Warehouse operators witnessing high demand in east and northeast India
While 3PL companies have some presence in Kolkata, Siliguri and Guwahati and cater to Northeast cities from there, they now plan to go deeper to fast track last mile delivery.
“We are betting big on east India because of its strategic location with newly developed national highways, freight corridors and ports with the potential to serve the entire eastern belt and neighbouring countries” said Abhijit Verma, executive director and CEO of Avigna Group.
Avigna expanded its warehouses from 4 locations to 7 locations in the last 2 years and is expanding across north and east India.
Third party logistic firms like Quickshift, ANS commerce and Stellar also have plans to expand in the northeast.
“Our expansion strategy for the east is quite spread out, which includes centres such as Kolkata and Siliguri in West Bengal, Cuttack and Bhubaneswar in Odisha, Patna in Bihar and Raipur in Chhattisgarh.
To strengthen our contract logistics operations in the east, we have built a 500,000 sq. ft. area logistics park in Kolkata,” said Anshuman Singh, chairman and MD, Stellar Value Chain Solutions. “We will soon launch another half a million sq. ft. warehousing space in Kolkata.”
Similar logistics parks are also lined up in Guwahati, Patna, Siliguri, Bhubaneswar and Raipur.
The push is largely being attributed to a spike in e-commerce transactions in the north eastern states.
“E-commerce activity has witnessed the greatest expansion in the north-eastern states of India. We are expecting a phenomenal rise in demand for large-format warehouses in key cities like Guwahati, Siliguri and Imphal and at a later stage in the tier-II cities in north-east India.
These places will emerge as important distribution nodes for e-commerce players,” said Anoop Chauhan, COO – Supply Chain, Avvashya CCI, a contract logistics business of
Avvashya CCI has established outposts in Guwahati, Bhubaneswar and Kolkata and is now expanding operations in Siliguri in West Bengal.
According to Knight frank India, warehousing demand in secondary markets has grown 31% YoY compared to a 23% YoY de-growth for primary markets, in FY 2021.
“With the pandemic having severely impacted offline retail, this festive season has witnessed growth rates upward of 40% in tier II markets including eastern India cities like Siliguri, Guwahati among others. To ensure deliveries in 1-2 days, brands are keeping stocks closer to such markets,” said Prodipto Roy, cofounder, Quickshift.
Quickshift has leased 20,000 sq ft of warehousing space in Kolkata to facilitate last mile delivery in eastern and north eastern regions.
Industry reports show that third party logistics has become the key demand driver for warehouses in Kolkata, accounting for a whopping 47% of transactions in FY 2021 compared to 26% in FY 2020. Siliguri also has emerged as a key warehousing hub recording warehousing leasing of 0.4 million sq ft, in FY 2021 indicating a 100% YoY growth over FY 2020.
“We are looking for strategic partnership with warehouse space aggregators for rental space and infra with our core focus on structuring and streamlining the processes,” said Nakul Singh, coounder, ANS Commerce.
Given that the market, till date, has been largely unorganised, the scope for growth in large, investment grade warehousing developments remains huge.
Demand has been robust over the last 18-24 months with rentals firming up across major Tier I markets.
Going forward, market activity will be driven by large e-commerce, 3PL players in addition to FMCG, retail, consumer electronics and pharma/healthcare sectors.