09/03/2019 – Samuel Krist
Things will go uphill and down again, but one thing is clear: It will not be possible to stop it. In the next few years, the entire logistics industry will undergo a transformation. An enormous demand for drivers and greater efficiency will be met by digitalisation, several new players and the elephant in the room: autonomous trucks.
But not so fast. Let's start in the here and now.
Where we stand
The logistics industry is a huge market. Internationally, its value is estimated at over four trillion dollars – ten percent of total global GDP. Half of this value added is generated by trucks on the road, as 85 percent of all goods travel a distance of 150 kilometres or less. A distance over which other modes of transport have no chance. This is also reflected in the labor market: In the US the road freight provides nine million jobs, in the EU over six and a half million – not counting indirectly profiting businesses such as repair shops, rest stops, motels and many more.
And the market is growing steadily, driven by flourishing world trade and the triumph of online commerce. Already today, millions of jobs remain unfilled worldwide, the industry can hardly meet demand, and wage costs are rising. No wonder, then, that there is enormous potential for digitalisation and automation projects.
What is happening now?
Even without major technical innovations, it is now possible to digitalize many processes and work more efficiently. In this extremely fragmented industry – the 10 largest players have a worldwide market share of only 20 percent – even today faxes are sent, telephone calls are made and long lists are written. The consequences: empty trips, waiting times, poor data evaluation and unnecessary communication effort. In times of personnel shortage, this is actually unforgivable, but nevertheless large and small companies alike feel safe, because things are running smoothly. The orders fly in just like that, there is more demand than supply. But this could change quickly if one does not rethink early. The situation is well-known and attracts ambitious people with new ideas: A number of start-ups have already developed apps and platforms that can be used to increase efficiency at many points along the value chain. Optimized route and storage space planning meet data evaluation, reliable tracking and clear cost calculation at the push of a button. Anyone who does not participate in this, runs the risk of losing touch.
At the same time, more and more large shops and marketplaces, above all Amazon, are relying on their own fulfillment. They see the industry's untapped potential, while the industry seems too saturated to notice that others are gaining an edge.
And then what?
That's when things really get going. Autonomous vehicles are no longer a vision of the future. Today, autonomous cars already have millions of test kilometres on the speedometer, and trucks are in no way inferior to them. The development is mainly held back by laws, but in the end it is only a matter of time until public opinion changes and the technology is accepted. The higher efficiency, which means lower costs, less pollution, fewer accidents and faster deliveries (trucks without drivers don't need a break...), will ultimately ensure this.
One thing no one should forget: Even if autonomous cars are in the focus of the media and thus also of public perception, the impact of self-driving trucks will be immeasurably large – and it will come first. In purely technical terms, long-distance transport between cities, on motorways and highways, is much less complicated. Legally, things will also move faster if the self-driving bolides do not come close to crosswalks and residential areas. Meanwhile, vehicle manufacturers are gaining more and more self-confidence. In Germany, which is heavily regulated, the first pilot projects have been underway for a year now with platooning technology: Here, several driverless trucks are driving in the slipstream of a man-operated vehicle – the soft start into autonomous delivery traffic. In the US, completely autonomous tours and passing manoeuvres on open roads have even been carried out, Volvo produces its self-driving trucks completely without a driver's cab. The message: We are ready to go.
Let's cut to the chase.
A trillion-dollar market with immense growth and demand that can hardly be satisfied will very soon be given the opportunity to increase efficiency enormously and at the same time eliminate a large part of all labour costs. This opportunity will be seized. Because those who do not do so will disappear.
But it will not stop at autonomous trucks. The warehouses, transhipment points, ships and ports of the future will, in perspective, become completely automated and autonomous, as will many other areas where trucks or other slow-moving machines are moved, i.e. mines, farms and factory sites. A completely closed private area with fixed, calculable routes and procedures, without legal restrictions and human interference: that is the sandbox dream of every developer in this field.
What this means for the labour market is becoming apparent. Estimates vary, but the International Transport Forum ITF, an OECD think tank with 60 member countries, predicts that by 2030 around 50 to 70 percent of all driver jobs will disappear. Not all of them altogether and not all at once, but still. If we assume a conservative 50 percent, this would mean over four million jobs in the USA and over three million in the EU - leaving out the mass of dependent companies.
We are therefore facing an enormous upheaval in the working world in many parts of the world. Jobs will disappear en masse, and at the same time a number of new occupational fields will be created. Every player in logistics would do well to prepare for this future.