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Material handling outlook strong despite economic slowdown

Accelerating e-commerce activity, rebound in manufacturing are among the factors that will boost the material handling market heading into 2021, economist tells industry trade group.

Material handling outlook strong despite economic slowdown, MHI says

Although global economic growth has slowed due to the coronavirus pandemic, there are bright spots on the horizon and the material handling industry is one of them, according to economist Jason Schenker, who delivered a keynote presentation at this week’s 2020 MHI Digital Fall Meeting.

Schenker, who is president of Prestige Economics and chairman of The Futurist Institute, said that despite the slowdown, 2020 will still be one of the strongest years on record for material handling, based on order and shipment data and a host of other factors that are boosting the market. Last year was a record year for the industry, with new orders for material handling equipment totaling $34.5 billion and shipments of $34.2 billion, according to data from MHI and Prestige Economics. As of October, the outlook calls for roughly $32 billion in new orders and shipments this year, according to the data. 


Looking back to the start of the pandemic, Schenker said of the industry outlook, “This isn’t as catastrophic as we feared back in April,” adding that 2020 is set to be “one of the three best years for material handling data.”

Schenker pointed to three economic “upside risks” that bode well for the industry: accelerating e-commerce activity, supply chain build-up and increased manufacturing over time due to the United States-Mexico-Canada trade agreement, and anticipated positive U.S. economic growth in 2021. He added that the slowdown in activity in some segments of the economy this year, including manufacturing and new orders for material handling equipment, have not reached the depths seen during the 2008 recession and that manufacturing and the industrial economy is seeing a “pretty good rebound across the board.”

Downside risks include: the International Monetary Fund (IMF) is warning that the 2020 global recession could be worse than 2008 in some respects; oil and gas, tourism, and automotive industries remain under pressure; joblessness remains exceptionally high, and housing is at risk as credit tightens.

Despite those downsides, Schenker said he remains optimistic about the material handling market. When asked about the outlook for the next two years, he again pointed to record e-commerce levels and demand for retail and consumer goods as key positive factors.

“The material handling numbers are going to be good for the next couple of years,” he told attendees during a question-and-answer portion of the presentation. 

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