Automation Advances Across the Supply Chain: From Sandvik Mines to Walmart ShelvesNov27

THEME ALERT

Today’s Featured Topic

Automation Advances Across the Supply Chain: From Sandvik Mines to Walmart Shelves

Change-Driven Themes: Updates on Previous Featured Topics

Looking for an older report? See all of Joe’s Viewpoints on our website →

If you haven’t signed up for website access already, see the bottom of the report for a how-to

A Review of Our Change-Driven Themes →

MRP believes professional investors would be well-served to focus on themes in all market environments. It is the identification of change-driven themes that is our mission at MRP. So, in the face of the recent market turmoil, an update of our own themes is in order. Since March we have added 6 new themes and also eliminated 6. Currently, we have a total of 22 themes that are active. A review of all those active themes follows.

Joe Mac’s Market Viewpoint: A Review of Our-Change Driven Themes →

A Review of Our Change-Driven Themes →

MRP believes professional investors would be well-served to focus on themes in all market environments. It is the identification of change-driven themes that is our mission at MRP. So, in the face of the recent market turmoil, an update of our own themes is in order. Since March we have added 6 new themes and also eliminated 6. Currently, we have a total of 22 themes that are active. A review of all those active themes follows.

Joe Mac’s Market Viewpoint: A Review of Our Change-Driven Themes →

Select a theme to see recent Featured Topics we’ve written about it

If you haven’t signed up for website access already, see the bottom of the report for a how-to

Want to see more? You’ll find all of our recent Featured Topics here →

If you haven’t signed up for website access already, see the bottom of the report for a how-to

THEME ALERT

Automation Advances Across the Supply Chain: From Sandvik Mines to Walmart Shelves → 

Robots are being increasingly employed across all stages of the supply chain. From raw commodities, to intermediate goods, and final delivery of consumer products, automation is boosting productivity and cost-efficiency. Billions of dollars around the world are flowing into technologies that will drastically change how all future goods are processed.

According to International Data Corporation (IDC), 60% of the world’s 2,000 largest companieswill have deployed autonomous mobile robots by 2021.

IDC has also predicted that brick and mortar retail should begin feeling the robotic transformation very soon. By 2023, 25% of leading retail stores will have explored or deployed in-store robots to relieve human workers from repetitive tasks. These robot deployments could increase worker productivity by up to 40%. Walmart is now testing robots that roam store aisles to check inventory and tell workers where to find goods, but fetching items is next. In the Philippines, SM Megamall, the nation’s second-biggest shopping center, will deploy three speaking androids that provide mall directions and information on promotions and events in the first quarter of 2019.

However, robots could see their greatest utility further down, along the supply chain. 

Not only can robots operate more efficiently when unpredictable human movement is removed from the equation, but the ability to link up with a larger network of robots who can communicate and automatically delegate responsibilities to one another, based on which process is the most efficient.

Popular US grocer Kroger and online UK grocer Ocado recently partnered to announced they would build an initial $55 million automated robot warehouse. In one of Ocado’s operating warehouses located in Andover, U.K., thousands of robots pack grocery orders and process 65,000 orders per week. Thanks to an air traffic control system, the robots move along a grid, communicate with each other and use charging bays to keep their batteries full.

The surging demand for warehouse labor, due to the rise of E-commerce, has outstripped the number of available workers. 

E-commerce leader Amazon.com already has more than 100,000 robots at over 175 order-fulfillment centers worldwide. The e-commerce giant’s automation drive has been so successful that it is now launching its own cloud-based robotics platform, AWS RoboMaker. RoboMaker is expected to help them streamline the robotics development process in pursuit of more advanced “pick and place” bots (ones that can grab items from shelves and put them into bins for packaging and shipping) for use in even more fulfillment centers. Cainiao, a Chinese logistics firm majority-owned by Alibaba has opened a similar fulfillment warehouse with over 700 robots.

Geek+, also a Chinese firm, which produces robots that assist with warehouse logistics has said its recent $150 million funding round was the largest Series B financing to date for a company working with artificial intelligence enabled logistics robot solutions. The company’s bots automate common manual tasks such as automated forklifts, palate movers, box pickers and even mobile modular robotic conveyor belts. Geek+ warehouse robots can also deliver packages to workers and follow them around as extra storage.

China sees even more robot-enabled advantages on the factory floor.  

