Modernising The Sector Post-Covid-19

A vital part of the logistics world, the material handling and equipment (MHE) sector defines the machinery and operations for the movement, control and storage of goods and materials.

According to Grand View Research, the global MHE market was valued at $26.3-billion in 2020, with prospects to grow over seven per cent for the next few years. But it adds that over half of factory owners have delayed new projects due to the pandemic, putting original equipment manufacturers (OEMs) under pressure to digitise their operations. In some cases, OEMs had shuttered operations, while others vastly reduced output.

According to Mishen Naidoo, engineering and solutions manager at Manitou, the market has rebounded considerably since last year.

“For material handling in general, the trend in the first half of 2021 showed a leap from the stagnant market in 2020. It saw an incredible spike in heavy telehandlers across the mining industry, which links to the current mining supercycle, with some construction companies on a buying cycle for reach telehandlers. The demand for backhoe loaders has also increased in the plant hire, construction and agricultural sectors,” he says.

Assessing COVID-19’s impact

The pandemic’s lockdowns were felt across the board for MHE companies. In particular, they impacted the delivery of new equipment and parts. According to a column published by EIE Group, OEMs in China, Japan and Europe cut back significantly on their operations – largely due to staff not being able to reach their workplaces.

Asian operations have since mostly rebounded, though some European manufacturers remain below their pre-pandemic output levels. Yet, the MHE sector could spring back further through pent-up demand from the market, particularly around consumer goods. Mordor Intelligence predicts that the retail sector will be responsible for almost 25 per cent of revenue for MHE operators in the Middle East and Africa.

Some of that rebound is already happening, claim Manitou and the EIE Group. But that is only half of the story. One thread that appears across different analyst reports is that for the MHE sector to return to its predicted growth – 7 per cent globally and 3.5 per cent in the Middle East and Africa – the sector needs to digitise more quickly to realise costs and meet the demands of a changing market.

Digital to the rescue?

The MHE sector is well-suited for digital fourth industrial revolution (4IR) technologies. According to an article published in a MDPI journal last year, “logistics, including material handling and intralogistics, both as a science and an economic sector, not only does not lack behind, but rather drives the application and development of basic methods, algorithms and technologies”. But, it added that these findings mainly come from small implementations.

That appears to be changing: the pandemic is driving and expanding MHE digitisation. Examples include more advanced warehouse control systems that integrate with smart devices on forklifts and RFID tags on goods to best co-ordinate warehouse operations.

Equipment providers are also increasingly offering remote maintenance, driver behaviour, and safety monitoring services, says Naidoo.  “Cost reductions have emerged in the form of fleet route analysis, operator behaviour analysis (erratic driving), forklift impact monitoring, which ultimately results in proactively reducing wear and tear, and downtime on machines. Injuries are also reduced by acting on poor operator behaviour (excess speed, harsh braking, overloading the machine), and choosing routes that are less likely to result
in collisions.”

Perhaps more interesting is the growth of subscription models, where companies rent equipment for limited periods. “This differs from the typical short-term rental and offers far more flexibility. The machines are not charged for on a daily rate, but customers subscribe to a contract over a set period, with a base monthly contract fee based on their estimated usage. This is ideal for businesses whose operations are cyclical or seasonal as they only pay for the hours that they use.”

The above developments did not appear overnight – they speak to an industry that has been working on digital for a while; all COVID-19 did was shift its gears.