WEBVTT - Tighter Capacity Could Extend Rate Cycle 0:00:00.970 --> 0:00:08.250 Hi, everyone. 0:00:08.289 --> 0:00:10.870 This is Lee Klaskow when we're talking transports. Welcome to 0:00:10.890 --> 0:00:14.730 Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Klaskow, 0:00:14.830 --> 0:00:19.030 Senior Freight Transportation Logistics Analyst at Bloomberg Intelligence, Bloomberg's in-house 0:00:19.050 --> 0:00:21.840 research arm. Before we dive in, a quick favor. If 0:00:21.890 --> 0:00:25.550 you enjoy the podcast, please take a moment to follow, rate, review, 0:00:25.700 --> 0:00:28.040 and share it with your network. It really helps more 0:00:28.100 --> 0:00:30.960 people discover the show. Today's episode is a little different. 0:00:31.300 --> 0:00:34.699 We're taking you on location to Trimble Insight 2026 in 0:00:34.740 --> 0:00:38.720 San Diego for a panel discussion about the forces reshaping 0:00:38.860 --> 0:00:41.880 the freight transportation markets. I was joined on stage by 0:00:41.960 --> 0:00:45.140 Craig Fuller, founder and CEO of FreightWaves, and Alex Formoso, 0:00:45.200 --> 0:00:48.900 executive VP of procurement and supply chain at Polyglass. The 0:00:48.940 --> 0:00:52.019 conversation was moderated by Trimble's Martin Schmidt. We covered a 0:00:52.040 --> 0:00:54.760 lot of ground, including whether the freight recovery is sustainable, 0:00:54.820 --> 0:00:58.280 why tightening trucking capacity could keep rates higher for longer, 0:00:58.640 --> 0:01:02.410 regulatory changes, and the impact of the Supreme Court's Montgomery decision. 0:01:02.970 --> 0:01:06.310 We also debate the outlook for autonomous trucking and discuss 0:01:06.350 --> 0:01:10.350 where AI is already creating real value and where the 0:01:10.410 --> 0:01:14.720 human touch remains irreplaceable. We even look ahead to 2027 0:01:14.720 --> 0:01:17.459 and discuss what carriers and shippers should be doing now 0:01:17.560 --> 0:01:20.340 to prepare for what's coming next. So let's head to 0:01:20.380 --> 0:01:23.619 San Diego and the main stage at Trimble Insight 2026. 0:01:23.620 --> 0:01:25.750 San Diego. 0:01:25.770 --> 0:01:28.360 Mmm, drink it in. 0:01:28.940 --> 0:01:32.840 It always goes down smooth. Before this, we heard how 0:01:32.860 --> 0:01:37.770 AI combined with human ingenuity and Sisu is changing transportation. 0:01:38.730 --> 0:01:41.350 Our panel is going to bring that conversation into the 0:01:41.390 --> 0:01:45.910 realities leaders are dealing with today. Market uncertainty, rising costs, 0:01:46.610 --> 0:01:50.100 regulatory change, and the pressure to invest in technology while 0:01:50.120 --> 0:01:53.960 continuing to run the business. We have three panelists as 0:01:54.020 --> 0:01:58.920 introduced with very different perspectives. Craig Fuller, Lee Clasco, and 0:01:59.020 --> 0:02:02.980 Alex Formoso. We only have 30-ish minutes here, so we're 0:02:03.000 --> 0:02:06.559 going to move quickly. If time permits, we can finish 0:02:06.600 --> 0:02:09.360 the audition, or we can try to tackle the driver shortage. 0:02:10.340 --> 0:02:12.650 So let's start with Craig over here. Craig is the 0:02:12.760 --> 0:02:15.570 founder and CEO of Freightwaves and brings a broad view 0:02:15.870 --> 0:02:19.650 of the markets, capacity, and technology disruption. He hosts a 0:02:19.669 --> 0:02:23.850 daily podcast at noon called Freightwaves. Lee Clasco is a 0:02:23.889 --> 0:02:27.830 senior transportation and logistics analyst with Bloomberg Intelligence and brings 0:02:27.870 --> 0:02:31.650 the data and financial perspective on carrier performance and the 0:02:31.690 --> 0:02:36.180 market outlook. He also hosts a weekly podcast called Talking Transports. 0:02:36.960 --> 0:02:41.660 And then Alex Formoso is the executive vice president of 0:02:41.740 --> 0:02:45.900 procurement and supply chain at Polyglass MAPE. Did I get 0:02:45.919 --> 0:02:46.240 that right? 