A wave of new connected technologies for long-haul trucks will trigger an economic boom over the next decade that will transform the industry, according to a new report.
McKinsey & Company released a 40-page study Monday on the future of commercial transport that highlights how automation technologies will drive this expansion. The report said trucking companies can expect revenues to increase by 50 percent over the next decade, with the bulk of that value created by new technologies.
Among those new capabilities, the research firm projects that by 2025, and least one of every three new heavy trucks will have high-level automation technology that eliminates the need for a full-time driver. Those and other technologies will drastically reduce costs for trucking companies across the spectrum while increasing demand for new trucks.
While all this is generally good news, the reports sounds a note of caution. With the arrival of new technology and growing demand, traditional players can expect even more digitally focused upstarts to enter the market to provide advanced technologies and compete for contracts.
“These innovations will increase competition, but also create new opportunities for established players along the entire logistics chain to compete for revenues,” according to the authors of the McKinsey report. “As a consequence, traditional industry borders will soften, with current and new players likely to enter new areas, create platforms, and establish new forms of cooperation.”
The past year has indeed seen a number of larger players make big noise with demonstrations of their self-driving truck capabilities. At the same time, Uber recently announced it had acquired Otto, a maker of self-driving kits for exiting trucks, for an undisclosed sum, just one sign that Silicon Valley has its sights set on trucking.
Where once self-driving trucks seemed like a fantasy, McKinsey said the economic path for adopting such technologies is becoming clearer. Eliminating substantial costs such as drivers could reduce the so-called “total cost of ownership” by 35 percent to 50 percent. Those savings will allow more trucking companies to invest in new trucks, McKinsey says.
And those trucks and their lower cost will enable new layers of last-mile services for customers who are increasingly expected a wide range of goods and services to be delivered almost instantly, the report says. That, in turn, will increase demand for more trucks that can be operating around the clock.
While there are many catalysts pushing toward this automated future, the report also notes that challenges remain, beyond simple just perfecting the technology and making it safe and reliable.
Regulatory frameworks are still in early stages, and there is a risk that trucking companies could face of patchwork of rules across states and countries. And to fully leverage the benefits, trucks will need more robust communication networks such as these speeds promised by next-generation 5G networks.