Mr. Brown is responsible for the federal, state, and local public and government relations for TuSimple. Working with legislators and regulators on best practices for safety, commercial viability, and policies. He works on building coalitions of industry, OEMs, Tier 1 providers, associations, and academics in the autonomous vehicle industry. Prior to TuSimple, he worked for the state of California, was Vice President at the Mitchell Firm, taught at Oxford University and University of California, San Diego.
Jon Panzer is the Senior Vice President of Technology & Strategic Planning at the Union Pacific Railroad. Jon has been an influential leader across UP for the last 24 years.
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3 Value Bombs
1) The transportation industry isn’t as exciting as technology and aerospace. There’s a lot of technology involved, movement, and being more sophisticated with e-commerce as consumers demand an interest change.
2) Get excited about automation. Be open minded. Realize that it is not tomorrow – change is incremental. As we go on in our lives, there will be more automated kiosks and robots in the streets. Automation is here. As a country and as a society, it is key to keep us moving forward.
3) Logistics is about getting goods to where they need to be. It’s from the beginning of the manufacturing process to warehousing and then distribution to stores and e-commerce where people make a purchase. Logistics makes sure that all of that happens behind the scenes without hiccups.
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**Click the time stamp to jump directly to that point in the episode.
Today’s Audio MASTERCLASS: How Self-Driving Trucks Will Change the World with Robert Brown and Jon Panzer
[1:26] – Robert describes the logistics industry to people who aren’t familiar
- It is a trillion-dollar industry in the US.
- 70% of all freight is on trucks.
- Getting stuff around the country is a vital part of the economy.
[3:30] – Robert breaks down his entire business model.
- They are the largest autonomous truck company in the entire United States.
- They retrofit trucks with their technologies – cameras, radars, and sensors.
- They are purpose-building the technology with the design of XAE Level 4. That level is defined as vehicles that are automated to go through a defined route.
[6:48] – How does his company win in the current marketplace?
- They are a tech company and they have partnerships, which will allow their company to scale.
[8:18] – What are the biggest challenges Robert thinks they will face over the next 3-5 years?
- They want to build their core competency in their software and the integration of their technology.
- There are a lot of timeframes that everyone needs to hit while working together to be able to deliver.
- Robots are very good at repeatable tasks.
- They want to be the best human driver, because one thing that a computer can do is to react faster, not get drowsy, not text, and not sleep.
- It will be at least a 10-year window before we see a market automation with long haul heavy trucking.
[11:21] – The driverless truck network, what does it look like?
- Think of it as a 5G phone, but you need a network like AT&T or Verizon network to make that phone work.
- They are building simple autonomous networks with their partnered fleets that will buy their international trucks and then build their network.
[12:55] – A timeout to thank our sponsors, ZipRecruiter and Creighton!
[15:16] – There will be changes in the industry where driverless trucks become the norm; how do they talk about job displacement?
- Be transparent and honest. Robert always reminds himself to be sensitive and aware when talking about the industry.
- There’s so much more that the technology can’t handle.
- Not one driver will lose their job to this technology.
[19:06] – The reason why automation is a good thing.
- There are environmental benefits when it comes to fuel savings. A 10% fuel economy is documented with autonomous trucks.
- There’s a capacity issue of not being able to have enough drivers, which is why they’re not manufacturing more trucks.
- This won’t displace drivers.
[21:19] – Robert’s key takeaway for Fire Nation.
- Get excited about automation. Be open minded. Realize that it is not tomorrow, it will be incremental. As we go on in our lives, there will be more automated kiosks and robots in the streets. Automation is here. As a country and as a society, it is a key thing to keep us moving forward.
[23:48] – Jon shares something interesting about himself that most people don’t know.
- He’s been teaching himself French. He’s been doing it for 2 years already.
[24:43] – What does the logistics industry mean to an outsider?
- It’s about getting goods to where they need to be. It’s from the beginning of the manufacturing process to warehousing and then distribution to stores and e-commerce where people make a purchase. Logistics makes sure all that happens behind the scenes without hiccups.
[25:20] – What are the strengths and weaknesses of the railroad industry?
- It’s effective when you have heavy and dense freight. It’s also fuel efficient.
- Disadvantage is that railroads don’t go everywhere. It’s slower and less reliable than trucking. Railroads are about a day slower than trucking.
[27:27] – The products that Jon focused on.
- The biggest growth area for railroad now is containerized freight.
- They compete with trucks, but they are their partners as well.
[29:01] – Who else is their competitor?
- They have other railroads, and then trucks are next in line.
- Short-sea shipping can also be considered, where freight might come from one port to another within the country. Ocean shipping is quite cheap.
[29:50] – What does Jon define as winning, and how does he do it?
- If you win the freight, you win.
- Customers care about three things: Capacity, Reliability, and Value or costs compared to competition.
[31:22] – A timeout to thank our sponsors, ZipRecruiter and Creighton!
[33:52] – What are some of the biggest challenges your company might face in the next 5 years?
- Their market shifts a lot.
- E-commerce is bad for rail; it requires them to move fast, therefore posing a big challenge for them since they move a day slower than trucks.
- Technology is evolving rapidly.
[36:12] – How long will it take until driverless trucks becomes a serious contender, and how will it impact the industry?
- They are a threat, but it’s also an opportunity.
- Transportation companies may jump at it quickly.
- We have to face the reality of technology advancements.
