Imported oil and its attendant risks. Greenhouse gases and global warming. An economy dependent on a vibrant freight transportation system. Add those up and the result is a growing imperative to find alternatives to traditional fuels.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
In 1925, a pair of German scientists applied for a patent for a process they had developed to turn carbon monoxide and hydrogen derived from coal into a liquid fuel. Franz Fischer and Hans Tropsch may not have thought of the process they developed as an alternative fuel in the way we think about that term today. But diesel fuel created through the Fischer-Tropsch process is one of a number of technologies that could transform the way freight carriers fuel their vehicles.
In some ways, the future is already here, with trucks of all sorts running on propane, compressed natural gas (CNG), and liquefied natural gas (LNG). Carriers like UPS and FedEx as well as many utility companies have been using alternative fuels in their fleet vehicles for several years.
What's driving these initiatives is a combination of worrisome issues. To start with, American politicians and the public want to reduce the nation's dependence on imported petroleum—though opinions vary on how to reach that goal. There's also a growing movement to reduce greenhouse gases as more scientists come to a consensus that the earth is warming and carbon emissions are part of the reason. And at $90 a barrel, oil has become an expensive commodity.
That all adds up to growing pressure on carriers and their equipment suppliers to find ways to run clean and lean operations.
"We want to lessen dependence on crude oil," says Robert Hall, director of vehicle engineering for UPS. "The world is using up its crude oil. To sustain our fleet and our business, we need to be prepared long term for the use of multiple fuels. Emissions reduction and quality are another issue." UPS says it has the largest fleet of vehicles operating on alternative fuels in the transportation industry, including 600 vehicles running on propane and 800 running on CNG.
Ready to come clean?
The imperative seems clear enough. But are American trucking fleets ready to make wholesale changes to their operations? In an internal document provided by one large contract fleet company that operates thousands of vehicles, company fleet managers candidly assessed the variety of technologies available to them. (The document was made available to DC VELOCITY with the understanding that its source would not be disclosed.)
Though it acknowledged the potential benefits of shifting to alternative fuels—reduced exhaust emissions, reduced dependence on imported petroleum, cost savings, and burnishing the corporate image—the analysis also carried some caveats. For example, reduction of some types of pollutants can occasionally lead to an increase in other types. It also warned that potential savings in fuel costs have to be balanced against potential higher costs in vehicle operations, including vehicle costs, payload capacity, vehicle range, power and torque, and fuel availability.
But alternative fuels and associated technologies aimed at more efficient operations are almost certainly in the offing for most fleets. The U.S. Department of Energy (DOE) has established a number of programs in partnership with industry aimed at research into and development of alternative fuels and a variety of technologies aimed at cleaner, more efficient freight operations.
Not surprisingly, much of the impetus for improvement comes from the West Coast, particularly California, where air quality has become a key public health concern. In June, for instance, California's South Coast Air Quality Management District, an air pollution control agency, approved a $2.9 million expenditure for 20 LNG heavy duty vehicles from Westport Innovations Inc., a Vancouver, B.C.-based developer of alternative fuel technology. The trucks will be operated by Total Transportation Services at the ports of Los Angeles and Long Beach.
Also active on the West Coast is WestStart-CALSTART, a not-for-profit consortium of some 145 companies focused on reducing transportation-related air pollution. "Our goal … is to see the development of clean transportation technologies," says John Boesel, the group's president and CEO.
Unlike some industry-sponsored organizations, the group does not promote a particular solution; it remains neutral on both fuel and technology. "We try to act as a strategic partner and facilitator to help all the companies succeed," Boesel says. Its efforts include programs focused on commercial traffic. In September, for example, WestStart-CALSTART sponsored the sixth annual National Hybrid Truck Users Forum in Washington state (for a list of upcoming events, visit www. calstart.org).
Big Brown goes green
In fact, hybrid vehicles have been much in the news recently. Last year, for example, UPS conducted a highly publicized hybrid vehicle test with the U.S. Environmental Protection Agency (EPA). For several months, UPS used a fleet of hydraulic hybrid delivery vehicles in the Detroit area, using a technology it developed in a partnership with the EPA as well as the U.S. Army, International Truck and Engine Corp., and Eaton Corp.
