All of us have had to get accustomed to the way in which technology is changing our everyday lives. We constantly reap the benefits of – and the frustrations with – such things as smartphones, GPS, WiFi, robotics and drones. And the trucking industry is by no means exempt, with technological developments such as telematics, spatial imaging, collision avoidance systems, blind spot warning devices, electronic logging devices and light detection and ranging (LIDAR). So, welcome to the brave, new world of the driverless truck or autonomous truck.
Both popular articles and technical research reports simultaneously raise hope - and strike fear - within the trucking industry. One report characterized the 80,000-pound autonomous truck as “cruise control on steroids.” So, what do we make of this impending adoption of the autonomous truck on a large-scale basis?
There are a myriad of concerns directly affecting today’s estimated 3.5 million long-haul truckers in the U.S. and tens of millions more abroad. According to the American Trucking Association (ATA), the trucking industry employs almost 9 million persons, both directly and indirectly and there are a myriad of issues facing the industry which include driver health, driver shortages and retention, layoffs and downsizing, downtime, competition, cash flow, wages and associated labor costs, maintenance, safety, regulation and deregulation, weather risks, insurance and maintenance, and hours of service.
The industry has already made some major changes, particularly when it comes to truck design, which has focused on improved aerodynamic architecture on both the tractor and the trailer. These changes are being implemented using such things as tail fairings, vortex generators and wheel covers. The combination of these changes reduce drag, thereby improving airflow and ultimately reducing fuel consumption [or improving fuel efficiency improvement (FEI)]. This contributes to a major cost savings to both owner-operators and major truck fleets such as UPS, Fed Ex, Schneider, C.R. England, J.B. Hunt and Swift, among many others.
However, an entirely new generation of technological change is now occurring, and it’s called the autonomous truck, or what design specialists refer to as “intelligent engineering.” The adoption of the autonomous truck is taking place on two fronts: a) the semi-automated autonomous truck (in which the driver retains some degree of control over the truck); and b) the fully-automated autonomous truck (in which, in the most extreme scenario, means that there is simply no driver inside the cab itself.
Let’s first put the technology in context. The fact of the matter is that any tractor built after 2013 – when automated transmissions were introduced and are a necessary requirement for driverless conversion – can be modified or retrofitted into an autonomous truck. And the technology is being adopted at an increasingly rapid rate. In fact, some speculate that the autonomous truck will be a more common sight on the road than the driverless car, which thanks to companies like Uber, have garnered most of the public’s attention. Further, numerous companies are heavily labor and capital invested in developing autonomous trucks and their corresponding technologies. These include corporate heavyweights such as Apple, Google, Microsoft, Freightliner, Ford, GM, Iveco, Uber, Scania and Volvo, to name just a few.
In Australia, the most truck dependent country on earth, Caterpillar and its reseller Westrac, have converted 22 of CAT’s 2,600 horsepower, 430-ton 793F mining trucks into autonomous trucks at mining conglomerate Rio Tinto’s Yandicogina and Nammuldi iron ore mines. Similar activities are occurring at Japanese industrial conglomerate Komatsu. It has been reported that each truck at the Yandi mine, as it is known, saves 500 work-hours per year. In the U.S., San Francisco-based Uber, which bought Otto for approximately $680 million, successfully delivered a truckload of Budweiser beer in Colorado using an autonomous truck, which changed lanes, and slowed and stopped in response to traffic conditions without human intervention. Further, Denton, Texas-based Peterbilt has partnered with Silicon Valley-based Embark Technologies and raised over $15 million in Series A funding to develop autonomous trucks.
