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

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

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Speaker 1: Lee Clascaw, senior freight, transportation and logistics analysts at Bloomberg Intelligence,

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Speaker 1: Bloomberg's in house research arm of almost five hundred analysts

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Speaker 1: and strategists around the world before diving in little public

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Speaker 1: service announcement. Your support is instrumental to keep bringing great

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Speaker 1: guests and conversations to you, our listeners. So we need

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

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Speaker 1: like it, and leave a comment.

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Speaker 2: Also, if you have any ideas.

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Speaker 1: For a future episode or just want to talk transports,

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Speaker 1: please set me up on the Bloomberg terminal and on

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

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Speaker 1: our episode. I'm very excited to have Jason Miller with

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Speaker 1: us today. A professor in supply chain management at Michigan

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Speaker 1: State University's Eli Broad College of Business. He researches topics

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Speaker 1: at the intersection of apply chain management and economics, with

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Speaker 1: a special focus on the for hire trucking industry in

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Speaker 1: the United States. Welcome to the podcast, Jason.

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Speaker 3: Hey, thanks so much for having Melee.

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Speaker 2: It is it doctor Jason, doctor Miller.

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Speaker 3: I can just go by Jason. I am super informal

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Speaker 3: with that title.

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Speaker 1: All right, all right, and people that you know this

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Speaker 1: is an audio podcast, unfortunately, and they can't enjoy your mustache.

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Speaker 2: That is one hell of a mustache.

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Speaker 3: And you know, the funny story with that was when

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Speaker 3: I became interim chairperson of my department. You know, I

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Speaker 3: would get comments about looking too young, and I used

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Speaker 3: to have a full beard. I had shaved that off

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Speaker 3: with COVID, so I went from looking like a lumberjack

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Speaker 3: to kind of looking like maybe a non traditional undergrad.

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Speaker 3: And then I'm like, Okay, well I don't want to

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Speaker 3: have the itchy beard. So the mustache made its appearance.

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Speaker 1: We'll keep on rocking and it looks good. Can you

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Speaker 1: talk a little bit about Michigan State Universal's logistics program.

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Speaker 3: Yeah. So we're one of the oldest sort of integrated

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Speaker 3: supply chain programs. The program was sort of formally rebranded

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Speaker 3: supply chain back in the mid two thousands. We graduate

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Speaker 3: about three hundred and fifty undergraduates each year, making us

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Speaker 3: one of the larger programs. Very good job placement rates,

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Speaker 3: starting salaries around seventy thousand dollars and we are the

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Speaker 3: number one rank program now for over a decade in

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Speaker 3: a row at the undergraduate level by US News and

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Speaker 3: World Report. At the graduate level, we have a specialized

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Speaker 3: Masters of Science and Supply Chain Management program I teach

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Speaker 3: in that's aimed really at working professionals with multiple years

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Speaker 3: of experience, so really get the opportunity to go in

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Speaker 3: depth with folks who are in the trenches. Currently, we're

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Speaker 3: a big part of our MBA program. We have two

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Speaker 3: PhD programs in the department, and then our most recent

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Speaker 3: edition is what's called a Graduate Certificate and Supply Chain

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Speaker 3: Management that is aimed for folks who are out of

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Speaker 3: undergrad may have found themselves in a supply chain role

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Speaker 3: and they really want to get a fairly quick you know,

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Speaker 3: grounding and basis. Or for folks who majored in something

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Speaker 3: that they're not finding much job market success and they

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Speaker 3: need something to improve their job market chances.

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Speaker 1: Right, and if you give out any honorary degrees, I

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Speaker 1: would love to add that to my resume.

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Speaker 3: So that's a university central and I don't even know

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Speaker 3: how that whole process work.

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Speaker 2: All right, Let's get down to business.

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Speaker 1: So you know, like like I did in the intro,

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Speaker 1: you kind of talk about the cross section of logistics

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Speaker 1: in the economy. I know you're very focused on the

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Speaker 1: trucking industry, and you're well published, and you're very active

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Speaker 1: on social media and I love reading your posts. Just

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Speaker 1: for a little plug, where can people like find your

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Speaker 1: stuff outside of the university where you want?

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Speaker 2: Are you on x?

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Speaker 3: LinkedIn is primarily where I put everything, just because I

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Speaker 3: need that longer format to really start getting getting in

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Speaker 3: enough enough depth that it's interesting for me as an academic,

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Speaker 3: but it's also not too in depth to where the

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Speaker 3: average you know, person and industry is going to say, Okay,

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Speaker 3: this is this isn't for me.

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Speaker 1: I recommend anyone that's listening to follow Jason on LinkedIn.

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Speaker 1: So what are you working on now? Like I'm assuming

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Speaker 1: you're you're looking deep into the rate cycle and to

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Speaker 1: demand kind of what are your takeaways on the state

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Speaker 1: of the North America trucking market?

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Speaker 3: You know, right now, my general sense is we're really

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Speaker 3: sort of continuing to be stalled out on that. I'm

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Speaker 3: going to say, drive in truckload space. You know, if

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Speaker 3: you look outside of regular seasonal fluctuations, line haul spot

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Speaker 3: rates per dat haven't really budged much since Q one

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Speaker 3: of twenty twenty three. We've seen our usual tightening that

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Speaker 3: we'll see in June, in the midsummer, and then in

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Speaker 3: November and December. But certainly this year has been a

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Speaker 3: disappointment from my standpoint. When I you know, when I

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Speaker 3: did some writing back last December and was sort of

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Speaker 3: making a twenty twenty five forecast, I was anticipating a

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Speaker 3: much more bullish scenario. We at that point in time

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Speaker 3: and had one hundred basis points of interest rate cuts.

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Speaker 3: We were expecting that to flow through into construction and

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Speaker 3: capital investment. And it just seems that the tariffs, and

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Speaker 3: possibly even more important, that uncertainty surrounding tariffs, has just

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Speaker 3: sort of deflated that potential freight balloon. And I mean,

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Speaker 3: if you take a look, for example, June, single family

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Speaker 3: housing starts are down ten percent year over year twenty

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Speaker 3: five versus twenty four. And I don't think anybody that

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Speaker 3: you would have talked to, you know, seven eight months ago,

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Speaker 3: would have anticipated behavior like that.

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Speaker 1: And you know, in the beginning of the year, we

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Speaker 1: were pretty optimistic about where the truck and market was

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Speaker 1: going to go. You know, we thought rates could get

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Speaker 1: contractual rates can increase by high single digits, maybe even

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Speaker 1: low double digits, and that's obviously been rained in considerably given.

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Speaker 2: Where we are.

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Speaker 1: So I guess from your standpoint, is it more or

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Speaker 1: less the policies out of Washington that are limiting where

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Speaker 1: trucking's going or is there something else that play there

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Speaker 1: that's just getting exasperated by what's going on in Washington.

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Speaker 3: Now, I would really say it is the policies from Washington.

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Speaker 3: And you know, when I look so some of the

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Speaker 3: indicators I really look at that have been historically fairly

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Speaker 3: good predictors of where the trucking cycles are going to go.

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Speaker 3: It's especially like the Institute for Supply Managements PMI for

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Speaker 3: manufacturing new orders, as well as sort of an aggregate

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Speaker 3: new orders index that I put together from the five

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Speaker 3: Fed banks that report PMI type manufacturing surveys. And if

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Speaker 3: you take a look for all of those, just as

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Speaker 3: you mentioned, December January, and even to some extent in February,

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Speaker 3: we were starting to see new orders move solidly back

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Speaker 3: into expansion territory for the first time since really early

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Speaker 3: Q two of twenty twenty two, believe it or not,

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Speaker 3: and that just did a U turn by March. April

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Speaker 3: was quite rough. May and June were maybe a little better,

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Speaker 3: but still in contraction. July right now, from what we've seen,

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Speaker 3: is at most kind of neutral. And you can just

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Speaker 3: trace all of that to the tariff shocks that we've experienced,

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Speaker 3: and it seems to be really sort of that curtail

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Speaker 3: of capital investment activity, that curtail of single family construction,

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Speaker 3: and without that additional essentially freight you know, demand shock,

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Speaker 3: it just you can't start pushing carriers towards that upper

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Speaker 3: level of capacity utilization where they're starting to routinely, you know,

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Speaker 3: reject tenders putting the freight on the spot market to

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Speaker 3: get that cycle going, and so on. One area where

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Speaker 3: I differ from you know, sort of others in the

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Speaker 3: industry is look, for me, looking back at the data,

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Speaker 3: it sort of bullish. Cycles and trucking are always to

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Speaker 3: me about demand. Supply factors are very much secondary, Whereas

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Speaker 3: I think we've had so many conversations about this belief

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Speaker 3: that okay, low spot rates are going to lead to

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Speaker 3: even more attrition to capacity, or the most recent was

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Speaker 3: the English language proficiency is going to result in this

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Speaker 3: massive drop of capacity, and certainly, looking at the behavior

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Speaker 3: of tender rejections and spot rates in July, it's difficult

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Speaker 3: to see that that's played some type of truly macro

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Speaker 3: level meaningful role, because if it had, we would expect

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Speaker 3: to see, you know, drive in spot rates increasing substantially,

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Speaker 3: and we're just not seeing.

