[mrhektor]

Super interesting analysis of the trucking market.

A couple of questions would be:

* At what speed is the industry going to embrace self-driving / "augmented driving" in trucks? I'd imagine a driver would still be required at the wheel in case of emergencies for the foreseeable future. What new skills would truckers have to learn?

* Given the environmental impact of trucking (self-driving or not), what are some interesting propositions that climate change startups could come up with? Do any players in the value chain even care about climate impact? Clearly, given the cut-throat nature of the business, there would necessarily need to be a revenue impact otherwise no one is going to use the proposition.

* I find the insurance part more interesting that the factoring part. Given the generally poor service quality of insurance companies, I'm wondering if there is a possibility of a "Lemonade" like insurance company in this space? Lemonade started out as a home insurer I believe. What is the killer proposition for an insurance company in this space?

Lots more thoughts come to mind. Again, great writeup, thanks!

[dchuk]

Margins in trucking simply can’t accommodate self driving without the costs of shipping having to go way up. The tech is expensive, we’re probably decades away from true self driving with no minder in the truck on open roads, who the hell knows how the regulatory landscape will shake out, this stuff may never work in bad weather conditions (blocking half the country for half the year). And even with self driving, you still have fuel/charging costs, tires, etc. and someone has to load and unload the truck.

The most likely beachhead will be desert lanes in places with low regulations where the middle mile is autonomous but things are handed off to a real driver for getting to the actual warehouse. That’s complicated/limited use cases/more expensive for the same product. Tough sell.

I work directly in heavy duty trucking tech. Our customers are the biggest fleets in the country. All of them are exploring the tech to not fall behind, but behind closed doors every trucking leader will admit we’re nowhere near operationalizing self driving. Not to mention it’s unclear if the biz model for autonomous trucks is to sell the tech (then who is liable when the robot kills someone?) or to sell trucking capacity, the latter squarely making the autonomy companies competitors of trucking carriers vs vendors. It’s messy as hell.

Self driving is the VR of logistics. “We’re a year away” for the next 25 years is where my bets are being placed.

[morpheos137]

With all due respect the hubris (and folly) of Silicon Valley pursuing driveless cars and trucks as well as things like uber is astounding.

It will fail in the market because the technology does not exist and will not exist in the foreseeable future unless or until something like AGI is perfected.

Driving is not a closed domain problem. There will always be fat tail circumstances where statistical methods will break down.

Furthermore driving, freight haul and taxicabs are NOT natural monopolies. They are not areas where technology can give enduring market power that society will tolerate (except perhaps in the case of regulatory / institutional capture). Instead they are low margin, established, service- commodity businesses.

The point of trucking is to safely and efficiently get goods from A to B. Until machines / automation can do it cheaper than humans it will not be viable.

There is no shortage of cheap low skilled labor in the USA.

Why invest in hugely expensive automation in an open problem domain that you can not even perfectly model when you can just pay a driver $25 an hour to do it better?

There is so much more easily attainable low hanging hanging fruit.

Why not automate warehouses?

Trains? Waitstaff? Insurance agents? Real estate agents?

Triage nursing?

All these are probably more attainable.

The driverless delusion reeks of sophomoric understanding of the problem domain fueled by credulous media and group think.

Personally I wouldn't hire anybody for a thinking role who believes that driverless trucks or taxis are viable marketable product for the open road. It is a good heuristic to separate critical thinkers from bandwagon riders.

It is literally an easier technical problem to land a man on the moon than to design an autonomous road vehicle that can do better and be more cost effective than humans in all circumstances.

Hopefully we will stop talking about this foolishness in a couple years.

https://blog.piekniewski.info/2021/12/18/farcical-self-delus...

[idopmstuff]

> Driving is not a closed domain problem. There will always be fat tail circumstances where statistical methods will break down.

Some of it is. Walmart has already deployed some self-driving semis in Arkansas that go between a warehouse and a store. There are a significant number of routes like this, always taking the same path back and forth between two places in a relatively controlled environment.

