Transportation and delivery are two of the main areas where recent technological developments, from drones to driverless vehicles, have opened up a range of possibilities that could become reality within the next few years. The diffusion of these technologies could reduce costs for companies facing multiple factors that are making shipping more expensive. Consumers would also benefit from fewer delays and disruptions, in addition to cheaper prices.
However, if the Teamsters union gets its way in negotiations with UPS, this potential might never be fully realized for the company. UPS is likely to lose market share to competitors and eventually go out of business. Amazon is reportedly going to launch its own delivery service, bringing an influx of competition and disruption to the sphere.
As recently reported by the Wall Street Journal, in its list of initial demands as part of negotiating the next contract covering about 260,000 UPS employees, the union indicated it wants to prohibit UPS from making use of drones, driverless vehicles, or other new technologies “that would curb demand for labor.” The demands, and the subsequent negotiations, will be an early representation of how concerns about the role of emerging technologies and their effect on current occupations could affect unionized businesses moving forward.
Aside from the prohibitions, the wish list includes provisions that the company should hire 10,000 more workers, and halt evening deliveries, including during the November-December holiday delivery period.
Autonomous vehicles without anyone in the driver’s seat are already being tested on American streets. Bills that would establish a fairly permissive regulatory framework for autonomous vehicles are working their way through both chambers of Congress. Commercial vehicles have so far been largely excluded, in large part due to union pressure.
UPS has already begun testing drone deliveries, most notably as part of a pilot program in Florida. In those tests, drones complemented traditional trucks by picking up packages from the roof of the truck, serving as the final link in the delivery chain, and bringing them to the final destination.
The company estimates that if drones cut one mile per day from each driver’s routes, the company would save $50 million each year in fuel costs.
The long-term effect of these technologies is difficult to ascertain at this nascent stage. It is possible that eventually, technologies would indeed reduce demand for labor related to delivery and transportation. More immediately, both drones and autonomous vehicles would likely complement traditional drivers and trucks, rather than replace them outright. People will continue to have a comparative advantage for many of the drivers’ tasks and will continue to play a significant role in deliveries at UPS and other companies.
Novel technologies or developments can also create entirely new occupations or industries. Even within the narrower scope of delivery and transportation, the net effect of these new technologies on employment is ambiguous. If the proliferation of these methods reduces costs to companies to the extent that volume increases substantially, the total number of employees involved could rise.
In one projection from Uber’s research arm, the scenario with self-driving trucks concluded that the number of trucking jobs would increase by 400,000 more by 2028 than the business-as-usual scenario without them. In their projections, the new technology increases the efficiency of long-haul routes, which then lowers trucking costs and ultimately contributes to more goods being shipped. Truck driving jobs shift from the long-haul variety to those covering local hauls and to moving goods to and from larger transfer hubs.
Truck Driving Job Growth in Two Scenarios
Source: Uber Advanced Technology Group, “The Future of Trucking: Mixed Fleets, Transfer Hubs, and More Opportunity for Truck Drivers,” February 1, 2018.
The number of truck-driving jobs a decade from now will depend on a number of factors, and estimation with any precision is a tall task. The report provides one illustrative scenario where the total number of truck-driving jobs would be boosted by self-driving trucks.
These UPS negotiations, and the potential role for new technologies, are not taking place in a vacuum. Shippers are grappling with higher fuel prices, putting a strain on their existing resources for both package delivery and freight shipping. Companies with shipping needs are facing higher costs or slower delivery times, with some of these new burdens being passed on to consumers.
If the union gets its way in the negotiations, UPS will not have the flexibility to incorporate new technologies that can rein in the cost of doing businesses and help it adapt to a changing business landscape. The potential benefits of prohibiting the adoption of new technologies in shipping and delivery are far outweighed by the costs these restrictions would impose on companies and consumers alike.
Negotiations before the current contract’s expiration in July could lead to the removal or attenuation of demands related to new technologies. The negotiations could have wider implications regarding which companies survive, and whether unions will continue to represent delivery companies. For their own survival, the Teamsters need to compromise.
Charles Hughes is a policy analyst at the Manhattan Institute. Follow him on Twitter @CharlesHHughes.
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