0:02:46.440 --> 0:02:46.639 Yes. 0:02:47.740 --> 0:02:48.540 He's kind of a big deal. 0:02:49.990 --> 0:02:54.090 He brings the shipper, manufacturing, and procurement perspective and might 0:02:54.169 --> 0:02:57.130 also start a podcast after this. So let's get to 0:02:57.150 --> 0:03:01.390 the actual questions here. So from each of your vantage points, 0:03:01.730 --> 0:03:05.070 what is hitting transportation organizations the hardest right now? And 0:03:05.130 --> 0:03:08.770 what are leaders most at risk of underestimating? Craig, let's 0:03:08.790 --> 0:03:09.209 start with you. 0:03:09.490 --> 0:03:11.830 Yeah, I mean, this is the most interesting time in trucking. 0:03:12.330 --> 0:03:14.270 I've been around it, was born in it, been around 0:03:14.290 --> 0:03:15.470 it my whole life. And I think it's the most 0:03:15.510 --> 0:03:21.290 interesting time since deregulation. Frankly, because the regulators are taking 0:03:21.310 --> 0:03:24.730 an enormous amount of look at all of the problems. 0:03:25.050 --> 0:03:28.730 For the last five years, we've suffered, the industry's suffered 0:03:28.790 --> 0:03:34.280 from a safety, security, and economic crisis that has created 0:03:34.310 --> 0:03:36.190 the Great Freight Recession. We're now coming out of it, 0:03:36.260 --> 0:03:40.820 largely thanks to regulatory pressure and oversight. And that's creating 0:03:40.940 --> 0:03:44.500 a whole new playbook on how to respond to those events. 0:03:45.340 --> 0:03:47.480 Technology and AI are part of that story, but I 0:03:47.500 --> 0:03:49.860 think what's more interesting is how the government is actually 0:03:51.360 --> 0:03:54.120 interfering in some ways or impacting the freight market in 0:03:54.140 --> 0:03:57.620 ways that they haven't done in, frankly, years. 0:04:00.000 --> 0:04:01.780 Lee, do you have anything to add to that? 0:04:01.940 --> 0:04:04.650 Yeah, I think Greg really nailed it on the head. 0:04:04.730 --> 0:04:08.529 In addition to that, there's obviously the macro backdrop, which 0:04:08.630 --> 0:04:13.610 is extremely uncertain and inflationary, and I think that is 0:04:13.670 --> 0:04:18.659 having a really big impact on carriers' ability to remain 0:04:18.779 --> 0:04:23.500 profitable in this current environment. But with rates going up 0:04:23.960 --> 0:04:27.060 as they have, obviously that has been a great tailwind 0:04:27.100 --> 0:04:31.370 for them to mitigate those sort of risks and costs. Excellent. 0:04:31.730 --> 0:04:34.210 And Alex, from your perspective? So from a shipper perspective, 0:04:34.350 --> 0:04:37.650 we've been struggling a lot with availability of loads. Some 0:04:37.670 --> 0:04:40.789 in some certain areas of the market and some others, 0:04:42.150 --> 0:04:44.310 lack of abundancy there to be able to find it. 0:04:44.850 --> 0:04:47.810 Then also the cost. The cost really has skyrocketed for 0:04:47.890 --> 0:04:50.969 us and it's very difficult to pass the cost down 0:04:51.430 --> 0:04:54.210 to our customer. They are willing to accept some of it, 0:04:54.270 --> 0:04:56.600 but it's been a real struggle to pass it down 0:04:56.620 --> 0:04:57.800 on the shipper side. 0:04:59.200 --> 0:05:00.320 So is this a. 0:05:00.320 --> 0:05:02.840 Temporary pressure or structural change. 0:05:02.560 --> 0:05:04.000 Leaders need to plan around? 0:05:04.600 --> 0:05:05.000 Structural. 0:05:06.060 --> 0:05:09.000 We're pretty close with the FMCSA and DOT. I've had 0:05:09.020 --> 0:05:11.890 a number of conversations with Secretary Barr's who's in charge 0:05:11.910 --> 0:05:14.729 of the Federal Motor Carrier Safety Administration. And the way 0:05:14.750 --> 0:05:18.339 that they're leaning into regulatory oversight are ways that we 0:05:18.380 --> 0:05:21.640 haven't seen. If you think about, I bet many in 0:05:21.680 --> 0:05:25.060 this room couldn't even name an FMCSA director that wasn't 0:05:25.100 --> 0:05:28.940 named bars prior. It's had an enormous amount of turnover 0:05:28.960 --> 0:05:31.859 in that job. But I think this administration is taking 0:05:31.880 --> 0:05:34.310 that job very serious. It's really starting all the way 0:05:34.320 --> 0:05:37.750 from the top at the White House and down. And 0:05:38.089 --> 0:05:41.890 it fits their overall mission well. Whether you like the 0:05:41.930 --> 0:05:48.030 policy or hate the policies, DOT is executing Trump's policies, 0:05:48.830 --> 0:05:51.210 but they're trying to put rules in place that codify 0:05:51.250 --> 0:05:54.780 these so that regardless of administration, that we will have 0:05:54.860 --> 0:05:58.020 a tighter, more secure, and more regulated market than we 0:05:58.060 --> 0:05:58.460 had before. 