In recent years, the logistics sector has faced something of a perfect storm. The constituent parts of this storm comprise an increase in e-commerce in general, a demand for next or even same-day delivery in particular, and, at the same time, a staffing crisis in the sector as a whole and in the warehouses that provide the sector’s foundation in particular.
Let’s Get Into The Data
While the rise in e-commerce has slowed since the artificially inflated acceleration witnessed during the COVID-19 pandemic (e-commerce sales rocketed by 46.5% in 2020, for example), it is still predicted to rise by a steady 4.1% through 2024 and into 2026. A 2023 YouGov survey of 2,100 adults and 2000 business representatives in the UK contained a range of findings which underlined the fact that the consumer appetite for at-home delivery in the UK – despite the ongoing cost of living crisis - is now firmly embedded and is expected to grow:
- 63% of businesses saw the demand for delivery services increasing
- 38% of businesses reported customers demanding faster delivery times
- 30% said customers were asking for more precise time slot offerings
- 26% of customers expected advance tracking of deliveries
Among the consumers surveyed, 24% of 16 to 24-year-olds (already the demographic using delivery services more than any other) said they intended to order more products online than they had the previous year. The state of the parcel delivery market provides a practical demonstration of the rising demand for home deliveries of every kind, representing the point toward which even the longest and most complex logistics and supply chain is heading.
Astronomical Growth In Deliveries Drives The Need
According to research published by Mordor Intelligence, we can trace back the upsurge in parcel delivery to 2019-2020, reflecting the online boom triggered by lockdowns. Over those 12 months, the volume of parcels being handled rose by 33%, going from 3.8 billion in 2019 to 5 billion in 2020. Other statistics which demonstrate the sheer scale of the parcel delivery market at the time include the following:
- In the UK, 160 parcels were generated every second – amounting to 14 million per day
- Parcels generated per person rose from 56 in 2019 to 74 in 2020
By 2022, Royal Mail—at that time the most popular courier service in the UK—had generated approximately £4.8 billion in revenue from parcel deliveries. A study by Fairfield Market Research found that the last-mile delivery market in the UK was worth $18.3 billion in 2022 and is expected to grow to $35.3 billion by 2029, a year-on-year growth rate of 9.8%.
If you work in the logistics industry, all of the above would seem to be extremely good news at first glance. The switch to online commerce has clearly become permanently embedded across the UK, and consumers are demanding more and better options for having goods delivered to their homes (or, increasingly, to parcel collection points).
This is not an entirely positive story, however, because the logistics industry as a whole, and warehousing in particular, is in the throes of a staffing crisis. Statistics published by the Office for National Statistics (ONS) showed that demand for warehouse staff in the UK had risen by 43.2% by the end of 2022 compared to pre-pandemic levels. In December 2020, for example, there were 1,000 more adverts for warehousing jobs in the UK than had been advertised in December 2019.
Employee Churn Impacts Heavily On Costs
The Chartered Institute of Logistics and Transport (CILT) surveyed in June 2022 and found that 86% of companies had experienced shortages in warehouse operatives during the previous two years. At the same time, a shortage of drivers (a much-publicised issue throughout this period) was something experienced by 60% of companies. In 2021, Amazon reported that only one in three employees stayed for more than 90 days, which cost the company around $8 billion, and this is an issue which has continued to impact the logistics sector after the post-pandemic ‘normal’ emerged. More figures from the ONS show that investment in the industry as a whole doubled in the period between 2011 and 2021, but during the same period, the employment rate in the sector only rose by 20%, while Logistics UK’s 2022 performance tracker found that 18% of businesses were reporting severe to very severe problems recruiting warehouse staff, a 5% increase in 2021.
A Career In Logistics? It’s A Tough Gig
There are many theories as to why this might be the case, with Brexit often cited, based on the fact that the ‘typical’ UK warehouse, pre-Brexit, was estimated to contain one in five workers who were EU migrants. Aside from this possible explanation, research carried out by Generation Logistics in 2022 found that 90% of people had never considered a career in the logistics sector and that the words most associated with warehouse work were ‘demanding’ (37%) and ‘boring’ (30%).
