I am a big fan of logistics. Moving things from here to there is the dream of any engineer. We can track my enthusiasm to my time spent playing SimCity and The Incredible Machine games. I will throw in some Lemmings in the mix too.
Despite my keen interest in the field, we must confess it’s perceived as a dull industry. And no wonder. Run by old school boys driving trucks and loading freights. Grease, dirt, heavy cargo and men in flannel shirts come to mind.
However, the logistic dream from the 60s has nothing to do with logistics in 2018. The convergence of e-commerce, mobile and artificial intelligence is sending shockwaves across the industry.
While international logistics are essential, their complexity pales to the challenges of last-mile delivery. And to be honest, the current last-mile companies suck big time. I’m tired of getting my food cold. I’ve tried them in many different cities and countries, and it’s a hit and miss. I mention food delivery, but the same goes for package delivery.
Many companies, stirred by the looming Amazon empire, are pushing into the field. To do last-mile right, you need massive capillarity and low response times. On top of building predictive systems for improved routing, which is worth noting, not everyone is doing; there is the simple need of adding more couriers. Here is the kickback, they have to be cheap. All hail to the sharing economy.
Overworked and underpaid riders roam the world cities delivering your overpriced pizza. And local governments aren’t liking it. There are now several instances where judges are slamming the breaks on last-mile companies on employee exploitation charges.
The rise of the robots
Not only last-mile delivery requires speed and capillarity, but low marginal costs. The problem is that humans are slow, expensive and above all, they despise this kind of work. People aren’t cogs, but we insist on using them as machinery.
Enter the robot utopia. What if we could substitute these tasks with robots, or more precisely, autonomous delivery vehicles. Devices that can travel by air or ground, without human intervention, delivering contents virtually anywhere within record time.
That’s the dream a set of companies has been pursuing during these past five years. The problem? The over-sold robotic promise of better-than-humans. The result is a backslash of under-performing companies with lame devices that produce mix-bag results.
To avoid undesired flashy PR, many of these companies have been in stealth mode for a while and have only unearthed their products recently.
Doritos. Drones. Drama. The perfect recipe for the big game. #JustAsk Alexa #SB51 pic.twitter.com/5sMvM5O6mU
— Amazon Echo (@amazonecho) February 6, 2017
To walk or to fly?
There are two big approaches in the field, air delivery with drones or ground distribution with small autonomous delivery rover-like vehicles. Which is better is up for debate.
Autonomous Air Delivery Vehicles
What better way to do last-mile delivery than via high-precision air delivery? It’s fast, allowing straightforward delivery routes and road traffic avoidance.
Within this group, we find companies like , Matternet, Zipline or the omnipresent Amazon. These systems work, and they’re impressive to watch.
Despite how remarkable they are, the aerial approach is riddled with problems. While it’s faster than ground approximations, technical specifications are complicated, both in-flight and on delivery. The major hurdle though isn’t technical but regulatory. Not only flight regulations are strict, but craft safety and air traffic control are critical.
The problem is so big that there are several startups like AirMap or Google’s Project Wing working on Drone Traffic Control products.
Drone delivery has a place and use, that said, I don’t believe it will be massive. The reason is simple, e-commerce package traffic (or food for that matter) is too big for last-mile air delivery. The scale needed to support an even small percentage of that traffic would collapse any city’s airspace.
“But tools have not yet been developed to predict how will affect small drones flying around obstacles such as buildings or hills at such low altitude, Gitlin said.”
Air traffic control for drones is coming. Here’s how it could work
Taking Amazon Prime as an example, we’re talking about five billion packages shipped in a year; 416 million a month. If you factor in the seasonality of shipping, you have north of 900+ million deliveries at any given December. That’s only Amazon. Factor in new players like Walmart and the impending growth of urban areas. Air delivery requirements (collision avoidance, weather patterns, and space to name a few) will make it very hard to scale beyond a certain threshold.
As I mentioned before, Drone Delivery is instrumental but the cornerstone industries won’t be ecommerce or food delivery per se. Companies will continue to pursue it, but it won’t amount to much at first. The real disruption will come from shippings where speed is critical as in life-threatening, for example, medical deliveries. From blood samples to vaccines to organs.
Drones will gain traction outside mega cities too. Agrotech is already making use of drones, and I’m sure they’ll expand their usage of delivery services too. Industrial operations will also employ air delivery for spare parts, maintenance operations and even safe product transportation (i.e., Diamond delivery through hostile territories).
Autonomous Ground Delivery Vehicles
The other big group is ground-delivery autonomous vehicles. Within this side, we have startups like Starship, Marble, Teleretail, Dispatch or Robbie.
Ground robots sacrifice speed for easier regulation and less technical complexity. These devices look like small Mars rovers and are designed to roam the walkways at human speeds. They are fully autonomous, even though they do have human backup operators in case of emergency. They range from small carts to small burrito-like stands with wheels.
Approval for this kind of vehicles has been straightforward. There are already five US states that allow them on their walkways as well as 40 European cities with small-scale pilots.
These robots are simpler to deploy, and that’s the reason why they’re already operational in some locations. As with drones, the concern is around how to scale their number. For now, regulation limits their speed (6 km/h) and weight (18kg – 36kg unloaded) to human standards to prevent dangerous collisions. These restrictions severely cap their performance. Some of these vehicles can reach speeds of up to 50km/h and achieve bigger sizes. Faster and bigger rovers would enable a much more prominent payload in less time, improving the last-mile performance goal.
