- The growing demand for reducing costs significantly and boosting efficiency in the warehouses has supported the deployment of the automated material handling systems and robots in the region. For instance, AutoStore uses robots and bins to quickly process small parts orders and provides better use of available space than any other automated system in the market.
- According to Swisslog Middle East several companies in the UAE and globally have benefitted immensely from logistics automation, and, particularly in the Middle East, there is an increasing demand for automated logistics solutions in industries ranging from e-commerce and retail to F&B and pharma.
- Moreover, according to World Bank's, 2018 Logistics Performance Index ranking, the UAE stands 13th out of the 160 countries outstripping Canada, France, Finland, Denmark and Australia. This is encouraging the businesses to adopt automated material handling solutions in the country.
- Automation is a crucial driver for the full spectrum of industries, including e-commerce. According to a Fitch Solutions report, the UAE’s e-commerce sector alone is currently worth USD 17.8 billion, representing 45.6% of the total value of the Middle East’s e-commerce market. This has been positively imapcting the growth of the market.
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Key Market Trends
Retail Sector to Witness Significant Growth
- The retail sector is one of the most significant contributors to the demand for automated material handling (AMH) solutions in the Middle East & African region. Almost 25% of the revenue obtained for AMH in the region was sourced from this sector.
- The growth of the retail segment in the region was primarily governed by two factors, rapid growth in the e-commerce segment and increasing investments in tourism and hospitality services.
- As most of the Middle Eastern countries depend on the oil and gas sector, they are taking necessary steps to increase their non-oil revenue streams. This trend is evident in the case of Saudi Arabia and the United Arab Emirates, which are investing heavily in special economic zones for the manufacturing sector and tourism development.
- Companies like IHG, Marriott, Accor Hotels, and Hilton are continuously expanding, as the investments in tourism are fetching more international tourists. In case of the e-commerce sector, with increasing demand from countries outside GCC, the GCC countries are evolving as redistributors. This is increasing the number of warehouse establishments in the region, leading to growth in demand for automated material handling (AMH) equipment.
South Africa to Hold Major Share
- Increasing FDI for the Middle East (due to increasing political conflicts in the European and American regions) is expected to drive the demand for automation in the region.
- Although Africa has surplus trade overseas, intra-African trade remains low. The adoption of more open policies and investments in infrastructure by the African countries is expected to build momentum for intra-African trade, strengthening the local distribution channels.
- With its well-built logistics networks in the region, South Africa is a promising platform for the e-commerce industry. More than 50% of the population in the country is estimated to have internet access, which account for around 83 million online shoppers in the region. Tourism is another primary driver for the increase in the demand for AMH equipment in the region, with its impact on the surrounding retail and food and beverage establishments.
Competitive Landscape
The Middle East & Africa automated material handling market is consolidated and moderately competitive in nature. Product launches, high expense on research and development, partnerships and acquisitions, etc. are the prime growth strategies adopted by the companies in the country to sustain the growing competition.
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