[38:22] – How will railroads and other established freight companies compete with driverless trucks when they become reality?
- They need to continue to make sure that trains get longer and more efficient, which dilutes the costs.
- Work on their own automation.
- Try to figure out how autonomous trucks could work in conjunction with railroads.
[41:13] – Self-driving trains and bullet trains—what does it look like to get there?
- The railroad industry has put in an extensive safety system that keeps trains from running red lights and going too fast, or running to each other.
- Next step is to create a software that would allow these trains to run autonomously.
- Full automation might be as far as 10 years out still
[44:09] – Jon’s key takeaway for Fire Nation
- The transportation industry isn’t as exciting as technology and aerospace. There’s a lot of technology involved, movement, and being more sophisticated with e-commerce as consumers demand an interest change.
Boom, shake the room, fire nation. JLD here with an audio master class on how self-driving trucks we'll change the world to drop these Value Bombs. I have brought up Robert Brown on the mic. Robert is responsible for the federal state and local public and government relations for two simple Working with legislators and regulators on best practices for safety, commercial viability, and policies. He works on building coalitions of industry. OEMs tier one providers, associations and academics in the autonomous vehicle industry. And Today fire nation. We'll be talking about the biggest challenges that there are companies face. And the next five years with self-driving trucks on the horizon, how far away are driverless trucks from actually becoming a reality?
What changes is it mean in the industry is Automation actually a good thing and so much more when we get back from thinking our Sponsors, this advertisement is brought to you by Creighton university, with the support of union Pacific, a degree from credence Heider college of business will empower you to think boldly Lee confidently and shape your future. For more program info, and to schedule an appointment with an enrollment specialist, or to start an application today, go to gradschool.creighton.edu. Robert say what's up too fire nation, and let's explain the Logistics industry to an outsider.
1 (1m 26s):
All right. Awesome. Well, thanks for having me. The logistics industry is incredible. It's a trillion dollar industry and the us, you know, especially the trucking industry, there's a sane. If you bought it at a truck, brought it up 70% of all freight has moved on Trucks. Umm, and then also trains in all sorts of, you know, on planes, trains and automobiles in, you know, just an immense amount. And as everyone, you know, during COVID with the increase of e-commerce and everyone expecting their stuff, you know, hours after you order it rather than days, an Amazon really Driving that, you know, through a competitors. So you have seen a huge announcements from Walmart and target and, and just an incredible amount of pressure on a already stressed system, you know, and, and getting stuff around this country.
1 (2m 13s):
Is it an important part of food, safety, security, and you know, and of course, just convenience now that we demand that a, you know, ours should be rather than one day shipping and a, just an incredibly vital part of our economy and workforce, you know, and you know, millions and millions Americas are our employed by our transportation and in the industry as well.
0 (2m 35s):
It is incredible. I've actually lived down here in Puerto Rico for four years now. So I was here during hurricane Maria and it just blew me away that after hurricane Maria, like we still have the logistical capability to get food across this Island with just like this unbelievably, you know, rural roads and mountains and all these different things, but they were still able to make things happen in to me. I was actually an armor officer in the army for two years and then my last two years and the army, I was a logistics officer. So I went to For uses to Logistics school as well. So I definitely have a little background in that. It's been, it's been a while.
1 (3m 10s):
Well, thank you for your service though. That's really cool. I'm sure.
0 (3m 13s):
Ah, thanks Robert. I appreciate that. And in the introduction I shared with fire nation, everything that you're responsible for, which is a lot, can you break down for fire nation, your current business model
1 (3m 25s):
Right now we are the largest autonomous truck company in the entire United States with a whopping 40 Trucks. So I say that we have to kind of a tongue and cheek because as anyone that knows that trucking industry, that is a, you know, I mean it's not very much, but you know, and it still a, a new industry. And right now we, we retrofit internationals and, and Peterbilt trucks with our technologies, with cameras and lidars and all sorts of great sensors. And we test the software that we're developing along with all the, all the hardware as well, every day between kind of bookend in between Phoenix, Arizona, and Dallas, Texas a we, we haul cargo for folks like ups.
1 (4m 6s):
We did a pilot with the United States postal service. I'm a clean foods, Arizona, a food bank. And so we get real world testing and, and also what's nice about it too, as we were not just out there and driving around empty Trucks, you know, we're actually a purpose building the technology with the design of, of what they call a SAE level for. And basically for folks that aren't familiar with the se levels, which is probably 99.9% of the population, that is a kind of the levels that you can pick a level of five Jetsons, a car, and it can go anywhere with the robot. A level four is, is really cool. It can do it go, you know, without a driver, but it's defined route. So, you know, between that, you know, ups facility and, and Phoenix to the ups facility, you know, Paso, Texas, we have the map that he can kind of think of it, putting it down in a digital Railroad and then the truck can run autonomously on that digital Railroad where we mapped.
1 (5m 1s):
So it can't just, you know, on a split decision, just take off to another location and, and that kind of thing, but the, the, the, the technology and the business use case where I think repeatable routes, high volume, which is great, you know, for the film in the long haul trucking industry. And, and that's the, the business problem we're trying to solve with this great technology.
