Beyond the headlines: Drivers and the economics of autonomous trucks

Despite predictions of massive job losses, autonomous trucks will likely still require a driver to be in the cab. 

Despite predictions of massive job losses, autonomous trucks will likely still require a driver to be in the cab. 

Significant job losses may be decades away, if at all, but cost savings are plentiful

Autonomous trucks are taking drivers’ jobs. An attention-grabbing headline, for sure, but not one grounded in reality, it appears.

While the promise of autonomous vehicle (AV) technology is tantalizing, two new reports have suggested significant job losses in the years ahead thanks to autonomous trucks.

A report from the International Transport Forum says that 70% of truck driving jobs could be eliminated by 2030 because of self-driving trucks.

“Driverless trucks could be a regular presence on many roads within the next ten years,” José Viegas, Secretary-General of the ITF, said in a statement. “Manufacturers are investing heavily into automation, and many governments are actively reviewing their regulations. Preparing now for potential negative social impact of job losses will mitigate the risks in case a rapid transition occurs.”

Goldman Sachs looked at the job market for several industries and found that AV adoption will be slow for several decades and any significant driver job losses due to the technology are perhaps 25 years away at this point.

“First, the driver job losses occur mostly several decades out, reflecting a slow AV penetration in the stock of cars. Second, the estimated peak effect on trend drivers’ employment of about 25k per month or about 300k per year about 25 years from now is definitely substantial,” the report notes. “The aggregate employment effects could be less negative, for instance because travel time could be reallocated to producing and consuming other goods and services.”

The report begins to hint at the current problem with autonomous trucks – they sound really sexy, and are adding a lot of anxiety for both current and future truck drivers, without adding any real definition about how the job will change.

And the headlines are certainly not adding any context about the economics of autonomous trucks, and how they may impact industries beyond trucking.

“Autonomous and connected vehicles are obviously issues the industry is dealing with right now,” Don Lefeve, president of the Commercial Vehicle Training Association (CVTA) tells FreightWaves. “It is becoming increasingly important for our member [to be informed] about what these technologies will do and what’s the timeline.

“The nature of the job will change, but I don’t think truck drivers will become obsolete anytime in the near future,” he adds.

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The Goldman Sachs’ report considers truck drivers, bus drivers and taxi drivers as potential drivers impacted by autonomous vehicles. All told, Goldman Sachs pegs that number at roughly 4 million driver jobs (3.1 million truck drivers, 1.7 million of those are long-haul truckers) at risk. Even that report, though, is predicting 300,000 job losses per year – 25 years in the future.

The ITF report notes the problem that Lefeve points to: that the idea of autonomous vehicles could slow new recruits to the industry. Lefeve, whose organization works with trucking companies and driver training schools, says there is no hard evidence at this point to suggest that, though.

What Goldman Sachs concludes is that technological change in the past few decades does not appear to have “resulted in faster productivity growth or more intense disruption across occupations and industries, much less mass unemployment. But changes to technology and trade have produced important shifts in the structure of the economy which have hit some groups of workers much harder than others,” it said. “The analysis of e-commerce and driverless cars highlights that new advances could add to existing challenges of labor market polarization and labor force drop-out.”

Chris Spear, president & CEO of American Trucking Associations, told the Washington Post that driverless trucks are still decades away.

"We fully believe drivers have a long-term place in our industry," Spear said. "You're still going to need them in the cab to do the pickups, to do the deliveries, to navigate the cityscapes. As long as you have other drivers driving cars, you're going to need drivers in trucks."

Economist Steven Banks also notes that the job of truck driver is not likely to disappear anytime soon.

“While those opposed to autonomous trucks 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%,” he says. “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.

Among the companies working to build advanced autonomous trucks, several believe there will still be driver jobs, they just may look a little different.

Starsky Robotics is taking a different approach to autonomous trucks. The company does not plan to eliminate drivers, just change where they go to work.

Co-founder Stefan Seltz-Axmacher told FreightWaves his company’s plan is to provide a remote controlled system where a driver would operate the truck – or a group of trucks – from a control center.

