Byron Knight explores the ‘tremendous opportunity’ to invest in new supply chain innovations
In the not-too-distant future, the complex process of transporting goods from Point A to Point B might look and sound quite different.
Picture this: Under the watchful gaze of technically skilled workers, a fully electric and autonomous yard vehicle (like this one) steers toward the warehouse, shuttling trailers back and forth. Inside the warehouse, robots glide across rows of packages, picking them up and moving them along to the next step of their journey. These packages arrive at their destination thanks in part to a nationwide fleet of autonomous electric vehicles navigating goods from warehouse to store.
All those technologies already exist, and the new logistics automation ecosystem to integrate them is already taking shape. KDT’s investments in logistics automation total $112 million to date, part of the $30 billion in technology-related investments Koch Industries has made in recent years. The scope of autonomous movement of goods is ripe for innovation and investment, a trillion-dollar total available market with opportunities ranging from sea to rail to the final mile of delivery. These emerging technologies are expected to disrupt logistics for good by moving items from Point A to Point B more predictably, cost-effectively, efficiently – and quickly.
That’s why, from Outrider in the trucking yard to Gideon Brothers in the warehouse, to Gatik on the critical Middle Mile between manufacturer and retailer – and beyond, – KDT is building mutually beneficial relationships with fellow investors, startups and some of the largest commercial business partners in the world engaged in the autonomous movement of goods.
There’s tremendous opportunity – and a demonstrated need – to address the most pressing challenges in the supply chain. Not only do Koch’s investments align with our focus on autonomous goods movement, they’re also solving real-world problems and challenges, providing better solutions than the next-best alternative. In 2020, e-commerce sales in the United States grew 44% from the previous year. Consumers not only want more choice, they also want their items cheaper and faster, necessitating smarter logistics solutions. When scaled across Koch operations, technology from these investment partners could revolutionize the journey of goods from producer to consumer – loosening supply bottlenecks, minimizing shipping delays and improving worker safety.
As a company with diversified capabilities itself, KDT’s investments go beyond just capital. We’re helping these entrepreneurs scale their innovations to create mutual benefit. Koch companies are a global lab for experimentation and growth, both for our preferred partners and our businesses and capabilities.
For one, KDT invested in Outrider when Koch company Georgia-Pacific saw an opportunity to improve facility operations, efficiency and safety. Outrider then piloted its technology with GP and is now working with more than 10 Fortune 500 companies to automate their yard operations.
As with some other recent Koch investments, Outrider’s solution employs electric vehicles. This is logical, as EVs are better equipped to handle the rigor of low speed, high torque and yard idling compared to conventional vehicles. This, in turn, creates long-term value for businesses by extending the life of the vehicle. And while there are many incentives and subsidies to invest in alternative energy technologies such as electric, we make a point of investing in businesses that are viable without them.
Croatia-based Gideon Brothers is driving similarly innovative autonomous solutions with mobile warehouse robots powered by artificial intelligence and 3D vision. Its technology enables these robots to carry, pick up and drop off items, empowering employees to perform more valuable tasks and develop new skills while increasing safety and efficiencies. By investing in Gideon Brothers, and piloting experiments across our facilities, we hope to implement this technology across Koch’s industrial operations.
KDT’s logistics investments also extend to the so-called “Middle Mile,” the routine but critical step in the shipping journey between manufacturer and retailer. In August 2021, KDT led a Series B funding round that will enable Gatik, an autonomous vehicle startup with offices in Palo Alto, California, and Toronto, to expand its autonomous trucking fleet across North America and expand its staff. The goals: lower costs, shorter delivery times and more dependable capacity for shipping partners, which ultimately reduces cost and improves choice for consumers.
These investments reflect a fact of business and life in 2021: Disruption is happening all around us and across countless industries. That’s why we will continue to seek out partners whose vision, knowledge and expertise will drive innovation in a mutually beneficial way.