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Speaker 1: Hi everyone, this is Lee Clasgow when We're Talking Transports.

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Speaker 1: Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,

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Speaker 1: Lee Clascow, senior Freight, transportation and logistics analysts at Bloomberg Intelligence,

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Speaker 1: Bloomberg and House Research arm of almost five hundred analysts

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Speaker 1: and strategists around the globe. Before diving in a little

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Speaker 1: public service announcement, your support is instrumental to keep bringing

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Speaker 1: great guests and conversations to you, our listeners, and we

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Speaker 1: need your support. So if you enjoy this podcast, share it,

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Speaker 1: like it, and leave a comment. Also, if you have

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Speaker 1: an idea for future episodes you're just want to talk transports,

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Speaker 1: please hit me up on the Bloomberg terminal, on LinkedIn

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Speaker 1: or on Twitter at logistics Late. Now on to our

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Speaker 1: episode I'm very excited to have with us today. Cameron Ramsdal,

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Speaker 1: CEO of Armstrong Transport Group. Cameron brings eighteen years of

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Speaker 1: operational technology, sales and M and a experience to the team.

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Speaker 1: Prior to Armstrong, he served as the CEO at a Merge,

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Speaker 1: President of Variant slash Us Express, and was the CTO

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Speaker 1: at Coyote Logistics. Cameeron Holds a BA in English and

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Speaker 1: Political Science from Dennison University and an MBA from Northwestern

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Speaker 1: University Kellogg School of Management. Welcome to the podcast, Cameeron,

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Speaker 1: Thanks so much for joining us.

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Speaker 2: Thanks Lee, appreciate you having me.

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Speaker 1: And this is an exciting episode because we're in studio.

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Speaker 1: We don't get to do this all the time and

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Speaker 1: it's a treat, so it's good to see the have

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Speaker 1: a conversation face to face. So Armstrong Transport Group again,

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Speaker 1: you know, maybe not a household name for everybody. Could

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Speaker 1: you talk about what the company does where you based

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Speaker 1: just some basic background on the company.

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Speaker 2: Sure. So Armstrong is a three pl headquartered out of Charlotte.

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Speaker 2: We're about one point three five one point four billion

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Speaker 2: by total revenue. We're about twenty years old and very

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Speaker 2: well diversified. We have a hybrid operating model, so that

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Speaker 2: means we have an agent program on one side of

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Speaker 2: the business and we also have a more traditional kind

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Speaker 2: of W two brokerage like Coyote, RXO, C H. Robinson

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Speaker 2: type of type of model as well.

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Speaker 1: Oh interesting, what's the makeup of the agents versus the

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Speaker 1: in house brokers.

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Speaker 2: It's seventy five twenty five, seventy five percent agent twenty

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Speaker 2: five percent all right, brokerage, so that that model is

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Speaker 2: more like a land Star. I guess right, there's some parallels.

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Speaker 2: I mean, Landstar has a lot of assets. We wear

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Speaker 2: asset light. But yeah, very similar in that we have

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Speaker 2: agents like they do.

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Speaker 1: Okay, And you know in the introduction I mentioned you

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Speaker 1: were CTO of Coyote Logistics. You know that asset has

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Speaker 1: been I guess moved around from newcomp time and sold

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Speaker 1: to RXO. Now, so Coyote was kind of I guess

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Speaker 1: known for technology is do you guys have proprietary technology

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Speaker 1: at Armstrong?

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Speaker 2: We do. We We've always had proprietary technology. We actually

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Speaker 2: undertook quite a large project right after I came on.

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Speaker 2: So I'm in my third year now in October of

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Speaker 2: twenty three, so about four or five months after I joined,

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Speaker 2: we kind of re energized as an effort we had

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Speaker 2: had for four or five years trying to rebuild our platform,

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Speaker 2: and for whatever reason we kind of tabled it for

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Speaker 2: a while. And you know, the technology had been around.

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Speaker 2: The technology we were working on was functionally quite quite good,

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Speaker 2: but architecturally, you know, a lots change over the last

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Speaker 2: fifteen years. So we needed to kind of take the

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Speaker 2: paddles to it, maintain the functionality, and then expand on it.

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Speaker 2: So we've actually replatformed the entire business over the last

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Speaker 2: two years. We're about ninety five percent deployed now. It's

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Speaker 2: been probably one of more painstaking efforts in my career,

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Speaker 2: but we've managed to get the entire business over to

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Speaker 2: the new platform again, about ninety five percent complete. We

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Speaker 2: should be done done next month.

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Speaker 1: And you know, obviously technology has involved what are kind

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Speaker 1: of the major changes that you made to the platform.

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Speaker 2: Yeah, that was one of the challenges because you know,

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Speaker 2: when you take on an opportunity like that, you have

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Speaker 2: a massive opportunity cost, so you're rebuilding things. You're fundamentally

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Speaker 2: rebuilding things you already have, and that as that opportunity

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Speaker 2: cause of you know, what are you building that new

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Speaker 2: We were actually able to do both, so, you know,

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Speaker 2: for the last two years, i'd say it was kind

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Speaker 2: of six months of heads down work and we've rolled

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Speaker 2: it out kind of simultaneously, so we were able to

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Speaker 2: add new functionality to the existing system while we were

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Speaker 2: bringing people into it. So a little bit of a

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Speaker 2: difficult game there, but happy to say we're on the

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Speaker 2: other end of it.

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Speaker 1: Right, I want to talk more about technology, but before

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Speaker 1: we go on, I just want a little more about Armstrong.

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Speaker 1: So are you guys like a top twenty freight broker

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Speaker 1: in the US.

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Speaker 2: Yep, We're in the top twenty. If you look at

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Speaker 2: us overall, we're very diversified. So we have look at

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Speaker 2: the one point four billion dollars of total revenue. One

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Speaker 2: of the fastest growing parts of our business is LTL,

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Speaker 2: which is a new service we launched. The second fastest

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Speaker 2: growing is our cross border Mexico which we launched last year.

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Speaker 2: Call that two hundred million between them. And then the

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Speaker 2: balance is really all of North America third to third

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Speaker 2: to third van reefer in flatbed. So very diversified across

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Speaker 2: different equipment types.

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Speaker 1: And you know you mentioned the top line, you know,

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Speaker 1: without sending your private company.

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Speaker 2: Yep.

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Speaker 1: Are you profitable? Are you guys making money?

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Speaker 2: We are profitable, are very much so.

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Speaker 1: So.

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Speaker 2: We've been in business for twenty years next year, and

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Speaker 2: I think one of the most remarkable parts of our

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Speaker 2: journeys it took us like fourteen years to get to

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Speaker 2: about four hundred and fifty billion. Hit that in twenty nineteen.

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Speaker 2: We were able to almost double it again in four

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Speaker 2: years to twenty twenty three, we're about, you know, eight

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Speaker 2: hundred and twenty five million this year. We're kind of

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Speaker 2: creeping up on doubling it again in two years. So

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Speaker 2: that pace of growth and the acceleration of that growth is,

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Speaker 2: as you know, despite a really nasty freight environment, which

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Speaker 2: I know you're very aware of, fed three years of

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Speaker 2: a freight recession, we've been able to grow profitably through that.

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Speaker 1: And what's what's been like fueling that that explosive.

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Speaker 2: Growth honestly doing a lot of the things that got

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Speaker 2: us to where we were prior, so making sure we're

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Speaker 2: taking care of our customers, making sure we're taking care

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Speaker 2: of our agents, doing more with both of those. So

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Speaker 2: who are the customers that are asking us for things?

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Speaker 2: That's what led us into LTL. We had active customers

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Speaker 2: asking us if we could do LTL that loved our service.

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Speaker 2: On the truckload side, we had active customers asking us

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Speaker 2: to go handle their cross border Mexico shipment. So we

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Speaker 2: started that offering, so starting new service lines, but it's

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Speaker 2: really been how do we do more with the customers

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Speaker 2: that we have, and how do we add new.

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Speaker 1: Customers, right, and then I guess is the growth, at

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Speaker 1: least the percentage growth, is that coming more from the

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Speaker 1: agent network? Are you bringing more agents onto you know,

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Speaker 1: the platform? I know, you know, one of your competitors

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Speaker 1: would say, you know, we're focused on the million dollar agents,

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Speaker 1: you know, is that something that you guys are focused

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Speaker 1: on or is it more or less, you know, growing

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Speaker 1: the in house brokerage part of the business.

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Speaker 2: Honestly, it's it's both. So we got our brokerage from

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Speaker 2: buying two agents. It's the only our Our growth story

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Speaker 2: has really been organic, with the exception of internal M

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Speaker 2: and A. So buying agents and that want to exit

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Speaker 2: for whatever reason, they have something happened in their lifestyle

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Speaker 2: or they wanted to make a change and they're looking

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Speaker 2: for an exit. Sure, so we've done that twice, one

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Speaker 2: in twenty twenty and one twenty twenty one, and that

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Speaker 2: kind of seeded the brokerage. But honestly, that I just

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Speaker 2: kind of stratified our business to the one point four

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Speaker 2: and how to break it down into those parts. What's

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Speaker 2: remarkable is that over the last two years, we looked

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Speaker 2: identical two years ago than we do today. So we

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Speaker 2: are still a third to third a third vanary for flatbed.

