1 00:00:10,880 --> 00:00:14,960 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:15,000 --> 00:00:19,239 Speaker 1: I'm Joe Wisenthal and I'm Tracy Hallaway. So, Tracy, we've 3 00:00:19,239 --> 00:00:23,800 Speaker 1: been covering supply chain issues for quite a long time 4 00:00:24,040 --> 00:00:27,280 Speaker 1: on Odd Lots. I think, probably longer than much of 5 00:00:27,280 --> 00:00:28,800 Speaker 1: the media. What do you think, I feel like we've 6 00:00:28,800 --> 00:00:33,080 Speaker 1: been ahead of um. I think that's fair. Like I 7 00:00:33,120 --> 00:00:35,120 Speaker 1: feel like we've certainly been talking about it for over 8 00:00:35,120 --> 00:00:39,720 Speaker 1: a year, like in excruciating detail at times, whereas other 9 00:00:39,760 --> 00:00:43,920 Speaker 1: people are only just starting to cover it somewhat superficially. Yeah, 10 00:00:43,920 --> 00:00:46,839 Speaker 1: all right, So I'm glad we got that shoulder padding 11 00:00:46,920 --> 00:00:49,280 Speaker 1: out of the way, but in all sorts. Is one 12 00:00:49,320 --> 00:00:51,839 Speaker 1: of the nice things about this is about having been 13 00:00:51,880 --> 00:00:53,959 Speaker 1: talking about it for so long is a we can 14 00:00:54,320 --> 00:00:56,240 Speaker 1: have a point of reference because we've talked to some 15 00:00:56,280 --> 00:00:58,160 Speaker 1: guests earlier in the year, and now we can talk 16 00:00:58,160 --> 00:01:01,760 Speaker 1: about how things evolved, and as you say, like we 17 00:01:01,840 --> 00:01:04,200 Speaker 1: can drill deeper because like every time we have one 18 00:01:04,200 --> 00:01:08,360 Speaker 1: of these conversations. Recently we talked to Ryan Peterson a flexport. 19 00:01:08,840 --> 00:01:11,160 Speaker 1: We recently talked about more of the commodity side with 20 00:01:11,240 --> 00:01:13,800 Speaker 1: Jeff Curry. Each time we have these conversations, I kind 21 00:01:13,800 --> 00:01:16,000 Speaker 1: of have more questions that I want so we can 22 00:01:16,120 --> 00:01:20,520 Speaker 1: sort of drill deeper. Yeah, It's it's a really like 23 00:01:20,800 --> 00:01:24,280 Speaker 1: iterative conversation in some ways, because every time we have 24 00:01:24,319 --> 00:01:27,920 Speaker 1: a logistics or supply shortage episode, like I always come 25 00:01:27,920 --> 00:01:30,600 Speaker 1: away with additional questions or thoughts. And one of the 26 00:01:30,640 --> 00:01:34,000 Speaker 1: big ones um that came up recently on the last 27 00:01:34,040 --> 00:01:37,240 Speaker 1: episode with Ryan Peterson was the idea of why there 28 00:01:37,360 --> 00:01:41,920 Speaker 1: isn't a secondary market for containers and container ship bing, 29 00:01:42,080 --> 00:01:43,720 Speaker 1: And this is something that has sort of come up 30 00:01:43,760 --> 00:01:46,640 Speaker 1: again and again on these episodes. In many ways, it 31 00:01:46,680 --> 00:01:51,000 Speaker 1: feels like the logistics industry is like kind of old fashioned. Yeah, 32 00:01:51,360 --> 00:01:55,400 Speaker 1: so that's kind of what's blowing my mind in multiple ways. 33 00:01:55,560 --> 00:01:58,200 Speaker 1: It's like people always talk about like the oh, the 34 00:01:58,200 --> 00:02:01,480 Speaker 1: economy is over financialized, and that's kind of this cliche. 35 00:02:01,680 --> 00:02:03,920 Speaker 1: And often times I would say, people who even say 36 00:02:03,960 --> 00:02:07,040 Speaker 1: that may not have a clear idea of like what 37 00:02:07,080 --> 00:02:08,640 Speaker 1: they even mean by that. It's just sort of this 38 00:02:08,880 --> 00:02:11,640 Speaker 1: intuition that people have. But in some ways, I feel 39 00:02:11,639 --> 00:02:15,680 Speaker 1: like when it comes to logistics, the economy feels under financialized. 40 00:02:15,760 --> 00:02:19,160 Speaker 1: There's a lack of formal financial instruments, there's a lack 41 00:02:19,240 --> 00:02:23,359 Speaker 1: of like liquid uh secondary markets for capacity, there's a 42 00:02:23,440 --> 00:02:26,120 Speaker 1: lack of hedging tools. It feels like for many of 43 00:02:26,200 --> 00:02:28,760 Speaker 1: the players in this market and this you know, it's 44 00:02:28,800 --> 00:02:31,880 Speaker 1: all the way down the line from shipping to rail 45 00:02:31,960 --> 00:02:34,800 Speaker 1: to trucking and so like that's kind of surprised. And 46 00:02:34,840 --> 00:02:37,000 Speaker 1: then the other thing that is interesting to me, and 47 00:02:37,040 --> 00:02:39,880 Speaker 1: it's very closely related to this, like the B two 48 00:02:39,880 --> 00:02:45,560 Speaker 1: B market for logistics, it just feels so ancient beyond financialization. 49 00:02:45,720 --> 00:02:47,800 Speaker 1: It's like like I'm on this, like I like join 50 00:02:47,960 --> 00:02:51,600 Speaker 1: like surreptitiously, this like WhatsApp group for like truck drivers, 51 00:02:51,639 --> 00:02:54,440 Speaker 1: and it's basically like people's like no, it's like literally 52 00:02:54,440 --> 00:02:57,120 Speaker 1: it's like it's for you now, No I know. But 53 00:02:57,240 --> 00:03:01,160 Speaker 1: it's like people posting these things like oh, anyone in Spokane, 54 00:03:01,160 --> 00:03:05,880 Speaker 1: Washington have capacity, and you learn in Rockville, Maryland have capacity. 55 00:03:05,960 --> 00:03:08,240 Speaker 1: And it's like we're used to like from like a 56 00:03:08,240 --> 00:03:10,600 Speaker 1: B two C like consumers just like we get this, 57 00:03:10,680 --> 00:03:12,919 Speaker 1: like we can track ups and FedEx and it's super 58 00:03:13,040 --> 00:03:15,920 Speaker 1: like smooth. And when you like sort of look behind 59 00:03:16,000 --> 00:03:19,200 Speaker 1: the scenes, everything feels like it's sort of so like 60 00:03:19,880 --> 00:03:24,160 Speaker 1: so blued together a duct taped together. Yeah, it's kind 61 00:03:24,160 --> 00:03:26,480 Speaker 1: of crazy to think that the supply chain depends on 62 00:03:26,639 --> 00:03:29,480 Speaker 1: you know, a random trucker seeing like something posted on 63 00:03:29,480 --> 00:03:32,720 Speaker 1: a message board or what'sapp and going, oh, yeah, I'm 64 00:03:32,760 --> 00:03:35,840 Speaker 1: free next week, I'll take that job. And this kind 65 00:03:35,840 --> 00:03:38,600 Speaker 1: of gets back. I mean, this is very much related 66 00:03:38,640 --> 00:03:40,600 Speaker 1: to the conversation we've been having for the past year 67 00:03:40,680 --> 00:03:42,360 Speaker 1: or so, which is all about how do you actually 68 00:03:42,400 --> 00:03:45,280 Speaker 1: solve the supply chain problems. So we are starting to 69 00:03:45,280 --> 00:03:48,800 Speaker 1: see all these different solutions being proposed right now. Um 70 00:03:48,840 --> 00:03:52,600 Speaker 1: Biden was just talking about increasing capacity at the part 71 00:03:52,600 --> 00:03:55,600 Speaker 1: of Los Angeles. Uh, just last week. We're recording this 72 00:03:55,760 --> 00:03:59,280 Speaker 1: on October and so it's getting more and more attention. 73 00:03:59,360 --> 00:04:03,280 Speaker 1: You're seeing more are more people suggest ways to fix it, 74 00:04:03,400 --> 00:04:05,560 Speaker 1: and of course the question is are any of those 75 00:04:05,600 --> 00:04:07,880 Speaker 1: going to work? Right? And so that is sort of 76 00:04:07,920 --> 00:04:09,880 Speaker 1: the big news that maybe we could key off our 77 00:04:09,880 --> 00:04:14,000 Speaker 1: discussion on today. The White House clearly feeling some urgency 78 00:04:14,160 --> 00:04:17,440 Speaker 1: on the supply chain stress and making this effort. It's 79 00:04:17,480 --> 00:04:20,520 Speaker 1: like a multi company effort with the Port of Los Angeles, 80 00:04:21,040 --> 00:04:25,160 Speaker 1: and yesterday, I believe the rail company Union Pacific announced 81 00:04:25,160 --> 00:04:27,160 Speaker 1: that they would be part of it to basically get 82 00:04:27,160 --> 00:04:30,520 Speaker 1: twenty four seven operations out of that part because we 83 00:04:30,600 --> 00:04:33,760 Speaker 1: know there's this big shipping queue, all these ships waiting 84 00:04:33,800 --> 00:04:35,920 Speaker 1: out there just to unload. We know there's a traffic 85 00:04:36,000 --> 00:04:37,920 Speaker 1: jam of the truckers whose job it is to pick 86 00:04:38,000 --> 00:04:41,120 Speaker 1: up the containers and move them to inland warehouses and 87 00:04:41,160 --> 00:04:45,120 Speaker 1: so forth, and so one effort that maybe would you know, 88 00:04:45,160 --> 00:04:47,880 Speaker 1: if they could get twenty f seven operations, that would 89 00:04:47,880 --> 00:04:52,040 Speaker 1: be great. But honestly, like that sounds very complicated literally 90 00:04:52,080 --> 00:04:55,560 Speaker 1: just going to seven. So lots to talk about and 91 00:04:55,600 --> 00:04:59,000 Speaker 1: all this lots to keep diving into because there's things 92 00:04:59,040 --> 00:05:01,000 Speaker 1: to drill into a new news So we have a 93 00:05:01,440 --> 00:05:04,160 Speaker 1: perfect guest. We actually last talked to him in June. 94 00:05:04,680 --> 00:05:06,359 Speaker 1: That was a great episode where we had to have 95 00:05:06,440 --> 00:05:09,279 Speaker 1: him back. We're gonna be speaking with Craig Fuller. He 96 00:05:09,360 --> 00:05:11,640 Speaker 1: has the founder and CEO of Freight Waves, which is 97 00:05:11,640 --> 00:05:15,760 Speaker 1: a data and information company on logistics and trucking. So Craig, 98 00:05:15,760 --> 00:05:19,839 Speaker 1: thank you so much for coming back on. Hey, Joe Tracy, 99 00:05:19,960 --> 00:05:21,400 Speaker 1: great to be here. You guys are the o G 100 00:05:21,720 --> 00:05:25,640 Speaker 1: S of media covering supply to you're you're the you're 101 00:05:25,800 --> 00:05:28,040 Speaker 1: the o G O G. But that's nice of you 102 00:05:28,120 --> 00:05:32,080 Speaker 1: to say, um, but let's actually just start with that 103 00:05:32,160 --> 00:05:35,479 Speaker 1: new news and in the last week, you know, it's like, Okay, 104 00:05:35,480 --> 00:05:39,880 Speaker 1: we're gonna operate, and they announced it and just to me, 105 00:05:40,040 --> 00:05:43,320 Speaker 1: doing everything that we've talked about with like the people 106 00:05:43,320 --> 00:05:46,479 Speaker 1: work there, the logistics, even that just going from like 107 00:05:46,520 --> 00:05:50,080 Speaker 1: a normal schedule to a port strikes me as like, 108 00:05:50,360 --> 00:05:53,320 Speaker 1: my guess is that that is no easy task at all, 109 00:05:53,320 --> 00:05:55,280 Speaker 1: That that is going to be a curricul and effort. 110 00:05:55,640 --> 00:05:57,800 Speaker 1: Is not just some you know, switch that you flipped. 111 00:05:57,839 --> 00:06:01,520 Speaker 1: What is your sort of take the difficulty and the 112 00:06:01,600 --> 00:06:05,080 Speaker 1: challenges that the White House will face in opening up 113 00:06:05,200 --> 00:06:09,880 Speaker 1: throughput at that port. Yeah, this is an unorganized orchestra 114 00:06:10,040 --> 00:06:11,880 Speaker 1: that you have to sort of organize. So you've got 115 00:06:11,960 --> 00:06:15,400 Speaker 1: all these moving parts. You get not only do you 116 00:06:15,440 --> 00:06:18,240 Speaker 1: have the just the idea that you're going to open 117 00:06:18,320 --> 00:06:21,479 Speaker 1: up the port and all of the sort of inertia 118 00:06:21,560 --> 00:06:24,640 Speaker 1: that that creates in terms of changing policies and procedures. 119 00:06:25,120 --> 00:06:28,560 Speaker 1: That you have an employment challenges between labor folks that 120 00:06:28,600 --> 00:06:31,599 Speaker 1: work at the ports, all of the operational support people 121 00:06:31,600 --> 00:06:34,040 Speaker 1: that support the ports, and then you've got all the 122 00:06:34,080 --> 00:06:36,720 Speaker 1: supporting infrastructure around the railroads, which we did see the 123 00:06:36,760 --> 00:06:40,480 Speaker 1: Union Pacific announcement yesterday. But you also have trucking companies 124 00:06:40,480 --> 00:06:43,239 Speaker 1: and warehouse operations and so you've got all of these 125 00:06:43,640 --> 00:06:47,800 Speaker 1: moving parts that really have to work together to enable this. 126 00:06:47,960 --> 00:06:49,440 Speaker 1: And then you have a union with a lot of 127 00:06:49,480 --> 00:06:54,040 Speaker 1: power that is very reluctant to to make big moves 128 00:06:54,640 --> 00:06:57,479 Speaker 1: uh and extend hours. They have have historically had a 129 00:06:57,480 --> 00:06:59,640 Speaker 1: lot of power over how the port is on trying 130 00:06:59,640 --> 00:07:03,680 Speaker 1: about the the I l W I l W the longshoreman, 131 00:07:04,400 --> 00:07:06,600 Speaker 1: that's correct, And they've got there's a big union contract 132 00:07:06,600 --> 00:07:08,159 Speaker 1: that's coming up this summer, and I think it's going 133 00:07:08,200 --> 00:07:11,000 Speaker 1: to be interesting to our next summer to see how 134 00:07:11,440 --> 00:07:13,480 Speaker 1: much control they have or how much power they have 135 00:07:13,560 --> 00:07:16,200 Speaker 1: in light of the you know, all the pressures that 136 00:07:16,200 --> 00:07:19,720 Speaker 1: are on them. But that's an entirely different episode in itself. Uh. 137 00:07:19,760 --> 00:07:22,920 Speaker 1: And so with all of that said, it's not as 138 00:07:22,960 --> 00:07:25,320 Speaker 1: easy as saying, hey, we're going to open up and 139 00:07:25,400 --> 00:07:28,040 Speaker 1: keep keep the port open up longer because you have 140 00:07:28,160 --> 00:07:31,160 Speaker 1: all of these moving and independent parts that have to 141 00:07:31,200 --> 00:07:34,720 Speaker 1: work together. So, I mean, if if there's one thing 142 00:07:34,880 --> 00:07:37,480 Speaker 1: I feel that all lots of listeners have probably learned 143 00:07:37,520 --> 00:07:40,320 Speaker 1: at this point in time, it's that