Logistics, warehousing jobs to remain despite automation |

The warehousing and logistics industries have flourished in Lackawanna and Luzerne counties in recent years as businesses and e-commerce giants, including Amazon and Chewy, hone in on the region and its workforce, creating thousands of new jobs. Even as companies utilize automation to improve efficiency in warehouses, those jobs are expected to remain, though their focus could shift from picking and packing orders to more specialized skill sets.

The region’s core strength for warehousing and logistics comes from its highway access, affordable business costs and close proximity to major cities, which will always keep Northeast Pennsylvania on the radar of warehousing and logistics companies, said Jim Cummings, vice president of marketing at Mericle Commercial Real Estate Services. Mericle encompasses 26 million square feet of space, including warehousing, manufacturing, office space and medical companies, totaling more than 200 companies and 20,000 employees, Cummings said.

With industrial parks in Lackawanna and Luzerne counties, including the Mid Valley Industrial Park in Olyphant and CenterPoint Commerce & Trade Park in Pittston and Jenkins townships, Mericle’s portfolio includes Amazon, Chewy, FedEx, Patagonia, Home Depot, Walmart and Lowe’s.

In the years leading up to the pandemic, Mericle and other developers across the country fielded a noticeable increase in calls from companies seeking space for e-commerce fulfillment centers, Cummings said. During the pandemic, those calls spiked, he said. Consumers no longer felt comfortable visiting stores in person and instead turned toward the web, he said.

“Many people ordered products online for the first time during the pandemic, and industry experts expect some of these new shopping habits to be ‘sticky,’ ” Cummings said in an email. “That is, some consumers will continue to shop online even when they feel comfortable going out in public again. The demand for warehouse space, therefore, is expected to remain strong.”

In recent years, John Augustine, president and CEO of Penn’s Northeast, watched hourly rates at warehousing jobs climb from $9 to $14 to about $18.

“It’s over $40,000,” he said. “That is a very decent living wage in Northeastern PA.”

Penn’s Northeast is a collective aiming to promote new investments, jobs and business opportunities by promoting Northeast Pennsylvania.

Cummings believes the region may be nearing a point where the industry’s appetite for hiking wage rates will start to wane, leading to robotics and artificial intelligence replacing low-skilled jobs. With that, however, comes new demand in employees skilled in robotics, electronics and computer technologies, Cummings said.

In the early days of e-commerce during the 1990s, customers used the internet to buy niche items that weren’t readily available in physical stores, said Jim McMurphy, the chief information officer of Kane Logistics.

Kane is a third-party logistics firm, which means it uses its warehouse space to store and distribute products for other businesses. Kane operates locations across the country, including three Scranton-area distribution centers totaling 2 million square feet of space, according to its website.

Online clothing sales pushed e-commerce beyond niche markets, though vendors faced significant impediments early on selling items that people couldn’t feel and try on, prompting sellers to implement friendly exchange and return policies, McMurphy said.

Following clothing, McMurphy pointed to food sales as a landmark in the growth of e-commerce. Even five to 10 years ago, there was hardly a concept of buying food online outside of specialty items such as chocolates and cheeses. Now, it’s become common, including people buying their pet food online.

“The long story short is the trend in e-commerce is really (that) people are much more comfortable buying anything,” he said. “They got very, very comfortable with it very, very quickly, and then COVID dramatically increased that concept.”

Customer expectations for quick deliveries only grew with e-commerce.

Within the past decade, if they told customers their order would arrive in three days, and it arrived in two to three days, everyone was happy, McMurphy said.

“Now, people want it tomorrow for free,” he said.

Longtime warehouse operator Paul Delp, a member of the U.S. Surface Transportation Board’s Railroad-Shipper Transportation Advisory Council, still remembers tracking warehouse inventory using 5-inch-by-8-inch note cards, which had to be updated on a daily basis.

“When computers started … it was like, ‘This is like manna from heaven,’ ” said Delp, the 45-year president of Lansdale-based Lansdale Warehouse Co. Inc.

Delp is also a former two-term board member of the International Warehouse Logistics Association. The IWLA aims to help its members run successful warehouse-based logistics services businesses, according to its website.

