Global warehouse automation product sales are slumping from their pandemic highs, leading to declining order intakes and prolonged sales cycles as the sector saw a contraction in 2022 and another declining year in 2023, according to the consulting firm Interact Analysis.
The swing follows record levels of warehouse automation investments in previous years, driven by higher e-commerce sales and a boom in speculative warehouse construction. But given macro-economic strains like an inflationary environment and resulting high interest rates, forecasts call for a relatively sluggish 2024 with limited order intake growth, the firm said.
Despite those overall challenges, certain sub-segments of the market are still seeing significant growth and offer new opportunities in turbulent times.
For example, U.S. manufacturing is on the rise as several large international companies are in the process of near-shoring and re-shoring their production facilities to better manage supply chain disruptions caused by the pandemic. That trend is also being driven by the Inflation Reduction Act, which has led to a large increase in domestic production of electric vehicles (EVs) and related products such as batteries.
Other areas with continued growth in warehouse automation demand include pet care—since record numbers of households adopted animals during the pandemic—and healthcare, where companies are hurrying to meet regulations in the Drug Supply Chain Security Act, which requires manufacturers and distributors to electronically trace drugs all the way from manufacturing to consumption.