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Speaker 1: Hi everyone, Welcome to Bloomberg Intelligence Talking Transports podcast. I'm

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Speaker 1: your host, Lee Clasgow, Senior Freight Transportation Logistics Analysts at

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Speaker 1: Bloomberg Intelligence, Bloomberg's in house research arm of almost five

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Speaker 1: hundred analysts and strategists. Before diving in a 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 onto the podcast like the one we have today.

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Speaker 1: If you haven't already, please do take a moment to

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Speaker 1: follow rate share the Talking Transports podcasts with your family

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Speaker 1: and friends. We appreciate your support. I'm very excited to

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Speaker 1: have with me today. Mario Herrick, XPO's CEO, A Rollie's

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Speaker 1: held since November twenty twenty two and prior to becoming CEO.

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Speaker 1: Mario is XPO's Chief Information Officer since twenty eleven. He

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Speaker 1: also serves on the board of Directors of QXO. He

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Speaker 1: holds a master's degree in Engineering Information Technology from MIT

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Speaker 1: and a degree in Engineering, Computer and Communications from the

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Speaker 1: American University in Beirut the American University of Beirut in Lebanon.

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Speaker 1: Thanks for joining us, Mario. How are you doing today?

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Speaker 2: I'm doing great, Delly, Thanks, thanks so much. For having

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Speaker 2: me on.

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Speaker 1: And tell everyone where you are today, because you're at

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Speaker 1: a pretty exciting place. I'm a little jealous of the

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Speaker 1: things you're going to see over the next couple of days.

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Speaker 2: Well, Lee, I'm in Indianapolis where the National Truck Driving

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Speaker 2: Championship is taking place, and that in our business, we

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Speaker 2: call it the super Bowl of Safety. It's a competition

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Speaker 2: that is focused on truck drivers and focus on safety,

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Speaker 2: where truck drivers effectively compete at the state level and

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Speaker 2: then if they win at the state level any different

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Speaker 2: set of classes of equipment, they make it to the

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Speaker 2: national Championship. And we have twenty two drivers that we're

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Speaker 2: incredibly proud of for our competing here this week and

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Speaker 2: glad to be here to cheer them on, and we'll

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Speaker 2: see how we do and the result the finals will

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Speaker 2: be will be tomorrow. So excited to see what the

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Speaker 2: outcomes would look like.

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Speaker 1: Well, good luck to your drivers into XPO. So, most

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Speaker 1: people probably infer that XBO is a trucking company, So

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Speaker 1: could you tell people that might not be familiar with

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Speaker 1: the XBO name and brand what do you guys do?

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Speaker 2: Well, Lee, we're one of the largest less than truckload carriers,

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Speaker 2: in North America. And what that means whenever a customer

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Speaker 2: wants to move one or two or three pallets of freight,

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Speaker 2: so they don't have enough freight to fill a full

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Speaker 2: truck a full trailer going from a certain origin to destination,

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Speaker 2: they use a carrier like us to be able to

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Speaker 2: move that freight across North America. We have a network

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Speaker 2: of more than three hundred locations across the US and Canada,

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Speaker 2: and we also have roughly around nine thousand trucks, and

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Speaker 2: we also have a large fleet of trailers, more than

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Speaker 2: thirty thousand trailers where we can move that freight on

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Speaker 2: behalf of our customers. And every single year we moved

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Speaker 2: more than eighteen billion pounds of freight for customers across

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Speaker 2: across the continent. We also have a European business we operate.

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Speaker 2: We are either number one, number two or number three

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Speaker 2: in less than truckload in brokerage which is full truckload,

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Speaker 2: as well as dedicated solutions and warehousing in Western Europe

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Speaker 2: as well. The total companies about forty thousand people. And

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Speaker 2: again we're in the business of moving goods for folks.

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Speaker 1: Great So when I when I first went between in college,

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Speaker 1: one of my summers I spent loading and loa loading

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Speaker 1: trailers for a less than truckload carrier and LTL carrier

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Speaker 1: New Jersey. They're unionized, they're no longer around anymore APA Trucking.

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Speaker 1: So that was a that was a tough job, and

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Speaker 1: that that was a very tough job. If I do

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Speaker 1: say so myself.

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Speaker 2: We have a ton of respect for our drivers and

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Speaker 2: dock workers who keep the freight moving every day.

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Speaker 1: ELI.

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Speaker 2: It's it's definitely a tough job out there, and they

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Speaker 2: keep out with economy moving here.

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Speaker 1: So XBO is a really interesting story. You're a company

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Speaker 1: that was a roll up of a bunch of different

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Speaker 1: businesses and then you divested a lot of those businesses

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Speaker 1: and you're focusing at least your goal is to focus

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Speaker 1: on the North America lesson truckload market. You know, your

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Speaker 1: company was in the news last week with you know,

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Speaker 1: I read a news story about that the sale of

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Speaker 1: the European business was back on the table. Can you

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Speaker 1: talk a little bit about that. I know you're not

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Speaker 1: going to tell me who's buying you for how much,

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Speaker 1: but can you talk to me about like what's driving

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Speaker 1: that decision to divest that business?

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Speaker 2: Well, We didn't comment on the on the story on

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Speaker 2: our market roomors overall, but if you take a step back,

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Speaker 2: we've always said we want to be a pure play

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Speaker 2: a North American LTL carrier, and it's a matter of when,

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Speaker 2: not a matter of if, And the main driver is

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Speaker 2: that we believe by being a pure play North American

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Speaker 2: LTL company, we can all be hyper focused on that

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Speaker 2: part of the business, but we're patient. We want to

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Speaker 2: make sure that we are getting the right value for

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Speaker 2: our European business. It is a great business. It has

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Speaker 2: the highest scarcity value LEE in terms of the capabilities

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Speaker 2: we have in Western Europe. We're either number one, number

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Speaker 2: two or number three in LTL and in brokerage or

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Speaker 2: asset light trucking and in dedicated solution and warehousing, and

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Speaker 2: it's been growing. We've been outperforming the market even here

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Speaker 2: any soft macro for freight transportation. In the second quarter,

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Speaker 2: we were able to grow profits to record levels, to

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Speaker 2: pre pandemic levels. We grew revenue in some countries like

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Speaker 2: the UK, we grew revenue low double digit and EBITA

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Speaker 2: and the high teens as well. So the team is

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Speaker 2: performing really well and again it's going to be a

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Speaker 2: matter of when, not a matter of if.

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Speaker 1: So XBO. You know, you have this strategy that you've

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Speaker 1: talked about for a while LTL two point zero. For

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Speaker 1: those that don't know, LTL is less than truckload. It's

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Speaker 1: just we say it interchangeably. Could you talk a little

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Speaker 1: bit about that, because it's really providing a lot of

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Speaker 1: self help in terms of your overall profitability, productivity, and

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Speaker 1: I would assume safety as well.

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Speaker 2: Yeah. So at the end of twenty twenty one, we

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Speaker 2: started in new strategy called LTL two point zero and

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Speaker 2: that strategy is focused on improving every part of the business.

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Speaker 2: But the foundation of the strategy is on our people,

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Speaker 2: our drivers, dock workers, technicians, where creating an environment where

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Speaker 2: they can give them the tools they need to succeed

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Speaker 2: and making sure that we are listening to them in

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Speaker 2: the field every single day. And the other foundation was

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Speaker 2: around the customers, making sure we are providing the best

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Speaker 2: service possible to our customers. And that strategy has four

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Speaker 2: pillars associated with it, starting with providing exceptional service for

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Speaker 2: our customers and over a two and a half short

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Speaker 2: period of time, we were able to reduce our damages

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Speaker 2: in the network by more than eighty percent. We've improved

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Speaker 2: our claims ratio, which is a ratio of how much

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Speaker 2: we pay and claims to the customer and damage claims

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Speaker 2: divided by the revenue we make in a given period.

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Speaker 2: We've reduced it from one point two percent to zero

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Speaker 2: point two percent ly and the way we focus about it,

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Speaker 2: it's all about providing great, on time, damage free service

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Speaker 2: for our customers. That's the first pillar of the strategy.

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Speaker 2: The second pillar revolves around investing more capital into the business,

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Speaker 2: investing in capacity ahead of demand. In a less than

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Speaker 2: truckload network, whenever you don't have capacity, you cannot move

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Speaker 2: the freight efficiently and you cannot provide great service for

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Speaker 2: the customer. So over the last two and a half years,

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Speaker 2: we've stepped up our capital investments into the network, but

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Speaker 2: we more than double that, and that's in the context

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Speaker 2: of more trailers, more trucks, and more real estate footprint,

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Speaker 2: more trucking terminals we call them service centers, and more

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Speaker 2: doers to be able to service the customer. The third

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Speaker 2: part of the strategy is focused on accelerating our yield

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Speaker 2: growth or pricing, and also that has multiple levels. Starting

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Speaker 2: with better service means that we can actually earn a

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Speaker 2: higher price from the customer who doesn't want to see

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Speaker 2: disruption in their supply chain. And then finally on the

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Speaker 2: fourth level is around optimizing costs and our cost footprint

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Speaker 2: and a combination of our technology enabling us to do

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Speaker 2: better labor planning as well as in sourcing third party

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Speaker 2: line haul. These are roughly twenty five percent of the

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Speaker 2: miles we move in our network are done with third parties,

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Speaker 2: and by doing that ourselves, we can both safe cost

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Speaker 2: and we can improve service as well. So these are

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Speaker 2: the Ford levels, and so far lead the strategy is working.

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Speaker 2: We've been outperforming the market, we've been growing our modin meaningfully,

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Speaker 2: and we've been delivering great results.

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Speaker 1: Yeah, so when you're bringing more of the line hall

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Speaker 1: stuff in house, kind of where are you in that

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Speaker 1: arc and kind of where do you want to end up?

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Speaker 1: Like what's a good percentage for XBO if there is one.

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Speaker 2: So at the beginning of our when we saw a

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Speaker 2: LTL two point zero, so call it. By the end

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Speaker 2: of twenty twenty one, roughly around twenty five percent of

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Speaker 2: our miles in our network we're being done by third parties.

