How Self-Driving Trucks Will Change The World with Robert Brown and Jon Panzer: An EOFire Classic from 2021

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Creator Science. Today, we're pulling a timeless EO Fire episode from the archives, so the giveaway may not be active, and we'll be breaking down how self-driving trucks will change the world. To drop these value bombs, I brought Robert Brown and John Panzer into EO Fire Studios. And today, Fire Nation, we'll be talking about getting excited about automation. You must be open-minded. It's not happening tomorrow.

0:35It's incremental, but automation is here. It's everywhere and it will keep moving us forward. And a big thank you for sponsoring today's episode goes to John, Robert, and our sponsors. Artificial intelligence has made a splash in the headlines and for good reason. The digital landscape is changing quickly and AI is a huge part of that. If you're feeling behind the curve, don't worry. HubSpot has got your back. HubSpot's AI power tools, including their content assistant and chat spot are a perfect place to start learning the power of AI. Here's how they work. HubSpot's content assistant helps you brainstorm, create, and share content in no time.

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1:56It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at thrivetimeshow.com. John, say what's up to Fire Nation and share something interesting about yourself that most people don't know. I, like most people, only speak a single language, but lately I've been teaching myself French as I commute to work and home every day. 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 I really enjoy it. It's interesting. Well, my last name is Dumas after the Count of Monte Cristo and Three Musketeers, Alexander Dumas.

2:40And 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 it. You can't practice. I barely know Spanish and I live in Puerto Rico. Well, you got me there anyway. John, as I kind of shared with all of Fire Nation before I brought you on here. We're gonna be talking a lot about logistics today and just in the nuts and bolts aspects of things. How would you explain the logistics industry to an outsider? 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.

3:15And 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 all that 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 in the logistics industry are really focusing on keeping things moving fluidly. 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?

3:51Great question. So the advantage of rail is it's especially effective when you have very dense, heavy freight, and it's incredibly fuel efficient as well. A train can move a ton of freight 900 miles on one gallon of diesel. So if you can imagine getting that kind of efficiency in your automobile. So it's very efficient on fuel and also just handling heavy things. Disadvantage-wise, railroads don't go everywhere. For example, you can send a letter through 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.

4:33So 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. For all you railroad aficionados out there, actually, one of the cool things I found out when I moved to Puerto Rico four years ago is they have a really awesome and super old railroad track that runs the perimeter of the island. So the island kind of looks like a horizontal iPhone where it's 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 the sugar cane and wherever you were on the island, you went to the closest points to where that railroad track was around the perimeter and you would just leave it there.

5:21And that railroad would just run, John, day in, day out, 24 hours a day, just stopping wherever it needed to, to pick up the sugar cane. And then of course, drop it off in the San Juan port when it needed to. 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 neat. And you talked about the strengths. You talked about, you know, one of the weaknesses, you can't go everywhere. Obviously you're like a day slower, but what products have you focused on that really do make sense for Union Pacific?

5:50Yeah, well, that's a pretty broad range of things, actually, even given the limitations I described, the biggest growth area for railroads right now is containerized freight. So we compete with trucks, but they're also our partners in that for long distances, they like to put their freight directly onto our trains, either just pick up a trailer and drop it on a train, or we have special containers that the wheels come off and we can stack those on trains. That works very well in partnership with trucking companies as well as competition. It also works really well. I mentioned heavy, heavy goods.

6:24Like you think of our grain business, all this grain, corn and soybeans that are grown in mostly the Midwest central part of the country. If you couldn't get that grain to the coasts or to export locations, the U.S. would really be stuck with more grain than we can use. So it makes it economical for exporting grain to China or South America and so forth. Automobiles is another area, any kind of construction products, rock that's used in building highways. Also like imports, containerized imports that come in on the ship. 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 up to 500 of them on a single train into inland locations like Chicago.

7:11So it's really a pretty diverse group of commodities that rail fits for. Now, besides trucking, which we'll dive a little bit more into in a bit here, what are some other competition that you have? Who else would be considered a competitor? Well, we have rail competitors. So there's other railroads. Trucks would be next in line. When you start to get beyond that, there are examples where shipping, we call it short sea shipping, if you can say that fast. But that's where freight might come out of one port in the U.S. and go into another port. And again, ocean shipping is quite cheap. But I think I'd say 90 % of our competition is either another railroad or a truck.

7:52And otherwise, it might be waterways, pipelines, and ocean ships. 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 UP win in the marketplace? What do you define as winning and how do you win? Yeah, great question. It's pretty easy to know if you win or not. If you win the freight, you win. So, I think of it this way. Customers really care about three things. And the first one may be a little bit of a surprise to people, but number one is capacity. Just having the transportation truck or rail car or whatever it is available for them to load their freight.

