Developing An AV Vision Part 5:
Autonomous Trucks vs. Rail Freight: Game Over?
Key Takeaways
- Autonomous trucks are already logging 620,000 miles per day in China, with over 2,000 vehicles on the roads, signalling that widespread adoption is just over the horizon.
- Autonomous trucks could reduce costs by up to 42% per mile on long-distance routes while operating 24/7 without driver breaks.
- Rail freight faces structural challenges with no automation on the horizon, continued diesel dependence, and increasing conflicts with passenger services for track access.
- The traditional arguments for shifting freight to rail: safety, emissions, and congestion, are all undermined by autonomous electric trucks.
- Smart road user charges based on time, location, weight, and environmental impact can incentivise autonomous trucks to operate during off-peak hours, potentially reducing congestion, even with more trucks on the roads.
- Revenue from road user charges can fund infrastructure upgrades to handle heavier electric trucks, reducing concerns about road damage.
- The shift from rail to road freight may benefit the environment if autonomous trucks are electrified while rail freight continues using diesel.
- Increased demand for passenger rail services, driven by road user charges on autonomous cars, can fill the funding gap currently supported by freight rail.
- After 30 years of failed strategies to shift freight to rail, it's time to adopt a mode-neutral approach and let market forces determine the most efficient transport mode.
- Rail freight won't disappear completely but will serve a smaller niche where it remains competitive.
What Next?
In part 6 of this series, I will look at the impact of autonomous vehicles on last-mile freight and how that should inform our vision for AVs.
Introduction
In the last few weeks, I have been exploring how autonomous vehicles (AVs) will transform different aspects of our transport systems. The goal is to develop a clear vision for how we should deploy AVs to deliver the best outcomes for society. This week, I turn to long-distance freight trucks.
The timing couldn't be more critical. Freight costs have been rising faster than general inflation, pushing up prices in our shops. Labour shortages plague the trucking industry. Meanwhile, decades of attempts to shift freight from roads to rails have largely failed.
Now, autonomous trucks are arriving fast. What do they mean for our strategic thinking around freight and our transport systems?
The Rise of Autonomous Freight Trucks
Looking back, I think 2025 will be remembered as the year when the freight industry woke up to autonomous vehicles.
Consider this: at the beginning of 2025, the NSW freight review didn't mention autonomous vehicles at all. They simply weren't on the radar of transport planners. A year on, I think that would not be the case.
What shifted? The numbers became impossible to ignore. Inceptio Technology's autonomous trucks now log 620,000 miles per day on China's roads. Yes, per day. Over 2,000 autonomous trucks are operating in China, and that number is growing rapidly.
China is far ahead of the rest of the world, but other countries are beginning to see progress. The trajectory is clear: autonomous trucks are coming.
So what does this mean for our transport systems?
The Current Strategy: Moving Freight to Rail
For decades, transport planners around the world have pursued the same goal: shift long-distance road freight onto rail.
The logic appears compelling. Moving freight from roads to rail delivers multiple benefits:
- Reduced traffic congestion
- Less damage to road infrastructure
- Lower pollution and emissions
- Improved safety on highways
- Better utilisation of rail infrastructure, generating revenue that supports passenger services
Yet despite these benefits being embedded in strategies everywhere, most jurisdictions have failed to increase rail freight’s mode share. Many have actually gone backwards.
Why? Last year, I wrote about the structural barriers.
The short version: freight rail suffers from structural problems that lead to chronic neglect, making it uncompetitive with road freight. Most freight rail reviews focus on fixing the symptoms of neglect rather than addressing the underlying structural issues. This is why recommendations for reform get accepted but then quietly ignored.
The reality is that for many goods and distances, road freight is currently cheaper and more reliable than rail.
How Autonomous Trucks Change Everything
Autonomous trucks bring a suite of advantages that fundamentally alter the economics of road freight:
No breaks required. Fatigue is a major challenge in road freight. Human drivers must stop regularly to rest, slowing delivery times. Autonomous trucks eliminate this constraint, operating continuously without fatigue-related stops.
