What is the impact of robotics on logistics warehousing activities in Germany and the Netherlands in the next 15 years?

1. Robotics and
automation
Impact on logistics
warehousing and
the labor market
Kees Verweij
Partner
German-Dutch Logistics Conference
Duisburg, April 10, 2018
Buck Consultants International
P.O. Box 1456
6501 BL Nijmegen
The Netherlands
Phone + 31 24 379 02 22
Mobile + 31 6 511 00 950
E-mail kees.verweij@bciglobal.com

2.  Buck Consultants International, 2018 1
1 Profile Buck Consultants International
 For Private & Public clients
 Infrastructure and logistics projects
 Seaport, airport and inland terminal
development
 Economic development
 Marketing plans
 For Corporate clients
 Footprint strategies & scenarios
 Supply chain design & optimization
 Location advice
 Real estate strategy and projects
 Business strategy development
 Strategic outsourcing (e.g. logistics)
Profiel
 Independent logistics consultancy
 Head office in Nijmegen
 World-wide active
 65 full-time professionals
 More than 1,500 projects in over 50 countries

3.  Buck Consultants International, 2018 2
3 Complexity of
labor market
2 Dynamics in logistics/warehousing
1 Increased size of
warehouses
XXL
Growth in e-Commerce/Omnichannel
Sustainable logistics
2 Rise in automation
and robotics
Robotics

4.  Buck Consultants International, 2018 3
Changes in warehouses
People
Inbound
flows Outbound
flows
Location and
Infrastructure
Building
confiiguration
Inventory and
intra logistics
AmenitiesAccessibility
New requirements for warehouse and direct
surroundings
Robotics
expertise
Location demands
Sustainable
building
3 Increased size of warehouses

5.  Buck Consultants International, 2018 4
Impact on different types of warehousing
Manufacturing EDC/Wholesale
Retail E-Commerce

6.  Buck Consultants International, 2018 5
EDC/Wholesale warehouse
Building types
Primary type
Central distribution
center
1 Main storage
technology
Pallet and shelve
racking
2 Order
handling
technology
Reach trucks, forklifts,
pallet truck, sorters and
conveyors, automatic
storage and retrieval
systems
3 Typical size 10.000 m2 to 50.000 m2
4 Clear height > 10 m
5 Loading
docks/ doors
1:1.000 m2
6 Depth of unit 100 m to 140 m

7.  Buck Consultants International, 2018 6
Building types
Primary type
E-Commerce/Retail
fulfillment center
1 Main storage
technology
Pallet and shelve racking,
mezzanine floor handling
2 Order
handling
technology
Reach trucks, forklifts,
pallet ruck, sorters and
conveyors, automatic
storage and retrieval
systems, robotics
3 Typical size 10.000 m2 to 120.000 m2
4 Clear height > 10 m
5 Loading
docks/doors
1:1.000 m2
6 Depth of unit 100 m to 140 m
E-Commerce

8.  Buck Consultants International, 2018 7
Location of XXL warehouses
EU Rank 1
Port of
Rotterdam
9,891 TUE
(10,8% EU)
EU Rank 2
Port of
Antwerp
8,929 TEU
(9,7% EU)
EU Rank 3
Port of
Hamburg
11,675 TEU
(12,7% EU)
EU Rank 4
Bremer
haven
5,510 TEU
(6,0% EU)
Sources: Eurostat Maritime Port Statistics, 2017; Eurostat, 2017; BCI, 2017
Container volume
(in 1,000 TEU)
> 600
300-600
< 300
Inhabitants/sq.km
Retailer
Producer
Multi tenant
LSP
In operation
Announced
XXL warehouse
>40.000 sq.m
XXL warehouses (> 40,000 m2) mainly on corridors

9.  Buck Consultants International, 2018 8
4 Rise in automation and robotics
BCI 2017
Fixed Flexible Unstructured
Surroundings
Autonomous
Applied
logic
No
logic
Task
complexity
Industry 1.0
2017
Machine
Industry 2.0
Industry 3.0
Industry 4.0
Human

10.  Buck Consultants International, 2018 9
Take-up of robotics: different speeds
Human
Advanced robotics
Traditional robotics
(“mechanisation”)
Fixed Flexible Unstructured
Surroundings
Autonomous
Applied
logic
No
logic
Task
complexity
Source: BCG, 2015
laggards
average
front runners