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Speaker 2: That, gotcha.

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Speaker 1: And then, you know, because you said it's mostly going

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Speaker 1: to be a demand driven but what's going on on

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Speaker 1: the supply side?

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Speaker 3: Yeah, supply side right now? I mean new orders for

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Speaker 3: obviously Class AID equipment has been quite weak, which is

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Speaker 3: expect given where rates have been at combined with the

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Speaker 3: fact we had you know, tremendously strong orders and then

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Speaker 3: pent up demand the prior couple years. Normally, and I've

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Speaker 3: even published a paper on this, but you know, historically

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Speaker 3: it was always changed in spot rates, predicts change in

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Speaker 3: new orders, very very very sharply. That completely broke down

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Speaker 3: with the equipment shortages or the part shortages, which led

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Speaker 3: to construct production issues in twenty one and twenty two.

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Speaker 3: You know, twenty three was sort of the great production year,

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Speaker 3: you know, a year lagged from when the freight market

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Speaker 3: had turned down, and now we're kind of just experiencing

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Speaker 3: sort of the extended period of that. But you know,

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Speaker 3: right now, it's it's interesting times because we're still trying

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Speaker 3: to get a sense too of you know, what's going

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Speaker 3: to happen with the Section two thirty two tariffs on

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Speaker 3: heavy trucks that is under review, and what does that

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Speaker 3: mean for production in Mexico, you know, Canada, Mexico, but

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Speaker 3: especially Mexico. And so it's just it's times of uncertainty,

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Speaker 3: the greatest uncertainty since the pandemic. The difference is this

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Speaker 3: is self imposed uncertainty due to teriff related policies versus

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Speaker 3: the unknown of a disease that we were just trying

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Speaker 3: to understand, you know, what we were coping with.

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Speaker 2: Are you following all the EPA mandates for trucking?

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Speaker 3: Not too much? And I could be wrong on this,

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Speaker 3: but I believe there had been some rollbacks if I

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Speaker 3: think some.

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Speaker 1: Of those, Yeah, I'm just curious if you're if you

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Speaker 1: had any thoughts about that, But we can we can

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Speaker 1: move on from there.

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Speaker 3: I don't follow that one too much. I've assumed with

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Speaker 3: this administration that you're looking at a lot of more

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Speaker 3: environmentally oriented rules are going to be rolled back so

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Speaker 3: and otherwise I think if you were expecting something more

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Speaker 3: imminent to happen, you would see, just like we saw

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Speaker 3: in the mid two thousands, a surge of equipment orders

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Speaker 3: trying to get ahead of that.

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Speaker 1: Gotcha, And can we, I guess, talk a little bit about,

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Speaker 1: you know, when do you think things are going to

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Speaker 1: get better? I mean, we both kind of agreed that

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Speaker 1: the recovery has been pushed off, but is this a

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Speaker 1: twenty twenty six event now?

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Speaker 3: And it depends really on what happens between now and

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Speaker 3: eight to one and then figure seeing even what progresses

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Speaker 3: from A one. I think that a best case scenario

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Speaker 3: at this point is a Q two twenty twenty six recovery,

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Speaker 3: and that requires sort of threading a needle on the

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Speaker 3: tariff front, and you know certainly would not include as

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Speaker 3: an example an all out trade war breaking out between

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Speaker 3: the US and the EU. I mean, that's one we're

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Speaker 3: you know, waiting to see if some agreement can be

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Speaker 3: struck there. But I would say, at this point we've

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Speaker 3: missed peak home building season and twenty twenty five that's

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Speaker 3: kind of getting past us. So if we start thinking

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Speaker 3: about how the market could tighten. You're probably not going

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Speaker 3: to see anything significant until on November December, traditional holiday seasonality,

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Speaker 3: and even then we're likely pass sort of the traditional

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Speaker 3: peak import season because we kick in, you know, these

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Speaker 3: twenty percent rates for Vietnam, around twenty percent for a

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Speaker 3: lot of the rest of Southeast Asia. That's going to

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Speaker 3: curtail volume without a doubt. We you know, imports from

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Speaker 3: China are being tariff high enough, there's demand destruction taking

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Speaker 3: place there, so you're not going to have the traditional

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Speaker 3: peak season, which now means that once you get on

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Speaker 3: the other side of Christmas, we got the usual January

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Speaker 3: February slump that we always have happened with seasonality. So

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Speaker 3: the best you're hoping for is things tighten up in

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Speaker 3: twenty six if home construction increases. But that's going to

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Speaker 3: take i think the FED further cutting interest rates. But

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Speaker 3: it's also going to mean that there's no real signs

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Speaker 3: of tariff driven inflation. When I look at the data,

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Speaker 3: I see a few more red flags I think than

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Speaker 3: a lot of folks are saying. And that's just because

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Speaker 3: I'm looking very far upstream and I'm asking myself questions,

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Speaker 3: why is the price of domestically manufactured hardware, for motor vehicles,

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Speaker 3: for furniture, et cetera. Why is that up six percent

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Speaker 3: since the start of the year. Why are furniture prices

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Speaker 3: right now for domestically made furniture up almost three point

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Speaker 3: eight percent year over year when furniture demand is weak,

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Speaker 3: and that three point eight percent is quite historically strong

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Speaker 3: year over year increases. And my hunch is that once

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Speaker 3: we get some stability and tariff rates, and especially if

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Speaker 3: they're baseline fifteen, if not twenty percent, in a lot

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Speaker 3: of instances, you're going to have importers finally feeling confident

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Speaker 3: enough to go to their buyers and say, look, we

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Speaker 3: were absorbing ten, we can absorb twenty. We're passing some

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Speaker 3: of this on you, and the essentially this uncertainty is

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Speaker 3: resolved itself. And so I tend to think that we're

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Speaker 3: not really going to get a good picture on the

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Speaker 3: inflationary side of this until even September, October, November data

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Speaker 3: to give any type of sort of tariffs cementing themselves

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Speaker 3: and then start to see what further price increases are.

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Speaker 3: So I tend to think we're a long way away,

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Speaker 3: which means the FED may not be cutting rates even

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Speaker 3: twice this year, Maybe we're looking at one cut, and

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Speaker 3: potentially if some of the next CPI and especially PPI

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Speaker 3: readings don't look well, we may be in for a

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Speaker 3: zero cut scenario in twenty five unless the labor market

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Speaker 3: starts to really crack. And if the labor market cracks,

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Speaker 3: forget about it. At that point, we're entering a recession.

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Speaker 2: Gotcha?

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Speaker 1: And I mean, do you game out recessions that you

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Speaker 1: have a probability of that possibly happening.

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Speaker 3: So I think the second half of this year is

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Speaker 3: probably fairly low. But again, the real question is what

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Speaker 3: happens with the EU trade deal at the moment. And

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Speaker 3: I'm also waiting to really see what the Section two

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Speaker 3: thirty two tariffs on semiconductors and derivatives entails, but also pharmaceuticals. Basically,

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Speaker 3: from an inflationary standpoint, if we see a fairly much

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Speaker 3: across the board, you know, twenty five or let's say

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Speaker 3: even fifty percent tariff on those items, that's going to

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Speaker 3: give the FED substantial pause for lowering interest rates, knowing

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Speaker 3: that that cost push inflation is going to be working

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Speaker 3: its way down to the ultimate end user level over

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Speaker 3: the next six to.

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Speaker 1: Nine months, gotcha, Just as an Fai in the Bloomberg terminal,

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Speaker 1: the probability of recession right now is it thirty five percent.

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Speaker 1: That's down from forty percent a couple of weeks ago.

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Speaker 1: So economists that that Bloomberg polls, I guess are thinking

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Speaker 1: that the risk is a little lower still relatively, you know,

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Speaker 1: compared to where we were, you know, during the pandemic

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Speaker 1: and then all that stuff. So, uh, you know, it'll

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Speaker 1: be interesting to see how that that ends up playing out.