“Which means we can provide a better lifestyle for the driver,” Seltz-Axmacher explains. “They could service different vehicles as those vehicles are getting on and off the highway.”

The trucks themselves would operate in autonomous mode while on highways, but the driver in the control room could take control of the vehicle as needed, or when operating on local streets, by using a display combined with cameras and sensors onboard the truck to see the vehicle’s surroundings.

Uber’s Otto is also developing a driverless truck and several of the truck manufacturers are working on the topic, including Daimler with its Freightliner Inspiration model and Volvo, which recently began testing an autonomous refuse vehicle.

Truck platoons are another use of autonomous technology that still requires a driver. Peloton is expected to launch a system commercially later this year that allows a platoon of 2 or more trucks to run down the highway spaced closely together. In a platoon, only the lead truck is operated by a driver, although all following trucks will have drivers in them ready to take control as needed. Those vehicles can also enter and exit the platoon as they choose.

Fuel savings of up to 10% for following trucks are possible through aerodynamic efficiencies.

In addition to the scenario that Goldman Sachs lays out, it does not take into account regulatory challenges to autonomous vehicles. Google has run into issues in several states with its self-driving car testing and Seltz-Axmacher says there are only two states currently that allow testing of its technology.

What do drivers think?

While many companies are working to develop autonomous trucking technology, for the drivers on the road today, there is a certain level of concern. The Washington Post recently interviewed drivers on the subject, and they were less than enthused.

"I been listening to a lot of crap on the truckers' channel," Danny Spell told the paper. "I think that if the government approves it, they're going to get a lot of people killed."

But Lefeve thinks that the hype and potential disruption autonomous trucks are capable of is actually obscuring the value they provide.

“As the technology gains steam, there are a lot of safety benefits the industry can adopt,” he says. “Regardless of whether someone engages the autopilot, you have to have someone to monitor the vehicle. I think the technology is so cool and cutting edge that [the role of the driver] is getting lost in the conversation.”

Lefeve adds that, like many others, he believes truck driver will still be an occupation, it just may look a little different than it does today. And that, he says, could be part of the solution to recruiting more millennials and ending the driver shortage.

“I think you will have a hybrid of a truck driver where you have a technician but also a truck driver,” Lefeve says. “That could potentially make the profession more attractive to millennials.”

Beyond the hype – the true costs of autonomous trucks

Banks recently wrote about some of the issues surrounding autonomous trucks, including factors such as driver health, driver shortages and retention, layoffs and downsizing, competition, cash flow, wages, safety, regulation and deregulation, fuel prices, weather, insurance, maintenance, and hours of service, in an effort to separate myth from reality.

“One of the key issues now looming over the industry is the role that new technologies – or what specialists refer to as ‘intelligent engineering’ – will play going forward, and among the most prominent is the expected widespread adoption of driverless trucks,” Banks wrote. “Some speculate that the [autonomous truck] will be a more common sight than the driverless car, which thanks to companies like Uber, have garnered most of the public’s attention. Further, numerous companies are heavily labor invested in – and are spending billions of dollars on – developing autonomous trucks and their corresponding technologies. These include corporate heavyweights such as Apple, Google, Microsoft, Freightliner, Ford, GM, Iveco, Scania and Volvo, to name just a few.”

According to the ATA, there are 3.5 million professional truck 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, to some degree or another, by the autonomous truck.
— Steven Banks, economist

Benefits of the vehicles are many, Banks notes, starting with improved fuel efficiency. Platooning provides a large opportunity for savings, he points out, mentioning the efforts of Peloton in this area. Peloton, he says, has attracted over $18 million in venture capital from the likes of Lockheed Martin and Intel to develop platooning technology. The company is expected to debut a two-truck platoon system later this year.

“It is estimated that a 25% reduction in drag generates a 5-15% decrease in fuel consumption,” Banks writes, adding that aerodynamic changes can also help. “We have already seen the way in which styling, design and engineering have improved aerodynamics – reducing fuel costs and emissions – in the new generation of streamlined Peterbilts, Kenworths, Scanias and Volvos.”

