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MATERIAL HANDLING Material Handling Industry in India: What drives the sector

May 24, 2019

The Indian material handling sector has observed a momentous growth in recent years, which is chiefly brought about by rising investment in infrastructure development, increased demand for higher automation, and safe working practices in the manufacturing area. As industrialisation is set to witness pivotal development in the years to come, the material handling equipment industry has a promising future, too. The cover story explores the recent trends and challenges in the material handling sector in India, the skill upgradation required in this space and what impact has “Make in India” plan & GST had on the sector in the country.

India is evolving as a vital market for material handling equipment, with the growth in the number of warehouses and container freight stations. This leads to the enhancement in demand for MHE, such as, forklifts, stackers and reach trucks. In fact, the market is estimated to grow at a CAGR of 10% from 2016 through 2020. Besides, with the global industry heading towards Industry 4.0 and the anticipated advance in sectors like, automotive, the material handling equipment sector will continue to flourish.

The state of MHE sector in India

According to Ernst and Young India, the size of the Indian warehousing industry (across commodities and modes) is pegged at about INR 560 billion (excluding inventory carrying costs, which amount to another INR 4,340 billion). In fact, in 2017, the Indian MHE market witnessed a growth of around 20% on year- to-year basis, which was doubled in 2018 to around 40%. For the near future, the growth projection for the electric counterbalance and warehouse equipment segment is also high.

“This higher growth is mainly supported by an investment friendly environment as well as an infrastructural boost from the government,” says Heike Oder, Head of Trade Press, Linde Material Handling and continues, “the tax reform in 2017 was a catalyst for the MHE industry, as it eliminates the cascading impact of different taxes and reduces the overall manufacturing cost. In addition, the advanced techniques of cargo handling, growth in the port sector, and the increasing e-commerce as well as increasing lack of space will be other drivers of the MHE market growth.”

Given the current exuberance seen across the Indian industry over the past year, the material handling industry is seeing a host of activities. “The demand for material handling equipment across different industry verticals has grown quite healthily in the past 12 months,” Tushar Mehendale, Managing Director, ElectroMech Material Handling Systems (India), opines and adds, “It remains to be seen if the momentum will continue going ahead, as there is some uncertainty, given the election season in India. Nevertheless, if the election declares a decisive mandate, then the current momentum should continue, as the uncertainty that has dogged the Indian industry will be addressed.”

The impact of “Make in India’’ & GST

Anil Lingayat, Executive Vice President & Business Head, Godrej Material Handling, postulates that the vast majority of India’s warehouses are still technologically outdated. In fact, the total quantum of warehousing space in India is inadequate and requires huge investments in terms of expansion and augmentation. He cites that in recent years, the Indian storage and warehousing industry has been in a transition phase from traditional towards modern infrastructure, with an increased emphasis on automation.

“The increase in consumption, change in lifestyles and unwillingness to do menial jobs will lead to the growth of the material handling industry,” he estimates and goes on, “these factors, in conjunction with the Government’s “Make in India’’ initiative, are expected to spur local manufacturing. This will lead to the setting-up of new facilities requiring forklifts in order to support its operations. In addition, the immense growth being witnessed in the warehousing sector to support the booming e-commerce and modern retail sectors will be another key driver for growth in the industry.”

Nonetheless, Manojit Acharya, Managing Director, Jungheinrich Lift Truck India, begs to differ slightly. He asserts, “The “Make in India’’ initiative did not have much of an impact on the material handling sector in terms of the global MHE companies starting to manufacture in India. The initiative did see a lot of our customer segments increase their manufacturing activities in India, which thereby does work in our favour in terms of growth in the market.”

Akin to the “Make in India’’ initiative, other factors like, GST have an impact on the sector as well. Its introduction has led to a transformational shift, from a complex multi-tiered tax structure to one that is unified and consistent, making the movement of goods and materials across the country far smoother and hassle-free. “The implementation of GST was very positive for the industry as it has removed the cascading impact of multiple taxes,” Oder says and continues, “it steered the focus on “operational efficiency’’ rather than tax efficiency and made it a catalyst for technology-based material handling solution providers like us. With the roll out of GST, consolidation of smaller warehouses build for tax efficiency will convert into fewer but larger warehouses, with higher capacity to improve operations efficiency.”

Seeing eye-to-eye with Oder, Acharya claims that prior to the launch of GST, the location of customer sites and storage of goods were dependent on states, tax sops, supplier base, etc. With GST unifying the market, there has been a rise in logistics and warehousing activities, as companies are consolidating warehouses, which are larger and automated. This has led to growth in the number of material handling equipment required and hence, resulted into high growth of the industry.

Trends in the material handling sector

With the prospects for material handling sector being very bright in India, the sector has the latest trends, in terms of advanced technologies, to embrace and look into. Productivity, safety and reliability continue to be the main drivers that determine the specifications of material handling equipment. Material handling being fundamentally a non-value added activity, the demand is for high productivity systems that reduce the per unit cost and time spent in moving the goods from one place to another.

“The current trends in the industry focus on increasing productivity by means of higher capacities and speeds,” Mehendale implies and goes on, “When you increase the capability of a system to deliver more throughput, the safety becomes paramount. Hence, a lot of thrust is being given on enhancing the safety features on equipment by ensuring safety of the operators, the material being handled and the infrastructure. Reliability, the third cornerstone, is being addressed by leveraging new age technologies like, IoT, in order to ensure that timely maintenance takes place before a catastrophic breakdown.”

