Logistics in the City of the Near Future by Edgar Blanco

for the afternoon for crossroads 2015 our first presenter is dr. Edgar Blanco my colleague Edgar is the executive director of the MIT scale network in Latin America he is also a research director here at the MIT Center for transportation logistics and has a lot of really interesting research that he's done that I think would many of you if not all would find very compelling in particular he's done groundbreaking work in the area of carbon footprint assessments and sustainable supply chains but today he's going to be speaking about some of his work focusing on mega cities and the logistics challenges that exist in mega cities and I think that you'll find his talk fascinating and it's a pleasure to have you dr. Blanco my talk see if you like it also the I think that you failed him too to mention that I'm a Georgia Tech graduate where is Chris where's Chris all right good so thank you so much and it's always a pleasure to to participate in this event and we're talking about the the topic they wanted me to talk about the near future of CDs and I don't like the near future especially what's being taped usually means that I'll be wrong but I'll still give it a shot but I will not follow the advice of my colleagues and I want you to talk about the past then now the future and they're really far away future even though the really far away future may not be around but that's okay so let me start with the past and as Jim mentioned about four years ago as part of our work in Latin America in Asia we start doing some work on urban logistics so this is live back from our 2012 crossroads we were talking about the megacity logistics lab some of the work we're doing there and I was very sorry I just come back from Beijing and I was spending some time there looking at urban deliveries and I was blown away by the same three-hour window delivery that was being offered in Beijing and that's my colleague from Tsinghua University and we're buying this camera and some of you have heard the story and we were in the office and we got it like a from 9 a.m. at noon we got the camera and that was a moment he was receiving the camera and that was I think I hope we had something like this in the US and I was so eager to share it with you and I talked about it about why was unique in those cities why work in Beijing why was Jae dong doing at that time that was making this possible and actually was not aggressive enough I guess because you know this is November 2014 and that's Allison same day delivery service in the US across several cities so we have it how many of you have used it do you like it it was fast that's a good that's a good way to go but did you enjoy the feeling accelerating okay I had a ferry was great you know instant gratification instant feedback I guess I would say instant feedback you you get it you get it to your door now you're always anxious exactly where they are if you're going to show on time but that that's a little bit of the future so that's one thing that has happened and and just you know of course working in this field everywhere I go and that was with my wife going through some Linens in Bed Bath & Beyond so this is a picture I took last week and if you go around and you start seeing all these advertisements of home deliveries from our store so just last week I noticed actually Bed Bath & Beyond also offers same-day delivery from their source here in Boston that's a map that's the store where we go shopping in South Bay Center we'll leave just seven seven minutes away from the store they know what what the hell I have to have to use it right this is what I do even though I buy one item I still got the item I was very happy and then for this talk I was very excited to tell you how in a way was and actually Bed Bath and Beyond have been doing this since 2010 yeah in New York City so things are moving very fast just we don't know they're moving fast and many more things are going and you probably have either as a customer or by reading the regular press this is all over the place you see companies like this if you have not heard at least one of these companies read more because they are they're everywhere so we have pause mates I think doing so far with Starbucks recently on delivery from Starbucks stores in stock are delivering groceries despite the big failures in 2099 with all these web and all these companies now grocery shopping online shopping is back with instacart they have a crowd based model they go to the store where you usually go we do the shopping for you and they someone else takes to your home the leave that's something similar but from shopping malls instead from stores so there's all this activity of like last mile 3d same-day delivery but I was still not convinced this has arrived until two weeks ago uber chowder so uber chowder uber chowder is that's it right when we have uber chowder that's we are here so this was in 13th of March over between 11 a.m. and 2 p.m. anyone in Boston could order chowder they will get it to your place any place you pick and there was a donation behind it and we working with the food bank but this is a little bit scary not because I want to write an uber after 3 p.m. after being delivering chowder all day but it's just what is this what is going on are we in the future now is the future this the future going to change and that's what I want to talk today a little bit more is this the near future is there something else going to happen why can I only get uber chowder in cities why don't you have a birch outer how can you get and when will you get uber charters I want to give you a sense of what it takes for uber chowder to get to you and finally what else lies in the in the future and those are the kind of three things I'm gonna hopefully cover today to give you a perspective of what is happening in last mile delivery so imma ship this is what I wanted to talk about originally by uber chowder is something you know too big to resist so let's just we have to get a little more academic here to get started so we just talked about the buying process most of you have seen it one way or the other I've made a little variation on the buying process just to emphasize a couple of things so usually we talk about traditional retail buying process we start with some discovery phase that's when you kind of get to know what you want to France websites etcetera then you decide to really go for that item search phase of the buying process