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Speaker 2: This last quarter we were down in the fifteen percent

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Speaker 2: range of these miles being outsourced, so we effectively have

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Speaker 2: in sourced over over that period of time roughly ten

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Speaker 2: percentage points from the twenty five percent total of being outsourced. Now,

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Speaker 2: historically we said that we want to get down to

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Speaker 2: the load double digit low teen by twenty twenty seven,

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Speaker 2: but we expect to get there much fasterly given the

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Speaker 2: tremendous progress the team has done in executing on that

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Speaker 2: initiative of insourcing, and from there we're not stopping at

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Speaker 2: loadable digit. We might get down to the single digit

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Speaker 2: territory as well as we as we continue to insource.

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Speaker 1: So XPO is a little different than some of your

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Speaker 1: competitors because you kind of have your own truck driving schools.

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Speaker 1: So to get those line haul drivers, I'm assuming you

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Speaker 1: know some of them come from your city operations, you

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Speaker 1: pick up in delivery operations, and others come from your

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Speaker 1: truck driving schools. Can you talk about the truck driving

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Speaker 1: schools kind of? Maybe how has attendance been, because the

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Speaker 1: labor market's been changing a pretty dramatic dramatically over the

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Speaker 1: last couple quarters.

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Speaker 2: Well, this is one of my favorite programs in the company, Lee,

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Speaker 2: because we develop truck drivers. And if you take a

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Speaker 2: step back in our industry, that has historically been a

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Speaker 2: driver shortage for trucks in North America. So we have

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Speaker 2: one hundred and eighty locations we can graduate our own drivers,

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Speaker 2: and as dock workers or other folks want to go

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Speaker 2: through that program, we pay for their tuition, so they

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Speaker 2: get to do with tuition free effectively, but we also

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Speaker 2: pay for their wages as they are going through the

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Speaker 2: driver schools and it's typically a seven weeks program where

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Speaker 2: we train them on not only how to operate a

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Speaker 2: Class AID vehicle to get their commercial driver license their CDL,

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Speaker 2: but we also train them on how to use our

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Speaker 2: equipment in terms of the trailers or a set of trailers,

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Speaker 2: how to be able to back up a certain trailer

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Speaker 2: to a dock as an example. And what this gives

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Speaker 2: us is the ability to graduate up to two thousand

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Speaker 2: truck drivers per year. You go back to twenty twenty

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Speaker 2: two for example, that year we graduated sixteen hundred drivers.

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Speaker 2: We graduated less drivers last year because the overall demand

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Speaker 2: was softer, but we have the capability as whenever the

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Speaker 2: cycle terms again for transportation, we would be able to

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Speaker 2: leverage our driver school program and again to grow this

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Speaker 2: next tin of drivers, and it is something that we

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Speaker 2: greate for the employees. Great for those folks to have

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Speaker 2: great long term careers with us driving trucks for the company. Yeah.

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Speaker 1: I had the opportunity a couple of years ago to

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Speaker 1: go to your driving schools and I did not do well.

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Speaker 1: Let's just say that. If you want to see how

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Speaker 1: badly I did, you can look at my Twitter at

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Speaker 1: logistics lead and you can see me kind of killing

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Speaker 1: a bunch of safety cones. Wasn't pretty great opportunity though.

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Speaker 1: You know, you mentioned investing in your network and and

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Speaker 1: some of that investment is in real estate. You had

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Speaker 1: the opportunity to buy a number of service centers from Yellow,

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Speaker 1: which went out of business about a year ago. Can

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Speaker 1: you talk about kind of where you are in terms

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Speaker 1: of bringing those online and what are they doing for

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Speaker 1: your overall network in terms of your productivity, efficiency or scale.

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Speaker 2: Yeah. So, if you take a step back in a

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Speaker 2: LTL or less cloud network, real estate or locations terminals

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Speaker 2: are usually dogs. They are long dogs that have doors

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Speaker 2: on one side, doors on the other side, and you

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Speaker 2: use that to be able to either get the freight

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Speaker 2: off of traders and then load traders going in other

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Speaker 2: directions in the countries. So you are we call it

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Speaker 2: breaking freight and then rebuilding traders to go to go

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Speaker 2: to their destinations. When you think of real estate in

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Speaker 2: our business, the more space you have, the more efficiently

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Speaker 2: you can load traders, and the more efficiently you can

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Speaker 2: run your dock operation as well, and you get more capacity.

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Speaker 2: So through this acquisition, we've acquired twenty eight service centers

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Speaker 2: from what used to be the Yellow network. We so far,

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Speaker 2: as of the end of last month, we had brought

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Speaker 2: online fourteen service centers. Fourteen of these now a number

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Speaker 2: of these where relocations where we moved from a smaller

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Speaker 2: service center into a lawsuer service center, and in number

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Speaker 2: of these where ones where we have now two locations

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Speaker 2: in a given market as well. Now, if you take

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Speaker 2: a step back, we've acquired roughly around three thousand doors

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Speaker 2: as part of that acquisition, or dock doors as part

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Speaker 2: of that acquisition, and the net adds to our network

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Speaker 2: would be roughly around two thousand doors, which would give

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Speaker 2: us an incremental fifteen percent more capacity in our network

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Speaker 2: now also an a less thant truckload network. Not all

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Speaker 2: capacity is created equals because you can imagine that in

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Speaker 2: one market you might have enough capacity for whenever the

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Speaker 2: cycle turns or whatever the freight demands is going to

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Speaker 2: look like for the next ten years. For another market,

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Speaker 2: you might not have enough doors in a physical capacity.

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Speaker 2: And this is a transformative acquisition for us because we

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Speaker 2: got doors in critical markets, in growing freight markets, markets

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Speaker 2: like in Nashville, for example, Tennessee, markets like Columbus, Ohio, Indianapolis, Atlanta, Georgia, Houston, Texas, Minneapolis, Brooklyn,

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Speaker 2: New York, Las Vegas. All of these are markets where

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Speaker 2: we either didn't have enough space or we are seeing

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Speaker 2: the freight markets grow over the next five, ten, fifteen years,

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Speaker 2: and these locations will give us this incremental amount of

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Speaker 2: capacity so we can provide great service for the customers

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Speaker 2: while having more space where we can handle more freight

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Speaker 2: as well.

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Speaker 1: And when you're operating in those areas like Brooklyn or

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Speaker 1: or those other high growth areas and you have two

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Speaker 1: service centers, I'm assuming you're keeping both service centers just

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Speaker 1: in case, or do you sell those or monetize those

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Speaker 1: service centers.

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Speaker 2: So so I'm going to give you two examples. We

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Speaker 2: do both you look at a market. You look at

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Speaker 2: a market like Nashville, Tennessee. So today we had the

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Speaker 2: service center in Nashville, Tennessee, which was in the downtown

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Speaker 2: area southeast of downtown in Nashville, where we had about

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Speaker 2: you call it, fifteen to twenty acres of land, about

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Speaker 2: one hundred and fifty doors. For the size of the

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Speaker 2: service center. Now, every night we were breaking about four

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Speaker 2: million pounds of freight in that particular service center. Again,

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Speaker 2: we're breaking means we are unloading four million pounds of

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Speaker 2: freight and then we are reloading four million pounds of freight.

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Speaker 2: Given the size of that service center, we had to

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Speaker 2: turn every door, so every door when you put a

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Speaker 2: trailer on it up to four times, which means you

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Speaker 2: are running your overnight shift longer, which also means now

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Speaker 2: you are actually operating through your inbet what we call

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Speaker 2: inbound shift or your city operation shift, where now you

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Speaker 2: are departing your drivers later in the day, and all

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Speaker 2: of that leads to an efficiency. So in the market Nashville,

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Speaker 2: in the market of Nashville, we first bought a service

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Speaker 2: center north of Nashville and Goodletsville where we used to

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Speaker 2: dispatch drivers up to an hour north and up to

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Speaker 2: an hour south every single day to pick up and

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Speaker 2: delivered Frede. We just moved thirty five of our drivers

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Speaker 2: from the existing side to the new site in Goodletsville,

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Speaker 2: and also those drivers have to drive five or ten

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Speaker 2: minutes to get to the customer, better service, higher efficiency.

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Speaker 2: We also bought a service center west of Nashville in

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Speaker 2: the outer loop because it's a very large facility, about

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Speaker 2: fifty acres of land more than to fifty doors, and

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Speaker 2: in that particular case, we're going to move all the

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Speaker 2: freight that gets relaid into that market to that location.

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Speaker 2: Example of a market where we are keeping the three locations,

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Speaker 2: it's a very fast growing market. We look at a

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Speaker 2: market like Brooklyn, New York. We had a small service centers,

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Speaker 2: We had about thirty doors. We couldn't handle all the

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Speaker 2: freight that we're that our customers are sending out away.

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Speaker 2: And now we have one of the largest service centers

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Speaker 2: in Brooklyn, more than eighty doors, and we just relocated

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Speaker 2: from the old one to the new one. And then

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Speaker 2: we're going to at some point either lease or sell

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Speaker 2: the existing location as well. So for all the ones

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Speaker 2: we're moving out of at some point in time, we're

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Speaker 2: going to be we're going to be either selling them

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Speaker 2: or figuring out how we're going to monetize them as well.

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Speaker 1: Okay, and so you know, we talked briefly about Yellow.

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Speaker 1: Yellow obviously was good for the industry, kept pricing more

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Speaker 1: rational for longer, was an opportunity to win some share.

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Speaker 1: Can you talk about you know how much share that

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Speaker 1: you guys think you won from Yellow? Was it all

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Speaker 1: good business? Did you keep it all? Just talk about that.

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Speaker 1: I guess that transition because we're coming up on the

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Speaker 1: anniversary soon, and you know, the demand prospects are a

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Speaker 1: little tougher now.

