The global market demand for elevators and escalators is estimated to 850,000 units a year. Asia-Pacific accounts for the largest share of the elevators and escalators market with approximately three-quarters of the global demand.
The demand for new installation market for elevators and escalators is highly correlated to the construction activity. The overall Asia-Pacific construction activity is predicted to remain sluggish due to the slowdown in China’s construction industry. However, China and India still represent the two largest market within Asia-Pacific, with China alone accounting for more than half of the global high rise building projects. Emerging markets in Southeast Asia such as Malaysia, Thailand, Indonesia, and Vietnam are investing heavily in new infrastructure projects, mostly related to urban transportations.
These investments are expected to drive the demand for elevators and escalators, particularly in the metropolitan areas of these countries.
Urbanization Fueling the Demand for Vertical Transportation
The vertical transportation industry is shaped to a large extent by the megatrend of rapid urbanization. By 2018, 50 percent of the population in the Asia-Pacific region is expected to be living in urban areas. These growing high density metropolitan areas will increase the importance of mobility efficiency. More people will need to move within a building at the same time. Tall buildings will need efficient elevators. According to “The Skyscraper Center ”, 7 out of the top 10 countries with total number of completed buildings above 100 m height are located in the Asia-Pacific. China has the highest number of skyscraper buildings, of which a whopping 1,814 are above 150 m height, more than double that of the United States. Other Asia-Pacific countries in the top 10 list include Japan, South Korea, Singapore, Australia, Indonesia, and the Philippines.
Within the emerging economies in Southeast Asia, the demand for elevators in the low to mid rise buildings is expected to be strong in the next three to five years. In Thailand, home to regional manufacturing plants for the two largest Japanese elevator manufacturers – Mitsubishi Elevator and Hitachi, the total elevators and escalators production is expected to breach 25,000 units a year as compared to the local Thailand demand of 5,500 units in 2015. These plants serve as a strategic supply base to the regional market, particularly to the fast growing neighboring countries of Vietnam, Malaysia, the Philippines, and Indonesia.
The rapid growth of large cities in Southeast Asia has created an urgent need for efficient public transportation to ease the increasing road traffic congestion. Metropolitan cities such as Kuala Lumpur, Bangkok, Hanoi, Ho Chi Minh, and Manila have developed plans for urban rail networks. In Kuala Lumpur metropolitan region, the Klang Valley MRT project scheduled to be operational by 2017 has resulted in large scale property development along the new line, thus fueling the demand for vertical transportation. Bangkok Metropolitan region has plans to build 219 Metro stations by 2020, spurring demand for condominiums, offices, and retail malls along the 12 mass rapid transit (MRT) lines. Hanoi and Ho Chi Minh have master plans for constructing 13 new metro lines by 2025. As the most populous metropolitan region in Southeast Asia, Manila metropolitan region is under-served by its 3 metro lines. The National Capital Region of the Philippines is planning to build 4 new metro lines along with extension of existing ones by 2025. All these are likely to create demand for elevators both directly from metro projects and also indirectly due to the property boom in the vicinity of these stations.
Smart Elevators
Emerging economies in Asia-Pacific are taking a leap and making large investments in creating new integrated cities, or often known as “smart cities”. These smart cities aim to be more people-centric and offer sustainable infrastructure to boost the livability. Vertical transportation is ready to onboard the bandwagon of being part of the smart solution. Many of the large elevator manufacturers offer elevator with destination dispatch. Destination dispatch allows passengers to select a particular floor before boarding the elevator. The algorithm will then be sent to a smart processor that groups multiple elevators to different group of passengers, thus optimizing the waiting and traveling times. The smart feature of destination dispatch can be further integrated with IoT, allowing personalized services for elevator through passengers’ smart phone. The possibility of summoning elevator even before a user reaches the elevator door is expected to seamlessly enhance user mobility.
As the trend of malls, airports, and urban public transportations get larger, human traffic management becomes increasingly important. Escalators are fastest mode of transporting large group of human traffic across different floors. As such, safety aspect is crucial especially with the recent influx of news about escalator related incidents happening around the world. Most of the cases involved unattended children trying to access or play on escalators. Manufacturers have been working with building management to ensure safety components including side safety brushes are installed to prevent shoes entrapment. Proper safety signs are to be marked and put up to remind the safety of the riders.
Maintenance Regulations Driven by Safety Concerns
As far as safety is concerned, Singapore Building and Construction Authority (BCA) has announced new regulation on the escalator maintenance applicable to more than 6,000 escalators installed in the island . From November 2016, under the new regulation, escalators have to be maintained monthly by contractors registered with the BCA. Safety features such as having sufficient lighting near escalator combs and emergency stop switches are to be inspected along with ensuring sufficient lubrication on movable parts, joints and gear-boxes to ensure the safety of escalators. On top of that, escalators owners must obtain a BCA permit to operate the escalators. The permit has to be renewed yearly. By March 2018, these permits must be displayed near the escalators similar to current practice for elevator.
It is estimated that the global elevators and escalators installed base was more than 13.5 million units. Elevators and escalators have to be maintained periodically. Maintenance business is a major source of revenue and recurring income for the vertical transportation industry. There are various forms of maintenance models including breakdown, preventive, condition-based, task based maintenance. The vertical transportation maintenance business is at the verge of transformation.
Internet of Vertical Transportation
Integrating elevators and escalators with “Internet of Vertical Transportation” is expected to be the new trend for the maintenance business. By monitoring elevators and escalators component that are connected to cloud, manufacturers and maintenance players will be able to analyze the need for components replacement and manage maintenance services effectively. Data collection from thousands of elevators and escalators, coupled with machine learning and predictive analytics, can transform the traditional scheduled maintenance business to efficient interactive data-driven maintenance services. This is expected to transform the relationship of service engineers with the customers.
The transformation in the industry is led by the global organizations such as Otis, Kone, Schindler, ThyssenKrupp, Mitsubishi Elevator, and Hitachi Elevator. The Japanese players, in particular those that are part of large conglomerates with extensive building related solution portfolio, have been aggressive in leveraging their business adjacencies to push for innovative building solutions. On the contrary, Otis is the only western company with building related product portfolio. It would be interesting to closely monitor the strategic direction of these companies.
Frost & Sullivan has a dedicated team of analysts that track the transformational trends in the buildings and construction related industry segments and technologies. We are currently undertaking a study on the Southeast Asia elevators and escalators market. Please reach out to us at [email protected] if you are interested in this study.
