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Last-Mile Delivery Innovation: Lots Of Ideas, Lots Of Challenges

Last-Mile Delivery Innovation: Lots Of Ideas, Lots Of Challenges

Drones, ebikes and electric delivery vans are just a few of the innovations revolutionizing the last-mile delivery space, but each faces their own unique challenges, and some of those challenges have little to do with the delivery mechanisms themselves.

Chris Nordh, senior director of advanced vehicle systems for Ryder System (NYSE: R), said that he sees many companies struggle with the "horizontal structures" necessary to implement successful electric vehicle solutions. Companies like to think vertically, he said, and deploying electric solutions requires cross-departmental cooperation that some companies are not prepared for. With that said, he called the "electrification of last mile vehicles … the most exciting thing in the space."

Nordh was speaking during a panel discussion on last mile delivery as part of the Fleet Technical Summit ahead of the Work Truck Show in Indianapolis, Indiana. He was joined on the panel by Michael McDonald, senior director of sustainability and government affairs for UPS (NYSE: UPS); Rich Tremmel, vice president of sales and marketing for Morgan Olson, and Angela Strand, managing director of Strand Strategy. The panel was moderated by Kevin Beatty, president of YUNEV.

"If you are in or around the last mile space, you know how many [companies] are now in that space," Beatty said opening the discussion, joking that if you just said "China," you had a chance of getting a company's location correct.

Beatty went on to point out the numerous pilot programs Walmart Inc (NYSE: WMT) is currently conducting in the last-mile delivery space, along with companies like J.B. Hunt (NASDAQ: JBHT) with its Final Mile service; Toyota, which is developing the e-Palette delivery concept, and autonomous delivery companies such as uDelv.

For the most part, panelists agreed, electric delivery vehicles are where most of the action is and will be. McDonald noted that UPS utilizes ebikes in some parts of the world, but that in the U.S., regulations and union contracts prevent their use. They are also limited, he said. "If you have to go up hills, because they are self-propelled, that adds time and doesn't [always] make them worth it," he said.

Drones are another concern. While they appear to be a perfect solution, Strand doesn't see them providing the best option in urban environments. "I'm more excited by drones in less populated areas," she said.

"When you look to incorporate ebikes and drones, you really need to take into consideration the laws," McDonald pointed out.

Strand said one development she is particularly excited about is the growing use of on-demand and dynamic routing solutions in the space. UPS has been doing this for several years with its Orion software, but the proliferation of companies needing this specific type of turn-by-turn navigation is growing, especially in the restaurant segment.

Morgan Olson specializes in truck bodies, and Tremmel noted one concept that some fleets are testing – multi load van bodies in a 30-foot configuration, allowing the company to load the vehicle from the rear but be unloaded along the sides using beverage doors.

"We are being asked to see if this is possible in our space," Tremmel said. "This type of vehicle might take two people rather than one to unload" so that has to be factored into the equation, but it might increase flexibility in last-mile e-commerce delivery.

The conversation, though, repeatedly came back to electric vehicles, which panelists agreed is an ideal solution for last-mile. Strand noted that electric vehicles could be appealing to a younger generation of driver, particularly those that may also have sustainability attachments. "The electric vehicle as a driver incentive is pretty interesting," she said.

Nordh pointed out that traditional original equipment manufacturer interest in electric vehicles was slow to develop, but it is ramping up. Ryder is working with Workhorse to develop and deploy electric vans in its network.

One interesting development is the ability to electrify the refrigeration systems on last-mile vehicles. Electric refrigeration systems have been around for many years, but they have not been integrated into an electric vehicle.

"We are probably no more than 12 months away from having electric refrigeration integrated with electric trucks," Nordh said. "But there is a tradeoff; if there is a 150-mile range, when you add electric refrigeration, it might reduce that range to 100 miles [or less]."

Charging infrastructure is a big concern that is starting to outweigh some other issues related to electric vehicles. For instance, McDonald said that when you charge five vehicles at a time in a building, spread across that building, there is no issues, "but lining up vehicles six inches apart and charging them all at once creates charge issues."

The panel agreed that innovation in the last-mile space will continue to grow, but the key is being flexible.  "You can't take anything off the table," McDonald said. "You won't know if it works unless you try it."

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