Economic Boom From Faster and Cheaper Movement of Goods

There is some suggestive evidence that lowering the cost and barriers to trade and increasing the volume of trade will boost GDP. It is difficult to isolate cause and effects. Past major examples of reduced transportation times and lowering costs of movement of goods are Interstate and national highway systems and shipping containers. Shipping containers reduce the handling times in and out of ports and warehouses. Shipping containers increase efficiency and reduce costs. The highways enabled trucks to move faster compared to dirt roads or poorly connecting regional road systems. Understanding these huge benefits is important now because the world can get comparable or larger economic boosts from self-driving cars and automation at ports, warehouses and factories.

A vector autoregressive approach looked at container shipping volume and data across 135 countries suggests that trade is a determinant of economic growth, as a 1% increase in transported TEUs (shipping containers) will lead to an approximate 1.7% increase in GDP.

A researcher with the St Louis Federal Reserve believes that shipping container related innovation was a major part of world trade increased by ten times (adjusted for inflation) from 1970 to 2018.

The US build the Interstate highway system from 1947 to 1964. This enabled cars and trucks to increase the distance traveled in a day by as much as two times to four times compared to 1920. It was a 1.2 to 1.5 times benefit compared to the roads of 1945. The gross domestic product (GDP) grew at an annual compounded rate of 3.9 percent from 1947-1964. The transport of freight in the U.S. grew considerably during this time. There was also the post-war economic boom as military production and investment was redirected to the domestic economy. However, President Eisenhower said the Interstate was the single biggest contributor.

The Interstate has had a significant impact on U.S. productivity. It reduced travel times in rural areas, as much as twenty percent and, by as much as fifty percent in some urban locations. Its expansion helped companies keep their transportation costs relatively low, which, in turn, has decreased product costs and increased product availability.

Strategy and Analytics estimates that self-driving trucks could halve logistics costs by 2030. Halving logistics costs is like a global tax cut. If logistics are 4% of all costs now then this would be a 2% tax cut for all transactions.

Self-Driving Vehicle Potential

Self-driving trucks would be able to drive 23 hours per day instead of 8 hours for a human-driven vehicle. Longer-term as safety for self-driving is improved and all vehicles on some or all roads have exclusive self-driving or self-driving compatible vehicles then the speed of traffic could be safely increased to 150 miles per hour. The eventual future of safe high-speed self-driving would make every dedicated highway like high-speed rail. Any country could make the regulation and infrastructure adjustment and rapidly have a network of high-speed rail equivalent highway. The US could go from no high-speed rail equivalent system to 100,000 to 150,000 mile networks of high-speed self-driving trucks. This would be five times the size of China’s high-speed rail network. China might have about ten thousand high-speed rail cars. Converting or replacing all semi-trucks with self-driving semi-trucks would be fifty to hundreds of times the capacity of China’s high-speed rail system.

China will also be able to convert its larger fleet of large trucks to self-driving electric trucks.

Converting the world to self-driving electric trucks would eliminate about 10 million barrels per day of oil usage. It would be about 3-4 million barrels per day in China alone. This would also have a large air pollution reduction. Air pollution in China reduces China’s GDP by about 6% from environmental and health damage.

Ark Invest Analysis of Autonomous Electric Trucks

ARK expects autonomous electric trucks to reduce the cost of trucking from 12 cents per ton-mile to 3 cents during the next five to ten years. Initially, truck shipment revenues could contract from $180 billion as costs drop by roughly 75%. Longer-term, however, the ton-miles shipped by truck could double as autonomous electric platforms undercut rail and add $100 billion to revenues.

The combination of electric and autonomous technology will increase productivity and lower the costs of trucking enormously. According to ARK’s research, electric drivetrains will push shipping costs down from 12 cents to 10 cents per ton-mile. Autonomous technology should cut costs by another 7 cents to 3 cents.

Higher utilization rates and reduced labor are the two most important variables in lowering autonomous trucking costs. Astonishingly, in the US today the capacity utilization of trucks is below 20%. ARK estimates that the utilization of autonomous trucks will be four times higher, not only relieving drivers of grueling duties behind the wheel but also reducing labor costs significantly.

SOURCES -Ark Invest, Strategy and Analytics, WeForum, Dept of Transportation
Written By Brian Wang,

21 thoughts on “Economic Boom From Faster and Cheaper Movement of Goods”

  1. The abuse and being ignored that he gets on this site is actually better treatment than he'd get from anyone who actually knows him in real life.

