Running Head: AUTOMATION IN THE TRANSPORTATION INDUSTRY

Automation in the Transportation Industry

Sergio Olivas
The University of Texas at El Paso

AUTOMATION IN THE TRANSPORTATION INDUSTRY

Abstract
The advancing sophistication of artificial intelligence and machine learning has enabled
the production of fully autonomous vehicles. The technology raises economic questions
concerning its impact to the United States and the U.S. transportation industry. This report will
discuss the technological and social factors that will either accelerate or delay the full
implementation of autonomous vehicles within the industry through the concepts of supply and
demand. Then, as the technology is implemented, the changes and potential roles of vehicle
operators and drivers will be discussed by applying historical lessons of past precedents to
anticipated social and technological trends. Lastly, the changes in unemployment and income
levels of different industries in the United States as a result of autonomous vehicles in the
transportation industry will be discussed. The reports research was compiled through a mixture
of primary and secondary sources.

AUTOMATION IN THE TRANSPORTATION INDUSTRY

Introduction
According to the lessons of history, machines and new technologies introduced in
different working fields were beneficial to those industries because they enabled the producers to
manufacture better quality products at a lower operating cost. During the implementation of
technology, workers were displaced, but new industries as well as new types of jobs were
created, yielding more jobs than were eliminated. Going into the twenty-first century, however,
economists in the field fear that newer technologies will revolutionize society in the United
States in such a fashion that will not follow the historical pattern of displacement and job growth.
Instead, experts predict that artificial intelligences capabilities to learn (known as machine
learning) as well as the bulk collection of data (also known as Big Data) will eliminate more
jobs than will be created. Most notably, a report written by Michael Osborne and Carl Frey
(2013) of the University of Oxford estimates that approximately forty-seven percent of jobs in
the U.S. are subject to being automated within the next two decades. Furthermore, employment
in the transportation industry is among the most vulnerable to automation according to the same
report. This assessment leads to several questions regarding the impact of automation on the
transportation industry and its rippling effects in U.S. society. Dialogue about automation in the
transportation industry may be reflected within the following questions:
1) What economic and technological factors would contribute to the rate of automation
for transportation jobs in the U.S.?
2) How does the role of vehicle operators in the U.S. transportation industry change with
the implementation of automation?
3) How would automation in the transportation industry affect unemployment and
income levels in the United States?

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Through these questions, scholars, entrepreneurs, and political leaders may corroborate
different solutions and initiatives that will allow citizens in the United States to adapt
comfortably in the new era of technology and social living.
Purpose and Methodology
The sources of this report are substantiated by a mixture of primary and secondary
sources. Secondary sources were selected through databases provided by the University of Texas
at El Paso (UTEP) and through basic internet search engines with scrutiny for the sources
content and credibility. For the primary source included in the research, an interview was
conducted face-to-face on March 8, 2016 with Dr. Christopher Kiekintveld. Dr. Kiekintveld is an
assistant professor in computer science at UTEP whose interest include artificial intelligence and
multi-agent systems both machine and human. The purpose of the interview was to evaluate
the validity of economists job-loss concerns by identifying the current capacity of artificial
intelligence and autonomous vehicles. Interview questions were directed to identify the
economic, technological, and social forces that would lead to the automation of transportation
jobs; the human oversight needed to operate the new technology; and the potential economic and
income effects. In summary, Dr. Kiekintveld asserts that autonomous vehicles will bring more
benefit than harm and that the transportation industry will not automate drastically in the
immediate future.
What technological and social factors would contribute to the rate of automation for
transportation industry jobs in the U.S.?
The answer to the first question is not whether or not automation will be introduced into
the transportation industry. Instead, this first question is a matter of when the new technology
will be situated within the transportation industry. In order to see when the mass deployment of

AUTOMATION IN THE TRANSPORTATION INDUSTRY

autonomous vehicles will occur, it is best to see this phenomenon through the economic concept
of supply and demand. The first aspect of this question, supply, pertains to the level of
sophistication of the technology that will automate the role of a driver. The latter aspect of the
question, demand, pertains to consumer willingness and ability to acquire the technology. There
are social trends indicating a rapid increase demand in the technology, but there are also trends
indicated a delayed demand in the technology. Before examining the trends that would affect
demand, the sophistication of the technology that would determine supply will be reviewed.

