Last-mile delivery a bellwether for auto industry tech

Big technologies aren't built. They're delivered.

Particularly in the automotive space, the most promising technologies—electrification, autonomy and robotics—have their proving grounds in the last-mile delivery sphere. And this, in turn, allows the sector to serve as a bellwether for the industry overall.

Carla Bailo, president and CEO of the Ann Arbor, Mich.-based Center for Automotive Research, isn't surprised. After all, she said, the first-mile and last-mile delivery spaces are nimble in ways that the other segments just aren't.

"When we think about first-mile or last-mile delivery of goods and services, most companies are going to a hub-and-spoke delivery model, and that means getting things out from that hub in the most efficient manner," Bailo said. "And if you think about the last-mile delivery service it is usually in—what I will call—a 'contained area,' so a neighborhood or a preordained route.

"The (fewer) variables you put into a route makes it more able to be autonomous or semi-autonomous and use different modes of delivery than a very complex situation of commuting somewhere or being in mixed traffic or mixed roadwork," she said. "That is why you are able to see the technology really start to blossom, and you perfect it in those kinds of situations."

Take electrification. The technology grew up quickly in the last-mile space, in part because the industry has the ability to control its infrastructure and operations. Delivery vehicles don't rack up a ton of miles delivering goods door-to-door, and they start from and return to the same hub daily, offering opportunities for regular recharging.

So while governments and auto industry heavyweights work to develop charging infrastructures for the coming onslaught of passenger EV models, the last-mile delivery space is diving into the technology.

Amazon is a prime example. Last year, the company pledged to purchase 100,000 custom electric delivery vehicles, and by February 2021 had rolled out electrified delivery vans on routes throughout the Los Angeles area. The vehicles, developed in partnership with Rivian, were set to make debuts in 15 additional cities by the end of this calendar year.

Sixteen cities may not seem like much, but all things considered, the move was a significant one, according to Mahesh Srinivasan, a University of Akron professor and director of the Institute for Global Business.

As a giant within the consumer retail space, he said, Amazon sets the tone for the entire last-mile delivery industry. By taking the step toward electrification, it is setting new standards for the industry as whole.

"Amazon is the big elephant in the room when you talk about logistics," Srinivasan said, "and they are moving forward with the electric vehicles."

It won't be long, he said, before the rest of the industry does, too.

Look no further than the U.S. Postal Service for proof of that. USPS said in February that it had signed a 10-year agreement with Oshkosh, Wis.-based Oshkosh Defense for the manufacturing of as many as 165,000 postal delivery vehicles.

Those vehicles, USPS said in a news release, will be EVs or fuel-efficient ICE vehicles that can be retrofitted to keep pace with advanced BEV technology.

The contract's initial investment was $482 million.

FedEx, meanwhile, has pledged to achieve carbon-neutral operations by 2040, and noted that it looks to transform its entire fleet to electric vehicles.

"Transforming a global fleet to electric vehicles is complex, and it's important that we have the right infrastructure to do it responsibly," FedEx said on its website. "We're working closely with power utilities, regulatory agencies, and others to make it happen—and every day is a step closer from now to what's next in achieving our goal."

Small vehicles, big opportunities

Autonomy, likewise, is taking shape in the last-mile delivery segment with companies like Nuro and Starship—a Goodyear-backed startup—redefining what it means to have goods and dinners delivered.

Nuro's small, driverless vehicles are designed to navigate city streets and neighborhood traffic to deliver groceries and meals. The company already has partnered with Walmart, Kroger, Chipotle, Dominos and CVS.

FedEx, in June, signed on with Nuro for delivery of packages, but it's not the only vision the company has for quick delivery. The global parcel service is looking to Roxo, an autonomous, electric delivery robot developed in conjunction with Deka Development and Research Corp. The robot is designed to carry short-distance, last-minute, last-mile deliveries directly to doorsteps.

"The bot uses Deka's established iBOT electric wheelchair base, capable of negotiating rough terrain, traversing steps, and steep inclines," FedEx said. "Its sensors maintain 360-degree awareness of its surroundings and uses artificial intelligence, or AI, to choose the safest path or course of action. With a tall profile it is easy for pedestrians and road users to see. It also uses signals, lights and a signaling screen that clearly communicate its directional intent."

