This Supply Chain Matters blog is a follow-up to a prior blog highlighting United Parcel Service (UPS) Q4 and full-year 2019 financial performance.
Last week, UPS announced that the carrier has ordered 10,000 new purpose-built electric delivery vans from electrical vehicle manufacturer, Arrival. The move was reported as an effort to accelerate overall fleet electrification.
Since 2016, both firms have been collaborating together in developing concepts for different sized EV vans. Both previously jointly announced the development of a pilot fleet of 35 vans that were tested in London and Paris.
Similar to Amazon.com fleet equipment procurement practices, UPS is additionally making a minority equity investment via its venture capital arm UPS Ventures. Such an investment will likely provide this parcel carrier with priority to acquire additional electric vans after this initial purchase. Future purchases are contingent on successful tests of initial vehicles.
UPS expects to deploy these new EV parcel vans in Europe and the United States.
Vehicle purchase prices and associated equity investments were not disclosed.
Founded in 2015, London based Arrival is described as a manufacturer of purpose-built vehicles that offer a value-proposition when compared to traditional internal combustion powered vehicles. The manufacturer incorporates modular design practices within its vehicles along with producing major components such as chassis, power train, body and electronic controls. Vehicles are reportedly produced in micro-factories utilizing lightweight, durable materials. The manufacturer currently employs upwards of 800 workers.
According to the announcement, the global parcel carrier will collaborate with the manufacturer to develop a wide range of vehicles with termed Advanced Driver Assistance Systems (ADAS), aimed at increased safety and efficiencies, including: “the potential for automated movements to UPS depots.” Initial testing will occur later this year.
Two years ago, UPS announced a partnership with electric van manufacturer Workhorse Group to build and pilot large electrically powered delivery vans and has further pre-ordered a group of Tesla’s Class 8 Electric Tractors. Added technology partnerships are with Alphabet’s Waymo division to test autonomous package van routing and with TuSimple for autonomous self-driving tractor trailers.
Contrasts with Amazon
In September 2019, this blog highlighted Amazon’s announced purchase of 100,000 electric delivery vans, designed and built start-up manufacturer Rivian Automotive, scheduled to be produced over a ten year period.
Originally founded in 2009 by a MIT engineering alum, this manufacturer’s stated mission is in developing vehicles, products and services related to sustainable transportation. The company had been generally characterized as a niche luxury electric-vehicle producer, somewhat in same persona of a Tesla Motors. The first product is an electrically powered pick-up truck.
The announcement was viewed as a response to Founder and CEO Jeff Bezos’s pledge that the online retailer and Cloud computing giant will be carbon neutral by 2040.
In February 2019, Amazon led a $750 million investment funding round related to Rivian.
Our written takeaways from the significance of Amazon’s acquisition was either a strategy to eventually elevate Rivian EV package delivery vans to preferred status for any Amazon Prime branded independent contractor last-mile delivery firms, along with the broader strategy facets for either Amazon’s potential direct or indirect involvement and influence in development and manufacturing of commercial driverless and electrically powered vehicles sometime down the road.
The contrast is Amazon’s continual tendencies to think big and act boldly with singular investments in promising start-ups and potentially innovative advanced technologies.
How each of these acquisition and investment strategies from different parcel logistics and transportation industry participants in the coming months and years turn out, will be fascinating to monitor and observe. They involve broader implications to ongoing industry disruption while having bragging rights to having best achieved corporate sustainability and carbon-free goals.
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