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Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.

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Speaker 1: I'm Joe Wisntal and I'm Tracy Halloway. So, Tracy, we've

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Speaker 1: obviously been talking a ton on this show about supply chain,

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Speaker 1: bottlenext logistics and so forth. Probably you know, we've talked

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Speaker 1: about all of it, but had a We've had a

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Speaker 1: pretty emphasis on ships vessels, this sort of like international

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Speaker 1: freight aspect of global supply chains. I think that's right,

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Speaker 1: although I feel like we're getting more and more specialized.

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Speaker 1: So we started with container shipping and then we got

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Speaker 1: into break book a little bit on our previous episode,

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Speaker 1: and we're thinking about doing a barge episode. Now we

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Speaker 1: haven't gone into I guess like land transport, but it does.

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Speaker 1: It does feel like like we're working our way through

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Speaker 1: all the different modes of transport. Like I wonder if

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Speaker 1: we're gonna end up doing a sort of odd lots

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Speaker 1: of coraical episode at some point, like the wackiest modes

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Speaker 1: of moving goods. Yeah, I mean, we got that's that's

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Speaker 1: the way to do. It's zoom outgo global and then

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Speaker 1: start to drill down to all of the different nootion crannies.

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Speaker 1: But as you mentioned we did a sort of the

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Speaker 1: bulk shipping episode a couple of weeks ago, and uh,

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Speaker 1: at the end we're like, Okay, we gotta go trucking next,

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Speaker 1: and to now it's time for now, we gotta talk

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Speaker 1: about tripping alright, the truck driving episode. It's time has come.

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Speaker 1: I cannot contain my enthusiasm for this episode because I

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Speaker 1: think I mentioned this before, but one of my dream

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Speaker 1: jobs that I used to fantasize about was being a

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Speaker 1: truck driver. I think, like, I'm sure I have a

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Speaker 1: romanticized notion of what it is. And obviously part of

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Speaker 1: our conversation is going to be about how difficult driving

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Speaker 1: and the job actually is for those doing it on

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Speaker 1: a day to day basis. But I have a personal

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Speaker 1: interest in this industry and I'm really curious to hear

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Speaker 1: what exactly is going on at the moment. I also

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Speaker 1: have a personal romanticized interest, not because I ever aspired

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Speaker 1: to be a truck driver per se, but I'm a

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Speaker 1: big fan of country music and there's you know, lots

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Speaker 1: of songs about truck driving. And I was a huge

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Speaker 1: fan as a kid of that movie Convoy, which also

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Speaker 1: has a great soundtrack of song about truck driving six

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Speaker 1: Days on the Road, another good song. So I'm also

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Speaker 1: very interested in as UM and I'm very excited for

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Speaker 1: these episodes. So after we did that last episode, we're like,

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Speaker 1: we gotta do the truck driving episode. Today's guest. Multiple

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Speaker 1: people reached out and said, you gotta get on this guy.

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Speaker 1: He's the obvious next one for it. Yeah, and I

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Speaker 1: think it's gonna be interesting. I mean, one of the

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Speaker 1: reasons let's come up is because we hear these reports

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Speaker 1: of a shortage in truck drivers, which is again feeding

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Speaker 1: into the supply chain issues that we've been discussing on

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Speaker 1: all thoughts for the past year now. But there's a

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Speaker 1: big question mark over whether or not that's actually happening.

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Speaker 1: And again to to that point about you and I

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Speaker 1: both romanticizing the job, like there's a disconnect. There isn't

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Speaker 1: there if there is indeed a shortage, and yet people

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Speaker 1: like you and I are thinking, oh, it'd be nice

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Speaker 1: to drive a truck around and you know, have an

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Speaker 1: opportunity to eat junk food and listen to country music

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Speaker 1: and and be like Chris Christofferson and Ally McGraw and convoy.

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Speaker 1: Something's going on. So I'm really interested by this dynamic

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Speaker 1: and I'm looking forward to this conversation exactly right. So,

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Speaker 1: as I mentioned, everyone said, you've got to reach out

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Speaker 1: to this guest, so I'm very excited. We're gonna be

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Speaker 1: speaking with Craig Fuller. He is the founder and CEO

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Speaker 1: of Freight Waves, which which is kind of like the

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Speaker 1: Bloomberg Terminal for transport, could be said. They cover transport

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Speaker 1: from a news perspective, they also have data all that stuff,

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Speaker 1: and he is going to tell us all about domestic

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Speaker 1: truck industry and how stuff gets around at or it's

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Speaker 1: unloaded from the ports. So Craig, thank you very much

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Speaker 1: for joining us. Hey, Joe Tracy, great to be here. Craig,

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Speaker 1: so excited to talk to um. Obviously, there's lots to cover,

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Speaker 1: and of course we're going to get into all of

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Speaker 1: the supply chain messes that we're seeing right now. But

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Speaker 1: as always, you know, it sort of helps, and I

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Speaker 1: think it's especially true in trucking to talk about what

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Speaker 1: the pre crisis environment looked like, because if I recall

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Speaker 1: from seeing the reporting, there was a lot of like

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Speaker 1: very intense boom and bus cycles just in the last

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Speaker 1: few years leading up to periods where it is very good,

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Speaker 1: periods where it was weak. How would you describe the

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Speaker 1: sort of health of the industry pre crisis. Yeah, So

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Speaker 1: this is an industry that runs on very thin margins.

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Speaker 1: So if you take the industry average in terms of profitability,

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Speaker 1: typically and in a good year the industry will generate

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Speaker 1: three cross profits. And so it is not an industry

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Speaker 1: that is typically very profitable. There's a lot of there's

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Speaker 1: very very few barriers of entry, uh. And it's a

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Speaker 1: very cychnical industry. And so it's and there's reasons of

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Speaker 1: when the market is good where costs go up significantly

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Speaker 1: because the input costs go up. Uh. And when the

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Speaker 1: market is really bad, obviously revenue you know, drives up

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Speaker 1: when the economy drives its sputtering. And so because of

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Speaker 1: all those reasons, it's a very cychnical industry. And so,

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Speaker 1: as you mentioned, over the fast past five years, we've

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Speaker 1: had two freight recessions uh in the past five years,

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Speaker 1: and two big boom cycles and that was pre COVID.

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Speaker 1: So you have fuel costs that are big input colls,

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Speaker 1: you have labor costs that are big input costs. You

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Speaker 1: have driver turnover that's a massive issue for the industry. Uh.

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Speaker 1: You have a regulatory environment which continues to be more

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Speaker 1: and more restrictive on home you can hire. And then

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Speaker 1: you have a whole set of liabilities that the trucking

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Speaker 1: companies have to accept because of you know, the way

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Speaker 1: that that they manage their drivers and a responsible for them.

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Speaker 1: So those drivers up in an accident, Uh, those trucking

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Speaker 1: companies can be sued for tens of thirty millions of dollars.

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Speaker 1: And so it's an industry that has a lot of

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Speaker 1: structural challenges, but it has no bearers of entry. So

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Speaker 1: anytime you see the market become really strong, like every

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Speaker 1: other commodity market, there's a massive, massive boom cycle. Uh,

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Speaker 1: and then when the economy slows down because you've overbuilt

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Speaker 1: the capacity, the market crashes. So when you say there's

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Speaker 1: no barrier to entry, could you maybe describe what that

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Speaker 1: means exactly in practice and what the players in the

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Speaker 1: trucking market actually are at the moment, Like, are there

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Speaker 1: are a few companies that dominate this form of transport

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Speaker 1: in the US, And are there also smaller players that

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Speaker 1: might be enticed into it at times when they can

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Speaker 1: get paid a lot of money for doing it. Yes,

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Speaker 1: so the market is incredibly fragmented. So I know you

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Speaker 1: guys have done a lot of shows on the global

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Speaker 1: shipping market. The differences between global shipping and trucking is

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Speaker 1: that ten if you take a top ten shipping carriers,

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Speaker 1: they represent of the capacity. So it's a very concentrated market.

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Speaker 1: In trucking, it's completely different. If you take the top

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Speaker 1: ten trucking companies, you'll come up with about twelve of

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Speaker 1: the total capacity. So there's no LIKESK equivalent none. So

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Speaker 1: like the largest asset based trucking company is a company

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Speaker 1: called night Swift out of Phoenix, Arizona, but it does

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Speaker 1: about five and a half six billion dollars in revenue

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Speaker 1: on an industry that does about eight billions. So if

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Speaker 1: you sort of look at look at it, it's it

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Speaker 1: is a very very fragmented market. Uh. And for those reasons,

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Speaker 1: you have a lot of independent decision makers out uh

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Speaker 1: driving a lot of the issues in the market. And

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Speaker 1: so Tracy, if you wanted to go start a trucking company,

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Speaker 1: you could do that today. You would go buy a truck,

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Speaker 1: you would get a CDL and then you would be

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Speaker 1: off to the races. There's very little that you would

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Speaker 1: have to do beyond that, and so, uh, it's an

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Speaker 1: industry that allows people who are looking for a level

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Speaker 1: of independence and who want to own a company to

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Speaker 1: go start a trucking company. Um. The challenges is that

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Speaker 1: oftentimes those people don't have strong business acumen or experience,

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Speaker 1: and so you have this massive boom bust cycle. I

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Speaker 1: was just looking at the number of new trucking companies

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Speaker 1: that entered the industry in the last thirty days, and

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Speaker 1: we had eleven thousand new trucking companies that entered the

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Speaker 1: industry within the past month. Okay, that's okay. Now I

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Speaker 1: feel like I want to just like do an episode

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Speaker 1: on this alone, but actually I want to follow up

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Speaker 1: on this point. So let's say Tracy followed her dream

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Speaker 1: and wanted to be a trucker and all she would

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Speaker 1: have to do is buy a truck, get a driver's license,

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Speaker 1: and cheese in business. The obvious. The other question is

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Speaker 1: is there a plug in plane network that allows her

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Speaker 1: to immediately get jobs? Like what is the process? So

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Speaker 1: of eleventh, obviously it can't be too much of a

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Speaker 1: relationship based business where you need to have connections. If

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Speaker 1: eleven thousand companies. I have to imagine many of them

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Speaker 1: extremely small, maybe one or two people connenter. So when

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Speaker 1: you someone starts one of these companies, is there just

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Speaker 1: some sort of automatic way where they can start bidding

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Speaker 1: for jobs. Yeah. It's essentially like selling e commerce on

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Speaker 1: the internet. And so there are what they call loadboards

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Speaker 1: which work a lot like Craigslist, where I can take transactions.

