Technology is affecting every industry. Radical change is on the way and it is going to lead to a ton of bankruptcies. Society, and markets, quite frankly are not prepared for what is coming.
Some of those who are extreme in their beliefs about the destruction that is about to take place come from a place where they foresee the impact that technology is making. It is often the side door impact that is the most powerful. This is always what catches people off guard.
For example, let us take a look at the idea of autonomous vehicles. What does this affect?
Obviously, the first thing that comes to mind is driving jobs. Anything that deal with driving will be autonomous wiping out millions of jobs.
This is a fairly evident and, in my view, correct assessment. Thus, we see those who ferry people or goods around will be out of jobs.
So we are about to see the taxi and trucking industries radically altered once autonomous driving capability goes live (and is approved by regulators).
However, along these same lines, what else is affect in the area of moving atoms around? There is another industry that is at risk of getting hit. It is one with huge amounts of fixed assets that, essentially, could become worthless in a short period of time.
How about the railroad industry? This is one that also moves goods around. Presently, this is done for 3-4 cents per mile. When using a truck, the going rate is roughly 12 cents a mile.
With autonomy, however, the trucking rate is expected to be near the 4 cent a mile price. This will radically change how we move products around. The drawback to trains is they only can go certain places. Most cargo ends up on trucks, it is just a question of how far they travel. In fact, much of the cargo is packed in trucks that are moved by train.
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Notice how this all changes with autonomy. Here we see the possibility, since the rate is near the same, to send the truck directly where it is required to go. It can travel 24/7, stopping only to recharge (presuming it is electric). There is no need to stop for breaks or limit the driving.
Essentially, we are looking at all the advantages to trains without the downside of having to ship it to a central location and then have the trucks disbursed from there.
From the financial sense, what does this do for the fixed assets of the railroad industry? Just think of all the millions that these companies have in locomotives alone. The price insulation along with the ownership of the rails means that these companies had a great business model.
Nevertheless, it is about to be impacted.
There are many companies facing something similar. When entities have large amounts of fixed assets on their balance sheet, things get very hairy when they have to start writing things down. This becomes a major problem if there is debt outstanding against these assets.
Another example that is taking place right now is banks. We know that more financial transactions are occurring online. This mean physical branches are becoming less important. In fact, they are fairly close to being money sucking propositions. With less people utilizing these locations, it is a major cost to keep them open. Banks are now starting to close them as they can.
Hence we see what was once an asset radically diminished. Locations that were in prime areas are no longer so as the entire economic model is transitioning.
How about the hotel industry? That is another one with a lot of fixed assets, often financed. What happens when there is a radical shift as we saw with video conferencing due to COVID. While that might return, how do project's such as Microsoft's Hololens change things when collaboration in a VR world can take place with participants from different parts of the world?
Add in the idea of autonomous vehicles, which will allow me, at some point, to rent a "sleeper" car, get in at 10 at night, and wake up at 7 Am at my destination. There is no need for an overnight stop.
Could all this affect the airlines? What happens to those short flights that are under 1,000 miles? Again, if I can get in a vehicle that will take me to my destination while I sleep, why go through the hassle of air travel especially since the time savings is reduced due to security, having to get there early, and flight delays? Just summon a car on an app on the phone, and away you go.
With how quickly things are happening, many companies could see their balance sheets blown up as their fixed assets plummet in value due to disruption. This is especially true when we start to transition things from atoms to bits. It is far quicker, easier, and less expensive to transmit bits as opposed to trying to move atoms around.
As we become more digitized, those assets that were valued in the physical world will become less so. That is going to cause many companies issues.
Just look at the commercial real estate sector to see what is coming down the road.
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Trucks are my biggest concern, not just for the tens of thousands of jobs lost and how many people will be sent to welfare. But also road safety. I am not convinced that the technology is at the right level yet.
Especially in areas with low GPS and internet coverage. Australia is a large continent with much of it uninhabited. Lack of services renderd this type of tech useless and a danger to our roads.
I want every driver less truck to contain a jockey for community safety. I don't want to be responsible for the death of families on the roads due to a malfunction.
Too dangerous.
I feel taxi's will be greatly impacted but UBER has already impacted that market. A taxi licence in Australia used to he $400k they have been reduced to a few grand due to Uber.
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To take it a step further, what happens to all those autonomous trucks when Amazon has warehouses full of 3D printers around the country where you can order you new "chair, shoes, gadget" online and they can "print" it in the warehouse and drone it out to you from a local warehouse? This shit is crazy. It IS going to take time though. Whether the tech is ready or not, there is no way they are going to shut down the entire trucking industry in a short period of time. Relatively short, maybe. But I can't see it happening in under 20 years. Just my opinion...
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It sure is weird looking at how things are going. I think one of the reasons why goods have trouble being moved around the world is the cost of transportation. So I definitely think those autonomous vehicles will definitely reduce the price of goods and help reduce the price of assets. So I wonder if we will also get autonomous airplanes or ships to further reduce prices.
If this happens, I guess those hotels and motels will be going out of business.
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It will be tricky for big long haul trucks to be compete with traditional trucks because the battery needed is currently very heavy ( and it won't improve in the next 5 years no matter what some dreamers think) and that takes a lot out of the load capacity. Also charging time will be long as well. And proof that this isn't easy to make is how long is taking tesla to roll them out to the public.
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one amazing thing about all this is that what affects some sectors will bring advantage to some other sectors,for example if a certain technology affects the air sector,that same technology could help make the rail sector to become functional and effective..technology is like a double egde sword that is necessary to have an easier life....
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Air and Sea Transport are next. Just wait for the freighters and planes to be fully automated and be able to travel. I know barges are used to transport vast quantities up and down the Mississippi river - and its hard to imagine they could be replaced by trucking but it sounds like they could.
Now the porch pirates can just follow the delivery drones and swipe them out the air.
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And what about the impact on the environment long-term? Even though I don't believe I will see it in my lifetime, my kids and their kids will be fighting the mistakes of my and previous generations. Autonomy could drastically reduce mistakes and travel time and hence the impact on the environment. We are at the precipice of a large catastrophe in my opinion and technology needs to enhance the environment. Then again, here I am posting on a blockchain that is not very environmentally friendly (though better than BTC and ETH networks!). Another great article. Thanks
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