then we actually then buy it at that time you shouldn't you do not use of differentiated buying from the delivery but nowadays we have to see those as two different steps buying then you get the delivery and then you do return if you need to or do any other services after that buy so the traditional way of doing this was the retail store the point-of-sale so all the discovery happens to a combination of store displays media maybe some word-of-mouth and eventually that the whole goal of all that was to get you to a store I'll walk in the store and eventually get to a cashier pay for the item and you know there's always been courier services everywhere in most department stores you can still get it today but then you just expect it to carry home and what you were done you were happy you keep it if not you should have to come back to the store and and return the product so that was the traditional retail model or have always been thinking of retail and you probably all are very familiar with this and then we got ecommerce after 1996 1998 2000 we got into the few ecommerce and that's kind of the pure e-commerce to say this the discovery happens in a website maybe on the store but that discovery phase was really geared toward getting you to the website remember we had our computers 286 processing processor right feels like ancient past and you went to the website and then you in the website you did the purchase and then from that purchase then some parcel shop out of a DC showed in your house and when you were done if you did not like the item then you returned it after a few years you know retailers figure you right this is really for real is gonna stay longer and they develop this multi-channel buying process and they kind of combine these two in one but they still saw it as a very separate path you should have stores where you hope to get to the aisle the checkout from the checkout you carry home and then you may have a website that drives some volume to the store but it was mostly for you to buy to the website you button the website you get it and then couriers or any other way get you to a home you can return it to the store or to the same channel you buy then there was innovations going on and everything was happy and that was 2005 maybe 2006 we're delighted were building huge distribution centers to support a website it was just 1% 2% 3% 4% 5% and then suddenly something happened January 7 2007 the iPhone was released most people didn't know what to do with it I of course bought the first iPhone and paid twice as much money got a refund because they did not get the pricing right and if they big Gator I do it for me but not for the rest of the world so I paid whatever he asked for it and and and the iPhone kind of changed everything is changing in such a way that this is now how today's buying process look like yeah we were happy with our little compartments data like these I don't understand but this is today's buying process these buying process is what got us to where we are now the buying process broke these barriers between those two or three channels and what the iPhone and it's ecosystem and of course the Samsung everything that goes are around it now has disrupted buying process the process were first of all I have the sales production was going up but it was still you know lol there kind of thing SMS is not not very engaging it was very limited for just interactions 101 but now we suddenly get this new way to explore communicate affordable mobile internet access start rolling out because now there was a demand for more bandwidth huge advances in speed on cell phone networks beuter friendly mobile websites html5 you know lots of backpacking technologies were developed partly to support its growth of mobile devices when I talk about the fourth bullet here is something not to underestimate millions of trained individuals that know how to interact with the signal how many of you have rolled out ASAP or Oracle training is this a pain have to trade all these people of all these many of these commands suddenly this ecosystem is like so contained so powerful that almost needs no training but that was kind of only became apparent after you had this this out there over time of course more sensors were in place in that little device and these are just regular sensors high-end sensors and this is thanks for pushing of the iPhone and then these competitors gps's gyroscopes cameras light sensors Wi-Fi Bluetooth RFID readers so now we have everything in one place and and that kind of started giving the birth of big data so all these things start convoluting and now those barriers what I used to have to go to my computer make the purchase they were gone I was gonna be in the aisle and I just could decide a double many times I wanted right there from that retailer or I wanted from Amazon all wanted from their website it was cheaper initially actually retailers I remember this story I think there was when Amazon just launched the scanner from the phone that retailers were hiding the barcodes right because they didn't want them to scan easily the price is the opposition embrace the price and just match it in the store anyways but that's another story so there's all these other things that started breaking these barriers and and that's when the buying process changed and it changed also by combining those technological aspects with three business models I'm going to point out that explain the future of Sevilla districts one of course is Amazon just gonna give you a couple of key statistics there so launched in 1995 14 years later seventy five billion on sales do we have another very important company that we do not associate with silly logistics but has to do with the notion of ability to share data trust others on a mobile phone and I'll talk more about that and facebook launches in 2004 has 1.3 billion users 10 years later and then we have our last disrupter all of them combined in there around the same time and this uber is the latest one butterbur have been around since 2009 it's just it was not in your city now it's in 53 countries and 200 cities five years later so how will all these get together into being able to answer the question that I posed at the beginning so what Willie Amazon showed is that people will buy online we just have to give them the right tools for them to buy online you have to make the process simple affordable you can compare products easily we have an internal system at MIT where we buy products it gave