AUTOMATION IN THE TRANSPORTATION INDUSTRY

Michael Osborne gave a presentation describing his findings in his 2013 report,
predicting up to forty-seven percent of U.S. jobs are subject to automation. Osborne elaborated
on how he and Frey came to that estimate: from information provided by the U.S. Bureau of
Labor Statistics, he evaluated the degree each job uses creativity, social intelligence, and
autonomous manipulation and perception (given the current difficulty to code each
characteristics) (Future of Working, 2015). From there, an algorithm was developed to evaluate
the potential probability of
automation to jobs that lacked these
characteristics, creating the chart in
Figure 1 (Future of Working, 2015).
Occupations within the
Transportation and Material Moving
Industry ranked the highest in terms
of the number of jobs subject to
automation. This is indicated by the
brown layer above the other color
Fig. 1: Chart from Frey and Osborne's report on the probability a U.S. occupation
will be automated within the next two decades

layers in the High section of the graph. This estimate come to no surprise given Googles
autonomous vehicle as an example.
The Google Car derives its performance from Big Data and sophisticated algorithms that
enables the car to interpret Big Data (Future of Working, 2015). Big Data is collected from
consumer smartphones on the road and has enabled Google to create virtual road maps (Future of
Working, 2015). Osborne stated: [The vehicles] more or less have the hardware on board that
they need in order to be autonomous. Theyve already got the safety systems; theyve already got

AUTOMATION IN THE TRANSPORTATION INDUSTRY

sensors. In fact, all they need really is the right data search and the right algorithms in order to
become autonomous (Future of Working, 2015). Dr. Kiekintveld stated the following in an
interview: There are lots of factors that will lead to the automation of the transportation
industry, but the biggest barriers are social and legal (interview, March 8, 2016). As of 2012, the
state of Nevada issued the Google Car a driving license (Future of Working, 2015). In this
context, Dr. Kiekintveld directs the attention predominantly towards the demand and regulation
of autonomous vehicles since the current state of machine learning permits companies to produce
autonomous vehicles adequately.
Currently, there are indications leading to an increased demand in public transportation
services due to millennials mobility behavior and seniors need for these services. The clearest
sign the demand for transportation will increase is through the U.S. Bureau of Labor Statisticss
estimates that transportation employment will increase by five percent until 2024 (U.S.
Department of Labor, 2015). This correlates with findings in a draft report by the U.S.
Department of Transportation (n.d.) which stated that millennials are driving fewer miles than
earlier generations and are preferring to live in urban environments where public transportation
is readily available. Additionally, with a retiring Baby Boomer generation, nearly fifty percent
have a disability that impedes into the elders ability to drive, increasing the demand for
autonomous vehicles for personal use or in public transportation (U.S. Department of
Transportation, n.d.).
A social characteristic that will delay demand for the technology is the consumers level
of comfort with the technology. For example, a podcast from NPR (2015) discusses the potential
fears that the general public would have with the Google Car. Steve Henn, the orator of the
podcast, describes his astonishment travelling in the autonomous vehicle but also his concern to

AUTOMATION IN THE TRANSPORTATION INDUSTRY

place his own children in it: There is this moment when something new is introduced and it
is disorienting it freaks us out (Episode 642: The Big Red Button, 2015). Steve compares the
Google Car to the automated elevator that swept U.S. society in the late nineteenth century.
Riders were alarmed and uncomfortable being in the automated elevator as designers constructed
an artificially safe environment through an emergency stop button and a reassuring mechanical
voice (Episode 642: The Big Red Button, 2015). Using the automated elevator as precedent,
consumers presumed fear of the automated vehicle would delay its full commercial
implementation through personal usage or public transportation services such as taxis and buses.
How does the role of vehicle operators in the U.S. transportation industry change with the
implementation of automation?
In addition to the several factors that will determine the proximity of automating the
transportation industry, there are several conditions that will lead to the change in the role of
vehicle operators with autonomous vehicles. The most appropriate approach to evaluate their role
is the degree in which the occupation will be automated: fully, or partially. Dr. Kiekintveld
asserted that determining the degree of automation is based on two major factors: the degree of
control of an environment and the demand of the market (interview, March 8, 2016). With this
assessment, these two factors will be analyzed to understand why those are important factors in
determining the role of vehicle operators.
There are several examples in which robotics work in sync with human beings including
automatic features in new vehicles. Dr. Kiekintveld states, Cars already work in coordination
with humans with automated breaking and sensors (interview, March 8, 2016). This relationship
of man and machine defines the role of the vehicle operator: an operator with extra tools to
enhance the efficiency and safety of a journey. This role changes slightly with the notable auto-