0 (5m 19s):
Well, I'm actually one of those people that walks around saying very loudly. I can not wait for the day that every single moving vehicle is driverless. And whenever I come across somebody that's like, I will never get into a driverless car. I go, you are a crazy person, because if you honestly believe that, like you don't realize how horrible human beings are driving it, it is so bad. It's so, so bad. I mean, in smartphones with texting and social media, it's only getting worse. I can't drive a car with a looking over at who I'm passing and Oh, nine times out of 10, their faces in a phone. I'm like, you're literally driving a car right now.
0 (5m 60s):
What is happening?
1 (6m 1s):
You know, we, we, we have, we were chatting before, you know, the community, I live in a beach community and you're taking your life in your own hands off the street and terrifying because you, you, you have your head on a swivel, you know, your dodging cars, because you have no idea if someone's going to see that stop sign or see you, you know, so yeah, the, that it was, you know, as I'm speaking to him on an iceberg, a smartphone and do everything on my smartphone, they've created distracted driving as, as causing headaches and a half, you know, for, for safety, for pedestrians and also, you know, cars and trucks on the road. For sure.
0 (6m 32s):
I mean, distracted driving is the majority, not the minority of drivers out there. And Robert, you have 40 Trucks. So how does your company, when in the current marketplace
1 (6m 43s):
Awesome company and it's for fun, and if you're ever out in Tucson, Arizona come out, come out for a visit and, and we have some cool stuff on YouTube, cause it, during COVID, obviously we can't have as many visitors. And so you can see the Technology of GE working on a daily basis. So, and we videoed some of our runs and whatnot, but, you know, so we were in the R and D fleet. We're a tech company, but I know what I tell people where it's going to get interesting is when you actually going to start seeing some scale, you know, if we take these 40 Trucks and, and turn it into hundreds of thousands of vehicles and that's through our partnerships, and we, we recently announced a partnership with Navistar that makes the international brand of heavy duty trucks. There are one of four or a leading North American, or it can OEMs.
1 (7m 23s):
And we announced a partnership with them about a month and a half ago. And, and that, and they've put a flag in the ground of 20, 20 For. And that's when you're going to start seeing a factory built know automotive grade and build to the highest safety standards out on the roads, you know, at relative scale, you know, even at scale, I mean, I always tell people that it's truly transformative technology, but it will take time. It will take, you know, regions and, and, you know, it's not no surprise that it will be the first corridor to be automated. And, and, and as we worked our way North, or, you know, doing it with the other, she was like weather and snow and, and, and, and all of the other different things that can have an encounter, a trunk on the highway.
0 (8m 4s):
And now Robert all companies face challenges. So I'm just curious with where you're at right now. What do you see are the biggest challenges that your company is going to face over the next three to five years?
1 (8m 15s):
You know, we have built an ecosystem, be like to say, I know everyone uses that term, but it's like this idea that, you know, but we want to be able to our core competency, which has the software and the integration of the technology, but we also are relying upon, you know, our great partners with Navistar is some tier ones, which, you know, make the components, you know, from breaking the steering. So there's a lot of timeframes that everyone needs to hit while working together to kind of deliver that promise. And that is that it is a, it is in a pretty aggressive time frame. You know, I, as someone like, you know, that, you know, especially in pre COVID, I use to try and get into the truck once a month to really see the development. Remember I've been with the company now almost three years. The first time I got out and I was like, this is, but now it's this incredible.
1 (8m 59s):
And I feel like I have two young boys, but I feel like a proud parent sometimes when I get on the truck and I see, and making decisions and changing lanes, doing a very humanistic behaviors, right. I'm, you know, robots are very good at repeatable a repeatable tasks, right. But creativity and, and nuance. And, and, and we, we, and it was, we, we, we talked, but we drive around kind of like were robots. And we just do it say to the nature, but humans are very good instinctual, creative creatures, you know, and there's, you know, I just think merging, you know, the next time we, you merge on the highway, think about it, like the social interaction you're having with those other people around you, some who are paying attention, some who are not, and, and, and, and teaching The the truck to be able to navigate that and see it and be seamless.
1 (9m 42s):
Right. We don't want us to go out like a sore thumb and, and, and luckily folks that have know the industry that have, you know, cut their teeth in the trucking industry of the entire careers, including our own drivers. And by the way, it is driver appreciation week. So think of a truck driver Today for all of that stuff that is on your store shelves. You know, we want ours to, to drive like the best human driver, if not better, because one thing about a computer can do it can react faster. It doesn't get drowsy, it doesn't sleep. It doesn't text all that kind of stuff that we outlined
0 (10m 12s):
Driverless trucks. They are a reality. I mean, you've already talked about the, the legs you are doing right now from Arizona to Dallas and back, but how far away is like 50% plus driverless trucks from just becoming a reality? What was that?
1 (10m 26s):
Yeah. Yeah. Just for fun. Yeah. I mean, it's going to take years for like, you know, 50% market share of, you know, that type of, because of the trucking industry is a very diverse to, you got to think of it as that is. Not every people always picture the over the road, long haul truck, but, you know, there's, there's all sorts of heavy calls and tankers and, and refrigerated units and, and, and local pickup and delivery, you know, delivering the beer kegs to your local bar and restaurant, you know, so there's, the trucking numbers are very high, but, you know, w when it comes to the long haul market, and you're looking at it probably at least a 10 year, you know, kind of window before you see any sort of like market saturation for Automation long haul, heavy trucking.
