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The route to fulfilment: Exclusive interview with DHL robotics boss

Exclusive interview with Denis Niezgoda, robotics accelerator lead at DHL

In this exclusive interview, Robotics and Automation News talks to Denis Niezgoda, robotics accelerator lead at DHL, who gets into details of the company’s automation strategy, highlights some challenges, and provides plenty of insight into numerous interesting initiatives DHL is currently engaged in. 

DHL, as many will know, is the world’s largest logistics company, and Niezgoda says that the German giant is forecasting “solid improvements” in global shipments, especially in its freight forwarding business – ocean freight, road freight, and rail freight – which are among its core business activities.

Denis Niezgoda, robotics accelerator lead at DHL

“One of the biggest growth factors is online shopping or e-commerce, where we see steady, low double-digit growth – not just only in domestic shipments, but what is getting much more interesting in the past one or two years is cross-border shipments,” says Niezgoda. 

E-commerce is a subject a lot of people talk about in logistics because it’s been a very strong driver of growth in the sector.

The relationship between e-commerce and logistics is particularly interesting when you consider that Amazon, which started out as an online bookstore and became the world’s largest online retailer, is now one of the world’s largest logistics companies.

Amazon Logistics is reportedly generating renues of approximately $24 billion a year, which would make it the third- or even second-largest logistics company in the world.

A lot of Amazon’s success in logistics is said to be down to the company’s effective utilisation of robotics and automation throughout its global operation.

With $57 billion annual revenues, DHL has plans to invest in robotics and automation throughout its entire supply chain network, but can anyone picture DHL as an online retail giant? 

Niezgoda indulges the question: “You may say you cannot imagine DHL being a logistics company and doing online retail at the same time, but we already do it, and I’m happy to give you insight into that.

“Currently we are doing logistics for e-commerce companies. We have set up a very strong strategy for our own business, with respect to how we would like to grow in e-commerce, how we would like to serve small and medium enterprises in their e-commerce business, by being responsible for their fulfilment.

“We call it e-commerce fulfilment, and we provide support in establishing a web shop, storage of their goods, and delivery from door to door.

“We are continuously investing into the fulfilment network that small and medium can leverage, while at the same time, continuously developing our network for our large customers on a global scale.”

dhl calendar

But that’s not what I meant

Yes, logistics, DHL, all very familiar. But can anyone imagine a DHL website like the one Amazon has, where all manner of products are available – even fresh foods and groceries as a result of Amazon’s takeover of Whole Foods Market recently?

Well, actually, this is something DHL seems to be experimenting with already. The company has at least two retail sites – one for household goods and the other for fresh food:

“We are one of the biggest online food retailers [in Europe] at the moment,” says Niezgoda. “We have a warehouse in the Czech Republic, which is enabling us to deliver food throughout Europe within two days.”

But while most companies would want to be the size of DHL, Niezgoda cautions against becoming overly dominant in a particular market.

“Consolidation is good to a certain degree, but we need to make sure we avoid monopolies over the next few years, whether it’s in retail or anything else.

“I think this is a major problem in our globalised world, increasing consolidation of different markets, and I think we need to be very careful about this.”

Free and fair competition good. Monopoly bad

While most people might agree that monopolies are generally not a good thing since they tend to abuse their power, what can you do when companies create better products and services and reach a dominant position apparently on merit?

Amazon is the top online retailer because most people clearly think its website offers the best shopping experience. Similarly, Google is the world’s largest search engine because one of the most annoying things in life is not being able to find things you’re looking for – and Google is believed by most to be the best at finding things.

This might be the reason why governments have not stopped companies like Amazon and Google from becoming monopolies, which is more or less what they are – certainly they completely dominate their respective markets.

But Amazon seems to have outgrown the e-commerce market and gone into all sorts of other markets, such as the cloud computing business, where it has made billions, and logistics, as mentioned above.

Even Google complains about Amazon, arguing that when people go online to do some shopping, it’s Amazon they look to first.

The reason Google brought up the subject was because, a few months ago, the European Union fined the search giant $2.7 billion for alleged monopolistic abuses, or “antitrust activities”, as they tend to be called.