As part of the Made in China 2025 initiative, Beijing hopes to boost their manufacturing via enhanced productivity. Tech firm IngDan has developed robots to man the production lines at food processing plants, while Suzhou Govion Technology has managed to more than double the productivity for applications that can be fulfilled by robot scanners. A human eye would take 5-6 seconds to process each object, versus 2-3 seconds by machine; SGT also noted that humans are much more prone to diminishing efficiency and errors over time from becoming tired. In Shanghai, Swedish-Swiss automation company ABB Group plans to build a $150 million robot factory capable of producing 100,000 robots per year by 2020.

Even before intermediate components reach the factory, robots are still having an effect, as industries like mining are increasingly employing robots as well.

Mining firms Sandvik and Resolute Mining are currently working together to fully automate Resolute Mining’s Syama underground mine in Mali, West Africa through the implementation of Sandvik’s range of automation solutions. Underground development has made way for sophisticated mobile monitoring equipment and guidance systems, which will in turn improve safety and productivity in the mine. Sandvik was first off the mark with its automated underground self-driving loaders which are operated autonomously from surface and has since built a strong position in autonomous equipment and automation which it plans to maintain going forward. The company expects to have close to 400 machines operating autonomously by the end of 2018.

Southwest of Mali, in the Congo, Randgold Resources is operating three Sandvik loaders fitted with the Sandvik’s AutoMine automated mining system and the OptiMine modular information management solution that offers a real-time view of underground mining operations to provide real-time tracking and production management tools and analytics outputs for overall equipment efficiency improvements. 

Transporting mined materials is also getting a robotic overhaul as Rio Tinto is rolling out the world’s first heavy freight driverless rail network in the Pilbara, a remote desert region in Western Australia that supplies half the world’s seaborne iron ore trade. Three-quarters of its trains run without drivers as they carry ore from its network of 16 mines to ports, from where it is shipped to Asia. The Anglo-Australian miner expects to get close to 100% by the end of the year. In addition to Rio Tinto, BHP and Fortescue say that the introduction of autonomous trucks is also generating productivity gains of between 15 and 30%.

Automation is a truly global phenomenon that many have seen coming, but few have been able to roll out a reliable timetable for. MRP believes that the transformation is already here and is increasingly upending all stages of the supply chain. Therefore, we have decided to re-affirm out Robotics and Automation theme.

THEME ALERT

MRP added Long Robotics and Automation to our list of themes on July 20, 2017. Since then, the Global Robotics & Automation ETF (ROBO) has returned 1% against the S&P 500’s 8% over the same period. Robotics has recently been caught up in the broader tech sell-off, but retains the long-term fundamentals that make it a disruptive investment theme.

We’ve also summarized the following articles related to this topic in the Technology section of today’s report.

Robotics & Automation

• China’s high-technology revolution extends to the factory floor
• Making complete underground automation a reality
• Amazon Launches a Cloud-Based Robotics Testing Platform
• How robot trains are boosting Australia’s mining industry

Robotics & Automation (ROBO) vs S&P 500 (SPY)

Economics & Trade

China Food

Swine Fever Adds to China’s Economic Headaches

Chinese pig farmers, already reeling from rising feed costs in Beijing’s tariff fight with U.S. President Donald Trump, face a new blow from an outbreak of African swine fever that has sent an economic shockwave through the countryside.

First detected in August, the disease has killed 1 million pigs, prompting authorities to restrict shipments of most of China’s 700 million swine, even though nearly all are still healthy. That has disrupted supplies of pork, China’s staple meat, to big cities while prices collapsed in areas with an oversupply of pigs that farmers are barred from shipping to other provinces. African swine fever doesn’t affect humans but is highly contagious in pigs, making it a serious threat to farm areas.

On Friday, the first cases were reported in Beijing, the capital. Authorities said a total of 86 pigs at two farms in suburban Fangshan district died. Also Friday, Xiamen Airlines, a mid-size Chinese carrier, announced it was suspending use of pork in in-flight meals.

The outbreak adds to a swarm of challenges for Chinese leaders as they grapple with Trump over Beijing’s technology policy and try to shore up cooling growth in the world’s second-largest economy. MNet

Politics & Policy

Lab Meat

The Government’s Role in the Rise of Lab-Grown Meat

Last month, the US Department of Agriculture and FDA convened to debate meat: what it is and isn’t, and if plant-based or lab-grown products like those made by Impossible Burger and Memphis Meats should be called meat. Lab-grown meat is still months from market, but vegetarian meats already have the poultry and cattle industries in a tizzy. Sales of meat analogues are growing at steady clip of 23 percent a year, nibbling out a decent market share.

