First-ever self-driving delivery on public roads sees groceries dropped off in Bay Area
Udelv’s autonomous delivery vehicle (with human backup driver in case of emergency) drives back to Draeger’s market in San Mateo, Calif., Tuesday, Jan. 30, 2018, after making its initial grocery deliveries. (Karl Mondon/Bay Area News Group)
By ETHAN BARON | email@example.com | Bay Area News Group PUBLISHED: January 30, 2018 at 12:21 pm | UPDATED: January 31, 2018 at 9:44 am
SAN MATEO — A Bay Area tech company is claiming the world’s first delivery of goods by a self-driving car on public roads, after its electric cargo truck carried groceries from the posh Draeger’s grocery store in San Mateo to two nearby locations Tuesday.
“We’re making history today by reinventing deliveries,” said Udelv CEO Daniel Laury.
Udelv plans to use its single automated vehicle — which requires a backup driver as per state law — to start regular deliveries to customers of the San Mateo Draeger’s store after mid-February. But the Burlingame company has higher ambitions: It hopes to have 1,500 of its vehicles on the road by 2021 and it wants to work with major firms involved in delivery such as store chains, Amazon and UPS, Laury said.
“This new machine is a revolution for retailers, shippers and delivery companies,” Laury said.
Udelv is targeting a lucrative market — McKinsey in October put the global cost of package delivery at more than $85 billion. But considerable obstacles remain for companies scrambling to use road-going robots to grab a piece of the pie.
For Udelv, technological, infrastructure and regulatory limitations mean the startup’s technology is more a first step than an ultimate solution to the problem of so-called “last-mile” delivery from businesses to consumers, said Gartner analyst Michael Ramsey.
“I love the technology,” Ramsey said. But he added, “I feel like at this point it’s kind of like … a very complex solution to a fairly simple problem.”
Instead of a robotic vehicle, a company could just hire someone for $15 an hour to make five or six deliveries per hour, for a cost of only about $3 per delivery, Ramsey said.
Actual cost savings could come when regulations allow for fully autonomous vehicles on public roads with no backup drivers, he noted, but it’s unclear when the federal and state governments may permit that.
Also, Udelv’s deliveries require the customer to meet the vehicle at the curb, where they use a mobile app to open the compartment holding their groceries. That means someone has to be home when the delivery occurs, Ramsey pointed out.
One possible solution would be curb-side boxes where a delivery vehicle can pull up and deposit goods, he said.
“Within 10 to 15 years, I expect that kind of infrastructure change will have to happen in order to make these autonomous-delivery solutions or even non-autonomous delivery solutions work better,” Ramsey said.
Udelv’s truck has 18 compartments in four different sizes, and a 60-mile range, so it can make deliveries to 18 different sites on one trip, Laury said. Top speed is 25 miles per hour, with a 700-pound carrying capacity.
In the future, Udelv could transport goods including pharmacy items; products from hardware stores; and other materials — for example, tools for a contractor at a work site, Laury said.
“How about ordering beer at 11 p.m. in the evening when you’re running out of it at a party?” he said.
Draeger’s currently charges $9.99 for grocery deliveries, but plans to cut that cost to customers as the family-owned business saves money by using Udelv, said Richard Draeger, a co-owner of the grocer, which also has stores in Los Altos, Menlo Park and Danville.
Laury said Udelv’s truck costs only 5 cents per mile in electricity costs, is safer for the public, and more environmentally friendly than delivery vehicles powered by fossil fuels.
The automated truck will let Draeger’s get groceries to customers within one to two hours, instead of the next-day delivery available now, Draeger said.
Udelv’s Laury dismissed the threat from Nuro, a startup by two former Google engineers that came out of stealth mode Tuesday. It also uses a custom-built vehicle and is intended for similar local deliveries.
“I’m not concerned at all,” Laury said, adding that Udelv’s vehicle is much bigger than Nuro’s and could therefore serve different markets.
Other companies working on automated delivery include Ford, which in August and September had human drivers delivering Domino’s pizzas in cars capable of autonomous driving in Michigan. Those vehicles were not in self-driving mode at the time.
Amazon in July applied to patent an “autonomous ground vehicle” to bring items from a delivery truck to a home. Starship of Redwood City and Marble of San Francisco have both used sidewalk robots in San Francisco to deliver take-out meals, with Marble also eyeing delivery from pharmacies and grocery stores.
Udelv is counting on rapid growth in e-commerce, which accounts for only 9 percent of current U.S. retail sales — but is expected to see 16 to 21 percent annual growth through 2021, according to Statista.
And Laury pointed to McKinsey’s prediction that 80 percent of all deliveries will be done by automated vehicles — including drones — in the next 10 years.
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Draeger sees Udelv ultimately cutting in half the grocery company’s delivery fee to customers — and helping it fend off Amazon, which last year bought upscale grocer Whole Foods.
“This allows us to compete in a much, much better way than we ever have in the past,” Draeger said.