We're likely to see more robots in DCs within the decade. But Tom Bonkenburg says the first wave will probably look a lot more like driverless forklifts than R2-D2 or C-3PO.
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP?s Supply Chain Quarterly and a staff writer for DC Velocity.
The Boston Consulting Group recently predicted that global sales for robots would reach $67 billion by 2025, with the industrial segment being the largest component of that market.
That prediction comes as no surprise to St. Onge Co. consultant Tom Bonkenburg, the leading expert on the use of robotic systems in distribution. A mechanical engineering graduate from the Rensselaer Polytechnic Institute, Bonkenburg has been fascinated by robots since he was a kid.
That fascination led him to a career in material handling. For the past 15 years, Bonkenburg's consulting efforts have focused on supply chain and warehouse design with a strong interest in custom automation and robotics within the distribution environment. He is currently a partner in the St. Onge Co. and heads up that firm's European office.
Bonkenburg recently discussed trends in robotics with DC Velocity Editor at Large James Cooke.
Q: What's the current state of "robotics" in warehousing?
A: The current state of robotics depends on your definition of the word "robot." For many years, we have seen robotic technology in the distribution environment such as AS/RS (automated storage/retrieval systems), AGVs (automated guided vehicles), shuttle systems, transfer cars, palletizers, Kiva, Symbotic, etc. These types of systems are mature, well understood, and installed in DCs around the world. However, if your definition of "robot" includes such terms as multipurpose, adaptable for different types of jobs, redeployable, or even "humanoid," then robotics is not very common in a typical warehouse environment.
Q: Any idea of the percentage of DCs that are using robotics in their operations? A: This is a very difficult question to answer. Our research shows that 15 percent of warehouses are mechanized, and only 5 percent have true automation. Robotic systems would typically fall somewhere within these operations. The key point to note is that 80 percent of DCs are currently manual, creating a large potential opportunity for the future deployment of robotic systems if they could be made capable and affordable.
Q: What types of robotic systems are being used in warehousing, and for what purpose? A: We often see robotic systems such as pallet AS/RS and end-of-line palletizers used in high-volume finished-goods warehouses that are attached to factories. These systems tend to operate for three shifts and handle a limited range of similar SKUs (stock-keeping units) but high volumes. The "goods to picker" technologies such as shuttles are being deployed in some direct-to-consumer piece picking operations with many small orders and large SKU bases.
Q: How about humanoid robotics? How soon do you think we'll see humanlike robots in warehousing? A: Many of the traditional robotic-arm manufacturers are developing two-arm "humanlike" robots for use in assembly operations. These robots are still bolted down within an automated work cell like typical manufacturing robots. So far, few have been installed, but the interest in these new robots is very high. I believe this technology will first take hold in the manufacturing environment and then possibly move to the distribution side of the supply chain. This transition will likely take several years and will require a few more software, sensor, and cost-point breakthroughs. The good news is that several companies are investing serious money into advancing this technology.
Q: Do you know of any companies that are experimenting with humanoid robots in DCs? A: One of the most impressive humanoid robots, Robonaut, was developed by NASA in cooperation with General Motors. They have experimented in the manufacturing environment but as far as I know not in the distribution environment.
Q: There's a company called Rethink Robotics that makes a humanoid robot called "Baxter." Where does development of that technology stand and is it being used in warehouses? A: I am a big fan of Rethink Robotics and their underlying concepts. They have developed a low-cost, easy-to-use software-focused robot that works alongside human workers without fences or safety gates. Unfortunately, their first system, Baxter, is quite slow and has limited capability when it comes to warehousing and many manufacturing operations. There are rumors in the market that their second-generation robot will come out next year, and I am looking forward to seeing if future generations, such as versions three or four, would be more suited to distribution operations.
Q: Are any companies developing humanoid robots for use in warehousing? A: Rethink Robotics has focused its development energy on manufacturing pick-and-place-type applications rather than on the more complex warehouse environment. This market strategy is similar to the path taken by other companies that are currently working on dual-arm robotics. The warehousing industry needs a robotic manufacturer to take the Rethink approach but focus on the distribution side of the supply chain.
Q: What's the biggest obstacle to putting robots in warehouses—cost or technology? A: The truth is that both cost and technology are currently barriers to bringing robots into the warehouse. A few fundamental breakthroughs are necessary to both improve capability and reduce cost. The good news is that mini robotic breakthroughs are happening every year, and their frequency is increasing rapidly. The future path to commonplace robotics will depend on low-cost sensors and inexpensive but massive computing power. Anyone who used to have a rotary phone and now has an iPhone knows that those two key ingredients improve rapidly! I believe that all supply chain professionals should watch the robotics space because we will all be amazed how fast it will change.