0:05:59.000 --> 0:05:59.580 And I think what's. 0:05:59.480 --> 0:06:02.680 Interesting about it is it used to be or had 0:06:02.740 --> 0:06:04.740 been over the last decade is a lot of the 0:06:05.220 --> 0:06:09.120 very powerful lobbying groups and very powerful operators like the 0:06:09.220 --> 0:06:12.990 ATA are were pushing for deregulation and lowering the barriers 0:06:13.010 --> 0:06:15.520 to entry. And I think what they've learned is that 0:06:15.560 --> 0:06:18.240 by lowering the barriers to entry, making it easier to 0:06:18.260 --> 0:06:21.040 get into the market, particularly for truck drivers, that it 0:06:21.060 --> 0:06:23.200 was actually hurting their business. And I think if you 0:06:23.240 --> 0:06:27.180 follow the money, the largest participants in the market, the 0:06:27.200 --> 0:06:31.760 largest motor carriers and the associations have sort of woken 0:06:31.850 --> 0:06:35.850 up to this safety, security, and more importantly, economic crisis. 0:06:36.540 --> 0:06:39.620 And so I think we're going to have persistent regulatory 0:06:39.779 --> 0:06:42.979 oversight and change. And that is going to change the 0:06:43.020 --> 0:06:47.520 entire trajectory of this market. So I would say, based 0:06:47.560 --> 0:06:50.740 on what I understand, is we're just getting started. And 0:06:50.779 --> 0:06:53.400 it's not just the federal, the feds that are doing this, 0:06:53.839 --> 0:06:57.680 but it's also extending to the states. And now, post-Montgomery, 0:06:58.279 --> 0:07:01.000 you have the Supreme Court and the court system that 0:07:01.020 --> 0:07:05.660 is actually regulating brokers, which have not... The FNCSA would 0:07:05.680 --> 0:07:08.020 tell you they don't regulate shippers, they don't regulate brokers. 0:07:09.700 --> 0:07:12.400 Now the court systems are taking the responsibility of regulating 0:07:12.440 --> 0:07:16.140 freight brokers, which is also going to change the trajectory 0:07:16.170 --> 0:07:18.710 of this market in ways that I think are going 0:07:18.730 --> 0:07:19.530 to be pretty profound. 0:07:20.870 --> 0:07:21.410 That's excellent. 0:07:21.890 --> 0:07:23.950 We'll get into some of the Montgomery discussions maybe a 0:07:23.970 --> 0:07:26.850 little bit later here. Lee, what do you think has 0:07:26.930 --> 0:07:29.810 changed most over the past, I was going to say year, 0:07:29.850 --> 0:07:31.930 but things change like every week it seems like right now. 0:07:31.950 --> 0:07:34.270 What do you think has changed the most this year? 0:07:35.000 --> 0:07:37.680 Well, I think it's really the supply side that Craig 0:07:37.720 --> 0:07:40.380 was talking about. You know, we view what's going on 0:07:40.420 --> 0:07:44.640 there as really creating a different rate cycle than what 0:07:44.670 --> 0:07:46.810 we've seen in the past. Really, it's going to be 0:07:46.830 --> 0:07:51.450 an elongated rate cycle. So higher rates probably for longer. And, 0:07:51.650 --> 0:07:53.910 you know, at the end of the day, no matter 0:07:53.950 --> 0:07:55.770 who's in the White House, you know, no matter what 0:07:55.830 --> 0:07:57.950 party's in the White House, we think that what the 0:07:57.970 --> 0:08:00.690 federal government is doing today has been a net positive 0:08:00.850 --> 0:08:04.130 for road safety. And so I don't see, you know, 0:08:04.170 --> 0:08:07.290 a lot of the things that the Trump administration is 0:08:07.330 --> 0:08:10.570 doing to get necessarily rolled back. You know, I think 0:08:10.630 --> 0:08:12.910 it's road safety is something I think we all can 0:08:12.930 --> 0:08:16.010 agree on. It's a good thing. And what they've been 0:08:16.060 --> 0:08:20.160 doing is helping to improve the overall safety of the 0:08:20.180 --> 0:08:23.080 rules to take roads, taking people that shouldn't be behind 0:08:23.120 --> 0:08:26.360 a truck off the road. So I think that's that positive. 