Japan Inc finds new business case for robotics during Covid-19

Japan Inc has found a new purpose for automation: business continuity in the uncertain era of Covid-19.

Shares in Japan’s office, medical and industrial goods suppliers including Askul, MonotaRo and As One have soared as heavy investments in robots helped these companies to handle a jump in online orders during the pandemic.

Coronavirus has boosted an existing trend in which Japanese ecommerce groups have turned to automation to counter a chronic labour shortage in a country that already makes half the world’s industrial robots.

But robots installed in warehouses and distribution centres have also allowed these companies to reap the benefit of bumper online sales during lockdowns, while maintaining social distancing by minimising interactions between human workers.

“There is less chance for people to contact each other as a result of people not walking [around at work] due to automation. It was very effective for our working environment” during Covid-19, said Hideo Amanuma, the head of Askul’s logistics unit. 

Globally, the warehouse industry has been more reluctant than carmakers and electronics groups in embracing automation. That was partly due to high costs and concerns that robots would struggle to match the productivity of human “pickers” in sorting through goods of various shapes and sizes.

But warehouses have now become one of the hottest fields for robotics. Research group Statista estimates that the global warehouse automation market will increase from $15bn last year to $30bn by 2026. 

Yano Research Institute, a market research group, projects Japan’s logistics robotics market will expand by a third in the 2020-2021 fiscal year to ¥17.5bn ($167m), partly driven by an increased focus on operational continuity during the pandemic. That figure is expected to increase nearly nine-fold to ¥150bn within a decade. 

“With the continuity of operations threatened by coronavirus, there are more companies willing to buy robots even if they are more costly than humans because it’s now viewed in the context of business continuity plan,” said Issei Takino, co-founder and chief executive of Mujin.

The Tokyo-based start-up makes robot motion and vision systems that are used to pick items in warehouses. Its customers include Askul, Fast Retailing — operator of clothing chain Uniqlo — and Chinese ecommerce group

Investors have zeroed in on those retailers that have been able to continue operating and keep up with demand during the pandemic. Shares in Askul and MonotaRo, an online tools and supplies retailer, have risen by 92 per cent and 131 per cent respectively since mid-March, the height of the coronavirus market turmoil.

Shares in As One, which distributes medical supplies and research equipment, have more than doubled in the same period. The company reported a 33 per cent year-on-year increase in medical-related revenue and a 21 per cent boost in ecommerce sales during the April to June quarter.

At its new distribution centre in Chiba, east of Tokyo, that opened in May, As One will aim to reduce its human workforce by about half and double the space for inventories compared with its existing facility in Saitama.

To achieve that, the company is using robots developed by Murata Machinery, Sharp and Mujin to move boxes of items.

As One estimates that it will take about a decade to get a return on its ¥5bn investment in the delivery centre. But for Tetsunari Kameishi, general manager of its logistics division, the more immediate challenge may be balancing its human and robotic workforces.

“To be honest, we are still struggling,” Mr Kameishi said. “In order for machines to deliver their full capacity, human workers need to keep up with their speed but matching their rates is difficult.”

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