The technology combines an efficient diesel engine with a hydraulic propulsion system in place of the conventional drivetrain and transmission. Hydraulic pumps and storage tanks store energy, similar to what is done with electric motors and batteries in hybrid electric vehicles. Fuel economy is increased in three ways, the EPA explains: Vehicle braking energy is recovered, the engine is operated more efficiently, and the engine can be shut off when stopped or decelerating.
In laboratory testing, the technology achieved a 60- to 70-percent improvement in fuel economy compared to conventional UPS package vans, according to the EPA. It also produced a 40-percent-plus reduction in carbon dioxide emissions.
The EPA estimates that when the hybrid components are manufactured in high volume, the added costs could be recovered in less than three years through lower fuel and brake maintenance costs. The trucks may also be eligible to qualify for a tax credit of up to 40 percent of the incremental cost of the vehicle, the EPA says.
A question of cost
Boesel reports that today's research initiatives go well beyond the fuels themselves to include ways to improve aerodynamics, boost fuel economy, and reduce vehicle weight. In fact, today, the drawback to greater deployment of innovative technologies is often not so much the availability of the technology itself, but cost. Batteries for hybrids are heavy and expensive. Conversion costs to make use of new fuels can be high. "The technology manufacturers need to keep working on lowering costs," concedes Boesel. "We are getting to the point on a life-cycle basis where these systems are making sense, but often fleets buy on the purchase cost."
As for how to make the technology more affordable, the answer could be as simple as scaling up production. As demand for a technology picks up, unit costs would likely fall. But that's not quite as easy as it sounds. "We have the chicken and the egg," Boesel says. Producing advanced technology trucks in low volume limits demand, but demand is required for manufacturers to ramp up production. The issue is creating the demand. But if market forces don't do it, regulation and law might.
Take the current and controversial proposal by the ports of Los Angeles and Long Beach. The two ports have proposed to the Federal Maritime Commission a plan to implement what they call their Clean Truck Program. According to an analysis by the National Industrial Transportation League, which is contesting the proposal, this program would require drayage companies to meet an accelerated schedule for implementing state and federal emissions standards.
Additionally, the California legislature late in its session this year adopted a bill aimed at raising smog abatement fees for all vehicles to fund research on alternative fuels. In mid-October, Gov. Arnold Schwarzenegger signed the bill into law.
In the meantime, fleet managers continue to investigate a range of possibilities. UPS's Hall says, "Over the short term—the next five to 15 years—it appears that hybrid electrics will be the leaders in getting us where we need to be. CNG and propane can play a role as well." He agrees with Boesel's assessment that technological advances and lower prices will spur more widespread adoption.
The road ahead
Right now, additional research is under way under a variety of auspices. The DOE's National Renewable Energy Laboratory, for example, sponsors research under the umbrella of its Advanced Heavy Hybrid Propulsion Systems Project. NREL says on its Web site that it projects that its efforts will "increase the fuel efficiency of heavy trucks and buses by as much as 100 percent, and improve their emissions to meet the Environmental Protection Agency's 2007-2010 emission standards."
Also active on the research front is the 21st Century Truck Partnership, an industry-government collaboration among heavy-duty engine manufacturers, heavy-duty truck and bus manufacturers, heavy hybrid powertrain manufacturers, and four federal government agencies. The consortium, which develops both public and proprietary research projects, supports research, development, and demonstration projects in five areas: engine systems, heavy-duty hybrids, idle reduction, safety, and parasitic losses (factors like aerodynamic drag resistance and rolling resistance).
In the meantime, the switch to alternative fuels and technologies is already under way in both public and private fleets, driven by economic, political, regulatory, and other forces. Given the size of the nation's fleet and the infrastructure challenges, the revolution will likely be slow to ignite. But ignite it will. A warming planet and volatility in oil supplies have put alternative fuels and technologies back in the spotlight for the first time since the energy crisis of the '70s—and this time, it's likely for good.
what are the options?
Any discussion of alternative fuels raises the question of what fuels are available—or might become available in the near future. What follows is an edited version of a list of alternative fuels compiled by the U.S. Department of Energy's Alternative Fuels and Advanced Vehicles Data Center and other sources. Not all of the alternatives may be appropriate for freight operations.
Biodiesel is a renewable alternative fuel produced from vegetable oils and animal fats. Although pure biodiesel (or biodiesel blended with petroleum diesel) can be used to fuel diesel vehicles, providing emissions and safety benefits, it may also produce increased NOx emissions. It has physical properties similar to those of petroleum diesel. A blend of 5 percent biodiesel and 95 percent petroleum diesel is currently accepted by all diesel engine manufacturers.
