The business of moving goods in the United States is dominated by trucks, which handles about two-thirds of the 20.2 billion tons of freight that’s transported annually. Parallel Systems founder and CEO Matt Soule wants to change that by putting a modern autonomous and electric twist on the centuries-old railroad system. 

The Los Angeles-based company is building battery-powered autonomous freight technology that works with existing freight cars and integrates with existing train control software. Soule’s pitch: Parallel’s system makes it less expensive for companies to use rail — not trucks — for short-distance deliveries.

Rail has been traditionally underutilized because trains are typically powered by large and expensive locomotives that pull hundreds of freight cars at a time over long distances, Soule explained to TechCrunch. Businesses often turn to trucks for moving freight shorter distances. 

Parallel Systems developed a system that allows train cars to attach and detach autonomously. This means companies can use Parallel’s tech for a variety of different delivery sizes and humans don’t have to manually connect and disconnect the cars — a dangerous process. Parallel’s tech also allows freight cars to brake significantly quicker than existing trains, Soule added.

“We’re using a different physical architecture to accomplish truck competitive economics at small scale rather than big scale,” Soule said. “The vehicle itself is compatible with existing rail infrastructure. It is designed and being demonstrated to operate alongside traditional rail operations. We’re not proposing to replace existing freight trains with this.”

Parallel recently was approved by the Federal Railway Administration to start piloting the tech in Georgia. This program will allow the company to test its tech-enabled trains along a 160-mile stretch between the Port of Savannah in Savannah, Georgia and multiple distribution sites in the state.

Parallel also recently raised a $38 million Series B round co-led by Anthos Capital and Collaborative Fund with participation from Congruent Ventures and Riot Ventures, among others. This brings Parallel’s total funding to more than $100 million. The fresh capital will be put toward commercialization with the company hoping to host its initial commercial launch in 2026.

Sophie Bakalar, a partner at Collaborative Fund, told TechCrunch that while Parallel doesn’t neatly fit into its consumer-leaning generalist thesis, the firm was intrigued by the company after getting introduced through an existing founder in their portfolio.

While Collaborative Fund doesn’t invest in this area typically, shipping and the movement of goods does have a big impact on the consumer companies Collab is usually backing, said Bakalar, adding that it’s hard to pass up a good opportunity — even if it is off-thesis.

“I think this team is really uniquely-positioned to solve this problem,” Bakalar said. “Just not many folks are going to be able to do it. I think it is a team that has a founder-product fit. It is a massive market and a massive challenge.”

Soule doesn’t have a background in rail, specifically. However, he does have a history of working in regulated transportation. He spent 20 years in aerospace, 13 of which were at SpaceX.

“We were constantly developing new technologies,” Soule said. “I worked in avionics, which is electronics and software that controls the rocket and got incredibly curious about how all these technologies could benefit other types of industries that have maybe not seen as much innovation.”

He launched the company in 2020 and now, five years later, Parallel has built out the technology and is focused on commercialization.

While getting companies to change their shipping and distribution strategies could be a large feat, demand for different solutions is there, Soule said. He added that that they have had interest from across the globe but plan to focus on the U.S. and Australia for now.

This news also comes as the U.S. hangs in tariff limbo. If tariffs do end up going through, Bakalar predicts it could stir up more demand for companies like Parallel as companies will likely be looking to cut costs in any way.

“This is like a generational innovation in terms of freight and you don’t see a lot of change in the freight industry,” Soule said. “But this is hitting on points that matter.”