If plans pan out, Walmart (NYSE: WMT) e-commerce shoppers in Bentonville, Arkansas, could be picking up orders delivered by fully autonomous vehicles by next summer.
That’s the ambitious timeline that Sam Saad, head of operations for Gatik, an autonomous vehicle startup, explained during a fireside chat Friday as part of FreightWaves’ Cold Chain Summit. Saad told interviewer Kevin Hill, director of research and editorial for FreightWaves, that he hoped fully autonomous vehicles would be on the road “before summer rolls around next year.”
“The short answer is we are quite ready to go on the tech side,” Saad said. “We want to ensure we can work closely with our customers and with regulators when we start doing the first unmanned runs.”
Gatik’s Sam Saad talks autonomous vehicles
Saad stressed that Bentonville may not be the ultimate location for driverless vehicles, but that is the first hope.
Gatik focuses on running box trucks ranging from 10 to 26 feet on fixed routes from a Walmart “dark store” in Bentonville to a local store. The runs are used to fill e-commerce, pickup-in-store orders for Walmart customers. That type of run is normally filled by a 53-foot trailer once or twice a week, Saad said, but using smaller vehicles allows the retailer to respond more quickly to customer demands.
“If you don’t have an item available on your digital shelves, the customer has a disproportionate reaction,” he said. “You don’t have the same kind of leeway that you might have had if a customer walked into a brick-and-mortar [store] and you didn’t have that particular item. What that means essentially is the customer doesn’t care what’s happening on the back end and won’t wait one or two days for that 53-foot trailer to arrive and replenish the shelf in a neighborhood market when they want to be able to place an online order and go pick that up.”
Gatik, founded in Palo Alto, California, in 2017, began working with Walmart in the summer of 2019. It put the first trucks on the road about a year ago. Saad said the founders of the company saw a gap in the “middle mile.”
“When you typically think about autonomous vehicles moving freight, you have large haul on one end of the spectrum — mostly highway driving — and then you have the slower-moving robots or even the sidewalk-moving robots, which is B2C,” Saad said. “What Gatik does is it focuses on the middle mile, which is a B2B play.”
The concept is to connect micro fulfillment centers and larger fulfilment centers with retail locations and offices.
“That’s really the unglamorous, expensive part of the supply chain that currently is getting a little bit squeezed due to e-commerce,” Saad noted.
The middle mile is a perfect opportunity for autonomy because it is “known, fixed, repeatable routes,” Saad said.
“We’re not trying to solve for universal autonomy such as Level 5; we’re really trying to solve for that Level 4 constrainment,” he noted. “The moment you know your routes and they are fixed and repeatable, then a lot of the structured variables, a lot of the structured edge cases — essentially items in your environment that might be variable but if you know the route you know to look out for them — those go out the window. We can solve for those once, we don’t need to solve for them periodically.”
Gatik trucks include a driver at all times and are currently running seven days a week, 12 hours per day. But drivers rarely need to touch the steering wheel. Saad estimated the average driver touches the wheel less than once per month.
Saad believes the time is right for this type of autonomy as COVID has accelerated e-commerce growth, which he said has increased between 70% and 90% at Gatik’s trial customers.
“We’re riding that particular wave. We’re helping our customers solve for an unexpected problem — a transportation network that is looking for contactless delivery and one that is looking for that middle-mile fulfillment to retail location solution,” he said.
Gatik trucks are equipped with Lidar, radar and camera systems with “redundancy baked into the entirety of the stack.”
Questioned on the economics of the technology, Saad didn’t offer specific numbers, but noted that a middle-mile driver is estimated to be between 30% and 40% of the cost of operating the vehicle. The challenge in an e-commerce world though is speed.
“It’s just cheaper to have a 53-foot trailer operating 12 hours per day hitting several routes and filling several stores rather than having a fleet of vehicles that are going back and forth connecting multiple stores to one another for inventory pooling or doing a micro fulfillment model hub and spoking out to different retail locations and fulfilling orders that way,” Saad said. “But at the end of the day, that near-real-time fulfillment is being driven and required [because of] e-commerce and online orders. A customer is not going to wait for a SKU to be fulfilled in two days while we are waiting for a 53-foot trailer.”
Addressing concerns that what Gatik is building is essentially a driver-replacement technology, Saad didn’t dispute that, but noted it shouldn’t be a concern for many years.
“We don’t see our technology disrupting drivers to a point where folks are going to start losing jobs,” he said. “There are so many vacancies right now … that the way we see it is this technology will start filling in some of these vacancies — jobs that people are not currently interested in — and maybe in 20, 30 or 40 years there may not be a driving position. We are not taking away any existing jobs today.”