Electricity can be used to power electric and plug-in hybrid electric vehicles directly from the power grid. Vehicles that run on electricity produce no tailpipe emissions. The only emissions that can be attributed to electricity are those generated in the production process at the power plant. Electricity is easily accessible for short-range driving.
Ethanol, also known as ethyl alcohol or grain alcohol, is a renewable fuel primarily made from starch crops, like corn. E85—a blend of 85 percent ethanol and 15 percent gasoline—can be used in light-, medium-, and heavy-duty vehicles. Its usage results in a 20-percent reduction in miles per gallon over conventional gasoline. Nearly one-third of U.S. gasoline contains ethanol in a low-level blend to reduce air pollution.
Hydrogen, the simplest and most abundant element in the universe, can be produced from fossil fuels and biomass and by electrolyzing water. Producing hydrogen with renewable energy and using it in fuel-cell vehicles holds the promise of virtually pollution-free transportation. Because hydrogen has a small amount of energy by volume compared with other fuels, storing sufficient quantities on a vehicle using currently available technology would require a tank larger than a typical car's trunk. Other primary problems at this time include the high cost of both the vehicles and the fuel.
Methanol, also known as wood alcohol, can be used as an alternative fuel. The use of methanol has declined significantly since the early 1990s, and auto makers are no longer manufacturing vehicles that run on it. It is used in some heavy truck and bus applications, but is not widely available.
Natural gas, a mixture of hydrocarbons, predominantly methane, is a domestically produced alternative fuel that can produce significantly fewer harmful emissions than gasoline or diesel when used in natural gas vehicles. It has a high octane rating and excellent properties for spark-ignited internal combustion engines. Although natural gas accounts for approximately one-quarter of the energy used in the United States, only about one-tenth of 1 percent is currently used for transportation fuel. It must be stored onboard a vehicle in either a compressed or liquefied state.
Propane is the most commonly used alternative transportation fuel. Also known as liquefied petroleum gas (LPG), it has a high energy density, giving propane vehicles good driving range. Propane has a high octane rating and excellent properties for spark-ignited internal combustion engines. Produced as a by-product of natural gas processing and crude oil refining, propane is non-toxic and presents no threat to soil, surface water, or groundwater.
Several other vehicle fuels are in the early stages of development, according to the Alternative Fuels and Advanced Vehicles Data Center. They include:
Biobutanol, an alcohol that can be produced through processing of domestically grown crops, like corn and sugar beets. Like ethanol, it can be used in gasoline-powered internal combustion engines.
Biogas, sometimes called swamp gas, landfill gas, or digester gas. Biogas is produced from the anaerobic digestion of organic matter such as animal manure, sewage, and municipal solid waste. After processing, it becomes a renewable substitute for natural gas and can be used to fuel natural gas vehicles. DOE says a 2007 report estimated that 12,000 vehicles are being fueled with upgraded biogas worldwide, with 70,000 biogas-fueled vehicles predicted by 2010.
Biomass-to-liquids fuels, which are produced through the conversion of diverse biomass feedstocks into a range of liquid fuels. One major benefit of these fuels is their compatibility with existing vehicle technologies and fuel distribution systems: Biomass-derived gasoline and diesel could be transported through existing pipelines, dispensed at existing fueling stations, and used to fuel today's gasoline- and diesel-powered vehicles.
Fischer-Tropsch diesel, which is made by converting gaseous hydrocarbons, like natural gas and gasified coal or biomass, into liquid fuel. Fischer-Tropsch diesel can be substituted directly for petroleum diesel to fuel diesel-powered vehicles without modification to the vehicle engine or fueling infrastructure.
Sean Webb’s background is in finance, not package engineering, but he sees that as a plus—particularly when it comes to explaining the financial benefits of automated packaging to clients. Webb is currently vice president of national accounts at Sparck Technologies, a company that manufactures automated solutions that produce right-sized packaging, where he is responsible for the sales and operational teams. Prior to joining Sparck, he worked in the financial sector for PEAK6, E*Trade, and ATD, including experience as an equity trader.
Webb holds a bachelor’s degree from Michigan State and an MBA in finance from Western Michigan University.
Q: How would you describe the current state of the packaging industry?
