Mumbai's 3PL Boom: How Third-Party Logistics Are Shaping the Warehousing Landscape
Third-party logistics (3PL) companies have become instrumental in helping businesses scale and satisfy their diverse consumer bases, which ultimately impacts the bottom line. On a larger scale, 3PL players are also reshaping the warehousing landscape in India. As the sector grows rapidly, it has had a ripple effect on the popularity of industrial warehousing facilities and industrial plots. To learn more about how the 3PL boom has affected warehousing in India and what lies in store for the future, continue reading.
Is the 3PL Boom Affecting India's Warehousing Market?
India's warehousing market is poised for a significant transformation. As per a report by CRBE[1] released in January 2024, leasing in the industrial and logistics sector grew to 38.8 million sq. ft. in 2023, compared to 36 million sq. ft. in the previous year. With the rapid evolution of supply chains, the country's warehouse space demand is expected to reach around 1.2 billion sq. ft. by 2027. This uptick in the demand for warehousing spaces will be witnessed across different grades (A, B and C) and various Indian cities. Furthermore, Grade A warehousing stock is likely to increase from 290 million sq. ft. in 2023 to an impressive 400 million sq. ft. by 2027.
Industry insiders have attributed the surging demand for industrial developments, industrial plots & logistics parks to the growth of the logistics sector and India's resilience despite global challenges. 2023 was a strong year for leasing momentum across eight major Indian cities. 3PL players held a substantial 45% share in the rising demand for warehousing and industrial park spaces. Additionally, a report by JLL[2], highlighted a 15% year-on-year increase in the total stock of Grade A and B warehouses across major Indian cities, with 3PL logistics players emerging as the largest segment responsible for the rising demand.
On one hand, the growing demand for 3PL services can be attributed to several factors, such as businesses outsourcing their logistics and warehousing management solutions. This allows them to focus on core activities that drive business. Businesses are also drawn toward 3PL providers due to the flexible warehousing options offered by the latter. Today, businesses are looking for warehousing facilities that can adapt to market shifts and seasonal demands. With the growing popularity of 3PL services, the demand for in-city distribution centres, warehousing, and industrial parks is also rising.
However, the Grade A logistics warehouse has a lower penetration rate, around 20-25%. Experts suggest that 3PL players are key to improving the penetration of Grade A warehouses and integrated logistics in India. They also highlight that multi-tenant warehousing facilities are gaining popularity due to manufacturers' preference for short-term commitments that prioritise flexibility and cost-efficiency. As 3PL players consolidate and move toward large, single warehouses to streamline operations, providers and developers will benefit from greater liquidity.
Despite challenges related to pricing and rental rates, industrial park developers in India can harness the rising popularity of industrial warehousing units, manufacturing in India and industrial plots to build relationships with 3PL players and leverage the country's evolving logistics landscape.
At Lodha, we value the power of timing and try to anticipate our client's needs before they arise. With Lodha Industrial and Logistics Parks (LILP), we have done just that. At LILP, we offer world-class warehousing units featuring plug-and-play facilities that enable optimal technological integration. Designed to streamline operations, reduce costs, and cut down on delivery times, the units at LILP are perfect for 3PL providers and businesses across sectors.
Lodha, India’s leading real estate developer, now setting benchmarks in the industrial and logistics sector with state-of-the-art warehousing solutions and features of industrial park that have unparalleled connectivity and operational excellence. While Lodha Industrial and Logistics Park, Palava allows businesses to meet their bulk warehousing needs and streamline logistics, Lodha Logistics Park (LLP) Kurla is designed for seamless in-city distribution, warehousing and last-mile delivery. Located close to various avenues of transport, from airports and ports to roadways and highways, Lodha Industrial and Logistics Park is strategically located to expedite deliveries and increase customer satisfaction to the rising demand for warehouses in Mumbai and top logistics parks in India.
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