Supply Chain Industry

Supply Chain Industry – Self Driving Trucks

After only six months in business, Uber paid $600 million to purchase self-drive long-haul truck start-up company Otto. Uber clearly saw the potential in this massive industry and was willing to pay up for the privilege of owning a technology without having any revenue or real business operations behind it.  However, there are different predictions about the future of this industry.

While Otto seems to have solved the problem of long-haul trucks driving on the highway, they are nowhere near solving the intricate problems of driving on local roads.  Apparently, the company has not yet solved how to navigate tight turns, construction, changes in routes or the careful driving required in cities or suburbs.

Weather is also a huge concern. Rain, sleet and snow are big problems for the technology to absorb because of the changes in breaking and driving patterns. Interestingly, fog may even be a bigger problem because it distorts the visual sensors determining the distance to other vehicles on the road.

Currently, there are millions of long-haul and short-haul truck drivers. It is one of the largest occupations in the country. Otto threatens the jobs of all of these individuals. On the other hand, it seems that the ability to navigate the problems above will take 5 to 10 years.  Regulatory delays may push back the timeline back to 15 years. Fortunately, it seems like these drivers will have time to make the slow transition to other occupations. In addition, the average age of drivers is quite old.  A number of them will be able to retire within the 15 years anyways.

The short term solution is to have Otto drive the trucks along the highway in good weather.  Once the truck reaches an exit, the human driver takes over. Warehouses that are located along highways that do not need human drivers to reach may increase in value.  Overall, the impact of these self driving trucks is still probably a few years away.