China's growing fleet of robovans

Key Concepts

• Robo vans (autonomous logistics vehicles)
• Level 4 autonomous driving
• SF Express (Chinese delivery company)
• Neolix (Robo van startup)
• Zongshen (Autonomous logistics startup)
• Rhino AI (Startup)
• WeRide (Self-driving technology for passenger vehicles)
• LiDAR (Light Detection and Ranging sensor)
• E-commerce market
• Logistics industry
• Parcel delivery
• Cost reduction in logistics
• Scalability in logistics
• Production cost
• Supply chain
• Global expansion of robo vans
• Competition in the robo van market
• Data collection for AI training
• Safety considerations in autonomous driving
• Impact of automation on jobs
• Drones for delivery

China's Advancement in Robo Vans: Challenges and Opportunities

This episode of Tech Asia delves into China's rapid progress in the field of robo vans, exploring the underlying reasons and the existing hurdles. The discussion features Wataru Suzuki, Tech Asia's Shanghai correspondent, who shares his observations from a recent business trip to Shenzhen.

Observations at Fuchanian Railway Station, Shenzhen

Wataru Suzuki recounts his experience at Fuchanian Railway Station, a major underground hub in Shenzhen that integrates subway and high-speed rail services. He witnessed a fleet of approximately nine robo vans operating in a wide corridor connecting the two platforms. These vans, smaller than cars or trucks, were observed loading large boxes from a warehouse into their cargo areas around 7:30-8:00 PM.

The robo vans then proceeded towards the subway station gates at a slow pace, slightly faster than walking speed, covering a short distance. Passengers moving around the station were unfazed, though the vans issued warnings for a 2-meter distance. The vehicles demonstrated an ability to stop when people crossed their path and resume movement once the way was clear, a process described as "seamless."

Upon reaching the gate, the boxes were automatically unloaded and then carried by staff onto the subway platform and into the actual subway trains, which are used by regular passengers. These trains then transport the boxes to a dedicated logistics hub for further distribution to their final destinations. This operation is managed by SF Express, a Chinese delivery company, utilizing robo vans manufactured by the startup Neolix. The primary objective of this initiative is to leverage the underutilized space within subway trains during off-peak hours (around 8-9 PM) to achieve more cost-effective and efficient deliveries.

Prevalence and Testing of Robo Vans in China

Despite the impressive demonstration, robo vans are not yet widespread or commonly seen on public streets, especially in city centers. This is due to Level 4 autonomous driving, which eliminates the need for a driver, still being in the testing phase in China. Current trials are confined to limited locations and specific scenarios, such as the controlled environment of a subway corridor with smooth surfaces and less chaotic pedestrian traffic compared to public roads.

However, these trials are expanding rapidly across China. Neolix announced the deployment of 10,000 vehicles, claiming to be the first company to reach this milestone. They also recently secured $600 million in Series D funding. Zongshen, another startup, also claims to have hit the 10,000-vehicle mark and raised $100 million from investors led by Ant Group. Smaller startups like Rhino AI are also active, and companies developing self-driving technology for passenger vehicles, such as WeRide, are venturing into autonomous delivery solutions. This indicates significant investment and development in the sector, even with the technology still in its nascent stages.

Driving Forces Behind China's Robo Van Push

The strong interest from Chinese companies and investors in autonomous logistics vans and taxis stems from several key factors:

• Logistics Industry Needs: The founder of Neolix, a veteran of the logistics industry, believes this sector will be the first to widely adopt autonomous driving due to the critical need for cost reduction and increased reliability.
• Massive E-commerce Market: China's vast e-commerce market generates an enormous volume of deliveries. Last year, approximately 170 billion parcels were delivered, averaging over 100 parcels per person annually.
• Competitive and Fragmented Market: The delivery industry in China is highly competitive and fragmented, leading to extremely low profit margins for companies, sometimes as low as one yuan per parcel.
• Cost Savings through Automation: Eliminating drivers and optimizing cargo space by using autonomous vehicles can significantly reduce operational costs and increase efficiency.
• Falling Production Costs: The cost of crucial components like LiDAR sensors has decreased rapidly, making robo vans more affordable to produce. Reports suggest the price of a robo van is already below $20,000 USD, making them cheaper than conventional cars and available on installment plans. This affordability accelerates adoption.

Global Ambitions and Challenges

The intense competition within China is driving down prices and margins for startups, making global expansion a crucial goal. Companies like Neolix and Zongshen are conducting trials outside of China, including in the Middle East and parts of South Korea.

However, exporting these vehicles presents challenges:

• Different Environments: Infrastructure and environmental conditions in other countries can differ significantly from China. For instance, sand on roads in some Middle Eastern regions requires more advanced navigation technology.
• International Competition: Chinese manufacturers face competition from established US and Japanese companies in overseas markets.

Technological Advancement and Future Outlook

While it's difficult to definitively compare the technological advancement of Chinese robo van manufacturers with their Western counterparts, the rapid deployment in China allows for extensive data collection, which is crucial for training and improving autonomous driving algorithms. The demonstration at Fuchanian station, despite being in a controlled environment, was impressive.

However, the technology is still far from mature. Safety remains a significant concern, and widespread deployment in dense urban areas, where most last-mile deliveries occur, is still some way off. Further testing and trials are necessary before human drivers can be fully replaced.

The future may indeed see a significant reduction in human drivers for delivery services, with technologies like drones also playing a role. However, robo vans currently can only handle a limited portion of the delivery process, particularly tasks requiring navigation into buildings or elevators. Despite these limitations, China's ambition to lead in autonomous technology suggests a continued push towards this future, mirroring the anxieties surrounding job displacement that also exist for robo taxis.

Conclusion

China is making significant strides in the development and deployment of robo vans, driven by a massive e-commerce market, intense competition, and falling production costs. While challenges related to technological maturity, safety, and international expansion remain, the rapid pace of innovation and investment indicates a strong trajectory towards a future with increased automation in logistics. The current focus is on controlled environments and specific use cases, but the long-term vision points towards a more autonomous delivery ecosystem.