With persistent safety concerns, worsening driver shortage and rising carbon footprints, one study predicts the GCC could benefit more than any other region, from the roll out of automated vehicles. Sindhu Hariharan examines the factors driving the future of transport
Looking at the pace of technological evolution, the year 2016 may well be a tipping point – a year when various technologies go mainstream and when the future becomes present. One such innovation, with the potential to completely transform the commercial road transport (CRT) sector is autonomous vehicles.
According to a recent study by management consultancy Strategy& (formerly Booz & Co), going forward, driverless trucks – which have long seemed far-fetched notion – will play a key role in road freight transport for the GCC.
Autonomous trucks, driverless vehicles that operate independently, are an emerging technology with significant potential benefits for GCC countries particularly given the regions ambitious plans to shift to a knowledge-based economy, foster digitization, and develop human capital, reveals the extensive report titled Trucking to the Future.
In the absence of a rail network for trade, most freight movement inside and amongst GCC nations is by road. Strategy&s study estimates that more than one million trucks are currently in operation across the region and this number is expected to grow at 5-9% each year. One reason for the growth is said to be government fuel subsidies that reduce fuel costs – perhaps the largest expenses of trucking companies – by at least 20%.
Speaking about the CRT sector in MENA, Akin Adamson, Middle East director, TRL (evidence-based transport solutions provider) says: The biggest challenge facing MENA countries is the fact that the sector is almost totally unregulated. Drivers do need to be trained, but not to a high standard. Vehicle safety standards are virtually non-existent and un-enforced and load weights are often more than twice those permitted in well-regulated environments.
Changing Lanes
With persistent safety concerns, worsening driver shortage and rising carbon footprints, there are enough reasons for the trucking industry to move to automated systems.
Dr Ulrich Kögler, partner, Strategy& (Dubai) says: GCC countries will benefit from autonomous trucks more than any other region in the world. The technology can reduce fuel costs, dramatically reduce the number and cost of accidents, reduce expatriate labour and create high value-added technology jobs.
While acknowledging higher up-front costs of autonomous vehicles compared to manned vehicles, Strategy&s study estimates that these expenses will likely be offset by reduced salary costs and increased operating efficiencies. It pegs total lifetime cost savings at 15-20% in the Middle East. The consulting firm believes that based on early estimates, autonomous trucks – once in mass production – will be about 25-30% more expensive than conventional trucks.
Taking low wages of drivers in the GCC into account, the study anticipates a payback time of roughly four or five years.
Current landscape
Manufacturers including Ford, Volvo, Toyota, Audi and Daimler have all announced plans to be a part of the driverless cars wave in the near future. Tech giants like Google and Tesla have also made notable progress. As self-driving cars begin to take shape, commercial driverless vehicles are next in line.
The report quotes instances of driverless trucks that already operate in closed environments. The mining firm Rio Tinto is reportedly using driverless trucks at its iron ore mines in Western Australia, which are remotely controlled from 1,400km away in Perth. Volvo Trucks says it foresees fully autonomous trucks running in controlled environments like ports and quarries as a first step of evolution.
Further, in May 2015 the first autonomous truck, Daimlers Freightliner Inspiration, was licensed to operate on a public highway in the US state of Nevada. With the development of autonomous vehicles, Daimler Trucks wants to advance the evolution in goods transport regarding safety and efficiency. Long-distance transport trucks, in particular, are destined for autonomous driving, says Uta Leitner, product communication, Daimler. She adds that Daimler intends to continue working on improving and expanding autonomous driving technology. Daimler tests autonomous driving in a first step for their main truck markets, Europe and the US.
Though there has been tangible progress in developing vehicles navigating with least human intervention, Strategy&s research estimates that transition to fully autonomous technology will take considerable time. Developers and analysts agree that semi-autonomous would be a better and more realistic focus point and someone will have to remain in the drivers seat for the foreseeable future. Mass production seems likely, after numerous rounds of testing, in the next 10 to 15 years which is not as far as it seems, for transporters to start planning for their impact.
Benefits of automation
The report elaborates on numerous advantages autonomous trucks present over conventional trucks.
Firstly, industry estimates suggest that driverless trucks would increase fuel efficiency of cargo trucks by 15-20% through computer-optimised acceleration and braking. This in turn would reduce fuel consumption and associated costs and lead to lower emissions. Autonomous trucks also enable a creative solution for fuel savings: platooning.
When the lead truck is electronically coupled to following trucks, allowing them to safely follow at shorter distances than normally adopted, it results in greater fuel efficiency for all vehicles involved through improved aerodynamics. Although many years away, this may enable the restrictions around driving hours to be eased if a significant proportion of a journey is conducted within a platoon, explains Adamson.
The report estimates that when the autonomous truck market in Europe matures, the total cost savings can reach 30-35% over the lifetime of each truck. At the lower current cost levels in MEA, correspondingly smaller savings at 15-20% seem achievable. More studies back this hypothesis. A study undertaken by AXA UK in conjunction with Douglas McNeill- an independent financial analyst and expert in the transport and logistics sector has found that there would be significant business advantages with the advent of automated logistics vehicles. In an official release, AXA pegs the total savings at £33.6 billion after 10 years from the introduction of such technology.