0:08:26.780 --> 0:08:28.620 And then, you know, what's changed? 0:08:29.420 --> 0:08:33.160 You know, it's whatever's going on in the Middle East, 0:08:34.120 --> 0:08:36.900 whether it's the Strait of Hormuz, you know, it's like 0:08:36.940 --> 0:08:40.140 game on, game off. And that's obviously having a huge 0:08:40.200 --> 0:08:44.060 impact on diesel pricing. And that's a huge input for 0:08:44.240 --> 0:08:48.480 the trucking industry. So, you know, geopolitical trends, I think, 0:08:48.500 --> 0:08:51.040 is a big thing that's been changing. And then, you know, 0:08:51.059 --> 0:08:54.100 what Craig was talking about on the supply side. That's 0:08:54.140 --> 0:08:56.520 a great transition into the next topic. So several of 0:08:56.559 --> 0:08:59.040 these pressures come back to the health of the freight market. 0:08:59.760 --> 0:09:02.560 Are we entering a real and sustainable freight market recovery, 0:09:02.820 --> 0:09:05.880 or are the current improvements mainly being driven by higher 0:09:06.020 --> 0:09:08.510 operating costs and capacity leaving the market? 0:09:09.350 --> 0:09:11.030 Craig? Well, I mean, the answer is yes. 0:09:11.870 --> 0:09:15.190 A lot of the improvements are because we are seeing 0:09:15.350 --> 0:09:20.579 structural changes in capacity created by regulatory changes. You're seeing 0:09:20.660 --> 0:09:25.020 less entrants come into market. The driver hiring situation is 0:09:25.120 --> 0:09:27.900 as tight. I'm sure folks in this room would attest 0:09:27.940 --> 0:09:31.020 to how hard it is to find truck drivers. And ultimately, 0:09:31.080 --> 0:09:35.059 truck drivers is the capacity constraint. The manufacturers can produce 0:09:35.100 --> 0:09:38.069 more trucks. It is really about whether we can find 0:09:38.090 --> 0:09:42.090 the truck drivers. And immigration over the last two decades 0:09:42.130 --> 0:09:44.429 has been the primary source of new truck drivers. The 0:09:44.450 --> 0:09:48.000 BLS data says as much as 23% of truck drivers 0:09:48.220 --> 0:09:52.340 are first generation immigrants. That was in 2019, that number 0:09:52.700 --> 0:09:56.270 by insurance estimates has probably doubled to about 40%. And 0:09:56.309 --> 0:10:00.090 so as we take immigrants out of the market, for 0:10:00.150 --> 0:10:04.069 regulatory change, change of immigration policy, and put more restrictions 0:10:04.170 --> 0:10:06.630 in place, that's going to reduce the available capacity. 0:10:06.650 --> 0:10:08.390 So that means that. 0:10:08.309 --> 0:10:11.970 We have this environment where it's going to be harder 0:10:12.590 --> 0:10:17.439 to add truck drivers to into the industry and because 0:10:17.500 --> 0:10:21.059 of the harder structural changes, that means this cycle. I mean, 0:10:21.140 --> 0:10:24.500 trucking has been historically, I'm sure the owners in this 0:10:24.559 --> 0:10:28.329 room can appreciate how low the return on capital and 0:10:28.390 --> 0:10:32.829 return on investment is for truckload particularly. This is giving, 0:10:32.970 --> 0:10:37.589 the structural change is gonna make it an environment where 0:10:37.630 --> 0:10:40.050 you do get a proper return for your capital because 0:10:40.690 --> 0:10:42.790 the winners are gonna be those that can recruit drivers 0:10:43.840 --> 0:10:47.729 and keep them running. And I think that's, back up 0:10:47.750 --> 0:10:51.150 what Lee said, I wrote an article, an opinion piece 0:10:51.190 --> 0:10:53.510 in the New York Times, which is not a place 0:10:53.530 --> 0:10:55.510 that you typically see pro-administration. 0:10:56.230 --> 0:10:59.130 And it had some very favorable things about DOT. They 0:10:59.150 --> 0:10:59.690 published it. 0:11:00.690 --> 0:11:02.620 And what was amazing is they actually shut down the 0:11:02.670 --> 0:11:05.920 comments after we got to 1,200 comments. And you would 0:11:05.940 --> 0:11:12.400 expect if it was a pro-administration article, that the comments 0:11:12.420 --> 0:11:14.040 would have been far more negative. And I thought it 0:11:14.059 --> 0:11:17.480 was interesting that the majority, probably 95% of those comments 0:11:17.500 --> 0:11:20.200 were very positive because it was in the mind of safety. 