A: The packaging and e-commerce industries are rapidly evolving, driven by shifting consumer preferences, technological advancements, and a heightened focus on sustainability. The packaging sector is increasingly prioritizing eco-friendly materials to reduce waste, while integrating smart technologies and customizable solutions to enhance brand engagement.
The e-commerce industry continues to expand, fueled by the convenience of online shopping and accelerated by the pandemic. Advances in artificial intelligence and augmented reality are enhancing the online shopping experience, while consumer expectations for fast delivery and seamless transactions are reshaping logistics and operations.
In addition, with the growth in environmental and sustainability regulatory initiatives—like Extended Producer Responsibility (EPR) laws and a New Jersey bill that would require retailers to use right-sized shipping boxes—right-sized packaging is playing a crucial role in reducing packaging waste and box volume.
Q: You came from the financial and equity markets. How has that been an advantage in your work as an executive at Sparck?
A: My background has allowed me to effectively communicate the incredible ROI [return on investment] and value that right-size automated packaging provides in a way that financial teams understand. Investment in this technology provides significant labor, transportation, and material savings that typically deliver a positive ROI in six to 18 months.
Q: What are the advantages to using automated right-sized packaging equipment?
A: By automating the packaging process to create right-sized boxes, facilities can boost productivity by streamlining operations and reducing manual handling. This leads to greater operational efficiency as automated systems handle tasks with precision and speed, minimizing downtime.
The use of right-sized packaging also results in substantial labor savings, as less labor is required for packaging tasks. In addition, these systems support scalability, allowing facilities to easily adapt to increased order volumes and evolving needs without compromising performance.
Q: How can automation help ease the labor problems associated with time-consuming pack-out operations?
A: Not only has the cost of labor increased dramatically, but finding a consistent labor force to keep up with the constant fluctuations around peak seasons is very challenging. Typically, one manual laborer can pack at a rate of 20 to 35 packages per hour. Our CVP automated packaging solution can pack up to 1,100 orders per hour utilizing a fully integrated system. This system not only creates a right-sized box, but also accurately weighs it, captures its dimensions, and adds the necessary carrier information.
Q: Beyond material savings, are there other advantages for transportation and warehouse functions in using right-sized packaging?
A: Yes. By creating smaller boxes, right-sizing enables more parcels to fit on a truck, leading to significant shipping and transportation savings. This also results in reduced CO2 emissions, as fewer truckloads are required. In addition, parcels with right-sized packaging are less prone to damage, and automation helps minimize errors.
In a warehouse setting, smaller packages are easier to convey and sort. Using a fully integrated system that combines multiple functions into a smaller footprint can also lead to operational space savings.
Q: Can you share any details on the typical ROI and the savings associated with packaging automation?
A: Three-dimensional right-sized packaging automation boosts productivity significantly, leading to increased overall revenue. Labor savings average 88%, and transportation savings accrue with each right-sized box. In addition, material savings from less wasteful use of corrugated packaging enhance the return on investment for companies. Together, these typically deliver returns in under 18 months, with some projects achieving ROI in as little as six months. These savings can total millions of dollars for businesses.
Q: How can facility managers convince corporate executives that automated packaging technology is a good investment for their operation?
A: We like to take a data-driven approach and utilize the actual data from the customer to understand the right fit. Using those results, we utilize our ROI tool to accurately project the savings, ROI, IRR (internal rate of return), and NPV (net present value) that facility managers can then use to [elicit] the support needed to make a good investment for their operation.
Q: Could you talk a little about the enhancements you’ve recently made to your automated solutions?
A: Sparck has introduced a number of enhancements to its packaging solutions, including fluting corrugate that supports packages of various weights and sizes, allowing the production of ultra-slim boxes with a minimum height of 28mm (1.1 inches). This innovation revolutionizes e-commerce packaging by enabling smaller parcels to fit through most European mailboxes, optimizing space in transit and increasing throughput rates for automated orders.
In addition, Sparck’s new real-time data monitoring tools provide detailed machine performance insights through various software solutions, allowing businesses to manage and optimize their packaging operations. These developments offer significant delivery performance improvements and cost savings globally.
Mid-marketorganizations are confident that adopting AI applications can deliver up to fourfold returns within 12 months, but first they have to get over obstacles like gaps in workforce readiness, data governance, and tech infrastructure, according to a study from Seattle consulting firm Avanade.
