What will it take to finally get Automated Trucks on the road?
So far, 2023 has been head-spinning if you’re an automated vehicles nerd. Let’s consider where we were a few months ago compared to now, based on key viewpoints from the Manifest 2023 event in early February. Manifest is interesting in that it brings the big broad brawny world of supply chain together with high tech players from across the board including electric vehicles, drones, warehouse automation, sidewalk delivery bots, and automated trucking. The event attracted several thousand attendees and over 1500 companies. Key shippers present were Coca Cola, DHL, Land O Lakes, Mattel, PepsiCo, and Walmart. Folks you want to know if you’re an AV trucking startup.
On the day Manifest opened, the recent Waymo layoffs came to light, making for some very intense hallway chatter. Many people knowledgeable about Waymo were present at the show, including well-connected alumni. Their reports varied from “the truck team is gone” to “all is basically normal, just a slight step back.” At the time, clarity was nowhere to be found.
Just a few weeks after Manifest, Locomation’s CEO countered press reports that the company was closing but acknowledged layoffs due to economic headwinds. Then, only days after that, we witnessed the shutdown of Embark Trucks, which was unable to raise funds for continued commercialization of their automated truck solution. With this spate of information coming in such close succession, there was only one word for it: sobering.
All this, back when bank failures were on no one’s radar. Given the Silicon Valley Bank collapse, and others, venture firms are now very, very cautious.
The Waymo situation has since clarified. It does seem clear that the layoffs were targeted more to the truck side of Waymo than the robotaxi side. Because Waymo’s founding vision is based deeply on people-carrying, in a time of belt-tightening Waymo must deliver on robotaxi. It is an existential necessity. They know they can re-energize their trucking operation once robotaxi is achieving significant revenues. Revenue is great, but profitability is better! More than likely, trucking is what will put Waymo over the top for profitability.
So. Is automated trucking in a death spiral? Certainly not. While individual companies are facing intense struggles, others are moving forward solidly. In-between, a few are sweating it out month-by-month. As I have frequently noted, there are pockets of strength and areas of weakness in this sector. Let’s look at additional data points, based on key insights which came to light during interviews and panels at Manifest.
What It Takes: Key Voices Speak Out
A basic set of must-haves are coming into focus as we near launch of commercial truck Automated Driving Systems (ADS). These revolve around the ADS tech, corporate leadership, interfacing with other supply-chain tech, regulatory reform, and – most important and utterly obvious – staying power. Let’s take a deeper look.
It takes the right use case. OK, of course there is no one “right” use case, but what I’m pointing to here are use cases for which products are ready (or almost ready) now, in which fleet operations benefit, the risk is contained, there is minimal uncertainty from outside factors, and the cost is palatable to customers.
In a conversation at Manifest with Brian Stuelpner, Vice President of Strategy, Planning, and Architecture, Schneider, we talked about where he sees the near-term fertile ground. One of the largest trucking firms on the continent, Schneider ranks 8th on the Transport Topics list of Top 100 For-Hire Carriers. Their trucks run almost 10 million miles per day. Mr. Stuelpner said automated yard trucks is an area Schneider is actively exploring, as they have significant yard truck operations. They are in discussions with AV yard truck developers. Running on private grounds at a distribution center or similar facilities, automated yard trucks are in late-stage trials with several companies developing products.
Early on, Gatik identified a use case which could be deployed expeditiously. By using box trucks to run short haul B2B freight on repeated multi-mile routes, they are able to deeply characterize the route and adapt to any idiosyncrasies. This simplified Operational Design Domain has allowed them to fulfill their safety requirements for driverless ops more quickly than those operating in city grids or across the Interstate Highway System. Gatik has seen healthy customer uptake and they are now operating trucks driverlessly in several cities across North America. Within the AV industry, this is a unique use case, at least so far.
GE Appliances is running loads between their factory and nearby warehouse in Selmer, Tennessee, working with Einride to move this freight autonomously without safety drivers (and with remote monitors), at low speeds on local roads. Harry Chase, Sr., Director Central Materials for the company, participated in a Manifest panel titled: “Fleet Autonomy and Electrification – What Goes Into a Connected and Sustainable Supply Chain?.” Opinions were offered re timing for commercial launch of automated trucking. In his view, “working on public roads without an escort at larger scale is a minimum of one year away.” The use case Einride is running is a fit for GE Appliances’ operations. “The automated trucks allow us to run without breaks. Charging can be completed while docked and being loaded and unloaded,” said Mr. Chase.
