Executive Summary – Joe Giordano
Part II of our robotics series dives into the fast-growing warehouse/logistics market (see Part I, focused on traditional industrial robotics, HERE), which World Robotics expects to expand from ~$4B today to over $22B by 2022. We leveraged our recent partnership with MassRobotics – a leading, non-profit hub for robotics startups – to carry out a proprietary survey of robotics users and manufacturers and develop a market model for demand based on eCommerce trends that support World Robotics’ growth algorithm. We also collaborated internally, with Amazon analyst John Blackledge, to develop an Amazon-based robotics demand model and explore strategies the market leader is taking to address demand, and with Washington Research policy expert Chris Krueger to look at how US/China relations could impact market development longer term.
Unlike traditional robotics, which have been around since the 1960s, warehouse/logistics robotics are much earlier in their deployment journey. More recent advances in sensing, mapping, and IIoT technology have made this type of investment more reasonable, and continuing shifts in consumer behavior towards eCommerce is stressing the labor force available to meet demand. These trends essentially ensure market development for robotics technologies, as humans alone will not be sufficient to ensure global fulfillment of goods. Our survey shows good alignment in terms of applications desired by users and currently being developed by manufacturers (pick and place and product movement/handling/delivery), and over 90% of manufacturer respondents either already have a commercially available product or will in less than a year. As the robots themselves become more commonplace, the ability to deploy quickly, minimize downtime, interface with other technologies, and seamlessly integrate with broader warehouse management systems likely determines winners in the space.
Investor interest in the broader startup robotics space remains high and is accelerating, though there is a noticeable lack of publicly traded options, at least currently. There is a robust, US-centric private market, however, with 7 companies having raised over $750MM in cumulative capital and 3 (nearly 4) over $1B. The mobile robot space in particular has seen 6 companies raise at or above $500MM with two high profile exits (Amazon’s $775MM purchase of Kiva in 2012 and Shopify’s recent $450MM acquisition of 6 River Systems).
As we did in Part I, we examined how a trend towards increased robotics adoption in the warehouse/logistics space has and is impacting the job market. Once again, the “robots are taking our jobs” argument simply fails to hold water. Warehouse employment has tripled since 2000 despite exponential growth of robotic deployments (albeit off a low base) and current job openings stand at the highest level over the period. As a percentage of total employment, the warehouse/transportation sector has effectively doubled. Wages are growing well in excess of the national average as employers seek to entice applicants – all signs of a healthy and expanding market despite continued deployment of new robotics technology. Given rising tensions with global trade partners, robotics end users in the US are incentivized to support the domestic landscape rather than rely on foreign technology – in this regard we believe the current lead held by the US is important and one that will need to be maintained and fostered.
The US landscape for this next wave of robotics development is robust and one that will be defined over the years to come. There will be failures, no doubt, but there will be many successful outcomes and we believe an overall buoyancy to the market as this type of technology will essentially be a requirement to handle the needs of an increasingly demanding consumer.
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