Episode 106: Craig Harper
In this week’s Be EPIC Podcast episode, Harper discusses sustainability, alternative fuels, and his advice to college students on how to be a successful leader. Read More
More About This Episode
Craig Harper joined J.B. Hunt Transport Services, Inc. in 1992 and became chief operations officer and executive vice president in 1997. After 28 years with the company, he recently became the chief sustainability officer for J.B. Hunt.* Harper is responsible for safety, maintenance, corporate driver personnel, the J.B. Hunt Experience, and fuel programs for the company. In this week’s Be EPIC Podcast episode, Harper discusses sustainability, alternative fuels, and his advice to college students on how to be a successful leader.
*Craig moved into this new role after the recording of this episode.
0:00:06.6 Matt Waller: Hi, I'm Matt Waller, Dean of the Sam M. Walton College of Business. Welcome to Be Epic, the podcast where we explore excellence, professionalism, innovation and collegiality, and what those values mean in business education and your life today.
0:00:27.2 Matt Waller: I have with me today, Craig Harper, Chief Operations Officer of JB Hunt. Craig, thank you for talking to me today.
0:00:37.2 Craig Harper: Oh, it's great to be here, Matt. I always enjoy visiting with you.
0:00:40.9 Matt Waller: Well, Craig, one of the things I've known about you over the past few years is how you are a real boundary-spanner. You're always looking at things on the boundary, and one of them has to do with energy, power supply, "How will trucks of the future be powered?" You're thinking about that. So not only are you dealing with the operations of the company, but you're also thinking about the future, which a lot of times people that are in a similar position to yours are more internally focused, you also look at the external.
0:01:17.9 Craig Harper: Well, I think our founder, Mr. Hunt, [chuckle] taught us a long time ago, "You better be creative and continue to look at what's coming around the corner. Be the disruptor instead of being disrupted," and he taught us that with intermodal. Back when he started talking about intermodal in 1989, everybody would have thought, "It's crazy for a trucker to be talking to the railroad." And I witnessed it firsthand, because when I came to JB Hunt in 1992, we were just taking on those containers. And I remember all the stories, people didn't think they were going to last, they couldn't understand how you could lift this container full of freight and it not break in half. And obviously, intermodal has turned out to be approximately 60% of our business, and it was great that Mr. Hunt led us into intermodal. And then since then, we've had other innovations with dedicated business, and then with our JB Hunt 360, with our digital freight-matching platform.
0:02:19.1 Craig Harper: So you've always gotta be looking to see what's coming around the corner, and see how you can participate in that and determine if it's a threat, or if it's an opportunity, or if it's somewhat both and you need to adjust. And now, I will say this, Wayne Garrison, our chairman, when he came back to the company in 1995, and I've sat down with him because I was running the hazardous waste division at that point, he asked me if it could be a billion-dollar industry? And I said, "No, I thought $150 million or $200 million would be a good number." And he said, "Well, if you can't be a billion dollars, you better find something else to do, 'cause you're nothing but a distraction." [chuckle] So I would say it's in our DNA to look for opportunities that have significant opportunities and upside in them.
0:03:08.1 Matt Waller: Well, intermodal certainly is a good example of that. Not only did it transform JB Hunt, but it really transformed the industry and wound up delivering a lot lower costs for shippers, but it's also been good for the environment.
0:03:25.7 Craig Harper: Absolutely, It's one of those stories that really turns out to be the win-win situation because it has offered lower cost to our customers, a very consistent service, and it's 250% more efficient than hauling that same freight from pick up to delivery on a truck.
0:03:46.6 Matt Waller: Well, Craig, discussing intermodal from that perspective is a good segue into what we're talking about today: Alternative fuels. Alternative fuels has the potential of the same kind of thing: Reducing costs for everybody, being better for the environment. And we've all known we should be investigating alternative fuels from the perspective of the environment, but it seems like there's a lot of interest in it right now. What's really driving that?
