Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.
Investors have shelved billions of dollars in construction projects since the Covid-19 pandemic and recession began in February, but the logistics sector has largely bucked that trend as companies continue to push a surge in new warehouse creation to handle booming e-commerce demand, according to a pair of studies released this week.
Counting all types of construction nationwide, builders doubled the value of projects they launched between the depths of the 2009 recession and the pre-Covid market peak in 2019, topping out last year at $853 billion worth of single family and multifamily housing, commercial projects, institutional building, manufacturing plants, public works, and electric power/utility sites.
The coronavirus stopped that trend abruptly, however, pushing the overall construction market into a steep decline that is forecast to tumble 14% in 2020 to $738 billion, according to “Dodge Construction Outlook 2021: Moving Forward on the Road to Recovery,” an economic report produced by New Jersey-based Dodge Data & Analytics, a market forecasting firm in the commercial construction sector.
But one exception stands out amid that sea of red ink, as warehouse starts are still expected to grow in 2020. Dodge defines warehouses as part of the larger “commercial” construction segment—alongside stores, offices, hotels, and parking garages—which is expected to fall 23% to $107 billion in 2020 before rebounding in 2021 with a 5% rise to $113 billion.
Likewise, a second report also found signs of a nascent economic recovery in logistics despite significant negative impacts on the retail and hospitality industries, which are particularly reliant on consumer spending and mobility, according to the latest “Global Real Estate Perspective” report from real restate firm Jones Lang LaSalle IP Inc. (JLL).
More specifically, warehouse growth is seeing spikes in certain specialty areas, such as an increase in last-mile logistics facilities as online retail grows, the conversion of retail facilities into logistics facilities in dense urban areas, and demand for cold-storage in the food & beverage and life sciences sectors. “Demand for logistics space has bounced back sharply, hitting record or near-record levels in several major global markets during the quarter. E-commerce companies have been particularly active, supported by increased consumer demand for online shopping,” the JLL report said.
Despite that optimism, the 2021 economic rebound could be delayed until later in the year if certain variables don’t line up, the Dodge report said. “Prospects for recovery in 2021 will be limited until a vaccine has been approved and has been widely adopted, a process that is expected to begin by mid-2021. The uncertainty surrounding further federal stimulus and growing budget gaps at state and local levels, however, cloud the outlook,” said report author Richard Branch, Dodge’s chief economist.
U.S. economy awaits second round of stimulus funds
Another wild card in the recovery will be federal stimulus funding, which made a significant impact on the economy beginning in March, when Congress passed the $1.7 trillion CARES Act—an acronym for Coronavirus Aid, Relief, and Economic Security—including the Paycheck Protection Program (PPP) and other loans and grants. That effect was temporary, however, as the fiscal boost provided by the CARES Act began to fade after income support programs within the act expired in July and the PPP ended in August, Dodge said.
The prospects for quick passage of a second large stimulus package now seem dim, based on November 4 election results that have split federal government control between a Democratic Biden Administration and House of Representatives and a Republican Senate. “Without the help provided by CARES funding, the economy is unlikely to regain significant forward traction until a vaccine has been approved and widely adopted across the United States,” the Dodge report found.
In the longer term, the researchers expect an additional $1.5 trillion of stimulus to be approved in the first quarter of 2021, helping the economy return to stronger growth in the second quarter of 2021. Yet even when that recovery occurs, the impact of the pandemic could have long-lasting implications for the retail industry, changing many of the supply chain patterns that have stood for decades, thanks to the closing of thousands of retail stores that failed to survive the recession.
“While brick and mortar is unlikely to disappear entirely, online shopping became a much more ingrained part of consumer purchasing behavior due to stay-at-home orders,” the Dodge report said. "A massive number of consumers clearly turned to online shopping to deal with the restrictions of Covid-19 in the second quarter. If this sea change in consumer behavior becomes a permanent phenomenon, the long-lasting effects of Covid-19 could mean further deterioration in retail construction starts in coming years.”
Despite the impact of those trends on retail stores, the accompanying rise in e-commerce has been good news for the warehouse construction needed to provide fulfillment for all those online orders.