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pilot feature in commercial aircrafts as NPR explains: Most of the time when youre the air in a
commercial jet plane, no human is really flying it. It is mostly controlled by computers, but we
dont think about this or freak out about this because there are men and women in uniforms
sitting up there ready to take control in case of an emergency (Episode 642: The Big Red
Button, 2015). During controlled environments, the aircraft will manage itself, leaving pilots as
supervisors of the journey. While there is some distinction between the role of a driver and a
pilot, the role of the driver may be shifted closer to that of the pilot with advance technology in
automated vehicles.
The U.S. Department of Transportation predicts that vehicles will change the relationship
between man and machine through the addition of vehicle-to-vehicle (V2V) interaction and
vehicle-to-infrastructure (V2I) interaction. Under V2V interaction, automated vehicles may
exchange big data and other information to improve driving efficiencies, travel time, and prevent
hazards undetectable by sensors (U.S. Department of Transportation, n.d.). Long distance freight
drivers may see adaptation the most, shifting from operator to supervise in case of emergencies.
However, data shows that there is little to oversee since approximately ninety percent of
collisions are the result of human error from distracted driving to intoxicated driving which
can be prevented given the capabilities of most automated features (U.S. Department of
Transportation).
As V2V interaction is more predominant to long distance freight drivers in highways, V2I
interaction is more applicable to urban/suburban environments for cars, taxis, and buses. V2I
interaction uses road regulators like traffic signals to send warnings to drivers about weather
conditions, traffic, upcoming work zones, and even potholes (U.S. Department of
Transportation, n.d.). Unlike highways, traffic in urban/suburban environments is less

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predictable, therefore, is not an environment that can be controlled so easily (Kiekintveld,

interview, March 8, 2016). For example, a Google Car recently collided with a public bus under
the assumption the bus would let the car merge into its lane (Associated Press, 2016). It can be
argued that this collision would have been prevented by V2V or V2I interaction. However, the
U.S. Department of Transportations draft report is a prediction up until 2045, meaning that
implementation of these technologies in the transportation infrastructure is not within the
immediate future.
The market will a play a role in the role drivers with automated vehicles, taking taxi
drivers for example. Due to delays in establishing the infrastructure for fully automated cars to
provide transportation services, the role of drivers as operators is likely to remain constant. In
fact, this personalized transportation service is anticipated to expand dramatically employment of
taxi drivers is expected to increase by thirteen percent until 2024, which is higher than the five
percent average in the industry, according to the U.S. Department of Labor, the, (U.S.
Department of Labor, 2015). However, consumers particularly millennials are motivated by
technology to find new ways of transportation, leading ride sharing companies like Uber to
quickly adopt automated vehicles in the near future in order to reduce costs and expand
convenience (U.S. Department of Transportation, n.d.). Dr. Kiekintveld summarize the role
change of drivers: Their training will be determined by the market: a combination of training
and new adaption (interview, March 8, 2016).
How would automation in the transportation industry affect unemployment and income
levels in the United States?
In the case of ride-sharing companies like Uber potentially implementing automated
vehicles at a lower cost relative to taxis companies, the employment of taxi drivers would be

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fundamentally affected. This would only occur if the role goes beyond of that of an operator or a
supervisor. However, if this is the case, then automated vehicles would not only displace workers
within the transportation industry, but the technology could have rippling effects across the
economy. This fear among economists challenges the established observation pertaining to new
technology that technology expands the economy and creates additional higher-paying jobs
compared to those that are lost. A discussion of conventional job displacement of the past versus
future displacement will be followed by a discussion of the redistribution of wealth (in the form
of income) across the United States.
The fear that automation will lead to high unemployment is not a new phenomenon. One
of the earliest examples is the stock frame knitting machines by inventor William Lee in 1589 in
which the Queen of England denied his request for patent protection on the premise that the
technology will lead to many unemployed knitters (Future of Working, 2015). However, this fear
overlooks the established observation of automation: automating a job creates more wealth and
raises the salaries of workers whose job was automated through their relocation to higher-skilled
positions all at a lower cost (Agency for Instructional Technology, 1996). A 1990s educational
video on economics and investments uses the example of a digger. If an individual uses a shovel
to dig dirt from the ground, then the amount excavated is the individuals output (Agency for
Instructional Technology, 1996). However, if a firm decides to adopt in a bulldozer, the operator
of the bulldozer may yield a greater output and his/her income will increase for his/her skills to
operate the machinery (Agency for Instructional Technology, 1996). For an employee, acquiring
training to operate new machinery would ensure the security of his/her employment along with
higher pay (Agency for Instructional Technology, 1996). This is the established observation for
job displacement in the past.

