What do self-driving trucks mean for third party logistics? How will trucks operated entirely by computers impact the industry? There is sure to be a duel between regulation and automation. And it may not be a matter of if, but when, that these machines take to the right lane in droves. What do you need to know We’ve done the research so you don’t have to.
The state of self-driving trucks in the world
In the US alone, truck drivers move 10 billion tons of freight annually. But the job can be very tough. The hours are long and life on the open road can be lonely. Not to mention driving doesn’t leave a lot of time for physical activity. Drivers sit for a long, long time. There are 3.5 million truck drivers in the US. It seems impossible that they could all be replaced by machines. Or is that so far fetched?
Australian mining giant Rio Tinto already uses 45 240-ton driverless trucks to move iron ore in two mines. Why? It’s simply safer and cheaper. Just last year, in May of 2015, the first self-driving truck hit the road in America in Nevada. In Europe, an entire convoy of trucks drove across Europe to the port of Rotterdam. “Truck Platooning”, as it’s called is when self-driving trucks drive together in a single line to achieve further fuel efficiency with the reduction of wind drag. The truck at the front sets the speed while the others follow closely behind. The tactic also can help reduce congestion on heavily-driven highways.
There has been as much if not more discussion about self-driving cars, but self-driving trucks may beat cars to market. Why? Long stretches of highway driving offer simplified decision-making situation for computers to manage, thereby reducing the risk to humans when compared to more complex urban driving environments with more variables in play. Shippers are presented with a bigger economic incentive to adopt self-driving trucks. Whereas humans primarily benefit from an increase in travel safety, shippers stand to save a lot of money while improving output.
A strong feeling of denial from industry incumbents
Even with self-driving trucks in active testing phases, and clear tremendous economical advantages, industry incumbents don’t see innovation taking hold.
“You are not going to see a truck without a driver in it for a long time,” says Ted Scott from the American Trucking Associations. “The human being is an excellent driver 99.9% of the time. It’s just a tiny instance every now and then that causes a problem. Computers break down more than that.”
Scott further argues that public perception will remain a problem.
“People generally don’t like to drive around trucks even when they have a driver in them. Now you start telling them there is no driver in that truck?”
Safety is another huge concern, and rightfully so. The most obvious question is, how can a 40 ton self-driving 18-wheeler be safe?
According to atbsshow.com:
“In 2012, over 330,000 large trucks were involved in crashes that killed about 4,000 people in the United States. Close to 90% of those were caused by driver error. Truck drivers are human. We can be tired, stressed, and angry. Thankfully self-driving vehicles are computers that don’t share human emotions. In the recent years, some of the country’s largest freight carriers have started to equip their trucks with active safety features like lane control and automatic braking. It only makes sense to continue adding more autonomous features to trucks. While self-driving technology could potentially reduce accidents caused by driver fatigue and distraction, no system is foolproof.”
Despite valid safety concerns, economics of self-driving trucks will be hard for shippers to not take advantage of, given the cost transportation plays in the overall cost of the goods being shipped.
The economics and benefits
The potential saving to the freight transportation industry is estimated to be $168 billion annually.
Here’s how that breaks down:
Labor: $70 billion
Fuel efficiency: $35 billion
Productivity: $27 billion
Accidents: $36 billion
This is before including any estimates from non-truck freight modes like air and rail.
Let’s break those numbers down with a more tangible example.
According to TechCrunch:
“Shipping a full truckload from L.A. to New York costs around $4,500 today, with labor representing 75 percent of that cost. But those labor savings aren’t the only gains to be had from the adoption of driverless trucks. Where drivers are restricted by law from driving more than 11 hours per day without taking an 8-hour break, a driverless truck can drive nearly 24 hours per day. That means the technology would effectively double the output of the U.S. transportation network at 25 percent of the cost.”
Semi-autonomous freight trucks might also help curve the driver shortage. According to The American Trucking Association:
“The trucking industry employs more than 7 million drivers, but the number of drivers have fallen in the recent years. The ATA estimate a shortage of about 40,000 drivers that could grow to about 240,000 by 2022. As you know, truck driving is a tough job and not everyone is cut out for its physical and mental demands. With self-driving trucks and the potential for pelotons, less drivers will be needed in the future.”
Clearly, the transportation industry is ripe for disruption. But how would innovation impact the lives of third party logistics providers?
What this all means for third party logistics
So what does this mean for the third-party-logistics company? In short, it means more truck supply, with reduced cost, and higher productivity. It should mean higher margins in the short term, but as more brokers begin to attain lower means of transporting their customers’ freight, they will inevitably compete on price. The rates customers are willing to pay for freight will go down, and the only way to offset the declining pay rate is more volume, which could be supplied by autonomous trucks that can travel 24 hours a day, 7 days a week, 365 days a year.
The biggest risk to third party logistics companies comes when a technology company, like Uber, begins to make driverless trucks available to shippers just as they currently make uber drivers available to people. A shipper could merely order 4 autonomous trucks for a pickup on a Monday. The trucks would drive themselves, back themselves into the dock and then take off for their destinations when loading has been completed. Possibly when loading has been completed by an autonomous forklift.
Manage your freight remotely. Complete visibility to your transportation supply chain is as close as your phone, tablet or computer. Freightflow freight broker software is the most easy-to-use freight broker software available today. The best part? It’s completely free to try. Don’t wait. Get started today with your no obligation, 100% free trial.