0:11:20.240 --> 0:11:22.699 There are 5,000 people a year that die from heavy 0:11:22.740 --> 0:11:27.679 duty accidents. The trucking on a per mile basis, the 0:11:27.720 --> 0:11:30.760 fatality rate has actually increased over the last decade, not decreased. 0:11:31.380 --> 0:11:35.110 And yet larger motor carriers have invested substantial amount of 0:11:35.140 --> 0:11:39.590 money in technology, safety, and training, and they are getting safer. 0:11:40.160 --> 0:11:41.460 But something else is amiss. 0:11:41.620 --> 0:11:43.740 And so I think any administration in the future, to 0:11:43.780 --> 0:11:45.980 talk sort of back to what Lee said, is going 0:11:46.000 --> 0:11:48.420 to have a problem going to the public and talking 0:11:48.460 --> 0:11:53.070 about lowering safety standards to allow more people to be 0:11:53.110 --> 0:11:55.550 in our industry. We have crossed that chasm, and I 0:11:55.570 --> 0:11:56.490 think it's a permanent shift. 0:11:57.490 --> 0:12:00.450 Alex, from your perspective, are you seeing any of this 0:12:01.010 --> 0:12:04.569 coming through and translating into actual bids, rates, or carrier negotiations? 0:12:05.370 --> 0:12:06.730 So for us, a couple of things that I'm going 0:12:06.750 --> 0:12:09.559 to be addressing some of what you said. as we're 0:12:09.580 --> 0:12:12.520 doing more understanding of what's happening in the market, we've 0:12:12.750 --> 0:12:18.290 seen that over 110 schools of driving, teaching drivers have 0:12:18.350 --> 0:12:20.590 closed in the last couple of years. And then we 0:12:20.610 --> 0:12:22.650 also see the aging, the average age of the driver 0:12:22.950 --> 0:12:26.470 continue to elevate, and we're not seeing. 0:12:25.330 --> 0:12:27.609 The new introduction into the market. 0:12:28.170 --> 0:12:30.179 Then when we sit back and realize what's going to 0:12:30.220 --> 0:12:32.679 be that within three to five years from now, well, 0:12:32.880 --> 0:12:35.900 we need to see more development on the self-driving vehicles. 0:12:36.460 --> 0:12:39.260 where it's going to need to have from point to point, 0:12:39.720 --> 0:12:42.579 and then be able to allow us to have a 0:12:42.640 --> 0:12:46.059 better position on the availability of those long hauls, those 0:12:46.080 --> 0:12:50.260 hauls that do require a manpower to manage those. So 0:12:50.280 --> 0:12:54.270 from us, to your question, the increase rates, we are 0:12:54.309 --> 0:12:57.890 seeing them, the lack of availability of the lanes that 0:12:57.910 --> 0:13:00.970 we need, long haul especially, short hauls have been easier, 0:13:00.990 --> 0:13:05.860 but the long hauls we've been stressing substantially. It's maybe 0:13:05.900 --> 0:13:07.420 one of the, we were talking about this backstage, maybe 0:13:07.440 --> 0:13:10.260 one of the first conferences I haven't heard about autonomous trucks. 0:13:10.340 --> 0:13:12.160 And you were talking to Craig a little bit about that. Craig, 0:13:12.179 --> 0:13:14.000 what was your response to that? 0:13:14.100 --> 0:13:16.290 I mean, it's coming. I think it's not a matter 0:13:16.370 --> 0:13:17.630 of if, but when. 0:13:17.650 --> 0:13:22.450 And I think we're going to see the capacity shortage, 0:13:22.470 --> 0:13:24.510 because I don't like the term driver shortage, because I 0:13:24.770 --> 0:13:29.329 think fundamentally the market corrects. But this capacity tightness and 0:13:29.429 --> 0:13:33.810 safety awareness is going to increase the investment and adoption 0:13:33.830 --> 0:13:36.830 of autonomous technology. question is i think we can argue 0:13:36.850 --> 0:13:39.849 about the timeline for that it's probably more ubiquitous in 0:13:39.890 --> 0:13:41.390 a decade i think we'll be sitting here but i 0:13:41.410 --> 0:13:45.709 think we'll start saying um we will start