India Urban Logistics Space Expected to Cross 7 Million sq ft by 2022
Urban logistics spaces in India is expected to exceed 7 million sq ft by 2022, as demand surges for faster goods distribution and e-commerce penetration, according to JLL.
The urban logistics industry in India is expected to expand significantly beyond 2022, as the increasing trend of faster goods distribution and e-commerce penetration increases nationwide. “Urban logistics will play a more front-and-centre role in the metropolitan economies of India as consumers become more tethered to the convenience, transparency and hygiene benefits of online purchasing throughout and post-Covid. The surge in e-commerce has led to increased storage space and logistic delivery capabilities, thereby giving owners and developers a clear opportunity to capitalise on the demand, which we believe will easily exceed 7 million sq. ft by 2022,” said Radha Dhir, CEO and Country Head, India, JLL.
“Today last-mile delivery takes up more than 47% of e-commerce transportation costs. Urban logistics have come in as the perfect bridge to reduce these costs as well as increase delivery efficiency. The shift from retail to urban logistics is generating change in the demand curve for highly automated and sustainable spaces, encouraging e-commerce and 3PL players to implement micro fulfilment technology to maximise efficiencies and optimise last-mile logistics to boost their businesses,” said Yogesh Shevade, Head – Logistics & industrial, India, JLL.
Dark stores are driving efficiencies, faster delivery capabilities and reducing logistics cost, the report said. Dark stores house goods used to fulfil orders placed online, for the last mile connectivity and have the potential of saving anywhere between 10%-30% of logistics costs. Certain wholesale distribution centre businesses are moving towards dark store concepts in India. Since real estate cost in urban locations for logistic activity cannot meet retail rental expectations, dark stores are deemed ideal replacements, as they also serve as cross-dock stores. These can be planned in unused commercial building basements, parking spaces, mall parking, and defunct facilities.
For grocery business, replenishment to dark stores can be twice or thrice a day, and typical door deliveries will be morning or in the evenings. Some e-commerce players operate daily essentials to enter customer wallets. Hence compliance is not a showstopper. According to JLL, generally, to handle 1000 Stock Keeping Unit (SKUs), warehouse space can range between 2,000-20,000 sq. ft. depending on product type and Days of Cover (100% inventory cover for number of days). Hence, it is possible to save anywhere between 10%-30% of logistics costs using dark stores.