But fussy regulations are already being spun up. In May, Missouri passed a bill limiting the use of the word “meat” to an “edible portion of livestock or poultry carcass.” Now even “plant-based meats” will have to rebrand. The FDA shouldn’t enact nitpicky labeling rules—especially since it was the federal government that promoted alternative meats in the first place.

The meat industry lobbies are fighting the FDA about meat labeling standards. The National Cattlemen’s Beef Association has asked the USDA to more strictly regulate alternative meats, calling them “egregiously labeled imitation products.” The Association claims that products like the Beyond Burger and Impossible Burger will confuse consumers.

The FDA’s nutrition facts and mandatory ingredient labeling already distinguish plant-based meats from their cow or chicken counterparts. An ingredient list of pea protein, apple fiber, and coconut oil isn’t trying to fool anyone. WIRED

Finance

Cryptocurrencies

Ohio will let businesses pay their taxes with Bitcoin

Starting this week, Ohio businesses will have a new way to pay their taxes: Bitcoin. The state of Ohio has opened a cryptocurrency portal, ohiocrypto.com, which will allow businesses to pay with the digital currency.

Ohio appears to be the first state to allow people to pay with a cryptocurrency, and that the idea originated with State Treasurer Josh Mandel. The site’s FAQ cites the state’s track record with innovation and says that paying via Bitcoin is instantaneous, secure, and transparent. It also lists 23 different taxes that businesses can pay with Bitcoin, ranging from cigarette and tobacco taxes to fuel and sales taxes.

The website directs businesses to enter their state registration number and enter their tax payment amount and tax period date. From there, they can use their cryptocurrency wallet to pay off their balance. The state Treasurer’s office will then use BitPay to process the payment. The website says that businesses operating in and paying taxes in Ohio are eligible — they don’t necessarily need to be headquartered in the state. The site says that Bitcoin is the only currency that’s currently accepted, but that it’s looking to add additional options in the future.

While Ohio’s initiative doesn’t grant the currency legal status, it would be a kind of tacit approval bitcoin has so far lacked. Arizona, Georgia, and Illinois have each considered similar programs, but they haven’t made it through their respective legislatures. Verge

Services

Plant-Based

This Is the Biggest Thanksgiving Ever for Fake Meat

This Thanksgiving, families across the country will oven-roast Tofurkys, Field Roasts, and other fake meats in addition to — or instead of — genuine turkeys. That’s according to MarketWatch, which reports that there will be more plant-based meat substitutes at holiday feasts this holiday season than any previous year. It cites a Nielsen report that found that meat substitute sales grew 6.1 percent this year, to $555 million — yet another sign that Americans’ diets are shifting toward meat alternatives.

A Fortune profile of Tofurky’s growing meatless empire breaks down the factors that are driving buyers towards meatless goods. There are ethical concerns about the treatment of animals, naturally, but the profile also identified concerns about health and the impact of farming on the environment as factors that are pushing American shoppers toward plant-based meat substitutes. “That’s not a fad,” Walmart’s Chase Worthen, who helps the company decide what vegetarian goods to stock in its stores, told the business magazine. “It’s a trend that’s here to stay.”

And MarketWatch pointed to a report by food consultancy Baum and Whiteman that predicted lab-grown meats, like those made by Memphis Meats and Future Meat Technologies, will be a key food trend in 2019. Futurism

Cannabis

Canada’s struggle to supply legal weed described as ‘national shortage’ that could last months

After more than a month of legal recreational marijuana sales in Canada, provinces say stores are still having trouble procuring enough pot from producers that have built large valuations on promises of selling tons of the drug.

MarketWatch talked to officials and retailers in eight of Canada’s 10 provinces, and all said they are receiving only small portions of the product they have ordered. One of the provinces, British Columbia, said supply issues aren’t expected to be resolved for six to 18 months, based on discussions with licensed pot producers. The other provinces did not give many reasons for investors to be optimistic, largely saying the shortages would hamper operations for weeks and likely much longer amid what one private retailer called “a national shortage” of cannabis.

The dearth of pot sales suggest that scaling legal cannabis sales across the country has been a complex endeavor that no enterprise has quite figured out. After five of the country’s largest weed companies reported earnings in the span of a few days earlier this month — Aurora Cannabis Inc. ACB, -5.01% , ACB, -4.63% Canopy Growth Corp. WEED, -4.82% , CGC, -5.48% CannTrust Holdings Inc. TRST, -3.65% CNTTF, -3.71% Cronos Group Inc. CRON, -5.68% CRON, -3.91% and Tilray Inc. TLRY, -2.07% — investors learned that in the last two weeks of September they had shipped less than 1% of the expected C$1 billion ($755.5 million) in recreational sales anticipated by Statistics Canada for 2018. MW

Ecommerce

Mobile drove Thanksgiving spending to a record high

US consumers spent a record $3.7 billion on Thanksgiving this year, driven primarily by mobile-commerce (m-commerce), according to data from Adobe, cited by TechCrunch. Thanksgiving was the first day this year where $1 billion in sales was completed on smartphones.