The report found that 85% of businesses are expressing concern over losing competitive ground without rapid AI adoption, and 53% of them expect to increase their budgets for gen AI projects by up to 25%. But despite that enthusiasm, nearly half are stuck at business case (48%) or proof of concept (44%) stage.
The results come from “Avanade Trendlines: AI Value Report 2025,” which includes two surveys conducted by the market research firms McGuire Research Services and Vanson Bourne. Conducted in in August and September 2024, they encompass responses from a total of 4,100 IT decision makers and senior business decision makers across Australia, Brazil, France, Germany, Italy, Japan, Netherlands, Spain, UK, and US.
Additional results showed that 76% of respondents state that poor data quality and governance inhibits their AI progress. To overcome that, companies are stepping up investments in that area, with 44% planning to implement new data platforms and 41% setting governance standards. And to support the scaling of AI, budgets will focus on data and analytics (27%), automation (17%), and security and cyber resilience (15%).
"Mid-market leaders are at a defining moment with AI—where investments must not only boost efficiency but ignite future innovation and sustainable growth," Rodrigo Caserta, CEO of Avanade, said in a release. "The tension between cost-cutting and growth ambitions shows the AI value equation is still being worked out. Productivity with AI isn't just about doing things faster; it's about reimagining work itself. People are central to this shift, requiring workforce alignment, clear communication, and new training. Leaders must rethink how they support collaboration, measure productivity, and ultimately, assess the true value AI brings to their organizations."
Editor's note:This article was revised on November 13 to correct the site of Avanade's headquarters; it is located in Seattle.
That result came from the company’s “GEP Global Supply Chain Volatility Index,” an indicator tracking demand conditions, shortages, transportation costs, inventories, and backlogs based on a monthly survey of 27,000 businesses. The October index number was -0.39, which was up only slightly from its level of -0.43 in September.
Researchers found a steep rise in slack across North American supply chains due to declining factory activity in the U.S. In fact, purchasing managers at U.S. manufacturers made their strongest cutbacks to buying volumes in nearly a year and a half, indicating that factories in the world's largest economy are preparing for lower production volumes, GEP said.
Elsewhere, suppliers feeding Asia also reported spare capacity in October, albeit to a lesser degree than seen in Western markets. Europe's industrial plight remained a key feature of the data in October, as vendor capacity was significantly underutilized, reflecting a continuation of subdued demand in key manufacturing hubs across the continent.
"We're in a buyers' market. October is the fourth straight month that suppliers worldwide reported spare capacity, with notable contractions in factory demand across North America and Europe, underscoring the challenging outlook for Western manufacturers," Todd Bremer, vice president, GEP, said in a release. "President-elect Trump inherits U.S. manufacturers with plenty of spare capacity while in contrast, China's modest rebound and strong expansion in India demonstrate greater resilience in Asia."
Ocean freight liner Hapag-Lloyd has ordered 24 new container ships through $4 billion in contracts with two Chinese shipyards, saying the investment will continue to modernize and decarbonize its fleet.
Half the order will include 12 vessels with a capacity of 16,800 twenty-foot equivalent units (TEU) to be built by Yangzijiang Shipbuilding Group, and will expand the Dutch company’s capacity. The other 12 ships with a capacity of 9,200 TEU each will be made by New Times Shipbuilding Company Ltd. and will replace aging vessels. Hapag-Lloyd’s current fleet includes 287 container ships with a total transport capacity of 2.2 million TEU.
Set for delivery between 2027 and 2029, the ships will all feature low-emission, high-pressure liquefied gas dual-fuel engines that are extremely fuel-efficient, the company said. In addition, these vessels can be operated with ammonia fuel or with biomethane, which can reduce CO2e emissions by up to 95% compared to conventional propulsion systems.
“This investment is one of the largest in the recent history of Hapag-Lloyd, and it represents a significant milestone for our company as it pursues the goals of its Strategy 2030, such as to grow while also modernizing and decarbonizing our fleet. Operating a fleet of more efficient vessels will also enhance our competitive position, and thanks to the increase in capacity, we will continue to offer our customers a global, high-quality product,” Rolf Habben Jansen, CEO of Hapag-Lloyd AG, said in a release.
The company says its Strategy 2030 follows the direction of the 1.5-degree target of the Paris Agreement. It plans to reduce absolute greenhouse gas emissions from fleet operations by around one third by 2030 compared to 2022, and to reach net-zero fleet operation by 2045.
