The Use of IT Technologies in Warehouses
1st November 2017 | Gwynne Richards
Is your business ready for the change?
Gwynne Richards with a copy of the last edition of Warehouse Management translated to Russian.
I recently visited Moscow for a conference on Logistics IT systems hosted by Axelot, a provider of warehouse and transport management systems. The audience numbered over 500 delegates and all were eager to hear about the current and future advances in technology and automation in logistics and supply chain.
According to a report by TransRussia, roughly 6.3 per cent of Russia’s $1.28 trillion GDP is generated by the transport and logistics industry. Former Vice Prime Minister Sergey Ivanov has estimated that the sector holds $150 billion of business potential. After years of underperformance, growth and optimism is returning to the nation’s transport and logistics sector.
This promise of growth provides many opportunities for local and foreign logistics service providers, be it freight transport, warehousing or IT systems. Within Russia, according to the TransRussia report, only 22 per cent of freight transport is outsourced compared to 48 per cent in China and close to 70 per cent in Europe.
Further opportunities for freight logistics companies, warehouse operators and IT companies lie on the growth in e-commerce. Digital retail sales topped out at $4.2 billion in Q1 2017, up 14 per cent year-on-year, with goods coming from Europe, China and even further afield. E-commerce is growing every year in Russia, suggesting a greater need for 3PL services going forward.
Many online retailers are also turning to technology and automation to satisfy the ever-demanding needs of consumers, with next-day delivery becoming the norm for online sales and even same-day delivery in many major cities.
According to JLL (2017), warehouse take-up in the Moscow region amounted to 362,000 square metres in Q3 2017, 54 per cent above the level in the same period of last year. More than half of this take-up was by e-commerce retailers. These included Utkonos, Wildberries and Gala-Centre.
Based on research carried out by Axelot, the use of logistics IT-technologies in Russia is estimated at 75 per cent, with the level of warehouse automation at 55 per cent. This includes reasonably basic systems through to fully automated warehouses.
The annual growth in the warehouse automation market is around 18-23 per cent. The volume of the market in 2016 was around $18.8 million.
The WMS market is split between Russian and US companies in the main with Axelot, Toplog, Solvo and Sevco having approximately 42 per cent of the market, and Manhattan and Lead from Wiptec having approximately 29 per cent of the market. The remainder is shared across a large number of providers, each with less than 1 per cent of the market.
The promised growth for Russia’s transport and logistics sectors and the rise of IT technologies present exciting change opportunities for professionals and consumers. With the systems in place to improve customer experience, is your business prepared to stay ahead of the competition? Read more about IT technologies and how they can benefit your business with the new edition of my book, Warehouse Management, available now.
Axelot (2017) www.axelot.ru
JLL (2017) E-commerce has driven Q3 warehouse take-up in Moscow Region by 54%; 16 October, 2017 http://www.jll.ru/russia/en-gb/news/660/e-commerce-has-driven-q3-warehouse-take-up-in-moscow-region-by-54-percent. Accessed 25/10/17
TransRussia (2017) Transport & Logistics in Russia: Returning to Growth
A Market Insights report from TransRussia/TransLogistica; Accessed 25/10/17
About the author: Gwynne Richards has over 30 years of experience in warehouse management and logistics. As well as running his own successful logistics consultancy, he provides a number of courses on warehouse and transport management and logistics outsourcing for practitioners. He is also the co-author of The Logistics and Supply Chain Toolkit with Susan Grinstead, also published by Kogan Page. He is a Fellow of the Chartered Institute of Logistics and Transport.