Warehouse Automation in 2022

Warehouse automation.

Here’s an interesting blog (from an American perspective) Ive found that throws up some astounding facts....

If you work in the order fulfilment, materials handling, or supply chain industries, then there is a 100-percent chance that you have given at least some thought to the ways that automation has, and continues to, change the nature of your work.

Even if you don’t work in those industries, you’ve undoubtedly heard countless stories about how automation is either going to a.) kill jobs or b.) lead us to a brand-new world of increased productivity.

Whichever version of the future you subscribe to, the truth is that warehouse automation is here to stay, and it’s only going to get more and more sophisticated and advanced as time goes on. Here are some interesting statistics that will help you understand the true value that warehouse automation brings to today’s rapidly evolving economy.

The Numbers Behind Why Operations Are Automating

Before diving into statistics specifically focused on how automation can benefit the warehouses and distribution centres that pursue it, it’s important to understand the trends that have led many of today’s order fulfilment operations to pursue automation. Among them are an increased awareness of the technologies, rising labour costs, and rising land/rent/facility costs, all of which encourage business owners to automate to bring costs down.

More than 80 percent of the warehouses today have no automation whatsoever.

However, since last decade ~15 percent of the warehouses are being mechanized, while only 5 percent are using sophisticated automation equipment and solutions. This brings immense market opportunities for the companies in the warehousing automation ecosystem.

Worldwide sales of warehouse automation technology (robotics, logistics, etc.) are expected to reach a market value of more than $22.4 billion by the end of 2021.

Warehouse automation is already big money and is only going to get bigger as more and more companies and operations begin making the switch.

As of 2018, an estimated 42% of warehouses and distribution centres expected to move forward with investments in technology and automation.

The figure, from Peerless Research Group’s (PRG) 2018 annual survey, noted that 40% of survey respondents expected to invest in conveyors and sortation equipment, 25% in robotics, and 14% in AGVs. A further 49% expected to invest in software (such as WES, WMS, or WCS) that runs the equipment.

The majority of warehouse and operations managers expect their overall spending on material handling equipment and automation to increase over the next few years.

52% expected an increase in investment, while 43% expected to spend roughly the same amount annually. Only 5% anticipated a decrease in investments.

The average warehouse or distribution centre considering investments in automation anticipates spending around $350,000.

This is an average, which can be skewed by both large and small investments. The median anticipated spending amount, which may be more representative of the responses, was just shy of $70,000.

In 2021, the warehouse automation market is expected to grow by more than 38 percent.

Warehouse automation market in 2019 was estimated at $15 billion up by 10.9 percent from the previous year. In 2020, the total warehouse automation market has experienced decline of 6 percent. However, this year (2021) is estimated to witness growth by almost 38.4 percent to reach $19.5 billion. According to estimates, the market is expected to grow by 1.5x in the mid-term (by 2025) and further expected to cross $37.6 billion by 2030. The calculated compound annual growth between 2021 and 2030 is estimated to be around 10 percent.

By the end of 2021, it’s expected that there will be at least 620,000 shipments of various warehouse automation technologies worldwide. By comparison, in 2016, there were about 40,000 units shipped.

Whether you’re looking at warehouse automation by the amount of money being spent or by the number of units being purchased and put to use, it’s easy to see that the trend is up.

Warehouses, distribution centres, and order fulfilment operations employ an estimated 53.7% more workers than they did just 5 years ago.

In 2016, an estimated 915,000 workers were employed in the sector. As of April 2021, that number hit just over 1,400,000. This increase has been driven by a number of trends, including the continued growth of ecommerce in the United States.

Labour costs constitute, on average, 65% of most warehouse facilities’ operating budgets.

That is a whopping number, surpassing the costs associated with taxes, utilities, rent (or building maintenance), and distribution combined. As the labour market continues to contract, operations are finding themselves needing to pay out higher and higher wages and benefits in order to attract and retain workers.

From January of 2020 to September of 2021, the average hourly wage of all warehouse/logistics employees rose by nearly 10%, some of the fastest wage growth since data began being collected.

A tightening job market has led to a significant increase in worker compensation, beating inflation over the same period. Since payroll is one of the single largest expenses for most operations, this has impacted the bottom lines of many, encouraging a switch to automation for cost savings. This trend has only continued in recent years, and has become especially salient in light of the coronavirus pandemic which has forced many businesses to fight for workers by offering higher wages.

A typical warehouse with 100 non-supervisory employees cost more than $3.7 million in labour expenses annually as of March 2018.

The average non-supervisory warehouse employee worked 40.9 hours weekly and made $17.61 per hour. This math doesn’t include the cost of health insurance, short- and long-term disability insurance, vacation, overtime, and other costs associated with employing workers.

In 2020, there were approximately 5 workplace injuries for every 100 full-time workers in the warehouse/storage industry.

Further, it’s estimated that 5% of all warehouse workers will experience some sort of injury on the job each year.

Warehousing and storage involve a lot of moving pieces, often with the use of heavy machinery. Humans, being humans, sometimes make mistakes due to distraction, exhaustion, negligence, etc. Automation is seen by many operations as a means of reducing this rate of injury by removing the human element from the most dangerous of processes.

The warehouse and transportation industry sees costs in excess of $84 billion per week due to serious, non-fatal injuries.

That is a staggering sum, which could be put to better use investing in growing the business and the industry, or else returning to shareholders and investors. Taking steps to reduce the human element, which is prone to accident and error, by automating the most monotonous and repetitive tasks, is an excellent means of reducing the number of workplace accidents.

The average size of a warehouse today is more than 180,000 square feet, compared to 127,000 square feet.

Today’s warehouses take up over 1/3 more space than they did a decade ago and are nearly three times more voluminous than they were prior to the year 2000. Stemming from an increase in SKUs and other factors, these larger footprints have led to increased facility costs. Warehouses looking to squeeze more usable space out of smaller footprints are increasingly looking to automation to get more out of the space they already