Automation will come not from technology, but from within the business

Automation will come not from technology, but from within the business

For anyone involved in road transport, we have seen a lifetime’s worth of change crammed into just a few short years.

The field of automation in particular is accelerating. We are working on self-driving trucks to transport our goods, but now drones and hyperloops are emerging on the horizon.

However, there is a long way to go before we reach this utopia on every road worldwide.

After all, the first major steps towards automation began way back in the 1980s with pioneer Ernst Dickmann’s Prometheus Programme. Fast forward to 2016 and we saw Uber’s OTTO company completing its first shipment of beer, with the firm proclaiming to be the first real-world commercial use of autonomous trucking.

Naturally, it drew a lot of attention. But more than two decades after Prometheus, this proved to be a false dawn – the project was abandoned soon after as Uber made the strategic decision to concentrate on autonomous cars instead.

What Uber did show, however, was that there is clearly a multitude of companies from Silicon Valley to New Delhi that are working relentlessly on automating trucks. They are challenging our thinking on what providers of transport will offer in the future.

But, crucially, they are showing us that it will not be the technology that will dictate the introduction of new innovations or services. Rather, the real driving force will be the opportunity for industry to improve operations and to capture new business opportunities.

We are seeing this theory play out in Europe right now.

Innovation led from the north

With much less media fanfare than the OTTO announcement, something much bigger has happened in the deep Norwegian wilderness: Volvo Trucks has launched its own commercial autonomous transport solution. Partnering with the Brønnøy Kalk AS limestone mine, they introduced six autonomous Volvo trucks to transport huge loads of limestone along a five-kilometre stretch of dusty track from the quarry to the station where it is loaded onto ships.

What makes this announcement so special? It is an example not just of a company introducing an autonomous truck but doing so in a way that allows it to change its business model. A simple journey repeated over and over again each day can now be handled much more efficiently and cost-effectively.

This initiative from Volvo Trucks will now be the first of many efforts where established truck manufacturers will offer their transport solutions directly to transport buyers, such as Brønnøy Kalk. The rest of the industry is taking note and considering what this all means for the future.

The transport operators of the future

Today, there are a number of very large, international transport companies bidding to cover shipments between various network of hubs, terminals, and warehouses. Take for example, IKEA, P&G or Lufthansa. These are examples of companies with large scale operations that are predictable in nature. They transport lots of goods, but often over many fixed routes (known well in advance), with the driving occurring over major, modern motorways.

By 2030 these companies – and other shippers – could well have a variety of ‘transport solution providers’ bidding for the same transport contract. These could be well-established truck manufacturers offering automated transport solutions, newer truck manufacturers or transport solution providers (for example Tesla and Einride), or Startups developing self-driving technologies to retrofit trucks (such as Embark and FluxAuto). We could also see large existing logistics companies like Amazon – with significant supply chains of their own – weighing in and expanding into transport, or even entirely new market entrants that we cannot foresee today. Or specific partnerships between these.

Be aware, not afraid

With the industry set to be disrupted in a big way, transport operators should not be afraid, but they should be aware.

The trucking business is one of the most competitive industries in the world. The vast majority of truck fleets are small, and there is far less consolidation going on than in other sectors of the economy.

Consider the USA for example, where 91% of fleets are made up of six trucks or less. Competition has always been fierce, but this is fine as long as everyone follows the same rules and regulations. Constant evolution is a key to securing your future in business.

CTS Group in the Netherlands is one example of how companies can not only survive but can thrive – by being adaptable. CTS started as freight forwarders, bought trucks and became a transport company. Through its cooperation with some 500 stakeholders across Europe, the company became part of a distribution network and ultimately evolved into a distribution centre thanks to its highly automated warehouse. Each of these steps required a new business model. CTS transformed its role and multiplied its value offering to customers by four over the course of 23 years. It’s an example of evolution, not revolution, as the key to long term success.

Drivers and driverless: there is room for both at the inn

For some of the most repetitive trucking assignments, such as driving in the Brønnøy Kalk AS mine or ferrying between two nearby terminals, it will become increasingly difficult to attract young drivers. It is precisely these jobs that will be most ripe for takeover by automated solutions, and where driverless transport will be most welcome to complement operators’ needs.

As companies look to the future and consider how to improve their value propositions in the long term, they will conclude that just hiring drivers to drive from A to B and back again will not be a recipe for survival.

The complexity of the majority of transport operations in the real world goes well beyond just steering, accelerating and stopping the truck. Therefore professional truck drivers and pilots will still be needed for a large number of operations, such as when transporting live animals, dangerous goods or over-sized transports. In these cases, autonomous trucks – those without a human on-board – will not be a viable solution for the foreseeable future.

So last week’s automation initiative in Norway did not really kill six jobs. Europe is suffering from an acute driver shortage in the road transport sector. The sector is trying to attract recruits and increase interest, and the jobs that were lost were some of the most monotonous to be found in the industry. Truck drivers repeatedly transporting limestone just five kilometres at a time today will be able to find much more interesting trucking jobs tomorrow. Volvo has released six drivers for more complex assignments while allowing driverless trucks to do the simple work.

Demand for freight transport demand is forecasted to grow by 230%by 2050 (primarily in non-OECD countries), so in my view the gradual introduction of automation alone will not be able to compensate for that growth when considered alongside the growing driver shortage that is forecast. Drivers needn’t fear for their livelihood: the industry is well placed to introduce technology and more humans at the same time.

Various international organisations, including the International Transport Workers’ Federation, are now examining and publishing research on how automation will affect truck drivers’ jobs. There is optimism that just as we are seeing in other industries, the human contribution to a business can be evolved and optimised once people are freed up from simple tasks. This allows people to concentrate on more sophisticated tasks making the most of the advantages we hold over robots, namely emotional intelligence or imagination.

Surviving and thriving in the future

IRU research recently revealed that three quarters (76%) of transport companies expect autonomous trucks to become a viable option within the next decade. But those same companies may be less able to predict how this will change their business and what they need to do now to prepare.

Transport companies need to focus on both the short term and long term at the same time. While preparing for a highly automated future, transport operators need to focus today on adopting digital innovation. This includes phasing out paper-based methods of working and manual planning.

At the same time, we must all prepare for tomorrow, taking note of the very latest trends and innovations, and taking example from the front runners who are leading the way. While nobody can predict how the future exactly, we can be sure it will  not be kind to those who do not adapt.

Zeljko Jeftic is Global Innovation lead at IRU