The global Material Handling Equipment market is expected to reach US$ 171 billion by the year 2027, trailing a post COVID-19 CAGR of 4.5%.
Rising demand for incorporation of automation and modernization in manufacturing processes, expansion of the aviation industry and e-commerce industry, and demand for transparency in supply chain and flexibility in warehouse operations are some of the factors expected to drive the growth.
Material handling equipment is used in warehouses for managing the storage and transportation of goods and products. It ensures improved productivity by enhancing logistics at warehouses and manufacturing plants. These products offer cost-effective, process efficiency, and an accurate method for the swift transition of goods across the manufacturing plants and warehouses, resulting in increased demand.
Material handling is a crucial intermediary in the manufacturing sector. Although it does not directly contribute to the production of goods, it leads to efficiency in handling, managing, storing, and transporting goods. This equipment complements the production activity by ensuring a swift, smooth, and efficient circulation of goods thereby, resulting in the increased demand for the equipment over the forecast period.
Rise in industrial and infrastructural activities to fulfill the demand from the ever-growing population, is anticipated to bode well for market growth. Manufacturing and other industries incessantly attract huge amounts of foreign capital, thus augmenting the production activities. Governments across the world are increasing their infrastructural development to build new airports, rail networks, seaports, and power plants, and upgrade the prevailing ones. All these activities are simplified by using material handling equipment such as forklifts, conveyors, and Automated Guided Vehicles (AGVs).
Rising employer inclination towards employee or worker safety is also expected to fuel the growth of the material handling market. Thus, owing to the rise in industrial activities, industrialists have become more responsible for worker and workplace safety to maintain their goodwill in the market. As more companies are inclining toward automation to sustain the competition, encourage efficiency in the warehouse, and cut down costs, they are striving to build a safer working environment for employees. Thus, improving working and safety conditions is an integral part of their industrial activities, which is expected to remain a major growth avenue for this market.
The pandemic is having a considerable impact on world economy and all industries. The asphyxiated economy has set into motion a cascading effect of a marked recession which is being felt by businesses and consumers alike. Global GDP is expected to dip into the red at -3% with the US economy shrinking by a shocking -5.9%. With roots in China, the world's supply chains are facing unprecedented disruption & shutdown. Interwoven with a demand crisis, the supply chain shocks are exerting a compounded blow to manufacturing companies worldwide. The worst affected industry in this pandemic driven crisis is manufacturing with its complex supply chains, labor intensive processes, and interdependencies. Division of labor, modular manufacturing strategies, outsourcing to reduce costs and increase the efficiency, consistency, and quality of each operations, have made the manufacturing sector most vulnerable amid the lockdown restrictions. An indication of the grim state of affairs is the fact that global manufacturing PMI is already declining and will fall to an estimated all-time low of 38.4 points in 2020 as compared to 53.8 in 2019. This indicates severe contraction of manufacturing activity including new orders, production, employment, supplier deliveries, inventories, customers' inventories, commodity prices, order backlog, new export orders, and imports. Global industrial output is plummeting sharply with the U.S posting steep declines of -16.5% & -15.2% in March & April 2020 .
Business investment confidence is tumbling amidst poor demand, falling profits, liquidity crunch and a reeling global economy. The great lockdown of 2020 has crushed the global economy and with it the manufacturing sector. The loss in consumer confidence and erosion of household wealth and discretionary spending will impact virtually every industry and business worldwide. Global merchandize trade is expected to plummet by 15% to 30% in the year 2020 highlighting the magnitude of disruption. Against this backdrop, it requires very little speculation to measure the impact on manufacturing. In the United States alone over 80% of manufacturers are bracing for losses. The impact will mean crunch on capital resources; workforce layoffs/reduction and loss in productivity; supply chain disruptions; difficulties with funding; and increase in cybersecurity risks and fraud. Unlike IT services where work is being carried out remotely via internet and cloud platforms, for the manufacturing industry, plant activities and production cannot be carried remotely and therefore remains worst affected. The slower economic activity means reduced demand for industrial and consumer goods and lower manufacturing orders. In the midst of this crisis, demand for advanced materials used in manufacturing is taking a heavy blow as cash strapped companies struggle to cope. With manufacturing industry collapsing like a pack of cards, materials in the value chain are facing the biggest business setback ever. Second wave of infections and still high unemployment rates are infusing uncertainty into the recovery timeline for consumer demand. Despite moves to reopen the economy, battered business confidence plummets to new depths & rampant CAPEX spending cuts continues threatening to lengthen the road to industrial recovery. Plant closures & liquidity issues are resulting in cancellation & postponement of production equipment upgrade and replacement. As companies brace for impact, the focus is shifting towards survival resulting in budget cuts for all immediate non-essential capital and operating expenditure. As production slips & plant capacity utilization rates declines, there is less critical need for slat band and belt conveyors used for automated or semi-automated packaging and processing functions.
