The AI revolution is here! And it has affected the transportation industry just as seriously as it did other industries.
One impact will be on the price competitiveness as a reduction in cost for heavily equipped shipping companies will push the price curve down. Another result will be on the operational costs as these companies will switch out of employing drivers for their work.
Here are all the risks and rewards for your business for hiring self-driving vehicles in place of your regular employees.
We all know that the employment of robots will decrease the costs of operations in the transportation industry. Here are all the benefits and cost savings that will accompany autonomous cars.
Saved Labor Costs
Large companies can save millions of dollars in salaries with the introduction of driverless vehicles. Of course, there will be huge initial costs including layoff compensation and investment needed for the new fleet, but these will be offset by long-term cost savings.
Savings in Documentation and Onboarding Costs
Besides removing the ongoing costs of salaries paid to these staff, the company will also reduce the burden of attracting skilled labor, authenticating their licenses, and onboarding them.
If the company hires unskilled or semi-skilled drivers, these costs are even higher as they may include the HGV theory tests costs on top of training for the job.
Plus, we shouldn’t forget the costs these companies incur for the ongoing training needs of the drivers in this industry. All these costs will be saved by adapting to new technology.
Many times, companies experience that human resource is the biggest bottleneck. With self-driving vehicles, this bottleneck will be taken care of to some extent. These vehicles will need less scheduling as the management will not have to match drivers with vehicles.
Risks and Costs
We can see that one of the biggest of managing the shipping business will be eliminated by the introduction of a self-driving fleet. If the company is also using robots to load and unload the merchandise, it will be another significant cost saving.
But these benefits carry some risks and additional costs. Here are all the downsides you should keep in mind while shifting to AI-controlled vehicles for your shipping arrangements.
Risk of Accident
Autonomous vehicles are increasingly being touted as riskier. Since their introduction, these vehicles have presented more than double the accident percentage of traditional cars. So, you get 9.1 crashes for every million miles traveled by autonomous vehicles against just 4.1 crashes from human drivers for the same distance traveled.
Given these figures, self-driving cars will attract higher insurance premiums than human-driven cars.
Risk of Damaged Merchandise
Most shipping and freight forwarding companies get insurance coverage for the merchandise they contract to transport. This insurance cost depends on the value of the item as well as the safety of the operation.
We can see from the previous section that the general risk associated with the freight forwarding operation will worsen with the deployment of autonomous vehicles. Consequently, the insurance costs for the merchandise these vehicles will carry will also increase.
Cost of Lost Reliability
Today’s business world depends a lot on speed and accuracy. It is especially true for the e-commerce model of selling. The whole supply chain depends on accuracy and sometimes it gets stuck when one vendor fails to deliver the supplies on time.
Because of the importance of speed in their business success, these businesses demand a service that is reliable and fast. While self-driving vehicles eliminate the concern for speed – as they are the fastest delivery options to date – they have seriously jeopardized reliability.
At more than double the accident rates of these vehicles, they aren’t reliable. And because logistic solution providers depend on more than one fleet to bring the merchandise to the buyer, the risk only multiplies.
Consequently, those businesses that heavily depend on reliability to forward their business goals would prefer to take their business to those shipping companies that still use the traditional freight forwarding model.
Cost of Maintenance
Although the cost of labor will decrease in one area of business management, it will increase in another. The demand for human-to-machine communication experts will increase.
Fleet management function start depending more on software engineers especially machine learning experts than on scheduling and coordinating staff. At the same time, the cost of maintenance of the vehicles will include a budget segment only for system maintenance.
Because of inherent risk and relevant safety laws and regulations, this budget will be a significant portion of the whole profit and loss projection – not just the maintenance budget.
The self-driving cars are the reality of the modern-day business world. This transition has arrived with its pros and cons for businesses and although some businesses don’t consider themselves ready to adopt this technology, not adapting may result in a loss of business and competitiveness.