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Speaker 1: Think of it, you know, probably the best analogy is

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Speaker 1: almost like an internet dating site like match dot com,

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Speaker 1: where buyers of capacity, so brokers, freight brokers are essentially

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Speaker 1: posting loads uh and then the trucking come but easy.

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Speaker 1: The tracy and this example would be looking for loads

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Speaker 1: wherever she wants to go uh for a load that

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Speaker 1: meets her uh, you know what she's looking for uh

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Speaker 1: and pays her what she wants to get paid. She

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Speaker 1: would take those loads uh and be able to fulfill

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Speaker 1: those orders. So that's a loadboard marketplace typically ran by

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Speaker 1: brokers uh. And then over time she would get a

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Speaker 1: couple of really close shipper relationships. And shippers and our

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Speaker 1: h lexicon are the people that move that buy freight services.

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Speaker 1: So these are the walmarts and the png s and

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Speaker 1: the amazons that are a buying capacity in the market.

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Speaker 1: And so over time, if Tracy really wanted to get

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Speaker 1: out of the sort of low inside of the market,

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Speaker 1: the spot side of the market, she would move into

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Speaker 1: developing close relationships with one or two really good shippers

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Speaker 1: that can keep her trucks moving at all times. And

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Speaker 1: so typically when you start in the industry, you're either

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Speaker 1: going to start as a truck driver as an employee driver,

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Speaker 1: so you go work for a trucking company doesn't require

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Speaker 1: you to go buy a truck. You would have become

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Speaker 1: in the other path, has become an owner operator and

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Speaker 1: signed up under a trucking authority. So a big trucking

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Speaker 1: company would contract you and you would be contracted to

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Speaker 1: them and they would help find loads for you. And

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Speaker 1: now we have this sort of digital marketplaces that are

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Speaker 1: both the traditional load boards or electronic apps where you

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Speaker 1: can just download it like an Uber and if you're

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Speaker 1: an Uber driver, you can get loads from that app.

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Speaker 1: It's a very similar set of marketplaces and trucking where

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Speaker 1: you can find orders that will allow you to keep moving.

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Speaker 1: So effectively, Tracy, you know, if you decided you want

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Speaker 1: to become a started trucking company. Within a couple of weeks,

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Speaker 1: you could have a truck, you could have your cd

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Speaker 1: L and you would be off to the races. And

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Speaker 1: in this market probably making two d thousand dollars a

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Speaker 1: year in gross revenue and your cost of good sold

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Speaker 1: or you're operating costs to be about a hundreds and thousands,

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Speaker 1: so you would make in profit today about a hundred thousand.

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Speaker 1: Now here's the challenge the market if it collapses, and

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Speaker 1: it will at some point. This is a boom and

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Speaker 1: bus cycle. So at some point you would go from

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Speaker 1: making two hundred thousand to probably uh in revenue to

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Speaker 1: about eighty thousand, and your operating costs would say consistent,

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Speaker 1: so you would actually end up losing. And that's what

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Speaker 1: causes this bankruptcy cycle that we see a lot. So

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Speaker 1: I have so many questions, but I mean, number one,

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Speaker 1: this idea of drivers choosing a load or a route

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Speaker 1: that they want to take. It reminds me a lot

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Speaker 1: of the way airline pilots bid for individual schedules, like

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Speaker 1: typically at the airline that actually employs them, but they

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Speaker 1: do kind of have the system where they can choose

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Speaker 1: where they want to go. And then I guess my

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Speaker 1: big question based on that is is there actually a

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Speaker 1: trucker shortage? If we have eleven thousand new trucking companies

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Speaker 1: being created, it seems like things are moving. It seems

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Speaker 1: like truck drivers have some flexibility in the routes that

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Speaker 1: they're choosing to take. I guess I'm curious, like, is

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Speaker 1: it an actual shortage or our truck drivers just avoiding

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Speaker 1: certain routes or certain types of work in the market. Tracy,

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Speaker 1: I'm so glad you asked this question because oftentimes people

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Speaker 1: talk about a quote unquote driver shortage without really exploring

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Speaker 1: what that means. And so I don't like the word

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Speaker 1: driver shortage because it's it's a term that is actually

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Speaker 1: doesn't really explain much in terms of what's actually taking place.

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Speaker 1: And so the way I think of the industry constructs

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Speaker 1: are a driver shortage is really a truck, a trucking company,

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Speaker 1: a fleet that doesn't have a driver. They have a truck,

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Speaker 1: but they don't have a drive before that truck. That's

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Speaker 1: a driver shortage the way we would describe it at

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Speaker 1: freight waves. And then you have capacity shortages, which is

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Speaker 1: which are imbalances between supply and demand. Now you can

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Speaker 1: have a driver shortage and a capacity shortage at the

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Speaker 1: same time. So a fleet or across the entire industry,

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Speaker 1: you can have driver shortages so we have more trucks

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Speaker 1: than we do drivers to drive them. That does happen

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Speaker 1: um and then you can also have capacity shortages, which

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Speaker 1: means there's more freight demand than there are trucks to

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Speaker 1: haul it, or you can have a capacity glut at

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Speaker 1: the same time. So so if you think about it

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Speaker 1: from the perspective of what's happening right now, is there

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Speaker 1: is a capacity shortage because the demand is so high.

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Speaker 1: And so just using the term driver shortage at times

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Speaker 1: doesn't really describe what's happening. Because back in two thousand

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Speaker 1: nineteen we had a capacity glut, but some trucking companies

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Speaker 1: have uh didn't have drivers to fulfill the trucks, but

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Speaker 1: they didn't need to because there wasn't enough freight to

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Speaker 1: actually create demand on those trucks. I have a sort

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Speaker 1: of very quick question, and it just again goes back

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Speaker 1: to Tracy's company that she's going to launch. Are there

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Speaker 1: actually trucks for sale? Yeah, so there's a used market

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Speaker 1: now you can't today get a new truck. So the

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Speaker 1: issue is that this is an asset. So the other

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Speaker 1: thing creates real economic issues for trucking companies typically that

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Speaker 1: own assets. If you think about owning assets, if you

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Speaker 1: own a building or a warehouse, you're gonna that asset

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Speaker 1: over time should appreciate and over time, uh, you're gonna

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Speaker 1: hold onto that for thirty years. Even in the shipping

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Speaker 1: industries you guys have covered, those ships have life cycles

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Speaker 1: of twenty to thirty years. And so if I go

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Speaker 1: buy a ship, I'm able to operate that ship for

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Speaker 1: thirty years. In trucking, I'm only going to be able

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Speaker 1: to operate that truck for three years. Uh. And so

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Speaker 1: so really, as I run that truck and put as

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Speaker 1: many miles as I can, there is a secondary market

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Speaker 1: for that uh. And so typically what happens is the

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Speaker 1: larger fleets or the owner operators that run nationwide will

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Speaker 1: end up running the truck for three years, and after

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Speaker 1: the three year cycle, they will end up selling it

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Speaker 1: into a secondary market, which will end up going to

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Speaker 1: more localized operations support operators, people that don't have as

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Speaker 1: strenuous sort of over the road long haul demands. And

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Speaker 1: so because of that, the trucking companies have to go

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Speaker 1: out and buy new trucks every three you know, they're

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Speaker 1: constantly buying new equipment. So you have this really big

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Speaker 1: issue where the you know, trucks don't hold their value

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Speaker 1: so based on what cycle or in in terms of

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Speaker 1: boom or bust, depends on how well they do, and

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Speaker 1: so that's a pretty significant issue. But right now, use

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Speaker 1: trucks have gone up about in the last three months.

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Speaker 1: So it's good if you own equipment and you can

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Speaker 1: sell that equipment. If you have too many trucks and

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Speaker 1: not enough drivers, you're you're doing quite well because your

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Speaker 1: balance sheets have really really improved, and so we're actually

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Speaker 1: seeing a lot of that. But ordering a new truck

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Speaker 1: here about nine months out to get it. If you

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Speaker 1: ordered a truck today, it would take you approximately nine

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Speaker 1: months to get it, and that is assuming that they

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Speaker 1: will even take your order. Right now, a lot of

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Speaker 1: the O. E. M s are not actually accepting new

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Speaker 1: truck orders. Just going back to truckers for a second,

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Speaker 1: because you know, my new trucking company, we obviously care

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Speaker 1: about the equipment, but we care very much about our

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Speaker 1: human capital as well. But my understanding is that there's

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Speaker 1: a lot of turnover among drivers too, So you know,

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Speaker 1: trucks might get worn out after three years. Drivers might

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Speaker 1: get worn out in even less time and leave the

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Speaker 1: industry altogether. Could you maybe describe how desirable is being

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Speaker 1: a truck driver as an occupation at the moment. So

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Speaker 1: Joe and I talked about how we both have a

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Speaker 1: sort of romanticized view of it, could you maybe um

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Speaker 1: tell us what it's really like and how it stacks

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Speaker 1: up against the money that you're actually being paid to

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Speaker 1: do it at the moment. The realities are quite different

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Speaker 1: than your romanticized view of the industry. It is a

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Speaker 1: tough job. So if you're an owner operator, you will

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Speaker 1: make in this market because the demand is so high,

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Speaker 1: you would do quite well. You know, you probably wouldn't

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Speaker 1: have a hundred thousand dollars as a employee driver. You're

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Speaker 1: probably going to be making about fifty five to sixty

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Speaker 1: thou dollars as an employee driver per year, and you're

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Speaker 1: gonna be paid on a per mile basis. Um you're

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Speaker 1: gonna you're gonna run your truck or drive or work

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Speaker 1: about fifty six hours on a given week, so it's

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Speaker 1: not a forty hour week. You're actually working fifty six hours.

