Driverless disruption coming your way, courtesy of eMercedesBenz

Den Howlett Profile picture for user gonzodaddy May 20, 2015
First it was driverless cars, now it is driverless trucks. Massive disruption is not far away. How will the US cope?

In a fascinating analysis of what is claimed to be just around the corner, Scott Santens assesses the impact of driverless trucks on the US economy in Self-Driving Trucks Are Going to Hit Us Like a Human-Driven Truck. As Bob Warfield points out in his further analysis from the economic perspective entitled It’s Time to Tax the Robots, Not the People:

As it stands, large organizations that can afford to buy driverless vehicles will be the beneficiaries and nobody has a plan for what will happen to the truck drivers.

What's going on? eMercedesBenz/Daimler have introduced the first driverless truck to be licensed in the state of Nevada. Big deal? Actually it is rather prosaic and barely qualifies for high-tech in a world of sensors, telemetry and advanced radar systems. According to Wired:

In hardware terms, the truck isn’t much different from the latest trucks and passenger cars Daimler is putting on the road. A stereoscopic camera reads lane lines. Short and long range radar scan the road up to 800 feet ahead for obstacles. No sensors face backward, because they’re not needed. There’s no vehicle-to-vehicle communication, no LIDaR. The software algorithms are adjusted versions of those developed for use in Mercedes-Benz’s autonomous vehicles.

Mercedes-Benz tries to downplay the impact saying these trucks will be in test mode for a decade, need to rack up at least a million miles, won't be truly driverless because they are only for interstate highway use and that the driver will still have control. Quite.

Santens clearly doesn't believe that for one New York minute. He likens the introduction of driverless vehicles in general as having the same 'ghost town' impact that the interstate highway system brought to numerous towns along Route 66 when they were constructed in the 1950s-80s:

That’s the potential of self-driving cars — the outright extinction of car ownership. And with that, the elimination of entire industries built up around the existence of car ownership like: mechanics, car washes, parking, valets, body shops, rental companies, car insurance, car loans, and on and on. Even hugely expensive and capital intensive mass-transit infrastructure projects like streetcars and light rail can be dropped in favor of vastly cheaper on demand robotic “transportation clouds”, and all those construction and maintenance jobs right along with it.

Looking specifically at truck impact:

Any realistic time horizon for self-driving trucks needs to look at horizons for cars and shift those even further towards the present. Trucks only need to be self-driven on highways. They do not need warehouse-to-store autonomy to be disruptive. City-to-city is sufficient. At the same time, trucks are almost entirely corporate driven. There are market forces above and beyond private cars operating for trucks. If there are savings to be found in eliminating truckers from drivers seats, which there are, these savings will be sought. It’s actually really easy to find these savings right now.

As a side note, debate continues about whether Route 66 should be recommissioned while many projects designed to protect its historical status have sprung up. In essence, what was once the great roadway unifier of the US has become an anachronism, replaced by better technology. Once again, technology threatens to upend not the road system and its adjacent services but an entire industry and all of its dependencies.

Naturally, the conversation switches to what happens when (not if) the estimated 3.5 million trucking jobs, expanded to possibly 10 million jobs when including adjacent services, disappear. That's where Warfield steps in with an argument for taxing robots as a way of funding the needs of the displaced middle class.

I had to giggle because if I close my eyes and forget that Warfield's an American, I could almost see Aneurin Bevan founder of the much loved UK NHS gleaming from ear to ear in approval at such a 'socialist' view. Even our friends in socialist France might go 'ooh-la-la' although I doubt it would be to Alison Goldfrapp's tune of the same name.

Both Warfield and Santens are deadly serious in their analyses, with Santens depicting an apocalyptic landscape that forecasts a seizing up of the economy rather than a freeing up.

Time to driverless adoption per Morgan Stanley

There is an alternative scenario. Potential corporate driven cost saving on this scale is almost unprecedented but not unique.

When car manufacturing was robotocized, huge swathes of job disappeared. The economies benefited from lower consumer prices or a curb on price inflation or both. Car sales swelled, people were displaced but ultimately redeployed.

What happens then when the driverless truck becomes the new normal, combined with 4th Generation manufacturing capability that Brian Sommer envisages? The combined cost savings might, for once, start to unlock what former analyst Bruce Richardson once declared was a multi-trillion dollar supply chain lock up, releasing vast amounts of wealth - but to whom?

I anticipate that rather than keeping all the savings to themselves, industries will share the wealth with the consumer in similar fashion to what we've seen in the past. It makes no sense to simply suck up savings for the benefit of shareholders. That would be socially unacceptable, triggering unimaginable unintended consequences.

The bigger issue to me lies in the lack of any Plan B as Warfield contends. Today we look out at the need for skilled and experienced workers at many levels, finding shortages almost everywhere. Schools remain challenged to deliver outcomes that feed the needs of the future workforce and as for STEM? In the meantime, HR systems continue to evolve, offering better and simpler access to rich learning tools.

At the risk of being accused of injecting a politically motivated agenda into this discourse, we seem to be approaching a point where the interests of the nation as a whole are veering towards a fiscal cliff of a different complexion to that threatened by the Great Recession.

Assuming the predictions to be somewhere near right, this shift would be insidious rather than overnight catastrophic but potentially devastating nonetheless to those businesses and people in the direct and indirect firing line. It is in these circumstances that governments have to step in because you can be certain that business will not do so voluntarily.

If put to the test, I quite like Warfield's general line of thinking around agendas that stimulate the startup and small business economy. He is right to say that represents the economic engine of the future. Models are already available for study in Europe from which America could usefully draw. But it still leaves open the question of what happens to that swathe of next generation people who may never be university educated.

Right now it looks like the US has about 10-15 years in which to course correct. That should be just enough time to both formulate and start implementing a Plan B. Sadly, with presidential elections a year and more away plus a polarized political system, it is hard to figure how this topic will get the attention it deserves. More broadly and as Warfield says:

The biggest obstacle in all this thinking is that currently, the people calling the shots in terms of lobbying and poltiical contributions are precisely the ones we propose to have pay for these new programs with new taxes.

How will we ever break out of that cycle?

Sounds like a change killer to me but change is not beyond the realms of possibility when weighed against the nightmare scenario of an entire industry under the cosh and the drag that has on innovation. Tie that back to almost certain strike action by truckers and you have the necessary ingredients for intervention. That's not the way you get an optimal outcome and to my mind it behooves industry to think very carefully before plunging headlong into this uncertain future.

For those in the EU reading this and thinking smugly 'never over here' don't be so certain. If driverless trucks mean a more competitively priced economy, then you will be next in line.

Endnote: The irony of what I am saying is not lost on the fact Memorial Day is just around the corner and the trigger for what is anticipated to be a cheerful car buying season.

Images via Bob Warfield/Scott Santens

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