TuSimple, an autonomous trucking company, has been conducting test drives for UPS between the Arizona cities of Phoenix and Tucson since May.
Now the corporate venture arm of the global package delivery giant says it has taken a minority stake in the San Diego startup, which believes its technology can reduce the costs of shipping goods via tractor-trailer by 30 percent.
Financial terms of the deal, announced Thursday, weren’t disclosed.
Autonomously navigated trucks would save the delivery industry money by reducing labor costs. Last year, more than half of UPS’s $64 billion in operating expenses went to cover compensation and benefits.
We’re not there yet, though. Arizona has some of the laxest laws in the US when it comes to self-driving technology and has become a popular spot for companies to test autonomous vehicles. In March 2018, a pedestrian was killed by a self-driving car in Tempe—the first recorded fatal crash involving a vehicle in autonomous driving mode. A back-up driver was riding in the car, an Uber (NYSE: [[ticker:UBER]]) vehicle, at the time of the crash, but didn’t react in time to avoid hitting the person in the road.
TuSimple says a driver and an engineer were in the trucks that have been hauling goods for Atlanta, GA-based UPS (NYSE: [[ticker:UPS]]). The delivery company, which moved 5.2 billion packages last year, says the daily test drives it has been conducting with the San Diego company were intended to determine whether its self-driving trucks could make that process more efficient using what’s known as Level 4 driving automation, in which a vehicle can operate without a driver under limited conditions. (A vehicle with Level 5 capabilities would be able to operate autonomously in all conditions.)
It seems convinced that’s the case.
UPS says the deal is an extension of its existing relationship with TuSimple, which is one of the trucking companies it pays to do some of its deliveries during peak times. On average last year UPS and its contractors moved about 21 million packages per day last year; it reported profits of about $4.8 billion on about $71.9 billion in revenue.
It’s not the only delivery company testing out TuSimple’s tech: The US Postal Service recently made test runs from Pheonix to Dallas, TX, with its trucks.
In the world of self-driving truck technology, while perhaps less attention-grabbing than autonomous vehicles for personal use, competitors abound: Uber started running routes in Arizona with its own trucks in late 2017.
Waymo, the self-driving division of Google parent company Alphabet (NASDAQ: [[ticker:GOOGL]]), has long been testing trucks there, and in other states, too.
“While fully autonomous, driverless vehicles still have development and regulatory work ahead, we are excited by the advances in braking and other technologies that companies like TuSimple are mastering,“ said Scott Price, UPS chief strategy and transformation officer, in a news release.
Price said the company believes such technologies will bring “significant safety and other benefits” even before vehicles become fully autonomous.
TuSimple founder Xiaodi Hou, the company’s president and chief technology officer, in the news release reiterated the company’s goal of being the first to bring a self-driving truck to market.
The company, founded in 2015, closed a $95 million financing round in December. China’s Sina (NASDAQ: [[ticker:SINA]]), which runs the social media platform Weibo, led the investment.
TuSimple also has offices in Beijing. Package delivery companies in China, including the country’s postal service, China Post, and logistics company Deppon Express, are testing autonomous vehicles to speed up their services, too.
