Dive Brief:

• Gatik, an autonomous vehicle logistics startup, is adding more than 10 temperature-controlled box trucks to its middle mile fleet, according to a company announcement Wednesday. It is adding 11- and 20-foot trucks to its network.
• The vehicles are designed to carry refrigerated, frozen and fresh groceries as well as heat-sensitive medications on fixed routes between distribution centers and stores with a safety driver present, according to a press release.
• Gatik has seen a 30% to 40% increase in delivery ​runs as its customers try to keep up with changing consumer shopping habits, particularly online ordering, Gautam Narang, Gatik's CEO and co-founder​ told Supply Chain Dive in an interview. 

Dive Brief:

Autonomous vehicle solutions are being piloted across the supply chain, from long-haul trucks to compact sidewalk delivery robots. Automating simple, repeatable routes, can allow carriers to increase efficiency and mitigate driver shortages, which in turn can benefit shippers in the form of reduced transport costs. 

The COVID-19 pandemic "highlights already weak links" in the supply chain, Narang said in a statement. "Consumers' needs and wants have changed dramatically, but the existing supply chain foundation is inelastic and doesn't support growth or unexpected changes in demand." Going forward, shippers will need more flexibility in their middle-mile to better respond to changes in demand, he said.

In Gatik's case, it is leveraging its fleet of box trucks to serve retailers that need additional inventory in stores and/or to ship directly to consumers from nearby microfulfillment centers as more people opt to shop online amid social-distancing measures.

"Our customers are leveraging these MFC's for order fulfillment," Narang said. 

The majority of retailers Gatik is working with are using centers that "are often highly automated, with a very small footprint and non-consumer facing most of the time," he said.

The fulfillment rates from MFCs are often much higher than those from traditional facilities. The higher throughput rates, particularly now that the COVID-19 pandemic has increased grocer demand overall, has increased Gatik's customers' need for more frequent middle mile deliveries to keep them replenished, he said.

The company has been partnering with Walmart since July 2019, delivering goods "12 hours each day, seven days each week," according to the release, and works with multiple other Fortune 500 retailers across North America.

Walmart, and other retailers Gatik works with are increasingly shipping online grocery orders from "dark stores," Narang said, either relying on employees to pick and prep orders, automated MFC systems on the back end, or some combination of the two models. 

He sees the future of grocery delivery shifting in favor of more frequent and automated mid-range deliveries within hub-and-spoke food supply chains. Especially now that the current pandemic has moved the needle further in favor of e-commerce versus in-store purchasing. "This segment has become a necessity ... and doing contactless or automated deliveries will be even more important than before," he said.

Gatik plans to expand its box fleet over the course of 2020, though Narang declined to comment publicly on how many vehicles the company plans to add. He did say that the company is "accelerating" its initial deployment plans and "overshooting" its initial estimate due to demand from existing and new customers.