1 00:00:07,640 --> 00:00:10,440 Speaker 1: Hi everyone, this is Lee Clasgow and we're Talking Transports. 2 00:00:10,520 --> 00:00:13,800 Speaker 1: Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host, 3 00:00:13,920 --> 00:00:18,960 Speaker 1: Lee Claskow, senior freight, transportation and logistics analysts at Bloomberg Intelligence, 4 00:00:18,960 --> 00:00:21,760 Speaker 1: Bloomberg's in house research arm of almost five hundred analysts 5 00:00:21,760 --> 00:00:25,280 Speaker 1: and strategists around the globe. Before diving in little public 6 00:00:25,320 --> 00:00:29,000 Speaker 1: service announcement. Your support is instrumental to keep bringing great 7 00:00:29,040 --> 00:00:31,800 Speaker 1: guests and conversations to you, our listeners, and we need 8 00:00:31,840 --> 00:00:32,360 Speaker 1: your support. 9 00:00:32,440 --> 00:00:33,239 Speaker 2: So please, if you. 10 00:00:33,240 --> 00:00:36,640 Speaker 1: Enjoy this podcast, share it, like it, leave a comment. Also, 11 00:00:36,800 --> 00:00:38,640 Speaker 1: if you have any ideas for a future episodes, or 12 00:00:38,760 --> 00:00:41,159 Speaker 1: just want to talk transports, please hit me up on 13 00:00:41,240 --> 00:00:44,760 Speaker 1: the Bloomberg terminal, on LinkedIn or on Twitter at Logistics Lee. 14 00:00:45,040 --> 00:00:48,040 Speaker 1: And Now onto our episode. We're delighted to have Drew Wilkerson, 15 00:00:48,479 --> 00:00:52,360 Speaker 1: ourxo's CEO and chairman, back as our guest on the podcast, 16 00:00:52,720 --> 00:00:55,080 Speaker 1: a role he's held since ROXO has spun out of 17 00:00:55,320 --> 00:00:59,200 Speaker 1: XPO in October twenty twenty two. RXO is listed on 18 00:00:59,240 --> 00:01:01,920 Speaker 1: the New York Stock Change under the ticker RXO, and 19 00:01:01,960 --> 00:01:05,400 Speaker 1: it has a market cap around two point four billion dollars. 20 00:01:06,080 --> 00:01:09,440 Speaker 1: Drew is a transportation industry veteran with over sixteen years 21 00:01:09,440 --> 00:01:13,760 Speaker 1: of experience in brokerage operations. He joined rxo's predecessor company 22 00:01:13,880 --> 00:01:17,400 Speaker 1: XBO in May of twenty twelve to spearhead the growth 23 00:01:17,400 --> 00:01:20,960 Speaker 1: of the company's flagship truck brokerage hub in Charlotte, North Carolina. 24 00:01:21,360 --> 00:01:25,840 Speaker 1: Prior to XBO, Drew held leadership positions in sales operations, 25 00:01:26,120 --> 00:01:28,640 Speaker 1: customer and carrier relationship management with h. 26 00:01:28,760 --> 00:01:29,240 Speaker 2: Robinson. 27 00:01:29,640 --> 00:01:31,440 Speaker 1: Welcome back to the podcast, Drew. 28 00:01:32,200 --> 00:01:33,680 Speaker 3: Thanks for having me Lei. It's great to be with 29 00:01:33,680 --> 00:01:34,119 Speaker 3: you again. 30 00:01:34,720 --> 00:01:36,800 Speaker 1: And a little bird told me you're a pretty big 31 00:01:37,000 --> 00:01:42,280 Speaker 1: college football fan, and you know, someone thought that Virginia 32 00:01:42,319 --> 00:01:44,240 Speaker 1: Tech was going to beat South Carolina in a couple 33 00:01:44,280 --> 00:01:44,520 Speaker 1: of weeks. 34 00:01:44,560 --> 00:01:46,600 Speaker 2: I just wanted to hear your thoughts on that. 35 00:01:46,600 --> 00:01:49,160 Speaker 3: That is not what the odds makers say. Now, I've 36 00:01:49,240 --> 00:01:52,240 Speaker 3: learned as a South Carolina fan to, you know, not 37 00:01:52,400 --> 00:01:55,000 Speaker 3: get your expectations up too high and hope for the 38 00:01:55,080 --> 00:01:57,920 Speaker 3: hope they over delivered for us in the season. We 39 00:01:58,000 --> 00:02:01,360 Speaker 3: finished the season strong last year, and heading into this year, 40 00:02:01,360 --> 00:02:03,720 Speaker 3: there's a lot of talk about how good we could 41 00:02:03,720 --> 00:02:06,360 Speaker 3: be and I think right now, in the early polls 42 00:02:06,400 --> 00:02:09,720 Speaker 3: were a top fifteen team but the results come down 43 00:02:09,760 --> 00:02:12,320 Speaker 3: to the field. As Steve Spurry once said, talking seasons over, 44 00:02:12,320 --> 00:02:13,519 Speaker 3: it's time to play the game. 45 00:02:13,680 --> 00:02:15,679 Speaker 1: All right, And speaking of playing the game, let's talk 46 00:02:15,720 --> 00:02:19,639 Speaker 1: about RXO. Can you give people a little brief description 47 00:02:20,000 --> 00:02:22,200 Speaker 1: of a baby, a little history about the company, the 48 00:02:22,240 --> 00:02:23,000 Speaker 1: markets you serve. 49 00:02:23,480 --> 00:02:28,520 Speaker 3: Yeah, absolutely so. RXO did a spinout of XPO Logistics 50 00:02:28,560 --> 00:02:31,880 Speaker 3: back in November of twenty twenty two. And when you 51 00:02:31,919 --> 00:02:34,880 Speaker 3: look at what was spun out of XPO, there were 52 00:02:34,960 --> 00:02:38,079 Speaker 3: three lines of business. It was led by our tech 53 00:02:38,200 --> 00:02:42,160 Speaker 3: enabled truck brokerage business. Now we are the third largest 54 00:02:42,240 --> 00:02:45,480 Speaker 3: truck brokerage in North America and we've been one of 55 00:02:45,560 --> 00:02:48,080 Speaker 3: the fastest growing if you go back over the last 56 00:02:48,080 --> 00:02:52,760 Speaker 3: fifteen years, largely organically, but more recently with the acquisition 57 00:02:52,840 --> 00:02:57,600 Speaker 3: of Coyote from ups inorganically. The second line of business 58 00:02:57,639 --> 00:03:01,280 Speaker 3: is our Mannus transportation business. This is where we act 59 00:03:01,520 --> 00:03:04,360 Speaker 3: as an extension of a customer for a portion or 60 00:03:04,520 --> 00:03:08,360 Speaker 3: all of their transportation, and we become their transportation department. 61 00:03:08,840 --> 00:03:11,080 Speaker 3: And for us, this is a great business. We've got 62 00:03:11,600 --> 00:03:14,080 Speaker 3: roughly three and a half billion dollars of freight under 63 00:03:14,120 --> 00:03:17,079 Speaker 3: management that we help our customers make the best decision 64 00:03:17,120 --> 00:03:19,840 Speaker 3: possible out there. And then the last line of business 65 00:03:20,000 --> 00:03:22,600 Speaker 3: is our last mile business. So if you think of 66 00:03:22,639 --> 00:03:27,600 Speaker 3: big and bulky goods that are going into folks homes, washers, dryers, refrigerators, 67 00:03:28,080 --> 00:03:30,800 Speaker 3: things like that, we're the leader in that space. We 68 00:03:30,960 --> 00:03:33,760 Speaker 3: have been the leader in that space forever. But we're 69 00:03:33,760 --> 00:03:36,240 Speaker 3: still taking market share and what's been a down market. 70 00:03:36,320 --> 00:03:40,120 Speaker 3: Last quarter, our stops were up on seventeen percent on 71 00:03:40,160 --> 00:03:41,600 Speaker 3: a year of a year basis, so there's a lot 72 00:03:41,640 --> 00:03:42,800 Speaker 3: of momentum in that business. 73 00:03:43,160 --> 00:03:44,960 Speaker 1: In all three of those business are non asset. 74 00:03:45,720 --> 00:03:48,640 Speaker 3: All three of those businesses are largely non asset now. 75 00:03:49,600 --> 00:03:52,000 Speaker 3: In the brokerage, we did build out more than a 76 00:03:52,040 --> 00:03:55,040 Speaker 3: decade ago, where we started adding trailers into our network 77 00:03:55,120 --> 00:03:57,280 Speaker 3: is something that allows us to look and feel like 78 00:03:57,320 --> 00:04:00,040 Speaker 3: an asset based care. So we have more capacity. We 79 00:04:00,120 --> 00:04:03,160 Speaker 3: got access to over one hundred and twenty thousand carriers, 80 00:04:03,160 --> 00:04:05,920 Speaker 3: and so if a customer's got those last minute shipments 81 00:04:05,960 --> 00:04:07,920 Speaker 3: but they wanted to be able to preload a trailer 82 00:04:08,000 --> 00:04:11,400 Speaker 3: or unloaded trailer at their leisure, we can flex capacity 83 00:04:11,600 --> 00:04:14,360 Speaker 3: up and down for a customer in that situation. So 84 00:04:14,400 --> 00:04:18,160 Speaker 3: they are least trailers largely, but we do do that. 85 00:04:18,920 --> 00:04:19,240 Speaker 2: Yeah. 86 00:04:19,279 --> 00:04:22,280 Speaker 1: So, you know you mentioned the Coyote acquisition. Obviously that 87 00:04:22,520 --> 00:04:25,640 Speaker 1: was a pretty big deal, not only for you, but 88 00:04:25,680 --> 00:04:29,679 Speaker 1: for the industry. You know, some serious consolidation going on there. 89 00:04:30,440 --> 00:04:32,680 Speaker 1: Can you talk about, you know, the integration of the 90 00:04:32,680 --> 00:04:35,440 Speaker 1: two companies, how's it going, When do you plan on 91 00:04:35,560 --> 00:04:38,800 Speaker 1: fully being fully integrated if you're not already, and kind 92 00:04:38,800 --> 00:04:40,960 Speaker 1: of what kind of synergies do you expect to extract 93 00:04:40,960 --> 00:04:41,600 Speaker 1: from that deal. 94 00:04:42,360 --> 00:04:45,080 Speaker 3: Yeah, So if you look at the acquisition of Coyote, 95 00:04:45,279 --> 00:04:47,159 Speaker 3: I think, and Lee you may know this better than me, 96 00:04:47,680 --> 00:04:51,320 Speaker 3: that it is the largest asset light acquisition that's ever 97 00:04:51,400 --> 00:04:54,520 Speaker 3: transpired in the space. And there's been some big acquisitions 98 00:04:54,520 --> 00:04:57,440 Speaker 3: if you go back, you know, a couple decades ago, 99 00:04:57,839 --> 00:05:02,680 Speaker 3: H Robinson acquired American caller Sia. Robinson's acquired Freight Quote, 100 00:05:03,120 --> 00:05:07,960 Speaker 3: Echo acquired Command you know, UPS acquired Coyote at one point. 