The Ripples of Self-Driving Trucks: A Series

In April 2016, 12 trucks representing the top European transportation companies of DAF, Daimler, Iveco, MAN, Scania and Volvo, arrived in the port city of Rotterdam, the Netherlands. Having embarked from places as far away as Southern Germany, this was no ordinary arrival; It was Europe’s first cross-border journey for a fleet of driverless trucks, providing a glimpse into the future of freight transportation. Fast-forward to February of 2018 and that glimpse becomes a vision as Embark, a California start-up, successfully sends a self-driving truck across the nearly 4,000 kilometers between Los Angeles, California and Jacksonville, Florida.

This series of articles will thus discuss the ways in which the inevitable growth of self-driving trucks will affect not only direct stakeholders, such as the over 100-billion-euro European transport and logistics industry and its 2.4 million road transport employees, but also the environment and safety of the general public.

Part 1: Self-Driving Trucks & The Transportation Logistics Industry

Considering 75 % of European goods and 70% of goods in the US are transported by trucks as opposed to ships or planes, even the slightest adaptation of road transport means sizeable ripples throughout the transport logistics industry. With the trucking aspect of logistics services accounting for 580 billion euro annual revenue and a projected yearly growth rate of 3.4% until 2023 in the US alone, it’s no wonder that international big players such as Google, Uber, and Tesla, as well as over 40 California start-ups such as Embark and Otto, are interested in joining long-haul focused companies like Volvo, Daimler, and DHL in their journey towards driverless trucks.

These driverless trucks are perhaps why a growth rate of 3.4% is expected only until 2023 – the trucking industry’s growth rate after the introduction and normalization of automated trucks is likely to be much higher. This growth rate, expected to reach 50% by the end of the first decade of wide-scale usage of self-driving trucks, can be understood by measuring both the savings and increased productivity that accompany sensory and data-operated trucks.

Self-Driving Trucks: Cost Reduction & Production Increase

Self-driving trucks are expected to save the freight transportation industry 136 billion euro annually, according to Morgan Stanley. Considering labor accounts for 34% of the operational costs per mile (1.6km), the largest chunk of savings is expected to be drawn from reducing labor costs, which could potentially account for 57 billion euro in savings each year. Part 2 of this series will further elaborate on this topic, particularly regarding the reshuffling of responsibilities in driverless trucks.

Increased productivity, resulting from the fact that driverless trucks can essentially be rolling for nearly 24 hours a day (as opposed to the 11 hour-a-day limit for human drivers) is expected to account for 22 billion euro in savings each year. Wheels rolling full-time means shorter delivery periods, which goes hand in hand with increased deliveries, which also goes hand in hand with increased revenue.

Despite being on the road more hours per day, autonomous trucks can be programed to drive at speeds optimized for efficient fuel usage, saving transport companies 29 billion euro in fuel each year, reducing fuel bills 4-7% and saving 6,500 euro per truck per year. We’ll discuss autonomous driving and its effect on the environment more in detail in part 4 of this series.

The final savings category includes not only finances, but lives. The reduction of accidents, and the insurance associated with potential accidents, is expected to amount to 29 billion euro per year. Considering 90% of the average 4,000 deaths from trucking accidents are a result of human error, perhaps the most moral argument for the switch to self-driving trucks is simply the number of lives expected to be saved each year.

The Inevitable Uptake of Self-Driving Trucks

Considering the potential savings to be reaped from self-driving trucks, it’s no wonder that McKinsey & Company’s report last summer projected that, by 2025, at least one of every three new heavy trucks will have high-level automation technology, or that IHS Automotive analysts estimate that annual sales of autonomous trucks could reach 600,000 units annually by 2035.

And for truck owners eager to join the automation game, installing sensory systems that would transform your manual truck into a smart truck today would cost you about 80,000 euro per truck at the moment. Yet California start-up, Otto, is looking to lower the technology’s price down to 24,000 euro, putting it within the vicinity of a 1-2-year payoff –a convincing scenario considering several industry leaders believe that such technology will one day be government-mandated.

While truck automation is likely to be a global phenomenon, it has gotten a particularly strong start in the US. That’s why German company, Daimler, has established its testing grounds in Nevada, where it was granted a state license. In fact, considering the state of Ohio has itself invested 12 million euro in established automated truck testing facilities, many European trucking companies have turned to the US market as its first potential customers, due likely to the extra red tape associated with the European Union’s differing road regulations per Member State. Yet the United Kingdom’s commitment of over 9 million euro to the technology paints an optimistic picture for what’s further down the driverless truck’s road.