After an incredibly busy past 12 months, the AMHSA Autumn Conference – which we were, thankfully, able to hold in person at our offices in Market Harborough – was a chance to take stock. Wanting to focus on research and trends for the automated logistics sector, we invited two guest speakers: Rueben Scriven, Senior Analyst with market research provider Interact Analysis and Clare Bottle FCILT, Chief Executive of the UK Warehousing Association (UKWA). AMHSA members benefited from insightful presentations that were too good not to share, so this article will summarise some of the key trends in our industry.
Automation continues to be a magnet for companies experiencing one or more of the common drivers: acute labour shortages, rising costs, the need for flexible manufacturing and the e-commerce boom (along with its labour-intensive order picking and high return rates). Labour availability issues have been worsened by a combination of the Covid-19 pandemic and Brexit. "The shortage of HGV drivers and forklift drivers used to be during peak within the Golden Triangle," said Clare Bottle, "but now it's all the time and everywhere. The pandemic did at least draw attention to the importance of the 2.5 million logistics roles in the UK, over 437,000 of which are in warehousing. The general public and policy-makers now seem to understand that these staff deserve keyworker status."
The inevitable result of these labour shortages is wage inflation. Solutions to the labour availability problem are neither simple nor rapid but, according to Clare, what will help significantly is widening the talent pool (not only to women but also to disabled people and ex-offenders) and increasing the focus on training in order to boost productivity.
Rapid growth in warehouse automation
Although 75% of warehouses worldwide today are manual, warehouse automation is growing at a phenomenally high rate. "It's one of the fastest growing industrial markets globally," said Rueben Scriven. "Warehouse automation revenues are forecast to grow from $29b in 2020 to just under $69b in 2025, representing a CAGR of 18% over the period."
Fulfilment centres, which currently account for only a small share of warehouse stock, are growing at a faster rate than distribution centres, so they will account for a greater proportion of space over time. With the continuing advances in robotic piece picking, fulfilment centres are precisely where automation could have the most impact.
Robotics and software will be key
Research by Interact Analysis shows that robotics and software products accounted for 51% of all new product launches in 2021. "We predict that warehouse automation integrators will see a CAGR of 16% in their sales of software solutions between 2020 and 2025," said Rueben, "and we think the focus on integration and software will make integrators more hardware agnostic." Piece picking robots are forecast to grow with a CAGR of 90% between 2020 and 2025, albeit from a very low base. This will take picking robot revenues from $50 million in 2020 to $1.3 billion in 2025.
Mobile automation drives growth
Although fixed automation solutions (such as conveyors, sorters and ASRS) are expected to have modest double-digit growth up to 2025, it is mobile robots that will be the driving force behind the burgeoning market for warehouse automation. In fact, mobile automation is forecast to grow five times faster than fixed automation.
While investment in conveyors as a proportion of total warehouse automation investment is forecast to fall from 13% in 2020 to only 8% in 2025, mobile robots' share of warehouse automation revenue is expected to rise from 7% in 2020 to more than 30% by 2030. "Although it looks like mobile is displacing fixed automation," explained Rueben, "it's really that mobile automation is opening up new opportunities through financial mechanisms such as Robotics-as-a-Service, whereas fixed automation has always been financed via a Capex model. RaaS is particularly attractive to SMEs that might not otherwise have invested in automation."
Clare Bottle turned the spotlight on sustainability in her presentation, challenging the industry to measure its performance against the Brundtland definition: sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Given the growth in warehousing occupation across all industries between 2015 and 2021 (particularly in the 3PL and e-commerce sectors), the environmental impact of warehousing has never been more important.
"There has been a natural tendency for companies to focus on their transport operations – which typically account for over 80% of the carbon emissions in a logistics operation – but what happens inside the warehouse matters too," stated Clare. According to a report by the Carbon Trust for UKWA in 2010, lighting in ambient warehouses and their offices accounted for 71% of energy use. "Great strides have been made to improve warehouse lighting since then," said Clare, "by incorporating more natural light, use of LED lighting and through sensor control systems." Battery charging, which accounted for 7% of energy consumption in the 2010 study, has increased and continues to do so. "With the growth forecast in mobile automation, this is an area that we need to keep a watchful eye on," she warned.
Huge potential for micro-fulfilment
Another trend highlighted by recent research by Interact Analysis is the growth in rapid delivery services in the US, as evidenced by the spike in funding rounds for grocery start-ups. “We estimate that if rapid delivery companies are able to acquire just 20% of the overall US online grocery market by 2025, these companies will need to operate more than 5,000 dark-stores,” said Rueben Scriven. "There could be huge potential for automation in these micro-fulfilment centres." On the back of the news that Tesco is partnering with Gorillas to pilot ultra-fast delivery services, there could also be a race to invest in MFCs in the UK, with automation likely to feature strongly. Watch this space.
As the UK’s leading authority on automated material handling with over 60 members, AMHSA seeks to accelerate the adoption of world-class intralogistics automation across the UK supply chain. Visit www.amhsa.co.uk, call 01858 414229 or email [email protected]