101 00:05:08,120 --> 00:05:10,640 Speaker 3: But when you look at an asset light company acquiring 102 00:05:10,640 --> 00:05:13,160 Speaker 3: an asset light company, I think this is the largest 103 00:05:13,160 --> 00:05:16,640 Speaker 3: one that has ever taken place. And to measure success, 104 00:05:17,000 --> 00:05:20,280 Speaker 3: we really start with three things. This is an asset 105 00:05:20,360 --> 00:05:22,839 Speaker 3: light business, so it starts with the people and making 106 00:05:22,880 --> 00:05:24,839 Speaker 3: sure that you're holding on to the people that the 107 00:05:24,839 --> 00:05:27,520 Speaker 3: people are excited about where they're coming to work, and 108 00:05:28,040 --> 00:05:30,520 Speaker 3: for us, there was a lot of excitement about Coyote 109 00:05:30,520 --> 00:05:33,360 Speaker 3: of coming to a place that Brokers was the centerpiece 110 00:05:33,400 --> 00:05:35,599 Speaker 3: of what was going on there, and they felt like 111 00:05:35,600 --> 00:05:37,279 Speaker 3: they were getting back to their roots, and not just 112 00:05:37,279 --> 00:05:39,600 Speaker 3: getting back to the roots, they were coming to an 113 00:05:39,680 --> 00:05:42,000 Speaker 3: organization where they were getting to be the star of 114 00:05:42,040 --> 00:05:45,160 Speaker 3: the show. There was so much of ups where they 115 00:05:45,160 --> 00:05:48,960 Speaker 3: were a part of a big organization and there wasn't 116 00:05:48,960 --> 00:05:51,599 Speaker 3: the biggest piece in the asset light piece. So for us, 117 00:05:51,800 --> 00:05:53,760 Speaker 3: this is what we specialize in. This is what we 118 00:05:53,839 --> 00:05:56,279 Speaker 3: focus in, and there was a lot of appreciation for 119 00:05:56,360 --> 00:05:59,080 Speaker 3: the people of saying we're going to be this in 120 00:05:59,160 --> 00:06:02,719 Speaker 3: the limelight for one of the largest asset light players 121 00:06:02,960 --> 00:06:06,320 Speaker 3: in the industry. The second piece is on customers. Whenever 122 00:06:06,400 --> 00:06:08,160 Speaker 3: you do an acquisition, you want to hold on to 123 00:06:08,240 --> 00:06:10,159 Speaker 3: the customers and one of the stats that we threw 124 00:06:10,200 --> 00:06:13,120 Speaker 3: out in the earnings call recently was we've held on 125 00:06:13,720 --> 00:06:16,520 Speaker 3: between the two companies ninety nine of the top one 126 00:06:16,600 --> 00:06:19,560 Speaker 3: hundred customers that we had, so the customer retention rate 127 00:06:19,800 --> 00:06:23,440 Speaker 3: has been extremely high. The feedback that we're having from 128 00:06:23,440 --> 00:06:26,960 Speaker 3: customers has been positive. As we were getting onto this podcast, 129 00:06:27,320 --> 00:06:29,200 Speaker 3: I was texting back and forth with one of our 130 00:06:29,279 --> 00:06:32,680 Speaker 3: large customers who's talking about giving us more opportunities now 131 00:06:32,680 --> 00:06:35,760 Speaker 3: that they've started to see the power of RXO behind 132 00:06:35,760 --> 00:06:38,560 Speaker 3: what they had been delivering. And then the last piece 133 00:06:38,600 --> 00:06:41,719 Speaker 3: is on the technology side. Technology and powers and enable 134 00:06:41,880 --> 00:06:44,599 Speaker 3: so much of what happens here. So for us, we 135 00:06:44,640 --> 00:06:46,520 Speaker 3: had to pick a platform to be able to do it. 136 00:06:47,160 --> 00:06:49,800 Speaker 3: Wanted to make sure that we had something that our 137 00:06:49,920 --> 00:06:52,919 Speaker 3: reps could work on and be more efficient than what 138 00:06:52,960 --> 00:06:56,520 Speaker 3: they were previously, and so we went with Freight Optimizer, 139 00:06:56,520 --> 00:06:59,960 Speaker 3: which was a legacy ROXO platform. But what we're doing 140 00:07:00,120 --> 00:07:02,480 Speaker 3: is we're taking the best tools because Coyote has some 141 00:07:02,560 --> 00:07:05,120 Speaker 3: great tools on the carrier side for the carriers I 142 00:07:05,240 --> 00:07:07,840 Speaker 3: work with as well as the carrier reps, and so 143 00:07:07,880 --> 00:07:10,760 Speaker 3: we're bringing those tools and putting them into Freight Optimizer. 144 00:07:11,640 --> 00:07:15,480 Speaker 3: The integration on the carrier side is already complete. Now 145 00:07:15,520 --> 00:07:19,200 Speaker 3: we're continuing to add tools in. Overall on the technology side, 146 00:07:19,200 --> 00:07:21,600 Speaker 3: we expect to be largely done by the end of 147 00:07:21,640 --> 00:07:24,920 Speaker 3: the third quarter. So for the largest acquisition that's ever 148 00:07:25,000 --> 00:07:28,480 Speaker 3: happened in North America the asset light sector, we're going 149 00:07:28,560 --> 00:07:31,040 Speaker 3: to be largely done in just over a year. When 150 00:07:31,040 --> 00:07:33,920 Speaker 3: you think about that timeline to be able to do that, 151 00:07:34,320 --> 00:07:36,600 Speaker 3: I think it's unheard of of what the team has 152 00:07:36,640 --> 00:07:39,440 Speaker 3: worked together to accomplish. 153 00:07:39,760 --> 00:07:43,240 Speaker 1: And kind of obviously there's going to be some you know, 154 00:07:43,440 --> 00:07:49,040 Speaker 1: crossover or overlap i should say, of customer coverage and people. So, 155 00:07:49,520 --> 00:07:52,160 Speaker 1: you know, how are you managing through that. You know, 156 00:07:52,200 --> 00:07:56,560 Speaker 1: obviously you're not going score churchs and mass firings, but 157 00:07:56,600 --> 00:07:58,960 Speaker 1: you know obviously you are going to try to get 158 00:07:58,960 --> 00:08:01,000 Speaker 1: some synergies out of it. So can you talk a 159 00:08:01,040 --> 00:08:02,960 Speaker 1: bit about, like, you know, how are you going about that, 160 00:08:03,120 --> 00:08:06,360 Speaker 1: managing the people and integrating the two cultures, because you know, 161 00:08:06,400 --> 00:08:09,880 Speaker 1: cultures are very important in the brokerage industry. 162 00:08:10,520 --> 00:08:12,560 Speaker 3: That's one of the beautiful things is that the cultures 163 00:08:12,600 --> 00:08:15,640 Speaker 3: were aligned. We were both a customer centric organization where 164 00:08:15,680 --> 00:08:19,800 Speaker 3: we focused largely on the customers and organic growth. Coyote, 165 00:08:19,840 --> 00:08:22,160 Speaker 3: if you go back, you know, to the early years 166 00:08:22,200 --> 00:08:24,440 Speaker 3: of two thousand and six twenty fifteen, is one of 167 00:08:24,480 --> 00:08:27,320 Speaker 3: the hottest names in transportation as far as how well 168 00:08:28,320 --> 00:08:30,840 Speaker 3: you go from you know, the early two thousand and 169 00:08:31,560 --> 00:08:34,480 Speaker 3: teens call it to twenty twenty one. RXO was the 170 00:08:34,520 --> 00:08:38,599 Speaker 3: fastest growing brokerage. I think the entrepreneurship, the focus on customers, 171 00:08:38,840 --> 00:08:42,720 Speaker 3: we were very much aligned as an organization and one 172 00:08:42,720 --> 00:08:44,640 Speaker 3: of the one of the great things on the acquisition 173 00:08:44,720 --> 00:08:46,880 Speaker 3: is as we did due diligence, we realized that we 174 00:08:46,960 --> 00:08:49,560 Speaker 3: didn't have a lot of customer crossover. There were some, 175 00:08:49,920 --> 00:08:51,520 Speaker 3: but there was not as much as what you would 176 00:08:51,520 --> 00:08:55,000 Speaker 3: have anticipated coming into it. And that was because Coyote 177 00:08:55,040 --> 00:08:58,679 Speaker 3: built the business off of food and beverage, and like 178 00:08:58,800 --> 00:09:01,400 Speaker 3: a lot of other brokerages out they had a heavy 179 00:09:01,440 --> 00:09:06,199 Speaker 3: food and beverage presence. RXO was built off of retail 180 00:09:06,240 --> 00:09:10,680 Speaker 3: and e commerce, industrial, manufacturing, automotive, So it's different verticals 181 00:09:10,720 --> 00:09:13,760 Speaker 3: that we were operating in. And so what we're able 182 00:09:13,760 --> 00:09:16,600 Speaker 3: to do is leverage our capacity, which also didn't have 183 00:09:16,640 --> 00:09:19,199 Speaker 3: a lot of crossover. And in it where Coyote is 184 00:09:19,200 --> 00:09:21,920 Speaker 3: working with larger carriers and private fleets and RXO was 185 00:09:21,960 --> 00:09:25,040 Speaker 3: working with smaller carriers, we were able to leverage our 186 00:09:25,040 --> 00:09:28,040 Speaker 3: capacity to allow them to have access to more freight, 187 00:09:28,360 --> 00:09:31,640 Speaker 3: allow our reps to have access to more freight. The 188 00:09:31,679 --> 00:09:34,120 Speaker 3: second part of your question on the synergies is we 189 00:09:34,200 --> 00:09:39,240 Speaker 3: expect to achieve over seventy million dollars of cash synergies 190 00:09:39,280 --> 00:09:41,080 Speaker 3: from the deal, and about sixty of that will be 191 00:09:41,240 --> 00:09:43,960 Speaker 3: in op X. We go through and we look at 192 00:09:43,960 --> 00:09:46,640 Speaker 3: things where we've got duplicate vendor spin where we're able 193 00:09:46,679 --> 00:09:49,360 Speaker 3: to leverage our scale on the vendors to be able 194 00:09:49,440 --> 00:09:53,840 Speaker 3: to receive better pricing. And for people, we always want 195 00:09:53,880 --> 00:09:55,520 Speaker 3: to make sure that we've got the right person and 196 00:09:55,600 --> 00:09:59,000 Speaker 3: the right role. And if there's opportunities you've got a 197 00:09:59,040 --> 00:10:01,559 Speaker 3: duplicate role, as there opportunities where you can have hot 198 00:10:01,640 --> 00:10:04,800 Speaker 3: talent folks go into other areas of the organization to 199 00:10:04,840 --> 00:10:06,080 Speaker 3: help us achieve our growth. 200 00:10:07,440 --> 00:10:08,240 Speaker 2: Gotcha. 201 00:10:08,440 --> 00:10:12,559 Speaker 1: And you know, moving away from the acquisition, looking forward 202 00:10:12,640 --> 00:10:17,400 Speaker 1: into the freight markets as best as we can given 203 00:10:17,440 --> 00:10:21,920 Speaker 1: the fact that the uncertainty that's out there. Can you 204 00:10:21,960 --> 00:10:24,679 Speaker 1: talk about the state of the freight brokerage industry and 205 00:10:25,160 --> 00:10:29,280 Speaker 1: an extension of that, the state of the trucking industry. 