When we try to assess the impacts of autonomous trucks, we need focus on both the relative costs and benefits, and, to be sure, there are many of each on both side of this equation. In terms of benefits, the most commonly cited are improved fuel efficiency, which as a consequence, results in lower emissions. This is particularly true in two cases. The first is when autonomous trucks travel in convoys – commonly referred to as “platooning” – or when a lead truck is followed, in relatively close proximity, by one or more autonomous trucks. The process of platooning - developed by Mountain View, CA-based Peloton Technologies - reduces drag between the vehicles, thereby improving fuel efficiency. It is estimated that a 25% reduction in drag generates a 5-15% decrease in fuel consumption. We have already seen the way in which styling, design and engineering has improved aerodynamics – reducing fuel costs and emissions – in the new generation of streamlined Peterbilts, Kenworths, Scanias and Volvos. As a side note, Peleton has attracted over $18 million in venture capital from investors, including Lockheed Martin and Intel to advance platooning technology.
The second benefit in terms of improved fuel efficiency and reduced emissions comes as a result of the fact that an autonomous truck can travel during times of less traffic congestion, i.e., off-peak hours. This allows trucks to travel greater distances in a shorter period of time. As far back as 2013, ATA estimated that inter-state congestion was costing the trucking industry over $9 billion in traffic-related idling time fuel costs and over 140 million hours of wasted worker-related labor time (12).
Another benefit proponents of autonomous point to is improved safety, which would result in fewer accidents. According to the Insurance Institute for Highway Safety (IIHS), big rigs are involved in approximately 350,000 crashes annually, resulting 3,900 crash-related deaths in 2015, up 22% from 2009. Of these, 16% of the deaths were the fault of the truck drivers themselves, 69% were the fault of the occupants of automobiles, and the remaining 15% of deaths involved pedestrians and motorcyclists. With autonomous trucks driving during off-peak traffic hours, the risks caused by driver fatigue can be markedly reduced. In fact, driver-related issues were a contributing factor in 87% of all big rig crashes.
Next, we have cost savings. While trucking remains the primary employer in 29 U.S. states, statistical sources suggest that the “human cost” of 2 drivers on a long-haul route can run a fleet upwards of $100,000 per year in wages, insurance premiums, bonuses, etc. and cost over $1 million over the service lifetime of the typical rig. Reducing the number of drivers per rig to a single person would effectively cut the labor costs by 50%. And, as Stefan Seltz-Axmacher, the CEO of autonomous truck startup Starsky Robotics noted, “unless you’re getting the driver out of the truck, you’re not solving anything.”
Statistics show that labor alone account for between 30% and 75% of the cost of trucking. Further, while human drivers are restricted by law to no more than 11 hours per day behind the wheel, autonomous trucks can theoretically be on the road 24/7.
Other statistics also point to cost savings. For example, Derek Kaufman, managing partner of Schwartz Advisors, highlights the potential insurance cost savings to both owner-operators and fleets. He estimates that a truck involved in an accident where: a) there is just property damage; b) an injury-accident; and c) a fatality, will cost insurance companies payouts of $100-200,000, $135-450,000 and $850,000-$1.3 million, respectively. With the adoption of the presumably “safer” autonomous trucks on the road, the cost savings to insurers will be substantial.
Further, there are productivity gains to be accrued. Some sources suggest that autonomous truck technology would “effectively double the output of the U.S. truck transportation network, at 25% of the cost.” While those opposed fear driver job losses, the fact of the matter is that, in the short run, there remains a shortage of qualified drivers, and driver turnover rates are still close to 100%. In addition, the fear of widespread job losses may be overstated, as drivers will still be needed for taking the truck to its final destination, loading and unloading shipments and refueling.
As for the relative costs, detractors of the technology also have a strong case to make. Scott Grenerth, the Director of Regulatory Affairs for the Owner-Operator Independent Drivers Association representing over 350,000 owner-operators in the U.S., states that “human” drivers are critical, and anything that leads to the replacement of these jobs by autonomous trucks would undermine safety. He notes that “a truck driver has to be 100% engaged in the act of driving, scanning the horizon for that SUV that’s changing a tireon theshoulder orsomeidiotdoing somethingdumb, and anything less isn’t something I want to deal with, ever.”
He goes on to say that “I don’t see computers being able to account for every situation a trucker might experience.” Another downside is the presumed shift in the labor force, with hundreds of thousands of traditional long-haul trucking jobs becoming redundant.