  2. What if shippers sorted packages and made them ready for delivery at major container ports, but instead of loading them up on hulking, polluting large trucks to drive all over the city, they were micro-sorted onto 3-wheel electric micro-vehicles, e.g. like the Acrimoto Deliverator, managed by Hyercar:
    This is just one example of a small, efficient vehicle that can be perpendicularly parked and unloaded directly onto New York City's busy sidewalks for final delivery to buildings.  This would end sprawling, time-consuming, disruptive, sidewalk-monopolizing package sorting at
    multiple destinations on complicated traffic-clogged streets – often with clogged with those very trucks delivering online purchases!

  3. This last mile delivery system – which I'll call Port to Portal for now – would make deliveries faster, more efficient, and clear the streets of what are probably the fastest growing class of vehicles: trucks delivering online purchases.  The pandemic accelerated the growth of the eCommerce sector, but the trend was firmly established before that.  This method of delivery might even benefit small shops that don't need huge deliveries of specific items at one time.A system like Hyercar would employ thousands of gig workers, who know the local streets, and who have the skills to drive a small, maneuverable e-vehicle, but are not licensed or skilled to drive a large truck.  Such jobs are badly needed in a recession that has affected working class people especially hard.  (I don't work for, or have any relation to, or investment in, Hyercar or Acrimoto).

  4. Small, targeted vehicles, might not have the range to deliver packages from, say, Elizabeth, New Jersey's massive port facilities, to points in New York City.  But the city has dozens of ports ready for small barge freight along its 520 miles of coastline.  A hundred micro-trucks could be loaded onto a barge, driverless – perhaps one day autonomously – at the outgoing port after package sorting.  Then, at the destination micro-distribution port, equipped with drivers/unloaders (it's unlikely we will replace unloaders and delivery persons with robots capable of navigating myriad apartment dwellings anytime soon).  By keeping destinations within a pre-defined (by zip code?) neighborhood, what truck traffic remains would be small vehicle, targeted precisely to those neighborhoods and well within electric vehicle ranges.  The ports could have fast-recharge stations for when the vehicles return for the next round.

  5. I've been thinking along those lines too.
    What if shippers sorted packages and made them ready for delivery at major container ports, but instead of loading them up on hulking, polluting large trucks to drive all over the city, they were micro-sorted onto 3-wheel electric micro-vehicles, e.g. like the Acrimoto Deliverator, managed by Hyercar:  This is just one example of a small, efficient vehicle that can be perpendicularly parked and unloaded directly onto New York City's busy sidewalks for final delivery to buildings.  This would end sprawling, time-consuming, disruptive, sidewalk-monopolizing package sorting at multiple destinations on complicated traffic-clogged streets – often with clogged with those very trucks delivering online purchases!

  6. Anything that drives down the cost.
    Container ships are the most efficient, then river barges, then trains, then trucks, then vans, then aircraft.
    Other countries have rail, which is great, but the USA has an extensive Interstate Highway system that drastically lowers the cost of moving things from a warehouse to its endpoint. It works with big trucks, smaller vans, people, and small packages.

    It's amazing to me that when I drive about 900 miles to visit my relatives in Pennsylvania, there is continuous pavement between me and everyone I plan on visiting. More importantly, 95% of the trip is made without street lights, stop signs, or any of that sort. It's open highway. Only on the last leg do my relatives live off the beaten path of the Interstate. I typically make that trip in one day.

    With multiple drivers taking turns sleeping, I could probably cross the country sideways in about 4 days. One time my brother drove from PA to TX and back in 24 hours. No sleep. That's over 2000 miles.

    One time My wife and I drove to Newport News and back in a 3 day weekend to see her brother's first concert. That was like 1500 miles. I had to work the next day too. There's no way we could have done any of this without the Interstate.

  7. The class action lawsuits that will come from deaths caused by self-driving trucks will more than make up for any money saved by not having a driver.

  8. It's economics of scale against transportation costs. As transport costs drop, economics of scale become more important. Hence, much larger and fewer factories. Elon Musk sees it, thus his Giga factories which in future will become even more Giga.

    The bigger the scale, the easier the automation. Automated production to automated transport – welcome to the future.

    The exception will be custom made stuff which could be 3D printed.

  9. It costs literally cents to move items from a warehouse in China to a warehouse in a western country. 6c being the quote I remember for a pair of jeans from a warehouse in GuangZhou to a warehouse in Sydney. (Assuming you want a full shipping container of clothes from one location to another.)