> Why invest in hugely expensive automation in an open problem domain that you can not even perfectly model when you can just pay a driver $25 an hour to do it better?

Driving time is a big one. There are strict limits on how many hours drivers can be driving on a given day. That means you've got a huge, expensive machine sitting idle for most of the day. Self-driving can get you double the usage of an expensive asset.

> Why not automate warehouses?

This is happening already. https://www.wsj.com/story/amazon-takes-steps-toward-warehous...

> It is literally an easier technical problem to land a man on the moon than to design an autonomous road vehicle that can do better and be more cost effective than humans in all circumstance.

Nobody's saying it has to work in all circumstances. You can choose where to deploy self-driving vehicles. If you stick to the American Southwest, you still have an enormous opportunity, but you eliminate one of the big challenges for autonomous vehicles - snow and other difficult weather.

[cwalv]

> Driving is not a closed domain problem. There will always be fat tail circumstances where statistical methods will break down.

It doesn’t have to solve all cases to be immensely useful. All it needs is to be able to recognize when it’s unable to safely have control with enough advance notice to delegate to a human. Remotely piloted aircraft have been a thing for a long time; seems like we could do the same with trucks, so that humans only need to do the driving a small % of the time. I also suspect that current AI will likely respond to emergency situations better than humans do on average, because they don’t get tired and have superior reaction time.

[grogenaut]

You can't just dump control to the person sleeping or playing marvel snap in the driver seat as your out. With aircraft there are attentive people on standby and more than one. With remote aircraft people are way less likely to die if something goes wrong. You also start really lowering the training level of humans.

I'll alter one of my favorite jokes to explain.

I want to go out like my Tesla ai did, in a bit of confusion and reanimated from rom, not screaming no no no no like the people in the car.

Tho truly with a lot of these the people will go out in their sleep.

[morpheos137]

Importantly with aircraft the time you have to correct an error that requires human pilot intervention before you crash is far greater than in a car. This is basic critical thinking... But so many people say we have autopilot why not driverless cars? Well obviously driverless cars are orders of magnitude more sensitive to error conditions on open roads than a plan flying in empty space.

[cwalv]

I wasn't comparing autopilot in an aircraft to autopilot in a car. I was comparing remote piloting of an aircraft to remote operation of a vehicle.

[grogenaut]

the paren'ts exact same point holds, how long to swap an attentive person in. Have you done support chat? it will immediately be one person to 55 cars, and add in the latency, they're not stopping that tesla move left and hit the breaks issue let alone a 30 car pileup.

[cwalv]

I'm not saying that you attempt FSD with the copout that a driver needs to stay attentive and be ready to intervene. I'm saying that there is a high proportion of truck driving that's completely mindless, and it's possible to have a system that recognizes the difference.

[WastingMyTime89]

Driverless trucking encompasses a large numbers of usage in between full autonomy everywhere and no autonomy at all.

For example, fully autonomous trucks which only work on highway with special equipment on the side could already be worth it. Long haul drivers can’t drive without stopping, can make mistakes and it’s not a very pleasant job. If you could only use a driver for the last few miles, that’s a huge gain.

You are mistaking a failure of your imagination for an absence of possibilities.

[karussell]

> I'd imagine a driver would still be required at the wheel in case of emergencies for the foreseeable future.

Yes, and manual work for on/off-loading or even paper work is still not uncommon. I can imagine that self-driving on long highways will come as a first step to avoid longer stops (no sleep time required) or to avoid a second driver.

> Clearly, given the cut-throat nature of the business, there would necessarily need to be a revenue impact otherwise no one is going to use the proposition.

I was wondering why route optimization wasn't mentioned in the post. Lot's of innovation happened in the past years. (With "route optimization" I mean both, the route selection between two points and also optimization of the order of multiple stops.)