11.  Buck Consultants International, 2018 10
Why robotics
Main reasons are:
 Reduction of operational cost
 Reduction of recruitment problems
 Improvement of process quality and consistency
 Improvement of employees job satisfaction
 Increasing output and process flexibility
 Less spillage and higher efficiency
 Safer operation
Source: Cisco

12.  Buck Consultants International, 2018 11
Estimate of average wage/hour for elementary jobs
Denmark
Belgium
Sweden
Finland
Ireland
France
Luxembourg
Austria
Netherlands
Italy
Euro(17)
Germany
UE(28)
UnitedKingdom
Spain
Greece
Cyprus
Slovenia
Malta
Portugal
EasternEurope
23
20 20
18
17 17 17
15
14 14
14 14
12
11
11
9
8
7
6
5
2-8
Costofrobot
Bron: RB, 2016
Total operational cost for a robot would be
around €18-20/hour vs. average wages in
the Eurozone of €14-15/hour
Cost development robots vs wages

13.  Buck Consultants International, 2018 12
Impact on location choice and warehouse
Multimodal locations
Large consumer
areas
Concentration
of manufacturing
XXL
Logistics
hotspots
E-fullfilment
centers
Manufacturing
warehousing
Retail
warehousing
EDC/RDC
Type of
warehouse
Specific building
characteristics with
automation
Specific building
characteristics with
robotics
Manufacturing
High bay
Standard grade A
building
EDC/RDC Build to suit
Standard grade A
building
Retail Build to suit
Standard grade A
building
E-Commerce
Standard Grade A
building with large
mezzanines
Standaard grade A
building
with large
mezzanines
Hotspots will continue to grow
Larger but standard
building dimensions
Conclusion: Relatively low impacts

14.  Buck Consultants International, 2018 13
Short term
Shortages at the labor market
A shortage of well-qualified personnel
forces companies to search for
alternative solutions for employment:
e.g. choosing locations with less
shortages, robotisation
C Complex EU labor market
Long term
Demographic developments
After 2020, the aging of the EU
population will become a major factor.
In 2040, the same amount of work has
to be done with 25% less employees
Expected labor shortages transport 2025
5 Impact on labor market

15.  Buck Consultants International, 2018 14
Impact on logistics labor
An Amazon order picker walks about
18 km per shift and picks an order every 33
seconds (112 picks/hour)
In combination with a robot, the order picker can
pick orders 2x as much (230 picks/hour)
The number of employees at Amazon has
grown in 2014-2017, even though the
number of robots has increased from 1,400
to 45,000 2014 2017

16.  Buck Consultants International, 2018 15
Which processes to be automated/robotised?
Pallet pick Case pick Item pick Packing

17.  Buck Consultants International, 2018 16
Impact of robotics for logistics labor needs
Warehouse
activities
Average division of activities Impact
robotics
Manufacturing
Warehouse
EDC/
Wholesale
Retail E-Commerce Savings
potential
labor
Pallet pick 80% 20% 10% 0% 70-90%
Case pick 15% 40% 45% 10% 50-75%
Item pick 5% 30% 35% 40% 50-75%
Packing 0% 10% 10% 50% 40-60%
= Focus area for robotics
Source: Assessment St Onge/BCI,2017
= Savings potential personnel

18.  Buck Consultants International, 2018 17
Calculation impacts robotics on labor in DC’s
 Buck Consultants International, 2017 17
The Netherlands and NR Westphalia:
 About 3,000 warehouses larger than 10.000 m2
 Robotics in 60% of warehouses until 2030: 10% front runners and 30%
laggards
 Savings potential: between 40-90% for 4 types of warehouse
 Numbers of job lost to robotics in the warehouse: about 70,000 jobs, or about
45-50 per warehouse in 2030
However:
 Autonomous increase of distribution activities between now and 2030: at least
+2 million m2 of warehouses larger than 10,000 m2 build each year
 Shortages on the logistics labor market will increase in the Netherlands and
NR Westphalia until 2030
Conclusion: It looks like the rise of robotics will overall not take logistics
jobs away, but be necessary to accommodate growth of the sector

19.  Buck Consultants International, 2018 18
Logistics future of Germany/Netherlands
Minus
 Loss of jobs at
specific warehouses
 Limited choice on
labor market
Plus
 Replace monotonous work
activities
 Increase in productivity
logistics sector
 Solution ofor demographic
long term trend and possible
growth of new DC’s
 Innovation in logistics sector
 Safer working environment