Learning ABC of ware housing
There is growing preference for Grade A warehousing spaces in the country. Operational efficiency and better management will hold the key for occupiers and companies willing to make it big. Chandranath Dey, Head of Industrial Operations, Business Development, Industrial Consulting & Supply Chain Consulting, JLL India, comments on the current scenario.
With rising levels of maturity, the industrial and logistics sector is becoming more organised as well as standardised. Grade A space is one of the stepping-stones in this process as it provides an ease in time-bound supply, customer satisfaction, risk-free environment and rationale in working capital requirement. There has been a quantum leap in demand for Grade A space over Grade B in the last year. While in 2017, overall India absorption in Grade A space was 9.9 mn sq. ft. against Grade B absorption of 9.8 mn sq. ft. year, 2018 witnessed a significant jump of preference for Grade A space. In 2018, at panIndia level, Grade A absorption was 17.66 mn sq. ft. against Grade B absorption of 14.14 mn sq. ft.
Few advantages that Grade A warehousing space has:
Operational efficiency: Up to 30 per cent additional open space; up to 30 per cent space for internal cargo handling and up to 40 per cent storage height to enhance traffic & cargo movement, use of modern MHEs and maximising storage load.
Wider cargo lines: Additional floor-load capacity (up to 50 per cent) and storage height facilitates heavy/odd-dimension cargos and increases pallet position for standardised cargo, especially for long-term storage.
Prevention: Improved fire fighting system, drainage system, floor-height and construction quality provide additional protection from unexpected threats and minimise risk of probable in-store damages.
Operational time management: Provision for sufficient parking, material handling and marshalling space optimises operational time and cost not only for vehicles and MHE operation but also for sorting/identification of products.
Clientele: Planned storage space, efficient material handling space, safety and security and better access/connectivity are the predominant criteria for MNC/ and national brands. Warehouses are the basic foundations for the supply chain of any company that relies on distribution of its products from factories to shops and end users. For this, companies might choose to lease or own spaces,
Warehouses are the basic foundations for the supply chain of any company that relies on distribution of its products from factories to shops and end users
depending on the total costs involved. Grade A warehouses are labelled based on their superior construction quality, location, space, amenities, clients, among others. As online retail grows, Grade A warehouses have also become a workplace of choice, for many without a college degree. This is helpful for many from the employment perspective. However, there are challenges: High cost of land sometimes comes as a challenge for investors interested in Grade A warehouses. Land cost constitutes a major component of a warehousing project investment.
GLOBAL SCENARIO
Globally, Grade A warehouses follow the following criteria: !DDITIONAL HEIGHT AND HIGHER floor load bearing capacity. "ETTER INFRASTRUCTURE WITH ACCESS to mechanised MHEs, fire detection and prevention systems, clean environment. ,AND USE WITH SPACE FOR PARKING heavy vehicles/MHEs movement, multi-modal connections.
GOING FORWARD
Grade A absorption share grew from 50 per cent to 56 per cent of total India absorption levels from 2017 to 2018. It is expected to further grow as occupiers look for spaces with higher specification as per requirements. A growing economy and a preference for well-oiled, organised spaces, along with GST will drive the demand for Grade A warehousing spaces.