Autonomous Vehicles and the Trucking Industry in Canada – Pui Hong

CTLA Feature Articles and Case Notes

Autonomous Vehicles and the Trucking Industry in Canada

Someone asked me at the beginning of 2020 what I thought would be the next big disruptor in the motor carrier business. I knew it had something to do with the two buzzwords “technology” and “innovation” but I couldn’t pinpoint anything in particular. Would it be highly advanced sensors and cameras that would significantly decrease safety incidents? Would the industry move towards vehicles that reduce greenhouse gas emissions? Would there be some kind of technological advancement that would help alleviate driver shortages plaguing the industry? Fast forward twenty months and there seems to be one technological innovation that covers all three – autonomous vehicles.

Autonomous vehicles (“AV”) have been on the mind of those in the automotive industry and governments for a number of years. In 2015, CAVCOE (formerly the Canadian Automated Vehicles Centre of Excellence) prepared an unsolicited white paper for the Government of Canada describing the opportunities and challenges in incorporating AVs into Canadian society as well as providing recommendations on implementation and incorporation1. In 2016, the province of Ontario launched a ten-year pilot program to allow the testing of AVs on Ontario’s roads. On September 13, 2017, the American Trucking Associations, Inc. (“ATA”) testified before the Senate Commerce Hearing on Transportation Innovation: Automated Trucks and our Nation’s Highways regarding, among other things, the positive impact AVs will have on the trucking industry2. The following month, the ATA issued its first Automated Truck Policy for the development of automated trucks3. Additionally, the provinces of Ontario and Alberta launched cooperative truck platooning pilot programs (January 1, 2019, and March 1, 2021, respectively) to test vehicle-to-vehicle communication technology under specific conditions along specified routes. While fully autonomous trucks (SAE Level 5 tech) will likely not be a reality on public roadways for a while, the use of AVs with SAE Level 3 and lower automation4 will support drivers by improving safety, lowering fuel burn and emissions, and reducing traffic congestion5. Increased use of AVs will also help with the issues of increased insurance costs and driver shortages. Pui Hong*

Insurance Costs and Liability

Truck insurance in Canada has continued to rise over the past few years. According to the Traffic Injury Research Foundation, more than 90% of road crashes are a result of human error or condition6. In 2018, the number of motor vehicle fatalities in Canada was 1,922, up 3.6% from 20177. Todd MacGillivray, Northbridge Insurance Vice President of Transportation and Logistics was quoted as saying that the “[trucking] business has been unprofitable for an extended period of time”8. The increasing cost of claims is a major contributing factor to this reality. In Canada in 2018, the average claim for property damage alone was $20,917. Where injuries were involved, the amount rose to $270,222, and where there was a fatality, it rose to almost $5 million9. The cost to run cross-border further increases insurance costs especially with the nuclear verdicts juries are awarding to plaintiffs in U.S. courts.

To combat increasing insurance costs, carriers are looking to technology to decrease safety incidents. The most common safety features of commercial vehicles today include forward collision warning, lane departure warning, and blind spot monitoring. Many carriers are also utilising fleet safety and risk management systems including outward facing cameras that record footage for a period of time before and after a recordable incident such as hard braking, hard turns, and speeding. In using available technology, carriers hope to decrease the number of traffic accidents and the cost of any damage sustained in addition to decreasing the severity of injuries sustained. This technology is a precursor to the development of semi and full AV.

With changes to technology and driving behaviour come changes to liability frameworks. Auto insurance in Canada is provincially/territorially regulated in Canada; accordingly, any changes to the way insurance is provided in Canada will require changes to the legislation of each province and territory10. There will be different challenges in determining liability and fault at different stages of AV deployment: (1) SAE Level 2 and 3 vehicles sharing the road with conventional vehicles; (2) SAE Level 4 and 5 vehicles sharing the road with conventional vehicles; and (3) Level 4 and 5 vehicles dominating the roads11. In the first stage where SAE Level 2 and 3 vehicles are sharing the road with conventional vehicles, the challenge will be in distinguishing between driver liability and vehicle liability12. Additionally, it is unclear how liability and fault will be shared in situations where both driver error and vehicle technology

contribute to an incident13. As the industry moves towards more automation, liability will start to resemble product liability shifting liability to vehicle manufacturers, software developers, third party service providers such as GPS and weather service providers, and infrastructure developers and operators14. An alternative approach to liability is the single policy approach. This approach was implemented by the United Kingdom in 2018 and recommended by the Insurance Bureau of Canada15. Under the single policy approach the “automated vehicle’s insurer would compensate injured people if the automated vehicle caused a collision, regardless of whether the human operator or automated technology was in control.”16 Canada’s current liability framework is adept at dealing with claims associated with SAE Level 2 and 3 automation but is not equipped to deal with novel situations brought about by SAE Level 4 and 5 automation, especially in common law jurisdictions where liability is decided by case law rather than statute17 .