206 00:10:29,600 --> 00:10:32,160 Speaker 3: We're still in a very soft truck market and it's 207 00:10:32,160 --> 00:10:35,080 Speaker 3: been down for three years. I think the narrative that 208 00:10:35,120 --> 00:10:38,000 Speaker 3: has flipped on our end is a year ago we 209 00:10:38,000 --> 00:10:40,680 Speaker 3: were telling you that this was a capacity problem. There's 210 00:10:40,679 --> 00:10:43,960 Speaker 3: too much capacity in the market. Capacity needed to be 211 00:10:44,000 --> 00:10:47,040 Speaker 3: able to exit. Now If you look at the data, 212 00:10:47,080 --> 00:10:48,760 Speaker 3: the data is telling us that it is more of 213 00:10:48,800 --> 00:10:52,240 Speaker 3: a demand problem. Demand is below levels of where it 214 00:10:52,400 --> 00:10:56,160 Speaker 3: was in twenty nineteen. If you look at areas like automotive, 215 00:10:56,520 --> 00:11:01,199 Speaker 3: home building, those areas have been hurt. They largely impact 216 00:11:01,600 --> 00:11:05,720 Speaker 3: what is going on in the transportation industry. With that said, 217 00:11:06,000 --> 00:11:08,040 Speaker 3: we do think we're coming off of the bottom. It's 218 00:11:08,040 --> 00:11:11,119 Speaker 3: just been a slow walk off the bottom. Tender rejections 219 00:11:11,120 --> 00:11:13,480 Speaker 3: are up on a year every year basis. Loaded truck 220 00:11:13,559 --> 00:11:17,440 Speaker 3: ratio is up on a year every year basis. But 221 00:11:17,480 --> 00:11:20,760 Speaker 3: it's not to that point where there is imbalance in 222 00:11:20,800 --> 00:11:23,679 Speaker 3: the market and you start seeing spot loads and projects 223 00:11:23,720 --> 00:11:27,720 Speaker 3: and mini bids starting to happen at that point yet. 224 00:11:28,320 --> 00:11:29,960 Speaker 1: And what are your customers telling you? What are the 225 00:11:29,960 --> 00:11:33,360 Speaker 1: shippers telling you about peak season? Are they preparing you 226 00:11:33,400 --> 00:11:36,199 Speaker 1: for more business? Are they preparing you for less business? 227 00:11:36,480 --> 00:11:37,200 Speaker 1: What are they say? 228 00:11:37,559 --> 00:11:40,160 Speaker 3: It's still too early to call for peak season For us, 229 00:11:40,360 --> 00:11:42,880 Speaker 3: We're working with all of our customers closely, and we're 230 00:11:42,880 --> 00:11:46,280 Speaker 3: hearing different things from different customers. Some of them are 231 00:11:46,320 --> 00:11:48,400 Speaker 3: telling us that they expect a pretty good peak season. 232 00:11:48,480 --> 00:11:51,200 Speaker 3: Others are telling us that they expect a peak season 233 00:11:51,280 --> 00:11:53,679 Speaker 3: more in line to what happened last year, and if 234 00:11:53,679 --> 00:11:55,840 Speaker 3: you go over the last several years, it's been a 235 00:11:55,960 --> 00:11:58,600 Speaker 3: muted peak season. So if I was forced to make 236 00:11:58,640 --> 00:12:00,560 Speaker 3: a call right now based off of what has happened 237 00:12:00,559 --> 00:12:02,440 Speaker 3: over the last several years in base off where we 238 00:12:02,480 --> 00:12:05,520 Speaker 3: are from a capacity standpoint, I would say that we 239 00:12:05,559 --> 00:12:08,720 Speaker 3: would expect another muted peak season at this point. But 240 00:12:08,800 --> 00:12:11,959 Speaker 3: we're prepared and we're staff for growth. If there's opportunities 241 00:12:12,480 --> 00:12:15,400 Speaker 3: or if you know, the FED cuts rates and that 242 00:12:15,600 --> 00:12:19,360 Speaker 3: somehow jobs consumer confidence on retail and e commerce, we're 243 00:12:19,360 --> 00:12:22,920 Speaker 3: in the best position to be able to be benefactors 244 00:12:22,920 --> 00:12:23,079 Speaker 3: of that. 245 00:12:23,600 --> 00:12:26,760 Speaker 1: Yeah, you know you mentioned you know you're prepared for growth. 246 00:12:26,920 --> 00:12:29,560 Speaker 1: Can you talk about you know, the technology that you 247 00:12:29,679 --> 00:12:32,880 Speaker 1: have and you know the benefit that gives you in 248 00:12:32,960 --> 00:12:35,960 Speaker 1: a scale that that gives you without adding heads ie 249 00:12:36,160 --> 00:12:39,559 Speaker 1: you can you know you can take on more value 250 00:12:39,679 --> 00:12:40,400 Speaker 1: with less people. 251 00:12:41,160 --> 00:12:46,440 Speaker 3: Yeah. So, technology and building technology for our employees, for 252 00:12:46,520 --> 00:12:49,520 Speaker 3: our customers as well as for the carriers that are 253 00:12:49,559 --> 00:12:52,560 Speaker 3: within our network has been our priority since day one, 254 00:12:52,640 --> 00:12:56,160 Speaker 3: and we really focus on building the best technology in 255 00:12:56,200 --> 00:12:58,560 Speaker 3: two ways. We hired a lot of people who were 256 00:12:58,559 --> 00:13:01,240 Speaker 3: some of the best technologists in the world, not necessarily 257 00:13:01,720 --> 00:13:04,840 Speaker 3: the best transportation technologists, but I'm talking about people who 258 00:13:04,840 --> 00:13:09,320 Speaker 3: have come from Amazon, Microsoft, Google, these type companies that 259 00:13:09,400 --> 00:13:12,680 Speaker 3: are technology is in their DNA, but we partnered them 260 00:13:13,040 --> 00:13:16,199 Speaker 3: with great operators and we were building our product from 261 00:13:16,240 --> 00:13:19,360 Speaker 3: the ground up, and Freight Optimizer has been an evolving 262 00:13:19,480 --> 00:13:23,120 Speaker 3: product for our broker reps for the last decade of 263 00:13:23,200 --> 00:13:25,120 Speaker 3: what we've been able to see. And so if you 264 00:13:25,160 --> 00:13:27,880 Speaker 3: look just at a simple metric on productivity, which is 265 00:13:27,880 --> 00:13:30,800 Speaker 3: what you're asking, you know, when you look at our productivity, 266 00:13:30,920 --> 00:13:33,079 Speaker 3: it was up eighteen percent on a year of a 267 00:13:33,120 --> 00:13:35,120 Speaker 3: year basis. If you look over the last two years, 268 00:13:35,120 --> 00:13:38,400 Speaker 3: it was up forty five percent. So for us, you know, 269 00:13:39,040 --> 00:13:41,960 Speaker 3: we're going to continue to invest in tools that reduce 270 00:13:42,000 --> 00:13:44,880 Speaker 3: the number of clicks that our employees have, reduce the 271 00:13:44,960 --> 00:13:47,000 Speaker 3: number of key strokes, because what we really want them 272 00:13:47,040 --> 00:13:49,800 Speaker 3: doing is focusing on the customers and the carriers that 273 00:13:49,800 --> 00:13:54,000 Speaker 3: they're working with that they can spend their time building relationships, 274 00:13:54,040 --> 00:13:58,800 Speaker 3: building solutions, creating tools for our customers to be able 275 00:13:58,840 --> 00:14:01,840 Speaker 3: to use that drives value in their transportation network. So 276 00:14:02,320 --> 00:14:05,800 Speaker 3: you know, we're laser focused on being efficient with the 277 00:14:05,840 --> 00:14:08,199 Speaker 3: technology that we put out, but making sure that we're 278 00:14:08,240 --> 00:14:09,920 Speaker 3: having the results, and I think when you look at 279 00:14:09,920 --> 00:14:12,560 Speaker 3: the productivity, we will not have to hire at the 280 00:14:12,559 --> 00:14:15,079 Speaker 3: same rate of what we did five years ago or 281 00:14:15,120 --> 00:14:17,680 Speaker 3: even a year ago because of the technology tools that 282 00:14:17,720 --> 00:14:18,440 Speaker 3: we put out there. 283 00:14:19,000 --> 00:14:21,800 Speaker 1: And when talking technology, actually we'd be remiss if we 284 00:14:21,840 --> 00:14:24,160 Speaker 1: didn't mention AI. And if you start talking about AI, 285 00:14:24,160 --> 00:14:27,200 Speaker 1: you might get another turn on your multiple fear stock. 286 00:14:27,600 --> 00:14:30,760 Speaker 1: So could you talk about you know, when you talk 287 00:14:30,760 --> 00:14:33,400 Speaker 1: about technology or are you talking about machine learning and AI? 288 00:14:33,560 --> 00:14:33,720 Speaker 2: Is that? 289 00:14:33,880 --> 00:14:35,720 Speaker 1: Is that what's driving the productivity gains? 290 00:14:36,600 --> 00:14:39,120 Speaker 3: And machine learning and AI is not new, right, I 291 00:14:39,120 --> 00:14:41,520 Speaker 3: think right now to your point, it is a buzzword. 292 00:14:41,600 --> 00:14:45,120 Speaker 3: And you know, companies in every industry are putting out 293 00:14:45,160 --> 00:14:48,720 Speaker 3: press releases on their new AI tools and a lot 294 00:14:48,800 --> 00:14:52,160 Speaker 3: of what they're talking about is just automation. And you know, 295 00:14:52,400 --> 00:14:54,120 Speaker 3: a lot of us been talking about I wouldn't even 296 00:14:54,120 --> 00:14:57,240 Speaker 3: consider new if you look at machine learning. Our pricing 297 00:14:57,280 --> 00:14:59,360 Speaker 3: algorithms that if you go back and you look over 298 00:14:59,360 --> 00:15:01,280 Speaker 3: the last decad that have allowed us to have some 299 00:15:01,360 --> 00:15:04,640 Speaker 3: of the strongest margins in the industry have been built 300 00:15:04,720 --> 00:15:07,200 Speaker 3: off of machine learning. And so that's where you go 301 00:15:07,280 --> 00:15:08,800 Speaker 3: to what I was talking about earlier and you have 302 00:15:08,880 --> 00:15:12,840 Speaker 3: this technologist who understands pricing algorithms, who's done it in 303 00:15:13,000 --> 00:15:16,280 Speaker 3: hotel industries, who's done it in other industries, and is 304 00:15:16,360 --> 00:15:19,000 Speaker 3: able to partner them with an operator, and you can 305 00:15:19,080 --> 00:15:21,200 Speaker 3: move the pricing dial on the customer side and on 306 00:15:21,240 --> 00:15:23,960 Speaker 3: the carrier side so that you're giving your customers and 307 00:15:24,000 --> 00:15:27,200 Speaker 3: your carriers fair, real time prices based off of what's 308 00:15:27,240 --> 00:15:30,600 Speaker 3: happening within the market. And if you're doing it right 309 00:15:31,480 --> 00:15:35,280 Speaker 3: with your data, your pricing algorithm gets smarter and smarter 310 00:15:35,400 --> 00:15:38,360 Speaker 3: with every load that goes into it. And when you 311 00:15:38,400 --> 00:15:42,320 Speaker 3: look at our freight brokerage group, third largest freight brokerage 312 00:15:42,320 --> 00:15:44,440 Speaker 3: out there are Manus trands. You know, we're the fifth 313 00:15:44,480 --> 00:15:46,760 Speaker 3: or sixth largest provider out there. We've got access to 314 00:15:46,880 --> 00:15:50,080 Speaker 3: a lot of data that goes into our pricing algorithms. 