trucking has a 144 00:07:40,320 --> 00:07:42,800 Speaker 1: lot to do with the gridlock that we are seeing 145 00:07:42,880 --> 00:07:45,960 Speaker 1: at ports. So in addition to a shortage of containers 146 00:07:46,040 --> 00:07:48,000 Speaker 1: and ships kind of going in the wrong way or 147 00:07:48,040 --> 00:07:51,600 Speaker 1: being out of position, there are these major major issues 148 00:07:51,760 --> 00:07:55,800 Speaker 1: with trucking. Maybe just to remind us all I just 149 00:07:55,840 --> 00:07:58,000 Speaker 1: remember the other thing all thoughts listeners know is like 150 00:07:58,160 --> 00:08:01,360 Speaker 1: the importance of spen in like a random port in 151 00:08:01,480 --> 00:08:04,800 Speaker 1: Norway and getting onto an actual ship. But anyway, the 152 00:08:04,840 --> 00:08:07,040 Speaker 1: importance of truckers, can you just walk us through like 153 00:08:07,240 --> 00:08:11,000 Speaker 1: their role in the port um situation and the supply 154 00:08:11,080 --> 00:08:13,000 Speaker 1: chain emanating out of the ports, because I think that's 155 00:08:13,040 --> 00:08:15,080 Speaker 1: probably going to set the basis for a lot of 156 00:08:15,080 --> 00:08:20,600 Speaker 1: this discussion. Yeah, so trucking operations handle approximately two thirds 157 00:08:20,600 --> 00:08:22,440 Speaker 1: of all freight that moves out of the ports and 158 00:08:22,480 --> 00:08:26,720 Speaker 1: so UM and typically dray operators. So if you think 159 00:08:26,760 --> 00:08:29,080 Speaker 1: of you go drive down the highway, the Interstate highway, 160 00:08:29,120 --> 00:08:32,000 Speaker 1: you see these fifty three foot trailers of these people, 161 00:08:32,200 --> 00:08:35,160 Speaker 1: you know, these eighteen wheelers that people see. It's very 162 00:08:35,200 --> 00:08:37,520 Speaker 1: different than what you see at the port. Typically there 163 00:08:37,520 --> 00:08:41,200 Speaker 1: are chassiss that the containers sit on. Uh, they're not 164 00:08:41,400 --> 00:08:43,720 Speaker 1: the big trailers that you would see. And in sort 165 00:08:43,720 --> 00:08:46,000 Speaker 1: of the heartland of the United States, the vast majority 166 00:08:46,040 --> 00:08:48,320 Speaker 1: of freight is actually on trailers. What ends up happening 167 00:08:48,400 --> 00:08:51,640 Speaker 1: is the DRE operators. The vast majority DRE operators will 168 00:08:51,640 --> 00:08:54,040 Speaker 1: stay within a hundred mile radius of the port and 169 00:08:54,160 --> 00:08:58,800 Speaker 1: basically take a container to a distribution center warehouse UH 170 00:08:58,800 --> 00:09:02,559 Speaker 1: and that container is the offloaded and then it goes 171 00:09:02,600 --> 00:09:06,080 Speaker 1: to a transfer facility and then put into a trailer 172 00:09:06,240 --> 00:09:09,079 Speaker 1: that would then be shipped across the country. So really 173 00:09:09,080 --> 00:09:11,520 Speaker 1: what what what happens is in terms of how the 174 00:09:11,600 --> 00:09:15,720 Speaker 1: port interacts with the domestic market is all of those 175 00:09:15,800 --> 00:09:21,480 Speaker 1: DRAY operators really are local operators, and it's the the 176 00:09:21,960 --> 00:09:24,760 Speaker 1: really construction is the amount of drey operators that are 177 00:09:24,760 --> 00:09:26,920 Speaker 1: able to go into the port and operated the port, 178 00:09:27,200 --> 00:09:30,040 Speaker 1: not the overall freight capacity that's across the United States. 179 00:09:30,240 --> 00:09:33,719 Speaker 1: And so getting those DRAY operations and those dray operators 180 00:09:33,760 --> 00:09:36,880 Speaker 1: to work really means that you need a lot of 181 00:09:36,880 --> 00:09:41,120 Speaker 1: employment availability for truck drivers in in around the ports UH, 182 00:09:41,160 --> 00:09:44,840 Speaker 1: and you need warehouse operations that can accept those containers 183 00:09:44,840 --> 00:09:48,960 Speaker 1: and offload them UH in the you know, metro area 184 00:09:49,320 --> 00:09:52,120 Speaker 1: wherever that ports located. So we're talking in southern California, 185 00:09:52,120 --> 00:09:55,920 Speaker 1: we're talking l A we're talking about the San Bernardino Valley. 186 00:09:56,280 --> 00:09:59,480 Speaker 1: We're talking about you know, places like Ontario and Fontana, California, 187 00:09:59,760 --> 00:10:04,200 Speaker 1: where the freight is then offloaded onto a you know, 188 00:10:04,240 --> 00:10:08,720 Speaker 1: an inland trailer or inland container that then goes on rail. 189 00:10:09,080 --> 00:10:11,920 Speaker 1: So I have a very small question. Could you remind 190 00:10:11,960 --> 00:10:15,920 Speaker 1: listeners what dre or drege means. I don't know. It's fine, 191 00:10:15,920 --> 00:10:19,640 Speaker 1: it's fine. I remember it came up on the past episode. 192 00:10:19,679 --> 00:10:23,120 Speaker 1: But for those who missed it, yeah, dre is just 193 00:10:23,360 --> 00:10:28,319 Speaker 1: a localized move. It's typically referred to port or even 194 00:10:28,440 --> 00:10:31,960 Speaker 1: at the railroads, where you're taking a container uh and 195 00:10:32,240 --> 00:10:35,000 Speaker 1: moving it on a on a relatively short distance, so 196 00:10:35,080 --> 00:10:37,800 Speaker 1: let's think of a hundred mile radius. These are not 197 00:10:37,880 --> 00:10:40,840 Speaker 1: the over the road trucking operations that you would, you know, 198 00:10:40,920 --> 00:10:43,400 Speaker 1: take a take a container from l A to Chicago 199 00:10:43,960 --> 00:10:46,400 Speaker 1: or l A to Kansas City. Now that may end 200 00:10:46,480 --> 00:10:49,560 Speaker 1: up on a railroad on intermodal, but it doesn't end 201 00:10:49,640 --> 00:10:52,959 Speaker 1: up You don't see a dre trucker go from l 202 00:10:53,040 --> 00:10:56,800 Speaker 1: A to Kansas City. So the last time we had 203 00:10:56,840 --> 00:10:59,600 Speaker 1: you on, we actually talked more about the sort of 204 00:10:59,640 --> 00:11:02,440 Speaker 1: the law long haul truckers and just sort of the 205 00:11:02,480 --> 00:11:05,440 Speaker 1: way that this current crisis were sort of interacting with 206 00:11:05,480 --> 00:11:08,320 Speaker 1: like a secular decline. It's not a very long haul 207 00:11:08,320 --> 00:11:11,400 Speaker 1: trucking is not a particularly appealing job for a lot 208 00:11:11,440 --> 00:11:13,960 Speaker 1: of people, or a lot of health problems associated with it. 209 00:11:14,040 --> 00:11:15,600 Speaker 1: You don't get to see your family very much, all 210 00:11:15,679 --> 00:11:21,120 Speaker 1: kinds of issues. How different is the DRAY market, how 211 00:11:21,160 --> 00:11:24,120 Speaker 1: are the are their drivers who work in both? Can 212 00:11:24,160 --> 00:11:27,400 Speaker 1: you talk a little bit about how distinct that market 213 00:11:27,679 --> 00:11:31,160 Speaker 1: is versus the sort of the broader long haul trucking 214 00:11:31,160 --> 00:11:34,199 Speaker 1: that we talked about last time. Yeah, DRE operations are 215 00:11:34,200 --> 00:11:39,040 Speaker 1: sort of Inland port trucking services is about five percent 216 00:11:39,160 --> 00:11:41,640 Speaker 1: of the overall trucking industry. It's a very small piece 217 00:11:41,679 --> 00:11:43,800 Speaker 1: of the overall trucking industry. It just plays a very 218 00:11:43,800 --> 00:11:47,120 Speaker 1: important role because it's really the intersection point between the 219 00:11:47,160 --> 00:11:50,960 Speaker 1: inland cargo or the the ocean cargo to the inland cargo. 220 00:11:51,080 --> 00:11:53,679 Speaker 1: So you think about it, the DRE operators have an 221 00:11:53,800 --> 00:11:58,040 Speaker 1: enormous amount of power versus their relative size of their 222 00:11:58,120 --> 00:12:01,880 Speaker 1: overall participation in the market. But having said that, there 223 00:12:01,920 --> 00:12:04,360 Speaker 1: they have very different issues. There's been a lot of 224 00:12:04,400 --> 00:12:08,560 Speaker 1: coverage of grade port operators and trucking operators. These are 225 00:12:08,600 --> 00:12:11,720 Speaker 1: typically you know, it's not as fragmented there, typically owned 226 00:12:11,760 --> 00:12:15,160 Speaker 1: by large conglomerates that have a lot of power of 227 00:12:15,160 --> 00:12:18,199 Speaker 1: who's been a lot of labor issues. Um, the ports 228 00:12:18,320 --> 00:12:22,839 Speaker 1: acquire newer emissions, a newer trucks, so they won't allow, 229 00:12:22,920 --> 00:12:26,000 Speaker 1: particularly in southern California, they won't allow trucks that don't 230 00:12:26,000 --> 00:12:28,520 Speaker 1: meet certain emission standards and they have to be post 231 00:12:28,559 --> 00:12:30,880 Speaker 1: two thousand eleven in order to operate at the port. 232 00:12:31,120 --> 00:12:33,760 Speaker 1: Doesn't exist across the country, and that's really related to 233 00:12:34,160 --> 00:12:37,560 Speaker 1: air pollution controls. But there's a lot of labor issue. 234 00:12:37,640 --> 00:12:42,400 Speaker 1: These are are sort of the typically viewed as the 235 00:12:42,440 --> 00:12:46,200 Speaker 1: companies have a lot of power at the port versus 236 00:12:46,240 --> 00:12:49,079 Speaker 1: what you see in the over the road trucking market, 237 00:12:49,080 --> 00:12:51,240 Speaker 1: which is from the opposite end of the spectru where 238 00:12:51,600 --> 00:12:54,079 Speaker 1: the truck drivers have an enormous amount of power over 239 00:12:54,120 --> 00:12:58,360 Speaker 1: their employers. And so because it's localized, you also see 240 00:12:58,720 --> 00:13:01,319 Speaker 1: unions that just paint and have a lot of influence 241 00:13:01,360 --> 00:13:04,520 Speaker 1: over those dre operations. But but but having said that, 242 00:13:04,559 --> 00:13:09,079 Speaker 1: it's just an entirely different marketplace. But I think both 243 00:13:09,160 --> 00:13:12,320 Speaker 1: the drage side of things, or I guess, um, you know, 244 00:13:12,360 --> 00:13:16,840 Speaker 1: associations representing dra Edge have voiced the same concerns as 245 00:13:17,040 --> 00:13:20,640 Speaker 1: the longer haul trucking companies when it comes to uh 246 00:13:21,000 --> 00:13:25,280 Speaker 1: Biden's focus on the supply chain stuff and the solutions 247 00:13:25,280 --> 00:13:27,920 Speaker 1: that he's so far proposed. Could you maybe walk us through, 248 00:13:28,000 --> 00:13:31,720 Speaker 1: like what the issues are that they're spotting in this. 249 00:13:31,880 --> 00:13:36,360 Speaker 1: So you know, part of Los Angeles moves to UM 250 00:13:36,360 --> 00:13:39,320 Speaker 1: it's operating all day and all night. In theory, that 251 00:13:39,360 --> 00:13:42,480 Speaker 1: should add many, many more hours in which they can 252 00:13:42,679 --> 00:13:46,280 Speaker 1: load and offload container ships. And yet you have the 253 00:13:46,320 --> 00:13:50,600 Speaker 1: trucking associations saying that, actually it's not that simple. Yeah, 254 00:13:50,600 --> 00:13:52,719 Speaker 1: that's right. You can't just have it eat it to 255 00:13:52,760 --> 00:13:54,880 Speaker 1: say hey, we're going on seven is in a restaurant 256 00:13:54,880 --> 00:13:56,840 Speaker 1: that you can decide you will extend hours too. So 257 00:13:57,240 --> 00:13:59,880 Speaker 1: it is a you know, this is a massive man, 258 00:14:00,160 --> 00:14:03,480 Speaker 1: a major employer on any city that it represents, and 259 00:14:03,520 --> 00:14:07,400 Speaker 1: it's a major economic center for that particular market. And 260 00:14:07,440 --> 00:14:09,840 Speaker 1: so if we look at Southern California, which is always 261 00:14:09,920 --> 00:14:11,760 Speaker 1: you know, it's the most important ports to set up 262 00:14:11,760 --> 00:14:14,040 Speaker 1: ports in the United States. It is, and it's also 263 00:14:14,080 --> 00:14:15,960 Speaker 1: the one that everyone is sort of focused on because 264 00:14:15,960 --> 00:14:17,719 Speaker 1: you have a hundred ships. Else today you have a 265 00:14:17,800 --> 00:14:20,960 Speaker 1: hundred ships outside the coast waiting to get to to 266 00:14:21,000 --> 00:14:24,000 Speaker 1: get unloaded, and so because of that, you you have 267 00:14:24,080 --> 00:14:28,400 Speaker 1: a lot of attention paid to the drey operators and 268 00:14:28,480 --> 00:14:31,880 Speaker 1: how they intersect with the port. But the reality is 269 00:14:31,920 --> 00:14:36,040 Speaker 1: that the overall trucking industry wants more efficiency. They're trying 270 00:14:36,080 --> 00:14:41,240 Speaker 1: to put pressure on the port operations, on the unions 271 00:14:41,280 --> 00:14:45,320 Speaker 1: because they want more seamless and more flexible hours. Because ultimately, 272 00:14:45,760 --> 00:14:48,840 Speaker 1: if this is a chuck point, there's a hundred ships 273 00:14:48,880 --> 00:14:52,360 Speaker 1: setting off the coast of southern California that have freight 274 00:14:52,600 --> 00:14:55,400 Speaker 1: that all those trucking operators would love to have their 275 00:14:55,400 --> 00:14:58,040 Speaker 1: hands on because it just drives a lot of demand. 276 00:14:58,280 --> 00:15:01,720 Speaker 1: And a lot of it is coordination of the trucking 277 00:15:01,800 --> 00:15:06,320 Speaker 1: industry coordinating with you know, the federal government who's then 278 00:15:06,360 --> 00:15:09,480 Speaker 1: trying to put pressure and coordinating with the port operators 279 00:15:09,480 --> 00:15:13,600 Speaker 1: and the UH union to really affect this. But this 280 00:15:13,680 --> 00:15:16,000 Speaker 1: is not as simple as just saying we're going to 281 00:15:16,120 --> 00:15:20,360 Speaker 1: operate longer hours and UH this is sort of overnight. 