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What Happens When Trucks Drive Themselves?

Night and day, the nation¡¯s highways are filled with millions of trucks. This enormous fleet - 253 million trucks - is essential to the U.S. economy and to our standard of living, bringing food, medicine, electronic devices, and virtually everything else that Americans consume from the producer to the retailer or the end-user.

Now, with the advances in driverless vehicle technology that we¡¯ve been discussing in previous issues, the opportunity to make this fleet more efficient is here. Within the next 15 years at most, driverless trucks - navigating from point to point without a human driver by using radar, GPS, sensors, and software - will disrupt the industry.

Among the benefits will be:

- Speed: Driverless trucks will be able to operate 24 hours a day, compared to a legal maximum of 11 hours for human drivers, so cargo will be delivered in less than half the time. Overnight or same-day ground delivery of more products will be available.

- Safety: Fewer accidents will occur as crashes based on human error and driver fatigue will be eliminated. Truck collisions cost $87 billion a year, with 116,000 deaths and injuries resulting from truck and bus accidents.1

- Fuel efficiency: According to the Center for Automotive Research, driverless trucks will use 15 to 20 percent less fuel because they will be programmed to accelerate and brake at optimal efficiency.2

- Productivity: Many companies struggle today with driver shortages of 15 percent, so removing the driver from the equation will enable more freight to be moved.3

- Reduced traffic congestion: Trucks will be programmed to avoid traveling through cities when commuter traffic on highways is already heavy.

- Cost savings: Companies will need fewer trucks, and they¡¯ll be able to eliminate the expense of human drivers. Manufacturers and retailers will pay lower shipping costs, and consumers will pay lower prices for the products they buy in stores.

Autonomous trucks are already operating in a remote region of Australia called The Pilbara, where Caterpillar is using 45 automated mining trucks at an iron-ore mine.4 The trucks carry rocks and dirt 24 hours a day, using their on-board software to navigate around obstacles. Before automation, each truck would require four drivers to operate in six-hour shifts around the clock, so the company has replaced 180 drivers with a handful of ¡°technical specialists¡± who sit in a control room miles from the site, watching the trucks¡¯ movements on computer displays.

It¡¯s easy to see why trucking companies are eagerly anticipating the shift to an all-driverless fleet. But there is a downside. The trucking industry also contributes to the strength of the U.S. economy through its employment of millions of drivers in well-paying jobs. According to the most recent data from the U.S. Bureau of Labor Statistics, as of May 2012, the median annual wage for heavy and tractor-trailer truck drivers was $38,200. And, according to the BLS, no college degree is required for these jobs.5

Currently, the industry employs 8.7 million people, including 3.5 million truck drivers, according to statistics from the American Trucker Association.6 But the impact on the economy is even greater when one considers that truck drivers are constantly traveling, so they need to buy meals in restaurants, pay for rooms in motels, and fill up their gas tanks at service stations.7 When millions of drivers no longer need to make a stop for food or rest on a coast-to-coast route, the revenues for these businesses will plunge.

Looking ahead, we foresee the following developments emerging from this trend:

First, in the short term, human truck drivers will still be in demand, and the occupation will grow.

The U.S. Bureau of Labor Statistics projects job growth of 11 percent from 2012 to 2022, for an increase of 192,600 jobs. More than 100,000 of those jobs are likely to go unfilled because there aren¡¯t enough drivers, which means that competition should continue to push wages higher. For Americans without college degrees or the technical skills to work in the revitalized manufacturing industry, truck driving will provide a relatively well-paying job until driverless trucks gradually replace those with human drivers.

Second, by the end of the next decade, the majority of jobs for human truck drivers will disappear.

This is yet another case in which consumers and investors will gain from the advent of a disruptive technology, but a whole class of employees will be displaced. Those people will need new opportunities to create value, earn a living, and feel like they are contributing to society. However, it¡¯s important to remember that driving a truck is a job that has only existed for 100 years. Just as driving trucks emerged as a career, new careers will emerge. But people with this skill-set will need to learn new marketable skills.

Third, autonomous trucks will take over the nation¡¯s highways sometime between 2020 and 2030.

It is only a matter of when - not if - autonomous trucks will replace those driven by humans. The financial case is just too compelling for the logistics companies to ignore. For all the benefits we¡¯ve cited?speed, safety, fuel efficiency, reduction in traffic congestion, productivity, and cost savings?the shift to driverless trucks is inevitable. The technology already exists, but estimates of the cost to retrofit a truck with self-driving technology range up to $200,000 at current prices. Those prices will surely fall as the costs of radar, GPS, sensors, and software drop over time. But, even at today¡¯s prices, after that one-time cost is invested, the savings could amount to $100,000 per truck each year, according to calculations by Peter Conway of Booz & Company.

Fourth, today¡¯s truck manufacturers and suppliers will face both threats and opportunities as autonomous trucks replace human drivers.

As Conway points out, ¡°Many will capitalize on new opportunities to supply billions of dollars of autonomous trucking equipment. But they¡¯ll also see orders plunge for cockpit gear such as steering wheels and other components that won¡¯t be needed if software replaces drivers. More importantly, if existing trucks can be retrofitted as autonomous vehicles, the current national fleet could find itself 30 percent over capacity, because of all the efficiency gains that can be extracted from existing vehicles.¡± That means the demand for new trucks will plummet. Meanwhile, Google, Apple, and other technology companies are creating competing versions of the autonomous driving system, while car manufacturers are working on their own approaches, and Uber is partnering with Carnegie Mellon University to develop its own solution.

