1 00:00:07,520 --> 00:00:10,280 Speaker 1: Hi everyone, this is Lee Clasgow when We're Talking Transports. 2 00:00:10,320 --> 00:00:13,640 Speaker 1: Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host, 3 00:00:13,760 --> 00:00:18,600 Speaker 1: Lee Clasgow, senior freight, transportation and logistics analysts at Bloomberg Intelligence, 4 00:00:18,800 --> 00:00:21,919 Speaker 1: Bloomberg's and house research arm of almost five hundred analysts 5 00:00:21,920 --> 00:00:25,160 Speaker 1: and strategists around the world. Before diving in a little 6 00:00:25,160 --> 00:00:29,040 Speaker 1: public service announcement, your support is instrumental to keep bringing 7 00:00:29,080 --> 00:00:32,320 Speaker 1: great guests and conversations to you, our listeners, and we 8 00:00:32,360 --> 00:00:34,840 Speaker 1: need your support. So please, if you enjoy this podcast, 9 00:00:34,920 --> 00:00:37,159 Speaker 1: share it, like it and leave a comment. Also, if 10 00:00:37,159 --> 00:00:39,240 Speaker 1: you have any ideas for future episodes, or just want 11 00:00:39,240 --> 00:00:42,440 Speaker 1: to talk transports, please hit me up on the Bloomberg terminal, 12 00:00:42,479 --> 00:00:45,279 Speaker 1: on LinkedIn or on Twitter at Logistics Lee. I'm very 13 00:00:45,280 --> 00:00:48,280 Speaker 1: excited to have with us today Andrew Slusher, President and 14 00:00:48,360 --> 00:00:52,640 Speaker 1: CEO of SMC three, a position he's held for the 15 00:00:52,680 --> 00:00:57,080 Speaker 1: past decade. His career spans transportation, technology, pricing, and revenue 16 00:00:57,120 --> 00:01:02,000 Speaker 1: management areas where he built deep expertise and driven innovation 17 00:01:02,160 --> 00:01:05,640 Speaker 1: across the supply chain. Welcome to Talking Transports, Andrew. 18 00:01:06,040 --> 00:01:07,440 Speaker 2: Thanks Lee, very glad to be here. 19 00:01:07,720 --> 00:01:11,920 Speaker 1: So SMC three, can you tell us a little about 20 00:01:11,920 --> 00:01:13,520 Speaker 1: the company and what does it stand for. 21 00:01:14,200 --> 00:01:18,039 Speaker 2: Sure, It originally was Southern Motor Carriers Association, and we're 22 00:01:18,080 --> 00:01:21,200 Speaker 2: a ninety year old company dating back to nineteen thirty five. 23 00:01:21,280 --> 00:01:26,360 Speaker 2: And the three and SMC three stands for data, technology 24 00:01:26,400 --> 00:01:29,800 Speaker 2: and Education. So we were once a rate bureau back 25 00:01:29,800 --> 00:01:32,120 Speaker 2: in the day when there was regulated pricing in the 26 00:01:32,240 --> 00:01:37,200 Speaker 2: LTL industry less than truckload industry, and when basically deregulation 27 00:01:37,280 --> 00:01:39,360 Speaker 2: took place in the late seventies, there was no longer 28 00:01:39,400 --> 00:01:42,080 Speaker 2: a need for rate buros to help facilitate rate making 29 00:01:42,280 --> 00:01:45,240 Speaker 2: in the industry. There were ten of these geographic rate 30 00:01:45,360 --> 00:01:47,560 Speaker 2: bureaus all around the United States. We're the one in 31 00:01:47,600 --> 00:01:50,960 Speaker 2: the Southeast. And when the need for a rate bureau 32 00:01:51,040 --> 00:01:55,520 Speaker 2: went away or rate buros went away, basically SMC three 33 00:01:55,680 --> 00:01:58,720 Speaker 2: took the lead and morphed into a technology and data 34 00:01:58,720 --> 00:02:04,280 Speaker 2: solutions provider. So in the nineteen eighties it acquired or 35 00:02:04,320 --> 00:02:08,040 Speaker 2: merged with Southern Central and Southern Rate Bureau and Louisville, Kentucky, 36 00:02:08,360 --> 00:02:10,480 Speaker 2: and that was really the genesis of a lot of 37 00:02:10,520 --> 00:02:14,239 Speaker 2: the technology solutions that we offer today. Today we offer 38 00:02:15,480 --> 00:02:17,919 Speaker 2: we're a middleware provider and we offer solutions that help 39 00:02:18,040 --> 00:02:22,320 Speaker 2: provide rate quotes, transit time information to shippers for managing 40 00:02:22,360 --> 00:02:26,680 Speaker 2: their freight and really helped drive efficiencies into the industry. 41 00:02:27,280 --> 00:02:30,640 Speaker 2: Think about three pls, think about shippers, et cetera. We 42 00:02:30,680 --> 00:02:34,359 Speaker 2: do business with thousands of customers around the US and 43 00:02:34,440 --> 00:02:38,000 Speaker 2: North America. Most of the Fortune five hundred companies use 44 00:02:38,000 --> 00:02:43,560 Speaker 2: our solutions, and so anyway, were widely connected from the 45 00:02:43,600 --> 00:02:45,840 Speaker 2: Fortune five hundred down to some of your smaller mom 46 00:02:45,840 --> 00:02:51,160 Speaker 2: and pop type logistics companies. SMC three basically makes their 47 00:02:51,200 --> 00:02:54,960 Speaker 2: lives easier and optimizing shipment movement, et cetera. So if 48 00:02:55,480 --> 00:02:58,080 Speaker 2: for some reason, anything wherever to happen to SMC three 49 00:02:58,120 --> 00:03:02,280 Speaker 2: and our service is the LTL free transportation industry would 50 00:03:02,320 --> 00:03:05,800 Speaker 2: definitely feel the impact. Think about when you're booking a 51 00:03:05,840 --> 00:03:08,160 Speaker 2: flight and you pull up your flight options, you see 52 00:03:08,160 --> 00:03:10,960 Speaker 2: a fair quote and you see your different options. Effectively, 53 00:03:11,040 --> 00:03:14,200 Speaker 2: that's what we provide to the TMS providers in the industry, 54 00:03:14,280 --> 00:03:18,880 Speaker 2: so rate information, transit time information so they can pick 55 00:03:18,919 --> 00:03:22,640 Speaker 2: the best option for their transportation needs. We're also looking 56 00:03:22,680 --> 00:03:26,000 Speaker 2: at providing carbon emissions and this is a new area 57 00:03:26,080 --> 00:03:28,120 Speaker 2: that we've ventured into in the last two years, and 58 00:03:28,160 --> 00:03:30,960 Speaker 2: to me sustainability is a really critical part of the 59 00:03:31,040 --> 00:03:34,760 Speaker 2: transportation industry and it will continue to be going forward, 60 00:03:34,840 --> 00:03:37,960 Speaker 2: but we have staked out a leadership role in the 61 00:03:38,000 --> 00:03:43,240 Speaker 2: sustainability stage for the industry. The other piece of what 62 00:03:43,280 --> 00:03:48,040 Speaker 2: we provide to is education solutions, and we are a 63 00:03:48,120 --> 00:03:52,320 Speaker 2: nonprofit trade association, so part of our mission though is 64 00:03:52,440 --> 00:03:55,600 Speaker 2: to bring the parties of the industry together to serve them, 65 00:03:55,920 --> 00:03:59,560 Speaker 2: basically serve the industry. So we have education solutions. One 66 00:03:59,560 --> 00:04:02,840 Speaker 2: of them as our LTL Certification program and you can 67 00:04:02,880 --> 00:04:05,040 Speaker 2: go on and it's five part series and you can 68 00:04:05,080 --> 00:04:07,920 Speaker 2: take courses that were prepared by SMC three and professors 69 00:04:07,920 --> 00:04:10,840 Speaker 2: and it's an online class and you can learn everything 70 00:04:11,000 --> 00:04:15,280 Speaker 2: LTL in the industry. So we host two conferences a 71 00:04:15,360 --> 00:04:17,760 Speaker 2: year as well, which are attended by leaders. It's a 72 00:04:17,760 --> 00:04:21,839 Speaker 2: who's who of the transportation industry. One is every January 73 00:04:21,880 --> 00:04:23,840 Speaker 2: in Atlanta and then one somewhere else in June at 74 00:04:23,839 --> 00:04:26,680 Speaker 2: a resort typically in June, but great conferences. So we 75 00:04:26,720 --> 00:04:30,120 Speaker 2: have a role in both technology and data but also 76 00:04:30,360 --> 00:04:31,480 Speaker 2: education in the industry. 