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Speaker 1: And you know it's interesting that you know, you you

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Speaker 1: I guess you're a little more I guess what do

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Speaker 1: you call pessimistic about inflation? So you don't think it's

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Speaker 1: you know, it's a dangerous where to use when explaining inflation,

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Speaker 1: but transitory like the rates are going to go up

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Speaker 1: because we all know what the towers are and then

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Speaker 1: they'll kind of stay steady from there. Do you think

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Speaker 1: it's going to be a continuation or do you think

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Speaker 1: it's going to be prices are going to have to

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Speaker 1: increase and they'll kind of stay there.

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Speaker 3: So I mean, the I think so the question is is,

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Speaker 3: you know, if we think the steady goal is two percent,

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Speaker 3: is it a big one time shock and then it

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Speaker 3: returns slowly. I'm not convinced of that, and I think,

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Speaker 3: and part of that is so I take a little

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Speaker 3: bit of a different view on what happened in twenty

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Speaker 3: one and twenty two, I think, and you know where

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Speaker 3: how I view twenty one and twenty two is. And

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Speaker 3: this helps explain too. Globally, what we saw was you

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Speaker 3: had a combination of tremendous cost push inflation then, but

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Speaker 3: it was due to shortages of input shortages and materials

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Speaker 3: that was endemic in the US and in Europe from

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Speaker 3: different data sources. But then that cost push inflation got

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Speaker 3: coupled with very strong demand due to monetary policy as

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Speaker 3: well as fiscal policy, and so what you had was

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Speaker 3: a psychology where producers selling to wholesalers and retailers said, hey,

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Speaker 3: I can raise my prices because the demand's there. And

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Speaker 3: so then what happens is the tier one suppliers selling

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Speaker 3: the raw materials are saying, well, my costs are going up,

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Speaker 3: and hey, if you say you're just passing it on,

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Speaker 3: I feel comfortable passing it on. And so you start

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Speaker 3: getting the spiral. And if you look margins in twenty

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Speaker 3: one were absolutely phenomenal with this, and so you had

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Speaker 3: this combination of cost push and flotationary forces mixed with

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Speaker 3: really strong demand, and it gives you this nasty cycle.

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Speaker 3: And the FED finally broke it by raising interest rates

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Speaker 3: that cool demand that let the shortages get themselves addressed

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Speaker 3: and things sort of settled down. What we have today

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Speaker 3: is a potential cost push inflation. I'm going to phrase

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Speaker 3: it more potential in the form of the tariffs. But

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Speaker 3: what's keeping it in check to some degree is the

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Speaker 3: weak demand. And we can see that, for example, in

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Speaker 3: the automakers really absorbing a lot of the tariffs so far.

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Speaker 3: If you start lowering interest rates too much and demand

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Speaker 3: starts to pick back up, now all of our producers

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Speaker 3: and our importers who have been absorbing the costs say

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Speaker 3: I could pass this on a little bit more. And

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Speaker 3: so I think for me, that's the challenge that the

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Speaker 3: FED is trying to deal with. And so I think

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Speaker 3: any type of cut of interest rates is going to

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Speaker 3: fail that if it increases demand, it's going to fairly

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Speaker 3: quickly see importers start to say, hey, we're passing on

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Speaker 3: some of these tariff costs. If or demand situation improves,

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Speaker 3: and so I tend to be a little bit more

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Speaker 3: pessimistic on where I think things are, just because when

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Speaker 3: you look at the sectors that we should see inflation,

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Speaker 3: we are saying it it's just very far from where

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Speaker 3: the consumer is right now. And so from a fraid

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Speaker 3: demand standpoint, it's either if you're either pessimistic about inflation,

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Speaker 3: you're saying either inflation gets higher and that's not good,

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Speaker 3: or you say people are absorbing the tariffs and that's

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Speaker 3: not good from a capital investment standpoint, because the overwhelming

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Speaker 3: evidence is not that foreign exporters are absorbing a large

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Speaker 3: share of these tariffs. We can see it in some sectors.

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Speaker 3: I've written about it on LinkedIn. You can see it

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Speaker 3: in Chinese apparel, you can see it in EU beverage,

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Speaker 3: but you don't see it an EU machinery or Chinese machinery,

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Speaker 3: or sectors where the dynamics are very different.

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Speaker 1: So going back to the supply side in trucking, and

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Speaker 1: this is going to be controversial within the trucking realm.

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Speaker 2: And again, you know.

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Speaker 1: The capacity is pretty loose right now, so it might

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Speaker 1: be silly to talk about, but do you think there's

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Speaker 1: a structural issue in trucking where there's always going to

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Speaker 1: be a quote unquote a driver shortage or if you

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Speaker 1: if you want to call it an issue with turnover.

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Speaker 3: So what I would say is trucking has a turn

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Speaker 3: an endemic turnover problem. It does not have a structural

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Speaker 3: shortage of driver problems. And the way I like to

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Speaker 3: think about it is if you look and I'm going

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Speaker 3: to use pre COVID period because I think that's a

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Speaker 3: more realistic, normalish type of economic scenario, is take a

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Speaker 3: look at what happens between the for the twenty seventeen

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Speaker 3: through twenty nineteen market cycle. In twenty seventeen, and you

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Speaker 3: start to have demand really start to increase towards the

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Speaker 3: middle part to second part of the year. You've got

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Speaker 3: you know, fracking is coming back, business tax cuts, commodity

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Speaker 3: markets are doing well, so there's a lot more freight

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Speaker 3: to be moved. And then once freight demand starts to

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Speaker 3: go up, carriers can't add capacity that quickly, so you

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Speaker 3: start to see more carriers get towards full utilization, they

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Speaker 3: start to reject tenders that puts freight on the spot market.

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Speaker 3: Spot prices go up. We get a feeding frenzy, and

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Speaker 3: the only way to correct that is either contract rates

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Speaker 3: have to go up and then also at the same

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Speaker 3: time you need more capacity to enter, and that takes

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Speaker 3: six to nine months. But what always ends up happening

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Speaker 3: is by the time we get to Q four of

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Speaker 3: twenty eighteen, freight demand starts to decrease on a seasonally

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Speaker 3: adjusted basis. We've had interest rate cuts or interest rate

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Speaker 3: hikes starting to bite. You started to have retaliatory tariffs.

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Speaker 3: Bit it a little bit in response to our tariffs.

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Speaker 3: But payrolls keep going up through most of twenty nineteen

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Speaker 3: because capacity gets added with a lag, and so each

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Speaker 3: market cycle sort of exhibits this pattern. Is demand increases

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Speaker 3: more rapidly than we can add supply, just due to

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Speaker 3: the fact that there's adjustment costs with adding supply. But

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Speaker 3: supply always overshoots demand because demand for trucking is practically

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Speaker 3: perfectly priced inelastic. Yes, on the intermodal side, there's some

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Speaker 3: elasticity there to the three railroads keep rates too high.

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Speaker 3: As truckload rates go down, there'll be some market show.

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Speaker 3: But in general, Procter and Gamble doesn't care if it's

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Speaker 3: three dollars a mile two dollars a mile they're shipping

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Speaker 3: something by truck. On the other hand, supply is super

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Speaker 3: price elastic rates go up, supply gets added, but with

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Speaker 3: the lag, so there's no structural shortage of drivers. I

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Speaker 3: completely disagree with the ATA on that, and the fact

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Speaker 3: we've been and over a two and a half year

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Speaker 3: freight recession would sort of suggest there's not a structural

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Speaker 3: shortage of drivers. No, if somebody says, well, there's a

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Speaker 3: structural shortage of good drivers, there's a structural shortage of

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Speaker 3: good everything. So I don't buy that argument whatsoever. But

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Speaker 3: on the turnover side, certainly turnover rates are quite high

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Speaker 3: compared to let's say manufacturing, and what that means is

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Speaker 3: for carriers, even if it's a down market like it's

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Speaker 3: been for the last two years, I'm still constantly hiring people. Still.

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Speaker 3: I may not even be trying to grow, I'm just

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Speaker 3: trying to maintain capacity. I'm still having to hire people

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Speaker 3: all the time. And so I think folks conflate the

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Speaker 3: I'm always hiring folks because of turnover with the concept

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Speaker 3: of a shortage, and they're two completely different things in economics.