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Speaker 2: The only thing that's really materially different is that obviously

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Speaker 2: LTL in Mexico are much bigger now.

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Speaker 1: All right, So what's the long term plans for Armstrong?

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Speaker 1: You guys want to go Are you owned by private equity?

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Speaker 1: Do you guys want to go public? We are looking

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Speaker 1: to be acquired, like.

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Speaker 2: What No, No, I think you know we are private

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Speaker 2: equity backed, so they'll exit at some point in time.

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Speaker 2: I think for us, we'd like to find another private

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Speaker 2: equity firm and keep doing, frankly, what we've been doing

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Speaker 2: for the last couple of years. We have an incredible

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Speaker 2: organic growth story. We don't do a whole lot of

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Speaker 2: external M and A. We're open to it, but it's

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Speaker 2: more opportunistics, something that would really add to the capabilities

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Speaker 2: versus some of the M and A you see in

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Speaker 2: the space. As you mentioned RXO and Coyote, which is,

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Speaker 2: you know, they're in very similar they do very similar things.

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Speaker 2: But you know, putting those two together, I've done a

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Speaker 2: few M and A deal in the past, and those

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Speaker 2: are tricky. Yeah, So you know, we tend to just

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Speaker 2: keep our heads down and kind of stay the organic

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Speaker 2: growth route. But yeah, I'm sure at some point in

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Speaker 2: time we'll transact. We're not really too focused on that

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Speaker 2: right now. Honestly, it's it's all about how do we

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Speaker 2: get this thing to the next milestone, a two billion?

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Speaker 2: How do we take it from two billion to three?

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Speaker 2: And frankly, I think we can just keep running the

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Speaker 2: same playbook that we've been running, ideally with some new

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Speaker 2: tools as you just mentioned, with the technology to help

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Speaker 2: us kind of accelerate that growth.

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Speaker 1: And you mentioned, you know, the company has been around

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Speaker 1: for a while and you've been in the seat for

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Speaker 1: about three years. Are any of the founders still involved?

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Speaker 1: I'm assuming it's someone with the last name Armstrong. No.

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Speaker 2: Actually, I think the story that I heard about Armstrong

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Speaker 2: when I asked was that it was, you know, this

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Speaker 2: is in the mid two thousands. It was really aligned

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Speaker 2: with the phone book and just trying to have something

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Speaker 2: at the start of the alphabet. But no, founders are

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Speaker 2: not involved at all. I guess haven't been for quite

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Speaker 2: some time. My predecessors actually are the chairman of our

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Speaker 2: boards that he's still involved.

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Speaker 1: Okay, so let's talk about the frame brokers industry. You know,

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Speaker 1: as we're recording this, there was some interesting news uh

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Speaker 1: with M and A uh DAT bought Convoy, at least

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Speaker 1: the convoy platform that was Convoy one time from flex Sport.

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Speaker 1: You know, was that an interesting deal from your perspective

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Speaker 1: because you know D A T I guess with their

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Speaker 1: biggest customers are are freight brokers, so it's kind of

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Speaker 1: an interesting transaction, at least from from my vantage point.

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Speaker 2: Yeah, it certainly is. I actually saw that when I

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Speaker 2: was walking in here for the first time, so that's

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Speaker 2: hot off the presses, you know. I think some of it.

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Speaker 2: My knee jerk reaction originally was, you know, does this

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Speaker 2: what does this mean? I think Convoy, that Convoy technology

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Speaker 2: stacked was probably one of the few meaningful potential disruptors

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Speaker 2: to a DAT, who is a very well established incumbent.

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Speaker 2: So you know, kudos to them for for taking that

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Speaker 2: chess piece off the board. It would be a good

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Speaker 2: thing for them. I think I'd like to get a

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Speaker 2: little bit more information before I say anything official on

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Speaker 2: the record about it, but I think the red line

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Speaker 2: would be, you know, if it crosses over they're taking

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Speaker 2: direct freight from from shippers. There was a line in

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Speaker 2: that article that kind of intimated that might be the case.

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Speaker 2: I think that would be problematic for most of dat's

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Speaker 2: customer base, But other than that, it seems like a

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Speaker 2: pretty pretty good deal for both parties.

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Speaker 1: Okay, looks like we'll have to find out more about

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Speaker 1: that in the coming days and weeks to come. So

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Speaker 1: the freight brokerage industry, you kind of eluded and eluded you.

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Speaker 2: You said it.

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Speaker 1: The freight brokerage market stinks for the most part. It's

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Speaker 1: been a tough market for the last three years. We've

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Speaker 1: been in a quote unquote freight recession. What is your

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Speaker 1: take on the freight markets? You know, what are your

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Speaker 1: take on what I guess tariffs have been doing to

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Speaker 1: freight demand. I'd just like to hear your kind of,

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Speaker 1: you know, high level view of the freight markets.

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Speaker 2: Yeah, it's certainly been an interesting few years. I came

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Speaker 2: on board here, right, I guess during the early endings

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Speaker 2: of this freight recession, before we knew how long in

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Speaker 2: protract it would really be. This is the longest I

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Speaker 2: think any of us in this century have seen kind

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Speaker 2: of a downward cycle on the rates we're approaching here

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Speaker 2: three years now. I'd say the overhaul kind of description

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Speaker 2: of the market that I would give is that we're

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Speaker 2: in this kind of period of stasis where the absolute

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Speaker 2: value of rates is pretty static. So if I just

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Speaker 2: look at Armstrong's data from the last we can go,

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Speaker 2: you know, all the way back in our history. But

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Speaker 2: if I just look back to you know, twenty seventeen,

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Speaker 2: at no point in time have rates on an absolute basis,

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Speaker 2: and we look at it as a rate per mile

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Speaker 2: net a fuel. So if you take out and mute

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Speaker 2: the impacts of fuel, which you know, spike up and down,

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Speaker 2: sure those rates have not really moved materially outside of

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Speaker 2: about a four cent band for two consecutive years, and

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Speaker 2: they are still on a percentage basis right around equilibrium.

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Speaker 2: So if you look at year over year percent change,

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Speaker 2: we are sitting at equilibrium, meaning the rates are not

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Speaker 2: moving off where they were the same time last year.

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Speaker 2: Zero percent change year over year, which is very abnormal.

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Speaker 2: Usually you get usually you get maybe one quarter of

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Speaker 2: that stasis, maybe two. But to have that for you know,

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Speaker 2: it looks like eight quarters now is pretty remarkable. So

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Speaker 2: I'd say it is in a period of stasis. Some

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Speaker 2: people say that, you know, the bottom is still falling out.

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Speaker 2: We don't see that. Some people have said, you know,

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Speaker 2: probably pre teariffs, that they saw rates going up throughout

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Speaker 2: the course of this year. We have also not observed that.

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Speaker 2: So it's it's very much kind of a wait and

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Speaker 2: see overall outlook right now.

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Speaker 1: And roughly how much of your business is I guess

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Speaker 1: transactional versus contractual.

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Speaker 2: We're twenty about seventy five to twenty five, seventy contractual

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Speaker 2: seventy five percent spot spot twenty five percent. Guys are

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Speaker 2: heavy and we flex that up and down just depending

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Speaker 2: on kind of where we are in the rate cycle.

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Speaker 2: So that's not always the case. But I think a

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Speaker 2: lot of folks have been very timid to take on

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Speaker 2: too much contract and the anticipation that rates we're going

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Speaker 2: to go inflationary again, we take We took a similar

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Speaker 2: kind of wait and see kind of be a little

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Speaker 2: bit more conservative approach, and this year the rates haven't

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Speaker 2: moved again, So you know, it's anyone's guess. On the

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Speaker 2: tariff front, I think that there's been a lot of noise.

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Speaker 2: There's certainly a tremendous amount of uncertainty even before tariffs,

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Speaker 2: with inflation and interest rates at record levels and very

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Speaker 2: short periods of time. Tariffs just threw another kind of

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Speaker 2: uncertain rate wrench into the whole thing. We did not

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Speaker 2: see a meaningful change on the demand side from that.

