Business Scan: The 2025 Industry Outlook
AS WE MOVE into 2025, the material handling industry continues to evolve, with each industry segment facing distinct challenges and opportunities. From shifting market dynamics and consolidation trends to rapid technological advancements and AI-driven solutions, companies are adapting to remain competitive in an increasingly complex landscape. Below, we explore key insights across three major industry segments: industrial trucks, storage and handling and systems integrators.
Industrial Trucks: Navigating Market Shifts and Technology Integration
Sales and Market Performance
Despite regional variations, companies reported an uptick in quotes and orders for new equipment. Parts, batteries and service segments remain strong. Inventory levels are stabilizing, and strategic “rightsizing” efforts are underway to align with demand fluctuations.
Competitive Landscape and Financial Outlook
Growth projections for 2025 remain optimistic. While companies are focused on maintaining cash flow efficiency, declining Days Sales Outstanding suggests improvements in financial management. The West Coast has expectations of recovery in 2025 as local construction conditions improve.
AI and Emerging Technologies
AI adoption is accelerating across various operational functions, including:
- Invoice Processing: automating data entry, enhancing efficiency.
- Recruitment: AI-powered tools like ChatGPT are optimizing hiring processes.
- Parts Inventory Management: AI-driven forecasting is improving stock control.
Additionally, machine learning is being leveraged to manage product specifications, while telematics and advanced safety features are being explored as cost-effective solutions.
Workforce Trends and Economic Considerations
Technician turnover is declining, and wage growth is stabilizing. Companies are increasingly focused on internal advancement and performance-based incentives. OEM lead times have improved, but pricing pressures remain a concern, particularly with increasing competition from offshore suppliers. Looking ahead, strong demand is anticipated in the second half of 2025, supported by higher auction prices and a rebound in key market segments.
Storage and Handling: Consolidation, Tariffs and Digital Transformation
Tariffs and Supply Chain Challenges
Tariffs are posing a significant challenge, particularly for Canadian aluminum suppliers, who account for a large portion of the industry’s aluminum supply. Rising steel prices could further pressure costs, potentially triggering panic buying as businesses push orders forward before additional tariffs take effect.
Order Activity and Outlook
While post-election order increases were anticipated, actual orders have yet to fully materialize. However, the industry saw record order intake immediately following the election, and expectations for a robust 2025 remain intact. Quoting activity remains high, with a strong second half of the year anticipated.
AI and Digital Innovation
AI is playing an increasingly crucial role in improving efficiency and the customer experience. Companies are implementing AI-enhanced solutions such as:
- Automated Order Processing: Streamlining customer interactions and reducing errors.
- Integrated AI: Enhancing order entry and management capabilities.
- Turnkey Solutions: AI-driven design support and permitting services.
Customer Behavior and Workforce Adjustments
Direct online purchasing is becoming more prevalent, with customers expecting companies to act more like general contractors. Service requests for new technologies, training and controls are on the rise. With increased retirements in the workforce, succession planning has become a priority, and companies are investing in on-site training and internal development programs.
Investment and Industry Resilience
Private equity interest is driving industry shifts, compelling businesses to adapt quickly. Strategic investments in automation and sustainability are helping companies maintain a competitive edge. Despite ongoing international uncertainty, the American market remains resilient, positioned well for continued growth through 2026.
Systems Integrators: The Rise of Automation and AI Integration Financial and Market Trends
Systems integrators had a strong close to 2024, with the fourth quarter posting particularly high revenues. The industry is exceeding early 2025 projections, with increased quoting and order activity signaling a promising start to the year. The demand for robotics remains strong, largely due to labor shortages. Mechatronics programs at trade schools are proving to be a valuable hiring pipeline.
Technology-driven Market Differentiation
As large OEM systems struggle with flexibility, independent integrators are leveraging their adaptability to secure deals. Customer testimonials continue to be an essential tool in winning new business, reinforcing the importance of strong client relationships.
Strategic Initiatives
AI adoption within systems integration remains somewhat siloed, with many companies using it for specific applications rather than integrating it across functions. Key areas of focus for strategic development include:
- Training Programs: Develop internal subject matter experts to support sales and engineering teams.
- Holistic Software Solutions: Software projects often uncover additional hardware needs, encouraging bundled solutions.
- Tariff Risk Mitigation: Companies are incorporating tariff-related contingencies into quotes and proposals.
Outlook and Workforce Development
Cautious optimism surrounds 2025, with expectations for continued technological advancements and increased demand for AI-integrated solutions. However, companies must address challenges related to data readiness and IT alignment for broader AI implementation. The rise of Autonomous Mobile Robots is particularly notable, with significant industry representation expected at industry trade shows such as Promat 2025.
To remain competitive, companies must attract talent with specialized skill sets while fostering collaboration between traditional systems integrators and IT professionals. AI adoption strategies will be a focal point in 2025, ensuring alignment with long-term business objectives.
Conclusion: A Transformative Year Ahead
The material handling industry is at a crossroads, with technological innovation, market consolidation and shifting economic conditions shaping the landscape. Industrial trucks, storage and handling and systems integrators each face unique challenges, yet the overarching trend is one of adaptation and opportunity. Companies that invest in AI, workforce development and strategic partnerships are poised to lead the industry forward. While short-term inflation concerns and international market uncertainties persist, the outlook for 2025 and beyond remains strong.
