Driverless trucks are an answer for the ever-worsening driver shortage plus the ever-increasing demands for freight movement. We’ve seen a plethora of AV truck startups come to the fore. Companies like Aurora, Embark, Ike, Kodiak, Plus, TuSimple, and Waymo are targeting long haul trucking. Einride and Gatik are targeting short haul. In the last year or so, the truck manufacturers have stepped up their development programs, notably Daimler’s tie-ups with Torc Robotics and Waymo, TRATON’s partnership with TuSimple, and Volvo Group establishing Volvo Autonomous Solutions. Major shippers like Amazon AMZN +1.4% and UPS are very much in the game.
Highly visible public road testing of long-haul driverless trucks is underway in China, Europe, and the U.S. Less visible to the public are logistics activities at warehouses and distribution centers, where truck trailers are shuttled between loading docks and storage yards in preparation for local delivery and long haul segments. This is a tedious and monotonous task for human drivers, performed in hazardous working conditions. Applying automated driving to these operations is tantalizing to Automated Driving System (ADS) developers, because it is seen as simpler than the highway: these are contained environments, speeds are low, and on-road vehicle regulations don't apply. But this setting presents an entirely new set of challenges, given the movements of people, forklifts, and human driven trucks in a confined area where maneuvering space can be very tight.
Outrider’s Play for the Logistics Yard Edge
Last February I wrote about Outrider’s Series A financing of $53M. (Disclosure: I am an advisor and hold an equity position in Outrider.) Since then, this Colorado-based trucking logistics startup has expanded its customer base, completed multiple pilot programs, and broadened its intellectual property portfolio. Outrider says their team “has grown to over 100 employees focused on key system capabilities, including controls, computer vision, motion planning, robotic manipulation, cloud computing, functional safety, and multi-robot orchestration.”
Founded in 2017, Outrider retrofits commercially available electric yard trucks with automated driving capability. They see electric yard trucks as a good fit with autonomy due to their reduced maintenance, lower operating costs, and clean power. “Across the industry, supply chain leaders are eager to reduce the carbon footprint of their logistics operations,” said Andrew Smith, Founder and CEO of Outrider. “Since the founding of our company, we designed our system to run on electric yard truck platforms instead of diesel trucks, resulting in the accelerated replacement of carbon-emitting trucks.”
Outrider offers an integrated, three-part system that includes management software, automated vehicles, and site infrastructure. Their system enables an operator at a customer site to activate drone tractors which move trailers to and from loading docks and parking spots, hitch and unhitch trailers, and robotically connect and disconnect trailer brake lines. All functions are centrally monitored and controlled at a macro level while the ADS on-board the vehicle does the key driving task.
Outrider says they are continually expanding their system’s operational design domain to address increasingly complex yards. Since their customers need to keep their loading docks active no matter the weather, I asked Andrew Smith about their system’s robustness to inclement weather. He noted that “in the early days of the system, there will be certain severe weather conditions when human drivers control the system. That said, our strategy since day one is the 24x7x365 round-the-clock operations of distribution yards.”
$65M Series B Investment Aimed At Rapid Scale-Up
Today Outrider announced it closed $65M in Series B funding, led by Koch Disruptive Technologies (KDT). Other existing investors increased their investments, including NEA, 8VC, and Prologis Ventures. New investors included Henry Crown and Company and Evolv Ventures. This brings their funds raised to date to a total of $118M.
The Series A raise was announced only eight months ago. I asked Andrew Smith why the Series B raise came so soon. He said that KDT, the lead investor for this round, was motivated by Outrider’s “clear technical leadership and the increased urgency of demand from enterprises in supply-chain-intensive industries.” He also noted that “due to COVID-19 related supply chain disruptions, supply chain leaders have even more urgency to make automation investments.” Smith added that the new funds put them “in an exceptional cash position to meet this demand by rapidly deploying, supporting, and scaling yard automation across our customers’ distribution networks.”
Two of Outrider’s new investors have deep strategic connections to the freight industry. Evolv Ventures, the investment arm of Kraft Heinz, clearly understands pain points in yard operations and the potential offered by automation. Henry Crown and Company owns Great Dane Trailers; innovations in freight movement are central to this business.
