For any number of reasons, the image of driverless trucks rumbling down the nation's highways doesn't sit well with many folks. For the nation's railroads, whose intermodal operations do battle each day with truckers for shipper dollars, the notion of autonomous vehicles could be well nigh intolerable.
The rails' competitive aces in the hole have long been superior equipment utilization, a smaller carbon footprint, and more-efficient use of fuel. Over-the-road truckers haul faster and with more flexibility, but those benefits come at a higher cost than using rail. Autonomous trucks could threaten intermodal's advantages, however, by significantly reducing the cost of shipping by truck.
The theory is that over-the-road truckers can use the technology to reduce labor costs, cut greenhouse-gas emissions, and slash insurance premiums if insurers conclude autonomous trucks make for safer operations than a vehicle piloted by a human. Given that labor and fuel alone account for around 70 percent of a typical trucker's operating cost, the potential exists for a meaningful shift in the cost equation between the modes.
ACROSS-THE-BOARD ADJUSTMENTSIf the railroads are worried about the competitive threat posed by autonomous vehicles, they aren't publicly letting on. Of the four rails operating along east-west routes that were contacted, only one, Fort Worth, Texas-based BNSF Railway Inc., offered a comment, saying it is "watching the developments occurring with autonomous vehicles and what their development could mean for our business." Jacksonville, Fla.-based CSX Corp. did not respond to a request for comment, while Omaha, Neb.-based Union Pacific Corp. and Norfolk, Va.-based Norfolk Southern Corp. referred queries to the trade group Association of American Railroads (AAR), which did not reply to a request for comment.
Yet it's hard to imagine the railroads just sitting by. The AAR, a powerful lobbying force, could persuade lawmakers and regulators to delay regulations or to mitigate their impact on the industry. Railroads could cut their labor costs by reducing train crew sizes from two to one or by leveraging investments made in Positive Train Control (PTC) technology—which tells a train where it can safely travel and reinforces that directive by overriding crew decision-making—as a step toward building a fully autonomous train. (PTC technology will be required on all trains by the end of 2018.) Both approaches, though, would move forward over the dead bodies of railroad labor unions.
Foster Finlay, head of the transport practice at consultancy Alix Partners, said rails' intermodal services have improved to the point where they can challenge over-the-road trucks at any level, regardless of how autonomous truck technology evolves. Rails know there isn't much margin for error in intermodal because, unlike carload service, there is no rail monopoly. As a result, they have shed the age-old mindset of "toothpaste tube" service—squeeze it at one end and eventually it will come out the other—to become more service-sensitive and customer-focused, Finlay said. A just-in-time delivery service, or one that's as close to that as is practical for an intermodal network to provide, is "well within reach," Finlay said.
Autonomous trucks will force change to both highway and rail modes, said Craig Dickman, chief executive officer of Breakthrough Fuel, a Green Bay, Wis.-based company that provides fuel management services. For trucks, the potential changes are as obvious as they are profound. For rails, it would mean an end to selling intermodal services based primarily on lower costs. As the scales begin to balance, rails will need to focus on strengthening their customer relationships, becoming more data-driven, and operating more efficiently than they ever have before, Dickman said. Reliability and predictability, which have not always been intermodal's strong suits, will become priorities, he said.
"It won't be a situation where one segment wins and one loses" in a world transitioning to autonomous trucks, he said. "Both segments will change."
TRIALS UNDER WAYShippers pay the bills, and some are bullish about autonomous trucks. Ties Soeters, North American vice president of logistics procurement for the Belgian brewery titan Anheuser-Busch InBev, told an industry conference in June that self-driving technologies are poised to deliver across-the-board benefits, most critically when it comes to mitigating the chances of human error, which causes up to 90 percent of all big-rig accidents.
Soeters, whose company was involved in the world's first commercial driverless truck trial last October, may be more aggressive than most logistics executives in embracing the new technology. The question for everyone, especially the railroads, is how many other big shippers feel that way and whether they are just waiting to see how regulators lay out the rules of the road. Soeters said the value of autonomous truck operations would not be fully realized until that happens.
THE DISTANT FUTUREThe use of an autonomous vehicle with no driver—known in federal safety lingo as a "Level 5" operation—is years away, if it ever happens at all. A more feasible near-term scenario is the adoption of a "Level 3" threshold, where a driver turns over control of a vehicle but remains ready to take over its operation should problems with the system arise. Or it could be something less technologically daring such as a driver-assisted platoon system where trucks travel in close formation and communicate electronically to coordinate vehicle speed and braking, technology that platoon supporters say will reduce drag and save fuel.
As it is tentatively envisioned today, platoons would assemble near a highway on-ramp for the tandem move and then disengage at pre-arranged exits for the vehicles to deliver locally. Marc Althen, president of Reading, Pa.-based third-party logistics service provider Penske Logistics, reckons platooning could become a reality within two to three years. Lee Clair, a consultant who has worked extensively with the railroads, said platoon operations beyond 1,000 miles could "strike at the heart" of intermodal's value proposition of cost-effective long-haul services.
Clair said the effect of autonomous trucks on the competitive landscape would first be felt through lower motor carrier insurance premiums as insurers incorporate newfangled safety improvements into their underwriting standards. But Todd Denton, managing director, transportation and logistics, for London-based insurance giant Aon plc, which has long experience in trucking, cautioned against making such a black-and-white assumption. Denton acknowledged that technologies enabling automated braking and collision avoidance are positive developments. But he warned against an overreliance by humans on technology, which could create a new set of safety concerns and liability issues, if a driver in the cab can't react fast enough during the critical seconds before a collision.
An accident involving autonomous trucks could open up a Pandora's Box of liability disputes involving truck manufacturers and deep-pocketed technology providers if it is determined that a system error, not driver error, was the cause, Denton said. What's more, there is a host of unanswered questions as to fault should a cyberattack lead to an accident by causing a truck to malfunction, he said.
For now, there is only one safe assumption: that autonomous truck technology will be ready before many in business and the public are prepared to embrace it. Federal truck safety regulators are just now starting down a long road toward shaping a driverless future. The Federal Motor Carrier Safety Administration (FMCSA), a subagency of the Department of Transportation, has already assigned three task forces to the project, according to Larry Minor, FMCSA's head of policy.
Among the many issues on the table will be whether federal law governing the length of a driver's workday, which includes the hours a driver can be behind the wheel, should be adjusted to account for a driver's effectively becoming a passenger for most of a trip. Again, as the theory goes, the longer a driver can stretch a workday, the more productive that driver can be.
Yet truckers are likely to find labor savings capped if drivers still need to be hired and retained, even if it means just having them seated in the cab. Furthermore, said John Bagileo, a long-time transportation attorney, drivers accompanying autonomous trucks may need to be trained in a new and sophisticated type of roadside maintenance should a system glitch occur far from any mechanic. Mastering that skill set will come at a cost to truckers and drivers alike, Bagileo said.
Gartner, Inc.