PEGGY FISHER: Trucking industry braces for technology disruption

While most of the hype in the last year has been around autonomous cars, commercial trucks most likely will be the first to become autonomous.

I'm not just being biased when I say this, but I understand that all technological change, big or small, is driven by economics, and its adoption occurs where it makes economic sense.

Look at it this way. A lidar unit — which is a key sensor needed for autonomous driving — costs about $4,000. The best-selling pickup and SUV in the U.S. are the Ford F-150, which starts at around $35,000 for the crew cab version, and the Toyota RAV4, which starts at about $25,000.

The cost of adding a lidar unit would add at least 11 percent to the price of the F-150 and 16 percent to the price of the RAV4. How many consumers are going to pay that premium?

However, fleet managers will plug that extra expense onto the price of their new Class 8 tractors, which are valued at more than $125,000, and analyze their return on investment. When the payback period drops to a certain level, they will buy.

As volumes increase, the price for the sensors and related equipment and software will drop, and manufacturing economies of scale will decrease the cost of this technology, which then will penetrate the consumer market.

Fleets also have additional motivations for adopting autonomous technology. Ideally, autonomous trucks have the capability to make a positive impact on the truck driver shortage.

Right now the freight market is booming, but carriers are struggling to find enough drivers and, in fact, many loads sit waiting for available drivers to pick them up.

Attracting and retaining drivers is the biggest challenge for freight companies today. The American Trucking Associations (ATA) estimates that the industry is about 51,000 drivers short now, and at this rate by 2026 it will be 170,000 drivers short. To make matters worse, the fleet driver turnover rate is approximately 90 percent.

As carriers fight for enough human drivers to keep trucks moving, the evolution of automation has many asking, "How much longer will a human driver be necessary?"

This has prompted several truck OEMs and other high-tech companies to begin developing autonomous trucks.

Last September, Starsky Robotics Inc. completed the longest end-to-end autonomous trip on record, hauling Hurricane Irma recovery aid 68 miles through Florida with a person in the cab but without driver intervention.

And earlier this year, this same company completed a seven-mile drive in Florida without a person in the cab. The truck's human driver was stationed about 100 miles away and monitored the tractor through a network of cameras and sensors.

Starsky Robotics' platform involves having a human remotely drive the truck only on and off the highway and then allows the vehicle to operate autonomously at highway speeds. Once the truck is in full autonomous mode, the remote driver can then pay attention to several other trucks.

While Starsky Robotics is a relatively small company, the big truck OEMs are not standing idly by. This year Daimler Trucks announced it is creating an Automated Truck Research Center to develop and test autonomous truck technologies including platooning.

It also announced plans to invest $588 million in 2018-19 to e-mobility, connectivity and automated commercial vehicle technology.

It will draw upon its R&D development engineering resources in Portland, Ore., Stuttgart, Germany, and Bangalore, India, and has laid out plans to focus on developing Level 4 technology, skipping Level 3 entirely in the interest of safety.

Peterbilt Motors Co. introduced its Model 579 in 2015, which was the next generation of Level 3 automation. This truck showcased advanced cruise control that accelerates and decelerates automatically to maintain safe following distances and has the ability to use cameras to bring the vehicle to a complete stop, if necessary.

It also has lane-departure warning systems (LDWS), which use cameras to detect lane edges and striping and alert the driver if the vehicle is drifting outside of its lane. The LDWS can self-correct the vehicle through integration with the electronically controlled steering system.

Other players in the autonomous truck business include A.B. Volvo, Tesla Inc., Google/Waymo, Uber/Otto and Amazon.com Inc.

Platooning builds on technologies already available on trucks today such as lane-keeping technology and automatic braking. It digitally tethers strings of two to five trucks closely together to reduce drag and improve fuel economy.

It has the potential to reduce fleets' fuel costs significantly as the fuel savings between the front and trailing trucks is approximately 4 percent when following at a distance of about 50 feet.

This technology allows trucks to follow safely at this close distance, something that would be impossible for a human driver to do safely. The closer the gap, the more the aerodynamics and fuel economy improve across the platoon. The goal for companies such as truck OEM Scania A.B. is to reduce the following distance to about 15 feet by 2020. A platooning truck is not a fully autonomous truck, but it is on the road to full autonomy.

The biggest problem that both platooning and autonomous truck developers have is government regulations. Platooning is allowed in the U.S. only under certain conditions in 17 states, and operating a fully autonomous vehicle on public roads is legal in only a handful of states.

To complicate things further, driving beyond the federal Hours-of-Service (HOS) regulation isn't legal anywhere. (This regulation limits truckers to driving no more than 11 hours a day within a 14-hour workday, and drivers must be off for 10 consecutive hours.)

Autonomous trucks could extend a driver's workday by allowing him or her to take mandated breaks while the truck is moving. The driver would only have to control the first- and last-mile driving (on and off the highway), he could sleep through most of the trip and be fresh to pick up the next load after delivery.

If regulations allowed the driver to do other things that extend his work day like this, then automated systems could help reduce the driver shortage. And large motor carriers would transition rapidly to trucks that meet the technology test to allow for longer hours of operation.

Another scenario might use autonomous trucks that are programmed to go on a particular long route on an interstate without drivers until they reach a central depot outside the urban area destinations at which drivers hop on to guide these trucks to their delivery locations.

Fleets that adopt autonomous technologies may also gain an edge in recruiting millennials as drivers since these younger people are accustomed to technology and electronic support across all aspects of their lives. In addition, one of the biggest drawbacks of truck driving is the long time spent away from home. If human drivers could stay in one location and operate trucks remotely via cameras and communication networks, more younger people probably would want to be drivers since no travel would be required.

