The Promise and Peril of Driverless Delivery

Prototype A/V at 2014 Geneva Auto Show

With the news of Amazon’s purchase of Whole Foods, I began thinking about the potential implications of autonomous delivery vehicles. It is possible that Amazon will transform Whole Foods using some of the technologies in its Seattle “Amazon Go” store, but I think there will be substantial changes outside the four walls of the grocery chain. Amazon, along with every other grocery-deliver company, currently relies on human-driven trucks and planes to ship items directly to customers. However, there is no question that the company is very interested in driver-less technologies that could be used to decrease the cost of delivery.

If you live in a city, you should care about autonomous vehicles (A/Vs). Here is why:

  • Early indicators show that the A/V may be as disruptive to urban form as the automobile. There is strong possibility that an unregulated A/V market would incentivize urban sprawl as they would reduce the time and financial burdens of living far from employment centers. Without some public sector intervention, the A/V could fundamentally reshape cities around the globe. This alone, in my opinion, is a compelling public interest in treating A/Vs different from other vehicles.
  • Public streets have many uses beyond transportation alone. Streets are places for commerce, play and social gatherings. An unregulated A/V market could quickly crowd-out these vital functions with robotic vehicles.  A/Vs will enable children, the elderly, and inebriated people to make trips they can’t currently – thus the technology may lead to higher numbers of cars on the road.  The presence of high volumes of A/Vs could make commercial corridors unattractive to shoppers, unfriendly for families, and uninviting for the community. The public sector has a vested interest in protecting these functions of its street network.
  • In addition to the current traffic, unregulated A/Vs could lead to an onslaught of Zero-Occupant Vehicles performing deliveries and pickups. This has the potential to make congestion on urban roadways worse. We do not have adequate planning techniques to predict the impact of these trips since they are currently impossible. It should be in the public interest to limit these trips until we understand how they will impact our transportation networks.
  • Jobs in the transportation sector may be at risk as A/Vs replace human drivers. While some drivers may be able to transition to other jobs in logistics (or other industries) it is unlikely that all will make a smooth transition. If your city has a substantial workforce in trucking or is a hub for logistics operations, the effects of A/Vs will be consequential to your city’s tax revenues and social benefits expenses.
  • Low priced delivery provided by A/Vs could potentially increase consumer demand for many packaged goods. This consumption will lead to increased pressure on landfill and recycling operations.
  • Early entries into the A/V delivery market may attempt to set up the service as a loss leader. These companies may reduce prices for deliveries to rapidly gain market share. However, these companies are benefiting from highly subsidized road network and low fuel costs.

While A/Vs may generate many benefits for consumers, they present unique challenges to cities. (Let’s not fool ourselves into thinking that A/Vs will somehow never become popular. Online consumers are demanding increasing convenience. Services like Amazon Prime Now are expanding access to near instant-gratification online shopping. It’s hard not to imagine that Amazon will not want to integrate this service into the grocery sector. Advocates such as Tony Seba envision A/Vs causing massive disruption to the transportation and energy sectors as soon as 2030.)

For these reasons, A/Vs should be treated differently from human operated vehicles.

It’s important for everybody to understand that we are dealing with a lot of uncertainty in this realm. Existing market pressures along with the emergence of new technology are shaking up our assumptions about how cities work. Yet, the question remains: how can cities prepare for autonomous vehicles?

  •  Auction licenses for commercial A/V operators. We do not, at this moment, know the market value of a license to operate an A/V. The ongoing market pressure between technology companies should lead to strong competition for scarce licenses. This pressure can benefit cities and the funding can support various programs such as job training and infrastructure (see below). It may be optimal to auction individual vehicle licenses rather than bulk licenses as there will likely be a very high demand for the first vehicles. In addition:
    • A/V licenses should only be valid for a short period (no longer than 18 months). This allows the city the ability to revise policies and rules around A/V licensing relatively quickly.
    • A/Vs should be legally bound by the license to coordinate to the highest possible extent with local emergency management agencies. While it may take several months or years for local agencies to figure out how to interface with private A/V operations, the obligation to serve the public interest during emergency events should be unambiguous.
    • A/V licenses for gas vehicles should be higher than hybrid and electric vehicles. This should send a price signal to encourage clean technology.
    • When new A/V operators are licensed in a city, they should be required to establish an escrow account with the municipality. (The fee should be set as a dollar amount per vehicle.) These funds could only be used in the event the operator exits the local market. The funds would be used to resume one of the public services provided by the operator (see below).
    • A/V license holders should report on the type of packaging used. (Depending on the local environmental conditions, it may be worthwhile to add an environmental impact fee for A/Vs that haul packaging that’s not compostable or recyclable.)
  • Include a Public Service Provision for each license holder.  Each license holder should be required to select one (or more) provision. Examples of these provisions include:
    • Recycling. An A/V operator can use its vehicles to pick up curbside recycling and return it to the city’s drop off station.
    • Transportation of city employees and/or materials. The A/V operator can augment the city’s fleet.
    • Augment the public transportation system. This provision would establish a quasi-public, fully autonomous, ride-hailing system. This is undoubtedly the most complex way to provide a public service – but it may also be the most valuable.  There are many considerations that must be in place before a private A/V operator can serve the general public including enhanced safety inspections, coordination with the local public transit operator(s) and terms of service. [See The Autonomous Publico for more details on this concept.]
    • An alternative Public Service Provision negotiated between the operator and the top elected officials. The term of this agreement should be concurrent with the license.

The advent of A/Vs should prompt city leaders to ask: who is this technology for? Often, these innovations serve those who can afford them well before they serve the vast majority of consumers. As such, city leaders should consider balancing the investment of revenues obtained through A/V licensing in an equitable manner.

This novel situation brought about by new technology can help city leaders focus on what is permanent.  A/Vs challenge the assumptions that have made places successful historically. If surface transportation becomes relatively cheap and painless (i.e. your commute is less stressful because you don’t have to think about driving or parking), then perhaps some of the benefits of traditional neighborhoods have been oversold.

However, human-scaled neighborhoods are the most future-proof asset that any city can ask for. When a neighborhood is designed around the scale of the human foot it can support the majority of functions for daily living within a short walking distance. At this scale, our cities dramatically reduce their dependence on fuel and transportation service providers.

With additional revenues in fees for A/V operators, city leaders have an opportunity to re-invest in the hardware that supports human-scaled development: foot paths, transit facilities, and bike lanes.