Following on from our recent piece on the widespread automation of labour, we look at three stocks in the local market verging on an automated future. Qube (QUB.AX), SpeedCast (SDA.AX) and Domino’s Pizza (DMP.AX) couldn’t be more different, but as we’ll explore, automation is a big part of their present and future plans and stands to be a source of incremental efficiency gains for years to come.
Qube is a portside logistics and bulk handling business with operations throughout Australia. Over the next ten years, it will develop a multibillion dollar intermodal terminal at Moorebank with a fully automated terminal and precinct capable of greater speed, efficiency and cost effectiveness than would have otherwise been possible. Labour costs in particular are forecast to be a fraction of the cost of a traditional project of this nature. As the video below shows, staff will primarily be used in either supervisory roles or selectively where automation is not yet reliable or cost effective. A secondary effect of this terminal will be to lower the need for road freight via trucks. Initial projections suggest this could eliminate ~300 trips per day by 2030, removing a large number of future trucking jobs in the Sydney area.

Figure 1. Moorebank Logistics Park, demonstration video
Source: Qube
Even outside of Moorebank, Qube’s focus remains on automation. Its acquisition of Patrick was predicated on the view that through automation and superior asset utilisation, Patrick had become ‘the most efficient, lowest-cost container terminal operator in the country’. More seasoned readers may remember Qube chairman and former Patrick CEO Chris Corrigan’s 1998 waterfront wars. Is it any wonder then, that it is Qube now leading the charge on automation nearly 20 years later?
If we move across the port into the water, you might also see the ships themselves are increasingly automated. From mammoth cruise ships to merchant vessels of all sizes, crew sizes are shrinking and data hungry automated systems are replacing them. Such needs are being met via satellite, and the largest provider of such services globally is ASX-listed SpeedCast (SDA.AX). Most commercial vessels today use a rudimentary and inexpensive technology known as an L-Band, but as their bandwidth capacity requirements grow, many are converting to more advanced systems where SpeedCast is well-positioned.
Merchant bandwidth capacity demand
Figure 2. Merchant bandwidth capacity demand                                          
Source: NSR, SpeedCast                                                                                                     
Figure 3. Energy market bandwidth demand vs. price
Figure 3. Energy market bandwidth demand vs. price
Source: NSR, SpeedCast
SpeedCast’s domination of oceanic connectivity extends into the energy sector, where it services many of the world’s largest offshore oil rigs. Digitisation and automation of the oilfield is driving massive bandwidth increases, further accelerated by falling costs due to oversupply from the satellite operators themselves. A service provider such as SpeedCast is able to pass on falling bandwidth costs to its customers while retaining some additional margin, and benefitting from the higher volumes as a result. As we move towards a world of smart oil rigs and autonomous ships, SpeedCast will continue to play a pivotal role in keeping remote systems connected.
At the other end of the business spectrum is Domino’s Pizza, one of the most successful stocks on the ASX over the last ten years. Domino’s has proven a master of automation and technological utilisation, all but removing in-store and telephone ordering, first through an intuitive online site and then through a very handy mobile app. More recently, it has released an automated voice assistant so customers can order by chatting to a computer, which happens to be a first in Australian fast food. More viscerally, Domino’s has also prototyped its very own pizza delivery robot, DRU.
DRU, Domino’s pizza delivery robot
Figure 4. DRU, Domino’s pizza delivery robot
Source: Domino’s Pizza Enterprises Ltd
The most telling evidence of its automation push, in our view, is its average headcount per store which has decreased steadily over time. Domino’s ambitions will be somewhat limited by its core franchisee model, as the upfront cost of replacing labour with new technology is very expensive. That being said, it is only a matter of time before the economics of in-store automation (e.g. replacing kitchen staff with robots) becomes tenable. In the meantime, Domino’s continues to push the frontier of technology in fast food, crafting a more efficient, reliable and cheaper service as a result.
Qube, Domino’s and SpeedCast have all recognised that the future lies in automation. They are very different business operating in logistics, telecommunications and fast food, respectively but their abilities to improve internal efficiency, boost sales or even facilitate automation, have them well-placed to be leaders over the next decade and beyond.
Clime owns shares in QUB and SDA.