When an English weaver’s apprentice named Ned Ludd allegedly smashed two stocking frames in 1779, his actions inspired a movement known as the Luddites, workers who destroyed machinery that they said threatened their jobs and livelihoods. More than two hundred years later, professionals across the economy are nervously eyeing headlines trumpeting automation, and wondering to themselves – are robots coming for my job next?
In logistics, this trend is especially pronounced. Every day, more and more conventional freight forwarding task move online, and robotics advances could eliminate humans from the warehouse floor in the next decade, trucks will one day drive themselves, and drones could handle those complex last-mile deliveries.
All that justifies some nervousness, but there’s a lesson to be learned from those 18th century rebels, and it’s certainly not the one that Ned Ludd and his followers would have expected, because just as the industrial revolution created scores more jobs than it created, automation is part of a larger socio-economic trend as well, one that we’re just beginning to grasp.
It turns out, those robots aren’t “taking” jobs. Instead, they are filling a role created by the very technological advances that brought them into existence.
If this is all starting to sound too philosophical for a logistics article, don’t worry. It’s actually as simple as remembering that those “advanced” looms in the 18th century Britain were actually part of a bigger picture. New machinery like the looms allowed companies to manufacture more textiles, at cheaper prices, opening the market to consumers who otherwise would not have purchased textiles.
That same dynamic impacted pretty much every market. Sure, certain trades such as the people who crafted horse buggies saw their sales decline, but that was around the time that technological advances made car manufacturing and sales possible. And now that people were buying cars, there were suddenly millions of new jobs to fill. That meant hiring people to build more roads, gas stations, bridges, the list goes on…
This isn’t a history lesson on the industrial revolution, but those lessons are worth bearing in mind as we turn to robotics, and fit them into a broader trend of artificial intelligence, the internet of things, and e-commerce.
Computers Changed The Game
The job market evolves in response to purchasing decisions, and how those products are purchased. With e-commerce, it is often said that the brick-and-mortar store front moved into people’s homes, via their computers, but that’s only part of the equation. The storefront also took the form of logistics companies because rather than interacting with a clerk, consumers started dealing with integrators, forwarders, and last-mile delivery companies.
Here’s where it gets interesting – the decline of brick-and-mortar actually created jobs, by the millions! In the US, the Progressive Policy Institute found that from December 2007 to May 2017, e-commerce created 397,000 jobs in the country, while at the same time, traditional retail only shed 76,000 jobs. That’s a net gain of over 300,000 jobs.
In Europe the picture is identical. Amazon announced that its expansion into Europe would create 15,000 new full-time jobs in 2017. That puts the European-based workforce of the US retail giant at more than 65,000 by the end of the year (2017). That’s just one company. In trucking, the continent is facing a looming labor shortage, while consumers are increasingly opting to click, rather than walk.
On a global scale, the logistics market is expected to grow from US$8.18 trillion in 2015 to US$15.52 trillion by 2023, growing at a CAGR of 7.5 percent from 2015 to 2024. In volumes, that’s a market growth from 54.69 billion tonnes in 2015, to 92.10 billion tonnes by 2024, growing at a CAGR of 6.0 percent over the same period.
Simply put, the current labor pool can’t meet that sort of demand, and automation is the only way forward.
So, What Happened?
Advances in computer technology spurred a 21st-century version of the industrial revolution, and by reducing the time and effort required to purchase goods, computers allowed consumers to purchase more goods. It turns out people’s aversion to shopping was not just the price tag, but instead, a complex interplay of opportunity costs such as transit to the store, time-intensive return policies, and lack of choice at individual outlets.
There’s a complex and costly logistics response to this new trend, and companies are struggling to meet surging online orders. They’re struggling in a number of ways, but one consistent challenge is providing the manpower to sort and ship those millions of packages that, simply, didn’t exist a decade ago. That’s a whole new business process that needs addressing, and whatever fills that demand will be the first solution there. As 2017 comes to a close, it’s increasingly likely that robots will be the solution.
The industrial revolution certainly came with its fair share of negative externalities, ones that drove home the importance of sound governance and regulations. Hundreds of years later, advances in computing and automation are likely to do the same, but this time around, we’re better prepared to meet the challenges, but to do so, the industry needs to attract talent, and that’s a challenge.
Those hundreds of thousands of workers on warehouse floors across Europe are the first place to start sourcing that talent, and it’s those robots that will make it possible, because soon, logistics companies will be able to use their hiring firepower to attract more qualified workers to take on the growing role of logistics.