Parcel Sortation Market by Type, Service Type, and Geography - Forecast and Analysis 2023-2027

Parcel Sortation Market Forecast 2023-2027

The parcel sortation market is estimated to grow by USD 1.11 billion declining at a CAGR of 9.36% between 2022 and 2027. The market is driven by three key factors. Firstly, the growing e-commerce industry is fueling the demand for efficient parcel sorting solutions. Secondly, increasing industrial automation and rising labor costs are pushing companies towards automated sorting systems. Lastly, the surge in transportation and logistics activities is driving the need for faster and more accurate parcel sorting processes to handle the increasing volume of shipments.

What will be the size of the Market During the Forecast Period?

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Market Segmentation

This market growth analysis report extensively covers market segmentation by type (linear sortation system and loop sortation system), service type (software, hardware, and services), and geography (Europe, North America, APAC, South America, and Middle East and Africa).

By Type 

The market share growth by the linear sortation system segment will be significant during the forecast period. The commodities are transported and delivered to their designated stations using a sliding mechanism on the linear sorter, which is a sorting and distribution system. The linear sorter has a speed of about 3 m/s and is appropriate for products with smooth surfaces (cartons or containers). 

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The linear sortation system segment was valued at USD 934.33 million in 2017 and continued to grow until 2021. A continuous material handling system is used for this form of sorting and distribution. As a result, the inventory is moved from point A to point B using a conveyor belt that runs automatically and continually. The individual commodities move into the branches that have been designated for them while the conveyor belt is continuously in operation. Depending on the bearing, the branches serve a variety of purposes. For example, the items are sorted by order for picking or delivery. If the products are stored, in another scenario, by kind. Before each branch, the system scans the inventory or analyses the weight and/or dimensions of the relevant products to determine whether the inventory has to turn at that branch or if it can continue moving along the main conveyor belt. The push-off devices are extended if the inventory needs to be transferred to the conveyor belt with branches. These do not affect the conveyor belt when not in use since they are positioned between or above the rollers of the conveyor belt. After that, the inventory retracts the push-off device, also known as the shoes, and travels along its designated course. The sorting and distribution system as a whole need not be paused during this procedure. A manual sorting procedure makes mistakes like inaccurate labeling and missorts that can delay the delivery of items and may ultimately lead to dissatisfied customers. Utilizing automated package sorting ensures consistent, precise results. Such factors are expected to drive the growth of the segment in the global market during the forecast period.

Regional Analysis

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Europe is estimated to contribute 34% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. 

Parcel delivery is expanding across Europe as a result of the e-commerce boom, especially in nations such as the UK and Germany.  The demand for parcel sortation systems is increasing as a result of the rising demand for delivered goods and the usage of automation in handling and sorting shipping materials. Furthermore, the UK's aviation sector, along with the e-commerce growth, is what drives the market for parcel sortation systems. To handle the rising passenger traffic, four significant UK airports have announced expansion plans. For instance, in 2019, Gatwick Airport unveiled a new five-year, EUR 1.1 billion expansion plan with the aim of increasing passenger numbers by roughly 53 million by 2024.

With more product launches, which aid in enhancing the supply chain for these products, Europe is expanding steadily. Smart technologies are being more widely used, with European makers of packet sorter systems adopting robot- and AI-based packet sorting systems. Germany makes a significant contribution to the expansion of the European market. To improve the distribution process, the nation is progressively employing automation technology. These elements are anticipated to stimulate the market for parcel sortation systems in Europe during the forecast period.

Market Dynamics and Customer Landscape

The market is propelled by the booming e-commerce industry's demand for faster delivery amid labor cost inflation. While initial capital expenditure and ongoing maintenance can pose restraints, the deployment of efficient automated warehouses is revolutionizing the logistic movement of goods. From traditional warehouses to smart and connected facilities, sorting equipment like conveyors and actuators streamlines operations. Integration of Industry 4.0 technologies addresses real-time technical challenges with sensing elements, cameras, and barcodes, ensuring precise sorting. Systems continuously undergo upgrades and repairs to maintain efficiency. With support from entities like the Department of Commerce, the market evolves to meet the evolving needs of the supply chain, enhancing efficiency and meeting customer expectations.

The growing e-commerce industry is notably driving market growth, although factors such as the high cost of implementation may impede market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Driver

The surge in the e-commerce industry prominently propels market growth. With increased internet accessibility and online shopping adoption, e-commerce experiences notable expansion. Timely delivery and quality packaging stand as crucial differentiators for e-commerce entities competing with traditional retailers. The demand for automation surges, driven by e-commerce players seeking flexibility, expanded SKUs, and efficient returns processing, often relying on third-party logistics partners. E-commerce's evolution necessitates selective mass picking, leading major players like Amazon to enhance customer experiences through partnerships with advanced logistics providers. This increasing reliance on e-commerce fosters demand for parcel sortation systems, especially as wholesalers automate operations to meet escalating delivery demands, further catalyzing market expansion.

Significant Market Trend

The development of automated sortation systems is one of the emerging market trends.  The ability of AI to accelerate virtual development in every industry has greatly aided the expansion of the material handling system sector. To offer same-day delivery, businesses are creating reliable sortation systems. Additionally, the development of future robotics and significant investments in its research and development fuel market expansion.