315 00:15:50,200 --> 00:15:53,800 Speaker 3: Is what allows it to be so strong. AI is 316 00:15:53,840 --> 00:15:57,080 Speaker 3: something that we will continue to invest in. And the 317 00:15:57,120 --> 00:16:00,440 Speaker 3: way that we're thinking about AI right now is anything 318 00:16:00,520 --> 00:16:04,480 Speaker 3: that is employee facing or customer facing or working with 319 00:16:04,600 --> 00:16:06,840 Speaker 3: our carrier network. We really want it to be homegrown. 320 00:16:06,960 --> 00:16:09,600 Speaker 3: As far as what we're building out as specialized tools. 321 00:16:09,640 --> 00:16:14,240 Speaker 3: It's unique to us, you know, on the back office side. 322 00:16:14,280 --> 00:16:16,640 Speaker 3: There may be some things that allow us to increase 323 00:16:16,680 --> 00:16:20,400 Speaker 3: productivity that we can use off the shelf programs, but 324 00:16:21,000 --> 00:16:24,560 Speaker 3: anything that is customer carrier employee facing, we want to 325 00:16:24,600 --> 00:16:27,120 Speaker 3: be to be unique to RXO because it's part of 326 00:16:27,160 --> 00:16:28,000 Speaker 3: our secret sauce. 327 00:16:28,600 --> 00:16:30,320 Speaker 1: Yeah, a lot of brokers now we're talking about like 328 00:16:30,440 --> 00:16:34,800 Speaker 1: frictionless transactions or totally automated transactions. Do you have any 329 00:16:34,840 --> 00:16:38,000 Speaker 1: goals of like, you know, what percentage of your transactions 330 00:16:38,000 --> 00:16:41,640 Speaker 1: do you think that can be totally automated unless there's 331 00:16:41,680 --> 00:16:45,800 Speaker 1: an exempt exception that needs to a human needs to 332 00:16:45,800 --> 00:16:46,200 Speaker 1: deal with. 333 00:16:46,720 --> 00:16:49,520 Speaker 3: Yeah. Pre acquisition of Coyote, we used to put out 334 00:16:49,520 --> 00:16:51,720 Speaker 3: a stat and it was like ninety seven ninety eight 335 00:16:51,760 --> 00:16:55,800 Speaker 3: percent of our orders are either created or covered digitally, 336 00:16:55,840 --> 00:16:59,480 Speaker 3: meaning there's no human interaction within those orders. Now with 337 00:16:59,560 --> 00:17:02,520 Speaker 3: that set, uh, we've got customers that you do not 338 00:17:02,640 --> 00:17:04,639 Speaker 3: that you want to make sure that there is human 339 00:17:04,680 --> 00:17:07,760 Speaker 3: interaction within those orders. Right now, you're thinking about high 340 00:17:07,800 --> 00:17:11,160 Speaker 3: cargo value freight, when you're thinking about electronics, when you're 341 00:17:11,160 --> 00:17:14,280 Speaker 3: thinking about automotive, you better believe that they want you 342 00:17:14,400 --> 00:17:17,240 Speaker 3: talking to a driver. They want to know that you've 343 00:17:17,359 --> 00:17:19,680 Speaker 3: you've physically talked to somebody and so I think it's 344 00:17:20,200 --> 00:17:22,240 Speaker 3: instead of putting a metric of this is where we 345 00:17:22,320 --> 00:17:25,239 Speaker 3: hope to go for created and covered longer term. It 346 00:17:25,240 --> 00:17:28,080 Speaker 3: really depends on what the customer makeup is and what's 347 00:17:28,240 --> 00:17:29,240 Speaker 3: required off of that. 348 00:17:30,359 --> 00:17:33,760 Speaker 1: Yeah, you know, you're talking about these high value shipments 349 00:17:33,840 --> 00:17:37,720 Speaker 1: and shipments that need the high amount of touch. I 350 00:17:37,720 --> 00:17:40,040 Speaker 1: guess this is a good time to pivot to fraud 351 00:17:40,560 --> 00:17:42,800 Speaker 1: because obviously, if it's something's worth, a lot of people 352 00:17:42,880 --> 00:17:45,160 Speaker 1: don't want to steal it. H And fraud has been 353 00:17:45,280 --> 00:17:48,520 Speaker 1: a growing industry, a growing problem within the trucking market. 354 00:17:48,640 --> 00:17:53,600 Speaker 1: How are you mitigating those risks? Are you using your 355 00:17:53,640 --> 00:17:57,280 Speaker 1: own proprietary technology to use third parties? How are you 356 00:17:57,320 --> 00:18:01,200 Speaker 1: going about it? You know, to ensure that shipments get 357 00:18:01,200 --> 00:18:02,320 Speaker 1: to where they need to go. 358 00:18:03,000 --> 00:18:06,399 Speaker 3: Fraud's been a huge problem in our industry for the 359 00:18:06,480 --> 00:18:10,040 Speaker 3: last several years. And when you look at our technology, 360 00:18:10,080 --> 00:18:13,399 Speaker 3: our technology screens the carriers that we're working with. It 361 00:18:13,440 --> 00:18:15,480 Speaker 3: tells us how often we've used them, when we've last 362 00:18:15,600 --> 00:18:18,040 Speaker 3: used them? Is this somebody that we're familiar with? Is 363 00:18:18,080 --> 00:18:21,000 Speaker 3: their insurance up to date? And our technology is smart 364 00:18:21,080 --> 00:18:23,199 Speaker 3: enough that it does it multiple times per day, and so 365 00:18:23,280 --> 00:18:26,200 Speaker 3: it's something that is always fresh of what we're doing. 366 00:18:26,440 --> 00:18:29,600 Speaker 3: It also gives us visibility throughout the shipment with the 367 00:18:29,640 --> 00:18:33,040 Speaker 3: carriers that we're partnering with. And then the second thing 368 00:18:33,160 --> 00:18:37,440 Speaker 3: goes down to process. We talked about high value cargo products. 369 00:18:37,640 --> 00:18:40,440 Speaker 3: We talked about automotive that is just in time shipments 370 00:18:40,520 --> 00:18:42,240 Speaker 3: that you can shut down a plant if you're not 371 00:18:42,280 --> 00:18:44,960 Speaker 3: getting it there on time. When you look at the 372 00:18:45,000 --> 00:18:48,400 Speaker 3: best in class processes that we've built for more than 373 00:18:48,400 --> 00:18:50,840 Speaker 3: a decade for these type customers, you're able to take 374 00:18:51,200 --> 00:18:53,960 Speaker 3: those processes and use it on all of your customers, 375 00:18:54,240 --> 00:18:57,000 Speaker 3: which help you prevent fraud and theft. 376 00:18:58,200 --> 00:18:58,560 Speaker 2: Got you. 377 00:19:00,119 --> 00:19:02,760 Speaker 1: Not to look backwards because we were talking about forward, 378 00:19:02,800 --> 00:19:05,040 Speaker 1: but you know, you guys just announce your your two 379 00:19:05,119 --> 00:19:09,960 Speaker 1: Q earnings kind of we're the major takeaways from that. 380 00:19:10,720 --> 00:19:14,720 Speaker 1: I'm assuming a lot of it circled revolved around the integration. 381 00:19:14,880 --> 00:19:17,520 Speaker 1: But from a performance standpoint, you know, how do you 382 00:19:17,520 --> 00:19:19,359 Speaker 1: think you did relative to your peers. 383 00:19:19,720 --> 00:19:22,080 Speaker 3: Yeah, so if you look at at market share, we 384 00:19:22,160 --> 00:19:24,439 Speaker 3: grew volume on a year of a year basis and 385 00:19:24,480 --> 00:19:29,200 Speaker 3: a market this down that was driven by our less 386 00:19:29,200 --> 00:19:31,919 Speaker 3: than truckload performance, which grew forty five percent on a 387 00:19:32,000 --> 00:19:35,000 Speaker 3: year over year basis, and the reason that we're winning 388 00:19:35,080 --> 00:19:38,200 Speaker 3: in less than truckload is because of our relationships and 389 00:19:38,240 --> 00:19:41,439 Speaker 3: our history with these customers on the truckload side that 390 00:19:41,520 --> 00:19:44,479 Speaker 3: are saying, we recognize the value you provided to us. 391 00:19:44,920 --> 00:19:46,919 Speaker 3: We want to be able to use the platform that 392 00:19:46,920 --> 00:19:51,960 Speaker 3: we're familiar with to help us prevent planes, damages, lost 393 00:19:51,960 --> 00:19:55,240 Speaker 3: shipments because LTL, if you think about it, for large shippers, 394 00:19:55,520 --> 00:19:58,520 Speaker 3: it's a small piece of their overall transportation spend, but 395 00:19:58,560 --> 00:20:00,479 Speaker 3: it's a big piece of their time. So if they 396 00:20:00,480 --> 00:20:02,960 Speaker 3: can let us come in and manage a piece of 397 00:20:03,040 --> 00:20:05,960 Speaker 3: it or all of it as an outsource, our brokers 398 00:20:05,960 --> 00:20:08,720 Speaker 3: team is winning there and they're winning big. The second 399 00:20:08,800 --> 00:20:11,600 Speaker 3: highlight is when you look at last mile. I talked 400 00:20:11,600 --> 00:20:15,080 Speaker 3: about the last mile industry being down right now. Our 401 00:20:15,119 --> 00:20:17,960 Speaker 3: stops were up seventeen percent on a year of a 402 00:20:18,040 --> 00:20:21,280 Speaker 3: year basis. When you look at where we finished from 403 00:20:21,280 --> 00:20:23,639 Speaker 3: an ebit of range, we finished at thirty eight million dollars, 404 00:20:23,640 --> 00:20:25,399 Speaker 3: which was at the high end of the range that 405 00:20:25,440 --> 00:20:28,520 Speaker 3: we provided to the analysts on the prior quarter of 406 00:20:28,560 --> 00:20:33,040 Speaker 3: thirty to forty million dollars. And we talked earlier about 407 00:20:33,040 --> 00:20:36,879 Speaker 3: the technology piece of the integration. We're largely complete, and 408 00:20:36,920 --> 00:20:38,439 Speaker 3: as we get to the third quarter, we think that 409 00:20:38,440 --> 00:20:40,760 Speaker 3: we will be right there at the finish line of 410 00:20:41,400 --> 00:20:45,320 Speaker 3: completing the technology and integration. And then the last highlight 411 00:20:45,480 --> 00:20:47,560 Speaker 3: is our free cash flow was sitting at fifty eight 412 00:20:47,600 --> 00:20:50,040 Speaker 3: percent for us. So when you look at that, that's 413 00:20:50,320 --> 00:20:53,359 Speaker 3: why investment. That's what's attractive about the brokerage model is 414 00:20:53,440 --> 00:20:55,720 Speaker 3: even in a down cycle, it can still generate high 415 00:20:55,720 --> 00:20:56,800 Speaker 3: free cash flow dollars. 