Mahindra Logistics is moving to a build-to-suit model to increase efficiency

Mahindra Logistics, the country’s third-party logistics service provider, is transitioning to a build-to-suit (BTS) model for its warehouse networks. The company believes this model is better suited to its long-term growth plans and will result in better profitability compared to previous periods when it was more focused on OEMs or component suppliers.

Prasanna Pahade, vice president of auto and agricultural business at Mahindra Logistics, said the company has established a network of BTS facilities across the country. “We connect every part of the country,” he said. “All major cities are now connected to Tier II and Tier III cities. “The BTS model enables Mahindra Logistics to increase efficiency and reduce costs. The company also believes that the BTS model will be more sustainable over the long term,” he added.

Pahade said the strategy is to identify major consumption hubs where demand is expected. “We’re going ahead of the curve and putting that capacity up there,” he continued.

Mahindra Logistics offers fully integrated solutions covering multi-modal transportation (inbound and outbound), warehousing solutions, branch and linefeed services, yard management, large contract labor management, just-in-time services, aftermarket logistics, returns logistics, and layout and process include design support for the automotive industry, among others.

As a result of this shift, Mahindra Logistics is adding new warehousing facilities, such as a large one in Nashik. The company also plans to open similar facilities across India.

The Company is also developing a new 1 million square meter warehouse park in the Chakan-Talegaon area, which is expected to be operational by the end of this fiscal year. The storage park will span three phases, with the first phase covering 0.5 million square meters. It plans to add approximately 2 to 2.5 million square feet of warehouse space annually and develop approximately 30 million square feet by FY27. In total, Mahindra Logistics currently has a storage area of ​​19 million square meters nationwide.

The company states that 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 increasing complexity of the supply chain. According to industry estimates, the market is expected to reach $8.667 billion by 2029, at a CAGR of 6.2%.

The Indian government had introduced several landmark reforms in the logistics sector in FY2022-23, aiming to create a comprehensive framework to revitalize the logistics sector.

For example, the National Logistics Policy (NLP), presented in September 2022, aims to reduce logistics costs from the current 14-16% to 8% of GDP over the next three years.

The introduction of the Universal Logistics Interface Platform (ULIP) and the Open Network for Digital Commerce (ONDC) are also significant developments in the digital infrastructure of the logistics industry. ULIP will create a single window for logistics data, while ONDC will create a common platform for buyers and sellers of goods. In addition, the government has also focused on the growth and development of an integrated infrastructure for the logistics sector as part of the Gati Shakti initiative. These include projects such as Bharatmala Pariyojana, Sagarmala and UDAN.

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