    Your local manufacturing will have to be almost exactly the same price as a huge dedicated factory in Asia for the transportation savings to make it actually cheaper.

    Local manufacturing can work for custom products. If you are getting those jeans made to measure then the response time and communication advantages of a local supplier can make it worth while. But for bulk, mass produced items where millions of people want the same thing it'll still be cheaper to mass produce them in one central location.

  10. Putting heavy trucks through tunnels is done in countless places all over the world. It's not a new, radical, risky concept.

  11. This is not Marxism, Marxism is another form of mega system probably less successful than ours. You are missing the bigger basic, thinking small, in the true organic measure of us that allow our true nature and true potential come forth.

  12. This is probably not as forward-thinking/ profoundly innovative a discussion as whether 'Globalization/ Offshoring vs (now becoming) Local Intensity/ Diverse Regionalizing' could work as a large-scale phenomena. Its about more stuff being done locally due to innovations in smaller factories/ businesses allowing more diverse products/ 3D printing/ shipping coordination (solve the dam Traveling Salesman theorem) rather than relying on bulk movement of product from low-value labour systems – thus balkanizing products, industries, economies, etc. (will southeast Asia continue to be the low-value factory for the world forever)(it is the Long-Tail Economy writ large). So, More Countries Trying to Do (produce) It All – less warehousing, less part-loading/ unloading. That being said, to get on point: it may not be big AI trucks moving big loads but small autonomous vehicles, 'hired' from their owners who will scurry and hoard and flock and scatter from pick-up to drop-off to pick-up… how much time is in travel and how much time is find, stop, load, redistribute cargo, unload — thus carrying 1000s of products to dozens of destinations before they find a home…. as I say, all about Salesman.

  13. You seem to be doing a poor job of covering your Neuvo-Marx leanings. A forced-egalitarian society will never be the most innovative or productive or even econometrically-sustainable, since the earliest source of a new idea/ thing/ service can never be known well and therefore most will be necessarily far removed from innovation and productivity until it is well known; being at that time no longer new. None should starve but neither should all be automatically given reward; for people are not Basically Good but the sum of their background, achievements, and drive; impossible to share out. There are not enough resources in the world for all to be rewarded for simply being alive, but enough to incentivize the most productive and creative to continue to increase the overall size of the 'wealth pie for All'; since the gains of investing in the best far outweigh the losses in not meting out bonuses to the Worst; and yet All will still be Better Off.

  14. The first real use of autonomous driving may be in a Personal Rapid Transit system. With hanging pods on a micro monorail in the air the “cars” have right of way and don’t have to deal with pedestrians or cyclists, but the rails are cheap to put in the air unlike train tracks or freeways.

  15. Semi sized boring tunnels could be useful as a way to get semis off of freeways but it is a large capital investment and I’m not sold on the long term reliability of trusting the throughput of a major logistics corridor to the weakest link of semi tires.

    My there is a lot to unpack in that sentence.

  16. Most consumers purchase the bulk of the products they acquire each year from a reseller. The post manufacturer markup ostensibly relates to transporting and storing these products closer to the consumer. The biggest benefit from solving mobility, the possibility of eliminating the reseller class by connecting manufacturers directly with consumers. The purchasing power would be greatly improved for the impoverished segment(2019 real median fullt-time earnings of men ($57,456) and women ($47,299))


  17. Company is missing a trick here. Quickly boring tunnels that can be used for moving goods will pay dividends quickly.

  18. Anything that reduces cost increases profit. It is however also important to look at how profit get distributed. The more equally profit is distributed, the higher its value. The best system that sustainably has an impetus to increase both profit and its distribution is that of self sufficiency. However self sufficient systems suffer from low productivity. Our real challenge is to miniaturize the means and production, make them self building and lower their cost so they can approach that of mega production. This is the best way to reduce transportation costs and other costs associated with mega production and maximize distribution of wealth.

    We can create a social structure of an interconnected, participatory, egalitarian and resource sharing communities that being are mostly self sustaining and nature based that can evolve in a more organic and meaningful ways than the current mega structure using the best technology we have in our disposal.

  19. I look for interstate driving to be the first big adopter of self driving. This is the most structured environment. Aurora has a JV with PACCAR TO implement the service. It seems to me urban self driving will be the most difficult but gets most of the publicity. How is Waymo doing with their fleet? It should produce a boom before employment issues become a problem. Plus if we do start a large infrastructure project with a T $Tbefore the amount is would be a great time to implement required upgrades.

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