2024 has been a bumpy ride for many parts of the material handling equipment industry. It’s not necessarily that orders have been weak; it’s just that they aren’t up to the levels seen during the heyday of the pandemic-induced warehouse expansions. One of the brighter spots has been the robotics and automation sector, which has benefited from warehouse leaders’ continuing struggles with worker shortages and increased labor costs—both of which can be addressed through the judicious application of automated systems.
As we do every year, we recently gathered experts from the robotics and automation industry to weigh in on both the challenges facing the market and the opportunities that lie ahead. Here’s what they said.
Participants (in alphabetical order):
BART CERA President & Chief Executive Officer Vargo
Q: WHAT DOES 2025 LOOK LIKE FOR THE AUTOMATION INDUSTRY?
Stanislas Normand – Exotec: I expect to see growth in automation investments in 2025 relative to 2024. The reality is that, despite the challenging economic environment, the underlying pressure to automate is still there. Businesses are still challenged by the overreliance on manual labor and growing customer expectations. For many, it is becoming a bottleneck for growth that can no longer be ignored. While it’s true that a lot of 2024 projects ended up being pushed [out], the need for automation is still very high, and we are currently seeing a really strong pipeline of projects in 2025.
Bart Cera – Vargo: 2024 was a “weird” year in that many companies struggled to make decisions to proceed with their investment plans even though the stock market was doing well and corporate earnings were generally up, with positive forecasts for the future. I think the looming inflationary pressures and uncertainty around monetary policy [and] changes to interest rates left a lot of folks sitting on cash and on the sidelines. It’s not too different from the consumer side—it is tough to buy when prices are up, and borrowing is expensive. With inflation softening and seemingly under control and the Fed’s recent interest rate cut, which should be expansionary, our industry should see a significant uptick in automation and larger CapEx project spends for 2025.
Andrea Pongolini – E80: We are seeing robust growth fueled by a strong foundation of repeat customers who continue to trust and rely on our solutions. One of the most prominent trends is the increasing demand for fully integrated end-to-end automation solutions. This demand is not just a North American phenomenon; it is also gaining traction across Europe and other markets. Companies are looking for ways to enhance their supply chain resilience, improve efficiency, and reduce environmental impact—and automation is at the core of these efforts.
Q: HOW WILL LOWER INTEREST RATES HELP SPUR INVESTMENTS IN AUTOMATION?
Ben Gaegauf – Agilox: This will surely help, though it’s not necessarily at the core of our conversations. Productivity, safety, and predictability are still the main conversation drivers. Of course, lower interest rates will help speed up the payback time for capital investments. And overall, just as with most other industries, we expect to benefit from a more favorable business environment in general, which should drive the economy higher.
Robert Humphrey – Element Logic: With the reduced cost of borrowing, we expect more companies will leverage and continue leveraging financing for these investments. Even with higher-than-average interest rates, we’ve still observed a large percentage of companies leveraging financing on automation projects to help preserve capital for investment in other areas of their business to maintain growth.
Chris Coote – Dexory: When interest rates are lower, businesses generally feel more confident about the economy and future profitability. This encourages firms to take on projects such as automation, which are designed to improve operational efficiencies.
For businesses that have already started their automation journeys, lower borrowing costs mean that businesses are able to scale their projects further and look at other areas they can invest in. This can include things like bringing in hardware and software solutions that enhance overall productivity. These projects are easier for businesses to initiate as cheaper debt financing becomes available.
Q: HOW CAN WAREHOUSE LEADERS SELL THEIR COMPANY’S DECISION-MAKERS ON THE ADVANTAGES OF ROBOTIC SOLUTIONS?
Nathan Richter – Movu: The key to convincing decision-makers lies in showing how warehouse automation directly addresses labor shortages and operational bottlenecks, and can thereby increase warehouse performance. With robotics solutions, companies can streamline material handling, improve order accuracy, and scale their operations. A clear ROI [return on investment] analysis that highlights faster throughput, reduced labor costs, and the ability to meet growing demand often seals the deal.
Rick DeFiesta – GeekPlus: When it comes to whether or not to automate, the real question posed to decision-makers should be, “What if we continue to carry on as we have?” You will still continue to struggle with [a shortage of] labor, and the cost of labor will continue to go up. So how will you get products to customers rapidly without making some investments that will offset the lack of labor and higher labor costs?