At Kane, McMurphy said their clients can either use their own inventory management systems or rely on Kane’s. Most use Kane’s, he said.

Current warehouse management system technology allows them to exchange inventory data with their customers in real time, he said. McMurphy described three concepts of inventory: having plenty of an item, having none of an item and running low on an item. If they have a lot of an item, or none of an item, they don’t have to be as concerned about their inventory, he said. When inventory is running low, tracking needs to be precise.

“Where it becomes really critical is when I’m running low,” he said.

In addition to driving accuracy and speed in their warehouses, their management system also allows them to identify bottlenecks, McMurphy said.

The sophisticated technology means “you can harvest the data to raise its hand and say, ‘Look at me and do something about it,’ ” he said.

In “old-world logistics,” if a warehouse wanted to increase productivity, it’d send a “drill sergeant” who would just yell at employees to work faster. Today, they use data to alert warehouse operators of clogs in their service, allowing them to address it, McMurphy said.

Automation in warehousing is both a means to be more efficient and meet demand, said Jared Stadlin, the chairman of the IWLA board of directors.

“As the labor market has become tighter as the employment numbers will tell you, people have been looking to automation as a workforce multiplier,” Stadlin said. “If you don’t have a huge pool of labor available to meet your needs, then technology becomes a way to bridge that gap, and you’re going to see more and more emphasis on warehouse automation.”

McMurphy broke warehousing into two categories: direct to consumer and business to business.

Direct to consumer means shipping a product to a person’s doorstep, whereas business to business would equate to the manufacturer sending its product to a warehouse, and the warehouse then shipping the product to a store or other business.

Automation and mechanization went into the direct-to-consumer path more quickly than business-to-business warehousing, McMurphy said, attributing it in part to the size of the products.

“The robotics and the mechanization that have been working for 10 or 15 years in the direct-to-consumer path are now moving up to be able to move cases and pallets,” he said. “The challenge really is they’re bigger and heavier.”

Rather than picking individual items, the robots would be moving pallets, he said.

However, to make automation worthwhile, a robot has to be able to replace at least two people to have any chance of paying for itself, McMurphy said. Besides costs, automation also poses challenges for older warehouses that weren’t designed for robots and humans to have room to work together, he said. Warehouse operators also have to deal with the robotics technology becoming outdated, which can take as little as three years, he said.

Like Stadlin, though, McMurphy pointed to the usefulness of robots covering labor shortages.

“The great thing about automation is you don’t have to rely on a person. It’s not that we don’t want people, but finding that balance between the people that want to work … that’s really where the challenge is right now,” he said. “You could, in theory, eliminate the need for people in almost any environment, but the cost of it is not going to be palatable for anybody.”

As the demand for retail services through the internet and other e-commerce applications continues to grow, ultimately, the job demand will remain, said Bruce Reddock, director of economic development at the Greater Scranton Chamber of Commerce.

Growing online sales require warehouses to be more lean and efficient to get more products out of the door, leading to increased use of technology, Reddock said.

“A lot of these facilities are going automated, if not fully automated, but it’s important to note that that automation process is not really hindering the job opportunities,” he said.

While businesses will take advantage of new technology, Reddock doesn’t anticipate it will cut many jobs.

“While it might reduce the amount of jobs by a slight margin, it’s not eliminating jobs,” he said. “In theory, it’s actually enhancing job opportunities, because now you don’t need somebody who’s just going to place a product in the box — you need somebody who’s going to run an automated machine.”

Reddock believes automation in warehouses will enhance employee skill sets and create new jobs that require those advanced skill sets.

At Kane, they need “tons of people” but are trying to use robotics to replace mundane tasks, McMurphy said.

For example, their million-square-foot Scranton warehouse is nearly half a mile long. They intend to roll out a project that will use automation to perform low-value work carrying inventory between drop zones, allowing workers to focus on the harder, more valuable aspects of the operation such as case picking and moving inventory vertically on racks, McMurphy said.

“Technology always sounds great. Automation always sounds great. It’s got to be practical and affordable,” he said. “So that’s the way we’ve really approached it: How can I take cost out of the equation and wasted effort, so that people can do the skilled work, and let the robots do the mundane work?”