Specifically, the EU says Google unfairly favours the products in its own Shopping portal – meaning, when someone searches Google for a product online, Google is likely to show products from its own advertisers rather than products from other companies.

Whether or not this is unfair is an interesting question. Retailers pay Google a lot of money to advertise on the search giant’s system and if Google did not prioritise their products over those of other retailers that are not Google’s customers, would Google’s customers have a right to take Google to court as well?

And anyway, ultimately, Google is a business. Why should it favour random companies over its own customers?

Nonetheless, the EU says: “Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors” and it must pay the largest fine in corporate history, probably.

Google has hired some of the top lawyers in Europe to fight the EU ruling, and had already produced data which apparently showed that one-third of online consumers start their search with Amazon, presumably supporting its argument that Google Shopping is not dominant in e-commerce.

In a statement some months ago, before the fine was imposed, Google said the EU had “failed to take into account the competitive significance of companies like Amazon and the broader dynamics of online shopping”.

A settlement looks unlikely in the short term.

Such legal and business arguments are probably not subject areas for this website, since we’re all about robotics.

But a look at the bigger picture sometimes helps to bring things into perspective.

For DHL and Germany, the prospect of seeing the decimation of high street shopping to the extent that has happened in many parts of Europe and the US is not something anyone wants.

And if people are going to choose to shop online, there should be at least more choices available than just one or two big websites.

Where does robotics and automation fit in to all this? Who knows. Your guess is as good anybody else’s. But it’s probably worth remembering that most people instinctively knew that the internet was the future of shopping, but only some companies, like Amazon, believed in that vision strongly enough to invest vast quantities of money and time and other resources into building their digital shopping centres.

Now, Amazon is bigger than Walmart in some ways. And its robotics division is developing drones for delivery to remote areas and its warehouses probably have the highest number of robots of any logistics company in the world.

Automation. Simply delivered

DHL, too, has been doing similar things – automating warehouses, using autonomous guided vehicles, and even testing drones for delivery to remote areas. Plus, it’s been an instigator and a developer of technologies such as driverless cars, autonomous trucks and other vehicles for that critical “last mile” to the customer’s home – the shortest yet most complex part of the logistics route.

Being the lead for DHL’s robotics accelerator, Niezgoda oversees DHL’s robotics programme across its many divisions, and is involved in the testing and verifying of all proof-of-concepts, as well as in bringing new technology to the company.

“The robotics accelerator programme within DHL supports all operational divisions within the whole supply chain,” says Niezgoda.

“My job is to identify and prototype state-of-the-art technologies under the robotics umbrella which can be applied in our business.

“This is all about supporting and developing a partner network with different startups, becoming a knowledgeable centre within DHL, and answers the need to ensure information flows freely through the different divisions, so we can apply these solutions at scale within our business.

“We published our trends report into Robotics in Logistics about a year ago, and I started to engage in robotics applications about two years ago.

“The fact is that we perceive that this is the peak point, the tipping point, the time when robotics is getting mature enough for the logistics industry in terms of costs and in terms of flexibility.

“We feel now is the time we should look into robotics.”

A human worker alongside the DHL warehouse robot, developed by Effidence

What have the robots ever done for us? 

DHL is doing more than just passively observe the robotics sector, as Niezgoda explains. Recently, it has agreed partnerships with a number of companies to test their robots in its warehouses and elsewhere.

Some of the companies are well known, others may not be as well known. Moreover, DHL is funding research and development into robotics to build technologies that no companies out there are currently offering.

“If you look into the logistics business, the most concrete applications currently taking place are in warehousing operations, so anything between the four walls,” says Niezgoda.

“I think the most concrete applications are three different ones. They are: point-to-point handling, or classical transport from A to B, where we are collaborating with Fetch Robotics; to increase productivity, our employees work with Locus Robotics, as well as Effidence; and in the piece-picking applications – so, very repetitive work streams within packing operations, where we are deploying Sawyer units in a fully operational environment.”

Autonomous bandwagon

While this article has compared DHL to Amazon, perhaps erroneously, it’s worth saying that all of the other logistics companies in the world are also looking into robotics and automation for the future of their operations.