416 00:20:58,000 --> 00:21:00,359 Speaker 1: You know, Just not to be all over the but 417 00:21:00,400 --> 00:21:03,200 Speaker 1: I want to go back to the acquisition of Coyote. 418 00:21:03,400 --> 00:21:05,440 Speaker 1: You know, going into it, obviously this was a big 419 00:21:05,520 --> 00:21:09,240 Speaker 1: undertaking for you and your team and also for the 420 00:21:09,280 --> 00:21:12,120 Speaker 1: Coyote team to fully integrate it. Kind of what were 421 00:21:12,119 --> 00:21:16,440 Speaker 1: the surprises during the integration process, you know, I guess 422 00:21:16,480 --> 00:21:19,919 Speaker 1: on the positive side, and what kind of challenges did 423 00:21:20,000 --> 00:21:22,280 Speaker 1: you did you face that we're that were greater than 424 00:21:22,320 --> 00:21:24,240 Speaker 1: maybe you initially thought going into the deal. 425 00:21:24,760 --> 00:21:27,879 Speaker 3: Well, I would start with the positives on the people, 426 00:21:28,640 --> 00:21:31,600 Speaker 3: and any time you're doing due diligence, there's only so 427 00:21:31,680 --> 00:21:34,639 Speaker 3: deep that you can go uh in a process of 428 00:21:34,640 --> 00:21:37,159 Speaker 3: talking to people, and so the people that we have 429 00:21:37,240 --> 00:21:40,720 Speaker 3: gotten to know, we've upgraded our leadership team with the 430 00:21:40,760 --> 00:21:43,040 Speaker 3: team that came over, and that doesn't mean that we 431 00:21:43,119 --> 00:21:45,399 Speaker 3: had a bad leadership team. It means taking the best 432 00:21:45,400 --> 00:21:48,320 Speaker 3: of both worlds and we're a stronger team together than 433 00:21:48,359 --> 00:21:51,680 Speaker 3: what we were apart from each other. The second thing 434 00:21:51,840 --> 00:21:57,680 Speaker 3: is the carrier procurement. Coyote had away with large companies 435 00:21:57,680 --> 00:21:59,679 Speaker 3: on their private fleets, which is something we've tried to 436 00:21:59,680 --> 00:22:02,560 Speaker 3: break in two for years. Be able to capitalize on 437 00:22:02,600 --> 00:22:05,880 Speaker 3: that on our whole network. That really the whole carrier 438 00:22:05,960 --> 00:22:08,600 Speaker 3: team within Coyote. You know, I don't think that we 439 00:22:08,720 --> 00:22:11,120 Speaker 3: knew the exact experience they had coming in, and their 440 00:22:11,160 --> 00:22:15,040 Speaker 3: average tenure on the carrier up floor is over eight years. 441 00:22:15,280 --> 00:22:18,440 Speaker 3: That's unheard of in this industry. So they've seen multiple cycles. 442 00:22:18,440 --> 00:22:21,919 Speaker 3: They know how to operate through through a cycle. And 443 00:22:21,960 --> 00:22:25,200 Speaker 3: then I'll end on the customer point, on the positives 444 00:22:25,200 --> 00:22:27,320 Speaker 3: of when you look at what we were able to 445 00:22:27,359 --> 00:22:31,080 Speaker 3: do by diversifying our customer base and get much larger 446 00:22:31,359 --> 00:22:34,359 Speaker 3: in the food and beverage industry, and the relationships and 447 00:22:34,400 --> 00:22:37,840 Speaker 3: the reputation that Coyote had there was extremely positive. So 448 00:22:37,920 --> 00:22:39,440 Speaker 3: to be able to build off all that is something 449 00:22:39,480 --> 00:22:42,640 Speaker 3: that we're asided about. When you look at things that 450 00:22:42,960 --> 00:22:46,000 Speaker 3: haven't gone as expected. There's always things in an acquisition, 451 00:22:46,119 --> 00:22:49,080 Speaker 3: especially one of the size that go don't go as expected. 452 00:22:50,080 --> 00:22:53,560 Speaker 3: One would be profitability, and I think that the profitability 453 00:22:53,640 --> 00:22:56,520 Speaker 3: of the Legacy Coyote team specifically in the fourth quarter 454 00:22:56,560 --> 00:23:00,000 Speaker 3: in the first quarter was lower than what was anticipate. 455 00:23:00,400 --> 00:23:03,399 Speaker 3: It's understandable of why it was lower because when you 456 00:23:03,440 --> 00:23:06,040 Speaker 3: looked at where they were at from a pricing perspective, 457 00:23:06,080 --> 00:23:08,000 Speaker 3: we knew that they were a little bit below market 458 00:23:08,040 --> 00:23:10,800 Speaker 3: and below Legacy ARC, so heading into that and you 459 00:23:10,840 --> 00:23:13,320 Speaker 3: had the weather implications in the fourth in the first 460 00:23:13,400 --> 00:23:17,679 Speaker 3: quarter that impacted profitability of the team, and then the 461 00:23:17,720 --> 00:23:20,399 Speaker 3: truckload volume slipped a little bit farther than what we 462 00:23:20,440 --> 00:23:22,760 Speaker 3: thought it would. But the good thing off of that 463 00:23:22,840 --> 00:23:24,720 Speaker 3: is we're still active with all of the customers and 464 00:23:24,760 --> 00:23:27,080 Speaker 3: we see a good path on getting back to organic 465 00:23:27,080 --> 00:23:28,240 Speaker 3: truckload volume growth. 466 00:23:28,880 --> 00:23:32,359 Speaker 1: And when you mentioned, you know, coyotes access to private fleets, 467 00:23:32,400 --> 00:23:35,400 Speaker 1: you're talking about like Walmart as a truck and you'll 468 00:23:35,480 --> 00:23:38,000 Speaker 1: kind of fill their back hall if their back hall 469 00:23:38,040 --> 00:23:39,480 Speaker 1: is empty, is what you're talking about. 470 00:23:39,520 --> 00:23:42,359 Speaker 3: That's right, Large companies who have a private fleet who 471 00:23:42,400 --> 00:23:44,640 Speaker 3: are looking to get there, who were looking to get 472 00:23:44,640 --> 00:23:46,560 Speaker 3: their fleet back from point A to point B or 473 00:23:46,560 --> 00:23:48,119 Speaker 3: to another pickup spot that's right. 474 00:23:48,119 --> 00:23:50,320 Speaker 1: Right, and to make some money or offset the costs 475 00:23:50,359 --> 00:23:55,320 Speaker 1: along the way. Okay, So you know we talked about, like, 476 00:23:55,920 --> 00:23:59,280 Speaker 1: you know, continuing on with the Coyote acquisition. So if 477 00:23:59,320 --> 00:24:02,520 Speaker 1: you have like two offices in Chicago and RXO office 478 00:24:02,560 --> 00:24:05,719 Speaker 1: and at Coyote office, how are you manning that process? 479 00:24:05,720 --> 00:24:07,320 Speaker 1: Because you know you did note that they do have 480 00:24:07,560 --> 00:24:11,639 Speaker 1: different customers. So are you operating two separate offices? Are 481 00:24:11,640 --> 00:24:13,679 Speaker 1: you trying to combine the two get the people together? 482 00:24:14,280 --> 00:24:17,639 Speaker 1: How are you working in that kind of physical integration. 483 00:24:18,200 --> 00:24:22,320 Speaker 3: There's been some real estate consolidation, you know, with this acquisition, 484 00:24:22,359 --> 00:24:24,919 Speaker 3: and probably more to go. A couple of examples is 485 00:24:25,480 --> 00:24:28,720 Speaker 3: Legacy RCHO had an office in downtown Chicago off of 486 00:24:28,760 --> 00:24:32,040 Speaker 3: Whacker Drive. Everybody is used to driving down the Interstate 487 00:24:32,040 --> 00:24:35,479 Speaker 3: and seeing the Coyote sign whenever you come into Chicago. 488 00:24:35,600 --> 00:24:38,280 Speaker 3: Now it's an RHO sign and the team that we 489 00:24:38,359 --> 00:24:41,240 Speaker 3: had off of Whacker is now into the building that 490 00:24:41,400 --> 00:24:45,959 Speaker 3: is affectionately known as the GX in Chicago, right. And Dublin, 491 00:24:46,000 --> 00:24:48,680 Speaker 3: Ohio is another example of where we had two offices 492 00:24:49,320 --> 00:24:52,040 Speaker 3: and we brought the Legacy Coyote team over with our 493 00:24:52,080 --> 00:24:56,040 Speaker 3: team in the office in Dublin, Ohio. We're better together 494 00:24:56,080 --> 00:24:58,359 Speaker 3: than what we are apart, and they're doing a lot 495 00:24:58,440 --> 00:25:01,520 Speaker 3: of the same functions. So there's more energy whenever you 496 00:25:01,520 --> 00:25:03,640 Speaker 3: get larger teams around each other. And so where we've 497 00:25:03,640 --> 00:25:07,280 Speaker 3: got opportunities to do that without creating a lot of disruption, 498 00:25:07,520 --> 00:25:09,160 Speaker 3: will absolutely look to do it. 499 00:25:09,640 --> 00:25:11,200 Speaker 2: Yeah, and I'm assuming for your brokers. 500 00:25:11,280 --> 00:25:14,199 Speaker 1: It's really an in office culture right because there's a 501 00:25:14,240 --> 00:25:16,520 Speaker 1: lot of learning to be done on the floor. 502 00:25:17,400 --> 00:25:19,920 Speaker 3: We are in office culture and we want our best 503 00:25:19,920 --> 00:25:22,000 Speaker 3: people on the floor because those are our best mentors. 504 00:25:22,040 --> 00:25:24,639 Speaker 3: There are best teachers to talk about what's going on. 505 00:25:24,680 --> 00:25:27,880 Speaker 3: When you can hear somebody that's sitting within earshot that's 506 00:25:27,960 --> 00:25:30,520 Speaker 3: negotiating a load, you get a real time feel for 507 00:25:30,600 --> 00:25:33,080 Speaker 3: what's going on in the market. When you get a 508 00:25:33,119 --> 00:25:36,159 Speaker 3: customer rep who puts an order on the board with 509 00:25:36,320 --> 00:25:38,439 Speaker 3: special requirements and they can shout it out to the 510 00:25:38,480 --> 00:25:41,119 Speaker 3: floor of I've got a hot load and it needs X, 511 00:25:41,240 --> 00:25:43,800 Speaker 3: Y and Z, you know, there's there's an energy and 512 00:25:43,880 --> 00:25:48,520 Speaker 3: a camaraderie that can't be replicated over Zoom and Microsoft teams. 