UPS has long been a supporter of emerging transportation technologies – and now the company is putting some money into autonomous trucks.

The company announced that its venture capital arm, UPS Ventures, has made a minority investment in autonomous driving company TuSimple. Together, UPS said, the companies are testing self-driving tractor-trailers on a route in Arizona to determine whether the vehicles can improve service and efficiency in the UPS network. This is an extension of an ongoing relationship between UPS and TuSimple in which UPS has bought transportation services from TuSimple.

The partnership began with the goal of helping UPS better understand the requirements for Level 4 autonomous trucking in its network. Level 4 autonomous means the vehicle’s onboard computer is in complete control at all times, eliminating manual intervention. Currently, however, laws regulating Level 4 autonomous driving require a driver in the vehicle at all times to take over operation if needed.

UPS has been providing truckloads of goods for TuSimple to carry on a North American Freight Forwarding route between Phoenix and Tucson, Arizona. The company initiated self-driving service in May with a driver and engineer in the vehicle. TuSimple and UPS monitor distance and time the trucks travel autonomously, as well as safety data and transport time.

“UPS is committed to developing and deploying technologies that enable us to operate our global logistics network more efficiently,” said Chief Strategy and Transformation Officer Scott Price. “While fully autonomous, driverless vehicles still have development and regulatory work ahead, we are excited by the advances in braking and other technologies that companies like TuSimple are mastering. All of these technologies offer significant safety and other benefits that will be realized long before the full vision of autonomous vehicles is brought to fruition – and UPS will be there, as a leader implementing these new technologies in our fleet.”

UPS contracts with third-party trucking companies during its peak shipping season. TuSimple believes it could cut average purchased transportation costs by 30%.

“We are honored by UPS’s strategic investment and their vote of confidence in TuSimple, this proves their commitment to staying at the forefront of innovation,” says TuSimple’s Founder, President & CTO Xiaodi Hou. “TuSimple is confident that it can accelerate bringing the first self-driving truck to market to increase road safety.”

UPS’s tests with TuSimple are part of an advanced technology evaluation for vehicles in the UPS Global Smart Logistics Network. UPS is investing in internet of things technology, artificial intelligence, and advanced analytics to increase fuel efficiency and improve customer service.

One way UPS explores new technologies is via its internal venture capital group UPS Ventures, established in 1997 as the UPS Strategic Enterprise Fund (SEF). In 2018, the SEF refined its objective and took the new name UPS Ventures. The group now seeks specific capabilities that UPS can integrate into its network immediately. UPS Ventures takes a minority stake in technology startups and actively partners with these companies to achieve technology goals for the UPS Smart Logistics Network.

“The UPS Ventures mission is to build collaborative relationships with early-stage companies that provide capabilities and insights that accelerate technological advancements within our network,” said UPS Ventures Managing Partner Todd Lewis. “UPS Ventures collaborates with startups to explore new technologies and tailor them to help meet our specific needs.”

The Wall Street Journal[paywall] noted that competition is heating up between logistics incumbents and Amazon as the e-commerce giant builds its own delivery network, including parcel and delivery fleets that will be directly competing with companies like UPS. Last week, FedEx said it was ending its contract to deliver Amazon packages through its ground network – a move that has largely been regarded as FedEx now viewing Amazon as a competitor instead of a customer.

The WSJ also reported that for TuSimple, the UPS investment is an extension of a $95 million Series D funding round in February that valued the company at $1.095 billion.

This is the first time UPS has invested in TuSimple.

Earlier this year, the U.S. Postal Service joined with TuSimple to test self-driving trucks on a more than 1,000-mile mail run between Phoenix and Dallas. The two-week pilot was the postal service’s first use of the technology for long hauls. TuSimple said it is scheduled to discuss future collaboration with USPS next week.