282 00:15:20,400 --> 00:15:22,440 Speaker 1: There's a lot of moving parts that have to be considered, 283 00:15:22,440 --> 00:15:25,720 Speaker 1: and most importantly, you have a major labor shortage people 284 00:15:25,760 --> 00:15:28,800 Speaker 1: that can actually operate at the port, and because of 285 00:15:28,960 --> 00:15:31,440 Speaker 1: all of the regulations and all the safety requirements that 286 00:15:31,600 --> 00:15:34,080 Speaker 1: it takes to be an operator, it's not as easy 287 00:15:34,120 --> 00:15:35,960 Speaker 1: as saying, hey, we're just gonna hire it out the shift. 288 00:15:36,000 --> 00:15:55,880 Speaker 1: It just doesn't work that way. Well, it's funny because 289 00:15:55,960 --> 00:15:59,800 Speaker 1: you say, this isn't is this isn't like a restaurant 290 00:15:59,800 --> 00:16:02,840 Speaker 1: the side it's gonna be open seven, And I understand 291 00:16:02,880 --> 00:16:06,360 Speaker 1: its orders of magnitude more complicated, but my first thought was, 292 00:16:06,400 --> 00:16:10,160 Speaker 1: like the year one, even a restaurant might have a 293 00:16:10,200 --> 00:16:14,680 Speaker 1: hard time going seven because of the well known uh 294 00:16:14,800 --> 00:16:18,640 Speaker 1: tightness of the surface labor market. And so yeah, I 295 00:16:18,640 --> 00:16:21,680 Speaker 1: mean even if you're even even if you can coordinate 296 00:16:22,480 --> 00:16:25,360 Speaker 1: the people who are work the ports and the unions 297 00:16:25,400 --> 00:16:28,040 Speaker 1: at the ports, of the dre operators in the warehouses 298 00:16:28,240 --> 00:16:31,360 Speaker 1: at which they're phrase is going to then be dropped 299 00:16:31,400 --> 00:16:34,360 Speaker 1: off inland, you still have to figure out like just 300 00:16:34,440 --> 00:16:37,720 Speaker 1: the actual like who's going to do the hours. Yeah, 301 00:16:37,840 --> 00:16:40,040 Speaker 1: labor is the you know, that's the biggest concern, is 302 00:16:40,080 --> 00:16:42,000 Speaker 1: where you're gonna get the people and and think about 303 00:16:42,040 --> 00:16:45,440 Speaker 1: working after hours or working on the weekend. It's a 304 00:16:45,560 --> 00:16:49,080 Speaker 1: very different sort of Each person that would want to 305 00:16:49,080 --> 00:16:52,560 Speaker 1: do that job typically These jobs are long tenure, they 306 00:16:52,600 --> 00:16:54,520 Speaker 1: take a lot of training. I mean you're dealing with, 307 00:16:55,040 --> 00:16:58,320 Speaker 1: you know, a very level, high level level of sophistication 308 00:16:58,400 --> 00:17:01,880 Speaker 1: orchestration that things to take place. And so getting labor 309 00:17:02,000 --> 00:17:04,200 Speaker 1: is a problem, as you mentioned for any job today, 310 00:17:04,200 --> 00:17:07,400 Speaker 1: it's a challenge, and started compound it by the fact 311 00:17:07,440 --> 00:17:10,479 Speaker 1: that you you need people who sort of understand how 312 00:17:10,480 --> 00:17:12,399 Speaker 1: it is. And we're not even talking about just the 313 00:17:12,440 --> 00:17:15,400 Speaker 1: crane operators. You remember that there's a lot of supporting 314 00:17:15,480 --> 00:17:19,320 Speaker 1: staff that goes into managing the entire port operations. It's 315 00:17:19,600 --> 00:17:21,960 Speaker 1: in many ways an airport for cargo, and so you 316 00:17:21,960 --> 00:17:24,600 Speaker 1: think about go to the Dallas are for the airports, 317 00:17:24,640 --> 00:17:28,040 Speaker 1: Chicago here or Atlanta, think of like how big this 318 00:17:28,080 --> 00:17:34,080 Speaker 1: infrastructure is. Between security professionals, between um just operation professionals. 319 00:17:34,440 --> 00:17:37,280 Speaker 1: You have a lot of people on the ground that 320 00:17:37,320 --> 00:17:39,880 Speaker 1: are making that happen, and you're trying to do this 321 00:17:40,000 --> 00:17:43,280 Speaker 1: at a port. It's much the same trying you know, 322 00:17:43,320 --> 00:17:45,359 Speaker 1: trying to manage that. And so this is going to 323 00:17:45,400 --> 00:17:49,360 Speaker 1: take a while before we actually see this go into effect, 324 00:17:49,840 --> 00:17:52,679 Speaker 1: and it's not something that will happen overnight. And like 325 00:17:52,720 --> 00:17:55,399 Speaker 1: I said, we haven't even talked about or we barely 326 00:17:55,400 --> 00:17:57,919 Speaker 1: talked about the fact that you need coordination of the 327 00:17:57,920 --> 00:18:01,560 Speaker 1: trucking operators and the warehouse who will offload these containers 328 00:18:02,040 --> 00:18:05,560 Speaker 1: to actually manage it and make ensure that it works. 329 00:18:07,480 --> 00:18:09,640 Speaker 1: So I want to ask you about the warehouses UM, 330 00:18:09,680 --> 00:18:13,240 Speaker 1: but maybe before I do. Just on the labor side, 331 00:18:13,560 --> 00:18:16,680 Speaker 1: I mean, Biden did talk about this a little bit, 332 00:18:16,720 --> 00:18:18,879 Speaker 1: so I think I think I saw that he was 333 00:18:18,920 --> 00:18:22,760 Speaker 1: talking about maybe making it easier for truckers to unionize 334 00:18:22,960 --> 00:18:25,960 Speaker 1: UM and boosting wages and things like that. I didn't 335 00:18:26,000 --> 00:18:30,520 Speaker 1: see many details beyond that, But what's your sense of 336 00:18:30,600 --> 00:18:33,320 Speaker 1: that side of things, Like, is there actually an effort 337 00:18:33,359 --> 00:18:35,880 Speaker 1: going on at the moment to make trucking a more 338 00:18:35,960 --> 00:18:41,119 Speaker 1: desirable or palatable profession. Yeah, I think it's you know, 339 00:18:41,440 --> 00:18:45,000 Speaker 1: at the dre operations are much easier unionized and have 340 00:18:45,240 --> 00:18:49,159 Speaker 1: much more an environment that's much easier to sort of 341 00:18:49,600 --> 00:18:52,120 Speaker 1: have the organized labor. Because the drivers stay local, they're 342 00:18:52,119 --> 00:18:55,600 Speaker 1: easier to organize their localized And there's a lot of 343 00:18:56,440 --> 00:19:01,000 Speaker 1: history of some practices that are less than desirable and 344 00:19:01,000 --> 00:19:06,760 Speaker 1: and really the trucking operators or the drivers themselves, uh 345 00:19:07,280 --> 00:19:10,040 Speaker 1: really sort of suffer a lot of the sort of 346 00:19:10,080 --> 00:19:13,320 Speaker 1: consequences of poor management and a lot of companies that 347 00:19:13,359 --> 00:19:15,360 Speaker 1: have sort of had abuse of practice. Is much more 348 00:19:15,400 --> 00:19:17,520 Speaker 1: so than you've seen the over the road trucking market. 349 00:19:17,840 --> 00:19:21,000 Speaker 1: It's probably one of the most, uh, in terms of 350 00:19:21,040 --> 00:19:24,000 Speaker 1: sort of poor labor practices. It's one of the more 351 00:19:24,320 --> 00:19:27,200 Speaker 1: um will say abusive. I think it's a really strong word, 352 00:19:27,520 --> 00:19:30,359 Speaker 1: but it's certainly not the most favorable climate for a 353 00:19:30,359 --> 00:19:33,040 Speaker 1: truck driver to operate that it's just because of the 354 00:19:33,440 --> 00:19:37,160 Speaker 1: way that you know, typically they find the trucking operators 355 00:19:37,200 --> 00:19:40,280 Speaker 1: finance the truck, they sort of in debt the driver 356 00:19:40,480 --> 00:19:43,800 Speaker 1: into the dre operator, the sort of subject. It's just 357 00:19:43,840 --> 00:19:48,080 Speaker 1: not an environment that's typically very friendly. You have rules 358 00:19:48,119 --> 00:19:50,159 Speaker 1: on who can actually enter the ports, so they have 359 00:19:50,200 --> 00:19:52,440 Speaker 1: a little bit control over that. It's just a much 360 00:19:52,560 --> 00:19:54,520 Speaker 1: it's almost like the taxi if you think of like 361 00:19:54,800 --> 00:19:57,080 Speaker 1: the way the taxis work and is like New York, 362 00:19:57,640 --> 00:20:00,520 Speaker 1: it's much more it's much more similar to that than 363 00:20:00,560 --> 00:20:02,879 Speaker 1: it is what you see the overthroad trucking market. The 364 00:20:02,920 --> 00:20:05,480 Speaker 1: overroad trucking market has its own set of issues, but 365 00:20:05,520 --> 00:20:09,760 Speaker 1: it's quite different than what you see with the dre operators. So, uh, 366 00:20:10,080 --> 00:20:11,960 Speaker 1: just getting back to the warehouse point, you talked about 367 00:20:11,960 --> 00:20:16,080 Speaker 1: the need for coordination between drivers or the trucking companies 368 00:20:16,119 --> 00:20:18,960 Speaker 1: and the warehouses. Can you talk about exactly like how 369 00:20:19,000 --> 00:20:23,920 Speaker 1: those two normally interact with each other and what's needed now. Yeah, 370 00:20:23,960 --> 00:20:27,480 Speaker 1: so effectively, when you think about the drey trucker who 371 00:20:27,520 --> 00:20:30,240 Speaker 1: goes and picks up the container at the port, they 372 00:20:30,280 --> 00:20:34,160 Speaker 1: take it into a warehouse or distribution center to off 373 00:20:34,280 --> 00:20:37,720 Speaker 1: to basically offload that cargo, so that container is unlikely 374 00:20:37,760 --> 00:20:40,520 Speaker 1: to show up at the retailer that you would get 375 00:20:40,520 --> 00:20:43,520 Speaker 1: your product out, particularly if you're outside of that sort 376 00:20:43,520 --> 00:20:46,479 Speaker 1: of metro area where that port is located. So this 377 00:20:46,520 --> 00:20:49,280 Speaker 1: would be translated the ship bent is then they break 378 00:20:49,320 --> 00:20:51,400 Speaker 1: it down, They take all the cargo, they break it down, 379 00:20:51,400 --> 00:20:53,760 Speaker 1: and they distribute it. So you may have a container 380 00:20:53,800 --> 00:20:57,640 Speaker 1: of teddy bears, and those teddy Bears are then distributed 381 00:20:57,680 --> 00:21:00,920 Speaker 1: to all of the inland look cations that are going 382 00:21:00,960 --> 00:21:03,520 Speaker 1: to and they end up on fifty foot trailers, and 383 00:21:03,560 --> 00:21:07,159 Speaker 1: so the teddy Bear boxes will then be mixed with 384 00:21:07,320 --> 00:21:10,120 Speaker 1: other cargo. So let's say it's going to a Walmart 385 00:21:10,160 --> 00:21:13,840 Speaker 1: distribution center, then Walmart will then take maybe it's shoes 386 00:21:13,960 --> 00:21:17,280 Speaker 1: and maybe it's you know, maybe it's coffee mugs and 387 00:21:17,320 --> 00:21:19,439 Speaker 1: teddy bears and all this freight gets mixed in it 388 00:21:19,720 --> 00:21:21,960 Speaker 1: to go to the final destination. So they've taken and 389 00:21:22,040 --> 00:21:26,520 Speaker 1: broken that one container, have sorted all of those sort 390 00:21:26,560 --> 00:21:29,160 Speaker 1: of locations where those teddy bears are going, and they 391 00:21:29,240 --> 00:21:31,840 Speaker 1: mix it with a bunch of other freight from other containers, 392 00:21:31,840 --> 00:21:34,560 Speaker 1: and that's effectively what those warehouses and distribution centers do. 393 00:21:35,000 --> 00:21:37,359 Speaker 1: So it's critical that if you want to turn the 394 00:21:37,440 --> 00:21:41,480 Speaker 1: equipment faster and get faster through put, it's not so 395 00:21:41,560 --> 00:21:44,600 Speaker 1: much about hours, it's about does the where are the 396 00:21:44,680 --> 00:21:51,080 Speaker 1: warehouses operating efficiently and act capacity to enable that freight 397 00:21:51,160 --> 00:21:54,040 Speaker 1: to be offloaded and turn that container so they can 398 00:21:54,080 --> 00:21:55,800 Speaker 1: get back to the port and the Chassie can get 399 00:21:55,800 --> 00:21:58,119 Speaker 1: back to the port. If your warehouses are closed, and 400 00:21:58,119 --> 00:22:01,240 Speaker 1: there are places in Southern California. In Southern California where 401 00:22:01,240 --> 00:22:04,240 Speaker 1: you're not allowed to make deliveries or pick ups after hours, 402 00:22:04,480 --> 00:22:08,120 Speaker 1: is they have ordinances due to sound and pollution where 403 00:22:08,920 --> 00:22:12,240 Speaker 1: they're not even allowed to go into a warehouse after hours. 