After 20 years as an aerospace engineer, including 13 years at SpaceX, Matt Soule sought a new transportation challenge he could channel into a startup. He chose electric battery autonomous freight trains.
"I became really enamored with it because it was very energy efficient. But the problem was market share," Soule, the CEO of Los Angeles-based Parallel Systems, told Benzinga. Soule co-founded Parallel in 2020 to develop the driverless freight trains he envisioned.
The U.S. freight transportation industry generates almost $900 billion per year in revenue, with trucking accounting for about $800 billion of that, and trains about $80 billion, Soule said.
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"The railroads are very successful in the US financially. They’re very profitable, but there’s no top line growth. It’s a major industry but it’s small compared to trucking," Soule said. "If the technology we’re developing allows the rail industry to steal only 10% of the truck industry, that would be double the rail industry."
Soule said his vision is getting closer to reality, with Parallel in the midst of a pilot program with Genesee & Wyoming, a shortline railroad headquartered in Darien, Connecticut. The pilot involves testing Parallel's second generation of driverless freight train on about 160 miles of railroad tracks connecting the Port of Savannah in Georgia to Cordele to the west.
Parallel said in April that it closed a $38 million Series B funding round that was led by Anthos Capital, and also involved the Collaborative Fund, Congruent Ventures, Riot Ventures, and other funds. The new raise brought Parallel's funding total to about $100 million.
Parallel plans to start manufacturing its third generation of freight trains next year, and could see commercialization not long after that, said Soule, although he declined to provide a specific time frame for commercialization.
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The Cargo Conundrum
The freight services that rail companies provide are typically for longer routes, such as Los Angeles to Chicago. But shorter routes, such as Los Angeles and San Diego, Las Vegas, Phoenix, and the San Francisco Bay Area are served exclusively by trucking.
"Those are all served by trucks because trucks have better service quality in those lower volume lanes and you don’t have the high cost of getting freight on and off the network," Soule told Benzinga.
These shorter routes are a segment of trucking known as drayage, which is the short distance transport of shipping containers by truck between a port, rail yard, or other inter-modal terminal and a local facility such as a warehouse or distribution center.
But the current system is inefficient, Soule said, because the truckers are often stuck in lines at the ports, waiting to receive their freight, which they then have to drive to a warehouse or distribution center that could be a few miles or dozens of miles away.
Truckers and trucking businesses make money based on how many deliveries they make within a daily government-allotted time that they are permitted to be behind the wheel. They also have to cover costs such as leases, insurance, gas, and drivers' pay.
"You want that driver moving, not waiting in traffic, not waiting in line for a box," Soule said to Benzinga.
Freight rail today only serves about 10% of container volume going through, and the other 90% is trucking. That’s especially evident if you drive in Southern California around Long Beach.
For example, trucks currently pick-up their freight at the Long Beach docks and take Highway 710 for about 60 miles inland to the Inland Empire, where about 10% of the nation's warehouses are. In that situation, because trucking is pretty much the only freight transport option, truckers spend hours in long lines waiting to pick up their cargo and then have to drop it off somewhere.
For Parallel, the opportunity lies in taking some of that shorter-distance freight delivery share from trucking, offering shippers and the broader freight shipping industry the promise of cheaper, greener, and more efficient transport through autonomous trains.
With automated and electric freight transport you can transport the cargo inland where trucks would wait for it and take it to their next destination.
Soule said this is how Parallel can achieve faster asset turn, improve service quality, improve reach within the network, get closer to customers, and provide shippers with regular service and money savings.
"The most important part of this innovation is we are achieving truck competitive economics at small scale rather than big scale," Soule told Benzinga.
Tracks connecting ports and warehouse destinations already exist in most places in the U.S., but are underused by the current fleets of conventional rail.
Parallel is developing autonomous freight trains that would receive cargo at the parts and then deliver it to warehouse destinations. Soule said that would relieve trucking congestion at ports, because drivers could skip waiting in line at ports and instead pick-up the cargo at the warehouses.
"We’ve effectively increased the surface area for trucks to pick up that freight and bring it the true last mile rather than 60 miles. That means they can do more turns per day," Soule said.
Soule claims that automated freight wouldn't take away trucking jobs but make trucking more efficient and thereby improve the lives of truckers.
"This is very exciting for them, because by us establishing an inland-port model, they don't have to wait in long lines at the shore port. They have an inland port option," Soule said.
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Autonomous Freight Today And Tomorrow
While Parallel Systems' autonomous freight train technology is at the forefront of transportation innovation, it's not the only effort out there.
There is at least one autonomous freight train network that is operational and used for commercial purposes: Rio Tinto's (NYSE:RIO) system in Australia's Western Australia state.
According to Railway Age, Rio Tinto's system became fully operational in 2018 and operates the "AutoHaul" system, which is a network of heavy-haul ore trains .China conducted successful trial runs of driverless heavy-haul freight trains in September 2024 and this past September.
The U.S., Canada, and Russia have remote controlled automated freight trains, but not fully autonomous like the Rio Tinto in Australia.
"The automated and electric vehicle industry we’re at a major inflection point," Soule said.
So is Parallel, which will start producing the third generation of electric battery autonomous freight vehicles next year, Soule said. He couldn't give a specific date for commercialization but said it was a "pretty short timeline."
There already have some customer agreements and are exploring other parts of the country that could be conducive to harnessing Parallel's driverless trains.
"We’re rapidly moving towards full commercialization. We’re the only ones doing anything like this that has Federal Railroad Administration approval," Soule told Benzinga.
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