Parcel Sortation System Market Size, Share & Trends Analysis Report By Type (Linear Sortation Systems, Loop Sortation Systems), By Applications (Retail and E-Commerce, Post and Parcel, Food and Beverage, Pharmaceutical and Medical, Airports, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global parcel sortation system market was valued at USD 2.29 billion in 2023. It is estimated to reach USD 5.26 billion by 2032, growing at a CAGR of 9.71% during the forecast period (2024–2032). In recent years, the world has transitioned to e-commerce from traditional in-store shopping due to the rapid proliferation of the internet and the high adoption of smartphones, thereby boosting market expansion to manage all the parcels efficiently. The rising air passenger traffic is also estimated to augment the market expansion. Moreover, the prominent stakeholders in the market are introducing technologically advanced parcel sortation systems, which are estimated to create opportunities for market growth.

A parcel sortation system is a specialized system used in logistics and distribution centers to automate the sorting and routing of parcels. It streamlines handling large packages by automatically identifying, categorizing, and directing parcels to their destinations, such as specific delivery routes or distribution hubs. Parcel sortation systems typically involve a combination of conveyor belts, barcode scanners, sensors, computer vision technology, and software algorithms to manage the flow of parcels efficiently.

Parcels are scanned and sorted as they travel along the conveyor system in accordance with predefined standards, like package sizes, delivery routes, and destination zip codes. These systems can significantly increase the speed and accuracy of parcel processing, reducing labor costs and improving overall operational efficiency in the logistics industry. They are essential for handling the ever-growing volume of e-commerce shipments and ensuring timely customer delivery.

Market Dynamics

Global Parcel Sortation System Market Drivers:

Expanding Global E-commerce Sector

The global e-commerce sector has experienced significant growth in recent years. Based on the figures presented in UNCTAD research, the ratio of online retail sales to overall retail sales increased from 17% in 2019 to 19% in 2020. Korea, China, and the United Kingdom exhibited the largest proportion of e-commerce sales among retail sales. The e-commerce industry experienced significant development primarily due to reasons such as the rising use of the internet and smartphones.

As of the latest figures, the expected number of internet users has reached 4.8 billion, according to the latest data from ITU (2021). The exponential expansion of the e-commerce sector has exerted significant pressure on logistics providers to handle deliveries effectively. Therefore, the logistics vendors implemented a parcel sortation system to manage the increasing demand. Consequently, this enhances the expansion of the market for parcel sortation systems.

Rising Number of Travelers to Surge the Demand for Sortation in Airports

The economic development in emerging countries is surging air traffic across the globe. The International Air Transport Association (IATA) announced that the strong post-pandemic passenger traffic trend continued in August. Total traffic in August 2023 (measured in revenue passenger kilometers or RPKs) rose 28.4% compared to August 2022. In line with this, governments in emerging nations are investing heavily in developing smart airports to offer greater convenience. Therefore, the growing number of air passengers and shifting preference towards smart airports with enhanced comfort, safety, security, and provision of luxury drive the market growth.

As per the IATA organization, over 90% of B2C e-commerce is performed by air transport. IATA developed a fast travel program to drive self-service options to address the rising consumer demand, improve airport efficiency, and enhance customer satisfaction. The air travel industry is employing efficient airport baggage handling systems with the capability to improve airport efficiency and enhance customer service. This is anticipated to upsurge the capital investments in the air travel sector, further driving the market growth.

Global Parcel Sortation System Market Restraint:

High Initial Investment

The high initial investment in parcel sortation systems poses a significant limitation in the market. Implementing such systems requires significant initial investments in acquiring equipment, software, and infrastructure, along with expenditures associated with installation and integration into existing logistical processes. This first monetary expenditure can be obstructive for numerous corporations, particularly smaller businesses or those with restricted money.

Additionally, the immediate transparency of the return on investment may not be evident, hence adding complexity to the decision-making process. The expenses associated with continuous maintenance, upgrades, and prospective adjustments also contribute significantly to the financial strain. As a result, organizations may be reluctant to make these investments without a thorough comprehension of the long-term advantages and a guarantee of a positive return on investment. Thus, the high initial investment is estimated to restrain the market growth.

Global Parcel Sortation System Market Opportunities:

Technological Advancements 

Technological improvements such as automation, artificial intelligence (AI), robotics, machine learning, and the Internet of Things (IoT) drive innovations in parcel sortation systems. These technologies enable faster and more accurate sorting, real-time tracking, and improved overall operational performance. For instance, in December 2021, Beumer Group, an expert in automation, introduced a novel sortation system designed specifically for efficiently handling small and medium-sized parcels. The new technique in Germany facilitates the more effective categorization of the increasing volume of tiny and medium-sized e-commerce packages managed by operators like DHL.

Furthermore, in June 2023, Ambi Robotics, the leading AI-powered robotic parcel sorting system company, unveiled AmbiSort B-Series. This modular parcel induction and sorting solution revolutionizes the global logistics business's speed, flexibility, and scalability. This robust technology enables shippers and e-commerce organizations to transform their sorting operations while decreasing operating expenses. The AmbiSort B-Series streamlines the task of categorizing and arranging packages into specific gaylord destinations, effectively tackling the labor-intensive manual sorting that often hinders efficient operations in fast-paced supply chains. These factors present an opportunity for market expansion.