Beginning at a low point of just 49 million square feet in 2010, warehouse starts increased by double-digit rates for seven consecutive years, resulting in an “amazing” 508% increase that brought starts up to 297 million square feet in 2017, the firm said. After a flat period in 2018, the hot curve resumed with 354 million square feet in 2019, and is forecast to resume that growth in 2021 with post-Covid projects led by a growing number of million-square-foot mega-warehouses built by amazon.com.
Agility Robotics, the small Oregon company that makes walking robots for warehouse applications, has taken on new funding from the powerhouse German automotive and industrial parts supplier Schaeffler AG, the firm said today.
Terms of the deal were not disclosed, but Schaeffler has made “a minority investment” in Agility and signed an agreement to purchase its humanoid robots for use across the global Schaeffler plant network.
That newly combined entity will generate annual revenue of around $26 billion, employ a workforce of some 120,000, and serve its customers from more than 44 research & development (R&D centers and more than 100 production sites around the world. The new setup will include four business divisions: E-Mobility, Powertrain & Chassis, Vehicle Lifetime Solutions and Bearings & Industrial Solutions.
“In disruptive times, implementing innovative manufacturing solutions is crucial to be successful. Here, humanoids play an important role,” Andreas Schick, Chief Operating Officer of Schaeffler AG, said in a release. “We, at Schaeffler, will integrate this technology into our operations and see the potential to deploy a significant number of humanoids in our global network of 100 plants by 2030. We look forward to the collaboration with Agility Robotics which will accelerate our activities in this field.”
Agility makes the “Digit” product, which it calls a bipedal Mobile Manipulation Robot (MMR). Earlier this year, Agility also began deploying its humanoid robots through a multi-year agreement with contract logistics provider GXO.
The Boston-based enterprise software vendor Board has acquired the California company Prevedere, a provider of predictive planning technology, saying the move will integrate internal performance metrics with external economic intelligence.
According to Board, the combined technologies will integrate millions of external data points—ranging from macroeconomic indicators to AI-driven predictive models—to help companies build predictive models for critical planning needs, cutting costs by reducing inventory excess and optimizing logistics in response to global trade dynamics.
That is particularly valuable in today’s rapidly changing markets, where companies face evolving customer preferences and economic shifts, the company said. “Our customers spend significant time analyzing internal data but often lack visibility into how external factors might impact their planning,” Jeff Casale, CEO of Board, said in a release. “By integrating Prevedere, we eliminate those blind spots, equipping executives with a complete view of their operating environment. This empowers them to respond dynamically to market changes and make informed decisions that drive competitive advantage.”
Material handling automation provider Vecna Robotics today named Karl Iagnemma as its new CEO and announced $14.5 million in additional funding from existing investors, the Waltham, Massachusetts firm said.
The fresh funding is earmarked to accelerate technology and product enhancements to address the automation needs of operators in automotive, general manufacturing, and high-volume warehousing.
Iagnemma comes to the company after roles as an MIT researcher and inventor, and with leadership titles including co-founder and CEO of autonomous vehicle technology company nuTonomy. The tier 1 supplier Aptiv acquired Aptiv in 2017 for $450 million, and named Iagnemma as founding CEO of Motional, its $4 billion robotaxi joint venture with automaker Hyundai Motor Group.
“Automation in logistics today is similar to the current state of robotaxis, in that there is a massive market opportunity but little market penetration,” Iagnemma said in a release. “I join Vecna Robotics at an inflection point in the material handling market, where operators are poised to adopt automation at scale. Vecna is uniquely positioned to shape the market with state-of-the-art technology and products that are easy to purchase, deploy, and operate reliably across many different workflows.”
In a push to automate manufacturing processes, businesses around the world have turned to robots—the latest figures from the Germany-based International Federation of Robotics (IFR) indicate that there are now 4,281,585 robot units operating in factories worldwide, a 10% jump over the previous year. And the pace of robotic adoption isn’t slowing: Annual installations in 2023 exceeded half a million units for the third consecutive year, the IFR said in its “World Robotics 2024 Report.”
As for where those robotic adoptions took place, the IFR says 70% of all newly deployed robots in 2023 were installed in Asia (with China alone accounting for over half of all global installations), 17% in Europe, and 10% in the Americas. Here’s a look at the numbers for several countries profiled in the report (along with the percentage change from 2022).
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.