Accelerating new technology adoption to boost MHE demand

November 1, 2021 3:31 pm

The rising need for global production companies to automate operations, and foster flow of goods in an efficient manner is the key force driving the market.

Today, material handling equipment have presence at airports, metros, warehouses, etc., any place that needs transportation of goods frequently will have material handling equipment present. They have become a ubiquitous part of life. Global material handling equipment market is to reach US$156 billion by the year 2026. Material Handling Equipment (MHE) represents an integral part of the supply chain of diverse industries. The rising need for global production companies to automate operations, and foster flow of goods in an efficient manner is the key force driving the market, at present. Growth in the market is also driven by improving investment in the construction and industrial sector, growing consumer spending on non-durable as well as durable products, improvement in fixed investment spending, and rise in mining activities worldwide. Led by countries such as Australia, India, and South Korea, the market in Asia-Pacific is forecast to reach US$2.8 Billion by the year 2026, while Latin America will expand at a 4.5 percent CAGR through 2026. 

Managing MHE business in pandemic difficult times 

Providing an overview, Vijay remarked, the businesses were affected worldwide due to the pandemic. We were also adversely affected like any other organisation. In our type of business, face-to-face meetings are critical to conducting site studies and demonstrating optimal solutions, which were not possible during Covid times. In prevailing circumstances, we banked upon digital platforms and communicated our value propositions through electronic media, keeping the health and well-being of our employees and customers first, strictly following Covid Protocols. Wherever permissible, our team members underwent the RT PCR test and carried the test report with themselves in the best interest of one and all in spite of additional cost. 

Anil said, we, at Godrej Material Handling, sensed the need for remote or digital assistance ahead of time and launched our product manuals on a digital platform, which both our channel partners and customers can easily access. Thanks to this, we were able to provide effective remote assistance to dozens of customers even during the lockdown and will continue to do so going forward. We were already using cloud services, hence there was no disruption in terms of data access for our team, which was one of the major challenges faced by many industries. Our team was already accustomed to virtual meetings and hence we could extend the same to our customer meetings without the need for any training or upskilling of the workforce during the time of the pandemic. 

In this period, monitoring, guiding, motivating, and supporting our sales team posed a big challenge for us, Vijay remarked, but we overcame it by conducting team meetings on a regular basis and being accessible even during the wee hours. In a nutshell, we remained positive and constructive during the toughest situation ever faced in the last millennium and could mitigate the same to the best possible extent. 

Talking about future-ready, Anil said, given Godrej & Boyce’ reputation for being future-ready across businesses and sectors, work on various digital platforms was underway since before the arrival of Covid. This helped in a seamless shift to the ‘New Normal’ without any drastic or uncomfortable changes for both internal and external stakeholders. Our rental fleet ensured daily sanitisation of the equipment and provided for a Covid insurance cover for the operators. This helped us win a lot of goodwill during the pandemic, adds Anil. 

Recovery in the MHE market 

The market has certainly recovered and so has the demand for access and MHE equipment, services, says Vijay . Some sectors are still badly affected and may take longer to read, but the majority of sectors have begun to improve. This equipment is critical for the safety of men and materials and essential for the operation of plants and buildings. Several requirements were deferred because of the pandemic situation. Now, these requirements are revived and customers have started buying. We are expecting the market to bounce back very strongly by the last quarter of this financial year and expecting demand to surge to an all-time high in the next financial year. 

Expressing optimism, Anil remarks, despite the sharp slowing of economic activity during the lockdown, India’s forklift industry revived late but reached the same level as the year before the lockdown. The major growth drivers have been the pharma, e-commerce and modern retail sectors. 

Furthermore, much of this growth came due to buying by MSME companies who faced labour challenges due to possible migrations during the initial lockdown. They had to mechanise handling operations to drive output in their operations. Given the growth that we have witnessed at Godrej Material Handling, a business of Godrej & Boyce, we are confident that the industry will continue to grow at least at 8-10 percent over the next few years. 

Key challenges in the market 

Talking about the pandemic, Vijay observed it upset cash flow and substantially lowered profitability, which is of paramount importance. Even blue-chip companies started demanding credit, which were known for their best vendor conducive policies. It has impacted our top and bottom lines. Decision-making took longer than it should have, which would have been finalised in a relatively shorter time during pre-covid time. Due to the downward market trend, several requirements were indefinitely postponed and that is affecting everybody’s revenue. 

