The age of robots is here and in full throttle Africa is embracing this technology, pertinently in the rapidly evolving warehousing and logistics sector. Industrial robots are set to take over this lucrative field, performing various tasks and automating warehouse and storage processes. The global industrial robots market size is set to grow at a compound annual growth rate (CAGR) of 14.7% to $6.18B in 2023 from $5.39 of 2022. At breakneck speed Africa is drawing deeper into the whirlpool of the fourth industrial revolution (4IR); marked the rapid proliferation of robotics and Artificial Intelligence (AI) startups in the continent. In light of this, the Uniccon Group based in Nigeria made an indelible mark in November 2022, by building Africa’s first humanoid robot, a 6-foot-tall multilingual human-like robot called Omeife, launched by Vice President Yemi Osinbajo.
The need for industrial robots in the warehousing and storage market, has been prompted by the accelerated movement of goods inside the warehouse. By the same token, this has been fueled by the massive mushrooming of the e-commerce industry in the continent, coupled with the urgency to deliver within the shortest time. The need for speed is critical and industrial robots have been identified as the viable solution to seal this deficit by expediting warehouse and storage processes.
This has come as unsettling news for many workers in the sector and herein the conflict lies due to the fear of being rendered irrelevant, redundant and ultimately getting laid off. Industrial robots have been deemed as ‘too much technology’ in most African countries that continue to grapple with the existential quandary of unemployment, which has in tandem deepened poverty levels.
Just how much technology is too much technology? Is Africa’s warehousing and logistics market ready for industrial robots? Is this a bane or boon for the emerging sector? On the flip side, will this high-level technology adoption increase both power and internet connectivity across the continent?
Warehouse designs have been changing pertinently in terms of technology, adopting more automated processes. In the wake of technology advancements, inevitably the sector had to shift from the traditional makeshift “go downs” for the storage of goods to world-class warehousing platforms that provide modern space-maximizing designs, connectivity, security and reliable power. This type of warehousing is driving international investment and giving local businesses the facilities they need, to grow and tap into wider markets. Best practices in the warehousing and logistics sector, have especially been bolstered by the utilization of data-driven solutions, such as AI. In parallel, this has aided in cutting back on operating costs, freeing employees from routine tasks.
Currently, markets across the globe have been greatly affected the supply chain disruption that emanated from the Russian –Ukraine war last year, which began as most African countries were striving for an economic rebound from the throes of the Covid-19 pandemic.
The season has been marked by historic inflation levels, a surge in commodity prices and economic sanctions; the warehousing and logistics sector has not been left unscathed by this quagmire.
According to a recent supply chain trends report compiled by the US-based Association for Supply Chain Management (ASCM), in partnership with the premier Elite channel SAPICS; the implementation of predictive and prescriptive analytics as well as advances in big data, algorithms and robotics will have wide-reaching effects in 2023. Furthermore, the report predicts that the year will be marked by more supply chain transformation via intelligent robotics.
Over and above, the ASCM report underlines that companies will be compelled to tap into next-generation robotics in the wake of supply chain disruptions, surging demand and labour shortages. Driven by rapid technological advancements and greater affordability, both mobile and stationary robots will assist workers with warehousing, transportation and last-mile delivery tasks.
Moreover, safer and more efficient warehouses with fewer people in them will drive down costs. Although the initial capital investment will be high, the cost savings are primed to be dramatic.
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Understanding Industrial Robots
According to the 2023 Warehousing and Storage Robots Global Market Report, industrial robots are categorized by products, function and application. In terms of products they include Mobile Robots, Articulated Robots, Cylindrical Robots, SCARA Robots, Parallel Robots, and Cartesian Robots. With the view of the functions performed, industrial robots Pick and Place; Palletize and De-Palletize; Transport and Package. Into the bargain, by application they are adopted in various sectors such as E-Commerce, Automotive, Consumer Electronics, Food and Beverage, Healthcare, among other areas. For instance, in 2022, Geodis signed an expanded agreement with Locus Robotics, an autonomous mobile robots (AMRs) supplier, to deploy 1,000 AMR robots at warehouses globally.
A mobile robot is a machine that is operated by software and uses sensors, as well as other technology to identify and move about its surroundings. They operate by combining artificial intelligence (AI) and physical robotic elements such as wheels, rails, and legs. Major players in the industrial robot market include ABB, Amazon, Yaskawa Electric Corp., Honeywell Intelligrated, Omron Corporation, Fetch Robotics, Inc., Fanuc Corp., Bastian Solutions, Yamaha Robotics, and Siemens AG.
In order to reduce the pick-up time of items, the picking process in warehouses is being rapidly enhanced by automation, as e-commerce deepens adoption. According to McKinsey, Africa’s e-commerce sector has projected annual sales of $75 billion by 2025.
In the same vein, a study by the Mace Group, indicates that the Covid-19 pandemic drove a surge in demand for online goods, in tandem creating opportunities for the warehousing sector. Furthermore, e-commerce revenue could nearly double to $46 million by 2025, creating further private sector demand for warehousing.
