Artificial Intelligence in Logistics: Emerging Startups, Challenges and Use Cases

Artificial intelligence is hitting new adoption levels each year, with industries like supply chain management and logistics taking center stage in the AI race. As per Infoholic Research, the AI in the logistics and supply chain market is predicted to grow at a CAGR of 42.9% over 2017-2023 to reach USD 6.5 billion by 2023.

The process complexity and amounts of data generated by the industry call for a higher and tighter structure and transparency through digitalization. Operational challenges aside, people want their stuff right now – be it a multinational corporation awaiting new equipment, or an Amazon customer expecting their gifts come holiday season. In today’s world, the speed of delivery matters more than ever. In addition to speed, customers demand deliveries and pick-ups at a specific time slot, adding a layer of complexity to route optimization. Then, there’s the question of pricing.

At the age of online price transparency, companies are expected to deliver a higher quality of service at lower costs, putting pressure on company margins and pushing them toward labor automation. There are just too many moving parts to this industry for it to persist without AI and the augmentation. With multiple players across different parts of the supply chain, regulators, a vast number of third parties including subcontractors, operators, airlines – this is literally too big to fail, but it’s certainly prone to economic stagnation and hard losses if the whole setup does not adapt to the modern age.

List of the 100 AI Logistics Startups

Inside: AI + Logistics landscape featuring 100 startups.

Based on public information gathered from Crunchbase and other sources, we have compiled a list of 100 startups that bring artificial intelligence to the global logistics industry. Every AI logistics tech startup carries a unique approach to Artificial Intelligence, and some of them have already operationalized several use cases.

To highlight a few cases, Dutch startup Fizyr enables the automating of human tasks in logistics using AI by building software products for automated picking and placing in harsh logistics environments. Instead of acquiring a proprietary picking cell, that most piece-picking companies in the market offer, Fizyr’s modular software product integrates smoothly with any camera, robot, and end-effector, allowing companies to choose the best equipment to meet their needs at any time. The algorithms provide over 100 grasp poses each second, including classification to handle objects differently, but also perform quality controls to detect defects to prevent damaged items from being placed on a sorter.

Indian company Invento Robotics specializes in developing service robots intended for customer interactions. Their flagship robot known as Mitra, can recognize guests with face recognition technology and engage them in conversations while alerting the hosts of guest arrival. This year, Mitra was trained to help healthcare workers screen and diagnose Covid-19 patients remotely to prevent exposure to Covid-19.

Based in Wilmington, MA, Locus Robotics manufactures autonomous, mobile robots to support e-commerce operations for retailers and warehouse logistics providers. It has recently announced that it now passed the 250 million units picked volume level, meaning that Locus robots can now pick more than 10,000 units every 15 minutes.

Nuro a Californian startup founded by ex-Google employees, has announced a $1 billion investment round from Softbank. The startup produces R-1 robots, which can carry many products on board, can cross sidewalks, and even climb stairs to make deliveries and due to their slimness, are safer than most alternatives.

Robby Technologies founded in 2016 and backed by YCombinator is developing Robby 2, an autonomous vehicle with advanced AI for navigation and interaction capabilities. It can navigate not only roads but also sidewalks, pedestrians, and rail crossings. It is also equipped with conversational AI to encourage interaction between humans and the robot. For example, if a person blocks Robby’s path, Robby will say “excuse me” and “thank you”.

Satellite imagery company DigitalGlobe high-resolution pictures of the planet’s surface to ride-sharing giant Uber. These images provide rich input sources for the development of advanced mapping tools to increase the precision of pick up, navigation, and drop off between its drivers and riders. DigitalGlobe’s satellites can decipher new road-surface markings, lane information, and street-scale changes to traffic patterns before a city adds them to its official vector map.

This is not an exclusive list of AI logistics startups – feel free to add more companies in the comment section at the end of this article – we’ll make sure to add them to our knowledge base.

Logistics industry trends and major players

Types of innovation in logistics.

While a great deal of innovation is coming from startups, established players bring plenty of disruption as well. Companies like DHL and ports like the Port of Rotterdam are constantly in the headlines when it comes to adopting new technologies. More specifically, DHL has built a machine learning-based tool that predicts air freight time delays. The machine analyzes 58 different data points and predicts daily transit delays or speedups up to a week in advance. Furthermore, the ML model pinpoints the top factors influencing shipment delays.

The Port of Rotterdam invested in self-learning models by developing Pronto, an app for standardized data exchange on port calls. The app allows shipping companies, agents, and terminals to plan, implement, and track their activities during a port call. By analyzing such factors as vessel type, cargo type, location, route, sailing speed, and other vessels in the vicinity, Pronto powered by AI predicts vessel arrival times in the port.

In the meantime, East Japan Railway Company, one of the largest logistics companies in the world, plans to launch the implementation of autonomous train driving by 2027.

FedEx recently announced its new FedEx SameDay Bot to make “last mile” deliveries more efficient. With a maximum speed of 10mph, the bot uses a combination of LIDAR sensors akin to those in self-driving cars and regular cameras to navigate on the road independently and avoid collisions. Perhaps very soon our pizza from Pizza Hut or groceries from Walgreens will be delivered by SameDay bot.

