Mahindra Logistics is making a shift towards a build-to-suit (BTS) model for its warehousing networks. As per the logistics provider this model will be more suitable for its long-term growth plans and will lead to a better payoff as compared to earlier times when it was more OEM or component supplier-focused.
“The company has built a network of BTS facilities across the country. We are connecting every part of the country,” he said. “All major cities are now getting connected with Tier-II and Tier-III cities. The BTS model allows Mahindra Logistics to increase efficiency and lower costs. The company also believes that the BTS model will be more sustainable in the long term.”Prasanna Pahade, Vice President of Auto and Farm Business at Mahindra Logistics
Pahade said that the strategy is to identify major consumption centres where they are likely to see demand. “We are going ahead of time and putting that capacity up there,” he continued.
As a result of this shift, Mahindra Logistics is adding new warehousing facilities, like the one in Nashik, and has plans to open similar facilities across the nation.
Also, Mahindra Logistics is developing a new 1 million-square-foot warehouse park in the Chakan-Talegaon region, which is expected to be operational by the end of this financial year. Spread over three phases, the warehouse park will in the first phase comprise of 0.5 million square feet of space, later the company has plans to add close to 2 to 2.5 million square feet of warehousing space annually and develop around 30 million square feet by FY27. On the whole, Mahindra Logistics currently has 19 million square feet of warehouse space across the country.
As per the company its expansion plans are in line with the growing demand for logistics services in India. The automotive logistics industry in the country is growing rapidly, driven by the increasing demand for vehicles and the growing complexity of the supply chain. The market is expected to reach a value of US$ 8.667 billion by 2029, at a CAGR of 6.2%, industry estimates suggest.
The fiscal year 2022-23 has witnesses the Indian government introduce several landmark reforms in the logistics sector, which are aimed at providing a comprehensive framework to provide a fillip to the logistics sector, including the NLP, ULIP and ONDC. Further, the Gati Shakti initiative has also focused on the growth and development of integrated infrastructure for the logistics sector.