Self-Driving "Fully Automated" Vehicles on German Autobahn; Supply Chain Math; Uber and Khan Academy

Don't worry taxi drivers, this is only a test: Self-driving cars to hit German Autobahn.

A section of the A9 Autobahn in Bavaria will be converted into a test route for self-driving cars, Transport Minister Alexander Dobrindt said on Monday.

"We will set up a test stretch on the A9 Autobahn" Dobrindt told the Frankfurter Allgemeine Zeitung in an interview, adding that the first steps towards the "Digital Testing Ground Autobahn" project would be taken this year.

Under Dobrindt's plan, the upgraded road will offer infrastructure allowing the cars to communicate with the road and with other vehicles around them.

"Cars with assisted driving and later fully-automated cars will be able to drive there", Dobrindt said.

"The German car industry will also be able to be world leaders in digital cars".

He added that "German manufacturers won't rely on Google" - the current leader in the field – to produce their own self-driving vehicles.

Cars, Trucks, Taxis

People will not give up their cars. But who needs truck drivers? And who needs taxi drivers?

I suspect trucking will be the first industry to go mostly driverless.

The Last Mile

Many claim trucks cannot load or unload themselves. Others argue trucks cannot maneuver around cities. Let's assume those objections are true whether they are or not.

Here's the simple solution as I have proposed before: Nothing stops a trucking company from having distribution facilities right off an interstate near major cities where local drivers deliver the goods the last mile.

Why can't all but the last few miles be driverless even if a skilled driver is needed some step of the way for safety reasons?

Supply Chain Math

SupplyChain247 reports Fuel Dip “Savings” Offset By Surge in Costs for Drivers, Equipment, and Healthcare.

Shippers negotiating with carriers over 2015 freight rates ought not be swayed by the dramatic lowering of diesel fuel costs into believing their carriers’ overall cost of doing business are lessening. In fact, they are rising.

A new report by the American Transportation Research Institute (ATRI), an arm of the American Trucking Associations, confirms what most trucking executives have been saying publicly for years: trucking costs are rising, with some components increasing sharply.

“The cost of finding, recruiting, training and keeping drivers is steadily rising,” Shevell says. “Equipment costs are through the roof. A new Class 8 truck costs about $135,000. Tires, insurance, terminal costs have all risen substantially. Plus, we’re hit with rising health care costs for our people.”

The ATRI study, “Analysis of the Operational Costs of Trucking,” has been tracking truckers’ costs annually since 2008. It is derived directly from carriers’ financial and operational data and provides a vital benchmarking tool for both carriers and shippers.

It found the average marginal cost per mile was $1.68 per mile in 2013. That was a 3 percent increase over the previous year. That compared with $1.45 per mile in 2009, the start of the recession for the trucking industry.

The single biggest cost driver was drivers, according to ATRI. Average driver wage per mile was 44 cents in 2013, up from 42 cents the previous year. The average truck driver benefit cost rose a penny to 13 cents per mile, according to the study.

That was largely caused by driver pay and benefit increases necessary to attract and retain drivers in the current tight labor market for truck drivers, the study concluded.

All Commercial Driving Will Soon Be Local

Supply chain reported a shortage of 30,000 drivers.

In a few years, I suggest there is going to be little need for long-haul drivers at all. Nearly all commercial driving will be local.

What About Uber?

The taxi driving company Uber has been banned in many places. I started accumulating all sorts of links many months ago. I collected well over 20. Here are a few of them.

• Germany: Car sharing service Uber banned in Germany
• France: France Bans Uber As Taxi Drivers Stage Protest In Paris
• New York City: Uber faces limited suspension in NYC for noncompliance
• Belgium: Uber prospers in Belgian capital despite ban
• Everywhere: Uber Is Apparently Illegal Almost Everywhere

In spite of the fact Uber is banned nearly everywhere, the company survives!

Why?

Because Uber is what the masses want.

Rise of the Disruption Economy

Here's a dated article (from October 2012), but it's also timeless in its message: Rise of the Disruption Economy.

By now, we’ve gotten pretty used to the disruption that the rise of the social web has created in the media industry, where it has upended traditional business models and allowed creators of content to connect directly with their audience. But that same wave of socially-driven disruption is now moving through the rest of the economy too.

Entrenched industries and regulators are fighting hard.

