Autonomous trucking company Embark Trucks Inc. and industrial real estate company Alterra Property Group formed a strategic partnership under which Alterra will provide transfer points along Embark’s shipping routes as it prepares for commercial deployment of its self-driving trucks in 2024.
Embark will use Alterra’s sites for a key step in its shipping process, the transfer of freight from human-driven to AV-driven transport. Under Embark’s model, the freight is moved by a local driver from pickup to a nearby transfer hub, where it is switched to an autonomous Embark truck for the long haul, at the end of which the process is repeated in reverse. Securing real estate for these transfer hubs is critical to Embark’s commercialization of its AV trucks.
“Alterra can provide the real estate portfolio, market expertise and capital required to activate a nationwide real estate network of transfer points, enabling Embark to remain asset-light and focused on our SaaS business model,” Embark chief commercial officer Sam Abidi said. “Working with Alterra should give Embark flexible access to a portfolio of AV-ready properties in Sunbelt markets where we plan to expand and marks another key step in our rollout of the Embark Coverage Map.”
In September, Embark announced a partnership with Ryder System Inc. under which Ryder would manage the work that goes on at the transfer sites, such as truck maintenance, yard operations and fleet management. Embark is aiming to have a network of 100 of these sites operating over the next five years. Its initial freight markets will be in the Sunbelt, with hubs planned for Arizona, California, Georgia, Florida, Tennessee and Texas.
In the short term, Embark and Alterra will focus on finding standardized, turn-key sites that Embark can put to work quickly with minimal lead time or development costs. Alterra, which invests in industrial outdoor storage properties, currently owns more than 100 sites across 27 states. The company plans to use existing funding and up to $1.5 billion of private equity to expand its portfolio, including through the acquisition of AV-ready sites in markets like Atlanta, Dallas and Los Angeles that it can make available to its Embark partnership.
Further on, the partnership intends to explore “more creative physical and economic structures” like allowing Embark to expand across a site over time or adopting per-use price structures that give Alterra the ability to participate in the economic upside of Embark’s expansion, the companies said.
“Industrial outdoor storage as an asset class has yet to be institutionalized, making it difficult for tenants with specific and nationwide real estate needs, like Embark, to systematically access a network of suitable sites,” Alterra managing director Leo Addimando said. “As a leader in this asset class on our way to accumulating a multi-billion dollar portfolio, we have the ability to provide Embark a strategic advantage when it comes to identifying, securing and developing a nationwide network of autonomous-ready sites.”