DHL Supply Chain to invest EUR 500mn in India to boost capacity
The expanded warehouse capacity is intended to better serve rising industries such as e-commerce, retail, consumer, life sciences, technology, engineering and manufacturing, and automotive
DHL Supply Chain (DHL) announced a EUR 500 million investment in India over the next five years to dramatically expand its warehouse capacity, workforce, and sustainability initiatives. DHL will own and operate wholly-owned large multi-client sites in India as a result of this transaction, adding twelve million square feet of warehouse space to the Group's existing portfolio.
The expanded warehouse capacity is intended to better serve rising industries such as e-commerce, retail, consumer, life sciences, technology, engineering and manufacturing, and automotive.
"The majority of the investment is going toward the construction of large warehouses and logistics centers where economies of scale. In India we will have a multiple customers facility, which means we can deploy people across multiple customers or bring in economies of scale," said Vikas Anand, Managing Director, DHL Supply Chain India.
Accelerated digital technology solutions, such as Assisted Picking Robots, Indoor Robotic Transport, Intelligent Process Automation, Wearable Devices, Voice Picking, Inventory Management Robots, and Algorithmic Optimizations, will be installed in these warehouses.
"Despite the current, economic and geopolitical uncertainties in the world, we see enormous growth potential in the Asia Pacific region, with India making a significant contribution. As a dynamic, stable and fast-growing economy, the Indian nation plays a key role for the global economy. Its investment-friendly and entrepreneurial environment makes India a preferred place for Deutsche Post DHL Group to even accelerate its investments. With a rich pool full of highly qualified young talents and innovative digital entrepreneurs India is a favourit hub for our global contract logistics business in DHL Supply Chain and one of our priority markets," said Oscar de Bok, CEO, DHL Supply Chain.
Investing in infrastructure for current and future customers
DHL Supply Chain India intends to grow its footprint and real estate investments by purchasing land and building campuses, each of which has the ability to develop 1 million square feet. DHL will expand capacity at wholly-owned DHL multi-client sites in important metro areas such as Bangalore, Chennai, Kolkata, Mumbai, the National Capital Region (NCR), and Pune by 12 million square feet. These cities contribute significantly to India's overall Gross Domestic Product (GDP). Furthermore, multi-client sites are being constructed in rapidly expanding state capitals and tier 2 cities like as Ambala, Baddi, Cochin, Coimbatore, Guwahati, Sanand, Hyderabad, Jaipur, Indore, Lucknow, Bhubaneshwar, Hosur, and Visakhapatnam.
DHL Supply Chain India will also open two new Business Support Centers (BSC) in Bangalore and Pune within the next 12-18 months to support customer demand. Currently, the company runs three Business Support Centers (BSC) at Mumbai, Gurgaon and Chennai. These BSCs provide 24x7 value-added services including domestic and international Transport Control Towers, Business Analytics to support decision-making, Freight Bill Audit Payment (FBAP), Order to Cash (O2C), LLP Control Towers and similar support services to its customers in India and across the globe.
"In addition, we plan to invest heavily in the 20 significant cities, called "tier one state capitals" in India, where the minimum size of a site would be around two lakh square feet. We currently have roughly 11 million square feet and aim to double it in the next five years to 22 million square feet," said Anand.
Creating employment opportunities
To complement its national strategic growth objectives, the firm plans to double its workforce size to 25,000 employees by 2026, with an 11% diversity ratio. Investment is being made in skill development and resourcing centres to induct and educate workers through certification programmes to prepare them for work process changes caused by the industry's rapid transitions and digitalization. The first resource centre has opened in Bangalore, with other locations planned in Mumbai, Delhi, Chennai, and Kolkata.
DHL Supply Chain's SmarTransport division will also leverage its warehouse investments to further accelerate transport growth by providing strategic, scalable solutions to large customers enabling economies of scale with end-to-end service offerings. Through its asset-heavy and asset-light model, DHL Supply Chain currently offers the full suite of transport solutions include Full Truck Load (FTL), Part Truck Load (PTL), "milk runs", secondary transport, intra-city and inter-city air movements.
In support of the DPDHL's roadmap to have climate-neutral logistics by 2030, DHL Supply Chain India will be converting its entire intra-city fleet into Green fuel / EV versions by 2025. In fact, by the end of 2022, 100% of the two-wheeler fleet will be converted to EVs. Furthermore, all new sites will implement green features, including solar panels for electricity, rainwater harvesting, LED lights, smart meters, etc.
"Asia Pacific currently accounts for about 15 percent of DHL Supply Chain's global revenue but is among the fastest growing regions, with India being a key contributor to this growth. The Indian logistics market, worth over US$200 billion now, is expected to grow at about 10% per year in the next five years to reach around US$330 billion. We take a long-term view in India with businesses here having reasons to be optimistic," said Terry Ryan, CEO, DHL Supply Chain Asia Pacific.
In recent years, the government has also increased efforts to improve the country's logistics performance, boost trade and safeguard foreign investment – in particular, expenditure on logistics is expected to reach USD$500 billion annually by 2025. A Logistics division was recently established to introduce positive changes to existing procedures and bring related technology and innovation to maximize efficiency.
"Building up large multi-client sites with efficient end-to-end transport solutions along with value-added services run by highly skilled employees allows us to maximize operational efficiency and puts us in a strong position to scale according to what our customers need, across various sectors. As one of the best places to work in India, we will continue to invest in our people, to deliver the best service quality to our customers," said Anand.