The future of the truck stop

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Among Warren Buffett’s recent acquisitions is a majority stake in Pilota major service station and a chain of truck stops. Business Intern reports that Berkshire Hathaway will soon buy 80% ownership of the company, rising from its current share of 39%.

Pilot’s sale price of $11 billion demonstrates its value to the economy. As the publication notes, “the company’s revenue has grown from about $20 billion in 2017 to $45 billion last year, and generates more than $1 billion in annual pre-tax profits.

Yet IIt’s an interesting time for this investment, as two technological advances could soon change commercial trucking. And those disruptions could apply to other suburban and interstate terrain.

First, the power source for trucks could increasingly become electric. The adoption of electric vehicles has become a priority for automakers hoping to satisfy demand for “greener” fuel and policymakers concerned about the environmental impacts of fossil fuels. To this end, a considerable degree of R&D and business investment has gone into the electrification of the country’s truck fleet. While in 2019, only 2,000 electric trucks were in service (i.e. around 0.01% of the global fleet), a projection claims this figure will increase to 54,000 (or 0.33%) by 2024. Beyond 2025, however, analysts expect faster adoptionmaybe 1/3 of light trucks by 2030.

This would make sense, as electric vehicles have cost advantages. Research by Berkeley Lab finds that the batteries could soon have sufficient autonomy to make a substantial part of the journeys at an economical rate. The research concluded that trucks with a battery distance of 375 miles, which would require six counts based on the average weekly mileage of a commercial truck trip, has a 13% lower total cost of ownership per mile, with a net savings of $200,000 over the life of the electric truck… TCO analysis considers purchase price and operating costs operation over the life of the truck.

These savings to go past the average cost of a semi-trailer truck itself, which is $150,000. So it’s hard to imagine electric trucks not becoming more common over time. Companies such as Freightliner, BYDand others have developed battery-powered models.

In an electrified trucking future, Pilot wouldn’t be obsolete, but their gas stations would have to switch to charging. Gas stations should do the same, and there are already some who have, Circle K has announced that it is working on a electric truck charging stationfor example.

But the biggest change could come from automating trucks. Although progress hasn’t always been obvious to outsiders, some manufacturers are pushing for the arrival of driverless trucks. According to Forbesone of them, TuSimple, claims that Level 4 automation—where “safety-critical functions” can be performed autonomously—is viable in the short term. TuSimple expects its technology to be on the road by 2024.

“TuSimple has gone public…and over 5,700 vehicles have been booked by shippers or sophisticated carriers in the first four months alone,” Forbes note, arguing that the company’s claims cannot be dismissed as mere bluster.

That doesn’t mean full autonomy is imminent – Level 4 only works “under certain conditions”, according to Forbes—but it does suggest a future, perhaps the 2030s, where fewer truckers will be needed. This will hit Pilot and other truck stops, which depend not only on fuel sales, but also on providing truckers with food, showers and more.

Certainly, if these two innovations (EV and AV) arrived en masse in the trucking industry, it would not automatically destroy Pilot. It would, however, speak to the more immediate value that Buffett likely sees in the business – his land.

Pilot has 750 locations in the United States and Canada, including key interstate points. Even if truck stops eventually become obsolete or change drastically due to disruptions, in ways no one can predict, the land can still be used for everything from hotels to e-commerce warehouses to labor housing. – of work that we sorely need. And with less need, given the shift to electric trucks, for these lots to accommodate polluting vehicles, it may be easier to mix uses. Residential options near highways are becoming more popular because the air quality is better. The pilot’s Flying J division is already discharges some surplus real estate.

In any case, these problems are not limited to truck stops. The rise of AV and electric vehicles could influence what happens with all standard gas stations in America. And it will affect suburban real estate as a whole, which is now heavy with parking lots and other potentially obsolete business models like indoor malls and car dealerships. But that’s not a bad thing; it opens the land to more diversified and economically productive uses.

This article featured additional reports of Market Town Planning Report Ethan Finlan, content staff member.

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