513 00:25:48,920 --> 00:25:52,399 Speaker 1: Are most of your your like incoming employees are they like, 514 00:25:53,400 --> 00:25:57,359 Speaker 1: are you hiring from like undergrads from universities or is 515 00:25:57,400 --> 00:25:59,040 Speaker 1: it more experienced people. 516 00:26:00,160 --> 00:26:04,119 Speaker 3: We do hire undergrads. I would say we're more of 517 00:26:04,119 --> 00:26:06,560 Speaker 3: a company that looked for somebody one or two jobs 518 00:26:06,560 --> 00:26:09,840 Speaker 3: out of college. Yeah, and you know, we'll let them 519 00:26:09,880 --> 00:26:11,960 Speaker 3: go work out some of the bad habits somewhere else 520 00:26:12,160 --> 00:26:14,199 Speaker 3: and then we'll bring them over. But you know, if 521 00:26:14,200 --> 00:26:15,919 Speaker 3: we find an all star coming out of college, we 522 00:26:16,000 --> 00:26:18,919 Speaker 3: absolutely bring them over. We've had interns that have been 523 00:26:18,960 --> 00:26:21,040 Speaker 3: with us for years coming out of college that have 524 00:26:21,119 --> 00:26:24,320 Speaker 3: been here now four or five, six years down the 525 00:26:24,400 --> 00:26:27,840 Speaker 3: road that still work here, and you know, it's great 526 00:26:27,880 --> 00:26:30,640 Speaker 3: to be able to see that. They get to see 527 00:26:30,640 --> 00:26:34,120 Speaker 3: the culture firsthand. For you know, one two summers into 528 00:26:34,119 --> 00:26:36,560 Speaker 3: sad to come back. But you know, when you look 529 00:26:36,600 --> 00:26:40,760 Speaker 3: at our typical hire on the floor is typically somebody 530 00:26:40,800 --> 00:26:42,680 Speaker 3: just had one to two jobs. And then we're always 531 00:26:42,680 --> 00:26:47,560 Speaker 3: looking for outstanding reps that have relationships, that have industry 532 00:26:47,600 --> 00:26:49,480 Speaker 3: knowledge that can come make us a better company. 533 00:26:50,200 --> 00:26:54,200 Speaker 1: And you know you mentioned productivity improvements earlier. Is that 534 00:26:54,280 --> 00:26:55,960 Speaker 1: how you measure employees success? 535 00:26:57,600 --> 00:27:00,120 Speaker 3: No, not necessarily, that's one of the factors that you 536 00:27:00,200 --> 00:27:04,440 Speaker 3: use to measure employee success. I mean, it really depends 537 00:27:04,480 --> 00:27:06,560 Speaker 3: on what the role is. If you're talking about an 538 00:27:06,560 --> 00:27:09,720 Speaker 3: inside sales role, you're measuring success by the number of 539 00:27:09,760 --> 00:27:12,919 Speaker 3: new customers they're bringing, on the amount of grocery margin 540 00:27:12,960 --> 00:27:16,119 Speaker 3: they're bringing, on the diversification where they're able to cross 541 00:27:16,119 --> 00:27:20,520 Speaker 3: sell into other parts of the organization. If you're looking 542 00:27:20,520 --> 00:27:23,320 Speaker 3: at the carrier side, you're looking at it in terms 543 00:27:23,359 --> 00:27:25,960 Speaker 3: of gross margin dollars. You're looking at in terms of 544 00:27:26,000 --> 00:27:29,320 Speaker 3: loads per day. But it's one of the factors, but 545 00:27:29,359 --> 00:27:30,280 Speaker 3: it's not the factor. 546 00:27:31,840 --> 00:27:34,040 Speaker 1: And you know, again going back to our crystal ball, 547 00:27:34,119 --> 00:27:36,359 Speaker 1: looking into the trucking market, you know you mentioned it 548 00:27:36,600 --> 00:27:41,280 Speaker 1: seems to be more of a demand issue. Now obviously 549 00:27:41,359 --> 00:27:44,159 Speaker 1: we're not having a freight recovery this year. Can you 550 00:27:44,160 --> 00:27:46,400 Speaker 1: look out and well maybe not obviously, who knows, right 551 00:27:46,800 --> 00:27:50,119 Speaker 1: anything can happen, But looking out further out, you know, 552 00:27:50,280 --> 00:27:53,240 Speaker 1: what are your expect expectations in twenty twenty six? Are 553 00:27:53,240 --> 00:27:56,720 Speaker 1: you expecting more of the same of this like flat, 554 00:27:57,440 --> 00:27:59,400 Speaker 1: tepid growth malaise. 555 00:28:00,359 --> 00:28:02,640 Speaker 3: I think it's too early to call twenty twenty six 556 00:28:02,680 --> 00:28:05,159 Speaker 3: of where we land there. I mean, I told you 557 00:28:05,160 --> 00:28:06,760 Speaker 3: it was too early to call peak season, so it's 558 00:28:06,800 --> 00:28:10,040 Speaker 3: definitely too early to call twenty twenty six on where 559 00:28:10,040 --> 00:28:12,920 Speaker 3: we land. I think the thing for us is how 560 00:28:12,920 --> 00:28:15,359 Speaker 3: do we position ourselves with customers so we are the 561 00:28:15,440 --> 00:28:17,280 Speaker 3: call that whenever it turns, we know that we are 562 00:28:17,359 --> 00:28:19,959 Speaker 3: in a cyclical business. It's been a cyclical business for 563 00:28:19,960 --> 00:28:22,720 Speaker 3: the last twenty years that I've been doing this, and 564 00:28:22,800 --> 00:28:24,879 Speaker 3: you know, this has been a downcycle that has lasted 565 00:28:24,920 --> 00:28:27,440 Speaker 3: longer than any other in my career. But it's still 566 00:28:27,520 --> 00:28:30,560 Speaker 3: about positioning yourselves right with the customer that as the 567 00:28:30,600 --> 00:28:34,639 Speaker 3: market turns, you've got the staffing, you've got the relationships, 568 00:28:34,960 --> 00:28:37,720 Speaker 3: you've got the capabilities to be able to deliver it 569 00:28:37,760 --> 00:28:39,920 Speaker 3: for them in times of stress. And that's something that 570 00:28:39,960 --> 00:28:41,320 Speaker 3: we know very very well. 571 00:28:42,440 --> 00:28:45,800 Speaker 1: And when you're looking at the freight broker industry, obviously 572 00:28:46,160 --> 00:28:50,280 Speaker 1: you've become a consolidator with this last acquisition and also 573 00:28:50,440 --> 00:28:55,640 Speaker 1: you've you know, won market share organically. Do you expect 574 00:28:55,720 --> 00:29:00,120 Speaker 1: the industry to consolidate significantly or is it always going 575 00:29:00,120 --> 00:29:03,160 Speaker 1: to be shifts because of just the nature of the business. 576 00:29:04,360 --> 00:29:07,400 Speaker 3: I expect major consolidation in the industry over the next 577 00:29:07,400 --> 00:29:09,520 Speaker 3: several years, and I think that This was a kickstar 578 00:29:09,720 --> 00:29:14,880 Speaker 3: starter of many things to come across the industry. When 579 00:29:14,920 --> 00:29:18,040 Speaker 3: you look at it, you know, there's seventeen thousand truck 580 00:29:18,080 --> 00:29:20,080 Speaker 3: brokers out there, and that's always the stat that gets 581 00:29:20,120 --> 00:29:23,800 Speaker 3: everybody's attention. But what they forget now post acquisition is 582 00:29:23,840 --> 00:29:26,440 Speaker 3: that the top nine brokers make up more than fifty 583 00:29:26,480 --> 00:29:29,800 Speaker 3: percent of the overall truck brokerage market. So for me, 584 00:29:30,000 --> 00:29:33,080 Speaker 3: I see the top players who are financially stable, who 585 00:29:33,080 --> 00:29:37,440 Speaker 3: have good relationships with their customers, who have the great 586 00:29:37,520 --> 00:29:41,520 Speaker 3: technology and the ability to create solutions for customers. They're 587 00:29:41,560 --> 00:29:44,160 Speaker 3: going to be the winner's long term. And I don't 588 00:29:44,160 --> 00:29:46,600 Speaker 3: think that number will be nine next time you and 589 00:29:46,640 --> 00:29:48,800 Speaker 3: I talk, you know, well, maybe we'll talk before then, 590 00:29:48,840 --> 00:29:51,840 Speaker 3: But if we talk, you know, two years down the road, 591 00:29:52,040 --> 00:29:54,080 Speaker 3: I think you're talking about a lot a number, a 592 00:29:54,080 --> 00:29:55,880 Speaker 3: lot less than nine, And as you get five years 593 00:29:55,880 --> 00:29:58,120 Speaker 3: down the road, you're probably talking about three or four. 594 00:29:59,280 --> 00:29:59,600 Speaker 2: Yeah. 595 00:29:59,640 --> 00:30:02,720 Speaker 1: Well, first off, I hope we talk more between now 596 00:30:02,760 --> 00:30:04,520 Speaker 1: in two years, And second, I just wanted to make 597 00:30:04,520 --> 00:30:06,920 Speaker 1: sure I heard the stat you said, the top nine 598 00:30:06,920 --> 00:30:08,920 Speaker 1: brokers make up fifty percent of the market, the. 599 00:30:08,960 --> 00:30:11,440 Speaker 3: Free more than fifty percent of the truck brokerage market, 600 00:30:11,760 --> 00:30:16,240 Speaker 3: and Lee that's important because the truck brokerage market is growing. 601 00:30:16,520 --> 00:30:18,760 Speaker 3: When you look at whenever I started in this industry, 602 00:30:18,840 --> 00:30:21,680 Speaker 3: I think it was you know, mid single digits of 603 00:30:21,720 --> 00:30:24,320 Speaker 3: what truck brokerage made of the four higher trucking market. 604 00:30:24,600 --> 00:30:27,240 Speaker 3: Now it's in the low twenties. Over the next five years, 605 00:30:27,240 --> 00:30:29,760 Speaker 3: I think it'll be in the thirties. You look longer term, 606 00:30:29,800 --> 00:30:31,520 Speaker 3: I think it'll be in the forties and follow a 607 00:30:31,560 --> 00:30:34,640 Speaker 3: similar path of what the forarding industry, where it got 608 00:30:34,640 --> 00:30:36,520 Speaker 3: closer to fifty to fifty. I don't think that it'll 609 00:30:36,560 --> 00:30:38,880 Speaker 3: ever get over fifty or as we sit here today, 610 00:30:38,880 --> 00:30:41,360 Speaker 3: I don't think it'll get over fifty, but I do 611 00:30:41,400 --> 00:30:44,440 Speaker 3: see a clear path for truck brokerages to get into 612 00:30:44,480 --> 00:30:47,600 Speaker 3: the forties of the overall four higher trucking market. 