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1、 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and wareh
2、ousing market in India1The logistics and warehousing market in IndiaOctober 2022 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private
3、English company limited by guarantee.All rights reserved.The logistics and warehousing market in India2Table of contents1.Preface2.Indian logistics and warehousing market an overview3.Key industry drivers4.Trends shaping the industry5.Evolving concepts and themes6.Logistics value chain7.The five com
4、petitive forces8.Navigating through the challenges9.Way forward:Immediate focus areas for companies483 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG
5、 International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India2 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member fir
6、ms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India3The logistics and warehousing market in India3PrefaceBuoyed by the challenges of the pandemic and the rising ecommerce activity,the logistics
7、 and warehousing sector in India has seen a rapid transformation.Evolving business needs and altering consumer behaviour has led to a series of technological advancements,investments,newer business formats,further driven by favourable government support.The ensuing focus towards speed and convenienc
8、e has driven consumers towards online shopping,while on the other hand,the commercial and office segments have witnessed mutations in the form of flexible office space and smaller formats closer to customer locations.Given the pace in demand from across the industries,the sector may well be set for
9、strong growth in the next few years.From a largely unorganised,asset-heavy industry,the industry is now shifting towards a lighter model,eliminating huge capex,optimising delivery timelines,and efficiently managing operations.Technological developments have been rampant across value chain,leading to
10、 larger focus on automation and data analytics,while also deploying digital tools for effectively utilising resources and managing operations.Recognising the growing demand for the sector,the Government has also implemented a range of action steps to improve the sectors viability.Development of dedi
11、cated rail-based freight corridors,improving focus towards multi-modal connectivity,policies such as Logistics Efficiency Enhancement Program,along with initiatives to support sustainabilityall of these account for policies favouring sectors growth.However,surging land prices,skewed modal share towa
12、rds road,high logistics costs,and lack of adequate infrastructure are some of the challenges faced by the sector.These challenges are likely to be addressed through larger focus on digitisation across supply chain processes,better planning and execution,and a balanced strategy towards the modal mix.
13、Moving ahead,the demand for logistics and warehousing is expected to percolate to tier II or secondary markets,given the increasing prevalence of these cities,specifically due to the traction in the ecommerce segment.Companies are expected to adapt to the changing industry dynamics,amending their bu
14、siness formats,the technology infrastructure,and the strategies across business processes.Lastly,technology will play a pivotal role across the logistics cycle,including sourcing,transport,storage,and delivery of goods.Companies implementing new technologies would be able to realise benefits in the
15、form of reduced manual effort,predictive insights,transparency across supplier tiers,and a better customer experience.2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with
16、KPMG International Limited,a private English company limited by guarantee.All rights reserved.2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limit
17、ed,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India4Indian logistics market an overviewThe Indian logistics sector is on a growth trajectory,driven by burgeoning ecommerce market and technology driven transformation.The industry has evo
18、lved from being a transport and storage driven activity to a specialised function,covering end to end planning and management of goods,value added services towardslast mile delivery,predictive planning and analytics,among others.170250380FY17FY21FY25EIndian logistics market(USD billion)1Peer landsca
19、peHighly fragmented industry with presence of several small,unorganised players75%15%10%Ownership(2021)1Up to 5 trucks5-20 trucksMore than 20trucks10%90%Structure1OrganisedUnorganised1.Logistics on the cusp of a transformation,Motilal Oswal,October 2021;2.Logistics service market in India,Netscribes
20、,2022;3.Third-party Logistics Market in India by End-user and Service-Forecast and Analysis 2021-2025,Technavio;4.Indian express logistics industry 2022,Indian Chamber of commerce and Aviral Segment break up(FY21)173%18%5%5%RoadRailWaterAirTop locations2Top rated states as per the Leads index 2021-r
21、ating the states on key parameters around logistics services and infrastructureTop rated states 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Lim
