The Rise of Autonomous Robotics in Modern Logistics

The Setup

The demand for automation in logistics is the strongest it’s ever been. Thanks to a confluence of macroeconomic trends, technological shifts, and new initiatives in the private sector, more companies are looking for autonomous robots that can help increase productivity and efficiency.

In this blog, we’ll discuss some of the most impactful trends driving this adoption. But first, let’s get some definitions out of the way.

What is logistics & fulfillment?

Logistics and fulfillment refer to the end-to-end process of managing inventory, storing products, processing orders, and delivering goods to customers efficiently and accurately.

Think about the shirt you’re wearing right now. A lengthy process occurs between the shirt being manufactured and you physically getting the product. Large brands like 亚马逊 沃尔玛 , and 塔吉特百货 have large fulfillment operations to manage and move inventory. Third-party logistics providers (3PLs) like DHL and GXO Logistics, Inc. also help move products in e-commerce and consumer goods.

The goal of logistics and fulfillment providers is to reduce the cost and increase the speed of this movement - that’s how they make $. It is a ruthless, low-margin business. The companies with the most efficiency and throughput are the ones who win. Efficiency and throughput you say? That’s where autonomous robots come in.

How do autonomous robots increase efficiency?

Robots have been a part of the logistics equation for a long time. However, with advancements in AI, autonomous robots can now complete more complex tasks that used to require human intervention.

Autonomous mobile robots (AMRs) now help humans complete micro-fulfillment tasks in warehouses. Autonomous forklifts can replace the need for human operators. Autonomous truck unloaders can relieve humans of the backbreaking task of unloading boxes from trucks.

Inside the world of logistics, dull, dangerous, and dirty tasks previously carried out by humans now have the opportunity to be automated by intelligent robots.

Changes in the Labor Market

Since the pandemic, the labor market has dramatically changed. Lockdowns, the Great Resignation, and dynamic interest rates have led the job market into the precarious position we’re in today.

But we already knew this! In this blog, I won’t dive into the causes of these changes. Instead, I’ll inspect their outcomes and what they mean for the logistics industry.

Wage growth across blue-collar jobs has risen sharply since the pandemic. Across construction/mining, manufacturing, and trade/transportation, wage growth is at a 20-year high.

Trade and transportation (of which logistics and fulfillment is included) have experienced the most growth, peaking at 7% in 2023.

I can already imagine you button-mashing, “But what about inflation!!!”. Relax, dude, I got you covered. Forget about all these nominal figures. The people want cold, hard, inflation-adjusted numbers. They want the truth.

The lowest-wage workers in the USA experienced the strongest (real) wage growth during the years after the pandemic. Their wages increased a whopping 12% compared to less than 5% rates for the rest of the job market.

The logistics industry is one of the largest employers of ‘low-wage’ workers.

With higher wages comes a tighter job market and increased employee turnover. As wages continue to rise, labor looks for greener pastures. This job-hopping can be troublesome for the companies themselves.

The cost of hiring, training, and lost productivity during periods of high employee turnover can be many multiples of the cost of wages themselves. Logistics has been hit hard: according to the US Bureau of Labor Statistics, trade, transportation, and utilities had the highest job quit levels among their blue-collar counterparts.

In an industry where efficiency = $, executives are scrambling to find ways to reduce downtime and turnover. Often, this leads to further wage increases, which can contribute to this self-fulfilling cycle.

These wage increases aren’t going anywhere thanks to policy changes and the increased threat of labor strikes. Since 2019, the minimum wage has increased in 29 states and Washington DC.

Automation Mandates

Imagine you’re a leader at a logistics company armed with this information about the job market.

The cost of your inputs is going up. Your productivity is going down. Your competition is fierce, looking for every opportunity to eat away at your margins. Something needs to change.

You look for a way to cut costs and increase productivity. You look towards robotics.

As wages have sharply risen, logistics companies have bolstered their commitment towards automation.

In 2021, Walmart announced plans to deploy $14 billion in automation and supply chain technologies. They’ve since invested in local fulfillment centers (LFCs) across the country. These LFCs are modular warehouses that are attached to stores and powered by robotics.

In the LFCs, robots like AlphaBot help retrieve items, rather than humans having to walk to pick up things themselves.

In April, 沃尔玛 announced that they were entering into a multi-year commercial deal with Fox Robotics , developers of FoxBot, the automated forklift. They’ve already rolled out 19 of these bad boys, with more to be deployed pending results.

DHL has also committed to increasing automation. In 2022, they announced a commitment to deploy 1,000 AMRs by 2025.

Earlier this year, DHL accelerated this goal, pouring in another $200 million to increase the presence of AMRs in their healthcare verticals.

These AMRs by Locus Robotics have already surpassed 250 million units picked for DHL. Expect to see these numbers increase sharply as DHL continues to adopt these AMRs in their fleet.

Autonomous robotics will transform logistics in the next decade.

They will lead to cheaper products delivered faster. They will lead to humans having to do less boring, manual labor.

They will lead to a better world. Time to build ??