The industrial robot gathers items and brings them to a central location, where an employee can fulfil orders fast. By way of example Ocado, a British supermarket started using a grid of picking robots in the warehouse that picks the ordered items and delivers them into crates, which are moved onto conveyors and carried to shelves, where an employee picks the crate and delivers the order to the customer helping in delivering the groceries fast.
The industrial robots in the warehousing and storage market consist of sales of delta robots, polar robots, and collaborative robots. By the same token, values in this market are factory gate values, which refers to the value of goods sold by the manufacturers or creators of the goods, whether to other entities such; downstream manufacturers, wholesalers, distributors and retailers or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.
The market value is defined as the revenues that enterprises gain from the sale of goods or services, within the specified market and geography through sales, grants, or donations in terms of the currency. The earnings for a specified geography are consumption values that are generated by organizations within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.
However, affordability of industrial robots poses a great challenge as they are largely capital intensive, given their utilization of the latest technology and sensors to operate efficiently and withstand massive weights. In view of this, a rough estimate of the cost of the setting up a warehouse operation of 50-100 robots, ranges between $2M to $4M which is a high investment. Consequently, these high costs limit the growth of the market as the easy adoption of industrial robots is thwarted.
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Overview of Africa’s warehousing and logistics market
The prime warehousing and logistics market has been registering exponential growth in certain pockets of sub-Saharan Africa, according to a recent Knight Franks’ report. Some common types of warehousing options in Africa include, Bonded warehouses which are owned by government or private companies with a government license; Public warehouses, these are owned and regulated by government bodies that charge rent; Private warehouses, owned and managed by manufacturers or by specialized developers and logistics parks operators.
Logistics in Africa has increased employment opportunities. For instance in Tema, Ghana, logistics company Agility Africa hires 100 percent of its employees locally, and additionally offers vocational and technical training to local students to create its own skilled labor force. For a long time now, the food and beverages market has been the dominant user of the warehousing market in Africa.
East Africa is projected to lead in the demand for industrial space, which is set to grow at 6 percent annually in Ethiopia, and at 5.1 percent and 3.6 percent in Uganda and Kenya, respectively. In response to the growing demand for warehousing, North Africa is expected to experience a gradual growth over the next 10 years. Egypt and Morocco currently have higher demand estimates than East and West Africa, in terms of size but are set to grow at a slower rate.
The African Continental Free Trade Area (AfCFTA) has additionally been driving demand for high-quality warehousing throughout the continent. Africa officially became a single free trade zone in January 2021, connecting Africa’s 1.3 billion people and a combined GDP of more than US$3 trillion. In August 2022, seven countries were selected to provisionally start trading goods under the AfCFTA on a pilot basis. They include Rwanda, Cameroon, Egypt, Ghana, Kenya, Mauritius, and Tanzania.
Some common types of warehousing in Africa include Logistics Parks, which are typically areas designed to specifically to consolidate and centralize storage, distribution, processing, assembly, light manufacturing and other activities that require warehousing. Modern logistics parks integrate easily with transportation networks so that goods move easily to and from intended markets. Additionally, ’Ready-built warehousing’ is available, which offers more predictable expenses given that the landlord absorbs the cost of land, permits, and other regulatory requirements.
Flexible leasing is also a viable option as it allows for letting of warehouse space according to need, via flexible leases which bolsters the growth of businesses. For instance, Agility Africa offers flexible leases from six months to five years, with sizes from 500 square meters to more than 10,000 square meters. Besides, another merit of leasing space in a logistics park involves stability in operating expenses, such as electricity or waste management.
There’s rapidly improving infrastructure and favorable government regulations. With perspective that the warehousing and logistics sector is reliant on quality infrastructure, African governments with the support of the World Bank are creating seven industrial corridors, which connect African regions by rail, by road, and by sea.
The Knight Frank report forecasts that the goal of Africa’s industrial corridors is to promote investment and development, laying the groundwork for more than a million square meters of purpose-built warehousing. Companies such as Agility have built logistics parks along these prime industrial corridors, offering ready access to major ports and roadways.
The report reveals that there is a guaranteed return on investment (ROI), as industrial assets such as warehouses offer an average 12 percent yield, which is double the yield of residential and more than the 9 percent yield of retail or office space. For instance, Agility is developing more than one million square meters of warehousing in upcoming industrial areas across Sub-Sahara Africa. This includes new facilities in the sub-Saharan capitals of Accra, Maputo, and Abidjan.
Furthermore, the snowballing of Special Economic Zones (SEZs) across the continent is greatly contributing to the warehousing sector, as many African governments are facilitating development of logistics parks, within SEZs to attract foreign investors.
For instance, many international energy companies have set up shop in the Agility Logistics Park in Ghana. Its warehousing meets international standards, important for oil and gas, mining, automotive, fast-moving consumer goods, and electronics companies. Albeit at its infancy stage, industrial robots will revolutionize the warehousing and logistics sector in Africa.