22、ited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India5Indian logistics market an overviewValue added services3PL logistics202020258%CAGR3Highly fragmentedConsolidated3PLFor large scale companies and wide operationsEnd users:Express logi
23、stics1,4Perishables or time sensitive deliveryEnd users:2020202516-18%CAGR175%25%OrganisedUnorganisedSources:1.Logistics on the cusp of a transformation,Motilal Oswal,October 2021;2.Logistics service market in India,Netscribes,2022;3.Third-party Logistics Market in India by End-user and Service-Fore
24、cast and Analysis 2021-2025,Technavio;4.Indian express logistics industry 2022,Indian Chamber of commerce and Aviral 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with K
25、PMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India6Indian warehousing market an overviewThe Indian warehousing market is also gaining momentum with increasing demand and supply over the years.3PL and ecommerce pl
26、ayers are the major occupiers,penetrating in tier-2 and 3 cities as well,and eventually increasing the share of secondary markets.Focusing on larger picture of convenience,efficiency,and sustainability,companies are moving to a hub and spoke model,while also adopting technology for streamlined opera
27、tions.Transaction share by end use of space(2021)*1Demand and supply scenario of tier 1 cities2Absorption by city(2021)218%15%14%11%8%8%4%3%20%Delhi NCRPuneMumbaiBengaluruChennaiKolkataHyderabadAhmedabadTier 2 and 3 cities85%15%WarehousingIndustrialWarehousing(2021)2Tier 2&Tier 3 citiesTier 1 cities
28、Supply 8.9 million sq.ft36 million sq.ftAbsorption8.6 million sq.ft25.1 million sq.ft*Warehousing refers to storage activity;Industrial refers to manufacturing activity6386631461599.9%10.2%8.5%9.4%9.9%11.2%0.00%2.00%4.00%6.00%8.00%10.00%12.00%0204060800019
29、202020212022E2023EGrade AGrade BVacancyCumulative Stock(mn sq.ft.)1.India Warehousing Market Report 2021,Knight Frank;2.Market in Minutes:India Industrial&Logistics,2021,Savills 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG glob
30、al organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India7Indian warehousing market an overview31%30%31%37%5%3%5%3%4%6%23%20%20212026P3PLEcommerceFMCDFMCGReta
31、ilOther sectorsMiscellaneousTransaction growth(2017-21 vs 2022-26)165%56%12%15%23%201920202021Sector split of warehousing Demand(2021)1Share of secondary markets in warehouse transactions is increasing11%1.India Warehousing Market Report 2021,Knight Frank;2.Market in Minutes:India Industrial&Logisti
32、cs,2021,Savills1%2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The log
33、istics and warehousing market in India8Key industry driversIncreasing ecommerce demand,technology upgradation and startup activity is driving market growthIntroduction of reforms such as GST and e-way bill,driving industry growth,consolidation and efficiencyFree trade warehousing zones and logistics
34、 parks.Governmentswarehousing policy on exclusive warehousing zones throughpublic-private partnerships to ease transportation and logisticscosts and further propel growth1Governments focus on infrastructure,logistics development andmulti modal connectivity,with INR7.5 lakh crore capex in FY23.2Gover
35、nment initiativesEmergence of new age tech logistics startups,strongly penetrating in this space and developing competitive offeringsSeveral players entering the B2B space,driven by manufacturingNew players bringing in more technology and digital systems for higher productivity,triggering overall in
36、dustry growthNew age startupsRise in ecommerce leading to expanded operations,catering accelerated demandChanging consumer behavior,demanding convenience through last-mile connectivity,ease of returns and othervalue-added servicesEmergence of Direct-to-consumer(D2C)brands seeking end to end logistic
37、s servicesOmni channel retailing further boosting demand for multiple warehouses to serve the end consumers.Flourishing ecommerceGlobal companies shifting manufacturing focus toIndia,leading to more demand for warehousingoptions and logistics servicesProduction Linked Incentive(PLI)scheme boostingdo
38、mestic manufacturing,and hence creating moredemand for industrial space and warehouses.Global manufacturing shiftModern technology solutions creating opportunities interms of expansion of solutions across the value chainWarehouses being conceptualised and integrated withtechnologies such as,Internet
39、 of Things(IoT),roboticsand artificial intelligence(AI)Technology advancementSources:1.How the new warehousing policy will transform Indias logistics,Mint,22 December 2021;2.Budget speech document 2022-2023,1 February 2022 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability P
40、artnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India9Trends shaping the industryGrowing scale of operations
41、pushing adoption of technology deployment and 3PL servicesSources:1.India Warehousing Market Report 2021,Knight Frank;2.Internet of Things finding takers among logistics firms:HERE Tech;15 July 2021Ecommerce is driving the Indian warehousing market volumes,with sectors share in warehousing transacti
42、ons growing from 18 per cent in FY2017 to 31 per cent in FY2021.1This has led companies to outsource their logistics requirements to 3PL operators,to optmise delivery timelines,avoid huge capex,while maintaining an Asset Light modelIncreasing focus on consumer-centricity,direct-to-consumer(D2C)model