Lithium-ion technology is another trend in the industry, with the batteries being compact, more efficient, fast charging, providing 6 to 10 times more cycles, having 100% discharge and being environment-friendly, as compared to lead-acid battery. The sector is also inclined towards environment-friendly products, without compromising on cost competitiveness. The dawn of refined electrical controls through numerous sensors and inverter drives makes it possible to accomplish the same level of control of operations using electrical drives.

The safety factor

It’s clear that the material handling industry is revolving around trends, from IoT and lithium-ion technology to reliability and safety, the latter being highly vital. Safety is of paramount importance in material handling because it involves moving equipment in a plant or a warehouse. To avoid accidents, technical, infrastructural and organisational measures must be effectively interlocked. Lingayat explains that Godrej material handling equipment are safe as they adhere to the relevant IS standards. They try to go beyond the standard to provide additional safety, such as, automatic speed reduction of equipment while equipment is turning, anti-rollback, curve speed control among others.

Further explaining their safety approach, Acharya says, “Our products are embedded with features which provide high reliability in equipment. For example, our forklift is equipped with features, such as, curve control on bends/turns, mast cushioning, and energy saving during braking.”

Challenges and opportunities

Apart from the aforementioned technological trends, a key opportunity for the material handling industry stays in the continued growth potential. This potential, at the same time, includes a challenge, as the industry needs to invest in R&D, production as well as human resources, in order to be able to handle this growth. In India, the major business challenge is to remain cost competitive, while at the same time, offer improved technology solutions to the customers in a dynamic business environment. Clients in India demand customisation of cost competitive technology and that makes it the most important aspect to remain competitive in the market in the long-term.

Sharing his views, Mehendale tells us that several buyers tend to confuse price and value. As a result, in the quest to reduce costs, they typically focus only on the upfront cost of acquisition instead of the total cost of ownership. While it is extremely easy to manufacture a cheap product, it won’t satisfy the requirements of the customers when it comes to productivity, safety and reliability. The current challenge in the market is being posed by value agnostic buyers and corresponding unscrupulous suppliers. Many sectors of the Indian industry are plagued by this malaise, leading to proliferation of low productivity, unsafe and highly unreliable equipment. Unbeknownst to these people, the entire competitiveness of the Indian industry is getting affected on account of this.

Throwing light on another major challenge, Lingayat points out the low demand of the equipment in comparison with major international markets. “Further, Indian manufacturers face a cost disadvantage because of economies of scale as compared to international manufacturers. Besides, components availability from ancillaries and other suppliers is comparatively lower in India,” he avers.

Automation and skill upgradtion

Machines operate optimally if they have a skilled operator manning them. Therefore, it is essential to impart proper operator training to use the equipment to its full potential. Without the right skill sets, using the machines to the optimum level becomes difficult. Lingayat observes, “There is an abundance of labour, however, there is a dearth of employable labour in the material handling field. In order to make them employable, skilling is necessary and upskilling, thereafter, to remain relevant in an age where automation is inevitable. Employees in the sector need to be trained for higher-end jobs to avoid becoming redundant in the age of automation.”

When it comes to utilising automation technology for material handling, automation for the sake of automation does not work. There needs to be a use case that justifies the costs for the derived benefits. “Many a times, an improper analysis leads to customers spending a bundle and not getting adequate value,” Mehendale expounds and adds, “Hence, the primary skill upgradation required, in this case, is more in analytical skills of the industrial engineering team that will enable them to take into consideration all the variables involved in justifying the automation.”

The role of digitalisation

Today, almost all major companies are talking about how digitalisation and the Internet of Things (IoT) is influencing their operations. Digitalisation and IoT are touching every facet of manufacturing and operational activity, helping companies ensure smooth functioning of operations. When it comes to the warehouse, forklifts are already doing quite a bit of the data collection. They are prepared with wireless connectivity and sensors that permit them to gather information from their own internal systems as well as from their enviornment, and then transmit this data to management systems.

Oder elucidates, “Forklift trucks collect and receive an ever-increasing amount of data, process it or exchange it with other systems. This gives them a growing intelligence so that they can support operators and fleet managers even more efficiently in their work. Progress in sensor technology and electronics are also leading to an increasing degree of automation in warehousing and production. Autonomous industrial trucks carry out standard tasks safely and ensure a high degree of flexibility, thanks to their free navigation in space.”

Since digitalisation and the internet are in the need of automation technology for material handling equipment, it is definitely going to play a major role in it. The industry is exploring the possibilities of automated trucks which can operate via WLAN and other digital media as required. The material handling industry has to rely on digitalisation and the internet if it has to track customer goods within the warehouse and control throughput of goods.

Bringing about higher ROI and efficiency

The material handling sector in India has gone through an evolution, with its attention presently turned to enhanced automation, production development, and safety. Increasing automation competencies along with the rise of innovative technologies are predicted to push the growth of the material handling equipment market. The demand is for MHE models that produce a faster ROI and bring about highest efficiency.

Image Gallery

  • A lot of thrust is being given on enhancing the safety features on equipment by ensuring safety of the operators, the material being handled and the infrastructure

  • With the global industry heading towards Industry 4.0 and the anticipated advance in sectors like, automotive, the material handling equipment sector will continue to flourish

  • Anil Lingayat,

    Executive VP & Business Head,

    Godrej Material Handling

  • Heike Oder,

    Head of Trade Press,

    Linde Material Handling

  • Manojit Acharya,

    Managing Director,

    Jungheinrich Lift Truck India

  • Tushar Mehendale,

    Managing Director,

    ElectroMech Material Handling Systems (India)

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