After a dismal 2009, makers of conveying and sortation systems believe a modest recovery is under way. In the meantime, look for great deals on equipment.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
The early signs, at least, are promising. After a dismal 2009, manufacturers of conveying and
sortation systems are once again getting what they believe are serious inquiries from potential
customers about new installations.
As far as the manufacturers are concerned, the rebound can't happen soon enough. Last year was
among the worst the industry has seen in some time. Through the first half of the year,
sales tracked by the Conveyor Equipment Manufacturers Association (CEMA) were down
by 18.8 percent. (Full year statistics will be announced next month.)
But equipment makers have reason for encouragement. Not only are they fielding more requests
for quotes, but buyers themselves have indicated they're likely to increase their spending this
year. In a survey conducted in mid-2009, DC Velocity asked readers about their plans for
spending on conveyor equipment in 2010. While 19 percent indicated they expected to cut spending,
31 percent said they planned to spend more this year than they did in 2009.
For companies planning to buy new equipment, the timing couldn't be better. Right now, vendors
are hungry for business. Most of the manufacturers admit pricing pressure is intense, and with
manufacturing capacity plentiful, they are anxious to book business.
The intense market competition is just one part of the story. Like their peers in many other
industries, conveyor manufacturers have worked hard to trim their own costs over the past 18
months or so. That means they can now cut a better deal and still make a profit.
William J. Casey, president and COO of SI Systems, says, "I know that we've done a lot of
belt tightening, so our break even is a lot lower and that should translate into
better-than-average profits." He admits, though, that competition for order fulfillment equipment
business is "a dogfight."
Larry Strayhorn, president of TGW Ermanco, agrees. "We all sense it's a buyers' market, and
they are taking every advantage they can to pit us all against each other," he says.
"This is a fantastic time for people to buy," adds Michael Johnson, senior vice president for
unit handling systems at HK Systems. "They will never get a better deal than now."
Cautious but hopeful
The deals may be out there, but equipment makers aren't expecting a flood of orders in the
immediate future. Todd Swinderman, current president of CEMA and director and chief technology
officer for Martin Engineering in Neponset, Ill., says, "Most of our members feel like we're
bouncing along the bottom. We don't expect to see a dramatic increase [in orders]." He does see
some light ahead, however. "After seeing a sharp decline in orders in 2009, companies believe the
worst is over and growth is on the way, if not immediately then by later this year."
Russ Devilbiss, chair of the conveyor & sortation systems product section of the Material
Handling Industry of America (MHIA) and sales and marketing manager for Carter Control Systems,
takes the same view. He says section members see glimmers of recovery. "I think we're hopeful
things will be a lot brighter," Devilbiss says. Even so, he expects the comeback to be a slow
one. MHIA's forecasts indicate that equipment sales won't see
a significant rebound until the third and fourth quarters of the year.
SI Systems, an automated systems specialist whose clients are concentrated heavily in the
pharmaceutical, health and beauty aid, entertainment, and office supply industries, is also
seeing signs that customers are getting ready to spend again. Casey says, "We are starting to see
the number of inquiries increase. I'm talking about what I would perceive, based on 40-plus
years of experience, as some pretty solid ones. Customers are starting to loosen the purse
strings a bit. We are not back to normal levels, but we have hit the bottom and are starting
to get a little bit of bounce. It will be a slow but steady recovery."
Johnson of HK Systems is not quite so sure those inquiries will quickly turn into orders.
"We have seen an uptick in quotes, and that gives us some hope, but honestly, the first half is
going to be a difficult time," he says. "I sense a tentativeness with some customers. We are
quoting larger systems, but I'll feel better when the orders come in."
That's not to say the picture at HK Systems is entirely bleak. Although demand for new
installations is down, Johnson reports that the company has seen growth in a few areas,
particularly aftermarket sales, modifications to existing systems, and retrofits. "We
anticipate that will continue to be strong," he says. "That's usually an indicator of an
economy in flux."
