Innovation in transport: navigating to a better destination

Date : 29 October 2019

E-commerce is growing in almost all markets, presenting opportunities for retailers and technology firms to innovate and provide faster, safer, cost-effective and environment-friendly delivery alternatives in both the last and middle mile space. However, with unique opportunities come not only operational challenges but also numerous and evolving regulations.

To date, the tendency from regulators has leant very much toward “better safe than sorry”, with several barriers in the way of widespread adoption for most middle and last-mile innovations. Are these barriers surmountable? That’s what I will focus on in this blog.

What’s been happening?

There’s been a sharp increase in the number of last and middle mile delivery’s pilots taking place. These are designed to test the viability of new innovative means of delivery.

A high-profile example is Walmart’s autonomous vehicles (AV’s), which have been developed by Gatik, a California-based startup. They are being deployed in the ‘middle mile’ between the retailer’s warehouses and its store-adjacent package pickup kiosks, with the aim of supporting the growth of its e-commerce arm, which is generating an increasingly substantial part of Walmart’s total revenue.

Source: Gatik

 

Meanwhile, Waymo, Goggle’s sister company, has been testing self-driving trucks in Arizona. These autonomous vehicles carry two trained safety drivers who can take over if there is a need to.

Source: Waymo

 

Drone deliveries are also being trialled by major technology and retail firms. These are among the more controversial innovations. Having teamed up with FedEx and Walgreens, and being given government approval, Google’s ‘Wing’ delivery service is now live in Virginia, US, making commercial deliveries of snacks and health care products. Is this a sign of things to come?

Source: Wing

 

Another technology on retailers’ radars is delivery robots. Similar to drones, the use of robots is still at its infancy but a few retailers, including Tesco, Albert Heijn and Amazon have been testing them in relatively controlled environments to understand not only their potential but also their limitations.

Source: Starship Technologies

 

Barriers

One of the most challenging obstacles facing businesses that eye the implementation of such technologies is safety. Each technology has its own challenges. For example, AV’s must be capable of navigating smoothly through dense traffic, while robots shouldn’t interfere with pedestrians or cyclists and drones shouldn’t pose a threat to people or damage surrounding infrastructure, such as streetlights and power lines.

Strict regulations will prove difficult to overcome, especially for drones and AV’s. For example, drones in the USA are obliged to fly within a maximum altitude of 400 feet, only during daylight, over a sparsely populated area, and be operated by a pilot on a Visual line-of-sight (VLOS) basis. But as we’ve seen with Wing, it’s possible, in the right circumstances, to navigate through regulation to a commercial proposition – even if it is currently small scale.

Most countries require AV’s to have a licensed driver present to monitor the vehicle’s operation and take over immediate control in the event of a failure or emergency. It’s difficult to see how businesses can realise the potential of automation when technologies involved need to be “man-marked”.  

Functional constraints, particularly for drones, can also hamper the scaling process. For example, landing zones would have to be clearly identified and strategically located. The payload for drones may also prove a barrier for decision-makers. Current models max out at medium-sized parcels weighing a few kilograms, limiting their usefulness.

How can these hurdles be surpassed?

Businesses will need to determine the viability of these technologies in a future that may look very different in terms of regulation. Regulations don’t stand still and will evolve. In the near term, one can probably expect drone deliveries to primarily take place in rural or low-density suburban areas that are relatively difficult to access, whilst robots could be used in suburban areas, gated communities and campuses. But there will be no one-size-fits-all rule book. Different countries, states, regions and cities may all have a different set of rules to play by.

Dense urban areas seem like the most natural environment for AV’s, although they can also be used for deliveries in remote areas where driving longer distances might be necessary, since the driver fatigue constraint doesn’t apply to this particular scenario. To achieve this, high-definition maps that cover entire countries will be needed to help AV’s operate safely, whilst algorithms for use in a wide range of weather conditions would also need to be developed.

Given the increasing environmental responsibility agenda, the uptake of innovative means of delivery to meet strict vehicle emissions standards is inevitable. Drones, robots and AV’s are potentially a more sustainable alternative to the traditional vehicles used by most of the existing logistics operators’ middle and last mile fleets and have a good chance of meeting stringent greenhouse emissions targets.

As for now, the cost of development and implementation of such technologies remains high, particularly given that penetration for most of the technologies discussed will be restricted in the short-medium term. But costs will eventually drop over time, as technologies become cheaper to manufacture, leading to a more sustainable model.

There has been undeniable progress in the development process of these technologies. Nevertheless, we’re likely to be waiting a while before we see the scale needed to make a material difference. Increased penetration will require the involvement and agreement of all key stakeholders, from retailers to tech firms and legislators to the general public. Expect a glacial creep of deployment rather than an avalanche!

Wassim El Attar

Supply Chain Analyst

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