77 00:04:31,560 --> 00:04:33,640 Speaker 1: And so when you talk about shipments, and as you mentioned, 78 00:04:33,640 --> 00:04:35,880 Speaker 1: you're purely focused on the LTL. 79 00:04:35,560 --> 00:04:39,880 Speaker 2: Market, primarily focused on LTL, we do have some solutions 80 00:04:39,920 --> 00:04:43,400 Speaker 2: that serve the truckload industry as well. We provide beyond 81 00:04:43,440 --> 00:04:45,760 Speaker 2: just rate quotes and transit times though. We provide an 82 00:04:45,800 --> 00:04:49,560 Speaker 2: activity based costing model. It's used broadly in the LTL 83 00:04:49,640 --> 00:04:53,240 Speaker 2: industry by over sixty percent of the carriers in the business, 84 00:04:53,640 --> 00:04:57,640 Speaker 2: and that helps them basically distill all of their costs 85 00:04:57,720 --> 00:05:00,520 Speaker 2: down to the shipment level of detail. You're trying to 86 00:05:00,560 --> 00:05:04,200 Speaker 2: set prices for customers, it's important to know how much 87 00:05:04,240 --> 00:05:06,640 Speaker 2: did it cost for me to serve that customer, So 88 00:05:06,680 --> 00:05:09,839 Speaker 2: we give them they utilize the model. We provide the 89 00:05:09,880 --> 00:05:13,080 Speaker 2: model basically that allows them to accurately cost their freight. 90 00:05:13,800 --> 00:05:16,200 Speaker 2: We do the same for the truckload industry. It's available 91 00:05:16,200 --> 00:05:18,240 Speaker 2: to many in the truckload space as well. So that's 92 00:05:18,320 --> 00:05:21,840 Speaker 2: really the one primary solution that's available to truckload that 93 00:05:21,880 --> 00:05:26,039 Speaker 2: we have that we're really heavily focused on LTL. The 94 00:05:26,160 --> 00:05:28,240 Speaker 2: nice thing about that model now is I mentioned the 95 00:05:28,360 --> 00:05:31,800 Speaker 2: focus on carbon emissions. We actually have a carbon calculator 96 00:05:31,800 --> 00:05:34,840 Speaker 2: built into the cost model today, so the carriers can 97 00:05:35,040 --> 00:05:38,240 Speaker 2: calculate their carbon impact at the shipment level of detail 98 00:05:38,320 --> 00:05:43,000 Speaker 2: if needed. And interestingly, over the last really five plus years, 99 00:05:43,680 --> 00:05:45,800 Speaker 2: more and more shippers when they put their freight out 100 00:05:45,800 --> 00:05:52,400 Speaker 2: to bid, they're requesting emissions information and so they now have. 101 00:05:52,800 --> 00:05:56,560 Speaker 2: We've driven some standardization of that calculation into the industry 102 00:05:56,560 --> 00:05:59,479 Speaker 2: that didn't exist in the past. And in the past 103 00:05:59,520 --> 00:06:01,479 Speaker 2: the carriers how do I respond to this? And they'd 104 00:06:01,520 --> 00:06:03,919 Speaker 2: all come in with different answers. So we've launched a 105 00:06:03,920 --> 00:06:08,800 Speaker 2: best practices programer on sustainability, have numerous carriers that participate 106 00:06:08,880 --> 00:06:11,560 Speaker 2: in that, and now we have the technology behind it 107 00:06:11,600 --> 00:06:14,159 Speaker 2: where they can calculate it at the shipment level of 108 00:06:14,160 --> 00:06:17,440 Speaker 2: detail or aggregate it to whatever level they need using 109 00:06:17,480 --> 00:06:18,840 Speaker 2: the cost model that we provide. 110 00:06:18,920 --> 00:06:20,320 Speaker 1: And so you know you mentioned you guys are a 111 00:06:20,320 --> 00:06:23,360 Speaker 1: non for profit, so so who owns you or like 112 00:06:24,800 --> 00:06:25,560 Speaker 1: a member owned? 113 00:06:25,920 --> 00:06:29,599 Speaker 2: Is that how it works? There's really not ownership and 114 00:06:29,800 --> 00:06:31,040 Speaker 2: we're a non process. 115 00:06:30,640 --> 00:06:32,720 Speaker 1: For those and air quotes. 116 00:06:33,040 --> 00:06:37,279 Speaker 2: Yeah, yeah, we have members, So we have members, but 117 00:06:38,080 --> 00:06:42,560 Speaker 2: ultimately all of the proceeds if we were to basically 118 00:06:43,880 --> 00:06:48,480 Speaker 2: we can acquire or merge with another nonprofit, but ultimately 119 00:06:48,560 --> 00:06:52,200 Speaker 2: the assets would flow into the state of Georgia. But 120 00:06:52,320 --> 00:06:54,240 Speaker 2: we are led I will tell you by a board 121 00:06:54,480 --> 00:06:59,760 Speaker 2: of twelve industry leaders from the LTL industry and we 122 00:06:59,800 --> 00:07:03,080 Speaker 2: have third party logistics representation. Some of the biggest ones 123 00:07:03,120 --> 00:07:06,039 Speaker 2: are on our board. Carriers are on our board, so 124 00:07:06,320 --> 00:07:08,680 Speaker 2: they are there to ensure that we're driving in the 125 00:07:08,760 --> 00:07:11,720 Speaker 2: right direction. And the nice thing about it is we 126 00:07:11,760 --> 00:07:16,040 Speaker 2: don't have to plan for next quarters report right and 127 00:07:16,080 --> 00:07:19,040 Speaker 2: we're not driven by short term gyrations in the economy 128 00:07:19,080 --> 00:07:21,200 Speaker 2: and the market. We're planning for the long term and 129 00:07:21,680 --> 00:07:24,840 Speaker 2: we're a service oriented company. We've again been around for 130 00:07:24,920 --> 00:07:28,160 Speaker 2: ninety years. We're a trusted entity in the industry and 131 00:07:28,680 --> 00:07:31,160 Speaker 2: it's truly nice that we can plan for the long term, 132 00:07:31,200 --> 00:07:34,880 Speaker 2: build for the long term and deliver solutions that help them. 133 00:07:35,200 --> 00:07:38,680 Speaker 2: And our board is the face of the industry that 134 00:07:38,720 --> 00:07:41,080 Speaker 2: we serve, so we have a great sounding board and 135 00:07:41,160 --> 00:07:43,360 Speaker 2: our board meetings to not only go over financials, but 136 00:07:43,400 --> 00:07:46,640 Speaker 2: to discuss product strategy and where we need to head right. 137 00:07:46,920 --> 00:07:50,600 Speaker 1: So, obviously technology is pretty important for your company and 138 00:07:50,680 --> 00:07:54,280 Speaker 1: it's probably been instrumental in the evolution of the company. 139 00:07:54,520 --> 00:07:57,840 Speaker 1: Can you talk about you know how much I don't know, 140 00:07:58,000 --> 00:08:01,560 Speaker 1: like you know all about your technology or do you 141 00:08:01,600 --> 00:08:04,679 Speaker 1: do most of your stuff in how are you leveraging AI? 142 00:08:04,880 --> 00:08:08,160 Speaker 1: How are you leveraging AI machine learning? Can you talk 143 00:08:08,200 --> 00:08:09,040 Speaker 1: to us about that. 144 00:08:09,120 --> 00:08:12,640 Speaker 2: You bet. So. We've gone through a huge transformation, as 145 00:08:12,720 --> 00:08:15,840 Speaker 2: I mentioned earlier, from a rate bureau from nineteen thirty 146 00:08:15,840 --> 00:08:19,880 Speaker 2: five till early eighties into a technology and data solutions provider, 147 00:08:20,760 --> 00:08:23,080 Speaker 2: and that was really from the eighties to say, the 148 00:08:23,320 --> 00:08:26,680 Speaker 2: eight timeframe. There were new products released, et cetera. All 149 00:08:26,760 --> 00:08:31,080 Speaker 2: of it was homegrown and kind of home hosted over 150 00:08:31,120 --> 00:08:34,080 Speaker 2: the last ten years. I arrived in twenty fifteen. Even 151 00:08:34,120 --> 00:08:38,199 Speaker 2: though we had some really great products and great offerings 152 00:08:38,240 --> 00:08:41,760 Speaker 2: that are used widely throughout the industry, we really had 153 00:08:41,800 --> 00:08:44,160 Speaker 2: not done a whole lot in terms of innovation. We 154 00:08:44,160 --> 00:08:46,920 Speaker 2: were staffed at that time at one hundred people and 155 00:08:47,360 --> 00:08:51,200 Speaker 2: in total we had six developers maintaining this environment. This 156 00:08:51,280 --> 00:08:55,560 Speaker 2: platform technology, as you know, was rapidly changing, and the 157 00:08:55,640 --> 00:08:58,800 Speaker 2: question for me from the board was where should this 158 00:08:58,960 --> 00:09:03,200 Speaker 2: organization go to make sure it thrives, it's thriving in 159 00:09:03,240 --> 00:09:06,120 Speaker 2: the future, et cetera. We've gone through huge transformation and 160 00:09:06,200 --> 00:09:09,480 Speaker 2: we have taken our it staff and our company has 161 00:09:09,480 --> 00:09:11,880 Speaker 2: gone from one hundred people to about two hundred today. 