404 00:22:12,240 --> 00:22:14,560 Speaker 1: So it's it's not as simple as hey, let's just 405 00:22:14,560 --> 00:22:17,280 Speaker 1: have the port operate. You then need labor inside the 406 00:22:17,280 --> 00:22:20,240 Speaker 1: warehouses and you need to have the support of the 407 00:22:20,280 --> 00:22:23,280 Speaker 1: local municipalities that will allow those trucks to come in 408 00:22:23,359 --> 00:22:27,639 Speaker 1: and out after hours. But because of noise pollution, noise concerns, 409 00:22:28,119 --> 00:22:31,240 Speaker 1: uh and pollution concerns, oftentimes that isn't the case. And 410 00:22:31,280 --> 00:22:34,600 Speaker 1: so this isn't just a simple thing to sort of saying, 411 00:22:34,680 --> 00:22:36,240 Speaker 1: let's turned the port on and all of a sudden 412 00:22:36,280 --> 00:22:40,320 Speaker 1: everything is magical. It is. It takes a lot of orchestration. God, 413 00:22:40,440 --> 00:22:42,879 Speaker 1: I hadn't even thought about that, But every it just 414 00:22:42,920 --> 00:22:45,240 Speaker 1: feels like, I feel like we can broad talk six 415 00:22:45,320 --> 00:22:49,000 Speaker 1: hours about literally like the process of getting a container 416 00:22:49,520 --> 00:22:52,040 Speaker 1: from a port to the warehouse, because I hadn't even 417 00:22:52,080 --> 00:22:54,359 Speaker 1: thought about like this idea that like they're gonna you know, okay, 418 00:22:54,359 --> 00:22:57,680 Speaker 1: the White House seven, but the towns in the cities 419 00:22:57,720 --> 00:22:59,639 Speaker 1: are gonna have rules on all of this too. And 420 00:22:59,680 --> 00:23:01,920 Speaker 1: there's not like it's not like we have some this 421 00:23:02,000 --> 00:23:05,640 Speaker 1: is this is I mean, California is the one. It's 422 00:23:05,720 --> 00:23:08,080 Speaker 1: really sort of strange looking at it from so far, 423 00:23:08,240 --> 00:23:12,240 Speaker 1: is that, you know, it's such an important part of 424 00:23:12,280 --> 00:23:16,000 Speaker 1: our economy and in the United States, yet you have 425 00:23:16,160 --> 00:23:20,280 Speaker 1: all of these really strange sort of political considerations that 426 00:23:20,640 --> 00:23:22,880 Speaker 1: impact if you look at a place like Savannah, Georgia, 427 00:23:22,920 --> 00:23:25,560 Speaker 1: which tends to be very pro business with a very 428 00:23:25,560 --> 00:23:28,440 Speaker 1: efficient port, it still has issues. So it's not just 429 00:23:28,600 --> 00:23:30,680 Speaker 1: the labor problems Southern California. I think a lot of 430 00:23:30,680 --> 00:23:33,960 Speaker 1: people like to point to that, but you actually see Savannah, 431 00:23:34,080 --> 00:23:36,680 Speaker 1: Georgia that actually is even further backed up. So we 432 00:23:37,040 --> 00:23:39,920 Speaker 1: have these problems that exist everywhere. Uh, and there are 433 00:23:39,960 --> 00:23:42,639 Speaker 1: no easy solutions. And this is not something that the 434 00:23:42,720 --> 00:23:46,760 Speaker 1: government can just do uh and hope that everything works out. 435 00:23:46,880 --> 00:23:49,680 Speaker 1: It's going to take a lot of coordination and effort 436 00:23:49,720 --> 00:23:52,720 Speaker 1: and energy among a lot of parties. And the problem 437 00:23:52,800 --> 00:23:56,400 Speaker 1: is it isn't just isn't that easy? Before we move 438 00:23:56,440 --> 00:23:59,080 Speaker 1: on from the dre operators and you know, there's sort 439 00:23:59,080 --> 00:24:01,280 Speaker 1: of there is this other world. Although we could keep 440 00:24:01,280 --> 00:24:04,119 Speaker 1: talking about, I do want to mention you mentioned the 441 00:24:04,240 --> 00:24:07,399 Speaker 1: sort of like brutal labor conditions reminds me just Rachel 442 00:24:07,440 --> 00:24:10,639 Speaker 1: Prematic business insider whose work I've followed on this. I 443 00:24:10,680 --> 00:24:12,879 Speaker 1: know she's talked to you. She tweeted about this. I 444 00:24:12,920 --> 00:24:15,679 Speaker 1: guess seen there was a Pulitzerprise story about how like 445 00:24:16,000 --> 00:24:20,600 Speaker 1: there was a indentured servitude some would say characterize some 446 00:24:20,640 --> 00:24:22,760 Speaker 1: of these markets because of, as you say, the sort 447 00:24:22,760 --> 00:24:25,600 Speaker 1: of the way the financing works and the way the 448 00:24:25,680 --> 00:24:28,680 Speaker 1: drivers are expected to like pay off these loans, kind 449 00:24:28,720 --> 00:24:31,480 Speaker 1: of like the New York City cab drivers does seem 450 00:24:31,480 --> 00:24:34,399 Speaker 1: about pretty brutal. Yeah, that's that's right. And that piece 451 00:24:34,680 --> 00:24:37,520 Speaker 1: is something that remember we're talking about with the USA 452 00:24:37,600 --> 00:24:42,240 Speaker 1: Today's story, correct. Uh. That piece particularly is talking about 453 00:24:42,280 --> 00:24:44,600 Speaker 1: the ports and DRE operators, which, like I said, is 454 00:24:44,640 --> 00:24:48,000 Speaker 1: a sort of a segment of trucking which has you know, 455 00:24:48,400 --> 00:24:52,720 Speaker 1: the corporations have a lot more power over the you know, 456 00:24:52,760 --> 00:24:55,359 Speaker 1: they've constructed the rules and the set of circumstances that 457 00:24:55,400 --> 00:24:58,200 Speaker 1: it really favored them. Corporations have a lot more power 458 00:24:58,280 --> 00:25:00,840 Speaker 1: than in the Drey operator and DRE operations, and they 459 00:25:00,880 --> 00:25:02,679 Speaker 1: do in these sort of over the road truck market's 460 00:25:02,720 --> 00:25:06,320 Speaker 1: exact opposite where the driver, the individual driver has an 461 00:25:06,440 --> 00:25:10,760 Speaker 1: enormous amount of power over the sort of environment versus 462 00:25:10,800 --> 00:25:13,119 Speaker 1: the DRE operations. So I think this is actually like 463 00:25:13,160 --> 00:25:18,280 Speaker 1: a good seg into another interesting dimension that happened since 464 00:25:18,320 --> 00:25:20,800 Speaker 1: the last time we talked. You had a lot of 465 00:25:20,800 --> 00:25:23,959 Speaker 1: comments on this on Twitter, but I don't know if 466 00:25:24,000 --> 00:25:26,439 Speaker 1: the stats are official you you might have them, But 467 00:25:26,520 --> 00:25:30,440 Speaker 1: the vaccine mandate and the requirement that or the sort 468 00:25:30,440 --> 00:25:34,040 Speaker 1: of executive order from the White House that large companies 469 00:25:34,200 --> 00:25:39,760 Speaker 1: essentially can put pressure or force their employees to get vaccinated. 470 00:25:40,119 --> 00:25:42,960 Speaker 1: I think it's companies that are have at least a 471 00:25:43,000 --> 00:25:47,720 Speaker 1: hundred employees, which not many trucking companies do. Could most 472 00:25:47,920 --> 00:25:49,840 Speaker 1: I under you know, as we learn last time, are 473 00:25:49,840 --> 00:25:53,439 Speaker 1: extremely small, but some do. I'm curious like how that's 474 00:25:53,680 --> 00:25:57,320 Speaker 1: unfolded and what we know about a tensions that have 475 00:25:57,480 --> 00:26:00,600 Speaker 1: arisen from that, and be just the sort of percentage 476 00:26:00,600 --> 00:26:04,400 Speaker 1: of truck drivers have gotten the vaccine. Yeah, it's hard 477 00:26:04,400 --> 00:26:07,159 Speaker 1: to know what percentage. We talked to fleet operators that 478 00:26:07,320 --> 00:26:11,000 Speaker 1: you have suggested that the number of unvaccinated is anywhere 479 00:26:11,000 --> 00:26:15,640 Speaker 1: from the typical answer I. They've done their own surveys. 480 00:26:15,680 --> 00:26:18,640 Speaker 1: They won't they won't share that data with us because 481 00:26:18,720 --> 00:26:20,840 Speaker 1: obviously they want to keep that pretty close to best. 482 00:26:20,840 --> 00:26:22,840 Speaker 1: There's a lot of sort of privacy. But they're from 483 00:26:22,840 --> 00:26:26,119 Speaker 1: their own assessments at least a third from what we 484 00:26:26,160 --> 00:26:29,720 Speaker 1: can gather, if not more are unvaccinated. And this was 485 00:26:29,880 --> 00:26:32,359 Speaker 1: of course about a month ago, that's probably has change. 486 00:26:32,400 --> 00:26:34,280 Speaker 1: I would imagine just looking at the broader data that 487 00:26:34,320 --> 00:26:36,720 Speaker 1: we see some level improvement, but it's hard to know 488 00:26:36,880 --> 00:26:39,919 Speaker 1: how how significant that is. I mean, the big issue 489 00:26:40,160 --> 00:26:43,760 Speaker 1: is the sort of discrepancy between the mandate saying that 490 00:26:43,800 --> 00:26:47,400 Speaker 1: if you have over a hundred employees then you have 491 00:26:47,520 --> 00:26:51,080 Speaker 1: to be vaccinated, and under a hundred employees you don't. 492 00:26:51,119 --> 00:26:53,360 Speaker 1: And you think about the fragmented nature of trucking as 493 00:26:53,359 --> 00:26:56,080 Speaker 1: you mentioned, Joe, because it is so fragmented, and these 494 00:26:56,080 --> 00:26:58,760 Speaker 1: tend to be a very a lot of very small operators, 495 00:26:59,240 --> 00:27:00,879 Speaker 1: you end up in a city way should where a 496 00:27:00,880 --> 00:27:03,760 Speaker 1: truck driver that works for a big company who doesn't 497 00:27:03,960 --> 00:27:06,879 Speaker 1: want to get vaccinated could just as well leave the 498 00:27:06,920 --> 00:27:09,400 Speaker 1: big company and go to a small operator. And now 499 00:27:09,480 --> 00:27:13,320 Speaker 1: you have this really weird sort of dichotomy between the 500 00:27:13,320 --> 00:27:16,040 Speaker 1: big companies and the small company. So a company with 501 00:27:16,200 --> 00:27:19,320 Speaker 1: ninety eight employees or ninety nine against ninety eight bloys 502 00:27:19,560 --> 00:27:22,359 Speaker 1: could easily add one driver, pick off a driver from 503 00:27:22,400 --> 00:27:25,600 Speaker 1: a big company, and they wouldn't have that driver would 504 00:27:25,640 --> 00:27:28,240 Speaker 1: not have to be vaccinated. You take a more extreme 505 00:27:28,280 --> 00:27:31,200 Speaker 1: example of a fleet, let's say ten trucks or ten 506 00:27:31,320 --> 00:27:35,040 Speaker 1: drivers or ten employees, and all of a sudden they 507 00:27:35,040 --> 00:27:38,159 Speaker 1: can add another, you know, eighty trucks to their to 508 00:27:38,240 --> 00:27:40,960 Speaker 1: their business and really sort of pick off the big fleets. 509 00:27:40,960 --> 00:27:45,040 Speaker 1: It just creates this really weird sort of environment where 510 00:27:45,800 --> 00:27:48,919 Speaker 1: while in the practice it may it may be very 511 00:27:49,000 --> 00:27:51,680 Speaker 1: valuable to get people vaccinated, the realities in the truck 512 00:27:51,680 --> 00:27:54,280 Speaker 1: and industry are quite different. So what is sort of 513 00:27:54,359 --> 00:27:58,159 Speaker 1: unknown about this is will we see a situation where 514 00:27:58,920 --> 00:28:02,960 Speaker 1: it becomes that much harder if this actually goes into effect, 515 00:28:03,040 --> 00:28:05,240 Speaker 1: or how it goes into effect, how hard it will 516 00:28:05,280 --> 00:28:07,720 Speaker 1: be for larger carriers to sort of feel their trucks. 517 00:28:07,720 --> 00:28:09,920 Speaker 1: And the reality is that even though the market is 518 00:28:10,000 --> 00:28:13,600 Speaker 1: very fragmented, sort of the larger shippers, the one with 519 00:28:13,680 --> 00:28:16,639 Speaker 1: really efficient supply chains, really are dependent upon the bigger 520 00:28:16,640 --> 00:28:20,080 Speaker 1: trucking companies to manage their supply chain. So that if 521 00:28:20,080 --> 00:28:23,400 Speaker 1: you think about the sort of efficiencies that we enjoy 522 00:28:23,520 --> 00:28:26,240 Speaker 1: in terms of ordering product and getting it on time, 523 00:28:26,280 --> 00:28:28,920 Speaker 1: and the brands and the retailers that do a really 524 00:28:28,960 --> 00:28:31,200 Speaker 1: good job of that, they tend to be they tend 525 00:28:31,240 --> 00:28:34,200 Speaker 1: to work with the larger operators because they have the scale, 526 00:28:34,560 --> 00:28:37,600 Speaker 1: they have the technology, they have the resources and the 527 00:28:37,640 --> 00:28:41,320 Speaker 1: assets to support the type of missions that those companies require. 528 00:28:41,600 --> 00:28:45,080 Speaker 1: The smaller operators because the fragmented nature of it don't 529 00:28:45,360 --> 00:28:48,000 Speaker 1: typically pay in that market at a big level, and 530 00:28:48,040 --> 00:28:51,959 Speaker 1: so it creates these sort of really unpredictable outcomes. I mean, 531 00:28:51,960 --> 00:28:54,960 Speaker 1: if you think about a large trucking company losing five 532 00:28:55,040 --> 00:28:57,520 Speaker 1: percent of its population. While all the surface that sounds 533 00:28:57,520 --> 00:29:00,280 Speaker 1: like a really sort of small number, it is very 534 00:29:00,320 --> 00:29:02,800 Speaker 1: significant in terms of what it could mean a capacity. 535 00:29:02,800 --> 00:29:06,400 Speaker 1: I think you guys understand that the marginal producer is 536 00:29:06,440 --> 00:29:08,240 Speaker 1: the one that sets the price of the market, and 537 00:29:08,280 --> 00:29:10,400 Speaker 1: you think about a three to five percent degregation and 538 00:29:10,440 --> 00:29:15,360 Speaker 1: capacity across the industry, that would have a exponential outcome 539 00:29:16,200 --> 00:29:18,440 Speaker 1: to the overall construction of the freight market. And so 540 00:29:18,520 --> 00:29:21,920 Speaker 1: the sort of inflationary market are prices that we've seen 541 00:29:21,960 --> 00:29:26,440 Speaker 1: with freight rates would just continue to accelerate. Well, this 542 00:29:26,520 --> 00:29:28,280 Speaker 1: is something that I wanted to ask you because I 543 00:29:28,320 --> 00:29:30,920 Speaker 1: remember when you first came on. One of the things 544 00:29:30,960 --> 00:29:33,760 Speaker 1: that stuck out in the conversation was I think you 545 00:29:33,840 --> 00:29:36,800 Speaker 1: pointed to twenty I think it was nine, as like 546 00:29:36,960 --> 00:29:40,600 Speaker 1: this terrible year for the trucking industry, where like the 547 00:29:40,680 --> 00:29:44,160 Speaker 1: number of companies that went bust was just astronomical, and 548 00:29:44,320 --> 00:29:48,200 Speaker 1: part of that, from what I remember, was the government 549 00:29:48,440 --> 00:29:52,920 Speaker 1: creating like some sort of new mandate for an electronic 550 00:29:53,040 --> 00:29:57,280 Speaker 1: logging device. Everyone had expected it that new requirement to 551 00:29:57,320 --> 00:30:00,560 Speaker 1: reduce capacity, but instead it ended up adding a ton 552 00:30:00,600 --> 00:30:02,680 Speaker 1: of capacity. And then you know, there were too many 553 00:30:03,040 --> 00:30:05,240 Speaker 1: tracking companies and so a bunch of them went out 554 00:30:05,240 --> 00:30:08,880 Speaker 1: of business. But like, could you draw a parallel between 555 00:30:08,960 --> 00:30:13,440 Speaker 1: that and what's going on now with the vaccine mandate. Yeah, 556 00:30:13,520 --> 00:30:17,880 Speaker 1: it's very interesting because it's hard to know what is 557 00:30:18,000 --> 00:30:21,840 Speaker 1: actually sort of causing all of the issues around the 558 00:30:21,880 --> 00:30:25,360 Speaker 1: sort of supply chain crunches and demand. So consider demand 559 00:30:25,400 --> 00:30:27,880 Speaker 1: is certainly an element of a government spending is an 560 00:30:27,920 --> 00:30:29,440 Speaker 1: element of it, and so you have this sort of 561 00:30:29,480 --> 00:30:33,160 Speaker 1: inflationary demand market which is taking place right now, and freight. 