The logistics automation market comprises automated machinery and software used in warehousing and distribution centers for handling, storage and transportation of goods. Automated solutions such as automated storage and retrieval systems (ASRS), automatic guided vehicles (AGVs), robotic arms, conveyors and sorting systems are helping optimize logistics operations and improve productivity. There is a growing need for logistics automation among manufacturers and e-commerce companies facing rising labor costs and labor shortages. Automation enables 24/7 operations with improved accuracy and minimizes human errors. The global logistics automation market is estimated to be valued at US$ 73.87 billion in 2024 and is expected to exhibit a CAGR of 10% over the forecast period from 2024 to 2031.
Key Takeaways
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The rapid growth of the e-commerce industry is a key opportunity for logistics automation solutions providers. E-commerce companies require efficient automation for order fulfillment centers to meet customer delivery expectations. The expanding middle-class in developing nations demanding fast delivery is also driving the market.
Several logistics automation players are expanding their presence globally to tap into foreign markets. For instance, Swisslog entered a partnership with Indian logistics real estate developer ESR to set up four automated fulfillment centers in India. Dematic acquired automation solutions firm Knapp to strengthen its foothold in European and Asian markets.
Market Drivers
Rising labor costs is a major market driver. With increasing wages across countries, logistics companies are adopting automation to reduce dependency on human workforce and lower operating expenses. Automation helps lower labor costs by 30-50%.
Market Restraints
High initial investment requirements is a key market restraint. Installation of robotic arms, conveyor belts, sorters and integrated software solutions incur heavy capital expenditures which small logistics companies may not be able to afford. Long return on investment timeline also discourages certain companies. Technical glitches and maintenance challenges of automated systems also hamper market growth.
Segment Analysis
The logistics automation market is segmented based on component, organization size, vertical, and geography. The component segment is further divided into hardware, software, and services. The harware sub-segment currently dominates the market and is expected to continue its dominance over the forecast period. This is because hardware components form the basis of any automation system and hardware upgradation is required regularly with technological advancements.
The organization size segment is classified into small & medium enterprises and large enterprises. The large enterprises sub-segment holds a larger market share currently due to the availability of more resources and requirements of large enterprises driving higher investments in logistics automation solutions. However, the small & medium enterprises sub-segment is anticipated to grow at a higher CAGR during the forecast period.
Global Analysis
North America holds the major share of the logistics automation market currently. This is owing to early adoption of technologies and presence of key players in the region. However, Asia Pacific is expected to grow at the highest CAGR during the forecast period. This can be attributed to growing e-commerce industry, rapid industrialization, and rising labor costs stimulating increased adoption of logistics automation solutions in the region. Countries such as China and India are expected to offer significant growth opportunities for market players during the forecast period.
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