The U.S. is expected to be a global leader in over-the-road truck automation due to the highly sophisticated trucking operations plus a favorable regulatory environment. However, for yard automation on private property, regulations are not a barrier, so I expect this market will quickly launch overseas as well. Andrew Smith puts it this way: “Outrider’s software, robotics, and intellectual property are applicable to automated distribution yards across the global supply chain. In North America alone, there is a $7.5B market opportunity for our systems. Most of the Fortune 500 companies with which we work have global distribution networks that will benefit from the efficiency, safety, and sustainability of yard automation.”
How Hard Can This Be?
Many in the tech industry may have the viewpoint that implementing automation at a logistics yard is pretty simple compared to highway driving. Might other highway-focused truck AV players with more sophisticated sensor suites, processing power, etc. want to get into this market? When I asked if Andrew Smith if he sees this as a threat, he pointed out that fielding an integrated and dependable solution involves complexities “that over-the-road vehicle automation companies simply don’t think about.” He noted the importance of an integrated approach comprising cloud-based management software, automated vehicles, and site infrastructure, plus integrating with warehouse management and yard management systems.
To emphasize his point, Smith highlighted the specific precision task of connecting and disconnecting the air line controlling the trailer’s parking brakes, noting that “the locations and types of hardware involved in these connections are highly variable across trailers, so we’ve developed proprietary vision-based robotics that attach the brake lines to the diverse fleet of trailers currently in operation.”
Is There A Market?
Why are Outrider’s investors so bullish? There are millions of tractor-trailers performing the long-haul job. Contrast this with the typical logistics yard, which may have only a few dozen “yard tractors” at most. Even though these facilities are essentially everywhere, tractor unit volumes are modest compared to over-the-road trucks. Is the yard automation market big enough to support a move to automation?
Maybe equipment sales aren’t the right approach. Maybe it’s about the number of “moves.” Outrider describes its revenue model as “a subscription-based distribution yard autonomy-as-a-service model that provides operation, monitoring, and support of the system,” based on providing detailed operations and safety plans for customers’ autonomous yards early in a project.
Who Else Is In This Game?
The competitive space for yard truck automation is heating up. Last March, Autonomous Solutions, Inc., Phantom Auto, FANUC America Corporation, and yard-truck manufacturer Terberg announced a partnership to provide “a fully unmanned yard truck solution.” The approach involves a retrofit yard automation capability, supported by tele-monitoring, tele-assistance and tele-driving when a remote driver needs to take over in unusual circumstances. Similar to Outrider, a robotic arm from FANUC takes care of connecting the trailer’s air brakes to the tractor. Within the partnership, ASI appears to be the lead in offering a solution to the logistics industry; their “Smart Yard Shifting solution” is extensively detailed on their website. No information is provided here as to customers and what level of deployments or testing are underway. Other than providing vehicle integration support, Terberg’s role in the partnership is not clear. Its pretty clear to me that Outrider and the ASI partnership are direct competitors.
Swedish startup Einride, which has raised $44M to date, is addressing low speed and last mile logistics. The company plans to enter the U.S. market next year. Einride vehicles can directly move goods from loading dock to a final destination, but are not built to address the trailer shuttling task. Their purpose-built vehicles integrate the powertrain and cargo compartment, so they are not a tractor that can hitch to a trailer for repositioning. Another startup, Gatik, aims to provide last mile freight services with box trucks. The early stage company NuPort Robotics is focused on AV EV tractors providing last mile operations on public streets, such as runs from an intermodal facility to a distribution center. Based in Toronto, NuPort is currently in a system development phase, with product introduction several years away. It does not appear that any of these companies are a direct Outrider competitor, but they will be working with customers similar to those Outrider is serving. We could see some forms of competition (or collaboration) arising.
Vehicle manufacturers are the ones to watch, i.e. those that build yard tractors (Kalmar Ottawa, Terberg, Tico, and others) as well as the over-the-road truck manufacturers. However, the current manufacturer business model is to build and sell equipment, whereas Outrider is selling automation services. With the truck manufacturer world evolving due to electrification and automation, I have no doubt these established players are closely watching the startups and evaluating the opportunity posed by autonomy-as-a-service and the recurring revenue which results.
The Edge Is Now
The business space and investment climate for automation in goods movement is highly promising. Deployments are happening “at the edges” right now, with Outrider in a leading position. Most industry experts agree that large scale highway-focused truck automation is still three to four years away. For large shippers, implementing yard automation is useful as an incubator for dipping their toes into these intriguing automation waters.
This article originally appeared on Forbes