According to Anil, MHE is crucial in bringing down the high cost proportioned to the supply chain in our country. There have been several key developments in the field of digitising the supply chain, but the core of the issue still lies in efficiencies in storage and movement of material. The Indian market, especially MSME, is still not sensitised to the benefits of palletisation and racking of goods. Block stacking of goods is both inefficient and poses safety hazards for people working in the warehouse. Another key challenge is the high cost of manufacturing in India compared to China. China enjoys economies of scale from the large domestic market and high export numbers. The Indian market is still at a nascent stage of developing warehouses and storage facilities and hence the demand is low. Also, adaptation by MSME is key to growth in this sector. 

Strategies for business revival The shift to online buying has been a blessing during the pandemic. E-commerce has majorly contributed to the growth of the business. Anil underscores, this growth and high level of consumer demand will persist in the foreseeable future. We expect customers to show interest in IoT-based solutions to monitor equipment health, receive alerts, monitor fleet productivity, ensure timely servicing, etc. This will also lead to new business models and very different solutions for customers. 

Due to an increase in warehouses, the demand for electric material handling equipment has also increased. Industries governed by strict norms such as Food & Beverage and Pharma were already using electric equipment, however, we have recently seen the increase in demand in other industries for their internal as well as inter-plant movement thanks to our outdoor duty forklift truck. 

We will continue to introduce new products and services in the market and invest in developing new technologies to facilitate our customers to increase their productivity and safety at their workplace. We are also coming up with a state-of-the-art manufacturing facility, which will be operational next year. 

Expressing his opinion, Vijay said, the main goal is to sustain ourselves without compromising on our valves. We have to harness the best out of available opportunities by winning maximum business cases to our advantage. Times are tough and recovery will take longer than anticipated, and any complacency will be very costly. In such a scenario, companies that have a customer focus and intent to support them will eventually come out as a winner. 

Policy support required for market revival 

Unfortunately, there has not been any legislation for working at heights and this limits the usage of access equipment in the country. Considering the enormity of consequences for non-compliance with safety guidelines, Vijay says, we are optimistic that stringent guidelines will be enforced in this area. 

Another challenge we face comes from the inhibited import of depilated and defunct machines which have already completed their useful lives. We believe that we should have policies to control such imports, which will be to the benefit of one and all. 

Anil emphasizes Material Handling Equipment should be awarded the status of an ‘essential industry’ because it supports all manufacturers, including those making medical and essential goods, in their supply chain. The Indian government fortunately continues to raise emission norms to curb pollution, but it currently applies to equipment made in India. These should be made applicable to any equipment operating in India, irrespective of its country of origin. Similarly, BIS standards for material handling equipment need revision to reflect developments in more advanced markets and also ought to apply to all equipment sold in India irrespective of country of origin. The safe load that can be lifted by a human being is limited to 20 kg. This needs to be enforced as a law. Standardisation and adoption of pallets is another area where industry needs to be encouraged. Government is keen to raise safety consciousness and safety standards. Trained and certified operators for all types of powered material handling equipment would serve to dramatically improve safety in the factory and warehouse. The government can contribute by making such requirements mandatory. MHE market growth next year and beyond. The sector saw many changes in consumer behaviour and preferences during the pandemic. The drastic shift from brick and mortar stores to online websites has posed a huge opportunity for growth for the MHE Sector. Anil observes that the demand for material handling equipment is increasing in warehousing and there will be gradual growth in the near future. With warehouses expanding in tier II and tier-III cities, the success of orders is anticipated at a high rate. 

There has been modest demand for access equipment due to the reasons explained above, says Vijay, adding that we are expecting the market to grow significantly if the third wave of a pandemic does not happen. However, the deliveries will take longer due to delayed supplies and scarcity of components, which may lead to excessively long lead times that will be difficult to cope with.This is the time for the industry to expand and grow in many terms. Adapting to new technology and innovating with the changing demands in the market, the MHE sector has great potential in the next year and beyond, concludes Anil. 

Way ahead 

Conveyors represent the most common MHE available as well as an imperative component of the material transition process in manufacturing facilities globally. The forklift segment is anticipated to benefit from technological advances and availability of automated platforms like monitoring and tracking solutions. A notable trend in the industry is the increasing switch to cleaner battery-powered electric materials handling systems. Demand for automated guided vehicles, and automated conveyors are expected to particularly register strong gains through the forthcoming years.