In what may be a stunner to many within the trucking industry, a new report by the global logistics think tank McKinsey & Company predicts that semi- and fully autonomous commercial motor vehicles will be used in regular operations within the next decade. The five-part report on the near-term technological disruption in global logistics takes a hard look at autonomous driving technologies and how they will shape the trucking industry.
While the report also looks at emerging technologies like analytics, e-Commerce, automation, asset sharing, and telematics, it is the analysis behind autonomous vehicles that stands to raise eyebrows. The report starts out by highlighting that two-thirds of all goods moved in America are moved by truck and that truck driving is one of the most common occupations in half of the United States. The report also notes that the trucking industry has experienced few major or structural changes in the preceding decades.
Yet, according to the report, autonomous trucks could signal a big change to that paradigm. With companies already using autonomous trucks to complete beer deliveries and fleet agreements beginning to flesh out how the vehicles will be used; widespread adoption may not be far. And while we have reports in the past the truck drivers will still be needed for a long time to come, the industry disruption remains on many levels.
Still, initial operations are in their infancy. And when combined with an initial price tag ranging between $30,000 and $100,000, many are quick to dismiss the idea that these technologies are on the verge of becoming incredibly popular with regular motor carriers. It is important, however, not to dismiss the march of technology.
How the Report Details Change
Should these technologies gain in popularity, it is likely that adoption would come in two waves. It will start with two-truck platoons with truck drivers operating each vehicle with Level 3 automation. We should see these scenarios come to fruition between now and 2020.
Over time, as connected convoys mature, algorithms will be developed in concert with advanced vehicle communications networks. This will lead to the second wave of automation in or around 2023. This second phase, according to the report’s authors, will include platooning on interstate highways where a truck driver’s intervention is not required. Of course, a truck driver will still be in the vehicle, but they will not need to become an active participant in operating the vehicle until it leaves the highway.
The report notes that at stage two, trucking companies could realize fuel and labor savings of up to 10%. While 10% may not seem like a lot to the average person, this could be a big deal for smaller and medium-sized trucking companies who work with lower margins. This transition will also require a lot of technological training and upkeep.
The next stage, according to the report, would be phase three in 2026. This stage could see fully autonomous vehicles operating on all segments of the interfaced highway system. It could even be that eventually, depending on the weather and conditions, trucks could even be operating without necessary intervention on regular roadways. Situations where vehicles could operate on roadways is called “constrained autonomy,” technology. Once the trucking industry has reached this level of adoption, trucking companies should see up to 20% savings in fuel and labor costs.
Yet, the predictions don’t end there. The report projects that by 2030, fully autonomous trucks will be operating across state lines using Level 5 full autonomy, requiring no human interaction at all. While this may seem like a tall order, if trucking companies do end up reaching this goal, they could see a whopping 45% reduction in operating costs related to fuel and labor.
Fortunately, the report’s authors still think that even at this phase, it will be a long time before autonomous fleets completely replace fleets operating with human intervention. Even fleets that attempt to go fully autonomous will have a hard time going fully driverless. The infrastructure and industry trust that must be placed in fleets of this type might not yet be fully realized.
A Tale of Industry Disruption
It is likely that however the autonomous vehicle rollout happens, the ripple effect will be felt across more industries than just trucking. Professional upheaval will happen all throughout the supply chain. From truck manufacturers to railroads, warehousing, distribution, and fulfillment centers to brokers, port operators and logistics companies, no one will be spared the fallout that comes from massive technological change.
Still, the trucking industry itself will bear the brunt of the change. There will be four distinct ways that this change will impact the industry. While capital expenditures for fleets will rise, operating costs should see a significant cut. Autonomous trucks should also help alleviate the industry’s ongoing capacity crunch. Could we even see a day when truck OEMs diversify their business models and themselves enter the transport markets?
As well as the technology underpinning these changes works, however, there are many factors in play that will impact how quickly and how widespread the technologies are adopted. It is important to consider basic economic realities when discussing new technologies and tectonic industry change. What might some of these economic realities be? And could they push the adoption and deployment of autonomous vehicles in an entirely unexpected way?
When it comes to changing the way things get sold and delivered, Amazon has always been the elephant in the room. With Amazon’s recent announcement that they are raising wages for their employees to $15 an hour, they are likely to change the employment landscape, yet it is their entry into the delivery market that is making waves. Might Amazon really get into the trucking business to have more control over their logistics supply chain? If so, how will they handle technological disruption associated with autonomous technologies?
The news is already out that Amazon has been testing autonomous drones to deliver packages, so what other disruption do they have planned? Just as fleets are beginning to boost pay and benefits packages to attract and retain top talent, Amazon’s wage hike is likely to increase pressure on fleets to pay out even more money. Might it be that the promise of automation becomes far less resistible once the low water mark hits a $20 or $25 an hour equivalent?
The Flipside of the Coin
There is still another side to the argument. The inability to attract qualified truck drivers is something that could easily be solved by varying levels of automation. While you may think the reason for that is allowing companies to avoid using manpower altogether, the actual argument lies in attracting workers through technology.
Imagine being a Millennial looking for a good-paying fun job. Now imagine said Millennial discovers they could be at the forefront of a revolution in trucking by operating an advanced big rig that can drive itself on the freeway. Suddenly the “traditional” field of trucking looks less like the Rust Belt and more like Silicon Valley.
It is important to remember, however, that none of the events mentioned have the ability to create truly tectonic changes within the industry. What will drive the change leading to the various phases of autonomous development will be macroeconomic factors. It is important to never overlook the innate human desire to get the job done in the most expeditious and efficient manner as possible.
The questions surrounding autonomous implementation are plentiful. How will a self-driving truck get dispatched? If a self-driving truck breaks down, what will be the responsibility of the truck driver? The technology is there, but what about the commitment to ensuring the technology is adopted in a way that benefits the industry?
There is a societal question at play here. There is more to this than just technology. Acceptance must come at all levels of society and government. Insurance companies have a huge part to play. The fact is, the promise of technological automation will transform industries far and wide, and it is already happening.
Plants in countries from France to China have embraced automation as a way to streamline operations and increase overall organizational efficiencies. At what point will trucking companies adopt a strategy that embraces these changes? ELD adoption and telematics have already opened the door, but will fleets walk through it? As the government, society, and trucking companies wrangle with these questions, it will be a matter of time before we have the answers.