With incredible advancements in technology, consumer behavior, and supply chain methodology – 2025 paints a picture of a diverse logistics ecosystem for DCs of all shapes and sizes.
Artificial Intelligence in the Warehouse
To no one’s surprise, AI is top of mind for many operators this year. Mostly focused on how to implement it correctly, 8 in 10 of the respondents said their organizations need a better understanding of how AI can be used in the DC.* AI lends itself to repetitive tasks such as data collection, entry, and inventory management, to name a few.
A few early AI supply chain offerings include:
Managing SKUs and slot positions can be optimized by AI to reduce time spent picking and errors related to manual ops. Implementing AI can expand tracking of items, while providing the best method of processing said items based on warehouse activity data.
Many DCs have achieved 2x productivity gains in piece picking applications using AI-based travel reduction, and even case pick to pallet operations have demonstrated 20-30% productivity gains.*
The sky is the limit when it comes to what AI can do with the warehouse and equipment data it’s provided with. For example, an AI algorithm can process the data related to order fulfillment times, collate all instances, and process a report indicating the slowest fill rates and why that might be (I.E. a conveyor unit jammed at a certain time or a worker is underperforming at a GTP station.)
For 2025- AI in warehouses may only be feasible for the largest companies, but it’ll soon become more accessible and trickle down to mid to small sized operators.
3PL & 4PL Growth
Third-party logistics (3PL) providers’ share of bulk industrial leasing activity (leases of 100,000 sq. ft. or more) rose to 34.1% through Q3 of this year from 30.6% through Q3 last year. 3PLs have accounted for 498 bulk leases so far this year, up by 9% from the 457 at this time last year.
On a quarterly basis, bulk leasing by 3PLs has steadily increased this year, reversing the steadily decreasing trend of 2023.**
The rapid growth of large warehouse operators from the pandemic is essentially finished, as companies like Amazon, Home Depot, and Walmart pull back on lease renewals and warehouse construction. Instead, many are opting to subsidize operations and process orders with 3PLs and 4PLs.
With recent fee structures and bulk rates changing across the board for parcel delivery companies, retailers are looking to axe costs by contracting with a 3PL or last-mile delivery.
3PLs can also offer a specific operational setup that make attractive use cases for retailers and shippers looking to take advantage of automation, but aren’t capable of implementing that system setup in their owned space. For example, crossdocking is a popular in-and-out processing method that companies can use to fulfill regional orders in areas that it wouldn’t make economic sense to operate an owned DC.
Consumer behavior, incoming tariffs, and the always increasing prevalence of eCommerce are other factors that could make 3PLs/4PLs the right choice for companies looking to expand and serve their customers – without breaking the bank on a warehouse.
Always Advancing Automation
Automation is constantly evolving – but it does reach a certain point where manufacturers must innovate somehow to keep up. This leads to companies investing heavily in R&D to continue producing highly optimized automation systems or by creating new specialized equipment. With the adaption of AI, this only fuels both the creation of these systems, and it’s capabilities.
It’s yet another year closer to automatic truck loading becoming a reality. Automation systems like the Picklebot and Mujin Truckbot were showcased at Modex ‘24, with some systems already installed at client facilities. These robots automatically load and unload trailers with a conveyor boom and mechanical “fingers” or vacuum cups that grab the item.
Electric delivery vehicles have been making the rounds for the last few years, but in 2024 Amazon made waves by deploying Rivian EDVs to replace their aging ICE delivery van vehicles. Amazon typically leads the charge in the logistics industry, so their adaptation of delivery EVs will prove to accelerate others to make the switch.
Automation sometimes comes in the form of aiding humans, rather than replacing them. Case in point is the usage of remote-controlled forklifts, rather than a fully automated one. As odd as it sounds, a forklift operator could work remotely via a joystick assembly and a live multi-angle camera feed. The technology is there, but the remains are to be seen if it will see widespread usage.
Secondary automation manufacturers are digging deeper and are engineering drop-in solutions that can drastically modify existing equipment. Are the diverts on your conveyor not keeping up with throughput? A secondary supplier might offer a faster solution that can be retrofitted, rather than replacing an entire unit.
Political Landscape Affecting the Supply Chain
High tariff rates can drastically alter trade between the US and international companies, raising the price of raw materials and goods transported from overseas. This may have companies raising prices to make up the difference, or searching for alternate sources for materials closer to home. China has been a target for high-tariff rates, but other countries have been identified by the administration as potential candidates for tariffs.
A key Trump policy is the need to bring back manufacturing and energy sources to the US. While nearshoring has been a trend in the supply chain due to past overseas delays and geopolitical strains, a concentrated congressional effort should be expected in 2025.
Many unskilled or low-level entry jobs within the supply chain utilize immigrants and temp staffing agencies to complete manual or repetitive tasks. The Trump administration has made it clear that it’ll curb the influx of migrants, decreasing the talent pool operators can hire from. Many facilities have seen the writing on the wall and have invested in gradual automation to eliminate those manual labor tasks altogether.
Sources:
*Supply Chain Dive (www.supplychaindive.com/spons/5-applications-for-artificial-intelligence-in-the-warehouse-and-distributio/605942/)
**CBRE (www.cbre.com/insights/briefs/three-trends-driving-resurgent-3pl-industrial-demand-this-year)