To meet rising demand, businesses everywhere are changing and embracing cutting-edge technology. To generate sizable returns on investments, distributors constantly strategize for the future and ways to beat out the competitors on a worldwide scale. Rich data insights are provided by the automated parcel sortation systems for improving operational effectiveness and customer satisfaction. Moreover, modern sorters' flexibility and scalability enable merchants and shippers to increase their assets in accordance with market developments. Thus, such factors are expected to drive the growth of the global market during the forecast period.

Major Market Challenge

The high cost of implementation is a major challenge impeding market growth. Since parcel sortation systems involve the use of sensors, software, and advanced technologies, their prices are considerably high and require a large initial one-time payment. Also, investments in trailers and docks, as well as in their modification, add to the costs. The costs appreciate depending on customization and other operational requirements based on the industry. Since these are expensive to implement, only companies that derive significant cost benefits from implementing these solutions invest in them. Small- and medium-sized enterprises (SMEs), on the other hand, find it difficult to invest in such systems due to their limited cash flow in operations.

While these systems offer significant savings in labor costs, the lack of widespread awareness among potential end-users about cost-reduction procedures limits their implementation. This is a major deterrent to market growth, especially in labor-intensive economies, where cheap manual labor is available. Thus, the high cost of implementation will become a major challenge for the growth of the global market during the forecast year.

Key Customer Landscape

The market research and growth report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the market growth and forecasting report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Customer Landscape

Who are the Major Parcel Sortation Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Alstef Group SAS - The key offerings of the company include parcel sortation systems. 

The market forecasting report also includes detailed analyses of the competitive landscape of the market and information about 15 market Companies, including:

• Beumer Group GmbH and Co. KG
• Daifuku Co. Ltd.
• Equinox MHE
• Falcon Autotech Pvt Ltd
• FIVES SAS
• GBI Intralogistics Inc.
• Grey Orange Pte. Ltd.
• Honeywell International Inc.
• Interroll Holding AG
• Intralox LLC
• Invata Intralogistics Inc.
• KION GROUP AG
• L. Possehl and Co. mbH
• Murata Machinery Ltd.
• Northrop Grumman Systems Corp.

Qualitative and quantitative analysis of Companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize Companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize Companies as dominant, leading, strong, tentative, and weak.

Market Analyst Overview

The market is experiencing rapid growth due to several factors. With the rise in labor cost inflation and increasing demand for faster delivery, companies are turning to automated parcel sorting solutions to streamline operations. However, challenges such as initial capital expenditure and ongoing maintenance act as restraints. Sorting equipment like conveyors, actuators, and belts are crucial components in traditional, smart, and connected warehouses. Real-time technical challenges, including mechanical failures and sorting errors, require advanced control software and sensing elements like cameras and barcodes. Despite these hurdles, innovations like Loop Parcel Sortation Systems and integrated warehouse management systems are optimizing logistics operations, enhancing inventory management, and improving order fulfillment, ensuring accurate and timely delivery of parcels while meeting service level demands.

The market, closely monitored by entities like the Department of Commerce, witnesses significant deployment across various industries. While initial installation costs and ongoing repairs and upgrades may pose challenges, the transition from traditional warehouses to smart and efficient automated facilities accelerates the logistic movement of goods. Command-driven systems efficiently handle diverse package sizes and shapes, despite technical flaws like misalignment or faulty sensors. Advanced features like diverters and optical character recognition ensure precise parcel routing, enhancing visibility and accuracy. With a focus on improving logistics applications and meeting customer service expectations, parcel sortation systems optimize order delivery times and streamline parcel handling processes to meet the growing volume of parcels efficiently.

Segment Overview

The market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. 

• Type Outlook 
  • Linear sortation system
  • Loop sortation system

• Service Type Outlook 
  • Software
  • Hardware
  • Services

• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa
  • South America
    • Chile
    • Brazil
    • Argentina

Parcel Sortation Market Scope
Report Coverage	Details
Page number	154
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Decelerate at a CAGR of 9.36%
Market growth 2023-2027	USD 1.11 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	9.95
Regional analysis	Europe, North America, APAC, South America, and Middle East and Africa
Performing market contribution	Europe at 34%
Key countries	US, China, Germany, France, and Italy
Competitive landscape	Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks
Key companies profiled	Alstef Group SAS, Beumer Group GmbH and Co. KG, Daifuku Co. Ltd., Equinox MHE, Falcon Autotech Pvt Ltd, FIVES SAS, GBI Intralogistics Inc., Grey Orange Pte. Ltd., Honeywell International Inc., Interroll Holding AG, Intralox LLC, Invata Intralogistics Inc., KION GROUP AG, L. Possehl and Co. mbH, Murata Machinery Ltd., Northrop Grumman Systems Corp., Okura Yusoki Co. Ltd., Pitney Bowes Inc., Siemens AG, and Toyota Industries Corp.
Market dynamics	Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2023 and 2027
• Precise estimation of the size of the market size and its contribution to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the industry across Europe, North America, APAC, South America, and Middle East and Africa
• A thorough analysis of the market’s competitive landscape and detailed information about Companies
• Comprehensive analysis of factors that will challenge the growth of market Companies

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