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The Boom In Logistics Is A Boon For Material Handling Equipment Market
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Logistics sector of India (Asia’s third largest economy), has surged over the period of last few years as e-commerce in India has grown up with electric pace, with the emergence of internet expansion in the country. The retailing and e-commerce business has not travelled this journey alone, but set the road ahead of logistics and material handling equipment (MHE) industry at the same.
These three industries (e-commerce, logistics and MHE) are interconnected and they are dependent on each other.
The Indian logistics industry has been growing by 15 percent annually for last few years and expected to grow further as the government recently approved 100 percent FDI in the marketplace for e-commerce retailing and will emerge further whenever the GST Bill will be passed by the Indian parliament.
As per one of the forecast report of TechNavio, logistics and transportation market would grow at a CAGR of 10.72 percent over the period of 2013-2018 in India.
Therefore, expansion of logistics and warehouse business has been shaping the material handling equipment industry in the country. The market size of this industry has estimated somewhere around USD 386 million as of June 2015. The material handling equipment industry is not only benefited from logistics industry, but also expanding with the growth in construction industry, where huge amount of such equipment are required at the sites.
The strong emergence of e-commerce would put enormous pressure on logistics industry and the pressure on logistics will raise demand for material handling equipment. As per the report of PwC, due to the emergence of e-commerce in the country, growth in warehousing, additional sorting and delivery centres would require investment of over USD 450 to 900 million till 2017-2020 and report projected, the industry is expected to spend an additional USD 500 to 1000 million on logistics function during the same period.
MHE usually used in almost every industry as its name indicates that it used for movement and maintenance of any goods and material. These equipments help in protection and control of materials and goods, storage of goods and products during the manufacturing, distribution, disposal and consumption process in across the industry.
There are primarily four types of equipment which are used during the entire process of material and goods handling. These are positioning equipment, storage equipment, unit load formation equipment and transport equipment. These Used Construction Equipment are forklifts, tippers, stackers, feeders, Unloaders, wagon tipplers, conveyors, screens and commercial vehicle which is used for logistics.
MHE industry may not directly help the economy, but it plays crucial role in manufacturing and delivering such goods to consumer and ensure the smooth and proper distribution.
As per the Crisil Research, the dominated players in MHE industry are L&T, BGR Energy Systems, McNally Bharat Engineering, ThyssenKrupp, Tecpro Systems, TRF and others.
As per another TechNavio report called ‘Warehousing Market in India 2014-2018’, the report projected the warehousing market in India would grow with CAGR of 17.12 percent over the period of 2013-2018.
The warehousing growth is rising in the country due to huge e-commerce market, because this industry requires a huge number of modern warehousing for the storage, packaging and maintenance and movement of goods and it needed big amount of MHE.
Morgan Stanley Research projected, Indian e-commerce market would be around USD 119 billion by 2020 and revised its earlier projection of USD 102 billion due to fast growing e-commerce industry. The e-commerce industry is also accelerating two other industries like Logistics and Material Handling Equipment industry along with its own growth.
Major logistics companies like Gati, DHL, FedEx, UPS and other medium and small logistic companies will require huge amount of MHE to meet the logistic industry demand.
Commercial vehicles which are used for logistic transportation is also likely to jump due to expansion of logistic sector.
Sources: Information and data in this article has been obtained from, Crisil Research, Morgan Stanley Research, PwC report, TechNavio, IndiaMHshow
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