Robots to displace transport and manufacturing workers in vast numbers

“In China, for example, unit labor costs in manufacturing have increased by more than 65 pecent since 2008. Wage rates have also been rising consistently in Korea, Japan, the U.S. and Germany,” the report reads.

The consultants estimate that 8.5 percent of the global manufacturing workforce could be displaced by industrial robots within the next decade – that’s 20 million manufacturing jobs.

The working poor likely to be hit hardest

And it is the lower income regions of the globe’s major economies that will be most affected.

“On average, a new robot displaces nearly twice as many jobs in lower-income regions compared with higher income regions of the same country,” according to the report.

In higher income regions, deployment of a robot displaces 1.3 human-held long-term jobs, on average. However, in lower income regions, introduction of robots leads to the long-term loss of 2.2 human-held jobs.

In the U.S. the states with high dependence on manufacturing seem particularly vulnerable, Oxford Economics found. The state most at risk is Oregon, particularly the regions in and around Portland. Other vulnerable states include Indiana, Louisiana, North Carolina and Texas. Less vulnerable states include the District of Columbia, Florida, Hawaii, Nevada and Vermont because of their reliance on tourism, finance and business services.

In Japan, the area around Tokyo is least exposed to the coming robotics revolution because companies in that area have already embraced robotics. The same is true of Kawasaki, Osaka and Yokohama. Hokkaido, Japan’s large northern island, is a non-manufacturing intensive region and has high levels of tourism and service industries. It too is a non-vulnerable region.

In South Korea, the southern port cities of Busan and Ulsan are highly vulnerable because of their high reliance on automobile manufacturing, shipbuilding and oil refining. Oxford Economics notes that there is a “remarkable dependence on manufacturing employment.” It’s a similar situation in the northern region of Incheon, which is a major seaport, logistics and manufacturing region. Conversely, the highly diversified city of Seoul is least vulnerable to a workplace robotics takeover in South Korea.

What do people do after robots take their jobs?

The consultants also estimate that about 1.7 million manufacturing jobs previously performed by humans “have been wiped out since 2000 due to the global rise of industrial robots.”

In the U.S., more than 260,000 jobs have already been eliminated by robots since 2000, which Oxford Economics states is equivalent to about 2 percent of today’s workforce.

The research highlights a critical future challenge. Analysis of more than 35,000 U.S. individuals who left their “production jobs” in the last 20 years were absorbed into three sectors – transport, construction/maintenance and office/administrative work.

This is not a happy finding given the forecast widespread deployment of robots into those very sectors.

“Ominously, our analysis found that these three occupational areas are among the most vulnerable to automation over the next decade. This highlights the ongoing threat to workers who are at highest risk to automation as the service economy enters its own era of technology-driven job disruption,” according to the report by Oxford Economics. The report focuses on the deployment of physical robots (i.e. the deployment of advanced software is excluded from the research).

It’s not a trend that’s just affecting the U.S. either. An earlier study by Oxford Economics found that 6.6 million jobs across the Association of South East Asian Nation economies “could be made redundant as a result of new technology adoption.”

Robotic takeover of transport? Not yet… but soon?

One of the areas that could see a large impact is the automation of trucked freight. For instance, in the U.S. last year, there were 3.5 million truck drivers. About 1.7 million of those people were heavy-duty and tractor-trailer drivers.

There are already trials of wholly autonomous trucks on public roads in Florida, for instance.

While acknowledging few “if any” drivers have yet lost their jobs to autonomous vehicles, Oxford Economics argues that situation “could begin to change over the next five years”. It quotes the Center for Global Policy Solutions,which estimates that more than four million jobs will be lost in a changeover to autonomous vehicles. 

“Occupations such as delivery and heavy-truck drivers, bus drivers and taxi and chauffeur drivers would be most severely affected,” the consultants predict. That said, the Oxford Economics report acknowledges that ”a shortage of truck drivers already plagues American roadways.”

Incidentally, informed sources have told FreightWaves that the U.S. trucking industry specifically needs well-qualified drivers. These are drivers with the right experience, a good record, low absenteeism, clean alcohol/drug tests and so on.

Robots take to the seas… and fjords, and rivers, and coasts

While truck drivers may face a threat from being directly replaced by robots, they also face an indirect threat – namely from a modal shift to the maritime sector. Over time that could potentially reduce the demand for trucking in coastal and significant inland waterway areas.

There are plans to automate the world of ocean shipping. There have been several small-scale autonomous shipping trials around the world, such as the ReVolt. And, more significantly, the recent test deployment of Sea-Kit Maxlimer – an unmanned 12-meter maritime drone with a 2.5 metric ton cargo carrying capacity (a metric ton is equivalent to 2,204.6 U.S. pounds). The unmanned drone recently sailed autonomously from the U.K. to Belgium carrying a tiny cargo of English oysters in a proof-of-concept voyage.

