Battle of middle mile set for lonely road
Loblaw is partnering with Gatik, an autonomous vehicle provider from the United States, to launch the first autonomous food delivery fleet.
This is a solution for the middle mile, which will assure links between distribution centres and stores. Consumers will not see autonomous vehicles driving up to their homes yet, but that day will surely come.
These cold-chain capable, boxed vehicles, which are not very large, have already been roaming Toronto’s streets for some time for another grocer. They even experienced last year’s winter, so Gatik is aware of potential perilous road conditions when operating its fleet.
Captured data by Gatik will give the company the experience needed to make the supply chain more efficient.
What is driving this decision is clearly e-commerce. The middle mile is where gains can be exponential even though the last mile may be the costliest.
This is the obscure part of the supply chain consumers do not see but are severely affected by.
Food prices are more manageable when costs are under control. With this partnership, Loblaw will be able to move food from automated picking facilities multiple times a day to support its PC Express online grocery service in the Greater Toronto Area. The fleet will likely be expanded, as this partnership is being presented as a longterm work in progress.
Online sales by grocers have increased almost 90 per cent since October 2019. For Loblaw, online sales growth is almost at 200 per cent,
compared to last year. In food retail, online sales represent close to 3.3 per cent of all sales, compared to 1.7 per cent last year, according to Nielsen.
This is incredible growth. With such a market shift, some supply chain adjustments are required. Unlike Sobeys, which is creating a unique and independent infrastructure to develop Voilà, Loblaw is opting to make its supply chain more cyberfriendly.
Both approaches can work. With these initiatives, grocers gain the ability to make more money online. For a few years, grocers were dithering with the concept. With COVID-19, they are fully committed. Moving forward, they will want us to buy more food online and will get better at providing this service.
Vehicles operated by Gatik will not be entirely autonomous. All vehicles will have a safety driver as a co-pilot for now. Since consumers are connecting with these vehicles, the approval process will probably be faster, but neither Gatik nor Loblaw could say when the autonomous fleet would be driving around without any humans at all.
Eliminating humans from the food supply chain is an option that has gained currency throughout the pandemic. For one, jurisdictions around the globe managing routes have struggled and had to think about restaurants, rest areas and how to keep truckers and staff safe while keeping the region foodsecure. Humans, as vectors for transmitting the virus, are seen as a liability when a public health crisis occurs.
Supply chains are increasingly becoming more automated, so Loblaw’s move with Gatik is anything but surprising.
This human-less food supply chain is an ideal for now, but Loblaw’s call is significant enough to allow most of us to dream. Given the economics of food distribution in Canada, though, this innovation is unavoidable and Loblaw appears to be out of the gate first, embracing what lies ahead.
Digitizing the supply chain can only help grocers better serve the Canadian market. With such a vast country, with few people living in it, making the middle mile more efficient is key. It does not necessarily mean that Loblaw or any other grocer’s intent is to eliminate all human involvement in the handling of food throughout its opera
tions. It will however seek different skills and knowledge to support its online ambitions.
The sector needs strong employees and always will. But as it morphs, employees will be expected to play different roles, and most of the work will have to be about data management, not handling food per se.
The last mile is an autonomous fleet’s next frontier, the most exciting one for the industry. Canadians may not be there yet, but grocers like Loblaw are signaling to the public that the horse has left the virtual barn.