Automation, Electrification, Emerging Markets Drive Growth in Material Handling Industry

The forklift market is entering a structural growth cycle and both the short-term and long-term outlook have been significantly upgraded.

Interact Analysis’ latest report forecasts global annual forklift shipments to exceed 3.6 million units by 2034. This marks an increase of approximately 400,000 units compared with previous forecasts. An optimistic outlook is driven by three main factors – automation, electrification, and emerging markets – jointly propelling the industry into a phase of high growth.

Here's a breakdown of the major drivers of growth and key market trends across different regions and product types.

Analysis of core growth drivers

1. The automation wave reshaping material handling. Demand for automation in manufacturing and logistics has shifted from “optional” to “essential.” Labor shortages, rising labor costs, and increasing supply chain complexity are driving companies to boost investment in automated warehousing and smart logistics solutions. Automated guided vehicles (AGVs), autonomous mobile robots (AMRs), and intelligent forklift systems with AI capabilities are becoming core equipment in modern warehouses. The report indicates that automated forklifts (e.g., Class 3.1) will achieve a compound annual growth rate (CAGR) in double-digit growth over the next five years, becoming the fastest-growing segment among all classes.
2. Electrification transition enters the fast lane. Electric forklifts, particularly models equipped with Li-ion batteries, are rapidly replacing traditional internal combustion engine (ICE) models. Li-ion technology has become the mainstream choice due to its comprehensive advantages in total cost of ownership (TCO), charging efficiency, maintenance convenience, and environmental friendliness. By 2026, the share of Li-ion batteries in electric forklifts is expected to surpass that of lead-acid batteries, exceeding 80% by 2034. China plays a key role in this transition, with its Li-ion forklift shipments projected to surge to over 1 million units by 2034;
3. Emerging markets as new growth drivers. Emerging economies in Southeast Asia, the Middle East, and Africa are injecting strong momentum into the forklift market through infrastructure expansion, manufacturing relocation, and the rise of local e-commerce. Among them, the Indian market is particularly outstanding, with order growth projected at over 11% in both 2025 and 2026.

Deep divergence in regional market patterns

1. China and India: dual-core drivers. China is not only the world’s largest forklift producer and consumer, but also the dominant force in technological evolution and price revolution. Its Class 3.1 small electric forklifts have achieved economies of scale and low cost, with unit prices falling to around $1,000, greatly promoting the global electrification process. Driven by the “Make in India” initiative and infrastructure policies, India has become one of the fastest-growing markets, with expanding local manufacturing and logistics sectors driving sustained equipment demand.
2. North American market: Moderate recovery. After a contraction in 2024, the U.S. market is expected to gradually recover in 2025 and return to positive growth in 2026. Its recovery is primarily driven by manufacturing resilience, recovering investment in automation, and normalized inventory levels. Nevertheless, North America still lags behind Europe and Asia in the electrification transition. This is especially apparent in Class 4/5 models, where traditional ICE models still hold a significant market share due to operational inertia and facility compatibility issues.
3. European market: Strength in the South, stability in the North. Overall European growth is stable, but internal differences are significant. Southern European countries like Spain and Italy show strong performance, while traditional industrial powers like Germany and France are experiencing moderate growth. Eastern Europe, due to cost advantages and increased foreign investment, has become a regional highlight for growth.

Product structure evolution and class rise and fall

1. Class 3.1 becomes the market mainstay. Driven by e-commerce and warehouse automation, Class 3.1 models are set to become the category with the largest shipment volume after 2030, boasting a remarkable ten-year CAGR. Chinese manufacturers possess significant cost and supply chain advantages in this segment, reshaping the competitive landscape globally.
2. Strong continued growth for electric products. Class 1 (electric counterbalance forklifts) and Class 2 (narrow aisle forklifts) also maintain robust growth, reflecting the spread of electrification in indoor and light-duty applications.
3. Structural decline of ICE models. Class 4 and 5 (ICE counterbalance forklifts) are the only category showing negative growth, with a projected ten-year CAGR of -0.5%. Stricter environmental regulations, TCO disadvantages, and corporate environmental, social, and governance (ESG) goals are collectively accelerating their market decline.

Future challenges and strategic directions

Despite the optimistic prospects for the global forklift market, it still faces challenges such as the “confidence gap” between orders and shipments, supply chain disruptions, geopolitical risks, and insufficient charging infrastructure. In response, mainstream manufacturers are transitioning from “equipment manufacturers” to “solution providers.” They are building comprehensive competitiveness centered on TCO by strengthening Li-ion battery technology, developing autonomous systems, and expanding rental and service platforms.