Adam Buttgenbach, Director of Fleet Engineering and Sustainability at PepsiCo, Inc. referred to a here-and-now use case during the same panel. For highway operations, he is strongly in favor of deploying what he called “Highly Automated Driving,” i.e. driver-in products which do the lion’s share of the driving while running long haul. His view is that this capability can provide safety gains and enhance driver satisfaction “for now,” and that development and planning for fully driverless systems can proceed for deployment in the future.
It takes “bandwidth,” i.e. leadership and commitment from end user companies. Mr. Stuelpner noted that Schneider will have 92 eCascadia electric Class 8 tractors delivered this year by Freightliner. He noted that Schneider’s sustainability targets, like many other corporations, key on 2025. This means that now through 2024 is crunch time for implementation of new equipment and operations. Meeting these targets will be challenging, he said, because there are so many factors that have to fall into place.
EV is a “here and now” issue for trucking. If your fleet isn’t already ordering EV’s the way Schneider and many others are, you’re looking at how EV can support portions of your network and when you will pull the trigger for purchases. What does this have to do with automated trucks? Corporate staff addressing strategic initiatives have only so much head space. To the degree EV is swallowing up all available time and budget, AV will take a back seat. The Big Dogs can do both, so I see them to be leaders of the pack with initial AV truck deployment. In particular, keep an eye on Aurora’s partners (FedEx, Schneider, U.S. Xpress, Werner, Covenant, and Ryder).
It takes practical regulations and policy. At Manifest 2023, policy factors were examined in a session titled “The Evolution of the Truck and the Impact It Has on Drivers,” with panelists Eric Fuller, CEO and President of US Xpress Enterprises, Inc., Brett Suma of Loadsmith and Graham Doorley of Terraline. One way or the other, everyone’s mind is on the labor issue. As moderator, I asked each of the panelists to provide their viewpoint. Mr. Fuller, in particular, spoke definitively about the shortage of truck drivers at US Xpress. He made the case that the driver shortage is so severe that impacts of automated trucking on current drivers will be minimal. Heads were nodding all around the room. I asked Mr. Fuller how many drivers they have at US Xpress. “About eight thousand,” he said. I continued, “In company meetings, what do you say to your drivers about automation and their job prospects?” “I tell my drivers that every one of them will have a driving job for as long as they want,” he said.
This Manifest panel occurred just a few days after the California Department of Motor Vehicles held a hearing in Sacramento seeking public comment on allowing automated trucking on state roads. Current regulations, in place since mid-last-decade, allow SAE Level 4 driverless operations only on vehicles less than 10,001 pounds. At the hearing, the California regulators heard from many ADS truck developer companies, a large portion of which are based in California. They want to be able to test and deploy their self-driving trucks within the state. Representatives from these companies made the case that AV trucks can be tested and deployed safely, pointing to extensive activity in other states. A contrary view came from members of the local Teamster’s Union. These truck drivers told the story of trucking and trucking jobs —their jobs —being vital to their lives, their families, and the prosperity of their communities. They appeared to view AV trucks as either “us” or “them.” If AV comes, they go. The ADS developer reps spoke to trucking’s critical role in the supply chain and the need for ample capacity to meet demand. Similar to Mr. Fuller of US Xpress, they stressed that human drivers and automated trucks can co-exist.
This week, UPS and the Teamsters opened contract talks, an intense ritual that occurs every five years. This contract is the largest collective bargaining agreement in the U.S. Their current agreement was completed in 2018 and automated trucks were on the table then. You can bet it’s a hot issue this time.
While the political arguments kick up dust – and are a real threat to robust deployment – regulations are somewhat more straightforward. Like this year, last year’s Manifest event also had a policy session on automated trucking. The panelists in the 2022 session stressed the need and urgency for USDOT to move forward on rulemaking to fully allow automated trucking (going beyond “guidance” provided several years ago in USDOT’s AV Policy 3.0). Lack of apparent progress from USDOT’s Federal Motor Carrier Safety Administration (FMCSA) resulted in frustration from the industry side during the last year. But wheels were turning within FMCSA. As it happened, on the same day that the Manifest 2023 truck AV policy session was held, the agency released a “Supplemental Advanced Notice of Proposed Rulemaking Regarding the Safe Integration of Automated Driving System Equipped Commercial Motor Vehicles (CMV),” aimed at establishing a regulatory framework for ADS-equipped CMV operations. The government sought stakeholder input on requiring AV truck operators to provide operational data to government agencies, what type of data to collect, approaches regarding vehicle inspections, and oversight of remote human assistance. The comment period closed in March with hundreds of responses. The viewpoints I spoke to in the paragraphs just above were strongly put forth, but there was also some very practical discourse about the specific questions raised by FMCSA. The ball moved down the field a bit.
