In this episode, we sit down with Volvo to discuss autonomous trucking including the use cases, progress towards a fully autonomous truck, and the partnership between DHL Supply Chain and Volvo.
Special Guests:
In this episode, we sit down with Volvo to discuss autonomous trucking including the use cases, progress towards a fully autonomous truck, and the partnership between DHL Supply Chain and Volvo.
Special Guests:
Speaker 1 (00:09):
Welcome to All Business, no Boundaries, a collection of supply chain stories by DHL Supply Chain, the North American leader in contract logistics. I'm your host Will Heywood. This is a place for in-depth discussions on the supply chain, challenges keeping you up at night. We're breaking beyond the boundaries that are limiting your supply chain. Today's episode is full speed ahead, breaking Barriers to Autonomous Trucking with Volvo. Our guests are Sasko Cuklev head of On-Road Solutions at Volvo Autonomous Solutions. And Jim Monkmeyer, president of transportation at DHL Supply Chain. Let's dive in. Okay gentlemen, we're in our headquarter building in Westerville, Ohio. I think this is the first episode we've done here and so it's nice to be face to face and it's nice SCO that you flew all the way from Gothenburg to join us. That's also a first for the podcast. So to start, what I'd like to do is just give you an opportunity to introduce yourself and your company and your role there and a little bit of your background. So we'll start with you and then onto you. Jim.
Speaker 2 (01:13):
Thank you very much. Super nice to be here. Great. Very excited. We have had a couple of great days together with you. So Sasko my name. I'm heading up the on-Road Solutions organization within Volvo Autonomous Solutions and it is simplified the trucking part of Volvo Autonomous Solutions. So we can say that we have three main functions within Volvo Autonomous Solutions. So it is a technology development organization that is responsible for the development of the virtual driver you can say. And then it is two solutions organizations. So it's an off-road solutions organization focusing very much on the construction part you can say working tightly together with our Volvo construction equipment organization. And then it is an on-road solutions organization that I'm heading up, which is the trucking part. So tightly together with Volvo trucks and our responsibilities in a way, the whole value chain, you can say from a first customer contact, the contracting part, negotiation, implementation, operations, and then the technology organization is supporting us with the solutions for that.
Speaker 1 (02:25):
Got it. And how long have you been in your current
Speaker 2 (02:27):
Role? I've been in my current role since 1st of January, 2020. And that was when Volvo Autonomous Solutions was created. So by then at that time there was a decision taking within Volvo Group, within the Volvo group to focus even more on autonomous. So they created a separate business area solely focusing on autonomous and so it is both the development and the commercialization and selling of autonomous solutions. Prior to that I was part of the Volvo Trucks organization working with the same sort of topic. I've been working within the autonomous space since 2015. I've been within the Volvo group since 1994, so it's quite long time in different positions. Yeah. Good. It's a little bit about me.
Speaker 1 (03:17):
Good. Jim,
Speaker 3 (03:19):
Jim Monkmeyer, president of Transportation and LLP or Lead Logistics Partner services with DHL. My scope responsibility is North America for DHL supply chain and it includes our dedicated fleet operations from more of a leadership perspective as well as our lead logistics partner business well and our freight brokerage.
Speaker 1 (03:42):
So how did we get to today, Jim? Can you kind of give a backdrop on the partnership with Volvo, sort of where we started, where we are now and where we're headed?
Speaker 3 (03:53):
Sure. We've had a very long relationship with Volvo as you can imagine. DHL supply chain being the largest supply chain player globally and Volvo being one of the very largest heavy truck manufacturers around the world. We have been purchasing and leasing equipment from Volvo for many, many years, thousands and thousands of vehicles. More recently we have engaged in this opportunity with autonomous trucks. We have been looking at the industry for some time and when we found out that Volvo was planning to get into the space and targeting North America first, we were very excited to get involved with them.
Speaker 1 (04:39):
Good. So how did it come to you?