Autonomous vehicles are also able to travel in times of less highway congestion, Banks says. “This allows the trucks to travel greater distances in a shorter period of time, avoiding congestion and gridlock. In fact, as far back as 2013, the American Transportation Association (ATA) estimated that interstate congestion was costing the trucking industry over $9 billion and over 140 million hours of wasted time.”

Technologies that operate the autonomous truck also have the potential to improve safety.

“According to the Insurance Institute for Highway Safety (IIHS), big rigs are involved in approximately 350,000 crashes annually, which in 2015 resulted in 3,900 crash-related deaths in 2015, up 22% from 2009,” Banks points out. “Of these, 16% of the deaths were the truck drivers themselves, 69% were the occupants of automobiles, and the remaining 15% of deaths involved pedestrians, motorcyclists and pedestrians. 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.”

There is also the potential for significant cost savings with autonomous vehicles, according to Banks.

“While trucking remains the primary employer in 29 U.S. states, statistical sources suggest that the ‘human cost’ of two drivers on a long-haul route can run a fleet upwards of $100,000 per year in wages, insurance premiums, bonuses, etc.,” he writes. “Reducing the number of drivers per rig to a single person would effectively cut the labor costs by 50%.”

There is also a possible insurance savings – a significant cost factor for fleets that self-insure. Banks notes that Derek Kaufman, managing partner of Schwartz Advisors, says that the costs of an accident involving a truck where there is only property damage runs between $100,000 and $200,000. That jumps to $135,000 to $450,000 when there is an injury and reaches as high as $1.3 million when a fatality is involved.

Banks says that when considering the impact of autonomous trucks on the industry, we need to look beyond just drivers being displaced.

“According to the ATA, there are 3.5 million professional truck drivers in the U.S.,” he says. “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, to some degree or another, by the autonomous truck.”

If could benefit other sectors of the economy, though.

“An obvious benefactor will be the education sector – particularly vocational schools – as the autonomous truck will increase demand for well-trained, technically savvy drivers,” Banks says. “As the head of Daimler’s U.S. operations noted, ‘tomorrow’s driver will be a logistics manager’ and that the key to DLTs success will lie in the ‘quality of the algorithm.’

“Other industries likely to emerge as a result of autonomous trucks include specialized maintenance facilities, including technology repair specialists, as well as producers of extended cabs such as Double Eagle that will [work] to improve driver/technician comfort while traveling long distances on a virtually non-stop basis,” Banks adds. “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.”

As an example, Banks pointed to Caterpillar’s 793F autonomous mining trucks that run in Australia. Those trucks, he says, took over 25 million lines of computer code to make them functional. “This will spur demand for highly skilled computer programmers, electrical engineers as well as financial analysts, lawyers and the like,” Banks notes.

Industries likely to see a decline in their business from autonomous vehicles are also many. These include demand for truck stops, truck parking facilities, full service and fast food restaurants and hotels and motels. These industries could trigger further job losses.

“And then there are what economists refer to as ‘multiplier effects,’” Banks explains. “It is not just the waiter or room attendant that stand to lose their job, but with the loss of their incomes, so too will all other local businesses that rely on their expenditures - from grocery stores to pet grooming salons.”

Driver compensation is also an issue that has not been addressed yet, Banks says. If they need to be in the vehicle, will they be paid more, assuming they are more highly trained? That is a question that needs to be answered.

“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 autonomous truck technology diffusion; the relative price sensitivity of the particular trucking sector adopting the autonomous truck (i.e., the per cost of adopting the technology for a single owner-operator will be substantially higher than the per truck cost for a major fleet operator, which can spread the cost 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.); the social and labor ramifications; and the economics (e.g., pricing, costs, return on investment, etc.) associated with autonomous trucks, among many others,” Banks sums up. “However, there is little doubt that the autonomous truck, once portrayed as nothing more than a myth, is rapidly becoming a reality.”