43、,last mile delivery is further driving this shift.Hence,larger focus on 3PLs to manage inventory,optimise fulfillment,end to end procurement,distribution and data management.3PL players are moving beyond traditional services to:Integrate manufacturers ecommerce websites to provide network-wide inven
44、tory Available to Promise(ATP)Provide estimated delivery dates for consumers and cost reduction,capacity expansion depending on demand Gain better visibility and faster decision-making and reporting across all operations.About 56 per cent of Indian logistics companies use map-based solutions for shi
45、pment monitoring.IoT,automation,electric vehicles(EVs),and location technology are among logistics industrys key priorities.2Warehousing providers are looking at lean and smart logistics solutions,with integration of technologies includingInternet of Things(IoT)for SKU*handling;augmented reality(AR)
46、,drones for inventory monitoring;and blockchain for data encryption.Big data to forecast changes in volume and customer demands,with solutions on real time data analysisOn road,integrated,optimisation and navigation software for driver delivery routesUse of Digital Twinsvirtual replicas of a physica
47、l object,like a building,to visualisewarehouse operations and coordinate data from sources like IoT sensors.Warehouses and facilities can also use the technology to create 3D models to see changes within the layout and also assess the impact in advance.Managing complexities through 3PLTechnology dep
48、loyment for end to endtransformationGrowthTransactions(million sq m)1FY2017-21 FY2022-26 3.49.14.97.7An AI driven freight platform is helping fleet owners reduce cost by providing real time visibility in supply chain and eliminating cargo theft,improving delays and detention,driver safety,vendor col
49、laboration with the use of IoT and analytics.165%56%Ecommerce3PLStatistics/Case studyA global logistics firm has launched an online platform providing fluidity and transparency in supply,with features like track and trace capabilities.Surging demand for ecommerce with increasing customer centricity
50、is pushing demand for third party integration.Role of warehousing and logistics is moving beyond the traditional scope,with end to end optimisation,technology deployment and value-added services.*Stock keeping unit 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnersh
51、ip and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India10Trends shaping the industryCompanies are increasingly embracin
52、g automation and enabling cost-effective warehousing techniquesSources:1.Smart warehousing:A pressing priority for post-COVID businesses,TPCI,June 19,2021;2.Micro Fulfillment Market Expected to Reach an Installed Base of 6600 MFCs by 2030 LogisticsIQ,3 March 2022Warehousing and logistics ecosystem i
53、s evolving,with major push towards automation across processes such as storage,retrieval and relocation of goods.Increased throughput requirement of sectors like ecommerce is expected to increase technology adoption.The Indian Warehouse Automation Market is expected to grow at a 26.4 per cent CAGR d
54、uring 2021-2026,from USD86.2 million in 2020 to USD512.2 million in 2026.1Some of the prevalent use cases include:Automation and robotics technologies,including automated storage and retrieval systems(ASRS),conveyors,palletizers,sortation systems,autonomous mobile robots(AMRs),automatic guided vehic
55、les(AGVs),for streamlined operationsProcess-oriented automation software that leverages scanners,barcodes,to streamline the data collection and integration processAutonomous mobile robots(AMRs)to deliver everything from intricate picking fulfilment to managing space efficiency by moving pallets and
56、large payloads not required immediately to remote/free locationsDark warehouses,which are completely automated and require no human involvement.Companies are increasingly evaluating the efficiencies of on-demand warehousing as a cost-effective and flexible business solution,while some are shifting t
57、o a hub and spoke model.On-demand warehousing is an online marketplace model that leverages the power of app-based tools.It helps with warehousing space requirements and connect with logistics players who offer excess warehousing capacity on a pay-per-use basisBy monetising unutilised storage spaces
58、,warehousing players can save themselves from bearing considerable expense on surplus spaces in on-demand warehousingLocalisation of micro-fulfillment warehousesciting facilities near high-population urban centers to enable faster and less expensive order fulfillment(Depending on the company,these w
59、arehouses may be stocked from larger distribution centers in a hub-and-spoke model or receive product directly from the manufacturer).End to end optimisationwith automationValue added servicesStatistics/Case studySurging demand for ecommerce with increasing customer centricity is pushing demand for