Speaker 2 (04:42):
Yeah, I mean we early said that we are not doing this for the sake of technology. We want to look into what problems are there out there and how can we solve them. And the best way to get there is to work tightly together with our customers. So we said earlier that let's identify what we call our key customers, a couple of them, a handful, engage with them and sort of build the solution jointly together with them, go into the transformation together with them. And when we talked about who our key customers can be, DHL was an obvious choice based on, I mean our long relationship. We have worked together before in innovation project. I think we share a lot of the values. So for us it was a natural to initiate the dialogue with DHL regarding this. Then I would say when we had the first meeting you, Jim, were there, Jason and a couple from your team, it felt like we really clicked in the way we would like to approach the area and the way forward to get to where we are aiming.
Speaker 1 (05:58):
So there's a lot of industry hype and supply chain period these days, but I would say autonomous trucking is probably number one. Can you guys talk a little bit about that click and what were the common objectives that you sort of started out with? How do you make this concrete? How do you make this an actual real thing and not just a technology experiment or a cool thing to do?
Speaker 3 (06:24):
Well, I would say a couple of things that we focused on early on or noticed with the relationship is of course Volvos has a history of being focused on safety and when you think about autonomous trucks moving down the road, safety has really got to be job one. And Volvo, they invented the three point seatbelt quite some time ago. They had a top safety ratings for many, many decades. And I think the safety is obviously extremely important to us as well at DHL with the trucks that we do run on the roads today. It's a huge focus and I think that it's a differentiator for Volvo and that was very important to us. Second thing you mentioned at Sesco briefly, but innovation, we're in this market. We know that there won't be a lot of these autonomous vehicles running on the road for some time, but we want to be there when they are available because we see that as a competitive advantage with this product. And we get into that I think a little bit more as we talk, but both Volvo and DHL want to be the innovation leaders I think in the space.
Speaker 1 (07:41):
So Sasco from Volvo's perspective, where are we on the sort of timeline here? Are we 10 years out from seeing some of these solutions actually live in a production environment? Are we five years or 20 years?
Speaker 2 (07:57):
That's the timing question is the million dollar question and I will not go in and say that it'll be at that date. We have an ambition to be among the first out. We believe that we will get there by partnering up with the industry leaders like DHL, and that's why we have done that. And we are also working with partners on the technology side and in this case for what we're aiming in here and talking about here, which is the hub tub highway segment in us, we have partnered up with one of the tech suppliers that we autonomous driving tech suppliers that we believe are leading, which is Aurora. And I think in sort of creating those partnerships of industry leading players, that is the way we will come to being among the first out then exactly when that will happen. We have a plan with in a way a phased approach where we will start with the operating on specific lanes first with a safety driver. Then when we feel ready, we will remove the safety driver exactly when that will happen. Let's see. But we have an ambition to be among the first and we definitely feel that we are on the right track to be that
Speaker 1 (09:12):
Good. So to take that a little further, so when we talked earlier, you mentioned that there are different applications for the trucks and you just mentioned certain lanes as sort of a first step, but what does that evolution look like?
Speaker 2 (09:31):
Yeah, we have talked about, first of all, we see autonomous as we say that we see it as a compliment to the transport system we have today. So it's not like from a specific point in time, we'll not see a manually driven truck on our roads. They will still be there. All the trends are showing that the transport need will increase and that's why we need to come up with new solutions to cope with that. And here I think autonomous solutions will be one of those solutions. So it'll be a compliment. We believe it will start on in specific applications, specific routes. So it's not anywhere, anytime everywhere. And we are talking right now about specific lanes where we are implementing transfer hubs close to the distribution centers so that we will have autonomous solutions between those hubs as a first step. Then of course in a longer perspective you can, but let's see how that will evolve. You can think of that we can increase the complexity and be able to go from the distribution center to distribution center and so on and so on. But let's not in the same time look too far ahead, let's solve this problem when we have done that and we'll see how the technology will mature and evolve, then we can take on next step. Got it. That is where we are right now.