613 00:30:47,840 --> 00:30:50,720 Speaker 1: Right and for those with the memory of XPO, you know, 614 00:30:50,840 --> 00:30:54,200 Speaker 1: XPO was started by Brad Jacobs to consolidate the brokerage 615 00:30:54,240 --> 00:30:58,240 Speaker 1: industry before they went into different businesses. So that's kind 616 00:30:58,280 --> 00:31:02,760 Speaker 1: of the genesis of of what is now RIX. So 617 00:31:03,320 --> 00:31:06,440 Speaker 1: when you look again into the future, obviously RXO is 618 00:31:06,440 --> 00:31:09,200 Speaker 1: one of those companies who else is still standing. 619 00:31:08,880 --> 00:31:12,760 Speaker 3: With you, you know, I think that's the beauty of 620 00:31:12,760 --> 00:31:15,000 Speaker 3: the top nine. When you say that, you're asking me 621 00:31:15,040 --> 00:31:16,920 Speaker 3: to predict who's going to acquire who, and I can't 622 00:31:16,960 --> 00:31:20,040 Speaker 3: do that, but I think that there are several really, 623 00:31:20,080 --> 00:31:23,160 Speaker 3: really good competitors out there. If you look at industry 624 00:31:23,240 --> 00:31:26,440 Speaker 3: leaders Sea Trominson, they've had some phenomenal quarters lately, and 625 00:31:26,520 --> 00:31:29,040 Speaker 3: Dave and his team have done a very good job. 626 00:31:29,480 --> 00:31:32,440 Speaker 3: When you look at a Rive a company, they're a 627 00:31:32,480 --> 00:31:35,000 Speaker 3: company that is a fast growing company and they've grown, 628 00:31:35,360 --> 00:31:38,000 Speaker 3: you know, I think entirely organically. Of what they've done, 629 00:31:38,760 --> 00:31:41,200 Speaker 3: it's been impressive to see. If you look at Doug 630 00:31:41,240 --> 00:31:44,000 Speaker 3: Wagner and what the team at Echo have done, They've 631 00:31:44,000 --> 00:31:47,320 Speaker 3: done a great job of building an LTL product and 632 00:31:47,360 --> 00:31:50,040 Speaker 3: a truckload product that focuses a lot on small to 633 00:31:50,080 --> 00:31:52,040 Speaker 3: mid sized customers, and they do that as well as 634 00:31:52,040 --> 00:31:54,560 Speaker 3: anybody in the industry. And so when you look at 635 00:31:54,640 --> 00:31:57,160 Speaker 3: there's a lot of great competitors out there. I can't 636 00:31:57,160 --> 00:31:59,600 Speaker 3: predict who's going to acquire who and where it all 637 00:31:59,640 --> 00:32:01,480 Speaker 3: shakes out, but I think when you look at the 638 00:32:01,640 --> 00:32:04,480 Speaker 3: landscape at the top, there's a lot of good quality 639 00:32:04,480 --> 00:32:05,280 Speaker 3: companies out there. 640 00:32:05,920 --> 00:32:07,680 Speaker 1: And for those listening, if you want to go back 641 00:32:07,680 --> 00:32:10,600 Speaker 1: to some old episodes. We've done podcasts with the CEO 642 00:32:10,720 --> 00:32:14,320 Speaker 1: of Arrivant, N. C. Robinson, so those are could be 643 00:32:14,360 --> 00:32:18,400 Speaker 1: interesting to you. So, you know, you mentioned some of 644 00:32:18,440 --> 00:32:21,760 Speaker 1: the I guess the and we'll call it a disappointment. 645 00:32:21,760 --> 00:32:24,400 Speaker 1: But the things that didn't go right or go as 646 00:32:24,440 --> 00:32:29,560 Speaker 1: expected with the merger with Coyote thus far, and one 647 00:32:29,680 --> 00:32:35,360 Speaker 1: was was margins on average even before the acquisition, did 648 00:32:35,440 --> 00:32:39,760 Speaker 1: RXO have higher margins than Coyote? 649 00:32:40,360 --> 00:32:42,680 Speaker 3: We did at legacy RXO. But I also needed to 650 00:32:42,680 --> 00:32:46,000 Speaker 3: caveat that again and go back to remember how the 651 00:32:46,000 --> 00:32:48,560 Speaker 3: books of businesses were built, right, it different business so 652 00:32:48,840 --> 00:32:52,040 Speaker 3: they were largely food and BEV and we were largely retel, 653 00:32:52,120 --> 00:32:56,720 Speaker 3: E commerce, industrial, manufacturing, automotive. Some of those are higher 654 00:32:56,760 --> 00:32:59,640 Speaker 3: margin per load shipments. Whenever you think about the requirements 655 00:32:59,680 --> 00:33:01,960 Speaker 3: that go into it. Now when you look at how 656 00:33:02,000 --> 00:33:05,120 Speaker 3: well it was buying transportation in the market, which is 657 00:33:05,120 --> 00:33:07,760 Speaker 3: what you really want to get after both teams had 658 00:33:07,760 --> 00:33:09,920 Speaker 3: different markets that they bought really well in and so 659 00:33:10,040 --> 00:33:13,080 Speaker 3: now it becomes about being able to capitalize on that 660 00:33:13,200 --> 00:33:17,440 Speaker 3: across the organization and looking at new power lanes that 661 00:33:17,480 --> 00:33:19,840 Speaker 3: we've got, how do we sell into that for our 662 00:33:19,880 --> 00:33:21,000 Speaker 3: customers in the right way. 663 00:33:21,920 --> 00:33:25,800 Speaker 1: And you know you did mention Dave Boseman A C. H. Robinson, 664 00:33:25,920 --> 00:33:29,120 Speaker 1: and you know he's was new to the brokerage industry. 665 00:33:29,200 --> 00:33:29,920 Speaker 2: He came in with a. 666 00:33:29,920 --> 00:33:35,360 Speaker 1: Toolkit of kind of six sigma kind of attitude towards 667 00:33:35,600 --> 00:33:39,120 Speaker 1: the brokerage industry. Have you, guys, from obviously the outside 668 00:33:39,120 --> 00:33:41,200 Speaker 1: looking in it, have you have you learned any best 669 00:33:41,240 --> 00:33:45,000 Speaker 1: practices from the success that they're having there, you know, 670 00:33:45,640 --> 00:33:49,120 Speaker 1: with how they're managing or changing the way they manage 671 00:33:49,160 --> 00:33:50,000 Speaker 1: their business. 672 00:33:51,000 --> 00:33:53,000 Speaker 3: You know, we're not in the boardroom with them, so 673 00:33:53,040 --> 00:33:56,080 Speaker 3: we don't exactly what they're doing. We're watching the results 674 00:33:56,120 --> 00:33:58,520 Speaker 3: just like you're watching the results. And I think what 675 00:33:58,760 --> 00:34:01,880 Speaker 3: Dave and the team have done has been, you know, 676 00:34:02,240 --> 00:34:05,120 Speaker 3: great to see. And I think that you know, for us, 677 00:34:05,160 --> 00:34:07,160 Speaker 3: the way that we look at the business is how 678 00:34:07,200 --> 00:34:09,160 Speaker 3: well do you perform through a cycling So at the 679 00:34:09,200 --> 00:34:12,040 Speaker 3: bottom part of the cycle, they're performing really, really well. 680 00:34:14,280 --> 00:34:16,520 Speaker 1: And you know, do you have any long, longer term 681 00:34:16,560 --> 00:34:21,120 Speaker 1: targets for RXO in terms of your margins that some 682 00:34:21,200 --> 00:34:22,160 Speaker 1: goals that you might want to. 683 00:34:22,160 --> 00:34:25,120 Speaker 3: Share when you look at it. I think, you know, 684 00:34:25,280 --> 00:34:27,600 Speaker 3: without putting a number because your margins can go up 685 00:34:27,680 --> 00:34:30,000 Speaker 3: or down based off of what's happening on the in 686 00:34:30,120 --> 00:34:35,920 Speaker 3: the market. But posts Coyote acquisition, one of the numbers 687 00:34:35,920 --> 00:34:37,960 Speaker 3: that we put out is that we do think that 688 00:34:38,000 --> 00:34:41,959 Speaker 3: we can improve how well we buy verse market about 689 00:34:41,960 --> 00:34:44,400 Speaker 3: one hundred basis points or more. And so when you 690 00:34:44,440 --> 00:34:48,479 Speaker 3: think about that, you know, that's call it forty million 691 00:34:48,600 --> 00:34:52,920 Speaker 3: bucks of cost avoidance or cost savings based off of 692 00:34:52,960 --> 00:34:55,279 Speaker 3: what's going on in the market. Obviously, if costs are 693 00:34:55,280 --> 00:34:57,360 Speaker 3: going up on the carrier side, then it's cost avoidance. 694 00:34:57,400 --> 00:35:00,400 Speaker 3: If they're coming down as savings to the and L 695 00:35:01,560 --> 00:35:03,759 Speaker 3: and we're already seeing the early signs of that in 696 00:35:03,840 --> 00:35:07,399 Speaker 3: just a few weeks. We've already saw where are how 697 00:35:07,440 --> 00:35:10,560 Speaker 3: well we buy verse market as one team is thirty 698 00:35:10,600 --> 00:35:12,880 Speaker 3: to fifty basis points better than what we were doing 699 00:35:13,280 --> 00:35:16,040 Speaker 3: pre cutover on the carrier side. 700 00:35:16,640 --> 00:35:19,360 Speaker 1: Got you and you know, is there anything else facing 701 00:35:19,840 --> 00:35:22,560 Speaker 1: you know, either your business or the free transportation logistics 702 00:35:22,600 --> 00:35:25,680 Speaker 1: industry that's kind of on your radar that you think 703 00:35:25,719 --> 00:35:28,680 Speaker 1: that is going to have an impact over the next 704 00:35:28,719 --> 00:35:30,160 Speaker 1: six to twelve months. 