The Sweet Spot for Otto’s Self-Driving Autonomous Trucks

Uber is moving forward at a rapid pace with testing self-driving autonomous trucks within it subsidiary Otto. Last week, in conjunction with Anheuser Busch, Otto transported 45,000 cans of Budweiser 120 miles in Colorado, with a driver only touching the wheel to get on and off the highway. Uber’s entrance into the freight hauling market will bring another disruptor and differentiator to the equation: quickly, self-driving autonomous trucks.

I believe this new technology will quickly be adopted by carriers due to a low price point, approximately $30k, and the opportunity to lift revenue and decrease operating costs at the same time. Once the regulatory red tape is cleared, a sweet spot within the industry will emerge: the first to use driverless technology. Shippers, carriers, and end customers all can reap the benefits from self-driving trucks in the coming years.

Eliminating the need for team drivers

The sweet spot for carrier adoption will be on the longer haul truckload (“TL”) shipments and loads that often require team drivers. Otto technology will allow carriers to work around hours of service restrictions currently imposed on human drivers. Carriers instantly can do more with the same fleet by enabling shorter transit times (no longer need to stop after HOS limitation) translating to more effective use of assets (truck is always rolling). This more effective use of assets will certainly lift the top line, as carriers can now haul more freight in the same period of time. Any shipments that previously leveraged team drivers to haul direct will now have the option to replace the cost of a second driver with the cost of self-driving technology instead, decreasing the overall cost of moving freight in the same shipment duration.

Improving capacity – and safety

With an added benefit of mitigating impact from the impending driver shortage by increasing capacity for carriers, automation should attract new drivers through a less stressful cab environment, by monitoring the execution of a shipment instead of actively driving. Carriers will also see a benefit  from reduction in insurance costs through less accidents and safer driving of semi-trucks. 40% of all trucking accidents are due to driver fatigue, which would be greatly reduced with the introduction of automation. An increase in safety will help create buy in from the public and clear regulatory hurdles as well.

Shippers will seek the multiple benefits offered by self-driving automation and help drive adoption by carriers in the marketplace. TL fresh food shippers that distribute goods nationally will be attracted to carriers that offer automated modes of transportation purely from a shelf life perspective. A shorter transit time will give the end customers longer remaining shelf life to work with for the sale of goods. Shippers that commonly expedite TL shipments using teams can access the new mode of transportation and receive the same transit time at a slightly lower cost.

Evolving technology to reflect changing business requirements

Transportation management system providers will feel a slight impact as well from the new technology and need to update portions of their software to change planning and execution of shipments that will leverage automated driving. This could include transit time calculations, routes used (minimize on/off ramps, avoidance of unmapped roads), mileage calculations, and new constraints that feed optimization engines.

A win-win-win

Otto’s self-driving autonomous truck technology will offer a triple win for carriers, customers, and the public. Increased safety, lower shipping costs for both shippers and carriers, and more effective use of assets will drive the adoption in the freight hauling business, helping Uber effectively enter and disrupt the freight hauling market.

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