CARGOCONNECT-AUGUST2024 - Flipbook - Page 86
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Importance of Last-Mile Delivery
L
ast-mile deliveries and reverse logistics account for 10-15% of the total
kilometers traveled in the overall
logistics value chain. However, they contribute nearly 50% of the delivery costs
in e-commerce. Improvements in urban
logistics are being developed to address
these challenges related to freight traïc
within cities. This includes analysing
distribution patterns based on urban
characteristics to optimise eïciency.
Why is In-City Warehousing
necessary?
There is a need to set up in-city warehouses
and fulolment centres closer to the end
customer to:
1. Enable quick commerce (which is
expected to account for 3% of overall
e-commerce sales by FY927).
2. Act as a dark store and substitute
front-end real estate needed for retail.
In-city warehousing is poised to play
a crucial role in urban development and
infrastructure as urban distribution and
e-commerce penetration continue to grow.
This should encompass various models of
in-city warehousing, including dark stores,
micro fulfilment centres (MFCs), mini
warehouses, ghost kitchens, and others.
In-City Warehousing space growth (mn sq ft)
Adoption and Trends in India
1. Currently, most incity warehousing utilises
commercial complexes
such as unused office
spaces, defunct supermarkets, closed restaurants,
hotels, cinema halls, and
covered parking spaces
that are not in use. Mini
warehouses and micro
fulolment centres, which
serve as inventory fulolment centres for other
businesses, typically have
lower speciocations and
are often developed on
repurposed real-estate.
2. With large national
developers entering the
in-city warehousing sector, they are expected to
leverage their existing
residential and commercial
real-estate for constructing
warehouses. These facilities
will feature higher speciocations, approaching Grade
A standards in terms of
height, noor size, loading
bays, etc. This market segment is projected to expand
to approximately 4 million
sq ft by FY926. The majority of this Grade A space is
anticipated to be utilised
for dark stores, which cater
to end-consumer delivery
models where rapid turnaround times are critical.
Consequently, dark stores
are likely to be strategically
positioned around major
demand centres, within
1-3 kilometers proximity
to customers, ensuring
optimal location, adequate
docking facilities, and sufocient space.
3. Another signiocant
driver for the increased
86 | CARGOCONNECT AUGUST 2024
A schematic representation of a value chain for a dark store
adoption in India is the
utilisation of micro fulolment centres to cater to
hyper-local demand, particularly from unorganised
retail such as local kirana
stores. Unlike in the US
and the UK, where these
centres are primarily used
by large grocery chains,
their penetration in India
could expand signiocantly
by serving hyper-local
needs. As a result, the
delivery radius and proximity to customers for these
centres in India catering to
hyper-local demands will
be smaller compared to
their global counterparts.
Furthermore, with
large food aggregating platforms promising delivery
within 10 minutes, ghost
kitchens are expected to
experience rapid growth.
These kitchens typically
operate with a delivery
radius limited to 1-2 kilometers to meet the quick
delivery expectations of
customers.
Current footprint by end use industries
Other Trends
Currently, most dark stores
and fulolment centres are
typically located on the
ground floor. However,
due to rising demand in
major urban centers such
as metros and tier I cities,
these in-city warehouses
could increasingly adopt
structures with multiple
noors like G+2 and G+3.
Rental costs currently
range from `60-85 per sq
ft and vary significantly
across cities. In-city warehouses command higher
rentals compared to traditional Grade A warehouses
located on the outskirts
with closer proximity to
major national highways.
Source: Alvarez & Marshal