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Speaker 2: Well, if you look at Yellow, it was roughly around

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Speaker 2: ten percent of the industry capacity ly and they were

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Speaker 2: about ten percent of the industry demand. Now, our industry

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Speaker 2: is very in terms of the number of carriers who

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Speaker 2: support LTL. You've had ten carriers that managed roughly three

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Speaker 2: quarters of the LTL industry. So when Yellow went bankrupt,

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Speaker 2: that ten percent of capacity went out of business and

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Speaker 2: the ten percent of demand went to all the other carriers. Now,

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Speaker 2: for US, sequentially last year, from the second quarter to

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Speaker 2: the third quarter, we our shipment count was up about

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Speaker 2: seven percent, more than typical seasonality. So if you look

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Speaker 2: at it versus Yellow being ten percent of the industry capacity,

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Speaker 2: we roughly turned away thirty percent of the freight that

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Speaker 2: was coming to us. And the reason for that was

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Speaker 2: that we were very disciplined in making sure that we

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Speaker 2: are taking freight that makes sense for an LTL network.

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Speaker 2: So if you had a customer that had doors with

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Speaker 2: glass in them, or long freight that doesn't fit well

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Speaker 2: in a trailer or other people's freight, we just turned

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Speaker 2: that business away. Similarly, if we had customers who were

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Speaker 2: not operating at a good margin and they wanted to

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Speaker 2: give us more freight, we told them we'll handle what

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Speaker 2: we committed to, but we're not going to take on

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Speaker 2: more freight from you. We're not going to give you

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Speaker 2: more capacity. Versus, if a customer had had a good

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Speaker 2: profile freight that fits well in our network, we took

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Speaker 2: on more of that freight as well. So we were

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Speaker 2: very selective in terms of what we onboarded, but we

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Speaker 2: ofroughly got about seven out of ten shipments in terms

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Speaker 2: of market share in terms of what we what we

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Speaker 2: got from that bankruptcy, and we were again very very

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Speaker 2: disciplined and working with our customers and making sure we

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Speaker 2: are protecting existing customers capacity as we went along with that.

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Speaker 2: And for us, if you look through of course of

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Speaker 2: the last here, it was the right strategy because we

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Speaker 2: were able to meaningfully grow our margin. We were able

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Speaker 2: to provide fantastic service to the customer down to a

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Speaker 2: claims ratio of zero point two percent last quarter, and

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Speaker 2: that's continue to improve between on time service and claims

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Speaker 2: for our customers. So we're prioritizing service, we're prioritizing quality

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Speaker 2: afraid that fits an LTL network, and we're not going

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Speaker 2: for the grab of market share at any price.

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Speaker 1: And do you see the LTL market in North America

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Speaker 1: consolidating further?

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Speaker 2: We are seeing some consolidation between national and regionals. You

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Speaker 2: see carriers for example Great Operator with Knight Swift, they

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Speaker 2: are consolidating of some of the regional carriers. So far

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Speaker 2: they acquired three regional players to combine them into a

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Speaker 2: larger career. This is not adding new capacity to the market,

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Speaker 2: but it's effectively trading hands of capacity into into a

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Speaker 2: larger into a larger network. So we're seeing some consolidation

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Speaker 2: for the larger players. We see less of that, we

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Speaker 2: see we see more of being effectively stable and irrational

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Speaker 2: ad of capacity over time as well. So we see

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Speaker 2: things being relatively stable like they've always been in LTL,

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Speaker 2: but again there's a few players that are looking at

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Speaker 2: consolidating some of the regional players into a larger career

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Speaker 2: as well.

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Speaker 1: Right, So, one of the indicators that we look at

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Speaker 1: for LTL demand is the ISM Manufacturing Index. It's been

385
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Speaker 1: a contraction territory for the most part every month since

386
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Speaker 1: October I think twenty twenty three, except for one month

387
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Speaker 1: where it did expand you know that that doesn't bode

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Speaker 1: well for the backdrop. Could you talk about the freight

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Speaker 1: cycle kind of where we are, you know, why is

390
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Speaker 1: demand declining? And maybe even talk about, you know what

391
00:20:26,160 --> 00:20:30,200
Speaker 1: your end markets are relative, you know, are you are

392
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Speaker 1: you more gear towards manufacturing, retail, e commerce? If you

393
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Speaker 1: could talk about that, that'd be really great.

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Speaker 2: So, so first starting with a latter half of the question, today,

395
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Speaker 2: our business is roughly two third industrial companies LEE. So

396
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Speaker 2: these are companies that could be local mom and pop

397
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Speaker 2: shop producing fasteners as an example, all the way to

398
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Speaker 2: large manufacturers or large auto companies as an example. And

399
00:20:53,280 --> 00:20:55,719
Speaker 2: that's roughly around two thirds of the of the business,

400
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Speaker 2: and one third of the business relates to retail in

401
00:20:59,000 --> 00:21:02,240
Speaker 2: one way or another reader to the consumer, either consumer

402
00:21:02,280 --> 00:21:05,840
Speaker 2: package good companies or retail companies that are moving goods

403
00:21:05,840 --> 00:21:10,119
Speaker 2: that tie back to the consumer. In terms of underlying demand,

404
00:21:10,280 --> 00:21:12,320
Speaker 2: we have been in a freight recession now for more

405
00:21:12,359 --> 00:21:14,679
Speaker 2: than two years, where when you look at the broader

406
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Speaker 2: transportation markets, they have been in a soft environment over

407
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Speaker 2: the last over the last two years, and that was

408
00:21:21,520 --> 00:21:24,480
Speaker 2: driven through a it went through cycles. The first part

409
00:21:24,520 --> 00:21:28,000
Speaker 2: of the cycle was in it posts COVID elevated amount

410
00:21:28,000 --> 00:21:31,439
Speaker 2: of consumer demand. A lot of the retailers have overstocked

411
00:21:31,440 --> 00:21:33,840
Speaker 2: inventories and they had to spend a certain amount of

412
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Speaker 2: time to normalize these back down. They're so far normalized.

413
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Speaker 2: And you've also seen initially there was an impact on

414
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Speaker 2: the industrial economy driven by the lack of materials being

415
00:21:44,640 --> 00:21:47,600
Speaker 2: shipped into these supply chains to produce the product that

416
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Speaker 2: some of these industrial companies were looking to build. And

417
00:21:50,840 --> 00:21:53,439
Speaker 2: as they were able to fulfill more order, demand picked up,

418
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Speaker 2: and then with rates being higher, demand came back down again.

419
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Speaker 2: So effectively high level, if you take a step back,

420
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Speaker 2: it's been a multiple phases of this freight recession. Typically

421
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Speaker 2: freight recessions pass only for about a year, so that

422
00:22:05,920 --> 00:22:08,760
Speaker 2: has been an elongated freight recession year we've seen over

423
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Speaker 2: the last over the last two years. Now, if you

424
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Speaker 2: take a step back, though, and you go back in

425
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Speaker 2: time in our industry, in the less than truckload industry,

426
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Speaker 2: if you compare twenty twenty one shipment count for all

427
00:22:21,640 --> 00:22:25,320
Speaker 2: the LTL publicly traded carriers, compare that to twenty twenty

428
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Speaker 2: three fall year. Demand is down about twelve percent over

429
00:22:28,800 --> 00:22:31,679
Speaker 2: that period of time. And if you compare twenty twenty

430
00:22:31,680 --> 00:22:35,880
Speaker 2: three to pre COVID so call it twenty eighteen twenty nineteen,

431
00:22:36,040 --> 00:22:40,760
Speaker 2: demand is down fifteen percent in terms of overall LTL shipping. Now,

432
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Speaker 2: at some point, as the FED start reducing rates, that

433
00:22:43,840 --> 00:22:47,760
Speaker 2: stimulates consumer demand, As that stimulates the industrial economy, company

434
00:22:47,800 --> 00:22:50,800
Speaker 2: spending more capital, you would see that the mat come back.

435
00:22:51,040 --> 00:22:53,160
Speaker 2: And at that point in time in our industry, you're

436
00:22:53,160 --> 00:22:56,480
Speaker 2: going to see a massive tailwind in demand coupled with

437
00:22:56,960 --> 00:23:00,240
Speaker 2: ten percent less capacity with the Yellow bankruptcy going to

438
00:23:00,280 --> 00:23:04,399
Speaker 2: create a very strong upcycle for LTL companies. Whenever that happens,

439
00:23:04,440 --> 00:23:06,359
Speaker 2: if it's the first half of twenty twenty five or

440
00:23:06,359 --> 00:23:09,480
Speaker 2: the back half or twenty twenty six, it's going to

441
00:23:09,520 --> 00:23:13,240
Speaker 2: be a very big upcycle for less centruckload companies.

442
00:23:14,000 --> 00:23:17,560
Speaker 1: Right, and so a lot of that upcycle or upside

443
00:23:17,760 --> 00:23:20,320
Speaker 1: is going to be the operational leverage that you generate

444
00:23:20,480 --> 00:23:24,639
Speaker 1: to just pushing more freight through your network, which is,

445
00:23:24,960 --> 00:23:27,879
Speaker 1: you know, an asset intensive network with all these service

446
00:23:27,880 --> 00:23:29,640
Speaker 1: centers across the country right.

