United Parcel Service has just opened its largest warehouse, a sprawling 20-acre facility on the outskirts of Louisville, Kentucky. But don’t expect the break room to be too crowded.
The package-handling giant plans to fill the $79 million facility with more than 3,000 robots by the end of next year to perform tasks such as lifting and reduce the need for manual labor. This level of automation means UPS can run the warehouse with about 200 employees, and that number is expected to increase over time.
“It’s a pillar of our strategy,” Bill Seward, president of UPS Supply Chain Solutions, said of the automated space. “It’s important to be able to provide your customers with best-in-class costs and best-in-class service. »
Major operators, including UPS and GXO Logistics Inc., use the drawing of automation to capture market share from companies that operate older facilities and rely more on human workers. Robots increase the speed and accuracy of order processing, provide better inventory tracking and save space by retrieving products stacked higher in the building, Seward said.
Sales at UPS’s logistics business soared 11% in the first nine months of this year, even as overall sales at Supply Chain Solutions, which also includes freight forwarding and truck brokerage, fell by more than 22% in a context of falling freight. Seward said the logistics sector had an operating margin twice that of its typical competitors, but did not provide a figure.
UPS declined to say how many fewer workers are needed in an automated facility compared to a more manual facility. Kentucky Gov. Andy Beshear’s administration said the facility could create 500 jobs in distribution and logistics.
Robots help increase worker retention by about 30% and reduce injuries related to heavy lifting and repetitive motions by 40%, Seward said. Warehouse employees are separate from UPS’s core small package delivery business and are non-union employees.
“They operate extremely efficiently because automated facilities provide very high service and speed performance,” he said.