Worldwide industrial racking system sales to cross US$ 12 billion in 2020

The global industrial racking system sales are likely to surpass US$ 12 billion towards 2020,” says a senior research analyst. Elaborating on the key dynamics of the industrial racking system market further, the analyst says, “Ahead of the much awaited World Expo 2020 planned in Dubai, 

it is more likely that the global demand for warehouse construction will elevate – thereby pushing sales prospects for industrial racking systems. The mushrooming demand for warehousing has been pushing end-use industries to invest extensively in upgrading their warehouse spaces, of which installation of industrial racking systems constitutes a vital part”.

Inadequacy of Warehouse Space Unlocks Opportunities

The warehouse industry continues to capture investors’ interest in the recent past. As a result, a majority of Tier 1 cities are witnessing an absolute scarcity of industrial warehousing space thus directing the same to Tier 2 cities. The subsequently swelling demand for industrial racking systems is driving a multi-billion-dollar market.

According to a recently published intelligence outlook on the global industrial racking system market, Study also cites the remarkable growth of the hospitality sector and the subsequent boost to consumer products as a crucial driver to the growth of the market.

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The considerably insufficient warehousing infrastructure is creating a heap of investment opportunities for manufacturers and stakeholders in the industrial racking system landscape. Another strong factor presented in the report as a key driver for market expansion is the rapidly progressing 3PLs (third-party logistics providers) space.

With escalating consumer preference for frozen and convenience foods, the consumption of industrial racking systems by the food and beverages industry is increasing at a rapid pace.

The research highlights excellent revenue growth prospects for shelving and bonded warehouses. The first-in-first-out (FIFO) racking systems remain a preferred choice among end-use industries, whereas in the case of shelving, open and closed systems continue to gather maximum revenue worldwide. As indicated by the report, medium and heavy-duty industrial racking systems secure the most preferred title for industrial storage applications.

Selective Racking Projected for a Dominant Share

With more than 70% market value share at present and over 7.5% yearly revenue growth estimated for 2019, the racking design remains a dominating design type in the industrial racking system landscape. The report attributes this scenario to the expansion of both online and conventional retail. Selective racking especially holds around 30% value share in the market, followed by narrow and wide aisle racking.

E-Commerce Reserves Most Lucrative Opportunities

Digging deep into the potential of a slew of end-use segments to develop investment opportunities for industrial racking system manufacturers, the report indicates that 3PLs, E-commerce, and retail continue to drive the market at a global level. 3PLs is the top consuming end-use segment at present; E-commerce is however projected for a massive incremental opportunity in coming years.

Swelling trade export volumes and the exponentially thriving E-commerce sector are prominently driving the revenue of the industrial racking system market, whereas favorable industrial regulations set by regional governments are also extending a substantial share in fueling the demand for industrial racking systems.

In addition to strategic expansion plans of organized players in the traditional brick-and-mortar retail sector, exceptionally attractive prospects of Ecommerce/E-retail/E-tail/online retailers are likely to be instrumental in high consumption demand for industrial racking systems.

Europe Reflects High Investment Potential

Currently, Europe holds more than 25% share of the total market value owing to the dramatically large expanse of E-commerce and customer-friendly regulatory framework.

Strong investment opportunities are likely to emerge in Europe owing to the increasing inadequacy of space, especially for manufacturing industries and the automotive sector.

Brisk development of the E-commerce sector and rapid modernization of the supply chain structure and operation are creating a favorable scenario for the growth of the industrial racking system landscape in recent years.

The maturing US warehouse industry is expecting proliferation in the near future, whereas Europe is witnessing a growing trend of investments in urban warehouses. Supply chain reconfiguration is identified to remain the key driving force for the expansion of major developed regional markets such as Japan, Europe, and the US.

Developing SEA Markets Emerge as Strong Candidates

According to the report, North America and Southeast Asia collectively account for a share as large as over 40%. The study projects a substantial incremental opportunity for SEAP and MEA. India is identified as the most attractive investment pocket for manufacturers and suppliers in the industrial racking system market.

Growing demand for modern distribution solutions due to increasing consumer affluence and the formation of a new consumer chunk continues to drive the industrial racking system market in developing regional economies such as India, China, Mexico, and Brazil.

On the other side, the growing criticality of organized logistics in terms of quality, time, and cost is likely to craft untapped business opportunities for manufacturers in developing markets of China, India, MEA, and SEAP. 

Strategy Analysis of Key Market Players

The industrial racking system market is a highly fragmented competitive landscape at a global level, and according to a research study, the top 6-8 players represent the market value share of a mere 14%.

The market is majorly operated by a large number of smaller companies, which are currently focusing on targeted product launches, multiple ownership, and improved affordability.

In addition to concentrating on addressing the existing storage space challenges, companies are extending their strategic efforts to strengthen profitable relationships with logistics providers across the supply chain.

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