Mobile devices played an instrumental role in traffic and sales volume this year. Smartphones contributed to more than 50% of online traffic to retail sites and 36.7% of sales. Desktop was the main method, accounting for 52.8% of sales.

And as the holiday season progresses — and spending increases— a wider share of sales than ever is expected to be transacted online: Sales are expected to reach $124 billion in US e-commerce during the season, up 14.8% annually.

Beyond the holiday season, m-commerce is expected to continue to play a larger role in the overall e-commerce space in the US: Business Insider Intelligence expects US m-commerce payment volume to grow from $105 billion last year to an estimated $387 billion in 2023. BI

Retail

Store Traffic Falls Again on Black Friday but Not All News Is Bad

A surge in online shopping and higher spending by low-income Americans gave a lift to the start of the holiday season, even as initial reports showed that foot traffic to traditional stores continued its long decline.

During Thanksgiving and Black Friday, traffic to U.S. stores fell between 5% and 9% compared with the same days last year, estimated RetailNext, which uses cameras to track people in both mall-based and stand-alone retailers. Another measurement firm, ShopperTrak, estimated traffic fell less sharply, about 1% over the two-day period from a year ago.

Purchases continued to shift online as stores put many of their best deals on their websites and more consumers, even those earning minimum wages, shop on their smartphones. Internet sales for Wednesday through Black Friday surged 26.4% from a year earlier to $12.3 billion, estimated Adobe Systems Inc., which tracks activity on thousands of websites.

And many lower-income Americans are finally feeling more flush a decade after the recession, say shoppers and retail executives. Lower gas prices and rising hourly wages are giving them extra cash to spend, a boon for Walmart Inc., second-tier mall owners and other retailers that count on them for a large percentage of their sales. WSJ

Manufacturing & Logistics

Satellites

LeoSat plans 5G-ready low latency satellite network for 2019 launch

Though satellite-based phone and internet services have developed reputations for offering slower service than terrestrial alternatives, the FCC recently approved next-generation satellite networks that promise improved performance. Now one of the approved providers, LeoSat Networks, says that it will offer 5G cellular-rivaling low latency that could be used either as a premium 5G alternative, or as a backbone for international commercial 5G services.

Next-generation 5G cellular service promises to improve at least four dimensions of telecommunications performance, but two — increased bandwidth and ultra-low latency, or responsiveness — are the technology’s biggest selling points.

Initially, the company’s motivation is to offer premium communications services to wealthy customers such as banks, governments, stock exchanges, and research centers that have a need for low latency data. These customers would use LeoSat-provided satellite communications hardware.

But LeoSat believes that its satellites could also be used by cellular carriers to handle 5G “backhaul” — the shifting of data that takes place behind the scenes, which otherwise would use either fiber cables or tower-to-tower wireless signaling. Customers would be able to use standard 5G smartphones and devices, but carriers would be sending their data through satellites, not just networks of cables. VB

Technology

Robotics & Automation

China’s high-technology revolution extends to the factory floor

China has laid out its ambitions to be the factory of the new era — featuring robots powered by artificial intelligence and sensors capable of manufacturing, assembling and inspecting.

The latest push, on display at China’s Hi-Tech fair in Shenzhen this month, catapults AI from the services sector — where it has been widely deployed via chatbots, targeted ads and newsfeeds — on to the factory floor.

Boosting manufacturing, the taproot of China’s economic rise, is a key part of Beijing’s Made in China 2025 policy. The sector’s leading edge has been eroded by rising wages, prompting manufacturers to move to cheaper locations such as Vietnam — and triggering Beijing’s efforts to ramp up productivity via technology

“They want to continue to be the world’s factory but not only of low-end items like toys and electronics,” said Edison Lee, analyst at Jefferies. “But because labour is no longer cheap they need to raise the productivity of factories and people.”

The policy has irked Washington, which sees it as a state-driven and funded policy that will disadvantage overseas competitors, but has been quickly adopted by domestic companies. FT

Robotics & Automation

Making complete underground automation a reality

With a proven track record of successfully implementing automation solutions Sandvik Mining and Rock Technology is playing a critical role in establishing Africa’s first fully-automated underground mine.