me 25 clicks to buy a stapler and I could do the same thing in one click in Amazon right so so it's easy so there's no friction so adoption of all kinds of terms that people never thought are going to be possible if you have asked me and I'm lucky I did not give that talk in 1997 will people buy shoes online I'll say never you have to try them first you have to smell them feel them it's not true right most products have broken that barrier of being marginal le adopters into getting to the 9 15% and the more we buy the more used we are to buy online so this shirt I'm wearing I did not buy same-day delivery but this I bought online why because now I know how to read the sizing charts used to be a pain but now they have all these kind of measurements I bought 2 or 3 of these shirts already so now I know how to buy them it take me two minutes I don't want to go to the mall and more and more of that is going on so most of these things means that ecommerce is really here to stay but most importantly we are all being trained on buying online so that's really thanks to Amazon it's insane push for infinite diversity of products so we could do it easily everywhere now we have Facebook and Facebook this is how one point plus building users look like connecting to each other but that's not what is interesting about Facebook despite that Chris doesn't like to use Facebook too much 556 million people around the world use Facebook on their phones remember about that comfort level of giving your information in the phone if you're in the store you need to leave the location if you have all your friends you can check into a place you can communicate to others you can ask others about why they think about this shirt does it look good on me you can do whatever you want online and you have a network of people that you used to be maybe connecting offline to make decisions that you can share with them you know how to find trusted sources through Facebook and Facebook sells you stuff as you walk through it I was researching uber chowder last night to get that icon this morning I got a new Eber add in my facebook whoa that's a scary but true reality of the future is that we have now so so much information about yourself that we have given in that now the information can go both ways and that allows for or the new buying process now I can discover anywhere that was just about to happen with the phones themselves search anywhere by anywhere that's just because of the basic phone technology but now I can request delivery anywhere because my sensors are advanced I know how to use these things I know how to zoom in and zoom out in the map I can pick put points I can get the informations alerts notification whatever I want and now more and more companies especially Amazon and and other online retailers are pushing to compete even harder to continue growth and they allow you all kinds of free services Prime membership infinite returns you can return anywhere but what we have no notice that this happens mostly as long as you are in a city and that's what I'm going to start collecting now these three trends we're the ones who got us where we are technology got us where we are but the realization of the future of logistics in cities is because of density before when all the investors were their own stores we design supply chains that were very efficient at moving to those stores online commerce developed these great systems combined with UPS FedEx DHL to be able to deliver anywhere from the websites but now when we have this buy anywhere return anywhere now we get back to the physical world of cities and this mostly happens in city areas rural areas are going to get a to but let me explain why happens in these cities used to be convenient and affordable if it's not convenient or affordable no one would adopt it so convenience New York City this is sixty five percent of people in New York City commute primarily by walking or public transport so in the past you want to purchase something that was big and heavy I have two choices wait for the weekend when I get my car or carry on the subway back from the office of course had no choice most people probably will choose to do it over the weekends or hours but now if I could do it I can stop by through the shopping and then go deliver at home this makes sense it's convenient to me it's a walking City and most cities around the world except the big cities in the u.s. tend to have the same similar profile 50% or more people commute walking so now you have an opportunity of convenience it's not only price remember I mentioned that that Bed Bath and Beyond was seven minutes away from where I live that was serendipitous but the average speed of travel in New York City is ten point nine miles per hour so that is the whole New York City the all the borough's now if you look at Manhattan it drops down to six and a half seven miles per hour let me give you what that means in terms of understanding the city as a place where the Jesus can't happen seven minutes those are those lines over there that's how far you can drive in a car in seven minutes a cab the city of New York has been collecting GPS data from cops since 2002 there's great reports and use it to read them that has all the travel speeds have they have changed over time and seven minutes can roughly get you one point two seven miles that's six kilometers six kilometers not square six kilometers radius that's around seven minutes population density of Manhattan is twenty five thousand people per square kilometer so that means that within seven minutes you can reach a hundred and fifty thousand people in Manhattan let's do some numbers let's suppose these people buy a product once a month you have five thousand potential sales per day ten percent penetration of the market one percent fifteen stops on our radius of 1.2 miles can you build a route around that absolutely yes one mile 50 stops potential stops that's density in cities that is the kind of environment where the potential of delivery happens interesting enough when this was in February when they were doing the one-hour delivery from Amazon their warehouse is in the power State Building they can reach within less than 20 minutes pretty much all the Manhattan area that is density let me go flashback on our cursor 2012 presentation of the mega city lab New York is not the most dense city in the world it's actually it's dense Manhattan is very dense but New York is not as this New York density areas around 