Finally, when assessing the relative costs and benefits of autonomous trucks – both quantitative and qualitative – we need to look at what economists refer to as forward and backward linkages. The former refers to new businesses that are spawned by an industry while the latter refers to businesses that are reliant upon that industry. According to the ATA, there are 3.5 million professional trucker drivers in the U.S. However, keep in mind that there are over 5.2 million other jobs that are directly and indirectly dependent upon the trucking industry - and all of these will be affected, so some degree.
In the case of forward linkages, an obvious benefactor will be the education sector – particularly vocational schools – as the autonomous truck will increase demand for well-trained, technically savvy drivers. As the head of Daimler’s U.S. operations noted, “tomorrow’s driver will be a logistics manager” and the key to autonomous truck success will lie in the “quality of the algorithm.” Other industries likely to emerge as a result include specialized maintenance facilities, including technology repair specialists, as will producers of extended cabs such as Double Eagle that will take advantage of autonomous trucks to improve driver/technician comfort while traveling long distances on a virtually non-stop basis. And of course, there will be ample room for an expansion of opportunities for other white-collar jobs such as financial analysts and patent infringement lawyers.
In terms of backward linkages, there are some businesses that will clearly benefit. One will be OEMs that assemble trucks. Software firms that produce and install technology into the cabs will also see windfalls. Going back to our Caterpillar 793F mining truck example from Australia, over 25 million lines of computer code were required to make the trucks functional. This will spur demand for highly skilled computer programmers and electrical engineers, as well as, again financial analysts, lawyers and the like. Other benefactors will include firms that need to map all of the nation’s 164,000 miles of highways, although much of this has been done to accommodate today’s GPS systems in automobiles.
But other industries will be hard hit. With trucks capable of driving virtually 24/7, the demand for truck stops, truck parking facilities, full service and fast food restaurants and hotels and motels will likely see a decline in the demand for their services. And then there are what economists refer to as“multiplier effects”; it is not justthe waiter or hotel room attendantthat standstolose their job, but with the loss of their incomes, so too will all local businesses that rely on their expenditures - from grocery stores to pet grooming salons.
And there remains an unmistakable “grey zone” when prognosticating about autonomous trucks in that there are distinct tradeoffs between the relative costs and the benefits, many of which aren’t always clear or clearly elucidated in economic terms. As ex-Google executive and co-founder of Otto Lior Ron suggests, “There are two questions for drivers. Do you want to be safe, or do you want to make money? And sometimes the two don’t add up.”
Further, what will the primary role of the person in the autonomous truck be? Many suggest that his/her primary function will shift from the traditional “truck driver” to one that can be better characterized as a “truck technician.” Other issues include how compensation may change. For example, will drivers be paid more or less than they are now, when much of their time will be spent either monitoring sophisticated technical systems or resting, as the trucks run on a potential 24/7 basis? What technological or educational skills will tomorrow’s truck “drivers” require that they do not possess today? What new forward and backward economic, sector and industry impacts be, from both an employment and a non-employment perspective? A full economic assessment has yet to be done, and the target itself is a moving one, as new technological developments are taking place with increasing swiftness.
How rapidly the autonomous truck becomes a common sight on local roads and interstate highways – both in the U.S. and abroad – depends on numerous factors: the speed with which the requisite technology is developed; the rate of technology diffusion; the relative price sensitivity of the particular trucking sector adopting the technology (i.e., the cost of adopting the technology for a single owner-operator is expected to be substantially higher than the per truck cost for a major fleet operator, which can spread the technological and other adoption costs over a much larger number of units); the regulatory environment which will either encourage or discourage the industry (e.g., safety concerns, emissions standards, etc.); social ramifications; etc. However, there is little doubt that the autonomous truck, once portrayed as nothing more than a myth, is now rapidly becoming a reality. And the micro- and macroeconomic implications behind the technology have yet to be fully assessed in a methodologically rigorous manner.