Q: What's the biggest opportunity for using robots in warehousing? A: When looking forward to the next likely breakthroughs in robotic technology, I feel that robotic industrial trucks, similar to but more advanced than those made by Seegrid, will be the true entry point for more widespread use of robotics in the warehouse. A truly functional fully robotic forklift could find immediate application in almost any warehouse. If you look at the recent breakthroughs in self-driving cars by companies such as Google, GM, BMW, Audi, etc., it is not hard to picture this happening in the coming years.
Q: You said that robotic industrial trucks would likely be the entry point for robots. Why is that? Why are we likely to see driverless forklifts in a warehouse before humanoid robots? A: While building a fully driverless forklift will be a great challenge, developing a humanoid robot to work in a warehouse will be even more difficult. Modern forklifts offer a robust, inexpensive, and well-designed physical platform to eventually automate with computers, sensors, and vision systems. There are several large forklift manufacturers with strong sales and support networks that could possibly deploy and maintain a robot forklift fleet.
In the case of a humanoid robot, there is still no strong physical hardware platform to start with and few large companies produce them. Most humanoid robots are currently prototypes or focused on light-duty manufacturing. More robust humanoid robotic systems with large support networks need to be developed before we can even think of applying them to warehouse applications. The modern forklift has a head start over humanoid robots since it is already a hardened piece of warehouse equipment with the relatively easy task of moving standard pallets rather than the more difficult humanoid tasks that require the handling of a wide range of dissimilar items.
Q: Do you expect humanoid robots to replace warehouse workers or to work alongside human workers in warehousing? A: My personal belief is that robots will work alongside human workers. People are very, very good, and we keep making them better. Anyone who has spent more than a day in a distribution center will see that it is a very dynamic environment that requires adaptability, flexibility, quick thinking, creative problem solving, and good decision making. Similar to a WMS [warehouse management system] or a conveyor system, robots will be a tool that the smart warehouse team will use to improve its operation. At the end of the day, a supply chain is only as good as the people who work within it, and therefore, the need for talented and motivated people will never disappear.
As U.S. small and medium-sized enterprises (SMEs) face an uncertain business landscape in 2025, a substantial majority (67%) expect positive growth in the new year compared to 2024, according to a survey from DHL.
However, the survey also showed that businesses could face a rocky road to reach that goal, as they navigate a complex environment of regulatory/policy shifts and global market volatility. Both those issues were cited as top challenges by 36% of respondents, followed by staffing/talent retention (11%) and digital threats and cyber attacks (2%).
Against that backdrop, SMEs said that the biggest opportunity for growth in 2025 lies in expanding into new markets (40%), followed by economic improvements (31%) and implementing new technologies (14%).
As the U.S. prepares for a broad shift in political leadership in Washington after a contentious election, the SMEs in DHL’s survey were likely split evenly on their opinion about the impact of regulatory and policy changes. A plurality of 40% were on the fence (uncertain, still evaluating), followed by 24% who believe regulatory changes could negatively impact growth, 20% who see these changes as having a positive impact, and 16% predicting no impact on growth at all.
That uncertainty also triggered a split when respondents were asked how they planned to adjust their strategy in 2025 in response to changes in the policy or regulatory landscape. The largest portion (38%) of SMEs said they remained uncertain or still evaluating, followed by 30% who will make minor adjustments, 19% will maintain their current approach, and 13% who were willing to significantly adjust their approach.
The overall national industrial real estate vacancy rate edged higher in the fourth quarter, although it still remains well below pre-pandemic levels, according to an analysis by Cushman & Wakefield.
Vacancy rates shrunk during the pandemic to historically low levels as e-commerce sales—and demand for warehouse space—boomed in response to massive numbers of people working and living from home. That frantic pace is now cooling off but real estate demand remains elevated from a long-term perspective.
“We've witnessed an uptick among firms looking to lease larger buildings to support their omnichannel fulfillment strategies and maintain inventory for their e-commerce, wholesale, and retail stock. This trend is not just about space, but about efficiency and customer satisfaction,” Jason Tolliver, President, Logistics & Industrial Services, said in a release. “Meanwhile, we're also seeing a flurry of activity to support forward-deployed stock models, a strategy that keeps products closer to the market they serve and where customers order them, promising quicker deliveries and happier customers.“
The latest figures show that industrial vacancy is likely nearing its peak for this cooling cycle in the coming quarters, Cushman & Wakefield analysts said.
Compared to the third quarter, the vacancy rate climbed 20 basis points to 6.7%, but that level was still 30 basis points below the 10-year, pre-pandemic average. Likewise, overall net absorption in the fourth quarter—a term for the amount of newly developed property leased by clients—measured 36.8 million square feet, up from the 33.3 million square feet recorded in the third quarter, but down 20% on a year-over-year basis.
In step with those statistics, real estate developers slowed their plans to erect more buildings. New construction deliveries continued to decelerate for the second straight quarter. Just 85.3 million square feet of new industrial product was completed in the fourth quarter, down 8% quarter-over-quarter and 48% versus one year ago.
