United Parcel Service just opened its largest warehouse, a sweeping 20-acre facility on the outskirts of Louisville, Kentucky. But don’t expect the break room to get 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 handle tasks like lifting and reduce the need for manual labor. That level of automation means UPS can run the warehouse with about 200 workers, which are expected to increase over time.
“It’s a linchpin of our strategy,” Bill Seward, president of UPS Supply Chain Solutions, said of the automated space. “It’s important to be able to deliver best-in-class cost and best-in-class service for your customers.”
Large operators, including UPS and GXO Logistics Inc., are using the draw of automation to grab market share from companies that run older facilities and count more on human workers. The robots increase the speed and accuracy of processing orders, keep better track of inventory and save space by fetching products that are stacked higher in the building, Seward said.
Sales at UPS’s logistics business have climbed 11% in the first nine months of this year even as overall sales for Supply Chain Solutions, which also includes freight forwarding and truck brokerage, fell more than 22% amid a cargo slump. Seward said the logistics business has twice the operating margin as its typical competitors, but didn’t provide a number.
UPS declined to say how many fewer workers are needed in an automated facility compared with a more manual one. Kentucky Governor Andy Beshear’s administration said the facility could create 500 distribution and logistics jobs.
The robots help increase worker retention by about 30% and reduce injuries from lifting heavy objects and repetitive motion by 40%, Seward said. The warehouse workers are separate from UPS’s main small-package delivery business and are non-union employees.
“They’re performing extremely effectively because the automated facilities have very high service and speed performance,” he said.