5,000 Manhattan of course is 25,000 these are the other cities in the world so this density makes same-day delivery routing inside the city within very short time windows combined with convenience and congestion makes it viable viable from the consumer point of view I'm walking I don't want to take my car out and makes it viable from the business point of view I can reach lots of people very close and I can deal with all the operational complexities like UPS does and that's why I go back flashback 2012 happen also in Europe with the automated packing stations in Europe DHL this is in Chile we're doing the same research we do on the field for our project and there was more and more of these packing stations again density drives options for me to go and pick up products that of me having for them to be delivered on my home so density drives the convenience of offering more choices and makes us feel profitable for companies so what has happened since 2012 something new happened there's there's there's a plus and a minus so when I went and talked about the the city of New York and I talked about this density this density is great but the things demand is very random it's highly variable so even though I have this potential average the matter we're hearing about this morning how do you build a logistic system so you wanna provide a consistent service you have to look at the peak and if you have this huge daily variability and this huge even abilities how can you build a logistic service around huge variability not only on demand then you know that your supply needs are gonna change dramatically and there was not a clear solution at least none of us believed it could be done even though it was write written the wall that how can we balance there's the opportunity to build density in logistics in cities but now we have to build viability of supply of transportation services and that's when we get the overs lifts instacart postmates by providing flexibility on the supply of transportation now the whole equation closes now I can have the enough profitability and now I have a service I can probably leverage to manage this variability of supply and that's what what they have been doing and most of you before I go to the Q&A questions we'll say but isn't over getting legal is in uber being fighting all over the world so I just preempted your question so uber is of course being fighting all over the world because it was it is considered to be a legal way of competition I'm fair so let me do another flashback but this is a 1907 flashback so that was no crossroad 1907 small company in Seattle starts delivering parcels sorry courier services for a few chains they were getting telephone calls the telephone was growing they eventually convinced their customers not to have their own delivery persons which have been having around for a long time and the out sorted delivery teams - this is more company in Seattle this comparing both other companies and go to other cities and in 1950 to 1970 it was a national company but it was actually illegal to move Freight between states because it was the Postal Service job to move it between states it was not the private sector job and the company fought for over it over 25 years to break the regulation that allowed this company to move between different states some of you know which company I'm talking about ups so it sounds familiar whenever you come with a new service that breaks this the current cost structure first reaction is illegal isn't immoral how can we people people per hour how can we move product between states I have invested all this money in this in these warehouses the post office is in the Constitution these are right right how so so UPS definitely right so this is where follow we're seeing the same pattern I you P s is very active in this space they were here also last year I believe talk about what they're doing on e-commerce and online delivery because they see they're riding in the wall is there this is their story uber is the story of UPS just played again in a smaller scale uber is not the story of us the story of a new way of doing logistics so let me answer your the first two two questions that was easy because this is the present so is this the near future absolutely yes absolutely yes but it's gonna get even worse than the diagram that I showed you the beginning buy online pick up in store that's how we call in the u.s. bhops we call click and Collect in Europe that's what I keep happening now retailers have figure out that the way to compete is to use that infrastructure for multiple purposes more technology in store aisles more technology inside the store we have more services coming in more automatic pakka stations to give flexibility of delivery we have Amazon putting lockers in 7-eleven we have Nanjing in China opening the largest scale of automatic package stations more home delivery is going to happen I use instacart almost once a month now because that's every week I have to go and do shopping but there's this one week that I'd rather not do shopping because the weather is bad I'm lazy and busy I have to talk for crossroads it's better for me right to just go online and buy from instacart they have all my history and they buy automatically it's one click and my groceries are in my doorstep two hours later they go literally five minutes from where I live but I rather pay three bucks then go five minutes to the store I know it's crazy but that's how humans work there's prime memberships or similar things going on when you just pay ahead of time do you have to worry about this and we all have used that I use it I'm a a big Prime member probably other ones who make lose money there's all kinds of sensors alert I'm used to no alerts my phones are great emergency alerts I can prioritise prioritizing I can dismiss them I can highlight them untrained so more and more services can be embedded into my system without me feeling another application I'm used to having a hundred apps anyways what's 101 why can I only get uber chowder in cities well first of all you have to have a legal seafoods but if you don't even if you have our little seafoods even then it's really all about density density is logistics that's what make it profitable now there's there's another step is you may not be able to get one-hour delivery to our delivery but you can get up pick up in store and that's going to happen very quickly because they're just bolting naturally into the current infrastructure but the