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Speaker 1: Right, And for those listening, you know, driver Turnover tends

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Speaker 1: to be high in trucking because it's obviously a pretty

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Speaker 1: fungible job. If you get pissed off at your dispatcher

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Speaker 1: at one company, you just might go down the road

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Speaker 1: and work for a different company. Also, a lot of

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Speaker 1: people get into trucking. It's usually a second or third

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Speaker 1: career for them. They think, hey, I'm going to go

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Speaker 1: see the country, and then they realize it's an extremely

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Speaker 1: tough profession because you're always on the road, you're you know,

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Speaker 1: living out of your truck. Obviously, it's an incredibly important

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Speaker 1: aspect of our economy and without it, most of us

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Speaker 1: would not have the things that we enjoy every day,

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Speaker 1: whether it's your I don't know, your beer, your avocados,

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Speaker 1: or your pillows. I don't know why I chose those

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Speaker 1: three things. But you know, it is a tough job,

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Speaker 1: and it's interesting. You know, we have data on the

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Speaker 1: Bloomberg Terminal from the American Trucking Association, and you know,

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Speaker 1: one of their data points is turnover at large truckload

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Speaker 1: providers and that's historically low, and it's historically low at

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Speaker 1: seventy percent, So we can go above one hundred percent

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Speaker 1: during really good times so turn over is something that

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Speaker 1: you know, we kind of look at when we're trying

435
00:25:03,000 --> 00:25:07,200
Speaker 1: to figure out what's going on in the trucking market.

436
00:25:07,640 --> 00:25:08,680
Speaker 2: What else is.

437
00:25:08,760 --> 00:25:12,600
Speaker 1: Kind of like a major challenge for the trucking industry?

438
00:25:14,080 --> 00:25:18,000
Speaker 1: Do you cover or look at like, you know, these

439
00:25:18,080 --> 00:25:20,560
Speaker 1: nuclear verdicts that we've been seeing as of late, Is

440
00:25:20,560 --> 00:25:21,760
Speaker 1: that something that you look at.

441
00:25:22,560 --> 00:25:25,080
Speaker 3: I haven't really looked at it that much from a

442
00:25:25,160 --> 00:25:31,200
Speaker 3: research standpoint, but it is certainly a topic. I think

443
00:25:31,320 --> 00:25:34,320
Speaker 3: in general this even broader issue as well. We keep

444
00:25:34,359 --> 00:25:38,360
Speaker 3: seeing cases on broker liability, and especially since a lot

445
00:25:38,400 --> 00:25:42,600
Speaker 3: of the big truckload players are also brokerages, that's going

446
00:25:42,680 --> 00:25:47,640
Speaker 3: to be a topic that's increasingly important. And the sort

447
00:25:47,680 --> 00:25:51,280
Speaker 3: of the vicarious liability aspects of that, what is due

448
00:25:51,320 --> 00:25:56,360
Speaker 3: diligence entail? You know, I published a paperback in twenty

449
00:25:56,440 --> 00:26:00,680
Speaker 3: twenty where I had argued essentially that we know very

450
00:26:00,720 --> 00:26:04,760
Speaker 3: well from the distributions of like the safety scores published

451
00:26:04,800 --> 00:26:08,080
Speaker 3: from the Compliance, Safety and Accountability Program by the Federal

452
00:26:08,080 --> 00:26:13,000
Speaker 3: Motorcare Safety Administration, I can give you pretty rough guidelines

453
00:26:13,040 --> 00:26:17,720
Speaker 3: onto Hey, if a carrier's safety performance is above xyz

454
00:26:17,920 --> 00:26:21,760
Speaker 3: threshold on these metrics, you probably don't want to use them,

455
00:26:22,080 --> 00:26:25,199
Speaker 3: and so that's something I'll be I'll be curious to

456
00:26:25,200 --> 00:26:28,400
Speaker 3: see as the industry continues to become more and more

457
00:26:28,440 --> 00:26:33,399
Speaker 3: and more data focused, you know, whether we start to

458
00:26:33,440 --> 00:26:37,639
Speaker 3: see you know, carrier selection and whatnot start to incorporate

459
00:26:37,680 --> 00:26:42,560
Speaker 3: more of you know, more above the minimum requirements that

460
00:26:42,840 --> 00:26:48,080
Speaker 3: FMCSA stipulates that must be used. Is firms try to

461
00:26:48,200 --> 00:26:52,840
Speaker 3: essentially avoid these issues. I think the challenges during a

462
00:26:52,960 --> 00:26:55,720
Speaker 3: down market it's easier to be very selective. But what

463
00:26:55,880 --> 00:27:00,120
Speaker 3: happens when the market turns and then folks are you know,

464
00:27:00,240 --> 00:27:03,399
Speaker 3: looking for capacity. You tend to be more willing to

465
00:27:03,440 --> 00:27:05,840
Speaker 3: take rest during that time period, right right?

466
00:27:05,960 --> 00:27:09,600
Speaker 1: You have you know, insurance costs and fraud or really

467
00:27:09,600 --> 00:27:14,639
Speaker 1: big issues facing the trucking industry. Can we talk about

468
00:27:14,840 --> 00:27:18,040
Speaker 1: technology a little bit? You know, what are your views

469
00:27:18,080 --> 00:27:21,760
Speaker 1: on AI machine learning? Are you foreigner against it?

470
00:27:21,800 --> 00:27:23,840
Speaker 2: Now? You know what do you think that fits in

471
00:27:23,880 --> 00:27:24,399
Speaker 2: with trucking?

472
00:27:25,080 --> 00:27:27,240
Speaker 3: So I think where it fits in very well. And

473
00:27:27,280 --> 00:27:29,960
Speaker 3: again this is especially going to be the very large firms.

474
00:27:30,000 --> 00:27:33,960
Speaker 3: If you're running a fleet of five trucks, you don't

475
00:27:34,000 --> 00:27:36,800
Speaker 3: need this stuff, right, I mean, you probably have a

476
00:27:37,000 --> 00:27:41,080
Speaker 3: very sort of stable network you've got a couple anchor shippers.

477
00:27:41,640 --> 00:27:44,080
Speaker 3: You can run this operation still on post and notes

478
00:27:44,080 --> 00:27:46,160
Speaker 3: with four or five trucks. And that's why a lot

479
00:27:46,160 --> 00:27:49,000
Speaker 3: of carriers stay small. They find their niche, they don't

480
00:27:49,000 --> 00:27:50,920
Speaker 3: want to get out of it. They don't want to

481
00:27:50,960 --> 00:27:55,040
Speaker 3: grow because it's a managerial nightmare, and so for those

482
00:27:55,080 --> 00:27:58,399
Speaker 3: firms really don't matter. For the big players, it's going

483
00:27:58,480 --> 00:28:01,400
Speaker 3: to just be a general extension of all the analytics

484
00:28:01,440 --> 00:28:03,600
Speaker 3: work that we've seen over the years. I mean, you know,

485
00:28:03,640 --> 00:28:06,520
Speaker 3: you look at carriers like Schneider has worked a lot with,

486
00:28:06,960 --> 00:28:10,919
Speaker 3: you know, Warren Powell when meritus professor from Princeton in

487
00:28:11,000 --> 00:28:15,760
Speaker 3: terms of optimization and things like that. It'll just be

488
00:28:15,960 --> 00:28:19,480
Speaker 3: even further and further and further improvement in terms of

489
00:28:21,000 --> 00:28:24,760
Speaker 3: finding efficiencies in the system. I mean, h Robinson has

490
00:28:24,800 --> 00:28:28,240
Speaker 3: been very public about their use of AI to automate

491
00:28:28,880 --> 00:28:33,159
Speaker 3: essentially fairly drudgery processes. They get an email asking for

492
00:28:33,200 --> 00:28:35,560
Speaker 3: a freight quote, and they can just now have AI

493
00:28:35,720 --> 00:28:38,800
Speaker 3: trained to say, hey, here you go, here's what it is.

494
00:28:38,840 --> 00:28:41,840
Speaker 3: Because the machine can read it, put the information in

495
00:28:41,880 --> 00:28:44,959
Speaker 3: their quoting tool, and it just basically sends an email

496
00:28:45,000 --> 00:28:48,000
Speaker 3: back with what the quoting tool tells it, so I

497
00:28:48,040 --> 00:28:51,040
Speaker 3: think it'll make further improvements. But I tend to be

498
00:28:51,040 --> 00:28:56,080
Speaker 3: a believer in sort of the great innovations thesis, which

499
00:28:56,160 --> 00:29:00,600
Speaker 3: is as transportation. If we think about it, the movement

500
00:29:00,840 --> 00:29:07,680
Speaker 3: from you know, mules to railroads was a phenomenal exponential

501
00:29:07,840 --> 00:29:11,760
Speaker 3: increase in efficiency, and then you could get rail to

502
00:29:11,960 --> 00:29:16,120
Speaker 3: truck for certain select movements that was more efficiency, but

503
00:29:16,320 --> 00:29:20,360
Speaker 3: the magnitude of that change is far less. I tend

504
00:29:20,440 --> 00:29:23,480
Speaker 3: to think for a lot of application specific to trucking.

