Autonomous Trucking

An Industry Snapshot and Realistic View Forward

However divisive he may be, Anthony Levandowski is an undeniable trailblazer in the world of autonomous vehicle technologies. After participating in the original DARPA Grand Challenge in 2004, Levandowski laid the groundwork for Waymo, Google’s autonomous vehicle unit. Waymo, by the way, has a projected market capitalization that surpasses Uber and Lyft combined. Levandowski’s latest project is Pronto, which builds autonomous technology for commercial trucking (class 8 vehicles). While Pronto is not the first to tackle autonomous trucking, Levandowski’s notoriety has drawn a lot of attention to this previously overlooked space.

For context, the trucking industry is ripe for disruption. Over 70% of all cargo is transported by trucks, generating over $700 billion in annual industry revenue. Between 2016 and 2027, the overall freight tonnage is set to grow 35%. And yet, long-distance hauling is dangerous, hard on drivers, and downright unhealthy. Around one-third of the 3.5 million truck drivers in the U.S. will be involved in a serious road accident at some point in their career. The industry itself faces a perplexing challenge in the form of labor shortages and abysmal attrition rates in spite of high wages. The high wages don’t appear to be enough to keep employees satisfied. While much of today’s labor force enjoys increasing flexibility, well-stocked workplaces, and flattening corporate hierarchies, the lives of truck operators have remained relatively untouched by modern workplace trends. In response, commercial vehicle operators have turned to the gig economy and consumer services to capitalize on more flexible lifestyles, leaving logistics companies short on labor.

While these shortcomings are well understood, the industry has other rarely discussed tensions. A few to consider below:

Fragmentation: The freight industry itself is highly fragmented. According to the team at Trucker Path, 90% of trucking companies operate fewer than six trucks. The five largest players account for just 9% of industry revenue. While this is an excellent environment for competition, it also suggests that there just aren’t a significant number of players with the capital to invest in innovative technology. In an industry comprised of small players with a high propensity for cash shortages, it’s hard to invest in innovation that doesn’t yield immediate returns.

Compliance: Between interstate commerce regulations and requirements from the DOT’s Federal Motor Carriers Safety Administration (FMCSA), compliance is an ongoing challenge for logistics companies. Each driver requires a commercial driver’s license, which includes background checks, training, written exams, and driving tests. The company itself must get Federal DOT and Motor Carrier Authority numbers; the former is used to track safety record and compliance, the latter specifies the type of trucking business you operate and goods you haul. Unfortunately, the requirements only grow from here: companies must overcome six additional hurdles to carry out their business, including Unified Carrier Registration, International Registration Plan (for interstate transport), heavy use tax regulations, international fuel tax agreement decals, BOC-3 forms registration (which requires legal representation in every state the business operates in), and a Standard Carrier Alpha Code (for government-related or international transport). The many requirements are daunting to execute and maintain.

Parking: A key aspect of strict operational standards for commercial trucking is overnight or extended parking. Since compliance regulations confine long-distance transporters to fixed driving times, the need for parking is substantial. More importantly, truck parking shortages are a national safety concern. To a small degree, the market has responded to this demand with applications and services. For example, the Smart Columbus initiative has made relevant datasets available to help create applications for truckers and other impacted entities. And yet, with the projected growth of truck traffic, the demand for truck parking will continue to outpace the supply of public and private parking facilities and will only exacerbate the truck parking problems experienced in many regions.

Troubled by struggling talent models and restricted business operations, logistics companies are circumspect by nature. As it stands, risk and innovation go hand-in-hand, so pushing logistics companies to invest in innovation asks them to assume more risk than they’re suited for. While the Silicon Valley moguls lust over the trillion-dollar opportunity that autonomous trucking presents, the existing market isn’t as easy to disrupt as it seems. Despite rapid technological advancements and the emergence of commercial-grade technologies, the regulatory climate, legal risks, ongoing questions regarding liability, and complex technical maintenance requirements will inhibit progress. Moreover, there are a very limited number of players with the capital and interest in proof-of-concept level technologies. In an industry plagued by thinning margins, logistics companies are more closely focused on labor-saving alternatives.

And yet, there are reasons to be optimistic about this market. While existing players may fall to the wayside, up-and-comers have already yielded relatively impressive results. Companies like Embark have already hit the road with trucks equipped with level two autonomy. Though the company was deprecated, Uber subsidiary Otto (another Levandowski operation) shipped a truckload of Budweiser with the driver monitoring from the sleep cabin for an entire two-hour journey all the way back in 2016. Enabling technologies, such as truck platooning, which uses a fusion of multi-truck coordination and smart sensing to shift some driving responsibilities away from operators, have gained real traction in recent years. In tandem, certain institutional players have stepped up to address a few of the compliance and policy gaps. The American Trucking Association (ATA) has released a comprehensive automated truck policy that lays the early groundwork for safety, the role of federal and state governments, uniformity across state lines, infrastructure, and education.

A fascinating amalgamation of opportunity and structural complexity, the trucking industry is worth following. Here are some of the players that stand out:

• Pronto.ai: If this video of Levandowski traversing the country to the tune of Bukowski’s Laughing Heart is truly authentic, Pronto is off to an interesting start.
• Peloton: Not to be confused with your chic new exercise equipment, Peloton saw the writing on the wall from the beginning and has been in operation since 2012.
• Kodiak Robotics: One of Otto’s co-founders, Don Burnette, recently launched autonomous trucking outfit, Kodiak Robotics, which has already raise $40M in Series B financing.
• Daimler: Announced at CES 2019, Daimler will begin manufacturing semi-autonomous (level two) trucks in July. It’s not fully self-driving, but it’s realistic and tangible.
• Starsky Robotics: Back in May 2018, Starsky Robotics became the first known operator in the trucking business to deploy full autonomy on the road for seven uninterrupted miles.
• Embark: According to the company’s website, Embark operates the longest automated freight route in the world. Recently, Amazon was seen hauling goods in an Embark truck along I-10. The company believes says it can make up for the driver shortage by targeting long-haul routes, which have become tougher positions to fill.