For example, in the US, UPS has been testing a drone delivery system which involves a human inside a truck. That human may also drive the truck for the time being, but how long before the truck becomes self-aware and runs off as soon as the human is outside… or at least becomes autonomous?

And given that autonomous vehicle technology for warehouse operations has been in existence for a long time, many logistics companies probably have significant numbers of robots working for them. We’ll try and find out, but we thought we’d start by asking Niezgoda if he knows.

“It’s difficult to say how many robots other companies have so I would find it difficult to compare DHL to others,” he says.

“But from what we are observing, what we see at different conferences and so on, I would say DHL is a first mover and a fast mover in the adoption of robotics technologies.

“This is due to the fact that we started to collaborate at a very early stage with robotics startups, knowing that their solutions might not have been fully mature at that time.

“However, sharing our requirements with them at a very early stage, and bringing them into our warehouses, to help them identify pain points in their own technology, has accelerated their own development, which is why we have a very close collaboration with these companies.

“They know that we’re one of the first movers, one of the first companies that are collaborating with them.

“So I see DHL using robots even beyond warehousing – if you look into our drone engagements, or you look into our street scooter fleets, you’ll see that DHL is constructing its own vehicles.

“In these areas, we are in the testing phase, using autonomous systems, and consolidating that know-how into different parts of our supply chain.

“From a technological perspective, these are important initiatives for all the different pieces of our supply chain. Many technological components come together for each of these applications.”

Build or buy? 

When your business gets to the size of a DHL, or maybe even before, at some point, you may find that the tools and technologies you need are not available on the market – no one is producing them, so no one is selling them.

So what do you do?

If your business is of a size of a DHL, then you develop the technology yourself, or ask someone else to develop it.

“DHL is obviously a logistics provider, so in the first stage, we don’t develop this robotics technology ourselves,” says Niezgoda.

“However, if we see that we have a certain demand for a specific application and the technology is just lacking, we collaborate with research institutes in order to invent technologies for ourselves.”

The example he gives is of an electric delivery van which DHL developed by itself.

DHL says it tried to persuade automakers to build it some electric vehicles but it was ignored – so it built its own.

The vehicle has been such a success that the company is now offering units for sale.

While technology developments for the roads has been challenging, inside the warehouse and within a given facility, things have been better.

Niezgoda says: “If we look at point-to-point handling, typical transport from A to B in a warehouse for instance, we see that in this environment there are many different startups and even mature technology providers starting to develop more flexible automation.

“We work with these companies very closely, and are not planning to build our own robot for that application if there is a good, professional partner that is helping us with that.

“When we see there is a sophisticated solution that we can apply, there is no need for us to develop our own.”

rethink dhl
DHL recently bought a number of machines from Rethink Robotics

Still not glamorous

As much as we might try to enthuse people about the logistics industry, by talking about advanced technologies and so on, chances are, it’s never going to be considered glamorous.

And this is a problem because logistics is a growing sector and it needs to hire more people. But they’re just not available.

To try and encourage young people to consider logistics as a career choice, DHL is being more communicative about what the industry is like, providing insights through its videos and other marketing marketing material.

The immediate issue, or shortage of skills, is in the software side, says Niezgoda.

“For DHL, we require people who know the logistics industry, who are able to get certain technological understanding and are able to identify how to fit into our existing business.

“However, from a robotics startup perspective, it’s much more software than hardware actually. You see, hardware is not that much different from vehicle to vehicle – AGVs have been deployed for decades. It’s much more about the software.

“If you look into a robotics solution like Fetch, the solution itself is 80 per cent software. So, what companies like these startups are looking for and demanding are software engineers, and this is actually difficult.

“It’s very difficult to get enough talented software developers and engineers, in software in general, also due to the fact that it requires a couple of years’ programming experience in order to be able to build upon a sophisticated robotics solution.

“Mechanical engineers for the hardware itself are there – they are available. But if there is a lack of expertise and know-how, it’s definitely on the software side.

“It’s a challenge that not only we are facing, but also many different industries in terms of digitalisation.

“Software skills, IT skills, programming, anything in that direction, under the umbrella term of computer science, it’s just getting much more important, and we try to actively motivate people to choose those types of careers.