505
00:29:23,960 --> 00:29:26,160
Speaker 3: At the end of the day, unless you get self

506
00:29:26,240 --> 00:29:29,800
Speaker 3: driving vehicles, which I think we're very far away from,

507
00:29:30,120 --> 00:29:33,040
Speaker 3: AI doesn't change the fundamental what the economists would call

508
00:29:33,200 --> 00:29:37,920
Speaker 3: production technology of the truckload sector. It's still about hauling

509
00:29:38,000 --> 00:29:41,680
Speaker 3: freight from point A to point B. There's tremendous randomness

510
00:29:41,720 --> 00:29:44,640
Speaker 3: in the generation of freight combined with where it's going

511
00:29:44,720 --> 00:29:47,960
Speaker 3: to go, and it's all about those economies. The scope

512
00:29:48,080 --> 00:29:53,480
Speaker 3: of you know, essentially building connected load chains to go

513
00:29:53,560 --> 00:29:55,640
Speaker 3: from A to B, B, two C, C to D

514
00:29:56,040 --> 00:29:59,200
Speaker 3: back to A with as minimal downtime as you can

515
00:29:59,320 --> 00:30:02,680
Speaker 3: within the concer trains posed by our service regulation. To

516
00:30:02,760 --> 00:30:05,280
Speaker 3: the extent, AI makes it better to do that you

517
00:30:05,360 --> 00:30:08,920
Speaker 3: may have some more efficiencies, but it's a lot more

518
00:30:08,920 --> 00:30:15,440
Speaker 3: incremental potentially than you know, other changes that we may

519
00:30:15,440 --> 00:30:18,440
Speaker 3: have had twenty five thirty years ago, where we start

520
00:30:18,480 --> 00:30:23,520
Speaker 3: getting combinatorial optimization that can you know, determine how shippers

521
00:30:23,560 --> 00:30:25,400
Speaker 3: allocate freight two carriers.

522
00:30:25,600 --> 00:30:28,560
Speaker 1: Yeah, just going back to the comments you made about

523
00:30:28,880 --> 00:30:31,440
Speaker 1: h Robinson for those interested in a couple of weeks ago,

524
00:30:31,480 --> 00:30:34,840
Speaker 1: we've published a podcast with they've both been the CEO

525
00:30:35,240 --> 00:30:37,520
Speaker 1: of Robinson, and he talks a lot about AI and

526
00:30:37,760 --> 00:30:41,800
Speaker 1: how they're leveraging technologies. So to self promote, I would

527
00:30:41,800 --> 00:30:44,120
Speaker 1: go back and listen to that if I were you.

528
00:30:45,680 --> 00:30:48,920
Speaker 1: And so, you know, you mentioned something about autonomous trucking.

529
00:30:49,160 --> 00:30:51,480
Speaker 1: It doesn't seem like you're a true believer, at least

530
00:30:51,560 --> 00:30:53,640
Speaker 1: not a true believer that it's going to happen tomorrow.

531
00:30:53,960 --> 00:30:56,520
Speaker 1: Can you talk about kind of your reservations about, you know,

532
00:30:56,600 --> 00:31:00,440
Speaker 1: why you think it's maybe something that's more future teristic

533
00:31:00,600 --> 00:31:02,080
Speaker 1: than today.

534
00:31:03,000 --> 00:31:06,400
Speaker 3: So I'd say, first off, drivers do a lot more

535
00:31:06,440 --> 00:31:10,400
Speaker 3: than just drive. Their security. They can fix problems when

536
00:31:10,440 --> 00:31:14,720
Speaker 3: they happen on the road, So drivers are not just

537
00:31:14,840 --> 00:31:18,120
Speaker 3: there to drive, and so you're still going to need

538
00:31:18,160 --> 00:31:21,040
Speaker 3: a vehicle with a lot, or you're still going to

539
00:31:21,120 --> 00:31:26,080
Speaker 3: need a person accompanying a lot. Drivers take pride in

540
00:31:26,080 --> 00:31:28,320
Speaker 3: how they were drive. My dad was a driver for

541
00:31:28,400 --> 00:31:32,640
Speaker 3: four years in the eighties, so I come from having

542
00:31:32,680 --> 00:31:35,600
Speaker 3: a parent that was in this sector. He primarily hauled

543
00:31:35,680 --> 00:31:38,200
Speaker 3: steel coils as a subcontractors, so he was the least

544
00:31:38,200 --> 00:31:42,400
Speaker 3: owner operator. Drivers take tremendous pride in their capabilities and

545
00:31:42,400 --> 00:31:45,600
Speaker 3: how they drive. No driver actually wants to really babysit

546
00:31:45,640 --> 00:31:48,239
Speaker 3: a computer. That is not what they want to do,

547
00:31:49,080 --> 00:31:51,480
Speaker 3: and so that is a human element of this that

548
00:31:51,560 --> 00:31:55,400
Speaker 3: I don't think is being recognized enough. The other issue

549
00:31:55,520 --> 00:32:00,320
Speaker 3: is just in general, only a subset of carrying are

550
00:32:00,320 --> 00:32:02,520
Speaker 3: really going to be able to use this technology. It's

551
00:32:02,560 --> 00:32:04,800
Speaker 3: going to be your JB Hunter Schneider's where there's a

552
00:32:04,800 --> 00:32:09,120
Speaker 3: lot of dedicated capacity for relatively short distance halls. So

553
00:32:09,160 --> 00:32:12,840
Speaker 3: I believe JBH is dedicated to vision. The average length

554
00:32:12,920 --> 00:32:14,720
Speaker 3: to hall is something like one hundred and fifty to

555
00:32:14,720 --> 00:32:17,520
Speaker 3: one hundred and sixty months, so it's it's quite short,

556
00:32:18,320 --> 00:32:22,040
Speaker 3: and so it's consistent freight to and from major metro areas.

557
00:32:22,520 --> 00:32:26,040
Speaker 3: You're going to need that type of sort of consistency

558
00:32:26,160 --> 00:32:31,400
Speaker 3: to justify the higher unit cost of the equipment for

559
00:32:31,960 --> 00:32:36,760
Speaker 3: small carriers, which actually today can consider or constitute more

560
00:32:36,800 --> 00:32:39,400
Speaker 3: of the industry from a relative standpoint than they did

561
00:32:39,440 --> 00:32:42,880
Speaker 3: a decade ago. Small carriers are not going to really

562
00:32:42,920 --> 00:32:48,400
Speaker 3: want this technology because their networks don't justify it. But

563
00:32:48,560 --> 00:32:52,640
Speaker 3: also you run into the proverbial issue of if my

564
00:32:52,720 --> 00:32:56,720
Speaker 3: equipment's down, I now have a higher fixed cost that

565
00:32:56,840 --> 00:32:59,440
Speaker 3: I'm having to absorb. It's why a lot of restaurants,

566
00:32:59,440 --> 00:33:02,920
Speaker 3: if I'm a all franchisee, the thought of a robot

567
00:33:02,960 --> 00:33:06,280
Speaker 3: flipping Hamburgers may sound great until somebody says, well, what

568
00:33:06,360 --> 00:33:10,680
Speaker 3: if the robot breaks, right, and then what do you do?

569
00:33:11,640 --> 00:33:14,160
Speaker 3: That's I think the type of situation you're looking at

570
00:33:14,200 --> 00:33:18,560
Speaker 3: as well, because think about as an autonomous system rolls out,

571
00:33:19,280 --> 00:33:21,920
Speaker 3: fixing it when it breaks, and it will break is

572
00:33:21,960 --> 00:33:25,240
Speaker 3: going to be much more challenging, and so for a

573
00:33:25,280 --> 00:33:27,360
Speaker 3: small firm, you're not going to want to go with that.

574
00:33:27,920 --> 00:33:31,240
Speaker 3: And so I certainly think there will be applications, But

575
00:33:31,760 --> 00:33:35,280
Speaker 3: if we look at the nature of freight, we're not

576
00:33:35,400 --> 00:33:38,000
Speaker 3: I don't see ten years from now the vast majority

577
00:33:38,000 --> 00:33:40,880
Speaker 3: of trucks being autonomous that that's just not going to happen.

