Market Overview

3 Innovative Companies Leading The Charge As Logistics Automation Accelerates


Robotics, automation and artificial intelligence (RAAI) technologies stand to advance nearly every sector of the market, whether that’s robots fulfilling orders on factory floors or taking over for doctors in performing surgeries.

In 2013, we created the ROBO Global Robotics & Automation Index in an effort to benchmark all that RAAI has to offer to investors. Since then, the index has significantly outperformed global equities. In the past three years alone, it has brought an annualized return of 17.5 percent, compared to the MSCI AC World Index, which has grown 10.7 percent over the same period (cumulative as of Q1 2019).

In order to capture the full growth potential of RAAI, our index includes over 80 stocks across 12 sub-sectors in 15 countries. The Logistics Automation sector has outperformed all 11 other components by delivering total returns of more than 215 percent (also cumulative as of Q1 2019). Logistics represent one of the most promising industries for robotics and AI technology thanks to applications including warehouse automation, e-commerce fulfillment, inventory management, freight location management, supply chain digitization and autonomous mobile robots.

Additionally, increasing consumer demand for short delivery times has mandated that companies explore potential solutions offered by robotics and AI. Because every competitor in the retail space must now compete with e-commerce, the bar in supply chain efficiency has been raised significantly for all involved. Three of the most innovative companies driving development in logistics automation are detailed below.

Daifuku: Japanese company DAIFUKU CO. (OTC: DAIUF) is the largest logistics automation solutions provider in the world. It provides automated systems to operate warehouses in a variety of industries including automotive, electronics, general manufacturing and food and beverage.

While many other companies in the logistics automation sector focus on one type of solution, Daifuku offers the widest range available. What makes Daifuku even more interesting from an investment standpoint is the exposure it provides to the Asia market, particularly China. While many consider China and Asia to be the leaders in technological innovation, the level of adoption is actually quite low outside of Japan.

This, coupled with the popularity of online retail in China, positions Daifuku for continued success in providing the infrastructure that supports this demand and automates production. Additionally, Daifuku has recently acquired several companies in North America, expanding its reach even further. In the past three years, the company has had a 220 percent growth on total return.

Ocado: A U.K. company, Ocado Group PLC (OTC: OCDGF) emerged as the best-performing stock in the index for Q1, increasing by 77 percent. Originally an online grocery provider, it has now become one of the leading players in the industry in light of its cutting-edge technology for warehouse and logistics automation.

The company operates some of the most advanced order-fulfillment centers in the world. Last year, Ocado announced a deal to supply Kroger, the largest U.S. supermarket chain, with solutions to automate 20 fulfillment centers across the country, and in Q1 2019, Ocado closed a $1 billion deal to add the Marks & Spencer brand to its grocery business. Over the last three years, Ocado has seen a total return of 350 percent.

Zebra Technologies: U.S. company Zebra Technologies Corp. (NASDAQ: ZBRA) has offered very strong investment performance for several years. It has become the global leader in track-and-trace technology, with products ranging from barcode printers and readers to RFID (radio-frequency identification) equipment and other supply chain automation solutions.

For example, Zebra Technologies has developed a system that digitally measures truckloads for optimal transport efficiency. Despite launching less than three years ago, this technology has already been deployed at more than 10,000 locations. In 2014, the company announced its acquisition of Motorola’s enterprise business. At the time, this news had a largely negative effect on the stock, and performance was flat for a while. However, this became a turning point in the company’s history and there was a catch-up effect for the stock. Zebra has achieved a 318 percent growth on total return in the past three years.

The level of expediency and efficiency that consumers now expect for product deliveries can only be achieved through logistics automation. The current market offers a great opportunity for investors because less than 10 percent of approximately 17,000 warehouses in the U.S. are fully automated. So while demand is clearly skyrocketing, adoption hasn’t yet advanced past a very early stage.

Jeremie Capron is the director of research at ROBO Global, an index, advisory and research company focused on robotics, automation and artificial intelligence (RAAI).

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Automation contributor contributors LogisticsTech ETFs General


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