Autonomous driving is on the horizon. And while the world and industry seem divided on aspects such as road safety, job losses, and moral apprehensions over AV’s and AI, multiple companies across North America and Europe are taking long strides in developing the technology and infrastructure around autonomous freight vehicles.
Some critical areas that AV advocates cite to support the development are autonomous freight vehicles are:
- Addressing chronic labour shortages (exacerbated by the pandemic)
- Overcoming operational inefficiencies
- Financial optimisation
According to the American Trucking Association, 2021 saw a shortage of 80,000 drivers. This figure is estimated to double by 2030. The scenario is similar in Europe; EU faced a shortage of 400,000 drivers in 2021. Driving jobs, particularly long hauls, can be physically and mentally exhausting and do not boast of a work-life balance as drivers can be on the road for 3-6 weeks straight quite often. The trucking industry has traditionally experienced high voluntary turn over, mostly attributable to low wages, demanding job, poor work-life balance, and an aging workforce.
Freight movement is anticipated to increase from 17.4 billion tons in 2015 to 25.5 billion tons in 2045, with trucks moving a substantial proportion of this increased movement. Autonomous trucking addresses the pressure such an increase would have on a traditionally strained component of the trucking industry – drivers.
Overcoming operational inefficiencies and financial optimisation:
Autonomous trucks would translate the idle time that drivers need for rest into hauling time, and can possibly double the vehicle utilization, operate nearly 24 hours 7 days a week except for scheduled maintenance, increase daily driving range from the current 600 miles to 1200 miles, increasing productivity substantially. According to the business case put forth by AV companies, the transition can also reduce ownership costs by up to 30% through labour pay saving and efficiency gains.
Autonomous Trucks are already on the roads. As per a model designed by Deloitte, the roll out of autonomous trucks is likely to be governed by the following factors:
- Existing infrastructure,
- Weather conditions,
- Public opinion
4. Regulatory environment. In 2018, Kodiak, an autonomous truck manufacturing company, narrowed down Texas as the best place to start commercialization of their vehicles, owing to the dry weather, the largest freight economy in the US, regulation friendly and favourable private investment environment. Consequently, the company’s first autonomous route was Dallas-Houston in 2019. Oregon and California are likely to be the next few states to start to adapt/integrate AV infrastructure.
When can an automation roll-out be expected?
Automation will perhaps happen over the next few decades; however, the above-mentioned factors can significantly dictate how soon or late that may be. Consensus is, that autonomous trucking can be effectively and noticeably present across states by 2045. However, apart from the technology and infrastructure that’d need to be tweaked to introduce autonomous freight vehicles safely and effectively on the roads, compliance, education & training structures and laws would also need a significant overhaul to facilitate a publicly acceptable transition.
Job losses/driver displacement and transition to AV:
Federal agencies and companies advancing AV tech acknowledge that up to 500,000 jobs driving jobs could be lost to automation. However, automation will lead to more high paying jobs that are less strenuous and will allow for better working conditions. Workforce education and training would be critical in mitigating the impact of job losses in the marketplace. According to a study by OCED (Organization for Economic Co-Operation and Development) – an intergovernmental organisation with 38 member countries, found that automated freight vehicles could reduce demand for drivers by as much as 50 to 70 percent across the US and Europe by 2030.
While autonomous technology will lower costs, increase efficiency and shipping predictability, it will also simultaneously increase the complexity of operating fleets and will require new services, support, and ecosystems to facilitate the transition. Three business models seem to emerge to address the tech infrastructure needed for autonomous freight industry.
- Autonomous Software-as-a-service: In this model the software company sells to or collaborates with AV manufacturers with limited to no implementation support.
- Holistic Solution: This model is a step up from the previous one wherein the company manages maintenance and provides operational support.
- Fleet Operator model: This model would have the manufacturer (vehicle and software) acting as carrier and working directly with shippers and distributors.
As the autonomous industry evolves, and it gets more complex and investment heavy to transition, it remains to be seen who stands to benefit most from this change and increased profit margins. Roughly, 80% of current operating fleets are small businesses with six or fewer units, that may not have the capital needed to adapt into the new business models. Intuitively and to some degree, empirically, the consolidation may favour the bigger, financially muscled companies, which would be a dramatic change from the current landscape, potentially moving the power into fewer hands. The distribution landscape would also see a significant shift as warehousing costs go down and distributors’ outreach expands, where in they can reach any place across the states within 24 hours given the 1000 miles or more a day of driving range. Moving perishable goods could greatly benefit from the decreased lead times. It can also effect rail and air freight industries as automated trucking may become the preferred mode of moving freight with lower costs, higher predictability and efficiency.
Both the government and the AV innovation companies acknowledge that public opinion will be a critical factor in determining the pace of the adoption of AV technology across states. Public opinion so far weighs against AV’s and most American’s are wary of automated freight vehicles being tested in their geographical locations. Incidents related to self-driving cars have left a lasting impact on people and it’s likely that the roll out for AV’s will take place over an extended period as the technology becomes safer and the state and federal agencies are able to adequately educate and train the public for the associated transition from traditional trucking and prepare the marketplace for the job losses that will occur on account of automation.
Pros and Cons of automation:
Automation, eventually, will be a safer mode of freight transport. With AI, the learning curve is exponential as the system learns from a national/global collective information base of real time traffic conditions, road etiquettes. With time, AV can drastically reduce the instance of accidents. It is quite likely that there will be a cost of learning as we have seen with the instances related to self-driving cars. However, as investments into AV and the pace of commercialization vastly depend upon public trust/opinion, companies involved in this innovation are being cautious to avoid serious untowardly instances.
As covered in detail above, automated vehicles will increase vehicle utilisation tremendously. This would translate into fuel efficiency, fewer and shorter maintenance schedules, and drastically decreased idle time. The daily range is likely to double from 600 miles to 1200 miles a day.
In its advance stages, AVs are slated to be more reliable, timely and consistent than a human driven vehicle as many driver related contingencies will be factored out.
Up to 30% ownerships costs will decrease with automation. With the daily increase in range, warehousing and inventory redundancy costs are also likely to drop down noticeably. Also, with the corresponding proposed infrastructural development around automated trucks (hub and spoke model), automated trucks are likely to be preferred by shippers and distributors given most places will be accessible within 24 hours by road.
Higher paying jobs:
The need for creation of a new ecosystem to sustain automation in trucking translates into higher paying and more balanced employment opportunities. These new categories of jobs are also likely to be less taxing and encourage a better work-life balance than the conventional long haul truck driving jobs.
With the foreseeable increased complexities involved in operating and coordinating automated fleets, there doesn’t seem to be a clear pathway for existence of small businesses/fleets. Given 84% of the current fleets in the US are 6 units or less, it could be a dramatic shift in the trucking ecosystem. With the investments needed to transition into automation, without a clear Federal and State forethought, the authority and power may become concentrated with the early tech innovators, investors, and stakeholders.
Automation is likely to displace a large portion of workforce; an estimated 50 to 70% jobs truck driving jobs could be lost across Europe and the US by 2030. Various Federal and State such as the Energy and Commerce Committee and US Senate Committee on Commerce, Science and Transportation have developed bills addressing many facets of AV policy. However, numerous factors are yet to be considered for a comprehensive legislative foundation to mitigate the impact of the foreseeable job losses and how the displaced job seekers can be accommodated in the AV/automation economy.