The Warehouse and Distribution (WD) industry still faces a wide range of challenges – a strong indication that the global uncertainty of 2022 and 2023 that has dogged corporate and consumer spending is not quite over yet.
The aftershocks of the Pandemic are still being felt – most keenly in the area of labour recruitment and retention – and most small and medium-sized warehouse operators are still favouring a cautious approach to spending.
Nevertheless, the WD market is projected to grow substantially: at a CAGR of 7.23 percent over the next four years, it will increase from 263.5 billion to $400.5 billion by 2027. And in order to cope better with this demand there will be a 15.9 percent increase in investment in automation technology in 2024, as increasing numbers of major operators seek robotic and AI-powered digital solutions to convert their WD enterprises into Dark Warehouses.
A January 2024 survey confirms that labour shortages continue to be the biggest concern in the sector. Some 31 percent of operators are worried, although it was not a clear winner.
Supply chain disruption (27 percent), the increased cost of transport/freight (25), increased customer demand for faster deliveries (23), increased order volumes (18), the pressure to restock (18) and a general lack of warehouse space (18) are also causing concern.
In Dark Warehouses, labour concerns do not exist. The lights are switched off because there are no humans at work. Instead, all the processes are automated. Still largely theoretical, some Dark Warehouses do exist, but only when the product is of a universal size and easy to handle.
Slowly, however, the tech is catching up with the ever-growing demand, and 2024 could be the year in which Dark Warehouses start functioning with varied stocks.
Some 40 percent of operators are expected to turn to automation technology in 2024, and it is predicted that 26 percent will be fully automated by 2027.
Dark Warehouses help operators to:
To convert their WD centre into a Dark Warehouse, many operators are likely to invest in necessary hardware, such as the Autonomous Mobile Robots (AMRs) and Automated Guided Vehicles (AGVs).
They will also acquire pouch technology to automate the order handling and returns processes by the buffering, sorting and sequencing of single items.
As far as software is concerned, rising consumer expectations have increased the pressure on warehouses to deliver quickly, and they are using all manner of AI-powered tools to analyse data to shave seconds off their supply times and improve inventory management.
Whether it’s using advanced localisation algorithms, augmented reality, track and trace technologies, location and environmental sensing systems, or automated scanning solutions, every little bit of data helps to improve their performance, spying patterns the human eye simply can’t detect.
According to the January 2024 survey, 18 percent plan to implement WMS/WES/WCS software and other favoured investments include radio frequency picking technology (17), conveyor and sortation systems (15), robotic cube storage (12), AMRs (12), AGVs (11), and ASRS including vertical lift modules, vertical carousels, and vertical buffer modules (9).
Investment in automation is not the only trend we can look forward to. Let’s take a look at what else experts are expecting:
The number of global warehouses will rise by 20 percent over the next two years: from 150,000 to 180,000, primarily due to a rise in demand in China, the US, Japan, India and Germany, which together will account for more than half of the increase.
Fuelled by a rise in e-commerce, particularly in the area of groceries, the demand for floor space has never been higher.
Many grocery products, which consumers would have in the past accessed locally, now bypass the stores altogether. Instead the suppliers deliver to the warehouse, from where it is taken directly to the customer.
In total, some 25 billion square feet (2.32 billion sqm) of warehouse space will be needed by the end of 2025, of which e-commerce will account for 6 billion.
Warehouses, and particularly Dark Warehouses, are fast discovering that reducing their carbon footprint complements the sustainability goals set by many potential customers.
They risk losing or not attracting new customers if they don’t embrace sustainability into every part of their infrastructure, from using only recyclable materials and renewable energy sources, to adopting circular economy principles – such as reusing pallets.
Meanwhile, brands are increasingly waking up to the benefits of merging their retail and e-tail stocks, which according to Maersk lends itself well to reducing their carbon footprint.
Merging the stocks enables brands to pull orders and returns from the same stockpile, servicing all the different ways in which they manage their omnichannel offering.
This gives brands flexibility in the way they manage their buffer stock, enabling them to reduce extra production and reduce their environmental footprint.
Humans may be disappearing from warehouses, but that doesn’t mean their welfare isn’t paramount, and we will accordingly see an increase in the safety of their working environment – particularly as more warehouses sprout up in countries where safety protocols are not as robust.
Improved safety standards, equipment and training will seek to further mitigate the risk of accidents and stock damage.
In particular, this year will see a rise in wearable technology devices such as smart glasses, wristbands, and scanners with AR capabilities to not only improve safety but also enhance worker productivity and data collection.
Supply chain agility and multi-channel fulfilment are only achievable if warehouse operators collaborate, and increasing numbers synchronise their networks.
To achieve this, we will see more warehouses integrate their management systems, real-time data analytics and IoT devices to offer customers better visibility and ensure a cohesive supply chain ecosystem.
RFID advances should enable them to improve their inventory tracking and management, reducing errors and improving the accuracy of their order fulfilment.
There’s no doubt the world’s warehouses will get a little darker – and given the ongoing labour shortages, the automation technology could not have come at a better time. The major operators can no longer ignore the long list of benefits that such an investment will bring.
