The U.S. Conveyor and Conveying Equipment Market to Lose Growth Momentum Due to the Pandemic

IndexBox has just published a new report: 'U.S. Conveyor And Conveying Equipment Market. Analysis And Forecast to 2025'. Here is a summary of the report's key findings.

The COVID-Related Recession Is to Undermine the Growth of the Industrial Sector, Which Is to Hamper Conveyor Market Growth

The U.S. conveyor and conveying equipment market expanded sharply to $10.8B in 2019, picking up by 5.1% against the previous year. This figure reflects the total revenue of producers and importers (excluding logistics costs, taxes, and tariffs, which will be included in the final consumer price). The market value increased at an average annual rate of +4.4% over the period from 2013 to 2019; however, the trend pattern remained relatively stable, with only minor fluctuations throughout the analyzed period. Over the last three years, it increased robustly, driven by the rising economy and investment. In physical terms, the market volume reached approx. 1.8M units, rising by +11.9%.

Conveyors and conveying equipment, as the element of engineering infrastructure, are widely used in various industries and transport facilities. Therefore, the key factor determining the development of the market is the dynamics of the industrial sector, which, in a broader context, reflects the overall GDP growth.

According to the World Bank outlook from January 2020, the U.S. economy was expected to slow down to +1.7% per year in the medium term, hampered by increasing global uncertainty, trade war, and slower global growth. In early 2020, however, the global economy entered a period of the crisis caused by the COVID-19 epidemic, due to which most countries in the world put on halt production and transport activity. The result will be a drop in GDP relative to previous years and an unprecedented decline in oil prices.

The U.S. is struggling with a drastic short-term recession, with the expected contraction of GDP of approx. -6.1% in 2020, as the hit of the pandemic was harder than expected, and unemployment soared due to the shutdown and social isolation.

The industrial sector has proven vulnerable to the pandemic as due to quarantine measures, industrial facilities were paused, and the drop in incomes of the population makes the growth of end markets unfeasible, thereby hampering any expansion of the industrial sector. Tight financial conditions and uncertainty regarding the length of the pandemic and the possible bottom of the related economic drop, as well as high volatility of financial markets, not to mention rising political tensions between the U.S. and China, disrupt capital investments in the immediate term, which is to put a drag on the conveyor market.

In the medium term, should the pandemic outbreak end in the second half of 2020, the economy is to start recovering in 2021 and then return to the gradual growth, driven by the fundamentals existed before 2020 and boosted by support measures imposed by the government.

Taking into account the above, it is expected that in 2020, the consumption of conveyors and conveying equipment will drop by approx. 6%. In the medium term, as the economy recovers from the effects of the pandemic, the market is expected to grow gradually, with an anticipated CAGR of +0.2% for the period from 2019 to 2030, which is projected to bring the market volume to 1.8M units by the end of 2030.

Canada and Mexico Remain the Key Foreign Market for Conveyor and Conveying Equipment Exports from the U.S.

In 2019, conveyor and conveying equipment exports amounted to $1.1B (IndexBox estimates) in 2019, decreasing for the second consecutive year. Canada ($383M), Mexico ($194M), and China ($58M) appeared to be the largest markets for conveyor and conveying equipment exported from the U.S. worldwide, together comprising 59% of total exports. Brazil, Chile, India, Italy, Vietnam, Colombia, Spain, Hong Kong SAR, and Kuwait lagged somewhat behind, together comprising a further 11%.

Vietnam recorded the highest growth rate of the value of exports, in terms of the main countries of destination over the period under review, while shipments for the other leaders experienced more modest paces of growth.

Conveyor and Conveying Equipment Imports into the U.S. Increased Robustly

In value terms, conveyor and conveying equipment imports dropped slightly to $2.4B (IndexBox estimates) in 2019. In general, total imports indicated a strong growth from 2013 to 2019: its value increased at an average annual rate of +28.1% over the last six years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2019 figures, imports increased by +56.5% against 2013 indices. The pace of growth was the most pronounced in 2017 when imports increased by 37% year-to-year. Over the period under review, imports reached the maximum at $2.4B in 2018 and then contracted in the following year.

In value terms, the largest conveyor and conveying equipment suppliers to the U.S. were Canada ($544M), Germany ($352M), and Mexico ($209M), with a combined 47% share of total imports.

Mexico saw the highest growth rate of the value of imports, in terms of the main suppliers over the period under review, while purchases for the other leaders experienced more modest paces of growth.

Companies Mentioned in the Report

Intelligrated Systems of Ohio, Esco Corporation, Jervis B. Webb Company, Nesco, Superior Industries, United Conveyor Corporation, Grob Systems, Barry-Wehmiller Container Systems, Roach Manufacturing Corporation, Arrowhead Conveyor Corporation, Joy Global Underground Mining, Diversified Conveyors, Western Pneumatics, Joy Global Conveyors, Intralox, Intelligrated Systems, Keneco, Emerging Acquisitions, Translogic Corporation, Fki Logistex Automation, Hillenbrand, Gower Corporation, Continental Global Group, Material Control Inc., Laitram, Intelligrated Systems, Arrowhead Systems, US Test Company 454, Dearborn Mid-West Company

Source: IndexBox Market Intelligence Platform