8 ms·

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

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!

karussell 4y ago
> 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.)
jillesvangurp 4y ago
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.
- snowypine 4y ago
  Agreed with electric trucks! Here's another W22 company focusing on building electric trucks - https://www.sixwheel.com https://www.sixwheel.com
- jaclaz 4y ago
  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 4y ago
    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 4y ago
      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 4y ago
morpheos137 4y ago
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-delusion/ https://blog.piekniewski.info/2021/12/18/farcical-self-delus...
- idopmstuff 4y ago
  > 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-warehouse-automation-14b7131d 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.
dchuk 4y ago
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.
snowypine 4y ago
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.

karussell 4y ago

> 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.)

jillesvangurp 4y ago

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.

snowypine 4y ago
Agreed with electric trucks! Here's another W22 company focusing on building electric trucks - https://www.sixwheel.com https://www.sixwheel.com
jaclaz 4y ago
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 4y ago
  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 4y ago
    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 4y ago

morpheos137 4y ago

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

idopmstuff 4y ago
> 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-warehouse-automation-14b7131d 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.

dchuk 4y ago

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.

snowypine 4y ago

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.