Beyond the economic advantages, one cannot ignore the significant social benefits that such a technology could present for GCC. The potential to create new kinds of jobs in technology such as software developers, data analysts and programmers is exciting. Strategy& expects this to reduce the regions reliance on expatriate labour and help to shift to a knowledge-based economy.
The most critical benefit perhaps is the aspect of safety. While evaluating safety, the report states that almost 90% of accidents are a result of human error. Further, accidents involving heavy trucks account for at least 10% of road traffic fatalities in the GCC and are said to cost up to $8bn per year in accidents and injuries. These next-generation trucks will help the cause since they have capabilities to anticipate technical problems and also possess self-monitoring features.
Between idea and implementation
The foremost hurdle for autonomous vehicles is believed to be the regulatory framework. The MENA region can learn from developed markets by creating the right regulatory environment for the development of automated vehicles and gaining governmental support to ensure that anticipated benefits of automated vehicles are achieved across the region, says Adamson. Manufacturers must work with policymakers to devise holistic strategies for the introduction of such vehicles.
Another grey area that both manufacturers and users need to consider is the issue of liability in the use of autonomous vehicles. Figuring out how insurance will work in case of vehicles navigated without drivers is a challenge. As a result, disruption in the field of vehicle insurance is expected to be profound. However, there seems to be little action from the industry mostly because they feel that the disruption wont hit until far in the future.
Numerous clarifications are needed in case of assigning responsibility. Who will be held responsible in case of an accident? Will automation result in reductions in insurance claim frequency and will that reduce policy rates? Will individuals or vehicle manufacturers or tech companies behind the navigation systems be held accountable?
Daimler says that the auto company has assembled a multi-divisional steering committee of experts from its various units to investigate these issues, thereby supporting dialogue and public debate regarding the associated legal and ethical questions.
With technology being the single largest driver of these transport systems, cyber security is also significant.
Recently reported events have shown that car and truck manufacturers already need to raise the cyber security standards of todays vehicles, points out Kögler. Hayder Wokil, automation director, Volvo Trucks agrees, adding:
Data and cyber-security will be a huge issue for the next 10 to 20 years. With growing volume and sophistication of cyber-attacks, we have this area under our radar for further development.
Putting forward fleet operators views, Jérôme Lorrain, COO of ground transportation, CEVA Logistics feels that availability of skilled drivers in terms of safety and driving efficiency could prove to be a key challenge for transporters in 2016. Despite a general belief that removing drivers from the equation may solve a host of problems for the industry, a swift implementation of this technology could have a significant impact on the driver labour market.
Adamson disagrees with this popular thought. For the foreseeable future there will be a need for a trained driver, even in vehicles capable of platooning or operating autonomously. In fact, there is a good argument to pay these drivers more, because they will be operating more complex vehicles, he says.
The driver is still the most important person in the cockpit. Automated driving functions support and relieve the strain on drivers by dealing with monotonous stretches and taking care of annoying stop-and-go driving in a traffic jam, Leitner explains.
Wokil feels it is too early to judge if automated features will affect jobs. Changes in one area open up new opportunities in other areas.
Policy framework
Two key areas providing substantial road blocks for rapid deployment of the technology are the need to define a resilient legal and regulatory framework and the impact on employment [of a lower skilled work force], says Kögler.
The report recommends policy level changes needed for this commercial implementation. Firstly, it says, policymakers will need to develop a legal framework that can accommodate autonomous vehicles. The most complex area in this regard is the allocation of liability. Second – is the need to develop regulations for self-driving vehicles across aspects like vehicle licensing, testing, and operations. Third is the need to build the physical infrastructure and technology. Kögler points out how GCC countries could actively support the development of the technology while simultaneously building an industrial basis for autonomous trucks in the GCC. This could entail a wide variety of initiatives including direct or indirect R&D and investment grants for research centres and manufacturing plants or joint ventures with leading developers/OEMs.
Lorrain believes that, additionally, on the macro-economic front, customs authorities will also have to validate any bonded movements, which will require understanding between the countries involved.
Accelerating the plans
As is said about technology in general, despite challenges the world is likely to achieve as much in over the next 10 years as it has in past decades. The 2016 CES event demonstrated that many manufacturers are aggressively pursuing the development of automated and electrically powered vehicles. So it is certainly a case of when and not if these vehicles will be created, stresses Adamson.
There could be something to be looked at in new airports which might be built in the future. In my opinion such systems should form part of the overall planning of a large infrastructure or project like that, emphasises Lorrain.
For MENA, the real challenge will be deployment and finding appropriate use cases that exploit the benefits automation can bring. Applications in city regions are likely to feature first with trial services operating within five years, says Adamson.
It is safe to say that MENA will not capture the benefits of these autonomous convoys by waiting for developments in the market. Action from the industry and policymakers today will help create the right conditions for large-scale deployment of this technology in the future.