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Speaker 2: You did see it kind of at a micro level

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Speaker 2: if you look at certain industries or certain shippers, But

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Speaker 2: in aggregate, we have not missed a beat. The only

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Speaker 2: thing I'd say is the one exception to that is

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Speaker 2: across border Mexico, we saw a tremendous amount of inventory

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Speaker 2: getting pulled up late February. Throughout March, volumes were just

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Speaker 2: off the chart, and then almost a full collapse after

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Speaker 2: a Liberation Day, not a full but call it fifty

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Speaker 2: percent collapse. Those have since recovered to kind of pre

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Speaker 2: inventory pull forward levels, but and it's now kind of

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Speaker 2: growing at the same pace it was before. But it

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Speaker 2: seemed like there was a massive pull forward of inventory

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Speaker 2: to kind of front run the tariffs and then waiting

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Speaker 2: for that to burn off, which I think just kind

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Speaker 2: of started happening now and we're seeing those volumes start

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Speaker 2: to trickle back. But other than that, we have not

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Speaker 2: seen that much of an impact from the tariffs. When

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Speaker 2: we talked to the shippers, I think they've been very

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Speaker 2: expository for many of them. So I had lunch with

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Speaker 2: a shipper last month that I'll, you know, spare you

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Speaker 2: their their industry and commodity, but they manufacture goods with

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Speaker 2: plastic resonance steel okay, and no one in their organization

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Speaker 2: seemed to know that all of their plastic resin actually

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Speaker 2: there was only one supplier in Canada that supplied it

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Speaker 2: for the entire company. It is a multi billion dollar organization,

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Speaker 2: and so I think they've really taken a look in

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Speaker 2: word and said, you know what does this mean? We're

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Speaker 2: severely exposed right now we have one supplier that's on

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Speaker 2: the wrong side of this deal, right, you know what

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Speaker 2: does that mean for us? And so that that partner

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Speaker 2: was a very good one, absorbed all the tariffs for

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Speaker 2: them in the short run, but they're still evaluating how

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Speaker 2: do we diversify that supplier base. So I think a

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Speaker 2: lot of shippers right now are doing the exact same thing.

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Speaker 2: But I don't know how you make decisions in an

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Speaker 2: environment where you don't have certainty around what the absolute

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Speaker 2: level of tariff is going to be. I think it's

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Speaker 2: it's very much a wait and see for most of

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Speaker 2: the shippers that I'm talking to.

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Speaker 1: Were you surprised that you didn't see a pull forward

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Speaker 1: in demand and the other businesses outside across border with Mexico.

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Speaker 2: I think we did to some extent, but it was

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Speaker 2: kind of muted and aggregate, and so some industries were,

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Speaker 2: you know, more impacted than others. It's certainly like automotive

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Speaker 2: suppliers and folks like that, but on the on the whole,

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Speaker 2: it kind of just it looked like a typical growth

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Speaker 2: month for US, Okay.

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Speaker 1: Okay, And I guess you know, given the fact that

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Speaker 1: you guys are in growth mode, you're you're growing anyway

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Speaker 1: beyond what the market's doing. Is that fair to say.

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Speaker 2: Yeah, we've we've grown nicely in spite of it.

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Speaker 1: Okay. And when you're when you're looking at you know

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Speaker 1: what your customers are telling you, and you know you've

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Speaker 1: been in the industry for a long time, so what

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Speaker 1: your gut is telling you, you know, where do you

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Speaker 1: think truckload rates are going over the next six months

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Speaker 1: into twenty twenty six.

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Speaker 2: I know, I'll preface this by saying that I've been

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Speaker 2: wrong every time I've said it for the last two years,

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Speaker 2: so you should take whatever I say next with the

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Speaker 2: grain of salt. We we aren't forecasting anything right now.

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Speaker 2: We expect no change for the rest of this year.

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Speaker 2: We're not using that to drive any kind of decision

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Speaker 2: making in the business we have. You know, as I

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Speaker 2: was just describing a growing business, a profitable business. We

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Speaker 2: want to do more of the things that are working

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Speaker 2: right now, and we need to be kind of agnostic

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Speaker 2: to where the rates are and what happens with rates.

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Speaker 2: So our personal kind of internal forecast is stop looking

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Speaker 2: at it, stop talking about it, just execute, take care

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Speaker 2: of our customers. It'll, you know, we will get to

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Speaker 2: an imbalance of supply and demand again. You'll have rate

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Speaker 2: volatility again. But right now, nothing in the budget, nothing

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Speaker 2: and how we're operating the business assumes any change for

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Speaker 2: the rest of this year. I do think that next

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Speaker 2: year I would be shocked to see anything an inflationary market.

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Speaker 2: But you know, right now, I don't see a catalyst

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Speaker 2: on either side of the market. I don't see something

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Speaker 2: that's going to rip a bunch of capacity out of

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Speaker 2: the markets. There's been a lot of talk, and I

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Speaker 2: would say noise not signal around you know, the English

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Speaker 2: speaking language mandate, and I think generally that's probably at

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Speaker 2: best going to be asymmetrically imposed, probably based on the state.

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Speaker 2: And I doubt it's going to take out enough driver

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Speaker 2: capacity to really move rates. And I certainly given you know,

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Speaker 2: tariff volatility, you know, interest rates that are still high

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Speaker 2: and not coming down, although we'll see the news this week,

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Speaker 2: but I don't think anyone's really bracing for that an

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Speaker 2: inflation that's being awfully stubborn. I just really don't see

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Speaker 2: a demand catalyst either, gotcha.

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Speaker 1: And you know you mentioned most of your businesses in

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Speaker 1: the spot market, so the capacity that you use to

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Speaker 1: fill that spot demand, are you pre negotiating with carriers

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Speaker 1: or you're actually going in the spot market too, And

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Speaker 1: in finding capacity.

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Speaker 2: On the contract side of our business, we try to

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Speaker 2: negotiate all of those with carriers. So we try to

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Speaker 2: lock in and what we call contract to contracts. So

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Speaker 2: you got a contract rate from the shipper, we want

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Speaker 2: that on a you know, one to maybe three depending

384
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Speaker 2: on the volume carriers at most. Sometimes you have contracts

385
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Speaker 2: that are not as high density, and so that's a

386
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Speaker 2: little bit harder to what we call dedicate. So get

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Speaker 2: that on a dedicated carrier, on a contract carrier, on

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Speaker 2: the spot most of the time. What we're trying to

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Speaker 2: do is just leverage our network of carriers. Internally, we

390
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Speaker 2: don't like to go out to the bid boards, we

391
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Speaker 2: don't like to go out to the you know, to

392
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Speaker 2: shop these things with unknown entities. Fraud has been a

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Speaker 2: nightmare in our space, as I'm sure you know, for

394
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Speaker 2: probably the better half of two years, and so we

395
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Speaker 2: really try to use in network carreers as much as possible.

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Speaker 2: But we are going and buying spot.

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Speaker 1: Okay, and I do want to talk about fraud, but

398
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Speaker 1: before we get off this topic, So when you're renegotiating

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Speaker 1: contracts with capacity providers, you know, are are they getting

400
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Speaker 1: any rate increases from you? Or are you being able

401
00:18:55,040 --> 00:18:57,439
Speaker 1: to have flat rates down rates?

402
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Speaker 2: Yeah, so the honest answer is it depends. So we

403
00:19:00,960 --> 00:19:03,840
Speaker 2: have seen in the last year or so a return

404
00:19:03,880 --> 00:19:06,760
Speaker 2: to seasonality, which I think is a very good thing. Sure,

405
00:19:06,840 --> 00:19:09,120
Speaker 2: we didn't see much seasonality at all. I don't think

406
00:19:09,119 --> 00:19:11,159
Speaker 2: you can really say anything with seasonal COVID, you can

407
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Speaker 2: kind of throw that out the window because all bets

408
00:19:12,840 --> 00:19:15,919
Speaker 2: were off. But it wasn't until last year and the

409
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Speaker 2: kind of post COVID era that we saw that return

410
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Speaker 2: to seasonality where you had a produce season, you had

411
00:19:20,040 --> 00:19:22,040
Speaker 2: a food and beverage season. You see tightness up in

412
00:19:22,080 --> 00:19:25,959
Speaker 2: the Northeast right now, and so it really depends on

413
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Speaker 2: how long that contract is. So is it a three month,

414
00:19:28,440 --> 00:19:32,359
Speaker 2: six month, or a year contract really determines whether what

415
00:19:32,440 --> 00:19:35,600
Speaker 2: the rate that we're subcontracting it for. And so in

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Speaker 2: the Northeast, if you're if we just got a new

417
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Speaker 2: award last week and we're going up to the Northeast

418
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Speaker 2: to try to find a truck going out bound, the

419
00:19:42,080 --> 00:19:44,520
Speaker 2: rates are elevated right now, so they would be seeing

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Speaker 2: an increase in rates.

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Speaker 1: Why is the Northeast type right now?

422
00:19:48,720 --> 00:19:52,040
Speaker 2: That is a fairly typical phenomenon that we see kind

423
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Speaker 2: of tail end of summer, just with a lot of

424
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Speaker 2: goods coming out. It may be exasperated by some of

425
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Speaker 2: the things happening at the ports right now, people trying

426
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Speaker 2: to get ahead of you know, what's going on in August.

427
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Speaker 2: It's always really difficult to exactly pinpoint what creates that

428
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Speaker 2: kind of tightness that you experienced one day and then

429
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Speaker 2: the seeming looseness of capacity the next day. But it's

430
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Speaker 2: been tied up there for two or three weeks and

431
00:20:15,960 --> 00:20:19,320
Speaker 2: so that would be a very different negotiation than you know,

432
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Speaker 2: two or three months ago or probably two or three

433
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Speaker 2: months from now.

