Loblaws is partnering with Gatik, an autonomous vehicle provider from the United States, to launch the first autonomous food delivery fleet.
This is a solution to the ‘middle mile,’ assuring links between distribution centres and stores. Consumers won’t see autonomous vehicles drive up to their homes yet but that day will surely come soon.
These cold-chain-capable, boxed vehicles aren’t very large. They’ve been roaming Toronto’s streets for some time, for another grocer. They even dealt with 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.
E-commerce is clearly driving this decision.
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 don’t see but are severely affected by. Food prices are more manageable when costs are under control.
Loblaws will be able to move food from automated picking facilities multiple times a day to support its PC Express online grocery service in the Toronto area. The fleet will likely be expanded as this partnership is being presented as a long-term work-in-progress.
Online sales by grocers have increased almost 90 per cent since October 2019. For Loblaws, online sales growth is almost at 200 per cent over 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 Global Connect.
This is just 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 by Sobeys, Loblaws is opting to make its supply chain more cyber-friendly. Both approaches can work.
With these initiatives, grocers gain the ability to make more money online, something they’ve been hesitant to do. For a few years, grocers dithered with the concept. But with COVID-19, grocers are fully committed. Moving forward, they will want us to buy more food online and they will get better at providing this service.
Vehicles operated by Gatik won’t be entirely autonomous – they’ll have a safety driver as a co-pilot for now. Since consumers are connecting with these vehicles, the approval process will probably be faster. Neither Gatik nor Loblaws could say when the autonomous fleet would be driving around without any humans. But it’s just a matter of time.
Eliminating humans from the food supply chain is an option that has gained currency throughout the pandemic. Around the globe, those managing routes have struggled, having to think about restaurants, rest areas, and how to keep truckers and staff safe while keeping the region’s food secure.
Humans, as vectors for transmitting the virus (or any disease for that matter), are seen as a liability when a public health crisis occurs. Supply chains are increasingly becoming more automated, so Loblaws’ move with Gatik is anything but surprising.
This human-less food supply chain is an ideal for now but Loblaws’ shift is significant enough to allow most of us to dream. And given the economics of food distribution in Canada, this innovation is unavoidable,. Loblaws 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 and relatively few people living in it, making the middle mile more efficient is key.
It doesn’t necessarily mean Loblaws, or any other grocer, is intent to eliminate all human involvement in the handling of food throughout its operations.
It will, however, seek different skills and knowledge to support its online ambitions. The sector needs strong employees and always will. As the sector morphs into an omnichannel beat of sort, employees will be expected to play different roles. Most of the work will be about data management, not handling food.
The last mile is an autonomous fleet’s next frontier. It’s the most exciting one for the industry and likely for us as well.
Canadians may not be there yet, but grocers like Loblaws are signalling to the public that the horse has left the virtual barn.
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University.