60、third party integration.Role of warehousing and logistics is moving beyond the traditional scope,with end-to-end optimisation,technology deployment and value-added servicesA leading ecommerce player is deploying a robot-based sortation technology in its warehouses.This enables 100 self-guided robots
61、 to autonomously sort items in the order of delivery pin codes.Every hundred AGVs(automated guided vehicles)result in a 60 per cent boost in process efficiency.Micro-fulfilment(growth estimates)210X by 2025 30X by 2030A logistics provider has invested in a network of fulfilment centers,enabling merc
62、hants to directly sell their products,and be closer to online buyers.Also helping them leverage the network with end to end visibility of operations 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independen
63、t member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India11Evolving concepts and themesSome of the emerging themes,though at a nascent stage,are expected to drive momentumA larger focus o
64、n circular economy based on Cradle-to-Cradle(C2C)approach is the next new normal,emphasising on remanufacturing,recycling,and reusability of materials.With government also pushing focus on transition from a linear to a circular economy,players would need to evaluate reverse logistics,having all proc
65、esses integrated.Currently at a nascent stage,urban logistics is gaining traction in metros and other cities,as consumers opt for more convenience,transparency and flexibility of online purchases.To reduce costs and increase delivery efficiency,warehouses are moving closer to customers with smaller
66、facilities,and penetrating to smaller cities as well.Indias urban logistics spaces are expected to cross 7 million sq.ft by 20221Logistics players would focus more towards deploying energy efficient EVs and alternate fuels.This could increase usage of biofuels,hybrid EVs and hydrogen fuel cells The
67、government has also been framing policies for cleaner technologies,and hence,investing in greener cold supply chains and solar-powered,temperature-controlled warehouses would be a focus area too.Drones are gradually becoming popular,aiming to eliminate manual effort and increase efficiency in areas
68、where deliveries are difficult.Indias drone rules 2021,3could pave the way for faster deliveries,higher profitability,and substantial reduction in carbon emission.Facilitating last mile deliveries,a package,which currently takes up to 72 hours to deliver,will be delivered between 8 to 12 hours with
69、heavy lift drones.2Focusing more on supply chain resilience,manufacturers are geographically diversifying their supply chains.Moreover,logistics providers are integrating systems and players across the value chain for higher visibility and governance.With disruptions becoming rampant,remote sourcing
70、 is expected to become more dominant with technologies such as AI and Blockchain.With remote working becoming popular,players are expected to deploy tools like smart glasses and augmented reality collaboration apps,to handle order allocation,inventory control management,order picking,and material ha
71、ndling with simultaneous collaboration.With AR-assisted training,employers could also get trained through assisted remote-learning features.Sources:1.India urban logistics spaces expected to cross 7 million sq.ft by 2022,JLL,9 September 2021;2.Heavy-Lift Made-In-India Drone To Redefine E-Commerce,Bi
72、ts&Drones,India,13 December 2021;3.The Drone Rules,2021,Ministry of civil Aviation,PIB,28 January 2022 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG Internatio
73、nal Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India12The logistics value chainNote:This is an indicative value chain based on a normal scenario.The value chain may alter basis the model followed by logistics providerProcurement
74、Inbound warehousingDistributionDelivery hubs/RetailerInboundOutboundFunction Inbound procurement of raw material and goods Consolidating shipments from different sources Inventory management Storage,sorting,packaging and other warehousing activities Outbound shipments from factory/warehouses to reta
75、ilers/delivery centers Shipment tracking,quality and temperature control Storage of finished goods Inventory management and demand planning Order processing and invoicing Last mile deliveryModeLoad units Bulk shipping Full Truckload(FTL)Not applicable Unit shipping FTL/LTLLess than truckload(LTL)Val
76、ue added services Supply chain planning Vendor management Assembly and product customisation/rebranding Route optimisation and cost planning Shelf replenishment and inventory analytics Notifications and updates;reverse logisticsEvolving roles Alternative fuels and EVs-deployment for procurement Bloc
77、kchain technologies for farm to fork tracking Smart warehouses and use of cobots Automation across various functions for fast turnaround and quality Sustainable distribution;drones;autonomous delivery testing Predictive analytics for cost and delivery planning Express delivery Micro fulfilment and d
78、ark stores moving closer to customerRoad,Maritime,Rail,AirInvolving both domestic and international transportRoad,Maritime,Rail,AirRoad for local supply;other modes for national/international shipmentsRoadInvolves local distributionEnd consumerFirst mileLine haulLast mile 2022 KPMG Assurance and Con
