Tuesday, October 19

Robots are replacing humans in warehouses amid a growing labour shortage


Amid online shopping boom, logistics companies turn to automation, which can cope more quickly and efficiently with increasingly complex orders

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Workers have long feared robots would take their jobs, but the tables have turned as logistics and delivery companies automate their businesses to tackle labour shortages.

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The monotony of some jobs makes recruiting and retaining workers harder, a growing problem across a range of sectors. Banks, for example, are automating boring “grunt work” to stop a talent drain.

In American and European warehouses, the boom in online shopping during the pandemic has accelerated the switch to automated systems and robots, which can cope more quickly and efficiently with increasingly complex orders as demand for next-day delivery rises and bottlenecks in the supply chain cause disruptions.

Globally, warehouses are expected to invest US$36 billion in automation this year, up 20 per cent on 2020. Combined investment this year and last has jumped US$1.6 billion against pre-pandemic forecasts, according to research group Interact Analysis.

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“In the 1980s, the main reason for investing in automation was to reduce labour costs. Now, for almost half the clients, their primary reason is labour availability. I talk to people every day and this is their biggest concern,” said Dwight Klappich , vice-president of research at Gartner, the advisory group.

In a sign of the pressures, he said one logistics provider made 26,000 hires to get the 13,000 warehouse staff they needed because so many new recruits drop out after the first few days.

double-arm prototype robot moves a box during a media preview in Japan in 2015.
A double-arm prototype robot moves a box during a media preview in Japan in 2015. Photo by Akio Kon/Bloomberg files

Sandeep Sakharkar, chief information officer at GXO Logistics Inc., said: “Automation is on the rise as a key aspect of the supply chain universe.”

His company, which is responsible for running warehouses for customers including Nike Inc., Nestlé SA and Apple Inc., plans to boost its number of robots and automated systems to 3,100 at its near 870 sites by the end of the year.

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Automation equipment suppliers are expanding, too.

“It’s a complete upward trend through this year and the years beyond,” said Thomas Evans, robotics chief technology officer for Honeywell International Inc., which increased revenues 14 per cent to US$2 billion in its warehouse automation division last year.

The market leader in deploying and developing warehouse automation is Amazon.com Inc., which raced ahead of rivals after acquiring Massachusetts-based Kiva Systems in 2012.

It is experimenting with a group of new robots, all with Sesame Street-themed code names, to carry out different tasks. A machine named Kermit, the frog puppet on the educational television show, autonomously takes empty tote boxes, used for storing goods, from one part of the warehouse to another.

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“Amazon’s investments in automation technology have enabled a temporary competitive advantage that will take many years for its competitors to respond to,” said Marc Wulfraat, president and founder of MWPVL International Inc., a logistics consultancy.

“It is our estimate that Amazon’s direct labour cost savings due to this technology is in the range of US$3 billion-US$4 billion per annum on a global basis — and this could well be understated.”

An automated transport robot moves between shelving units containing goods at Amazon.com Inc.'s new fulfilment centre in Kolbaskowo, Poland, in 2018.
An automated transport robot moves between shelving units containing goods at Amazon.com Inc.’s new fulfilment centre in Kolbaskowo, Poland, in 2018. Photo by Bartek Sadowski/Bloomberg files

The US group’s high wages and bonuses have also lured workers from rivals. It said this month it would pay college tuition for its 750,000 frontline US staff.

In addition, logistics groups are losing workers, who shifted to warehouses from hospitality at the height of the pandemic and are now returning to ply their original trade, said James Wroath, chief executive of Wincanton PLC, the largest British logistics outsourcer.

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“It’s no longer just drivers, it’s also warehouse people,” he added, referring to the growing problem of labour shortages.

Wincanton, which employs drivers and warehouse staff, has bet big on automation at its 528,000-square-foot warehouse in Northamptonshire.

It runs the automated warehouse that stores, sorts and packs goods for smaller online retailers unable to afford the multi-million-pound investments to do it themselves, but have a need for speedy delivery.

Kiva robots move racks of merchandise at an Amazon fulfilment centre.
Kiva robots move racks of merchandise at an Amazon fulfilment centre. Photo by Justin Sullivan/Getty Images files

Wincanton estimates that its automation initiative helps reduce its labour needs by 30 to 40 per cent to handle the same volumes compared with a warehouse that relies solely on humans.

“What becomes very obvious with automation is that people shortages are much less critical,” Wroath said. “But also the speed of it means you can do things in a more condensed period of time.”

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Scott Price, president of UPS International, agreed, saying the demand for next-day delivery has driven the increase in automation because it improves efficiency. He used the company’s expanded facility at East Midlands cargo airport, which can process 22,500 parcels an hour, as an example.

The repetitive or back-breaking nature of some tasks is also helped by automation, say workers and executives.

Linda Collins, a packer at the Wincanton site, found her tasks much easier than in her previous job because goods were autonomously ferried to her elevated platform.

This is the best way of doing it. You still need the human. It’s the way forward

Linda Collins

“This is the best way of doing it. You still need the human. It’s the way forward,” she said.

However, high upfront costs and energy needs have been big obstacles to the adoption of large automation systems. Only about 25 per cent of warehouses have any sort of automation, said Rueben Scriven of Interact Analysis, the research group.

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Warehouse automation can also be a double-edged sword, increasing labour pressures, said Jack Cox, managing director of property group CBRE Group Inc.’s EMEA industrial and logistics unit.

“The more efficient the ecosystem becomes, the quicker the goods need to be pushed into and taken out of the system. By making it more efficient, there’s an increased need for labour,” he said.

However, logistics companies are still racing to catch up with Amazon, as robotics has matured to a point where developers are producing lower cost, more flexible machines that are smaller and can be moved from one warehouse to the next rather than fixed, heavy installations.

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DHL International GmbH, the courier and package delivery company, is investing in 12 categories of robotics and software across 7,500 projects, including developing algorithms, using wearable devices and enabling robots to wrap pallets.

In June, it unveiled plans to double its fleet of picking assist robots from US-based Locus Robotics Corp., which whiz between pickers and packing areas, replacing forklifts or carts, to 2,000 units by next year.

“We need these types of collaborative robotics to cope with the increase in activity required in the supply chain,” said Oscar De Bok, chief executive of DHL Supply Chain. “Our workforce is still drastically increasing.”

© 2021 The Financial Times Ltd.

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