FedEx looks to boost robot use
Researchers warn it could lead to big job loss
FedEx and other companies are buying more industrial robots than ever, according to a leading robotics association.
The trend comes as the remnants of the COVID-19 pandemic and high rates of employee resignations have made it harder for companies to hire human workers.
“Well, I think the labor shortage we’re seeing has accelerated the adoption of robots,” said Jeff Burnstein, president of the Michigan-based Association for Advancing Automation. It’s a national organization that promotes the robotics industry and works with big companies like FedEx that use the devices.
“We talked to companies in every industry, not just FedEx, who are saying that they can’t find people. And in the business of warehousing and logistics, that’s a real problem.”
Companies bought a record number of industrial robots in North America last year: 39,708 units, at a value of $2 billion, the association said. That’s a 14% increase over the previous high in 2017.
Researchers at the University of Memphis and other observers have expressed concerns that in the long run, automation of the logistics industry could cause many Memphians to lose their jobs, leading to social and economic disruption.
FedEx’s decisions matter because the company is the city’s largest employer, with more than 30,000 people working at various facilities in the Memphis area.
“The innovations that FedEx is putting in place are designed to both increase capacity across our network to handle unprecedented demand, and improve the safety, security and timeliness of deliveries,” FedEx said in a statement “. . . We will continue to share updates on many of these initiatives and as you can imagine, innovation – including
automation and robotics – will be discussed at further length at the FedEx investor meeting in late June 2022.”
The statement did not address the question of how the adoption of these measures would impact the human job count.
FedEx has pursued the use of robots for years – for instance, its experimental delivery robot Roxo, which looks something like a miniature refrigerator on wheels, made a memorable appearance in 2019 on “The Tonight Show Starring Jimmy Fallon.” The robot is still being tested “for potential use cases in Plano, Texas and internationally,” the company said in a statement.
Advances within the robotics field within the past year or so have made automation more possible than ever, Raj Subramaniam, FedEx’s president and chief operating officer, said in response to a question from an analyst during a March 17 earnings call. “So we think there’s a huge opportunity for us,” said Subramaniam, who has since been named the company’s CEO-elect.
He briefly described the robotics efforts, ranging from driverless vehicles to automatic processes inside sorting hubs. “So lot of effort in this direction, because it’s very strategic, and, you
know, could have big implications in the years to come.”
In an email to The Commercial Appeal, Helane Becker, the Cowen & Co. analyst who asked about automation during the March 17 call, said the shift toward automation is already visible in the FedEx World Hub in Memphis.
Big changes might take place in the next three to five years, Becker wrote.
“We’ve already seen a number of jobs in the sort facilities be eliminated. Most of the jobs eliminated are there. The next step is to figure out a way to offload and reload the trucks using robots.”
Using robots brings advantages, she wrote. “The obvious answer is that robots don’t take vacations, they can work unlimited hours, they don’t get sick, etc. There is obviously maintenance that needs to be done on the robots, but there isn’t a shutdown.”
Satish Jindel is a former FedEx employee who now runs logistics consulting businesses. He’s been following automation efforts closely.
He said he visited China in 2017 and saw ground delivery robots similar to FedEx’s Roxo, along with flying delivery drones. These robots and drones were already working in the real world on behalf of a Chinese e-commerce company,
JD.com, he said.
He said the Roxo robot concept is unrealistic in America. “It would be limited to a few areas like a university campus, maybe. Not in the public arena. I see them getting damaged, destroyed, knocked down, all kinds of things.”
However, he said the concept of using flying drones to deliver packages over middle distances of about 50 miles is viable in the U.S.
On March 30, FedEx announced a partnership with California-based Elroy Air to start testing the idea in 2023. The company’s Chaparral aircraft takes off and lands vertically, like a helicopter, and can pick up 300 to 500 pounds of cargo and deliver it by air up to 300 miles, according to a news release.
FedEx could save huge sums of money by using robots to eliminate human jobs, according to Becker, the analyst. “We don’t have an estimate, but suspect it could be in the tens of millions of dollars,” she wrote in an email.
Jindel predicts robots and automation will reduce the number of jobs at FedEx over time. “And what pace it would happen, I cannot anticipate or predict that right now,” he said. It depends in part on how FedEx integrates its FedEx Express network, which focuses on air transport, with the FedEx Ground network, which focuses on truck transport, he said.
One possible scenario, presented by FedEx founder Fred Smith and others, is that the increased use of robots will change the nature of work, eliminating the worst jobs.
“Don’t be afraid of technology and innovation and robotics,” Smith said in a 2017 speech. “It makes people more productive. It makes goods less expensive. It makes life better.”
In 2019, authors at the Benjamin L. Hooks Institute for Social Change at the University of Memphis presented a less happy picture in a report titled “The Robots are Ready: Are We?”
The authors wrote that Black workers were disproportionately likely to lose their jobs due to automation, and that means the economic and social disruption of automation would be especially strong in Memphis, a majority Black city.