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Speaker 1: Okay, you know you mentioned fraud earlier. I'd love to

435
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Speaker 1: talk more about fraud, you know, kind of how do

436
00:20:28,040 --> 00:20:30,359
Speaker 1: you guys combat fraud. Do you use like a third

437
00:20:30,359 --> 00:20:34,080
Speaker 1: party system, do you do you use AI internally or

438
00:20:34,080 --> 00:20:36,639
Speaker 1: what are you doing to combat fraud? And if you

439
00:20:36,680 --> 00:20:40,720
Speaker 1: can give any examples of things that you've seen, because

440
00:20:40,720 --> 00:20:44,439
Speaker 1: I think listeners are tend to be pretty surprised about

441
00:20:44,480 --> 00:20:48,679
Speaker 1: how widespread it is and how creative the bad guys

442
00:20:48,680 --> 00:20:49,200
Speaker 1: have become.

443
00:20:49,640 --> 00:20:51,760
Speaker 2: Yeah, it is. It's a mess. It's the worst I've

444
00:20:51,760 --> 00:20:54,600
Speaker 2: seen it in my you know, eighteen year career and transportation.

445
00:20:55,280 --> 00:20:58,440
Speaker 2: We do use a third party system called Highway Sure

446
00:20:58,480 --> 00:21:00,000
Speaker 2: So out of Dallas.

447
00:21:00,040 --> 00:21:01,000
Speaker 1: Had them on the podcast.

448
00:21:01,119 --> 00:21:05,000
Speaker 2: Yep, they're a great company. They've done a lot. They've

449
00:21:05,040 --> 00:21:07,120
Speaker 2: only been around for a few years, but they're they're

450
00:21:07,320 --> 00:21:10,399
Speaker 2: very adaptive, they're nimble, they're they're trying to fight the

451
00:21:10,440 --> 00:21:12,399
Speaker 2: same fight we are, which is you have very creative

452
00:21:12,400 --> 00:21:16,439
Speaker 2: criminals on one side. And I equate fraud in our

453
00:21:16,480 --> 00:21:19,040
Speaker 2: space to cybersecurity, and I don't think it's ever a

454
00:21:19,119 --> 00:21:21,159
Speaker 2: solved problem, right, somebody. There are always going to be

455
00:21:21,160 --> 00:21:23,960
Speaker 2: some form of social engineering that you didn't anticipate. There's

456
00:21:23,960 --> 00:21:25,560
Speaker 2: always going to be a gap or something that you

457
00:21:25,920 --> 00:21:28,800
Speaker 2: just can't plug, or you plug one and another one

458
00:21:28,800 --> 00:21:31,360
Speaker 2: pops up later. So I think it's it's never really

459
00:21:31,400 --> 00:21:35,680
Speaker 2: a solve problem. But Highways has helped us tremendously. We've

460
00:21:35,680 --> 00:21:39,040
Speaker 2: had to re engineer our entire onboarding process probably two

461
00:21:39,119 --> 00:21:41,000
Speaker 2: or three times in the last two years, just to

462
00:21:41,640 --> 00:21:44,560
Speaker 2: evolve it and adapt it to how creative some of

463
00:21:44,560 --> 00:21:45,040
Speaker 2: these schemes are.

464
00:21:45,119 --> 00:21:47,119
Speaker 1: What were some of the biggest red flags that you

465
00:21:47,119 --> 00:21:49,800
Speaker 1: know that you're now looking for that you might have

466
00:21:49,880 --> 00:21:52,840
Speaker 1: not been looking for a year ago or eighteen months ago.

467
00:21:53,040 --> 00:21:55,359
Speaker 2: Yeah, I think the biggest gap that I still see,

468
00:21:56,000 --> 00:21:58,879
Speaker 2: and it's it's tough because the data isn't always available,

469
00:21:58,880 --> 00:22:01,879
Speaker 2: but the MC that are sold, So when an opera

470
00:22:01,960 --> 00:22:06,399
Speaker 2: carrier sells their MC number to another entity, sometimes for

471
00:22:06,480 --> 00:22:09,679
Speaker 2: this oh sure, it's a motor carrier number. So for

472
00:22:09,720 --> 00:22:12,000
Speaker 2: a long time it was the one unique identifier issued

473
00:22:12,000 --> 00:22:15,840
Speaker 2: by the federal government to identify carriers on the road,

474
00:22:16,080 --> 00:22:18,640
Speaker 2: and so we call it an MC number. There's also

475
00:22:18,680 --> 00:22:22,120
Speaker 2: a dot number, which we've kind of recently, we're doing

476
00:22:22,160 --> 00:22:24,640
Speaker 2: away with MC numbers, but my old habits die hard.

477
00:22:25,800 --> 00:22:29,400
Speaker 2: But you'll sell these these MC numbers and you won't

478
00:22:29,440 --> 00:22:33,280
Speaker 2: always know if they've if they've transacted. So the reporting

479
00:22:33,320 --> 00:22:35,359
Speaker 2: on it is still probably the single biggest gap that

480
00:22:35,400 --> 00:22:37,240
Speaker 2: we see, and it's the number one red flag is

481
00:22:37,640 --> 00:22:41,119
Speaker 2: you know they're selling it. Maybe the person selling it

482
00:22:41,160 --> 00:22:44,359
Speaker 2: has good intentions, but the person buying it doesn't, and

483
00:22:44,400 --> 00:22:47,160
Speaker 2: so that is an immediate red flag when we see it.

484
00:22:47,400 --> 00:22:50,520
Speaker 2: They're immediately deactivated in our system, and they stay deactivated

485
00:22:50,560 --> 00:22:53,119
Speaker 2: for six months. We want to see that they have

486
00:22:53,200 --> 00:22:57,280
Speaker 2: good operating history post transaction, but again getting that data,

487
00:22:57,280 --> 00:22:59,520
Speaker 2: they're not always reported, and it's a it's a massive,

488
00:22:59,520 --> 00:23:00,000
Speaker 2: massive gap.

489
00:23:00,400 --> 00:23:01,920
Speaker 1: I don't know if you can share. Can you share,

490
00:23:02,000 --> 00:23:05,280
Speaker 1: like any major fun incidents that you guys dealt with.

491
00:23:05,440 --> 00:23:07,480
Speaker 2: Yeah, I mean, I'll share. I'll share one that we

492
00:23:07,560 --> 00:23:13,480
Speaker 2: had fairly recently. We had loads delivering not too far

493
00:23:13,520 --> 00:23:17,639
Speaker 2: from here, and the he this was the most unique fraud,

494
00:23:17,680 --> 00:23:20,240
Speaker 2: But this isn't. This is just another kind of flavor

495
00:23:20,440 --> 00:23:23,479
Speaker 2: of the types of things that we're seeing. They were

496
00:23:23,520 --> 00:23:27,320
Speaker 2: coming up from the southeast up into New Jersey. There's

497
00:23:27,359 --> 00:23:30,240
Speaker 2: a long line of trucks sitting outside this facility, hours

498
00:23:30,240 --> 00:23:33,040
Speaker 2: and hours of wait time, and somebody from the shipper

499
00:23:33,480 --> 00:23:37,320
Speaker 2: at the consine came out dressed as the constine and said, hey,

500
00:23:37,720 --> 00:23:39,640
Speaker 2: it's a really long line. We have an NX warehouse.

501
00:23:39,640 --> 00:23:42,520
Speaker 2: Pull over here and get unloaded. He pulled over there,

502
00:23:42,600 --> 00:23:45,040
Speaker 2: got unloaded. Like you said, They literally just it was

503
00:23:45,040 --> 00:23:46,800
Speaker 2: an empty warehouse. He didn't know it because he never

504
00:23:46,800 --> 00:23:49,520
Speaker 2: got out of the truck. They transloated into another truck

505
00:23:49,520 --> 00:23:52,600
Speaker 2: and disappeared. And so you see this not just they're

506
00:23:52,640 --> 00:23:54,919
Speaker 2: not just intercepting these things on the road, you know,

507
00:23:55,000 --> 00:23:58,119
Speaker 2: posing as your as your ship or as your constone. Yeah,

508
00:23:58,160 --> 00:24:01,280
Speaker 2: so's it's different flavors of it all the time. Yeah,

509
00:24:01,320 --> 00:24:04,639
Speaker 2: And that there's you know, no amount of you know,

510
00:24:04,720 --> 00:24:07,040
Speaker 2: red flags or any kind of identification that we can

511
00:24:07,080 --> 00:24:08,000
Speaker 2: do for a fraud like that.

512
00:24:08,440 --> 00:24:10,800
Speaker 1: Yeah, it seems it seems like it's a lot more

513
00:24:10,840 --> 00:24:15,840
Speaker 1: than the hijacking scene and good fellas that it feels

514
00:24:15,840 --> 00:24:17,520
Speaker 1: like that. Yeah, I guess it's better for the driver,

515
00:24:17,640 --> 00:24:19,720
Speaker 1: it's safer for the driver, but it's still terrible for

516
00:24:19,760 --> 00:24:23,119
Speaker 1: the industry. You know, we were talking about technology. Uh,

517
00:24:23,160 --> 00:24:26,600
Speaker 1: you know, I did mention AI just FYI, if you

518
00:24:26,680 --> 00:24:28,520
Speaker 1: talk about a lot, you might get a couple of

519
00:24:28,560 --> 00:24:31,280
Speaker 1: turns on your valuation kind of what do you what

520
00:24:31,320 --> 00:24:34,400
Speaker 1: are you guys doing with AI internally? Are you are

521
00:24:34,400 --> 00:24:38,320
Speaker 1: you building it yourself? Are you using third parties? You know?