Ben Gaegauf – Agilox: The market is already well aware of the industry’s shift toward automation and robotics. Our challenge lies in showing customers that they can benefit from participating in this trend now—“What’s in it for me today rather than tomorrow?" We believe that at its core, there are essentially two main drivers that support robotics adoption: increased productivity (operational and financial) and risk reduction (predictability, safety, etc.). Robotic solutions help on both fronts, and the latest technological developments have made it much easier to demonstrate that to the customer.
Q: WHAT DO YOUR CUSTOMERS CONSIDER TO BE AN ACCEPTABLE ROI, AND DOES THAT VARY BY THE TYPE OF PROJECT?
Cody Upp – Zebra Robotics: Our automation solutions are quick to implement and scale as your needs evolve, delivering ROI. They allow you to achieve real-time visibility into workflow progress across your facility, optimizing operations, identifying bottlenecks, and driving continuous improvements—all guided by advanced insights and reporting.
It’s also important to note that for companies opting for the Robots-as-a-Service (RaaS) model, customers should not solely focus on traditional ROI metrics. Instead, they should consider how much free cash flow the investment is creating. The goal is to maximize their internal rates of return, ensuring that the investment contributes positively to their overall financial health and operational efficiency.
Chris Coote – Dexory: ROI can mean different things to people at different levels of the organization. Those in the C-suite might be looking at ROI from the point of view of cost savings, while those working on the warehouse floor might look at it from the perspective of time saved or accuracy improvements. Generally, each ROI case is as unique as each business is. Where the issues they are looking to solve through automation might be similar, the end goals and objectives of each business are going to be vastly different.
Rick DeFiesta – GeekPlus: Today, customers are not as rigid in their thinking about the ROI aspect of a project—meaning they’re not using strictly headcount or using metrics like, say, a two-year payback. They are considering many other factors, like being able to deliver to their growing ranks of customers and to meet their expectations. And in this day and age, if customers don’t receive a product in two days, they’re buying someplace else. So really, it’s a matter of meeting customer demand more than a justification for pure ROI.
Q: FOR A COMPANY WITHOUT ANY ROBOTS, UNDER WHAT CONDITIONS DOES IT MAKE SENSE TO INVEST IN ROBOTICS, AND WHAT IS A GOOD ENTRY POINT?
Robert Humphrey – Element Logic: In most cases, the conditions that make sense for robotics are factors such as labor shortages, high order volumes, the need for improving accuracy, etc. For the robotics systems we offer, we usually find that any company that has at least 5,000 storage locations and at least seven associates working as pickers in their warehouse is large enough to benefit from automation.
Chris Coote – Dexory: An entry point is entirely dependent on the business and its objectives. Generally, we would advise businesses to start by ensuring that they have the necessary intelligence available to them from their warehouses. This can include things like inventory accuracy all the way to optimizing warehouse layout. If you start to deploy picking robots in the first instance but they are going to the wrong locations because of discrepancies in the system, you may have deployed robotics but the solution is unlikely to have the desired impact if you failed to first address the visibility challenges in your operation.
Cody Upp – Zebra Robotics: It makes sense when you can create monthly free cash flow using a more efficient labor force as a saving category on the investment when robotics are used to drive labor efficiency and cost savings. Our automation enables you to achieve real-time visibility across your facility, connect isolated islands of automation, and [free up] employees to perform higher-value tasks, all with the flexibility to automate however you need.
Q: HOW HAS THE ADVENT OF THE ROBOTS-AS-A-SERVICE BUSINESS MODEL AFFECTED ROBOTICS ADOPTION?
Bart Cera – Vargo: One of the major ways RaaS has affected robotics adoption is by reducing the required capital purchase entry point and providing a bundled cost of use. In addition, many RaaS subscription providers offer flexibility to scale robotic operations up or down based on demand, whereas a traditional CapEx robotic purchase would require overinvestment to handle short-term peak operating demand or the deployment of some other work process to [handle the overflow]. Another positive that comes to mind is the ability to conduct an in-facility pilot to prove out the robots’ functionality. And because the robots tend to be quick to deploy, you can realize the benefits of the technology sooner.
Stanislas Normand – Exotec: I think that overall, RaaS will benefit the adoption of robotics. The model effectively brings down the financial barriers to trying out robotics, which can be particularly appealing to smaller or risk-averse organizations. We have even started seeing some early signs that RaaS can help move prospects toward higher-performance CapEx solutions.