Many in the industry think these are initial conditions and as humans become used to the vehicles, they’ll gradually tolerate higher limits.
While accidents will occur, it’s not fair to compare bikes or motorbikes with autonomous delivery vehicles. If done right, LIDAR technology should provide better sensors than anything human. This should enable brake and slowdown of the rovers in the presence of humans, making it safe to operate at higher speeds without incidents.
Another concern is walkway traffic. If last-mile companies start deploying these vehicles en masse, it could cause severe problems for pedestrians.
“If there really were hundreds of little robots,” Ehrenfeucht said, “they would stop functioning as sidewalks and start functioning more as bike lanes. They would stop being spaces that are available for playing games or sitting down.”
Renia Ehrenfeucht, University of New Mexico professor. Co-author of Sidewalks: Conflict and Negotiation over Public Space
Ehrenfeucht pointed out that 130 years ago, streets were not yet divided into lanes for traffic, parked cars, pedestrians and bikes, and that the introduction of robots to the streetscape might require a reimagining of the available space, possibly with a designated lane for robots.
I have to agree with Ehrenfeucht’s vision. I think that the advent of autonomous vehicles will reduce private car ownership and traffic. Hence we will be able to devote new lanes to autonomous ground vehicles. It will take years though. In the meanwhile, we’ll probably share the walkway with these little rovers.
It’s worth mentioning some other approaches like Nuro’s one. Cofounded by two former Googlers, they’re taking a radical approach. They’ve created an autonomous delivery vehicle, like Waymo’s, from the ground up. Jiajun “JZ” Zhu was one of the first employees at Waymo, so no surprise here. They’ve raised a monstrous 92 million dollar round for the company to put these babies on the road soon.
While I think the approach has merits, especially the heightened specialization of autonomous vehicles, they have a long way to go. Being a specialized vehicle, they’ll probably have less regulatory hurdles than Waymo, but they need to prove that a street-parked approach works better than a walkway one. That said, I’m sure they’ll inspire a new crop of vehicles designed for one use and one use only. It’s the modularization of the point of integration. The problem is, they might be too early for the modularization phase. Right now, vertical integration will win the game.
Disruptive effects of autonomous delivery vehicles
One of the most interesting effects is the clear disruptive nature of these vehicles. Most companies are aiming for e-commerce or food and grocery deliveries. That’s, in my opinion, the wrong disruptive approach.
There is entrenched competition in that space. There are myriad logistic companies that are pushing incremental innovations in last-mile deliveries. For autonomous delivery to survive, they need to focus on underserved or non-existent market footholds.
Starship Technologies is a fascinating case. They’ve gone from regular package delivery trials to focus on university and corporate campus deliveries. The move is genius. They’re serving a non-existent market, which welcomes the capacity to deliver goods (let it be food or packages) between buildings. Because there are no competitors, the users have no expectations. This works for Starship, who can develop their technology without performance comparisons. In such scenario, limiting regulations won’t matter much, as having rovers is already a welcome addition.
The critical part here is that autonomous delivery vehicle technology is a disruptive one. The pace of innovation is dramatic. Improvements in sensors, batteries, space allocation and route prediction will make to the market in no time.
“Mr. Blown’s trial showed consumers were open to this new service, but it also revealed some limitations of the robots: they were confined to a three-mile area that the machines had to map out beforehand.
Delivery robots hit the streets, but some cities opt out
[…]
“At the moment one of our couriers can deliver 50 parcels in one go. With one robot delivering a package in about half an hour, you would need a lot of robots.”
The Hermes case is a beautiful example of why this technology will disrupt the logistics industry. So far, limitations on autonomy, mapping and data necessity, speed and cargo caps, will make them underperform. Assuming that this will be the case in a couple of years is a mistake. One that will wipe many couriers. Disruptive technology advances will make it progress way faster than many can predict. Once these technologies make it out of their niches (upscale march), they’ll start competing with traditional couriers, and they’ll win.
Market opportunities
is wide open for a plethora of supporting services. 3D Sensing mapping companies will become increasingly important. New delivery companies don’t want to re-map an area but leverage preexistent LIDAR-generated 3D maps. There are several startups already working this approach, most only for roads, but the competition is still wide open for walkways and aerial maps.
Another space that will need some services are geofencing services for municipalities. Cities need a way to register autonomous delivery vehicles, to track them and to create no-fly-no-drive exclusion areas. The most advanced company in this space is AirMap, which does this for the drone industry. Nothing like it exists for ground delivery fleets. That piece will be pivotal to the mainstream adoption of autonomous delivery rovers.
Due to the autonomous nature of this vehicles, they’ll need to achieve a certain number of autonomous driven miles before they’re allowed to operate. Simulation software, like the one employed by Waymo, will be critical. Scenarios are different from autonomous cars. Walkways are very heterogeneous and pedestrians too. There will be a need to engineer synthetic scenarios permutations. These alternative scenarios will allow for better testing of the autonomous brain.
Many of these companies though, need to rethink their customers. Going for the sexy e-commerce pie might be a big mistake at this stage. New delivery methods allow them to serve inexistent demand. Becoming adept in these areas will allow them to expand horizontally and attack incumbents from a much more robust position.
It is an exciting new space, whose time is coming faster than many might think. Regulations are in place. Testing pilots are maturing, and scale is being achieved. I wouldn’t be surprised to see some of these vehicles roaming our streets in two to three years. It’s a brave new world, one where humans might be pushed aside if we aren’t careful.
Run, run, the robots are here!
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