DHL India Will Invest $100 Mn To Expand Warehouse Capacity

Logistics giant Deutsche Post DHL Group is planning to expand its warehouse capacity in India. The move may have been triggered by DHL India looking at the new planned national tax system and increasing ecommerce transactions.

Vikas Anand, Managing Director at DHL Supply Chain India said,  “We see business-to-consumer as the next big challenge, a big growth area and we really want to tap into that through businesses such as modern retail.”

Apart from increasing its warehouse space, DHL Supply Chain India is also looking to strengthen its transportation network which is used to deliver products from businesses to industrial and retail customers. Currently, the company transports goods by road, mainly through contracted trucks from dedicated vendors. It is looking to use railroads to improve time and fuel cost efficiency.

As per a report released by the Indian Institute of Foreign Trade (IIFT) and the Federation of Indian Chambers of Commerce & Industry-Confederation of Micro, Small and Medium Enterprises, (FICCI- CMSME), the B2C ecommerce market in India is expected to store a potential of $26 Bn. The study also estimates that $2 Bn in revenues can be achieved by 2020.

DHL India plans to invest more than $100 Mn in an additional capacity over the next three to four years. Out of this, about 65% will go into warehousing. The company aims to increase the warehouse space to more than 10 Mn square feet by 2020. Currently, it has warehouse space of 7 Mn sq ft. Multi-client centres located near metropolitan cities will make up 70% of the total space. The remaining space will be spread across various cities and towns that would be closer to the end-users.

According to Anand, DHL Supply Chain India’s sales have grown at about 30% annually over the past five years. This is double the estimate of the contract logistics industry average. The company claims to hold 8% to 10% share of the $3.5 Bn Indian logistics market.

According to the company’s annual report, in 2016, Asia Pacific contributed about $11.3 Bn to its parent Deutsche Post’s total revenue. The company said that demand for supply chain services will see a rise in the rapidly growing economies such as Southeast Asia and India.

In May 2017, Gurugram-based logistics ecommerce firm Delhivery secured $30 Mn in funding from Chinese international conglomerate Fosun International. Bengaluru-based truck network platform, 4tigo Network logistics, raised about $10 Mn Series A funding from existing investors Accel Partners and Infosys co-founder Nandan Nilekani. Other startups in this segment apart from DHL, include Bengaluru-based Locus, Ahmedabad-based logistics startup Locanix and Bengaluru-based B2B logistics startup BlackBuck.

In September 2016, DHL India entered an agreement with Alibaba to expand its Trade Facilitation Centre Programme in India. To procure the same, DHL had to present the members with one solution for the export and import of documents, samples, and small shipments.

(This development was reported by LiveMint)