The future of material handling

By Sachin Haralkar, Ralph Mair, Philipp Schmitt and Xing Wang

While many industries struggle to see where profitable expansion might come from in the future, the material handling and equipment (MHE) sector appears to be a niche with a comparatively bright future. Challenges naturally lie ahead. But so too do genuine and attractive opportunities for players who understand the relevant drivers of change and position themselves accordingly. Drawing on our in-depth project experience and intimate links to material handling players, we produced a short but detailed account of where the industry is headed and what key factors will separate the winners from the losers in this sector in the years ahead.

Trends in MHE hardware demand

Projecting an overall market volume in excess of USD 70 billion by the end of the decade, up from around USD 44 billion in 2024, the paper highlights those aspects of material handling hardware that are driving the most forceful growth. Drilling down, it explores why the retail industry in particular is behind an increasing transition to mobile automation systems. In particular, e-commerce is seen to have a pivotal role as online shop operators scramble to keep up with customers’ demands for ever shorter delivery times. These trends are clearly impacting the automated storage and retrieval systems (AS/RS) space, for example (see figure).

With no paradigm-shifting equipment technologies currently on the horizon, cost pressures and a focus on more incremental developments are increasingly encouraging MHE customers to accept mid-tech solutions (such as forklifts from China) as “good enough”. The paper discusses how this trend could affect prices and challenge traditional Western OEMs – and how the latter need to respond.

Software and AI on the rise

While MHE is, for obvious reasons, traditionally a hardware-heavy industry, several factors are now also magnifying the importance of software. One is simply the fact that many enterprise software systems and other programs are due to be replaced in the very near future. Another is the need to cut costs and boost efficiency by integrating the individual items of software that currently run disparate automation systems to form seamless ecosystems, especially in the context of warehouse management, execution and control. Yet another vital topic going forward is discovering how artificial intelligence (AI) can best be harnessed to streamline operations and enhance service delivery in material handling.

Margins on hardware and software/service will continue to trade places throughout the current decade. The implications of all these developments for MHE players’ software strategies and the business outlook for systems integrators in particular are therefore discussed in detail in the new Roland Berger paper.

Size – and focus – matters

A close look at the past performance and future prospects of companies from full-line providers to specialized niche OEMs to software houses should give every company in the industry pause for thought. In light of the findings, the paper concludes with practical advice and recommendations on how MHE players of every shape and size can best respond to surging software requirements, the rise of robotics and the challenge from China.

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