Supply chain experts and executives provided insight on industry trends and what will disrupt the sector over the next two decades in an annual conference at the University of Arkansas.
On Tuesday (April 17), about 230 people attended “Trends in Supply Chain Management Conference, Disruptive Innovation,” hosted by the Sam M. Walton College of Business.
Brent Williams, associate dean for Executive Education and Outreach in the college, said he spent the past six to eight months preparing for the 18th annual conference, providing thought leadership to the community.
In a segment of the conference, Stephan Keese, senior partner for Roland Berger, spoke on key issues expected to impact the industry including vehicle automation, digitization and electrification. He explained the industry isn’t using available capacity across the supply chain as efficiently as possible, and technology is expected to improve efficiencies, such as the loading and unloading process, and reduce the number of empty trucks running along the highways.
Transparency in an industry allows startups to offer solutions, and leads to increased pressure on price. Companies are starting to disrupt existing business models, and he said the trucking industry will likely continue to consolidate.
Keese said vehicle automation is expected to move quickly from automation level two to four as he sees little benefit in level three, which likely won’t happen. This past fall, the U.S. Department of Transportation and the National Highway Traffic Safety Administration released guidance on automated driving systems and showed the levels of automation. The first level includes existing systems, such as some technology to assist the driver, but the vehicle is still controlled by the driver. The second level allows the driver to maintain eyes on the road but won’t need to use hands or feet as steering and acceleration would be controlled by the vehicle. At level three, the driver must be available to take control of the vehicle within seconds. The driver isn’t required to monitor the road at level four, and at level five, the vehicle can perform all driving functions.
In 15 to 20 years, Keese expects to see self-driving trucks that don’t have cabs. The technology to produce a truck with level five automation such as this would cost an additional $20,000 from existing prices, but competition is expected to reduce this cost. Carriers won’t see much of a benefit in cost savings in automation levels two or three. But they can expect to the largest savings when the driver isn’t required, starting with level four.
Keese doesn’t believe platooning will have much of an impact on the industry as there won’t be enough reason to operate trucks in a platoon. It might benefit carriers such as FedEx that send multiple trucks along the same route. The fuel savings with platooning is projected to be between 5% and 10%, but a good driver could save that amount alone. And if a good driver were to establish a platoon with a bad driver, that savings would be eliminated, he said.
Another technology he doesn’t expect to develop is the remote operation of a truck like a drone. He said it’s dangerous to operate a 40 ton truck moving at 65 mph. However, control centers might be developed allowing one to remotely intervene in emergencies.
He expects technology to be available to run level three automation in two to three years and level four in five to six years. The hardware exists, but the software is a bigger challenge. And, the cost of the technology, such as light detection and ranging (LIDAR), which uses laser pulses to monitor the roadway, have fallen dramatically. In 2012, LIDAR technology was about $70,000 per unit, but has since fallen to between $3,000 and $6,000, said Craig Harper, executive vice president and chief operations officer for Lowell-based carrier J.B. Hunt Transport Services. And soon, possibly as low as $1,000.
Yet, the biggest challenges to vehicle automation are the legal requirements and ethical considerations, which will be formed by public opinion, Keese said. And incidents such as the Uber crash in Arizona won’t help bring the technology along. In March, one of Uber’s self-driving cars struck and killed a woman in Tempe, Ariz., and the crash led the company to suspend its tests of autonomous vehicles in the United States.
Keese said the use of electric trucks is expected to benefit short haul or drayage operations, within the 150 to 250 mile range. Drayage refers to trucks hauling to and from railroads in intermodal operations. Keese doesn’t expect electric big rigs to be used in long hauls because the battery weight takes up a large part of a truck’s load capacity. Also, electric trucks and automated trucks are contradictory because the benefit of a self-driving truck would be for it to operate continuously. And electric trucks need to charge for between six and eight hours daily. He wouldn’t recommend fast chargers, or superchargers, which are expected to charge a battery in 30 minutes, as they would reduce the battery life much more quickly than regular charging.
In November, J.B. Hunt placed an order for multiple battery-powered electric big rigs, and Harper said the company was looking forward to using them. In a question and answer session, Harper was curious as to the impact of electric vehicles on the existing power grid, and Keese said the grid has been stress tested and can handle 20% to 25% of the existing fleet of vehicles as electric. In the fourth quarter of 2017, the number of vehicles on the road in the United States rose 2% to 271.4 million, from the same period in 2016, according to Experian. Less than 2% were electric or hybrid vehicles.
When asked if electric would burn more efficiently than diesel, Keese said it’s not fair to compare the two because an electric vehicle takes the emissions from the vehicle and places them on the energy sector. And when looking at a “well to wheel analysis,” the emissions are not going to be much different.