Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% Upgrade now

Can AI Replace People? The Truck-Driving Case Study

By WisdomTree (Aneeka Gupta)Market OverviewAug 08, 2022 12:33
uk.investing.com/analysis/can-ai-replace-people-the-truckdriving-case-study-200530538
Can AI Replace People? The Truck-Driving Case Study
By WisdomTree (Aneeka Gupta)   |  Aug 08, 2022 12:33
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Christopher Gannatti, Global Head of Research, WisdomTree

In the current macroeconomic environment, there are many areas of employment where we might think it could make sense to have humans less involved. Human beings, for instance, might demand higher wages, which could, in turn, lead to high prices of certain products and services, further inflation, and demands for even higher wages. Economists term this the ‘wage-price-spiral’ and fighting it is a primary mission of central bankers.

However, if we can take humans away from certain tasks, then there are no more wages. As long as the system is maintained and monitored properly, a whole component of cost would melt away.

How close are we to being able to achieve this?

The case study of autonomous trucks

If we look at the business of trucking across the United States, there is already a chronic shortage of drivers. The American Trucking Association notes that there is a historic shortage of 80,000 drivers[1]. However, it’s important to realise that all truck-driving jobs are not equal. You have[2] long haul truck drivers, who could see their roles at the biggest risk, are spending the highest proportion of time driving on highways. Repetitive highway driving outside of cities and towns is where artificial intelligence (AI) is most likely to make an impact. Delivery drivers are at the opposite end of the spectrum. They frequently navigate small streets and other highly changeable environments.

We have to ensure we frame the topic accurately and recognise that autonomous delivery on small side streets in busy cities is quite a different problem to solve than trucks driving themselves long distances in highway conditions.

In fact, assuming good weather, which is generally the case in the Southwestern United States, an autonomous truck will see further than a human driver could. The system would also maintain the same attentiveness, never growing tired or drowsy. It could also operate 24 hours a day, 7 days per week, with the exception of fuelling time and maintenance time.

Labour costs typically represent 15% to 20% of the cost of operating a truck. Additionally, the law states that human drives need to rest, meaning that the truck can be used only about 30-40% of the time[3].

If trucks could be run 24 hours per day, 7 days a week, it could increase asset utilisation by a factor of 2 or more.

To place the market size in context, the trucking market in the U.S. is around $700 billion in size, while globally it is roughly $4 trillion in size[4]. Even a small gain from autonomous driving in a market this size could equate to very big values.

Global companies are testing on public roads in the US

Einride AB is a Swedish firm with a very unique looking autonomous truck. It has been typical to have a truck looking at least somewhat similar to what we are used to. Einride’s ‘Pods’ are stubby, snub-nosed vehicles, and there is no ‘cab’ where a human driver could sit and operate the vehicle by turning the wheel or pressing the pedals.

Testing of the Pods will be done in an operation with GE Appliances on a road between two warehouses in Tennessee.

The Pods have room for roughly 10 pallets of freight, a capacity of circa 57,000 pounds. Without onboard drivers, they are managed remotely, and operators can manage more than one vehicle at a time. Einride signed an agreement in 2021 to deliver 300 electric trucks to shipping giant A.P. Moller-Maersk A/S (OTC:AMKAF)[5].

Long-haul trucking can be the first step on a broader autonomous journey

Aurora is outlining a ‘market entry sequence’ for bringing various types of autonomous activity into the market. Trucking is first, for the rationale that we mentioned before, and Aurora has partnered with PACCAR and Volvo.

The next step regards ‘passenger mobility.’ Aurora indicates that the rollout benefits from the advances that they will make with the truck technologies. They have partnered with Uber (NYSE:UBER) and Toyota (NYSE:TM) for this segment.

Finally, Aurora notes ‘local goods delivery’. It could be that this is the most complex, but it is a large market opportunity valued with a total addressable market opportunity of about $100 billion[6].

TuSimple (NASDAQ:TSP) is running a global operation that has made a lot of progress so far[7]:

  • The firm notes more than 500,000 of level 4 test mileage in China
  • Sensors are able to detect out to 1,000 metres
  • There are around 25 current level 4 autonomous trucks in the TuSimple fleet

China’s estimated road freight market value was $750 billion in 2020, and it could grow to $1.3 trillion by 2030.

While the players take different approaches and tend to focus in different markets, it’s clear that significant progress has been made in autonomous trucking.

Still some years before massive human job replacement

Even with the significant progress that we can see, it is not clear exactly when we will see massive amounts of human jobs being replaced with autonomously driven trucks, and it is unlikely that in the current cycle of fighting inflation across the supply chain will be materially impacted by developments in this space. Still the market is so large that we believe investors do have to remain attentive, and it’s also clear that autonomous trucking could have the best chance for being utilised at scale.

Disclaimer: This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.



[1] Mims, Christopher. “Self-Driving Big Rigs Are Coming. Is America Ready?” Wall Street Journal. 18 June 2022.

[2] Viscelli, Steve. Driverless? Autonomous Trucks and the Future of the American Trucker. Centre for Labour Research and Education, University of California, Berkeley, and Working Partnerships USA. September 2018.

[3] Mims, 18 June 2022.

[4] Source: Aurora Investor Presentation, Updated as of March 2022.

[5] Young, Liz. “Sweden’s Einride to Test Autonomous Trucks on U.S. Roads.” Wall Street Journal. 23 June 2022.

[6] Source: Aurora Investor Presentation, Updated as of March 2022.

[7] Source: TuSimple 2022 Investor Day Presentation, 11 May 2022.

Can AI Replace People? The Truck-Driving Case Study
 

Related Articles

ING Economic and Financial Analysis
Rates Spark: Pivot Alert By ING Economic and Financial Analysis - Oct 04, 2022

Markets are smelling blood in the water, but do they have enough evidence to price a policy turnaround? Not yet in our view. The BoE’s reluctance to buy gilts is a sign that...

FocusEconomics
What's next for the UK economy? By FocusEconomics - Oct 04, 2022

The UK has been buffered in recent days by a tumbling pound and spiking bond yields. In our latest insight piece, we look at what is in store for the British economy. On 23...

Can AI Replace People? The Truck-Driving Case Study

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email