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Questions Surround Logistics Infrastructure as Demand Explodes

Getting delivery of a pint of chocolate ice cream or translucent setting powder in just a few hours is setting off  a host of new logistical considerations.

Questions of how the country’s current logistics infrastructure—from warehouses to city streets—can support the ballooning appetite for expedited and on-demand delivery, while also navigating appropriate wages for workers amid a driver shortage, have some wondering about the sustainability of the current model.

If conversations at the recently ended Shoptalk conference in Las Vegas are any indication, any resolution is still up in the air with two main questions reoccurring at the annual confab: what’s technology’s role in offering a solution and how do companies handle workers in conversations around e-commerce and last mile delivery.

“As these companies are forced to become profitable, we’re going to see a big change in how customers deal with a logistical cost,” pointed out Ernst & Young Partner Ashutosh Dekhne, discussing supply chain technologies.

Technology, to some extent, could help relieve pressures as it relates to a lack of workers or demanding productivity expectations.

“Obviously, everyone in this room understands that it’s no secret, we need drivers,” said Gautam Narang, co-founder and CEO of Gatik, a company that’s developed autonomous technology for light- and medium-duty trucks used by companies such as Walmart and Loblaw.

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Narang, who participated in a Shoptalk panel on robotics and fulfillment innovations, said technologies such as his company’s become “critical if you want to continue making those services available to the end consumer,” namely home delivery or curbside pickup.

Higher-tech supply chains are required to continue enabling those services as demand continues to rise, Narang argued.

At the warehouse level, robotics help with fulfillment, creating efficiencies that can assist human workers.

“People don’t want to be robots and that’s really what we’re expecting them to be,” said Lior Elazary, co-founder and CEO of InVia Robotics, a company that makes robotics software used in warehouses for picking, replenishment and returns.

An uptick in online ordering has made it difficult for the people handling fulfillment and delivery to keep pace and also hit the ambitious productivity targets required in e-commerce fulfillment, the CEO said.

“As consumers, we don’t make that any easier,” Elazary said. “We want that item; we want it faster.”

Christopher Payne, the president of DoorDash, admitted as much when he referenced the company’s 15-minute delivery program recently launched in New York, saying “consumers love it.”

Gatik driverless truck for Walmart
A Gatik self-driving vehicle parked in front of Walmart’s Bentonville, Ark. Neighborhood Market store. Courtesy

That’s where artificial intelligence and other advanced technologies come into play to, not necessarily replace human beings, but work in tandem with them to meet demand for faster delivery, Payne said.

“I don’t think a robot’s going to knock on your door any time soon, delivering product. So I’m more of a pragmatist,” he said of where technology is headed.

Uber CEO Dara Khosrowshahi echoed the sentiment when he said during his Shoptalk keynote he’s not forecasting robot drivers making Uber Eats deliveries.

“Over and over again, robots augment people, and we think that’ll be true in transportation and we think that’s true in logistics as well,” he said.

CEOs increasingly face questions when it comes to their fleet of drivers, many of whom have not been shy in their criticism of wages and benefits.

Instacart CEO Fidji Simo dodged the question when asked about the economics of being a shopper and driver for Instacart and whether there’s a path to increased wages.

“I think the main path is really giving them more access to more opportunities and so…our shoppers always say when there’s a big increase in demand, like Covid peaks, shopper satisfaction just shoots through the roof and so what we’re trying to do is attract more demand for these types of orders,” she said. “Part of the platform vision is helping retailers with doing all of that on their own properties, which benefits shoppers because that means orders to deliver.”

On-demand delivery companies, like Instacart, have surcharges in place in response to rising fuel costs, which Simo said also creates “an ecosystem where [shoppers and drivers] feel valued and well compensated.”

Khosrowshahi also pointed to Uber’s gas surcharge when the subject of driver costs came up.

“It’s in our interest that our earners earn a good, flexible living,” he said.

The temporary surcharge, ranging from 35 cents to 45 cents for Uber Eats, was announced in March for a period of 60 days, with all of that money going to drivers. The company said it would reassess the situation at the end of that period.

When asked what happens after that date passes, Khosrowshahi said “It depends on where fuel prices are.”