The global market for Material Handling Equipment (MHE) is projected to reach US$200 billion by 2027, driven by the strong emphasis on production and operational efficiency and worker safety, says a latest report from Global Market Insights Inc.
The market will witness growth with increasing number of industrial facilities modernising their infrastructure to boost productivity. Industries are employing sophisticated machines to increase throughput by speeding up the process of material movement.
The concept of ‘last-mile’ is widely popularised in supply chain management and transportation planning for its ability to increase customer satisfaction and profitability. Automation, optimisation and delivery route planning are therefore vital strategies adopted by companies to improve their last-mile performance. Of equal importance are the ‘first-mile’ operations involving indoor material handling on the plant floor. Raw material being the primary and most importance element in manufacturing needs to move through multiple stages of production and final packaging in a smooth and seamless manner to prevent logistical bottlenecks in production.
Not to question, timely handling of materials is important to ensure that right materials in right quantities are delivered to the right locations at the right time. Automation of material handling processes also has the benefit of making the workplace safer. Automation helps eliminate accidents and occupational safety issues associated with manual labor contributing towards better worker safety, health, wellness, and reduced company expenditure on employee insurance and compensation. The importance of the financial savings that can accrue from ensuring conformance to safety regulations cannot be undermined especially against the backdrop where legislations are becoming stringent and exceedingly punitive.
Trends, Drivers to Market Growth
Growing popularity of same day deliveries for e-commerce fulfillment as a service differentiator is also strengthening the business case for mechanised and automated handling of materials. One major trend in the market is recent and dramatic expansion in the development of robots for use in warehouses, predominantly those serving the rapidly growing e-commerce industry. At present, many companies in the USA, Europe and Asia stand strong to exploit this huge opportunity and now manufacture automated material handling equipment for use in warehouse and logistic operations across the globe.
The increasing popularity of customised orders has propelled the manufacturers and warehouse operators to increase the efficiency and speed of their picking and sorting processes to achieve business success. Also, the manual processing of customised orders increases the probability of errors due to the added complexity. Automated material handling (AMH) systems such as robotic pickers, ASRS, AGV, automated sorters, and conveyor systems can help handle the customised orders at a faster rate, along with reducing the error rate to a great extent.
According to the report, major driver in global AMH equipment market is constantly growing demand for automated material handling equipment as companies derive more and more worth from cost-cutting and labour-reduction. As sensor technologies advance and the capability to harness and investigate big data becomes more feasible in real time, the limits of operational efficiency in manufacturing, processing, material handling and logistics industries will continue to be pushed.
Also driving growth in the market is continuous technology developments and the resulting launch of sophisticated equipment with high levels of safety and well-researched ergonomics; and automation features that improve throughput and efficiencies. There is an increasing demand for industrial trucks that enable to transfer heavy goods easily and efficiently. There is a high demand for automated guided vehicles (AGVs) as they carry loads along the facility floor without the need of a driver or an onboard operator. They are operated using an integrated system of hardware and software components. Advancements in the sensor industry will fuel the R&D associated with AGVs. As they do not require personnel for operation, they significantly reduce the labor costs. There will also be an increasing demand for side loaders that carry long loads in the wood and steel industries.
Other noteworthy trends include healthy demand for alternatives such as electric tugs and manual stackers given the high risk of employee accidents and fatalities related to manually operated forklifts; and rising investments in robotics research and development and launch of new equipment with smart capabilities.
In 2020, COVID-19 had a negative effect on the AMH equipment market, resulting in decreased shipments of AMH equipment and the revenues generated from them. As a result, a drop was witnessed in the growth trend of the market during the first half of 2020. This trend is expected to discontinue in the latter half of the year as the demand is expected to increase due to the growing concern for material handling.
The COVID-19 pandemic has substantially impacted the value chain of the AMH equipment market. The US, China, India, South Korea, and Japan, which have been adversely affected by the pandemic, account for a significant share of the global AMH equipment manufacturing. The automotive, aviation, and metal & heavy machinery industries are witnessing a low demand, which is expected to continue for the short term due to the global slowdown and declining purchasing power.
APAC to lead AMH equipment market
Asia Pacific is expected to be the fastest-growing market for AMH equipment. Rising awareness related to warehouse automation, increasing emphasis of leading economies such as China and Japan on robotics and automation, and the growing e-commerce industry are some of the primary factors contributing to the high growth rate of APAC. The rapid growth of automotive, ecommerce, food & beverages, and healthcare industries in emerging economies, such as China and Japan, has contributed to the growth of the AMH equipment market in APAC.
Moreover, governments in APAC countries are increasingly emphasising safety on production floors, which can be best achieved by the implementation of AMH equipment. The market is witnessing rapid growth in countries such as China and Japan, owing to increasing investments by manufacturers and suppliers in the installation of such equipment at warehouses and distribution centers.
In fact, China ranks as the fastest growing market with a CAGR of 7.3% over the analysis period supported by factors such as increase in new warehouse establishments against the backdrop of improving global trade and domestic consumption; developing internet infrastructure and the resulting increase in e-commerce and urban logistics; and the Made in China (MIC) 2025 initiative that aims to bring the country’s massive manufacturing and production sector into the forefront of global technology competitiveness.
Geographically, APAC accounted for the largest market share of more than 35% revenue in global automated material handling equipment market. Growing manufacturing units in countries like China, Japan and also India will augment the application of such equipment over the next few years. The Asia Pacific region is projected to grow at a CAGR of around +10% during the forecast period. On the other hand, Europe is closely followed by the APAC, which occupied about 28% of the market share owing to presence of big automotive industry players and huge automobile production in the region.
Going forward, the expanding 3PL industry globally will boost the adoption of material handling equipment in warehouses and distribution centers. As online retailing has gained traction, several companies are leveraging the benefits of third-party logistics (3PL) providers to cater to the increasing consumer demands. This will encourage 3PLs to modernise their warehouses and storage facilities to ensure on-time and fast delivery of shipments. AMH equipment enables them to efficiently load/unload products from transportation trucks, store products at large heights in racks, and move products easily throughout the facility through constrained spaces.