Fifth, despite automation, the amount of non-perishable goods hauled by trucks will begin to decline a decade from now.

That¡¯s because 3D printing and other technologies will enable more products and components to be produced in the same location where they will be used. For an analogy, consider how the widespread adoption of email and e-commerce eliminated the need for mail carriers to deliver personal letters, business correspondence, catalogues, bank statements, and utility bills. According to data posted by the United States Post Office historian, the number of pieces of first-class mail delivered in the U.S. peaked at 103.6 billion in 2001 and has declined steadily since then, to 63.6 billion in 2014. That¡¯s a drop of 40 percent in just 13 years.8 It is unlikely that the trucking industry will experience such a significant dip in demand, but it would be foolish to expect that the future will unfold in a linear fashion, with driverless trucks transporting the same volume of goods that cross the roads today. As one technology advances, other technologies rarely stand still. Forgetting that fact would be equivalent to the Postmaster General of 1970 planning for a 21st century in which robots in flying cars would be delivering the Sears catalogue to every home.

Resource List:

1. The Wall Street Journal, July 23, 2013, ¡°Daddy, What Was a Truck Driver?¡± by Dennis K. Berman. ¨Ï 2013 Dow Jones & Company, Inc. All rights reserved.
http://www.wsj.com/articles/SB10001424127887324144304578624221804774116

2. Strategy+Business, Summer 2013, ¡°The Next Autonomous Car Is a Truck,¡± by Peter Conway. ¨Ï 2013 PwC. All rights reserved.
http://www.strategy-business.com/article/00176?gko=9c9b6

3. The Wall Street Journal, July 23, 2013, ¡°Daddy, What Was a Truck Driver?¡± by Dennis K. Berman. ¨Ï 2013 Dow Jones & Company, Inc. All rights reserved.
http://www.wsj.com/articles/SB10001424127887324144304578624221804774116

4. iBid.

5. For more information about heavy and tractor-trailer truck drivers, visit the Bureau of Labor Statistics website at:
http://www.bls.gov/ooh/transportation-and-material-moving/heavy-and-tractor-trailer-truck-drivers.htm

6. The Huffington Post, May 18, 2015, ¡°Self-Driving Trucks Are Going to Hit Us Like a Human-Driven Truck,¡± by Scott Santens. 2015 TheHuffingtonPost.com. All rights reserved.
http://www.huffingtonpost.com/scott-santens/self-driving-trucks-are-going-to-hit-us_b_7308874.html

7. AEIdeas, May 21, 2015, ¡°With Driverless Trucks, More People will Lose Their Jobs Than Just Truckers,¡± by James Pethokoukis. 2015 American Enterprise Institute for Public Policy Research. All rights reserved.
https://www.aei.org/publication/with-driverless-trucks-more-people-will-lose-their-jobs-than-just-truckers/

8. You can access additional information regarding first-class mail volume by visiting the United States Postal Service website at:
https://about.usps.com/who-we-are/postal-history/first-class-mail-since-1926.htm




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* *

References List :

1. The Wall Street Journal, July 23, 2013, ¡°Daddy, What Was a Truck Driver?¡± by Dennis K. Berman. ¨Ï 2013 Dow Jones & Company, Inc. All rights reserved.
http://www.wsj.com/articles/SB10001424127887324144304578624221804774116

2. Strategy+Business, Summer 2013, ¡°The Next Autonomous Car Is a Truck,¡± by Peter Conway. ¨Ï 2013 PwC. All rights reserved.
http://www.strategy-business.com/article/00176?gko=9c9b6

3. The Wall Street Journal, July 23, 2013, ¡°Daddy, What Was a Truck Driver?¡± by Dennis K. Berman. ¨Ï 2013 Dow Jones & Company, Inc. All rights reserved.
http://www.wsj.com/articles/SB10001424127887324144304578624221804774116

4. iBid.

5. For more information about heavy and tractor-trailer truck drivers, visit the Bureau of Labor Statistics website at:
http://www.bls.gov/ooh/transportation-and-material-moving/heavy-and-tractor-trailer-truck-drivers.htm

6. The Huffington Post, May 18, 2015, ¡°Self-Driving Trucks Are Going to Hit Us Like a Human-Driven Truck,¡± by Scott Santens. 2015 TheHuffingtonPost.com. All rights reserved.
http://www.huffingtonpost.com/scott-santens/self-driving-trucks-are-going-to-hit-us_b_7308874.html

7. AEIdeas, May 21, 2015, ¡°With Driverless Trucks, More People will Lose Their Jobs Than Just Truckers,¡± by James Pethokoukis. 2015 American Enterprise Institute for Public Policy Research. All rights reserved.
https://www.aei.org/publication/with-driverless-trucks-more-people-will-lose-their-jobs-than-just-truckers/

8. You can access additional information regarding first-class mail volume by visiting the United States Postal Service website at:
https://about.usps.com/who-we-are/postal-history/first-class-mail-since-1926.htm



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