As AVs are tested in various situations and environments, some provinces have made small changes to legislation and regulations to govern AV pilot projects. In Ontario, the Ontario Highway Traffic Act was amended to permit AVs on roads for pilot projects and sets out the minimum required insurance for vehicles with different seating capacities18. Quebec amended its Automobile Insurance Act which requires AVs to hold minimum liability coverage for property damage of $1 million as well as the standard no-fault coverage required under that Act19. While Canada’s current liability structure would be able to deal with claims caused by SAE Level 2 and 3 vehicles, as AV use increases and AVs move to SAE Level 4 and 5 automation, jurisdictions will need to revise and update laws and regulations on liability and fault determination in vehicle collisions20 .

Driver Shortage

Another issue plaguing the trucking industry is the shortage of drivers across North America. In 2019, Canada trucking industry faced an average job vacancy rate of 6.8% with long haul drivers facing a 9.4% average vacancy rate21. According to the FMCSA, in the U.S. turnover rates are over 90% for large, long haul carriers and over 70% for small carriers22. Canada is expected to be short 25,000 truck drivers by 202323 . In the U.S., it is estimated that the industry will need to hire 1.1 million drivers over the next decade (110,000 drivers per year) to meet demand in light of drivers retiring. Factors behind the shortage include an aging workforce, misconceptions about the industry among women and younger individuals, and a high turnover rate24 . Additionally, it takes time to properly train new, inexperienced drivers entering the industry before they can drive on their own.

The use of AVs could help with the driver shortage problem as there are a number of benefits to using AVs. A few examples include minimizing the stresses of driving (e.g. lane changes, merging, etc.); attracting drivers from non-traditional driver candidate pools (e.g. younger individuals and women); and altering the role of the driver in a manner that help minimize fatigue and support alternative arrangements such as job sharing. Additionally, increased use will undoubtedly impact the labour market and the driver’s role. While some driving jobs may be significantly decreased or eliminated in some industries (e.g., taxis, ridesharing, and haul truck drivers for oil and gas mining sites), that will likely not be the case for the trucking industry - at least for the foreseeable future. Automating the driving function will assist drivers by decreasing the stresses of driving and improving safety while on the road. As well, the use of technology may attract younger drivers and other demographics who are used to or are interested in working with the latest technology. It will also decrease the amount of training required before an individual is able to drive independently.

While AVs may not completely solve the driver shortage problem, it may help to alleviate it by enlarging the pool of potential drivers into those demographics that have traditionally shied away from careers in trucking as well as shortening the amount of time it takes to train new drivers.

Cybersecurity and Privacy

would be complete without a discussion about cybersecurity and privacy? With the advent of technological advances came an increase in cyberattacks. In 2007, a study found that hackers were attacking computers and networks at a rate of one attack every 39 seconds25. In 2020, the Internet Crime Complaint Center found that the rate of attacks was about one successful attack every 1.12 seconds26. In 2020, 86% of data breaches were financially motivated, 10% were motivated by espionage. Overall, 45% of breaches occurred by hacking, 17% involved malware, and 22% involved phishing27. These statistics are troubling in and of themselves but are even more so considering the recent high-profile attacks on SolarWinds and Colonial Pipeline. In order for AVs to work optimally, current infrastructure must support communication between vehicles, external communication devices, and infrastructure28. This connectivity results in a direct correlation between the risk and severity of cyberattacks and AV usage. In March 2020, Transport Canada published its Vehicle Cyber Security Strategy29. The Strategy “identifies overarching priorities with a view to strengthen the cyber security resilience of vehicles and the supporting road transportation infrastructure in Canada.”30 The 3 overarching cyber security goals for AVs in Canada are: (1) incorporating vehicle cyber security considerations into policy and regulatory frameworks; (2) promoting awareness and fostering a modernized, innovative approach to vehicle cyber security; and (3) addressing emerging and adjacent issues in the vehicle cyber security landscape31 . As important as it is for governments to implement strategies and legislation to combat the novel risks posed by AVs and the corresponding technological advances, it is also imperative that companies implement policies and practices to protect not only the stream of data flowing from AVs but also the security and privacy of personally identifiable information collected from its personnel and customers. In preparation for the increased use of AVs, companies should take steps to include AVs in its governance framework and cyber security preparedness. Additionally, companies should be mindful of the way vendors intend to use

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the data they access and negotiate contract terms accordingly.

As our society relies more and more on technology, cyber security risks and privacy concerns continue to be near the top of the list for many compliance and risk management departments. In 2018, the federal privacy commissioner highlighted to the industry that the privacy watchdog was concerned about the data generated by connected and autonomous vehicles and the need for transparency and improving consent around that data32. While the use of AVs decreases safety risks in one area, it increases safety risks in another area.