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Speaker 1: But here's the reality is you're not at home every

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Speaker 1: single night. The vast majority of the drivers, you're actually

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Speaker 1: out and so while you may not be on duty

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Speaker 1: that you know, the six hours in a given week,

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Speaker 1: you're you're still at a truck stop. You know, you're

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Speaker 1: still dealing with sort of being out over the road.

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Speaker 1: So it's it's really it creates a lot of strain

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Speaker 1: on families. Uh, it creates a lot of strain on people.

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Speaker 1: It takes a special kind of person to want a

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Speaker 1: life where they're out in the road. It's it's a

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Speaker 1: job that's very dangerous. It's one of the most dangerous

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Speaker 1: jobs in America. It's a job that has very high

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Speaker 1: occupational issues in terms of health. You're sitting in a

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Speaker 1: truck for a you know, you're driving for eleven hours

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Speaker 1: a day, you're sitting, which you know, drivers have high

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Speaker 1: incidents of obesity and diabetes. So it's not a great lifestyle.

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Speaker 1: Uh and uh. For all of those reasons, it's not

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Speaker 1: a desirable job for for a large percent of the population.

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Speaker 1: And the Unfortunately, the industry salaries have not kept up

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Speaker 1: with a lot of the competitive industries which they compete

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Speaker 1: for labor like warehousing, construction, other types of industries which

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Speaker 1: tend to pull the same labor of course, so I'm

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Speaker 1: curious like on this, like what were there and you

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Speaker 1: alluded to this at the very beginning the workplace trends,

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Speaker 1: But what was the trajectory of sort of people entering

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Speaker 1: the workforce making their careers as truck drivers. And then

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Speaker 1: in this particular spike, has there been any like um

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Speaker 1: pay dynamic or any increase in wage that has perhaps

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Speaker 1: brought people off the sidelines either to get back into

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Speaker 1: trucking or to get their c d L. Yeah, so

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Speaker 1: let's let's talk about two things. One is there's effectively

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Speaker 1: two separate markets between the employee driver market, which is

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Speaker 1: someone who goes and gets a job at a trucking company,

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Speaker 1: which is actually seen a three there's three percent less

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Speaker 1: truck drivers today that work for fleets then there were

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Speaker 1: pre COVID, so we actually lost three percent of the

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Speaker 1: industry that the driving force of employees. And then we've

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Speaker 1: seen an increase in eleven thousand trucking companies in the

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Speaker 1: last month. Those are not employees, those are essentially fleet

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Speaker 1: operators that are in that So we've seen some a

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Speaker 1: lot of growth in the owner operated market of the

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Speaker 1: spot market because they can make a lot more money.

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Speaker 1: And we've seen a shortage in the UH employee drivers

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Speaker 1: UM and so turnover typically in a trucking companies a

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Speaker 1: hundred and fifteen because a lot of people end enter

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Speaker 1: the industry but don't really know what they're getting into.

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Speaker 1: They have this sort of I don't you know. Tracy

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Speaker 1: has this sort of idolized view of how great this

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Speaker 1: is going to be, and she enters the industry. She

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Speaker 1: goes to a trucking school and is excited about her

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Speaker 1: career for the first couple of weeks and then realizes

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Speaker 1: just how tough UH it really is to be a

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Speaker 1: truck driver, and so she ends up quitting and deciding

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Speaker 1: it's not a great job for her, and so she

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Speaker 1: ends up going to work at a at a warehouse

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Speaker 1: or ends up going to do construction where she can

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Speaker 1: make today more money than she can be for it

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Speaker 1: can be a truck driver. And so there's just a

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Speaker 1: lot of structural issues that are there just for the

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Speaker 1: how long H is truck driving school? How long would

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Speaker 1: it take an average person to go from never having

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Speaker 1: driven a truck to being UH licensed UH six to

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Speaker 1: eight weeks um and it depends. And this is in

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Speaker 1: a in a COVID world, truck and schools have shut down.

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Speaker 1: So this is the other issue is that if you

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Speaker 1: sort of look at it, a lot of states didn't

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Speaker 1: treat trucking as a critical job or a truck driving

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Speaker 1: schools is a critical job. So they were basically a

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Speaker 1: lot of them were mandated to be shut down. And

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Speaker 1: so a large percent of the people that enter the

396
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Speaker 1: industry that become employee drivers enter through the truck driving schools.

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Speaker 1: When we lost twenty percent of them and even the

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Speaker 1: ones that did have survived were actually shut down for

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Speaker 1: months a couple of months, and so there was this

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Speaker 1: big shortage of bringing new people into the industry, uh

401
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Speaker 1: for for those jobs. And that's what's really created as

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Speaker 1: to pass the constraint that we see right now. So

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Speaker 1: one thing I've been thinking about is is there a

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Speaker 1: way aside from raising wages because you mentioned this is

405
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Speaker 1: a slim margin industry and you know, maybe giving truck

406
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Speaker 1: drivers a massive pay rise doesn't really work economically, But

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Speaker 1: is there a way to make the job more i

408
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Speaker 1: don't want to say enjoyable, but maybe less stressful or

409
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Speaker 1: make the lifestyle less onerous so that you attract more people,

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Speaker 1: particularly women and maybe some other minorities who aren't necessarily

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Speaker 1: interested in truck driving at the moment, so that you

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Speaker 1: entice them into the job and you have a bigger

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Speaker 1: pool of potential drivers. And Rate Trucking Company is trying

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Speaker 1: to figure that out, and no one has sort of

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Speaker 1: figured out the secret to it. There are certainly initiatives

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Speaker 1: to bring women. Some fleets have as as much as

417
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Speaker 1: of their fleet are women. Automated transmissions sort of removing

418
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Speaker 1: the stick, if you will, actually attracted a lot of women.

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Speaker 1: A lot of the O. E. M S designed trucks

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Speaker 1: that are in seats that are more comfortable for women,

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Speaker 1: are allowed for someone who's shorter, has a smaller body

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Speaker 1: to fit inside the cab, and typically the trucks were

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Speaker 1: built for men, you know, big, big, sort of big

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Speaker 1: oversized environments, and now they've sort of focused on the

425
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Speaker 1: aesthetics to trap more women to the industry, and so

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Speaker 1: there certainly is an element of that, but the industry

427
00:24:45,640 --> 00:24:48,600
Speaker 1: has not figured it out. Now we do see large

428
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Speaker 1: investments around recruiting Latino drivers, recruiting African American drivers, recruiting

429
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Speaker 1: you know, one of the largest population of truck drivers

430
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Speaker 1: has been very successful has been uh. Indian populations in

431
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Speaker 1: trucking is actually a very respected industry in India. UH.

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Speaker 1: And so a lot of the trucking companies have figured

433
00:25:13,520 --> 00:25:17,840
Speaker 1: out that they can bring in, you know, bringing immigrants

434
00:25:17,880 --> 00:25:20,480
Speaker 1: from India that have a pedigree in trucking and they

435
00:25:20,520 --> 00:25:23,240
Speaker 1: will bring their families and their friends to join their fleet.

436
00:25:23,680 --> 00:25:27,320
Speaker 1: And so there's this very large population of Indian American

437
00:25:27,320 --> 00:25:31,360
Speaker 1: truck drivers that have have been very successful. So there

438
00:25:31,480 --> 00:25:35,600
Speaker 1: is a effort to diversify the industry, but it's still

439
00:25:35,640 --> 00:25:38,600
Speaker 1: an industry that is not attractive to a lot of

440
00:25:38,640 --> 00:25:41,359
Speaker 1: people when they can find alternative work. You know. One

441
00:25:41,440 --> 00:25:43,960
Speaker 1: of the issues that you you have in in sort

442
00:25:44,000 --> 00:25:48,600
Speaker 1: of as you diversify is Latino populations into want to

443
00:25:48,640 --> 00:25:51,320
Speaker 1: stay close to families. So the lifestyle of being a

444
00:25:51,359 --> 00:25:54,399
Speaker 1: truck driver doesn't work great for someone who wants to

445
00:25:54,440 --> 00:25:57,680
Speaker 1: be with their family on a you know, every night basis. Um.

446
00:25:57,800 --> 00:26:02,240
Speaker 1: And so you have sort of these constraints that exist

447
00:26:02,280 --> 00:26:06,840
Speaker 1: in the industry and there really isn't an easy answer. Um.

448
00:26:06,960 --> 00:26:09,680
Speaker 1: The job itself requires you to be out over the road.