562 00:30:33,200 --> 00:30:35,760 Speaker 1: If you go back to two eighteen, really two things 563 00:30:35,760 --> 00:30:38,920 Speaker 1: that were sort of driving the the increase in capacity 564 00:30:39,080 --> 00:30:41,600 Speaker 1: and sort of the bust of two thousand nineteen, which 565 00:30:41,640 --> 00:30:44,480 Speaker 1: is in two thousand and eighteen, as Trace mentioned, the 566 00:30:44,880 --> 00:30:48,760 Speaker 1: government mandated electronic logging devices, and there was an assumption 567 00:30:48,960 --> 00:30:52,880 Speaker 1: moving up into that that drivers would not participate in 568 00:30:52,920 --> 00:30:55,560 Speaker 1: the electronic logging devices. Is that drivers were saying, I'm 569 00:30:55,560 --> 00:30:58,440 Speaker 1: not going to let big brother track me and have 570 00:30:58,760 --> 00:31:01,400 Speaker 1: let the government see what I'm actually doing. Over the road, 571 00:31:01,400 --> 00:31:03,719 Speaker 1: and there was this level of paranoia. Well when that 572 00:31:03,760 --> 00:31:06,720 Speaker 1: me and date came about and this had taken you know, 573 00:31:06,720 --> 00:31:10,320 Speaker 1: it took about a decade for between all the lawsuits 574 00:31:10,360 --> 00:31:13,200 Speaker 1: and regulatory changes before it actually been into effects. It 575 00:31:13,280 --> 00:31:16,280 Speaker 1: wasn't an unsort of expected outcome. A lot of what 576 00:31:16,360 --> 00:31:20,080 Speaker 1: actually happened was the opposite. Is that every fleet operator 577 00:31:20,200 --> 00:31:23,160 Speaker 1: thought anticipated there was gonna be a massive capacity crunch, 578 00:31:23,480 --> 00:31:26,480 Speaker 1: and so they sort of overcorrected, uh in terms of 579 00:31:26,640 --> 00:31:30,880 Speaker 1: adding capacity. At the same time, we saw an economic 580 00:31:31,200 --> 00:31:34,080 Speaker 1: or an industrial slowdown due to tearips sort of the 581 00:31:34,120 --> 00:31:36,960 Speaker 1: Trump's tariffs that took place in two thousand eighteen, which 582 00:31:37,000 --> 00:31:39,200 Speaker 1: is caused a big hangover nineteen. So we had an 583 00:31:39,240 --> 00:31:42,840 Speaker 1: oversupplied market at nineteen in terms of capacity and under 584 00:31:43,400 --> 00:31:46,440 Speaker 1: demanded market in terms of freight. And that's what we 585 00:31:46,480 --> 00:31:49,280 Speaker 1: saw a nine team which caused these bankruptcies. And like 586 00:31:49,280 --> 00:31:52,280 Speaker 1: I said, it's we're talking about three to five sort 587 00:31:52,280 --> 00:31:54,600 Speaker 1: of change in the market constructs, which caused a lot 588 00:31:54,640 --> 00:31:58,680 Speaker 1: of bankruptcies because the marginal producers were really driving prices down. 589 00:31:58,680 --> 00:32:03,040 Speaker 1: They were just oversupplied. This situation is in many ways 590 00:32:03,480 --> 00:32:07,080 Speaker 1: different in the sense that back in nineteen the labor 591 00:32:07,160 --> 00:32:09,840 Speaker 1: market was not super was not as tight as it is. 592 00:32:09,880 --> 00:32:12,280 Speaker 1: It was tight, but not what we see right now, 593 00:32:12,800 --> 00:32:16,800 Speaker 1: and the jobs that would be fungible or to trucking 594 00:32:16,800 --> 00:32:20,120 Speaker 1: would be construction. Back into does A nineteen was was 595 00:32:20,200 --> 00:32:23,280 Speaker 1: good but not great. The conditions weren't spectacular like they 596 00:32:23,280 --> 00:32:26,120 Speaker 1: are right now in terms of labor demand, and so 597 00:32:26,640 --> 00:32:29,480 Speaker 1: what exists today is quite different than what existed then, 598 00:32:29,560 --> 00:32:33,080 Speaker 1: which is, you know, drivers can easily leave their fleet 599 00:32:33,600 --> 00:32:35,760 Speaker 1: to go get a construction job and make as much 600 00:32:35,880 --> 00:32:38,120 Speaker 1: money as they would drive in a truck and not 601 00:32:38,280 --> 00:32:41,320 Speaker 1: have to deal with the stand out over the road 602 00:32:41,440 --> 00:32:43,840 Speaker 1: and being away from home. They can also operate in 603 00:32:43,880 --> 00:32:47,520 Speaker 1: the gray economy through these types of jobs like construction 604 00:32:47,600 --> 00:32:50,440 Speaker 1: where they don't have to report that income, and still 605 00:32:50,520 --> 00:32:53,720 Speaker 1: because of a lot of the government assistances, benefit from 606 00:32:53,760 --> 00:32:56,000 Speaker 1: from not having to sort of go off some of 607 00:32:56,000 --> 00:32:58,920 Speaker 1: the government assistants that exist. And so because of all 608 00:32:58,920 --> 00:33:02,200 Speaker 1: the sort of construction of the market, it sort of 609 00:33:02,200 --> 00:33:04,200 Speaker 1: means that if somebody's gonna leave a fleet, they probably 610 00:33:04,200 --> 00:33:06,080 Speaker 1: don't stay in the truck in industry. They probably do 611 00:33:06,160 --> 00:33:08,200 Speaker 1: something else. And so it's just a lot of sort 612 00:33:08,240 --> 00:33:10,760 Speaker 1: of unknown factors that take place that are just creating 613 00:33:10,760 --> 00:33:13,560 Speaker 1: all these really strange environments. One of the things that 614 00:33:13,800 --> 00:33:16,200 Speaker 1: you know, when we looked at the vaccine mandate, I 615 00:33:16,360 --> 00:33:20,760 Speaker 1: pointed out that this could cause a significant amount of 616 00:33:20,840 --> 00:33:23,480 Speaker 1: drivers to leave the industry. People challenge that fact and 617 00:33:23,480 --> 00:33:26,360 Speaker 1: this that they wouldn't give up their job if just 618 00:33:26,440 --> 00:33:28,800 Speaker 1: for the vaccine, and I'd say, well, I take exception 619 00:33:28,880 --> 00:33:31,800 Speaker 1: to that, because it's hard enough for them to stay 620 00:33:32,480 --> 00:33:35,320 Speaker 1: employed or want to stay in the trucking industry as 621 00:33:35,360 --> 00:33:37,960 Speaker 1: it is. And you're talking about with all of the 622 00:33:38,040 --> 00:33:41,720 Speaker 1: data around how important it is to be vaccinated, where 623 00:33:41,720 --> 00:33:44,040 Speaker 1: you're risking your own life and your family, you actually 624 00:33:44,120 --> 00:33:46,640 Speaker 1: think they're going to keep their trucking job. They're gonna 625 00:33:46,640 --> 00:33:48,680 Speaker 1: get vaccinated because they want to keep the trucking job. 626 00:33:48,720 --> 00:33:50,400 Speaker 1: That just isn't the way it works. And so you 627 00:33:50,480 --> 00:33:52,960 Speaker 1: do expect that if this goes into effect, or when 628 00:33:52,960 --> 00:33:56,120 Speaker 1: it goes into effect, that you will see a percent 629 00:33:56,320 --> 00:33:58,840 Speaker 1: of truck drivers that will leave the industries. Is we 630 00:33:59,120 --> 00:34:01,800 Speaker 1: don't know how many end up leaving, but we do 631 00:34:01,920 --> 00:34:20,920 Speaker 1: know that some will. So I want to talk a 632 00:34:20,960 --> 00:34:24,120 Speaker 1: little bit more about the I guess you say, the 633 00:34:24,120 --> 00:34:29,520 Speaker 1: market structure of this, the trucking economy and I mentioned 634 00:34:29,680 --> 00:34:31,640 Speaker 1: in the intro and I said, what's that? But it's 635 00:34:31,640 --> 00:34:35,520 Speaker 1: actually I learned on some Telegram groups and I see 636 00:34:35,600 --> 00:34:40,200 Speaker 1: things like people posting Joe is an undercover trucker. Just 637 00:34:39,719 --> 00:34:45,440 Speaker 1: you know, Tracy, Joe, we gotta get you guys to 638 00:34:45,640 --> 00:34:48,440 Speaker 1: run a trucking company. This is how it's gonna work. 639 00:34:48,480 --> 00:34:50,040 Speaker 1: You know, Tracy, get drive and I'm going to be 640 00:34:50,080 --> 00:34:52,359 Speaker 1: like a dispatcher or something like that. But I look 641 00:34:52,400 --> 00:34:56,360 Speaker 1: in these telegram groups and I all day throughout it 642 00:34:56,520 --> 00:34:59,600 Speaker 1: like any cap in Crest Hill, Illinois, which actually I 643 00:34:59,680 --> 00:35:02,160 Speaker 1: went to up middle school, or I went to elementary 644 00:35:02,160 --> 00:35:03,960 Speaker 1: school for a couple of years in Cryst Hill, any 645 00:35:04,040 --> 00:35:08,360 Speaker 1: van load from Dallas, Texas, any van cap in Aurora, Colorado? 646 00:35:08,960 --> 00:35:11,879 Speaker 1: What am I reading? Hey? When I see these things? 647 00:35:11,920 --> 00:35:16,440 Speaker 1: And how important are these sort of informal message board 648 00:35:17,120 --> 00:35:21,760 Speaker 1: postings too? Like the overall market. So it's a really 649 00:35:21,960 --> 00:35:25,480 Speaker 1: sort of interesting because it's not just Telegram, it's Facebook. 650 00:35:25,600 --> 00:35:27,239 Speaker 1: It's you know, you don't really see a lot of 651 00:35:27,239 --> 00:35:30,239 Speaker 1: activity on Twitter, frankly, but Facebook is that it's actually 652 00:35:30,280 --> 00:35:33,960 Speaker 1: a really important messaging system for truck drivers, um and 653 00:35:34,000 --> 00:35:36,040 Speaker 1: so you can actually find out a ton of information 654 00:35:36,080 --> 00:35:37,880 Speaker 1: about what's happened in the industry because it tends to 655 00:35:37,920 --> 00:35:40,560 Speaker 1: be the first place they go to is Facebook. Um, 656 00:35:40,719 --> 00:35:43,319 Speaker 1: but what you're actually hearing is when they say van, 657 00:35:43,560 --> 00:35:46,319 Speaker 1: it's not vans. I mean this is study because like I, 658 00:35:46,400 --> 00:35:48,880 Speaker 1: when we bring in a journalist who's writing about it 659 00:35:48,960 --> 00:35:51,000 Speaker 1: and they read the word van, they immediately think a 660 00:35:51,000 --> 00:35:52,719 Speaker 1: bunch of vans and like, no, no, no no, no, this 661 00:35:52,760 --> 00:35:55,200 Speaker 1: is a fifty three ft van trader. It just means 662 00:35:55,239 --> 00:35:57,759 Speaker 1: that it's not the van trader means it doesn't have 663 00:35:57,800 --> 00:36:00,760 Speaker 1: a refrigerated unit, and it's not. It is have a flatboat. 664 00:36:00,760 --> 00:36:03,360 Speaker 1: It's a it's an enclosed uh. And I've learned that 665 00:36:03,520 --> 00:36:07,680 Speaker 1: reefer is the term for refrigerator. They're not mowing cannabis, 666 00:36:07,760 --> 00:36:12,080 Speaker 1: they're hauling refrigerated A reefer is the term. So yeah, 667 00:36:12,080 --> 00:36:15,839 Speaker 1: So what what effectively is happening is the truck driver 668 00:36:16,080 --> 00:36:19,799 Speaker 1: that you mentioned is asking for a van load, for 669 00:36:19,920 --> 00:36:23,400 Speaker 1: a fifty three ft trailer load to go to I 670 00:36:23,440 --> 00:36:26,759 Speaker 1: believe you said Dallas and somewhere else. They want to 671 00:36:26,800 --> 00:36:28,880 Speaker 1: find a load that goes in that direction. Because you 672 00:36:28,920 --> 00:36:32,040 Speaker 1: remember in the over the road trucking market is these 673 00:36:32,080 --> 00:36:34,560 Speaker 1: are not planned routes. Day and day out. So if 674 00:36:34,600 --> 00:36:36,560 Speaker 1: if you're working and dre at the port, you're going 675 00:36:36,560 --> 00:36:38,160 Speaker 1: in and out of the port. You may be going 676 00:36:38,200 --> 00:36:40,480 Speaker 1: to different parts of southern California, but you're going in 677 00:36:40,480 --> 00:36:42,040 Speaker 1: and out of the port. That's where your life is. 678 00:36:42,480 --> 00:36:45,919 Speaker 1: In the overthroad trucking market, you're sort of nomadic or 679 00:36:45,960 --> 00:36:48,719 Speaker 1: a gypsy of sorts, where you don't know where you're 680 00:36:48,719 --> 00:36:51,319 Speaker 1: going each day. And and if you own your own 681 00:36:51,320 --> 00:36:53,919 Speaker 1: trucking company, if your owner operator, you get to sort 682 00:36:53,920 --> 00:36:56,839 Speaker 1: of set your own hours and get to pick where 683 00:36:56,880 --> 00:36:59,320 Speaker 1: you want to go. So this driver that you mentioned 684 00:36:59,680 --> 00:37:03,719 Speaker 1: is king for a load from Illinois wherever the town 685 00:37:03,760 --> 00:37:08,000 Speaker 1: he's in Illinois, to to Dallas, and so he's trying 686 00:37:08,000 --> 00:37:10,839 Speaker 1: to find a load that fits his desire. We don't 687 00:37:10,840 --> 00:37:12,239 Speaker 1: know why he wants to go to Dallas. Maybe he 688 00:37:12,280 --> 00:37:15,320 Speaker 1: lives in Dallas. Maybe he's got a spouse in Dallas, 689 00:37:15,400 --> 00:37:17,360 Speaker 1: or a family in Dallas. Maybe he has a girlfriend 690 00:37:17,400 --> 00:37:19,880 Speaker 1: of Dallas. Whatever, maybe he wants to go to a 691 00:37:20,040 --> 00:37:23,160 Speaker 1: sporting event. Drivers do decide they want to go to 692 00:37:23,160 --> 00:37:26,200 Speaker 1: these different markets for various reasons, many of them economic, 693 00:37:26,360 --> 00:37:28,960 Speaker 1: other just because they want to go there. What what 694 00:37:29,000 --> 00:37:30,680 Speaker 1: he's trying to do is final load that fits his 695 00:37:30,719 --> 00:37:32,640 Speaker 1: needs that can get them there, and so they use 696 00:37:32,719 --> 00:37:35,880 Speaker 1: these message boards. Is sort of an informal marketplace to 697 00:37:35,920 --> 00:37:38,640 Speaker 1: get access to freight. There are more formal marketplaces. We've 698 00:37:38,719 --> 00:37:41,560 Speaker 1: seen sort of the emergence of digital apps which are 699 00:37:41,600 --> 00:37:45,439 Speaker 1: sort of really new Uber Freight as one Convoy is one, 700 00:37:45,960 --> 00:37:48,080 Speaker 1: and as well as sort of traditional freight brokers that 701 00:37:48,120 --> 00:37:51,799 Speaker 1: have built their own marketplaces. But you also see what 702 00:37:51,840 --> 00:37:54,399 Speaker 1: we call load boards, which think of it as Craigslist 703 00:37:54,520 --> 00:37:57,759 Speaker 1: for freight, where or a match dot Com for freight 704 00:37:57,880 --> 00:38:00,239 Speaker 1: is probably a better example, where a buyo or and 705 00:38:00,320 --> 00:38:04,680 Speaker 1: a seller of capacity. So the broker is looking for, 706 00:38:04,960 --> 00:38:09,360 Speaker 1: you know, looking for matches and trying to find drivers 707 00:38:09,440 --> 00:38:12,840 Speaker 1: or truckers that will fit there will take the loads 708 00:38:12,840 --> 00:38:15,480 Speaker 1: that they offer, and drivers are trying to find loads 709 00:38:15,480 --> 00:38:17,360 Speaker 1: that will fit their needs. And so you can search 710 00:38:17,719 --> 00:38:19,680 Speaker 1: for hey, I'm looking for a load that originates in 711 00:38:19,719 --> 00:38:22,560 Speaker 1: Illinois and goes to Dallas, and then they'll match it. Now, 712 00:38:22,600 --> 00:38:24,880 Speaker 1: one of the really interesting things about that is the 713 00:38:24,920 --> 00:38:27,880 Speaker 1: assumption is that the trading would happen on online, But 714 00:38:28,080 --> 00:38:31,560 Speaker 1: much like internet dating is, when you consummated transaction, you 715 00:38:31,640 --> 00:38:35,239 Speaker 1: do it through another method, so email or phone you're 716 00:38:35,239 --> 00:38:38,120 Speaker 1: not actually transacting inside the platform, which is a really 717 00:38:38,160 --> 00:38:40,960 Speaker 1: strange sort of environment. Which is the reason we think 718 00:38:41,000 --> 00:38:43,440 Speaker 1: of it as Craigslist more than eBay or Amazon, is 719 00:38:43,480 --> 00:38:48,239 Speaker 1: that the actual consummation happens offline. How come no one 720 00:38:48,320 --> 00:38:52,759 Speaker 1: has like cornered this market and created like Facebook for 721 00:38:52,800 --> 00:38:55,759 Speaker 1: truckers and then created like some sort of platform where 722 00:38:55,800 --> 00:38:59,839 Speaker 1: you could actually transact as well, like find the truckers 723 00:39:00,360 --> 00:39:03,520 Speaker 1: and then also pay them or book them all in 724 00:39:03,640 --> 00:39:07,719 Speaker 1: like one network. Yeah, so there's been a lot of attempts. 