Warehouse Automation Spending Slumps from Pandemic Highs - Modern Distribution Management

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Warehouse Automation Spending Slumps from Pandemic Highs

However, certain markets continue to see strong demand and runway, led by U.S. manufacturing.
Autonomous Robot transportation in warehouses, Warehouse automation concept. 3D illustration

Following several years of record-setting warehouse automation investments triggered by the COVID-19 pandemic’s impact on eCommerce sales, those investments have slumped to contraction, reports consulting firm Interact Analysis.

The firm’s “3 Growth Opportunities During a Warehouse Automation Industry Downcycle” report, issued earlier in October, stated that the warehouse automation market is “struggling with declining order intake and prolonged sales cycles,” which have led to a contraction in 2022 and so far in 2023, and a relatively sluggish 2024 is likely to follow. 

The report cites the inflationary environment and resulting high interest rates as key factors likely to limit warehouse automation investments in the near future.

However, several market sub-segments are still witnessing major growth and continued opportunities, Interact Analysis said. The firm pointed to U.S. manufacturing as one of them, buoyed by the nearshoring/reshoring movement that has resulted in a U.S. factory construction boom — leading to higher investment in warehouse automation from manufacturers. Manufacturers of electric vehicles and the batteries that power them are a key driver here, the report cited.

The report added that pet care and healthcare are two other industries primed for continued high investment in warehouse automation, in part on the strength of record numbers of households adopting animals since the pandemic’s onset, and healthcare companies hustling to meet regulations of the Drug Supply Chain Security Act.

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