Roland Berger's recently released report, "Of Robots and Men in Logistics," analyzes the human and economic impacts of robotization on the logistics industry. The report explores the most effective ways for companies to manage this transition while maintaining a competitive edge. The eventual transition is inevitable, as evidenced by the rising productivity, extended lifespans and falling costs of robotics. Robots are expected to directly replace up to 1.5 million logistics jobs in Europe unless something is done to prepare for the transition.

Shanghai, July 14, 2016

Robotic logistics solutions have come a long way in recent years, thanks to the interest and investment of leading Internet companies which envision robotics as a key to further expansion. Advances in gripping techniques, item recognition and work-environment-analysis technologies will cut the cost of environmental integration significantly by facilitating collaboration between humans and machines. Robots, assuming they are in continuous use, are four to six times more efficient than human operators, could reduce handling costs by 20-40% and are expected to increase revenues. The total hourly cost of a robot is around EUR 18-20 per hour, which is lower than labor costs in most European countries. As labor grows increasingly expensive, the average cost of operating a robot is expected to drop below EUR 10 per hour. In addition, thanks to low-cost solutions developed by research institutes and startups, the full cost of a robot designed for the logistics industry will fall to less than EUR 100,000 by 2020. By that time, the payback period for such investments is expected to be under three years.

Although the robotization of logistics has only just begun, its enormous potential is leading the industry to rethink systems that have been in place for decades. The robotization of logistics could eliminate several hundred thousand unskilled jobs over the next ten years; and, by the time the transition has run its full course, robots could be responsible for directly replacing 1.5 million jobs in the Eurozone alone. The most heavily affected sectors will be distribution, manufacturing and outsourced logistics services. Because logistics services must be performed locally and high-quality human service will not be enough to offset the savings made possible by robots, the wisest course of action for countries would be to position themselves as attractive regional hubs for robotic logistics services.

Roland Berger recommends that logistics companies take the following actions in order to manage the transition to increased robotization:

• Develop a new business model

Robotization should be regarded as a disruptive force capable of ushering in a new generation of services. The benefits of the transition will be significant enough to impact the prevailing business models and value chain within the logistics industry. Awareness of the potential impact, however, remains limited. Unlike previous industrial revolutions, which favored players that had reached a critical mass, collaborative robotics will also be accessible to smaller players. In practical terms, it will enable small providers of logistics services to be more competitive. To achieve this, new professions such as “robot integrator" and "remote platform administrator" will emerge as part of an entire ecosystem underpinning the new technology. Widespread application of robotics will pave the way for players to "break the rules" of the logistics industry.

• Carefully manage the transition to offset losses

According to our survey, it is a common belief that complex national regulations are the main obstacle to the development of a competitive logistics industry. However, Roland Berger’s report finds that the increased complexity of regulations has actually increased the pace at which robotization taking root. Overprotective policies aimed at preserving jobs have only endangered those jobs further. Robotization may have the added benefit of helping companies appease socially conscious customers who are sensitive to reports of poor working conditions for human laborers at warehouses and factories.

• Prioritize decision-making and planning on how to manage the impact of robotization

While the robotization of logistics is likely to be disruptive in the short term, it is destined to become the norm in the long term. To gain a competitive edge globally, companies should quickly allocate more resources into researching and financing new robotics positions, as well as training staff to fill those positions. Careful management of the transition is essential. If robotization occurs too quickly, it will have a disastrous social impact. If it is too slow, however, it will limit access to technology to only players of sufficient scale to support medium-term investment, which would stifle the potential for creation of new jobs and value within the robotics ecosystem as a whole.