Robert Humphrey – Element Logic: RaaS has drastically increased adoption of robotics systems for the industry as a whole. It allows the end-user to greatly improve the ROI timing because it [eliminates the need for a large upfront capital investment] yet typically provides immediate benefits. It has greatly reduced the barrier to entry for many companies. It also provides a flexible approach, which makes growing and/or changing the system to align with the underlying business needs easier.
Q: WHAT CAN TODAY’S ROBOTICS SYSTEMS DO THAT PREPANDEMIC SYSTEMS COULD NOT?
Rick DeFiesta – GeekPlus: Industrial automation is the fastest-growing segment technology-wise. Robotics companies were pushed to solve problems to meet demand at a much faster rate than if the pandemic hadn’t happened. As customer demand for speedier deliveries continues to increase, robotics companies are always working to create smarter and faster automated warehouses.
Nathan Richter – Movu: Postpandemic robotics systems are far more advanced in terms of flexibility, scalability, and intelligence. Today’s robots can integrate seamlessly with warehouse management systems, work alongside human workers in collaborative environments, and adapt to changing workflows in real time. Our robots can now handle a broader range of tasks, from pallet and bin storage, to pallet transport, to bin/eaches picking.
Andrea Pongolini – E80: The capabilities of robotic systems have evolved significantly since the prepandemic era. Today, robotic systems offer advanced integration with digital infrastructures, providing real-time data analysis that enhances decision-making and operational efficiency. They now handle more complex tasks with precision, such as using vision systems for intricate product handling. In addition, modern systems are more adaptable and scalable, allowing businesses to respond to sudden fluctuations in demand more effectively.
Q: HOW WILL ADVANCES IN ARTIFICIAL INTELLIGENCE (AI) AFFECT TOMORROW’S ROBOTICS?
Nathan Richter – Movu: AI will enhance warehouse robotics by making systems more adaptive, predictive, and efficient. Our company is already exploring AI-driven optimization in our robots, enabling smarter decision-making, such as dynamic route planning and predictive maintenance. These advancements will allow tomorrow’s warehouses to operate with even greater efficiency and minimal downtime, driving further innovation in the sector.
Cody Upp – Zebra Robotics: We look for advancements in AI to enable the use of machine learning instead of algorithmic decision-making around order allocation.
Bart Cera – Vargo: Wow, that is a great question—and one that’s hard to answer given the significant AI advances we’ve seen in a relatively short time. I think robotics (with the help of continued increases in computing power) will continue to make stair-step increases in performance speed and the ability to perceive the environment around them, while further expanding their autonomy and possibly even increasing their cognitive abilities to apply reason, plan, and solve problems. Hopefully, it stops, though, before they become self-aware and take over the world (ha ha).
Q: WHAT ONE PROBLEM DO CUSTOMERS MOST WISH TO SOLVE WITH ROBOTICS?
Ben Gaegauf – Agilox: Our customers want to improve their ability to serve their own customers while at the same time improving their productivity and profitability. Efficiency is the name of the game. Our customers want predictability, improved workplace safety, traceability, and, above all, the flexibility to adapt to changes in the market quickly, easily, and independently.
Andrea Pongolini – E80: I’d say the one problem our customers most wish to solve with robotics is improving operational efficiency while reducing costs. Across industries, companies are constantly looking for ways to streamline their production processes, increase throughput, and optimize resource utilization—all without compromising quality or safety. Robotics plays a critical role in addressing these challenges by automating repetitive tasks, improving accuracy, and minimizing the inefficiencies associated with manual work.
Stanislas Normand – Exotec: I would say it’s a blend of two problems: reaching a high level of performance while maintaining operational flexibility. Traditionally, warehouse automation focused purely on performance, which is why many legacy automation solutions leveraged monolithic systems optimized for high throughput. The problem with these systems is that you need to have the ability to accurately forecast your needs years in advance because once these systems are installed, there is no easy way to scale them up or down. This means that most of these projects either overshoot or undershoot with respect to capacity.
That’s where robotics fits in. Because robotic systems are generally lighter weight, have shorter installation times, and can scale after the initial installation, they offer the best of both worlds in terms of their ability to reach high performance without sacrificing the flexibility to grow your operations down the line.