Is greater warehouse automation coming to New Zealand? Worker shortages and technological enhancements strengthen case for automation

According to the Productivity Commission, New Zealand tends to lag behind other developed countries in its adoption of new technologies, including automation. With worker shortages and rising demand for next-day deliveries shifting the calculus in favour of automated solutions, is this about to change? Here, John Young, APAC country supplier at automation equipment supplier EU Automation, argues that New Zealand may be on the edge of a wave of warehouse automation.

Logistics and supply chains professionals have long seen the benefits of automated warehouse systems. Although in many cases automation can complement existing manual operations, it is increasingly seen as a way of responding to worker shortages.

Ageing populations mean fewer available workers, while the monotonous nature of warehouse work makes it difficult to recruit and retain staff. Where once it was feared robots would take jobs from humans, now it is more common to find them doing jobs where there are chronic worker shortages.

However, automation does not simply replace manual operations. Automated solutions — from radio frequency identification devices (RFID) and wearables to collaborative robots or cobots — promise to deliver improvements in efficiency, safety and the ability to do more with a smaller footprint. In places where vacancy rates are low and the need to utilise space is greater than ever, the case for automation is strong.

Getting ahead

The pandemic has increased the race to automate in many industries. The need to keep plants running with fewer workers and reduced social contact has driven a further uptake. For warehouse automation, the pandemic has accelerated the rise of e-commerce and consumer preferences for next-day deliveries, a trend which only strengthens the case for automation.

Amazon is the global leader in warehouse automation and its early investments give it a competitive advantage that will be difficult for competitors to erode. The company is operating with robots named after Sesame Street characters and it is estimated that Kermit and his friends are saving the company a staggering $3 to 4 billion annually. It is these kinds of figures that ultimately force others to take the plunge into automation, even if the initial capital costs are high. In New Zealand, however, things are a little different, with Amazon customers having to rely instead on Amazon Australia.

Globally, warehouses are expected to invest $36 billion in automation this year, a 20% increase from 2020. According to Interact Analysis, combined investment in 2020 and 2021 jumped $1.6 billion against pre-pandemic forecasts. At a time when many things are heaving in a downward direction, automation is on the up. But what about New Zealand?

New Zealand next?

Many of the factors listed above, such as worker shortages and rising input costs, have been present in New Zealand since before the pandemic. In Auckland, historically low vacancy rates and the high cost of industrial land were leading many experts to predict a greater investment in automation was not far off.

This solution has often been combined with spreading warehouse facilities across two-levels. This trend is also present across the Tasman Sea in Australia, but it is beginning to be observable in New Zealand. In Auckland, Farmers has a warehouse spread across two floors, allowing them to operate from a smaller footprint while being close to their market. Indeed, the ability to increase storage utilisation within an existing footprint is one of the major selling points of automated systems.

While New Zealand handled the first wave of Covid-19 remarkably well, the more recent Delta and now Omicron outbreak has been difficult to manage. The current conditions New Zealand is now facing many of the same imperatives that other western nations have been facing since spring 2020. Thankfully, recent developments in automation are making it easier than before to justify the higher up-front costs that automation sometimes requires.

One such development is the rise of collaborative robots, or cobots. These smaller robots can be safely operated alongside human workers, without the need for safety cages or separation zones that sometimes were required with larger industrial installations. Crucially, cobots provide the flexibility that is needed in situations where space is at a premium, and they can be easily moved around a warehouse to use space effectively.

Warehouse automation is on the rise globally, driven by technological advancements and worker shortages. While New Zealand has generally lagged behind many similar developed economies in its uptake of warehouse automation, the same factors that have driven its adoption elsewhere are present here too. While Kermit himself may be yet to make an appearance in New Zealand, there is every sign that automation will soon take off.