Mahindra Logistics shifts to build-to-suit model to boost efficiency

Mahindra Logistics, the country’s third-party logistics provider is shifting to a build-to-suit (BTS) model for its warehousing networks. The company believes that 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.

Prasanna Pahade, Vice President of Auto and Farm Business at Mahindra Logistics, told Autocar Professional that 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,” he added.

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. 

Mahindra Logistics offers fully integrated solutions spanning multi-modal transportation (inbound and outbound), warehousing solutions, store and linefeed services, yard management, large contractual workforce management, just-in-time services, aftermarket logistics, return logistics, and layout and process design support among others, for the automotive industry. 

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-foot warehouse park in the Chakan-Talegaon region, which is expected to be operational by the end of this financial year. The warehouse park will be spread over three phases, with the first phase comprising 0.5 million square feet. It 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. 

The company claims 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 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 Indian government had introduced several landmark reforms in the logistics sector in the fiscal year 2022–23, which are aimed at providing a comprehensive framework to provide a fillip to the logistics sector.

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

The launch 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 sector. ULIP will create a single window for logistics data, while ONDC will create a common platform for buyers and sellers of goods. Further, under the Gati Shakti initiative, the government has also focused on the growth and development of integrated infrastructure for the logistics sector. This includes projects such as the Bharatmala Pariyojana, Sagarmala, and UDAN.