By Mohandas Menon
KOCHI: Coimbatore in Tamil Nadu is rapidly emerging as a key warehousing hub for Kerala, driven by logistical constraints and geographical challenges faced within the state.
Proximity to Kerala, strong road and rail connectivity, and access to ports in Chennai, Ennore, Tuticorin, and Kochi make Coimbatore a vital logistics centre for South India.
Kerala’s unique geography, marked by a long coastline and the Western Ghats, poses logistical challenges.
High transportation costs
High transportation costs and limited connectivity with neighbouring states add to the complexity; moreover the lack of industrial land and high real estate prices make setting up large warehouses costly, especially near cities like Kochi and Thiruvananthapuram.
The state’s labour dynamics also present challenges. High unionisation and frequent strikes add to operational costs, and they occasionally disrupt business.
Labour shortages, especially in manual work sectors, drive up wages, making warehousing operations more expensive.
Due to these factors, Kerala relies heavily on warehouses in neighbouring states, as it lacks adequate large-scale warehousing.
The demand for cold storage is especially high, yet the infrastructure remains underdeveloped, resulting in higher transport costs and product spoilage, particularly for seafood and pharmaceuticals.
These factors have compelled Kerala to look outside the state for its logistics requirements, and among the neighbouring cities, Coimbatore naturally stands out due to its industrial advancement and more importantly, its proximity to Kerala.
Tamil Nadu government and private investors have developed integrated logistics parks in Coimbatore in order to cater to the fast-moving consumer goods (FMCG) and e-commerce.
Major logistics centres
Coimbatore has attracted major logistics centres from Amazon and Flipkart, serving both Coimbatore and Kerala. Equipped with automation and advanced inventory systems, these centres streamline supply chains and last-mile delivery.
Kerala’s demand for consumer goods, boosted by GST, is met through Coimbatore’s strategic logistics and warehousing, bridging essential supply chain needs for the region.
Kerala benefits from GST
It remains a fact that Kerala benefits significantly from India’s Goods and Services Tax (GST) regime, mainly due to high consumption driven by its high per capita income. A steady inflow of remittances from Gulf countries further boosts household income, fuelling demand for consumer goods, real estate, and lifestyle upgrades.
Kerala’s consumption per capita is among the highest in India, making it an attractive market for brands and businesses. Since GST implementation in 2017, companies have restructured distribution using a “hub-and-spoke” model. This has led to larger, centralised distribution centres, aimed at optimising costs and improving delivery speed.