kind of dynamism that we're seeing is mainly centered around cities it's all about density and congestion if we get rid of the congestion that Monsieur crevel logistics will change so what else lies head inside religious so the near future we are living it embrace it make the most out of it there will be some constant consolidation how about a little bit beyond what lies ahead in logistics so this is the mandatory slide in every logistics talk between now and 2020 so I'll start putting in so this is the future right so we've great news right a couple of days ago the FAA approved finally some testing of drones so drones are here and I'm gonna say this is not the future now I'm being taped and I'm a big Amazon customer so I love Amazon yeah but this is probably not the future of Toulouse you'll have I mean I'm sure they'll be a role a role of drones and as soon as they have the service I'll be the first one to buy one thing just to try and get a drone into my house but this does not mean this is going to be the scale absolution so what is the scale-up solution for syllogistic s-- so you've seen this picture or a variation of this picture of the problem is series that we have the space kind of set if you're china you're building new series every year no problem you can plant them new and go ahead I'm turn them well and we wish you well but most of us already stuck in the city the way it is and the more cars are in the city that means more congestion so more cities realize that these pictures are reality so to move this same amount of people in this is amount of space if all of us have cars so they invest a lot in public transport they try to use less space and they'll kind of continue to do even more over the years and they know if we have bikes even better people want to be healthy they want to leave until they're 90 years old biking around we want to be like the Dutch people so they have more bike lanes so we can move and give more choices because congestion remember 10 miles per hour that's average in New York City 7 miles per hour is probably the reality walking is three miles per hour biking is around six or seven so you're better going on a bike if you survive so so this is the the kind of the trend right so cities are going to continue to shrink infrastructure to favor the things that you is that infrastructure better and even with a current ownership Mission New York is a number of cars per thousand residents so neither has 210 cars per thousand dresses that's why so many people use the public transport because people can not afford a car it doesn't make sense for them to have a car we see this like like Mexico City is a little bit higher but then you have the densities how many cars you have per square kilometer of course you have not enough roads so there's all these huge densities which drive congestion so that's why people want to move more easily and cities are investing more and more in public transport and public transport is usually used in very uneven ways so this is a study we're doing here with Professor marucho who is not here from federal university of rio de janeiro and this is the one of the trunk lines that move inside the city that connects the outskirts into the downtown of rio and those of course are the peak hours of commute and they are unavoidable I mean you need to have them deserve main for moving people but off-peak hours this infrastructure is not being used now could this be used for Freight can we start thinking of true intermodal urban freight transportation and maybe we think right now is crazy but we'll have any space well one is drones which we can fly over them but the other one is more let's look at what we have how can we use it differently so this is been around thought process for quite some years and you actually been piloted in many places in Europe especially with the trauma infrastructure investing billions of dollars and then Trump became obsolete we have tram lines all over the place they can use transfer spray this is both bagging moving some logistics into the city in Germany so that's one option the problem with this option is it requires lots of investment of capital to make the stations friendly for Freight and people so I foresee this being a little bit further down the road but there's another another choice and these other choice are bikes who lives in a city that has bikes bike sharing systems are becoming quite popular for many reasons there are trendy but they're also healthy and this is the number of bike sharing fleas especially look at the emerging markets Mexico City China Beijing Shanghai those are the congested cities maybe the future in only the US Europe Asia on the urban side so we have lots of these bikes now if we walk there's a there's a station right here right now if we walk outside all the lights are going to be parked why because you'll hear you're working you're doing your your job enjoying our a great day so the bags are pretty much unutilized most of the day but again you build for peak infrastructure so you know you can use bikes but at the same time you're opening infrastructure just for bikes New York has line for bikes Boston has room for bikes have all these lanes going on so let me introduce you to one of the new projects that we're developing this was a design developer the Media Lab and this is an autonomous bike alterna most cars 1990 I'll turn with bikes does the future why bikes are first of all if you don't want to be autonomous no problem you can write it it has helps you with the there's an electric motor that helps you be more powerful and you can go up uphill has a limit of 22 miles per hour so no worries you cannot do any damage it's kind of a friendly has these nice mechanisms Carbon exterior has protected too with the rain you have the infrastructure and of course being a mighty is being designed so you can have an app and you can call the bike so I want my bike come to me wait for me outside I'm done I can check my email when I go with the bike but probably I will drive it then I'll drop it yeah and then somebody else call they're like so I need less bikes but I need to move them around but even if that happens that bike will be idle most of the time so that's what we're doing with with the Media Lab what if we use those bikes to move with packages instead of there being idle since this autonomous we can put packages and we can move them around and we can do deliveries between store we can balance inventory we can do all kinds