New research from CBRE Japan has shown that logistics companies believe technological advancements could reduce staff numbers and therefore balance potentially higher labour costs resulting from COVID-19.

As part of its Japan Logistics Occupier Survey 2020, CBRE conducted an online survey with companies in Japan that utilize logistics facilities (logistics operators and consignor firms).

Of the 336 valid responses, 242 from logistics operators and 94 from consignor firms.

CBRE's Japan Logistics Occupier Survey 2020- At a glance:

• In terms of medium- to long-term changes and impact of COVID-19, the most frequent response was "additional inventory" (30 per cent).
• A total of 80 per cent of respondents believe image processing, Automated Guided Vehicles (AGVs), and Internet of Things (IoT) (including RFID tags) were all expected to have a major impact on the industry across the next three years.
• Regarding the allocation and outlook for costs, although cost structures in the logistics industry vary between sectors and types of business, on average, the highest proportion of costs were for transportation/delivery (34 per cent) and labour (29 per cent). 

 In terms of medium- to long-term changes and impact of COVID-19, the most frequent response was "additional inventory" (30 per cent).

CBRE Head of Research Hiroshi Okubo said in the wake of the supply chain disruptions caused by the "corona shock," companies are preparing for unforeseen circumstances in the future.

"It is clear that many companies think it is inevitable to increase inventory," he said 

"There are still many logistics sites where an increase in distribution volume leads to a rise in labor costs."

The breakdown of costs, according to the survey. Source: CBRE

The survey also indicated 80 per cent of respondents believe image processing, Automated Guided Vehicles (AGVs), and Internet of Things (IoT) (including RFID tags) were all expected to have a major impact on the industry across the next three years, with a further 78 per cent of respondents indicating they thought the use of these technologies would cause the number of warehouse staff to decrease. 

Mr Okubo said companies were hoping automation would improve margins affected by the potential rise in labour costs.

What companies believe will be longer-term impact of COVID-19. Source: CBRE 

"The vast majority of respondents said that both transportation/delivery costs and labour costs would rise over the next three years, putting pressure on future earnings," he said.

"In addition, the second most common response to what the medium to long term changes of the industry would be was 'accelerated automation of warehouse work'.

"This suggests that companies expect technology to reduce staff numbers, and therefore lower labour costs."

Click here to view the full report.

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