In 2026, the conversation around material handling in manufacturing is shifting from what’s possible to what’s practical. After years of proving their value, once-novel concepts in automation, workforce development and sustainability are now seen as essential, cost-effective solutions for the factory floor.

This shift is driving major changes in how facilities operate, from the equipment they use to the skills their workers need. Here are the five transformations defining material handling in manufacturing this year.

Higher Adoption of Modular Automation

Tech experts have touted the potential of modular automation for process industries for many years. Many warehouse operators have come to appreciate its value compared to fixed systems. Modular solutions are particularly appealing to midtier players, according to Mordor Intelligence. These warehouse operators love these automated platforms for the versatility they provide.

The crane heights of fixed systems are also reconfigurable, but may require multi-week shutdowns to adjust to SKU volatility. Apparel and consumer electronics manufacturers are more prone to this risk, and they need the agility that modular automation systems can provide to be more resilient in the face of rapidly shifting market conditions.

Moreover, the rise of modular microfulfillment fuels demand for scalable, customizable robotics. Like other retailers, manufacturers that sell direct to consumers are building small, automated warehouses in urban areas to meet the two-hour delivery cutoffs in densely populated cities.

A popular approach is to rent existing facilities and retrofit them with cubic storage grids and rack-climbing bots. Despite rental premiums, microfulfillment sites under 50,000 square feet with the capacity of 400 to 600 bins per 1,000 square feet can break even in less than three years due to transportation savings.

Faster Rates of Upskilling and Reskilling

Warehouse operators have known for years that AI would both create and eliminate jobs. In 2023, Goldman Sachs estimated that AI systems could affect 300 million full-time jobs due to workflow automation.

AI’s potential to significantly boost global GDP is widely accepted. Whether its advancement would be a net positive for employment is a different story. What is certain is that economists have found that approximately two-thirds of occupations in the United States alone have exposure to some degree of automation.

Warehouse work is one of the most automatable jobs, particularly for tasks such as order fulfillment. Despite the perceived threat to human workers, executives argue that reducing payroll is not the primary goal of adopting warehouse robots. The main objective is to address the pervasive, chronic labor shortage and limited local talent pool.

AMRs, AVGs, articulated, gantry, palletizing and polar robots, cobots, and SCARAs reduce manual labor but still require human intervention. Every step toward warehouse autonomy entails upskilling and reskilling of impacted employees to boost productivity, promote safety and protect careers.

Training programs typically focus on digital literacy, data interpretation and process optimization. The more effective ones prioritize skill acquisition and futureproofing. More leaders are realizing that hands-on training and mentorship outweigh online courses and lectures. Sandbox environments encourage employees to experiment with ways to incorporate digital tools into workflows and develop new processes. Many executives are also acknowledging the importance of instilling a growth mindset in training adaptable warehouse workers.

Less Desire for Asset Ownership

Demand for material handling equipment is outpacing supply, and only some organizations have the resources to acquire expensive assets. The rental market stands to benefit from the growing sentiment toward financial flexibility, be it short- or long-term.

Forklift rentals are an excellent example. The rental market is a significant and growing part of the forklift industry, which is expected to reach $8 million in value. Traditionally, warehouse management turns to equipment lessors to boost material handling capacity during peak periods. Now, rapid advances in industrial machinery make renting a more practical way to access the latest technology without buying it outright, allowing organizations to pick and choose more powerful models within their budgets.

Furthermore, the advent of robotics-as-a-software provides manufacturers with a more convenient and less risky way to incorporate robots into their warehouse operations. This subscription-based model is yet another sign of the sharing economy's broadening influence on businesses. Nonownership spares subscribers from most of the hassles of maintenance while retaining control of industrial robots for as long as they like.

Low up-front costs, less maintenance burden and ease of scalability should accelerate the adoption of robotics in manufacturing. Robotics-as-a-software enables affordable and flexible equipment swaps — the opposite of costly automated machine acquisitions and upgrades.

Broader Decarbonization of Equipment

Sustainability remains a priority for manufacturers in 2026. Eco-friendly business practices are becoming the standard. The costs of breaching tightening environmental regulations in the United States, the European Union and many other parts of the world have turned compliance risk reduction into a reward in itself.

Green operation should be higher on the agenda of B2B manufacturers that risk falling out of favor with clients mindful of their Scope 3 emissions. These life cycle emissions account for most of an organization’s carbon footprint and are also the most challenging to quantify.

Clients with ambitious environmental, social and governance goals prioritize reducing upstream Scope 3 emissions by buying from suppliers that have taken action to lower their own carbon footprints. Sourcing goods that both minimize cost and carbon footprint is a more common procurement practice now than in previous years.

Adopting low-emission and electric material handling machines is one of the fastest ways to decarbonize an energy-hungry industry like manufacturing. Higher model availability and more energy-efficient designs encourage a growing number of warehouse operators to switch to green technologies.

More Reliance on Containerized Battery Energy Storage Systems (BESS)

The commercial and industrial applications of containerized BESS will expand at a compound annual growth rate of 22.1% from 2025 to 2030. Manufacturers are among the biggest purchasers of stationary energy storage systems in 10-, 20- and 40-foot shipping containers. This phenomenon makes sense on many levels.

First, battery energy storage promotes energy self-sufficiency, climate resilience and circularity, supporting sustainability efforts. Second, containerized BESS are transportable, reconfigurable, stackable and scalable by design, reinforcing the theme of modularity in the industry. Third, they have a relatively straightforward setup and isolate sensitive components in a controlled environment, ensuring faster deployment and greater protection against the elements.

Investing in containerized BESS for grid stabilization, renewable energy generation system integration and backup power is worth the expense. They typically house second-life EV batteries, which almost always use lithium-ion battery chemistry due to its high efficiency and low self-discharge. However, manufacturers should think about decommissioning during the procurement stage.

BESS decommissioning can be complicated and perilous, potentially starting fires, endangering workers’ lives and causing extended, unscheduled downtime. Perform thorough planning and coordination and anticipate every contingency to prepare accordingly.

Innovating Material Handling in Manufacturing in 2026

2026 is the year manufacturer-owned and -operated warehouses become more autonomous, modular and sustainable. These trends should accelerate upskilling and reskilling, ensuring that well-trained workers remain gainfully employed amid ongoing innovation.