{"id":24962,"date":"2017-11-15T19:32:36","date_gmt":"2017-11-16T00:32:36","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/from-garbage-to-mining-volvo-gears-up-for-growth-in-autonomous-trucking\/"},"modified":"2017-11-15T19:32:36","modified_gmt":"2017-11-16T00:32:36","slug":"from-garbage-to-mining-volvo-gears-up-for-growth-in-autonomous-trucking","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/from-garbage-to-mining-volvo-gears-up-for-growth-in-autonomous-trucking\/","title":{"rendered":"From Garbage to Mining \u2013 Volvo Gears Up for Growth in Autonomous Trucking"},"content":{"rendered":"

Going driverless is necessitated by changing economic and environmental conditions<\/strong><\/p>\n

Several macroeconomic trends call for increasing optimization in the truck industry in Europe. In its White Paper on Transport published in 2011, the European Commission set itself an aggressive target to reduce greenhouse gas emissions by 20% from 2008 levels by 2030 (see Exhibit 1 for breakdown of GHG emissions). [1] In addition, congestion costs in European urban areas are projected to increase by 50% by 2050 and transport will continue to depend primarily on oil, with a little over 10% coming from renewable energy sources. [2] Stagnant economic growth in Europe has intensified competition among manufacturers and has shifted management\u2019s focus to profitability. To reduce their carbon footprint and to take cost out of the supply chain, truck OEMs Volvo, Daimler and MAN have begun testing autonomous driving in controlled environments to minimize fuel consumption and decrease road congestion. The next step is to enter public roads.<\/p>\n

\"\"<\/a>
Exhibit 1: Greenhouse gas emissions, analysis by source sector, EU-28, 1990 and 2015. Source: Eurostat<\/em><\/figcaption><\/figure>\n

Volvo\u2019s \u201cplatoons\u201d are gradually scaling up<\/strong><\/p>\n

European institutions have been favorable of truck platooning, a driving method which allows WiFi-connected vehicles to drive cooperatively at less than 1 second apart at a constant speed (see Exhibit 2). [3] In April 2016, the Dutch government organized the European Platooning Challenge, during which a dozen trucks, three of which belonged to Volvo, traveled over 1,000 km from Gothenburg, Sweden to Rotterdam, Netherlands. [4] Automated driving has the potential to impact the entire mobility system by reducing fuel consumption by an estimated 4% in the leading vehicle and 10% in the following vehicle, respectively. [5] Other benefits include improving labor productivity, which currently accounts for 35% to 45% of operating costs of road freight in Europe, and eliminating 90% of all accidents that are human-induced. [6]<\/p>\n

 <\/p>\n

\"\"<\/a>
Exhibit 2: Two-truck platoon. Source: Peloton<\/em><\/figcaption><\/figure>\n

In the context of mining, where Volvo Group was the first to test driverless truck technology, additional opportunities arise from improved safety as the truck monitors its surroundings and adjusts its trajectory in real time to avoid both fixed and moving objects. [7] Volvo was among the first investors in US startup Peloton, a developer of platooning systems, [8] which demonstrates the company\u2019s long-term commitment to commercializing the technology beyond controlled experiments.<\/p>\n

Volvo should address a multitude of parties in the supply chain to expand their automated convoys<\/strong><\/p>\n

Platooning impacts several groups of stakeholders in the supply chain \u2013 developers (OEMs), users (carriers), policy-makers (governments), and regulators (EU). In addition to management\u2019s current plans, to succeed in the race for autonomous trucking, Volvo should consider each of the above players, as they scale the program.<\/p>\n

\"\"<\/a><\/p>\n

Exhibit 3: Value chain overview. Source: TNO White Paper on Truck Platooning<\/em><\/p>\n

As competitors are also testing driverless truck technology, Volvo should be willing to collaborate with other OEMs to design solutions that enable multi-brand platoons as carriers often source from multiple manufacturers and have significant bargaining power in the value chain. This will allow for more testing and will fuel the growth of the initiative as having lobbying power in front of governments via multiple partnerships along the supply chain will be critical to the endeavor. Volvo\u2019s first-mover advantage in this instance will be extremely beneficial in capturing market share initially, in the long-run however, reluctance to partner may backfire as carriers negotiate favorable deals with other OEMs.<\/p>\n