522
00:24:38,400 --> 00:24:40,760
Speaker 1: How how are you using AI? One of your one

523
00:24:40,800 --> 00:24:43,600
Speaker 1: of the largest brokers in the space, you know, talks

524
00:24:43,640 --> 00:24:45,600
Speaker 1: a lot about how they're making their you know, their

525
00:24:45,600 --> 00:24:48,359
Speaker 1: brokers a lot more productive by with the machine learning

526
00:24:48,400 --> 00:24:51,520
Speaker 1: that they're doing, and they're trying to, you know, reduce friction. Like,

527
00:24:51,680 --> 00:24:52,960
Speaker 1: what are you guys doing.

528
00:24:52,760 --> 00:24:56,920
Speaker 2: With AIH we have, We've jumped in with two feet,

529
00:24:57,520 --> 00:24:59,480
Speaker 2: so we have been working on a number of things

530
00:24:59,480 --> 00:25:01,439
Speaker 2: for the past year to roll out throughout the business.

531
00:25:01,440 --> 00:25:03,879
Speaker 2: So I will say my general outlook on this is

532
00:25:03,880 --> 00:25:07,760
Speaker 2: that it will fundamentally change the landscape. I think for

533
00:25:07,800 --> 00:25:10,160
Speaker 2: the better. That technology is real. I think that there's

534
00:25:10,200 --> 00:25:12,159
Speaker 2: one of my favorite quotes is that the future is

535
00:25:12,160 --> 00:25:15,160
Speaker 2: already here, is just not evenly distributed. And I would

536
00:25:15,200 --> 00:25:17,160
Speaker 2: say that's very much the case with AI right now.

537
00:25:17,280 --> 00:25:20,240
Speaker 2: Our engineers use AI every single day. So we have

538
00:25:20,280 --> 00:25:23,600
Speaker 2: our team of internal engineers using it, our lawyers are

539
00:25:23,680 --> 00:25:28,200
Speaker 2: using it, and we have been driving it through our carrier, sales,

540
00:25:28,359 --> 00:25:32,440
Speaker 2: carrier operations, and customer operations functions now for a number

541
00:25:32,480 --> 00:25:35,960
Speaker 2: of months, so it will touch every part of the transaction.

542
00:25:36,760 --> 00:25:40,560
Speaker 2: We're processing documents automatically with it, so being able to

543
00:25:40,600 --> 00:25:44,280
Speaker 2: just kind of read documents, classify them, understand what they are,

544
00:25:44,359 --> 00:25:48,600
Speaker 2: get them processed to touching the actual transactions. So how

545
00:25:48,600 --> 00:25:53,000
Speaker 2: do we quote our customers? How are we interacting with carriers?

546
00:25:53,040 --> 00:25:56,600
Speaker 2: So it is in many instances right now a call

547
00:25:56,640 --> 00:25:59,520
Speaker 2: service for us. So it's feeled that we were missing

548
00:26:00,119 --> 00:26:04,280
Speaker 2: an abandonment rate that was too high. Our COO and

549
00:26:04,280 --> 00:26:06,760
Speaker 2: I were talking about, you know, inbound calls. How many

550
00:26:06,800 --> 00:26:10,119
Speaker 2: of these can we not get to? We missed about

551
00:26:10,160 --> 00:26:12,840
Speaker 2: five thousand phone calls every single.

552
00:26:12,600 --> 00:26:14,160
Speaker 1: Week because there was no one to pick it up.

553
00:26:14,359 --> 00:26:16,480
Speaker 2: Just everyone was dispatch. Everyone else is on the phone,

554
00:26:16,520 --> 00:26:18,320
Speaker 2: they're dealing with something else. So we were just missing

555
00:26:18,320 --> 00:26:20,600
Speaker 2: this and everything that we tried, we could chip away

556
00:26:20,640 --> 00:26:23,520
Speaker 2: at the numbers. So we have you know, AI voice

557
00:26:23,520 --> 00:26:26,199
Speaker 2: spots that are answering the phone. They sound like a

558
00:26:26,200 --> 00:26:29,560
Speaker 2: different person every time, so they have different personas you

559
00:26:29,600 --> 00:26:32,680
Speaker 2: cannot really tell that you're not talking to a human

560
00:26:32,720 --> 00:26:35,800
Speaker 2: because the intonation is so strong and they are either

561
00:26:35,880 --> 00:26:38,480
Speaker 2: handling the issue or sending it to the right person,

562
00:26:38,560 --> 00:26:40,840
Speaker 2: triaging it getting it to the right person. So it's

563
00:26:41,119 --> 00:26:43,879
Speaker 2: it's taken all that inbound call volume, which was too

564
00:26:44,119 --> 00:26:46,119
Speaker 2: droves and droves of people that try to do and

565
00:26:46,160 --> 00:26:50,040
Speaker 2: frankly we could never do it. Well, you just simply can't.

566
00:26:50,359 --> 00:26:52,439
Speaker 2: You know, when you have, you know, a load that

567
00:26:52,600 --> 00:26:54,760
Speaker 2: a lot of cut carriers want, they're all going to

568
00:26:54,800 --> 00:26:56,240
Speaker 2: call you at the same time, same thing that you're

569
00:26:56,280 --> 00:26:58,760
Speaker 2: doing on the outbound calling. So we've put it on

570
00:26:58,800 --> 00:27:01,080
Speaker 2: the phone systems, we have an email, but it is

571
00:27:01,119 --> 00:27:04,399
Speaker 2: touching every part of our transaction and I think that

572
00:27:04,720 --> 00:27:07,159
Speaker 2: the impact of it over the next few years, I

573
00:27:07,160 --> 00:27:10,560
Speaker 2: think truly we can probably double again the size of

574
00:27:10,560 --> 00:27:13,439
Speaker 2: our business by total revenue and probably increase headcount by

575
00:27:13,440 --> 00:27:16,400
Speaker 2: twenty or thirty percent. Well at most, that's what we're

576
00:27:16,400 --> 00:27:17,600
Speaker 2: seeing in the ear landings here.

577
00:27:17,760 --> 00:27:20,240
Speaker 1: That's great, that's great. And this is a silly question,

578
00:27:20,280 --> 00:27:22,280
Speaker 1: but do you have a favorite persona of Ali?

579
00:27:23,760 --> 00:27:27,480
Speaker 2: I don't yet. I know Grock has some racier ones

580
00:27:27,480 --> 00:27:28,240
Speaker 2: that they've come out with.

581
00:27:30,160 --> 00:27:37,199
Speaker 1: Yeah. Absolutely, you know, we've talked a lot about you know,

582
00:27:37,680 --> 00:27:39,119
Speaker 1: well not a lot, but we talked a little bit

583
00:27:39,119 --> 00:27:41,960
Speaker 1: about M and A. You know some deals that we've seen,

584
00:27:43,200 --> 00:27:46,439
Speaker 1: you know, Coyote, your old firm, it's been acquired. You know.

585
00:27:46,480 --> 00:27:48,720
Speaker 1: Where do you see kind of M and A in

586
00:27:48,800 --> 00:27:52,560
Speaker 1: the space in the broker space? Is it? Is it

587
00:27:52,640 --> 00:27:56,640
Speaker 1: something where the large players are gonna you know, by

588
00:27:56,680 --> 00:27:59,040
Speaker 1: each other, or is it just really most of the

589
00:27:59,160 --> 00:28:01,560
Speaker 1: M and A is happening at the low the.

590
00:28:03,160 --> 00:28:05,000
Speaker 2: Other tale of the market.

591
00:28:04,720 --> 00:28:05,200
Speaker 1: If you will.

592
00:28:05,800 --> 00:28:08,399
Speaker 2: Yeah, I think there's there's been a lot of learnings

593
00:28:08,400 --> 00:28:10,879
Speaker 2: over the last ten to fifteen years on M and A.

594
00:28:10,960 --> 00:28:12,760
Speaker 2: There's been a lot of deals, and I think my

595
00:28:12,920 --> 00:28:15,720
Speaker 2: general take on it is people have said the brokerage

596
00:28:16,080 --> 00:28:18,560
Speaker 2: market is going to consolidate, right, And you know, I

597
00:28:18,560 --> 00:28:21,520
Speaker 2: think for folks listening to there are estimates of how

598
00:28:21,560 --> 00:28:23,760
Speaker 2: many brokers are in the US today, is anywhere between

599
00:28:23,800 --> 00:28:27,240
Speaker 2: eighty to twenty thousand, right, So pick your number. Who

600
00:28:27,320 --> 00:28:31,760
Speaker 2: really operates, who operates with scale. I don't see meaningful

601
00:28:31,880 --> 00:28:36,040
Speaker 2: consolidation that would like substantively change the makeup of the

602
00:28:36,080 --> 00:28:39,760
Speaker 2: industry happening anytime soon. I just think taking that many

603
00:28:39,760 --> 00:28:43,200
Speaker 2: players down to a few is been talked about a lot,

604
00:28:43,280 --> 00:28:45,320
Speaker 2: but it's just not something that I can really imagine

605
00:28:45,360 --> 00:28:48,080
Speaker 2: happening on any kind of short time horizon. I do

606
00:28:48,120 --> 00:28:51,360
Speaker 2: think that the role for M and A my preference

607
00:28:51,360 --> 00:28:54,080
Speaker 2: for it. Again, I mentioned, you know, Armstrong is more opportunistic.

