How we love a new year! It brings the promise of fresh hopes and new beginnings.
So what can we expect for 2016? Here are some thoughts on what this year will bring for the economies within Asia and the impact on the industry we are in.
Economically, growth in the region will remain robust, though it is not without its challenges. China’s growth is easing affecting economies across the globe, but we are seeing a pick-up in India, Indonesia, Philippines, and Vietnam.
Asia is becoming more urban, which has implications for the FMGC and retail markets. Of the 22 mega-cities with populations of over 10 million each, 12 of these are in Asia, and the number is growing. We can expect a rise in discretionary spending, which will drive the growth in modern retail. We can expect more investment in urban infrastructure as well as retail space, which in turn will bring new retailers to the region.
Online sales will continue to spiral upwards, especially in Asia. It is projected to increase at a compound annual growth rate of 18.5%, surpassing the global average, to reach US$1.3 trillion by 2019. China has already overtaken the US as the world’s biggest online retail market on higher internet penetration and smartphone ownership.
What are the implications for warehousing and storage?
We can expect the industry to expand to accommodate the increasing demand.
As volumes expand, and the labour market becomes tight and expensive, traditional and very mechanical type of operations will give way to automation.
The spike in on-line sales, which has resulted in exponential increase in small individual orders, proliferation in SKUs and increasing service level expectations, will make it necessary for fulfillment and distribution centers to adopt some form of automation and intelligence.
The business case for any investment is becoming much easier to make. Studies have shown the shift from man to goods to goods to man storage systems can result in a quantum leap in productivity and increase in warehouse efficiency, as walking, searching and selecting can take up 75% of an order picker’s time. By eliminating all three you can raise productivity by a factor of four.
Industry majors are setting their sights on robotics to raise their game, as robotics and automation technologies such as automated guided vehicles, support zero-defect logistics processes and enable new levels of productivity. With better robotic performance, rapid progress in grip and sensor technology, and an improving price/performance ratio, we can expect higher take up of dynamic systems and technologies in different operational areas.
In more mature markets such as Australia where labour is scarce and costs are high, fully automated case picking systems are already in operation.
For most of Asia, however, we expect automation adoption to be gradual. Already we are seeing companies consolidating their fast moving products in selected area where lanes of pallets are stored on either flow racks or channel storage creating a picking tunnel where operatives can either pick to a pallet or to a belt reducing travel time increasing the picks per hour.