While governments favor technological advances in the field of transportation due to their environmental benefits and more efficient use of road infrastructure, they are also very cautious of how driverless technologies may impact the labor market. In its current state, the technology reduces truck idle time as the driver of the following vehicle may rest while the leading vehicle drives. [9] Man-hour optimization, however, may evolve to a point where drivers are not needed. To manage this tension with governments without restricting innovation, Volvo should explore the impact driverless technology will have on the job market for drivers and proactively re-train employees that risk being displaced to assume other functions within or outside the organization. This will alleviate regulators\u2019 concerns and seamlessly move the project forward.<\/p>\n

Several other questions that platooning poses have to do with potential widespread adoption of the technology outside the first EU participants. Should there be a uniform legislation that governs driverless technologies in the context of transportation policies across European borders such as limits on minimum following distance? What arrangements does the EU need to lobby for in countries outside the zone so that platoons can pass through them? In addition to drivers, which functions will become obsolete and what roles can these employees assume in the world of autonomous trucks?<\/p>\n

(word count: 737)<\/p>\n

Resources<\/p>\n

[1] European Commission, \u201cWhite Paper on Transport – Roadmap to a Single European Transport Area\u201d, March 2016, https:\/\/ec.europa.eu\/transport\/themes\/strategies\/2011_white_paper_en, accessed November 14, 2017.<\/p>\n

[2] European Environment Agency, \u201cTransport in Europe\u201d, June 2016, https:\/\/www.eea.europa.eu\/signals\/signals-2016\/articles\/transport-in-europe-key-facts-trends, accessed November 14, 2017.<\/p>\n

[3] Netherlands Organization for Applied Scientific Research, \u201cTruck Platooning; Driving the Future of Transportation\u201d, March 2015, https:\/\/www.tno.nl\/en\/about-tno\/news\/2015\/3\/truck-platooning-driving-the-future-of-transportation-tno-whitepaper\/, accessed November 14, 2017.<\/p>\n

[4] Joon Ian Wong for Quartz, \u201cA Fleet of Trucks Just Drove Themselves Across Europe\u201d, April 2016, https:\/\/qz.com\/656104\/a-fleet-of-trucks-just-drove-themselves-across-europe\/, accessed November 14, 2017.<\/p>\n

[5] Ontario Trucking Association, \u201cNACFE: Double Truck Platoon Can Reduce Fuel Consumption by 4-10%\u201d, September 2016, http:\/\/ontruck.org\/nacfe-double-truck-platoon-can-reduce-fuel-consumption-by-4-10\/, accessed November 14, 2017.<\/p>\n

[6] International Transport Forum, \u201cManaging the Transition to Driverless Road Freight Transport, 2017, https:\/\/www.itf-oecd.org\/sites\/default\/files\/docs\/managing-transition-driverless-road-freight-transport.pdf, accessed November 14, 2017.<\/p>\n

[7] Volvo Group Press Release, \u201cVolvo First in the World with Self-Driving Truck in Underground Mine, September 2016, http:\/\/www.volvogroup.com\/en-en\/news\/2016\/sep\/news-2297091.html, accessed November 14, 2017.<\/p>\n

[8] Peloton Press Release, \u201cPeloton Technology Secures $60M to Fuel Commercial Truck Industry Collaboration on the Road to Automation\u201d, April 2017, https:\/\/peloton-tech.com\/seriesb\/, accessed November 14, 2017.<\/p>\n

[10] Netherlands Organization for Applied Scientific Research, \u201cTruck Platooning; Driving the Future of Transportation\u201d, March 2015, https:\/\/www.tno.nl\/en\/about-tno\/news\/2015\/3\/truck-platooning-driving-the-future-of-transportation-tno-whitepaper\/, accessed November 14, 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

Volvo Group, the Swedish multinational manufacturing company, has been testing a multitude of driverless truck applications, ranging from urban waste management to transport flow optimization in underground mines, in hopes of becoming a forerunner in the autonomous trucking industry in Europe. <\/p>\n","protected":false},"author":10018,"featured_media":25098,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-24962","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","hck-taxonomy-industry-transportation"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nFrom Garbage to Mining \u2013 Volvo Gears Up for Growth in Autonomous Trucking - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/from-garbage-to-mining-volvo-gears-up-for-growth-in-autonomous-trucking\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"From Garbage to Mining \u2013 Volvo Gears Up for Growth in Autonomous Trucking - 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