447
00:23:30,600 --> 00:23:33,320
Speaker 2: From one perspective, so you need the capacity to move

448
00:23:33,359 --> 00:23:35,760
Speaker 2: the freight. But keep in mindly that a lot of

449
00:23:35,800 --> 00:23:39,760
Speaker 2: the cost is actually variable cost. So today anywhere between

450
00:23:39,840 --> 00:23:42,520
Speaker 2: two thirds to three quarters of our cost structure is

451
00:23:42,600 --> 00:23:45,600
Speaker 2: variable cost structure that we can flex based on what

452
00:23:45,640 --> 00:23:48,399
Speaker 2: we're seeing in the volume environment. And case in point,

453
00:23:48,440 --> 00:23:51,040
Speaker 2: you look over the last three quarters, we've been able

454
00:23:51,040 --> 00:23:54,840
Speaker 2: to improve our operating ratio, which is a measure of margin,

455
00:23:55,520 --> 00:24:00,200
Speaker 2: by four hundred basis points every every quarter, and that's

456
00:24:00,200 --> 00:24:04,040
Speaker 2: despite being in a very soft freight environment. And similarly,

457
00:24:04,119 --> 00:24:07,000
Speaker 2: last quarter we grew our operating income and LTL by

458
00:24:07,000 --> 00:24:10,040
Speaker 2: more than fifty percent. We grew our EPs as a

459
00:24:10,080 --> 00:24:12,840
Speaker 2: company by fifty eight percent as well. So despite the

460
00:24:12,840 --> 00:24:16,199
Speaker 2: freight recession, given all that our strategy is working, we

461
00:24:16,280 --> 00:24:19,040
Speaker 2: have all the right levers and we're executing and we

462
00:24:19,080 --> 00:24:21,959
Speaker 2: have a lot of specific initiatives that we are driving

463
00:24:22,160 --> 00:24:24,680
Speaker 2: that's enabling us, regardless what we're seeing in the macro,

464
00:24:24,720 --> 00:24:27,240
Speaker 2: to deliver great, great outcomes for our company.

465
00:24:28,320 --> 00:24:30,440
Speaker 1: Yeah, So, you know, one of the interesting things about

466
00:24:30,480 --> 00:24:33,600
Speaker 1: the lesson truckload market relative to the truckload market is

467
00:24:33,800 --> 00:24:36,080
Speaker 1: the pricing power that you guys have. Obviously it's a

468
00:24:36,160 --> 00:24:39,440
Speaker 1: much more consolidated market has gotten more consolidated with Yellow.

469
00:24:40,640 --> 00:24:44,320
Speaker 1: Could you talk about pricing kind of what your strategy

470
00:24:44,440 --> 00:24:49,679
Speaker 1: is there? Just pricing still rational from your standpoint today

471
00:24:49,680 --> 00:24:50,680
Speaker 1: in August.

472
00:24:51,160 --> 00:24:53,840
Speaker 2: We're seeing a lee a very constructive pricing environment in

473
00:24:53,880 --> 00:24:57,280
Speaker 2: the less than truckload industry and for us specifically and

474
00:24:57,320 --> 00:24:59,960
Speaker 2: now a lot of what we're seeing from our customers

475
00:25:00,000 --> 00:25:02,880
Speaker 2: stomers want to pay for good service whenever you pick

476
00:25:02,920 --> 00:25:05,199
Speaker 2: up the freight on time, deliver it on time, delivery,

477
00:25:05,280 --> 00:25:09,159
Speaker 2: damage free, that they understand that we need to invest

478
00:25:09,200 --> 00:25:12,119
Speaker 2: in our network and our people and our equipment to

479
00:25:12,160 --> 00:25:15,679
Speaker 2: make sure that we can provide exceptional service. And so

480
00:25:16,200 --> 00:25:18,040
Speaker 2: what we typically see is that we're being able to

481
00:25:18,040 --> 00:25:20,800
Speaker 2: get a premium on what we're seeing in the market

482
00:25:21,400 --> 00:25:24,040
Speaker 2: in terms of overall pricing. Usually in our industry, we

483
00:25:24,080 --> 00:25:26,399
Speaker 2: want to price roughly around one hundred basis points or

484
00:25:26,440 --> 00:25:29,119
Speaker 2: so ahead of what you're seeing from an overall market

485
00:25:29,119 --> 00:25:32,679
Speaker 2: inflation from a cost inflation perspective in your network, and

486
00:25:32,720 --> 00:25:35,320
Speaker 2: customers understand again that we have to invest in our network,

487
00:25:35,560 --> 00:25:38,879
Speaker 2: and we're seeing our customers willing to give us a

488
00:25:38,880 --> 00:25:41,879
Speaker 2: bit more given to improvement the tremendous improvements and service

489
00:25:41,920 --> 00:25:44,200
Speaker 2: that we've seen in our network. Now. The other two

490
00:25:44,200 --> 00:25:48,600
Speaker 2: components of our strategy are driven by adding new services.

491
00:25:49,000 --> 00:25:52,040
Speaker 2: So as we add what we call them premium services.

492
00:25:52,040 --> 00:25:54,080
Speaker 2: So for example, if a customer wants to ship into

493
00:25:54,119 --> 00:25:56,160
Speaker 2: a trade show where they can get up to five

494
00:25:56,240 --> 00:25:58,600
Speaker 2: days of free storage, they can get a concierge desk

495
00:25:58,880 --> 00:26:01,280
Speaker 2: to help them coordinate the pick up and deliveries to

496
00:26:01,320 --> 00:26:04,600
Speaker 2: the trade show. Or cross border Mexico where we have

497
00:26:04,640 --> 00:26:09,760
Speaker 2: more than seven locations of cross border where we can

498
00:26:09,920 --> 00:26:13,320
Speaker 2: move cross border freight from Mexico and provide great capacity

499
00:26:13,359 --> 00:26:16,040
Speaker 2: within Mexico as well with ninety nine percent coverage for

500
00:26:16,080 --> 00:26:19,000
Speaker 2: the entire country. That comes also at a higher premium,

501
00:26:19,040 --> 00:26:22,280
Speaker 2: at a higher price, but customers obviously are looking for

502
00:26:22,320 --> 00:26:26,600
Speaker 2: that service as they need shore more manufacturing into North America. Similarly,

503
00:26:26,640 --> 00:26:28,960
Speaker 2: if they want to ship into retailers, we give them

504
00:26:28,960 --> 00:26:31,720
Speaker 2: services that must arrive by date where they can specify

505
00:26:31,800 --> 00:26:34,000
Speaker 2: a time window by which they want the freight to

506
00:26:34,040 --> 00:26:37,200
Speaker 2: get to a certain retailer to avoid chargebacks, and we

507
00:26:37,280 --> 00:26:39,760
Speaker 2: give them those great services as well. But these are

508
00:26:39,800 --> 00:26:43,680
Speaker 2: also leading to more pricing that is driven by offering

509
00:26:43,680 --> 00:26:46,440
Speaker 2: incremental services for the customers that they are asking for.

510
00:26:46,840 --> 00:26:49,919
Speaker 2: And the third area is around growing our what we

511
00:26:49,960 --> 00:26:52,480
Speaker 2: call local account business. These are local mom and pop

512
00:26:52,520 --> 00:26:54,720
Speaker 2: shops that could ship five shipments a week ten shipments

513
00:26:54,720 --> 00:26:57,080
Speaker 2: a week, where we over the last year and a

514
00:26:57,160 --> 00:27:00,800
Speaker 2: half we added twenty five percent more local to be

515
00:27:00,840 --> 00:27:02,840
Speaker 2: able to grow that business. And that business comes at

516
00:27:02,840 --> 00:27:04,960
Speaker 2: a higher motion and a higher price and higher yield

517
00:27:05,040 --> 00:27:08,639
Speaker 2: as well. That we are growing meaningfully here in the

518
00:27:08,680 --> 00:27:10,200
Speaker 2: near term, and we expect that to be the case

519
00:27:10,240 --> 00:27:11,800
Speaker 2: over the long term as well. But these are the

520
00:27:11,800 --> 00:27:15,560
Speaker 2: three initiatives that we are driving for that improved pricing

521
00:27:15,600 --> 00:27:16,960
Speaker 2: across our network as well.

522
00:27:17,680 --> 00:27:21,159
Speaker 1: You mentioned Mexico across border business. So when you have

523
00:27:21,600 --> 00:27:24,679
Speaker 1: a cross border move, are you handing it off to

524
00:27:24,960 --> 00:27:30,160
Speaker 1: like a partner or do you actually have operations in Mexico,

525
00:27:30,800 --> 00:27:31,160
Speaker 1: so we.

526
00:27:31,080 --> 00:27:34,320
Speaker 2: Work with a partner in Mexico. We went from having

527
00:27:34,400 --> 00:27:38,040
Speaker 2: roughly around eighteen or so terminals in terms of covering

528
00:27:38,200 --> 00:27:40,480
Speaker 2: the country and now we have more than fifty terminals

529
00:27:40,680 --> 00:27:43,440
Speaker 2: that can cover the entire country, and we have seven

530
00:27:43,480 --> 00:27:48,280
Speaker 2: border crossing locations that we operate ourselves, and we typically

531
00:27:48,359 --> 00:27:50,439
Speaker 2: hand over the freight at the border and then we

532
00:27:50,440 --> 00:27:53,040
Speaker 2: take it from there on XBO equipment with XBO drivers

533
00:27:53,160 --> 00:27:56,480
Speaker 2: all the way to destination. Now for the customer, they

534
00:27:56,480 --> 00:28:00,000
Speaker 2: don't for them, it's very transparent, so we give them

535
00:28:00,119 --> 00:28:02,600
Speaker 2: tracking end to end from the time freight gets picked

536
00:28:02,600 --> 00:28:05,560
Speaker 2: out of the time freight gets delivered, or whether it's

537
00:28:05,640 --> 00:28:08,680
Speaker 2: going into Mexico or adam Mexico we get. We get

538
00:28:08,680 --> 00:28:10,280
Speaker 2: all of that and in place in this part of

539
00:28:10,320 --> 00:28:13,280
Speaker 2: our Mexico plus offering. We'll all shore over the last

540
00:28:13,280 --> 00:28:17,040
Speaker 2: couple of months. We also offer full security in Mexico.

541
00:28:17,640 --> 00:28:20,480
Speaker 2: We offer all the customs, paper work processing, so anything

542
00:28:20,520 --> 00:28:22,320
Speaker 2: that relates to how you move the product within the

543
00:28:22,400 --> 00:28:25,399
Speaker 2: US as well, and we've seen tremendous growth in that market.

544
00:28:25,440 --> 00:28:27,600
Speaker 2: A lot of our customers, both on the industrial side

545
00:28:27,600 --> 00:28:30,160
Speaker 2: and the detail side, are seeing more of that cross

546
00:28:30,200 --> 00:28:32,399
Speaker 2: border activity. And we're going to be there to support

547
00:28:32,400 --> 00:28:34,760
Speaker 2: them with capacity and great service. Yeah.