[snowypine]

1 - Oh man, this was one of the questions that was asked by almost every investor. The truth is that no one really knows. My best guess is that we're a decade or more away from true self-driving. Augmented driving might be sooner but trucking is one of the biggest employers in 35 states. Truck drivers are not going to let self/augmented driving eat into their paychecks.

2 - Unfortunately, the margins are too thin for owner operators to have a vested interest in climate. I do think that an interesting distribution strategy for cleaner trucks is to sell heavily into private fleets (e.g. walmart trucking) because there's an ESG angle that the companies can buy into. As for dedicated trucking carriers, it's going to be hard to convince them unless there's some realistic return on investment.

3 - This is interesting, I haven't looked into insurance too much personally and I know the barrier to entry there is extremely high. That being said, I think the liability aspect reduces the viability of offering low-cost insurance. Most trucks are essentially houses on wheels in terms of cost and a single accident can run in the millions.

I'd imagine that if you really wanted to build an insurance company for trucking, you'd need to focus exclusively on mega-fleets (25+ truck carriers) and somehow offer them better rates than legacy insurance companies. While owner operators pay a lot in terms of insurance, the market simply isn't big enough to build a cohesive risk engine and underprice existing insurance without taking on unaccounted risk.

[jillesvangurp]

IMHO (and this is just my relatively uninformed opinion), the key driving force here will be the shift to electric trucks. These are more expensive to buy but cheaper to operate. At least right now. And also easier to turn into self driving platforms.

ICE trucks are really hard to operate. You are basically micro managing the gears, dealing with lot of fairly complex bit of equipment, etc. Electric trucks basically have no gears, heaps of torque and don't really require much more than just pointing them in the right direction. Apparently as easy as driving a normal car.

So, electrification strikes me as a core requirement for self driving. And of course electric trucks are also more environmentally friendly. Less brake dust (regenerative braking) and less emissions. And the batteries are recycled at the end of their life. So there's that.

The shift to electric trucks is already happening of course but its very capital intensive. Millions of trucks with a price tag of hundreds of thousands each means a lot of capital will have to be expended. Trillions basically. That alone will ensure it will take quite long to complete. A decade minimum before most new trucks are electric and then at least another decade before most ICE trucks have been retired. And the first generations won't be self driving. So these new trucks would be in service for a decade plus before being swapped out for self driving ones. So, if that takes another decade to happen, we're talking 30-40 years. Minimum. But with the first ones on the road as early as less than a decade from now. It's going to be a slow process.

Insurance is basically about risk. Insurance companies like to minimize risk and maximize profits. An electric truck that is less likely to break down regularly is less risky and would on paper require a lower insurance fee. And then a self driving truck is less likely to get into accidents or other liability related issues. Which again means lower fees. So, that helps.

[jaclaz]

You seem to me way too optimistic/entusiast on the matter.

Volvo (which is BTW one of the more optimistic companies) is still today excluding long-haul trucks from being fully electric, and they have just started production of short-haul and "regional" electric trucks.

And of course full self-driving is still beyond the horizon.

BTW, and only as a side note, traditional trucks already use engine braking or retarders extensively, so I don't think that regenerative braking will change much when it comes to the amount of brake dust.

[slfnflctd]

It continually boggles my mind that more people aren't interested in hybrids here. There's a company called Hyliion that's been working on this for a while (I have no involvement or investment with them, just interested), and there are likely others as well, but there still doesn't seem to be a lot of uptake or discussion about it.

Hybrids seem to me like a net win all around for at least some use cases. I'm not sure where the value proposition is breaking down (or if anyone's even put in the effort to figure out whether it actually is breaking down).

[jaclaz]

For long-haul hybrids do make a lot of sense, moving on the highways/out of cities on fuel, then switching to electric when entering them but - isn't there always a but - there is a much simpler solution already available, you use a "normal" truck for the highway, arrive on an exchange parking, leave the trailer that then is brought into the city by a pure electric truck.

Surely there can be particular routes/scenarios where hybrids may offer an advantage, but it is not (at least to me) very clear which ones they are.