0:04:19.0 Craig Harper: Yeah, this goes back... And I know you and I have talked before, and I say sometimes I gotta hold back, because I get too optimistic about some new technologies, and I think that time period ought to be sped up instead of lengthened. And alternative fuels falls into that category, because back in 2008 when diesel was selling at $4.74 a gallon, and CNG offered a $2 discount per diesel gallon equivalent. Now, that was when CNG and LNG was about a dollar discount on diesel gallon equivalent, and I really thought natural gas was going to take off.
0:04:54.8 Craig Harper: And we've experimented with natural gas, and I wish I could tell you that the story was more positive. It's worked well in the refuse industry, with all of the different waste companies that don't run that many miles and they stay within a certain area, it's worked well in the bus industry, but it's been a challenge on the trucking side. But I'm really excited about the electric side, whether we're talking on battery or whether we're talking fuel cell. But again, we're gonna have to see this technology come in in incremental steps and have success with it, before we can really leapfrog into it, and also we have to have the equipment available.
0:05:33.3 Craig Harper: That's one thing I get asked the question about why we don't have more already? Well, OEMs aren't producing them yet. Yeah, we're anxiously awaiting for that production line with OEMs. We're testing some trucks right now on the electric side: The Freightliner, Daimler's trucks, the eCascadia, and the eM2. The eCascadia is the large sleeper cab, and the eM2 is more for local and regional deliveries.
0:06:00.0 Matt Waller: And of course, another option is the hydrogen fuel cell approach. The electric requires a lot of batteries, and then there are some sustainability issues around the batteries in some cases.
0:06:14.9 Craig Harper: Yeah, it's gonna be interesting to see this come about. And on the prior question, you did ask me, "What's really been the impetus for speeding this up right now?" A lot of that has to deal with the regulations that you see taking place over, really, in the European countries, putting timetables or when they're looking to phase out the ice engines as we call them, the internal combustion engines, and really phase out of diesel and gasoline, and you're seeing timetables like at 2035, 2040. So that's really been part of this reason that you've seen so much activity. And then just recently even out in California where the governor passed a mandate that you will no longer have internal combustion engines available for sale at 2035 in the auto side and then also in the truck side, except for special use cases.
0:07:02.5 Craig Harper: So that's really increased a lot of the talk and the activity. And then getting back to the question about the whole electric side, yes, you have the two options. The battery, where you have the energy obviously in the battery cell, and then the fuel cell, which is really a chemical reaction, which is great, 'cause the byproduct of the hydrogen is water. So you say, "Well, gosh, that sounds like a great scenario, why don't we do that?" But there's one big problem, Matt, the fuel cost of hydrogen right now is like four times that of diesel.
0:07:36.0 Matt Waller: So here's a question that might come up in people's minds about that. Hydrogen's the most plentiful element in the universe, why is it so expensive? [chuckle]
0:07:46.9 Craig Harper: And that's a great question. The problem is, it's attached to something. It's attached to, in water, it's attached in methane and you gotta strip it off. The best way of stripping it off is using electrolysis, and so you have to use electricity to strip that hydrogen away. And right now, there's three different types of hydrogen that you'll hear people talking about. There's grey, and there's blue and there's green. The most prominent hydrogen is the grey hydrogen, about 95% of the hydrogen worldwide. Unfortunately, to use that, you're using fossil fuels, and you lose a lot of the efficiency in going through the process; best case, 30% of the power that you have, to all the way up to 60%, that it takes to strip that hydrogen away from the water, or away from the methane.
0:08:43.0 Matt Waller: So it's interesting... This is off the subject just a bit, but I wanna explore it for a second. You are the Chief Operations Officer of JB Hunt, you've been at JB Hunt for almost 30 years, I believe, and you talk like a engineering professor almost. [chuckle] How did you learn all of this?
0:09:04.8 Craig Harper: I don't know if you set that up or not, [chuckle] but actually I'm a chemistry major from this university.
0:09:10.0 Matt Waller: Oh, I didn't know you were a chemistry major.
