Consumer durables witnessed bulk of the consolidation, followed by FACG

Reduction in no of

Parameters Reduction in cost warehousea
Consumer durables 40-50% 50-60%
FMCG 10-15% 15-20%

Source: CRISIL Research

However, with the economic slowdown caused by the pandemic and subsequent lockdowns resulting in lower
consumer discretionary spend, the consumer durables industry has been one of the hardest hit and is expected to
witness a decline of 15-17% in terms of volume, in turn pulling down warehousing demand from the same in
fiscal 2021.

Multi-modal logistics parks (MMLPs) — An opportunity for organised players

MMLP refers to a hub providing integrated logistics facilities with mechanised handling and inventory
management. However, there is no regulatory definition for MMLP in India yet.

MMLPs are being designed to act as one-stop solutions with facilities such as customs clearance services,
warehouses, cold storage, vehicle parking, and other value-added services.

At present, MMLPs are planned at numerous locations across the country by different ministries. The development
of MMLPs was initially proposed by the Ministry of Railways along dedicated freight corridors (DFCs) in 2009.
Following suit, 15 MMLPs were announced by the Ministry of Shipping under Sagarmala and 35 MMLPs by the
Ministry of Road Transport and Highways under Bharatmala in 2015.

However, on-ground execution of the project has been slow. MMLPs suffers from issues such as lack of standard
definition and involvement of multiple ministries.

To reduce the gap between planning and execution, the government has suggested creation of a MMLP authority
in its National Draft Logistics Policy. This centralised agency will oversee the planning and development of these
parks.

As per the project guidelines, the land to develop MMLPs is to be provided by the respective state governments,
while the connecting rail, port and railway connectivity will be ensured by the respective ministries. Private
players such as 3PL players or logistics service providers have been invited to develop and operate the
infrastructure, which could act as an opportunity for expansion of organised players.

Infrastructure and tax reforms

Government support for infrastructure and tax reforms among other growth drivers for industry

 
    
  
 
 
 
 
 
   
  

Infrastructure initiatives
Streamlined infrastructure loads to etficiency gains
and improves competitiveness. Intiatives as.
MMLPs, DFC, status of infrastructure to logistics,

food processing centres etc. This will improve
logistics compatitenss of the country

End user industries:
Consumption oriented sectors account for
Significant portion of demand, like FMCG, FMCD

ey)
Warehousing

 
  

st.
GST will result in warehouse consolidation, leading

to reduction in inventory and thus reduction in
overall logistics cost for players

EXIM growth:
EXIM traffic. particularly, for containers and non-
bulk goods §s also a major contributor

 

Source: Industry, CRISIL Research
Note: FMCD: Fast Moving Consumer Durables

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