Warehouse automation services market to double by 2025
- 2020 global warehouse automation machinery revenues top $19.6 bn
- Service contracts worth $4.3bn to OEMs/integrators in 2020
- Service market split in 2020: on-site services – 40%; upgrades – 22%; remote services – 19%
- Americas & Europe are the largest markets but Asian growth rates to catch up by 2024
Service contracts will become a significant source of regular revenue for OEMs and integrators
In a new report on the warehouse automation service market, research company Interact Analysis has revealed that soaring growth in the warehouse automation equipment market is causing parallel growth in the market for service contracts – worth $4.3bn in 2020 and projected to grow to $8.7bn by 2025.
Interact Analysis’s research predicts that the global market for servicing of installed automation equipment will see year-on-year double-digit growth up to 2025, when revenues will top $8.7bn. This will be a stable and lucrative market for OEMs and integrators, affording higher profit margins than equipment sales. Currently, a significant number of end-users carry out service and maintenance in-house or use a third party. And there are also customers who consider it cost-effective to leave their machinery un-serviced. Interact Analysis’s work shows that the growing complexity of equipment and rising pressure to avoid machinery down-time, will mean that OEMs and integrators will significantly grow their share of the services market in the next five years.
The research shows that the potential revenue generated from offering a lifetime service contract to an automation project is roughly equivalent to the original cost of the project. So, in broad brush terms, a whole-life service contract could double the original revenue from the sale of the machinery. Furthermore, the research shows peaks and troughs in the service cycle, with the highs coming around the 5-, 10- and 15-year marks, corresponding to times when parts are likely to require replacement, and computers and control equipment to need upgrading.
In 2020, on-site service in various incarnations – site visits to identify and repair problems, preventive maintenance visits, and the deployment by OEMs of technicians to sites on a full- or part-time basis – accounted for 40% of service revenues. Upgrade services (modernization or alteration of existing systems, not replacement) accounted for 22%, and remote services, where customers have telephone hotline access to support, 19%. That figure of 19% belies the fact that basic hotline service packages have a very high take-up among end-users, some 80-90%. Additionally, on-site services will become more prevalent as automation solutions get more sophisticated.
Jason dePreaux, principal analyst at Interact Analysis says: “In 2020, 80% of the revenues from automation machinery service contracts were generated in the Americas and in the EMEA (Europe, the Middle East, and Africa) region. Historically, there has always been a much higher adoption rate of service arrangements in those two regions than there has been in the Asia Pacific (APAC) region – due to lower labour costs in Asia, expectations for maintenance to be included in the project sale, and robust in-house service capabilities by large eCommerce companies. But this situation is set to change. As worker expectations rise and wages level up in APAC, and other factors come into play, such as recent experiences with social distancing and the pandemic, we expect the region to be setting the pace where warehouse automation installations are concerned. Indeed we forecast that, by 2024, the rate of growth in the APAC service market will be faster than in the Americas or EMEA.”
About the report
This is the most comprehensive report available on the warehouse automation service sector. The statistics and forecasts in the report are based on the results from three estimation techniques – bottom-up estimates, a top-down demand model, and an installed base model. For bottom-up estimates, we used detailed estimates for 2020 from over 30 warehouse automation equipment vendors. For the top-down demand model, we used data from previous reports to examine historic market sizes by region, back to the year 2000. Using historic market sizes, we were able to calculate the size of the current installed base, and a running total of projects, taking in project retirement rates. This data enabled us to make confident predictions for this service sector.
We believe this report constitutes a vital tool for planners and strategists in the field of warehouse automation machinery services. For further information, click here
About Interact Analysis
Interact Analysis is an international provider of market research for the Intelligent Automation sector. Our team of experienced industry analysts delivers research into three core sectors: industrial automation, robotics and warehouse automation, and commercial vehicles. Intelligent Automation – which is the integration of artificial intelligence and automation – will change virtually every industry imaginable. This combination enables greater efficiencies, productivity, convenience, and scale. It has the potential to drastically alter the outlook for many traditional industries such as manufacturing, healthcare and automotive as well as to lead to the emergence of entirely new industries.