578
00:33:41,320 --> 00:33:44,640
Speaker 1: Yeah, I totally agree with you, and I think the

579
00:33:45,080 --> 00:33:48,560
Speaker 1: most interesting thing about the autonomous technologies is that they

580
00:33:48,600 --> 00:33:52,720
Speaker 1: are going to make trucks safer for trucks with drivers

581
00:33:52,720 --> 00:33:58,240
Speaker 1: in them, because that technology will really really help things along.

582
00:33:58,800 --> 00:34:03,320
Speaker 1: So a little bit little truck humor there for those listening.

583
00:34:04,520 --> 00:34:06,360
Speaker 1: You know, I know you do all transports. I know

584
00:34:06,400 --> 00:34:10,600
Speaker 1: you do focus on trucking, but you know, I'd love

585
00:34:10,640 --> 00:34:13,319
Speaker 1: to hear your thoughts about, you know, the potential for

586
00:34:13,400 --> 00:34:16,480
Speaker 1: a Union Pacific Norfolk Southern merger, which is you know,

587
00:34:16,600 --> 00:34:21,000
Speaker 1: today UP announced that they are in fact having advanced

588
00:34:21,040 --> 00:34:24,000
Speaker 1: talks with Norfolk Southern. So what are your thoughts about

589
00:34:24,120 --> 00:34:26,160
Speaker 1: a deal? Do you think a deal can get done

590
00:34:26,320 --> 00:34:28,360
Speaker 1: if you do have a thought on that, given that

591
00:34:28,920 --> 00:34:31,000
Speaker 1: you know there's a high regulatory hurdle there.

592
00:34:31,840 --> 00:34:33,480
Speaker 3: Yeah, So what I would say is, I'm not going

593
00:34:33,560 --> 00:34:36,680
Speaker 3: to speculate on whether the deal will get approved by

594
00:34:36,960 --> 00:34:39,759
Speaker 3: you know, let's say the STV YEP. But what I

595
00:34:39,800 --> 00:34:43,560
Speaker 3: can say is that combination and I really hadn't appreciated

596
00:34:43,600 --> 00:34:46,080
Speaker 3: it till I actually looked at the twenty twenty four

597
00:34:46,239 --> 00:34:51,200
Speaker 3: data on rail movements by commodity, and that's when you

598
00:34:51,239 --> 00:34:54,960
Speaker 3: realize like this is a monster if this gets created.

599
00:34:55,080 --> 00:34:57,840
Speaker 3: So I mean, just to give some statistics, if you

600
00:34:57,920 --> 00:35:02,480
Speaker 3: use twenty twenty four US movements, I'm gonna call it UPNS.

601
00:35:02,520 --> 00:35:04,480
Speaker 3: I don't know why, I just like the sound of

602
00:35:04,480 --> 00:35:09,200
Speaker 3: that better than NSUP. So UPNS would be have forty

603
00:35:09,440 --> 00:35:14,360
Speaker 3: three percent of all movements, that's all containers, all car loads,

604
00:35:14,400 --> 00:35:18,640
Speaker 3: all truck trailers. BNSF would be a distant second at

605
00:35:18,680 --> 00:35:23,879
Speaker 3: that point at twenty seven percent. And for some commodity categories,

606
00:35:23,880 --> 00:35:30,560
Speaker 3: for example chemicals, UPNS would have forty nine percent market

607
00:35:30,600 --> 00:35:33,959
Speaker 3: share of chemical movements in the US. Now, outside of COLE,

608
00:35:34,040 --> 00:35:37,200
Speaker 3: that is your largest carload commodity by a long shot.

609
00:35:38,000 --> 00:35:42,480
Speaker 3: CSX is a distant second place at eighteen percent. For

610
00:35:42,600 --> 00:35:46,960
Speaker 3: motor vehicles and equipment, UPNS has forty seven percent market

611
00:35:46,960 --> 00:35:50,520
Speaker 3: share behind CSX again is a distant second place at

612
00:35:50,600 --> 00:35:54,799
Speaker 3: twenty three percent. Even for intermodal containers, so not even

613
00:35:54,800 --> 00:36:01,080
Speaker 3: including truck trailers, just intermodal containers, UPNS is forty six

614
00:36:01,160 --> 00:36:05,279
Speaker 3: percent market share after BNSF and BNSF is second and

615
00:36:05,400 --> 00:36:08,320
Speaker 3: just thirty percent. So you would just have an absolute

616
00:36:08,560 --> 00:36:14,799
Speaker 3: monster doing over fifteen million movements a year. And so

617
00:36:14,880 --> 00:36:17,879
Speaker 3: I do think one of the challenges is if this

618
00:36:18,280 --> 00:36:22,480
Speaker 3: merger were to happen, it puts some pressure on CSX

619
00:36:22,520 --> 00:36:26,040
Speaker 3: and BNSF because now, all of a sudden, you have

620
00:36:26,200 --> 00:36:30,760
Speaker 3: one integrated monster that each of them is now facing

621
00:36:30,840 --> 00:36:34,400
Speaker 3: as their core rival and their respective parts of the country.

622
00:36:34,800 --> 00:36:39,040
Speaker 1: Yeah, and you know, as as his deal progresses, I

623
00:36:39,040 --> 00:36:42,359
Speaker 1: would not be surprised if Ben and CSX announced their

624
00:36:42,400 --> 00:36:45,759
Speaker 1: own kind of merger because to your point, they'd be

625
00:36:45,840 --> 00:36:47,480
Speaker 1: at a competitive disadvantage.

626
00:36:48,400 --> 00:36:50,160
Speaker 2: And the rules that were established by.

627
00:36:50,040 --> 00:36:53,480
Speaker 1: The STB in twenty two thousand and one were really

628
00:36:53,560 --> 00:36:58,920
Speaker 1: driven to kind of stop the mergers of large class

629
00:36:58,920 --> 00:37:01,279
Speaker 1: one rail So it'll be interesting to see a if

630
00:37:01,320 --> 00:37:04,440
Speaker 1: those rules continue, because the STB is having some hearings

631
00:37:04,440 --> 00:37:07,239
Speaker 1: in August about, you know, what they can do to

632
00:37:07,280 --> 00:37:10,560
Speaker 1: streamline their regulatory process, So it'll be interesting to see

633
00:37:10,600 --> 00:37:14,360
Speaker 1: if that includes the kind of rules around M and A.

634
00:37:15,239 --> 00:37:20,799
Speaker 1: So you know, you're in academia, which is awesome, What

635
00:37:20,840 --> 00:37:23,560
Speaker 1: do you is there a book about transportation that you

636
00:37:23,600 --> 00:37:26,359
Speaker 1: know you tell your students like you gotta read this

637
00:37:26,560 --> 00:37:29,279
Speaker 1: for and not like a textbook, like just a book

638
00:37:29,360 --> 00:37:31,680
Speaker 1: about transportation fiction or nonfiction.

639
00:37:32,360 --> 00:37:36,800
Speaker 3: So certainly for Trucking by far the book I always

640
00:37:36,920 --> 00:37:39,239
Speaker 3: make any doctoral student read if they're going to get

641
00:37:39,239 --> 00:37:41,880
Speaker 3: into trucking as a book but called Pedal to the

642
00:37:41,920 --> 00:37:48,200
Speaker 3: Metal by Lawrence Uhlett. It's from nineteen ninety four. Ulett

643
00:37:48,400 --> 00:37:51,799
Speaker 3: is a interestingly enough a sociology professor, but he was

644
00:37:51,800 --> 00:37:56,560
Speaker 3: a truck driver for much of the eighties, and so

645
00:37:56,680 --> 00:38:01,400
Speaker 3: he tells his stories of working for MOULDI pulled different firms,

646
00:38:02,200 --> 00:38:05,040
Speaker 3: and he brings such a unique angle to it as

647
00:38:05,080 --> 00:38:08,480
Speaker 3: a sociologist. He talks about why do truck drivers work

648
00:38:08,600 --> 00:38:13,279
Speaker 3: so hard? Because every economic theory would say, why would

649
00:38:13,320 --> 00:38:16,480
Speaker 3: they work hard? They're working away from direct management oversight,

650
00:38:16,560 --> 00:38:20,399
Speaker 3: and we're talking in nineteen eighties. Computers were very, very

651
00:38:20,520 --> 00:38:23,440
Speaker 3: very rare at that point in time, and so he

652
00:38:23,560 --> 00:38:27,440
Speaker 3: just has such a fascinating perspective on the industry. And

653
00:38:27,480 --> 00:38:29,959
Speaker 3: that was what really sort of got me into doing

