Otto Automation: A future of cost-efficient productivity or the death of the blue collar worker?

Uber has provided thousands of jobs for drivers around the world. With Otto, its latest investment in autonomous vehicles, is it working to take that all away??

As technology companies search for the next frontier in innovation, a lot of attention has been given to the development of autonomous vehicles. Companies like Google and Tesla have captured the attention of the public through their investment in the creation of fully automated cars for the everyday consumer. Even traditional players in the automotive industry like Ford and Volvo have announced plans to enter into this space.1 Alongside these efforts, many companies in both auto and tech are working to integrate that same technology into commercial transportation vehicles, particularly commercial trucks.

Approximately 70% of all freight in the United States is transported by trucks, with roughly 4 million truck drivers traveling an estimated 430 billion miles each year.2 As the industry represents such a crucial part of the transportation business, there’s a strong push to develop and apply automated driving in order to drive progress within the industry.

That’s where Otto comes in.

Otto was acquired by Uber in August with the goal of launching a self-driving truck service (Uber Freight) in the next few months.3 However, as you can tell from the video, there are a number of considerations that factor into bringing an initiative like this to the mainstream.

Less Accidents and Reduced Costs, What’s Not to Love?

In this industry, automated driving technology offers a number of potential benefits to companies and society at large. Currently, labor represents 40-75% of the operational costs for the entire industry.4,6 While presently the law requires a human in the truck while the technology is being used, the ultimate goal will be to eliminate the need for a driver at all.

In addition, drivers are restricted by law from driving more than 11 hours per day without taking an 8-hour break. In contrast, a driverless truck can operate almost 24 hours per day, allowing a company to double the driver’s output for a single day.

As shipping represents a considerable portion of the cost of goods being transported, these savings can also be shared with the end consumer in the form of lower prices on goods.

In addition to cost savings, once this technology is implemented across the industry, we can expect a steep reduction in the number and severity of accidents involving commercial trucks. In the US, approximately 300,000 tractor trailers or large trucks are involved in crashes each year that have resulted in ~4,000 deaths per year. It is also estimated that 90 percent of these accidents are the result of driver error.2 Automated driving technology that reduces or eliminates the human component from driving has the potential to greatly reduce the dangers we see today. While it’s unclear whether people will ever be completely removed from the equation, any reduction in the number of human drivers needed to operate trucks could have a substantial impact on the bottom line in this industry.

But What Happens to the Human Element?

This innovation also presents a number of potential risks and issues that go hand-in-hand with the benefits discussed above. Approximately 4 million people are employed as commercial truck drivers in the United States: 2.9 million truckers and delivery drivers, 674,000 bus drivers, 181,000 cab drivers and chauffeurs.2,7 This job represents one of the last industries in which non-college-educated individuals can earn middle class wages. Therefore, the introduction of automated trucks may risk losing jobs for about 1-2% of the entire US workforce and have an adverse effect on our economy as a whole.7,8

This change may also affect the way we are able to determine liability in the case of an accident. Traditionally, we have determined liability based on the circumstances surrounding a human driver and his/her ability to operate a vehicle safely. Now, this liability will likely be shifted to companies, increasing the potential of incurring costs through legal and repair fees.

There’s No Stopping the Future

From a 2011 study5 conducted in an Australian mining company, we can see that the issues associated with the industry are not particularly new, they just have not been sufficiently solved yet.

However, innovation continues on. A number of fully-autonomous and semi-autonomous commercial trucks are in their testing phases. For example, Uber has begun to test self-driving tractor trailers in Colorado and California while Freightliner has been using their highway autopilot technology to provide semi-autonomous driving capabilities for tractor trailers.

Driverless trucking is right around the corner and the only remaining barriers are in the regulatory category. But, safety regulators want to see autonomous driving technology rolled out in the US. In fact, the U.S. Department of Transportation has made a commitment to push research with “a 10-year, $4 billion investment to accelerate the development and adoption of safe vehicle automation through real-world pilot projects.” 9

It is clear that the future is here, but are we ready for it?