608
00:28:54,080 --> 00:28:57,200
Speaker 2: We're not out there looking We're perfectly happy with organic

609
00:28:57,240 --> 00:29:01,120
Speaker 2: growth story, but anything that would add to capabilities I

610
00:29:01,160 --> 00:29:03,080
Speaker 2: think can make a lot of sense. I think when

611
00:29:03,080 --> 00:29:07,120
Speaker 2: you get into where M and A fails in brokerage

612
00:29:07,800 --> 00:29:11,000
Speaker 2: is customer overlap. And so if you are a three

613
00:29:11,000 --> 00:29:14,120
Speaker 2: PL you buy another three PL, fifty percent of the

614
00:29:14,160 --> 00:29:16,720
Speaker 2: logos are the same, you're upsetting fifty percent of the

615
00:29:16,760 --> 00:29:19,680
Speaker 2: sales reps on one side of the transaction. Yeah, and

616
00:29:19,880 --> 00:29:23,080
Speaker 2: this is a relationship business. This is a people centric business.

617
00:29:23,120 --> 00:29:25,200
Speaker 2: So I've talked a lot about it, all the technology

618
00:29:25,200 --> 00:29:27,800
Speaker 2: and issues we have replatforming, which has allowed us to

619
00:29:27,800 --> 00:29:31,200
Speaker 2: take advantage of all the advancements in AI, but this

620
00:29:31,320 --> 00:29:35,479
Speaker 2: is still fundamentally a relationship business. And if you're going

621
00:29:35,560 --> 00:29:38,880
Speaker 2: to do a transaction, you're going to piss off fifty

622
00:29:38,920 --> 00:29:41,360
Speaker 2: percent of a population, or any percent of a population.

623
00:29:41,720 --> 00:29:44,000
Speaker 2: It just introduces more risk than I think is worth it.

624
00:29:44,120 --> 00:29:48,400
Speaker 2: And so I just advise anyone doing aggressive M and

625
00:29:48,440 --> 00:29:49,800
Speaker 2: A to have a really good plan and to make

626
00:29:49,840 --> 00:29:52,080
Speaker 2: sure you understand your overlap. But I think it will

627
00:29:52,080 --> 00:29:55,200
Speaker 2: continue to happen. I mean, I do think if you

628
00:29:56,000 --> 00:30:00,160
Speaker 2: are a large kind of three pl you're very heavily

629
00:30:00,320 --> 00:30:04,960
Speaker 2: focused on van and reefer. You know, buying a good

630
00:30:05,000 --> 00:30:07,320
Speaker 2: flatbed broker could be a great transaction for you can

631
00:30:07,320 --> 00:30:10,160
Speaker 2: break you into a new network, and those deals make

632
00:30:10,160 --> 00:30:12,040
Speaker 2: a lot more sense to me than seeing two folks

633
00:30:12,080 --> 00:30:14,479
Speaker 2: that do the same thing go after the same customer segments.

634
00:30:14,480 --> 00:30:17,200
Speaker 2: And I've seen that, you know, three, four or five

635
00:30:17,240 --> 00:30:19,640
Speaker 2: dozen times, and you know, I haven't heard a whole

636
00:30:19,720 --> 00:30:23,040
Speaker 2: lot of incredible growth or incredible success stories coming out.

637
00:30:23,080 --> 00:30:25,800
Speaker 1: And that's probably why consolidation is really at least not

638
00:30:25,840 --> 00:30:28,000
Speaker 1: going to happen in scale because you you you, you

639
00:30:28,280 --> 00:30:31,280
Speaker 1: will say you annoy that one broker, and it's very

640
00:30:31,280 --> 00:30:34,520
Speaker 1: easy for them to go off like a yep because

641
00:30:34,800 --> 00:30:37,560
Speaker 1: you know, with off the shelf technology that can pretty

642
00:30:37,600 --> 00:30:41,880
Speaker 1: much go up and running pretty quickly. So you know,

643
00:30:41,960 --> 00:30:44,720
Speaker 1: you mentioned you can double your size, but just adding

644
00:30:44,760 --> 00:30:48,920
Speaker 1: twenty to thirty percent of headcount. You know, when you

645
00:30:48,960 --> 00:30:53,280
Speaker 1: guys are recruiting brokers where you're recruiting from, I know

646
00:30:53,360 --> 00:30:58,080
Speaker 1: it's you know, the brokerage industry tends to be you know,

647
00:30:58,320 --> 00:31:01,920
Speaker 1: very I guess in office culture because there's a lot

648
00:31:01,960 --> 00:31:04,720
Speaker 1: of training on the job training that happens. Can you

649
00:31:04,760 --> 00:31:07,640
Speaker 1: talk about, you know, when you guys are hiring brokers,

650
00:31:07,720 --> 00:31:10,720
Speaker 1: are you are you looking for recent college grads? Are

651
00:31:10,720 --> 00:31:14,320
Speaker 1: you looking for you know, a grizzly veteran with thirty

652
00:31:14,400 --> 00:31:17,200
Speaker 1: years experience? Kind of what's what's the sweet spot for

653
00:31:17,240 --> 00:31:18,760
Speaker 1: you when you guys are adding those heads?

654
00:31:18,920 --> 00:31:20,760
Speaker 2: You know, we have so we have recruiting on both

655
00:31:20,800 --> 00:31:22,400
Speaker 2: sides of them. So we have agent recruiting and we

656
00:31:22,440 --> 00:31:26,760
Speaker 2: also have brokerage recruiting. Right, I'd say in both instances,

657
00:31:26,800 --> 00:31:30,880
Speaker 2: we're looking for someone with experience. Generally the attrition's lower.

658
00:31:31,120 --> 00:31:34,160
Speaker 2: It's you have somebody that's kind of not already self

659
00:31:34,160 --> 00:31:36,760
Speaker 2: selected out. You see, the folks that go heavy out

660
00:31:36,760 --> 00:31:39,160
Speaker 2: of university tend to have you know, fifty percent attrition

661
00:31:39,240 --> 00:31:40,640
Speaker 2: would be a good thing for a lot of them

662
00:31:40,720 --> 00:31:42,360
Speaker 2: over the course of two or three years. And so

663
00:31:42,680 --> 00:31:45,200
Speaker 2: it's really really expensive and you get people. You know,

664
00:31:45,240 --> 00:31:48,000
Speaker 2: this industry tends to you self select out pretty quick

665
00:31:48,000 --> 00:31:50,000
Speaker 2: because it's a it's a tough industry. It's hard work.

666
00:31:50,800 --> 00:31:53,920
Speaker 2: It's really not for everyone. And so if when you

667
00:31:53,960 --> 00:31:56,240
Speaker 2: get them and they decide that they want to do this,

668
00:31:56,560 --> 00:31:58,720
Speaker 2: it's great And like, may I've been in it now

669
00:31:58,720 --> 00:32:03,840
Speaker 2: eighteen years, didn't expect that. But I think for us overall,

670
00:32:03,880 --> 00:32:07,120
Speaker 2: we prefer to have, especially on the agent side, somebody

671
00:32:07,120 --> 00:32:09,440
Speaker 2: with more experience. Maybe they were in a W two

672
00:32:09,520 --> 00:32:12,080
Speaker 2: model before they decided they wanted to be their own,

673
00:32:12,480 --> 00:32:15,760
Speaker 2: you know, a small business owner breakout on their own

674
00:32:15,560 --> 00:32:20,400
Speaker 2: and use Armstrong's platform to run their business. So it's

675
00:32:20,440 --> 00:32:24,280
Speaker 2: definitely on both sides, much more heavily weighted towards somebody

676
00:32:24,360 --> 00:32:27,440
Speaker 2: with experience that has realized that this industry is for them.

677
00:32:27,440 --> 00:32:28,760
Speaker 2: They want to be in it for the long run,

678
00:32:28,800 --> 00:32:30,560
Speaker 2: and we like to play long term games with long

679
00:32:30,600 --> 00:32:31,080
Speaker 2: term people.

680
00:32:31,120 --> 00:32:35,120
Speaker 1: So okay, and I think you said you mentioned you

681
00:32:35,200 --> 00:32:37,880
Speaker 1: were in it for eighteen years. Ye, you kind of

682
00:32:38,440 --> 00:32:40,480
Speaker 1: said you were surprised, Like, what did you think you

683
00:32:40,480 --> 00:32:41,000
Speaker 1: were going to do?

684
00:32:41,400 --> 00:32:43,760
Speaker 2: Well? I thought I was. Actually I came out of school.

