Source: AAG Insight
In times of crisis, people become creative. Everybody affected by the new circumstances was eventually forced to think about how to make the best of the rather unfamiliar situation with more than ever restrictions on our physical mobility such as being forced to stay at home. Online meeting software developers, Zoom and Tencent to mention foremost, saw an astonishing increase of private and business users. Everyday life habits needed to be radically restructured and thus the related services or products deeply stricken into these habits. This affected the amount and types of products, food, and service we purchased and purchase, but perhaps more so the way we actually receive and enjoy what we have paid for. In times of crises, people become creative. This also applies to the autonomous cargo and delivery industry. For this industry that is relatively immature, this pandemic posed a meaningful opportunity for technology testing and validation.
Currently, one can observe three major scenarios of unmanned delivery, namely autonomous trucks, unmanned low-speed delivery bots, and maybe unnamed delivery drones, which we will ignore for this time. But how far are these scenarios from actually being applied in the real world on a big-scale and in a safe manner? To get a somewhat clearer answer to that, we might ask the following questions. How mature is the technology? What degree of readiness does the regulatory framework show? What is the degree of acceptance by end-users and by the society in general? How effective, in terms of profitability and efficiency increases, is the use of such technology?
The perhaps most expected of the aforementioned application scenarios would be the autonomous truck scenario. Most recently, Chinese AD truck startup TuSimple has drawn the most attention. It has been testing with 40 trucks regularly on dedicated highway sections, all occupied by a safety driver. At the same time, the company has already secured high-profile logistics clients, among them UPS, that it plans to serve from 2021 onwards starting with 7 routes in the US highway network. Surely, autonomous trucks would make truck fleet operators’ businesses more profitable in the long run, since the vehicles can operate for 24 hours a day and can achieve a higher energy-efficiency and lower maintenance costs than human-driven trucks, and can eliminate the need to employ human drivers, weighing off the initial investment rather quickly. That is, if the regulatory environment makes it legal for AD trucks to be driven without a safety driver onboard. In most parts of the world, apart from issuing testing licenses for certain sections, authorities have not yet rolled out comprehensive regulatory frameworks for autonomous trucking yet. In terms of maturity, due to the significant lower complexity of highway cruising as opposed to the chaotic urban traffic jungle, the current level automation is sufficient for the trucks to operate without needing human intervention, making the regulatory hurdle the highest one to pass.
The other major trend is the emergence of unmanned low-speed delivery bots released in major parts by Chinese e-commerce and internet giants such as JD.com, Meituan Dianping, Baidu, Alibaba, and so forth. With these companies abusing the relatively open definition of AD L4 and hailing the arrival of true autonomous driving, initially, these vehicles were only able to operate in geo-fenced areas, such as residential communities, industrial parks, or leisure parks closed off from public roads. Each equipped with LiDAR, radars, and cameras, they were able to perform safely and in a slow-speed of manner of avg. max. 15 km/h all maneuvers required completely independent and without any human intervention, which made it seem somehow reasonable to classify these mobile goods and food storage as AD L4 vehicles. Along with time, their manufacturers have upgraded them with the ability to cruise on the auxiliary lane of some Chinese cities. This was famously utilized during covid-19, where Baidu used its delivery bots to deliver medical and food supply to medical facilities in an at that time very much preferred no-contact manner. In regards to operation safety, these delivery bots have probed in countless trials in China’s geo-fenced area without any major incidents. In contrast to autonomous trucks, the regulatory barrier they face is easy to get over, as these vehicles for the most part do not operate on public roads, and usually a special operation permit from the respective geo-fenced site suffices. In times of social distancing and no-contact policies, these vehicles have gained a valuable spot in the everybody’s eyes. In terms of business viability, there are not enough reasons for these delivery bots to replace the typical delivery worker, but rather act as a complementary solution which can save time by taking over the allocation of goods to be delivered within the bounds of a residential community or any other geo-fenced area. In 2019, unmanned delivery market size in China is 110 million RMB and is estimated grow eight-to-nine-fold within 5 years. Now the only concern is the cost of the delivery bot, around 180,000 RMB each, which equals to 2 - 3 deliverymen’s annual wage. If the price could further decrease with the technology development and economies of scale, we could even foresee a 100-billion-RMB market in the future, knowing the fact that roughly 200 million packages are being delivered everyday now.
Apart from the above-mentioned technological innovation capabilities of Chinese autonomous driving players, China’s market condition is arguably most favorable for big scale commercialization of such technology. Firstly, Chinese authorities are very keen to set up regulatory framework to encourage these kinds of advanced technologies to be commercialized in larger scale. Moreover, Chinese society prefers to live in gated-residential communities where provide a vast playground for unmanned delivery to be equipped. Meanwhile, due to the recent pandemic, the increased sense of hygiene and newly emerged social distancing regulations paired with the high population density in China are yet other driving factors for the promotion and usage of unmanned deliveries.
AAG Insight – China Pioneers in Commercialization of Autonomous Cargo Use Cases