Pockets of optimism
Others in the industry sound a bit more optimistic. Ken Ruehrdanz, market development manager for
Dematic Corp. and former chair of the MHIA conveyor & sortation systems product section, expects
to see steady growth in demand for integrated systems this year. "The need for processing speed,
increased levels of accuracy, higher customer service levels, more value-added services, with more
ergonomics and sustainability built in, will drive the market need for integrated material flow
systems in 2010," he wrote in response to a query from DC Velocity. "Warehouse operators
continue to be driven to reduce warehouse logistics costs."
Some are already seeing signs of growth. John Sarinick, vice president and division manager for
Beumer Corp.'s sortation group and vice chair of MHIA's conveyor & sortation systems product group,
says his company started seeing an uptick in the summer. "True proposals turned up in the last
quarter, and several [were] due here in January," he says. "We're hoping for a strong first
quarter."
Sarinick expects growth to be led by dot-com customers, which are projected to recover more
quickly than their brick-and-mortar counterparts. "Direct-to-consumer is looking to be a strong
market for our products," he says. Facility upgrades will be another growth area, Sarinick adds.
"With the economy down, customers are using automated systems to get more out of their [existing
facilities] rather than building greenfield facilities as we saw in previous years," he says.
Bucking the trend
Not all equipment makers look back on 2009 as a disaster. Take TGW Ermanco, for example. "It was a
pretty dismal year, but we did better than expected," says Strayhorn, who joined the company as
president last April. "Actually, the group [which includes several material handling firms
operating under the umbrella of the Austria-based TGW Logistics Group] grew a little last
year."
The company is looking to build on that growth by shifting its strategy from supplying products
to integrators toward developing material handling systems for end customers, Strayhorn says. "We
are still going to maintain relationships and sell conveyor systems to our business partners, but
we are breaking out of the box and approaching the market in a direct fashion," he explains.
Strayhorn says it's necessary for the company to "break out of the commodity box [because] that's
the worst box you can be in in our industry. It drives down margins and limits growth."
At least one company will look back fondly on last year. "Schaefer had a great year in 2009,"
says Jack Lehr, vice president of sales for Schaefer Systems, a large systems integrator for
automated warehouses and distribution centers. He expects business to remain strong this year.
"Blue chip companies in our markets took advantage of our services to leapfrog their
competition," he says. Specifically, Schaefer had success with large food distributors, major
retailers, and electronic commerce fulfillment specialists. "They went against the trend," he
says. "Companies that are segment leaders and had the capital took advantage of lower construction
costs and the opportunity to get the lowest cost per unit."
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!
Toyota Material Handling and its nationwide network of dealers showcased their commitment to improving their local communities during the company’s annual “Lift the Community Day.” Since 2021, Toyota associates have participated in an annual day-long philanthropic event held near Toyota’s Columbus, Indiana, headquarters. This year, the initiative expanded to include participation from Toyota’s dealers, increasing the impact on communities throughout the U.S. A total of 324 Toyota associates completed 2,300 hours of community service during this year’s event.
The PMMI Foundation, the charitable arm of PMMI, The Association for Packaging and Processing Technologies, awarded nearly $200,000 in scholarships to students pursuing careers in the packaging and processing industry. Each year, the PMMI Foundation provides academic scholarships to students studying packaging, food processing, and engineering to underscore its commitment to the future of the packaging and processing industry.
Truck leasing and fleet management services provider Fleet Advantage hosted its “Kids Around the Corner Foundation” back-to-school backpack drive in July. During the event, company associates assembled 200 backpacks filled with essential school supplies for high school-age students. The backpacks were then delivered to Henderson Behavioral Health’s Youth & Family Services location in Tamarac, Florida.
For the past seven years, third-party logistics service specialist ODW Logistics has provided logistics support for the Pelotonia Ride Weekend, a campaign to raise funds for cancer research at The Ohio State University’s Comprehensive Cancer Center–Arthur G. James Cancer Hospital and Richard J. Solove Research Institute. As in the past, ODW provided inventory management services and transportation for the riders’ bicycles at this year’s event. In all, some 7,000 riders and 3,000 volunteers participated in the ride weekend.