Insight:
- The material transportation market is rapidly expanding due to e-commerce, technological advancements, and the growth of the construction industry.
- Companies must adopt technology, prioritize sustainability, and improve safety measures to capitalize on this growing market.
Understanding the material transportation market
First, let’s have the bird’s view of the market. The material transport market consists of structures, people, vehicles, and facilities establishing interaction to move materials from their origin or hold to their point of utilization. This includes everything from pre-shipment planning and arrangement, selection of shipping transportation means, in-transit management of the goods, and finally, the actual forwarding of the items.
Material handling equipment includes AGVs, automated storage and retrieval systems, forklifts, cranes, pallet racks, conveyors, hoists, and others. Pallet racks are units used for stacking individual items or pallets of a good that range from single or multiple racks in architectural design.
Related activities include assembly, distribution, transportation, etc. The end users span multiple industries such as food and beverage, automotive, construction, consumer goods, electronics, pharmaceuticals, and various eCommerce sectors. The material transport and logistics market is extremely diverse and has three major sub-market divisions.
- By equipment type: Automated guided vehicles (AGVs), automated storage and retrieval systems, forklifts, cranes, pallet racks, conveyors, hoists, and others.
- By activity: Assembly, distribution, transportation, and other activities.
- By industry: Food and beverage, automotive, construction, consumer goods and electronics, pharmaceuticals, e-commerce, etc.
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An overview of the material handling market
The material transportation market is set to skyrocket in the coming yearsThe material transportation market has seen strong growth in recent years. Looking at the growth forecast for the coming years, it can be seen that the revenue is expected to increase from $49.45 billion in 2023 to $44.46 billion in 2024, which is a compound annual growth rate (CAGR) of 9.9%.
This increase is driven by several factors, such as technological innovations in the industrial and manufacturing industries, expansion of e-commerce, the consolidation of global supply chains, the imposition of stronger safety and ergonomic regulations, and the need to improve efficiency at reduced costs.
In the forthcoming years, the empirical growth in the transportation of materials may revolutionize the entire transport industry. The transportation market has grown rapidly over the last few years and is expected to increase in value. Projections suggest the market will become over $64.85 billion in 2028, expanding at the rate of 9.9% per year. The factors that can be said to explain this growth include the following:
- The e-commerce boom: When e-commerce overtakes traditional shopping spaces, the demand for service providers who can enhance, optimize, and implement the distribution and storage of products remains high.
- Automation and robotics: Using handling and storage automation technologies such as robotics in transport and storage operations has brought success by improving output efficiency and decreasing operational expenses.
- Sustainability and green initiatives: Concern about the environment prompted businesses to adopt transport and logistics solutions with low environmental impact and high energy efficiency.
- Rise of smart warehouses: Advanced technologies incorporated with smart warehouses have enhanced the management of inventories.
- Meeting the demands of the changing terrain: Companies in the transportation of building materials are compelled to change and even advance on the recent trends in the market.
The impact of e-commerce on the material transportation market
The material handling industry has observed substantial changes due to the growth of e-commerce. According to the International Trade Administration, e-commerce sales in the United Kingdom amounted to 30% of overall retail revenue by the end of September 2022, much higher than the 20 percent proportion in 2020. Each year, retail sales through e-commerce exceed 120 million dollars.
In the previous year, the perspective was that in the UK, 82% of the population made at least one online order in 2021! Due to the pandemic, e-commerce continued growing since many switched to buying things without going out.
E-commerce expansion has notably stimulated the demand for material handling services. To meet this need, the participants in the material handling industries are focusing on developing specialized equipment & systems: engineered, automated warehouses and remotely tracked transport vehicles. Therefore, the expansion of e-commerce is expected to assist the material handling market.
Factors driving growth in the material handling market
Opportunities in the construction industry
The construction sector, which is expanding rapidly, is likely to be the main contributor to the development of the material handling market over the forecast period. The processes that create, facilitate, and maintain structures, civil engineering works, and industrial plants can be included in the construction industry definition.
In construction, activities involving the movement and management of materials are intended to enhance material flow, lower transfer costs, maximize facility utilization, promote safer and improved working conditions, facilitate construction processes, and increase output.
According to a report by Oxford Economics, a UK-based economic information services company, global construction output was $10.7 trillion in 2020 and is projected to increase by 42%, or $4.5 trillion, to reach $15.2 trillion by 2030. This indicates that the strong growth of the construction industry is driving the development of the materials handling market.
The rapid advancement of information technology has brought about efficient solutions for the transportation industry. Advanced management software and GPS systems are vital for improving operations, decreasing errors, and increasing productivity. The advent of self-driving vehicles is particularly noteworthy, as it promises to change the transportation industry by providing enhanced safety and continuous service, which helps lower costs and boosts the competitive position of transportation companies.
Challenges in the material handling market
One of the main areas of concern on construction sites is safety and security hazards, which involve moving various materials. Many construction site accidents can be traced back to material handling devices and inadequate compliance and supervision of safety precautions.
The scope of material activities on construction sites includes but is not limited to:
- The use of cranes for the lifting of steel components from channel stock.
- Driving brick and concrete-laden trucks and using other material handling accessories such as hydraulic excavators.
- Hoisting appliances and conveyor belts.
Being inexperienced in performing operational tasks compounds the problem, leading to increased accidents and death toll.
A study published in October 2023 by the international journal Science found that 46% of all reported workplace accidents in Saudi Arabia were related to construction. Of these, 27% were due to falls from heights. The absence of safety measures and the presence of inexperienced workers on construction sites result in a higher number of accidents during material handling, which can adversely affect the material handling market.
Conclusion
The market for material transport services is steadily growing. This is partly due to the growth in industries and the rise of e-commerce and technological change. The most notable among these is the growth in e-commerce, which has driven a great need for quick and adaptable modes of transportation.
To maintain growth and withstand pressure, companies in this industry must work on tech adoption, sustainable and adaptable solution development, and enhanced safety in the workplace. Given such a huge potential, the material transport market will continue to catalyze economic and social transformation.
