TRANSPORTATION & LOGISTICS BRIEFING: Fiat Chrysler teams up with BMW, Intel — Nvidia invests in autonomous trucking startup — Drone delivery challenges

Welcome to Transportation & Logistics Briefing, a new morning email providing the latest news, data, and insight on how digital technology is disrupting transportation and delivery, produced by BI Intelligence.

Sign up and receive Transportation & Logistics Briefing free to your inbox.

Have feedback? We'd like to hear from you. Write me at: jcamhi@businessinsider.com.

FIAT CHRYSLER TEAMS UP WITH BMW AND INTEL ON SELF-DRIVING CARS: Fiat Chrysler joined a partnership between BMW and Intel this week aimed at developing self-driving technology, Reuters reports. Fiat Chrysler says that it plans to put a self-driving car on the road by 2021 — a timeline similar to many other automakers — the consortium may allow the companies involved to leverage each other’s technology and expertise to meet that goal.

The three companies said that their engineers will work together in multiple locations around the world to jointly develop sensors and software for self-driving cars. Such partnerships are fast becoming standard practice across the automotive industry. Just last week, Intel teamed up with Toyota to launch a consortium focused on self-driving and connected car technologies. Fiat Chrysler also has a separate partnership with Waymo, Google’s self-driving spinoff, to test its technology in Chrysler Pacifica minivans. These alliances help carmakers and technology providers share costs and accelerate the development of self-driving technology.

In addition to these benefits, the alliance could allow the companies to explore new business models enabled by self driving technology:

The group plans to develop autonomous taxis that consumers could hail through a smartphone app, according to Reuters. The market for such robo-taxi services could reach $2 trillion by 2030, McKinsey forecasts. By cutting out the need to pay a driver, autonomous taxis could make cab rides so cheap that consumers will ditch car ownership as their primary means of daily transportation. That prospect is pushing car companies to explore how they can use autonomous technology to challenge Uber and Lyft in the ride-hailing market.
With the addition of Fiat Chrysler, the partnership could potentially bring its self-driving efforts into the trucking space as well. Fiat Chrysler has deep roots in the semi-truck manufacturing business in both Europe and North America, suggesting it could look to integrate any self-driving technology it develops for cars into its trucks too. That, in turn, could pave the way in the long run for an on-demand trucking service, similar to the ride-hailing concept, that allows shippers to book space in autonomous trucks for goods they need transported through an app.

Carmakers are still in early stages of exploring how self-driving technology will impact their business models. These companies need to hedge against the possibility that the traditional car ownership model could be upended by the arrival of self-driving cars. Ford, for example, is looking into providing shuttle services and metered parking, according to its CEO, Jim Hackett. If car companies don’t move aggressively into experimenting with new services and business models, they risk losing their place at the heart of consumer transportation to the hundreds of startups pouring into the automotive space.

Who Do You Trust Autonomous Cars?

NVIDIA INVESTS IN CHINESE AUTONOMOUS TRUCKING STARTUP: Prominent chipmaker Nvidia joined a new $20 million funding round for China-based autonomous trucking startup TuSimple, Tech Crunch reports. Nvidia is providing the two-year-old startup with some of its technology, including graphics processing chips and its Drive PX 2 computer, one of the foremost computing solutions for self-driving cars in the industry today.

TuSimple completed a test this past June with a truck that autonomously drove 200 miles between Yuma, Arizona and San Diego, California. Its self-driving software navigates roads through a combination of high-definition mapping, radar technology, and computer vision algorithms that process images from eight cameras positioned around the truck. TuSimple’s CTO said that its software combined with Nvidia’s graphics and computer processing technology will create “a world class platform that will disrupt the freight industry.”

Nvidia is one of the leading companies in the self-driving space, and has been moving aggressively into the trucking space in the last few months. The company has already formed partnerships with several automakers, including Toyota and Volvo, that use its technology in their testing and development of self-driving cars. In March, it scored a new partnership with truck manufacturer PACCAR and tested a proof-of-concept vehicle using the Drive PX2 computer, which Tesla also uses for its Autopilot program.