Speaker 3 (10:58):
Of course we have a driver shortage here. We had it before Covid. I know there's still a few naysayers out there, but I think the discussions are more about how severe the driver shortage is. And so you see different numbers published, but the fact that we have turnover of nearly a hundred percent with our trucking operations in this country tells you that people are able to jump from job to job, take the next sign on bonus because there just aren't enough drivers to go around. The average age of the drivers is right around 50, and a lot of those drivers are going to continue to retire and we're going to have more needs for freight movement. And so if the autonomous piece can help with some of the long haul freight movements, which tend to be the least desirable for the drivers, that will at least help us stem off the growing concern of driver shortage.
Speaker 2 (11:54):
Fully agree.
Speaker 1 (12:05):
Now for a short break at DHL supply chain, we're all in on continuous innovation that accelerates digitalization of the end-to-end supply chain, dhl, supply chain, all innovation, no boundaries. Learn more at dhl.com/all innovation, no boundaries. Now back to the episode. Yeah, Jim, you've been in one of these units haven't you? Or a test one? Yeah. Can you describe what that's like? Yeah,
Speaker 3 (12:37):
I was quite surprised at how safe I felt. We drove both times with a couple of different vehicles in different cities. We drove for an hour and they have a safety driver there, which legally is required at this point with their hands near the steering wheel, their foot near the brake and never in the hour drives on and off of very busy freeways turning at stoplights and intersections in dense city traffic. Never was there anything close to an incident. And so my sense is the technology is almost there. I know we need to go through more testing and put some more millions of miles of safe driving behind us, but some of the bigger challenges I think are going to be things like just the acceptance of other drivers on the road, the legislation to ensure that we don't have every state having their own set of rules, which makes it very difficult for the autonomous companies to start to build a network.
Speaker 1 (13:46):
So what was your top speed when you were in there?
Speaker 3 (13:50):
We were probably doing 60. It feels like you're kind of in this gentle giant vehicle because everything is almost, feels a little bit like slow motion. Again, felt very safe merging into traffic and passing slower vehicles when necessary, but they tend to go a little bit on the slow side.
Speaker 1 (14:15):
Yeah, yeah, yeah. Gotcha. Can
Speaker 2 (14:16):
I add on to that? Yeah, I mean I agree with you Jim. We are getting closer from a technology perspective, but still there is work to do. I mean we are not ready and you mentioned the safety aspect as one. I mean that is utmost important topic we have here. So we need to have a safe solution. Then also on the truck side, I think what we are focusing very much on is to have an industrialized product that is ready for commercialization. So it's not only about taking a truck existing today or that you get from the factory today and then add on a driver. It is more than that. So we are working very much in getting the truck, sort of getting the redundant systems on our key systems. We talk about having an autonomy enabled truck, so redundancy, we want to have it industrialized, we want to get it out from our factory.
(15:21):
We want to have a highly integrated solution driver and truck where we work tightly together on how that integration should be. So we work extremely tight together with Aurora, our tech partner, about how that integration should be, and then the truck should come out from our factory, in this case in New River Valley with an autonomy enabled truck integrated with the driver. So it's more or less to plug in the software and install it on the specific lane that we're aiming at. So it is a lot of work. It is not that simple as we hear from sometimes just give us a truck and then we will do the rest. We will mount the sensors and develop the software. I think you have to integrate them and make sure that the integration is safe and there we have some more work to do.