0 (11m 12s):
So let's talk about the driverless truck network. Like, what would that look like? I know we, like we said, it was going to take time to get to that place, but once we do get there, like, how does that actually perform? Yeah,
1 (11m 24s):
That is actually, it was a partner or an earlier announcement this week, we call it the TuSimple autonomous freight network. So a lot of people think of, you know, the autonomy, a truck that we announced that our national, I think of that as, you know, your 5g phone, but you need the at T and T Verizon network to make that phone work. Right. So that's what TuSimple comes in. And our core competency, like I said, the technology and integrating throughout the system, we're building the, to be a simple autonomous freight network with our partners, like ups, like McLean, like us express. Now these are the, these are the fleet's that will, by those international truck's in 20, 20 For. And then they get to build out that network so that when that truck is available off the factory line, that network can support us.
1 (12m 6s):
So right now we go from Phoenix to Dallas. So we're going to be checking in with our partners like ups and be like, okay, as, as, as a, as a route to Charlotte, you know, is that your next or, or Atlanta, or go down to Miami, you know, where, where is the freight moving in your network that you need us to build that digital Railroad. And that's what the TuSimple autonomous freight network
0 (12m 24s):
Fire nation I've already learned so much in such a short period of time here with Robert. I love where the inner city is going for the reasons that I've already shared earlier. That's, you know, basically I don't trust in and really just dislike all distracted drivers out there and the world, unfortunately, that is the majority of people, but we have some really important key things that will be talking about. As soon as we get back from thinking our Sponsors, if you're ready to take your business education to the next level than a graduate degree from Creighton universities, Heider college or a business will empower you to think boldly lead confidently and shape your future. The Heider college of business offers multiple formats and delivery options, including part-time and full-time programs, as well as one of the courses, without the commitment of a full degree, you can also choose to take courses online or on campus to fit your busy schedule.
0 (13m 14s):
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0 (13m 54s):
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0 (14m 38s):
All you need is wifi. To try it for free, just go to zip recruiter.com/fire, ZipRecruiter the smartest way to hire. So Robert, we're back. And I'm going to talk about changes to the industry. There's going to be some changes when it driverless trucks become the norm. I mean, there's obviously the thing about job displacement in all these others, things that happen. So how do you talk about that?
1 (15m 4s):
And transparent and honest, and that comes from a family of truck drivers Evers, and, you know, and I, and I've done trucking call-in shows and Sirius radio, and he spoke at maths at all, all sorts of things. And I always tell people, you know, I, when I'm talking about this technology, I also to remind myself, you know, people will drive trucks, that to feed their families, right. You know, and so you have to have a, a S S sensitivity and awareness. And so I hope this comes across your listeners, as well as a genuine thing that, you know, I'm supposed to be the most bullish person in this room about this technology. And I truly believe not one person will lose their job to automate a Trucks there a job hopefully will be better. We'll still need truck driver's on each end of that route, you know, to deliver to that Wal-Mart or deliver to that, you know, Kroger or Vaughn's where the driver can go home, you know, be home with them, with their families every night.
1 (15m 55s):
But that segment of that long haul, you know, from Phoenix to Dallas, or, you know, Miami to Seattle, you want to take the longest route. We can think of it, you know, we can handle that, but there's so much more of the technology can't handle. And, you know, the average age of a truck driver in the last I saw that I was 55, you know, there's estimates, you know, obviously pre COVID that, you know, there is a shortage of around 50,000 drivers. So maybe one day, you know, maybe that, that job isn't replaced by a human it's, you know, just through retirement and nutrition, because it is done by, you know, an autonomous vehicle. But again, I, I fervently believe that not one driver will lose their job to this technology.
0 (16m 33s):
That's awesome. And speaking of like, just how you're going to exist, and co-exist like, how can and will driverless trucks actually interface with existing Transportation networks? Like in other industries, like railroads and, and planes and ships, like, how could that work on a practical level? All right.
1 (16m 50s):
You hope complimentary, you know, a lot of people talk about intermodal, you know, being a transformative, a segment, you know, when mr. Hahn JB hunt sign, that deal with Burley's in Northern, you know, and in intermodal exploded a lot of people to see this as it could be intermodal 2.0, where instead of it's instead of truck to train back the truck, it's manual driven truck to autonomous truck, to a man or a truck, you know, and where that middle segment or that middle mile has done by Automation, you know, increasing That, you know, because the artist, the What is decreasing that capacity right now. A if you, if you talked to any of the big fleets right now, is that long haul segment for time-sensitive goods, you know, everyone's bought in that thing of strawberries that left, you know, the port of LA and, and needed to get to Chicago.
1 (17m 39s):
And by the time they get to the grocery store, there is a, you know, a day away from, you know, being grown mold, you know, how do we create that supply chain to be seamless for that time sensitive type of goods that need you to move across country That, you know, and, and, and, you know, efficient way where you're not paying an arm and a leg and, and driving up the consumer costs. And so that's where we see, I think this, this intermodal 2.0, really taking hold a for those times that it is a top service type of goods, you know, whether it's e-commerce medical supplies. I mean, we used to say that, you know, as a, kind of just a talking point, but now with Ken, with COVID, and, you know, from, from math to ventilators tu, you know, you know, Clorox wipes, you know, everyone, you know, during COVID, and, you know, when the first one to that grocery store and saw the shelves empty, that's the Transportation, you know, a choke point, you know, so, you know, increasing that capacity is vital.
1 (18m 30s):
Not only For, you know, our convenience, but also just, you know, our national security and, and, and jobs across this country.