0:09:12.1 Craig Harper: Yeah, I am a chemistry major from the U of A. And we joke sometimes, because I went through dental school and got in dental school before I graduated, and then after I got out, I couldn't stand the thought of being a dentist. I did graduate from dental school. And so I went and took numerous jobs, but I never had finished my college degree. I lacked world lit and psychology, and so I came back and took those courses and actually graduated 20 years after my start date. But yes, I am a chemistry major. I'm proud to be a graduate of this fine school here at the University of Arkansas.
0:09:48.2 Matt Waller: Well, that kind of understanding of chemistry, I would imagine, is really helpful in thinking about these things.
0:09:54.0 Craig Harper: It is, and then one of the jobs... JB Hunt was my seventh job that I've had, and one of my jobs was actually running a hazardous waste company where we recycled chemicals into fuel. And so when you're doing that, you really break out your chemistry book again, because there's not a whole lot of quality going into what's in the waste barrel. It has been beneficial, I would say, in getting back into all this, the hydrogen fuel cell and battery technology.
0:10:23.4 Matt Waller: Well, with a lot of new technologies like this, you often get, "which comes first, the chicken or the egg?" Problem, because you need economies of scale to be able to make them economical, but it's hard to get adoption without low cost. And so what needs to happen to speed up adoption?
0:10:44.4 Craig Harper: And you're exactly right on the chicken-or-the-egg analogy here. And I really think we gotta continue to have government assistance with grant money. And I don't believe any technology should have to be propped up for extended periods of time, but right now, you've got to have that infrastructure come about. To power the electric truck, there's a lot of work that has to be done on infrastructure. I'm talking about on the battery side and electricity side, and then you go over to fuel cell.
0:11:14.2 Matt Waller: And when you talk about fuel cell, you're always referring to hydrogen, right?
0:11:17.5 Craig Harper: That's right, that's right. And I'll say this, things could change. We've seen change come about quickly before, and you've got major companies investing heavily into fuel cell technology. Recently, you've had Daimler make an announcement to join forces with Volvo, you have Toyota in working with Hino, the truck division, you've got a lot of work going on with Shell and with BP on the renewable side. But you've got to do something to encourage people to invest in this technology, and part of being sustainable means you're sustainable as a company too. So if a company like JB Hunt, who is competing on very price-sensitive area of haul and freight, you can't go out with a truck that cost two to three times what the competing solution is.
0:12:11.6 Craig Harper: So that's where you've got to have these grants and prove this stuff really works, and then that will encourage investors to come in, entrepreneurs to come in, but you gotta start somewhere, and we've gotta know that the product works. We trade our trucks every four to five years depending on the use of the truck.
0:12:29.2 Craig Harper: So with 16,000 plus company trucks, we're gonna trade... You do the math... 4000 trucks a year or so. Well, we can't step out and buy 3000 or 4000 trucks that have just been tested for a little while. We have to see this produced and the results over and over and over. It's like, and hey, I'd like to ask all your listeners, when did you buy your first flat screen TV? You didn't buy the $10,000 one probably. You kept seeing 'em come down to eight to six to four. Maybe you jumped in at 2000, or maybe you're like me and jumped in at 1200, or maybe you've waited till now and jumped in at $400.
0:13:04.7 Matt Waller: Well, not only is the cost coming down, the quality's been going up.
0:13:07.8 Craig Harper: And that same thing happens with this technology. You have to be careful about when and how you jump in, and be very thoughtful about it, and that's again, where the government grant money can incentivize people to get out there and test it. And lemme say this, we got a dedicated business with over 10,000 tractors. We'll put trucks on for anybody, anywhere, any type of equipment they want. They just have to sign up to pay for that truck. So the customers that are... They ask a lot of questions about this, but once they start seeing that price, they start kind of backing off a little bit, so that's why there needs to be incentives to get that customer to buy it off, so that we can get an agreement with them to put this equipment in and prove out how efficient, how good it is for our environment and for our customers and for the safety of the motoring public.