Commercial AV truck operations can proceed now based on specific laws at the State level. Yet national rules are needed to support long haul trucking. It’s getting to be crunch time for the Feds.
It takes good weather (for now). Schneider operates broadly across the country but given their Green Bay, Wisconsin, headquarters I asked Mr. Stuelpner about the most common criticism of AV’s from trucker’s: they won’t be able to handle the challenging weather conditions across much of the country. He’s not worried, saying “It’s just a matter of timing, it’ll come.” This is of course echoed by the ADS developers.
One of Gatik’s early customers, Loblaws, began initial testing in Toronto, Ontario in the winter of 2020. During the process to test and validate the ADS on Loblaws local routes, the vehicles operated successfully year-round. As to the long-haul actors, they note they’re also quite capable in inclement weather, even as they concentrate near-term operations in the southern tier of the U.S.
Is there enough long-haul road freight in USA’s lower third to generate significant revenue? Certainly. To become profitable? Time will tell.
The ability to handle a broad range of weather conditions will provide a competitive advantage to those companies that can do so.
It takes playing nice with other autonomy. GE Appliances is a believer in indoor autonomy. When it comes to warehouse jobs, Mr. Chase notes they have added over 4000 jobs while increasing investment in automation. Where indoor and outdoor meet, “we need to develop robots to unload automated trucks, i.e. get to an ‘automated dock,’” he said. But that’s just the start. As outdoor AV’s become integrated into the overall enterprise, he stresses that “we need a common language for different systems to communicate and work together. Interoperability will be critical to having mobile automation work together and with fixed automation.”
It takes being truly commercial-ready. In other words, shifting from being developers to becoming commercial providers. Succeeding in “Service Delivery” is a different animal from conducting successful trials. Aurora, Kodiak Robotics, Torc Robotics, and TuSimple are running freight over-the-road with safety drivers, and Volvo Autonomous Solutions recently announced operations starting soon in Texas in a partnership with freight carrier Ascend. Aurora and Kodiak have both said they will launch commercial operations with their automated trucks by the end of 2024.
To Aurora, “commercial-ready” means that they offer “features and services to enable autonomous deployment and optimize asset utilization for customers.” In this vein, last week Aurora launched its first commercial-ready terminal for AV trucks at their South Dallas terminal. “The facility is designed with innovative features critical for driverless operations and will serve as a blueprint for Aurora’s future network of terminals,” Aurora said. As well as traditional terminal services such as fueling and on-site maintenance, the AV-ready terminal includes “specific capabilities for driverless operations such as sensor calibration ranges, high-speed data offload, and launching and landing zones.” Aurora will initially run freight driverlessly between Dallas and Houston. The company expects its Houston terminal to be ready for commercial operation in Q3 2023, which they say will enable end-to-end autonomous operation on its launch lane.
By contrast, Kodiak Robotics will be piggybacking its support needs at third-party terminal and maintenance locations. Last summer, Kodiak announced its first terminal in partnership with Pilot Company, the largest operator of travel centers in North America. The partners aim to create an “autonomous truckport” in the Atlanta area to evaluate potential service offerings and explore scalable solutions. According to Kodiak, these services will include “spaces to pick-up and drop-off autonomous trucking loads; conduct inspections; maintain and refuel trucks; and the ability to transfer data for processing, such as feature development and mapping.” At the time of the announcement, Pilot also became a strategic investor in Kodiak.
Speaking of maintenance, this is also key to becoming commercial-ready. Third party maintenance provider Ryder has stepped up to support several ADS developers. Waymo partnered with Ryder in 2021 and their ongoing cooperation was re-affirmed earlier this month by Waymo Via’s head of commercialization in this FreightWaves article. Aurora announced a similar partnership with Ryder last November.
Having transitioned to commercial operations some time ago, Gatik is in a league of its own. They identified and addressed the unique commercial operational needs of their surface-street operations to be initial commercial deployment.