Coursera, which offers online-education courses, was recently hit with a regulatory freeze in Minnesota, because the rules for education-related businesses in that state require that they jump through a series of hoops, including filing for registration (and paying fees). The state later modified its views on the service after an uproar about these restrictions, but it is unlikely to be the only roadblock the company runs into as it tries to expand.

Airbnb is in a similar position to the hotel industry: the application of social features — which allow owners of apartments, houses, trailers and even treehouses to easily find and connect with potential short-term renters — has changed the balance of power to the point where someone with a spare room has the ability to create a peer-powered business with virtually no overhead. That’s clearly a threat to the hotel business, which is using whatever political and regulatory connections it can to put limits on the company, even as it grows larger.

Uber, the car-scheduling service, has been another prominent participant in this back-and-forth struggle with regulations and an entrenched industry — virtually everywhere the company has set up shop, from San Francisco to New York, it has run into a regulatory morass that is designed to protect the existing taxi and livery industry as much as it is intended to protect consumers.

The service has had problems in San Francisco as well, and is likely to run into similar issues anywhere there is an entrenched taxi industry that is trying to protect its historic market power and profit margins. In New York, for example, taxi “medallions” — which allow an owner to operate a cab business there — sell for $1 million each. That kind of industry isn’t going to appreciate a disruptor like Uber, and in New York in particular the taxi business is a big political player.

Khan Academy

Disruptors are universally despised by bureaucrats and existing businesses.

Sal Khan at the Khan Academy is another one of those disruptors. Public union educators do not like his model of free education.

Click on the preceding link to check out free math classes for any grade you want from "early math" to 3rd grade through 8th grade.

Geometry, trig, calculus, differential equations? Yep, you bet. Science has 41 study topics. The list  goes on and on.

Sal Khan at TED



Please play at least the first couple minutes of the above video. Here's a link if it does not play: Sal Khan at TED.

Progress Cannot Be Stopped

No doubt the Fed (central bankers) are deeply disturbed by all of this price-deflationary progress, as are bureaucrats in general.

• Union teachers do not want to see online courses take hold or get accredited.
• Taxi drivers fight Uber.
• New York City wants to keep selling taxi medallions for $1,000,000.
• Hotels fight Airbnb.

It's the biggest protection racket in the world. But progress cannot be stopped.

Taxi Drivers? Who Need Em?

Interestingly, I think even Uber's model will soon give way for the simple reason all commercial drivers will quickly be obsolete.

Uber's model, if it survives, may look something like this.

• Customer pages a cab on his cell phone.
• Cab locates customer via cell phone GPS.
• Customer receives a code back and approximate wait time.
• Cell phone sends signal to open door when cab arrives.

For hot locations such as airports where cabs are already waiting, a cab pulls up and the cab door opens right up with simple tap of a button. A conductor may be needed to oversee things.

Commercial Drivers? Why?

Communication dispatch with driverless vehicles will eventually handle most needs.

The above may take a few years longer than trucks, just as fiber or wireless to homes (the last mile) was once the telecommunication problem.

The Key

Disruptive technology is advancing so fast, that bureaucrats cannot keep up with it! And that's a good thing. The bad thing is they try.

Additional Reading on Driverless Vehicles

• January 21, 2015: Job Site of the Future: Unmanned Bulldozers and Drones for Routine Construction
• July 31, 2014: Driverless Cars on UK Public Streets Starting January; Transforming Personal Mobility; Taxi and Truck-Drivers Targeted
• June 23, 2014: Robot Truck Convoy Tests in Nevada; Driverless Trucks Before Cars, and Before the End of the Decade.
• May 25, 2014: Driverless Cars Legally Hit Roads as California Issues Licenses; The Last Mile
• August 05, 2013: Message to 5.7 Million Truck Drivers "No Drivers Needed" Your Job is About to Vanish; Time Marches On, Fed Resistance is Futile

Additional Reading on Free Education

• January 24, 2015: Education Moment: The Man with 26 Million Students
• March 29, 2014: Teaching Revolution: Online, Accredited, Free; Start Learning Now!
• January 27, 2014: New York Times - Salman Khan Turned Family Tutoring Into Khan Academy
• September 03, 2013: Future of Education is At Hand: Online, Accredited, Affordable, Useful

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com