0:13:58.8 Matt Waller: How well is the government at this point supporting the experimentation with these kinds of technologies?
0:14:07.8 Craig Harper: Well, we all give California a hard time about a lot of things, but I will say, California has the most grant funding available right now, but it's not always clear exactly what you have to do to get it and how long it's gonna be there. An example, like in our case, sometimes you have to dispose of a truck to get the grant money. You have to dispose of the current truck you're operating. Well, right now, our oldest truck is five years old, so that makes it very difficult. We can't put that old truck in the graveyard and give up an investment that's still worth tens of thousands of dollars. But what they are doing now with some new grant money is they're allowing you to substitute, meaning that they find a way to get our five-year-old truck to somebody that has a 10-year-old truck and let them dispose of the 10-year-old truck and take our five-year-old truck.
0:15:02.1 Matt Waller: When you look at the total cost of ownership, it's really hard to justify this for an individual firm, and that's kind of what we're talking about a little bit, is that this is almost by definition a public good, just like the interstate highway system was. It's like, everyone might be better off with this, but no one firm can scale this to the point where they could make it cost-justifiable, but in the meantime, of course, companies can be experimenting and trying to figure out what they can do. And I asked you a little bit about the grants that are available to carriers, but how about to OEMs?
0:15:46.4 Craig Harper: And a great point, and we really count on our OEMs. We do work with our OEMs very closely. We need them to be able to produce large numbers. We can't buy add-on kit that you just stick on the side or behind the truck. It's gotta be something that comes off the line that has a parts and distribution network. We have to have reliable up-time. That truck needs to be available to run, and it needs to be able to be repaired at a decent price, needs to be able to be repaired quickly, it needs to have a residual value, it needs to be able to have the range that we have today. So when you put all those things in, that total cost of ownership is a real challenge right now.
0:16:33.1 Matt Waller: So, Craig, to the extent you can share with us, what are some current initiatives or experiments that JB Hunt is doing along these lines?
0:16:43.5 Craig Harper: Yeah, we're currently running 160 natural gas trucks. Also testing out the electric trucks as our OEMs make 'em available, and that's what I was talking about earlier. You can't go to one of the major OEMs today and buy any production-ready electric truck, and certainly not buy one in any mass quantities right now. So we're working with OEMs on the products and the design that they are looking at bringing out as far as the electric vehicles go, and then also we're testing those trucks that I commented about earlier with the Freightliner trucks.
0:17:21.7 Matt Waller: One other question I have about this is when I think about hydrogen fuel cells, hydrogen is very explosive. If we move to a hydrogen kind of an economy, how will they move it around and store it safely?
0:17:40.8 Craig Harper: Yeah, hydrogen actually is, by most people's analysis, safer than the gasoline that you have in your car right now, and the reason for that, it's so much lighter, it goes up in the air quickly and disseminates quickly, versus if you're in an accident with gasoline, it can spill on the vehicle or unfortunately spill on the individual and cause obviously death, severe damage, whatever else. So hydrogen is actually safer than gasoline or diesel, and I think you'd get the entire scientific community backing that up.
0:18:17.7 Matt Waller: So if cars and trucks moved towards hydrogen fuel cells, would there be filling stations like we have today where you go and get hydrogen fuel?
0:18:29.4 Craig Harper: That gets back to your chicken and your egg question, because most people, it seems, would feel that hydrogen is lagging the battery electric side by some number of years. You could argue whether that's three years or eight years or whatever, because you gotta get that price of that hydrogen down. Remember, we talked about the expense of obtaining the hydrogen, but then you've got to transport it. You either have to compress it or you have to liquefy it, and to liquefy that hydrogen, you have to get it to minus 453 degrees. The answer is that's off ways, 'cause they're so expensive to put in, so you're gonna first see it where you have a lot of density.