We hear more and more announcements from big auto players such as BMW, Daimler, Ford, Toyota, and VW. Most of them are developing autonomous vehicle technologies. At the same time, younger companies like Google, Tesla, and Waymo challenge the incumbents by developing their own autonomous vehicles using proprietary AI and manufacturing techniques. In addition, mobility platform companies Lyft and Uber are partnering with established automotive companies to offer on-demand rides autonomously.

Overall, the innovation in logistics can be grouped into the following cohorts:

1. Automation of existing processes

Automation is the first step towards large-scale optimization across the board, and lots of companies have already done it to at least stay competitive:

• Automating repeatable tasks like form completion, invoicing, and inventory check-ups.
• Accelerating the complex brokerage process susceptible to human error and requiring very specific knowledge of regulations.
• Automating customer data collection and storage – an ongoing challenge for large enterprises that want to keep up-to-date records on their clients.
• Automation of warehouse operations with autonomous robots - replacing or aiding humans with all operations inside the warehouse.

2. Prediction and forecasting for process optimization

Automation already brings major benefits to the industry, but there are even bigger gains in the predictive power of AI. There’s an entire host of potential AI use cases in logistics that are being either explored or internalized by major logistics companies:

• Predicting delivery routes by enhancing communication between a multitude of global supply chain participants to efficiently transport, pick up and deliver shipments.
• Forecasting wear and tear of machinery and improving the Overall Equipment Effectiveness index.
• Predicting fuel usage for fleet optimization.
• Predicting future demand for production.

3. Advanced technology for disruptive innovation

If we explore the technology funnel even deeper, there’s basically a sea of possibilities when it comes to more advanced forms of AI that we are just starting to explore. Think Boston Dynamics and Amazon’s fleet of autonomous delivery drones, and then consider how far off are these use cases:

• AI in image recognition will speed up inventory management, while intelligent robotic sorting will accelerate parcel processing.
• The intersection of AI and IoT will empower sensors to produce visibility in supply chains, accurate security and safety solutions, and reduce harmful emissions.
• Purchasing through smart AI assistants like Siri, Alexa and Google will help personalize the shopping experience and increase the already break-neck velocity of consumerism.

According to Rob Carter, CIO of FedEx, you will be able to "talk your way through and [Alexa will] ask the right questions to make sure you’ve completed the work. Then you can expect a truck to roll up to the front door of your office, pick up the shipments, and move them along."

Covid-19 impact on the sector

Challenging times that present numerous opportunities.

The pandemic put a major strain on the entire sector. There are a few reasons for that. One is the globalized nature of today's supply chain where various components of a single product are manufactured in various countries, especially in China. Two is the new regulations like additional protocols, in connection to the spread of the virus created delivery bottlenecks and slowed down the movement of goods. Three - the governments, businesses, and consumers expected certain goods to be delivered faster. At the beginning of the pandemic, they were masks and PPE equipment. As we are nearing the end of 2020, new processes have to be created to ship the vaccines under appropriate conditions in the US, Europe, and the rest of the world, putting additional stress on the logistics companies. One of the consequences of the pandemic may be the shortening of the supply chain or its diversification to reduce dependence on many countries and possibly replacement of offshoring with nearshoring for strategic goods.

That being said, the pandemic created unprecedented opportunities for certain sectors of the logistics.

• The rise of the e-commerce industry as more consumers switch from offline to online
• Drones, autonomous vehicle, robotics startups that replace a human in delivery, minimize exposure to a labor shortage and help maintain social distancing
• Route optimization with AI to speed up delivery of goods while reducing carbon emissions

For instance, a Bengaluru-based start-up Invento Robotics, has been re-purposing its robots — to screening and diagnostics to prevent exposure to Covid-19 patients by doctors and healthcare workers. The robot helps with patient data collection i.e. name and symptoms and measures temperature. Those with symptoms or who have been in contact with a Covid-19 positive family member are directed towards the diagnostics robot for a remote video conversation with a doctor.

TagBox, a supply chain monitoring company, retrained its AI innovative logistic models to enforce, maintain, and manage social distancing within the workplace. The start-up’s wearable Tag360 alerts when a person's temperature is rising. It can monitor the handling of diagnostic test kits, alerts if unauthorized opening, mishandling, or temperature risk is detected.

M&A Activity in Logistics and Supply Chain Management

A great deal of M&A activity is happening in the logistics sector. We see ride-hailing companies consolidating, industry incumbents adding innovative tech solutions or top talent to strengthen their departments through the acquisitions.

One of the flagship recent deals in December 2020 was the IPO of Doordash, a leader in food delivery that leverages various AI and ML techniques to intelligently model the decision space and achieve near-optimal solutions in seconds. Another interesting deal was the sale of its autonomous driving unit by Uber to a competing autonomous vehicle technology startup Aurora. As part of the deal, Uber is buying a 26% stake for USD 400m into the company.

In October 2020, an Israel-based Fleetonomy was acquired by Via. With this acquisition, a ride-hailing leader Via is expanding into the logistics and supply chain business. Fleetonomy’s AI-based solutions are powering fleet owners, auto manufacturers, and mobility service providers to maximize their fleets by rolling out customized ridesharing, dynamic shuttle routes, on-demand rental, and car subscription services.

While there were plenty of impressive acquisitions in 2019-2020, we predict many more to come in the next few years as the industry continues to be technologically disrupted. In the table below, we summarize the most recent tech acquisitions in logistics, transportation, and smart mobility space.