The Trucking Industry’s Days Are Numbered

You don’t have to try very hard these days to find someone talking about driver-less cars, the technology has been a prominent feature of the news cycle for years now and from the look of it we are only in the beginning stages.  Most of what you see on the subject presents the movement toward autonomous vehicles as a good thing, offering the potential to save thousands of lives every year while also increasing efficiency on the roads. Both of these facts are true, as are many of the positives about self-driving personal vehicles.  One thing you don’t hear many people talking about though are the brutal negative externalities that will come along with the adoption of this new technology.  I am not talking about the Uber drivers who will be replaced by computer systems, nor am I talking about the sudden fall in demand for body-shop work as collisions become a rarity.   I am talking about the enormous void that will be left in the economy when the trucking industry is completely turned on its head.

Many people don’t realize the true breadth of this industry, but commercial trucking makes up a huge portion of the US economy.  The American Trucker Association (ATA) reports that there are approximately 3.5 million commercial truck drivers in America. In addition to that 3.5 million, there are another 5.2 million American jobs that are directly related to the trucking industry without actually driving the trucks themselves.  These jobs include terminal operators, logistics managers, dispatch managers, payroll offices, CDL instructors, weigh-station attendants, and many many more.  That brings us to roughly 8.7 million people making their living directly related to the trucking industry.  The ATA also reports that by the year 2020 the demand for truck drivers is expected to increase by more than 20%, with a shortage of operators imminent if current trends continue.  Truckers already make a healthy middle-class living, and with a shortage of operators and increasing demand those salaries may continue to grow.  As truckers drive across the country they spend that salary on food, beverages, entertainment, lodging, and many other services. Therefore, one cannot stop at truckers and trucking jobs when thinking about the impact trucking has on the US economy.  Entire businesses have been built on the demand that truckers generate for eating, drinking, and resting establishments.  Millions of store clerks, hotel maids, waitresses, and other jobs depend on a steady flow of truck drivers to generate the business they are accustomed to.  The real economic impact of trucking is nearly impossible to measure for these reasons.

So what happens when truckers are replaced by computer systems that automate the entire process?  A computer system needs no sleep, no food, no rest.  The computer systems are so advanced already that they can cross a continent with little to no human interaction once the journey begins.  Not only is human interaction unnecessary in this new system, it is the biggest source of potential problems.  Humans are unpredictable and imprecise, as such they will be removed from the entire process wherever possible.  Refueling, docking, inter-modal transfer, and even logistics planning will all eventually need to be converted to robotics to ensure it all works seamlessly together.  There will no longer be any need for truck stops, roadside hotels in the middle of nowhere, or one-off diners clustered around trucking hubs. The closest comparison in history to this sort of transportation shake up is the creation of the national highway system in the mid 1900’s.  That process removed the regular flow of travelers from many smaller roadways and resulted in entire communities withering into obsolescence. Imagine the feeling if you had invested thousands into a roadside dinner only to find out five years later that your town was bypassed and the 20,000 vehicles that drove past each day trickled to a few hundred.   If you have ever driven route 66, you probably have a pretty good idea of what I mean…

The timing of all this is expected to be at least another 15 to 20 years out, but could well be much closer than predicted given the accelerating rate of technological change.  The technology has been on roads in the US for over a year already. Daimler’s prototype, the Freightliner Inspiration, is a driver-less 18-wheeler that can reportedly cross the country with out a human ever taking the wheel.  That truck hit roads in Nevada in early 2015 and is well on its way to the number of test miles it needs before the vehicle can be considered for integration into the real world.   More recently, 6 different teams of driver-less trucks completed a multi-country tour of Europe last summer without a single issue.   The remaining roadblocks are mostly political. Trucking companies are pushing hard to accelerate the process because they stand to make millions in the transition as the costs of transporting goods will shrink to a fraction of the current levels.

For what it is worth, driverless trucking is not all doom and gloom for the average consumer though.  Under current conditions it is estimated that the labor cost alone to drive a full load from LA to Seattle is over $4,000.  Couple this with the cost of insurance, incidental damages, and human errors…it is not unreasonable to think that the cost of shipping something cross country on a truck could be cut in half. This lower cost will make for easy and efficient distribution of goods, or even transportation of people once buses become autonomous as well. It is unclear what new opportunities will be generated by these new systems, only that they will turn the existing system on its head.  It is possible that the infrastructure will be re-purposed, and jobs will open in other segments of the economy to accommodate the surplus of labor.  These are variables that are unpredictable at best, but .

One thing that everyone seems to agree on is that the trucking industry has at least 10 years of rapid growth before the real transition is upon us.  During this time it is likely that the smart investors who are already in trucking in some way will begin to seek other options.  As the transition nears, deals will likely come to market that seem too good to be true. In most cases, they will be.  If you are already involved in such investments, enjoy the ride up in the coming years but start planning an exit now so you are not left jingling the keys to a truck stop while you watch the robots drive right on by.

To read more on the subject you may find these articles of interest:


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