati Kausar, Crystal Group, ColdStar Logistics, and ColdEx.
Co-Packing Market:
Major players in the co-packing industry include CLR Services, ORganico Beverages, Gossip Flavored Milk, Jam Jam Group, Packmasters, Jain Packaging, and Solutions, Fibro Foods, Usha Foods, Jayanti, and Bharat Vikas Group.
India Logistics Market Future Outlook & Projections
The logistics market in India is expected to experience medium level of growth owing to improving infrastructure, increasing industrial output, significant consolidation of the market, and booming e-commerce. The logistics industry is expected to witness the entry of new players and new mergers and acquisitions between the players. Improvement in port infrastructure: Dwell times have reduced in JNPT, the largest container port in the country, as well as all the major ports from 82 hours in 2016-17 to 59 hours in 2018-19 and, are expected to reduce further.
Moreover, phase I of the Bharatmala Pariyojana set to be completed by 2021-223, which includes 34,800 km of roads. Focus on road infrastructure and dependence on roads for freight transport is expected to continue. Container truck's proportion in the market is expected to rise in the future due to its versatility and resistance to adverse weather.
Key Segments Covered: -
Freight Forwarding Market
By Revenue by Mode of Transportation
Road Freight (Volume and Revenue)
Rail Freight (Revenue)
Sea Freight (Revenue)
Air Freight (Revenue)
Warehousing Market
Space by Business Model
Industrial/Retail
CFS/ICD
Cold Storage
Agriculture
Warehousing Space by Region
NCR
Mumbai
Bangalore
Pune
Chennai
Kolkata
Hyderabad
Ahmedabad
Others
Space by End User
3PL
E-Commerce
Retail
Engineering & Manufacturing
Electronics
Others
Cold Chain Market
Revenue by Service
Cold Transportation
Cold Storage
Revenue by Temperature Range
Freezers
Chillers
Ambient
Snapshot on Co-Packing Market in India
Companies Covered
TCI
Agarwal Packers and Movers
Varuna Group
Gati
VRL Logistics
Blue Dart
DTDC
Safexpress
NTC Logistics India
KerryIndev Logistics
Stellar Value Chain
Shree Shubham Logistics
Central Warehousing Corporation
Avvashya CCI
Rhenus Logistics
Avanthi Warehousing Services
ATR Warehousing
Snowman Logistics
Coldman Logistics
ColdStar Logistics
ColdEx
Gubba Cold Storage
Crystal Group
Key Target Audience
Freight Forwarding Companies
E Commerce Logistics Companies
3PL Companies
Consultancy Companies
Logistics/Warehousing Companies
Real Estate Companies/ Industrial Developers
Time Period Captured in the Report: -
Historical Period – 2014-2019
Forecast Period – 2020-2024F
Key Topics Covered in the Report: -
India Logistics and Warehousing Market Introduction
Logistics Infrastructure
India Logistics and Warehousing Market Size
India Logistics and Warehousing Market Segmentation
India Logistics and Warehousing Market Future Outlook
India Logistics and Warehousing Market Future Segmentation
India Freight Transportation Market Size
India Freight Transportation Market Segmentation
India Freight Transportation Market Future Outlook
India Freight Transportation Market Future Segmentation
India Warehousing Market Size
India Warehousing Market Segmentation
India Warehousing Market Future Outlook
India Warehousing Market Future Segmentation
India Cold Chain Market Size
India Cold Chain Market Segmentation
India Cold Chain Market Future Outlook
India Cold Chain Market Future Segmentation
Regulatory Environment
Issues and Challenges
For More Information on the research report, refer to below link: -
Related Reports by Ken Research: -
Contact Us: -
Ken Research
Ankur Gupta, Head Marketing & Communications
Ankur@kenresearch.com
+91-9015378249