Why delivery droids don’t matter

It is quite some time since I had the chance to write another blog post. Having a long weekend with not so spectacular weather allowed me to spend some more time behind the screen and dig into a recently published article from the consulting firm McKinsey titled “Are droids the future of last-mile logistics: Lessons from Japan and is available here: https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/efficient-and-sustainable-last-mile-logistics-lessons-from-japan?cid=other-eml-alt-mip-mck&hdpid=94cf1d38-2e8b-48c3-943b-2d67d7ce12fc&hctky=2817573&hlkid=40c1da10f0db492285b2b3cb784f577f.

Under the assumption that the current pandemic will not significantly impact the demand for urban housing and workplaces, we will be able to observe further urbanization (there are numerous simulations about that from the UN, WEF, consulting firms and many others). Now with urbanization, we always face the challenge of transportation for all types of goods.

While we have efficient ways for transporting core utilities (water, electricity, waste water, heating, waste collection,…), the question is especially interesting for persons as well as products, i.e. no commodities. Since we know that transport is a function of energy and space and space is not of abundance in a city, the cost to fulfill this function increases significantly with the reduction of available space. The ultimate problem to deal with is the last mile. How to get something from a transport hub to the door step.

The article argues that for CO2 reasons, droids could be a suitable solution for this last-mile transport, to bring parcels up to 100kg from a truck or a collection station to your home. To enable this, the authors see some supply chain and regulatory hurdles that I don’t want to address here.

I would top their path of argumentation and add the technical feasibility and reliability as an additional topic, the cost for operation and question the actual demand vs. pricing for it.

To start off, the technical feasibility has three aspects that challenge droids as suitable mode for transportation:

  • Manageability of transport throughout the space in the city
  • Reliability of the droid’s transport technology
  • Reliability of the droid’s steering/driving technology

Even though we all believe that a city is well organized, flat at crossings and pavement all over, the city is in fact a quite “rough” terrain. For a droid, even a sidewalk a bit elevated a small construction site or some steps can pose a stopping obstacle. The alternative to “fly” droids as drones on the other hand does not work due to the energy consumption of flying.

Transportation technology of a droid is usually a simple electric motor powered by a traction transformer. Each has its technical reliability limits, in particular the wheel and the bearing will lead to a quite substantial stoppage rate “in the field” thus requiring a person to come by and pick the droid up again for repair. For this decade, I am sure that we will not see a technical break even on this aspect.

The steering technology highly relates on object recognition and object avoidance. This can be done in two ways: on-board, by having sufficient computation power to calculate it (and therefore requiring battery power and cooling) or external (i.e. in a cloud) requiring a stable communication path and sufficient bandwidth. To build up the latter for such vehicles is economically not likely, but even if it is done, the reliability of the driving technology still has to be proven to a regulator. In contrast to driving cars, where we can always argue that it is better than the human, for droids no such measure exists. It is therefore demanded to build a “failsafe” system for droids by the regulator, which is with the current technology on how we analyze objects is not possible.

For the cost of operations, I see some significant challenges (also related to the technology):

  • Cost of a droid
  • Cost of maintaining a droid
  • Cost for insurance of a droid

At the moment, the costs of a droid are skyrocket high. With increased demand, it can come down to a few thousand EUR. Still, the technology that has to be built in for its driving system requires advanced optics and computation power which will never be cheap. If it takes a droid somewhere 30min to deliver a parcel with 50 EUR and it does somewhere around 20 deliveries per day, just the amortization of the droid will take a 1-5% cost of the good.

Maintenance of such droids require specialized staff with electronics skills. These persons are highly skilled and will be a significant cost driver at least until it fully can be automatized.

One of the fascinating challenges will be on what will be the responsibility of the logistics “operator” and the vehicle “constructor”. If they are to operate fully autonomous, there will be some limitless liability be fallen on one of them, requiring the respective insurance policies.

However, I am not sure if the demand for last-mile transport will truly increase or even stay at the level it is at the moment. There is a global movement to bring, at least in heavily industrialized countries, the consumption rather down than up, hopefully resulting in less demand for this kind of transport.

Finally, I personally see it not as a necessity to automatise jobs with a low level of training required. All of us on this planet circling around our sun have a right to do something meaningful. For some persons, this might be doing complex simulations, for others it could be delivering a parcel as long as it is meaningfully renumerated.

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