On May 19th, The Energy Security Leadership Council of SAFE (Securing America’s Future Energy) released “A National Strategy For Energy Security: The Innovation Revolution.” Though SAFE’s focus is making America more energy independent, the recommendations and insights contained in their national strategy have great implications for the future of freight transport, supply chains, and logistic costs. Fred Smith, President & CEO of FedEx, is one of the Council co-chairs. He argues that we are at the beginning of a transportation innovation revolution including autonomous vehicles, driver assist technologies, internet of things, big data, deep machine learning, alternative fuels, electrification, and new efficiencies in both vehicles and systems. He also argues that perhaps the biggest threat to achieving the promise of these technologies, and the resultant benefits to safety, environment, life style, mobility, and logistics costs are government regulations designed for the past.
In the 1970’s, logistics cost as a percentage of GDP was about 16%. Federal officials recognized that a system of federal regulation based on railroad regulation of the 1880’s wouldn’t support the needs of our economy in an increasingly globalized and competitive world where computerization was making all sorts of things possible. During the 1970’s and continuing into the 1980’s, trucks, trains, and cargo planes were “deregulated.” Railroads returning to profitability, the growth of the air cargo business took off, and a more competitive trucking industry spawning thousands of new business entrants. As a result, today’s US logistics cost has been cut in half to approximately 8% compared to the pre-deregulation 16%. We are also safer, cleaner, and less dependent on foreign oil.
In the words of Yogi Berra, “It’s déjà vu all over again.” Much as significant regulatory changes were needed 40 years ago, they are needed again. Without them we risk slowing the adoption of advanced vehicle technologies including drones, droids, self-driving vehicles and connected vehicles including platooned trucks. A framework that allows performance based vehicle (PBV) standards for trucks, similar to those developed in Australia, is also required to allow improvements in truck efficiency, safety, and environmental performance.
It is hard to recognize the beginning of an innovation revolution, particularly with all the technological changes that have occurred in the nearly 40 years since US transportation deregulation. I recommend you take a look at SAFE’s recommendations (http://secureenergy.org/). It will make you a believer and perhaps even a champion for regulatory change. Our logistics has gone from 16% to 8%, much of that decrease because our leaders responded to an intersection of technology and regulation. Today’s transportation innovation is a revolution we can’t afford to squander but it will require the entire logistics community to advocate for changes in regulations that were written for other technologies in another time.