Analysis of Autonomous Vehicles and Job Loss: Disaster or Opportunity?
Though most consider the mainstream saturation of autonomous vehicles to be decades away, there is a growing trend within the automotive and transportation industries towards self-driving vehicles. So, what does this trend mean for the future of the transportation industry? First, we will examine the current state of the transportation industry and why it is trending towards automation. Then we will examine the potential opportunities of automation implementation through the lens of the “creative destruction” concept.
Current State of the Transportation Industry
Per the Bureau of Labor Statistics (BLS), transportation and freight are the fourth largest employment group in the U.S. with almost 10 million workers, behind only food services, office staff, and sales. Additionally, according to Driver Solutions, truck driving is the most popular job in 29 states. At first glance, these numbers suggest that the transportation industry is both healthy and booming. However, under closer scrutiny several concerning problems within the transportation industry become apparent.
The first main concern within the transportation industry is the driver shortage. Within the U.S., the shortage is estimated to be around 50,000 drivers. There are a variety of issues contributing to this shortage but it really comes down to trucking not being a very appealing job for most prospective employees. The long hours spent driving combined with a relatively solitary lifestyle eliminates trucking as a potential career path for many within the workforce.
Turnover within full-truckload (FTL) fleets is at approximately 90%. This means that 9 out of 10 drivers quit after a single year. Many trucking companies are trying to combat this shortage by offering increased benefits such as free commercial driver’s license (CDL) training to trucker candidates and increased home time and retirement plans for current truckers. However, when one considers the already attractive benefits attached to the transportation industry, including a mean annual salary of approximately $43,00 (BLS) compared to the $45,000 for college graduates (BLS) it seems unrealistic to suggest that more benefits are the answer.
The problem is further exacerbated by the aging demographics of not only the truck drivers but the transportation industry in general. The average age of truck drivers in the U.S. is 55. A sizable percentage of the current 850,000 truck drivers will be approaching retirement within the next 5-10 years. This aging trend within the trucking population reflects the overall aging of the transportation industry, with the average age being 48 years old. Transportation companies fight the aging issue similarly to the overall driver shortage, offering more benefits to current and potential truck drivers. Many see these strategies as short-term fixes similar to putting a band-aid on an open wound. Instead many within the transportation industry read the driver shortage as further indication that vehicle automation is the way of the future.
Autonomous Vehicles Today
While the consensus is that mainstream vehicle automation is still decades away, it has not stopped many major companies from positioning themselves to benefit from this technological shift. Uber has recently launched Uber Freight and has tapped a self-driving expert in Lior Ron to head the branch. Likewise, Ford has replaced their CEO with Jim Hackett an expert in autonomous vehicles. At the same time, self-driving vehicles continue to be tested in cities such as Pittsburg and Boston.
So, what does this shift towards automation indicate for the future of the transportation industry? Many groups have concluded that the implementation of autonomous vehicles will result in a loss of 300,000 jobs per year with a result of nearly halving the transportation industry’s current workforce from 10 million to 6 million.
At first glance, these numbers seem incredibly daunting. Technology that is disruptive enough to render nearly half of the transportation industry’s workforce obsolete seems both dangerous and unfair.
Many transportation companies will buy into this fear and fight for governmental controls against automation. Much like how traditional taxi companies have resisted the marketplace disruptor Uber. However, companies that embrace automation as an inevitable shift within the marketplace can set themselves up for massive benefits and increased market-share. This mindset requires an adherence to the concept of creative destruction.
Creative destruction is the idea that product and processes are constantly being innovated; replacing outdated operations/technology with new ones. Companies that can embrace creative destruction have an easier time of situating themselves on the forefront of a new industry-disruptive trend which translates into greater value creation for the company. Companies who are taking note of the rise of vehicle automation may be wise to begin enacting measures to position themselves ahead of this technological shift within the transportation industry. Those who do not may see themselves left behind in a rapidly innovating marketplace.
If you are interested in learning more about trucking automation or any other topic in the freight industry, we here at LTX would love to answer any question you may have.’