Likewise, only four geographic markets saw more than 20 million square feet of completions year-to-date, compared to 10 markets in 2023. Meanwhile, as construction starts remained tempered overall, the under-development pipeline has continued to thin out, dropping by 36% annually to its lowest level (290.5 million square feet) since the third quarter of 2018.
Despite the dip in demand last quarter, the market for industrial space remains relatively healthy, Cushman & Wakefield said.
“After a year of hesitancy, logistics is entering a new, sustained growth phase,” Tolliver said. “Corporate capital is being deployed to optimize supply chains, diversify networks, and minimize potential risks. What's particularly encouraging is the proactive approach of retailers, wholesalers, and 3PLs, who are not just reacting to the market, but shaping it. 2025 will be a year characterized by this bias for action.”
The three companies say the deal will allow clients to both define ideal set-ups for new warehouses and to continuously enhance existing facilities with Mega, an Nvidia Omniverse blueprint for large-scale industrial digital twins. The strategy includes a digital twin powered by physical AI – AI models that embody principles and qualities of the physical world – to improve the performance of intelligent warehouses that operate with automated forklifts, smart cameras and automation and robotics solutions.
The partners’ approach will take advantage of digital twins to plan warehouses and train robots, they said. “Future warehouses will function like massive autonomous robots, orchestrating fleets of robots within them,” Jensen Huang, founder and CEO of Nvidia, said in a release. “By integrating Omniverse and Mega into their solutions, Kion and Accenture can dramatically accelerate the development of industrial AI and autonomy for the world’s distribution and logistics ecosystem.”
Kion said it will use Nvidia’s technology to provide digital twins of warehouses that allows facility operators to design the most efficient and safe warehouse configuration without interrupting operations for testing. That includes optimizing the number of robots, workers, and automation equipment. The digital twin provides a testing ground for all aspects of warehouse operations, including facility layouts, the behavior of robot fleets, and the optimal number of workers and intelligent vehicles, the company said.
In that approach, the digital twin doesn’t stop at simulating and testing configurations, but it also trains the warehouse robots to handle changing conditions such as demand, inventory fluctuation, and layout changes. Integrated with Kion’s warehouse management software (WMS), the digital twin assigns tasks like moving goods from buffer zones to storage locations to virtual robots. And powered by advanced AI, the virtual robots plan, execute, and refine these tasks in a continuous loop, simulating and ultimately optimizing real-world operations with infinite scenarios, Kion said.
Following the deal, Palm Harbor, Florida-based FreightCenter’s customers will gain access to BlueGrace’s unified transportation management system, BlueShip TMS, enabling freight management across various shipping modes. They can also use BlueGrace’s truckload and less-than-truckload (LTL) services and its EVOS load optimization tools, stemming from another acquisition BlueGrace did in 2024.
According to Tampa, Florida-based BlueGrace, the acquisition aligns with its mission to deliver simplified logistics solutions for all size businesses.
Terms of the deal were not disclosed, but the firms said that FreightCenter will continue to operate as an independent business under its current brand, in order to ensure continuity for its customers and partners.
BlueGrace is held by the private equity firm Warburg Pincus. It operates from nine offices located in transportation hubs across the U.S. and Mexico, serving over 10,000 customers annually through its BlueShip technology platform that offers connectivity with more than 250,000 carrier suppliers.
Under terms of the deal, Sick and Endress+Hauser will each hold 50% of a joint venture called "Endress+Hauser SICK GmbH+Co. KG," which will strengthen the development and production of analyzer and gas flow meter technologies. According to Sick, its gas flow meters make it possible to switch to low-emission and non-fossil energy sources, for example, and the process analyzers allow reliable monitoring of emissions.
As part of the partnership, the product solutions manufactured together will now be marketed by Endress+Hauser, allowing customers to use a broader product portfolio distributed from a single source via that company’s global sales centers.
Under terms of the contract between the two companies—which was signed in the summer of 2024— around 800 Sick employees located in 42 countries will transfer to Endress+Hauser, including workers in the global sales and service units of Sick’s “Cleaner Industries” division.
“This partnership is a perfect match,” Peter Selders, CEO of the Endress+Hauser Group, said in a release. “It creates new opportunities for growth and development, particularly in the sustainable transformation of the process industry. By joining forces, we offer added value to our customers. Our combined efforts will make us faster and ultimately more successful than if we acted alone. In this case, one and one equals more than two.”
According to Sick, the move means that its current customers will continue to find familiar Sick contacts available at Endress+Hauser for consulting, sales, and service of process automation solutions. The company says this approach allows it to focus on its core business of factory and logistics automation to meet global demand for automation and digitalization.
Sick says its core business has always been in factory and logistics automation, which accounts for more than 80% of sales, and this area remains unaffected by the new joint venture. In Sick’s view, automation is crucial for industrial companies to secure their productivity despite limited resources. And Sick’s sensor solutions are a critical part of industrial automation, which increases productivity through artificial intelligence and the digital networking of production and supply chains.