of things we want bike sure you can see the picture well this bike is a bike with the four boxes on it so it's autonomous right so I can also do an on-demand delivery I can't with more hearts of CDs I can be part of the lubricant the same our deliveries I can have the bike wait for me for my package you have a courier and we were with some of my team in New York on Friday actually talked into a career about these bikes and and we were talking well what happens if people steal the packages right it was the first thing that most people think about and it's interesting about these bikes because of the speed they don't use lasers which is the problem with most of the autonomous vehicles they use actually video recognition it's much easier because the speed of travel is much less but it's great for security if you steal a package people have a picture of you I will probably have also your DNA everything from the bike right away so no worries they will be able to track you down and get your package back so this is the kind of project that we're developing is how to design this really innovative future CDs systems where you can plan these bags you have to plan it right you have to move them around to the infrastructure that's more like the kind of futuristic vision of urban deliveries but it all comes down from this density this convenience this familiarity with online commerce mobile phones all that combined is making that these solutions are really a possibility moving forward and that's what little you're interested about this talk to me this is what we're doing now this future urban disease networks and talk to me is not talk to me these two people that work with me I just do not think I just come here and talk right and tell you what we're doing and some of them are here so do you mind raising your hands people that work on the lab so they're on this row over here you can corner them they can tell you everything they know about PVS that's the very lack of marketing name of that bike pev we have to find a better name so any suggestions are welcome and that's what I want to talk about today thank you so much who would like to ask the first question actually the second the third question alright or maybe the second one that was the first question Daniel Hager I was wondering so I'm Daniel's Teaneck from MIT so anyway I was wondering are there any additional infrastructure needs that cities will that cities will need coming up in the future these mega cities at all that we thought about that or is it more utilizing the infrastructure that we have to the best we can I think that the most of the existing cities were more on the using the current infrastructure the best we can and that's why sharing of all these existing capital is were the future lies sharing the bikes sharing cars sharing trains sharing buses sharing those is what really is needed in the past that sharing was very complicated convoluted we didn't know how to communicate to each other an efficient way and sharing is increasingly possible and I think that's thanks to cell phones basically that the sharing capabilities of a city are much higher than in the past and if we are on that autonomous vehicles and one of the reasons we think that like the bikes are a little bit better as a first mover of autonomous vehicles is that bikes are less threatening you know you're afraid of a big car moving the highway with no one a little bike if they hit you you just get off my way and you keep moving you're not gonna die from this little bike so there's a little bit more of acceptance as well so those kind of maybe some of those new conveniences in cities may have a role where you can use them in a more selective way but I think sharing infrastructure is really for the old cities now you can always think of building super long flying cars always an option going underneath cities again and more subways always an option but those are just two large investments and I think we have lots opportunities just on the infrastructure itself that exists hi I'm Liz door I work for CSX I spent most of my life in smaller cities Richmond Jacksonville and we're slower to adopt things like uber even GrubHub etc what you've talked a little bit about rural and big cities but what do you see for some of these smaller cities patience density I think that it becomes our about we are in the stages of these investments where there's a little bit of risk being taken most of these services are not they're profitable you are just building the capabilities and until they have more information about what it takes to make one of these systems profitable I think they're going to find justice solutions for those I mean look at the speed that uber is moving we're talking about 200 cities in five years so they have a lot of that say learning to happen so in the rural areas I expect this to be more just on the fringes because there's no density no that doesn't mean this is when I get there is this gonna have a different shape of form less services maybe only on weekends I mean a little bit more restricted not as dynamic because there's not enough demand so on the other hand I think retailers have a big opportunity to use the retail infrastructure to provide new services local to the community around those rural areas you have stores everywhere you can pair them with schools or high schools in the region to provide some of these delivery services and you can provide this kind of services but that will take a little bit a little bit longer just because that's more a lot more risks if you go into that direction so I cannot give you a date well maybe a date where mm oh well I have to come back to talk about of this again five years after that that's what it's gonna be there however this is so horribl up from Home Depot in Mexico a couple of questions what is the current status of the autonomous bike project and have you been approached by any of the big e-commerce companies so one you cannot talk about this bike it's still not being released the the bike is the prototype is gonna be the first bike arrived in MIT campus in the summer so did they say summer still summer June June June we're gonna have the first bike with all the electronics so but believe it or not the eggs are the easy part the professor does autonomous vehicles at MIT that was part of this project this is easy a bike I can do it in my sleep so this bike is less than $10,000 so it's still expensive but it's not but it's pected to go very quickly down