654
00:38:30,040 --> 00:38:32,440
Speaker 3: a lot of the research that I ended up doing,

655
00:38:33,080 --> 00:38:36,399
Speaker 3: because it turned out that trucking is one sector where

656
00:38:36,400 --> 00:38:40,239
Speaker 3: there's a lot of data available, but it has just

657
00:38:40,320 --> 00:38:45,240
Speaker 3: got such unique dynamics that take place that it really

658
00:38:45,280 --> 00:38:48,720
Speaker 3: interested me. So that is for me, like the all time,

659
00:38:49,120 --> 00:38:54,640
Speaker 3: by far best book on that. I'd say for anybody

660
00:38:54,640 --> 00:38:57,440
Speaker 3: who's interested in trucking and is kind of curious about

661
00:38:57,440 --> 00:39:01,799
Speaker 3: like electronic logs and things like that. Karen Levy has

662
00:39:01,840 --> 00:39:06,000
Speaker 3: a great book called Data Driven that's a good read

663
00:39:07,120 --> 00:39:10,040
Speaker 3: in terms of sort of that she went out did

664
00:39:10,120 --> 00:39:13,160
Speaker 3: a lot of ethnographic work talking to carriers, talking to

665
00:39:13,239 --> 00:39:17,120
Speaker 3: drivers about how electronic log shape things. And so her

666
00:39:17,160 --> 00:39:20,719
Speaker 3: work's interesting because myself and some of my colleagues have

667
00:39:20,840 --> 00:39:24,320
Speaker 3: so far to date published every paper on the impact

668
00:39:24,400 --> 00:39:28,200
Speaker 3: of the electronic logging devices as well as factors that

669
00:39:28,239 --> 00:39:31,640
Speaker 3: were affecting carriers adoption of it, And so for me

670
00:39:31,680 --> 00:39:35,359
Speaker 3: as a statistician, it's interesting to see sort of that

671
00:39:35,400 --> 00:39:40,799
Speaker 3: grant you know, more you know, field interview ethnographic type

672
00:39:40,800 --> 00:39:44,560
Speaker 3: of work that really sort of corroborates what we're seeing

673
00:39:44,600 --> 00:39:48,320
Speaker 3: when we look at sort of these broader statistical associations

674
00:39:48,320 --> 00:39:49,080
Speaker 3: that emerge.

675
00:39:49,239 --> 00:39:53,600
Speaker 1: And you know, we mentioned obviously social media earlier that

676
00:39:53,680 --> 00:39:57,040
Speaker 1: you're you know, you're pretty prolific on LinkedIn. Are there

677
00:39:57,080 --> 00:39:59,960
Speaker 1: people in transportation that you follow on social media?

678
00:40:00,040 --> 00:40:00,560
Speaker 2: Yeah?

679
00:40:00,680 --> 00:40:04,279
Speaker 3: Besides me, of course, so some other folks who I

680
00:40:04,320 --> 00:40:08,000
Speaker 3: really like the content they put out. Ken adamo At

681
00:40:08,440 --> 00:40:12,319
Speaker 3: dat Sure. Ken puts out some great stuff. And what

682
00:40:12,400 --> 00:40:15,160
Speaker 3: I appreciate about Ken is he's willing to, you know, again,

683
00:40:15,280 --> 00:40:18,960
Speaker 3: what the data. As much as data can't speak for itself,

684
00:40:19,080 --> 00:40:22,520
Speaker 3: you still have to provide the interpretation, but he's willing

685
00:40:22,560 --> 00:40:26,600
Speaker 3: to say, here's the data, here's my interpretation. This is

686
00:40:26,719 --> 00:40:30,360
Speaker 3: very broad representative. A lot of you may disagree with this,

687
00:40:31,640 --> 00:40:36,239
Speaker 3: you know, particularly for example, this idea of the requirement

688
00:40:36,360 --> 00:40:40,040
Speaker 3: that brokers have to give truck you know, truckload carriers

689
00:40:40,120 --> 00:40:43,120
Speaker 3: information about the pricing and the margin and all of this.

690
00:40:43,960 --> 00:40:47,040
Speaker 3: I've been on the record saying it doesn't matter for

691
00:40:47,120 --> 00:40:49,680
Speaker 3: a small carrier whether you get this information or not,

692
00:40:49,760 --> 00:40:53,359
Speaker 3: because no offense, that gigantic shipper doesn't want to deal

693
00:40:53,400 --> 00:40:57,120
Speaker 3: with you directly, You're not going to disintermediate the broker

694
00:40:57,200 --> 00:41:02,440
Speaker 3: from this relationship. But so Ken Ken does some great stuff.

695
00:41:03,280 --> 00:41:06,800
Speaker 3: Thomas Watson at Freight Waves puts out some really good

696
00:41:07,360 --> 00:41:12,400
Speaker 3: analyzes and charts using their sonar program. He focuses a

697
00:41:12,400 --> 00:41:15,799
Speaker 3: lot on uh, you know, kind of current state of

698
00:41:15,840 --> 00:41:19,600
Speaker 3: the market as well. So it's always nice, you know,

699
00:41:19,680 --> 00:41:23,160
Speaker 3: I work a lot using dat's publicly available data, but

700
00:41:23,239 --> 00:41:27,800
Speaker 3: it's nice to see you know, corroborating information from different sources.

701
00:41:28,920 --> 00:41:32,319
Speaker 3: So I usually really like to give his stuff a

702
00:41:32,320 --> 00:41:35,320
Speaker 3: look as well. And then for anybody if you're interested

703
00:41:35,360 --> 00:41:38,040
Speaker 3: in like the tariff and trade space, I got to

704
00:41:38,080 --> 00:41:42,920
Speaker 3: give a shout out to Richard Baldwin, another fellow academic

705
00:41:44,480 --> 00:41:48,880
Speaker 3: across the pond who's phenomenal on that trade space. But

706
00:41:48,960 --> 00:41:53,319
Speaker 3: he has a very unique and I think sophisticated way

707
00:41:53,360 --> 00:41:57,400
Speaker 3: of really looking at the complexities of the tariffs. You know,

708
00:41:57,480 --> 00:42:01,520
Speaker 3: for example, writing an article just the other day about

709
00:42:01,520 --> 00:42:07,680
Speaker 3: the Japanese tariffs and really highlighting some of the challenges

710
00:42:07,719 --> 00:42:11,520
Speaker 3: in the potentially of fifteen percent tariff on finished Japanese

711
00:42:11,640 --> 00:42:15,880
Speaker 3: vehicles may actually mean that when the dust settles, a

712
00:42:16,040 --> 00:42:21,280
Speaker 3: fifteen percent tariff finished Japanese vehicle in Japan is actually

713
00:42:21,360 --> 00:42:25,240
Speaker 3: now more competitive in the United States than a US

714
00:42:25,320 --> 00:42:29,719
Speaker 3: assembled vehicle because of all the swede of tariffs. So

715
00:42:29,840 --> 00:42:33,319
Speaker 3: essentially on a relative basis, are we maybe, actually, you know,

716
00:42:33,360 --> 00:42:38,400
Speaker 3: with policies like that, inadvertently making ourselves less competitive? And

717
00:42:38,480 --> 00:42:43,840
Speaker 3: what are the complexities if Japan If Japanese automakers shift

718
00:42:43,960 --> 00:42:49,160
Speaker 3: some sourcing from Mexico back to Japan, for I shouldn't

719
00:42:49,160 --> 00:42:53,880
Speaker 3: say sourcing, shift assembly back to Japan, are they actually

720
00:42:53,920 --> 00:42:57,120
Speaker 3: better off now exporting from Japan to the US market,

721
00:42:57,960 --> 00:43:01,240
Speaker 3: and that hurts US autoparts maker who are actually supplying

722
00:43:01,280 --> 00:43:04,000
Speaker 3: to those plants in Mexico but wouldn't supply to the

723
00:43:04,040 --> 00:43:04,880
Speaker 3: plants in Japan.

724
00:43:05,440 --> 00:43:08,720
Speaker 1: That sounds a very interesting paper.

725
00:43:08,760 --> 00:43:10,080
Speaker 2: I gotta I gotta take a look at that.