0 (18m 37s):
I know, I know that you think that Automation is a good thing, and I do as well. And you've talked about that, you know, just recently on your last answer, as well as throughout this entire interview, but one thing I want to ask you is why is automation a good thing? Look like let's kind of expound upon that a little bit. Maybe give some examples that you've seen in other places that's really exemplifies the great virtues of automation. Obviously, you know,
1 (19m 1s):
You touched upon the safety aspect, but you're also going to be see some environmental benefits when it comes to a fuel savings. You know, we've, we've already documented a, a 10% fuel economy increase with autonomous trucks. And then, you know, to most probably casual listeners, that's not a huge deal, but 10% fuel economy, you're talking to, you know, hundreds and thousands of gallons of diesel fuel, you know, that that will be saved, you know, from this type of technologies. Do you have an environmental benefits along with, you know, the upstream and downstream have of the economy? You know, right now there is a capacity issue, you know, with not being able to have to have enough driver's so they're not making as many Trucks. And so, you know, you know, Navistar can now, you know, manufacturer more Trucks, that means more tires.
1 (19m 46s):
That means more, you know, diesel mechanics. And then obviously, you know, the downstream of, you know, the consumers, you know, the grocery store is the, the cost of That milk, you know, the opening new markets for small business, for the dairy farmers, For, you know, agricultural, you know, folks to go to, to get a trend goods across this country. I mean, I know there is a lot of fear and I'm totally understand where it comes from from people, you know, from a safety perspective, again, from a workforce perspective. But again, those are the types of answers that we're working on every day, we will deploy in a, an unsafe product in it. And again, I like to remind people that, again, this won't displace, you know, drivers that will hopefully will make their drive there, there drives, you know, a lot easier and making their, how they do business better as well.
0 (20m 31s):
Fire nation, your hearing Robert kids in the background that we kind of are joking about it in the pre-interview chat. Like, Hey, this is the new world we live in. It's actually the norm now to hear just life happening in the background, because, Hey, this is life. And I love all of it for all of those reasons in Robert you dropped so many Value Bombs. So this entire interview was the one key takeaway. Like what's the one that thing you want to really make sure fire nation gets from everything that we've talked about today. And then we'll say goodbye,
1 (20m 58s):
You are getting excited about Automation just in trucking. And you're seeing it on lots of different modes of transportation and getting yourself prepared and being open-minded. But that at the same time, realizing it's not tomorrow, you know, there is, it will be, it will be incremental. It will be a route specific, but as you will, you know, go along in your life, you'll start seeing more, you know, robot's on your streets, you'll be seeing more, you know, automated kiosks because you know, Automation is here. And, and as a, as a, as a country and as a society, it is a key thing to keep us moving forward. So I'll leave it there. And thank you so much on the spot
0 (21m 34s):
Fire nation, your, the average of the five people you spend the most time with in you'd been hanging out with our B and J L D today. So keep up that heat and that you want to head over to eofire.com and type of a Robert in the search bar that the show's page will pop up with everything we've talked about. Today all the best things in that show notes page will be linked out fire nation. And Robert, I just want to say, thank you for sharing your truth, your knowledge, your Value with fire nation today, for that we salute you, and we will catch you on the flip side. Thank you. John take care. All right. Fire nation. We're doing something pretty cool today. And now that we've heard from Robert Brown from the driverless trucking industry, I'm going to bring on John Panzer from Union Pacific to talk about the rail industry.
0 (22m 23s):
And this will give a really cool perspective from the other side of the fence. So buckling, cause this is going to be a wild ride. Lights that spark fire nation. JLD here with an audio masterclass on how the Railroad industry is preparing for driverless trucks to drop these Value Bombs. I have brought John Panzer on the mic. He is the senior vice president of technology in Strategic Planning at the Union Pacific Railroad Jon has been an influential leader across UP for the last 20, 40 years. And today, Friday, is she going to talk about the strengths and weaknesses of Railroad shipping over other alternatives?
0 (23m 5s):
How does it Union Pacific When in today's marketplace. The biggest challenges are going to face over the next five years. And how long do they have until driverless trucks become a serious contender? So without any further ado, let's bring on John, John say what's up to the fire nation and share something interesting about yourself that most people don't.
1 (23m 28s):
I like most people only speak a single language, but lately I've been teaching myself French as a commute in it to work and home every day, it's a, I've been doing it for two years. And I think if I keep on the same path by 10 years, I might be able to be the level of a fifth grader. So it was early enjoy as
0 (23m 46s):
Well. My last name is Dumas after the accounts of Monte Cristo in three Musketeers Alexander Dumas. And I will say that, unfortunately, that is not a language that I have a grasp on. So you can't riff with me right now on that you can practice. I barely no Spanish and I lived in Puerto Rico, or you got me there anyway, John As, I kind of a shared with all of the fire nation before I brought you on here. I'm going to be talking a lot about the logistics today and just in the nuts and bolts aspects of things. How would you explain the Logistics industry to an outsider?
2 (24m 19s):
Yeah, Logistics is pretty simple on the surface, but there's a lot beneath the surface and it's really about getting goods where they need to be. And that's everything from the beginning of a manufacturing process through warehousing distribution to a store directly to people's homes through e-commerce. And it's making sure that all of that it happens behind the scenes without any hiccups. And really what shippers are interested in is making sure that they don't lose sales. So people know that Logistics industry are really focusing on keeping things moving fluidly.