 

Otto in Action
Look mom, no hands!

(799 Words)

Sources

1 Chafkin, Max, “Uber’s First Self-Driving Fleet Arrives in Pittsburgh This Month”, Bloomberg Business, 2016. http://www.bloomberg.com/news/features/2016-08-18/uber-s-first-self-driving-fleet-arrives-in-pittsburgh-this-month-is06r7on. Accessed November 2016.

2 American Trucking Association, “Reports, Trends & Statistics”. http://www.trucking.org/News_and_Information_Reports.aspx. Accessed November 2016.

3 Steinmetz, Katy, “Inside Otto, Uber’s New Self-Driving Truck Division”, Time, 2016. http://time.com/4458507/otto-uber-deal-driverless-autonomous-trucks. Accessed November 2016.

4 Knight, Will, “China’s Driverless Trucks Are Revving Their Engines”, MIT Technology Review, 2016. https://www.technologyreview.com/s/602854/chinas-driverless-trucks-are-revving-their-engines. Accessed November 2016.

5 Drew Bellamy, Luka Pravica, Assessing the impact of driverless haul trucks in Australian surface mining, Resources Policy, Volume 36, Issue 2, June 2011, Pages 149-158, (http://www.sciencedirect.com/science/article/pii/S0301420710000516)

6 Cohen, Sam, “Are Driverless Trucks Ready For Delivery?”, Huffington Post, 2016. http://www.huffingtonpost.com/sam-cohen/are-driverless-trucks-rea_b_12742318.html. Accessed November 2016.

7 Wadwha, Vivek, “Commentary: Shift to automation may prevent Trump from delivering on his jobs promise”, Chicago Tribune, 2016. http://www.chicagotribune.com/business/ct-trump-biz-tech-automation-robots-jobs-20161109-story.html. Accessed November 2016.

8 American Transportation Research Institute, “Identifying Autonomous Vehicle Technology Impacts on the Trucking Industry”. http://atri-online.org/2016/11/15/5267/. Accessed November 2016.

9 U.S. Department of Transportation, “Secretary Foxx Unveils President Obama’s FY17 Budget Proposal of Nearly $4 Billion for Automated Vehicles and Announces DOT Initiatives to Accelerate Vehicle Safety Innovations”. https://www.transportation.gov/briefing-room/secretary-foxx-unveils-president-obama%E2%80%99s-fy17-budget-proposal-nearly-4-billion.  Accessed November 2016.

10 Trenholm, Richard, “Why self-driving cars won’t put all Uber drivers out of a job”, MIT Technology Review, 2016. https://www.cnet.com/roadshow/news/uber-self-driving-cars-will-not-replace-all-uber-drivers.  Accessed November 2016.

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10 thoughts on “Otto Automation: A future of cost-efficient productivity or the death of the blue collar worker?

  1. Interesting article. I do agree that a major factor for the proliferation of autonomous trucks will the laws and restrictions placed on the industry from the regulators. Many of the distribution centers for large retailers are based on or near major highways and it has been proven that the rate of fatalities are less on interstates/highways then local and urban roads. When regulators give approval for this technology to be used actively on the highways I see regulators limiting the use of the trucks to non-urban areas, which already aligns with our existing hub approach to retail distribution.

  2. I really enjoyed learning more about Otto. Given that one out of every fifteen workers in the US is a trucker (http://www.alltrucking.com/faq/truck-drivers-in-the-usa/) and the huge incentive for business to cut out the scale of costs that labor represents in logistics (40%+ cited in the post), I do wonder how the inevitable depletion of one of our last remaining well-paying blue collar jobs will impact our political discourse under the upcoming administration.

  3. It’s great that Uber is thinking about the future. Right now Uber is working hard on matching human drivers with passengers, but it is pursuing heavy research in self-driving vehicles (and investments like Otto).

