More than Point A to Point B: Why Koch is Scaling Up Autonomous and Electrified Logistics Solutions

Byron Knight, COO and Managing Director, Koch Disruptive Technologies, explains
recent investments in 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 TK to date/in 2021 – 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 who are
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 these investments align with
our focus on autonomous goods movement, but they’re also solving real-world
problems and challenges, providing better solutions than their next-best alternative.
In 2020, ecommerce 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. From loosening supply bottlenecks
to minimizing shipping delays to improving the safety of workers, technology from
these investment partners and scaled across Koch operations has the potential to
revolutionize the journey of goods from producer to consumer.

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 example, 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 four other Fortune 200 companies.

Like some Koch companies’ other recent 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 invest in businesses that are viable without
them. As battery technology improves, so does its cost to implement at scale in
solutions like Outrider’s.

Croatia-based Gideon Brothers is driving similarly innovative autonomous solutions
with mobile warehouse robots powered by artificial intelligence and 3D vision. Their
technology enables these robots to carry, pick up, and drop off items – freeing up
human employees to perform more valuable tasks and increase safety and
efficiencies. Autonomous forklift technology from Gideon Brothers will not only
enable greater warehouse efficiency and safety, but also empower employees to
continue to develop new skills and find what drives them. By investing in Gideon
Brothers, and piloting experiments across our facilities, we hope to scale 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 – with
Gatik, an autonomous vehicle startup with offices in Palo Alto, California, and
Toronto. In August 2021, KDT led a Series B funding round which will enable the
company to scale its autonomous trucking fleet across North America and expand
its staff. The goal: 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 forward in a mutually beneficial way for society.

Byron Knight
COO and Managing Director

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