Quarterly Market Observatory

Logistics & Warehousing Market in Outlook Update – Q2 2020

June 2020 The Eighty – 20 of Industry: What Matters?

Leading Impact of Covid-19 pandemic on the supply chain Edge disruptions in India Logistics - transportation Supply shock due to shut down of manufacturing facilities disrupted the logistics and warehousing segment in India; revival on cards in near future

Overall container The capping of Railways incur ₹450 As the imposition of the lockdowns and the spread of Covid- volume slowed airfares by the crore loss, around 7 19 disrupted the manufacturing facilities worldwide, the down to 3.5 per cent government may million cancelled tickets supply shock triggered the ripple effect on logistics and in Feb-April as further hurt carriers due to COVID-19 warehousing segment across the globe. Moreover, India too against 11 per cent who are estimated to has not escape the wrath of the virus and affected the growth in the be incurring daily More than 50% of the logistics segment. Notably, overall container volume slowed corresponding losses of ₹70-90 50 lakh trucks are down to 3.5 per cent in Feb-April as against 11 per cent period of FY19 crore already off the road due growth in the corresponding period of FY19. In addition, to the unavailability of Railways incur INR 450 crore loss as movement of drivers. Level of High Medium passengers has been suspended. Also, the freight corridors Impact impacted due to shutting down of manufacturing industries. Furthermore, the largest hit sector is aerospace sector as Source: eninrac consulting & Channel checks Indian aviation industry could face INR 24,000 crore revenue loss. On the other hand, the warehousing segment is likely Supply Chain has been disrupted all around the world due to expected to grow quicker than other segments as investment pandemic Covid-19. India too has not escape the wrath of the virus deals of almost USD 600 million are underway in the and supply chain disruptions have kicked-in during Q1 2020 and has warehousing space owing to greater attention to local started moving towards the normal track in Q2 2020. sourcing in order to reduce the imports majorly from China. Numbers to Focus Key Features Deployment Upon – Q1 2020 Expected Trends - Projects

China supplies 70% of active 01 Land acquisition to take off pharmaceutical ingredients (API) for warehousing project at requirement for the India Jewar Airport As Covid-19 Disrupts The severe disruptions in China were Global Supply Chains, Will The Zurich Airport International AG, on having a ripple effect on global trade flows. Companies Turn to India? November 29, was selected as the This has led to reduction of inventory concessionaire for developing the greenfield Jewar airport in the NCR buffers and left no room for adequate China is falling in attractiveness, buffers or safeguards. The vulnerabilities of region. Early stage activities such as what is filling its place? Given this system has been brutally exposed by land acquisition may take off first, Covid-19. This includes pharmaceuticals amount of dependence on China, particularly for the purpose of (China supplies almost 70 per cent of the only alternative country that can warehousing and supply chain active pharmaceutical ingredients (API) have the scale, the skills and the requirement for the industry space to service American demand 02 Decline in Coal imports effectively is India. as supply chain disrupted Warehousing Demand In due to economic slowdown 8 Major Cities Drops 29% Traction of Organised warehousing (in %) in the Indian market In Jan-Mar, New Supply The ongoing slowdown in coal imports Down 14% The 3PL and e- is most likely attributable to the 12% commerce 3 PL economic slowdown in recent months which has brought down the overall Warehousing space leasing 8% E-Commerce players are the 40% Manufacturing demand. Power demand and fell 29 per cent to 5.9 million FMCG consequently thermal power sq ft and new supply biggest 20% Others generation has witnesses a decline in declined 14 per cent to 9 adopters of the last three to four months which million sq ft in the first 20% organised along with the slowdown in other quarter of this calendar year consuming industries is resulting in the across eight major cities in warehousing fall in coal demand supply gap. the country amid coronavirus outbreak Source: eninrac consulting, Channel Checks Warehousing Demand Shaken, but Recoveries Could be Quick Quarterly Update Absorption Share Absorption Share Absorption Share – Q2 CY 2020 Sectors Pre Post Sectors Pre Post Corona Corona Corona Corona . Supply Chain has been disrupted all around the world due to Retail 7% Ecomm- Non 14% Essential pandemic Covid-19. India too has Level of not escape the wrath of the virus. Share FMCG 8% 3PL-FMCG 12% Warehousing Demand Shaken, but Recoveries Could be Quick. Decrease 3PL, e-commerce & FMCG for essential goods / services & Manufacturing 20% Pharma/Agri 5% Stable Pharma likely to recover the Increase quickest. Ecomm- 6% 3PL-Auto 12% Essential Source: eninrac reearch & Channel checks

Key Investments – Key Trends – Key Signpost – Industrial Q2 2020 Logistics & Warehousing Market in Warehouse to see sunlight India Q2 2020

. The ’s has decided to promote . The warehousing and logistics asset class could • Many warehousing complexes are expected domestic manufacturing of critical Key Starting be among the fastest to recover from the to come up across India, more so in the Materials and Active Pharmaceutical Ingredients coronavirus crisis. Warehousing and logistics post-covid world. Many e-commerce categories are expected to boom, as people (APIs) in the country. The approved scheme will industry will grow at 35% in 2021 compared with the earlier industry demand forecast of 25%. make a behavioural shift from buying offline promote Bulk Drug Parks with financial investment to shopping online.

of ₹3,000 crore in the next five years. . Online grocery platform bigbasket is looking at • Over the next couple of years, industrial . India could witness deals of nearly $600 million in hiring 10,000 people for its warehouses and last- warehousing is expected to see a sunrise warehousing if present-day negotiations go to plan. mile delivery to clear pending orders quickly and as (as some expect) manufacturing shifts Manufacturing, third-party logistics and ecommerce meet the spike in orders on account of the out of China. India wants to be prepared— companies have signed over 3 Mn sq. Feet of new nationwide lockdown. developers, particularly. They are building warehousing contracts across six locations in the warehouses at a frantic pace, often with April, while land acquisition of 3,000 acres for private equity (PE) booty. construction of new warehouses is currently under various stages of closing. QUARTERLY MARKET OBSERVATORY 04 Numbers to Learn to Numbers 04 India by theMoreover, numbers for deals secured warehousing spaces availableIndiain road, and air inports) India, of number The status of transportation segment (rail, 07 Deployment TrendsDeployment07 additions shall form additions shallform part of this section investments, like tenders and capacity segment logistics growthcovering warehousing space The pace of deployment of at projects 01 This Quarter This 01 interface interface developments, & regulatorypolicy including warehouse segment major highlights for The section showcases shall the logistics and warehouselogistics companies

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