Dive Brief:

• FedEx is expanding its portfolio of last-mile technology through a "multi-year, multi-phase agreement" with Nuro to test autonomous delivery vehicles, the carrier announced Tuesday.
• "Kicking off with testing in Houston, this program allows Nuro and FedEx to explore high value use cases, including multi-stop and appointment-based deliveries," a spokesperson from FedEx said in an email.
• The testing began in "several Houston zip codes in April" and may expand to additional cities over time, a spokesperson from Nuro said in an email. So far, no packages have been delivered to customers through the collaboration.

Dive Insight:

FedEx's partnership with Nuro signals the company is looking to solve the last-mile problem by working with partners to identify specific solutions for each use case rather than through a one-size-fits-all approach.

Delivery providers like FedEx, UPS, DHL, USPS, Amazon and Alibaba have long been tasked with fulfilling online orders within hours and directly to consumers' homes. Often, this is an expensive proposition as a single order can send delivery vehicles far from distribution centers or cause inefficient routes.

Meanwhile, the number of online orders and demands on package delivery providers continues to grow. To increase their margins, each of these delivery companies have been looking to solutions such as increased rates, route-planning algorithms, closer distribution centers, drones and autonomous delivery vehicles.

FedEx highlighted some of its ideas at its Peak Innovation Showcase in October 2020. It teamed up with Mercedes-Benz to develop CoRos, a system that automatically scans packages when they are loaded into a van. It developed a partnership with Microsoft to streamline its data at a global scale. FedEx spoke about the demand for automated delivery modes like drones and delivery robots.

"COVID has accelerated the demand for these reliable autonomous last-mile delivery type devices," FedEx Office President and CEO Brian Philips said during the event, speaking about Roxo, its delivery robot with touchless door opening.

But the partnership with Nuro is not redundant: they are complementary, according to FedEx. Roxo is best suited for use within three to five miles of an operation, while Nuro is more of a middle-mile and last-mile solution.

"Roxo and Nuro will serve different use cases given their differences in size, range and cargo capacity differences," a spokesperson for FedEx said in an email.