162 00:09:12,160 --> 00:09:14,880 Speaker 2: We've gone from twenty three million in revenue to this 163 00:09:14,960 --> 00:09:17,560 Speaker 2: year will be around fifty four million in revenue. For 164 00:09:17,600 --> 00:09:20,200 Speaker 2: a ninety year old company to experience that kind of 165 00:09:20,200 --> 00:09:25,160 Speaker 2: growth is terrific to see. But the key underpinning, I 166 00:09:25,160 --> 00:09:30,120 Speaker 2: would tell you is service, reliability, service quality. People trust 167 00:09:30,360 --> 00:09:32,760 Speaker 2: what they're going to get from SMC three. We have 168 00:09:32,840 --> 00:09:37,840 Speaker 2: over a ninety nine point nine percent up performance and 169 00:09:38,720 --> 00:09:41,200 Speaker 2: so it's quality solutions that are widely embraced. And one 170 00:09:41,240 --> 00:09:43,360 Speaker 2: of my goals when I came in was to make 171 00:09:43,400 --> 00:09:48,320 Speaker 2: sure that people use SMC three because they choose to 172 00:09:48,440 --> 00:09:50,920 Speaker 2: use SMC three, not because they feel like they have 173 00:09:51,000 --> 00:09:54,679 Speaker 2: to use SMC three. And we are very focused on people. 174 00:09:54,840 --> 00:09:57,720 Speaker 2: And I know you ask about technology, but I'll jump 175 00:09:57,760 --> 00:10:01,000 Speaker 2: onto the people side really quickly. My number one focus 176 00:10:01,000 --> 00:10:04,200 Speaker 2: in my career has always been on people. It's my 177 00:10:04,320 --> 00:10:08,559 Speaker 2: employees and it's our customers, and I continue to focus 178 00:10:08,600 --> 00:10:11,359 Speaker 2: on that, and I want to make sure our customers 179 00:10:11,360 --> 00:10:14,200 Speaker 2: have an experience that they say, I love working with 180 00:10:14,440 --> 00:10:18,000 Speaker 2: SMC three, I love their products, they work. I love 181 00:10:18,040 --> 00:10:20,560 Speaker 2: the people because they're always there for me, supporting me. 182 00:10:21,120 --> 00:10:25,560 Speaker 2: So we're trying to be everything we can be to 183 00:10:25,679 --> 00:10:29,360 Speaker 2: serve them well and give them a great experience. Technology wise, 184 00:10:30,160 --> 00:10:32,760 Speaker 2: we've gone from six developers to well over forty today, 185 00:10:32,760 --> 00:10:35,959 Speaker 2: our IT team is over half of our organization, so 186 00:10:36,000 --> 00:10:40,640 Speaker 2: we have significantly scaled up our development efforts. We've launched 187 00:10:40,720 --> 00:10:44,000 Speaker 2: many new products over the last ten years, so we're 188 00:10:44,040 --> 00:10:47,199 Speaker 2: excited about where we're going. We have dynamic pricing solutions 189 00:10:47,240 --> 00:10:51,720 Speaker 2: now that are available. We have API solutions available for 190 00:10:51,800 --> 00:10:55,400 Speaker 2: tracking and tracing shipments. All of those are homegrown, hosted 191 00:10:55,440 --> 00:10:58,640 Speaker 2: in our own cloud. We have multiple data centers across 192 00:10:58,679 --> 00:11:03,680 Speaker 2: the US for security and for backup redundancy. But we 193 00:11:03,800 --> 00:11:07,120 Speaker 2: all also are moving into AI and a lot of 194 00:11:07,160 --> 00:11:10,280 Speaker 2: companies you hear about lead with AI, and we're all about, 195 00:11:10,360 --> 00:11:14,120 Speaker 2: you know, a gentic AI or this or that. We're 196 00:11:14,160 --> 00:11:17,000 Speaker 2: not leading with AI. We're not not not to impress 197 00:11:17,040 --> 00:11:20,600 Speaker 2: the world with AI. But I will tell you behind 198 00:11:20,600 --> 00:11:23,560 Speaker 2: the scenes, we do what we can do to drive 199 00:11:23,600 --> 00:11:26,320 Speaker 2: efficiencies into the organization so we can do more to 200 00:11:26,360 --> 00:11:28,840 Speaker 2: serve the industry. And AI is one of those techniques, 201 00:11:29,360 --> 00:11:32,240 Speaker 2: so we're using it. I would tell you today all 202 00:11:32,280 --> 00:11:35,000 Speaker 2: of our employees use AI in some shape or form. 203 00:11:35,440 --> 00:11:38,400 Speaker 2: We're using it for code generation for some of our 204 00:11:38,440 --> 00:11:44,400 Speaker 2: a PI solutions. So anyway we do use AI. Jit 205 00:11:44,480 --> 00:11:48,160 Speaker 2: Hub Copilot is used and also an internal version of 206 00:11:48,240 --> 00:11:53,600 Speaker 2: Chat GPT, but we we're not what i'd call a 207 00:11:53,640 --> 00:11:57,880 Speaker 2: bleeding edge tech company. We've got to make sure because 208 00:11:57,920 --> 00:12:00,520 Speaker 2: we are a nonprofit we sell fund need to make 209 00:12:00,520 --> 00:12:03,560 Speaker 2: sure when we invest in something it's going to succeed 210 00:12:03,679 --> 00:12:06,200 Speaker 2: and deliver our return, so we can continue that cycle 211 00:12:06,240 --> 00:12:10,240 Speaker 2: of investment for the industry. But we do deploy new 212 00:12:10,240 --> 00:12:13,040 Speaker 2: technologies as they become available. And the landscape has changed 213 00:12:13,080 --> 00:12:14,959 Speaker 2: so dramatically over the last ten years. It's been a 214 00:12:15,000 --> 00:12:16,160 Speaker 2: lot of fun, right. 215 00:12:16,640 --> 00:12:18,680 Speaker 1: So there's a lot of developments going in the freight 216 00:12:18,720 --> 00:12:21,400 Speaker 1: markets and the lto markets. You know, one recently was 217 00:12:22,040 --> 00:12:26,680 Speaker 1: you know, a new freight classification. The changes were recently 218 00:12:26,760 --> 00:12:31,160 Speaker 1: made by the National Motor of Freight Classification or actually 219 00:12:31,160 --> 00:12:35,400 Speaker 1: by the n m FTA. How is that impacting the 220 00:12:35,520 --> 00:12:39,960 Speaker 1: LTL industry? How is it impacting your products? Did you 221 00:12:39,960 --> 00:12:43,000 Speaker 1: guys have to prepare for this or was this kind 222 00:12:43,000 --> 00:12:46,319 Speaker 1: of like a non event for you guys? 223 00:12:47,360 --> 00:12:49,559 Speaker 2: Honestly, I'd tell you it's a bit of a non event. 224 00:12:49,600 --> 00:12:53,200 Speaker 2: We were prepared for it. And it's another pricing methodology. 225 00:12:53,280 --> 00:12:56,880 Speaker 2: We support so many different pricing methodologies in the industry 226 00:12:56,880 --> 00:12:59,240 Speaker 2: and able to in order to be able to deliver 227 00:12:59,440 --> 00:13:02,920 Speaker 2: rate quotes to three pls and shippers. You have to 228 00:13:02,920 --> 00:13:05,120 Speaker 2: be able to support a lot of different methodologies, so 229 00:13:05,440 --> 00:13:08,000 Speaker 2: we get requests for different methodologies each and every day. 230 00:13:08,040 --> 00:13:09,560 Speaker 2: What I'm going to tell you is the nice thing 231 00:13:09,600 --> 00:13:13,480 Speaker 2: about the change that the NFC NFC made is that 232 00:13:13,520 --> 00:13:18,000 Speaker 2: it's a move towards density, which more for the classification 233 00:13:18,120 --> 00:13:21,480 Speaker 2: of freight and commodities in the industry. So it more 234 00:13:21,559 --> 00:13:26,719 Speaker 2: closely aligns with the carriers and what drives their profitability. 235 00:13:27,320 --> 00:13:30,880 Speaker 2: So it's going to help them make smarter decisions as 236 00:13:30,880 --> 00:13:35,880 Speaker 2: they price their freight and that better reflect reality of 237 00:13:36,000 --> 00:13:38,600 Speaker 2: what's actually being shipped. So I think that'll be good. Now, 238 00:13:38,600 --> 00:13:42,600 Speaker 2: we'll result in some surprises for some customers. Absolutely. There 239 00:13:42,600 --> 00:13:44,520 Speaker 2: are a lot of customers who were proactive about it 240 00:13:44,559 --> 00:13:46,480 Speaker 2: and said we need to make sure that you guys 241 00:13:46,960 --> 00:13:51,000 Speaker 2: reprice our freight appropriately, and they got that done prior 242 00:13:51,000 --> 00:13:52,840 Speaker 2: to the changes going in, so when it happened, they 243 00:13:52,880 --> 00:13:55,920 Speaker 2: were ready. Others may be a little surprised that their 244 00:13:55,920 --> 00:14:01,280 Speaker 2: bill could go up or down slightly. There will be impacts, 245 00:14:01,280 --> 00:14:03,800 Speaker 2: but at the end of the day, it's another methodology. 246 00:14:05,120 --> 00:14:07,640 Speaker 2: But I like it because it more closely aligns with 247 00:14:07,720 --> 00:14:10,400 Speaker 2: the carriers' costs and will help them run a more 248 00:14:10,400 --> 00:14:11,280 Speaker 2: efficient operation. 