Smart Warehouses Continue to Expand

As customers demand faster online deliveries, warehouses are getting smarter.

By 2026, warehouse automation should grow 14% and $30 billion by 2026, according to research house LogisticsIQ. While the US leads the way globally, Indonesia, Australia and the Philippines are catching up, according to JLL.

“Along with expanding their warehousing and distribution centres, automation is the greatest asset for businesses operating in an on-demand economy,” says Allan Frydman, JLL’s principal consultant for industrial.

When a warehouse is smart, it could offer basic programs to manage inventory data, the most advanced robots and mechanized shelving to limit the need for humans. Frydman says some companies can now pick 35,000 orders in an hour and have boxes ready for shipment within 30 minutes.

By 2026, Statista projects that the global warehouse automation market could surpass $30 billion. In 2016, the US market was $9.9. JLL says online retailers racing to win customers with rapid deliveries and maximum efficiency are driving this growth.

Right now, the average customer expects deliveries within 4.5 days. That has grown from 5.5 days in 2021, according to AlixPartners. The stakes are significant if customers don’t get a delivery when they want it. Seventeen percent of consumers will abandon a brand if they face a long delivery wait, according to PwC.

Retailers are making investments to meet this demand, with JLL pointing to Australian e-tailer Kogan as one example. With 15 third-party-operated warehouses, the company is reported to be seeking a large site on which to build its own automated facility.

Drones will also be part of this changing technology landscape, according to JLL. In a separate report, Ashley Smart, EMEA logistics development director at JLL, said that buildings will need to “accommodate drones in just a few years if technical and regulatory progress continues at its current pace.”

To accommodate drones, warehouses will need to incorporate charging points, roof hatches or skylights, or more space outside for drone landing pads to be drone-ready. In addition, warehouse operators will need to rethink design, picking and packing operations and shipping methods.

But drones, shelving and robots won’t be the only thing driving delivery upgrades.

Last Fall,  Steve Weikal, lecturer, researcher and CRE Tech lead, MIT Real Estate Innovation Lab, and James Robert Scott, lead researcher, MIT Real Estate Innovation Lab, said data analytics and artificial intelligence would increase the efficiency of supply chains. As data is collected along the supply chain and from operations within buildings, it should help developers make better locational decisions and improve facilities’ operational performance.

While technology is here to stay, humans aren’t going anywhere. Weikal and Scott say robots, sensor networks and AI will make the workplace safer and more efficient. They will also allow human workers to focus on creative problem-solving.