548
00:28:34,800 --> 00:28:37,960
Speaker 1: So, you know, when we look at the lesson truckload market,

549
00:28:37,960 --> 00:28:42,240
Speaker 1: we're pretty polished on relative to other modes of transportation.

550
00:28:42,360 --> 00:28:43,920
Speaker 1: A lot of has to do with the pricing, which

551
00:28:43,960 --> 00:28:46,880
Speaker 1: we think you should increase by mid single digits for

552
00:28:46,960 --> 00:28:49,920
Speaker 1: the industry. And I would assume that XPO would probably

553
00:28:50,000 --> 00:28:52,600
Speaker 1: see that given you know, all the self help things

554
00:28:52,600 --> 00:28:55,120
Speaker 1: that you guys are doing in terms of better service,

555
00:28:56,120 --> 00:28:59,240
Speaker 1: and you know the additional premium services that you're adding

556
00:28:59,240 --> 00:29:01,680
Speaker 1: on to that. Got it, switching gears a little bit

557
00:29:01,720 --> 00:29:04,320
Speaker 1: of capacity. You know, you talked about capacity a bunch.

558
00:29:04,720 --> 00:29:08,320
Speaker 1: Could you talk about eccess capacity? And I'm assuming when

559
00:29:08,320 --> 00:29:10,320
Speaker 1: you're talking about it you're talking about doors.

560
00:29:11,440 --> 00:29:15,000
Speaker 2: Yeah. So the way we define excess capacity is typically

561
00:29:15,000 --> 00:29:18,720
Speaker 2: on doors because usually the lead time to acquire trucks

562
00:29:19,160 --> 00:29:21,680
Speaker 2: and we build our own trailers, so we have a

563
00:29:21,680 --> 00:29:24,320
Speaker 2: company specific level to build that. But the lead time

564
00:29:24,320 --> 00:29:26,680
Speaker 2: to get trailers and truck it's typically shorter, and the

565
00:29:26,760 --> 00:29:29,480
Speaker 2: lead time to add people to hire more drivers or

566
00:29:29,520 --> 00:29:32,040
Speaker 2: more dog workers is also shorter than real estates. So

567
00:29:32,040 --> 00:29:35,480
Speaker 2: when we typically talk about eccess capacity, we talk about

568
00:29:35,840 --> 00:29:38,440
Speaker 2: given how much freight we are handling. And if you

569
00:29:38,600 --> 00:29:41,720
Speaker 2: average how much in a given location, how many doors

570
00:29:41,760 --> 00:29:44,400
Speaker 2: you need to handle the freight. That's how we compute

571
00:29:44,440 --> 00:29:47,760
Speaker 2: that excess capacity. Today across our network, twenty we have

572
00:29:47,840 --> 00:29:50,680
Speaker 2: excess capacity or roughly around twenty to twenty five percent

573
00:29:51,400 --> 00:29:56,600
Speaker 2: across North America, and that's driven by by it's not

574
00:29:56,680 --> 00:29:59,600
Speaker 2: equally distributed across all markets, so some markets have more

575
00:29:59,640 --> 00:30:02,920
Speaker 2: capacity than others as well. Now, we historically we used

576
00:30:02,960 --> 00:30:05,840
Speaker 2: to hover between fifteen to twenty percent access capacity, but

577
00:30:05,960 --> 00:30:09,880
Speaker 2: with the incremental additions of the service centers we acquired

578
00:30:09,880 --> 00:30:12,640
Speaker 2: from Yellow and the ones where we expanded or built,

579
00:30:13,360 --> 00:30:15,400
Speaker 2: we were able to increase that in the twenty to

580
00:30:15,440 --> 00:30:17,880
Speaker 2: twenty five percent range. And this is keep in mind

581
00:30:17,920 --> 00:30:21,080
Speaker 2: in a soft freight market and where are sale DOO

582
00:30:21,120 --> 00:30:24,440
Speaker 2: or demand. Our goal as we complete the integration of

583
00:30:24,440 --> 00:30:27,080
Speaker 2: the twenty eight service centers we acquired is to be

584
00:30:27,480 --> 00:30:30,760
Speaker 2: closer to that thirty percent mark for access capacity, which

585
00:30:30,800 --> 00:30:33,840
Speaker 2: is an ideal spot to be at in a soft

586
00:30:33,840 --> 00:30:37,240
Speaker 2: freight environment. So I mentioned earlier on the trade demand

587
00:30:37,320 --> 00:30:39,640
Speaker 2: is down in the mid teens from pre COVID to

588
00:30:39,720 --> 00:30:42,080
Speaker 2: twenty twenty three, so you can imagine Lee if you

589
00:30:42,120 --> 00:30:44,960
Speaker 2: add a couple points of growth in the industry, and

590
00:30:45,240 --> 00:30:48,640
Speaker 2: if you add a fifteen point recovery of LTL volumes,

591
00:30:48,880 --> 00:30:50,640
Speaker 2: that's going to put us in a great spot to

592
00:30:50,680 --> 00:30:52,920
Speaker 2: be able to provide capacity for our customers in the

593
00:30:52,960 --> 00:30:56,360
Speaker 2: next up cycle. As we've added a physical capacity now

594
00:30:56,400 --> 00:30:59,480
Speaker 2: on the other form of capacity for rolling stock. Over

595
00:30:59,520 --> 00:31:01,160
Speaker 2: the last two and a half years, since the end

596
00:31:01,200 --> 00:31:03,960
Speaker 2: of twenty twenty one, we have added more than fourteen

597
00:31:04,240 --> 00:31:07,840
Speaker 2: thousand new trailers and we've built all of these in

598
00:31:07,880 --> 00:31:10,440
Speaker 2: the great town of Sarse, Arkansas, where we have a

599
00:31:10,440 --> 00:31:14,800
Speaker 2: great team of people who build excellent quality trailers and

600
00:31:14,840 --> 00:31:16,400
Speaker 2: we do it at cost. We don't do it with

601
00:31:16,440 --> 00:31:18,760
Speaker 2: a margin that the trader manufacturer you need to get

602
00:31:18,800 --> 00:31:21,240
Speaker 2: as well. And this enabling us to get the rolling

603
00:31:21,280 --> 00:31:24,160
Speaker 2: stock and capacity we need to move freight in our traders.

604
00:31:24,160 --> 00:31:27,360
Speaker 2: And we've added more than four thousand new trucks over

605
00:31:27,360 --> 00:31:29,720
Speaker 2: that period of time. We took down our fleet age

606
00:31:29,720 --> 00:31:32,200
Speaker 2: from six years and end of twenty twenty one down

607
00:31:32,240 --> 00:31:34,800
Speaker 2: to forty years where we are now, and that helps

608
00:31:34,840 --> 00:31:37,440
Speaker 2: us to reduce maintenance costs. That also have the rolling

609
00:31:37,480 --> 00:31:40,280
Speaker 2: stock the actual truck capacity to move freight for our

610
00:31:40,320 --> 00:31:43,440
Speaker 2: customers as well.

611
00:31:42,320 --> 00:31:44,280
Speaker 1: And so that four your average life is that for

612
00:31:44,600 --> 00:31:48,280
Speaker 1: all your trucks or just two trucks you in a line.

613
00:31:48,040 --> 00:31:56,440
Speaker 2: HALLO, that's four trucks in for all trucks for both

614
00:31:56,440 --> 00:31:58,800
Speaker 2: on the line hall side and the pickup and delivery side.

615
00:31:59,200 --> 00:32:02,080
Speaker 2: Is is where we think about these truck additions and

616
00:32:02,120 --> 00:32:05,040
Speaker 2: for the for the truck side and for the trailer side.

617
00:32:05,040 --> 00:32:07,960
Speaker 2: And we usually in our business we use trucks both

618
00:32:08,080 --> 00:32:10,040
Speaker 2: in the city and then in line haul. It it's

619
00:32:10,080 --> 00:32:13,000
Speaker 2: three laying for our network. We also launch a new

620
00:32:13,040 --> 00:32:16,240
Speaker 2: operation we call it road Flex operation that sends line

621
00:32:16,280 --> 00:32:20,040
Speaker 2: haul further down our network and we use sleeper cap

622
00:32:20,080 --> 00:32:23,040
Speaker 2: trucks or the larger trucks for that and for those

623
00:32:23,080 --> 00:32:26,760
Speaker 2: we are also we're also obviously acquiring new trucks for it.

624
00:32:26,800 --> 00:32:29,720
Speaker 2: On the on the trailer side, the fourteen thousand trailers

625
00:32:29,720 --> 00:32:32,160
Speaker 2: are a combination of line haul trailers. These are twenty

626
00:32:32,200 --> 00:32:35,280
Speaker 2: eight feet trailers we call them pups, as well as

627
00:32:35,360 --> 00:32:38,240
Speaker 2: larger trailers for the eight or fifty three feet trailers

628
00:32:38,560 --> 00:32:40,400
Speaker 2: that we use in the city operation to pick up

629
00:32:40,400 --> 00:32:41,880
Speaker 2: and deliver freight for our customers.

630
00:32:42,040 --> 00:32:43,880
Speaker 1: I got a model of one of your pups behind

631
00:32:43,920 --> 00:32:45,880
Speaker 1: me right there. That might be the lego one. I

632
00:32:45,920 --> 00:32:49,480
Speaker 1: got another one over there which is the real one.

633
00:32:49,560 --> 00:32:52,680
Speaker 1: So you know they look hard to see. The XPO

634
00:32:52,760 --> 00:32:54,920
Speaker 1: is a little glory, but trust me there's I got

635
00:32:55,120 --> 00:32:56,400
Speaker 1: two of them back there behind me.

