Automated Material Handling Systems Market

Automated Material Handling Systems Market Outlook (2023 to 2033)

Based on the latest research conducted by FMI, the global automated material handling systems market is expected to register a CAGR of 9.2% during the forecast period. In 2023, the market valuation is expected to be US$ 34 billion. By 2033, the value is anticipated to surpass US$ 81.8 billion.

The growth rate of the market is supported by some factors mentioned below.

• Requirement of fast, precise, and convenient delivery of purchased items.
• Ability to enhance product throughput, minimize order errors, and create the most out of their handling and sorting operations.
• Huge requirement for automated pick-and-place robots in logistics.
• Ability to respond to heightened customer requirements proficiently for the e-commerce market, despite the presence of many Stock Keeping Units.

Due to the thriving e-commerce industry, the market share is predicted to expand at an exponential rate throughout the forecast period. With customers preferring online shopping, their needs evolving, and severe rivalry among online retailers, the demand for automated material handling systems is expected to surge.

Automated material handling systems can handle a wide range of product stock keeping units (SKUs), huge SKU ranges, and lead time in the e-commerce market. This enables e-commerce businesses to efficiently meet rising customer demand. As online shoppers' preferences for customized and personalized products grow, e-commerce enterprises are finding it increasingly difficult to fulfill complicated requests using manual methods.

Customers also want these customized purchases to be delivered at reasonable rates and at the same time as standard orders. Due to the growing popularity of customized orders, manufacturers have been improving the efficiency of their picking and sorting operations.

Asia Pacific is expected to hold the dominant market share during the forecast period. Soaring industrial automation application, adoption of robots by leading countries including China and Japan is expected to surge the market share. The expansive e-commerce industry is also driving Asia Pacific's automated material handling systems market share.

In December 2021, KION Group established a new forklift truck manufacturing facility in China to provide supply chain solutions. Furthermore, governments in the Asia Pacific region are emphasizing a lot on workplace protection and reliability. This is effectively accomplished by integrating automated material handling equipment with the daily operations.

Historical CAGR (2017 to 2022) vs Anticipated CAGR

With businesses worldwide looking to automate their functions and deliver the products before the estimated time, the market is in for robust growth. With the growing e-commerce sector, and key players investing huge amounts for improvising logistics, it is expected that sales of automated material handling systems would surge. However, the COVID-19 pandemic had resulted in a shortage of raw materials which are useful for the manufacturing of this equipment.

This led to a price rise, as a result of which the sales saw a dip. On these lines, the researchers have opined that the anticipated CAGR may take a dip. The historical CAGR for the market was 12.2%, while the anticipated CAGR is 9.2%.

• Short-term (2023 to 2026): This period would be all about gathering the momentum. After recovering from a near economic collapse, the manufacturers would be looking to regroup. By assisting end users specifically to improve the value chain, providing utmost safety, and ensuring minimum labor interference, the demand for these systems would increase.
• Medium-term (2026 to 2029): During this timeframe, the market might see more and more buyers owing to the ability to make use of Near Field Communication. The establishment of this wireless technology on a large-scale basis would assist the manufacturers in identifying materials. This would save loads of time, as manufacturers can employ the labor on other aspects, and the technology involved would make the process of sorting faster. This coupled with the implementation of IoT would make the material handling systems way more precise and fast paced.
• Long-term (2029 to 2033): The market would certainly carry forward from where it left in terms of growth during this period. Complete automation may certainly lead to the ignorance of certain important characteristics, which can only be accomplished through human intelligence. Owing to this, the market might witness the rise of cobots. Known to work in synchronization with human beings, the cobots have the ability to increase the precision of business. Instead of following a pattern, these can achieve agile transformation whenever required, which would certainly change the fate of any business for good.

Manufacturers to play a Key Role in Market Growth

Owing to the rising popularity of customized orders, producers and logistics companies have started enhancing the effectiveness and frequency of their picking and sorting operations. Furthermore, because of the added sophistication, the collection and processing of personalized orders increase the likelihood of errors.

Automated material handling solutions, such as robotic pickers, ASRS, AGV, automated sorters, and conveyors, handle customized orders more quickly, while also increasing accuracy.

Due to the commencement of COVID-19, theautomated material handling equipment marketis growing primarily due to increased demand for ASRS in the e-commerce industry. Many businesses, includinghealthcare, e-commerce,and food and beverage, have adjusted their operations. Global demand for industrial and consumer goods has risen as well.

Nikhil Kaitwade

Principal Consultant

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Factors Limiting the Growth of the Market

The marketgrowth is projected to be hampered by the high operating and maintenance costs.Automationin the production process necessitates seamless operations, which results in greater operating expenses. Increasing preference for rentingequipmentmay also hamper the overall growth.

Small and medium-sized businessesplay an important role in a country's economic growth.SMEs assist businesses with the raw materials and components they require. TheseSMEs'supply chains rely heavily on material handling operations. The large upfront expenses of deployingautomated material handling systems, on the other hand, preventSMEsfrom fully automating their supply chain processes.

Some key businesses reduce their initial expenses by rentingindustrialvehicles, leasingequipment, or purchasing usedequipment. This as well is anticipated to stymie newequipmentpurchases.

Country-wise Insights

United States: Compliance Issues to Remain the Key Driver

In the United States, there are regulations based on a maximum weight a worker can lift. However, with the application of automated material handling systems, no such restrictions are imposed. They can lift weights worth hundreds of kilos, without any breaks, as a result of which the output increases by more than 5x times.

