Automated Warehouse Robots Made in China
“I Worked at an Amazon Fulfillment Center; They Treat Workers Like Robots,” was the title of an article by Time Magazine which went on to talk about how workers were having a hard time enduring “the agony of walking 15 miles a day and doing hundreds of squats.” They shan’t be worried about that for too much longer as automated warehouse robots are going to step right in and fill those tired shoes. It’s not a fulfilling occupation for humans – shuffling boxes of stuff around warehouses all day. Last year we looked at 7 Warehouse Robots for Retail Automation noting that yesterday’s “large, dangerous mechanical monsters” are being tamed by “powerful but increasingly inexpensive sensor systems and the magic of artificial intelligence.” Today, we’re going to look at a suite of industrial robots for warehouses being built by a Chinese firm called Geek+.
Automated Warehouse Robots Made in China
Founded in 2015, Beijing startup Geek+ has taken in nearly $390 million in funding to become “the world’s leading provider of advanced robotics and AI technologies applied to logistics,” having successfully completed over 200 projects across four continents, deploying more than 7,000 robots.
Update 06/18/2020: Geek+ has raised $200 million in Series C funding to ramp up its robots-as-a-service business model and expand partnerships. This brings the company’s total funding to $439.4 million to date.
Their new Nanjing factory is entirely comprised of “robots making robots” which almost doubles traditional manual production capacity. A single shift of annual production is expected to produce more than 10,000 robots of varying types such as the ones seen below:
Solutions like the “picking system” seen above can be deployed quickly (around 3 months), save lots of money (labor decreases between 50 – 70%), and provide a return on investment in a short period of time (2-3 years payback period). Examples abound of companies adopting warehouse robotics solutions to do things better and faster – like Denmark logistics provider DSV.
Robots Add Warehouse Space
Founded in 1976, DSV is a Danish provider of logistics with 47,000 employees who help move products over land air and sea. A small part of their operation can be found in a 45,000 square foot Hong Kong warehouse, where workers walk around fulfilling orders from a total population of 6,000 different tiny cosmetic items. That was before Geek+ deployed an automated solution – 42 picking robots, 739 racks, and 9 workstations. Now, when DSV receives a clients’ order, Geek+ picking robots bring the right rack with the right number of items for workers to fulfill orders. As a result, humans no longer needed to wander the warehouse floors and productivity doubled with improved accuracy.
Aside from the obvious labor cost savings, the bin location adjustments – robots don’t need much room to walk around – resulted in a 200% increase in storage capacity. Given the exorbitant price of Hong Kong commercial realty, this may be the single best benefit of adopting the Geek+ picking system. But this example isn’t what really makes Geek+ exciting. The real potential here is something Geek+ calls “flexible infrastructure”.
Flexible Automated Warehouses
The Geek+ robotic offering is an entire platform that transforms today’s “automated warehouse” into tomorrow’s “flexible infrastructure”. This means you can have an entirely empty warehouse one day, and then by the second day, have a fully roboticised warehouse, complete with picking stations. Couple that flexibility with an “as a service” business model and this means far less capital needs to be committed to building out warehouses. Compare this to “mechanized warehouse automation” which requires investments in fixed infrastructure such as conveyors and automated storage and retrieval systems.
To understand the potential impact of warehouse automation we can – again – turn to the world’s most populous country where single people enjoy their freedom by spending money. Singles day or Guanggun Jie is the largest shopping day in the world falling on November 11th. (The date “11/11” represents lots of “lonely ones.”) The holiday is promoted heavily by Alibaba (BABA) which took in 812 million orders for Single’s Day 2017. What’s remarkable is how quickly they were able to ship these orders compared to just four years ago.
Using warehouse automation technologies, Alibaba was able to deliver about three times as many orders at about a third of the cost.
We talked before about how the Chinese and the Americans have different perceptions about their relative position in global technology leadership, but there’s no doubt that China is the place to be if you want to sell warehouse robots. According to the Financial Times, China is “poised to dominate global e-commerce” going forward as they presently handle nearly half the world’s e-commerce.
E-commerce is a core driver behind warehouse systems like the one offered by Geek+ which has enough potential domestically to avoid any geopolitical risk as the United States populations sour on China, though it’s doubtful any of them have ever set foot in the place. If the U.S. wants to stay competitive, they’ll need to adopt warehouse automation as well. According to information provided by Geek+, less than one-fifth of the 20,000 warehouses in the United States utilize advanced automation. In fact, just over half are still manual.
Geek+ goes on to say that “according to research company Tractica, unit sales of warehousing and logistics robots will grow rapidly over the next five years from 194,000 units in 2018 to 938,000 units annually by 2022, with the rate of growth slowing after 2021 as many major players will have adopted robotic systems by then.” For companies like Geek+ that offer a “warehouse robots as a service” business model, this spending will be reflected in an annual “run rate” which will provide a steady stream of high-margin revenues that will persist for decades to come.
Amazon’s plan is to stop filling new job requisitions for packers and the problem of unhappy workers will take care of itself. This may be just another example of robots doing jobs nobody else wants to do, but there’s a much bigger problem at stake. Social scientists have shown that if you stratify a society based on IQ, you will get a bell-curve distribution of people. Those on the lower end of that distribution are limited in the types of jobs they can perform. In other words, robots are increasing the IQ requirements for your average job. That may make people uncomfortable, but it’s a reality we’ll need to face if we want to minimize the impact of Industry 4.0 on global populations. There is no clear answer to the problem, but what we can be sure of is that tomorrow’s “flexible warehouses” will have far fewer humans than they have today.
This little-known grocery technology company is deploying retail robotics technology to help companies like Kroger compete with Amazon. So we bought the stock. Become a Nanalyze Premium annual member today to see the ~35 holdings in our tech stock portfolio.