It might take Smart Trailers. The “Smart Trailer” is a term encompassing all manner of sensing and data capabilities on a truck trailer. The list is long, but a typical Smart Trailer might notify the truck driver about tire pressure, brakes, lights, and door positions, as well as monitoring interior conditions for refrigerated trailers. What about when there’s not a driver? That same data can be transmitted via the cellular network to Remote Assist operations centers supporting the autonomous vehicle.
There are those in the biz who say Smart Trailers are essential to ensure that the ADS tractor-trailer combination is in top form. Some trucking operations always have the same tractor with the same trailer, but this is the exception. The vast majority of the time, a tractor picks up a trailer, does the haul, drops it off, and then picks up another trailer. So, if Smart Trailers are a necessity, a massive retrofit is needed across the trailer inventory. This is a non-starter for going commercial with AV trucking.
The ADS developers note that new depot-based inspection processes approved by the Commercial Vehicle Safety Alliance will be a powerful tool in assessing any trailer issues. Additionally, when running on the road, they note that trailer factors key to safe operations can be sensed by the tractor. The tractor-based ADS is constantly assessing vehicle dynamics of the overall rig. If a trailer tire goes out, the responsiveness of the rig changes and this can be measured. If trailer brakes are fading, overall braking degrades, and this can be detected.
I don’t get the sense that this issue will slow down truck AV commercialization initially, but it will continue to be an active area of discussion.
It takes having the umpf to ride out economic storms. In today’s economic climate, the game has shifted to advantage ADS developers with deep pockets who can play the long game. Or at least those with corporate backers who fit this bill.
There are those who are essentially on their own, i.e. startups funded with venture capital. Since privately funded companies do not publicly report cash on hand and expenditures, from the outside looking in it is difficult to assess their financial health. Kodiak is venture-funded and has recently augmented their cash with a U.S. Defense Department contract to help ride out the storm. Plus is also venture-funded and is generating revenue with their PlusDrive driver-in trucking product while developing their driverless system. Likewise, Einride has introduced a revenue-producing business in the EV space while they ramp up their AV deployments. Given that VC’s are much more reticent now compared to when these companies were founded, managing cash and generating revenue prior to full deployment is vital. These companies could go public to raise more funds, but the pros and cons of doing so are quite complex.
Waabi is a well-funded young startup that aims to move quickly to introduce a truck AV product, relying heavily on simulation. They have a strategic investment from Volvo Group Venture Capital; the amount of the investment is unknown. Overall, Waabi is a bit of enigma for now until more is disclosed. I’m very interested to hear more about their progress during the rest of this year.
TuSimple is not “on their own.” As a public company they are owned by a very large group of investors. Having been through a storm of management chaos, their stock is in the dumps. Assuming they right the ship, they have significant cash in the bank and have substantially reduced their cash burn rate in terms of staff and operations. As they move towards their planned first commercial operations, many eyes are watching closely. Will their cash carry them through to achieving profitability?
There are those that have major corporate backing, such as Torc Robotics (Daimler Trucks) and Waymo (Alphabet). Having a major corporation backing your go-to-market journey is a good place to be these days, but of course the corporate funding has limits too. The economic winds can change internal funding decisions, as has happened with Waymo.
In another form of “corporate backing,” RRAI has $228M of Series A venture capital plus 20 years of profitability from their origin company, Robotic Research, Inc. If Robotic Research keeps winning U.S. Defense Department contracts for vehicle autonomy – a pretty good bet – this will act as corporate backing for RRAI to introduce commercial autonomy products, including automated yard tractors, and scale up to achieve profitability.
Bottom Line
So. That’s a perspective on the last few months and where we are now. There will be plenty of action in the coming months. The pace of change and progress will not slow down, more likely it will speed up.
Even as individual companies fail or face challenges, the freight carriers and shippers are still winners here. The expertise developed over the last ten years or so across many ADS companies – some still in the game, some not – continues to contribute to the tech development.
Will automated trucking technology reach the point where it is deployed at scale for over-the-road trucking? While not a certainty, the strong players are looking good to achieve this goal.
Will deployment lead to successful businesses and driverless trucking dominance? It’s one step at a time down this unpredictable road.
Disclosure: I hold equity positions and/or advise companies developing Automated Driving Systems, including these companies mentioned in this article: Aurora, Gatik, Plus, and RRAI.
Big thanks to Linda Beatty of Bishop Consulting for the article art!
