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CES

CES

Chinese on-demand giants Meituan, JD.com invest in automation as delivery volumes surge

  • Meituan processed 15.3 million food delivery orders per day in the first six months of last year
PUBLISHED : Friday, 11 January, 2019, 6:02am
UPDATED : Saturday, 12 January, 2019, 7:25am

As more Chinese consumers embrace the concept of on-demand delivery – for everything from their morning coffee to furniture for a new flat – the companies handling the logistics of that are investing heavily in automation to cut costs and speed up delivery.

JD.com, China’s No 2 online shopping platform, and Meituan Dianping, an on-demand services giant, both made their debut at CES in Las Vegas this week, showcasing their latest development efforts in autonomous delivery vehicles.

At its CES booth, Meituan showed two autonomous delivery bots, one for a range of 1 kilometre and another for a 3 kilometre range, for inside office compounds, university campuses and industrial estates, as well as a third bot that handles deliveries that require it to enter a building lift.

In China, where it processed about 15.3 million food delivery orders on a daily basis in the first six months of last year, the company has been conducting trials of automated services within the 1 kilometre boundary.

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“The vehicles haven’t reached the stage of mass production yet,” said Xia Huaxia, Meituan’s chief scientist, adding that the unit with the 3 kilometre range will be ready for commercial scale deployment by the end of the year.

“While the software needs more iteration, the hardware needs more time for enhancement to prove its stability.”

Backed by artificial intelligence, autonomous driving is seen as an amalgamation of advanced consumer and industrial technologies, including 5G mobile systems, new energy vehicles, and manufacturing, with the Chinese government designating smart vehicles as one of its key development priorities for the nation.

The talk of investing more in autonomous solutions also comes at a difficult time, with the US-China trade war dragging down growth in the mainland economy and with lay-offs being considered across the technology sector.

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Still, Zhang Chen, chief technology officer at JD.com, expressed his optimism on the prospects for automated delivery during a CES panel discussion on Wednesday. “In China, it is more manageable to tackle driverless delivery vehicles because the physical boundaries are well defined [in terms of starting point and destination].”

“We have had test runs on our smart delivery stations, where driverless delivery vehicles are already operating,” he said. “It’s not to scale now, but by doing test runs we can collect data and learn how to improve.”

JD.com displayed a wider variety of automated tools at CES, from self-driving delivery vehicles to plane-like drones. Before CES, the Nasdaq-listed e-commerce and logistics giant launched two smart delivery stations in China, carrying out deliveries with a 50-50 split between robots and human couriers. Its delivery bot can carry up to 30 parcels and drive itself within a five-kilometre radius.

Although Meituan and JD.com are making their mark at CES this year, neither company has any immediate plans to deploy their on-demand delivery technologies in the US.

While countries like the US have higher labour costs and therefore more incentive to adopt autonomous delivery systems, the size of the market is the key factor, the company representatives pointed out.

“The volume of delivery orders [in the US] is by a far cry from that in China,” said Xia, speaking on the sidelines of CES. “Restaurants and residential neighbourhoods tend to have lower density [here], reducing the overall efficiency of autonomous delivery.”

Meituan expects the fully operational self-driving vehicles to each handle a few dozen orders per day compared to the average of 30 a day that human delivery agents can do now, said Xia. However, he does not see the technology killing jobs for human delivery people given the high growth rates of the on demand industry.

“Food delivery orders in China will continue to grow by a few tenfolds in the future. The adoption of automation will only reduce some pressure on new hiring,” he said.