8:39Just 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. If you have variability in the delivery timing of your freight, it's not going to work for customers because they'll have stock outs and so forth. And then third is really the value. What's the total cost compared to the competition? How does it fit into the total cost supply chain for the shipper? So it has to really fit on all three of those items. But number one, if you're in the transportation department for a shipper and nobody even shows up to take the goods off the dock, you lose.

9:17So that's the number one thing. 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 in the upcoming years and more when we get back from thanking those sponsors. Success Story, hosted by Scott D. Clary, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals.

9:49Success Story features Q &A sessions with successful business leaders, keynote presentations, and conversations on sales, marketing, business startups, and entrepreneurship. One of Scott's recent episodes was with none other than Jack Canfield, where they discuss adapting to life's twists and turns. Listen to Success Story wherever you get your podcasts. Are you ready to grow your business now? What if you could learn the proven systems and processes that have been used to grow thousands of multi-million dollar success stories? At Thrivetimeshow.com, see testimonials of how Clay Clark's proven business coaching has helped over 2 ,000 clients to increase profitability dramatically.

10:25Clay's proven business coaching program is month to month and less money than hiring a minimum wage employee. Sound too good to be true? Go to thrivetimeshow.com to see over 2 ,000 documented success stories. Because Clay only takes on 160 clients, he personally designs your business plan for you. Then Clay's team of talented designers, videographers, web developers, workflow mappers, and accounting coaches will help you implement that proven plan. See over 2 ,000 verified success stories and schedule your free 101 13-point assessment with Mr. Clay Clark himself today at Thrivetimeshow.com. Knowledge will not attract money unless it is organized and directed through practical plans of action.

11:05Become the next success story. Schedule your free 13-point assessment today at Thrivetimeshow.com. So John, we're back and all of our industries, all of our verticals, all of our niches are gonna face big challenges in the next five years. It's just a reality, period, end of story. But for you in the rail industry, what's one of the biggest challenges that you feel like your company is going to face in the next five years? Our markets have been shifting a lot, and 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 utility electricity generation, and that's going away.

11:44There's concerns about climate change that's driving utilities to shift to renewable fuels and natural gas and so forth. So that business is down about two-thirds for the rail industry and is projected to go down even 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 rail. But as we all know, one-in-two-day shipping requires goods to move very fast. And again, being a little bit slower than trucks, it creates something of a challenge for us. Although the big e-commerce shippers and parcel shippers are our biggest customers right now.

12:20So it's kind of an opportunity to win, but it's also a challenge. Technology is evolving very rapidly and making sure that customers have the visibility they need to where their goods are and predicting reliably when they will be delivered. That's a challenge. And just keeping up with those kind of changes in technology is a big thing. So those are some of the biggest challenges that we see facing the rail industry right now. If you look over time, in the past five years, rail volumes have been somewhat stagnant for those reasons. And we've been offsetting some of the losses with growth in the containerized freight, but that's going to continue to be a challenge for us.

13:05Now 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, you know, 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 is going to become anything of the norm. I even kind of pressed him on like, when are you going to 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 UP?

13:40And how do you think they're going to impact your position in the industry, if at all? Great question. I'm quite familiar with that company. In fact, we talk to them directly on occasion because we have the same questions. How quickly are we going to see driverless trucks on the highway? And because Because we look at it certainly as a threat, but also as an opportunity. And so like everyone else, we're very interested in the pace of development. So I've spent a lot of time on that and also looking at other similar companies. And I believe that we'll see driver out, no driver in the cab testing of some of these models, this level four level of automation, probably within even a couple of years, a year or two, where they'll be testing, maybe even sooner testing.

14:27And then as far as a ramp up, you know, my best guess is probably later mid decade, maybe four or five years, three to five years even. And once they get it right and there's an adoption capability, I think the transportation companies are going to jump on it very quickly. Some people are very worried about the safety aspects of it, of course. We all are. But 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 autonomous because it's staying perfectly between the lines. I get nervous when I see that drift of that big Mack truck, I will say.

15:06Right. So it'll be the one that doesn't cut in front of you. It'll 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 again, that's a threat to the railroads. But it's also you have to face the realities of technology advancement. And I think it's going to be one. Yeah, it's a threat to everybody who doesn't have their eyes open in the transportation industry because, I mean, the reality is, you know, actual human drivers are like the number one, number two, and, you know, at the least number three biggest employers in almost every single state in the United States.

