CARGOCONNECT JULY2024 - Flipbook - Page 6
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There has been a sharp rise in
demand from end-user tenants for
warehousing assets, particularly
on a Built to Suit contract basis as
per their customised specifications.
Global institutional investors like Blackstone,
InvestCorp, Morgan Stanley, Mirae Asset and
Bain Capital, etc. are actively investing in
warehousing assets through joint ventures and
platform deals at entry cap rates of around 7%.
The growing importance of quick
commerce is highlighted by its
rapid ascent. According to Goldman
Sachs reports, annual Q-commerce
sales are projected to reach US$5
billion within three years. UBS analysts indicate
that Q-commerce currently accounts for
approximately 8% of the e-commerce industry
and is expected to capture a 20% market share
by FY29.
There are over 7,000 container
ships continuously operating
on the world’s seas.
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At its current volume of 420 million
metric tonnes (MMT) for the financial
year 2023-24, more than a quarter of
India’s cargo was transported through
an Adani port. It also accounted for
44% of India’s containerised seaborne cargo.
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The Department for Promotion
of Industry and Internal Trade
(DPIIT) plans to engage the
National Council of Applied
Economic Research (NCAER) to
conduct a primary survey to assess cargo
movement patterns and the cost of logistics
for each component involved. Last year, the
think tank had estimated India’s logistics costs
in 2021-22 at 7.8-8.9% of the GDP, based on
secondary data.
6 | CARGOCONNECT JULY 2024
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The truck to driver ratio in the
country has fallen to an abysmally
low level of about 55 per 100 trucks,
compared to 75 drivers per 100
trucks a few years ago. Low pay
scales, inadequate workplace benefits, lack
of hygienic restrooms, and insufficient night
parking facilities contribute to high attrition
rates, discouraging many from the younger
generation from pursuing this profession.
The Indian Warehousing market
is currently at an inflection point
with some similarities to the
office market of the 2000’s. With
rising FDI inflows (US$10 billion
between 2017-2022), higher private capital
allocation to the sector and sustained singledigit vacancy levels for Grade A warehousing
space, the sector is definitely poised for
growth.
With demand outpacing the
supply addition in India for the
last five years by a whopping
~40%, alongside healthy growth
in market rents by 5% p.a. For
Grade A facilities, the uptrend is expected
to accelerate in the foreseeable future. This
imbalance between demand and supply
creates a favourable investment environment
with adequate headroom for rental growth and
capital appreciation, while also generating
stable yields from reputed tenants.
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Presently, the National Highway
Authority of India (NHAI) gathers
approximately `40,000 crore in toll
revenue. This figure is projected
to increase to `1.40 trillion within
the next 2-3 years as India transitions to the
advanced Global Navigation Satellite System
(GNSS) based electronic toll collection system.
According to the bid document, the
GNSS-based tolling will initially be
rolled out on 2000 km of national
highways in the first three months
after the award of the contract and
extended to 10000 km in nine months, 25000
km of tolled highways in 15 months and 50,000
km of tolled highways or pan-India in two years.
The concessionaire will be expected to operate
and maintain the toll plaza for 10 years.