Speaking on the side lines of Electra Mining Africa 2018, where Sandvik unveiled its Leopard DI650i drill rig for the first time globally, Sandvik Mining and Rock Technology president Lars Engström noted the company’s partnership with ASX-listed gold miner Resolute Mining.

“The Syama underground ore body is 1 km deep and 200 m wide and provides a fantastic opportunity for a bulk underground mine, says Resolute Mining CEO John Welborn, noting that the operation will adopt sub-level caving as the mining method to produce on average 300 000 ozpa of gold over its 14-year mine life.

“Sub-level caving, the repetitive activity of drilling up into the ore body and collapsing it down into a draw point where the ore is collected and extracted, lends itself to automation and evolving technologies and efficiencies,” Welborn explains.

The gold miner is thus in the process of transitioning its Syama open pit to a fully automated underground mining operation and notes that by partnering with Sandvik, it can create a truly digital mine. MRA

Robotics & Automation

Amazon Launches a Cloud-Based Robotics Testing Platform

Amazon’s kicking off Re:Invent week with the launch of AWS RoboMaker. The cloud-based service utilizes the widely deployed open-source software Robot Operating System (ROS) to offer developers a place to develop and test robotics applications.

RoboMaker essentially serves as a platform to help speed up the time-consuming robotics development process. Among the tools offered by the service are Amazon’s machine learning technologies and analytics that help create a simulation for real-world robotics development.

The system can also be used to help manage fleet deployment for warehouse-style robotics designed to work in tandem.

“AWS RoboMaker automatically provisions the underlying infrastructure and it downloads, compiles, and configures the operating system, development software, and ROS,” the company writes. “AWS RoboMaker’s robotics simulation makes it easy to set up large-scale and parallel simulations with pre-built worlds, such as indoor rooms, retail stores, and racing tracks, so developers can test their applications on-demand and run multiple simulations in parallel.”

The feature arrives as Amazon is taking a more serious look at robotics. The company has long deployed warehouse robotics, which will be in full force this holiday season. It’s also reportedly been looking at pick and place robots to help speed up fulfillment, along with a rumored home robot said to be on track for 2019. TC

Robotics & Automation

How robot trains are boosting Australia’s mining industry

When a runaway train carrying 238 wagons of iron ore derailed in Australia this month due to human error and equipment failure, it cost BHP Billiton millions of dollars in lost production. But it also turned the spotlight on how replacing people with autonomous technology can boost safety and efficiency in the mining industry.

Rio Tinto is rolling out the world’s first heavy freight driverless rail network in the Pilbara, a remote desert region in Western Australia that supplies half the world’s seaborne iron ore trade.

Three-quarters of its trains run without drivers as they carry ore from its network of 16 mines to ports, from where it is shipped to Asia. The Anglo-Australian miner expects to get close to 100 per cent by the end of the year.

Rio is leading a high-tech revolution sweeping the mining industry, which is deploying driverless trains, trucks, drills and loaders that are typically controlled from remote operations centres in cities far from mine sites. The rollout of autonomous systems has accelerated in the wake of the 2012-2015 commodities crash, which forced global miners to slash costs, streamline their workforces and increase productivity. FT

5G

German regulator sets ball rolling for 5G auctions

Germany’s network regulator set the ball rolling on Monday to auction fifth-generation mobile licenses, winning a nod from lawmakers after months of controversy over whether the plan would help to close a connectivity deficit with the country’s rivals. The BNetzA agency said it was immediately opening applications for the 5G spectrum, setting a deadline of Jan. 25 for submissions and saying the auction would begin in early 2019.

The process of determining the ground rules for 5G services that could power connected factories and wireless broadband has been fraught, reflecting concerns that Europe’s largest economy – already plagued by patchy 4G coverage – could fall further behind its rivals in the digital stakes. In the end, an advisory council of elected lawmakers backed the BNetzA’s final blueprint published this month after the regulator addressed earlier concerns around the extent of future network coverage.

The BNetzA will auction spectrum in the 2.0 Gigahertz and 3.6 Gigahertz bands that are best suited to data-intensive industrial or urban applications – and not to plugging holes in Germany’s existing networks. Also on offer will be frequencies in the 3.7-3.8 Gigahertz and 26 Gigahertz ranges that are suitable for local applications, such as creating superfast networks for industrial campuses.

Germany’s three main network operators – Deutsche Telekom , Vodafone and Telefonica Deutschland – are all expected to bid despite their reservations over the design and possible cost of the 5G auctions. R