Robotics will change the way logistics properties are built and operated, but not as fast as some may think, new research concludes.
Across Europe, it is easy to assume that every modern warehouse facility one sees from the outside must contain a legion of robots with hardly any humans present. But the reality is somewhat different, as a new study has highlighted.
In a paper called Labour & Automation and the Rise of Robots in Logistics by JLL, it concludes that in the short to medium term (5 years), there will be continuing demand for warehouses that can tap into labour supply.
It estimates that more than 300,000 new warehouse jobs have been created over the past three years, based on the level of new completions and applying the metric of 1 job per 100 m2. Rather than robots and tech suddenly displacing people, occupiers are finding shortages of labour to be a concern. E-commerce is fuelling demand. This growing user of warehouses is described as ‘labour intensive’ as fulfilment centres often operate around the clock and involve item picking and packing or processing by humans.
But therein lies the rub. The lack of available labour will, among other factors, encourage companies to invest in automation, it says. Although data is scarce, logistics giant DHL said in a 2016 study that a survey showed 80% of warehouses were manually operated, 15% were mechanised or use some type of materials-handling automation and 5% use more advanced technology such as robots.
JLL is convinced more automation and robots deployed in warehouses will eventually come about even in situations where robots are designed to work in collaboration with real people. But this doesn’t necessarily mean a revolution in location, for instance. ‘Overall, we do not anticipate fundamental changes in warehouse locations. Therefore, whilst automation and robots will usher in a potential revolution in logistics, Europe’s logistics properties will see more incremental changes. Occupiers, developers and investors should take comfort from this as we believe that many of the property market fundamentals that they are familiar with will not radically alter,’ it says.
Higher skill levels
The report concludes that the basic strategic location decisions to do with proximity to customers, transport infrastructure and parcel/pallet hubs won’t change much. The advent of autonomous trucks will not affect locations much either. However, labour considerations will play less of a role in micro-location decisions involving a choice between specific warehouse sites. Some locations that have limited labour availability and high labour costs could actually become more attractive to occupiers. ‘With more automation on the horizon, the nature of certain warehouse jobs will change with demand for higher skilled workers required to oversee, operate, maintain and repair the automated systems,’ it says.
However, there is a caveat. ‘Based on our warehouse visits, we believe this shift should not be exaggerated. In facilities we visited, the number of people currently required for these roles is typically relatively small compared with the number of “standard” warehouse jobs at around 10% of all jobs. The higher skilled logistics jobs that will be created by more automation (and robots) will mostly occur outside of warehouses.’
The case studies cited in the report paint an interesting picture. French hypermarket chain Leclerc opened its first automated distribution centre at Alsace in 2014. The 32,000 m2 facility services around 100 stores and employs 120. John Lewis of the UK has a campus of three facilities at Magna Park in Milton Keynes for small item distribution. One of them, MP1, is semi-automated and employs 500. Dutch e-commerce firm Wehkamp has a new facility at Zwolle that handles 196,000 items a day and employs 200. Lidl’s 71,800 m2 site in Madrid that opened in 2016 has conventional storage, a refrigerated area and a fully automated storage warehouse. It employs 100 currently but this number will rise to 275 when fully operational. Amazon has been rolling out mobile robots following its acquisition of Kiva in 2012. ‘As technology progresses and costs fall, robots will be increasingly used in a wide range of warehouse roles such as unloading inbound goods, putting goods into storage, picking, packing and dispatch,’ says the report.
Smaller but taller
What does it foretell for real estate? Warehouse buildings will be smaller but taller as automation enables more efficient use of floor space and mezzanine levels; smaller buildings will require less land for car parking; mezzanine levels will be designed to support heavier loads; floors will have to be super flat for more robots and automated systems; there will need to be less office space and amenities. JLL: ‘These changes do not necessarily mean that all older buildings will become obsolete as it may be possible to improve their efficiency by retrofitting them.’