Let’s Have More Imagination And Creativity
So much for the scale and nature of the problem – the headline figures are clear, but we need to ask what warehouse operators can do to deal with the situation. Making the work more appealing – i.e., by ramping up safety measures, paying more, and putting career pathways in place – is an obvious answer that most operators are bound to have already considered. The fact is that a more fundamental re-imagining of how warehouses operate is needed if the long-term issues of growing demand and a shrinking workforce are to be dealt with. The route to this reworking of warehouse space is a more widespread adoption of automation.
What If...? Considering Automation
In simple terms, two strands of automation are likely to be introduced in a warehouse environment. The first of these is physical and robotic automation, beginning with the kind of conveyors that many warehouses now have and moving on through increasingly advanced robotics solutions. The second is using a warehouse management system (WMS) – software which helps to manage the flow of items into, through and out of the warehouse. A genuinely modern warehouse, hoping to operate to maximum efficiency with a reduced number of employees, will combine the two types of technology to minimise, for example, the amount of time employees spend walking from one part of the warehouse to another.
It’s now quite tricky to think of a process within a warehouse that we can’t make more efficient by implementing automation and technology. Robotic packing systems can utilise custom-built End-of-arm tools to pick items from warehouse racks and place them in suitable cases. Although the robotic arms of a few years ago may have been bulky and not necessarily quick, the more advanced solutions are far sleeker and capable of picking and packing at a pace that outstrips that of a mere mortal!
Another process that often causes delays within a warehouse is the insertion of the proper documents within each item, which is vital if companies are to avoid shipping delays and mistakes. An automated system can scan each item as it moves along a belt and then create the necessary paperwork in situ, including details such as weight, dimensions and handling instructions. The same system will have documentation such as warranty certificates and manuals loaded so that these can be printed off and inserted before the package is sealed for shipping.
We Can All Learn From The Giants
Look no further than the online giant Amazon for a vision of further reaches in warehouse automation. Late in 2023, the company unveiled a new robotics system called Sequoia, installed in a logistics centre in Texas. The system featured a combination of automated vehicles, mechanical arms, computer vision technologies and gantry cranes, as well as ergonomic workstations for employees, to create something which, they claimed, could identify and place stock within a warehouse up to 75% faster than had previously been possible, with the time spent processing orders cut by 25%.
Meanwhile, at the Delivering the Future event held by Amazon in October 2023, they introduced Digit, the prototype of the latest robot to be used alongside employees picking, moving and handling items in warehouses. Once rolled out, Digit will take its place alongside 750,000 robots Amazon already uses in its warehouses.
Is This for You? Can It Be Done On A Smaller Scale?
Implementing these technologies will undoubtedly cause varying degrees and kinds of disruption in any warehouse.
So, the first thing to consider before implementing a change is the kind of warehouse racking and the layouts in the building. The introduction of conveyors and/or robotic pickers could greatly reduce the amount of space required between racking. This could come in the form of a redesign of the layout to maximise the efficient use of space.
What Do You Already Have In Place?
If you’ve installed modular racking, that’s a real plus. It offers a high degree of flexibility that will help to future-proof the warehouse as you introduce technology, making it much easier to accommodate more tech and fewer employees. If you already have horizontal and vertical carousels installed, the ability to adjust existing racking will ensure that the carousels operate in the best possible position for operational efficiency. This is just one example. These and other options will be your platform for making the most of the technology available without incurring the expense of having to re-install everything from scratch.
For Further Thought
The technology utilised by Amazon may currently be out of reach of the majority of warehouse operators (notwithstanding the fact that today’s state-of-the-art breakthrough tends to become tomorrow’s par for the course item).
However, anyone can employ the fundamental principle when considering bringing in the tech.
This principle is that you can use technology to eliminate mundane, repetitive, and menial manual tasks within warehouses—and also far more likely to cause injuries. Not only will this mean businesses can operate with fewer employees, but it will also mean those people are employed in the delivery of higher-value work that’s far more rewarding.