going beyond 0:13:45.790 --> 0:13:49.840 pilots within the next couple of years i think 2032 0:13:49.840 --> 0:13:54.679 to 2035 um within the next six to eight years 0:13:54.720 --> 0:13:56.939 is when you're going to start you guys are likely 0:13:57.000 --> 0:14:01.660 tendering to some form of autonomous um and this i 0:14:01.700 --> 0:14:04.309 think if we sort of think about politics because the 0:14:04.350 --> 0:14:09.510 regulatory environment is a political situation, I think it's likely 0:14:09.550 --> 0:14:13.069 that the next administration, that autonomous and AI become the 0:14:13.150 --> 0:14:19.620 topic of importance because of the overall social and labor 0:14:19.660 --> 0:14:21.480 questions that are out there. And so I think this 0:14:21.560 --> 0:14:24.560 is what my assessment of that is that the technology 0:14:24.600 --> 0:14:27.729 will be ready before the public necessarily is. Excellent. 0:14:28.670 --> 0:14:31.590 We've been quiet in this question period here for this one. 0:14:31.610 --> 0:14:35.220 Do you have anything to add or to support? I'm 0:14:35.250 --> 0:14:36.230 probably a little. 0:14:36.080 --> 0:14:39.640 Bearish on autonomous being widespread. I think it's more like 0:14:39.640 --> 0:14:43.040 20 years out than 10 years out. I think it's 0:14:43.060 --> 0:14:45.200 going to work in certain applications, but it's not going 0:14:45.220 --> 0:14:49.660 to be widespread across the country. I think certain applications, 0:14:49.940 --> 0:14:55.090 it's absolutely a good and interesting technology. To Craig's point, 0:14:55.150 --> 0:14:57.510 I think it's the, it needs, we all need to 0:14:57.550 --> 0:15:00.050 be comfortable with it. And I think that's going to 0:15:00.440 --> 0:15:04.300 take time because the perception of, you know, trucks are, 0:15:04.360 --> 0:15:07.580 they're unsafe to begin with by the, you know, the 0:15:07.620 --> 0:15:09.820 driving public. And I don't, I don't subscribe to that. 0:15:09.920 --> 0:15:12.040 But so, and if you don't even have somebody behind 0:15:12.080 --> 0:15:15.590 the wheel, I think people are a little skittish about that. 0:15:15.610 --> 0:15:17.770 And there's a whole lot of regulatory issues that have 0:15:17.810 --> 0:15:19.090 to be ironed out as well. 0:15:19.870 --> 0:15:20.730 You know, it is here. 0:15:20.750 --> 0:15:25.260 I think it is viable, but I think the application 0:15:25.320 --> 0:15:26.410 has to warrant it. 0:15:27.340 --> 0:15:29.520 We were talking a little bit in the question here 0:15:29.570 --> 0:15:33.910 about the recovering freight market. Lee, what do you think 0:15:33.930 --> 0:15:35.730 could cause the recovery to stall here? 0:15:37.190 --> 0:15:40.910 Well, I mean, from an economic standpoint, we're seeing mortgage 0:15:40.970 --> 0:15:47.590 rates at 7%, making housing less affordable for people. And 0:15:47.650 --> 0:15:50.670 people aren't refinancing their mortgages usually when they either buy 0:15:50.690 --> 0:15:53.180 a new home or refinance their mortgage. You know, they 0:15:53.280 --> 0:15:56.980 might spend some money to, you know, buy a couch, 0:15:57.080 --> 0:16:00.710 buy a refrigerator. And that all goes in a truck. So, 0:16:00.790 --> 0:16:04.850 you know, a bad housing market is not necessarily good 0:16:05.130 --> 0:16:07.210 for trucking. And then also, you know, you're probably going 0:16:07.230 --> 0:16:11.120 to have another the Fed, the Federal Reserve will probably 0:16:11.540 --> 0:16:15.540 increase interest rates again. The market is forecasting about a 0:16:15.520 --> 0:16:20.960 25 basis increase, one more increase this year. Some expectations 0:16:21.020 --> 0:16:23.980 are for maybe even two times, which is a pretty 0:16:24.020 --> 0:16:28.110 incredible comment because 12 to 14 months ago, we were 0:16:28.190 --> 0:16:31.870 all talking about rate cuts. So the interest rates were 0:16:31.890 --> 0:16:34.489 definitely going in the wrong direction. And that just makes 0:16:34.530 --> 0:16:38.710 everything expensive from homes to credit cards to autos. And 0:16:38.750 --> 0:16:42.740 those are things that are good for freight demand. And 0:16:42.760 --> 0:16:45.940 then you also have the K-shaped recovery rate. meaning that, 0:16:45.980 --> 0:16:47.820 you know, people at the high end of the income 0:16:47.860 --> 0:16:50.710 ladder are doing pretty well and, you know, higher gas 0:16:50.750 --> 0:16:54.590 prices really aren't going to change their purchasing behavior. But 0:16:54.650 --> 0:16:59.410 it's eating into, you know, the lower rungs of income households. 