0 (24m 51s):
Let's talk now specifically about the Railroad industry, what are the strengths and also the weaknesses of the railroad industry, specifically shipping over different alternatives that are out there in the marketplace?
2 (25m 4s):
Great question. So the advantage of rail is, is it is especially effective when you have a very dense, heavy freight, a and it's incredibly fuel efficient as well. We, we can move a train, can move a ton of freight, 900 miles on one gallon of diesel. So if you can imagine getting that kind of a efficiency in your automobile. So it's a very efficient on, on fuel and also just handling heavy things, disadvantage wise, Railroad, don't go everywhere. You know, for example, you can send a post a, a letter to the post office from any address to any other address, but railroads only go certain places and you have to have tracks all the way from the beginning to the end.
2 (25m 46s):
So it doesn't fit everywhere. And it's also a little slower and a little less reliable than say our primary competition, which is trucking. We usually say railroading is about a day slower than trucking
0 (25m 58s):
For all. You have a railroad aficionados out there. And actually one of the cool thing I found out when I moved to Porto Rico for years ago is they have a really awesome and super old railroad track that runs the perimeter of the Island's. So the Island kind of looks like a horizontal iPhone where it's a 111 miles wide by 37 miles in length. And there's a Railroad that just runs around the whole Island, because what used to happen back in the day in the sugar industry days, they would chop down in the sugarcane and wherever you were on the Island, you went to the closest point to where that railroad track was around the perimeter, and he would just leave it there. And that railroad is run Jon day in and day out, 24 hours a day, just stopping wherever it needed to, to pick up the sugarcane.
0 (26m 40s):
And then of course drop it off in the San Juan port when it needed to it. So that was something I found really cool when I first moved here and just, you know, this really, really old school side of rail shipping, which is really needs. And you've talked about the strengths, you've talked about, you know, one of the weaknesses you can go everywhere. Obviously you're like a day slower, but what products have you focus on that really do make sense for Union, Pacific,
2 (27m 3s):
It's a pretty broad range of things, actually, even given the limitations that is described, you know, the biggest growth area for railroads right now is containerized freight. So, you know, we can compete with Trucks, but there also our partners in the us for a long distances, they like to put their, their freight on directly onto our trains. Either just pick up a trailer and drop it on the, a train, or how do we have special containers that the wheels come off and we can stack those on trains? Oh, well that works very well in partnership with, with trucking companies, as well as competition. It also works really well. You know, I mentioned heavy, heavy goods. Like you think of our PR a grain business, all of this grain, corn and soybeans that are grown in mostly the Midwest central part of the country.
2 (27m 46s):
If you couldn't get that grain to the coasts or to export locations, that the us would really be stuck with more grain than that, then we can use. So it, it makes it an economical, ah, for export in grand to China or South America and so forth. Automobiles is another area or any kind of construction product's rock that is used in building highways, M a we also like in ports, containerized imports to come in on the ship. Did you see the big ships with lots of containers on them? A lot of those containers just get put right on a train at the port and those boxes can be moved a up to 500, have them on a single train, a at the end, the location's like Chicago. So it's really a pretty diverse group of commodities that rail fits For
0 (28m 28s):
Now besides trucking, which will dive a little bit more into, in a bit here. What are some other competition that you have, like who else would be considered a competitor?
2 (28m 37s):
Well, we have rail competitors, so there's other railroads trucks would be next in line a when you start to get beyond that, you know, there are, there are, there are examples where shipping, they call it a short, short, see shipping, if you could say that the past, but that's where you might freight might come out of one port in the us and go and do another port. And, and again, ocean shipping is quite cheap, but, you know, I, I think, I think I'd say 90% of our competition is either another Railroad or a truck, and otherwise it might be wireways pipelines and, and our chefs
0 (29m 11s):
Short sea shipping, short sea shipping, short sea shipping. I mean, fire nation, if you can match that quality right there three times in a row. Very, very impressive. So John how does you pee when in the marketplace? Like, what do you define is winning and how do you win?
2 (29m 28s):
That's a great question. Its, you know, it's a pretty easy to know if you win or not. If you, if you, when the freight you a you win. So, you know, I think of it this way, customers care about really care about three things. A and the first one may be little bit of a surprise to people, but number one is capacity just having the Transportation a truck or rail car or whatever it is available for them to load their freight, just get it off the dock and get it moving. Second is it's got to get there on time and it's got to be reliable, consistent day in and day out. You know, if you have variability in the delivery, timing of your freight, ah, it's not going to work for customers because they'll have stockouts and so forth. And then third is, is really the, the, the value, you know, How, what's the total cost compare to the competition.
2 (30m 14s):
How does it fit into the, the total cost supply chain for the shipper? So it has to be, it has to really fit on all, all three of those items. But number one, if you're, if you're in the transportation part in the apartment for a shipper and nobody even shows up to take the goods off the dock you lose. So that's the number one thing.
0 (30m 31s):
Yeah. Especially if you're dealing with things that have expiration dates, you're going to lose quickly. So customers, fire nation care about three things, capacity being on time and value. And we're about to take a very quick break fire nation, but we have some really interesting things to talk about. Some challenges that rail is going to face and the upcoming years and more, when we get back from taking those Sponsors, if you are ready to take your business education to the next level than a graduate degree from Creighton universities, Heider college or a business will empower you to think boldly lead confidently and shape your future. The Heider college of business offers multiple formats and delivery options, including part-time and full-time programs as well as one off courses, without the commitment of a full degree, you can also choose to take courses online or on campus to fit your busy schedule.
