Human vs Machine Efficiency Competition... How to Open the Era of 'Robot Logistics Centers'? [Im Ju-hyung's Tech Talk]

E-commerce Companies Focus on 'Robot Logistics'
UK Ocado CFC, US Amazon Shelf-Organizing Robots
Safer and More Efficient Than Human Workers
'High Costs' Hinder Widespread Adoption
Experts Say "Robots Struggle Against Cheap 'Humans'"

Inside view of Ocado's robotic logistics center 'CFC'. / Photo by Ocado YouTube video

[Asia Economy Reporter Lim Juhyung] Labor-intensive industries such as logistics and delivery face various challenges including harsh working conditions and facility safety. To address these issues, delivery companies have aggressively adopted IT and robotics technologies. Some companies have even completed fully automated 'robotic logistics centers' that require no human intervention.

Following a fire at an e-commerce company's logistics center in Icheon, Gyeonggi Province on the 17th, warehouse facility safety in logistics companies has emerged as a new risk.

In fact, logistics center fires are not a recent issue. In April last year, a fire broke out at a new construction site of the Nam Icheon logistics center, resulting in 38 deaths and 10 injuries. Given that hundreds of workers are deployed at once and work long hours in logistics centers, a large fire could lead to significant damage.

Meanwhile, the intense labor demands in the logistics industry have also been pointed out as a problem. According to data from the 'Delivery Workers Overwork Death Countermeasures Committee' (Countermeasures Committee), 16 delivery workers died from overwork just last year.

Unsorted postal packages piled up at the post office. / Photo by Yonhap News

The Countermeasures Committee identified the recent trend of 'rapid delivery services' in the delivery industry as a cause of worker overwork. To achieve fast delivery, sorting, packing, and preparing shipments must be completed within a day, increasing the intensity of night and early morning shifts for workers.

This labor intensity issue is not only controversial in domestic companies. Amazon, the world's largest e-commerce company employing over 370,000 employees in the U.S., has also faced criticism from local civic groups and think tanks due to its high labor demands.

As a result, some e-commerce companies are accelerating 'logistics automation.' They plan to fill logistics centers with robots, conveyor belts, and other equipment to reduce human worker density and lower labor intensity.

British e-commerce company Ocado, which is making massive investments in developing robotic logistics centers / Photo by Ocado

The most representative example of a 'robotic logistics center' is the UK grocery-specialized e-commerce company 'Ocado.' Ocado is a logistics and technology company developing both e-commerce and robotic logistics centers simultaneously, gaining global logistics industry attention for creating robots that automatically organize delivery items while moving on a grid-shaped rail system.

Ocado's robotic logistics center is called the CFC (Central Fulfilment Center). Inside the CFC, instead of aisles for people, square-shaped rails are stacked neatly, and hundreds of small box-shaped robots move along these rails to organize delivery items. These robots are controlled by artificial intelligence (AI) developed by Ocado, and human workers only pack the items brought by the robots into boxes and deliver them to customers. This automates the most labor-intensive part of the delivery process: sorting items.

Existing e-commerce companies like Amazon are trying hybrid models where humans and robots work together instead of fully automated logistics centers. According to U.S. 'CNBC' news on the 13th (local time), Amazon recently piloted robots named 'Ernie' and 'Bert' that take items down from shelves.

Testing the automated shelving robot 'Burt' by Amazon / Photo by Amazon YouTube capture

These robots perform shelf item placement tasks that could be dangerous for humans, minimizing the risk of injury to Amazon employees.

Robotic logistics centers have advantages in minimizing safety issues and labor burdens for human workers, and they are much more efficient than logistics centers staffed solely by humans.

Previously, Ocado's CFC in Andover, UK, was completely destroyed by a large fire in 2019. However, since there were no employees inside the logistics center at the time, the fire was extinguished without any casualties.

Also, robots can operate freely in relatively narrow spaces compared to humans, so even if the logistics center is downsized, the volume of orders that can be processed does not decrease. Based on this, Ocado has installed 'mini logistics centers' in the heart of major cities since last year and launched 'Ocado Zoom,' an ultra-fast delivery service that completes delivery within just one hour after ordering.

However, despite these advantages, robotic logistics centers have not yet completely replaced human workers.

Reference photo. On the morning of the 7th of last month, employees are carrying goods at a courier logistics center in Seoul. The photo is unrelated to specific expressions in the article. / Photo by Yonhap News

First, human labor is cheaper than robots in terms of labor costs. Experts point out that this could delay the automation of logistics center operations.

In April last year, the UK tech media 'Wired' stated, "The biggest obstacle threatening Ocado's future is cheap humans," adding, "Ocado spent two years researching robots capable of one-hour delivery service, but rival companies simply hired tens of thousands of riders to do the work."

This means that compared to the costs of robot systems for delivery and manufacturing, employing human workers is much more efficient.

Regarding this, Tom Brereton, an analyst at UK consulting firm 'GlobalData,' criticized, "Robot technology is very impressive but also rigid," and said, "Robots are competing in a market flooded with 'cheap labor' like a rising tide."