0:16:59.670 --> 0:17:02.970 And that's moving up and up into the middle income households. So, 0:17:03.270 --> 0:17:06.929 you know, as as as fuel remains higher for longer, 0:17:07.350 --> 0:17:11.150 as interest as I'm sorry, as inflation remains persistent, that's 0:17:11.170 --> 0:17:13.719 really going to weigh on the consumer. And, you know, 0:17:13.760 --> 0:17:19.679 we did see recently the Michigan sentiment index for consumers 0:17:19.760 --> 0:17:22.500 came out and it was at a very low level 0:17:22.540 --> 0:17:24.040 that we haven't seen in quite some time. 0:17:24.359 --> 0:17:24.899 Nimbism. 0:17:25.520 --> 0:17:28.160 That's what's going to kill the freight market. And it's 0:17:28.200 --> 0:17:31.709 the thing that's holding up the economy right now are 0:17:31.750 --> 0:17:34.530 all the CapEx and AI data center build out. And 0:17:34.790 --> 0:17:37.010 if you were to get, and maybe during the next 0:17:37.070 --> 0:17:41.160 election cycle, They would put a moratorium on data centers or, 0:17:42.310 --> 0:17:46.270 heaven forbid, power plant production. Something crazy that happens in 0:17:46.310 --> 0:17:51.090 Washington that stalls out the CapEx build-out, that would absolutely 0:17:51.130 --> 0:17:54.850 crater the freight economy. Because to Lee's point, we track 0:17:54.890 --> 0:18:00.340 the data. Consumer freight has slowed down. I wouldn't say sharply, 0:18:00.640 --> 0:18:04.200 but much greater. That's what kept the freight market going 0:18:04.240 --> 0:18:06.700 for the last couple of years. It's the industrial side 0:18:06.740 --> 0:18:09.060 of the economy that's doing well. If you put a 0:18:09.060 --> 0:18:12.700 moratorium on data centers, that's going to crater the industrial sector. 0:18:12.800 --> 0:18:14.700 Data centers, whether you like them or not, or want 0:18:14.720 --> 0:18:17.090 them in your back, not or not, are a gift 0:18:17.180 --> 0:18:19.570 to the freight market and to our economy. It's the 0:18:19.609 --> 0:18:23.869 largest CapEx build out in history. And if you didn't 0:18:23.930 --> 0:18:25.669 have that, we would be talking about. 0:18:25.530 --> 0:18:26.430 A very different market. 0:18:27.510 --> 0:18:30.040 And that industrial economy and the strength you're seeing in 0:18:30.060 --> 0:18:35.000 the ISM index, which has been in expansion territory every 0:18:35.040 --> 0:18:37.930 month this year through September. Prior to that, it was 0:18:37.990 --> 0:18:40.830 in contraction territory. I believe it was like 36 out 0:18:41.109 --> 0:18:46.109 of the last 39 months prior to 2026. So the 0:18:46.130 --> 0:18:49.389 AI spend, the data center spend has really been a boon. 0:18:49.450 --> 0:18:53.050 And it'll be interesting to see if that has legs 0:18:53.109 --> 0:18:54.170 and can continue. 0:18:54.630 --> 0:18:56.670 So we talked a little bit about the fuel prices, 0:18:56.730 --> 0:19:00.060 the economic cycle. Organizations can't really control that, but they 0:19:00.080 --> 0:19:04.420 can control how efficiently they operate. That brings us back 0:19:04.460 --> 0:19:09.530 to technology. So where is AI-driven automation producing measurable operational 0:19:09.570 --> 0:19:14.030 value today, and where are we still confusing experimentation with 0:19:14.070 --> 0:19:19.330 real transformation? Alex, do you have any operational or procurement 0:19:19.369 --> 0:19:25.129 examples that you can share utilizing AI? Yeah, we do have. Currently, 0:19:25.150 --> 0:19:29.869 we're using the TMS system. We use the Trimble's products 0:19:29.910 --> 0:19:33.490 here in our organization. It's allowing us to make decisions 0:19:33.530 --> 0:19:36.570 a lot quicker, We were able to do procurement on 0:19:36.850 --> 0:19:39.340 real time and have multiple carriers bid at the same 0:19:39.380 --> 0:19:41.860 time for our loads. We also were able to put 0:19:42.200 --> 0:19:44.659 prices out there for where we're willing to pay for 0:19:44.700 --> 0:19:47.490 those lanes. And then the system is learning what our 0:19:47.530 --> 0:19:49.970 patterns are, and then it's putting it out by itself. 