Automation is Filling the Labor Gap Ahead of Peak Season

The way we think about peak season is changing. What was once a Q4 holiday rush is now spread throughout the year in pockets of demand based on mass sales events such as Amazon Prime Day. To keep up with this demand and quickly changing consumer buying habits, many shippers are looking to automation.

“The businesses that we’re engaging with, they’re kind of getting away from the strategy that they can just bring in hundreds of people to help them through peak and then send them on their way,” says Michael Johnson, vice president of business consulting, Deposco. “They want to make more long-term investments, and the folks that they're bringing in want to have an idea of how they can grow with that business.”

A study published by Gartner’s Dwight Klappich found that by 2027, over 75% of companies will have adopted some form of cyber-physical automation within their warehouse operations. In addition, 98% of respondents said they are either currently investing, or planning to invest, in cyber-physical automation within the next two years.

Labor availability and constraints are the primary drivers for investing in automation, forcing companies to seek flexible solutions. For more than four out of 10 respondents (43%), transportation and logistics labor shortages will accelerate technology investments (as opposed to only 11% last year) to help fill in the gap.

Ahead of this year’s peak season, UPS and FedEx recently announced automation investments to help streamline their operations and deliver packages faster and more efficiently. UPS plans to use automation to reduce nondriver headcount within its operations and lower labor costs beginning in year two of the company’s new labor contract. FedEx Ground is deploying technology company Berkshire Grey’s robotic product sortation and identification systems to sort small packages for daily operations.

Another study from Deposco found that when navigating peak season, many are first investing in warehouse management (WMS) and order management systems (OMS), with 92% saying these solutions will prepare their warehouse operations to be more profitable during peak season.

Because a WMS or OMS serves as the foundation for inventory, operations, and other technology systems, getting this type of solution in place is often the first step to deploying automation, which more than half (55%) of respondents are prioritizing this year.

Labor availability and constraints are the primary drivers for investing in automation, forcing companies to seek flexible solutions. For more than four out of 10 respondents (43%), transportation and logistics labor shortages will accelerate technology investments (as opposed to only 11% last year) to help fill in the gap. These investments include things like robotics, wearables, artificial intelligence (AI), and augmented and virtual reality.

Automation is also being used to upskill and retain the current workforce.

“Automation certainly influences the way in which businesses look at labor,” says Johnson. “Not just from a reducing headcount perspective, but maybe more so by doing more with the existing workforce or allowing the existing workforce to grow and develop new skills they may have not had an opportunity to do beforehand.”