Squeezed by a labor crunch at a time of unprecedented demand, warehouse operators are bypassing the pilot stage and jumping right into large-scale robotic installations.
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
The warehouse automation market has been growing steadily for decades, but the pandemic year of 2021 saw some foundational shifts in the sector. Beset by labor shortages amid the e-commerce boom, desperate DC operators hit the fast-forward button on plans to roll out technologies like robotic fulfillment systems.
In the early days of warehouse robots, new customers would typically test the unfamiliar systems with limited pilot trials, installing a small number of robots in a corner of the building. If the pilot proved a success, customers would then buy a few more units, slowly building a fleet of autonomous mobile robots (AMRs), automated guided vehicles (AGVs), robotic picking arms, and other devices.
That approach was effective at controlling the risk—and expense—associated with deploying what was then a bleeding-edge technology, but it often left robotic vendors stuck in “pilot purgatory,” a dreaded state of limbo where users seemed to forever test the systems but never commit to large-scale rollouts.
Jump ahead to 2022, and no one’s complaining about pilot purgatory any more. The number of robots sold in North America set a new record in 2021, with 39,708 units sold at a value of $2 billion, a 14% increase over the previous high in 2017, according to the Association for Advancing Automation (A3).
A3 President Jeff Burnstein says the numbers reflect a surge of purchases for applications outside the automotive sector, which has historically led other users in adopting robotic technologies. “More industries recognized that robotics could help reverse productivity declines and fill repetitive jobs human workers don’t want,” Burnstein said in a release. Users are finding that it’s “no longer a choice whether to deploy robots and automation. It’s now an absolute imperative.”
A SENSE OF URGENCY
At the same time that tough business conditions created that imperative, companies were becoming less wary of the technology and more comfortable with the concept, industry sources say. Even if they hadn’t yet purchased robots for their own DCs, they saw companies all around them solving productivity problems with the devices and realizing a relatively speedy return on their investment.
Thanks to that growing confidence, customers are now buying logistics robots on a far larger scale than they were just a few years ago, says Paul Ambruso, head of product and strategy for mobile robotics at Berkshire Grey. “Pilot programs are still sort of the norm, but now it is done not as a small portion of the facility, but in the entire facility,” he says. “So there’s a tendency toward whole-facility installs and then replicating that.”
And it’s not just happening in DCs. Customers are also buying robots for use in the back of a retail store or in a “dark store”—that is, a store that’s dedicated strictly to online order fulfillment. And if they’re satisfied with the results, they add additional sites throughout the company’s network.
Buyers have shifted to the new approach because of the same labor and e-commerce pressures that are afflicting so many sectors throughout the economy, says Jim Lawton, vice president and general manager for robotics automation at Zebra Technologies, which in 2021 acquired the AMR vendor Fetch Robotics.
Those pressures are having a particular impact on fulfillment operations run bylarge third-party logistics service providers (3PLs), he adds. “They have a lot less patience now than what I’ve seen in the past. We haven’t seen as much urgency for this before,” Lawton says. “There’s no proof of concept, no kick the tires. I don’t want to say they’re not being deliberate; they are being deliberate, but they’re being deliberately fast.”
SPEEDY DEPLOYMENTS
Another change that’s driving the accelerated adoption of robots by fulfillment operations is that vendors have made them easier to configure, deploy, and maintain, Lawton says.
In Zebra’s case, the company can visit a new customer location and drive one of its robots around the site with a videogame-type controller to familiarize it with the building’s floor plan. That robot then shares its mapping data with the rest of the fleet, and the system is soon installed. “So it’s up and running in a single-digit number of days or weeks, and that’s really appealing [to customers],” Lawton says.
When it comes to large-scale warehouse robotic installations, the prospect of a speedy startup has been a major selling point, Ambruso agrees. “We used to tell people it would take eight months to [complete]a 50,000- or 60,000-square-foot installation, and some customers would say ‘I can’t wait eight months, so just do a part of the facility and we’ll call it a pilot,” Ambruso says. “But now, we’re installing the system in weeks, so we can [complete] large [projects] quickly.”
To speed up installations, Berkshire Grey runs software simulations of each site with “digital twin” models, he adds. It further streamlines the process by making use of modular designs, staging spare parts nearby to expedite necessary repairs, and handling maintenance on a “managed service” basis so clients don’t have to hire their own engineers.
TABLE STAKES FOR THE FULFILLMENT GAME
With access to all that customer support, companies are increasingly willing to jump into the automation pool with both feet instead of just dipping a toe in the water, according to A.K. Schultz, co-founder and CEO of SVT Robotics. And as more of them dive in, he adds, robots are fast becoming the ante to play the game.
“In the general market, you’re no longer treated like the Illuminati for suggesting robots. It’s now assumed that if you’re not doing it, you’re on the back side of the curve,” Schultz says. “So there’s a shift in risk; from the risk of burning your capital to the risk of doing nothing and going out of business.”
As they come under increasing pressure to automate, many companies are concluding it would take nearly as much corporate effort to conduct a pilot as to put a full-blown project in motion, he says. “So instead of spending $100,000 or $500,000, we’re seeing people going straight for the $1 million project, then upgrade to $10 million, so everyone’s sliding up the scale.”
As the trend toward larger robotic deployments sweeps through the logistics industry, vendors say they’re only scratching the surface of the total market opportunity. Just a small portion of warehouses currently have automated systems in place, and with e-commerce growth expected to maintain its frenetic pace, robot providers can expect demand for their products to continue to soar.
“This market is huge; there’s more than enough room here for all of us that are currently playing,” Zebra’s Lawson says. “We’re collectively educating the market, and a rising tide lifts all boats.”
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.