636
00:32:56,800 --> 00:32:59,120
Speaker 2: By the way, they look for those new trailers with

637
00:32:59,360 --> 00:33:02,240
Speaker 2: just your logo, they look fantastic. It's clean, and we

638
00:33:02,280 --> 00:33:05,720
Speaker 2: have our customer slogan, which is your freight first, because

639
00:33:05,720 --> 00:33:08,440
Speaker 2: we want to tell our customers we love them. We

640
00:33:08,520 --> 00:33:10,000
Speaker 2: want to make sure that we're handling that freight in

641
00:33:10,040 --> 00:33:11,080
Speaker 2: the best way possible.

642
00:33:12,840 --> 00:33:15,560
Speaker 1: Great, So I want to talk a little about something

643
00:33:15,600 --> 00:33:18,040
Speaker 1: that's probably very near and dear to your heart from

644
00:33:18,080 --> 00:33:22,360
Speaker 1: your previous role at XBOS, the CIO and your background

645
00:33:22,440 --> 00:33:26,880
Speaker 1: at MIT. Can you talk about how XBO is leveraging

646
00:33:26,920 --> 00:33:29,920
Speaker 1: technology and what exactly does that mean? Like, what are

647
00:33:29,920 --> 00:33:33,320
Speaker 1: you leveraging? Do you have robots? Is it AI or

648
00:33:33,600 --> 00:33:36,720
Speaker 1: is it more basic than that that's really helping you

649
00:33:36,720 --> 00:33:38,000
Speaker 1: guys drive productivity.

650
00:33:38,960 --> 00:33:42,320
Speaker 2: Well, we look at technology in a few ways. A

651
00:33:42,320 --> 00:33:45,000
Speaker 2: lot of it comes back to the use of data

652
00:33:45,200 --> 00:33:48,600
Speaker 2: and how we use data to further optimize our network.

653
00:33:49,000 --> 00:33:50,880
Speaker 2: But if you break it down, there's the use of

654
00:33:50,920 --> 00:33:54,560
Speaker 2: technology to optimize cost and how we can run more efficiently.

655
00:33:55,080 --> 00:33:57,560
Speaker 2: And there's the use of technology that helps with pricing

656
00:33:57,640 --> 00:34:00,600
Speaker 2: and understand costing all the way down to the palette

657
00:34:00,680 --> 00:34:02,800
Speaker 2: level what it costs us to move a certain shipment

658
00:34:02,840 --> 00:34:05,080
Speaker 2: for the customer, so we can price it the right way.

659
00:34:05,560 --> 00:34:07,960
Speaker 2: But starting first on the cost sidely there are three

660
00:34:08,040 --> 00:34:10,279
Speaker 2: categories of costs that we focus on and how we

661
00:34:10,360 --> 00:34:13,480
Speaker 2: use technology and we use AI and machine learning and

662
00:34:13,520 --> 00:34:16,320
Speaker 2: how we optimize those areas. The first one is around

663
00:34:16,400 --> 00:34:19,279
Speaker 2: what we call line haul technology, which is if you

664
00:34:19,280 --> 00:34:21,720
Speaker 2: take a step back, every day, you know we handle

665
00:34:21,880 --> 00:34:25,440
Speaker 2: a north of fifty thousand shipments per day and at

666
00:34:25,480 --> 00:34:27,400
Speaker 2: any point in time you have more than one hundred

667
00:34:27,480 --> 00:34:31,040
Speaker 2: thousand shipments flowing through our network, given that on average,

668
00:34:31,120 --> 00:34:34,120
Speaker 2: our transit time is about two days depending on the

669
00:34:34,160 --> 00:34:38,719
Speaker 2: length of haul for our customers. Now, when we load

670
00:34:38,760 --> 00:34:42,040
Speaker 2: these traders, we have machine learning models and AI that

671
00:34:42,200 --> 00:34:44,480
Speaker 2: tell you how many trailers you got to build out

672
00:34:44,480 --> 00:34:47,640
Speaker 2: of every location and what's the next destination, what's the

673
00:34:47,680 --> 00:34:50,600
Speaker 2: next hub to optimize the amount of freight that you

674
00:34:50,640 --> 00:34:54,239
Speaker 2: are moving in a given trader to maximize efficiency, and

675
00:34:54,520 --> 00:34:56,759
Speaker 2: we use technology to do that. Every single week, we

676
00:34:56,800 --> 00:34:59,640
Speaker 2: optimize all the house and every single evening based on

677
00:34:59,680 --> 00:35:01,640
Speaker 2: all the freight we are getting from the city from

678
00:35:02,040 --> 00:35:07,320
Speaker 2: the pickup and delivery operation. We optimize that using using AI. Similarly,

679
00:35:07,440 --> 00:35:09,799
Speaker 2: whenever we are running our city operation, we have all

680
00:35:09,800 --> 00:35:13,640
Speaker 2: proprietary technology and how we manage routes for our drivers

681
00:35:13,640 --> 00:35:15,080
Speaker 2: to make the rap to make sure that the routes

682
00:35:15,120 --> 00:35:17,839
Speaker 2: are efficient but you are not putting too much work

683
00:35:17,880 --> 00:35:20,680
Speaker 2: where the driver cannot get that are work done by

684
00:35:20,680 --> 00:35:22,919
Speaker 2: the end of the shift. And similarly where they don't

685
00:35:22,960 --> 00:35:25,320
Speaker 2: have too little work and they are being inefficient as well,

686
00:35:25,560 --> 00:35:28,760
Speaker 2: and we use AI to maximize We call it effectively

687
00:35:28,800 --> 00:35:31,239
Speaker 2: pounds per man hour or stops per hour for a

688
00:35:31,280 --> 00:35:35,239
Speaker 2: given driver. Given how we optimize those routes. We also

689
00:35:35,280 --> 00:35:38,760
Speaker 2: have technology on the cost side to optimize labor. Every

690
00:35:38,840 --> 00:35:43,279
Speaker 2: single day, our technology forecasts what kind of volume we're

691
00:35:43,320 --> 00:35:45,239
Speaker 2: going to get for the next week, for the next month,

692
00:35:45,280 --> 00:35:48,120
Speaker 2: for the next three month, and it tells our operators

693
00:35:48,120 --> 00:35:50,520
Speaker 2: in the field how to staff their dogs to make

694
00:35:50,520 --> 00:35:53,000
Speaker 2: sure we are properly staffed. We are not overly staffed

695
00:35:53,000 --> 00:35:55,840
Speaker 2: and we're wasting resources, and we are not short staffed

696
00:35:55,840 --> 00:35:58,600
Speaker 2: and we are impacting service and over the last six

697
00:35:58,680 --> 00:36:03,320
Speaker 2: week six quarters, we've been able to improve efficiency every

698
00:36:03,440 --> 00:36:07,480
Speaker 2: single quarter and that includes yellow, the yellow disruption, that

699
00:36:07,640 --> 00:36:11,239
Speaker 2: includes post COVID disruptions. We're able to improve efficiency in

700
00:36:11,320 --> 00:36:13,640
Speaker 2: terms of how much headcount we have versus a man

701
00:36:13,680 --> 00:36:15,840
Speaker 2: of fraid that we are handling. The second side of

702
00:36:15,840 --> 00:36:18,160
Speaker 2: the technology. Over the last couple of years, that we

703
00:36:18,200 --> 00:36:20,920
Speaker 2: build new costing technology and this is where we can

704
00:36:21,000 --> 00:36:23,520
Speaker 2: tell down to the palette level what the cost is.

705
00:36:23,560 --> 00:36:27,360
Speaker 2: Even we use machine learning to predict how many minutes

706
00:36:27,680 --> 00:36:30,080
Speaker 2: a driver is going to be at a certain customer location.

707
00:36:30,120 --> 00:36:32,279
Speaker 2: So you can imagine a customer that has a lot

708
00:36:32,280 --> 00:36:34,160
Speaker 2: of demand and given a location and the driver might

709
00:36:34,200 --> 00:36:36,759
Speaker 2: wait for twenty five minutes, the system can predict that.

710
00:36:37,120 --> 00:36:39,040
Speaker 2: Or if you location is as soon as you get there,

711
00:36:39,040 --> 00:36:40,640
Speaker 2: you can upload and get out of there and you

712
00:36:40,680 --> 00:36:43,040
Speaker 2: only need fifteen minutes or ten minutes, the system can

713
00:36:43,040 --> 00:36:45,680
Speaker 2: predict that as well. So it's very effective technology. It

714
00:36:45,680 --> 00:36:48,600
Speaker 2: helps us operate more efficiently by using AI and machine

715
00:36:48,680 --> 00:36:51,640
Speaker 2: learning and data to optimize how we operate our network.

716
00:36:52,000 --> 00:36:54,160
Speaker 1: And in terms of technology, are you guys looking at

717
00:36:54,200 --> 00:36:59,240
Speaker 1: any alternative technologies for trucks, like whether it's electric or

718
00:36:59,400 --> 00:37:01,280
Speaker 1: natural gas, anything, like that.

719
00:37:02,480 --> 00:37:05,120
Speaker 2: So we are deploying electric trucks in the state of

720
00:37:05,160 --> 00:37:10,040
Speaker 2: California to be able to meet the mandates in using

721
00:37:10,080 --> 00:37:13,799
Speaker 2: electric vehicles there, but we are predominantly redeploying what we

722
00:37:13,840 --> 00:37:17,200
Speaker 2: call straight trucks, so they are the smaller form factor

723
00:37:17,239 --> 00:37:20,239
Speaker 2: trucks that where we can do city operations, so picking

724
00:37:20,320 --> 00:37:23,480
Speaker 2: up and delivering freight in the city. For Class eight vehicles,

725
00:37:23,600 --> 00:37:26,360
Speaker 2: there's still an issue one with the costs of the units.

