In US and European warehouses, the boom in online shopping during the pandemic has accelerated the switch to automated systems and robots

Barcelona, October 19, 2021.- The prestigious English newspaper, Financial Times, has published a report on the coexistence between human beings and machines, in industries such as logistics, it is already happening today.

As reported by Financial Times, workers have long feared robots would take their jobs. But today, the tables have turned as logistics and delivery companies automate their businesses to tackle labour shortages.

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

“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.

Sandeep Sakharkar, chief information officer at GXO Logistics, 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, Nestlé and Apple, plans to boost its number of robots and automated systems to 3,100 at its near 870 sites by the end of the year.

Chart showing average automation spend per warehouse in select countries

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, which increased revenues 14 per cent to $2bn in its warehouse automation division last year. 

The market leader in deploying and developing warehouse automation is Amazon, 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 US television show, autonomously takes empty tote boxes, used for storing goods, from one part of the warehouse to another.

“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, a logistics consultancy.

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

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, the largest British logistics outsourcer.

“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 sq ft warehouse in Northamptonshire. 

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

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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