Globally, Interact Analysis’ market forecast projections for warehouse automation revenue have come down slightly from the November 2023 forecast. However, when you drill down to specific regions, we see a more nuanced picture. In the US, for example, projections have increased thanks to higher consumer spending, improved attitude toward the economy and Amazon starting to invest again.
Forecasts for the EMEA region have decreased slightly, although this is driven largely by the UK and Germany – we actually see higher revenue growth in Eastern Europe driven by an expected increase in capital investments from manufacturers (Western European manufacturers offshoring to Eastern Europe and Chinese producers setting up shop in Europe).
Meanwhile, warehouse automation revenues are expected to contract significantly in APAC, driven by a slowdown in investments from China. The housing crisis in China has led to a decline in consumer spending, resulting in e-commerce retailers and express parcel operators pausing their investments.
Warehouse construction
Now that we’ve laid out our high-level assumptions, we can dig into the data. Our Q2 2024 Warehouse Building Stock Database release shows that the number of warehouses added to the building stock is expected to decline, relative to our Q1 release. However, this decline is largely limited to Western Europe and APAC, with minimal adjustments made to the US. The decline is primarily due to challenging economic conditions in China, and the sustained economic uncertainty in Europe because of geopolitical risks and a slower-than-expected climbdown in interest rates.
Although our Q2 2024 forecast has declined relative to our Q1 2024 projections, we are still anticipating growth in warehouse construction in actual terms between 2023 and 2026, albeit at a far slower rate than during the pandemic.
Our Warehouse Building Stock Database model partly relies on macroeconomic data published by the IMF to predict future warehouse construction. Specifically, the model looks at GDP, inflation, e-commerce growth rates and unemployment.
Mobile robot investments
We’ve reduced our mobile robot revenue forecast by US$2bn to just over US$14bn in 2027, with the projected market size 13% lower than originally predicted. The main drivers for these changes are:
- Weaker demand and higher pricing pressure in China;
- Longer sales cycle from 3PLs;
- Weaker revenue growth for shelf-to-person AMRs.
Our forecast for material transportation mobile robots is broadly unchanged since the last report as this part of the market is relatively more mature and predictable. On the other hand, order fulfillment AMRs are still an emerging product, which makes long-term growth harder to predict.
However, the industry has now grown to a size where it is no longer immune to the wider economy. Previously, project sizes (and therefore investments) were much smaller, and customer projects were plentiful. This meant the AMR market was in effect too small to be affected by wider economic performance and could still grow effectively through economic slowdowns. We appear to have now hit the inflection point where this is no longer the case.
Despite the above points, our outlook for the industry is still extremely positive, with the underlying drivers of growth remaining strong.
Final thoughts
Although our forecast updates reflect a slightly more pessimistic outlook, it’s important to recognize the nuance. In many segments, we’re anticipating much higher growth rates than previously thought.
Given the challenging macroeconomic environment, it’s important to identify the high-growth opportunities. As part of our research, we’re always looking to identify emerging opportunities and key threats to the industry.
This article was originally published in the September 2024 issue of Parcel and Postal Technology International.