249 00:14:11,840 --> 00:14:14,320 Speaker 1: So you guys both have a pretty interesting perspective on 250 00:14:14,400 --> 00:14:17,200 Speaker 1: the freight markets. Given your board makeup and the fact 251 00:14:17,240 --> 00:14:19,880 Speaker 1: that you mentioned you know most of Fortune five hundred 252 00:14:20,320 --> 00:14:23,800 Speaker 1: companies or your customers. What are they telling you about 253 00:14:23,960 --> 00:14:28,520 Speaker 1: the freight demand today? Maybe the outlook. I mean, obviously 254 00:14:28,560 --> 00:14:33,360 Speaker 1: everyone's crystal ball is cracked and foggy. But you know, 255 00:14:33,440 --> 00:14:37,920 Speaker 1: what are you hearing from your customers and your board members. 256 00:14:37,960 --> 00:14:42,040 Speaker 2: It's a world of unpredictability and uncertainty that we live in. 257 00:14:42,200 --> 00:14:44,400 Speaker 2: And you know, we've been looking at this. She had 258 00:14:44,480 --> 00:14:47,360 Speaker 2: COVID and there was this huge surge in demand which 259 00:14:47,400 --> 00:14:50,760 Speaker 2: boosted all fortunes for the LTL industry and truckload for 260 00:14:50,800 --> 00:14:55,120 Speaker 2: that matter, great times in twenty twenty twenty twenty one, 261 00:14:56,040 --> 00:15:00,680 Speaker 2: and then twenty twenty two things leveled out, inventory adjusted, 262 00:15:00,760 --> 00:15:05,200 Speaker 2: and really things flattened out. And I've been hearing you know, 263 00:15:05,280 --> 00:15:07,640 Speaker 2: so we've been in a freight recession, and I've been 264 00:15:07,640 --> 00:15:10,360 Speaker 2: hearing comments about well, and this is for the last 265 00:15:10,400 --> 00:15:12,480 Speaker 2: three years, Oh, we should be coming out of it 266 00:15:12,520 --> 00:15:14,520 Speaker 2: by the second half of the year, and we never 267 00:15:14,640 --> 00:15:18,120 Speaker 2: never really did. Last year heard the same thing never 268 00:15:18,240 --> 00:15:20,840 Speaker 2: really did, and this year is interesting. At the beginning 269 00:15:20,880 --> 00:15:22,560 Speaker 2: of the year, a lot of economis were saying, oh, 270 00:15:22,600 --> 00:15:24,480 Speaker 2: we should see a recovery, freight recovery. At the end 271 00:15:24,480 --> 00:15:27,400 Speaker 2: of the year, I think the verdict is out and 272 00:15:27,440 --> 00:15:29,800 Speaker 2: hearing it from some of the carriers and three pls 273 00:15:29,840 --> 00:15:34,520 Speaker 2: on our board. The bottom line is we're bouncing along 274 00:15:34,600 --> 00:15:37,720 Speaker 2: what feels like a bottom and we're not seeing a 275 00:15:37,760 --> 00:15:42,520 Speaker 2: lot of signs of lift yet. The nice thing is 276 00:15:43,520 --> 00:15:47,600 Speaker 2: there hasn't been just a major downward thrust, but there's 277 00:15:47,720 --> 00:15:50,800 Speaker 2: also not an upward piece of momentum that's really emerged. 278 00:15:50,920 --> 00:15:54,600 Speaker 2: And early this year was interesting. You know, I look 279 00:15:54,640 --> 00:15:57,000 Speaker 2: at and I'll back up a little bit last year, 280 00:15:57,480 --> 00:16:00,800 Speaker 2: spoke with our employees in October, and I encourage them 281 00:16:00,840 --> 00:16:04,360 Speaker 2: to go vote. Vote in the presidential election cycle, vote 282 00:16:04,400 --> 00:16:09,560 Speaker 2: your conscience, and regardless of which party wins, the economy 283 00:16:09,560 --> 00:16:14,520 Speaker 2: should stabilize because the one thing corporations want is predictability 284 00:16:14,560 --> 00:16:19,400 Speaker 2: of policy. And so you'll get that. You're going to 285 00:16:19,480 --> 00:16:21,960 Speaker 2: know tax policy based on the outcome of the election 286 00:16:22,080 --> 00:16:24,320 Speaker 2: from either party, and that will at least have a 287 00:16:24,320 --> 00:16:27,080 Speaker 2: stabilizing effect. So we get into the new year and 288 00:16:27,160 --> 00:16:29,960 Speaker 2: let's just say it's been far from predictable with the 289 00:16:29,960 --> 00:16:32,280 Speaker 2: tariffs and a lot of things that just cast some gyrations. 290 00:16:32,480 --> 00:16:36,080 Speaker 2: Not anything against what's going going on, but I do 291 00:16:36,160 --> 00:16:39,480 Speaker 2: think there's been some shock to the system. And we 292 00:16:39,520 --> 00:16:42,760 Speaker 2: saw early this year the markets dropped pretty quickly with 293 00:16:42,840 --> 00:16:45,480 Speaker 2: the threat of tariffs and the concern about inflationary pressures. 294 00:16:45,520 --> 00:16:48,680 Speaker 2: And when the markets drop, consumers started to show signs 295 00:16:48,680 --> 00:16:51,600 Speaker 2: of pulling back, which they've continued to. One of the 296 00:16:51,600 --> 00:16:56,600 Speaker 2: things that has historically propelled the economy has been consumer spending, 297 00:16:56,680 --> 00:16:59,560 Speaker 2: driven out of gains that they take off of their 298 00:16:59,560 --> 00:17:02,960 Speaker 2: investment and appreciation. And when the market started to dry up, 299 00:17:03,280 --> 00:17:05,760 Speaker 2: there was a pullback on the consumer side, and you 300 00:17:05,800 --> 00:17:08,960 Speaker 2: had the commercial corporations holding back on a lot of 301 00:17:08,960 --> 00:17:13,119 Speaker 2: capital expenditures and decisions because of questions about what's the 302 00:17:13,160 --> 00:17:15,960 Speaker 2: policy going to look like, where is this tariff thing going, 303 00:17:17,240 --> 00:17:20,160 Speaker 2: and here we are today and there was so that 304 00:17:20,240 --> 00:17:22,280 Speaker 2: kind of sent things into a bit of a downward 305 00:17:22,320 --> 00:17:24,679 Speaker 2: cycle in the first few months of the year, and 306 00:17:24,720 --> 00:17:29,320 Speaker 2: then then basically pulled back and gave some delays on 307 00:17:29,359 --> 00:17:33,000 Speaker 2: the tariffs and the market rallied and people are enjoying 308 00:17:33,040 --> 00:17:37,320 Speaker 2: that now. So there is actually some signs of consumer stability, 309 00:17:37,600 --> 00:17:42,239 Speaker 2: which is encouraging, but it's because the market's going up now. 310 00:17:42,280 --> 00:17:44,480 Speaker 2: The market is very different than the economy, as you know, 311 00:17:45,920 --> 00:17:49,200 Speaker 2: but it also does propel the economy and it can 312 00:17:49,440 --> 00:17:52,719 Speaker 2: create inertia. So right now I think there's some momentum 313 00:17:53,000 --> 00:17:56,399 Speaker 2: being generated. One of the underlying areas of concern I 314 00:17:56,440 --> 00:18:00,320 Speaker 2: have is the ISM producers production manufacturing production in US. 315 00:18:00,560 --> 00:18:04,040 Speaker 2: It's still in contraction mode and it has been for 316 00:18:04,080 --> 00:18:07,679 Speaker 2: several months, and that tends to be a leading indicator 317 00:18:07,720 --> 00:18:10,719 Speaker 2: of LTL in the freight industry, and the fact that 318 00:18:10,720 --> 00:18:13,200 Speaker 2: it's at forty eight point nine, which is below fifty, 319 00:18:13,240 --> 00:18:16,120 Speaker 2: which is kind of the break even level. We're still 320 00:18:16,119 --> 00:18:19,600 Speaker 2: contracting on manufacturing, so there's some good out there and 321 00:18:19,680 --> 00:18:23,400 Speaker 2: there's some challenges out there still, and honestly, we'll see 322 00:18:23,400 --> 00:18:25,720 Speaker 2: where it goes. The CPI is another one. 323 00:18:26,200 --> 00:18:28,439 Speaker 1: So yeah, on the ISM, I think it's been in 324 00:18:28,480 --> 00:18:30,840 Speaker 1: a contraction territory of the thirty one in the last 325 00:18:30,920 --> 00:18:35,119 Speaker 1: thirty three months, you know, and consensus expectations for a 326 00:18:35,119 --> 00:18:38,159 Speaker 1: lot of publicly traded LTL carriers are for tonnage to 327 00:18:38,160 --> 00:18:41,320 Speaker 1: be done by mid single digits, So the outlook is 328 00:18:41,640 --> 00:18:46,240 Speaker 1: not great. You know, you mentioned the consumer, and obviously 329 00:18:46,440 --> 00:18:51,200 Speaker 1: consumers they're big into buying online e commerce. How does 330 00:18:51,320 --> 00:18:55,600 Speaker 1: e commerce in that development impacted the LTL market from 331 00:18:55,600 --> 00:18:56,680 Speaker 1: your vantage point. 