DHL to increase warehousing to benefit from GST & rising ecommerce sales

India’s consumer market secured a place with the top five in Asia. One of the main reasons for this is its thriving ecommerce industry. This budding industry has increased the demand for logistic services. Even with retailers and sellers expressing their reservations about Goods and Services Tax (GST), logistics firms feel it will not hamper their business.

Deutsche Post DHL Group plans to expand its warehousing capacity to meet the growing ecommerce boom and likely boost in freight movement after GST is implemented.

Benefits of expansion

The Mumbai-based managing director at DHL Supply China India Pvt. Ltd., Vikas Anand declared, “We see business-to-consumer as the next big challenge, a big growth area and we really want to tap into that through businesses such as modern retail.”

As for the national tax to be implemented on 1st July, it is expected to make online retail easier by ridding the ecommerce space of levies divided among –

  • Cities
  • States
  • Federal governments

According to Anand, there are multiple opportunities to avail of. This is because businesses with manufacturing outlets scattered in different states to take advantage of the local taxes will combine operations once GST comes into play.

DHL expansion plan

A] Warehousing

In the coming three to four years, the DHL supply chain in India plans to invest more than $100 million to increase its capacities. Around 65% of this investment is expected to go towards warehousing. By 2020, Anand said that the company plans to increase its warehousing from 7 million square feet to 10 million square feet. Out of this entire space, 70% will be concentrated in metros while the rest is expected to be spread through various towns and cities where the end-users are.

B] Transportation

Besides its warehouse facilities, the logistics company also intends on strengthening its transportation network that caters to industrial and retail customers. DHL Supply Chain India transports goods via road through contracted trucks from dedicated sellers. It plans to use railroads to decrease delivery time and reduce fuel costs.

Anand said, “A good high-single digit of DHL’s freight movement may be through trains in the next five years, mainly to move goods between two big cities.”

As many as 1.2 million online transactions arise on a daily basis in the Indian ecommerce market. From 2017 to 2020 this number is likely to grow by 31%, which will make daily transactions range up to 80 billion, a KPMG report stated in 2016. Besides logistics companies like DHL, online marketplace owned logistics firms may also be planning expansion tactics to meet the demand of the increasing consumers in the country.

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