Self-driving technology has enormous potential to disrupt the nearly $700 billion US trucking industry, but that disruption will be gradual and occur in stages over the coming decades. The trucking industry faces a growing shortage of truckers, and self-driving trucks could fill that void while reducing labor and fuel costs. However, fully autonomous trucks are still a long way from hitting the road. In an upcoming report, BI Intelligence will outline the progression of self-driving trucking, from early driver-assist and “platooning” systems that will take hold in the next few years to semi- and then fully-autonomous trucks in the coming decades.

Enjoy reading this briefing? Sign up and receive Transportation & Logistics Briefing to your inbox.

TECH AND REGULATORY CHALLENGES LIE AHEAD FOR DRONE DELIVERY: A slew of companies around the world, including Amazon and Alphabet, have been testing drone deliveries in recent years. However, it will be years before these companies’ plans come to fruition, as major technology and regulatory barriers still need to be overcome before commercial drone delivery goes mainstream, a feature article in Tech Crunch points out.

Chief among these barriers is the need for an air traffic control system that could track and manage large numbers of drones delivering packages to businesses and residences. This is both a technical and regulatory challenge, as regulatory authorities won’t legalize commercial drone delivery until such a system is developed, Tech Crunch noted. NASA has been working on a system in the US and conducted tests earlier this summer in conjunction with the FAA and various private companies. Amazon is also developing its own air traffic control system for drones at a research center in Paris, France. However, these systems, which will play an important role in preventing crashes or flights into unauthorized airspace, are still many years away from launch.
Companies haven't figured out how to drop off packages by drone to customers' homes while avoiding damage or theft. Amazon, for one, is exploring multiple delivery methods. In its tests in the UK, Amazon’s drones land at designated locations on customers’ properties. However, the company has also filed a patent that suggests it may look into dropping packages by parachute.
Lastly, drones still have to earn the trust of regulators and consumers by proving they are safe and reliable. That will require more testing, and an openness on the part of delivery companies to work with regulators by sharing data and conducting audits. Earning consumers’ trust will probably take more time and effort to allay concerns about privacy and safety when drones are flying over their property.

In a report released earlier this year, BI Intelligence predicted that these various challenges will delay the commercial launch of drone delivery programs until after 2020. However, this delay will not dissuade companies from continuing to develop delivery drones. The benefits that drones can offer in automating the last mile of delivery — the final and most expensive part of the delivery process when the package reaches the customer’s doorstep — are simply too large to ignore.

Drone Delivery Consumer

In other news...

Ford filed a patent for a system that allows drivers to remove the steering wheel and pedals from a self-driving car. Most self-driving cars used in tests today have steering wheels and pedals that fold back into the vehicle’s dashboard. Ford's system takes a seemingly easier approach by allowing customers to simply remove the steering wheel and pedals when they don't want to use them, and shows that Ford is already thinking ahead to when cars reach the final level of full autonomy and no longer require driving instruments.
Earlier this week, the American Trucking Association reported that the trucking industry generated $676.2 billion in revenue last year, down 4% from $704.3 billion in 2015. The total amount of cargo moved by the industry actually increased from 10.17 billion tons in 2015 to 10.42 billion in 2016, but a rate war sparked by growing competition in the industry depressed total revenue.
Already troubled by a spate of recent scandals and ongoing controversy over the departure of its former CEO, Uber now has to submit to 20 years of privacy audits by outside parties following a new settlement reached this week with the Federal Trade Commission. In its settlement, the FTC said that Uber failed to ensure that its employees did not access the private data of its customers and drivers, despite the company’s public assurances that it would do so. This failure resulted in employees using an internal tool, dubbed “God’s View,” to track the accounts of individual users, including politicians and celebrities.

Join the conversation about this story »

NOW WATCH: Researchers created fake footage of Obama speaking — and the results are scary