Dark warehouses — warehouses with no humans on the floor or assembly lines — are one of the most lucrative and advanced applications of the Internet of Things (IoT). NewtonX conducted a survey with a total of 30 managers, CEOs, Chief Robotics Officers, and government officials who are involved in the deployment and development of warehouse robots in the U.S., to report on the development of dark warehouses, the economic ramifications of dark warehouses, and to gauge worker sentiment toward increasingly automated stateside manufacturing.
The survey revealed a domino effect in warehousing automation: dark warehouses are smaller, more compact and more efficient, which allows companies to set up shop closer to urban centers, thereby reducing transportation costs. Consequently, the use of drones has become a realistic possibility for companies including Amazon and Kroger, because the distance between the warehouse and delivery point becomes significantly shorter. This in turn reduces investment in trucking — which accounts for two million jobs and a $700B industry. Experts acknowledged that warehousing jobs, which at one point seemed like a safe alternative to the shrinking American manufacturing labor market, are likely to diminish significantly, shrinking the pool of available jobs for workers without a college degree.
An Entire WareHouse Run Through IoT: What The American Factories of Today Look Like
Dark warehouses are significantly smaller and more compact than traditional, human-powered warehouses. There’s no need for wide aisles to let freights, humans, or forklifts move around; instead, robotic arms unpack pallets, place goods on conveyor belts, and zoom around from one station to another on robot-friendly highways. A system operator monitors performance through a bank of screens, while a few workers are kept on hand to unload trucks and service bots. The robots are equipped with sensors to avoid collisions and to report back on stock, inventory delivery, and battery (most warehouse robots can charge themselves, and can run for many hours on 5 minutes of charge). The robots work at full productivity 24 hours a day, more than doubling the productivity of most traditional warehouses, while also reducing human labor costs to a fraction of what they were in traditional warehouses.
Ocada, a British online supermarket, revealed last year that it was developing a new computer vision system to allow robots to grasp an item without the need for a 3D model of it. Kroger recently partnered with Ocada to roll out 20 robotic warehouses in the U.S. over the next three years. Symbotic, one of the leading suppliers of automated warehouse robots, is working with Coca Cola, Target, and Wal-Mart. The company claims that its system allows food retailers and wholesalers to cut distribution-center labor costs by 80%, and invest in warehouses that are 25% to 40% smaller. Alibaba, the Chinese e-commerce giant, uses robots that can carry up to 500 Kg above them to automate 70% of warehouse work.
Amazon has already begun to invest in real-estate based on the promise of smaller, more efficient warehouses. Ten years ago, last touchpoint commerce demand was a fraction of what it is today; but today, urban core locations have lower vacancy rates than they have in decades. In 2015 Amazon built a warehouse in the middle of Manhattan, directly across from the Empire State Building, in order to fulfill two-hour delivery requests.
These urban core warehouses need to be smaller and more efficient than traditional ones in order to make up for the increased cost of real estate. Robotic arms, conveyer belts, and sensors on shelves, trucks, and conveyors create a system of technologies that can “talk” to each other without human input, in much the same way that your Amazon Echo can talk with your home lighting system. And when first drones, and then self-driving cars become legal, delivery systems will integrate with dark warehouses to fully automate every step of the storage and delivery process.
Dark Warehouses Are a Productive Application of IoT; But Experts Worry About Unskilled Human Laborers
The more effectively that robots are able to communicate with each other, the less input is needed by humans. Where once automated warehouses consisted of stationary robots performing routine tasks, today, robots can follow complex series of interconnected “jobs” based on information sent from sensors and “triggers” to perform if-this-then-that series of tasks.
While good for productivity — the NewtonX managers and CEOs of companies using dark warehouses (or semi-dark warehouses) estimated that they’ve cut costs between 15-48% — the domino effect that experts identified does not bode well for unskilled laborers. While the number of people working in non supervisory roles in transportation and warehousing has increased by 400,000 over the last ten years, experts identified this as a trend reflective of the retail move from brick and mortar to e-commerce. To illustrate this trend, the overall employment of retail sales workers is projected to grow just two percent over the next ten years. Job growth in the warehouse and transportation sector is growing, but experts note that, simultaneously, jobs in other sectors that cater to the same demographic are shrinking. And if dark warehouses continue to be as successful as they currently are at cutting operational costs and increasing productivity, the outlook for unskilled warehouse workers is fairly bleak.
Common economic theory posits that increased automation results in labor switching — unskilled workers moving from sector to sector. For instance, while manufacturing jobs have shrunk, warehouse jobs have grown. But increased automation in warehouses also affects a major sector: trucking and transport. Currently, trucking jobs account for the employment of millions of Americans, and pay an average of $42k per year — significantly more than the average pay for many unskilled positions (retail workers earn around $20k). If dark warehouses reduce the need for delivery trucks, that shrinks another pool of unskilled labor.
NewtonX experts, however, noted that worker satisfaction has improved with increased automation. Labor conditions in warehouses (Amazon notwithstanding) are much improved. With robots doing the “heavy lifting”, workers no longer experience back problems from lifting thousands of pounds of goods per day, health issues from walking upwards of 20 miles per day, etc.
But the privileging of the mind over the body exacerbates discrepancies between social classes. That dark warehouses of the future may be a promising technological development that improve margins for businesses, but from a societal perspective, they raise a series of troubling employment concerns.