Faster Goods Distribution and E-Commerce Penetration to Drive the Urban Logistics Industry.

Faster Goods Distribution and E-Commerce Penetration to Drive the Urban Logistics Industry.

Last updated: Oct, 2021

According to JLL’s report 'India Urban Logistics - Are dark stores revolutionising the sector?', urban logistics spaces in India are anticipated to exceed 7 million sq. ft by 2022, as demand grows.

The urban logistics industry in India is at a budding and fragmented fringe state now and is on the cusp of going mainstream. Demand will be backed by freight congestion presently impacting cities and communities and alleviate the associated environmental impact of vehicles on these places. According to JLL, urban logistics will assist these infrastructure, community, and environmental concerns, while through the efficient movement and transport of commodities in urban areas through last-mile storage spaces. Additionally, urban logistics is anticipated to expand considerably beyond 2022, as the rising trend of faster goods distribution and e-commerce penetration increases countrywide.

“Urban logistics will play a major front-and-centre role in the metropolitan economies of India as consumers become more hitched to the convenience, transparency and hygiene benefits of online buying throughout and post-Covid. The rise in e-commerce has led to increased storage space and logistic delivery capabilities, thereby giving owners and developers a great opportunity to capitalise on the demand, which we think will easily exceed 7 million sq. ft by 2022,” said Ms. Radha Dhir, CEO and Country Head, India, JLL.

“Nowadays last-mile delivery takes up > 47% of e-commerce transportation expenses. Urban logistics have come in as the ideal bridge to lessen these expenses as well as increase delivery efficiency. With expanded warehouse and logistics requirements growth, business models are progressing and creating a vast opportunity for the industrial sector. Besides, the shift from retail to urban logistics is creating change in the demand curve for highly automated and sustainable spaces, encouraging e-commerce and third party players to device micro fulfilment technology to maximise efficiencies and optimise last-mile logistics to increase their businesses,” said Mr. Yogesh Shevade, Head – Logistics & industrial, India, JLL.

Dark stores are pushing efficiencies, faster delivery capabilities and lessening logistics cost

Dark stores house goods utilized to satisfy orders placed online, for the last mile connectivity and have the possibility of saving anywhere between 10%-30% of logistics costs. Some wholesale distribution centre businesses are turning towards dark store concepts in India. As real estate cost in urban locations for logistic activity cannot meet retail rental prospects, dark stores are considered ideal replacements, as they also operate as cross-dock stores. These can be planned in vacant commercial building basements, parking spaces, mall parking, defunct facilities, etc. 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. Few e-commerce players functions daily essentials to enter customer wallets. Thus, compliance is not a showstopper.

According to JLL, generally, to carry 1,000 Stock Keeping Unit (SKUs), warehouse area can range between 2,000-20,000 sq. ft. differing on product type and Days of Cover (100% inventory cover for number of days). Therefore, it is possible to save anywhere between 10%-30% of logistics costs using dark stores.

The demand for greater automation is powering sustainable requirement for urban logistics spaces

Collaborative logistics will also lead to a more sustainable urban logistics infrastructure in India, According to JLL. Key initiatives such as vehicle load consolidation, automatic route mapping, data collection, and assessment, will lead to lesser delivery vehicles on the road and savings on fuel and emissions.

The opportunities with urban logistics in resolving SKU problems are numerous. SKUs are turning into cost-effective real estate alternatives assisting companies avoid high traffic areas in cities, serving several online stores concurrently and far more variation per item at a far lower space cost.

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