“SEA-KIT’s voyage demonstrates an effective model for international communication and cooperation in the field of uncrewed shipping,” the company said in a statement.

The next major step-up may well be the launch next year of the Norwegian vessel Yara Birkeland – a fully autonomous, zero-emission, feeder container ship. A tiny containership, admittedly, with a length overall of 80 meters, a breadth of 15 meters and a cargo-carrying capacity of 120 twenty-foot equivalent unit shipping containers and a deadweight of 3,200 metric tons.

It may be a small ship but its creator, Yara – a nutrients, fertilizer and chemicals company – has big ambitions.

The unmanned boxship will eliminate up to 40,000 truck journeys a year, the company says.

And it’s not just the ship itself; the company joined forces with equipment maker Kalmar to create autonomous equipment, software and services for the ship. That includes operations such as loading, unloading and sailing.

The Yara Birkeland will transport fertilizer from the company’s Porsgrunn plant via inland waterways to deep sea ports at Larvik and Brevik, which is a 31-nautical mile journal.

If the Yara Birkeland is successful, it could be proof that humans are not needed to crew a ship at sea anymore. A maritime executive spoke to FreightWaves on the topic of future maritime workforce planning. He said that there would likely still be a need for officers and engineers, although they would likely be based on shore in the future. But he was less optimistic about the future of integrated ratings (deck hands).

“You might as well take them out and shoot them,” he said.

Robotics in the landside supply chain: port robots

Automation, robotics and workforce planning is a big issue on the landside as well. In “Automated terminals offer competitive advantages,” a recent research note issued by rating agency Moody’s, it is noted that labor accounts for more than 50 percent of the costs of a conventional marine terminal operator.

“In most developed countries, port labor is unionized. In the U.S., port labor costs have historically risen annually in excess of inflation and continue to do so based on current wage schedules,” Moody’s says.

Moody’s adds that automated terminals have 40 percent to 70 percent lower labor requirements than conventional terminals.

“Automation replaces labor-intensive processes with capital-intensive ones, changing the variable costs associated with the daily hiring of longshoremen into fixed costs associated with robotic handling equipment. This increases fixed costs and can reduce financial flexibility, particularly because the capital outlay is significant.

“However, in contrast to annually escalating labor costs, the capital/equipment costs are fixed and amortized over time, and over volume, which affords better predictability of long-term operating costs and better scalability… Operating cost predictability is also partially attributable to lower performance variability in automated operations, with robotic processes less subject to accident, error, fatigue and other variables,” Moody’s concludes.

So why aren’t ports around the world already automated?

In some parts of the world, the improvement in cost as described by Moody’s hasn’t necessarily proven true (to date). The marine container terminal at Pasir Panjang, at the Port of Singapore, has been automated for nearly two decades. Yet Pasir Panjang is just one of several terminals at the port and it was for many years the only automated terminal at the port. During a site visit, a port executive told this reporter that while the port is able to mass import relatively inexpensive labor from India, it did not make sense to fully automate the port.

However, as Oxford Economics has indicated, the costs of robotics are declining, so that calculation may change in the near future. The port has said it will fully automate the Tuas Terminal at some point in the future.

Moody’s also notes that there can be union and political opposition to automation because of the potential impact on jobs. For instance, “a signature feature of the 2018 International Longshoremen’s Association (ILA) contract was the prohibition of fully automated container terminals at ports on the East Coast and Gulf Coast,” Moody’s notes.

Moody’s also reports that at Rotterdam, the Netherlands, after a series of 24-hour strikes in protest against automation, longshoremen were awarded job guarantees for five years.

Meanwhile, in 2014 in Australia, international terminal operator Hutchison broke into the duopoly market with a fully automated marine container terminal to enthusiastic cheering from the local industry. However, it wasn’t to last. Although maritime container terminals are automated they do not (yet) completely eliminate the need for longshoremen.

Hutchison apparently misjudged the local culture and got its sums wrong when negotiating collective agreements with the workforce. Australian industrial relations are particularly tricky and Hutchison was widely rumored not to be enjoying good relations with its Australian workforce.

Within a year or two of operation, Hutchison was making large swathes of its workforce redundant. It was done in a particularly ham-fisted way with the workforce being told of the loss of their jobs by text messages. The messages directed longshoremen to check their email inbox and there they found their redundancy messages. A massive series of strikes, which led to extensive local media coverage, and the creation of a strikers’ camp at, and a blockade of, the port gates followed.

Yet despite the political and workforce issues, as Moody’s points out, there are considerable cost savings and also benefits in operations and also air quality emissions from port automation. Accordingly, Moody’s expects the adoption of automation at ports to increase in North America and around the world.