449
00:26:10,200 --> 00:26:14,040
Speaker 1: You know, freight has to move. It is inconsistent, you

450
00:26:14,400 --> 00:26:17,439
Speaker 1: don't have a consistent schedule, you're not hauling a consistent route,

451
00:26:17,960 --> 00:26:20,360
Speaker 1: and so there's a lot of structural issues that are

452
00:26:20,440 --> 00:26:24,040
Speaker 1: not easily addressed. So, first of all, I hope if

453
00:26:24,080 --> 00:26:27,920
Speaker 1: we do get a lot more Indian or Indian American drivers,

454
00:26:28,000 --> 00:26:32,960
Speaker 1: that they bring the Indian tradition of decorating the trucks

455
00:26:33,160 --> 00:26:37,439
Speaker 1: with them, because they do they do. There's there is

456
00:26:37,480 --> 00:26:42,040
Speaker 1: some awesome YouTube videos which our Body was style and

457
00:26:42,080 --> 00:26:46,200
Speaker 1: they're they're incredible because they're they're dancing in front of

458
00:26:46,200 --> 00:26:50,359
Speaker 1: their rigs and they've outfitted these beautiful rigs. It is

459
00:26:50,480 --> 00:26:54,760
Speaker 1: and and and and the job itself is one of pride.

460
00:26:55,320 --> 00:26:58,960
Speaker 1: It is one that they're very proud of the job.

461
00:26:59,119 --> 00:27:04,480
Speaker 1: And it's it is an unusually there's an esteem associated

462
00:27:04,480 --> 00:27:09,439
Speaker 1: with becoming a truck driver. And it's an industry or

463
00:27:09,560 --> 00:27:11,800
Speaker 1: a group of population that the industry has been very

464
00:27:11,840 --> 00:27:16,119
Speaker 1: successful recruiting. And the challenges because of the American immigration

465
00:27:16,160 --> 00:27:21,200
Speaker 1: policy doesn't allow us to import hundreds of thousands of

466
00:27:21,600 --> 00:27:23,800
Speaker 1: folks from India to take these jobs, and so we're

467
00:27:23,840 --> 00:27:28,040
Speaker 1: sort of stuck with a small portion of the industry

468
00:27:28,080 --> 00:27:32,320
Speaker 1: that that fits that demographic. Yeah, So I've seen some

469
00:27:32,359 --> 00:27:35,919
Speaker 1: of those trucks in India and Pakistan and they're absolutely

470
00:27:36,000 --> 00:27:38,200
Speaker 1: beautiful and I think I've spent a lot of time

471
00:27:38,400 --> 00:27:41,399
Speaker 1: photographing them myself. But the other thing I want to

472
00:27:41,440 --> 00:27:45,320
Speaker 1: ask is, so, if you think that being away from

473
00:27:45,359 --> 00:27:50,919
Speaker 1: home is a major downside for potential truck drivers, is

474
00:27:50,960 --> 00:27:54,560
Speaker 1: there any way to try to fix that problem? Like

475
00:27:54,680 --> 00:27:58,440
Speaker 1: could you organize some of the trucking routes more efficiently?

476
00:27:58,560 --> 00:28:01,200
Speaker 1: Could you develop some sort of end off system where

477
00:28:01,320 --> 00:28:04,840
Speaker 1: instead of having a single driver drive from you know,

478
00:28:04,920 --> 00:28:07,399
Speaker 1: like the west coast to the east coast, they could

479
00:28:07,400 --> 00:28:12,400
Speaker 1: maybe pass on their loads from like, you know, midway

480
00:28:12,480 --> 00:28:14,800
Speaker 1: through the journey or something like that, so that they

481
00:28:14,960 --> 00:28:18,360
Speaker 1: wouldn't have to spend so much time away from their

482
00:28:18,359 --> 00:28:21,040
Speaker 1: home or their home base. Or does that not just

483
00:28:21,160 --> 00:28:26,479
Speaker 1: work economically? Were logistically It's very difficult, and it is

484
00:28:26,600 --> 00:28:29,920
Speaker 1: tried in you know, it is tried and successful and

485
00:28:30,000 --> 00:28:32,600
Speaker 1: sort of parcel operations and what they call lt L

486
00:28:32,680 --> 00:28:37,240
Speaker 1: which are small palettes or small parcel where I'm running

487
00:28:37,680 --> 00:28:40,960
Speaker 1: a terminal determinal network and I sort of it's sort

488
00:28:40,960 --> 00:28:43,080
Speaker 1: of a closed loop, if you will, where the same

489
00:28:43,120 --> 00:28:45,000
Speaker 1: set of drivers are going back and forth. So it

490
00:28:45,080 --> 00:28:49,640
Speaker 1: does work in very limited cases. But supply chains, the

491
00:28:50,000 --> 00:28:54,600
Speaker 1: issue is that the customer demands, the supply chain demands

492
00:28:55,240 --> 00:29:00,840
Speaker 1: are very different than the driver uh and trucking demands.

493
00:29:01,040 --> 00:29:04,120
Speaker 1: And so what supply chains want our products there as

494
00:29:04,160 --> 00:29:07,160
Speaker 1: fast as possible. They want them efficient, you know, they

495
00:29:07,160 --> 00:29:10,320
Speaker 1: want to move. Is all liquidity demanded in the supply chain,

496
00:29:10,680 --> 00:29:14,480
Speaker 1: and so you can't optimize the trucking market or network.

497
00:29:14,720 --> 00:29:18,000
Speaker 1: Should that I agree that, um, you would want to

498
00:29:18,160 --> 00:29:20,959
Speaker 1: if you if everything else is created equals So for

499
00:29:21,000 --> 00:29:23,680
Speaker 1: those reasons, you know, freight tends to run what we

500
00:29:23,800 --> 00:29:26,240
Speaker 1: call head hall and back hall. So you see places

501
00:29:26,280 --> 00:29:29,440
Speaker 1: like southern California l A, which you know is the

502
00:29:29,520 --> 00:29:33,240
Speaker 1: largest port in the United States. You know, a lot

503
00:29:33,280 --> 00:29:37,479
Speaker 1: of freight enters l A, but very very little freight

504
00:29:38,160 --> 00:29:41,280
Speaker 1: is imported into Southern California from the rest of the country.

505
00:29:41,360 --> 00:29:44,400
Speaker 1: So what you have is this massive head haul market

506
00:29:44,200 --> 00:29:47,040
Speaker 1: out of southern California that goes all over the country

507
00:29:47,480 --> 00:29:52,520
Speaker 1: and then basically very little freights coming from the other

508
00:29:52,560 --> 00:29:54,800
Speaker 1: parts of the country back to l A. So there's

509
00:29:54,800 --> 00:29:58,520
Speaker 1: just a lot of inefficiencies and how supply chains work

510
00:29:58,640 --> 00:30:02,600
Speaker 1: that create issues and Frankly, customers want things as soon

511
00:30:02,640 --> 00:30:05,000
Speaker 1: as possible. Businesses want them as soon as possible. And

512
00:30:05,040 --> 00:30:08,760
Speaker 1: for those reasons, you can't optimize, uh as you mentioned,

513
00:30:08,760 --> 00:30:11,480
Speaker 1: for these handoffs scenarios. Companies have tried it. It just

514
00:30:11,520 --> 00:30:14,840
Speaker 1: doesn't work pretty well. So that perfectly leads to where

515
00:30:14,840 --> 00:30:16,920
Speaker 1: I was going to go next, because you know, we've

516
00:30:16,920 --> 00:30:19,000
Speaker 1: talked about a lot about some of the big structural

517
00:30:19,200 --> 00:30:22,680
Speaker 1: issues facing this industry, but also the current moment for

518
00:30:22,760 --> 00:30:24,920
Speaker 1: supply chains, and we've touched on it a little bit,

519
00:30:25,240 --> 00:30:27,440
Speaker 1: has some unique challenges, and I think that's a good

520
00:30:27,440 --> 00:30:32,040
Speaker 1: place to start. The the the gap between outbound shipments

521
00:30:32,080 --> 00:30:35,840
Speaker 1: from the port of Los Angeles elsewhere versus inbound which

522
00:30:35,920 --> 00:30:38,040
Speaker 1: was already very um you know, there's already a big

523
00:30:38,040 --> 00:30:42,320
Speaker 1: disparity for years, but that's really grown massively in this

524
00:30:42,440 --> 00:30:44,640
Speaker 1: crisis because of all the goods important and how little

525
00:30:44,800 --> 00:30:48,480
Speaker 1: is being exported, and that has created its own unique

526
00:30:48,560 --> 00:30:53,800
Speaker 1: challenges for shipping, you know, because the ships aren't taking

527
00:30:53,800 --> 00:30:56,440
Speaker 1: back as many containers and so forth. We've talked about that,

528
00:30:56,920 --> 00:30:59,840
Speaker 1: So let's talk about like other than just the pure

529
00:31:00,040 --> 00:31:04,720
Speaker 1: like overwhelming sort of like supply demand mismatch, how else

530
00:31:05,000 --> 00:31:08,800
Speaker 1: are the sort of like new imbalances making this moment

531
00:31:09,200 --> 00:31:13,600
Speaker 1: even worse and exacerbating some of the structural problems for

532
00:31:13,640 --> 00:31:18,520
Speaker 1: this industry. Well, you know, this is interesting because I

533
00:31:18,720 --> 00:31:21,080
Speaker 1: listened to a couple of your podcast, particularly around shipping,

534
00:31:21,760 --> 00:31:26,240
Speaker 1: and people are now aware of all of the things

535
00:31:26,320 --> 00:31:28,440
Speaker 1: that can go wrong in a supply chain, where before

536
00:31:28,480 --> 00:31:31,800
Speaker 1: no one cared. And so for someone who does this, uh,

537
00:31:31,880 --> 00:31:34,240
Speaker 1: this is you know something we do, I do full time.