332 00:18:57,280 --> 00:19:00,639 Speaker 2: It has, I al would say driven probably more short 333 00:19:00,680 --> 00:19:03,880 Speaker 2: haul distribution, a lot of final mile stuff. Amazon does 334 00:19:03,880 --> 00:19:07,240 Speaker 2: a lot of it on its own, so it has 335 00:19:07,400 --> 00:19:11,960 Speaker 2: created some changes in distribution patterns and all that. So 336 00:19:12,600 --> 00:19:14,600 Speaker 2: and I'd say that trend's been going on now for 337 00:19:14,720 --> 00:19:17,439 Speaker 2: quite a long time, so not a huge shift this 338 00:19:17,560 --> 00:19:20,920 Speaker 2: year versus last. It's a continuation of a cycle that's 339 00:19:20,920 --> 00:19:21,800 Speaker 2: been going for a while. 340 00:19:21,920 --> 00:19:22,560 Speaker 1: But a positive. 341 00:19:22,960 --> 00:19:24,320 Speaker 2: It's a positive, it's a positive. 342 00:19:25,480 --> 00:19:27,640 Speaker 1: You know, there's been a lot of interesting things going 343 00:19:27,640 --> 00:19:30,520 Speaker 1: on in the LTL space, you know, I know you're 344 00:19:31,200 --> 00:19:33,399 Speaker 1: you kind of have a, like I said, a unique 345 00:19:33,480 --> 00:19:37,639 Speaker 1: vantage point. We've seen consolidations, we've seen bankruptcies. 346 00:19:38,560 --> 00:19:38,760 Speaker 2: You know. 347 00:19:39,680 --> 00:19:42,320 Speaker 1: What are your thoughts on consolidation in the space. You know, 348 00:19:42,440 --> 00:19:45,320 Speaker 1: night Swift has been one that's been buying regional carriers, 349 00:19:46,000 --> 00:19:47,520 Speaker 1: you know, Yellow and out of business a couple of 350 00:19:47,560 --> 00:19:49,760 Speaker 1: years ago. FedEx Freight is going to spin out and 351 00:19:49,800 --> 00:19:53,560 Speaker 1: that could create some interesting dynamics in the marketplace. What's 352 00:19:53,600 --> 00:19:59,639 Speaker 1: your perspective on the evolution of the LTL competitive market 353 00:19:59,640 --> 00:20:00,800 Speaker 1: over the couple of years. 354 00:20:00,880 --> 00:20:02,560 Speaker 2: I think it's gonna be real interesting to see how 355 00:20:02,560 --> 00:20:04,560 Speaker 2: it shakes out. I actually was at Yellow for thirteen 356 00:20:04,680 --> 00:20:07,920 Speaker 2: years from nineteen ninety eight through twenty eleven, and saw 357 00:20:07,960 --> 00:20:11,280 Speaker 2: some really great times there and also some challenging times 358 00:20:10,960 --> 00:20:14,000 Speaker 2: toward the end of my time there. I was sorry 359 00:20:14,040 --> 00:20:16,120 Speaker 2: to see them go out a couple of years ago, 360 00:20:16,640 --> 00:20:18,680 Speaker 2: But instantly what was interesting to. 361 00:20:18,640 --> 00:20:20,240 Speaker 1: Me were you were you a Yellow guy or a 362 00:20:20,320 --> 00:20:20,880 Speaker 1: roadway guy. 363 00:20:21,080 --> 00:20:23,560 Speaker 2: I was Yellow VP of Pricing at Yellow, but ultimately 364 00:20:23,640 --> 00:20:27,320 Speaker 2: I had all of them, and honestly, I love the 365 00:20:27,359 --> 00:20:29,560 Speaker 2: people from both of those companies and got to know 366 00:20:29,640 --> 00:20:31,960 Speaker 2: many of them. It's a great group of employees. So 367 00:20:32,600 --> 00:20:35,800 Speaker 2: more than anything, I hated to see the company end 368 00:20:35,880 --> 00:20:39,240 Speaker 2: up ceasing to exist, But it wasn't shocking given the 369 00:20:39,320 --> 00:20:43,000 Speaker 2: turmoil that had really unfolded over a ten plus year period. 370 00:20:44,440 --> 00:20:47,960 Speaker 2: But bottom line is, when Yellow went out a couple 371 00:20:47,920 --> 00:20:51,720 Speaker 2: of years ago, there was so much excess capacity already 372 00:20:51,720 --> 00:20:54,760 Speaker 2: in the market. It was post COVID boom, and things 373 00:20:54,840 --> 00:20:57,760 Speaker 2: had flattened out and started to soften, And I had 374 00:20:57,760 --> 00:21:01,399 Speaker 2: heard numbers back in that timeframe of eighteen nineteen percent 375 00:21:01,480 --> 00:21:05,879 Speaker 2: excess capacity. So when Yellow went out, it wasn't It 376 00:21:05,880 --> 00:21:08,280 Speaker 2: didn't really create much of a blip. And sure there 377 00:21:08,320 --> 00:21:10,240 Speaker 2: was a little bit of a bump in tonnage and 378 00:21:10,240 --> 00:21:13,960 Speaker 2: freight for the carriers and really helped stabilize pricing further. 379 00:21:14,560 --> 00:21:16,560 Speaker 2: But at the end of the day, it was a 380 00:21:16,560 --> 00:21:18,359 Speaker 2: bit of an I say, at a non event in 381 00:21:18,400 --> 00:21:22,520 Speaker 2: the industry. What is resulting though, as you know and 382 00:21:22,560 --> 00:21:24,560 Speaker 2: alluded to, a lot of the carriers out there have 383 00:21:24,680 --> 00:21:28,199 Speaker 2: acquired terminals from Yellow and the asset sales that have 384 00:21:28,280 --> 00:21:32,159 Speaker 2: gone on, and I would say it concerns me just 385 00:21:32,200 --> 00:21:36,240 Speaker 2: a bit long term if the freight environment doesn't pick 386 00:21:36,359 --> 00:21:42,400 Speaker 2: up as those terminals start coming online, capacity there will be, 387 00:21:42,480 --> 00:21:45,800 Speaker 2: let's just say, capacity will be plentiful, which can put 388 00:21:45,880 --> 00:21:48,560 Speaker 2: pressure on the pricing side in the industry. Right now, 389 00:21:48,600 --> 00:21:52,280 Speaker 2: there's been a good stability around price in the LTL 390 00:21:52,320 --> 00:21:55,560 Speaker 2: space in spite of the flat kind of tonnage environment. Yep. 391 00:21:57,040 --> 00:21:58,879 Speaker 2: But I do think it'll be real interesting over the 392 00:21:58,920 --> 00:22:03,480 Speaker 2: next day five years to see how that capacity is 393 00:22:03,560 --> 00:22:07,720 Speaker 2: absorbed into the industry as carriers look to grow into it. Yeah. 394 00:22:07,480 --> 00:22:11,199 Speaker 1: Yeah, a lot of expectations for pricings, which measured by 395 00:22:11,240 --> 00:22:13,399 Speaker 1: a revenue for one hundred eight less fuel search charges 396 00:22:13,400 --> 00:22:16,240 Speaker 1: would you of course know as expected in mid single 397 00:22:16,240 --> 00:22:20,080 Speaker 1: digit growth, So that's going to you know, help mitigate 398 00:22:20,119 --> 00:22:23,320 Speaker 1: the impact from the lower tonnage. But still way on, 399 00:22:23,560 --> 00:22:24,040 Speaker 1: uh way. 400 00:22:24,600 --> 00:22:26,600 Speaker 2: The FedEx spent off I think will be interesting too. 401 00:22:26,680 --> 00:22:29,040 Speaker 2: I mean, and they used to be independent as American 402 00:22:29,119 --> 00:22:32,080 Speaker 2: Freightways in the days, and it'll be interesting to see 403 00:22:32,080 --> 00:22:35,040 Speaker 2: how that unfolds. But I honestly think it's going to 404 00:22:35,080 --> 00:22:39,240 Speaker 2: bring greater efficiency to the FedEx freight organization and allow 405 00:22:39,280 --> 00:22:42,600 Speaker 2: them to operate in a more nimble manner in the industry. 406 00:22:42,680 --> 00:22:45,840 Speaker 2: So it should be good from a shipper's perspective and 407 00:22:45,920 --> 00:22:48,240 Speaker 2: just a competitiveness standpoint, I think it'll be a plus 408 00:22:48,280 --> 00:22:49,600 Speaker 2: for the industry and for FedEx. 409 00:22:49,680 --> 00:22:53,320 Speaker 1: Right, So, what's what's next for the company or do 410 00:22:53,320 --> 00:22:55,560 Speaker 1: you have any like services as you're planning to roll 411 00:22:55,600 --> 00:22:58,359 Speaker 1: out you know you discussed earlier. You know you're focus 412 00:22:58,440 --> 00:23:03,320 Speaker 1: on emissions, you know where what other services do you 413 00:23:03,320 --> 00:23:06,480 Speaker 1: guys plan on providing you know in the future. 