Robots are overtaking people IRL
The dominant narrative shifted from the automation of physical work to the replacement of knowledge workers by AI. Maybe. Robots are also gaining on people IRL.
Covid lifted robots and people
Covid e-commerce bumps and Government acts were strong tail winds to the logistics and warehousing sectors of the US economy. The rising tide lifted job seekers, staffing firms, and robotics companies, until recently.
Light industrial staffing grew year-on-year during covid but is starting to shrink (graphic below)1.
Robot demand continues to grow while staffing decelerates
As consumer demand stabilizes post-covid, the e-commerce boom slowed down. The staffing firms that were seeing record growth in light industrial are now seeing declines. However, robotics companies are still growing2. Companies are making long-term bets into high capital expenditure products to serve the evolving market.
Comparing year-on-year revenue changes from the latest available quarterly earnings shows the decline in staffing and the continued growth in robotics.
Two types of robotics systems benefited from the market growth: Autonomous Mobile Robots (AMR) and then Automated Storage, Automated Retrieval Systems (ASRS).
ASRS sales outpace AMRs
While there was a boom in AMR company creation, and ASRS companies have been around longer, ASRS providers are seeing significant growth.
Robotics systems are not cheap in terms of upfront costs, process workflow changes, facilities, and IT. To date, enterprise customers with dedicated technical operations teams are the ones that employ these systems. The mid market and smaller customers do not see the ROI in the systems or end up going with a Third Party Logistics provider (3PL) that might employ robotics systems on a customers behalf.
DHL, FedEx, and others have made significant investmenta in Robotics.
Bringing ASRS efficiencies down market
Symbiotic, an ASRS provider, created a joint venture with SoftBank, called Greenbox3, and they are also going after this smaller market segment. Customers who can’t afford their own ASRS but can still benefit from robotics.
This allows merchants to access sophisticated fulfillment but also shrinks the number of employers competing for talent. Covid-employment shortages were an accelerant for companies turning to robots. Now we’re seeing a short-term trend in a software economy and a secular trend towards robotics automation in logistics. The longer term view is bullish on robots and bearish on staffing, in this category. Of course, this will just shift the skill sets needed in and around logistics.
After AMRss, humans
The bulk of commercially available robots in the space have been ARMs and ASRSs, but humanoid factors are now doing proof-of-concepts at Tesla and Amazon. Humanoid robots have the advantage of working in spaces designed for people, providing an adaptability benefit.
The robots are gaining
Gen AI changed the focus of the automation narrative from manual labor to knowledge work. Behind the hype, robots are actually gaining on people. As companies reduce their staffing needs, they are continuing to invest in capex-heavy projects like robotics.
While the buyers for robotics market are led by enterprise buyers, the use of joint ventures and 3PLs allow smaller companies to get the benefits of robotics without the cost. Ultimately small CPG and retail companies will catch up with the likes Amazon and Walmart.
tl;dr
Gen AI led people to believe automation will take over knowledge work before it does manual labor
Post covid, companies are continuing to invest in robotics automation, while staffing needs decline
In particular, companies that provide Automated Storage, Automated Retrieval systems are seeing strong growth
ASRS systems are expensive so 3PLs and ASRS providers are coming up with ways to bring the benefits down market
https://www2.staffingindustry.com/Editorial/Industrial-Staffing-Report/Sept.-21-2023/List-of-largest-industrial-staffing-firms-highlights-the-segment-s-growth
https://www.marketresearchfuture.com/reports/material-handling-robotics-market-5099
https://www.symbotic.com/about/news-events/news/softbank-group-and-symbotic-establish-new-warehouse-as-a-service-joint-venture-to-transform-supply-chain-services-through-automation-and-a-i/