685
00:32:43,760 --> 00:32:45,480
Speaker 2: I was working for a senator on Capitol Hill, so

686
00:32:45,480 --> 00:32:48,920
Speaker 2: I a very different path than what I'm on now

687
00:32:49,720 --> 00:32:51,840
Speaker 2: and just fell out of love with politics and got

688
00:32:51,840 --> 00:32:54,280
Speaker 2: a job at Coyote when it was about forty million

689
00:32:54,320 --> 00:32:58,200
Speaker 2: dollars and stayed there for eleven years, went on a

690
00:32:58,280 --> 00:33:01,680
Speaker 2: crazy ride to four billion in that eleven year span.

691
00:33:01,840 --> 00:33:04,520
Speaker 2: But uh, yeah, it just just has this way of

692
00:33:04,600 --> 00:33:06,480
Speaker 2: getting its mits on you and not letting you go.

693
00:33:07,560 --> 00:33:09,920
Speaker 1: Is there anything you know as a leader of a

694
00:33:10,000 --> 00:33:12,840
Speaker 1: large transportation company that kind of keeps you up at night?

695
00:33:14,840 --> 00:33:16,520
Speaker 2: I don't know. I tend to be a little bit

696
00:33:16,520 --> 00:33:18,600
Speaker 2: of a warrior by by nature, which I think is

697
00:33:18,640 --> 00:33:20,320
Speaker 2: a good thing. I've tried to learn how to harness that,

698
00:33:21,040 --> 00:33:22,640
Speaker 2: so I has to say a little bit of everything,

699
00:33:22,840 --> 00:33:25,960
Speaker 2: but nothing existentially, I think, you know, the industry is

700
00:33:26,000 --> 00:33:29,240
Speaker 2: in a despite the rate cycle. I think the industry

701
00:33:29,400 --> 00:33:31,160
Speaker 2: A lot of people look at it and say, I

702
00:33:31,160 --> 00:33:33,000
Speaker 2: don't know about that. I think the industry is overall

703
00:33:33,240 --> 00:33:36,600
Speaker 2: pretty healthy, with the two exceptions of, yeah, rates everyone

704
00:33:36,600 --> 00:33:38,520
Speaker 2: would like rates to be a little higher than they

705
00:33:38,560 --> 00:33:40,800
Speaker 2: are now and fraud. Those are the two kind of

706
00:33:40,880 --> 00:33:44,880
Speaker 2: black eyes. But other than that, no, doesn't nothing that

707
00:33:44,920 --> 00:33:48,080
Speaker 2: really keeps me up at night at at an existential level.

708
00:33:48,360 --> 00:33:50,360
Speaker 1: Right, And we were talking a little bit about the

709
00:33:50,560 --> 00:33:53,640
Speaker 1: the LTL, the lesson truckload market. You know how that's

710
00:33:53,640 --> 00:33:56,200
Speaker 1: been a growth there. If you guys, is LTL from

711
00:33:56,200 --> 00:33:59,760
Speaker 1: a broker standpoint, more profitable than than truckload from a

712
00:33:59,760 --> 00:34:00,680
Speaker 1: margent standpoint.

713
00:34:00,800 --> 00:34:03,200
Speaker 2: Yeah, if you look at it on the yields or better,

714
00:34:03,240 --> 00:34:06,560
Speaker 2: So the margin percent is higher, the absolute amount of

715
00:34:06,640 --> 00:34:10,560
Speaker 2: money per transaction is is much lower. And so you

716
00:34:10,600 --> 00:34:14,080
Speaker 2: know your your margin per load is significantly lower than truckload,

717
00:34:14,200 --> 00:34:17,919
Speaker 2: but you certainly make up for it in the percentage.

718
00:34:18,280 --> 00:34:21,080
Speaker 1: And then I guess, you know, not to jump back

719
00:34:21,120 --> 00:34:23,080
Speaker 1: and forth, but you know, you started in politics, you

720
00:34:23,120 --> 00:34:26,800
Speaker 1: got into transports, Like what made you make the switch?

721
00:34:26,880 --> 00:34:31,360
Speaker 1: Would did you just like, like I guess, you know,

722
00:34:31,440 --> 00:34:33,879
Speaker 1: see a job opening online or something I did?

723
00:34:34,120 --> 00:34:37,640
Speaker 2: Yeah, I think I just was disenchanted with the process

724
00:34:37,719 --> 00:34:41,880
Speaker 2: of getting a bill through. I worked when I was

725
00:34:41,920 --> 00:34:44,480
Speaker 2: there on the last time we tried to address immigration reform,

726
00:34:45,000 --> 00:34:48,640
Speaker 2: and we worked for months on end to try to

727
00:34:48,680 --> 00:34:51,279
Speaker 2: push it through bipartisan support. And then you know, one

728
00:34:51,320 --> 00:34:53,799
Speaker 2: guy out of North Carolina, ironically where I live now,

729
00:34:54,200 --> 00:34:56,440
Speaker 2: Jim de Mint, just reversed his vote at last second

730
00:34:56,480 --> 00:34:58,759
Speaker 2: killed the whole thing. So that was the last time

731
00:34:58,800 --> 00:35:02,560
Speaker 2: we tried to address comprehensive immigration reform in the US.

732
00:35:02,600 --> 00:35:04,680
Speaker 2: I was an seven and I honestly, I mean I

733
00:35:04,719 --> 00:35:06,719
Speaker 2: was just so disenchanted with the whole thing where you know,

734
00:35:06,719 --> 00:35:09,120
Speaker 2: you had bipartis and support, everyone was kind of you

735
00:35:09,160 --> 00:35:10,640
Speaker 2: felt like you were going to get something done that

736
00:35:10,719 --> 00:35:13,719
Speaker 2: was going to meaningfully benefit the country, and you know,

737
00:35:13,800 --> 00:35:16,520
Speaker 2: snap of a finger, it's gone. And so I decided

738
00:35:16,560 --> 00:35:18,880
Speaker 2: I want to go into the private sector. And honestly,

739
00:35:19,120 --> 00:35:21,719
Speaker 2: I saw an article about Coyote on I think it

740
00:35:21,760 --> 00:35:25,080
Speaker 2: was in Cranes, Yeah, and about Jeff Silver, the founder,

741
00:35:25,120 --> 00:35:27,120
Speaker 2: and said, I want to work for that guy. And

742
00:35:27,160 --> 00:35:30,000
Speaker 2: I walked in with true to my you know, prior

743
00:35:30,040 --> 00:35:31,840
Speaker 2: work experience roots, I walked in with a suit and

744
00:35:31,880 --> 00:35:34,000
Speaker 2: tie into a brokerage floor. And for any of your

745
00:35:34,000 --> 00:35:36,120
Speaker 2: listeners that don't know, no one in brokerage wears a

746
00:35:36,120 --> 00:35:38,040
Speaker 2: suit and a tie. And it was like a record

747
00:35:38,080 --> 00:35:43,560
Speaker 2: stopped on the floor. That's funny, Joony chewing tobacco. Everyone

748
00:35:43,560 --> 00:35:48,080
Speaker 2: else did. So, so that's.

749
00:35:47,920 --> 00:35:51,640
Speaker 1: A very interesting transition, you know. And I guess what

750
00:35:51,840 --> 00:35:54,600
Speaker 1: is the favorite your favorite thing not only about the

751
00:35:54,680 --> 00:35:57,400
Speaker 1: job that you have now, but but about the brokerage industry.

752
00:35:57,440 --> 00:36:00,319
Speaker 1: They kind of have kind of that kept you in

753
00:36:00,400 --> 00:36:01,160
Speaker 1: it for so long.

754
00:36:01,320 --> 00:36:05,160
Speaker 2: I mean, it's it's a fascinating industry. I mean, it's

755
00:36:05,200 --> 00:36:07,439
Speaker 2: it's the closest thing that I've seen to perfect free

756
00:36:07,440 --> 00:36:10,040
Speaker 2: market economics. If you look at the price for a

757
00:36:10,080 --> 00:36:13,000
Speaker 2: low just to Atlanta to Chicago, it has a different

758
00:36:13,000 --> 00:36:15,560
Speaker 2: price at eight am than it does at ten am noon,

759
00:36:16,160 --> 00:36:19,720
Speaker 2: four o'clock. So just that that kind of the economic

760
00:36:19,800 --> 00:36:22,680
Speaker 2: the underlying economics, and this the sheer fragmentation in the

761
00:36:22,680 --> 00:36:25,560
Speaker 2: marketplace on both sides, both shippers and on the carrier side,

762
00:36:25,840 --> 00:36:30,280
Speaker 2: right just creates this dynamic that just it's fast paced,

763
00:36:30,360 --> 00:36:32,480
Speaker 2: it's easy to get, you know, fall in love with

764
00:36:32,520 --> 00:36:35,520
Speaker 2: and get addicted to, but it's also incredibly intellectually stimulating

765
00:36:35,560 --> 00:36:38,759
Speaker 2: and really tough. And so the just thing I like

766
00:36:38,840 --> 00:36:40,759
Speaker 2: most about my job right now is just this one.

