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Back to the future: looking at the changing face of warehouse automation

On 1 January 2025, it was 25 years to the day since Erik de Jonge joined Vanderlande. Back then he was a systems engineer developing solutions for the food sector. Now, as Senior Manager Market Insights for Warehousing Solutions, Erik keeps an eye on the challenges the business can expect to face in the years ahead. In this special blog, he looks back at the changing landscape of logistic process automation before returning to his “day job” by offering an insight into what 2025 and beyond have in store.

“Around 2000, mechanical engineering dominated the landscape, but now software is the most important differentiator.”
Erik de Jonge
Senior Manager Market Insights

When I started at Vanderlande, the global warehousing automation market was worth around €5 billion per year. How things have changed: during my time at Vanderlande I have seen the market we service grow to €30 billion annually and enjoy an average growth of 9% per year since the turn of the century. This expansion has been driven by technological advancements, evolving consumer expectations and the rise of e-commerce.

Vanderlande now has a truly international business profile, which partly reflects the global expansion of the warehousing sector. Traditionally strong in Europe and North America, advanced logistic automation has been introduced to the APAC countries – especially China – and other regions, fuelled by economic growth and innovation.

Turn of the century technology

So, what did the warehousing world look like back in 2000, when we had just survived the millennium bug!? Back then, we were mostly designing conveyor-based systems, such as zone picking and batch picking, in which operators had to do a lot of walking to place items on the belts. I remember designing pick-to-belt solutions for large food retailers, as well as cross-docking systems for the fresh products.

The introduction of goods-to-person systems, supported by automated storage and retrieval systems – such as miniloads and shuttles – improved productivity, provided more efficient storage and delivered greater picking accuracy. These were soon followed by the first automated case picking (ACP) solutions, and while it may seem like some time ago, we carried out our first pilots of automated item picking with robots back in 2010.

When Amazon acquired KIVA Systems in 2012, it sparked much interest in autonomous mobile robots (AMRs) throughout the industry. Now, this technology is making its presence felt across the modern warehouse. AMRs and automated guided vehicles (AGVs) have become essential for tasks such as picking, packing and transportation.

A pick–to-belt system in the 2000s

The emergence of sophisticated software

Around 2000, mechanical engineering dominated the landscape, but now software is the most important differentiator. The emergence of advanced IT solutions has certainly had an impact on the sector, and these are essential for the efficient performance of modern automation.

For example, warehouses are beginning to use predictive analytics to reduce downtime and manage resources more efficiently. Meanwhile, “big data” and AI are being harnessed to improve planning, forecasting and system optimisation. We are also seeing the emergence of orchestration software, which helps warehouses manage various equipment – including robots and AMRs – in perfect harmony.

The introduction of new technologies over the years has been one of steady evolution. However, it could be argued that there was a true revolution in the marketplace, with the rise of e-commerce, which started to see real growth around 2010.

From that year up to 2020, the warehouse automation market grew by 14% per year. What’s more, thanks to the COVID-19 pandemic, the growth through 2020 to 2021 reached 34%. This has accelerated demand for fast, flexible and scalable solutions. Automation now handles smaller orders with short delivery windows as systems are optimised for omnichannel logistics.

The growing importance of sustainability

When I started work as an engineer, sustainability was not high on the list of priorities for the warehousing sector, or indeed the manufacturers of logistic process automation. The issue became more prominent between 2015 and 2020 as organisations started integrating sustainability into their corporate strategies and align with global initiatives like the Paris Agreement.

Vanderlande is among those businesses that takes sustainability seriously and it is now one of our strategic priorities. Like us, our customers want to minimise their impact on the environment, which is why, for example, we’re focusing on developing energy-efficient systems, using recyclable and reusable materials, and designing ergonomic equipment.

What’s in store for 2025…

In terms of general market outlook, our own forecasting models point to an average growth rate of around 10% from 2025 onwards. Some warehousing operators are still dealing with overcapacity, thanks to the flurry of projects undertaken because of the demand for online shopping during the pandemic. Nevertheless, the e-commerce market is expanding again after three steady years, with revenue projected to show an annual growth rate of around 9.5% between 2024 and 2029. This will result in a market volume of around US$6,478 billion by 2029 (Statista).

A recent survey from Modern Materials Handling (Warehouse/DC Operations Survey) highlights that labour costs and shortages will remain a significant issue in 2025. Interestingly, the top concern identified was a “reliance on outdated storage, picking, or material handling equipment”. This marks a shift away from paper-based methods toward greater adoption of software and automation technologies, such as warehouse management systems, slotting and sortation. This evolution aligns with a more data-driven approach to operations, including the use of dashboards and productivity metrics. Consequently, the survey anticipates larger capital expenditure budgets in the coming years to address these challenges.

According to the 2024 MHI Annual Industry Report, 55% of supply chain leaders are set to increase their technology and innovation investments. Around 88% say they plan to spend more than $1 million, while 42% are looking to invest over $10 million.

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