Back in the summer the BBC ran a story about driverless lorries being tested on UK roads by the end of next year. Platoons of HGVs will be connected wirelessly with a human driver in the lead vehicle.
This is the first step towards fully automated lorries and vans. Talk to those involved in logistics and they all say the same thing: the technology is nearly there and evolving fast – it’s everything else that needs to catch up.
“The questions is not ‘what?’ but ‘when’… technology is far more advanced than we see today,” says Amaury Gariel, head of EMEA industrial and logistics at CBRE.
The main barriers to autonomous vehicles (AV) and autonomous goods vehicles (AGV) becoming a feature on UK roads now appear to be infrastructure, law, insurance and public perception. There is no doubt that this technology is going to be a feature of everyday lives in the future, and there are many implications for logistics and logistics real estate.
AGVs are, on paper, safer and offer greater efficiency in distribution costs. But there is still a lot of crystal ball-gazing about the full implications –particularly in how the industry transitions to using the new technology as it rolls out.
“Where things are going to be in five to 10 years’ time is more tricky. We can see where we are going to be in 15-20 years,” says Dave Lowery, investment analyst at AXA IM – Real Assets.
But it’s time to get ready says Bill Page, business space research manager at Legal & General Investment Management: “If you assume an annuity style 20-year lease, it’s quite conceivable that all the technology we’ve been talking about will be operating. Is the industry ready for that? No.”
So, what does the industry need to be ready for?
One of the most obvious changes AGVs will bring is in how long lorries can be on the road. Drivers are restricted to the number of hours they can spend behind the wheel and distribution hubs are located accordingly.
“One of the reasons the golden triangle in the Midlands is so successful is you can get to lots of places in eight to nine hours. If you can drive through the night then the location of logistics might change. A fully automatic regional logistics hub might not need to be as central as it once was,” says Page.
This potentially opens up new locations for distribution warehouses. Rui Nobre, chairman and chief executive of Griffen UK, says occupiers could focus even more on real estate and labour cost, “so you could find a change to locations where land and labour is cheaper”.
Lowery agrees: “Bigger warehouses could be located somewhere different, they could be a bit further away from major transport or conurbations.”
There is also the issue of data. The more automated the logistics process becomes, the more data available, and that will only speed up change.
The idea of autonomous vehicles, robots and droids may have once seemed like the stuff of science fiction but science fiction is rapidly becoming science fact.
Last-mile delivery
Efficient last-mile delivery has always been a difficult nut to crack. Consumer appetite for shopping online continues to grow, and with it the expectation of having purchases delivered more and more quickly.
The introduction of AVs – plus alternative vehicles – could be a game changer. In last year’s McKinsey report into last mile delivery it was estimated that 80% of parcel delivery will be made by AVs.
And it is easy to see why. Having quiet, electric AVs in urban areas could make 24-hour deliveries less intrusive. Amazon has already started putting lockers in its recently acquired Whole Food stores from which customers can collect goods bought online. What if those lockers were on an AVs? And what if parcels could be loaded onto those AVs using robots rather than humans – picking, packing and delivering in a continuous automated process?
Dave Lowery, investment analysts at AXA IM – Real Assets says this is where there will be a real impact in urban logistics. “It will be expensive to start with for those who lead the way. But you could see some real winners emerge.”
More automation could lead to more efficient use of urban warehouse space or even make space redundant, and that is something that AXA is already considering when investing. “What is the alternative use or residual use. If you have a last-mile site but in 10 years time that isn’t fit for use, what else can you do with that site?”
If you add into the equation the potential for fewer cars on the road as people choose to share AVs rather than own their own (see box), redundant car parking spaces could provide a viable alternative. In Paris, car ownership is declining, which means more empty space in underground car parks. It is a secure place to transfer goods from vans to electric bikes for delivery and some space is already being leased for this purpose.
Lisa Graham, head of EMEA industrial research at Cushman & Wakefield, says: “Nobody wants this activity right by their house so underground works.”
Drones shouldn’t be dismissed either. Page says: “Drones aren’t new, they have been used since the 1980s and have potential but have limitations. Eighty per cent of Amazon’s items are below 5kg, which is the weight threshold for a drone. We will see more adoption of drones in the next five years.”
Likewise, droids – mini autonomous delivery vehicles – which travel at pedestrian speed along pavements could do door to door deliveries. US firm Dispatch raised £2m of seed funding last year to develop its idea for a droid that can carry up to 100lbs in different compartments, which are accessed by the customer using an app.
UK takeaway delivery firm Just Eat started trialling food deliveries by droid in London last year. Designed by Starship Technologies, the droid sends a text to let the customer know it has arrived with a code for accessing their order. The droids drive unaided but are centrally monitored by a human.
Urban logistics hubs may have to look very different to accommodate a variety of different last-mile delivery options whether that is drone landing pads, droid packing and charging areas or automated vans.
Role of lorries
If autonomous vehicles can be on the road longer it means goods can be on the road longer, and this has the potential to change the role of the lorry.
“The inventory will become more mobile and there is a share of the logistical operation that will happen in the truck,” says Amaury Gariel, head of EMEA industrial and logistics at CBRE.
Could lorries also be shared? It isn’t as outlandish an idea as it first seems. Take cars as an example. They are expensive to own, and car sharing is growing. With the introduction of AVs, technology could make it feasible to book a car via an app for an individual journey rather than having your own car sat parked for most of the day.
An empty truck is inefficient, so it is feasible you could apply a similar system to logistics.
Dave Lowery, investment analyst at AXA IM – Real Assets, says: “One lorry could be owned by lots of different firms, buying into the fact that there is a real shift in the ownership of vehicles whether it is cars or lorries.”
This could help improve logistics efficiency as there would be fewer empty vehicles on the road, but would also help reduce the overall number of lorries, which would mean less congestion.
To send feedback, e-mail stacey.meadwell@egi.co.uk or tweet @EGStaceyM or @estatesgazette