725 00:39:07,719 --> 00:39:11,160 Speaker 1: I mean, the load boards are as close to a 726 00:39:11,320 --> 00:39:14,560 Speaker 1: marketplace as you can get, and that you know there's 727 00:39:14,640 --> 00:39:16,719 Speaker 1: two is d A T and truck stop sort of 728 00:39:17,000 --> 00:39:20,640 Speaker 1: have the vast majority of market share, probably nineties seven 729 00:39:20,760 --> 00:39:24,920 Speaker 1: percent market share combined, and so they are the marketplaces 730 00:39:24,960 --> 00:39:27,560 Speaker 1: of the spot market. They tend to handle freight that's 731 00:39:28,000 --> 00:39:31,799 Speaker 1: already been uh, sort of picked apart by the contracted 732 00:39:31,800 --> 00:39:33,879 Speaker 1: freight contractor. Freight doesn't end up on the load board, 733 00:39:34,239 --> 00:39:37,040 Speaker 1: it's typically and then brokers will pick their own freight. 734 00:39:37,280 --> 00:39:40,719 Speaker 1: They'll end up picking what they can through their own networks, 735 00:39:40,719 --> 00:39:42,680 Speaker 1: and then whatever is left over they sort of put 736 00:39:42,719 --> 00:39:47,520 Speaker 1: into these loadboard marketplaces. What we are seeing. So that's 737 00:39:47,520 --> 00:39:49,839 Speaker 1: sort of the way things have operated, and they sort 738 00:39:49,840 --> 00:39:52,279 Speaker 1: of emerged from sort of truck stops in the old days, 739 00:39:52,280 --> 00:39:54,719 Speaker 1: in the nineteen seventies or nineteen eighties, you would go 740 00:39:54,760 --> 00:39:56,520 Speaker 1: to a truck stop and they would be a board 741 00:39:57,360 --> 00:39:59,160 Speaker 1: a screen that would show all the loads and you 742 00:39:59,200 --> 00:40:00,719 Speaker 1: could have a fine. You pick it up, and you 743 00:40:00,840 --> 00:40:03,080 Speaker 1: call and say I want load one, two, three, four five, 744 00:40:03,680 --> 00:40:06,040 Speaker 1: and that's how you would get the load. Now it's 745 00:40:06,160 --> 00:40:08,839 Speaker 1: the Internet has sort of enabled this sort of marketplace model, 746 00:40:08,880 --> 00:40:13,359 Speaker 1: but we don't see binding outcomes or an exchange that 747 00:40:13,480 --> 00:40:16,120 Speaker 1: you would identify and financial markets take place. In freight, 748 00:40:16,480 --> 00:40:19,640 Speaker 1: there has been an emergence in the last say five 749 00:40:19,760 --> 00:40:24,320 Speaker 1: years of digital marketplaces almost like an uber a freight. 750 00:40:24,400 --> 00:40:26,960 Speaker 1: In fact, uber freight is an uber a freight is 751 00:40:26,960 --> 00:40:31,360 Speaker 1: a digital marketplace which enables an owner operator to basically 752 00:40:31,520 --> 00:40:34,560 Speaker 1: find freight and source it from a digital marketplace. All 753 00:40:34,600 --> 00:40:37,719 Speaker 1: of the consummation happens in the marketplace UH and then 754 00:40:37,760 --> 00:40:41,200 Speaker 1: they're paid. The difference is that the freight broker is 755 00:40:41,239 --> 00:40:44,840 Speaker 1: the principle and the transactions. So effectively, what they have 756 00:40:44,960 --> 00:40:48,240 Speaker 1: is these marketplaces, but they're the driver is being paid 757 00:40:48,680 --> 00:40:52,839 Speaker 1: or the operator is being paid from the digital marketplace, 758 00:40:53,160 --> 00:40:55,160 Speaker 1: and so it's not truly an exchange. It's more of 759 00:40:55,160 --> 00:40:57,840 Speaker 1: a closed network. Which is why the Uber example is 760 00:40:57,880 --> 00:41:00,200 Speaker 1: a better example, because if you think about an Uber 761 00:41:00,280 --> 00:41:02,680 Speaker 1: driver and they're getting paid by Uber, same existing the 762 00:41:02,680 --> 00:41:07,200 Speaker 1: trucking market is that that that digital freight marketplace matching 763 00:41:07,239 --> 00:41:10,319 Speaker 1: engine is actually sourced the freight, they have the customer relationship. 764 00:41:10,680 --> 00:41:13,120 Speaker 1: There are the ones that set the price. Now it 765 00:41:13,120 --> 00:41:15,640 Speaker 1: may be set by some type of algorithm, it may 766 00:41:15,640 --> 00:41:18,960 Speaker 1: be set by an in depth of sorts, but at 767 00:41:18,960 --> 00:41:21,840 Speaker 1: the end of the day, the rules are governed by 768 00:41:21,960 --> 00:41:25,640 Speaker 1: the principle of the transaction, which is the freight broker, 769 00:41:25,760 --> 00:41:28,360 Speaker 1: and not by a third party marketplace that you would 770 00:41:28,440 --> 00:41:31,120 Speaker 1: expect in a large commodity market. And I think one 771 00:41:31,160 --> 00:41:33,759 Speaker 1: of the things that really shocking about this, and Joe 772 00:41:33,760 --> 00:41:35,719 Speaker 1: you touched on it earlier, is you know, this is 773 00:41:35,719 --> 00:41:38,719 Speaker 1: an eight hundred billion dollar market. It is a massively 774 00:41:38,760 --> 00:41:41,640 Speaker 1: big market. In fact, if you look at petroleum production 775 00:41:41,920 --> 00:41:44,280 Speaker 1: and the size of it, we're talking about a market 776 00:41:44,280 --> 00:41:46,279 Speaker 1: it's about twice the size of it of what you 777 00:41:46,320 --> 00:41:48,439 Speaker 1: see in the sort of petroleum market the United States, 778 00:41:48,480 --> 00:41:52,640 Speaker 1: and so it is a massively important market to the economy. 779 00:41:52,960 --> 00:41:57,759 Speaker 1: It has a bigger impact on finished goods costs in 780 00:41:57,880 --> 00:42:00,880 Speaker 1: terms of GDP than what you see in energy, and 781 00:42:00,920 --> 00:42:03,359 Speaker 1: so it is a it is just has so much 782 00:42:03,440 --> 00:42:08,280 Speaker 1: power in terms of of the economic viability of the economy, 783 00:42:08,440 --> 00:42:12,279 Speaker 1: yet it is an unstructured wild West of sorts. I 784 00:42:12,320 --> 00:42:14,360 Speaker 1: want to get into that further at a second, But Tracy, 785 00:42:14,400 --> 00:42:17,360 Speaker 1: I just I came up with an assignment for you, 786 00:42:17,440 --> 00:42:21,560 Speaker 1: a post assignment for the blog. Okay, well, this is 787 00:42:21,560 --> 00:42:24,239 Speaker 1: a really good one. You should write a post comparing 788 00:42:24,800 --> 00:42:29,000 Speaker 1: the unstructured nature of the trucking market to all the 789 00:42:29,080 --> 00:42:32,960 Speaker 1: unstructured and the attempts to electronify the corporate bond market, 790 00:42:33,120 --> 00:42:34,919 Speaker 1: which is also we used to talk about a lot 791 00:42:35,320 --> 00:42:38,279 Speaker 1: and the similarities and differences because I'm feeling like, you know, 792 00:42:38,320 --> 00:42:40,920 Speaker 1: I remember our old episodes with Chris White that we 793 00:42:40,960 --> 00:42:42,879 Speaker 1: should have we should have them back on. But I'm 794 00:42:42,920 --> 00:42:46,920 Speaker 1: feeling in talking to Craig now some similarities in like, Okay, 795 00:42:46,920 --> 00:42:52,319 Speaker 1: here's this gigantic market corporate corporate bonds shockingly sort of 796 00:42:52,719 --> 00:42:55,920 Speaker 1: still like difficult to consolidate and like trying to find etcetera. 797 00:42:55,960 --> 00:42:58,440 Speaker 1: I'm feeling a lot of actually, like, uh, I'm feeling 798 00:42:58,440 --> 00:43:00,600 Speaker 1: some similarities there. I think you should write post on it. 799 00:43:01,320 --> 00:43:04,359 Speaker 1: That's so funny because Chris actually emailed me overnight, so yes, 800 00:43:04,400 --> 00:43:06,320 Speaker 1: we will get him back on UM. But yeah, I 801 00:43:06,560 --> 00:43:08,799 Speaker 1: can kind of see a parallel. So you know, there's 802 00:43:08,800 --> 00:43:12,000 Speaker 1: all these different freight loads and freight types and all 803 00:43:12,000 --> 00:43:15,279 Speaker 1: these different routes and nothing is really like interchangeable in 804 00:43:15,320 --> 00:43:17,960 Speaker 1: the same way that there are all these different types 805 00:43:18,160 --> 00:43:20,960 Speaker 1: of corporate bonds with different maturities and stuff like that, 806 00:43:21,000 --> 00:43:24,040 Speaker 1: and that kind of makes the market hard to function. 807 00:43:24,640 --> 00:43:27,280 Speaker 1: Can I ask one more general question before we continue 808 00:43:27,320 --> 00:43:31,520 Speaker 1: down these sort of financialization theme, But one of the 809 00:43:31,520 --> 00:43:35,600 Speaker 1: things that stands out from this conversation and also our 810 00:43:35,600 --> 00:43:39,359 Speaker 1: previous conversation is that clearly the industry has very very 811 00:43:39,400 --> 00:43:42,680 Speaker 1: slim profit margins. And I'm just wondering if you could 812 00:43:42,800 --> 00:43:46,400 Speaker 1: maybe update us on what's going on at the moment 813 00:43:46,520 --> 00:43:49,479 Speaker 1: with profits, because, like in a traditional market, you would 814 00:43:49,480 --> 00:43:54,759 Speaker 1: expect if demand is exceeding supply massively that prices would 815 00:43:54,760 --> 00:43:58,000 Speaker 1: go up and eventually the companies would be able to 816 00:43:58,000 --> 00:44:00,319 Speaker 1: pay their workers more and that might saw of some 817 00:44:00,400 --> 00:44:04,960 Speaker 1: of the labor shortage issues. But my impression is that 818 00:44:05,200 --> 00:44:07,759 Speaker 1: doesn't seem to be happening. So could we maybe get 819 00:44:07,760 --> 00:44:10,840 Speaker 1: a little bit more color on like how much money 820 00:44:10,920 --> 00:44:14,520 Speaker 1: trucking companies are actually making at the moment. Yeah, it's 821 00:44:14,680 --> 00:44:16,040 Speaker 1: you know, it's interesting you say that because if you 822 00:44:16,080 --> 00:44:18,719 Speaker 1: look at what's happening on the ocean side, it's the opposite, right, 823 00:44:18,920 --> 00:44:22,120 Speaker 1: So first, trucking is the ocean carrs have never made 824 00:44:22,120 --> 00:44:24,520 Speaker 1: more money. I think, you know, in one quarter, Marisk 825 00:44:24,600 --> 00:44:27,160 Speaker 1: made more than not past nine years combined or something, 826 00:44:27,200 --> 00:44:29,759 Speaker 1: and saying like that, So the ocean carriers are doing 827 00:44:29,800 --> 00:44:32,080 Speaker 1: exceptionally well at this market because you have a lot 828 00:44:32,160 --> 00:44:35,279 Speaker 1: of pricing power. It's a non fragmented market. You have 829 00:44:35,520 --> 00:44:39,600 Speaker 1: basically ten companies that control something like the ocean market 830 00:44:39,600 --> 00:44:43,239 Speaker 1: trucking the exact composite. And so while trucking companies are 831 00:44:43,320 --> 00:44:48,080 Speaker 1: enjoying really high pricing power over the market, they also 832 00:44:48,160 --> 00:44:52,400 Speaker 1: are experiencing massive wage inflation at the same time and 833 00:44:52,400 --> 00:44:56,040 Speaker 1: and so effectively, and not just wages, that's their cost 834 00:44:56,040 --> 00:44:58,719 Speaker 1: of equipments going up, their costal fuels going up, just 835 00:44:58,880 --> 00:45:02,640 Speaker 1: all the components they operate their business. And because the 836 00:45:02,760 --> 00:45:06,239 Speaker 1: quality of driver that they're hiring, just as an aggregate, 837 00:45:06,320 --> 00:45:09,640 Speaker 1: tends to get less and less. Just the just what 838 00:45:09,760 --> 00:45:12,319 Speaker 1: happens in the market when you have everybody trying to 839 00:45:12,320 --> 00:45:16,280 Speaker 1: fill seats to get drivers, is you start to not 840 00:45:16,280 --> 00:45:18,560 Speaker 1: not the big carriers don't get away with this because 841 00:45:18,960 --> 00:45:21,880 Speaker 1: they just have so much pressure on them from insurance 842 00:45:21,920 --> 00:45:24,719 Speaker 1: companies and regulators, but the small carrors start to get 843 00:45:24,760 --> 00:45:26,439 Speaker 1: a little bit more loose on who they hire, which 844 00:45:26,440 --> 00:45:29,359 Speaker 1: increase the amount of accidents, and so insurance rates tend 845 00:45:29,400 --> 00:45:32,360 Speaker 1: to accelerate, and so trucking companies are seeing all of 846 00:45:32,400 --> 00:45:37,279 Speaker 1: their input costs accelerate in this environment, and we're not 847 00:45:37,400 --> 00:45:40,880 Speaker 1: seeing what you would expect would be super high record profits. 