24/7 operations. Human drivers can only work a limited number of hours per day. Autonomous trucks can keep moving around the clock.
Superior safety trajectory. I'm not interested in debating whether autonomous trucks are safer than human drivers today. We're developing a long-term vision here. The key point is this: autonomous trucks will continually improve their safety record in the years ahead, while human-driven trucks will not. Eventually, autonomous trucks will be definitively safer.
Solving the driver shortage. Long-haul trucking struggles to attract workers in many countries. The industry faces high turnover and chronic recruitment challenges. Autonomous trucks eliminate this problem.
Potential for zero emissions. Today, most autonomous trucks aren't electric; many in China run on Liquefied Natural Gas. But the future trajectory points toward electric autonomous trucks powered by increasingly clean energy sources. They'll still generate pollution from tyres and brakes, of course.
Dramatic cost reductions. According to McKinsey analysis, autonomous trucks could reduce the total cost of ownership for long-distance routes (over 1,500 miles) by up to 42% per mile.
This 2021 research modelled what these changes might look like in Sweden, providing early evidence of the scale of disruption ahead.
In short, the future of road freight will be far more appealing and significantly cheaper than today.
I haven't covered labour transition issues, connectivity infrastructure requirements, or battery range challenges for long-distance electric trucking. That's deliberate. We're developing a long-term vision here. While these will all pose challenges in the short and medium term, I expect them to be largely resolved over time.
The Uncertain Future of Rail Freight
Now contrast this with the outlook for rail freight:
No automation on the horizon. While trucks are automating rapidly, freight rail is not. Yes, autonomous train systems exist. But the governance structures and fragmentation of most rail systems mean they won't be automated anytime soon. This means no significant cost savings from automation.
Increasing conflicts with passenger services. Many jurisdictions are expanding passenger rail services. Where freight and passenger services share tracks, this creates conflicts. In most countries outside the United States, passenger services get priority, leaving freight with increasingly poor network access.
Uncertain path to decarbonisation. Rail freight runs overwhelmingly on diesel. While trials of alternative fuels exist, the economics of transitioning a low-margin business with long-lived assets remain deeply uncertain.
The implications are stark. Rail freight costs are unlikely to fall significantly, if at all. Meanwhile, road freight costs could plummet. The result? A massive shift of freight from rail to road, exactly the opposite of what most governments' strategies call for.
Rethinking the Case for Rail Freight
Is this shift necessarily bad? Should we fight to preserve our rail freight strategies, or is it time to rethink them entirely?
Let's examine each traditional argument for rail freight in a world with autonomous trucks:
Safety. As autonomous road freight becomes safer, the safety advantage of rail diminishes or disappears entirely.
Pollution. If road freight electrifies while rail freight continues using diesel, the environmental argument for rail disappears, and potentially reverses.
This leaves three arguments standing: traffic congestion, road infrastructure damage, and funding for rail network fixed costs.
At first glance, the first-order effects all look problematic:
- More freight switching from rail to road increases congestion
- Electric trucks are heavier than diesel trucks (due to batteries), increasing road damage per vehicle
- More trucks on roads means even more total infrastructure damage
- Lost rail freight revenue leaves rail infrastructure funding gaps
But we need to think about second-order effects and policy responses.
The Road User Charging Solution
I've consistently argued that we need road user charges for autonomous vehicles, including autonomous trucks. This changes everything.
You might assume road user charges would simply increase road freight costs, helping rail freight compete and achieving our strategic goals. But it's not that straightforward.
I'm not proposing a simple distance-based charge. I'm envisioning a sophisticated system that accounts for:
- Which roads you use (quieter roads cost less)
- Congestion levels (off-peak travel costs less)
- Environmental footprint (incentivising clean energy)
- Vehicle weight
- Distance travelled
Today, if you imposed road user charges on freight trucks, operators have limited options to reduce those charges. Goods costs might rise, which is why so few jurisdictions charge road freight.