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0 (32m 43s):
All you need is wifi. To try it for free, just go to zip recruiter.com/fire, ZipRecruiter the smartest way to hire. So Jon we're back and see all of our industries, all of our verticals, all have our niches are going to face big challenges in the next five years. There's just a reality and period. End of story. But for you and the rail industry, like what's one of the biggest challenges that you feel like your companies is going to face. And the next five years,
2 (33m 11s):
Our market's have been shifting a lot. And if it matches a lot of what you see going on in the economy today. So historically railroads used to haul a lot of coal. Most of that was for a utility electricity generation and, and that's going away, you know, there's concerns about climate change. That's driving utilities to shift, to renewable fuels and natural gas and so forth. So that R that Business has is down about two thirds for the rail industry and is projected to go down even much, much further than that. So that's a big shift for us. E-commerce is another big shift. So e-commerce isn't necessarily bad for, for rail, but as we all know, you know, one and two day shipping requires goods to move very fast.
2 (33m 51s):
And again, being a little bit slower than Trucks, that it creates something of a challenge for us. Although the big e-commerce shippers in parcel shippers are our biggest customers right now. So it's kind of a, a, a w you know, an opportunity to win, but it's also a challenge. Technology is evolving very rapidly and making sure that the customers have the, the visibility they need to, where their goods are on predicting reliable, reliable, when that there will be delivered. That's the challenge. And, you know, keeping up with, with those kinds of those kinda changes in technology is a of a thing. So those are some of the biggest challenges that we see facing the Railroad rail industry. Right now, it looks over time.
2 (34m 33s):
And the reason in the past five years, Rael volumes has been somewhat stagnant for those reasons. And we'd been, off-setting some of the losses with growth in the containerized freight, but that, that is going to continue to be a challenge for us.
0 (34m 45s):
Now, you have used the word trucking a number of times when you're talking about your competitors and your competition overall, and, you know, somebody who I recently interviewed has a fleet of 40 driverless trucks, and they're doing some really cool things between Arizona and Dallas, but of course he did say that, you know, there's definitely some time before this was going to become anything, have a, the norm, I even kind of pressed them on, like, what are you gonna get even to like 50%? And like, he was really hedging away from that. But how long do you think you have until driverless trucks become a serious contender for UPP? And how do you think they're going to impact your position in the industry? If at all
2 (35m 26s):
Great question. You know, I'm quite familiar with that company. In fact, we, we talked to them directly in a, on occasion because we have the same questions. How quickly are we getting to see driverless trucks on the way? And because it's, you know, we look at it certainly as a threat, but also as an opportunity. And so like everyone else we're, we were very interested in the pace of development. So, you know, I, I've spent a lot of time on that and, and also looking at other similar companies, and I believe that will see a driver out, no driver in the cab testing of some of these models, this level for a level of automation, probably within even a couple of years, a year or two, where there'll be, there'll be testing, maybe even sooner testing.
2 (36m 8s):
And then as far as the ramp up, or, you know, my best guess is I'm probably later mid decade, maybe four or five years, three to five years even. And once they get it right, a and there's an adoption, a capability, I think the, the, the, the transportation companies are gonna jump on it very quickly. Some people are very worried about the safety aspects of it. Of course we all are, but, but, you know, I always put it this way in the future when you're driving down the interstate next to an autonomous truck you'll know that it's an autonomous, because it's not, it's staying perfectly between the lines.
0 (36m 43s):
I get nervous when I see that drift of that big a Mack truck, I will say that
2 (36m 46s):
You're right. So it will be the one that doesn't cut in front of you. It will be the one that doesn't drift. So I think you'll see when they get it right, it's going to be safer. And, and again, that's a threat to the Railroad, but it's also, you have to face the realities of technology advancement. And I think is going to be,
0 (37m 2s):
Yeah, it's a threat to everybody who does not have their eyes open and the transportation industry, because the reality is, you know, the actual human drivers are like the number one, number two. And, and, and, you know, at the least number three biggest employers and almost every single state in the United States. So that's a huge, huge employer. And, you know, all of that gets replaced as a ton of ramifications are all the way up and down the line. And talk to us now about how railroads and other kinds of more established freight companies are going to compete with driverless trucks when they do become that reality. Even if we are talking maybe 50 years down the line, I know you guys, our eyes open right now, which is great. How are you going to compete
2 (37m 40s):
Or a number of things that we're doing? And we're always trying to get better. We're trying to get more efficient. One of the, one of the things that we've been working on in the last couple of years is making sure our trains get longer and longer and more efficient in diluting. The costs have say the crew's that run on an existing train. Again, we've, we've increased our train sizes so we can get some times upwards of 500, the equivalent of 500 trucks worth of freight on a single train. And, and that, you know, that's a very efficient, second is, you know, we are working on automation of our own automated trains, which I can talk to in a minute. And then thirdly is how, how might we use the autonomous trucks? And then let me give you an example in our, a containerized business, that business always starts and ends with a truck.
