Market and influencing factors
Industrial trucks and warehouse systems are essential elements in the production and logistics processes of many manufacturers as well as in wholesale and retail. The main growth drivers are the advancing interconnectivity of the global economy and specialisation of companies, which require additional transport services between what are becoming increasingly fragmented value chains and supply chains. Moreover, complex processes are increasingly being digitalised as part of Industry 4.0, calling for intelligent and connected trucks and logistics solutions.
Both segments are exposed to the industry’s cyclical fluctuations. Economic conditions in the different regions and the rates of growth in global trade are therefore key influencing factors for the KION Group. Nonetheless, the market for material handling solutions is a global growth market whose rates of expansion in recent years have consistently exceeded the pace of global economic growth. The economic situation is also affected by competition levels, exchange rates and changes in commodity prices. Another important influencing factor is the economic development of individual customer segments. The most important and fastest-growing of these is the e-commerce sector. Increasing complexity, cost pressures and shifting customer expectations require shorter lead times, an optimum flow of goods, lower inventories and process reliability.
Regulatory frameworks have a major impact on the business model, both in the Industrial Trucks & Services segment and in the Supply Chain Solutions segment. The products and services of companies in the KION Group have to comply with the specific legal requirements in their respective markets. Compliance with the different requirements has to be verified or certified. Many of the legal requirements are enshrined in product-specific standards and other norms (e.g. EN, ISO and DIN).
Legal requirements also apply to the construction and operation of production facilities, including in relation to air pollution avoidance, noise reduction, waste production & disposal and health & safety. Furthermore, the KION Group fulfils all of the legal provisions pertaining to exports and financing business.
Influencing factors in the Industrial Trucks & Services segment
Measured in terms of unit sales of new trucks, the growth of the market for industrial trucks has exceeded global economic growth over the past ten years (2006–2016), rising at an average of 3.3 per cent per year. However, it should be noted that these statistics do not include price effects or the contribution from the service business.
Measured in terms of units ordered, 37.6 per cent of the global market was attributable to IC trucks in 2016, while electric forklift trucks accounted for 17.4 per cent and warehouse trucks for 45.0 per cent. Due to more stringent emissions regulations and the expansion of e-commerce, the KION Group expects the segmentation of the market to shift even more towards electric forklift trucks and warehouse trucks, which are particularly suitable for use in buildings. In the developed economies, these two product categories – in which the KION Group is particularly strongly positioned – already account for the bulk of the market volume. By contrast, counterbalance trucks with an internal combustion engine (diesel trucks) make up a comparatively high proportion of the total volume in growth regions.
In emerging markets, demand for logistics services on the back of increasing consumer spending is being fuelled by the expansion of industrial and public infrastructure as well as rising living standards. In mature markets, where supply chains are highly sophisticated, the large number of trucks in use provides a strong base for replacement business and high demand for services. The KION Group estimates that a high proportion of sales in western Europe are accounted for by replacement investments.
In the long-term, due to rising customer expectations in terms of quality, efficiency and eco-friendliness of industrial trucks, the middle (volume) price segment is likely to become increasingly important for the growth markets in particular. At the same time, there is mounting competitive pressure as some manufacturers in the economy segment based in emerging markets are pursuing an international expansion strategy. In the premium segment, customers are much more focused than before on optimising total cost of ownership and on the integration of fully automated intralogistics solutions. In 2016, according to the KION Group’s estimates, the premium price segment and the economy price segment each accounted for between 25 per cent and 30 per cent of units ordered in the market for industrial trucks. The remainder was attributable to the volume price segment, making it the largest in terms of units sold.
Influencing factors in the Supply Chain Solutions segment
The market for automation solutions has seen average annual growth of around 8 per cent in the five years (2010 – 2015) according to the Modern Materials Handling website, which measured the revenue of the 20 largest manufacturers and took account of minor consolidation effects. This market therefore expanded at a much faster rate than global economic output.
The growth of e-commerce is the main influence on demand for automated supply chains. According to market analysis by the E-Commerce Foundation, global online trading expanded at an average rate of around 22 per cent between 2012 and 2016. The market research institution eMarketer forecasts that the volume will more than double again by 2020. This calls for new, more decentralised warehouse and logistics capacity that enables faster deliveries and, due to automated processes, keeps down personnel expenses and floor space costs.
The digitalisation and automation of production and supply chains in the context of Industry 4.0 and the multichannel strategies being adopted in traditional industries – e.g. supermarket chains, grocery wholesale and retail, fashion, food and beverage manufacturing, and parcel and courier services – are also contributing to the growing need for ever more efficient supply chain solutions. This calls for concepts and solutions that help manufacturers, retailers, wholesalers and service providers to keep up with rapidly changing consumer requirements. Technological progress, e.g. in the field of robot-operated picking systems, is also fuelling buy-in for automation concepts.