538
00:31:34,720 --> 00:31:37,920
Speaker 1: It's really it's it's a really interesting time because all

539
00:31:37,920 --> 00:31:41,960
Speaker 1: of a sudden, people are very aware and very concerned

540
00:31:42,000 --> 00:31:45,040
Speaker 1: about all of the stuff that's taking place across the

541
00:31:45,040 --> 00:31:47,400
Speaker 1: global supply chain, where was before no one cared. I

542
00:31:47,480 --> 00:31:50,000
Speaker 1: would often get asked, can you actually build a media

543
00:31:50,240 --> 00:31:52,800
Speaker 1: and data business? For fraid it seems like a very

544
00:31:52,840 --> 00:31:54,520
Speaker 1: small niche, And I'm like, well, it's two percent of

545
00:31:54,520 --> 00:31:58,440
Speaker 1: the global economy. Of the economy the global economy is

546
00:31:58,480 --> 00:32:01,480
Speaker 1: are logistics dependent end trees. But everybody sort of ignored

547
00:32:01,480 --> 00:32:04,160
Speaker 1: it because they all assumed it all worked because they

548
00:32:04,240 --> 00:32:07,760
Speaker 1: didn't they didn't experience these issues. So these issues that

549
00:32:07,800 --> 00:32:11,840
Speaker 1: we're seeing have always existed, just not to the degree

550
00:32:11,960 --> 00:32:15,480
Speaker 1: that the market was already strained and stretched that we

551
00:32:15,520 --> 00:32:18,720
Speaker 1: see right now, and frankly most people were not aware

552
00:32:18,720 --> 00:32:22,160
Speaker 1: of it. We've always had hurricanes that have disrupted supply chains.

553
00:32:22,240 --> 00:32:26,280
Speaker 1: We've we've had at times pipeline issues. We've had you know,

554
00:32:26,440 --> 00:32:31,440
Speaker 1: presidents that shut down borders that create massive disruptions. Um

555
00:32:31,480 --> 00:32:34,000
Speaker 1: just just out of you know, uh, sit out a

556
00:32:34,000 --> 00:32:35,480
Speaker 1: tweet and all of a sudden, I'm gonna shut on

557
00:32:35,520 --> 00:32:37,920
Speaker 1: the Mexican border because I don't like the fact that

558
00:32:37,920 --> 00:32:40,680
Speaker 1: you're not paying from my wall. And if you do that,

559
00:32:41,040 --> 00:32:43,560
Speaker 1: then all of a sudden, the auto suppliers have to

560
00:32:43,840 --> 00:32:47,200
Speaker 1: put a lot of inventory into Southern Texas that they

561
00:32:47,240 --> 00:32:50,600
Speaker 1: haven't available. These things are always playing out, and now

562
00:32:50,680 --> 00:32:55,760
Speaker 1: we're really aware as a society how vulnerable you are

563
00:32:55,960 --> 00:32:58,680
Speaker 1: supply chain disruptions which have always existed, just not with

564
00:32:58,760 --> 00:33:00,960
Speaker 1: the degree they are and not act back. And so

565
00:33:01,640 --> 00:33:04,080
Speaker 1: a lot of this is sort of I think a

566
00:33:04,120 --> 00:33:06,800
Speaker 1: new awareness and new level of respect that people have.

567
00:33:07,120 --> 00:33:10,080
Speaker 1: There's all this inner dependency. So you look at what's

568
00:33:10,080 --> 00:33:14,000
Speaker 1: happening shipping, it certainly impacts the trucking market, and it's

569
00:33:14,040 --> 00:33:17,959
Speaker 1: both ways, because what ends up happening is the trucking market.

570
00:33:18,360 --> 00:33:22,320
Speaker 1: As much as one fifth of trucking volumes are tied

571
00:33:22,400 --> 00:33:25,800
Speaker 1: directly to imports, and for those reasons, when you see

572
00:33:25,800 --> 00:33:30,520
Speaker 1: this massive amount of imports hit the freight market, uh,

573
00:33:30,560 --> 00:33:34,560
Speaker 1: it creates an enormous amount of strain in terms of

574
00:33:34,600 --> 00:33:38,920
Speaker 1: trucking capacity or trucking demand. And for those reasons, we're

575
00:33:38,960 --> 00:33:41,880
Speaker 1: seeing a lot of issues. Uh. And just look at

576
00:33:41,920 --> 00:33:44,800
Speaker 1: tight inventories and look at the lack of labor supply.

577
00:33:45,360 --> 00:33:47,680
Speaker 1: All this stuff is playing out and now people are

578
00:33:47,720 --> 00:33:50,680
Speaker 1: experiencing that only in their business life, with their experience

579
00:33:50,680 --> 00:33:53,640
Speaker 1: in their personal life. So you mentioned the idea that

580
00:33:53,680 --> 00:33:57,200
Speaker 1: even though the trucking industry is in a boon now

581
00:33:57,320 --> 00:33:59,760
Speaker 1: and people can make a lot of money, that it's

582
00:34:00,040 --> 00:34:02,360
Speaker 1: most certainly going to end up in a bust and

583
00:34:02,600 --> 00:34:05,720
Speaker 1: over capacity at some point in time. And this is

584
00:34:05,760 --> 00:34:08,480
Speaker 1: something that keeps cropping up in all of our discussions

585
00:34:08,560 --> 00:34:13,000
Speaker 1: about shipping. And I'm just wondering, what is it about

586
00:34:13,040 --> 00:34:18,319
Speaker 1: the transport industry that seems to make it so cyclical

587
00:34:18,600 --> 00:34:22,240
Speaker 1: in nature. So you mentioned the low barriers to entry

588
00:34:22,280 --> 00:34:25,040
Speaker 1: for trucking, and I could see how you would get

589
00:34:25,040 --> 00:34:27,680
Speaker 1: a bunch of people who start trucking companies when times

590
00:34:27,680 --> 00:34:29,400
Speaker 1: are good and they think it's an easy way to

591
00:34:29,440 --> 00:34:31,799
Speaker 1: make money and then when things get a little bit

592
00:34:31,840 --> 00:34:34,600
Speaker 1: more difficult, they all go bust and it's a sort

593
00:34:34,640 --> 00:34:37,680
Speaker 1: of self fulfilling cycle. But it's a little bit different

594
00:34:37,760 --> 00:34:40,400
Speaker 1: in shipping, where you do have long lead times to

595
00:34:40,520 --> 00:34:44,680
Speaker 1: build very very expensive vessels. It's dominated by a few

596
00:34:44,719 --> 00:34:47,080
Speaker 1: companies that have a decent amount of money, or at

597
00:34:47,160 --> 00:34:49,880
Speaker 1: least more money than some of the trucking companies. So

598
00:34:49,920 --> 00:34:53,480
Speaker 1: I guess my question is what's the common thread between

599
00:34:53,520 --> 00:34:57,040
Speaker 1: all these transportation and logistics companies that seems to make

600
00:34:57,080 --> 00:35:02,520
Speaker 1: them very, very vulnerable to these cycles of booms and us. Yeah,

601
00:35:02,600 --> 00:35:05,600
Speaker 1: it's a it's a great question. So in the shipping market,

602
00:35:05,600 --> 00:35:07,279
Speaker 1: I'm going to own a ship for thirty years, So

603
00:35:07,400 --> 00:35:11,000
Speaker 1: these shipping cycles typically play out over decades. Um. You know,

604
00:35:11,080 --> 00:35:14,839
Speaker 1: the shipping industry has had this sort of a shut

605
00:35:14,960 --> 00:35:18,880
Speaker 1: recessionary environments two thousand eight since the Great Financial Crisis,

606
00:35:19,200 --> 00:35:21,959
Speaker 1: and in the last two years a sort of has

607
00:35:22,000 --> 00:35:23,960
Speaker 1: had has sort of come out of that, and COVID

608
00:35:24,080 --> 00:35:27,839
Speaker 1: really accelerated that. So that cycle will probably live on

609
00:35:27,960 --> 00:35:31,120
Speaker 1: for some some period of time. Uh. In trucking, they

610
00:35:31,160 --> 00:35:34,120
Speaker 1: typically the industry runs in three to four year cycles

611
00:35:34,160 --> 00:35:38,279
Speaker 1: because it's very it's very close to the broader industrial

612
00:35:38,320 --> 00:35:42,560
Speaker 1: cycle and the economy and the domestic economy. Uh. And

613
00:35:42,600 --> 00:35:46,920
Speaker 1: so for those reasons, if the industrial sector is very soft,

614
00:35:47,000 --> 00:35:51,040
Speaker 1: so well trucking. And but what happens is because of

615
00:35:51,120 --> 00:35:55,279
Speaker 1: the lack of bears of entry, people when they enter

616
00:35:55,360 --> 00:35:57,200
Speaker 1: the industry, they go out by these trucks. You all

617
00:35:57,200 --> 00:35:59,840
Speaker 1: of a sudden have this glut of capacity and the

618
00:36:00,000 --> 00:36:02,759
Speaker 1: industry has to throw that during the softer time. So

619
00:36:03,040 --> 00:36:06,520
Speaker 1: two thousand eighteen was a record year for trucking. Two

620
00:36:06,520 --> 00:36:10,279
Speaker 1: thousand nineteen was the worst year in trucking since the

621
00:36:10,320 --> 00:36:13,960
Speaker 1: Great Depression. Two thousand and twenty. We saw two side,

622
00:36:14,080 --> 00:36:17,040
Speaker 1: you know, really three cycles. We saw the run up

623
00:36:17,080 --> 00:36:20,440
Speaker 1: to COVID where you have this massive surge and demand.

624
00:36:21,000 --> 00:36:24,279
Speaker 1: We saw a crash where you saw this massive hangover.

625
00:36:25,000 --> 00:36:28,240
Speaker 1: So in March you saw this massive surge. In April

626
00:36:28,320 --> 00:36:32,040
Speaker 1: you saw this massive hangover. And then we've seen a

627
00:36:32,080 --> 00:36:35,800
Speaker 1: super demand cycle since then. And so uh, these cycles

628
00:36:35,840 --> 00:36:39,360
Speaker 1: live out and because there's very little barriers of entry,

629
00:36:39,920 --> 00:36:43,600
Speaker 1: it allows the industry to get over supplied really really quickly.

