Post Pandemic Warehouse Automation Market poised for Long Term Gains

An updated report by international market research provider, Interact Analysis, suggests that the warehouse automation market is set to make long term gains into 2023. 

Despite many industrial sectors suffering major losses as a result of the pandemic, COVID-19 has driven more people to turn to online shopping giving the sector a boost which is set to last well after the end of the pandemic.  This is causing warehouse managers to increasingly resort to automation solutions to provide a more efficient, productive and socially distanced working environment on the shop floor.


A Closer Look at the Numbers

Due to COVID-19, revenue for 2020 will continue to depress as completion dates for projects are pushed back to next year; however, the sudden surge in online shopping has caused a significant increase in order intake.  The second quarter order intake for Dematic has doubled compared to the same quarter in 2019, with the company planning to hire 1000 new staff by the end of the year.  In addition to this, the market size of the automation sector is set to be 6% larger in 2023 than pre-pandemic forecasts.  Although a lot of sectors such as manufacturing and apparel are predicted to see a drop in their market share – a combined decrease of $600m – the general merchandise and groceries are expected to make up for this fall, driving a significant overall net increase in the warehouse automation market.  Data from the report puts that increase at a combined market value of $3.5bn higher than pre-pandemic forecasts.  As a result of this, supermarket chains are now investing in their own warehouse automation.  With contracts to manufacture 38 automated warehouses by the end of 2025, Ocado are set to become one of the leading warehouse automation providers.


Software Revenues Under Threat

Another important finding from the report is that warehouse automation software revenue seems to be under threat.  An explanation for this is the growing trend among online retailers to bring warehouse execution and management software in-house.  Companies like Amazon, Alibaba and JD.com have been leading the way in this trend and other retailers are starting to follow suit.  As a result of this, we could see the market price of automation software commoditised forcing multiple systems integrators to tender bids for solution designs.  Research is suggesting that more innovation is required to suit specific sectors which off the shelf software is not providing.

Interact Analysis’ lead analyst for warehouse automation, Rueben Scriven says:

“The warehouse automation world is on the move. COVID-19 has devastated high streets and shopping malls, but there are already signs that eCommerce retailers are preparing to step in, with grocery retailers taking advantage of disused sites to augment micro fulfilment centres onto existing stores, bringing the fulfilment process closer to the customer, and attracting customers and jobs back in to the high street.  When it comes to the issue of automation software development moving in-house, we found that only the grocery sector will likely continue to heavily rely on existing integrator software solutions.  The way forward for warehouse automation vendors supplying online retailers is to increase their ability to tailor their software offering to individual customers.”



“Don’t Expand Congestion Charge,” Logistics UK plea as Government threaten to recoup TFL Losses

Logistics UK, a business group representing the logistics sector, made a plea to Rt Hon Grant Shapps MP, the Secretary of State for Transport, to outline the serious concerns they had regarding the then-proposed plans to expand the congestion charge. 

This plea came off the back of the Mayor of London, Sadiq Khan coming under pressure from Boris Johnson and other ministers telling him to make an expansion of the £15 a day congestion charge to the North and South circular roads, scrapping free travel for older and younger Londoners, and increasing TFL fares by more than previously agreed in return for a bailout package for Transport for London.


David Wells, Chief Executive of Logistics UK had this to say on the matter,

“Logistics UK is urging the government to refrain from including an expansion of the London Congestion Charge as a condition of Transport for London’s financial bailout package; logistics businesses continue to struggle financially and operationally as a result of the Covid-19 crisis and this additional burden would be a significant blow to the recovering logistics sector.  With little alternative to using lorries and vans to keep the capital’s businesses, schools, shops and homes stocked with the goods and services they need, these changes amount to a tax on deliveries and would therefore have little effect on commercial vehicle movements.  Instead, it would simply increase operating costs for those charged with delivering to meet the capital’s needs, including supporting the vulnerable and those self-isolating with home deliveries during this difficult time.”


Fortunately, Sadiq Khan has managed to secure a deal in the eleventh hour that sees the proposed expansion of the congestion charge scrapped and has secured an agreement with the government on a £1.8bn funding deal to keep TFL services such as busses and tubes running until March 2021.  Khan has been seeking a £4.9bn settlement for the next 18 months to keep public transport in London moving after the revenue collapse that Covid-19 brought with it.  Last month, Boris Johnson said that TFL were, “effectively bankrupt,” before the global pandemic began and blamed the London Mayor for the transport systems financial situation.  TFL defended Khan, saying that he had inherited a £1.5bn deficit from when Johnson, himself was Mayor.

Khan explained that although the agreed £1.8bn deal was, “not ideal,” he did add that, “We fought hard against this government which is so determined to punish our city for doing the right thing to tackle Covid-19.  The only reason TFL needs government support is because its fares incomes have almost dried up since March.”

Khan initially rejected the proposal from the government saying that it would have affected more than 4 million more Londoners.  He successfully defeated this proposal and all other proposals made against TFL in exchange for the bailout; however, the prices on fares will increase by RPI+1% in January as previously agreed.  Despite the Mayor’s success in defeating these proposals made by the government, another financial agreement will need to be negotiated prior to next year’s mayoral election.

Sadiq Khan also said that, “These negotiations with government have been an appalling and totally unnecessary distraction at a time when every ounce of attention should have been focused on trying to slow the spread of Covid-19 and protecting jobs.

The pandemic has had the same impact on the finances of the privatised rail companies as it has on TFL and the government immediately bailed them out for 18 months with no strings attached.  There is simply no reason why the same easy solution could not have been applied to London, which would have allowed us all to focus on the issues that matter most to Londoners, which are tackling the virus and protecting jobs.

I am pleased that we have succeeded in killing off the very worst government proposals.  These proposals from the government would have hammered Londoners by massively expanding the congestion charge zone, scrapping free travel for younger and older Londoners and increasing TFL fares by more than RPI+1.  I am determined that none of this will now happen.”