15:35So that's a huge, huge employer. And if all of that gets replaced, there's a ton of ramifications all the way up and down the line. And talk to us now about how railroads and other kind of more established freight companies are going to compete with driverless trucks when they do become that reality. Even if we're talking maybe 50 years down the line, I know you guys are eyes open right now, which is great. How are you going to compete? There's a number of things that we're doing, and we're always trying to get better. We're trying to get more efficient. And one of the things we've been working on the last couple of years is making sure our trains get longer and longer and more efficient and diluting the costs of, say, the crews that run an existing train.

16:16Again, we've increased our train sizes so we can get sometimes upwards of 500, equivalent of 500 trucks worth of freight on a single train. And that's 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 and thirdly is how how might we use autonomous trucks let me give you an example in our containerized business that business always starts and ends with a truck there's always a truck that brings the container to the rail terminal and one that delivers it at destination. And sometimes the distance between the destination of the destination rail terminal and the warehouse where that container is going could be hundreds of miles.

17:03For example, we move a lot of goods from Chicago, put them on a truck and move them into Ohio, for example. And so we might be able to set up autonomous trucks to do that final delivery, even if it's not maybe right to the warehouse door, but to say 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 in conjunction with railroading to make our business cheaper and also greater capacity for customers. John, this 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.

17:43I mean, that's the future. Forget about even having to have four wheels on the ground, man. I just want to know that you have an air drone come in, picking up some freight right from, even while the train is moving, it could do this. And then it could drop it in my backyard. And I'm like, thank you. Right, we may do that. I've seen a patent application for the very thing where a drone comes in and picks up freight right out of a rail car and delivers it to somebody's home. That's so cool. So that could happen. And again, I'm thinking even the moving rail cars. I mean, that's like the next level where like the drone comes and it's just like somehow magnetized and 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 and boom, then it's off and going.

18:26So you're kind of just like Santa Claus, just as you're moving by town, just picking things up and dropping things off and nobody knows the 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? Let me put it this way. Let's start with automated trains are actually in operation today, not as much in the U.S., but in Australia, there are trains that are operating fully independently with no locomotive or conductor in the cab, traveling hundreds of miles, being able to navigate through crossings, road crossings where there might be vehicles and other hazards.

19:09So the technology is there. In the U.S., 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 too fast and running into each other if there's a mistake by the engineer, 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 the horizon and the gray crossings and so forth to make sure there's not obstructions in the way.

19:45The next step of that is literally to create or to install the software that, again, exists in other places that will allow the train to run autonomously, just starting, stopping, and controlling speed. So that is actually probably not more than a year or two, three years down the horizon. 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 a unique labor situation where we would have to get agreements with our workers and their unions to support that type of an operation.

20:27And then, of course, just like trucking, there's a lot of edge cases. How do you handle certain unexpected events? But I think it's coming. And one difference between us and trucks is even with the crews in the cab or the locomotive, we can get some benefits out of automation. Think fuel efficiency. You may 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 and to consider that down the road there might be a congestion or a red light 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.

21:13So we're going to get some of those benefits probably in the next three or four years. Full automation is probably, you know, for us is also more like maybe 10 years out, but we're working on those things. Well, John, at least for my audience, you're 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, from this interview, from what they've learned from you. What's one key takeaway? Transportation industry isn't as exciting as other things like technology and aerospace. There is a lot going on.

21:47There's a lot of technology that's involved. There's a lot of movement. It's becoming much more sophisticated with e-commerce and as consumer demands and interests change. So it's a quite dynamic market that you may not realize. Fire Nation, you're the average of the five people you spend the most time with. You've just been hanging out with JP and JLD today. So keep up that heat and head over to eofire.com. Type John, J-O-N in the search bar. And the show notes page will pop up with everything we talked about today. Links to all that jazz. And John, I want to say thank you, brother, for sharing your truth, knowledge, value with Fire Nation today.

22:25For that, we salute you and we'll catch you on the flip side. Hey, John, thank you very much. I appreciated talking with you. Hey, Fire Nation. Today's value bomb content was 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 step by step. Visit thefreedomjournal.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. success story hosted by scott d clary is brought to you by the hubspot podcast network the audio destination for business professionals success story features q a sessions with successful business leaders keynote presentations and conversations on sales marketing business startups and entrepreneurship one of scott's recent episodes was with none other than jack canfield where they discuss adapting to life's twists and turns listen to success story wherever you get your podcasts.

23:25Is this your year? Visit thrivetimeshow.com to see testimonials of how Clay Clark's business coaching has helped over 2 ,000 entrepreneurs to dramatically increase profitability. It's month to month and less money than an average minimum wage employee. Schedule your free consultation today at thrivetimeshow.com.