726
00:43:10,600 --> 00:43:13,520
Speaker 3: Oh yeah, yeah, And Richard does a great job and

727
00:43:13,640 --> 00:43:16,840
Speaker 3: not again kind of writing for a general audience versus

728
00:43:16,920 --> 00:43:19,640
Speaker 3: you know. The one thing for anybody listening to understand

729
00:43:19,719 --> 00:43:24,040
Speaker 3: is US academics. If we write complexly, we apologize, but

730
00:43:24,160 --> 00:43:26,439
Speaker 3: you should read what we actually write to each other

731
00:43:26,480 --> 00:43:29,920
Speaker 3: in the form of peer reviewed papers. They are for

732
00:43:30,000 --> 00:43:35,040
Speaker 3: the average person completely unintelligible. We always tell our doctoral

733
00:43:35,080 --> 00:43:38,200
Speaker 3: students once they start doing things, it's going to take

734
00:43:38,239 --> 00:43:41,440
Speaker 3: you eighteen months till you can actually really read and

735
00:43:41,560 --> 00:43:46,680
Speaker 3: understand one of these things. And so, you know, it's

736
00:43:47,760 --> 00:43:51,239
Speaker 3: it's interesting to see I think more academics becoming more

737
00:43:51,320 --> 00:43:57,000
Speaker 3: involved on social media. I'm another another person, my friend Yao, Jen,

738
00:43:57,120 --> 00:43:59,960
Speaker 3: I mean goes by Henry at Miami of Ohio does

739
00:44:00,120 --> 00:44:03,040
Speaker 3: a lot of really good, you know, charts out of

740
00:44:03,160 --> 00:44:05,480
Speaker 3: Fred just trying to you know, again, trying to put

741
00:44:05,560 --> 00:44:08,040
Speaker 3: a better sense and understanding of what's going on.

742
00:44:08,280 --> 00:44:11,439
Speaker 1: And for those interested, we did a podcast with Ken

743
00:44:11,480 --> 00:44:14,399
Speaker 1: I think last year from DAT so you might want

744
00:44:14,440 --> 00:44:16,320
Speaker 1: to go take a look at.

745
00:44:16,719 --> 00:44:17,879
Speaker 2: A past episode.

746
00:44:18,120 --> 00:44:20,799
Speaker 1: And just I guess before I let you go and

747
00:44:20,840 --> 00:44:23,360
Speaker 1: wrap things up here because we're coming towards the the

748
00:44:23,440 --> 00:44:26,680
Speaker 1: end of our time. You know, I guess, how did

749
00:44:26,719 --> 00:44:32,960
Speaker 1: you first gravitate towards transports, you know, with your with

750
00:44:33,000 --> 00:44:35,279
Speaker 1: your studies. How did you say, like, you know, this

751
00:44:35,719 --> 00:44:37,120
Speaker 1: is this is what I want to do.

752
00:44:37,840 --> 00:44:43,680
Speaker 3: Yeah, So it was a combination of good timing and whatnot.

753
00:44:43,800 --> 00:44:46,920
Speaker 3: So one of my he became one of my dissertation mentors,

754
00:44:47,000 --> 00:44:50,160
Speaker 3: John Sildona. He's the Sears endowed share at the University

755
00:44:50,200 --> 00:44:52,960
Speaker 3: of West Virginia now, but he had been at Ohio

756
00:44:53,000 --> 00:44:55,840
Speaker 3: State at the time, and this would have been twenty eleven,

757
00:44:56,000 --> 00:44:59,600
Speaker 3: twenty twelve, and they had just done a massive survey

758
00:44:59,640 --> 00:45:04,240
Speaker 3: about organizational control mechanisms in the trucking industry, collecting data

759
00:45:04,280 --> 00:45:08,960
Speaker 3: on monitoring technologies can use you know, use of different

760
00:45:09,000 --> 00:45:13,120
Speaker 3: incentives turnover, et cetera. And that was right when the

761
00:45:13,360 --> 00:45:16,759
Speaker 3: Compliance Safety and Accountability Program had just rolled out and

762
00:45:16,880 --> 00:45:20,080
Speaker 3: was publishing all of this data on care safety and

763
00:45:20,120 --> 00:45:23,480
Speaker 3: I knew of that, and I'd said, well, John, trucking

764
00:45:23,560 --> 00:45:28,799
Speaker 3: is an interesting setting, there's a safety data. Why don't

765
00:45:28,840 --> 00:45:31,400
Speaker 3: we merge this together and this will be my dissertation,

766
00:45:31,560 --> 00:45:34,239
Speaker 3: and that senate what I ended up doing. And then

767
00:45:34,280 --> 00:45:37,360
Speaker 3: once I had went down that rabbit hole, started to

768
00:45:37,440 --> 00:45:41,560
Speaker 3: do a lot of research on you know, how did

769
00:45:41,640 --> 00:45:47,960
Speaker 3: carrier safety evolve following the CSA program, what factors affected that?

770
00:45:48,880 --> 00:45:51,640
Speaker 3: And then I ended up getting really involved more in

771
00:45:51,680 --> 00:45:54,520
Speaker 3: the productivity and market side thanks to would have been

772
00:45:54,560 --> 00:45:56,680
Speaker 3: a doctoral student at the time of Michigan State, a

773
00:45:56,719 --> 00:46:00,640
Speaker 3: gentleman named Bill Muir, who I always tremendous amount of

774
00:46:00,680 --> 00:46:04,439
Speaker 3: gratitude too for really opening my eyes to a lot

775
00:46:04,480 --> 00:46:08,400
Speaker 3: of the connection between supply chain and economics, and so

776
00:46:08,680 --> 00:46:11,360
Speaker 3: kind of one thing led to another. When the ELD

777
00:46:11,520 --> 00:46:16,319
Speaker 3: mandate then started to hit, I'd reached out to Kevin Hill,

778
00:46:16,400 --> 00:46:21,080
Speaker 3: a carrierless which was eventually bought by Highway, after I

779
00:46:21,120 --> 00:46:24,000
Speaker 3: saw him cited in Wall Street Journal about this survey

780
00:46:24,080 --> 00:46:28,120
Speaker 3: on trucker the extent carriers were becoming compliant with ELD

781
00:46:28,200 --> 00:46:29,799
Speaker 3: mat date and said, hey, I'm an academic, you want

782
00:46:29,840 --> 00:46:31,680
Speaker 3: partner on those? And he goes sure, here's the data.

783
00:46:32,360 --> 00:46:34,759
Speaker 3: And so we've published some papers off that and then

784
00:46:35,080 --> 00:46:37,200
Speaker 3: working with my colleagues and a lot of you know,

785
00:46:37,520 --> 00:46:41,200
Speaker 3: really understanding the eld mandate not only the initial effects

786
00:46:41,239 --> 00:46:45,279
Speaker 3: but longer term. And you know, it's kind of one

787
00:46:45,320 --> 00:46:47,960
Speaker 3: of those you almost diversify as an academic the same

788
00:46:48,000 --> 00:46:51,239
Speaker 3: way companies do. You typically start narrow with a line

789
00:46:51,280 --> 00:46:53,720
Speaker 3: of business, you get to know that well, you start

790
00:46:53,760 --> 00:46:56,800
Speaker 3: to see areas of overlap and other lines of business,

791
00:46:56,800 --> 00:46:59,319
Speaker 3: and you sort of diversify yourself out that way.

792
00:46:59,480 --> 00:47:02,719
Speaker 1: Gotcha, all right, great stuff, and Jason, I really appreciate

793
00:47:02,719 --> 00:47:04,719
Speaker 1: your time and your insights today. Thanks so much for

794
00:47:04,800 --> 00:47:06,399
Speaker 1: joining us on Talking Transports.

795
00:47:06,600 --> 00:47:08,560
Speaker 3: Hey, thanks for having me Lee, and.

796
00:47:08,480 --> 00:47:09,799
Speaker 2: I want to thank you for tuning in.

797
00:47:09,840 --> 00:47:12,399
Speaker 1: If you liked the episode, please subscribe.

798
00:47:11,800 --> 00:47:12,760
Speaker 2: And leave a review.

799
00:47:13,160 --> 00:47:15,000
Speaker 1: We have lined up a number of great guests for

800
00:47:15,040 --> 00:47:17,880
Speaker 1: the podcast, so please check back to hear conversations with

801
00:47:18,000 --> 00:47:22,520
Speaker 1: C suite executives, shippers, regulators, and decision makers within the

802
00:47:22,560 --> 00:47:25,760
Speaker 1: freight markets. Also, if you want to learn more about

803
00:47:25,920 --> 00:47:29,000
Speaker 1: the freight transportation markets, check out our work on the

804
00:47:29,000 --> 00:47:33,560
Speaker 1: Bloomberg Terminal at BIGO and on social media. This is

805
00:47:33,640 --> 00:47:36,920
Speaker 1: Lee Clasgow signing off and thanks for talking transports with me,