Autonomous Vehicle Use in Canada’s Trucking Industry

While widespread AV use in the trucking industry is not yet occurring in Canada, it is a matter of time before they will be used. The likelihood of seeing SAE Level 5 trucks being used in the near future is slim as such fully automated vehicles require more sophisticated infrastructure and connectivity, however, AVs providing assistance to human drivers will be more and more prevalent as governments and society embrace the use of AVs. Of course, how quickly AVs will be used and to what extent will depend on infrastructure support and public opinion of AVs. That being said, AVs have been shown to reduce crashes and assist drivers by utilising a combination of hardware (cameras, sensors, and radar) and software to help identify safety risks. This could lead to a decrease in insurance costs and change the perception of the trucking industry making it more appealing to a new demographic of workers such as younger individuals and women. Are AVs the solution to the trucking industries insurance and driver shortage problem? Possibly.

Endnotes

1 Preparing for Autonomous Vehicles in Canada: A White Paper Prepared for the Government of Canada, Canadian Automated Vehicles Centre of Excellence,

December 16, 2015. 2 Transcript of Statement of Chris Spear, President and CEO on behalf of American Trucking Associations, Inc. (ATA), September 13, 2017, Senate Committee on

Commerce, Science, and Transportation – Transportation Innovation: Automated Trucks and our Nation’s Highways, at https://www.commerce.senate.gov/services/files/7333E8F5-4577-41BF-91CB-DB08E3A146AE. 3 See Automated Truck Policy, October 24, 2017, at https://www.trucking.org/news-insights/ata-board-endorses-comprehensive-automated-truck-policy. 4 There are 5 levels of automation in a vehicle. SAE Level 1 is full human control. SAE Level 2 entails a automated driving system (“ADS”) assisting the driver with either steering or braking and is engaged at the driver’s request. SAE Level 3 involves an ADS performing the dynamic driving task in certain conditions, but the expectation is that the driver is ready and available to intervene at the ADS’ request or in the event of failures in other vehicle systems. SAE Level 4 involves an ADS performing the dynamic driving task where the human driver becomes a driver when the system is engaged. SAE Level 5 involves full automation of the entire driving task and the human driver is a passenger with no expectation that the human driver will need to intervene in the driving task. 5 Transcript of Statement of Chris Spear, President and CEO on behalf of American Trucking Associations, Inc. (“ATA”), September 13, 2017, Senate Committee on

Commerce, Science, and Transportation – Transportation Innovation: Automated Trucks and our Nation’s Highways, at https://www.commerce.senate.gov/services/files/7333E8F5-4577-41BF-91CB-DB08E3A146AE p. 3. 6 Robyn D. Robertson, Shawna R. Meister and Ward G.M. Vanlaar, September 2016. Traffic Injury Research Foundation; Automated Vehicles: Driver Knowledge,

Attitudes, & Practices, Executive Summary p. i. 7 https://tc.canada.ca/en/road-transportation/motor-vehicle-safety/canadian-motor-vehicle-traffic-collision-statistics-2018. 8 Smith, John G., October 2, 2020, at https://www.trucknews.com/transportation/hard-market-continues-to-drive-truck-insurance-costs-higher/1003145228/. 9 Id. 10 Council of Canadian Academies, 2021. Choosing Canada’s Automotive Future, Ottawa (ON). The Expert Panel on Connected and Autonomous Vehicles and Shared

Mobility, Council of Canadian Academies p. 58. 11 Id. at p. 58. 12 Id. 13 Id. at p. 59 14 Id. at p. 60. 15 Id. at p. 62. 16 Id. at p. 62. 17 Id. at p. 62. 18 O. Reg. 306/15, s. 2.2. 19 Council of Canadian Academies, 2021. Choosing Canada’s Automotive Future, Ottawa (ON). The Expert Panel on Connected and Autonomous Vehicles and Shared

Mobility, Council of Canadian Academies p. 61. 20 Id. p. 60. 21 Smith, John G., March 11, 2020, at https://www.trucknews.com/transportation/canada-short-25000-truck-drivers-by-2023 report/1003137725/#:~:text=”The%20truck%20driver%20occupation%20in%20report%20concludes. 22 Heavy Duty Trucking Staff, July 8, 2021, at https://www.truckinginfo.com/10146957/ata-usdot-officials-discuss-truck-driver-retention-challenges. 23 Id. 24 Smith, John G., March 11, 2020, at https://www.trucknews.com/transportation/canada-short-25000-truck-drivers-by-2023 report/1003137725/#:~:text=”The%20truck%20driver%20occupation%20in%20report%20concludes. 25 See https://www.comparitech.com/vpn/cybersecurity-cyber-crime-statistics-facts-trends/.

26 Id. 27 https://www.varonis.com/blog/cybersecurity-statistics/. 28 Jarvie, Max and Nagy, Andy, June 2020, at https://www.blg.com/en/insights/2020/06/the-sensor_-_legal-insights-into-autonomous-vehicles-june2020. 29 See https://tc.canada.ca/en/road-transportation/innovative-technologies/connected-automated-vehicles/transport-canada-s-vehicle-cyber-security-strategy. 30 Id. 31 Id. 32 Love, Robert L. and Vila, Edona C., January 31, 2019, at https://www.blg.com/en/insights/2019/01/the-sensor--the-legal-crystal-ball-autonomous-vehicles-developments-to-watch-for-in-2019.