Total Property - Issue 2 2019
Robots, scurrying around warehouse floors carrying pallets of inventory, picking goods and packing them, are transforming the global logistics industry and the property in which it operates.
Warehouses and logistics centres are being reshaped by the modern need for speed, accuracy, cost management and difficulties in sourcing labour. The changes are set to be felt throughout the sector in properties of varying types, locations and sizes.
The surge in automation and robotics investment is being fuelled by a steady rise in online sales, expected to top US$1 trillion by 2023. In that same period, it is estimated that global spending on logistics robotics will rise from $600 million last year to $4.6 billion by 2023.
Global e-commerce behemoth Amazon has more than 100,000 robots helping to meet its fulfillment demand.
DHL's latest export barometer shows that 16 percent of New Zealand respondents generate more than 90 percent of their sales online. E-commerce shipments to Australia have soared by 46 percent in a year.
When DHL opened a new $15.3 million, 5,000m2 warehouse at Auckland airport, its entire processing was automated. High-speed reweigh machines, automated conveyor belts, overhead scanners and cameras and daylight-sensor lights were installed.
DHL can now process 2,400 shipments an hour, doubling its handling capacity. Parcels and pallets are handled only twice – once for unload and once for reload.
“It accommodates growth through enabling more shipments to be processed within a given time frame,” says DHL country manager Mark Foy. “This enables us to ramp up efficiently through peak periods and reduce resources through low periods.”
Foy says process automation improves accuracy and efficiency and allows a shift of staff focus to more value-adding work.
Robotics are also transforming racking and shelving, says John Cowan, general manager of Auckland Racking and Shelving Solutions. “It is down to the millimetre for racking, the thickness of the floor and walls. Everything has to be perfect. It is economy of scale.”
Auckland logistics and warehousing company Carroll’s is on the first rung of automation. Managing director Chris Carroll says technology has been the biggest shift in New Zealand logistics in the past decade.
“It is a labour-intensive, high-cost business and expanding is always a challenge because of where land prices have gone over the past decade.
“Technology has made it easier to run warehousing and third-party logistics.
“It’s a case of maximising the warehouse footprint the most effective way without losing access to the products and therefore efficiency,” says Carroll, whose business has invested in semi-automated forklifts which drive themselves to each location to pick product.
He believes that as labour costs rise and robotics costs fall there will be a tipping point where the business will go to robots. “That tipping point in New Zealand is probably not too far away.”
Bayleys’ national industrial and logistics director, Scott Campbell, says industrial rents are expected to rise another 3-5 percent this year as vacancy levels remain tight.
The main cause is the rise of e-commerce and food businesses, such as My Food Bag, population growth and business confidence.
“Auckland Council does not have enough industrial land zoned and the city will run out in five to seven years,” says Campbell. “There is a push further south and sheds are getting bigger because there is not enough contiguous land.”
The typical warehouse stud height is nine metres, but some owners and tenants are starting to look at stud heights of up to 30 metres.
“Everyone is looking at going higher because it’s more difficult to build outwards.”
Chris Meikle, and Joseph Bashouri of Woodhams Meikle Zhan Architects have completed a number of automated buildings for Goodman, PFI and other developers.
The fully-automated Sistema premises the firm designed at Auckland Airport won the Property Council's supreme award two years ago.
The 47,000m² factory and warehouse with 4,000m² of office space was designed to take plastic beads from silos through pipes routed to machines making plastic container products.
The size, layout, proportion and orientation of the building were determined based on Sistema’s business needs, manufacturing process and other operational requirements.
Bashouri says the routing of the pipes and the “nitty gritty” of automated production was a complicated process.
Though the uptake of technology is being led by the big players for now, the changes are set to sweep right across the industrial property sector.
Meikle and Bashouri say in the next decade picking and packing by robots will be widely adopted in New Zealand.
Campbell says that as warehouse stud heights increase, narrow-aisle racking or no-aisle racking will become common – allowing more product to be stored, boosting the value firms can extract from the floorspace.
“There will be more automation and higher stud warehouses. There is more inquiry on robots from tenants, and more businesses talking about it.”
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