2 (38m 27s):
There is always a truck that brings the container to the rail terminal in one that delivers It at destination. And sometimes the distance between the destination of the, the destination rail terminal, and that warehouse where that container's going, it could be hundreds of miles. For example, we move a lot of goods from Chicago, put 'em on a truck up and move them into Ohio, for example. And so we might be able to set up an autonomous trucks to do that final delivery, even if it's not maybe right to the warehouse door, but to a, say a, a, a yard right outside of the city, and then put a driver in for the final delivery. So we're trying to figure out how that might work a in conjunction with railroading to, to, to make our, our business is cheaper.
2 (39m 11s):
And also also a, you know, you know, a greater capacity for customers
0 (39m 15s):
John just comes from an outsider. So take it for what it's worth, which probably isn't that much. But listen, skip the Trucks go right to the air drones. I mean, that's the future. I forget about it and having to have four wheels on the ground, man. I just want to know that you have an air drone come in and pick it up some freight, right. From, you know, even while the train is moving, it could do this and then it can drop it in my backyard. And I'm like, thank you.
2 (39m 40s):
All right. We may, we may do that. There's I would have seen, I have seen a patent application for a week. The very thing where a drone comes in and pick us up for it right out of a rail car and delivers it to somebody's home. So that could, that could happen.
0 (39m 53s):
And I'm thinking of the moving rail cars. I mean, that's like the next level where the drone comes and it just like somehow magnetizing open slides open the top of that rail car, picks it up while it's, you know, going like 30, 40, 50 miles an hour in boom, then it's off and going. So you're kind of like Santa Claus, just as you're moving by, town's just pick the things up and drop things off. And nobody knows that better. So you did mention that you're also looking at self-driving trains and bullet trains on the horizon. So let's talk a little bit more about that. Like, what does that process of getting there? Look like in reality?
2 (40m 23s):
Okay, let me put it this way. Lets start with automated trains. Our actually in operation today now is not as much in the us, but in Australia there are trains that are operating fully independently with no locomotive or conductor in the cab, a traveling hundreds of miles, being able to navigate through a crossings, you know, road crossings, where there might be vehicles and, and other hazards. And so the technology is there in the us, the Railroad industry in its entirety has just finished putting in a very extensive safety system that keeps trains from running red lights and going to fast and running into each other.
2 (41m 4s):
If there is a mistake by the engineer or say running a red light. So the advantage of that is that there's communication power, connectivity that would support autonomous trains and also the bandwidth of information that you would need to transmit back and forth to when you're visualizing, you know, the, the, the horizon and the great cross things and so forth to make sure there's not obstructions in a way the next step of that is literally to, to create or to install the software. And that again, exist and other places that will allow the train to run autonomously, starting and stopping and controlling speed. So that, that is actually probably not more than a year or two or three years down the horizon.
2 (41m 47s):
However, we have our own unique set of challenges to getting that done across the railroad industry. And one of them is regulatory just like autonomous Trucks, but also we have unique labor situation or we would have to get agreements with our workers or a, and there are unions to, to support that type of an operation. And then of course just like trucking, there's a lot of edge cases. How do you handle a certain unexpected events, but I think it's coming. And, and one difference is between us. And Trucks because even with the Cruze in the cab where the locomotive, we can get some benefits out of Automation think you think fuel efficiency, people, you know, he might not realize this, but handling a three mile long train takes a little bit of a touch when you're at the controls and to keep it running smooth and also to maximize fuel efficiency.
2 (42m 36s):
And to consider that down the road, there might be a, a, a congestion or a red light and that you would have to stop. So we can integrate our dispatching system and our train control system, such that those trains move at optimal speed and burn the minimum amount of fuel and still get to their destination on time. So we're going to get some of those benefits probably in the next three or four years. A full Automation is probably, you know, for us is also more of like maybe 10 years out, but we were working on those things
0 (43m 5s):
Or at least from my audience, your, the spokesperson for the rail industry. So just share with us one thing that you really want to make sure our audience gets when they walk away from this episode or from this interview, from what they've learned from you. What's one key takeaway
2 (43m 20s):
Transportation industry ISN as exciting as well as other things like technology and aerospace, there is a lot going on. There's a lot of technology that's involved. There's a lot of, a lot of movement. It's becoming much more sophisticated with e-commerce and as consumer demands and interests change. So it, it, it's, it's a quite dynamic market that you may not realize
0 (43m 41s):
Fire nation, your, the average of the five people you spend the most time with. And you've just been hanging out with JP and J L D today. So keep up that heat and head over to eofire.com type John Jon in the search bar on the show notes page will pop up with everything we talked about today. It links to all that jazz. And John, I'm going to say thank you brother, for sharing your truth, knowledge, Value with fire nation today, for that we salute you and we'll catch you on the flip side. And
2 (44m 8s):
John, thank you so much. I appreciate it. And talking with
0 (44m 11s):
You, Hey, fire nation today's Value Bombs content is brought to you by John and Creighton and successful entrepreneurs. They accomplish big goals. That's why I created the freedom journal to guide you in accomplishing your number one goal in 100 days. And we're talking to step-by-step visit the freedom journal.com use promo code podcast for a $15 discount. And thank you for listening to my Podcast and I'll catch you there, or I'll catch you on the flip side. This advertisement is brought to you by creating the university with the support of union Pacific A degree from Creighton is Heider college of business will empower you to think boldly Lee confidently and shape your future. For more program info Automation and to schedule an appointment with an enrollment specialist or to start an application today, go to grad school.creighton.edu.
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