767
00:36:40,800 --> 00:36:43,000
Speaker 2: I get to work with great people. And two is

768
00:36:43,040 --> 00:36:45,279
Speaker 2: there's a different problem to solve every single day. It's

769
00:36:45,480 --> 00:36:46,040
Speaker 2: never boring.

770
00:36:47,040 --> 00:36:50,920
Speaker 1: Now, is most of your time client facing? Is it

771
00:36:51,239 --> 00:36:52,040
Speaker 1: inward facing?

772
00:36:52,080 --> 00:36:52,160
Speaker 2: Like?

773
00:36:52,160 --> 00:36:53,479
Speaker 1: Where do you spend most of your time?

774
00:36:53,920 --> 00:36:55,920
Speaker 2: Depends on the week. So I spend a lot of

775
00:36:55,920 --> 00:36:58,120
Speaker 2: time with our We say we have, you know, three

776
00:36:58,160 --> 00:37:01,040
Speaker 2: different types of customers. We have our agents, we have

777
00:37:01,080 --> 00:37:02,759
Speaker 2: our shippers, and we have our carriers. I like to

778
00:37:02,760 --> 00:37:06,000
Speaker 2: spend at least if you look at a nagrid over

779
00:37:06,000 --> 00:37:08,480
Speaker 2: a year, twenty five to thirty five percent of my

780
00:37:08,560 --> 00:37:13,440
Speaker 2: time with our customers, I spend probably I would I

781
00:37:13,440 --> 00:37:16,799
Speaker 2: would kind of carve out shippers from that. I spend

782
00:37:16,800 --> 00:37:19,040
Speaker 2: probably another twenty to thirty percent of my time with

783
00:37:19,040 --> 00:37:21,640
Speaker 2: our agents and our and then internally facing with our

784
00:37:21,960 --> 00:37:24,160
Speaker 2: brokerage folks and what we call shared services. So we

785
00:37:24,200 --> 00:37:26,800
Speaker 2: look at it, you know, the traditional back office functions,

786
00:37:27,600 --> 00:37:31,200
Speaker 2: so billing credit, those are not back office functions at Armstrong.

787
00:37:31,239 --> 00:37:33,680
Speaker 2: Those we call that shared services. That is a customer

788
00:37:33,760 --> 00:37:37,920
Speaker 2: service department that services our agents and our and our brokers,

789
00:37:37,960 --> 00:37:40,200
Speaker 2: and so we treat them with like an SLA, so

790
00:37:40,239 --> 00:37:43,160
Speaker 2: they have if you get an inbound email for this request,

791
00:37:43,200 --> 00:37:45,520
Speaker 2: you have to respond to it within this period of time.

792
00:37:45,560 --> 00:37:48,440
Speaker 2: And we track those things, we metric them, and we

793
00:37:48,480 --> 00:37:50,520
Speaker 2: spend a lot of time internally working with those teams

794
00:37:50,520 --> 00:37:52,280
Speaker 2: to try to make sure that we're hitting those slas

795
00:37:52,280 --> 00:37:54,440
Speaker 2: and that we're staying true to our word with our customers.

796
00:37:54,719 --> 00:37:57,200
Speaker 1: Great, and you know, before I let you go is

797
00:37:57,239 --> 00:38:00,320
Speaker 1: something that I always like to ask my guests, do

798
00:38:00,360 --> 00:38:02,279
Speaker 1: you have a favorite book about leadership or about the

799
00:38:02,320 --> 00:38:06,520
Speaker 1: transportation market? That's kind of close to your heart. It'd

800
00:38:06,560 --> 00:38:08,400
Speaker 1: be interesting to hear, especially since I'm looking for a

801
00:38:08,400 --> 00:38:11,720
Speaker 1: new summer read. Right now, Well, if you like history,

802
00:38:12,680 --> 00:38:15,680
Speaker 1: I'm actually in the middle. I'd say the tail end

803
00:38:15,760 --> 00:38:18,239
Speaker 1: of a book right now that's pretty fascinating called The

804
00:38:18,280 --> 00:38:22,280
Speaker 1: Box by Mark Levinson, and he goes through the history

805
00:38:22,480 --> 00:38:25,520
Speaker 1: of containerization and how it changed the world, how it

806
00:38:25,520 --> 00:38:26,879
Speaker 1: made it flatter, how it made it cheaper.

807
00:38:26,960 --> 00:38:31,440
Speaker 2: But it walks you through Malcolm McLean's story, if you

808
00:38:31,480 --> 00:38:33,279
Speaker 2: know who that is from, kind of the one of

809
00:38:33,320 --> 00:38:36,680
Speaker 2: the pioneers of the industry, how the Vietnam War kind

810
00:38:36,719 --> 00:38:39,160
Speaker 2: of shaped the twenty foot container, and so it really

811
00:38:39,200 --> 00:38:42,120
Speaker 2: describes how shipping has progressed in the history of shipping

812
00:38:42,120 --> 00:38:43,799
Speaker 2: through that lens. I'd say it's one of the more

813
00:38:43,840 --> 00:38:45,240
Speaker 2: fascinating reads I've had in a while.

814
00:38:45,320 --> 00:38:47,200
Speaker 1: All right, great, do you guys do much on the

815
00:38:47,200 --> 00:38:47,959
Speaker 1: intermodal side.

816
00:38:48,200 --> 00:38:51,440
Speaker 2: We don't. We don't sore where I'd say where we

817
00:38:51,560 --> 00:38:57,440
Speaker 2: have all very limited kind of exposure is on intermodal Okay, awesome.

818
00:38:57,640 --> 00:38:59,680
Speaker 2: So it's a tough a that's a tough business and

819
00:39:00,040 --> 00:39:02,800
Speaker 2: will be interesting to see what happens with the recent merger.

820
00:39:02,800 --> 00:39:04,279
Speaker 2: Announcer announcement.

821
00:39:04,360 --> 00:39:05,680
Speaker 1: I was gonna ask, do you do you have any

822
00:39:05,680 --> 00:39:06,239
Speaker 1: thoughts on that?

823
00:39:06,320 --> 00:39:08,879
Speaker 2: I don't. I mean, that's talk about an interesting day

824
00:39:08,920 --> 00:39:11,360
Speaker 2: for a podcast. It's two major announcements this morning. So

825
00:39:12,719 --> 00:39:15,120
Speaker 2: I think my early take is I think there should

826
00:39:15,239 --> 00:39:19,120
Speaker 2: there will probably be some opportunity for brokers and three

827
00:39:19,120 --> 00:39:21,320
Speaker 2: pls in the short run that play in that space.

828
00:39:22,440 --> 00:39:25,160
Speaker 2: If that deal goes through, right, there's gonna be disruption,

829
00:39:25,239 --> 00:39:29,120
Speaker 2: There's going to be congestion. How they reconfigure networks. I

830
00:39:29,120 --> 00:39:32,080
Speaker 2: think it's interesting and I think sorely needed to have

831
00:39:32,120 --> 00:39:36,040
Speaker 2: that kind of first coast to coast service offering. But

832
00:39:36,480 --> 00:39:38,879
Speaker 2: now I don't know. I'm gonna suspend any judgment until

833
00:39:38,880 --> 00:39:40,160
Speaker 2: I get a few more details on it.

834
00:39:40,440 --> 00:39:42,480
Speaker 1: All right, Well, hopefully we'll come back to the podcast

835
00:39:42,560 --> 00:39:46,680
Speaker 1: we can talk more about it. Assuming that those deals

836
00:39:46,760 --> 00:39:49,840
Speaker 1: were that deal, the railroad deal between Union Pacific and

837
00:39:49,880 --> 00:39:53,440
Speaker 1: Norfolk Southern kind of evolved a little further than just

838
00:39:53,960 --> 00:39:56,759
Speaker 1: hearsay and talk. All right, Cameron, I really want to

839
00:39:56,760 --> 00:39:58,320
Speaker 1: thank you for your time and insights today.

840
00:39:58,680 --> 00:40:00,560
Speaker 2: Yeah, thank you very much for having me, and.

841
00:40:00,600 --> 00:40:02,200
Speaker 1: I want to thank you for tuning in. If you'd

842
00:40:02,200 --> 00:40:05,319
Speaker 1: like the episode, please subscribe and leave a review. We've

843
00:40:05,360 --> 00:40:07,640
Speaker 1: lined up a number of great guests for the podcast,

844
00:40:07,640 --> 00:40:11,960
Speaker 1: so please check back to hear conversations with C suite executives, shippers,

845
00:40:12,280 --> 00:40:15,960
Speaker 1: regulators and decision makers within the freight markets. Also, if

846
00:40:15,960 --> 00:40:18,720
Speaker 1: you want to learn more about the freight transportation markets,

847
00:40:19,040 --> 00:40:23,000
Speaker 1: check our work out on the Bloomberg Terminal at Bigo

848
00:40:23,360 --> 00:40:26,719
Speaker 1: and on social media. This is Lee Glasgow signing off

849
00:40:26,760 --> 00:40:28,680
Speaker 1: and thanks again for talking transports with me.