The company launched Roxo in Japan in July and hopes to expand. In the U.S., the technology is being tested in Memphis, Tenn.; Manchester, N.H.; and both Plano and Frisco, Texas.

Starship, meanwhile, is doing the same with its small, insulated robotic vehicles designed to scoot take-out orders and other deliveries across college campuses.

These may not be conventional vehicles, but Bailo said they offer plenty of opportunities for auto suppliers across the rubber industry.

"When we look at some of the delivery vehicles—like Nuro or Starship Technologies—they have tires, they have door seals, they have other things that are going to have to be made out of rubber," Bailo said. "And then the quantities of them will be vast. When you think about it from a hub-and-spoke perspective—10 robots going out from one vehicle—that is a lot of products."

Drone-ing on
Drone technology seems to be perpetually on the horizon in the last-mile delivery sector. According to Srinivasan, some analysts projected that, by 2020, half of the packages delivered would be carried by drones.

We aren't there yet, Srinivasan said. But he's also not about to give up the technology overall.

"I think there is still promise in that we can expect to see drone technology and delivery by drones pick up a little," he said. "But it will not be as quick because of some challenges."

Public policy and regulations are among those challenges, according to Bailo. And it doesn't just impact drones—that challenge is a universal one. It remains one of the key reasons that new automotive technology can be tested mainly in easily regulated areas.

Once the technology is ready for a larger-scale deployment, the policy and regulation front gets a little bit trickier.

"Regulations and public policy are still far behind technology," Bailo said. "As you move into larger geographic expanses, then you have to deal with many, many different parties and worry about that so it makes it much more difficult."

Getting those regulations sorted out will be important, because the technologies emerging in the first-mile and last-mile delivery spaces have potential to create greater equity, Bailo said. Drone technology is one that has potential to do just that.

"The other part about drone delivery that is really, really interesting is that it is one way to get goods out to the rural communities and do that expeditiously and efficiently," Bailo said. "Because … in a lot of cases electrification, today, just won't work in those areas where a drone will work very well."

Consumer-centric

In the last-mile delivery space, the consumer is the focus. And for the technology to really work for everyone, easy-to-use, well-designed software will be essential, Srinivasan said.

Software is an area that may be overlooked in discussions about the future of last-mile delivery, but Srinivasan contends that it's one of the most critical components moving the entire industry forward. If packages are going to be delivered more quickly, he said, there needs to be seamless logistics and organization across companies.

"I think the two-hour window is going to become pretty standard," Srinivasan said. "Amazon Prime, (which) pioneered the two-day window, moved to a one-day window and now has same-day in many places, and I think that is what people are expecting. If you need to move to a two-hour delivery standard, you need to automate the process."

Exactly what that automation will look like is tough to say. But in the retail space, Srinivasan assumes that it will continue to move toward consumer-centric applications—giving the consumer more control over when and how quickly packages are delivered.

"Uber has done a good job of integrating the application from the consumer side," Srinivasan said. "It is seamless. So when a customer wants a ride, it is seamless in how it finds the driver to pick up the rider, and they show up."

And, like Uber, retail is transferring the bulk of that last-mile responsibility to the consumer. In many ways, large retailers like Walmart, Target and Home Depot are expanding in their roles as fulfillment centers. Consumers can use a computer or app to make purchases and then pick them up in-store, curbside or even at pick-up lockers.

These trends are likely to continue, Srinivasan said, and he won't be surprised to see them expand. How quickly that happens, though, depends on how willing consumers are to embrace the technology.

"(Technology) goes through a lifecycle before it can be accepted," Srinivasan said. "There is some resistance from the consumer's end. If they are not familiar with the technology, if people don't know how to work something … or they are afraid they'd do something wrong, that stops them at the door."

At this point, adoption and implementation of new technology in the last-mile delivery space is relatively universal. The only exception, Bailo said, would be Japan, which embraced last-mile delivery years ago.

"They already have motorcycle delivery, (and) they have been doing this for years, optimizing their supply chain," Bailo said. "China and Europe, they are all working strongly on the first-mile, last-mile, but I don't see anybody really taking the lead. I think the U.S. is pretty much aligned with the rest of the world in terms of first-mile, last-mile and some of the pilots we have going on."