This is because of the difficulty in justification. Typical 3PL contracts with customers are 2-3 years. After the contract ends, the customer can either re-contract with another 2-3 years or change the service provider.

If the automation is expensive and requires a long period to depreciate (more than the 1st contractual period), then it may be challenging to convince the management on the investment.

Agreed. Additionally, after the contractual period is over, if there is a change in customer for the same space, the automation installed may not be suitable. Dismantling of the machine may incur additional cost, time and effort.