How warehousing policy will reduce logistics expenses

What is the news?

The Government of India has proposed a New Warehousing Policy.

What is Warehousing?

Warehousing can be defined as the systematic process of storing and preserving goods on a large scale in a warehouse and making them available when they are demanded, i.e. for sale, distribution and consumption.

Which sector has been driving the warehousing demand?

The e-commerce sector has been driving the demand for logistics and warehousing across global markets. It has emerged as the most prominent driver of Indian warehousing market volumes, along with the third party logistics sector.

What is the aim of the proposed new warehousing policy?

The Policy aims to reduce logistic cost and ease transportation by developing exclusive warehousing zones in public-private partnership(PPP) model.

Who will frame and implement the policy?

The policy will be framed and implemented by the National Highways Authority of India (NHAI).

Where will the warehouses be located?

The warehouses will be located outside city centres, especially around the land available with NHAI along highways and expressways.

These warehouses will house cold-storage chains and will be able to store all kinds of cargo—wet and dry. 

Moreover, since warehouses are expected to come up outside city centres, large trucks carrying the cargo will not need to enter the city to unload their goods. This will also help boost bulk carrying capacity and save fuel. These large vehicles can also transport more goods compared to the smaller trucks.

What will be the impact of this policy on logistics cost?

Warehousing zones will help cut India’s logistics cost which is 14%-16% of gross domestic product (GDP) compared to 8%-10%  of  GDP in China and 12%-13% in the  US.

Moreover, the Government of India is also developing 35 Multi-Modal Logistics Parks (MMLPs) to improve the country’s freight logistics sector. This will help aid the proposed warehousing policy.

Source: This post is based on the article ‘How warehousing policy will reduce logistics expenses’ published in Indian Express on 22^nd Dec 2021.