630
00:36:43,680 --> 00:36:48,000
Speaker 1: And because you have such a fragmented market, there are

631
00:36:48,080 --> 00:36:51,960
Speaker 1: forty thousand trucking companies that that have that have employees

632
00:36:52,840 --> 00:36:54,760
Speaker 1: that work for them to have more than one truck.

633
00:36:55,200 --> 00:36:59,560
Speaker 1: And for those reasons, there are so many independent decision

634
00:36:59,560 --> 00:37:02,600
Speaker 1: makers that are out making decisions on what's in their

635
00:37:02,640 --> 00:37:06,040
Speaker 1: best interest and oftentimes don't have you biquitous information across

636
00:37:06,080 --> 00:37:09,640
Speaker 1: the industry, uh that they end up end up buying

637
00:37:09,640 --> 00:37:14,360
Speaker 1: more trucks, growing their fleet, and increasing their costs along

638
00:37:14,400 --> 00:37:16,880
Speaker 1: the way. So right now, what's happening is the trucking

639
00:37:16,880 --> 00:37:21,160
Speaker 1: industry is dramatically increasing labor costs. They're trying to attract

640
00:37:21,200 --> 00:37:25,200
Speaker 1: new drivers into the industry by increasing salaries. Well, the

641
00:37:25,600 --> 00:37:29,400
Speaker 1: problem is when the market busts, they will be stuck

642
00:37:29,440 --> 00:37:33,800
Speaker 1: with those salaries. So they're operating costs have gone up.

643
00:37:33,880 --> 00:37:37,360
Speaker 1: The operating costs have shot, you know, way up. They

644
00:37:37,440 --> 00:37:40,160
Speaker 1: will have to live with those higher operating costs. And

645
00:37:40,200 --> 00:37:42,000
Speaker 1: it's okay, is the market as long as the markets

646
00:37:42,000 --> 00:37:44,920
Speaker 1: doing well. But when the market, when the volume drives up,

647
00:37:45,040 --> 00:37:48,279
Speaker 1: is it inevitably will they will be stuck with very

648
00:37:48,360 --> 00:37:50,799
Speaker 1: high operating costs and we'll just see a massive bleed

649
00:37:50,840 --> 00:37:54,400
Speaker 1: out in the industry. Can you just go back and

650
00:37:54,719 --> 00:37:58,640
Speaker 1: talk about specifically, I mean, that is pretty striking to say,

651
00:37:58,719 --> 00:38:02,160
Speaker 1: is the worst year in a on a growth basis

652
00:38:02,160 --> 00:38:05,839
Speaker 1: since the Depression. It was the worst trucking market in

653
00:38:05,920 --> 00:38:09,680
Speaker 1: terms of bankruptcies since the greater since the Great Procession.

654
00:38:09,719 --> 00:38:12,440
Speaker 1: So just look us through if you don't mind, like

655
00:38:12,760 --> 00:38:16,480
Speaker 1: to give us this summary of what really happened in ten.

656
00:38:16,560 --> 00:38:19,640
Speaker 1: So the government created this new mandate called the electronic

657
00:38:19,680 --> 00:38:22,760
Speaker 1: logging device, which basically in the old days truck drivers

658
00:38:22,800 --> 00:38:27,800
Speaker 1: would would use paper logs and cheating or creative accounting

659
00:38:27,800 --> 00:38:29,880
Speaker 1: as we like to call it, a lot of them

660
00:38:29,880 --> 00:38:32,040
Speaker 1: were cheating the amount of time. Now the big trucking

661
00:38:32,040 --> 00:38:34,880
Speaker 1: companies and there's always this rubbed between the small trucking

662
00:38:34,920 --> 00:38:38,279
Speaker 1: companies which are the independent and the big trucking companies,

663
00:38:38,719 --> 00:38:40,879
Speaker 1: and so there's always this sort of the little guys

664
00:38:40,880 --> 00:38:42,400
Speaker 1: and the big guys are sort of always fighting it

665
00:38:42,440 --> 00:38:45,560
Speaker 1: out in terms of what regulations. So the big carriers

666
00:38:45,960 --> 00:38:49,680
Speaker 1: are all constantly getting sued and constantly getting audited by

667
00:38:49,719 --> 00:38:52,520
Speaker 1: the federal government and others, so they have to keep

668
00:38:52,560 --> 00:38:56,680
Speaker 1: things really really tight compliant otherwise they just you know,

669
00:38:57,400 --> 00:38:59,560
Speaker 1: it would be a pretty nasty situation for them. So

670
00:39:00,040 --> 00:39:04,360
Speaker 1: the small carriers have don't typically have to operate, uh

671
00:39:04,400 --> 00:39:07,040
Speaker 1: in that fashion or have not operated. So the government

672
00:39:07,160 --> 00:39:12,040
Speaker 1: mandated they called electronic clogging devices, which actually electronically monitor

673
00:39:12,320 --> 00:39:15,880
Speaker 1: the amount of hours driver drives and so it records

674
00:39:15,920 --> 00:39:20,480
Speaker 1: all that information. And so this everyone sort of expected

675
00:39:20,480 --> 00:39:25,080
Speaker 1: this massive churn of capacity. Uh. And because everybody thought, well,

676
00:39:25,080 --> 00:39:27,600
Speaker 1: this is going to you know, destroying a lot of

677
00:39:27,600 --> 00:39:30,719
Speaker 1: the available capacity in the market, and for a short term,

678
00:39:31,040 --> 00:39:35,080
Speaker 1: short time, it did. Uh. They're expecting that this would

679
00:39:35,200 --> 00:39:39,839
Speaker 1: create such a tightness in capacity that the rules would

680
00:39:39,840 --> 00:39:42,320
Speaker 1: be different this time. And this is something the industry

681
00:39:42,320 --> 00:39:44,640
Speaker 1: always say, is it's different this time. You'll hear this

682
00:39:44,760 --> 00:39:46,719
Speaker 1: a lot. People say that all the time. To me,

683
00:39:47,160 --> 00:39:48,840
Speaker 1: at this time, it's different. Well, I've heard that for

684
00:39:48,880 --> 00:39:50,759
Speaker 1: forty two years since I, you know, I grew up

685
00:39:50,760 --> 00:39:53,720
Speaker 1: in the industry. So I've heard that it's never different.

686
00:39:54,280 --> 00:39:57,360
Speaker 1: It's just the maybe the situation is different, but the

687
00:39:57,440 --> 00:40:00,080
Speaker 1: rules are always the same. And so the industry were

688
00:40:00,160 --> 00:40:03,400
Speaker 1: we ramped up a lot of capacity headed up to

689
00:40:03,440 --> 00:40:06,480
Speaker 1: the e L demand date. The L demand date happened,

690
00:40:07,120 --> 00:40:11,600
Speaker 1: and what they expected to happen was this massive contraction

691
00:40:11,640 --> 00:40:14,959
Speaker 1: and capacity. We actually saw the opposite. We actually saw

692
00:40:15,000 --> 00:40:18,840
Speaker 1: a building of capacity, and so there was a lot

693
00:40:18,920 --> 00:40:23,719
Speaker 1: of additional supply brought into the market over six to

694
00:40:23,840 --> 00:40:26,920
Speaker 1: nine months in two thousand eighteen. Now, at the time

695
00:40:27,000 --> 00:40:29,800
Speaker 1: in two thousand eighteen, there was a lot of industrial demand.

696
00:40:29,840 --> 00:40:32,760
Speaker 1: The industrial economy was doing quite well. This was post

697
00:40:32,920 --> 00:40:37,279
Speaker 1: Donald Trump's tax cuts. It was sort of you know,

698
00:40:37,360 --> 00:40:40,160
Speaker 1: the economy was doing really well. All of a sudden,

699
00:40:40,200 --> 00:40:43,160
Speaker 1: we had terrorists put in place in mid two thousand eighteen,

700
00:40:43,600 --> 00:40:47,719
Speaker 1: and we saw an industrial slowdown throughout the economy. And

701
00:40:47,800 --> 00:40:51,360
Speaker 1: so as the economy slowed down, the industry was still

702
00:40:51,400 --> 00:40:54,400
Speaker 1: building up capacity and they were continuing to build up

703
00:40:54,440 --> 00:40:58,080
Speaker 1: that capacity all the way until about the third quarter

704
00:40:58,719 --> 00:41:01,200
Speaker 1: or fourth quarter of two thousand and eighteen. And then

705
00:41:02,239 --> 00:41:05,399
Speaker 1: with the slowdown and the industrial economy at a time

706
00:41:05,440 --> 00:41:11,320
Speaker 1: and capacity had been overbuilt. This massive, massive UH issue

707
00:41:11,320 --> 00:41:15,400
Speaker 1: in two dozen nineteen where the market was oversupplied and

708
00:41:15,440 --> 00:41:17,759
Speaker 1: we saw a lot of bankruptcies. You know, we at

709
00:41:17,800 --> 00:41:22,760
Speaker 1: freight ways, we're covering probably for bankruptcies at one point

710
00:41:23,480 --> 00:41:26,520
Speaker 1: for bankruptcies a day where we would you know, and

711
00:41:26,560 --> 00:41:28,520
Speaker 1: some of them were big. There was a four thousand

712
00:41:28,760 --> 00:41:33,319
Speaker 1: Republican try that went out went out of business. New

713
00:41:33,320 --> 00:41:35,360
Speaker 1: England Motor Freight, which is a new York based LTL

714
00:41:35,400 --> 00:41:37,680
Speaker 1: Care went out of business. So you know, there's just

715
00:41:37,719 --> 00:41:41,080
Speaker 1: a lot of bankruptcies that happened in two nineteen because, uh,

716
00:41:41,120 --> 00:42:00,799
Speaker 1: these companies just couldn't survive it. So this sort of

717
00:42:00,800 --> 00:42:03,680
Speaker 1: gets back to the question that I asked earlier, But

718
00:42:03,920 --> 00:42:07,400
Speaker 1: is there anything that can be done in order to

719
00:42:07,680 --> 00:42:13,000
Speaker 1: balance out the industry from this boom bus cycle? No,

720
00:42:13,200 --> 00:42:16,800
Speaker 1: it is. It's classic economics and and so I mean, Tracy,

721
00:42:17,000 --> 00:42:19,560
Speaker 1: this is just the reality of it, and a lot

722
00:42:19,600 --> 00:42:22,799
Speaker 1: of people assume. And so I grew up. My dad,

723
00:42:23,320 --> 00:42:27,280
Speaker 1: uh started a trucking company, my uncle started a trucking company.

