It is certain that the transportation technology is in the midst of a revolution and autonomous vehicles are now the buzzword in the logistics industry. Advanced technologies are constantly The presence of autonomous vehicles and its impact on Supply Chainsimproving the effectiveness of current transportation methods and these new developments are bound to re-shape mobility. A combination of developments in sophisticated computer navigation, GPS technology, camera technology, and sensor technology have made it possible for vehicles to be driven without human intervention.

Apart from the automobile companies, technology giants like Google and Apple have also invested heavily in this technology.  Companies like Walmart have already started piloting grocery delivery via autonomous vehicles in partnership with a company that, a year ago, launched what it calls the “world’s first autonomous grocery delivery on public roads” in partnership with Draeger’s Market, which operates four independent grocery stores in Northern California.

In fact, the Global Truck Study 2018 by PwC’s strategy & consultancy indicates that by 2030, trucking and logistics will be an ecosystem of autonomous vehicles directed by a digitized supply chain management system, combining driverless, cabless trucks and delivery hubs staffed by robots. Morgan Stanley, an investment banking company in the US, estimates the potential savings to the US freight transport industry at $168 billion annually from improved fuel consumption, reduced labour costs, improved productivity and reduced accidents. 

 

So how exactly will the presence of autonomous vehicles impact Supply Chains?

  • Cost reduction

According to the PWC’s report mentioned above, the digitization and automation of processes and delivery vehicles will reduce logistics costs for standardized transport by 47% by 2030. 80% of these savings will be attributable to the reduction of personnel in the transport and logistics industry. In the U.S. alone, there are 5.7 million professional licensed drivers. According to the Wall Street Journal, a full-time driver’s salary plus benefits costs the transportation company between $70,000 and $110,000. With the current 10-15% driver deficit, autonomous vehicles can be a big help for transportation companies.

Furthermore, there will be a huge increase in efficiency. For example: autonomous lorries will be able to travel more from 2030 onward since there will be no breaks for drivers and idling time will be reduced through the use of algorithms.

  • Impact distribution and production

Autonomous vehicles also significantly impacts distribution and production centers. Previously, distribution centers were built on cheaper land where highways and human resources were easily accessible. However, with the changing consumer requirements, speedier delivery times are needed. Hence, these large centers will need to be closer to the end consumer. In fact, distribution centers are becoming smaller since companies want to be located close to multiple cities instead of just distributing from one central location. It has been estimated that rent costs will increase, which will most likely be offset by reducing costs in implementing autonomous transportation during the final mile of delivery.

  • Improved Safety

When Google’s autonomous car crashed in Mountain View, people were quick to jump to the conclusion that using such technology in the logistics industry is unsafe. However, that would be ignoring  the real success rate. The car had already driven more than 1.4 million miles without a single incident. The accident rate for cars driven by humans stands at almost two crashes per million miles. Hence, by eliminating driver-related errors, autonomous cars significantly improve vehicle safety and ensure that the goods reach the destination safely.

  • Solving the driver shortage issue in the U.S

A report from the American Trucking Associations shows that by the end of 2017, the logistics industry suffered from a shortage of nearly 50,000 drivers. Even though many worry that self-driving vehicles will take human jobs, statistics indicate there currently aren’t actually enough people to fill those available roles.

Actually, companies that rely on trucks to ship their products throughout the nation and the world are likely to encourage the increased production of these vehicles. Due to the desire to save money combined with a lack of drivers, it seems that there will be more enthusiastic demand for autonomous trucks in the near future.

 

Conclusion

The impact of autonomous vehicles on the supply chain are far-reaching. Freight volume will increase over time, as vehicles won’t need to make as many stops, products will be delivered more efficiently and cost will be reduced. When more autonomous vehicles will be on the road, congestion will also be reduced due to reduction in driver errors and increases in efficiencies. Hence, it is clear that autonomous vehicles will impact supply chain management as a whole.