Like the cowboy before him, another mythic American hero may soon ride off into the sunset. Say goodbye to the iconic truck drivin’ man and hello, robo-trucker. If Uber’s plans to put self-driving trucks on the road materialize, it may be 10-4, good buddy, over and out for the nation’s truck drivers.
With wheels in motion to put driverless Uber cars on the road soon, the app-based ride-hailing company now is moving in at full speed on the multibillion dollar trucking industry. To that end, Uber partnered in 2015 with the sophisticated robotics lab at Carnegie Mellon University in Pittsburgh, PA. And when that partnership stalled, Uber hired away 40 of the lab’s robotics engineers according to media reports.
Uber also spent $680 million last summer to buy San Francisco-based Otto, a company focused on self-driving technology. Otto retrofits semi-trucks with radars, cameras and laser sensors to make them capable of driving themselves.
On October 25, an experimental Otto 18-wheeler rolled at 55 mph down 125 miles of highway southbound from Fort Collins to Colorado Springs. Although staff was on-board, the truck was in autonomous mode for the long haul. And this dry run was anything but. The cargo ironically was 50,000 cans of Budweiser, a beer long associated with American blue collar workers, including the truck drivers that the autonomous truck may displace.
Given the impact of Uber and its rival Lyft on taxi drivers, the threat of self-driving trucks to the trucking industry is massive. According to the Bureau of Labor and Statistics, there were 602,940 truck drivers in the U.S. in 2015. The work involves the long tedious days on the road romanticized in many a country western song. But truck drivers make on average $42,680, putting them solidly in the middle class, constituting $26 billion in wages. With large cuts in manufacturing employment, trucking has been one the few industries where workers with only a high school education can make a decent living.
Although the average salary for a self-driving vehicle engineer, according to Paysa’s analysis is $138k in base salary and $233k in full compensation, the cost savings in the long run would be huge. Given that automation generally leads to far better economies of scale, much fewer engineers would be needed to replace truck drivers, a decisive competitive advantage and a key reason companies like Uber are so aggressively pushing self-driving technology. With high tech and automation playing an ever-increasing role in cutting down on blue collar jobs, American workers lacking a college degree and seeking middle class salaries are increasingly at risk of losing their jobs.
This development may have people one day saying, “You mean they used to let humans drive 18-wheel big rigs loaded with consumer goods across the country? But humans get tired, are prone to error and – get a paycheck!”
And any trucking company that continues to provide a paycheck to humans behind the wheel may run the risk of being unable to compete with lower rates for autonomous vehicles. A quick look at the downward fortunes of the taxi industry may hint at what’s in store for truckers.
Uber and Lyft are both Paysa top ranking tech companies for 2016. They have clearly taken away business from traditional taxi cab companies as San Francisco Yellow Cab’s bankruptcy filing indicates. Medallion Financial (NASDAQ:TAXI), a loan originator for taxicab medallions, has seen its stock price fall with the onset of ride sharing companies. As shown below, the steep fall in its stock price coincides with the rise in company rank for Uber and Lyft in 2015.
NASDAQ:TAXI Stock Price
Image provided courtesy of Google Finance.
In an October 2016 article in Wired about the Otto test drive, staff said that truck drivers would still be needed to maneuver the trucks through local traffic getting on and off the freeway. The idea is that once the truck takes over the wheel, the driver is free to catch up on paperwork or maybe take a nap.
But noted one of the article’s 80 commenters, “Sure, there’s a driver present now. But do you really think companies will keep any on board when they become redundant? First it’ll be the long haul truckers running the interstate between distribution centers. Then as technology advances, we’ll see box trucks rolling between distribution and the stores on city and suburban streets. If Amazon’s smart warehouses are any indication, robots might even be tasked with loading and unloading the trucks of their cargo!”
However, there are some who see the transition to autonomous trucks as a practical solution for a shortage of truck drivers willing to drive long distances. Recently, Forbes reported, “In the U.S., the shortfall is estimated at around 50,000 drivers, and age distribution of the 850,000 currently on the road suggests it will get significantly worse in the next five to ten years.”
Given the need to transport goods – the trucking industry hauls 70 percent of the nation’s freight—about 10.5 billion tons annually – it is likely that self-driving trucks will be a reality sooner than self-driving cars. What’s unlikely is that the robo-trucker we’ll soon meet will drink coffee at truck stops, flirt with the waitress or become the subject of a country western song.