414 00:23:06,960 --> 00:23:09,400 Speaker 2: I mean, dynamic pricing is one thing that we've rolled out, 415 00:23:09,480 --> 00:23:13,280 Speaker 2: and the world of traditional class based commodity class based 416 00:23:13,320 --> 00:23:18,480 Speaker 2: pricing is slowly declining and that's what our core products are. 417 00:23:18,480 --> 00:23:20,840 Speaker 1: And can you dumb down when you're talking about LTL 418 00:23:20,920 --> 00:23:22,879 Speaker 1: dynamic pricing, what does that mean to you? 419 00:23:22,920 --> 00:23:28,480 Speaker 2: Guys? Carriers can basically set prices on the fly as 420 00:23:28,520 --> 00:23:32,080 Speaker 2: they see fits. So we've actually built an integration with 421 00:23:32,160 --> 00:23:35,959 Speaker 2: our dynamic pricing model to the LTL carriers costing model, 422 00:23:36,320 --> 00:23:38,240 Speaker 2: so they can eat if they want, they can price 423 00:23:38,280 --> 00:23:41,840 Speaker 2: it off of the cost for handling freight and given lanes, 424 00:23:41,880 --> 00:23:43,400 Speaker 2: and if they know they have a back haul lane 425 00:23:43,400 --> 00:23:45,680 Speaker 2: and they need to move the price down on a 426 00:23:45,680 --> 00:23:48,080 Speaker 2: given day, then they can do that. So they can price, 427 00:23:48,680 --> 00:23:51,000 Speaker 2: let's just to be simple, from day to day, from 428 00:23:51,080 --> 00:23:53,680 Speaker 2: hour to hour, minutes minute, They can change their prices 429 00:23:53,720 --> 00:23:57,919 Speaker 2: on the fly with this dynamic pricing tool as opposed 430 00:23:57,960 --> 00:24:01,000 Speaker 2: to having contract rates that are in place and typically 431 00:24:01,040 --> 00:24:05,400 Speaker 2: negotiated once a year if they so. This gives them 432 00:24:05,800 --> 00:24:10,400 Speaker 2: far more flexibility in driving efficiency into their operation by 433 00:24:10,680 --> 00:24:14,040 Speaker 2: targeting the freight and the shipments that they need to 434 00:24:14,040 --> 00:24:17,520 Speaker 2: help balance their system more effectively. And there are a 435 00:24:17,520 --> 00:24:20,600 Speaker 2: lot of offshoots of that involving AI and predictive pricing, 436 00:24:20,600 --> 00:24:23,639 Speaker 2: analytic analytics, et cetera that can be built into dynamic pricing, 437 00:24:23,680 --> 00:24:26,800 Speaker 2: so it's not just a cost driven model, but it 438 00:24:26,840 --> 00:24:30,080 Speaker 2: can also be driven by likelihood of winning freight at 439 00:24:30,080 --> 00:24:32,840 Speaker 2: such and such a price point, So predictive pricing could 440 00:24:32,880 --> 00:24:35,919 Speaker 2: be folded into that. We also have a new application 441 00:24:36,000 --> 00:24:39,960 Speaker 2: coming out to help manage contracts and pricing. LTL pricing 442 00:24:40,040 --> 00:24:43,120 Speaker 2: is horribly complex, and I. 443 00:24:43,080 --> 00:24:46,399 Speaker 1: Think, can you walk us through what it kind of 444 00:24:46,400 --> 00:24:49,400 Speaker 1: looks like? Big picture, Like you know, you. 445 00:24:49,320 --> 00:24:53,480 Speaker 2: Don't want me to go there. But actually it was 446 00:24:53,520 --> 00:24:57,280 Speaker 2: funny when I got on at Yellow as VP of pricing. 447 00:24:57,359 --> 00:25:00,399 Speaker 2: The former CEO at Yellow was more my and he 448 00:25:00,440 --> 00:25:03,679 Speaker 2: had come out of the airline industry, and he said, Andy, 449 00:25:03,760 --> 00:25:06,240 Speaker 2: if you can figure out airline pricing, so I was 450 00:25:06,280 --> 00:25:10,480 Speaker 2: at American Airlines previously, you can figure out LTL pricing. 451 00:25:11,119 --> 00:25:13,800 Speaker 2: I am so thankful. I had a team of seasoned 452 00:25:13,880 --> 00:25:17,199 Speaker 2: veterans at Yellow who knew LTL pricing because it's the 453 00:25:17,200 --> 00:25:22,879 Speaker 2: most convoluted pricing. But it's driven off of a structured 454 00:25:22,920 --> 00:25:27,359 Speaker 2: classification code with weight breaks and link of Haull breaks, 455 00:25:27,400 --> 00:25:30,840 Speaker 2: and there's all sorts of complexity when you think about 456 00:25:30,880 --> 00:25:35,119 Speaker 2: all the zip code to zip code combinations for moving 457 00:25:35,160 --> 00:25:38,280 Speaker 2: freight all around the country and all across North America. 458 00:25:38,680 --> 00:25:42,440 Speaker 2: You have literally a price per hundred weight for each 459 00:25:42,520 --> 00:25:45,640 Speaker 2: of these zip to zip pairs for every weight break 460 00:25:45,680 --> 00:25:47,240 Speaker 2: you can imagine out there, and there mused to be 461 00:25:47,280 --> 00:25:52,360 Speaker 2: about seventeen of them and just a convoluted complex. Right. 462 00:25:52,760 --> 00:25:55,679 Speaker 1: And if I'm a shipber and you're an LTL carrier, 463 00:25:56,920 --> 00:26:00,480 Speaker 1: so am I getting just like one flat rate? Or 464 00:26:00,520 --> 00:26:03,080 Speaker 1: am I like saying, well, give me some rates on 465 00:26:03,920 --> 00:26:06,000 Speaker 1: these two points for this amount of weight. 466 00:26:06,160 --> 00:26:08,960 Speaker 2: Is like typically the way it works, there's there's a 467 00:26:09,000 --> 00:26:11,600 Speaker 2: set of base rates that cover all points, okay, and 468 00:26:11,640 --> 00:26:16,600 Speaker 2: then the car the shippers negotiate a discount and it's 469 00:26:16,640 --> 00:26:19,400 Speaker 2: a game of discounting, and the ltail industry a discount 470 00:26:19,440 --> 00:26:22,760 Speaker 2: off of the base rates, which are effectively rack rates, 471 00:26:22,800 --> 00:26:26,720 Speaker 2: this kind of a max level rate, and shippers negotiate 472 00:26:26,800 --> 00:26:29,080 Speaker 2: discounts off of those, and the net rate is what 473 00:26:29,119 --> 00:26:32,240 Speaker 2: they end up paying based on what they're shipping from 474 00:26:32,280 --> 00:26:34,880 Speaker 2: point A to point B. So it's it's always been 475 00:26:35,040 --> 00:26:39,520 Speaker 2: a process a negotiation typically once a year between the 476 00:26:39,520 --> 00:26:42,560 Speaker 2: shipper and the carrier to rework their rates or the 477 00:26:42,600 --> 00:26:46,760 Speaker 2: three pl in the carrier. And with dynamic pricing, though, 478 00:26:46,800 --> 00:26:49,159 Speaker 2: what's neat about that is it's a price for that 479 00:26:49,200 --> 00:26:52,159 Speaker 2: shipment in that market at that point in time, and 480 00:26:52,200 --> 00:26:56,440 Speaker 2: the model, based on rules or predictive pricing analytics, can 481 00:26:56,560 --> 00:27:00,280 Speaker 2: generate a rate at the shipment level of detail on 482 00:27:00,359 --> 00:27:03,360 Speaker 2: that day, regardless of what the contractually negotiated rates are. 483 00:27:03,440 --> 00:27:06,639 Speaker 1: So right, and so it's not only good for the carrier, 484 00:27:06,680 --> 00:27:08,920 Speaker 1: it's also good for the shipper because they can decide, well, 485 00:27:08,960 --> 00:27:11,439 Speaker 1: I can hold this shipment for two days because they 486 00:27:11,440 --> 00:27:14,119 Speaker 1: don't need it somewhere by a specific date, and I 487 00:27:14,160 --> 00:27:17,040 Speaker 1: can save ten percent five percent exactly exactly. 488 00:27:17,160 --> 00:27:20,159 Speaker 2: So dynamic pricing is a really exciting area. There are 489 00:27:20,160 --> 00:27:22,520 Speaker 2: also a lot of rules and conditions that the carriers 490 00:27:22,560 --> 00:27:25,880 Speaker 2: have for freight. It's for additional services that are provided. 491 00:27:25,880 --> 00:27:27,159 Speaker 2: Do you need a lift gate, do you need a 492 00:27:27,200 --> 00:27:30,520 Speaker 2: delivery to your front door, et cetera. And we have 493 00:27:30,840 --> 00:27:34,359 Speaker 2: a system now that basically will quote not only the 494 00:27:34,400 --> 00:27:37,600 Speaker 2: base rate price that the shipper would see, but all 495 00:27:37,640 --> 00:27:41,760 Speaker 2: the ascessorial charges or extended service charges those are built 496 00:27:41,760 --> 00:27:45,720 Speaker 2: into it as well, can be housed in our ecosystem, 497 00:27:45,960 --> 00:27:50,720 Speaker 2: so to speak. And so basically we take a horribly 498 00:27:50,920 --> 00:27:53,239 Speaker 2: complex and I won't go into the depths of it, 499 00:27:53,400 --> 00:27:57,040 Speaker 2: a horribly complex pricing environment and we simplify it for 500 00:27:57,240 --> 00:28:00,119 Speaker 2: shippers and we provide also tools to three pls and 501 00:28:00,160 --> 00:28:03,720 Speaker 2: shippers for analyzing those rates. We have a bid procurement tool, 502 00:28:03,880 --> 00:28:06,840 Speaker 2: bid Sense, which if a shipper wants to bid it's freight, 503 00:28:06,880 --> 00:28:09,840 Speaker 2: a major corporation wants to bid freight, they can link 504 00:28:10,040 --> 00:28:13,520 Speaker 2: directly to the carriers through our bid procurement tool and 505 00:28:13,600 --> 00:28:17,239 Speaker 2: actually determine where they can which carriers will provide them 506 00:28:17,280 --> 00:28:19,280 Speaker 2: the best rates in all the different lanes, and they 507 00:28:19,320 --> 00:28:23,240 Speaker 2: award their freight based on that. So we do have 508 00:28:23,359 --> 00:28:26,199 Speaker 2: tools that help them with the analytics behind it as 509 00:28:26,240 --> 00:28:27,760 Speaker 2: well as the bid process itself. 