in price so the first prototype is gonna be here in the summer and respect to have the point of fact is already happening so in terms of a city that uses the bikes that's the discussion so after the summer you can come here and touch the bike right ride their bike and feel about the bike that's what when I start approaching the e-commerce companies because at this stage no one believes that the bike can actually exist so I was hoping to have the bike here with me but not ready so the bike is gonna be ready in the summer so by the way I'm only working on the algorithmic side of the bike the part that does the boxes the design of the bike is done by mechanical engineering the media lab electrical engineering over-mighty and we're just a team of people that are trying to use the most efficient of this technology that's gonna be around very soon Dave Dave retune with evergreen packaging so regulation and and liability are such a major cost component of all modes of transportation how does that way into the future they you're saying yes so that was why him most of the time on our meeting in New York last week was about that worker compensation is you know 30 to 60 percent depending on on the industry to forty percent of the cost of transportation and that's why part of career services that are bike people driven career services are not as competitive let's say as uber because we were doesn't have the liability aspect as well defined so it's a it's a big it's a big big problem and I think it's gonna happen it's gonna be negotiated all directions in some of the lab it's gonna go down so uh I didn't know this but in New York you cannot have a biker being a contractor has to be an employee a truck driver can be a contractor but a biker cannot an autonomous biker I'm sure so the so there's a little bit of that negotiation didn't we should came back you know in the 1950s when they were negotiating some of these liability issues and I think that it's gonna come down some of the liability issues for traditional cars as they negotiate we see this and it's going to go up as well on the let's say the more crowdsourcing based services but if you think about the moment in time where we are we're only just getting started that extra cost is probably gonna be a wash once you look at the enough density and penetration if you have 7080 stops you know you have a UPS UPS rather a FedEx route this is 80 stops do you have an 80 stop dynamic routing with crowdsourcing you pretty much can cover those extra costs a matter of time I think a bit of negotiation and it's just it will be in both ways reduce the costs on con on liability and increase the cost of some of these services right now they probably are below what they should be i Chris car so energy just wanted to ask you a little bit more about what's your idea for a business model was if this was something that you thought someone would buy a bike is it something where a company might buy a fleet of then rent it out hourly which are ideas on that work so we have not gotten that far we're still figuring out how many bags we need for Cambridge and we still do not know how many but these kind of services because of the capital investment even though they're just five thousand dollars or four thousand dollars you need hundreds of them to be the system to be more effective which makes it more of I will not say utility but more like a private public partnership you need some sort of right-of-way some sort of understanding of the rules of the road so at the beginning you're probably more imperative with cities like most of the city by showing systems are where there's a private entity an operator they have some sort of contact with the city for xx years while they figure out the details and the role of of the private industry is to maybe get either subsidized rates to use some of that by providing the capital upfront so I don't think we have a clear business model more than we need a partner from the city we need a partner from the companies because we need to accomplish this are using it so I we were not there yet guess in summary I do not foresee this being like airline industry that you have you know five competitors of bikes in the city you know maybe you get there but you just don't see it in the shorter I see it more like our bike sharing systems one company gets a contract gets a bead builds the infrastructure in joint partnership with the city later on maybe more new models are brought in but in the short term I don't foresee anything more exciting yeah then that now marketing of your brand in the bikes anytime so so that we can talk narayana with PepsiCo yeah as we start deploying some of these autonomous vehicles for managing the last mile logistics how do we envision the product return process to work and also how do we you know satisfy the customers need of trying or different items before accepting the one they want as they try in the big-box stores good so a couple of things I probably didn't mention this too much but these bikes are electric bikes so let's say energy-efficient bikes their battery packs are much smaller and they can charge very quickly so let's say they're very efficient and environmentally efficient so going back and back and forth to your house five times until you get a right pair of shoes no problem for the environment now congestion and traffic there's another thing in capacity so how do I see I think that witches are getting better at buying online it's just a word not that good there's always a return return process I think the return process of clothing the return rates of clothing on our double the ones that are in retail so definitely still be a big part of it but that's that's what we signed for and and the other part of the question was how do we see these bikes help in the return process yeah so some of the things that I did not mention about the bike system we're still designing the freight component of it we're gonna need huffs hops where there's some sort of people but those hops do not need to be dedicated hops they don't need to be like a post-office hub it could be a store next where you are like in Europe that there are several places where you can get deliveries it's only a few packages you're gonna get in your neighborhood there could be like a service provided by the retailer where you can leave the packages and then pick them up on your way home so the return part of that can be managed that way you can also schedule these bikes you can I'm gonna