    I think that as soon as self-driving is better than human drivers, in 3-5 years, Uber will start replacing their human fleet with driverless cars. This will cause a ton of controversy, but it is inevitable.

  4. I wonder if additional cost savings and efficiency improvements could be realized beyond just driving more hours on a single truck and not paying a driver. Specifically, I think that a computer driver could completely change the way that trucks are driven that could further help everyone. For example, if multiple trucks could electronically communicate together they could potentially drive in a very close pack to reduce the average wind resistance. In addition, the trucks could be used for the public good by being used as mobile data centers that could relay information to other self driving cars on the road – such as road conditions, traffic, etc.

  5. All of the data suggests that self-driving cars are safer than those driven by humans. Given this, is the hold-up in rolling out self-driving cars the readiness of the technology, or the public/regulators? My intuition is that as we get closer and closer, the ultimate delay will be regulators, given the enormous number of workers self-driven cars will put out of jobs.

    I wonder how Uber’s user-base will respond to this issue, when it comes to getting rolled out to the core business. If your driver is speeding, you can tell him to slow down. If he doesn’t, and continues driving in an unsafe manner, there is recourse in that the rider can give him or her a poor rating. How will this work with self-driving cars? I think the issue will be met with enormous resistance, despite data supporting enhanced safety. It will be interesting to see how uber and others address this from a marketing standpoint.

  6. Otto is the best! One of the interesting things about the acquisition by Uber is an issue that was raised in the Watson case–talent poaching. Anthony Levandowski (the Otto CEO) was one of the early guys that started Google’s self driving efforts, and it’s telling that after the Otto acquisition Uber put Levandowski in charge of all of their self-driving efforts. It was an area that the company had stated was the key to making their business model work from a cost perspective (e.g., eliminating the driver), and it seems like they needed to find talent from outside to really make progress. Lior Ron was also part of the Otto founding team and he was formerly the head of Google Maps–maps being another area where Uber was struggling to create an alternative best in class capability.

    And per syu’s comment above, here’s a map of the most common job by state and trucker driver is the most common in a surprising number of states: http://www.npr.org/sections/money/2015/02/05/382664837/map-the-most-common-job-in-every-state

  7. I’m also bullish on the selfdriving trucks. If say on average a truck driver gets paid 40k/year, then 3million truck driver will save 120b per year for the employers. Not only it benefit the employers, the freed up labor will be generating additional productivities. Just like how after washer is invented, more and more women joined workforce from being tied to houseworks. Imagine how much productivities it provide to the society. The only caveat is that this change might come sooner than people are ready for, and therefore how to deal with a huge number of retired truck drivers, how to re-train and equip them with needed skills to fill the gap and contribute to the society in different ways will be a challenge when changes come in too soon.

  8. While I sympathize with the trucker whose job security lies in the balance, there seems to be little stopping the transition to an automated transportation future. Like you clearly outline in the post, what’s not to love? Humans are highly unreliable drivers, susceptible to fatigue, distraction, intoxication, emotional distress, etc. That said, as with any new technology, any early mistakes that lead to accidents can be catastrophic to the speedy adoption of self driving vehicles.

  9. Thanks for sharing, in my research about Uber i also came across the fact that Uber heavily invests on self-driving technologies. I actually can’t see a real benefit to the world with driverless cars. Those investments could be easily shifted more value creating real technologies. Tech companies should consider ethical innovation as a philosophy to add more value. create more jobs and improve our lives. Moreover, I can’t even imagine the necessary changes in regulation and infrastructure to empower self-driving vehicles.

  10. Great article and an interesting food of thought on how digitization and automation will take away the jobs of many in the industry. But doesnt that happen with any industry which gets hit by industrialisation and automation? What I am more worries about is the human touch and response at the times of emergency. Google has been trying their hands of driverless cars and there are issues that need to be resolved. Of course ethical risks are something that I am more worried about.

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