But autonomous trucks unlock new operational flexibility. They can shift to night driving and off-peak times without the constraints of human driver schedules. This would dramatically reduce their road user charges, allowing them to potentially lower costs through automation while still paying for road use.
Crucially, moving trucks off-peak would reduce congestion, even with more total trucks on the road as freight shifts from rail.
So the congestion argument for rail freight weakens considerably.
What About the Other Arguments?
That leaves two arguments: road damage and rail infrastructure funding.
Road user charges don't just change behaviour, they generate revenue. If governments use this revenue to upgrade and maintain roads for heavier loads, the concern about road damage could be greatly mitigated.
Now we're down to the rail infrastructure funding argument. This is perhaps the weakest case for rail freight in most places, but it still matters.
In the United States, where passenger trains run as secondary services on freight railroad tracks, losing freight revenue could be catastrophic. If railroads can't compete and maintain infrastructure, freight lines could close entirely, taking passenger services with them.
But this is where we need to think holistically about the entire transport system, not just freight.
I believe we need road user charges for all autonomous vehicles, not just trucks. As AVs become ubiquitous and road user charges spread, we should see increased demand for alternatives to driverless cars, including passenger rail. We'll need more passenger rail services, not fewer.
This increased passenger demand, if priced appropriately, should generate revenue to cover the fixed costs of rail networks where passenger services are the primary use, which is most places outside the United States.
What about the United States? I'm genuinely uncertain what would happen if we removed Amtrak's current service limitations and let passenger rail compete on equal terms with freight. Would more reliable, frequent service trigger a renaissance in interstate passenger rail? Perhaps. It's worth exploring.
And with that, even the final argument for prioritising rail freight over road freight disappears, at least outside the United States.
A New Strategic Direction
It may be time to abandon our strategic bias toward rail freight, a strategy we've largely failed to implement anyway, and adopt a more mode-neutral approach.
Set infrastructure charges to recover capital and maintenance costs. Let operators choose the most efficient mode. See where market forces lead us.
Rail freight won't vanish. Some routes and cargo types will remain competitive. The economics of autonomous trucks become less compelling over shorter distances.
But rail freight will be a smaller industry. And that may be perfectly fine.
Conclusion
For decades, transport planners have pursued a clear goal: shift freight from roads to rail. The benefits seemed compelling: less congestion, safer roads, lower emissions, and reduced infrastructure damage. But autonomous trucks are about to upend this entire strategy.
The math is simple. Autonomous trucks will cut costs by up to 42%, operate 24/7 and solve chronic driver shortages. Meanwhile, rail freight faces an uncertain future with no automation on the horizon, continued reliance on diesel, and increasing competition for track access from passenger services.
The traditional arguments for rail freight are crumbling. Safety? Autonomous trucks will be safer. Environment? Electric autonomous trucks beat diesel trains. The economic case simply doesn't hold up anymore.
But this doesn't mean chaos on our roads. With smart road-user charging based on time, location, weight, and environmental impact, autonomous trucks will naturally shift to off-peak hours. This operational flexibility, impossible for human drivers, transforms the equation. Trucks can reduce their costs while paying for road use, and governments gain revenue to upgrade infrastructure for heavier loads.
Perhaps it's time to stop fighting. Instead of clinging to a rail freight strategy we've never successfully implemented, we should embrace a mode-neutral approach. Set infrastructure charges fairly, let operators choose the most efficient mode, and use the revenue wisely.
Rail freight won't disappear entirely. Some routes and cargo types will remain competitive. But the industry will be smaller, and that's probably okay. The bigger picture matters more: cheaper goods, cleaner transport, safer roads, and a transport system that works more effectively.
The game isn't completely over for rail freight. But autonomous trucks should force a rethink.