[jillesvangurp]

I think companies looking to switch to electric trucks are primarily motivated by the lower maintenance/operational cost and lower electricity cost. It's a big investment but over the lifetime of the vehicle it's worth the money. The environmental benefits are a nice plus point of course but not the main thing.

Using a hybrid, you get back a lot of the maintenance hassle and on top of that your fuel is again more expensive. It's basically most of the downsides of an ICE truck without most of the upsides of a full battery electric truck. So, the business case for hybrid trucks is just a lot more murky. I'm sure there will be some companies that will try this but the money is going to be in full battery electric.

[slfnflctd]

I appreciate that perspective, I know many share it.

> you get back a lot of the maintenance hassle and on top of that your fuel is again more expensive

The entire value proposition of hybrids is that they both reduce the amount of required maintenance on the ICE part (plus the brakes) and reduce the amount of fuel needed-- while maintaining all the flexibility of ICE vehicles. As a bonus, they require far fewer batteries than full electrics at a time when battery supply is clearly going to be constrained for the foreseeable future.

Fully electric trucks will have trouble anywhere with long stretches of cold weather. Operating outside of their ideal temperature zone will result in much lower efficiency, exacerbated by the weight of the batteries remaining the same regardless of charge level.

I think there are ideal niches for both approaches. Honestly, I also think most pure ICE drivetrains should be converted over to varying types of hybrids in the long run, because it almost always seems to be a net win to me... but I could be wrong. Would love to see more R&D put into it, in any case.

[AnimalMuppet]

> The entire value proposition of hybrids is that they both reduce the amount of required maintenance on the ICE part (plus the brakes) ...

Is that a net win? It reduces maintenance on the brakes, it may reduce maintenance on the ICE, and it adds a whole bunch of new stuff to maintain. Does anyone have data on the net effect? Does anyone have data for trucks?

[jillesvangurp]

Tesla just launched a long haul truck with 500 mile range. They are not the only ones targeting long haul. The perpetuating myth here is that this is somehow hard or impossible. The reality is that this is just a matter of including a few extra tonnes of battery and multiple companies have trucks on the road that can do this. Which is what Tesla did. They also have a fairly efficient drive train. And a charging system to top this thing up. Early days but it seems like it's starting to become worth the trouble.

Nikola advertises a battery electric heavy truck with 330 miles of range. Nikola and Volvo seems to still be pretending that they are going to use hydrogen but at the same time they are selling a lot of battery electric at this point and not a whole lot of hydrogen trucks. Mostly ranges are creeping up to the point where drivers must stop to take a break anyway that is long enough to top the battery up. So, the range anxiety argument is simply not there. It's a pure cost driven thing. And it's not like hydrogen fueling is particularly fast or cheap.

Of course, a lot of companies are opting for shorter range trucks because they are much cheaper and because that suits their needs. Long haul electric trucks are more expensive. Because of the extra batteries. So, yes, the sweet spot of the market is short haul, for now. But there's nothing inherently hard about longer range trucks. It's just a cost and supply chain issue. As battery production scales and prices come down further, we'll see more companies dip their toes into long haul.

Self driving is a thing that multiple electric truck and van companies are talking about at this point as something that they want to do. It's still pretty far out but it's not that much harder than self driving cars. But as I said, the bigger challenge here is simply replacing fleets which is an inherently slow process. But of course that's exactly where the money is going to be for manufacturers.

[jaclaz]

For long range trucks (electric) there could be (in theory) yet another possibility, adding a trailer on the highways.

Not entirely unlike existing multi-trailer (used on some roads in Australia), so called Road Trains, but limited to two trailers, the main one and the battery trailer:

https://en.wikipedia.org/wiki/Road_train

the truck would enter the highway, stop at a service station, add a "powerpack" battery trailer, drive until the next station, swap battery trailer as many times as needed, then leave it at the last service station before destination.

[snowypine]

Agreed with electric trucks! Here's another W22 company focusing on building electric trucks - https://www.sixwheel.com