848 00:45:41,320 --> 00:45:43,520 Speaker 1: It's gonna be interesting to see where we haven't seen 849 00:45:43,560 --> 00:45:46,560 Speaker 1: a lot of quarterly earnings so far. It's just too 850 00:45:46,560 --> 00:45:48,520 Speaker 1: early in the in the month to see it. But 851 00:45:48,560 --> 00:45:50,760 Speaker 1: over the next couple of weeks, we expect that companies 852 00:45:50,760 --> 00:45:53,920 Speaker 1: will have really robust revenues, but they will also have 853 00:45:54,000 --> 00:45:56,840 Speaker 1: a lot of concerns about costs that have also increased, 854 00:45:57,040 --> 00:45:59,400 Speaker 1: and so there will be there won't be a significant 855 00:45:59,480 --> 00:46:02,400 Speaker 1: margin in expansion that you would see in other commodity markets, 856 00:46:02,440 --> 00:46:06,040 Speaker 1: which is you know, is unfortunate for these carriers because 857 00:46:06,080 --> 00:46:08,560 Speaker 1: this is the one time or one of the few 858 00:46:08,600 --> 00:46:12,160 Speaker 1: times where they have all of this pricing power, and 859 00:46:11,880 --> 00:46:14,960 Speaker 1: yet and yet they have all these cost issues that 860 00:46:15,080 --> 00:46:18,280 Speaker 1: they're also faced with, and so it isn't as easy 861 00:46:18,320 --> 00:46:21,280 Speaker 1: as hey, everybody's making money hand over the fist because 862 00:46:21,280 --> 00:46:22,759 Speaker 1: they've done that. The other thing to keep in mind 863 00:46:22,800 --> 00:46:26,759 Speaker 1: is that particularly larger sort of asset based carriers tend 864 00:46:26,800 --> 00:46:30,400 Speaker 1: to operate the vast majority of their freight through contractored loads, 865 00:46:30,520 --> 00:46:35,920 Speaker 1: and those contracted loads are set basically have set prices 866 00:46:36,000 --> 00:46:39,160 Speaker 1: or rates to them where they don't get the benefit 867 00:46:39,200 --> 00:46:42,160 Speaker 1: of really high acceleration and spot rates. So they're seeing 868 00:46:42,200 --> 00:46:45,080 Speaker 1: it on the labor side, they're seeing really high increases 869 00:46:45,080 --> 00:46:48,160 Speaker 1: and costs. Yet if they've locked in those rates for 870 00:46:48,200 --> 00:46:51,200 Speaker 1: a year, they're sort of stuck with them. And unlike 871 00:46:51,200 --> 00:46:54,760 Speaker 1: the ocean side, where you see the ocean carriers basically 872 00:46:54,800 --> 00:46:58,240 Speaker 1: say if you don't pay my five x rate increase today, 873 00:46:58,320 --> 00:47:01,040 Speaker 1: I'm not picking up your freight. It does happen that 874 00:47:01,080 --> 00:47:03,520 Speaker 1: they don't honor contracts, but they tend to do that 875 00:47:03,600 --> 00:47:06,399 Speaker 1: with the smaller shippers. They tend to do it with 876 00:47:06,600 --> 00:47:08,600 Speaker 1: rates that are sort of sub part of the market, 877 00:47:08,960 --> 00:47:11,759 Speaker 1: or people that have very cyclical freight. You don't see 878 00:47:11,800 --> 00:47:15,480 Speaker 1: them to the larger carreers have much more contracted freight, 879 00:47:15,760 --> 00:47:17,680 Speaker 1: and they tend to be they tend to be stuck 880 00:47:17,680 --> 00:47:21,359 Speaker 1: in this cycle where they can't dramatically raise rates intracycle 881 00:47:21,480 --> 00:47:25,319 Speaker 1: yet their costs or increasing. So that actually is like 882 00:47:25,360 --> 00:47:28,000 Speaker 1: the sort of like good seg to this idea of 883 00:47:28,040 --> 00:47:31,160 Speaker 1: like what I characterized in the beginning is what I 884 00:47:31,160 --> 00:47:34,239 Speaker 1: see is sort of the under financialization of the of 885 00:47:34,600 --> 00:47:36,839 Speaker 1: uh this market. And we already sort of talked about 886 00:47:36,840 --> 00:47:38,680 Speaker 1: a little bit with the fact that there's not a 887 00:47:38,800 --> 00:47:41,880 Speaker 1: sort of unified there's still nothing close to like a 888 00:47:42,040 --> 00:47:46,400 Speaker 1: unified exchange like like a you know, a CME or something. 889 00:47:46,440 --> 00:47:49,560 Speaker 1: And it's interesting because as you say, you know, arguably 890 00:47:49,800 --> 00:47:52,680 Speaker 1: you know trucking is well, it's not. Arguably trucking is huge. 891 00:47:53,080 --> 00:47:55,680 Speaker 1: Is arguably as are more significant than oil, and of 892 00:47:55,719 --> 00:47:58,640 Speaker 1: course oil and certain commodities like that are some of 893 00:47:58,640 --> 00:48:02,680 Speaker 1: the most financialized as it. Prior to your current endeavor, 894 00:48:02,920 --> 00:48:06,440 Speaker 1: you tried to build this, right, like you tried to 895 00:48:06,480 --> 00:48:09,799 Speaker 1: create something like a trucking futures market. Can you talk 896 00:48:09,840 --> 00:48:12,760 Speaker 1: to us a little bit about like what you see 897 00:48:12,800 --> 00:48:15,879 Speaker 1: as the opportunities or why you know what it will 898 00:48:15,920 --> 00:48:19,320 Speaker 1: take for something like that to emerge, Like what steps 899 00:48:19,360 --> 00:48:21,040 Speaker 1: I have to imagine there has to be more data, 900 00:48:21,400 --> 00:48:25,600 Speaker 1: more recognized indices um that could be served as reference prices, 901 00:48:25,640 --> 00:48:28,360 Speaker 1: but like could that happen? What will it take for 902 00:48:28,400 --> 00:48:31,359 Speaker 1: there to be like a futures market or hedge double 903 00:48:31,480 --> 00:48:36,680 Speaker 1: contracts or hegible instruments on an exchange in this area. Yeah, Joe, 904 00:48:36,719 --> 00:48:39,560 Speaker 1: it's interesting. Freightways started out, it was the original idea 905 00:48:39,600 --> 00:48:42,600 Speaker 1: behind Freightways was to build a futures market for trucking, uh, 906 00:48:42,640 --> 00:48:45,479 Speaker 1: and then it started in two thousands seventeen to really 907 00:48:45,520 --> 00:48:48,279 Speaker 1: go out and build that. What we realized is that 908 00:48:48,800 --> 00:48:52,600 Speaker 1: and we actually launched contracts and you know, we had 909 00:48:52,640 --> 00:48:55,000 Speaker 1: the fortune of being the first people and traded a 910 00:48:55,200 --> 00:48:57,000 Speaker 1: you know, a couple of dozen contracts and by the 911 00:48:57,000 --> 00:48:59,719 Speaker 1: time we delisted it. So we had attempted to create 912 00:48:59,719 --> 00:49:02,880 Speaker 1: a futures market because the market is so massive, it 913 00:49:03,040 --> 00:49:06,120 Speaker 1: is so big, and it is so unstructured that it 914 00:49:06,200 --> 00:49:08,319 Speaker 1: just it seems like at some point it should become 915 00:49:08,360 --> 00:49:12,320 Speaker 1: structures so that the volatility that exists starts to enable 916 00:49:12,440 --> 00:49:16,080 Speaker 1: instruments that people can hedge it and UH sort of 917 00:49:16,239 --> 00:49:19,719 Speaker 1: muted economic exposure that they end up with. The reality 918 00:49:19,800 --> 00:49:22,240 Speaker 1: is that the market wasn't ready for it, as we learned, 919 00:49:22,560 --> 00:49:24,359 Speaker 1: and there's the reasons it wasn't ready for is there 920 00:49:24,360 --> 00:49:26,880 Speaker 1: wasn't data. That was what prompted us to realize there 921 00:49:26,960 --> 00:49:30,000 Speaker 1: is no equivalent Bloomberg in freight. So we went out 922 00:49:30,040 --> 00:49:33,360 Speaker 1: and created freight Waves as a data and media source 923 00:49:33,480 --> 00:49:36,680 Speaker 1: provider to provide intelligence to the market, because that's one 924 00:49:36,719 --> 00:49:38,520 Speaker 1: of the things that we discovered as we looked at 925 00:49:38,520 --> 00:49:42,120 Speaker 1: commodity markets is typically these things happen with the sort 926 00:49:42,120 --> 00:49:45,319 Speaker 1: of backdrop of information services so that people feel they 927 00:49:45,320 --> 00:49:47,399 Speaker 1: can either are the market or trade the market get 928 00:49:47,400 --> 00:49:49,440 Speaker 1: an edge. It just didn't exist in freight. So we 929 00:49:49,480 --> 00:49:51,520 Speaker 1: went out and effectively tried to create it, and that's 930 00:49:51,560 --> 00:49:56,040 Speaker 1: what freight Waves became, was this data provider of the industry. 931 00:49:56,600 --> 00:49:59,480 Speaker 1: One of the realities of trucking is because of the 932 00:49:59,520 --> 00:50:04,800 Speaker 1: despair and fragmentedate fragment nature of eighteen thousand origin destination 933 00:50:04,840 --> 00:50:08,760 Speaker 1: pairs is very difficult to get. You can't trade individual pairs, 934 00:50:08,760 --> 00:50:12,959 Speaker 1: you can't be like physically settled futures market just wouldn't work. 935 00:50:13,520 --> 00:50:15,960 Speaker 1: Even a ford market is very difficult. There's been attempts 936 00:50:16,000 --> 00:50:18,279 Speaker 1: at that that we didn't try, but others had and 937 00:50:18,280 --> 00:50:21,120 Speaker 1: they've sort of pivoted their business model as well. What 938 00:50:21,120 --> 00:50:23,880 Speaker 1: what I do think we will see in time? You know, 939 00:50:24,000 --> 00:50:26,800 Speaker 1: maybe it will be breakways that does it, or maybe 940 00:50:27,160 --> 00:50:30,160 Speaker 1: you know a couple of evolutions beyond us. In time, 941 00:50:30,680 --> 00:50:33,160 Speaker 1: there will be a benchmark index. You mentioned the bond market, 942 00:50:33,239 --> 00:50:35,759 Speaker 1: we could use you know, Prime or Library is sort 943 00:50:35,800 --> 00:50:39,000 Speaker 1: of a reference to that is, there should be some 944 00:50:39,200 --> 00:50:43,760 Speaker 1: type of national index where people can at least hedge 945 00:50:44,000 --> 00:50:47,759 Speaker 1: some of the mitigate some of their the volatility that 946 00:50:47,800 --> 00:50:51,000 Speaker 1: exists in rates. That is, that is probably the likely 947 00:50:51,440 --> 00:50:53,800 Speaker 1: place that we would see some type of financial structure 948 00:50:53,800 --> 00:50:57,480 Speaker 1: as a national reference price that's assessed in the market. 949 00:50:57,600 --> 00:51:00,440 Speaker 1: And that is what everything is based on. Seeing an 950 00:51:00,440 --> 00:51:03,239 Speaker 1: ocean shipping in the bulk business is there is a 951 00:51:03,719 --> 00:51:06,319 Speaker 1: Baltic has built this in the Baltic Drag index has 952 00:51:06,320 --> 00:51:10,239 Speaker 1: built this reference price for global ocean bulk shipping than 953 00:51:10,320 --> 00:51:12,360 Speaker 1: everything that sort of derived off that. They have the 954 00:51:12,440 --> 00:51:16,480 Speaker 1: lane issues as well. In time, that is where the 955 00:51:16,520 --> 00:51:19,759 Speaker 1: market will head is to a national index. But what 956 00:51:19,960 --> 00:51:22,480 Speaker 1: you need enable to in order to enable that is 957 00:51:22,520 --> 00:51:26,600 Speaker 1: you need data being fed in daily for assessments and 958 00:51:26,760 --> 00:51:30,440 Speaker 1: something that everyone sort of recognizes as a market assessment 959 00:51:30,960 --> 00:51:34,799 Speaker 1: that that people will start to build index link contracts off. 960 00:51:34,920 --> 00:51:38,440 Speaker 1: And so I think that's probably going to happen pretty 961 00:51:38,440 --> 00:51:41,719 Speaker 1: pretty soon. Is where you'll see an index link contract 962 00:51:41,920 --> 00:51:44,960 Speaker 1: against the national average and people will say, this lane 963 00:51:45,360 --> 00:51:49,840 Speaker 1: is at a premium to the national average during this season, 964 00:51:49,920 --> 00:51:53,600 Speaker 1: and it's at a ten percent premium during the off season, 965 00:51:53,960 --> 00:51:56,440 Speaker 1: and so you can start to see market construction that way. 966 00:51:56,480 --> 00:51:58,520 Speaker 1: But I think that's what has to start before you 967 00:51:58,560 --> 00:52:02,120 Speaker 1: start to see some type of struct financial structure in 968 00:52:02,160 --> 00:52:03,759 Speaker 1: the market. And we've learned that the hard way is 969 00:52:03,800 --> 00:52:06,480 Speaker 1: that not only was the market not ready for futures, 970 00:52:06,800 --> 00:52:09,719 Speaker 1: it also was a situation there wasn't a central sort 971 00:52:09,719 --> 00:52:14,000 Speaker 1: of reference national index that everyone used to sort of 972 00:52:14,080 --> 00:52:17,640 Speaker 1: build their physical products off of. And that's reorthly what 973 00:52:17,680 --> 00:52:20,440 Speaker 1: you need. So I mean, I mean again, this seems 974 00:52:20,480 --> 00:52:23,000 Speaker 1: like building a futures market from scratch. Again, we could 975 00:52:23,000 --> 00:52:24,719 Speaker 1: probably talk about this for hours, but you know, like 976 00:52:24,880 --> 00:52:28,399 Speaker 1: one thing I'm curious about, and you can't, as you said, 977 00:52:28,600 --> 00:52:31,840 Speaker 1: you can't really have a cash settled futures market without 978 00:52:32,040 --> 00:52:36,960 Speaker 1: agreed upon reference prices, without indusseries inherently seemed like they 979 00:52:37,000 --> 00:52:39,720 Speaker 1: have to come first so that there is a reference 980 00:52:39,760 --> 00:52:42,400 Speaker 1: price that the futures can then trade against, maybe a 981 00:52:42,520 --> 00:52:45,080 Speaker 1: national average, and maybe like then you start getting maybe 982 00:52:45,280 --> 00:52:48,240 Speaker 1: futures for some big roots. When going back to those 983 00:52:48,400 --> 00:52:52,560 Speaker 1: thinking about those like telegram groups where it's like, okay, 984 00:52:52,600 --> 00:52:57,680 Speaker 1: I go from Dallas to Crystill, Illinois, Like is their transparency? 