DCs to see growth spurt

By Staff -- Modern Materials Handling, 10/1/2005

The volume of goods that needs to be moved and stored will keep rising over the next year as least as fast as overall economic growth. And that will put added pressure on distribution and logistics operations, according to Dr. James Haughey, director of economics for Reed Business Information.

As a result, a rising number of companies will be compelled to invest in more storage and distribution space. Haughey says that he expects building to commence soon. "In the U.S. economy, demand is growing faster than supply which puts ever increasing pressure on production and distribution capacity."

Meanwhile, above average growth in U.S. production and distribution since the spring of 2003 has set off a capital spending boom equal to the investment spending increases in the late 1990's, he notes.

Haughey expects equipment sales to be robust for the balance of this year. "Materials handling equipment shipments from U.S. factories will increase 24% in 2005 even as equipment imports soar to meet U.S. orders," he comments. "Strong late 2004 and early 2005 shipments were largely driven by the replacement of industrial trucks postponed from earlier lean economic years."

In addition, conveyor sales growth remains strong in 2005, says Haughey.

Haughey remains optimistic for market stability in the coming years. "Sales growth in 2007 is likely to be as least as high as in 2006." As the chart shows, Modern's exclusive Materials Handling Orders Index will be strong throughout 2007.