724
00:42:28,040 --> 00:42:32,600
Speaker 1: My grandfather was was in trucking. And so I've grown

725
00:42:32,680 --> 00:42:36,719
Speaker 1: up listening to my dad talk about the cycles. And

726
00:42:36,760 --> 00:42:40,360
Speaker 1: it's existed as far back as I can remember, uh,

727
00:42:40,440 --> 00:42:43,480
Speaker 1: these cycles. Uh, and so even you know, we have

728
00:42:43,560 --> 00:42:45,799
Speaker 1: something called the Hall of Fame at Freight Ways, which

729
00:42:45,840 --> 00:42:49,360
Speaker 1: is we cover stories about historical trucking companies for featured.

730
00:42:49,719 --> 00:42:52,080
Speaker 1: A lot of them are now out of business. Um,

731
00:42:52,120 --> 00:42:55,960
Speaker 1: if you go back to pre de regulation, so there

732
00:42:56,040 --> 00:42:58,400
Speaker 1: was a time when trucking was a great industry and

733
00:42:58,440 --> 00:43:00,959
Speaker 1: a great job and that was pred regulation. But when

734
00:43:01,239 --> 00:43:04,879
Speaker 1: the Carter administration deregulated trucking in the in the late

735
00:43:04,920 --> 00:43:08,680
Speaker 1: seventies along with the airlines and telecommunications sector when they

736
00:43:08,680 --> 00:43:12,360
Speaker 1: when they deregulated over you know, the during that period

737
00:43:12,360 --> 00:43:16,400
Speaker 1: of time, what ended up happening is that you saw

738
00:43:16,480 --> 00:43:20,319
Speaker 1: a massive drop in transportation costs send a GDP. But

739
00:43:20,400 --> 00:43:22,880
Speaker 1: what you also saw was this massive boom month cycle.

740
00:43:23,000 --> 00:43:25,160
Speaker 1: Rate used to be fixed, which means there was no

741
00:43:25,800 --> 00:43:29,040
Speaker 1: marketplace for rates. You have a fixed rate, you had

742
00:43:29,080 --> 00:43:32,320
Speaker 1: to file the tariff with the government, and only certain

743
00:43:32,400 --> 00:43:34,720
Speaker 1: carriers could bid on lanes. Very similar to the airline

744
00:43:34,719 --> 00:43:37,839
Speaker 1: whey the airlines work today, uh in terms of international

745
00:43:38,440 --> 00:43:41,600
Speaker 1: sort of you know, they restrict how many airlines could

746
00:43:41,600 --> 00:43:45,600
Speaker 1: fly internationally these routes um but pricing was also fixed

747
00:43:45,880 --> 00:43:48,759
Speaker 1: and and so for those reasons, it was a very

748
00:43:48,840 --> 00:43:52,960
Speaker 1: stable market. But when the government deregulated, it allowed a

749
00:43:53,000 --> 00:43:56,640
Speaker 1: lot of you know, just as massive sort of level

750
00:43:56,680 --> 00:43:58,640
Speaker 1: of altility that is going to be with us as

751
00:43:58,680 --> 00:44:01,080
Speaker 1: long as the economic cycle, which you know, as long

752
00:44:01,120 --> 00:44:04,480
Speaker 1: as as long as we're living a free ish market,

753
00:44:04,640 --> 00:44:07,239
Speaker 1: you always have that. Well, I have an idea to

754
00:44:07,640 --> 00:44:10,719
Speaker 1: stabilize the trucking market. And I'm gonna and tell me

755
00:44:10,760 --> 00:44:12,920
Speaker 1: why if it's ever been tried, and why it won't work.

756
00:44:12,960 --> 00:44:15,040
Speaker 1: I mean, I'm sure it won't work because someone would

757
00:44:15,040 --> 00:44:20,080
Speaker 1: have done it. But instead of Tracy starting a independent

758
00:44:20,239 --> 00:44:23,640
Speaker 1: truck driving company, why doesn't she start like a private

759
00:44:23,640 --> 00:44:27,759
Speaker 1: equity roll up that buys five thousand different trucking companies

760
00:44:28,239 --> 00:44:32,480
Speaker 1: and then create some really slick digital platform where so

761
00:44:32,560 --> 00:44:35,600
Speaker 1: that it's more than the Craigslist for trucking and give

762
00:44:35,680 --> 00:44:39,000
Speaker 1: repeat customers a nice break and try to like really

763
00:44:39,600 --> 00:44:43,080
Speaker 1: become the Marisk of trucking in some way. Why wouldn't

764
00:44:43,080 --> 00:44:46,160
Speaker 1: that work? Can I just say that my dream of

765
00:44:46,200 --> 00:44:49,320
Speaker 1: being a loan truck driver left to my own devices

766
00:44:49,360 --> 00:44:52,640
Speaker 1: has suddenly morphed into me becoming like a private equity

767
00:44:52,680 --> 00:44:56,960
Speaker 1: tycoon rulling over some sort of tech fuel to think

768
00:44:56,960 --> 00:44:59,560
Speaker 1: of a different approach that might be more sustainable. Okay,

769
00:44:59,600 --> 00:45:02,439
Speaker 1: go ahead, Tracy. You would be You would be far

770
00:45:02,880 --> 00:45:06,400
Speaker 1: happier being sitting on the financial side of the industry.

771
00:45:06,440 --> 00:45:09,440
Speaker 1: The driving and so like, it's hard work, and I

772
00:45:09,480 --> 00:45:11,880
Speaker 1: don't want to be dismissive to the drivers. It is

773
00:45:11,920 --> 00:45:14,600
Speaker 1: hard work and they know they keep the economy running.

774
00:45:14,760 --> 00:45:17,240
Speaker 1: And it can't be the first to have thought of that. Well,

775
00:45:17,280 --> 00:45:20,600
Speaker 1: you're not, but the track record of private equity roll

776
00:45:20,719 --> 00:45:24,280
Speaker 1: up is one that is not great. So we've seen

777
00:45:24,640 --> 00:45:27,359
Speaker 1: this tried. So there's really a couple of markets. You've

778
00:45:27,360 --> 00:45:29,839
Speaker 1: seen the l T L and parcel market. There's been

779
00:45:30,120 --> 00:45:33,799
Speaker 1: very successful roll ups in the LTL market, Brad Jacob said,

780
00:45:33,880 --> 00:45:37,439
Speaker 1: XPO has has rolled up a lot of the sort

781
00:45:37,440 --> 00:45:40,440
Speaker 1: of trucking entities UH in the l T L, UH

782
00:45:40,560 --> 00:45:43,640
Speaker 1: and fording market and has been very successful there. But

783
00:45:43,800 --> 00:45:46,920
Speaker 1: in the truckload market, the market that we've taught predominance

784
00:45:46,960 --> 00:45:50,800
Speaker 1: of today, that full truckload market where the vast majority

785
00:45:50,800 --> 00:45:54,560
Speaker 1: of capacity lives UM it is very difficult because it

786
00:45:54,640 --> 00:45:57,800
Speaker 1: takes someone who understands how to operate an entity, and

787
00:45:57,840 --> 00:46:00,319
Speaker 1: there are no there are no economies of scale. And

788
00:46:00,360 --> 00:46:04,200
Speaker 1: here's the reason is that drivers are the factor that

789
00:46:04,320 --> 00:46:06,759
Speaker 1: matter most and trucking and the problem is if you

790
00:46:06,800 --> 00:46:10,000
Speaker 1: start rolling up a bunch of companies, you have all

791
00:46:10,040 --> 00:46:13,120
Speaker 1: of these cultural issues and skill is not your friend

792
00:46:13,239 --> 00:46:16,120
Speaker 1: when you're dealing with human capital. And so as you

793
00:46:16,600 --> 00:46:21,480
Speaker 1: start to roll up entities, oftentimes the companies don't have

794
00:46:21,800 --> 00:46:27,160
Speaker 1: similar operating UH lanes, they don't have similar networks, they

795
00:46:27,200 --> 00:46:29,560
Speaker 1: don't even have similar equipment. And then you have the

796
00:46:29,640 --> 00:46:33,359
Speaker 1: human factor, which typically as you get bigger, you you

797
00:46:33,480 --> 00:46:37,600
Speaker 1: tend to have to have more strenuous requirements on who

798
00:46:37,680 --> 00:46:40,680
Speaker 1: you hire because your insurance companies will demand it because

799
00:46:40,680 --> 00:46:43,800
Speaker 1: you're now a much bigger target in a courtroom. It

800
00:46:43,960 --> 00:46:46,680
Speaker 1: just there are no economies of scale on size, and

801
00:46:46,719 --> 00:46:50,120
Speaker 1: so even the large public trucking companies that are private

802
00:46:50,160 --> 00:46:54,000
Speaker 1: for that matter, that have that are ran by operators,

803
00:46:54,520 --> 00:46:59,400
Speaker 1: their track record and doing big acquisitions is just not great.