705 00:35:30,840 --> 00:35:32,560 Speaker 3: Well, I think the biggest thing is what happens in 706 00:35:32,600 --> 00:35:35,440 Speaker 3: the market, because you know, we talked a little bit about, 707 00:35:35,800 --> 00:35:39,200 Speaker 3: you know, the top of the house, that is how 708 00:35:39,320 --> 00:35:42,200 Speaker 3: is performing within freight brokers. But when you go back 709 00:35:42,239 --> 00:35:44,400 Speaker 3: in twenty twenty three and you look in twenty twenty 710 00:35:44,400 --> 00:35:46,560 Speaker 3: four and twenty twenty three, ten percent of brokers went 711 00:35:46,600 --> 00:35:49,360 Speaker 3: out of business. Twenty twenty four, ten percent of brokers 712 00:35:49,360 --> 00:35:51,480 Speaker 3: went out of business. I would bet that the number 713 00:35:51,520 --> 00:35:54,680 Speaker 3: will be around that again as twenty twenty five. So 714 00:35:54,760 --> 00:35:57,399 Speaker 3: I think that it's not just a consolidation story. It's 715 00:35:57,440 --> 00:35:59,680 Speaker 3: also who are you doing business with and are they 716 00:35:59,680 --> 00:36:01,879 Speaker 3: finingctually stable that they're going to be able to make 717 00:36:01,920 --> 00:36:04,719 Speaker 3: it through the downturn to the other side. One of 718 00:36:04,760 --> 00:36:07,520 Speaker 3: the things that we have seen from large enterprise customers 719 00:36:07,600 --> 00:36:10,800 Speaker 3: is they are testing the financial stability of the carriers 720 00:36:11,080 --> 00:36:13,360 Speaker 3: more so than what they've ever done before. And I 721 00:36:13,360 --> 00:36:16,480 Speaker 3: think that's where when you look at RXO, we've got 722 00:36:16,560 --> 00:36:20,520 Speaker 3: roughly six hundred million dollars of available liquidity, are our 723 00:36:21,120 --> 00:36:23,439 Speaker 3: net debts sitting just over two times, so we sit 724 00:36:23,480 --> 00:36:25,120 Speaker 3: in a really good position to be able to have 725 00:36:25,200 --> 00:36:27,840 Speaker 3: those Then you get to talk about the solutions and 726 00:36:27,960 --> 00:36:30,400 Speaker 3: the different things that you can provide across all of 727 00:36:30,440 --> 00:36:33,760 Speaker 3: your different lines of business. For these customers. 728 00:36:34,360 --> 00:36:39,000 Speaker 1: And you know, earlier you mentioned the consolidation of the industry, 729 00:36:39,120 --> 00:36:40,719 Speaker 1: and obviously that's a lot of that's going to be 730 00:36:40,719 --> 00:36:45,560 Speaker 1: through M and A. Are you guys able if the 731 00:36:45,640 --> 00:36:48,319 Speaker 1: right deal came along to do another large acquisition or 732 00:36:48,320 --> 00:36:50,759 Speaker 1: do you need some time to digest the Coyote deal. 733 00:36:51,440 --> 00:36:53,520 Speaker 3: Yeah, we've had almost a year to digest it now, 734 00:36:53,560 --> 00:36:55,040 Speaker 3: and so I think you know, when you look at it, 735 00:36:55,120 --> 00:36:57,200 Speaker 3: I talked about the three things that are going really 736 00:36:57,239 --> 00:37:02,000 Speaker 3: really well and on the people, the customers, and the technology. 737 00:37:02,880 --> 00:37:05,200 Speaker 3: Right now, we're laser focus on making sure that we've 738 00:37:05,239 --> 00:37:08,759 Speaker 3: got the profitability there for the long term and that 739 00:37:08,800 --> 00:37:12,440 Speaker 3: we're creating value for our customers and for our shareholders 740 00:37:12,600 --> 00:37:15,200 Speaker 3: over the long term. But you know, you can't help 741 00:37:15,239 --> 00:37:16,680 Speaker 3: the timing of M and A. And we don't have 742 00:37:16,719 --> 00:37:20,200 Speaker 3: blinders on, and we have the bandwidth and the capacity 743 00:37:20,200 --> 00:37:22,560 Speaker 3: and the team that can handle something if the right 744 00:37:22,600 --> 00:37:25,600 Speaker 3: deal comes across. But deals are hard to get over 745 00:37:25,640 --> 00:37:27,560 Speaker 3: the finish line. You have to have a willing buyer, 746 00:37:27,840 --> 00:37:30,640 Speaker 3: a willing seller has to be a strategic fit, has 747 00:37:30,680 --> 00:37:34,120 Speaker 3: to be a cultural fit for the organization. So M 748 00:37:34,160 --> 00:37:34,880 Speaker 3: and A is tricky. 749 00:37:35,600 --> 00:37:37,920 Speaker 1: Are there markets that you like to buy into like 750 00:37:38,160 --> 00:37:42,319 Speaker 1: markets that you're currently not covering, that is are attractive to. 751 00:37:42,360 --> 00:37:45,120 Speaker 3: Our ex markets that we're not covering. I think that 752 00:37:45,160 --> 00:37:46,799 Speaker 3: we would look at what does that do for the 753 00:37:46,800 --> 00:37:50,000 Speaker 3: customer and how does that differentiate. Is this something that 754 00:37:50,040 --> 00:37:53,480 Speaker 3: would be easy to cross sell across our organization When 755 00:37:53,480 --> 00:37:56,480 Speaker 3: you think about markets that we are into that we 756 00:37:56,520 --> 00:38:00,360 Speaker 3: would want to expand on starts with Manased Transportation. Manus 757 00:38:00,400 --> 00:38:02,880 Speaker 3: Transportation is very good at having data and if we 758 00:38:02,920 --> 00:38:05,360 Speaker 3: do our jobs right on the broker side and on 759 00:38:05,400 --> 00:38:07,600 Speaker 3: the last mile side and other parts of the organization, 760 00:38:08,320 --> 00:38:10,600 Speaker 3: MANUS trans gets to act as a customer to that 761 00:38:11,000 --> 00:38:15,000 Speaker 3: to the other lines of business within RXO. When you 762 00:38:15,040 --> 00:38:18,520 Speaker 3: think about brokerage, you should think about different modes of transportation. 763 00:38:18,600 --> 00:38:21,960 Speaker 3: Both Legacy Coyote and Legacy RXO were built on full 764 00:38:22,000 --> 00:38:25,360 Speaker 3: truckload volume largely. If there's something that allowed us to 765 00:38:26,239 --> 00:38:28,840 Speaker 3: enhance our lt ON growth even further, if there was 766 00:38:28,880 --> 00:38:33,440 Speaker 3: something that allowed us to grow refrigerated or flatbedshipments, or 767 00:38:33,760 --> 00:38:36,439 Speaker 3: focus on small to mid sized customers, because we both 768 00:38:36,440 --> 00:38:39,320 Speaker 3: do enterprise customers really well. If there's something that brought 769 00:38:39,360 --> 00:38:42,600 Speaker 3: in a small to mid sized customers mix, those would 770 00:38:42,640 --> 00:38:43,879 Speaker 3: all be things that we would look at. 771 00:38:45,360 --> 00:38:47,960 Speaker 1: And you know with consolidation there was there was a 772 00:38:48,000 --> 00:38:50,600 Speaker 1: deal a couple of weeks ago by now, the DAT 773 00:38:51,239 --> 00:38:54,120 Speaker 1: buying convoys brokerage business. 774 00:38:54,480 --> 00:38:56,600 Speaker 2: Did that surprise you? That transaction. 775 00:38:59,600 --> 00:39:01,840 Speaker 3: Not in an ass necessarily surprised. I didn't know what 776 00:39:01,960 --> 00:39:05,080 Speaker 3: was coming, So I guess in that sense it surprised me. Yeah, 777 00:39:05,080 --> 00:39:08,799 Speaker 3: but you know, like you can see that DAT is 778 00:39:08,840 --> 00:39:13,160 Speaker 3: looking for different ways to service their client base, which 779 00:39:13,200 --> 00:39:15,400 Speaker 3: is you know a lot of the brokers out there, 780 00:39:15,440 --> 00:39:17,600 Speaker 3: and especially helps them with the small to mid size 781 00:39:17,600 --> 00:39:19,360 Speaker 3: to give them something else to sell into it. So 782 00:39:19,719 --> 00:39:22,560 Speaker 3: in that sense, it wasn't surprising, gotcha. 783 00:39:23,480 --> 00:39:26,279 Speaker 1: And so you know we're wrapping up coming at the 784 00:39:26,360 --> 00:39:29,040 Speaker 1: end of our time here. You know, just just what 785 00:39:29,600 --> 00:39:32,319 Speaker 1: do you like most about, you know, running RXO right now? 786 00:39:33,000 --> 00:39:35,280 Speaker 3: The people. Yeah, I got to spend time this morning 787 00:39:35,360 --> 00:39:38,520 Speaker 3: with there's like forty folks that are going through a 788 00:39:38,600 --> 00:39:41,440 Speaker 3: leadership development program at RXO, and I think when you 789 00:39:41,480 --> 00:39:44,240 Speaker 3: look at the people, we've got some of the best 790 00:39:44,239 --> 00:39:46,160 Speaker 3: people in the industry. But they're really good people and 791 00:39:46,200 --> 00:39:49,360 Speaker 3: I enjoy spending time with them. I learned from them 792 00:39:49,480 --> 00:39:52,640 Speaker 3: every single day. You know, the customers, these are customers 793 00:39:52,680 --> 00:39:54,719 Speaker 3: that have been with us forever. If you look at 794 00:39:54,719 --> 00:39:58,200 Speaker 3: our top customers, they've been with us for sixteen years 795 00:39:58,560 --> 00:40:01,600 Speaker 3: on average. So for me and our investors, we've got 796 00:40:01,640 --> 00:40:03,640 Speaker 3: investors that have been with us from the early days 797 00:40:03,640 --> 00:40:06,560 Speaker 3: of XBO, that stuck with us through the acquisition. For me, 798 00:40:06,640 --> 00:40:09,439 Speaker 3: it's all about the relationships that we've formed and how 799 00:40:09,440 --> 00:40:11,720 Speaker 3: do we become a better company off of that, and 800 00:40:11,800 --> 00:40:14,080 Speaker 3: how do we challenge ourselves And so for me, it's 801 00:40:14,120 --> 00:40:14,960 Speaker 3: all about the people. 802 00:40:15,400 --> 00:40:17,360 Speaker 2: All right, do you have a favorite employee? 803 00:40:18,480 --> 00:40:21,440 Speaker 3: Got seventy four hundred of them? 804 00:40:21,560 --> 00:40:22,680 Speaker 2: All right, Drew. 805 00:40:22,719 --> 00:40:25,279 Speaker 1: I really appreciate your time and your insights again and 806 00:40:25,840 --> 00:40:28,200 Speaker 1: really appreciate you coming back onto the podcast, So thank 807 00:40:28,280 --> 00:40:28,759 Speaker 1: you for that. 808 00:40:29,520 --> 00:40:31,440 Speaker 3: Absolutely, thank you for having me. It's great talking to 809 00:40:31,480 --> 00:40:32,560 Speaker 3: you as always. 810 00:40:32,560 --> 00:40:34,080 Speaker 2: And I want to thank you for tuning in. 811 00:40:34,120 --> 00:40:36,800 Speaker 1: If you liked the episode, please subscribe and leave a review. 812 00:40:36,920 --> 00:40:39,160 Speaker 1: We've lined up a number of great guests for the podcast, 813 00:40:39,160 --> 00:40:44,520 Speaker 1: so please check back to hear conversations with C suite executives, shippers, regulators, 814 00:40:44,520 --> 00:40:47,960 Speaker 1: and decision makers within the freight markets. Also, if you 815 00:40:48,000 --> 00:40:50,960 Speaker 1: want to learn more about the freight transportation markets, check 816 00:40:51,000 --> 00:40:54,160 Speaker 1: out our work on the Bloomberg Terminal at Bigo and 817 00:40:54,239 --> 00:40:57,160 Speaker 1: on social media. This is Lee Clascal signing off and 818 00:40:57,200 --> 00:41:03,239 Speaker 1: thanks for talking transports with me.