LOGISTICS AUTOMATION MARKET ANALYSIS

Logistics Automation Market Size and Trends

The logistics automation market is estimated to be valued at US$ 53.71 Billion in 2024 and is expected to reach US$ 115.27 Billion by 2031, exhibiting a compound annual growth rate (CAGR) of 11.5% from 2024 to 2031.

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The logistics automation market is witnessing significant trend of automation and advanced technologies. Industry players are continuously focusing on incorporating new technological advancements such as autonomous vehicles, robotics, internet of things, and analytics solutions to enhance efficiency and optimize logistics operations. Various companies in different industry verticals are increasingly adopting automation in their supply chain and logistics operations to minimize costs, improve productivity and remain competitive. The growing e-commerce sector is further driving the need for logistics automation. Self-driving trucks, automated sortation systems, and delivery drones are some emerging areas that are expected to revolutionize logistics activities in the coming years.

Increasing E-commerce Penetration

The flourishing e-commerce sector has been one of the key drivers for automation adoption across the logistics industry. With more and more consumers opting to shop online rather than visiting physical stores, e-tailers are facing tremendous pressure to provide faster delivery at reduced costs. Automating various warehousing and fulfillment operations has enabled them to meet these challenging customer demands. Advanced robotic systems and autonomous vehicles are now capable of picking, sorting and transporting products inside distribution centers as well as making last-mile deliveries with high accuracy and efficiency. This allows e-commerce companies to process a large number of individual orders simultaneously, shorten delivery timelines, and improve the overall customer experience. The pandemic has further amplified e-commerce sales worldwide as people avoided visiting crowded public areas. This boom in online purchases has intensified the need for logistics automation to handle the spikes in order volumes effectively without compromising on service quality. Going forward, automating distribution and delivery networks are expected to be a business imperative for e-tailers to capitalize on the opportunities presented by the relentless growth of the B2C e-commerce sector.

For example, the e-commerce giant, Amazon, with a US$ 5 billion investment in the Indian market, is expanding its automated warehouse network across the country. Among the early adopters of robotics in India, Amazon utilizes Kiva robots for picking and packing tasks in its large warehouses. In June 2022, Amazon introduced Porteus, its first autonomous mobile robot, designed to ease the workload of warehouse employees. Porteus navigates Amazon facilities using advanced safety, perception, and navigation technology. Additionally, the increasing investment in the FMCG sector in India is driving the demand for warehouse automation solutions.

Addressing Labor Shortages

The logistics industry has long grappled with issues related to labor shortage and rising employee costs. Manual material handling processes require a sizeable workforce which is becoming increasingly difficult to hire and retain. Automation provides an attractive solution to this problem by reducing dependency on human labor for tasks that can be standardized. Moreover, automated systems are capable of working tirelessly in ergonomically difficult, hazardous or repetitive jobs with high accuracy and productivity. This ensures uninterrupted operations even during times of labor constraints. The coronavirus pandemic has further disrupted the availability of temporary logistics labor as people opted to stay indoors for safety. Automation helped many companies maintain business continuity during this period without risking the health of employees. Going forward, an aging workforce and low unemployment rates in developed markets will continue posing challenges for recruiting and training employees for logistics operations. Automation offers a sustainable way to overcome these roadblocks and future proof warehousing/distribution processes with a skills-independent workforce.