WEBVTT - Truckers Facing Expensive Operating Environment

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<v Speaker 1>These sees Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Stinovic on Bloomberg Radio. So we got a great read

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<v Speaker 1>of the economy and an important part of our economy,

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<v Speaker 1>and that is the group that kind of moves everything around.

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<v Speaker 1>We did it in December. We wanted to have our

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<v Speaker 1>next guest back for an update, and we're talking about

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<v Speaker 1>the trucking industry. Yeah, very please step back with us

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<v Speaker 1>once again. Melissa Foreman, president at Triumph Pay, joining us

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<v Speaker 1>via zoom from Dallas, Texas. To remind everyone, Triumph Pay

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<v Speaker 1>is a payment platform. What it does is it connects brokers,

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<v Speaker 1>shippers and carriers. It's a division of t b K

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<v Speaker 1>Bank SSB member fd I C and part of the

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<v Speaker 1>publicly traded Triumph Financial got about one point five billion

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<v Speaker 1>dollar market cap. Melissa, good to have you with us.

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<v Speaker 1>How are you? I'm good, Carol and Tim, how are

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<v Speaker 1>you guys? Would you for having me back? We're doing

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<v Speaker 1>pretty well. So we last spoke to you towards the

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<v Speaker 1>end of the year last year, and I'm just wondering

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<v Speaker 1>how things are going now and how things have changed

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<v Speaker 1>since then. Yeah, I think you know what what we

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<v Speaker 1>talked about last time. Is that we didn't see the

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<v Speaker 1>seasonal peak that we typically do in in October, November,

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<v Speaker 1>December into the holidays and things kind of we're starting

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<v Speaker 1>to hit the bottom. What we've seen on our side

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<v Speaker 1>in that time frame, you know, through the beginning of

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<v Speaker 1>January in December is it's starting to feel like it's

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<v Speaker 1>flattening a little bit. So the average voice prices seem

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<v Speaker 1>to stabilize UM and so I we hope we don't

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<v Speaker 1>have a crystal ball, but we hope that it will

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<v Speaker 1>hold fast and we'll start seeing things pick back up

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<v Speaker 1>here um in the next month or two, but down

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<v Speaker 1>from a year ago. Like how is the best metric here?

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<v Speaker 1>I always feel like because of the pandemic, everything is

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<v Speaker 1>so a little bit foggy. So do you compare it

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<v Speaker 1>to pre pandemic levels kind of where we are? We

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<v Speaker 1>do so, yes, when you look at pre pandemic levels

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<v Speaker 1>and I can't quote exactly, you know, this week where

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<v Speaker 1>they're at, but um, what an average invoice price for

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<v Speaker 1>a spot market over the road trucker's invoice would be

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<v Speaker 1>around sixte UM. So now we're seeing that right around

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<v Speaker 1>two thousand and fifty UM, which is far better than

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<v Speaker 1>than what we saw pre pandemic, but certainly not as

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<v Speaker 1>good as that, you know, the peaks that we hit

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<v Speaker 1>a year or so ago when it was hitting. So

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<v Speaker 1>it feels like it's it's rough, um. But again, what

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<v Speaker 1>we have to remember is what's changed since pre pandemic

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<v Speaker 1>is the cost of fuel, the cost of equipment, the

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<v Speaker 1>cost of financing with the federate increases and all those

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<v Speaker 1>hikes and how they impact driver's ability to operate their business.

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<v Speaker 1>So it has become more expensive for them to operate

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<v Speaker 1>their business than it was pre pandemic um. And so

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<v Speaker 1>you know, I certainly can't imagine that we could get

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<v Speaker 1>much lower than the two dollars you know, two dollars

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<v Speaker 1>per per mile um for a driver carrier to even

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<v Speaker 1>be able to operate. What about when it comes to

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<v Speaker 1>supply of drivers and carriers, is it still is it

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<v Speaker 1>still difficult? Are you still having trouble finding people? There?

