Sortation Systems Market – Growth, Trends, COVID-19 Impact, and Forecasts (2021 – 2026)

The Global Sortation Systems market was valued at USD 5291.2 million in 2020 and expected to reach USD 6886.7 million by 2026 and grow at a CAGR of 4.47% over the forecast period (2021-2026). With the rapid growth in stock keeping units (SKUs), wholesalers and distributors are finding it hard to make informed decisions about their operations. This drives the need for the smarter use of labor, equipment, and technology.

– The main factors driving the need for automated material handling systems are cost savings, labor efficiency, and space constraints.

– In the current competitive landscape, there is an ever-increasing number of available products and demand for more frequent and smaller deliveries. Automating distribution operations can immediately increase an organization’s order accuracy anywhere from half a percent up to several percentage points.

– According to the 2017 Annual Industry Report produced by MHI, 63% of supply chain professionals revealed that hiring and retaining a skilled workforce continues to be the biggest obstacle faced by their businesses. Since millennials are known for placing high importance on the quality of time-off and the ability to work on top-notch automated projects, automated warehouses are being marked as a lucrative source of employment, as well as advanced learnings.

Key Market Trends

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Increasing Demand for improving Order Accuracy and SKU Proliferation

– Automating warehouse and order fulfilment operations has turned out to be the primary strategy to ensure the realization of supply chain productivity and fiscal goals while maximizing customer service levels in North America.

– By automating distribution operations, organizations across North America are increasing order accuracy ranging from half a percent up to several percentage points. Businesses that automate realize a significant reduction in operational costs and a measurable increase in service levels, which have an immediate impact on overall profitability and a long-term positive effect on the market share growth.

United States is Expected to Hold a Significant Market Share

The United States is contributing around 91% in the revenue share in the sortation systems market in North America.

The major factors driving this growth in this region are –

– An increasing interest in sustainability, coupled with a robust economy as a result of cost containment, has led to the demand for the sortation systems in the country. In the United States, post offices have seen a 60% energy savings in parcel-handling applications after employing roller sortation system across their parcel handling module.

– The strong economy of the US region, with notable port traffic, increased e-commerce activity, and key manufacturing indices resulting in manufacturing growth are poised to drive the demand for sortation system across the country.

– These scenarios, coupled with the high rate of adoption of Industry 4.0 across industries is expected to create considerable demand across the region over the forecast period.

Competitive Landscape

The presence of long-standing vendors is expected to increase the level of competitive rivalry during the forecast period. There are some major market players which have considerable influence on the overall market. However, the focus on innovation in material handling systems as part of the ‘smart logistics’ concept and huge investments made in this segment in order to strengthen their positions as technology and innovation leaders in materials handling, to accommodate the ‘Industry 4.0’ trend are helping them grow.

For instance, Fast Retailing Co. Ltd and Daifuku Co. Ltd concluded an agreement to form a strategic partnership aimed at establishing comprehensive logistics services over the medium to long term.

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