Speaker 3 (16:09):
When I was over in Sweden had the opportunity to tour the facility where they're making these vehicles. That's what finally dawned on me the difference. You see the tech companies and we're working with them as well, but the tech companies are taking a finished vehicle and then trying to add the technology. Whereas Volvo, you could see in the operation that they're building this all the different elements that are required, building essentially holistic tractor that's focused on autonomy. And in addition to that, I would say that we had one of these companies that we were working with very closely, a tech company, and suddenly they got out of the business. They were acquired by another company that wanted to focus on autonomous cars. And so we were kind of starting over from square one and that's why we're working with multiple partners. But we also know that Volvo's going to be there, the end,
Speaker 1 (17:06):
They're staying in the truck business,
Speaker 3 (17:07):
They're going to stay in the truck
Speaker 1 (17:08):
Business and everything we're talking about here is diesel powered. Right.
Speaker 2 (17:13):
We are starting with that. Yes.
Speaker 1 (17:14):
Yeah. So how does Volvo think about, because electrification is another big trend on the horizon, how does electrification play in this? Does it at all, is that a kind of separate initiative within the company?
Speaker 2 (17:31):
I would say this, first of all, the electro mobility and sustainability journey is top prioritized within the Volvo group. I believe that we are one of the leading ones when it comes to having electrical trucks and our offering when it comes to electrical trucks. So there we have very ambitious targets, very ambitious plans, and I think we are, if not leading, one of the leading when it comes to that, how we connect that to autonomous. We have said that we will of course look into what plans we have from our truck point of view and try to mirror that into what we are doing and in autonomous. So we definitely foresee that going forward that we should integrate that. But on the other hand, we have said, let's start with what we have today, make sure to integrate the Aurora driver in this case with the trucks we have today. We work on the autonomy enabled truck, which is a diesel truck today. But then going forward, of course we're looking into more sustainable solutions to make them autonomous as well.
Speaker 1 (18:38):
Yeah, well, don't get me wrong, I mean the autonomous piece is a pretty big, pretty big stretch in and of itself.
Speaker 3 (18:46):
And we're working with Volvo on electric vehicles as well, kind of on an independent path, but we've ordered 10 semis, class eight heavy trucks from Volvo this year and we plan to order another 40 next year. And to your point, sesco, you've been the only ones that have been able to work with the timeline that we're on to obtain those vehicles and have enough range, 250 miles plus of range to be able to run the routes that we need to run in the us which of course is a big country
Speaker 2 (19:23):
And I can just hub to hub is one of the segments we're working on. We are focusing on two others, so it's mining and ports and logistics centers. So we are right now in an implementation in the port of Gutenburg. That solution is with an electrical truck and that is we have electrical solutions sort of an offer today for that sort of application. We are also having a haul mini hauler called the Tara solution, which is fully autonomous, fully electrical that we are implementing today. So we are already today working on autonomous and electromobility jointly. Then when we will have an offering for the hub to hub, more long hauling, of course, we'll try to incorporate that into the autonomous
Speaker 1 (20:11):
Part as well. Right. And Jim, the trucks we were ordering, when do you expect to see those on the road?
Speaker 3 (20:17):
We'll get the first set in the first quarter
Speaker 1 (20:19):
Next year. Yeah. Okay. So soon. Good. So I'd like both of your perspectives on how these partnerships work. So obviously there's a commercial relationship here, but as you work with DHL, SCO and Jim, you with Volvo, sort of what's the give and take, what are your goals working with DHL and what are your goals working with Volvo?
Speaker 2 (20:44):
First of all, I think we talk about a partner, so it is not a customer in that sense. Of course, in the end we'll come to some kind of agreement that we should do this and we will have to negotiate price and so on, but it is a partnership. So that is the first thing we were aiming for having a partnership and not this customer supplier relationship, which I don't believe in at this stage where we are in right now and here I definitely think that we have that where it is very open, we share, we in a way build a solution together. So with your expertise you have with our expertise that we have, and if we then combine as well the different tech partners we are working with, with their expertise, I think we have all the ingredients to create the solution. So I see it very much as creating new ecosystems or partnerships to figure out how the future transport system will look like.