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The job displacement of the future is different for an underlying reason: employees with
skills are now being automated. [With new technology], there is a potential for displacements,
but now, the sophistication is climbing the ladder (Kiekintveld, interview, March 8, 2016). In
the case of the bulldozer, if it can operate autonomously, then there is little need for an operator.
Additionally, looking beyond the choices of individual firms, autonomous vehicles have industry
wide applications. When the Ford Motor Company implemented the assembly line, individuals
who knew the steps to build a car were replaced by lower-skilled workers, generating more jobs
in the process. With autonomous vehicles, lower-skilled drivers could be displaced by fewer
workers who may supervise an entire fleet of vehicles. Estimates conducted by Carl Frey show
that less than one percent of employees are working in industries that began at the beginning of
the twenty-first century, adding to the belief that not enough jobs will be generated to
complement lost jobs (Future of Working, 2015). Furthermore, Huffing Post blogger Sam Tracy
(2015) outlines several industries that will be affected by the driverless revolution: insurance
providers (for fewer accidents), mechanics (for fewer car owners), motels and rest-stop diners
(for fewer truck drives), and local governments (for fewer traffic law violations). Sam Tracys
statement reflects the cash flow generated by the drivers of the transportation industry. This
disruption in cash flow would create a financial paradox: high unemployment would lead to
lower consumer purchasing power, reducing demand, pushing companies to reduce costs by
automating more jobs, thus creating a continuing cycle (Dirican, 2015). This theoretical fate
overlooks the new jobs that would be created as well as their respected incomes.
Since the transitional period to advancing technologies is gradual, it may be difficult to
examine the income levels across the United States that would be affected by the driverless
revolution. In the transportation industry, it cannot be claimed that the incomes of drivers will

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increase since current drivers may not definitively be operators or supervisors of the autonomous
vehicles (Kiekintveld, interview, March 8, 2016). For the industries that would be affected by the
driverless revolution, jobs may be lost, but this loss should be seen positively as it indicates the
generation of more wealth with fewer labor, liberating labor for more innovation (Tracy, 2015).
Additionally, Dr. Kiekintveld explains the uncertainty of the future industries that will be
developed: Alarm is being is raised about loss of jobs because no one knows where the new
jobs will be coming from There will be long-term benefits, but we may have to experience
short-term pain [through job displacement]. (interview, March 8, 2016). Addressing
employment, income, and the redistribution of wealth is a social and political issue which may
be mitigated through the reexamination of the relationship between labor and wealth
(Kiekintveld, interview, March 8, 2016). However, while the technology of autonomous vehicles
is present, the results of its full implementation is remote and may not be comprehended until the
transportation industry matures to that stage (Tracy, 2015).
Conclusion
Through these questions, scholars, entrepreneurs, and political leaders may corroborate
different solutions and initiatives that will allows citizens in the United States to adapt
comfortably in the new era of technology and social living. Given that autonomous vehicles are
sophisticated and capable of autonomy, the introduction of the technology into the market is
based more on the purchasing trends of the consumer that will accelerate or delay it. As the
vehicles are implemented, the role of drivers in the transportation industry will depend on the
degree of control of an environment as well as the demand the market, leading drivers to operate
the technology, to supervise the technology, or to be fully automated by it. If the technology
automated the role of the driver, then its economic effects will be felt in several industries that

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are dependent of the transportation industry; however, the degree the technology will impact the
United States will not be determined until that state of the transportation industry has been met.
Jobs may be lost, but new industries as a result of autonomous vehicles would emerge, and if
necessary, a reevaluation of the distribution of wealth.

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References
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