80 per cent of warehousing jobs at risk from automation, says Citigroup
According to a new report by Citigroup's research wing, increasing e-Commerce demand is fueling the need to automate warehouse and shipping processes
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NEW YORK—Widespread automation is set to put 80 per cent of global jobs in transportation, warehousing and logistics at risk, according to a new report from Citi Global Perspectives & Solutions, the research division of the U.S. multinational bank Citigroup Inc.
The report says that growth in e-Commerce is the main driver of warehouse automation, a trend which will increase with additional broadband and mobile device penetration.
Citi GPS says that global e-Commerce sales have grown at a compound annual growth rate of 20 per cent over the last decade, and that Millennials, those most likely to shop online, will soon enter their peak spending years.
In 2016, e-Commerce accounted for 8.1 per cent of retail sales in the U.S., up over 15 per cent year-on-year. Similar figures were found in the U.K. and Japan.
With e-Commerce demand on the rise, the need for warehousing is rising with it. The report says online business models need 300 per cent more warehousing space compared to store-based fulfillment, and that over 2.3 billion square feet of new warehousing space will be required globally by 2035.
The need for increased warehousing is complicated by limited warehouse availability in places like the U.S. and the U.K.
Citi GPS says that increased warehousing demand and the decline in physical shops and malls is changing the way city planners look at zoning land.
However, beyond making more space for warehouses, greater efficiency in warehousing processes are needed, and that’s where automation comes in.
The report says that implementing automated processes in warehouses results in productivity gains of five to six times that of manual processes, and two to three times that of manual operations involving conveyors.
With manufacturers and retailers hungry for improved productivity, the march to implement this technology is happening.
However, Citi GPS says implementation is uneven, with delivery times in some countries lagging far behind those in parts of the U.S. and Europe. The lack of e-Commerce penetration in many countries is also a deterrent to warehouse automation.
The report says increased road traffic is a challenge too: kilometres traveled by light goods vehicles in the U.K. were 47 per cent higher in 2015 compared to 2000, while kilometres traveled by passenger cars were only five per cent higher.
Challenges aside, e-Commerce and the warehousing demand it will generate are increasing—especially when it comes to cross-border trade. DHL estimates that 15 per cent of global e-Commerce is cross-border, and is set to increase to 25 per cent in the future.