510 00:28:28,320 --> 00:28:32,679 Speaker 1: And so just you know, kind of curious, what is 511 00:28:32,720 --> 00:28:36,280 Speaker 1: the most common accessorial charge or top two or three 512 00:28:36,440 --> 00:28:39,720 Speaker 1: accessorial charges that people get charged for. Don't mean to 513 00:28:39,720 --> 00:28:40,520 Speaker 1: put you on the spot. 514 00:28:41,000 --> 00:28:44,040 Speaker 2: Yeah, I'd tell you a lot of them around notification 515 00:28:44,160 --> 00:28:48,840 Speaker 2: of delivery, notification of pickup. But with all the tracking 516 00:28:48,880 --> 00:28:52,080 Speaker 2: and tracing that's available to today now, that's probably a 517 00:28:52,080 --> 00:28:54,120 Speaker 2: lot less in demand than it was when I was 518 00:28:54,160 --> 00:28:58,000 Speaker 2: there back in the early part of the two thousands. 519 00:28:58,040 --> 00:29:02,320 Speaker 1: Right, So you know, is there anything on your radar? 520 00:29:02,640 --> 00:29:05,360 Speaker 1: You know, as a as a leader of a transportation 521 00:29:05,680 --> 00:29:09,200 Speaker 1: related company, a free transportation related company that's on your 522 00:29:09,280 --> 00:29:15,000 Speaker 1: radar that either you look at as a significant challenge 523 00:29:15,280 --> 00:29:17,680 Speaker 1: or an opportunity on the other side of the coin. 524 00:29:17,960 --> 00:29:21,320 Speaker 2: Honestly, I would tell you that we are so plugged 525 00:29:21,360 --> 00:29:25,360 Speaker 2: in with the industry and the customers in the industry, 526 00:29:25,520 --> 00:29:27,960 Speaker 2: just through our conferences that we host, and through our 527 00:29:28,040 --> 00:29:31,720 Speaker 2: board meetings and we have advisory meetings too with LTL 528 00:29:31,800 --> 00:29:34,920 Speaker 2: carriers and three pls. We feel like we have really 529 00:29:34,920 --> 00:29:38,200 Speaker 2: good line of sight as to the changing dynamics affecting 530 00:29:38,240 --> 00:29:41,360 Speaker 2: the industry and we're always trying to factor that into 531 00:29:41,400 --> 00:29:44,240 Speaker 2: our product equation in terms of where we're headed. The 532 00:29:44,280 --> 00:29:47,520 Speaker 2: biggest challenge, I guess and the thing that weighs on 533 00:29:47,600 --> 00:29:50,040 Speaker 2: me is just where is AI going to go? Yeah, 534 00:29:50,200 --> 00:29:52,160 Speaker 2: where is technology going to go? And is it going 535 00:29:52,200 --> 00:29:55,000 Speaker 2: to go in manners that could totally disrupt our world 536 00:29:55,040 --> 00:29:58,600 Speaker 2: and really all of transportation. And so we're always looking 537 00:29:59,200 --> 00:30:04,160 Speaker 2: both extern and internally to prepare for whatever might be, 538 00:30:04,520 --> 00:30:06,880 Speaker 2: you know, down the road, and make sure we're ready 539 00:30:06,880 --> 00:30:07,200 Speaker 2: for it. 540 00:30:07,760 --> 00:30:10,080 Speaker 1: Right, you mentioned you were you were in the airline 541 00:30:10,120 --> 00:30:15,560 Speaker 1: industry before going into trucking or LTL. What made you 542 00:30:16,160 --> 00:30:18,920 Speaker 1: make the transition from from the skies to the road. 543 00:30:20,920 --> 00:30:25,720 Speaker 2: Interestingly, I actually set out to be an investment manager 544 00:30:26,480 --> 00:30:30,280 Speaker 2: and my goal, and I majored in finance University Missouri, 545 00:30:30,480 --> 00:30:33,040 Speaker 2: graduated back in the eighties, and then went to get 546 00:30:33,040 --> 00:30:37,600 Speaker 2: my MBA at TCU Investment Management, and I graduated right 547 00:30:37,680 --> 00:30:40,640 Speaker 2: after the stock market crashed in October of eighty seven 548 00:30:40,720 --> 00:30:43,960 Speaker 2: and jobs were wiped out on Wall Street and all around. Yeah, 549 00:30:44,040 --> 00:30:47,320 Speaker 2: so I jokingly say I had a totally unplanned career, 550 00:30:47,360 --> 00:30:49,800 Speaker 2: and I actually I went to work very briefly at 551 00:30:49,800 --> 00:30:53,640 Speaker 2: the Federal Reserve in Kansas City, left there after five 552 00:30:53,680 --> 00:30:56,080 Speaker 2: months because I had a great opportunity with American Airlines, 553 00:30:56,080 --> 00:30:57,840 Speaker 2: and this was back in the late eighties when they 554 00:30:57,840 --> 00:31:01,880 Speaker 2: were launching their automated yield management revenue management systems and 555 00:31:01,920 --> 00:31:04,240 Speaker 2: they were one of the leaders or pioneers in that space. 556 00:31:04,720 --> 00:31:07,040 Speaker 2: Had a great experience with America and I spent seven 557 00:31:07,120 --> 00:31:11,400 Speaker 2: years with American Airlines and pricing revenue management, and then 558 00:31:11,440 --> 00:31:14,280 Speaker 2: I moved from there to Saber, which is the transportation 559 00:31:14,480 --> 00:31:17,640 Speaker 2: technology business, which is really where I and well, American 560 00:31:17,680 --> 00:31:20,640 Speaker 2: gave me a good dose of technology that Saber was 561 00:31:20,680 --> 00:31:23,400 Speaker 2: a complete immersion in it, and spent a number of 562 00:31:23,440 --> 00:31:25,920 Speaker 2: years there, and I just had an opportunity that just 563 00:31:26,360 --> 00:31:29,480 Speaker 2: popped up on my radar about an opportunity with Yellow 564 00:31:29,480 --> 00:31:32,320 Speaker 2: Freight to be the vice president of pricing. I'm originally 565 00:31:32,320 --> 00:31:35,600 Speaker 2: from Kansas City, and I thought I'll at least talk 566 00:31:35,640 --> 00:31:37,960 Speaker 2: to them and see where this goes. And it just 567 00:31:38,000 --> 00:31:40,320 Speaker 2: turned out that Yellow was going through a turnaround back 568 00:31:40,320 --> 00:31:42,360 Speaker 2: in the late nineties and they had a number of 569 00:31:42,400 --> 00:31:44,720 Speaker 2: people from the airline industry. Mary Myers is one that 570 00:31:44,760 --> 00:31:48,400 Speaker 2: I had mentioned earlier, and I hit it off with 571 00:31:48,520 --> 00:31:52,320 Speaker 2: them and ended up in LTL pricing for a number 572 00:31:52,360 --> 00:31:56,120 Speaker 2: of years. Spent thirteen years at Yellow, and after I 573 00:31:56,200 --> 00:31:58,520 Speaker 2: left Yellow in twenty eleven, I went back to Saber 574 00:31:58,600 --> 00:32:03,240 Speaker 2: and ran an installation of a yield management system that 575 00:32:03,240 --> 00:32:06,400 Speaker 2: Saber was doing at Air Berlin. So I spent a 576 00:32:06,400 --> 00:32:08,760 Speaker 2: couple of years working with Air Berlin and Berlin Germany 577 00:32:09,280 --> 00:32:12,680 Speaker 2: and then eventually made my way to SMC three. And 578 00:32:12,880 --> 00:32:15,560 Speaker 2: what's really funny is I had told my wife back 579 00:32:15,600 --> 00:32:18,840 Speaker 2: in the two thousand and ten timeframe that if I 580 00:32:18,880 --> 00:32:20,760 Speaker 2: could pick a company that I'd love to work for, 581 00:32:20,800 --> 00:32:25,000 Speaker 2: would be SMC three. And we had become customers at 582 00:32:25,080 --> 00:32:28,400 Speaker 2: Yellow of SMC three during my time there at Yellow 583 00:32:29,080 --> 00:32:31,120 Speaker 2: and I attended the conferences and I had gotten to 584 00:32:31,160 --> 00:32:35,240 Speaker 2: know my predecessor, the CEO, Jack Middleton, who had spent 585 00:32:35,280 --> 00:32:37,840 Speaker 2: fifty years with SMC three, is a great leader and 586 00:32:37,920 --> 00:32:41,160 Speaker 2: visionary for the industry, and Jack and I hit it off, 587 00:32:41,200 --> 00:32:43,640 Speaker 2: and when Jack was ready to retire, he asked if 588 00:32:43,680 --> 00:32:46,600 Speaker 2: I'd have any interest in that position. But I always 589 00:32:46,640 --> 00:32:50,120 Speaker 2: admired SMC three from the outside looking in because of 590 00:32:50,600 --> 00:32:54,600 Speaker 2: amazing customer service, amazing customer experience, and just performance. They 591 00:32:54,680 --> 00:32:58,080 Speaker 2: were reliable, and so I was thrilled to have the 592 00:32:58,120 --> 00:33:01,120 Speaker 2: opportunity and ended up getting selected for it. So long 593 00:33:01,160 --> 00:33:02,960 Speaker 2: story short, that's how I went from a goal of 594 00:33:03,000 --> 00:33:06,040 Speaker 2: investment management to a career and transportation and technology. But 595 00:33:06,080 --> 00:33:09,880 Speaker 2: it's been a lot of fun and truthfully, what makes 596 00:33:09,920 --> 00:33:14,040 Speaker 2: my job most enjoyable is the people that I work 597 00:33:14,120 --> 00:33:17,280 Speaker 2: with at the company. I love. What I saw on 598 00:33:17,320 --> 00:33:20,800 Speaker 2: the outside looking in to SMC three is real and 599 00:33:21,160 --> 00:33:23,320 Speaker 2: I've thoroughly enjoyed. We have some of the best people 600 00:33:23,360 --> 00:33:24,040 Speaker 2: in the industry. 