Warehouse Automation Will Experience Slowdown In 2023, New Data Suggests

When the epidemic struck, advances in warehouse automation helped businesses to meet peak demand while remaining cost-effective. However, when countries throughout the world began to control the pandemic, the return to in-store buying necessitates changes in industrial automation.

Interact Analysis, a technology-driven research business, has released a new report that provides a broad outlook on the warehouse automation market in the next few years. According to the “Warehouse Automation – 2022” report, the warehouse automation market will experience a slowdown in 2023.

Over the previous two years of the pandemic, market growth has been remarkable. The warehouse automation market, in particular, reached $28.5 billion in 2020 and is expected to grow by 28% in 2021. The increase mirrored the move to e-commerce, as well as enterprises’ increasing adoption of new technologies to streamline their operations.

However, now that life has returned to normal, stiff competition from in-store buying may result in sluggish demand for e-commerce, pushing major corporations such as Amazon to reduce its automation capacity.

Other reasons, such as inflation and the Russia-Ukraine war, have also contributed to the underperformance, according to Rueben Scriven, Research Manager at Interact Analysis. There are also other issues the global economy faces.

Analysts, on the other hand, believe the downturn is merely temporary, with a robust return in 2027. The warehouse automation market is expected to grow at a CAGR of 19% between 2024 and 2027. The expansion is mostly due to macroeconomic recovery and sustained growth in the e-commerce business.

According to 2021 statistics, Amazon’s choice to recoup investment in automation will slow industry growth because the company represents for around 35% of the global warehouse automation market.

However, this is not instantaneous due to the timelines involved in implementing many types of automation systems.

The warehouse automation is in fact under influence of industrial automation attributed by different trends rather than only e-commerce. While long-term development still favors e-commerce growth, other trends like electric vehicles (EVs) or energy-saving technology also contribute to the overall demand for automation.

Scriven highlighted two developments in the United States, reshoring and near-shoring, as promising to boost demand for warehouse automation. These developments will assist automation providers and system integrators in gaining more customers in the durable goods sectors.

The Research Manager believes that diversification is beneficial to the achievement of sustainable growth. In addition, software solutions do not need to be integrated with new automation hardware projects in order to be implemented; rather, they can be utilized to coordinate already existing systems or to assist in the optimization of manual warehouse processes. It is anticipated that this will make a difference, which will make it possible for integrated solutions providers to secure the business.

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