Study: Challenges ahead for warehouse automation market

The warehouse automation market faces potential challenges ahead as global economic forces threaten slowing growth, according to a study from UK-based research firm Interact Analysis, released this week.

The market for warehouse automation equipment is expected to continue its double-digit growth pace over the next five years, the researchers said, increasing at a compound annual growth rate (CAGR) of 12.6%. But they also point to a temporary dip in revenue between 2020 and 2021, largely due to trade tensions between the United States and China and slowing demand for automation equipment in Europe.

The global economic headwinds are causing some companies to delay capital expenditures, the authors said, pointing to a resulting drop in order intake among many warehouse automation vendors. The situation makes it increasingly important for vendors to emphasize service, maintenance, and aftermarket sales, which the authors said will alleviate some of the pressure from weaker order intake in the short-term.

Despite the dip on the horizon, the study predicts double-digit market growth in 2019 and 2020 as well as a solid long-term outlook.

"Looking at the wider picture, there is reason to be optimistic. While order intake for large warehouse automation projects may be slowing in the short-term because of political and economic uncertainty, we forecast the market will return to double-digit growth rates by 2022 following the dip in revenue growth between 2020 and 2021," according to Rueben Scriven, market research analyst at Interact Analysis. "In the mid- to long-term, the logistical pressures which e-commerce puts on distribution networks and the growing consumer demand for faster and cheaper online delivery options will drive long-term and sustained growth in the warehouse automation market."