Is technological development in logistics a threat to employees?

9 November 2021

8.6 trillion US dollars – that was the value of the global logistics market in the weaker year 2020. The United States generated, almost alone in North America, 20% of this amount during that time. The supply chain’s impact on the country’s GDP has already reached over 10%. Asia and the Pacific earned almost twice the value of America. Europe, which is trying to jump into second place, reached 1.6 trillion. These figures, apart from the scale being hard to imagine, say above all that someone has worked for it. 

In Germany only, for which logistics is the largest economic sector, more than 3 million people are employed. It is also the country that is leading the development of infrastructure and technology in our industry. The UK has a similar size of workforce. At the same time, a very high increase in the number of schools with a logistics specialisation has been observed for several years in almost the entire world. What will happen to all these people when the already fashionable and ever-present automation enters the market from all sides? We are, after all, talking about a modest estimated number of more than a hundred million workers worldwide.

Warehouse robots can do any job 3-4 times faster than a human with little risk of error 

In many cases, the extremely popular TMS class software is capable of replacing a number of activities of the freight forwarder at even shorter times than robots in a warehouse. The popular algorithm assessing technological advances “Will robots take my job” estimates that the occupation described as “Cargo and Freight Agent” is at 97% risk.

Decathlon tested drone deliveries in Poland at the beginning of the year, and as of this autumn, 7-Eleven, the US giant, is starting similar tests in Korea. Drivers, in turn, will be replaced by autonomous vehicles, being tested for over a decade. It seems that as logisticians we are at the event horizon and the black hole that will engulf us is called new technologies. 

Source: Facebook/Spartaqs Group

The world’s greatest logistics challenge

Not only Europe has a problem, but as a dense conglomerate of needs, it constitutes a litmus test for transport and warehousing in growing economies. According to calculations by trans.info – a continental service, there is a shortage of 400 000 professional drivers. The situation is most challenging in Poland, the United Kingdom and Germany. Autonomous vehicles have been under discussion for years. In fact, we should all be supporting this technology as one that is safer for health and life. The problem is that we are still talking about the crawling stage. 

Shawn Kerrigan from Plus, a US company specialising in the autonomous vehicle experience, makes the current approach clear: “First, you need to develop technology that is much safer than a human driver. Secondly, you need to prove this safety to regulators and the public before implementing it on a large scale.” The first tests have recently been carried out in China on nearly 1,000-mile routes. 

The interest is noticeable, but the future is still uncertain. When will we see the first vehicles on American or European roads? Which medium-sized companies will be able to replace their entire fleet with unmanned vehicles? The European climate package mentions a 55% reduction in greenhouse gas emissions by 2030. If this was achieved in 10 years, we would be able to breathe more deeply. For the time being, the profession of a professional driver is not only secure but desirable, and this is unlikely to change in the next decade.

Tesco recruits prisoners

The age of an average warehouse worker is around 30 years. In Eastern and Central Europe it tends to be slightly higher due to migration – mainly from Ukraine. Amazon is one of the largest employers in this part of the continent and, although it is regarded as an attractive employer by managers in both the US and Europe, the approach to work for manual workers is controversial. It also affects the overall perception of employment in the warehouse, where the workforce is starting to become scarce. While the mentioned migrants are a great support here, in the UK Brexit has caused serious shortages. This is why Tesco has started a pilot scheme to employ prisoners, with the expected displeasure of the rest of the staff. 

WMSs present in warehouses allow for more efficient management of operations, but few are able to integrate with robots at every stage. Alibaba, the world’s largest retailer, handled nearly 3 billion shipments in 5 days, tied with Singles’ Day, with the use of robots, but also the support of thousands of people. Completely autonomous warehouses are isolated cases in the world, and they appeared more than a decade ago. Smaller companies still use 100% human power, while the presence of WMS solutions is not yet standard.

Alibaba, robots in the warehouse / Source: Business Insider

Unwanted forwarder and planner

While working with Trimble, a Californian tycoon, we had the opportunity to talk to the owner of a medium-sized company performing international transport. The need to use new technological solutions came by itself when the profits of the company started to fall dramatically. Implementation of TMS allowed to reduce not only the number of employees, but also to organize and control processes, giving a profit of 5%. Further implementations based on the electronic handling of the document workflow saved time and stress in the accounting department, which was responsible for the document mailing process. In this case, we are still talking about savings in the single-digit range.

The higher turnover of a transport company supported by such systems certainly reduces the need to hire more staff, yet the capabilities of the person using such support will always be limited. There is a noticeable change in the competences of the forwarder, who in unfortunate cases is a seller of the load. The more serious-minded entrepreneur here sees a supervisor who has soft skills at the level of communication rather than negotiations and, above all, skilfully uses modern tools.

Even the extremely popular freight exchanges have been developing extensive communication systems and new modules to automate work for several years. Digital freight forwarding, which has been on the rise for some years now, is an unquestionable help for … the freight forwarder. Thanks to them, repetitive work is replaced by an algorithm which saves time for handling operations or offers, for example, the possibility of tracking the status of a shipment, which was unthinkable only 10 years ago. There is still a long way to go from a few percent technological support to full process automation.

Demand for transport is under no doubt 

Being the number 1 trend in 2021, e-commerce is doing everything it can to reduce the time needed for the smooth flow of goods. The popularity of online shopping in recent years has reached a growth that effectively affected the prices of IT services. In 2018, Romania has already recorded a 39% increased interest in online transactions, while nearly 30% growth in online sales was recently recorded by the Czech Republic. In Germany 85% of people did e-shopping in 2020.

The year 2021 has clearly shown how much more technological innovation we need. This is not because machine capitalism has wiped out the so-called protein element, but because we badly lack this protein. And there we are, with an offer of the software supporting optimal use of cargo space on a semi-trailer, container or pallet, saving up to several dozen of minutes of the logistician’s work, whose work will be made easier by the technology at each stage of the supply chain – whether we are talking about CEP, contract logistics, international transport, forwarding or a warehouse.