“We also see that in different countries – in the US, in Europe and elsewhere – schools and universities are actively thinking about how to get more people interested in these subjects.”

Humans wanted 

Logistics companies are not the only ones facing a possible shortage of people with the right computer science backgrounds, industrial companies in general are also having to deal with dwindling interest and enthusiasm for working in the industrial sector in general.

But, as Niezgoda says, there’s more to working in logistics than perhaps people might think.

“If people think about logistics, they probably think that it’s basically a very simple industry – moving boxes from A to B,” he says.

“But when you take a closer look, maybe see some videos DHL have produced, you see how exciting this industry can be.

“DHL is being more open about its business and showing people what it does, as this is another way to encourage people to become interested in logistics.

“Two years ago, it was quite difficult to find appropriate people that had the skills to work at DHL. But now that people see that DHL is looking into robotics of different types – mobile robots, piece-picking robots, drones, autonomous cars – and computing, such as predictive analytics, big data applications, artificial intelligence… Now people are applying with the right mindset and skillset for us.

“That was not possible two years ago.

“But it was also important for us to set the reputation of the company correctly by being more communicative to the outside world, beyond DHL.”

DHL says it tried to persuade automakers to build it some electric vehicles but it was ignored – so it built its own

Logistics leads the way to our driverless future

Many people believe driverless trucks will take to the roads before driverless cars.

The thinking is that driverless vehicles that carry goods risk fewer people – as in, there’s fewer people inside the vehicle.

Besides, as Niezgoda explains, there’s simply fewer people who want to become truck drivers.

So it’s not as simple as saying driverless trucks are going to take the jobs of human drivers and cause mass unemployment – those human drivers aren’t going to be there anyway soon, according to Niezgoda.

“There’s a few different things we need to consider here,” says Niezgoda. “First of all, if we look into an autonomous truck, we need to define which level of automation, and then we need to decide when it is to be implemented.

“I believe we’re going to see the first steps of automation within the next four years. By about 2020 or 2021, we’ll see highway driving assistance systems that are not only for stop and go in traffic jams, but are really able to take over steering, accelerate or decelerate over the whole course of driving on a highway.

“From a technological perspective, it’s not an issue today – the vehicles are capable. We have some computer vision challenges we still need to solve, but there is enough time for development.

“From a regulatory point of view, we see that the European Union as well as the United States are actively supporting the development, so we are seeing already the first rules being developed, and these will further mature, adapting to the development of the technology.

“So, 2020-2021 you’re going to see the first levels of automation. And the fully autonomous truck that is able to drive – in the sense that it will keep in its lane, accelerate, pass other cars, drive autonomously, park itself and things like that – is not going to be many years after that.

“You mentioned the threat to the jobs of truck drivers. If you let me give you my personal opinion for a moment.

“What do you think the age of the average truck driver today? In Germany it’s about 48 to 50, according to a study done in 2011 or 2012.

“And while 150,000 truck drivers are going into retirement each year across Europe, only about 30,000 to 40,000 are entering the job of being a truck driver.

“And if you consider that over 80 per cent of logistics movement is done by truck, with that trend even growing, we see that in a couple of years, there’s going to be huge lack of drivers – we won’t have enough drivers.

“And this lack of skilled workers is kind of an explosion – suddenly people will realise there’s not enough drivers – and this will happen within the next 10 years.

“We’re going to lose so many truck drivers and it’s just getting worse and worse because it’s also getting more and more difficult to get enough people for this job.

“So we really need to understand how can we make this job more attractive in order to get more people in. If we don’t have enough people, how can we adapt and start automating parts of the supply chain?

“And this is the same challenge we are perceiving in many operations – in warehousing, in transportation and last-mile delivery.

“In the manufacturing sector, it’s also the same thing – a shortage of skilled workers.

“Due to higher and different types of education, as well as an ageing population, it’s just getting extremely difficult to keep up with the growth that we see for DHL on the global scale, and maintaining growth in productivity.

“There are many challenges that people don’t see if they don’t work in this environment.”

(Interview by Abdul Montaqim.)