726
00:37:26,360 --> 00:37:30,280
Speaker 2: Whenever you're looking at the Class eight electric truck, typically

727
00:37:30,840 --> 00:37:34,280
Speaker 2: the cost is higher. But more importantly, there's an issue

728
00:37:34,280 --> 00:37:37,759
Speaker 2: with the charging infrastructure today. It takes if you want

729
00:37:37,800 --> 00:37:42,000
Speaker 2: to charge a Class eight vehicle in less than an hour,

730
00:37:42,080 --> 00:37:44,960
Speaker 2: you need a megawa charger, and in most of our

731
00:37:45,080 --> 00:37:47,160
Speaker 2: terminals we have fifty trucks or one hundred trucks, so

732
00:37:47,200 --> 00:37:49,880
Speaker 2: you need twenty twenty five to thirty chargers. And you

733
00:37:49,920 --> 00:37:52,319
Speaker 2: can imagine a megawat of electricity is what a small

734
00:37:52,360 --> 00:37:54,880
Speaker 2: town in the US would consume. So the grid is

735
00:37:54,880 --> 00:37:56,759
Speaker 2: not ready in some parts of the country where if

736
00:37:56,760 --> 00:38:00,040
Speaker 2: you have twenty five mega of power being drawn on

737
00:38:00,280 --> 00:38:03,480
Speaker 2: to be able to charge a fleet, that could be

738
00:38:03,560 --> 00:38:08,320
Speaker 2: detrimental in terms of in terms of UH being able

739
00:38:08,360 --> 00:38:11,480
Speaker 2: to support that. The grid is not ready yet. So

740
00:38:11,680 --> 00:38:13,799
Speaker 2: again we are deploying these vehicles that I think it's

741
00:38:13,840 --> 00:38:16,600
Speaker 2: early innings and as technology catches up, we're going to

742
00:38:16,719 --> 00:38:18,360
Speaker 2: lean on that with what it makes sense.

743
00:38:19,000 --> 00:38:21,640
Speaker 1: And looking forward, like just changing gears a little bit.

744
00:38:21,719 --> 00:38:25,120
Speaker 1: Looking forward, What are your customers telling you about demand?

745
00:38:25,880 --> 00:38:29,800
Speaker 1: You know, what are they expecting? Are your retails customers

746
00:38:29,840 --> 00:38:33,080
Speaker 1: expecting a peak season? Kind of talk about that if

747
00:38:33,080 --> 00:38:33,440
Speaker 1: you would.

748
00:38:34,280 --> 00:38:36,440
Speaker 2: Yeah, So, what we're seeing here in the in the

749
00:38:36,520 --> 00:38:40,920
Speaker 2: near term demand continues to be soft. It's it's been

750
00:38:40,960 --> 00:38:43,560
Speaker 2: the case in the in the freight economy here for

751
00:38:43,640 --> 00:38:45,560
Speaker 2: the last for the last few years, you've seen the

752
00:38:45,600 --> 00:38:48,480
Speaker 2: ism you mentioned earlier on on the industrial side, you know,

753
00:38:48,520 --> 00:38:51,200
Speaker 2: hover between you know, call it in that high forties

754
00:38:51,320 --> 00:38:53,440
Speaker 2: range for a period of time. It seems to be

755
00:38:53,480 --> 00:38:56,560
Speaker 2: bouncing along the bottom. In terms of overall demand. We

756
00:38:56,640 --> 00:38:59,799
Speaker 2: saw a bit more strength in the detail sector by

757
00:39:00,080 --> 00:39:02,000
Speaker 2: end of the second quarter, where we saw a bit

758
00:39:02,080 --> 00:39:04,040
Speaker 2: higher demand on the in the retail sector than we

759
00:39:04,080 --> 00:39:06,759
Speaker 2: saw on the industrial side. There now in terms of

760
00:39:06,800 --> 00:39:09,520
Speaker 2: the back half of the year, by in the month

761
00:39:09,560 --> 00:39:12,960
Speaker 2: of July, we surveyed a lot of our customers on

762
00:39:13,000 --> 00:39:15,120
Speaker 2: what they are seeing in the back half of the year,

763
00:39:15,480 --> 00:39:18,880
Speaker 2: and roughly around half the customers expect to be to

764
00:39:18,920 --> 00:39:21,200
Speaker 2: see flatish demand in the back half of the year.

765
00:39:21,600 --> 00:39:25,400
Speaker 2: About a quarter and these are industrial and retail companies

766
00:39:25,680 --> 00:39:28,120
Speaker 2: are seeing a pickup in demand in the back half,

767
00:39:28,160 --> 00:39:31,279
Speaker 2: and about a quarter are seeing softening in demand. So

768
00:39:31,320 --> 00:39:35,360
Speaker 2: on that basis, it seems to be soft but stably

769
00:39:35,400 --> 00:39:37,560
Speaker 2: soft in the back half of the year. And we'll

770
00:39:37,560 --> 00:39:40,120
Speaker 2: see what the cycle would look like as we get

771
00:39:40,120 --> 00:39:42,160
Speaker 2: through peak here and then as we go into Q

772
00:39:42,280 --> 00:39:44,400
Speaker 2: one of next year, what that demand environment is going

773
00:39:44,440 --> 00:39:44,640
Speaker 2: to do.

774
00:39:45,160 --> 00:39:48,920
Speaker 1: Just I have a couple other quick questions. I might

775
00:39:48,960 --> 00:39:50,600
Speaker 1: get ailed up by my boss, but I didn't ask

776
00:39:50,600 --> 00:39:53,200
Speaker 1: a couple of financial questions. Can you talk about your

777
00:39:53,560 --> 00:39:58,200
Speaker 1: capital priorities of XBO where you guys employing your capital.

778
00:39:58,800 --> 00:40:00,840
Speaker 2: Well, first, we don't want your to be yelling at you,

779
00:40:01,000 --> 00:40:06,000
Speaker 2: So looking at capital allocation, the primary use for capital

780
00:40:06,080 --> 00:40:09,320
Speaker 2: for us is around deploying capital back into the business.

781
00:40:09,800 --> 00:40:12,439
Speaker 2: This is the highly turned business for us. Historically, over

782
00:40:12,520 --> 00:40:16,600
Speaker 2: thirty percent of our ROIC on the capital we deploy

783
00:40:17,400 --> 00:40:19,799
Speaker 2: and we and it makes a big difference on how

784
00:40:19,800 --> 00:40:22,000
Speaker 2: we can grow the Both top and bottom line of

785
00:40:22,080 --> 00:40:25,040
Speaker 2: the company. You look at this year earlier, we're spending

786
00:40:25,080 --> 00:40:28,440
Speaker 2: roughly around thirteen percent in OURLTL business as a percent

787
00:40:28,480 --> 00:40:32,279
Speaker 2: of revenue and capital back into the business. The other

788
00:40:32,360 --> 00:40:36,920
Speaker 2: capital allocation priorities are around paying down debt. Today, we

789
00:40:37,040 --> 00:40:40,320
Speaker 2: ended this last quarter at having two point seven turns

790
00:40:40,320 --> 00:40:43,560
Speaker 2: of EBITA to that ratio, and our goal is to

791
00:40:43,560 --> 00:40:47,560
Speaker 2: continue to take that down over over time. And if

792
00:40:47,600 --> 00:40:49,880
Speaker 2: our share price today we are treading at a discount

793
00:40:49,880 --> 00:40:52,919
Speaker 2: compared to our peers, and if we think about over

794
00:40:52,920 --> 00:40:54,759
Speaker 2: the years to come, if the share price is not

795
00:40:54,840 --> 00:40:56,880
Speaker 2: reflective of what we believe the value of the company,

796
00:40:56,880 --> 00:40:59,520
Speaker 2: we can also look at buying back shares as well.

797
00:40:59,600 --> 00:41:02,360
Speaker 2: We're going to be flexible to create shareholder value. But

798
00:41:02,400 --> 00:41:04,839
Speaker 2: these are the top capital priorities, and I do look

799
00:41:04,880 --> 00:41:07,920
Speaker 2: at our plan in two phases. As we delivered the

800
00:41:07,920 --> 00:41:10,640
Speaker 2: ban sheet over the next few years and we get

801
00:41:10,680 --> 00:41:13,759
Speaker 2: down our debt to EBITA issue to be more in

802
00:41:13,800 --> 00:41:17,239
Speaker 2: that one range one turn range, we can also look

803
00:41:17,280 --> 00:41:20,600
Speaker 2: at deploying more capital into either buying back shares or

804
00:41:20,640 --> 00:41:23,640
Speaker 2: issuing a small dividend for for our shareholders as well

805
00:41:24,040 --> 00:41:25,879
Speaker 2: could be in the cards and call it twenty twenty

806
00:41:25,920 --> 00:41:26,600
Speaker 2: seven and beyond.

807
00:41:27,239 --> 00:41:30,799
Speaker 1: Okay, great, So how did you get into transportation guy

808
00:41:30,840 --> 00:41:33,400
Speaker 1: from MIT? How does that happen?

809
00:41:34,200 --> 00:41:37,000
Speaker 2: Well, I go back to twenty eleven, Brad Jacobs, a

810
00:41:37,040 --> 00:41:42,439
Speaker 2: great leader who founded the company, and yeah, it's so.

811
00:41:42,600 --> 00:41:45,840
Speaker 2: At the time, we were looking to acquire and integrate

812
00:41:45,920 --> 00:41:49,520
Speaker 2: many transportation companies, predominantly in the brokerage space. So the

813
00:41:49,600 --> 00:41:52,759
Speaker 2: goal was to build the best technology platform for truck

814
00:41:52,800 --> 00:41:56,600
Speaker 2: brokerage where effectively you don't need to have as much

815
00:41:56,640 --> 00:42:00,040
Speaker 2: people calling others and using rolodecks and using email and

816
00:42:00,239 --> 00:42:03,080
Speaker 2: good all the ways of communicating and using systems, using

817
00:42:03,120 --> 00:42:07,640
Speaker 2: machines to be able to predict what carrier would be

818
00:42:07,680 --> 00:42:09,479
Speaker 2: a fit for a given load and how you price

819
00:42:09,560 --> 00:42:11,920
Speaker 2: that load as well. So at the time, back in

820
00:42:11,920 --> 00:42:15,839
Speaker 2: twenty eleven, he was just founding the company XBO, and

821
00:42:16,360 --> 00:42:18,719
Speaker 2: I was stirred higher on the team. I was the

822
00:42:18,719 --> 00:42:20,880
Speaker 2: head of technology at the time. So we built a

823
00:42:20,880 --> 00:42:23,920
Speaker 2: great technology platform for our brokerage business. Today, that's a

824
00:42:23,920 --> 00:42:28,120
Speaker 2: company called RXO that Drew Wilkerson, great CEO, run that company,

825
00:42:28,320 --> 00:42:30,400
Speaker 2: and I believe they're going to have a huge upside

826
00:42:30,440 --> 00:42:33,200
Speaker 2: over time. But that was the early innings of the company.

