LOUISVILLE, Kentucky - United Parcel Service (UPS) just opened its largest warehouse, a sweeping 8ha facility on the outskirts of Louisville, Kentucky. But do not expect the break room to get too crowded.

The package-handling giant plans to fill the US$79 million (S$106.5 million) facility with more than 3,000 robots by 2024 to handle tasks like lifting and reduce the need for manual labour. That level of automation means UPS can run the warehouse with only about 200 workers, with this number expected to increase over time.

“It’s a linchpin of our strategy,” UPS Supply Chain Solutions president Bill Seward said of the automated space. “It’s important to be able to deliver best-in-class cost and best-in-class service for your customers.”

Large operators, including UPS and GXO Logistics, are using the draw of automation to grab market share from companies that run older facilities and count more on human workers. The robots increase the speed and accuracy of processing orders, keep better track of inventory and save space by fetching products that are stacked higher in the building, Mr Seward said.

Sales at UPS’ logistics business have climbed 11 per cent in the first nine months of 2023, even as overall sales for Supply Chain Solutions, which also includes freight forwarding and truck brokerage, fell more than 22 per cent amid a cargo slump. Mr Seward said the logistics business has twice the operating margin as its typical competitors, but did not provide a number.

UPS declined to say how many fewer workers are needed in an automated facility compared with a more manual one. The robots help increase worker retention by about 30 per cent and reduce injuries from lifting heavy objects and repetitive motion by 40 per cent, Mr Seward said. The warehouse workers are separate from UPS’ main small-package delivery business and are non-union employees.

“They’re performing extremely effectively because the automated facilities have very high service and speed performance,” he said. BLOOMBERG