FB Pixel no scriptChinese firms turn to autonomous delivery to counter rising costs of gig labor | KrASIA
MENU
KrASIA
Insights

Chinese firms turn to autonomous delivery to counter rising costs of gig labor

Written by AJ Cortese Published on   4 mins read

Share
Chinese tech firms are looking at autonomous solutions as a viable alternative for last-mile deliveries.

Take a morning stroll down the streets of any Chinese city, and you are likely to see groups of delivery riders clad in the yellow jackets of Meituan or blue uniforms of Ele.me assembling for their daily rally. Meanwhile, team leaders are preparing to deliver a rousing pep talk to motivate riders for another day of shuttling packaged meals around the city.

Companies like Meituan, Alibaba, and JD have built their billion-dollar valuations on the backs of millions of delivery riders ready to deliver millions of packages across China, at the same time benefitting from the historically low cost of labor in China.

However, wages are rising. The government recently released new policies to improve labor conditions and the basic incomes of gig workers, pushing Chinese delivery firms to explore new technologies to sustain their business models.

Tech titans plow money into autonomous logistics

JD.com, Alibaba, and Meituan are all ramping up their investments in unmanned delivery robots, having already debuted self-driving delivery devices in controlled environments in cities across China.

In April, Meituan launched its new Modai 20 unmanned delivery vehicle in Beijing, Shanghai, and Shenzhen. The robots can deliver parcels or meals within closed or semi-controlled environments like office complexes, school campuses, and public parks. The Modai 20 is the first device released by Meituan’s R&D division of unmanned logistics solutions, a unit for which Meituan invested over USD 13 billion, thanks also to the support of its backer, Tencent.

Alibaba is also moving fast. Its logistics arm, Cainiao, is already operating an undisclosed number of unmanned delivery devices on college campuses in China, serving 300,000 students at 15 universities in 11 cities, according to the firm. Cainiao plans to deploy at least 1,000 autonomous delivery vehicles by the end of next year, the firm’s CTO Cheng Li said during the 2021 Global Smart Logistics Summit in Hangzhou.

Meanwhile, JD.com’s unmanned delivery services completed “24 times more orders” during this year’s 618 shopping festival in June compared to last year, the firm announced without disclosing further details. JD.com has been cooperating with third-party autonomous transport providers like iDriverPlus and DeepMap, the company said.

Investors’ interest in unmanned solutions

Besides the initiatives launched by giants like Meituan, Alibaba, and JD.com, a host of unmanned delivery startups are developing their own solutions to facilitate autonomous last-mile delivery by both land and air, with the support of local and international investors. The market for unmanned logistics robots is expected to reach a value of RMB 10 billion (USD 1.55 billion) by 2025, according to data from Yanzhong Consulting.

Excelland AI is a Shenzhen-based robot manufacturer of unmanned logistics vehicles that have been deployed by China’s largest delivery platforms such as Ele.me. In June, it netted hundreds of millions of yuan in a strategic investment round by Ele.me and Yunfeng Capital. As of May this year, Excelland AI’s products were operating in 300 cities across China, serving around 60,000 people daily, founder Gu Zhenjiang told 36Kr.

In August, Beijing-based Neolix.ai also completed an undisclosed Series B round from SoftBank and CICC Capital. The firm has deployed nearly 1,000 unmanned vehicles in more than 30 cities in nine countries worldwide, cumulatively completing over 1 million orders, according to the firm. Neolix has also reached cooperation agreements with restaurant brands like Pizza Hut and KFC to provide unmanned delivery services in China.

Read more: Meet the company behind China’s self-driving vending machines

Neolix.ai’s unmanned delivery vehicles can be seen in several cities in China. Photo courtesy of Neolix.ai.

As the sector matures and service providers gather more data, the efficiency and safety of unmanned delivery services will improve, Roy Liu, principal at SoftBank’s China offices, told 36Kr.

“In the future, driverless cars will use data-driven intelligence and will be implemented in a variety of commercial and social application scenarios at scale. Thanks to big data, the systems can be continuously updated and iterated to form an efficient, safe, and standardized operating system,” he said.

Tech companies are also exploring other more advanced alternatives, such as drones. In June, Meituan presented a self-developed drone that promises a delivery time of 15 minutes for orders within a 3 km radius. In partnership with the Shanghai district of Jinshan, the company announced plans to build a pilot operation center for an urban low-altitude drone logistics network. So far, Meituan’s drones have accomplished over 200,000 flight tests and delivered about 2,500 orders. In June, the devices were also used to deliver supplies to residents in Shenzhen’s Nanshan district, which was isolated under a COVID-19 quarantine.

Meituan’s self-developed drone. Photo courtesy of Meituan.

Antwork is another startup that focuses on drone deliveries. The firm, which has medical supply deliveries as its core business, obtained in October 2019 the world’s first drone delivery license granted by the Civil Aviation Administration of China. Since then, the company’s drones—which can carry a maximum load capacity of 5 kg for a maximum flight range of 15 km—have been ferrying blood supplies and samples to some of China’s hospitals and laboratories during the COVID-19 pandemic.

In January, with the collaboration of industry players like EHang, JD.Com, and ZTO Express, the Chinese State Post Bureau issued specific regulations for delivery services conducted by unmanned aircraft, designed to improve last-mile deliveries and ensure the safety of drone operations.

In the near term, unmanned ground transportation services will be the first mode in which autonomous logistics will be implemented at a significant scale, experts say, while regulators are also trudging ahead by granting licenses to major players for low-altitude logistics solutions.

Share

Auto loading next article...

Loading...