Warehouse Automation Market: 175+ Companies are Shaping the Future of Warehouses

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One of the biggest challenges facing the logistics industry today is labour availability. It’s not easy for companies around the world to find enough high-quality employees to move goods from suppliers to customers. Two competing factors are making this especially difficult: The first is an increasing need for more logistics workers and this is being driven by the e-commerce revolution and its need for more parcel shipments; the second is a decline in the size of the available workforce due to shrinking population levels in the Western world.

The eMarketer estimates that the global retail market will reach $25.038 trillion in 2019, an increase of 4.5% and slight acceleration in growth w.r.t to last year. At the same time, it represents a marked decline from the five years preceding that, when global retail sales grew between 5.7% and 7.5% each year. This consumer spending slowdown over the past two years reflects growing economic uncertainty and a dampening economic environment across many corners of the globe. Despite of this declining trend, eMarketer estimates that global ecommerce will rise 20.7% in 2019 to $3.535 trillion. Despite its obviously strong growth rate, 2019 will experience a decline from the previous two years when ecommerce grew 28.0% in 2017 and 22.9% in 2018. By 2021, global ecommerce is supposed to reach $5 trillion, though growth rate would not be as attractive as 20% in coming years.

This growth directly affects the requirement for logistics labor since online retail typically needs more labor per item sold than traditional brick-and-mortar retail. This is because, instead of moving merchandise to a retail store in bulk, the organization must pick and pack online purchases individually by hand. Freight and parcel handling labor go up as well since these goods must be shipped as separate parcels to be delivered directly to consumers’ homes. Added to this, the average weight of these shipments is increasing as consumers can now order large items such as white goods, building supplies, and even furniture online. For the first time in history, future populations will be smaller than past generations in the mature markets. A recent study by BCG shows that over the next fifteen years Germany alone could see a labor deficit up to 10 million workers.

LogisticsIQ™ latest market research study “Warehouse Automation Market By Technology (AGV/AMR, AS/RS, Conveyors, Sortation, Order Picking, Automatic Identification and Data Capture, Palletizing & Depalletizing, Overhead Systems, MRO Services and WMS/WES/WCS), By Industry (E-commerce, General Merchandise, Grocery, Apparel, Food & Beverage, Pharma, 3PL), By Functions (Inbound, Picking, Outbound), By Geography – Global Forecast to 2025“, estimates that the global Warehouse Automation Market will grow more than 2x from $13 Billion in 2018 to $27 billion by 2025, at a CAGR of 11.7% between 2019 and 2025.

Since 1948, the US economy has grown at an average pace of 3% per year. If this trend continues and with the current rate of productivity, over the next thirty years the US will need 35 million more workers than will be available. How will companies fill this labor gap?5 Even today employees are being asked to work additional years and retire later due to staff shortages, but logistics is a difficult occupation for an already aging workforce.

To combat these challenges, the managers of tomorrow’s supply chains will need to either continue to raise costs while reducing service or will need to compensate with automation that can support workers and increase productivity. Today’s current material handling automation solutions have helped to ease and postpone this challenge but in many cases the solutions are just not flexible enough to cover all the requirements of a dynamic supply chain.

Research shows that 80% of current warehouses are manually operated with no supporting automation. These warehouses have dealt with demands for increased productivity and throughput by supporting existing workers with good layout design, mobile material handling equipment, and constantly improving IT.

Some 15% of our current warehouses are mechanized. In addition to the technology used in manual warehouses, these distribution centres also use some type of material handling automation such as conveyors, sorters, goods-to-picker solutions, and other mechanized equipment to further improve the productivity of the existing workforce. While some of the components of these systems (ASRS / AGVs / shuttles) could be accurately considered as a type of robot, they are generally not in the same category as the robotic systems discussed so far in this trend report. The research finds that just 5% of current warehouses are automated.

The reality today is that these automated warehouses are typically highly mechanized environments that still employ people in key functions. An example would be a modern sorting centre which has much higher productivity and accuracy than in previous generations. Even with all this advanced technology, in large sorting hubs there may still be more than 1,000 employees who spend their time loading and unloading trucks, handling parcel ULD containers, and manually sorting odd-sized items.

As a result, modern warehouse automation technologies like AGVs, AMRs, ASRS (Storage), Order Picking Solutions, AIDC and WMS are going to take the CenterStage in next 5 years. LogisticsIQ™ market study estimates that AGVs/AMRs are going to have more than 15% market share in overall warehouse automation led by players like Dematic, SSI-Schaefer, Geek+, GreyOrange and HikVision. There are many leading players in warehouse automation across different functions like Material Handling, AMRs, Sensors & Control, AIDC and WMS. LogisticsIQ™ has also created a Market Map for such players as depicted below.

Key Facts and Drivers:

1.       Order Fulfilment in E-commerce sector is the biggest factor driving the adoption of warehouse automation technologies

2.       High warehouse rents, shortage of skilled warehouse staffs and increasing staff costs are driving even higher adoption

3.       AGV/AMR, ASRS and Order Picking Solutions to have the highest market share of warehouse automation market in 2025

4.       Last Mile Delivery, Micro Fulfillment centres and Urban Warehouses drive the need for reduced warehouse space and more automation

5.       100 start-ups operating and >$5B investment will flow into this space by 2025



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