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<v Speaker 1>There are and and a lot of that. You know,

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<v Speaker 1>the reasons differ right from from season the season and

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<v Speaker 1>what's happening in the industry. And you know, right now

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<v Speaker 1>there's there's a lot of drivers that are saying, I'm

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<v Speaker 1>going to park my truck, I'm not going to operate

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<v Speaker 1>at a loss, and so they're able to to park it,

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<v Speaker 1>put it on the fence, and and go do something

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<v Speaker 1>else while they waited out. And so you see a

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<v Speaker 1>lot of authorities coming out of the market. Um. And

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<v Speaker 1>then as soon as things pick back up, you'll start

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<v Speaker 1>to see them come back in. That sounds that sounds

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<v Speaker 1>inflationary to me. That sounds exactly like what the FETE

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<v Speaker 1>is worried about. Mm hmm. It is so how much

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<v Speaker 1>more would would people have to pay in order to

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<v Speaker 1>get these drivers off the sidelines? And how do we

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<v Speaker 1>see those higher payments actually, uh go, you know, trickle

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<v Speaker 1>into the economy in terms of higher prices for us,

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<v Speaker 1>which again is what the FETE is worried about. Yeah. Absolutely,

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<v Speaker 1>So you know, when you look at their cost to operate,

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<v Speaker 1>you know, trucking companies historically have made you know, a

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<v Speaker 1>ten to fifteen eighteen on a on a good year

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<v Speaker 1>percent margin um. Right now they're running at at zero

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<v Speaker 1>or three to five percent margins for the smaller guys,

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<v Speaker 1>and so we just need to be able to make

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<v Speaker 1>money again, right, They need to be able to be profitable,

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<v Speaker 1>They need to be able to operate their businesses, um,

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<v Speaker 1>and so the all the inflationary cost increases for equipment

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<v Speaker 1>and fuel, ETCeteras is really what's what's causing them to

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<v Speaker 1>have these issues? And so how do we fix that? Right?

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<v Speaker 1>We've got to get to feel the cost of fuel down.

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<v Speaker 1>I got to get how do you make money on

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<v Speaker 1>if you're getting two dollars per mile your operational cost?

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<v Speaker 1>How do you how do the trucker make money? Help

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<v Speaker 1>me understand the math here, Yeah, I mean, you know,

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<v Speaker 1>the majority of that is going towards fuel and the

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<v Speaker 1>equipment and and the cost of the drivers you know,

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<v Speaker 1>salary and so. Um, it's difficult again like right now

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<v Speaker 1>is you know three five eight percent margins are are

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<v Speaker 1>push and so it's difficult to make money. And that's

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<v Speaker 1>why you see a lot of carriers coming out. I

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<v Speaker 1>want to talk autonomous trucks with you. Once again, we're

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<v Speaker 1>not seeing them on the roads, you know, despite the

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<v Speaker 1>fact that Tesla, well we do see it. I mean

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<v Speaker 1>a couple of those, but I mean they're not widespread

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<v Speaker 1>by any means right now. How do you think about

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<v Speaker 1>autonomous trucks in your work? And to what extent should

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<v Speaker 1>should we think about them as consumers? And should drivers

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<v Speaker 1>think about being replaced. Yeah, again, m as I said

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<v Speaker 1>last time, we're a long ways out. No no difference. Um,

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<v Speaker 1>I don't. I don't think we're anywhere close to having

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<v Speaker 1>drivers on the road. Are autonomous trucks on the road

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<v Speaker 1>without drivers and they're controlling them. Um. There are certainly

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<v Speaker 1>applications for point to point pick up such importance and

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<v Speaker 1>such where you can have UM equipment do that, but

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<v Speaker 1>that's because you don't have the variables of the open road.

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<v Speaker 1>Our drivers are phenomenal and navigating our interstates, are infrastructure

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<v Speaker 1>in the state that it's in, and dealing with other people,

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<v Speaker 1>and and and not only is that they face with

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<v Speaker 1>you know, fifty ft trailer behind them that's fully loaded.