601 00:33:24,160 --> 00:33:26,760 Speaker 1: Who's your favorite employee and I'm kidding, yeah, I won't go. 602 00:33:26,760 --> 00:33:29,520 Speaker 2: There, but I don't pick favorites, but I love them 603 00:33:29,520 --> 00:33:32,480 Speaker 2: all and one thing we've done is we have brought 604 00:33:32,480 --> 00:33:35,880 Speaker 2: in people from the industry. SMC three used to be 605 00:33:35,960 --> 00:33:38,200 Speaker 2: kind of a homegrown company with people that knew how 606 00:33:38,200 --> 00:33:40,720 Speaker 2: to build LTEL base rates and this and that. But 607 00:33:40,960 --> 00:33:45,000 Speaker 2: we've brought in people with experience from three pls, from shippers, 608 00:33:45,040 --> 00:33:48,160 Speaker 2: from carriers. So today we have a team that really 609 00:33:48,240 --> 00:33:50,720 Speaker 2: not only knows how to build rates, but how are 610 00:33:50,720 --> 00:33:53,080 Speaker 2: they used, what problems are we solving, and so we're 611 00:33:53,120 --> 00:33:55,400 Speaker 2: really able to bring a whole lot more insight to 612 00:33:55,520 --> 00:33:57,720 Speaker 2: the table than we did when I first arrived. But 613 00:33:57,760 --> 00:34:00,640 Speaker 2: it's been a whole lot of fun, and it's people 614 00:34:00,680 --> 00:34:03,200 Speaker 2: serving people, and like I said, we're here to serve 615 00:34:03,240 --> 00:34:04,960 Speaker 2: the industry, and it's been a whole lot of fun 616 00:34:05,000 --> 00:34:05,920 Speaker 2: making that happen. 617 00:34:05,840 --> 00:34:08,359 Speaker 1: And being originally from Casey. You a Chief Span or. 618 00:34:09,920 --> 00:34:12,359 Speaker 2: That'll get me in trouble, But I'm a Chiefs fan 619 00:34:12,600 --> 00:34:15,440 Speaker 2: and I am a Royal Span. I know that's been 620 00:34:15,640 --> 00:34:17,360 Speaker 2: a roller coaster up and down, and they've got a 621 00:34:17,360 --> 00:34:19,000 Speaker 2: couple of good years here and there over the last 622 00:34:19,040 --> 00:34:20,759 Speaker 2: thirty but the Chiefs have been a whole lot of fun, 623 00:34:20,960 --> 00:34:23,879 Speaker 2: except for last year's Super Bowl. And my daughter who 624 00:34:23,960 --> 00:34:26,520 Speaker 2: lives here in the New York area. She's dating a 625 00:34:26,560 --> 00:34:29,400 Speaker 2: guy from Philadelphia, and so we never heard the end 626 00:34:29,440 --> 00:34:32,520 Speaker 2: of the Eagles walloping of the Chiefs in the Super Bowl. 627 00:34:32,560 --> 00:34:34,440 Speaker 2: But it's been a fun run with Chiefs. 628 00:34:34,680 --> 00:34:37,880 Speaker 1: Yeah, I'm a Giant fan, so it's been tough, especially 629 00:34:37,920 --> 00:34:39,520 Speaker 1: with the Eagles doing so well. 630 00:34:39,680 --> 00:34:42,200 Speaker 2: I love sports, so that's my other hobby. We have 631 00:34:42,239 --> 00:34:46,960 Speaker 2: five kids, and I've coached youth soccer and baseball for 632 00:34:47,040 --> 00:34:49,400 Speaker 2: about a nineteen year period. I finally hung it up 633 00:34:49,480 --> 00:34:52,680 Speaker 2: last year and my youngest son is a junior in 634 00:34:52,760 --> 00:34:54,560 Speaker 2: high school and he plays on the school team. But 635 00:34:54,800 --> 00:34:57,239 Speaker 2: he needed better coaching than I could offer, so well, 636 00:34:57,280 --> 00:34:58,239 Speaker 2: it was time to hang it up. 637 00:34:58,239 --> 00:35:01,040 Speaker 1: Well, that's awesome that you had the opportunity with your kids, 638 00:35:01,680 --> 00:35:03,560 Speaker 1: so you know we're coming up at the end of 639 00:35:03,600 --> 00:35:06,200 Speaker 1: the time. I always like to ask you this question 640 00:35:06,280 --> 00:35:08,759 Speaker 1: of our guests, do you have like a favorite book, 641 00:35:08,760 --> 00:35:11,640 Speaker 1: either in transportation or leadership that you know, either you 642 00:35:11,760 --> 00:35:14,120 Speaker 1: read recently or it's just close to your your heart. 643 00:35:14,200 --> 00:35:15,120 Speaker 1: It really spoke to you. 644 00:35:15,640 --> 00:35:19,600 Speaker 2: I read some books, you know on on business. One 645 00:35:19,640 --> 00:35:21,560 Speaker 2: of my favorites is It's been out there a long 646 00:35:21,600 --> 00:35:23,920 Speaker 2: time and it's it's good to great by Jim Collins, 647 00:35:24,000 --> 00:35:26,680 Speaker 2: and I like it because it's a very pragmatic, practical 648 00:35:26,719 --> 00:35:30,000 Speaker 2: book speaks about a data driven type culture and mindset. 649 00:35:30,080 --> 00:35:33,040 Speaker 2: So I like that book. But honestly, I spend more 650 00:35:33,080 --> 00:35:35,960 Speaker 2: time probably reading about the economy. I love reading the 651 00:35:35,960 --> 00:35:40,200 Speaker 2: Wall Street Journal and BBC News, Bloomberg. I'm all over it, 652 00:35:40,320 --> 00:35:44,960 Speaker 2: and so I'm driven by just staying current on news 653 00:35:44,960 --> 00:35:47,879 Speaker 2: and trends more so than books. But Good to Great 654 00:35:47,960 --> 00:35:48,719 Speaker 2: was always a good one. 655 00:35:48,920 --> 00:35:51,239 Speaker 1: I just actually listened to that on my commute to work. 656 00:35:51,800 --> 00:35:54,359 Speaker 1: I did book on So you know, you mentioned the 657 00:35:54,480 --> 00:35:57,400 Speaker 1: LTL certificate, So so how long does that take for 658 00:35:57,440 --> 00:36:01,840 Speaker 1: someone to do? Usually? Oh, probably at their own pace. 659 00:36:01,920 --> 00:36:05,759 Speaker 2: Right, it's self paced, it's online, self pace, so some 660 00:36:05,800 --> 00:36:07,840 Speaker 2: people can do it. Some people will choose to do 661 00:36:07,880 --> 00:36:10,440 Speaker 2: it over a two month period or three month period, 662 00:36:10,800 --> 00:36:12,759 Speaker 2: you know. Others if they were to pour themselves in 663 00:36:12,840 --> 00:36:15,120 Speaker 2: full time, I'd say they could probably get through it 664 00:36:15,440 --> 00:36:17,200 Speaker 2: in a week, maybe a week and a half. 665 00:36:17,360 --> 00:36:20,840 Speaker 1: All right, So very cool. Well, well, Andrew, it was 666 00:36:20,920 --> 00:36:23,680 Speaker 1: really nice speaking with you and learning more about the company. 667 00:36:23,719 --> 00:36:25,000 Speaker 1: I really want to thank you for your time and 668 00:36:25,080 --> 00:36:25,800 Speaker 1: insights today. 669 00:36:26,160 --> 00:36:29,200 Speaker 2: Thanks Lee, I appreciate you having me on my pleasure. 670 00:36:29,200 --> 00:36:31,760 Speaker 1: And you know. I want to thank you for tuning 671 00:36:31,800 --> 00:36:34,160 Speaker 1: in and listening. If you liked the episode, please subscribe 672 00:36:34,160 --> 00:36:36,560 Speaker 1: and leave a review. We've lined up a number of 673 00:36:36,560 --> 00:36:39,040 Speaker 1: great guests for the podcast, so please check back to 674 00:36:39,080 --> 00:36:44,280 Speaker 1: hear conversations with C suite executives, shippers, regulators, and decision 675 00:36:44,280 --> 00:36:46,960 Speaker 1: makers within the freight markets. Also, if you want to 676 00:36:47,040 --> 00:36:50,279 Speaker 1: learn more about the freight transportation markets, check out our 677 00:36:50,320 --> 00:36:53,960 Speaker 1: work on the Bloomberg Terminal at Bigo and on social media. 678 00:36:54,320 --> 00:36:56,960 Speaker 1: This is Lee Glasgow signing off and thanks for talking 679 00:36:57,040 --> 00:37:02,080 Speaker 1: transports with me.