79、sulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India13The
80、five competitive forcesSources:1.Logistics on the cusp of a transformation,Motilal Oswal,October 2021Note:This is a broad-based Porters five forces model prepared for the overall logistics industry.Analysis the competitive forces would be more prevalent if a defined segment within the industry is pi
81、ckedThreat of new entrants:HighThreat of substitutes:ModerateBargaining power of suppliers:LowBargaining power of buyers:Moderate to highLow barriers to entry making market entry easyModerate investment requiredTechnology advancement introducing new players(including startups,ecommerce players)into
82、the industry.No other close substitute to logistics industry,apart from transportation servicesConsumers have an option to switch to other modes(for instance,rail,instead of air freight).Minimum differentiation and low switching costs gives high bargaining power to consumersConsumers often tend to s
83、witch service providers,basis costs,flexibility and value-added services.Presence of large number of players reduces the bargaining power of suppliers,due to abundance of choiceLesser dependence on one supplier due to less complex serviceHowever,players with large scale and differentiated offerings
84、could have a competitive edge.Industry rivalry:HighHighly fragmented industry with 90 per cent small unorganised players1Intense competition with several players offering undifferentiated yet competitive services.2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership
85、 and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India14Navigating through the challengesHigh cost and visibilitySources
86、:1.Logistics on the cusp of a transformation,Motilal Oswal,October 2021;2.Fast Tracking Freight In India,NITI Aayog,June 2021;3.94%of the Fortune 1000 are seeing coronavirus supply chain disruptions:Report,Fortune,February 2020;4.Top 5 trends in supply chain management to look out for in 2022,Econom
87、ic Times,19 February 2022;5.Logistics Efficiency Enhancement Program(LEEP),Ministry of road transport and highwaysChallengeSteps to mitigateSkewed towards road transportRails share in freight transportation in India has been declining over the years.In 2021,it accounted for 18 percent share compared
88、 to 71 percent share for roads.1While rail could be a cost-effective and efficient option,companies are still not deploying it due to time constraints and lack of flexibility.Cost of road transport is much higher(INR2.5 per tonne/km compared to INR1.35 per tonne/km for rail and INR1.1 per tonne/km f
89、or water).1Long haul goods could be transported through rail;bulk freight and low to medium value non-bulk products can also be moved through rail and intermodal transportThe Government has been taking initiatives towards rail infrastructure,investing in dedicated freight corridors to increase rail
90、network capacity.Eastern and western dedicated freight corridors are expected to be commissioned by June 2022.2Lack of visibilitySupply disruption has been a major cause of concern in the recent times.Several logistics firms have struggled or continue to struggle with deliveries due to lack of visib
91、ility across suppliers and routes.This eventually has an impact on the whole value chain,delaying production as well.Use of control towers for better visibility,and a connected view of metrics and events across the supply chainLogistics firms can track the whole process of inventory receiving,storag
92、e,order management and fulfilment,and shipping from a single location.Deploy real time tracking to send warnings and alerts for immediate actions in case on any disruption.Notify customers on shipping and estimated time of arrival(ETA).High logistics costsLogistics costs in India are significantly h
93、igh,accounting for 14 percent of the GDP,2much higher than other large economies.Driven by high transportation cost,this can be attributed to low efficiency;under utilisation of trucks,skewed modal share,and obsolete technologiesWhile one of the ways to cost reduction is balancing the modes of trans
94、port,companies should also increase efficiency by optimising vehicle use and productivity through effective routing and loadingInvest in standardisation and digitisation of processes and equipment The government has introduced Logistics Efficiency Enhancement Program(LEEP)5to improve logistics effic
95、iency and building 35 multimodal logistics parks.71394544IndiaUSEuropeChinaModal share(%)1RoadRailWaterPipeline62%34%4%Logistics costs in India2TransportationInventoryAdministrativeNearly 94 per cent of the Fortune 1000 companies experienced supply chain disruptions during the pandemic.3Disruptions
96、cost three out of every 10 containers to miss their scheduled sailing,thereby affecting their scheduling reliability.4 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with
97、 KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India15Navigating through the challengesOvercoming the environmental impact and soaring land pricesSources:1.Govt increases allocation for EV subsidy threefold,Econo