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<v Speaker 1>And so will there be an application someday that allows

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<v Speaker 1>us to alleviate a driver shortage, Yes, But then there

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<v Speaker 1>it's going to create other opportunities. You know, somebody is

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<v Speaker 1>going to be and I imagine, you know, behind a

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<v Speaker 1>joystick on a computer game, you know, helping navigate these

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<v Speaker 1>trucks through the city, And it's just going to change

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<v Speaker 1>the way we see things. But I don't see it

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<v Speaker 1>taking trucks off the road completely. It's one of the

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<v Speaker 1>things we talked to Robotic right truck trucking specifically with

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<v Speaker 1>the Amazon with Cathy would recently, Hey, what you are

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<v Speaker 1>seeing Melissa from UM Truckers. What does it tell you

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<v Speaker 1>about the economy right now? Is it a little bit

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<v Speaker 1>up in the air? Is the glass more half full?

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<v Speaker 1>Is a glass more half empty? Well? I think I

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<v Speaker 1>think I saw the report that GP was up a

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<v Speaker 1>little bit in the last report. UM. We do see,

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<v Speaker 1>you know, folks have shifted their spending UM to more

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<v Speaker 1>experiences than than consumer products. Again, we talked about that

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<v Speaker 1>UM a couple of months ago, and you know, I

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<v Speaker 1>feel like it's it's it feels to me that it's stabilizing.

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<v Speaker 1>We're starting to see some you know, orders go up

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<v Speaker 1>a little bit to bring UM product across you know,

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<v Speaker 1>import products and into our warehouses, and so you're starting

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<v Speaker 1>to see some signs of that coming back. UM. But

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<v Speaker 1>I think it's too it's too early to tell right

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<v Speaker 1>now is to how deep we're going to go or

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<v Speaker 1>or when it's gonna turn that corner. But you say recession,

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<v Speaker 1>it feels that way. Okay, Okay, So what about the

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<v Speaker 1>questions sort of a different way when it comes to

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<v Speaker 1>just inflation, because speaking to you and understanding the shortage

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<v Speaker 1>is understanding that drivers are going on the sidelines because

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<v Speaker 1>they can't make money. Uh, do you feel like uh,

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<v Speaker 1>the FED? And I know, I know we're not talking

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<v Speaker 1>you know, federal reserve policy here, but that's what we

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<v Speaker 1>talked about last week. So do you feel like the

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<v Speaker 1>FED is is I don't want to ask you if

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<v Speaker 1>they're making the right decision, but do you think does

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<v Speaker 1>it seem like to you inflation is coming down? You know,

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<v Speaker 1>I could not answer that question, Tim, I don't know

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<v Speaker 1>enough about the financing side of it and and how

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<v Speaker 1>all those lovers that can be pulled affect. But what

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<v Speaker 1>about trust from you? So for Triumph Pay, we we

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<v Speaker 1>feel like and for the industry, while there are some

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<v Speaker 1>slowing and it has been some some slowing that's happening,

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<v Speaker 1>we feel like it's it's flattened out. And so from

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<v Speaker 1>the view that we have UM, it starts to feel

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<v Speaker 1>like things are are leveling right and we're going to

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<v Speaker 1>start to see some more normalization in the industry. But

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<v Speaker 1>looking at that lens from you know, four to six

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<v Speaker 1>week view is too short to be able to make

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<v Speaker 1>a call. And so we could we have seen, you know,

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<v Speaker 1>average and voice prices fluctuate from from week to week

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<v Speaker 1>pretty substantially um from all the different indicators, you know,

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<v Speaker 1>different things that happen in the industry, whether it's weather

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<v Speaker 1>related or inflationary related, and so it's it's just a

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<v Speaker 1>very volatile market. And you know, we will continue to

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<v Speaker 1>be here and support carriers through through the process and

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<v Speaker 1>brokers through the process that we can make sure that

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<v Speaker 1>their businesses are ready right to address that vall Chile.

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<v Speaker 1>And that's what Triumph paid us, all right. Melissa Foreman,

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<v Speaker 1>president of Try and Pay, joining us via zoom from Dallas,

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<v Speaker 1>Texas with a check on the trucking industry