0:19:50.680 --> 0:19:52.780 so it's allowing us to be more efficient tremendously from 0:19:52.800 --> 0:19:55.879 the ai side in what we have coming forward on 0:19:56.140 --> 0:19:59.940 on our ability to the back office be more efficient 0:20:00.030 --> 0:20:02.629 and be able to carry more lanes without having to 0:20:02.690 --> 0:20:05.949 increase the labor force craig what do you think um 0:20:06.540 --> 0:20:09.080 this has kind of on the market or the brokerage 0:20:09.140 --> 0:20:13.520 impact with the AI being introduced to help speed things 0:20:13.600 --> 0:20:14.660 up here for selections? 0:20:15.140 --> 0:20:17.379 Yeah, I mean, I think AI is a continuation of 0:20:17.420 --> 0:20:19.899 a process. I mean, brokers, and I tell this to 0:20:19.960 --> 0:20:23.440 every founder, are always the easiest customers to sell into. 0:20:23.480 --> 0:20:26.490 If there's any founders in the room thinking about technology, 0:20:26.970 --> 0:20:29.870 sell it into the brokerage industry because effectively these guys 0:20:29.910 --> 0:20:33.430 are your day traders of the industry. They're the ones 0:20:33.470 --> 0:20:36.840 that are most willing to adapt and add use. far 0:20:36.900 --> 0:20:39.590 more than the asset carriers. Selling into asset-based carriers is 0:20:39.619 --> 0:20:42.570 a very long sales cycle. They tend to be much 0:20:42.609 --> 0:20:46.390 more cynical about improvements, but that's a penny's business where 0:20:46.410 --> 0:20:48.810 they have to be. That's how you survive running an 0:20:48.890 --> 0:20:51.490 asset carrier is you have to pay attention to every penny. 0:20:51.930 --> 0:20:54.700 Brokers don't have that problem and they're willing to adapt technology. 0:20:55.359 --> 0:20:57.820 AI is a manifestation of a trend that's been going 0:20:57.920 --> 0:21:00.159 on since the beginning of brokerage, which is anything that 0:21:00.200 --> 0:21:03.560 can give them the edge to either buy more efficiently 0:21:03.580 --> 0:21:05.970 or I mean, there's only two ways to make money 0:21:06.010 --> 0:21:11.889 in brokerage. Either your margin expands on a per transaction basis, 0:21:11.910 --> 0:21:15.070 or you do more loads. Margins are going to compress 0:21:15.250 --> 0:21:18.710 and are continuing to compress, particularly around this regulatory environment, 0:21:20.040 --> 0:21:24.420 because shippers are now going to, they're flexing and saying, 0:21:24.500 --> 0:21:26.140 I need to know, I don't know if you guys 0:21:26.160 --> 0:21:29.760 have done this, but they're now screening who their brokers 0:21:29.820 --> 0:21:33.119 are buying capacity from. which means the price, the clearing 0:21:33.160 --> 0:21:35.000 price for brokerage. 0:21:34.619 --> 0:21:36.460 Is going up. They're having to pay higher rates. 0:21:37.240 --> 0:21:40.400 And yet shippers aren't necessarily accepting the kind of contract 0:21:40.420 --> 0:21:42.950 rate increases that allow brokers to make the kind of money. 0:21:43.510 --> 0:21:45.730 So the only way brokers are going to increase their 0:21:46.310 --> 0:21:49.109 profits is to do more volume. And AI is a 0:21:49.150 --> 0:21:53.920 way to help them optimize that solution. So the more technology, 0:21:53.980 --> 0:21:55.820 the more loads that they can push through the system, 0:21:56.780 --> 0:21:59.580 they'll be able to grow. And those that don't, aren't 0:21:59.640 --> 0:22:01.340 able to do that, are going to continue to find 0:22:01.420 --> 0:22:03.179 it's a more and more difficult environment. 0:22:04.359 --> 0:22:07.200 Alex, do you agree with what Craig was just mentioning there? Yes, 0:22:07.260 --> 0:22:12.399