The transition to autonomous vehicles also will take place in the last-mile delivery sector, which is one of the costliest links in the delivery chain. In the last 10 years, e-commerce has grown to about 16 percent of U.S. retail sales from about 6 percent, and this growth rate is expected to continue unabated.

Can you imagine the number of delivery vans and drivers needed to satisfy the demand for package delivery?

This is another area for which autonomous vehicles can solve the problem and why a handful of startups have the goal of eliminating the cost of delivery drivers by replacing them with self-driving delivery vehicles.

It is estimated that autonomous vehicles will be making 80 percent of last-mile business-to-customer deliveries by 2025, according to a 2016 report by McKinsey & Co.

Some people believe that the home-delivery industry will be among the first to get the green light for real-world operation because the light, small, low-speed vehicles being developed for the application present less of a safety challenge than do driverless cars and trucks.

The vehicles being developed range widely in size and operation, but there are a few common characteristics.

All are battery-electric powered — which limits range (but this is not a big issue for home delivery) — run silently and are environmentally clean. They make use of radar, on-board cameras, GPS systems and other sensors to map where they are going.

Customers must come to the vehicle or to an outdoor drop site, in the case of flying drones, to get their goods. They deliver goods ranging from pizza and beer to prescription medicines and important documents.

You've probably never heard of the companies making these vehicles such as:

• Udelv Inc., which operates a low-speed, street-legal vehicle with 18 independently lockable cargo holds and a 700-pound carrying capacity;
• Dispatch L.L.C., which is developing an autonomous package cart that is small, has four wheels, a 100-pound carrying capacity, a cargo area with four independently lockable bays, and is designed to run on sidewalks and in other pedestrian spaces but not on streets; and
• Nuro Inc., which has built a fully autonomous delivery vehicle about the height and length of a standard compact SUV but is only about 3.5 feet wide. Its cargo capacity is 250 pounds.

Workhorse Group Inc. makes electric parcel vans and pickup trucks and has expanded into flying "last-mile" delivery with its truck-launched "HorseFly" octocopter drone.

The HorseFly can carry packages up to 10 pounds and sits atop a delivery van. It is loaded and launched by the driver and delivers to remote rural addresses and hard-to-reach locations while the van continues on to its next scheduled stop. The drone can operate in a radius of two miles around the van under present FAA rules and is programmed to return to the van for re-loading after making a delivery. The HorseFly has been tested by UPS Inc. and is expected to be put into commercial use this year.

Many think truck drivers will be the primary casualties of autonomous technologies. While human drivers will still be required to operate large trucks, especially in dense urban areas for "last-mile" deliveries, automation will create far higher truck utilization rates and be used at times when highway traffic is minimal, which will improve safety.

It is estimated when autonomous trucks are fully deployed around 2030, about half of the 1.6 million drivers in the U.S. today will lose their jobs.

Those who remain will find that their roles probably will change to that of load managers or freight conductors. However, the potential for disruption is far greater than just truck driving jobs.

In a study titled "Disruption. Implications. Choices." by RethinkX, a think tank of technology experts, it is envisioned that intense social change will arrive a lot sooner than most people think as a result of autonomous vehicle technology.

While the study focused on the passenger side of the automotive industry, its conclusions are still alarming. This group sees transportation as a service (TaaS), something we are already seeing as a growing trend, as a fundamental shift away from people owning their own cars to where they pay subscriptions or single-use fees to have autonomous vehicles take them wherever they need to go.

People will use apps to call up a vehicle much like Uber or Lyft today but without the driver. The study says that most people will want to do this since by getting rid of their cars, car payments, insurance, gas, oil and tires, they could put about $5,600 a year back in their wallets, or the equivalent of getting a 10-percent raise on average.

If most people get rid of their cars, the new car market in the U.S. could be gutted by as much as 70 percent, and car dealerships, automobile insurance companies and driving jobs of all sorts from cabbies to truck drivers would be decimated.

Assuming a loss of 5 million driving jobs at an average annual salary of $40,000, a $200 billion hole could be blown in the economy along with revenue from gasoline taxes, which could take another $50 billion annual hit.

In addition, up to 100 million used vehicles would become worthless, or even worse, people may have to pay someone to haul their old cars away and dispose of them. According to the study, these outcomes likely will require legislative action to manage.

However, on the positive side, by taking the cost of owning a car away from a huge portion of the population, $1 trillion a year would go directly into consumer markets, which would result in the largest boom in consumer spending in history and would be great news for trucking companies.

The study predicts the decline of car dealerships by as early as 2024 with autonomous vehicles in widespread use and resulting in various disruptive consequences by 2030. I would expect tire dealers will also be greatly impacted as well.

I doubt that this will happen so quickly since I believe it will take at least a decade before driverless trucks have a regular presence on many roads and this will occur before autonomous cars are in wide use, but it is a scenario that may certainly be possible by 2030…or not.

I remember back in the late '70s when movies first started to be made commercially available on VHS, people thought that this technology would be the demise of movie theaters. However, this never happened, but rather a whole new business developed for companies such as Blockbuster and now Netflix.

I am also reminded that "he who lives by the crystal ball is destined to eat ground glass." Whether people give up their beloved cars or not, one thing is for certain.

Autonomous technology is coming and with it will come disruption as well as new opportunities.

Peggy can be reached via e-mail at [email protected].