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Global market for warehouse automation to double by 2025

22 October 2019

A market research study carried out by LogisticsIQ forecasts the global warehouse automation market more than double from $13 billion in 2018 to $27 billion by 2025, at a CAGR of 11.7% between 2019 and 2025.

The research pinpoints ‘substantial growth opportunities’ in the warehouse automation market space essentially due to several structural trends in consumer demand within eCommerce, retailing and 3PL logistics.

Meeting customer demands within eCommerce requires increased adoption of warehouse automation solutions to keep costs and operational complexity in check, the research says, as online retailing is fundamentally a logistics business driven by margin improvement from cost reduction in inventory management, order fulfilment and delivery capabilities.

The company says: “Warehouse automation solutions are built for scale and can deliver higher output and more accurate order fulfilment than a manual setup at lower operating costs.”

The research adds: “The spatial savings from reduced warehouse footprints can be up to 85% and reductions in operational costs of up to 65%. Space savings are achieved primarily through storing SKUs higher and denser, and reductions in operational costs are resulting from decreased demand for manual labour.”

Key findings include:

Picking systems are still largely manual: The order picking process can be done manually or can be automated. Manual picking is preferred when there is a wide variety of SKUs (for example online grocery shopping) to pick from. The order picking is the most labour intense part of the warehouse/DC and ideal for automation, however automation becomes increasingly challenging as the number of SKUs goes up. Barcode scanning can minimise errors but RFID (radio frequency) is quicker and more accurate for product identification. Manual pickers can still be tasked with picking individual items; however, automated storage and retrieval systems can bring the goods to the picker, and order picking robots can improve this further, thereby cutting down on a lot of manual labour and costs. Technologies like pick-to-light or pick-to-voice can also increase the efficiency of the human worker even if the task is not truly automated.

Robots, drones and autonomous vehicles (AGV, AMR) are a new asset: The AGV market has doubled in the last three years and is estimated to grow by 35% CAGR in the next five years.