When the world shut down this spring, it didn’t shut down completely. Amongst the ranks of essential workers were the people ensuring e-commerce shipments continued. Simultaneously, a host of robotic delivery startups such as Nuro, Starship, and Neolix found themselves catapulted from curiosities to critical services, delivering medicines and meals to quarantined residents in the U.S., U.K., and China without the fear of contagion. What could have been a long decade of slow adoption and piecemeal deployments was instantly accelerated by the virus, hinting at a future of increased throughput, falling costs, and new business models premised on continuous deliveries.
Foreshadowing the convergence of these trends, in late January UPS partnered with Waymo—the leader in all-purpose autonomy—to deploy its Phoenix-based fleet of self-driving Chrysler Pacifica minivans, powered by the Waymo Driver, on behalf of picking up packages from UPS stores in Phoenix. Unlike its fledgling consumer-facing competitors, however, Waymo would concentrate on shuttling shipments from UPS Stores across the city to its partner’s regional hub in Tempe. Their mutual goal: to understand how AVs’ consistency and efficiency will transform the shipper’s operations, starting with the simple acts of loading and unloading a vehicle.
CHANGING THE FLOW
The Chrysler Pacifica is no stranger to the UPS fleet. But because Waymo houses the brains of its Waymo Driver in the trunk, UPS staff must load and unload packages through the side. This creates the first of many branching possibilities. “In the future, do we want a vehicle that’s rear-loaded?” asks Lauren Barriere, head of business development at Waymo. “Or is there an opportunity to change the flow of operations so that, in this instance, side-loading is more efficient?”
Typically, when one of UPS’ famed brown “package cars” enters a facility, it must execute a three-point turn to back up to the loading dock. Just as its drivers famously avoid left-hand turns, they also steer away from backing up, for safety reasons. “Changing the flow is very interesting to us, because it would save mileage and increase safety,” says Philip Aiello, director of advanced automotive technology at UPS. So, instead of docks, future facilities may be redesigned to feed or siphon boxes from a ballet of AVs gliding past.
The changes would be no less significant for UPS Stores, of which there are more than 5,200 independently-owned locations in the U.S. and Canada. Waymo now offers select Phoenix-area branches the option to hail its vehicles for on-demand pickups through the Waymo app. “For stores, that flexibility is huge, enabling them to clear out their back rooms,” Aiello says. “And for us, that means injecting packages into our network seven, eight, or nine hours faster than we would by waiting until the end of day. This naturally benefits the small and medium businesses that often use the UPS Stores for their shipping. At the same time, it allows UPS package car drivers to focus their attention on delivering, rather than picking up from UPS stores.”
COST, CAPACITY, CAPABILITY
There are three reasons companies like UPS and Waymo are deploying automation to cover the last mile and meter, says Ghost Road author Anthony Townsend: cost, capacity, and capability. But both Waymo’s pilot and the post-pandemic demand for contactless solutions reveals that new capabilities are the real draw. “Any AV company, and anyone building out a delivery network, needs to be prepared to have people and automated vehicles supporting each other and swapping roles on the fly,” Townsend says.
One consequence of this is increasingly specialized vehicles over time. Townsend notes the parcels-and-package-cars approach emerged from a century-old B2B model. Post-COVID, B2C deliveries have grown from roughly half to nearly 70% of UPS’ volume. And that doesn’t include multibillion-dollar categories such as groceries and meals—with Amazon and Walmart muscling in on the former, while Doordash, GrubHub, Uber, and Postmates race to profitably consolidate the latter.
SUCCEEDING AT SCALE
From Waymo’s perspective, this is all good. One of the benefits of heavily investing in autonomy is that, if you succeed, scaling up, down, or sideways isn’t all that difficult. “We see ourselves as building the Waymo Driver, and that Driver can work on many different platforms,” Barriere says. “It’ll depend on the different deliveries and different use cases, and we’re open to operating across all of them.”
In another of the company’s pilots with AutoNation, Waymo is dispatching last-minute deliveries of auto parts that go beyond just-in-time into the nick-of-time. But its real strength, Barriere insists, isn’t speed but consistency. Guaranteeing on-time delivery is not only a hit with customers, but it also enables vehicles to travel more efficiently at constant speeds, conserving energy (and carbon emissions).
For its part, UPS is also open to exploring the potential product mix autonomy enables—and how to repurpose floor space in UPS Stores once it’s no longer needed for storage. “It’s not about one vehicle or one pilot,” Aiello says. “It’s about the entire ecosystem—the logistics, the products, and the potential for products coming out of it.”
That potential may be greater than almost anyone realizes. Nearly twenty years ago, the economists Ed Glaeser and Janet Kohlhase calculated the costs of moving goods had declined by more than 90% over the course of the twentieth century. “There is little reason to doubt that this decline will continue,” they wrote.