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Mobile robot market slows but robust growth continues

Robotics & Warehouse Automation

June 2024

Ash Sharma

Chief Commercial Officer & VP of Research - Robotics & Warehouse Automation

Ash is the Chief Commercial Officer for IA, and Vice President of Research for Robotics & Warehouse Automation. He brings 20 years of experience to the table in sectors ranging from industrial automation and smart manufacturing to drones, robotics and medical technology.

Key Takeaways:

  • The mobile robot market grew by 27% in 2023 to reach $4.5bn globally.
  • We have however cut our forecast for 2024 due to a slowdown in China. Despite this, growth in the US market will help drive global revenues to reach $5.6bn.
  • Once the major driver of autonomous mobile robot (AMR) market growth, the Kiva-inspired shelf-to-person robot is seeing revenue growth slow – with global revenues increasing by “only” 12% in 2023 – and it is forecast to be one of the weakest segments for mobile robots in 2024.

Introduction

According to our latest research (released in early June), the mobile robot market grew by 27% in 2023 to reach $4.5bn globally. This strong revenue growth came despite tough conditions caused by a large backlog from preceding years. We have however cut our forecast for 2024 due to a slowdown in China. Despite this, growth in the US market will help drive global revenues to reach $5.6bn for the year.

While we still expect strong demand for automated guided vehicles (AGVs) and AMRs, our 2027 projections are now approximately $2bn lower than before. This is almost entirely attributed to slower demand for order fulfillment AMRs. Our forecast for material transport mobile robots is broadly unchanged since the last report. This part of the market is relatively more mature and predictable. On the other hand, order fulfillment AMRs are still an emerging and nascent 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 hence investments) were much smaller, and customer projects were abundant. This meant the AMR market was in effect too small to be impacted by wider economic performance and could still grow effectively through economic slowdowns. We now appear to have hit the inflection point where that is no longer the case.

Despite the points covered above, our outlook for the industry is still extremely positive with the underlying drivers of growth remaining strong. In 2027 we predict that annual revenues for mobile robots will surpass $14bn.

Regional dynamics vary considerably

Our outlook for China has reduced considerably. Its economy continues to slow, dragging down investment in automation in the short term. As a result, we have reduced our 2024 and 2025 forecasts. Conversely, we have tempered our expectations for price erosion in China as both costs and prices have already sunk to such a low level that there is now little room to drop further.

In the US market (particularly within the 3PL and retail sectors) we have heard customers are delaying sign-off on new projects. It is speculated that this is due to the upcoming elections causing companies to ‘wait and see’. Underlying demand (and intent to deploy robots) remains robust; however, projects are taking much longer to gain the necessary approvals and sign-off to proceed. This is partly because projects are getting much larger and therefore the expense requires greater scrutiny further up organizations, and partly as a post-covid correction has alleviated the need to implement automation as quickly as possible.

However, our longer-term outlook for the US remains robust and will be a major driver of global mobile robot growth over the next five years. Food & Beverage, healthcare and durable manufacturing (e.g., semiconductors and automotive) are commonly mentioned as the end sectors driving growth for AMR and AGV vendors. This is not surprising given the activity in new manufacturing facilities because of the Inflation Reduction Act and the CHIPS and Science Act, as well as the automotive sector’s shift to electrification.

Growth in China has slowed temporarily, but the US market is robust

Shelf-to-person AMR demand slowing

Once the major driver of AMR growth, the Kiva-inspired shelf-to-person robot is seeing revenue growth slow, with global revenues rising by “only” 12% in 2023, and it is forecast to be one of the weakest segments for mobile robots in 2024. This is for three major reasons: First, average selling prices have dropped considerably with companies like HIK Robot – benefiting from a low-cost supply chain – driving down prices. Second, customers are shifting to other solutions such as tote-to-person, and to some extent cube-based storage systems, which offer greater storage density. Third, the slowdown of new greenfield warehouse building (which tend to be most suitable for shelf-to-person AMRs) has reduced the overall opportunity for the robots.

Strong revenue growth is forecast for most other mobile robot products. Most notably case picking, person-to-goods, tote-to-person and forklifts robots are all forecast to grow by more than 30% in 2024. Case picking is an emerging type of robot with relatively few vendors, however major customers are now adopting them in warehouses and the potential opportunities for the market are huge. Our analysis of warehouse throughput and labor estimates that close to 90,000 full time equivalents (FTEs) were required for case picking in the US alone in 2022 and that 36 billion cases were picked during the year. This is a substantial amount and demonstrates that the market opportunities for case picking robots are also enormous.

While person-to-goods has seen delays in customer rollouts impacting order intake in 2023 and 2024, revenue growth is somewhat protected due to the robot as a service (RaaS) model that is often implemented. Similarly, automated forklift growth is less susceptible to short-term economic dips due to the long commissioning timescales, huge backlog and multi-site (and often multi-country) contracts that customers have signed with vendors. As a result, we expect steady 20-30% annual growth for automated forklifts.

Whilst S2P revenue growth has slowed, other robot types are still in high demand

Final Thoughts

Despite some reductions to our forecasts for mobile robots, our outlook for the industry is still extremely positive, with the underlying drivers of growth remaining strong. Corporations have by and large accelerated their automation plans, with the aim of reducing reliance on human labor. As such, demand for mobile robots remains strong across the board. The shortage of labor continues to be the biggest driver of demand for mobile robots and its impact is only becoming more acute.

To learn more about the global mobile robot market and Interact Analysis’ latest report, please reach out to Ash Sharma.

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