Regional Analysis

North America Dominates the Global Market

Based on region, the global parcel sortation system market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

North America is the most significant global parcel sortation system market shareholder and is expected to expand substantially during the forecast period. North America is a key region in the parcel sortation system market, propelled by the robust presence of major e-commerce players and a well-developed logistics infrastructure. International players from other regions in the logistics automation industry are trying to expand their foothold in this region as it is a technologically advanced and mature region. For instance, in March 2023, Unbox Robotics, an Indian robotics technology business specializing in intralogistics, intends to broaden its presence in global markets, beginning with the United States. The company, which has demonstrated success in the domestic third-party logistics (3PL) industry, aims to offer its technology to address the existing need for advanced plug-and-play automation solutions in the United States. Unbox Robotics assists prominent e-commerce, retail, and logistics organizations worldwide in automating their fulfillment operations using the UnboxSort technology.

Furthermore, the prominent stakeholders actively engage in various strategic initiatives such as mergers and acquisitions, collaborations, expansions, and product launches. For instance, in August 2023, Duravant LLC, a worldwide provider of engineered equipment and automation solutions for the food processing, packaging, and material handling industries, announced its acquisition of National Presort, LP ("NPI"), a prominent manufacturer of automated parcel sortation systems based in Fort Worth, TX. NPI has provided comprehensive equipment solutions for e-commerce, courier, parcel post, warehouse, and fulfillment operations for more than 45 years. These solutions are designed to enhance productivity and precision and minimize fulfillment time. Thus, all these factors expedite the regional market expansion.

Asia-Pacific is becoming a very profitable market for parcel sorting systems as a result of the quick growth of e-commerce in nations like China and India. The region's market is growing thanks in part to investments in the development of infrastructure and technological innovations in logistics. The market players are also introducing novel and efficient parcel sortation systems in this region. For instance, in January 2024, PT Pos Indonesia implemented robotic parcel sorting technology at its processing center in Surabaya, a seaport city on the island of Java, as a step towards complete mechanization.

Pos Indonesia has successfully integrated the t-Sort system from Libiao Robotics into their current IT system, together with RFID parcel scanning software. This integration allows for tracking parcels and letters from the moment the sender dispatches them until they reach the intended delivery destination. The t-Sort system comprises sorting robots, a user-friendly assembly platform, and control software. Due to its modular architecture, Pos Indonesia can easily and swiftly relocate the sorting process, minimizing any disruptions to the business. This is expected to propel the regional market growth.

Segmental Analysis

The global parcel sortation system market is segmented by type and application.

Based on type, the global parcel sortation system market is divided into linear sortation systems and loop sortation systems.

A loop parcel sortation system is an automated sorting device frequently employed in logistics and distribution centers to effectively sort and direct shipments. In a loop parcel sortation system, parcels are usually loaded onto a conveyor belt that creates a continuous loop or circuit within the sorting facility. The sorting process in a loop parcel sortation system is usually managed by software that guides the flow of parcels on the conveyor belt and activates the sorting devices at the designated stations.

The loop parcel sortation system can also be integrated with other systems, such as order management systems or transportation management systems, to guarantee precise categorization and prompt delivery of parcels. Loop parcel sortation systems are renowned for their exceptional capacity and precision. They are indispensable in contemporary logistics operations that manage substantial quantities of packages and necessitate rapid and effective sorting capabilities.

Based on application, the global parcel sortation system market is segmented into retail and e-commerce, post and parcel, food and beverage, pharmaceutical and medical, airports, and others.

The retail and e-commerce segment dominates the global market. The e-commerce sector holds the largest market share due to its exponential growth rate and rising demand for automated sorting systems. The global retail industry has emerged as one of the fast-paced industries due to changing consumer expenditure patterns and the emergence of several new market players. Moreover, changing customer lifestyles and rapid digitalization provide an impetus to segment growth. As per Japan's Ministry of Economy, Trade, and Industry, the global e-commerce market generated about USD 2.84 trillion in 2018, which is anticipated to double during the forecast period.

Additionally, the COVID-19 outbreak is projected to surge the demand for e-commerce shopping platforms to avoid crowded areas. The e-commerce delivery centers are equipped with high throughput to deliver a large number of parcels and items to customers with high precision and speed. Moreover, labor shortages and reduced working hours are surging the demand for automation and unmanned sorting systems.

Impact of covid-19

The pandemic wreaked havoc on the smart home products market. The temporary shutdown and the restrictions on international and domestic travel created a large-scale impact. It leads to impaired production capability and restricts new deployments. The effect on the construction sectors has also contributed to the market hindrance.

Recent Developments

• October 2023- Ambi Robotics, a company specializing in AI-driven robotic sorting solutions for supply chain operations, and Pitney Bowes Inc., a global shipping and mailing company offering technology, logistics, and financial services, jointly announced the successful implementation of the AmbiSort B-Series modular parcel induction and sorting solution for middle-mile operations.
• November 2023- Guernsey Post finished the installation of an automated system for sorting parcels. The postal service has installed a £1.8 million parcel sorting machine at its Envoy House headquarters.