Speaker 3 (21:45):
Yeah, I agree with that. I think we can really talk openly, whereas I think with the tech providers, it's a bit more of a traditional customer supplier relationship, and Volvo has a different perspective, has spoken I think in depth with a lot of the different tech partners out there, tech providers out there. So I think we're learning a lot more at a deeper level about where this industry's going and who the main players are going to be. Yeah,
Speaker 1 (22:23):
Sure, sure. I want to jump back to the drivers. So if I was talking to a driver or an average driver, what would they say about autonomous trucks? Would they be worried about it? Would they be excited about it? How would it change what their workday looks like, work life looks like?
Speaker 3 (22:46):
I think if they aren't paying attention to the industry in depth, because it is complicated to understand exactly what's happening in the market, what the impact will be, you might have an initial concern. I think the reality is though, that the volume of trucking, the need for capacity out there is so great and growing. While we see a little bit of a lull right now in 2022, it's going to continue to grow over time and the autonomous trucks aren't going to have a significant impact for the next several years. What is going to happen over time is that there's going to be a shift because of this capability that a lot of the longer haul trucking operations that are the least desirable for the drivers are the ones that are going to be the most appropriate for autonomous. The long distances. If you think about the US market driving across the country or the Canadian market, you have long distances, drivers get tired.
(23:54):
It can be as much as a two week trip to get across the country, the continent, and then come back, find other freight and come back. These are the least desirable routes. And so by applying autonomous in some capacity over time, what we'll see is that the long haul driver probably will continue to grow for some time, but the regional need will grow faster because these autonomous trucks need to hand off that trailer to a driver to make that final mile pickup or delivery at either end. So you'll see those local jobs increase, and those are the ones where the drivers get home at night and that will open up the ability, we're trying to find women drivers. We're looking at the 18 to 21 year olds now that we've got legislation to allow for that, and we're looking at every angle that we can to get more drivers into the market. The electric vehicles will help. They're cleaner, they're a little more fun to drive, and if autonomy means that there'll be more regional jobs, I think that's a good thing.
Speaker 2 (25:05):
No, I agree. I agree. I understand that they have questions about it, but again, this is not like at one point in time, all the manually drilling trucks will be gone. It'll be for specific applications, specific lanes. It is the long hauling. We have a shortage of drivers today. We believe that the capacity need will sort of increase. So I don't think it'll be as big problem, the big problem as the drivers see. Definitely not.
Speaker 1 (25:44):
Okay, good. Good. The last thing I want to touch on is just the markets. We're here in the us you guys are a global company, so how do you see, are certain markets going to be ahead of others or is this going to sort of roll out uniformly across the globe?
Speaker 2 (26:05):
As I said, we are focusing on a couple of segments, and for those segments, we have said that we will start in different markets. So when it comes to hub to hub, the highway segment, we believe that that will kick off first in us. It's a huge sort of opportunity for that segment here in US, and that's why we start here. Then we have already today, I mean, for our trucking business, US is a big, huge, important market. We have a presence here with our head office in Greensboro, North Carolina. So for us, it's a natural step to go for us for the hub to hub highway segments.
Speaker 1 (26:47):
And then Jim, with your counterparts and other parts of DHL, are you working the same Volvo partnership with them as well?
Speaker 3 (26:58):
Yeah, we're ready to go as soon as the, it's going to depend on the market, but I think Europe and the UK are good opportunities that we see from DHL's perspective. And I do sit on the global board for transport, and there's a lot of people watching the example here in the us. Yeah.
Speaker 1 (27:22):
Good, good. Well, that's exciting, exciting times. Appreciate you both being here, particularly you for making the long journey. Thank you for having me, and we'll look to check back in with you. You didn't make a firm prediction, but maybe next time, maybe next time, we can pin you down on that. If you enjoyed the conversation today, please share it with a friend and rate us on Apple Podcasts and Spotify. Learn more about how we're leading the way in innovation for our customers at dhl.com/allin and follow us on LinkedIn to get the latest supply chain updates. We'll see you next time.