827
00:42:33,200 --> 00:42:35,880
Speaker 2: And then over the last more than ten years, I've

828
00:42:35,960 --> 00:42:38,399
Speaker 2: run technology, then worked a lot on the m Anda

829
00:42:38,440 --> 00:42:43,120
Speaker 2: integrations of companies We've acquired, ran sales for a period

830
00:42:43,120 --> 00:42:46,000
Speaker 2: of time our entire sales force, and then ran our

831
00:42:46,120 --> 00:42:49,839
Speaker 2: LTL business for a year before becoming a CEO here

832
00:42:49,920 --> 00:42:52,120
Speaker 2: for about a year and a half to two years.

833
00:42:52,760 --> 00:42:56,160
Speaker 1: Yeah, Drew from ERXO was on the podcast a couple

834
00:42:56,200 --> 00:42:58,600
Speaker 1: episodes ago. So if you're listening and interested to hear

835
00:42:58,680 --> 00:43:01,799
Speaker 1: about that interesting business as you should definitely check back

836
00:43:02,040 --> 00:43:04,319
Speaker 1: and listen. Is there anything that keeps you up at

837
00:43:04,400 --> 00:43:07,920
Speaker 1: night as a CEO of a major transportation company.

838
00:43:08,120 --> 00:43:10,120
Speaker 2: That is always You're always worried about the macro, what

839
00:43:10,160 --> 00:43:11,680
Speaker 2: the macro is going to do, if the man's going

840
00:43:11,719 --> 00:43:13,239
Speaker 2: to go down or out. But we have a great

841
00:43:13,239 --> 00:43:15,560
Speaker 2: team that can doesn't matter what the macro does, We're

842
00:43:15,560 --> 00:43:17,920
Speaker 2: going to We're going to execute against any any backdrop.

843
00:43:18,320 --> 00:43:20,520
Speaker 2: I always have concerns about cyber risk. The world is

844
00:43:20,560 --> 00:43:23,839
Speaker 2: getting a more dangerous when it comes to cyber and

845
00:43:23,880 --> 00:43:26,960
Speaker 2: cyber attackers. We again have a great cyber program and

846
00:43:27,000 --> 00:43:29,239
Speaker 2: we invest a lot of money in making sure we

847
00:43:29,280 --> 00:43:31,640
Speaker 2: have all of our defenses where they need to be.

848
00:43:31,760 --> 00:43:34,200
Speaker 2: But that's always a risk. Probably the third one would

849
00:43:34,200 --> 00:43:37,239
Speaker 2: be around the truck drivers and truck driver availability over

850
00:43:37,280 --> 00:43:40,880
Speaker 2: the next ten years. If you look at historically, you

851
00:43:40,880 --> 00:43:43,920
Speaker 2: have a aging population of truck drivers in our country,

852
00:43:43,960 --> 00:43:46,520
Speaker 2: and historically it's been there's been a shortage of truck

853
00:43:46,600 --> 00:43:51,160
Speaker 2: drivers as well. Now I'm very proud and confident in

854
00:43:51,200 --> 00:43:54,880
Speaker 2: our capability to recruit and train our own drivers and

855
00:43:54,920 --> 00:43:56,719
Speaker 2: make sure that they get their CDA license. But that's

856
00:43:56,760 --> 00:43:59,360
Speaker 2: something I worry about more in ten year horizon in

857
00:43:59,400 --> 00:44:01,640
Speaker 2: terms of the liability of truck divers as well. But

858
00:44:01,680 --> 00:44:04,120
Speaker 2: these are three things I can think of that I

859
00:44:04,120 --> 00:44:05,600
Speaker 2: would to say, they keep me up at night. By

860
00:44:05,600 --> 00:44:08,319
Speaker 2: the way, Lee, because I sleep very soundly. I usually don't,

861
00:44:08,840 --> 00:44:10,960
Speaker 2: so when I get it, I just have it. So

862
00:44:11,239 --> 00:44:14,000
Speaker 2: But at the same time, the three risks I look at.

863
00:44:15,000 --> 00:44:17,360
Speaker 1: And one last question I always like to ask my

864
00:44:17,400 --> 00:44:19,600
Speaker 1: guests that you know, do you have a favorite book

865
00:44:19,600 --> 00:44:23,399
Speaker 1: about transportation, logistics or leadership that it's kind of close

866
00:44:23,440 --> 00:44:26,560
Speaker 1: to your heart that you like to tell people about.

867
00:44:27,840 --> 00:44:31,439
Speaker 2: That's a great question. I'd say one one book here

868
00:44:31,480 --> 00:44:34,640
Speaker 2: recently is how to Make a few Billion Dollars that

869
00:44:34,760 --> 00:44:38,920
Speaker 2: brad Our found. But I'll tell you. I've lift that

870
00:44:39,000 --> 00:44:41,240
Speaker 2: book over more than a decade and it's a great

871
00:44:41,280 --> 00:44:44,400
Speaker 2: blueprint for anybody who wants to accomplish something big in life.

872
00:44:44,760 --> 00:44:47,399
Speaker 2: And it's focused on people. It's focused on making sure

873
00:44:47,440 --> 00:44:49,480
Speaker 2: you have a winning team that is a libiting outside

874
00:44:49,520 --> 00:44:52,920
Speaker 2: the result like creating an environment where people feel feel

875
00:44:52,960 --> 00:44:56,400
Speaker 2: proud and feel empowered and motivated to do great things.

876
00:44:56,719 --> 00:44:58,480
Speaker 2: And I'll give you another one. Actually, you know not

877
00:44:58,560 --> 00:45:02,560
Speaker 2: think about it. Hunter Harrison a great railroad leader. Although

878
00:45:02,719 --> 00:45:05,520
Speaker 2: railroads and LTL they don't have a lot of similarity

879
00:45:05,520 --> 00:45:07,120
Speaker 2: in how you run the network or how you move

880
00:45:07,160 --> 00:45:09,919
Speaker 2: the freight, but it still goes back to transportation and freight.

881
00:45:09,960 --> 00:45:12,839
Speaker 2: But a book called How We Work and Why, which

882
00:45:12,920 --> 00:45:16,680
Speaker 2: is about how to run a precision railroad and it's

883
00:45:16,719 --> 00:45:20,040
Speaker 2: an excellent book that focuses on service as well as

884
00:45:20,120 --> 00:45:23,560
Speaker 2: cost efficiency. And if you think about LTL, this is

885
00:45:23,600 --> 00:45:25,960
Speaker 2: the foundation. The foundation is how you can provide great

886
00:45:26,000 --> 00:45:29,080
Speaker 2: service for your customers while running your line hauled network

887
00:45:29,120 --> 00:45:32,279
Speaker 2: in the most efficient way where you are loading effectively

888
00:45:32,320 --> 00:45:34,440
Speaker 2: the most amount of freight in the given trailer to

889
00:45:34,480 --> 00:45:36,799
Speaker 2: get it to a certain destination for the customer as well.

890
00:45:36,800 --> 00:45:38,880
Speaker 2: But these are two books I can think of that

891
00:45:39,560 --> 00:45:42,200
Speaker 2: are great trades and I would encourage anybody to read them.

892
00:45:42,239 --> 00:45:43,520
Speaker 2: You'll be better for it.

893
00:45:44,040 --> 00:45:46,680
Speaker 1: Three D Yeah, yeah, two good books written by two

894
00:45:46,800 --> 00:45:50,720
Speaker 1: titans of the freight transportation world, at least the modern

895
00:45:50,840 --> 00:45:55,360
Speaker 1: one at that. Well, Mario, thank you so much for

896
00:45:55,400 --> 00:45:57,839
Speaker 1: your time. I could talk to you for a real

897
00:45:57,960 --> 00:46:01,040
Speaker 1: long time. I want to wish you and your driver's

898
00:46:01,480 --> 00:46:05,239
Speaker 1: best of luck at the National Truck Driver Championship in Indianapolis.

899
00:46:05,320 --> 00:46:07,320
Speaker 1: So good luck to you and your team.

900
00:46:07,600 --> 00:46:09,600
Speaker 2: Hi, I appreciate it. Lee, Thanks, thanks so much for

901
00:46:09,600 --> 00:46:10,840
Speaker 2: having me on the podcast today.

902
00:46:11,440 --> 00:46:15,800
Speaker 1: All right, great, and thanks for you for joining us today.

903
00:46:16,640 --> 00:46:19,080
Speaker 1: I also really want to thank you for tuning in.

904
00:46:19,160 --> 00:46:21,960
Speaker 1: If you liked the episode, please subscribe and leave a review.

905
00:46:22,280 --> 00:46:24,279
Speaker 1: We've lined up a number of great guests for the

906
00:46:24,320 --> 00:46:27,799
Speaker 1: podcast you should check back to hear from conversations with

907
00:46:27,920 --> 00:46:32,200
Speaker 1: C suite executives, shippers, regulators, and decision makers within the

908
00:46:32,200 --> 00:46:34,640
Speaker 1: freight markets. Also, if you have an idea for a

909
00:46:34,680 --> 00:46:37,960
Speaker 1: future episode or just want to talk transports, please hit

910
00:46:38,000 --> 00:46:41,040
Speaker 1: me up on the terminal, on LinkedIn or on Twitter

911
00:46:41,120 --> 00:46:43,799
Speaker 1: at logistics Lee. Thanks everyone, and take care.