Market and influencing factors
The material handling market comprises the market for industrial trucks and supply chain solutions including services. The KION Group estimates that around 60 percent of revenue in the relevant market is attributable to industrial trucks and related services. The remaining revenue is attributable to supply chain solutions and services.
In the past, the material handling market has been heavily influenced by macroeconomic factors. Economic conditions in the different regions and the rates of growth in global trade have a major effect on customers’ willingness to invest. Regional differences in inflation trends and in the level of interest rates help to shape the market environment as well.
Volatility in the commodity markets and in exchange rates also affects conditions in the market. Increases in procurement prices for commodities and intermediate products and translation effects caused by fluctuations in exchange rates can have a significant impact on the financial performance of individual market participants. Economic trends within individual customer sectors are another influencing factor.
Influencing factors in the Industrial Trucks & Services segment
Historically, new business in the Industrial Trucks & Services market segment has shown a very strong correlation with the performance of broad economic indicators, such as the volume of global trade, gross domestic product, and industrial output. The service business, meanwhile, is more stable than the product business as it is linked to the installed base of trucks over their entire lifetime.
Measured in terms of units ordered, around 29 percent of the global market for industrial trucks was attributable to IC counterbalance trucks in the first ten months of 2023, while electric forklift trucks accounted for roughly 18 percent and warehouse technology 53 percent (World Industrial Truck Statistics, February 2024)*.
Sustainability and electrification are among the main driving factors in the market for industrial trucks and services. Customers are increasingly demanding solutions, primarily in the form of electric trucks, for environmentally friendly supply chains. Consequently, the strongest growth in the new truck business in recent years, including in the first ten months of 2023 (2017 to October 2023), has been for forklift trucks and warehouse trucks powered by an electric drive. Alongside the growth in electric forklift trucks, much of the additional volume in the market for new industrial trucks is attributable to the electrification of hand pallet trucks, which are being replaced by entry-level electric trucks in the lower weight categories. It should be noted that, on average, the unit price for warehouse trucks is considerably lower than for counterbalance trucks. In the first ten months of 2023, IC counterbalance trucks continued to make up a comparatively high but falling proportion of the total unit volume in high-growth markets (World Industrial Truck Statistics, February 2024).
Stricter emissions standards, the range of new energy solutions available, and customers’ efforts to be more sustainable by using lithium-ion batteries and fuel cells are also boosting demand for counterbalance trucks with an electric drive and for warehouse facilities.
Furthermore, the increasing automation of warehouses is pushing up demand for industrial trucks with an electric drive. Customers are becoming more and more interested in hybrid solutions in which automation technology is added to standard industrial trucks to create automated guided vehicle systems. These products are aimed at reducing injuries to operators and damage to goods and infrastructure. They also help to improve transportation quality, reliability, and productivity.
Digitalization has led to greater demand for networked trucks, and, for example, for fleet management systems and for products that use big data to support predictive maintenance services (Hans Böckler Foundation, February 2022).
The industrial truck market is benefiting, among other things, from customers’ growing requirements regarding the quality, efficiency, and sustainability of industrial trucks and from higher expectations in terms of service, availability of spare parts, and flexible rental solutions. Customers are more focused on optimizing total cost of ownership and, increasingly, on the ability to integrate the trucks into fully automated intralogistics solutions. The degree of automation in the chosen solution, which ranges from manual or semi-automated to fully automated, is determined by the customer’s processes. Furthermore, the competitive pressure remains high around the world as some manufacturers in the economy and volume segments based in China have been pursuing an international expansion strategy for a number of years now. The large number of industrial trucks already in use in the market also provides a strong base for replacement business and rising demand for services.
Influencing factors in the Supply Chain Solutions segment
According to the KION Group’s estimates, the average annual growth rate in the market for supply chain solutions has been significantly higher than in the market for industrial trucks and services in recent years (2017–2023), owing to growing demand in the main customer industries. Both the project business (business solutions) and downstream services (customer services) have contributed to this expansion. The service business benefits from the growing number and the rising complexity of installed systems.
According to Interact Analysis, the significant customer sectors for the supply chain solutions market are the general merchandise and grocery wholesale and retail industry, manufacturing, parcel delivery services, and pure e-commerce (Interact Analysis, November 2023).
The Supply Chain Solutions market segment has longer project cycles, often extending over several years. Its service business is generally more stable than the product business as it is linked to the installed base of systems over their entire lifetime.
The growth of e-commerce in recent years has had a major influence on demand for supply chain solutions, including for warehouse automation, sortation systems, and automated goods transportation. Global online trade (B2C) has expanded at an average rate of 16 percent per annum in recent years (2017 to 2023) according to research institute eMarketer (eMarketer, June 2023). The KION Group believes that customers’ desire for ever-faster delivery times coupled with the growing shortage of skilled workers has made companies more willing to invest in the automation and digitalization of their supply chains (Forbes, October 2023).
The combination of smaller order volumes and large numbers of orders requires efficient and automated solutions. This is driving demand for decentralized and smaller warehouse and logistics facilities in urban areas that speed up delivery times and, due to automated processes, reduces personnel expenses and floor space costs. Consequently, the research institute Interact Analysis is predicting above-average growth in the market for micro-fulfillment automation in the years ahead (Interact Analysis, March 2022). At the same time, the focus of technological progress is increasingly shifting toward software and robotics solutions. Interact Analysis anticipates that this will lead to disproportionately strong growth in the market for AMRs and AGVs (Interact Analysis, November 2023).
* Data on the overall market is currently only available for the first ten months of the reporting year. This is because the relevant trade association has changed the publishing dates for market data on order intake for industrial trucks.