0:19:18.7 Matt Waller: I don't remember the exact numbers, but our country has one of the best networks of pipelines in the world, the best network of pipelines in the world, and I read... I can't remember now. But something like, say, 25% of the ton miles of things moved are moved through a pipeline. We don't usually think of it as a mode of transportation. Of course, it's primarily moving petroleum products, but it seems like could some of our pipeline infrastructure be re-designed to be able to move hydrogen?
0:19:55.2 Craig Harper: You can actually move hydrogen in the existing natural gas pipelines, a small percent though, 5%. There will have to be some work done on the pipelines to be able to move hydrogen, if that's the form in which we choose to have it move.
0:20:11.7 Matt Waller: So, Craig, as I said at the beginning, of course, you're the chief operations officer, so you have a lot of responsibility that spans everything from drivers to just all kinds of things for the company in an operations perspective, and I would think that kind of perspective really helps when you're boundary spanning and looking forward.
0:20:30.7 Craig Harper: Yeah, and I work a lot with the hiring of drivers, with safety, and with fuel, and all those blend in together, because obviously drivers know that fuel is critical, and being able to refuel quickly. 'Cause one thing we didn't hit on, remember the driver's time, we're only utilizing as an industry, we're only utilizing seven hours of their available 11, and so we've gotta find a way to use that time, because talking about sustainability and improving efficiency, and that's our goal at JB Hunt is to have the most efficient transportation network in North America, and a lot of that starts with using that driver's available time. Then the other part is putting the right load on the right truck at the right time, and that's what we do through JB Hunt 360, eliminate all those empty miles. So yes, by working with drivers and talking to carriers and working with the fueling and working with safety, it does blend in together very well.
0:21:32.9 Matt Waller: So you've had a really interesting career and you've wound up in a place that's really utilizing your gifts and talents well, and you're making a big difference and have for quite a while, but you didn't know you were gonna wind up here when you were in college.
0:21:49.1 Craig Harper: No, not at all.
0:21:50.9 Matt Waller: And that's pretty common. You thought you wanted to be a dentist, and many students know of a very small set of options, and they sometimes pursue those, but many times when you gravitate towards things you're really interested in, and passionate about, or just maybe strong in, you tend to excel.
0:22:11.0 Craig Harper: Yeah, man, I would tell your students, former students, take out the earbuds. People hear me say that and go, "Okay, what does that mean?" It means be aware of what's going on around you. You don't know where that next opportunity may show up and who it may show up with, and what industry it may be in, so take out those earbuds, meet the people around you, network, learn all you can. There's no reason not to learn everything, anything you wanna learn now. Go to school, get that background, and then when something kinda triggers an interest, go download the podcast, go watch YouTube videos. You and I joke about it all the time, but there's no reason why people can't continue their education long after their formal education in college or graduate school, and I do that. I feel like I wanna know more about my subject when I'm in the room than anybody else, so I'm gonna study it like crazy, and I'm gonna dig into it, I'm gonna peel back every layer of that onion and get down to the heart of it, so that I can understand it and talk about it and feel that I'm convinced that it's the right thing to do.
0:23:15.5 Matt Waller: Well, you know, students of course, have access to YouTube and many other form... Podcasts, etcetera. And there's a certain percentage of students that really enjoy that, but you're right, it really never ends. It's almost like learning to learn while you're young is a good idea. You can't be a successful leader, and you can't be very successful at anything without being a constant student.
0:23:43.9 Craig Harper: I agree. When there's something that comes up and you say, I wonder how that's done, or how they do that, go ahead, Google it, right then. Find out what that answer is, and you'll see that 15 minutes a day, 30 minutes a day, an hour on the weekend, it all adds up, and it can be very rewarding.
0:24:03.6 Matt Waller: Thank you so much, Craig, this has been outstanding.
0:24:06.9 Craig Harper: Thank you, Matt. I always love seeing you and getting to visit. Thank you.
0:24:14.0 Matt Waller: Thanks for listening to today's episode of The Be EPIC podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching BeEpic podcast. One word, that's, B-E-E-P-I-C podcast. And now, be epic.