Navigating the evolving landscape of 2024 warehouse trends

Trend/prediction #1

E-commerce will continue to fuel the fulfillment footprint, driving investments in new technology and operating concepts for direct-to-consumer fulfillment.

From third-party logistics providers to general merchandisers, grocers and manufacturers, the need to rethink how direct-to-consumer fulfillment can be done in the most efficient manner will continue to be a trend in 2024—with each segment taking a unique approach.  E-commerce exploded with the pandemic, and its continued growth means warehouse space will grow too, albeit at a slower pace.

The general rule of thumb is that for every $1bn in online sales, 1 million square feet of warehousing is needed to support it. As e-commerce continues to grow, warehouse space is expected to top 6 billion square feet in 2025. A pause in hyper-growth provides the opportunity to equip the existing warehouse footprint with technology that supports scalability in 2024.

Trend/prediction #2:

Look for dramatic physical transformations in warehouses.

Warehouse operators need to be flexible and agile to prepare for “what’s next.” Expect warehouse operators to transform warehouse space to meet the changes dictated by the continued growth of e-commerce shopping and challenges accessing qualified labour. As retailers carry less inventory on shelves and fulfill more orders directly from the warehouse, operators must be equipped to meet increased demand and create more shelf space, reorganise inventory movement flows, and introduce more flexible automation into the mix to replace fixed conveyors that use valuable warehouse floor space.

Globally, there were 150,000 warehouses at the end of 2020, roughly 25 billion square feet of space. By the end of 2025, there will be nearly 180,000 warehouses around the world with China, the United States, Japan, India and Germany accounting for more than half of the global warehouse building stock.

Trend/prediction #3:

Gaps will widen between large, medium and small warehouses.

Existing gaps between large, medium and small warehouses will continue to expand given the current macroeconomic environment. Larger, typically multinational, tier-one warehouse organisations will invest more in technology, more often, than their smaller, commonly regional or local tier-two and tier-three players. This will further expand the gap between them. But don’t assume smaller warehouse organisations don’t recognise the importance of tech investments. Rather, with little or no cash reserves and more expensive capital as seen today, It’s simply easier for a larger-scale, tier-one organisation to secure funding for its investments in technology.

A tighter economy requires smaller warehouse organisations to be more conservative in their expenditures, including for tech. They are more apt to refresh their warehouse space footprint over investing in more technology. The end result is essentially two development speeds. Warehouses that can invest in technology will come out stronger. Companies that are unable to secure investments funds won’t be able to realise the full benefits of technology until the economy improves.

Trend/prediction #4:

More automation, more augmentation for more higher-value human roles.

Warehouse operations are ripe for automation and a greenfield for robots. Only a handful are rumored to be nearing full (“dark warehouse”) automation. Few are employing automation tools at the level needed to augment labour shortages and shorten fulfillment lead times. A high cost of capital will impact all return on investment (ROI) calculations. However, current turnover rates leave little to no room to slow down investments. Business-critical use cases still need to be performed, if no labour is available, they might be divorced from traditional pay-back calculations and drive even more automation.

As retailers respond to fluctuating consumer demand, it also impacts manufacturers – they will need to work to align their technological capabilities so storage and loading areas are in lockstep with production lines and retail stores. Robot-powered automation will lead the way alongside critical mobility, scanning, printing and location technologies. Automated pick-to-light, voice, automatic storage and retrieval systems (ASRS) along with sortation and conveyors will remain staples. Warehouse workers will take on the higher-value tasks that require a human touch—decision-making and dexterity that only humans can deliver.

Warehouse leaders will utilise their front-line workers for customer-centric tasks focused on quality assurance and accuracy, cost control and space utilisation. Prioritising customer order accuracy, returns, expedited put away, trailer loading and utilisation over moving materials across an expansive warehouse footprint will prevail when given the choice and the deployment of autonomous mobile robots into the environment.  In fact, the more the low-value-added work is removed from the process with automation, the more important it will be to equip labour with the right technology for the tasks at hand.

Trend/prediction #5:

Labour will be optimised with modern mobility and decision automation.

The outside world isn’t going to wait for warehouse operators to change what’s happening inside the four walls. Unfortunately, customers will go elsewhere if they have a poor experience receiving their promised goods… and they may not return. Warehouse operations are very much a central hub to business operations—from being linked to the global supply chain and inventory management to customer satisfaction. Without intelligent warehouse operations, goods can’t be manufactured, and orders can’t be filled.

Warehouse operators will push to increase their intelligence and visibility to subsequently advance asset utilisation and operational agility. Even shaving seconds off current processes will tremendously increase order processing capacity, building a strong case for warehouse automation and mobility. This will drive investments in mobility solutions that are powerful, easy, intuitive and even hands-free. We will also see increased adoption of augmented or assisted reality applications, artificial intelligence tools, dynamic communication and collaboration tools, track and trace, location and environmental sensing, and automated scanning solutions.