In the post COVID-19 period, growth will be led by re-doubled focus on modernization and automation of manufacturing processes coupled with the need for transparency within the supply chain and more focus on flexible warehouse operations. The market will receive notable impetus from technological advancements, recovery in manufacturing activities in developing countries and growing investment to upgrade manufacturing units. Factors such as strong focus on automation, productivity and worker safety will play a paramount role in augmenting market growth. While increasing implementation of advanced control methodologies is likely to favorably change the market dynamics, the combination of material handling machinery with electronic intelligence is anticipated to positively change the market outlook. Future growth will also be led by increasing adoption of these systems across diverse industries and notable use of these platforms for automobile production. However, high initial investment along with maintenance costs remains one of the major barriers for the market growth. The expensive nature of material handling systems will make it difficult for small- to-medium-sized companies to deploy the machinery within their production and distribution units. In addition, a number of large companies are planning to cut costs by considering options like purchasing second-hand units, renting industrial trucks or acquiring systems on lease. Some of the other factors that will challenge growth include technical issues related to operation, concerns associated with integration of software and hardware components, and cyber security threats.
The products segment has been segregated into storage and handling equipment, automated storage and retrieval system, industrial trucks, bulk material handling equipment, and others. The automated storage and retrieval system segment is anticipated to expand at the highest CAGR of over 5.2% over the forecast period, owing to the growing adoption of robotic systems, conveyor systems, and AGVs in warehouses and manufacturing units.
Meanwhile, the storage and handling equipment are used to buffer or hold materials when they are not being transported. They are used for temporary storage and long-term storage. Thus, the demand for pallets, shelves, and racks is anticipated to rise over the forecast period. Furthermore, the industrial trucks segment held the largest market share of over 30.0% in 2018 and is anticipated to witness significant growth over the forecast period. This is attributed to the technological advancements and emergence of automated solutions such as tracking and monitoring solutions in industrial trucks.
The end-user segment has been segregated into automotive, food and beverages, chemical, semiconductor and electronics, e-commerce, aviation, pharmaceuticals, and others. The e-commerce segment held the largest market share exceeding 15% in terms of revenue in 2019 and is anticipated to expand at the highest CAGR of over 8.2% over the forecast period.
Meanwhile, the food and beverage segment is anticipated to register a CAGR of over 5.5% over the forecast period. The rising need for handling, storing, and transporting materials within the factory for efficient manufacturing and packing of materials is anticipated to spur the equipment sales over the forecast period. Similarly, the aviation segment is anticipated to exceed USD 2.00 billion by 2018. Baggage handling systems, check-in systems, and other automation solutions incorporated in airports is expected to spur the sales.
Europe held the largest market share in 2019 and accounted for over 33% owing to huge investments made by governments for the adoption of innovative solutions coupled with the rising adoption of automation by several players. For instance, Toyota Industries Corporation launched two new automated shuttle solutions in the European market known as Toyota Autoshuttle and Toyota Radioshuttle. These shuttles are pallet carriers and are suitable for carrying heavy goods and ensures no goods damage.
Meanwhile, North American is projected to witness significant growth over the forecast period, attributed to the rising demand for automated material handling equipment. Increasing awareness about employee safety, accuracy, and effectiveness in managing bulk materials, along with adequate usage of space, and the emergence of integrated Industry 4.0 with IoT is expected to positively impact the regional growth.
Competitors identified in this market include, among others:
Storage and Handling Equipment
Automated Storage and Retrieval System
Bulk Material Handling Equipment
Food & Beverages
Semiconductor & Electronics
Middle East & Africa
United Arab Emirates (UAE)
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