985 00:52:57,719 --> 00:52:59,000 Speaker 1: I mean I guess that's what you're trying to do, 986 00:52:59,040 --> 00:53:01,959 Speaker 1: but like in that in the price that gets paid, 987 00:53:02,000 --> 00:53:06,200 Speaker 1: I mean there's no like centralized like listing anywhere. Right. Yeah, 988 00:53:06,239 --> 00:53:08,880 Speaker 1: this is where I was really like starting to actually 989 00:53:08,920 --> 00:53:11,080 Speaker 1: think about the corporate bond market because one of the 990 00:53:11,080 --> 00:53:14,360 Speaker 1: difficulties there is that actually there's a lot of incentive 991 00:53:14,480 --> 00:53:19,320 Speaker 1: not to reveal prices, Like it's not a transparent market 992 00:53:19,680 --> 00:53:22,799 Speaker 1: because people don't want it to be. And so I 993 00:53:22,800 --> 00:53:25,480 Speaker 1: wonder if the trucking market is like that too. I 994 00:53:25,520 --> 00:53:28,560 Speaker 1: think there's some sense of it. But but what's happening 995 00:53:28,560 --> 00:53:30,879 Speaker 1: now is that Silicon Valley has pumped so much money 996 00:53:30,880 --> 00:53:35,359 Speaker 1: into the idea of of transparencies. Everyone recognizes the need 997 00:53:35,440 --> 00:53:37,959 Speaker 1: for being transparent, and while these marketplaces sort of popped 998 00:53:38,040 --> 00:53:40,000 Speaker 1: up to deliver that, there's been a lot of movement 999 00:53:40,080 --> 00:53:44,760 Speaker 1: towards more transparent marketplaces, and so I think the idea 1000 00:53:44,840 --> 00:53:47,720 Speaker 1: that companies have made so much money because the markets 1001 00:53:47,760 --> 00:53:52,560 Speaker 1: are pay is one that has gotten tired more recently 1002 00:53:52,680 --> 00:53:56,880 Speaker 1: because people recognize that ultimately, when you're when you're managing freight, 1003 00:53:57,480 --> 00:54:01,680 Speaker 1: it's not just the price discovery and the price element 1004 00:54:01,840 --> 00:54:05,000 Speaker 1: is the ability to physically manage the logistics behind it. 1005 00:54:05,239 --> 00:54:08,240 Speaker 1: And because there is so much attention paid. And remember 1006 00:54:08,280 --> 00:54:10,160 Speaker 1: that unlike the corporate bodom market, I don't know a 1007 00:54:10,160 --> 00:54:12,960 Speaker 1: ton about corporate markets, so this may sound incorrect, may 1008 00:54:12,960 --> 00:54:16,160 Speaker 1: be incorrect. Is that if you take a company like 1009 00:54:16,200 --> 00:54:21,280 Speaker 1: a Walmart or any big shipper, is of their freight 1010 00:54:21,440 --> 00:54:25,560 Speaker 1: is managed under contracted relationships. They have a fixed price 1011 00:54:26,320 --> 00:54:29,080 Speaker 1: where they're doing business with a set of carriers, and 1012 00:54:29,080 --> 00:54:31,920 Speaker 1: the same carriers tend to participate in the spot market. 1013 00:54:32,000 --> 00:54:34,360 Speaker 1: So because of that, there's a lot of power that 1014 00:54:34,400 --> 00:54:37,120 Speaker 1: the shippers have. The people that that are are buying 1015 00:54:37,160 --> 00:54:39,560 Speaker 1: capacity have a lot of power to sort of affect 1016 00:54:39,560 --> 00:54:41,680 Speaker 1: the market and sort of force some level of structure. 1017 00:54:42,080 --> 00:54:46,080 Speaker 1: The challenge there is that, and so they want transparency. 1018 00:54:46,120 --> 00:54:48,600 Speaker 1: They don't like this faltility, don't like the opaqueness. The 1019 00:54:48,680 --> 00:54:52,400 Speaker 1: challenge is that, because they also have the ability to 1020 00:54:52,400 --> 00:54:55,240 Speaker 1: sort of affect a fixed price, is that their lessons 1021 00:54:55,239 --> 00:54:57,560 Speaker 1: sent to sort of hedge their spot exposure. We think 1022 00:54:57,560 --> 00:55:00,279 Speaker 1: over time that will take place, but you're you're right. 1023 00:55:00,760 --> 00:55:03,840 Speaker 1: Historically there's been this desire to sort of manage and 1024 00:55:03,880 --> 00:55:06,200 Speaker 1: opaid market and sort of keep it opaque. But I 1025 00:55:06,239 --> 00:55:09,440 Speaker 1: think we're starting to see that become less and less reality, 1026 00:55:09,480 --> 00:55:13,279 Speaker 1: where companies, particularly Silicon Valley funded companies, have said, Hey, 1027 00:55:13,480 --> 00:55:15,560 Speaker 1: we need to do a much better job of building 1028 00:55:15,600 --> 00:55:17,680 Speaker 1: structure to the market. We need to build a betch 1029 00:55:17,719 --> 00:55:20,279 Speaker 1: better job of being transparent, and we're going to create 1030 00:55:20,280 --> 00:55:23,239 Speaker 1: these digital marketplaces to do that. Because of all that 1031 00:55:23,360 --> 00:55:26,920 Speaker 1: capital and technology is pouring into it, there is a 1032 00:55:27,000 --> 00:55:32,640 Speaker 1: desire among those participants to create a more transparent marketplace. 1033 00:55:33,800 --> 00:55:36,080 Speaker 1: This is so great chatting with you, and I learned 1034 00:55:36,120 --> 00:55:37,880 Speaker 1: so much, and like I said, like we could just 1035 00:55:37,960 --> 00:55:40,640 Speaker 1: keep going down this route. We could talk about the 1036 00:55:40,719 --> 00:55:44,120 Speaker 1: dredge market for hours. We could talk about the complexity 1037 00:55:44,120 --> 00:55:47,319 Speaker 1: of building an index. Index construction is sort of a 1038 00:55:47,360 --> 00:55:49,319 Speaker 1: fascinating thing to me, and we can talk about that 1039 00:55:49,360 --> 00:55:52,520 Speaker 1: in another episode, but eventually probably just should cut it off. 1040 00:55:52,560 --> 00:55:55,200 Speaker 1: And have you back on again in a few months. Craig, 1041 00:55:55,400 --> 00:55:57,799 Speaker 1: so great to catch up with you again. Thank you 1042 00:55:57,840 --> 00:56:01,080 Speaker 1: for coming back on ID Love Joe Tracy really appreciated 1043 00:56:01,080 --> 00:56:04,160 Speaker 1: always fun. That was great. That was great, Greig, thank 1044 00:56:04,200 --> 00:56:14,480 Speaker 1: you so much. That was great. I wasn't kidding there 1045 00:56:14,520 --> 00:56:16,279 Speaker 1: at the end. I really do feel like we could 1046 00:56:16,320 --> 00:56:18,719 Speaker 1: just have like a six hour conversation with Craig on 1047 00:56:19,320 --> 00:56:21,719 Speaker 1: any one of the sub topics we hit on, and 1048 00:56:21,719 --> 00:56:23,880 Speaker 1: it would just it feels like there's just endless stuff 1049 00:56:23,880 --> 00:56:26,400 Speaker 1: to talk about. We I need to know more about 1050 00:56:26,480 --> 00:56:31,279 Speaker 1: your adventures on like trucking message groups and loadboards and 1051 00:56:31,320 --> 00:56:33,160 Speaker 1: stuff like that. Oh, I don't even do anything. I 1052 00:56:33,280 --> 00:56:35,000 Speaker 1: just like I went on Telegram and I did a 1053 00:56:35,040 --> 00:56:37,719 Speaker 1: search because you know, I wanted to see what people 1054 00:56:37,719 --> 00:56:40,279 Speaker 1: and I just found all these like I haven't it's 1055 00:56:40,280 --> 00:56:42,480 Speaker 1: not too adventurous. I just learned and I trying to 1056 00:56:42,480 --> 00:56:44,600 Speaker 1: figure out what some of this. What's the most interesting 1057 00:56:44,680 --> 00:56:49,800 Speaker 1: thing that you've seen there? No, it's really those messages 1058 00:56:49,880 --> 00:56:52,480 Speaker 1: that I said to uh, they're very They're not like 1059 00:56:52,600 --> 00:56:55,719 Speaker 1: juicy message boards like those ones that I read. I 1060 00:56:55,800 --> 00:56:57,920 Speaker 1: was like Edny load from Las Vegas, any cap and 1061 00:56:57,960 --> 00:57:00,960 Speaker 1: trout Dell Oregon. Like that is literally what the message 1062 00:57:00,960 --> 00:57:02,719 Speaker 1: boards are. I'll send you the link, so you know 1063 00:57:02,760 --> 00:57:04,879 Speaker 1: what I was thinking about though, And again, so many 1064 00:57:04,880 --> 00:57:07,719 Speaker 1: different things I'm thinking about now, but you know, like uh, 1065 00:57:07,719 --> 00:57:09,479 Speaker 1: and I think we're gonna have them on again soon. 1066 00:57:09,560 --> 00:57:12,600 Speaker 1: Like you know, we did the lumber episode with stincon Dean. 1067 00:57:13,360 --> 00:57:15,359 Speaker 1: I went down this sort of rabbit hole after that 1068 00:57:15,480 --> 00:57:19,320 Speaker 1: reading about how lumber futures are created. And there's this 1069 00:57:19,360 --> 00:57:22,280 Speaker 1: company called Random Lengths and they have like this like 1070 00:57:22,560 --> 00:57:27,640 Speaker 1: very detailed white paper essentially on how they create a 1071 00:57:27,760 --> 00:57:30,440 Speaker 1: daily reference price for the price of lumber. And of 1072 00:57:30,480 --> 00:57:34,080 Speaker 1: course it involves calling up lumber yards and it's sort 1073 00:57:34,120 --> 00:57:36,840 Speaker 1: of like library where they have to like lop offs 1074 00:57:36,920 --> 00:57:39,840 Speaker 1: and like extreme cases, and there's all this stuff, and 1075 00:57:39,920 --> 00:57:43,000 Speaker 1: thinking about like that's literally just pieces of wood in 1076 00:57:43,320 --> 00:57:47,520 Speaker 1: you know, fairly like a standard size and dimensions, thinking 1077 00:57:47,560 --> 00:57:50,400 Speaker 1: about like how you know the complexity of creating an 1078 00:57:50,440 --> 00:57:53,360 Speaker 1: index for like the price of wood, and then thinking 1079 00:57:53,360 --> 00:57:56,040 Speaker 1: about creating an index for the price of trucking, which 1080 00:57:56,080 --> 00:58:01,360 Speaker 1: is like infinite combinations of goods and services and times. Boy, 1081 00:58:01,440 --> 00:58:04,960 Speaker 1: does that seem like it's a it's a tough job. Yeah, 1082 00:58:05,000 --> 00:58:07,080 Speaker 1: And I think you you are really spot on with 1083 00:58:07,120 --> 00:58:09,720 Speaker 1: the corporate bond market analogy, Like not only do you 1084 00:58:09,760 --> 00:58:14,560 Speaker 1: have all these different like trucking prices and contracts, but 1085 00:58:14,680 --> 00:58:18,800 Speaker 1: you have people who are incentivized in different ways, and 1086 00:58:18,880 --> 00:58:21,840 Speaker 1: like people who might not want to move to a 1087 00:58:21,880 --> 00:58:25,040 Speaker 1: more transparent system or even like it could just not 1088 00:58:25,160 --> 00:58:27,320 Speaker 1: be about that, just people who don't want to modernize 1089 00:58:27,360 --> 00:58:31,680 Speaker 1: or change the way things have been working for decades now. Yes, 1090 00:58:31,920 --> 00:58:35,480 Speaker 1: and I might mention that there is a certain company 1091 00:58:35,640 --> 00:58:39,440 Speaker 1: that has done extremely well in the corporate bond market 1092 00:58:39,520 --> 00:58:43,120 Speaker 1: by serving as a sort of instant messaging service, you know, 1093 00:58:43,400 --> 00:58:47,760 Speaker 1: where brokers and traders send send kind of like those 1094 00:58:47,960 --> 00:58:49,920 Speaker 1: I won't mention the company now, it's I don't know 1095 00:58:49,920 --> 00:58:53,440 Speaker 1: who you're talking about. That kind of reminds me of 1096 00:58:53,480 --> 00:58:56,520 Speaker 1: like these like you know, on some level, it's like, um, 1097 00:58:57,000 --> 00:59:00,200 Speaker 1: like reminds me of those telegram pages where it's like 1098 00:59:00,640 --> 00:59:02,800 Speaker 1: who I have this for sale? Who has this? And 1099 00:59:02,800 --> 00:59:06,920 Speaker 1: who wants to buy this? And like, just like truckting, 1100 00:59:07,080 --> 00:59:09,960 Speaker 1: corporate bonds is sort of like a big part of 1101 00:59:09,960 --> 00:59:13,360 Speaker 1: it is literally like sort of ib or I ams 1102 00:59:13,400 --> 00:59:16,160 Speaker 1: and message boards and uh, you know, it's nothing like 1103 00:59:16,200 --> 00:59:18,480 Speaker 1: what I think we think of still as like a 1104 00:59:18,560 --> 00:59:20,520 Speaker 1: sort of like, no, it's not like the n Y 1105 00:59:20,600 --> 00:59:22,840 Speaker 1: I see, where everyone knows the price of you know, 1106 00:59:23,000 --> 00:59:26,040 Speaker 1: Facebook at any given time. Well, this is why I'm 1107 00:59:26,080 --> 00:59:30,200 Speaker 1: sort of surprised that there hasn't been a centralized message board. 1108 00:59:30,240 --> 00:59:31,720 Speaker 1: Like I get that there are a bunch of different 1109 00:59:31,720 --> 00:59:35,439 Speaker 1: load boards, but like, I'm surprised one network hasn't taken over. 1110 00:59:36,200 --> 00:59:40,000 Speaker 1: But maybe maybe maybe it will one day. Anyway, Um, 1111 00:59:40,040 --> 00:59:42,760 Speaker 1: maybe should we leave it there? Yeah? So much. We 1112 00:59:42,800 --> 00:59:45,720 Speaker 1: could go on recapping, but let's leave it there, all right. 1113 00:59:45,800 --> 00:59:49,080 Speaker 1: All Thoughts Supply Chain spinoff coming soon. I'm sure this 1114 00:59:49,160 --> 00:59:52,040 Speaker 1: has been another episode of the All Thoughts podcast. I'm 1115 00:59:52,040 --> 00:59:54,800 Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy 1116 00:59:54,800 --> 00:59:57,640 Speaker 1: Alloway and I'm Joe wi Isn'tal. You can follow me 1117 00:59:57,760 --> 01:00:01,520 Speaker 1: on Twitter at the Stalwart. Follow our guest Craig Fuller, 1118 01:00:01,640 --> 01:00:06,000 Speaker 1: He's at Freight Ali. Follow our producer Laura Carlson, She's 1119 01:00:06,040 --> 01:00:09,200 Speaker 1: at Laura M. Carlson. Followed the Bloomberg head of podcast 1120 01:00:09,240 --> 01:00:13,320 Speaker 1: Francesca Levie at Francesca Today, and check out all of 1121 01:00:13,360 --> 01:00:17,840 Speaker 1: our podcasts at Bloomberg under the handle at podcasts. Thanks 1122 01:00:17,840 --> 01:00:18,320 Speaker 1: for listening.