The IoT market in the United States is currently growing at a rapid pace. As per the estimates, the IoT market in the country is expected to surge at a CAGR of 23%. IoT is being increasingly implemented in these handling systems, as these help in maintaining the coherence of the material handling systems with various processes.

United Kingdom: Tough quality check measures to drive the growth

United Kingdom is mainly meant for its stringent measures on quality control. The ability to reduce contamination happens to be one of the most important criteria. The automated material handling systems work particularly well in the environments which are sensitive to even the small particles in the air. Thus, the deployment of these systems can assist the units achieve certification of class 1000, or even class 10. This also leads to lower levels of contamination.

The stakeholders in the United Kingdom are also spell bound by the ability to carry out their tasks independently. This had led to improvement in cycle times, as a result of which the operators can be assigned to other important areas of the business.

China: Massive e-commerce represents a beam of hope

China is the market leader when it comes to the e-commerce market. In 2022, China reported sales worth US$ 2 trillion. This is despite the fact that the country reported massive losses in a lot of sectors. The material handling system is used in the e-commerce sector, as it helps in the transportation of goods. Moreover, these systems also help in the automation of processes, which drastically reduces the order processing time.

In the processes that involve manufacturing at a large scale, the automated material handling systems have the ability to identify the missing material. As the Chinese manufacturers are known for scaling up the production capacity, such capabilities would certainly help the businesses grow.

Japan: Growing Logistics Market to Enhance Growth

The upgrade of warehouse facilities and increased outsourcing of logistics activities to the Japanese players is expected to propel the market growth. Apart from that, Japan is also meant for its massive semiconductor market.

In 2021, the semiconductor market in Japan generated a revenue of more than US$ 45 billion, and the market is expected to grow at a robust rate of 16.3%. The material handling equipment is mainly used in the assembly of the semiconductors. These also help to load and unload work in process parts from one or more storage units. These factors are expected to drive the automated material handling equipment market.

South Korea: Supply Chain Management Market to Lead the Growth

The South Korea supply chain management market is expected to showcase above-average growth after a couple of years of hibernation. The application of automated material handling systems helps push, store, and retrieve these materials. Moreover, South Korea is one of those nations which is at the forefront of the industry 4.0 revolution.

Industry 4.0 is expected to drive the South Korean economy, as it is adopted by the manufacturing sector, which contributes nearly 30% to the GDP. The automated material handling systems are expected to be an essential part of industry 4.0, as the concept is entirely based on automation.

Segmentation Insights

Which Product Type is expected to have the Leading Market Share?

The WMS segment is expected to be highly preferred during the forecast period. The warehouse management system is believed to be one of the most crucial aspects of the business to link the supply chain processes.

These also make use of software, which tends to increase the efficiency by making use of barcode technology, mobile computing, and web-based applications. The manufacturers are on a mission to automate manual processes and capture data. This has led to the development of automated WMS, which helps in inventory control as well.

Which is the Most Sought-after System Type?

According to system load evaluation, theunit load sub-segmentis predicted to increase at a high rate. This can be attributed to thee-commerce industry'sexpansion. The unit load enables the simultaneoushandlingof many commodities, resulting in shorter order lead times and loweroperational costs.

The pallet, which is the most common form of unit load platform, assists in the transportation and storage of goods. Most importantly, the unit load assists in increasing the space, and in a lot of cases, this increases the warehouse value as well.

Start-ups Utilize Robot-as-a-service for Short-haul Logistics

The new players in the market are solving shortcomings in the short-haul logistics by implementing a robot-as-a-service business model. Robotic solutions are being developed for improving short-haul routes, which considerably reduces forklift labor. These also improve the lead time in the logistics.

Ware: The start-up has been providing an enterprise-grade supply chain digitization platform. Ware has been building technology at the intersection of robotics and machine learning, thereby leveraging the power of drones to transform the way warehouses tracks inventory. In October 2020, Ware raised US$ 2.5 million in seed funding. The team said that it would make use of these funds to further its artificial intelligence capabilities.

Key players look to develop a Decarbonized Society

The key players operating in the market are accelerating their efforts to achieve a decarbonized society. These actions are expected to work in tandem with the sustainability action plan developed by the manufacturers.

Owing to this, they have started working towards developing photovoltaic systems, switching to renewable energy plans, etc. In December 2022, Daifuku had accelerated company wide efforts to achieve decarbonized society. Shiga Works, which is Daifuku’s core manufacturing plant, had already transitioned to 100% renewable energy.

Key developments in the market:

• In October 2022, Daifuku North America announced the grand opening of a new manufacturing plant.
• In October 2022, Kion Group announced Marcus Wassenberg as the Group Chief Financial Officer.

Dominant Players in the Market

Automated Material Handling Systems Market Segmentation

By Product:

• Robots
• ASRS
• Conveyors & Sortation Systems
• Cranes
• WMS
• AGV

By System Type:

• Unit Load
• Bulk Load

By Vertical:

• Automotive
• Metals & Heavy Machinery
• Food & Beverages
• Chemicals
• Healthcare
• 3PL
• Semiconductors & Electronics
• Aviation
• E-Commerce
• Others

By Region:

• North America
• Latin America
• Asia Pacific
• The Middle East and Africa
• Europe