Mobile robot shipments grew by 45% in 2023 after 33% growth in 2022, when vendors shipped more than 120,000 units and made $3.6 billion in revenue, estimated Interact Analysis. Last year posed challenges including faltering post-pandemic e-commerce, high interest rates, and vendor consolidation. However, demand for point-to-point movement of materials continued to be strong, said the firm.
In fact, more than 50,000 automated guided vehicles (AGVs) and autonomous mobile robots (AMRs) were sold last year, wrote Ash Sharma in a release. The lead of the Robotics and Warehouse Automation Division and managing director of Interact Analysis forecast that sales could approach 250,000 and that global revenues could reach $6 billion this year.
2023 still a period of growth, says Sharma
What is your sense of the past year — on balance, was 2023 a good one or a troubled year for the industry?
Sharma: There has never been a dull moment in the history of robotics. I think it was a period of reflection and rebalancing for a lot of companies because, even though the industry was growing, it wasn’t in that nosebleed growth period.
There were some challenges in accessing capital and financing, and customers were delaying a lot of projects as the macro economy was not looking so promising. But lots of new products and concepts were launched, there were some really successful trade fairs, and there were major customer announcements of rollouts.
So let’s break some of that down. How much of the capital constraints were unique, as companies that were running on fumes after the COVID-19 pandemic reassessed their financial priorities?
Sharma: There was all this private equity venture capital flowing into the market to capitalize on the e-commerce boom, and some of the valuations we saw were pretty eye-watering. We’ve seen fewer big deals this past year, such as Rockwell Automation’s acquisition of Clearpath.
It’s not that capital is incredibly difficult to come by, but investors are now looking for returns. And there’s no access to cheap financing, so the amount of fundraising and expansion has really slowed for a lot of companies. IPOs have been put off, but I think 2024 will be different.
While we saw some failures this past year, there’s clearly still demand for mobile robots. Is it a matter of slowing sales or incremental innovation, and it this temporary?
Sharma: It’s a cyclical thing as with any industry. The companies that have built up reserves are the ones that have weathered the storm the best.
It’s no secret that there’s a lot of companies up for sale. We saw that with Shopify’s sale of 6 River Systems to Ocado.
Mobile robot suppliers target 3PLs
Were there any bright spots in 2023? Automotive ticked back up, according to the Association for Advancing Automation (A3), and warehouse automation is still interesting, not only to investors, but also to developers and suppliers. Where was there growth?
Sharma: A few high-level trends have really driven growth. In automotive, it’s the new and re-engineered production lines around electric vehicles and battery manufacturing, even though passenger vehicle sales haven’t really grown that much over the past few years.
Then there’s new market segments that are opening up that didn’t have the opportunity to automate before. For example, third-party logistics providers [3PLs] traditionally work on short contracts and have pretty slim margins. That’s why mobile robots are so compelling to them because they can start small and build up to tens of thousands of dollars to automate.
Some AMR providers have told us that they’re going after 3PLs rather than the estimated 80% of the warehouse market that doesn’t yet have robots because logistics providers have multiple customers and can automate at scale. How does that help with technology and investment risk?
Sharma: Absolutely. 3PLs have thousands of warehouses and can balance deals and risks across multiple end customers. It’s like what Amazon did with taking robots to drive down costs and get deliveries out quicker.
Robotics has become a competitive advantage, and companies are recognizing that they can offer cheaper, faster fulfillment so that they’ll win more contracts.
Emerging technologies to watch
We’ve discussed mobile robots, but were there any other types of robots where you saw a lot of activity in 2023?
Sharma: Humanoid robots are very interesting, even though it’s very, very early-stage. We’re seeing pilots happening, such as Agility Robotics‘ Digit with Amazon and GXO, and we’re watching it quite closely.
The other big story of the past year was generative AI. How much attention are you paying to AI developments alongside or in connection with robotics?
Sharma: Clearly, the value of robotics and automation is around the software. The hardware is becoming commoditized; there’s dozens of robots that look pretty much the same.
But what really differentiates them is the software and artificial intelligence behind it. I’m not just talking simple fleet management, but also about proper workflow, optimizing entire facilities, and predicting what is needed.
Sharma: It’s not quite the convergence of cobots and industrial robots, but you’ll see movement toward expanding their footprints.
Opening up more and more use cases is going to happen, but the downside is that as some of these robots get bigger, they have to move at a slower pace to remain safe around humans. But payloads and applications like palletizing and welding will continue to grow.
Will cobots take over from industrial robots for manipulation? I don’t think so, at least not for high-volume applications. They will fill the gaps and work alongside them and people.
Are there any component or ingredient technologies in which there was significant progress this past year?
Sharma: There’s a lot happening around sensor technology, particularly some cameras and visual sensors. This technology can make robots smarter, safer, and faster. So navigation for mobile robots or picking with robotic arms can improve.
Interact Analysis watches evolving robotics markets
Prior to Rockwell’s acquisition of Clearpath, we had Zebra and Fetch, plus ABB buying ASTI. Does Interact Analysis see the trend of these big industrial automation companies buying mobile robot suppliers for their portfolios continuing?
Sharma: Yes and no. There are clearly companies that would benefit from this high-growth-margin industry and expanding their offerings.
The barrier to that is that there are so many companies out there offering so many different types of robots. Unless you’re acquiring a company with a very broad portfolio, you’re limiting yourself by putting all your eggs in one basket.
There’s a lot of startup activity in a regional scale, in terms of incubators and clusters, but how do geopolitical and demographic challenges affect the industry?
Sharma: We’re seeing more localization of manufacturing, bringing expertise back from Asia to the West. The lack of labor and labor costs are driving up the need for automation in the U.S.
The big trends here are macro-level, seismic shifts; they’re not short-term things. They include the aging population and the fact that people don’t want to work in factories, warehouses, and farms anymore. Younger people want to work in coding, and that’s not going away anytime soon.
In the past, it was about high-volume, low-cost manufacturing, but perhaps not quite so much now. There are challenges with supply chains and access to components like processors, as well as the threat of protectionist legislation.
Are there any areas in particular where you expect or would like to see real growth in 2024?
Sharma: Obviously, we’ve seen a lot in manufacturing and warehousing. I think agriculture has huge untapped potential. Construction is another industry with highly repetitive, heavy labor, so it has very strong potential.
What about service and healthcare robots?
Sharma: Yeah, it’s a novelty. I think there are certain sectors where the human imperfection is what makes things interesting, so I’m less bullish on customer-service robots apart from cleaning robots and those doing fairly menial tasks.
Surgical robots and exoskeletons for the nursing sector show that healthcare is another area where robots will continue to be developed and used.
The robotics industry has reached critical mass. After the success that industrial customers have seen with their deployments so far, it’s difficult to see that the market will be going anywhere other than growing.