98、mic times,4 February 2022;2.Fast Tracking Freight In India,NITI Aayog,June 2021ChallengeSteps to mitigateIssues around environmental impactWith a very high share of road transport,Indias freight activity deploy internal combustion engine(ICE)vehicles,mostly powered by diesel.Penetration of EVs in fr
99、eight is less than 1 percent,with players posing reluctance to switch to alternate fuels.Moreover,trucks in India have poor fuel economy,which negatively impacts the environment.Improving fuel economy by discarding old vehicles with poor performanceShift to EVs or alternate fuels,while also deploy c
100、lean technology for fuel efficiency.The government has launched FAME II scheme,offering a subsidy to accelerate manufacturing and deployment of EVs.Under the scheme,the government has allocated INR 8,596 crore for upfront subsidies for EVs and INR1,000 crore for charging.1 Surging land pricesLogisti
101、cs and warehousing companies are faced with a growing challenge of increasing land prices and unavailability of suitable land parcels.Increasing competition for a suitable land parcel with several complexities around regulations is further adding to uncertainty.Since Indian warehouses are experienci
102、ng horizontal development with more requirement of land,increasing prices could further add to incremental costs.Develop a plan for space optimisation for better land utilisationDeploy technologies to reduce cost of operations,and hence,offset the impact of rising land costFocus on smarter small war
103、ehousing spaces055404550IndiaUSChina EuropeFuel consumption of Heavy-Duty Vehicles2Fuel consumption(L/100 km)Having an efficient modal mix could ultimately bring down costs India has set a target of reducing the logistics costs as a share of GDP from 14 percent to 10 percent which can sav
104、e up to INR 10 lakh crore.Shift towards other modes to cause less road traffic.Also,improved modal share and reduce the vehicular-freight activity by 48 percent in 2050Greater supply chain visibility to enable companies de-risk supply chains,avoid surge in prices due to unavailability,while ensuring
105、 continued supply Additionally,focus on alternative fuels will lead to reduced carbon emissions and improved air quality India can save 10 giga tonnes of CO2 and 15 million tonnes of nitrogen oxide(NOx)caused by freight transport by 2050.Key takeaways2 2022 KPMG Assurance and Consulting Services LLP
106、,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India16Way forward:Immediate fo
107、cus areas for companiesTap into secondary marketsSustainability is keyTechnology remains paramountAdapt to changing formatsTier 1 cities remain key markets,however,it is imperative to percolate into secondary markets,given the increasing prevalence of tier 1&2 cities,especially with growing ecommerc
108、e.Utilising newer concepts of warehouses,including dark stores,micro fulfilment hubs and on demand warehousing would be key to success,driving efficient last mile deliveries.Sustainability to become a prominent pillar of the industry.Companies should be focusing towards deploying sustainable practic
109、es throughout its value chain and functions.Green logistics,fuel economy and alternate fuels,smarter energy efficient warehouses are some of the initiatives to begin with.These could not only help achieve nations sustainability target,but alsobenefit in the form of goodwill,newer customers,better pa
110、rtnerships,among others.Rise of ecommerce has created room for growth in the form of evolving formats such as omnichannel retail,quick commerce and other models such as Buy Online,Pick up in store(BOPIS).It will be critical for logistics and warehouse companies to strategise and manage their operati
111、ons with changing landscape,to tap into these opportunities.Necessary to adopt technology across logistics cycle,including transport,storage and management of goods.Companies implementing new technologies to reduce manual effort,IoT and cloud for real time insights and predictive maintenance,and blo
112、ckchain for supply chain transparency could receive plethora of benefits in the longer run.The logistics and warehousing market in India16 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member f
113、irms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPM
114、G International Limited,a private English company limited by guarantee.All rights reserved.The logistics and warehousing market in India17Acknowledgements 2022 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of inde
115、pendent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.We are sincerely grateful to the following people from the ecosystem who have helped in the preparation of this reportCompliance and DesignSameer Hattangadi(Senior Assoc
116、iate Director)Lata Rathod(Manager)Nisha Fernandes(Manager)Shveta Pednekar(Manager)Reshma Pai(Associate Director)Aanchal Behl(Assistant Manager)Damini Sharda(Associate consultant)ResearchThe logistics and warehousing market in India17The information contained herein is of a general nature and is not
117、intended to address the circumstances of any particular individual or entity.Although we endeavour to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.No one should
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