be in that place at 2 p.m. meet me there and we can plan for that we can send you alerts if you're not there you can tell me what you are not charge you more if you want the bag to wait for you so once you get into the autonomous cycle the biggest problem for us is more we have enough capacity to satisfy all those in immediate requests we have to put some discipline the discipline needs to be done through hops and this helps need to be small hops the basement of this of this building over here you don't have to build infrastructure you need some crowd source based worker someone that comes and helps you with the bike for you know you pay them by the hour and you have some sort of big hops like normal city hops to move Freight and constantly afraid so if you think of this schematic of a city imagine this would be like some major hub in a neighborhood where you get most of the packages then you have a smaller hubs in different places where you can do transshipment and have people helping be a crowdsourcing I could imagine but you will need some people anyways to manage those some of these transitions and that could be you as a consumer or it could be someone we hire on demand as needed everything is planned with information so that's kind of our vision again it's very much in shape and where is it Andrea that we are I'll put them here in the spot they're right here you can talk to them they're supposed to give me a report tomorrow about how these hubs are meant to be designed so they should have already some knowledge this is really ongoing work so I cannot give you some of the details because we don't know this what other questions might you have Oh Stephanie so my question is in regards to Stephanie butcher from MIT so this is great and you would just talk about having a hub where you could have people load the bikes but would you be primarily using these to start for b2b transactions where you could ensure that there was someone there to receive the bike so when we first met with the Media Lab we were they were thinking of him some big robot arm that will unload the bag but that was too much more investment so yeah so you need some sort of meeting point with the customer but remember he's like uber you have to meet the the car somewhere right but you can tell them where to meet you and how to meet you so and we are all being pretty good well trained to learn how to meet people dynamically so imagine that this is just a dot and we can tell you right now I'm gonna be my off in the next two hours great perfect we reposition the package there's all this no this one is exciting for logistics we get all this information about how you buy when you buy we know when your orders been supposed to come the package come at night we can use the bikes we will closer to either your work or your office place before the time comes and when you're ready to get your package just call the back I'm gonna be here for the next two hours please come with my package while you're there you get your alert you come down you get the package you come out it'll be some code you didn't steal other people's packages we'll take your picture and then we will keep going so we are thinking a very dynamic system not as much as is that what you PS is trying to do with my choice and FedEx also were they trying to give you as much information keep you up-to-date all the time so we don't miss that moment where you are well you should we don't want you to move to another place we will go to you that is the division now this requires much more algorithms much more planning much more logistics more than four people for moving people from one point to the other is easy just call the baguettes you drive when you're done for logistics I have to coordinate with you that's why this is as much as it is how people movement system is a freight movement system because that's where all the incursion is to come planning forecasting right interfaces to get to you and meet you the right incentives for you not to have that bike waiting for you for two hours and using a reason so that's kind of the interesting parts of this and but yes that's a vision the vision is more very smart proactive looking so we can give you the bike such that you think that you had no friction at all I was in my office anyways oh the bag just came that's the kind of experience we want rather than now I have to go to this place okay this we have to plan it ahead of time will be a few hops in between Rob Fitzpatrick from NICTA ago thanks for that as you articulately pointed out both ups and Ober have faced transitional challenges we have local governments etc have you done any work on the impact in reduction of congestion or similar metrics you might be able to use to sell to local governments so the result we're reviewing yesterday on the reduction of co2 we expect a huge reduction of co2 just because we move to electric so that's let's say not an issue congestion is a slightly different because congestion has to do what kind of infrastructure you have for the bike system for example in the Cambridge area there's dedicated lanes of bikes so in that sense a new system of bikes it will increase congestion of bikers hopefully they will be nice to the bike will not push it around but but it will be a little bit of a child and less of a challenge if you go to New York City well you do not have bikes Lane systems and congestion is an issue now we were seeing and I'm here spanning a bit beyond my knowledge but we were looking at some of the dynamic algorithms for how close kind of bike Drive behind a car and it's just a matter of inches and it kind of stopped quickly yes you can stop that quickly because there's none of mass in the bike a car is different animal so we think that it's more about making sure that people are around the bike are comfortable with seeing those bikes moving around and you didn't try to hit them or cross them or something yeah but the bike itself can be very quickly moved in to traffic without creating a lot of disruption but we don't have enough data the first piece we're gonna do is here in Cambridge and we're going to hopefully get some more details that we can assure but yes co2 has been our main main sale point congestion less so we're only now building the simulation models that show that okay thank you dr. Banco you

Channel: MIT Center for Transportation & Logistics

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Length: 59min 26sec (3566 seconds)

Published: Wed Apr 29 2015