Australia and New Zealand’s supply chains are facing sustained pressure from labour shortages, weak productivity growth and rising global volatility, according to Dematic Australia and New Zealand, the region’s largest supplier of warehouse automation solutions.
“Labour constraints in logistics are no longer temporary disruptions,” says Michael Jerogin, CEO of Dematic APAC. “They are structural realities. If organisations are still relying on workforce expansion alone to increase output, they are exposed. The question is not whether automation is relevant, but whether you can consistently meet customer expectations without it.”
Jerogin says automation is increasingly viewed as a way to maintain service levels, rather than simply reduce headcount. “When labour is constrained, technology allows organisations to increase throughput, improve accuracy, reduce operational risk and drive competitiveness without scaling headcount at the same rate as volume.”
Companies including Woolworths, Westrac, Sigma Healthcare, AS Colour and PepsiCo are investing in automation across Australia and New Zealand to maintain customer service, operational resilience and agility.
Jerogin adds: “The real lever for competitiveness now sits inside operations. How efficiently goods move through a facility, how resilient processes are to disruption, and how safely teams can operate under pressure will determine who grows and who stalls. Protecting service levels has become the strategic priority.”
The shift is occurring as national productivity remains weak. Data from the Australian Bureau of Statistics, analysed by the Productivity Commission, shows labour costs increased 3 to 3.5 per cent over the year to September 2025, while labour productivity grew just 0.8 per cent. Industrial and logistics markets remain tight, with national vacancy rates around 3.2 per cent in the second half of 2025. In major metropolitan areas, warehouse space near customers is increasingly scarce and expensive.
Jerogin says successful automation depends on matching technology to operations, strategy and constraints.
“Steel and robotics perform tasks, but it is the software, system architecture and the people behind planning, integration, and ongoing service and support of the solution that determine whether an operation achieves its key objectives of increasing productivity, improving service levels, or making operations more agile and resilient.”
Historically, automation investment was framed as cost reduction. Jerogin says boards now view it as a resilience strategy that mitigates reliance on hard-to-fill roles, reduces exposure to disruption, and strengthens safety outcomes.
“With productivity stagnating nationally, the businesses that secure internal efficiency advantages now are better placed to compete and remain profitable. Automation has moved from future consideration to present necessity.”
