52 Business The EconomistAugust 8th 2020
L
ife on theroad has become a lot tougher since the 1980s, when
Schumpeter spent a year driving a battered old lorry with sever-
al tonnes of four-hooved cargo around the western United States.
The cab was too cramped to sleep in. The radio only played am. And
sweat would drench his shirt as he swerved down roads like the
“Grapevine”, north of Los Angeles, with the smell of burning brake
pads in his nose. Yet it was as close to the idyllic, free-wheelin’ life
as a young Brit could hope for.
Not so for the genuine American trucker. Until that decade of
deregulatory zeal, truckers were the best-paid members of Ameri-
ca’s working class. Their union, the International Brotherhood of
Teamsters, was revered and feared. And the romance of the road
was celebrated in 1970s films like “Convoy”. Then came the Motor
Carrier Act of 1980, which swept away restrictions on the number
of haulage firms, as well as price controls. Union membership
plunged and truckers’ livelihoods took a turn for the worse. Their
sacrifice benefited the American consumer, though. As Steve Vis-
celli, a sociologist and author of “The Big Rig”, says, cheaper haul-
age on the back of lower wages for drivers supported a boom in big-
box retailing that has transformed commerce ever since.
Today trucking is once again caught in an epochal upheaval
that is also reshaping the retail industry. The main cause is online
shopping, which is reducing long-haul delivery of containers from
port to Main Street, and speeding up that of smaller packages from
warehouses operated by retailers like Amazon and Walmart in
America to consumers’ doorsteps. In addition, the experience of
covid-19 is leading to a rethink of supply chains, which McKinsey,
a consultancy, says may bring manufacturing closer to home and
increase demand for road haulage. And as one of the world’s most
fragmented industries, trucking is under pressure to become
leaner, cleaner and more automated. The tech world is abuzz with
efforts to disrupt it. Truckers, enjoying a rare moment of acclaim
for their front-line work in the pandemic, are also on the front line
of forces such as electrification and autonomous driving which,
though overloaded with hype, could reshape their business.
This upheaval has only just begun to attract attention, despite
the industry’s size and the fact almost every product travels by lor-
ry. It often gets short shrift. Few would guess, for instance, that inAmerica road-freight revenues are almost $800bn, about the same
size as the world’s airline industry. In America and Europe there
are 3.5m and about 3m lorry drivers, respectively, making trucking
a jobs juggernaut. Yet it is so splintered that it is easy to overlook.
China, for instance, has an estimated 8m trucking firms, most of
which are one-man shops. America has almost 900,000, 96% of
which own fewer than 20 lorries, according to the American Truck-
ing Associations (ata). In long-haul especially, this fragmentation
comes at a high economic cost. The biggest 25 full-trailer (or
“truckload”) freight firms in America, led by companies such as
J.B. Hunt, account for less than a tenth of industry revenue. They
are the most efficient, pay decent wages and are trundling through
the pandemic with tolerable results. But the small fry producing
the remaining 90% of revenues are in the slow lane. For about a
third of the time they are on the road cargo-less—and drivers make
no money. The pandemic is making their fortunes even worse.
Change is clearest in the short-haul segment, most recognis-
able in the fleets of delivery vehicles operated by logistics giants
such as ups, which have benefited from surging demand from
locked-down shoppers, and increased profits despite the extra
cost of door-to-door deliveries. Digitisation is helping improve ef-
ficiency, too. Uber Freight, the ride-hailing giant’s shipping arm, is
developing a brokerage app to match carriers with shippers. In
China, Full Truck Alliance, a startup backed by SoftBank, a Japa-
nese technology group, is said to have a similar business model. E-
trucks are on the horizon, albeit bedecked with bubblelike hoopla.
The wild stockmarket debut of Nikola, a startup that plans to lease
vehicles powered by hydrogen fuel cells, makes Tesla (which
wants to start making a massive “semi” e-truck in Texas) look like a
boring investment. At some times recently Nikola, which has yet
to produce, let alone sell, a single vehicle, has been worth more
than Fiat Chrysler. At least the histrionics have drawn attention to
plans by more sober American truck- and engine-makers like pac-
carand Cummins to manufacture e-vehicles. Amazon has a $5bn
order with Rivian, a startup, for 100,000 electric vans.
The biggest force of disruption is autonomous driving, which
some fear could hit trucking like a neutron bomb, killing jobs that
account for as much as 40% of freight costs. “Driver-assist” tech-
nology such as adaptive cruise control, which adjusts a lorry’s
speed to keep a safe distance from vehicles in front, is already a re-
ality. Bob Costello of the ata says that the use of autopilot with a
driver on board could be common within five years. TuSimple, a
startup based in California and China, last month announced a
partnership with Navistar, a truckmaker, to build semi-articulated
robot trucks by 2024.Right lane exits
The spectre of platoons of driverless lorries barrelling down high-
ways is probably some way off. Regulation for self-driving trucks is
non-existent. The powerful rail industry will fight tooth and nail
against a technology that imperils its future. Truckers, too, will
raise a stink if they feel they have no prospects. Driverless cabs will
not be here for decades, says Mr Costello.
One day they will come, though. The benefits of autonomous
and electric trucking may be too powerful to resist, says John Mur-
nane of McKinsey. In the meantime expect a further split in the
trucking industry, with the best-capitalised firms in the fast lane
and the also-rans headed for the off-ramp. For truckers, even less
of the romance of the open road will remain. But as journeys short-
en, at least they will sleep in the cab less often. 7Schumpeter Dangerous curves ahead
The trucking industry is in the midst of upheaval—and hype