The Future of Transportation

The Future of Transportation

Redefining travel and distribution

Time is one thing in life that we never get back. Despite this, Americans spent a collective 70 billion hours behind the wheel last year alone—an 8% increase from 2014, according to AAA data. The average American spends 18 of their 365 days each year driving, according to a study conducted by Cooper Tire. Driving is such a deeply fundamental part of the American way of life that it is almost a staple of our existence—but what if there was a way we could reimagine how we use this time? Autonomous vehicles have been on the minds of transportation and supply chain professionals alike for years now. The introduction of autonomous vehicles into America and other developed nations could transform both productivity and safety for people and companies everywhere.

From a time-saved perspective alone, it is projected that autonomous vehicles have the potential to increase GDP by 1 trillion dollars over the next decade in America. Instead of spending hours a day traveling between work, school, and activities, an autonomous vehicle world would allow people to get more work done when they would otherwise be commuting. Rather than stressing about traffic in the morning, people will be able to spend time with their kids or log-in to their 8 a.m. meeting. In addition to this, autonomous vehicles would significantly improve safety on America’s roadways. Nearly 90% of all car accidents are caused by human error. By removing the human aspect from driving, one can anticipate accident rates will drop by a similar percentage. Such a drop in car accidents will not only drastically reduce insurance expenditures, but also save numerous lives. All things considered, the introduction of autonomous vehicles is an overwhelming net positive in society. As the world heads in this direction, supply chains should be among the biggest beneficiaries.

The supply chain opportunities in autonomous vehicles

Autonomous vehicles have the potential to significantly improve freight transportation through smart technology and reduced costs. One of the most notable differences between manned vehicles and autonomous vehicles is the ability for autonomous vehicles to communicate with each another. Such communication allows freight carriers to follow more closely to each other than human driven cars, significantly increasing road capacity for others while decreasing fuel costs for shipping companies in a process known as platooning. Moreover, vehicles without human drivers will not have to stop for rest and will be able to operate at all hours of the day. Companies will be able to ship things at the times most convenient to them and will be able to utilize more vehicles at any given time. Experts have estimated that such an increase in vehicle utilization could lead to a reduction in vehicle fleets of up to 13%, considerably reducing costs for some companies. Finally, autonomous vehicles will help reduce a company’s exposure to the chronic shortage of commercial truck drivers—a constant bottleneck facing many logistics companies.

What is the market for autonomous vehicles?

The perceived benefits of autonomous vehicles are so substantial that Intel is forecasting a new transportation economy based on autonomous vehicles worth $7 trillion by 2050, with $2.9 trillion coming from business-to-business transportation. It seems there is not a week that goes by where a major company does not announce a partnership related to autonomous vehicles. Recently, Daimler trucks acquired Torc Robotics to improve freight transportation between major distribution centers. Similarly, supermarket giant Walmart views autonomous vehicles as particularly useful in deliveries that require repeated moves. The primary objective of most businesses in the autonomous vehicles market is finding a way to use autonomous vehicles for repeated moves between transportation hubs—hubs that are often a great distance apart.

When will use become widespread?

With all this money to be made, why don’t we already see more autonomous vehicles on the road? Experts cite various technological, governmental, and psychological factors as the primary roadblock to the widespread use of autonomous vehicles. In the next decade, the technological and regulatory environments are expected to become more conducive to such widespread use, though patience is key. One thing is clear—though we likely won’t see the widespread use of autonomous vehicles on America’s roadways in the next 3-5 years, it is becoming increasingly likely that we will see more autonomous vehicles used by America’s shipping giants as time passes. It is not a matter of if, but when.

Supply chain labor implications

The move to autonomous or even partially autonomous vehicles will not only reduce the need for commercial truck drivers, but also create positions that require a different skill set. Depending on how things play out, anything ranging from coordinating vehicle platoons across multiple organizations to scheduling slots on corridors reserved for specific vehicle types can be done. This raises important policy considerations for the American workforce: today’s trucking industry supports a significant number of jobs earning between $45-100K that don’t require a college degree. If autonomous vehicles become a mainstream feature of the trucking industry, millions of Americans may find themselves out of work. Thus, the time is now to take action on training for autonomous vehicles, lest this technological shift exacerbate the hollowing out of the middle class.

Resources and further readings