2025 has been a turbulent year for the warehouse automation market, noted Interact Analysis. The year began with optimism, but as President Trump’s trade policies became clearer, market sentiment shifted toward a more pessimistic outlook.
Despite this, data indicates that order intake for fixed automation in 2024 exceeded Interact Analysis’ expectations. This stronger-than-expected backlog from last year partially offset the negative impact of tariffs on revenues in the first half of 2025. At the same time, we have made a significant downward revision to our mobile robot forecast.
Taking all factors into account – including macroeconomic conditions, the robust 2024 order intake, and the revised mobile automation outlook – we made a slight downward adjustment to our overall market forecast. Notably, our forecast for fixed automation has been revised upward due to the improved 2024 figures. This article explores these dynamics in detail, providing a comprehensive analysis of the current state of the market.
Macroeconomic landscape: Uncertainty is hurting growth
At the start of 2025, the macroeconomic outlook appeared relatively positive. For instance, having bottomed out in July 2024, the year-over-year growth rate of U.S. warehouse construction showed steady improvement through February 2025.
However, the economic uncertainty following the announcement of Trump’s new tariffs has tempered Interact Analysis’ optimism. As a result, the firm now expects warehouse construction to contract slightly in 2025 compared with 2024.
The impact of these tariffs is reflected in the Economic Policy Uncertainty (EPU) Index, which indicates that current economic uncertainty is even greater than during the pandemic. This heightened uncertainty is likely to delay major capital investments, including those in warehouse construction.
Consequently, Interact Analysis has revised its latest projections for net new warehouse capacity (in millions of square feet) slightly downward, with a rebound now anticipated from 2027 onward. Two key underlying factors will driving this expected recovery, it said.
Utilization and vacancy rates reach a turning point
Warehouse utilization is starting to improve. During the COVID-19 pandemic, usage peaked, and vacancy rates fell to historic lows. However, utilization declined post-pandemic, while vacancy rates surged and exceeded even pre-pandemic levels.
- In the U.S., vacancy rates dropped to 2.8% during the pandemic (from ~5%) but have since risen to 7%.
- In the U.K., rates fell to 3.1% during the pandemic and have since climbed to 6.5%.
- In Beijing and Shanghai, vacancy rates jumped from 1% and 3% during the pandemic to 14.8% and 19.2% in 2024, respectively.
However, recent data suggests utilization rates are increasing again. As vacancy rates decline, rent prices tend to rise, improving return on investment (ROI) for developers and encouraging new warehouse construction. In the U.S., the year-over-year growth in vacancy rates is slowing, and Interact Analysis said it expects rates to begin declining later this year or early 2026.
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E-commerce has quiet growth with big impact, finds Interact Analysis
While e-commerce cooled after the pandemic, its gradual and steady growth has seen the online share of total retail sales return to pandemic-era highs. This silent resurgence is reducing vacancy rates and increasing warehouse utilization, especially since order fulfillment requires more space due to split-case operations. This is unlike traditional brick-and-mortar distribution, which is largely case- or pallet-based.
Warehouse automation: A tale of two halves
Interact Analysis’ latest warehouse automation forecast reveals a mixed picture. The fixed automation segment has been revised slightly upward compared with its November 2024 release, while the mobile robot segment has been significantly downgraded.
As a result, the firm’s projected total market size for 2030 is slightly lower than previously forecasted.
Fixed automation is stronger than expected in 2024 revenue
To understand the upward revision in Interact Analysis’ fixed automation forecast, it broke it into into three segments:
- Historical: Revised slightly upward because of stronger-than-expected revenue performance in 2024, resulting in a larger market base.
- Short-term (2025–2026): Revised downward due to ongoing economic uncertainty and the impact of new tariffs.
- Long-term (2027 onward): Revised slightly upward, driven by stronger growth expectations in the U.S. general merchandise and parcel sectors since our November 2024 update. Amazon’s $15 billion investments, coupled with several large parcel initiatives, led to these revised segments.
Interact Analysis mobile methodology adjustments drive downward revision
Interact Analysis said it has revised its mobile robot forecast downward in response to a combination of both internal and external factors.
- Internal factors: A more detailed analysis of the total addressable market led the firm to narrow its focus to low- and mid-throughput sites, reducing what had previously been an overestimated market size. With eight years of historical data now available, Interact Analysis also adjusted its long-term growth assumptions to better reflect actual adoption patterns amid volatile market cycles. Additionally, vendor data—particularly from some Chinese manufacturers and long-tail vendors—was revised after identifying inflated sales and shipment figures.
- External factors: Trade tensions and tariffs – particularly those involving the U.S., China, and Europe – have created substantial uncertainty. These measures have increased the cost of mobile robot components and disrupted global supply chains, dampening both short- and long-term growth prospects.
Together, these factors contribute to a more conservative and realistic outlook for mobile automation.
The big picture: Headwinds & tailwinds
In the short to mid-term, brownfield projects (retrofitting existing facilities) will dominate automation deployments, favoring smaller, more targeted systems. Interact Analysis expects a rebound in greenfield projects from 2027 onward, although it is likely to be at a more moderate scale than during the pandemic-driven boom.
Despite the current headwinds, the message remains clear: labor shortages and rising e-commerce demands are fueling sustained investment in automation. While tariff-related uncertainty may temporarily limit large greenfield investments, the long-term fundamentals supporting warehouse automation remain strong.
About the author
Rueben Scriven is a research manager at Interact Analysis. He is a leading warehouse automation industry analyst and has spoken at top industry events. Scriven has been featured in The Financial Times, The Wall Street Journal, The Economist, Reuters, and CNBC, along with numerous trade publications.
Scriven leads the Warehouse Automation research practice at Interact Analysis, a market intelligence firm focused on supply chain automation technologies. In recent years, his group’s research and analysis has expanded into warehouse software, covering the whole tech stack, from subsystem control software to execution and management software.
Editor’s note: This article was syndicated with permission from Interact Analysis.