804
00:47:00,080 --> 00:47:02,560
Speaker 1: There have been a couple that have been very successful

805
00:47:02,600 --> 00:47:05,600
Speaker 1: as a company out of Cannon called Transport, which is

806
00:47:05,680 --> 00:47:10,400
Speaker 1: probably the most successful acquire which does acquire companies and

807
00:47:10,440 --> 00:47:14,160
Speaker 1: has been successful sort of really operating them and then not.

808
00:47:14,440 --> 00:47:18,000
Speaker 1: Swift has also had a successful track record of buying

809
00:47:18,080 --> 00:47:23,200
Speaker 1: and acquiring, but those were exceptions with exceptional management teams.

810
00:47:23,280 --> 00:47:25,600
Speaker 1: But they're not private equity. So private equity has a

811
00:47:25,800 --> 00:47:30,920
Speaker 1: very very poor track record of acquiring companies. Oftentimes they

812
00:47:31,000 --> 00:47:33,000
Speaker 1: it ends up really really ugly for them because they

813
00:47:33,040 --> 00:47:35,040
Speaker 1: don't know how to operate it. They don't trucking is

814
00:47:35,080 --> 00:47:38,680
Speaker 1: an industry that they're constantly playing. You know, you're playing

815
00:47:38,680 --> 00:47:41,239
Speaker 1: defense on a constant basis because you're dealing with all

816
00:47:41,239 --> 00:47:43,040
Speaker 1: these factors that you have to deal with. When when

817
00:47:43,040 --> 00:47:45,439
Speaker 1: the market is good as it is right now, where

818
00:47:45,440 --> 00:47:48,320
Speaker 1: you would think trucking companies atret to bring really really great,

819
00:47:48,840 --> 00:47:51,719
Speaker 1: they're actually struggling because they can't find people to fill

820
00:47:51,719 --> 00:47:55,719
Speaker 1: their trucks. And so when markets are good, you have

821
00:47:55,800 --> 00:47:58,120
Speaker 1: a new set of problems, and so you go fix

822
00:47:58,160 --> 00:48:01,160
Speaker 1: those set of problems by and care seen driver salaries,

823
00:48:01,600 --> 00:48:04,160
Speaker 1: and all of a sudden you're and everyone else is

824
00:48:04,160 --> 00:48:06,600
Speaker 1: doing it, so you're constantly having to play catch up,

825
00:48:07,320 --> 00:48:10,840
Speaker 1: and then you're stuck with those higher salaries when the

826
00:48:10,840 --> 00:48:15,160
Speaker 1: market softens, and so it's just it's a very tough environment. Now,

827
00:48:15,400 --> 00:48:18,279
Speaker 1: there are other parts of the market, like what we

828
00:48:18,360 --> 00:48:22,640
Speaker 1: call freight brokerages, which there are sixteen thousand independent freight

829
00:48:22,640 --> 00:48:25,200
Speaker 1: brokers in the United States. These are effectively the day

830
00:48:25,200 --> 00:48:29,040
Speaker 1: traders of the market. If you ran a consumer products company,

831
00:48:29,320 --> 00:48:33,080
Speaker 1: you're probably using freight broker because that tends to be

832
00:48:33,120 --> 00:48:36,600
Speaker 1: where they They live a lot in that market. But

833
00:48:36,680 --> 00:48:38,839
Speaker 1: they are the intermediaries, and that's where all the money

834
00:48:38,880 --> 00:48:40,719
Speaker 1: that they don't own, the assets they don't have to build,

835
00:48:40,719 --> 00:48:42,360
Speaker 1: the drivers, they don't have to do with the insurance

836
00:48:42,400 --> 00:48:45,680
Speaker 1: typically and so for those reasons, they do quite well.

837
00:48:45,840 --> 00:48:49,680
Speaker 1: And there's it's been a very attractive private equity play,

838
00:48:49,800 --> 00:48:53,319
Speaker 1: but in trucking, asset based trucking, it's it is not

839
00:48:53,600 --> 00:48:56,120
Speaker 1: a good private equity play. There no return on assets,

840
00:48:56,320 --> 00:48:59,439
Speaker 1: and and for those reasons, it's just it's a really

841
00:48:59,520 --> 00:49:02,520
Speaker 1: nasty industry. Do you have to say? I find it so?

842
00:49:03,360 --> 00:49:07,080
Speaker 1: I find it so counterintuitive that for a logistics industry,

843
00:49:07,280 --> 00:49:10,960
Speaker 1: scale might not be the answer to all its problems.

844
00:49:11,000 --> 00:49:13,880
Speaker 1: Like you would think that if you could just like

845
00:49:14,080 --> 00:49:17,359
Speaker 1: increase size, increase the network, there would be some efficiencies there,

846
00:49:17,440 --> 00:49:21,239
Speaker 1: but it seems like you're suggesting that's not necessarily the case. Well,

847
00:49:21,320 --> 00:49:24,319
Speaker 1: just to add to Tracy's question, you know, like is

848
00:49:24,360 --> 00:49:28,520
Speaker 1: the difference between and it sounds like the difference between

849
00:49:28,600 --> 00:49:32,320
Speaker 1: say like trucking full truckload trucking that we're talking about

850
00:49:32,520 --> 00:49:36,320
Speaker 1: versus a UPS or fed X is really how taxing

851
00:49:36,840 --> 00:49:40,120
Speaker 1: the job is to the humans. Is that the key

852
00:49:40,160 --> 00:49:44,200
Speaker 1: difference there? Well, FedEx and UPS. We would never describe

853
00:49:44,239 --> 00:49:47,279
Speaker 1: FedEx as trucking companies, No, no, no, no, I just

854
00:49:47,320 --> 00:49:50,239
Speaker 1: mean in terms of like a national logistics company. Like

855
00:49:50,320 --> 00:49:54,680
Speaker 1: the reason why that type of logistics and package shipment

856
00:49:54,800 --> 00:49:58,600
Speaker 1: can scale nationally versus trucking where you don't get those scales.

857
00:49:58,960 --> 00:50:02,839
Speaker 1: It sounds like a big difference is how taxing it

858
00:50:02,880 --> 00:50:04,880
Speaker 1: is on the actual humans who have to do the

859
00:50:04,960 --> 00:50:10,240
Speaker 1: job that it's it's partially that, but it's also because

860
00:50:10,640 --> 00:50:15,080
Speaker 1: the parcel market, you know, FedEx and UPS have these

861
00:50:15,280 --> 00:50:20,320
Speaker 1: very sophisticated and very expensive physical networks that go beyond

862
00:50:20,400 --> 00:50:24,080
Speaker 1: just the trucks and the planes. They have physical warehouses

863
00:50:24,080 --> 00:50:29,040
Speaker 1: and sorting facilities, which affords some economis as a scale, like,

864
00:50:29,080 --> 00:50:32,680
Speaker 1: it's very difficult, and Amazon is certainly probably the only

865
00:50:32,719 --> 00:50:34,960
Speaker 1: company that can pull this off, or is trying to

866
00:50:34,960 --> 00:50:38,480
Speaker 1: pull this off, is to build this infrastructure of warehouses

867
00:50:38,480 --> 00:50:42,040
Speaker 1: and sorting centers and network to sort of rival FedEx

868
00:50:42,040 --> 00:50:46,239
Speaker 1: and UPS. Even DHL, you know the world's largest parcel company,

869
00:50:46,560 --> 00:50:50,040
Speaker 1: has struggled in the United States to compete against FedEx

870
00:50:50,040 --> 00:50:53,279
Speaker 1: and UPS because they're so entrenched. And those companies have

871
00:50:53,320 --> 00:50:57,200
Speaker 1: done exceptionally well, even with Amazon as a competitor, and

872
00:50:57,200 --> 00:50:59,759
Speaker 1: and and companies that have tried to, you know, like

873
00:50:59,800 --> 00:51:02,200
Speaker 1: the Jail that tried to come in the market. Truckload

874
00:51:02,280 --> 00:51:05,239
Speaker 1: is very different because it's a fungible commodity you know,

875
00:51:05,320 --> 00:51:09,640
Speaker 1: shippers don't really they have relationships, but most of the

876
00:51:09,680 --> 00:51:12,239
Speaker 1: freight moves based on rate UH. And that rate is

877
00:51:12,280 --> 00:51:14,200
Speaker 1: set by the conditions in the markets. When the market

878
00:51:14,280 --> 00:51:17,439
Speaker 1: is oversupplied, rates collapse. When the market is undersupplied, rates

879
00:51:17,440 --> 00:51:20,040
Speaker 1: shoot up. And there's always a rate that's available in

880
00:51:20,080 --> 00:51:22,360
Speaker 1: the market. You can always move your freight for the

881
00:51:22,440 --> 00:51:25,200
Speaker 1: right price. Even if that price is you know, a

882
00:51:25,280 --> 00:51:27,560
Speaker 1: hundred dollars a mile, you can find someone to do it.

883
00:51:27,680 --> 00:51:31,160
Speaker 1: So for those reasons, Um, it's it's just it's a

884
00:51:31,239 --> 00:51:35,799
Speaker 1: market that has these substantial booms about cycles uh, and

885
00:51:35,880 --> 00:51:40,040
Speaker 1: it's very difficult and doesn't allow for economs of scale. Now,

886
00:51:40,400 --> 00:51:42,279
Speaker 1: the reason you don't get a commis of scale come

887
00:51:42,320 --> 00:51:44,799
Speaker 1: down to the truck driver. That is the factor here.

888
00:51:45,320 --> 00:51:48,280
Speaker 1: And if we sort of fast forward to two thousand

889
00:51:48,360 --> 00:51:51,759
Speaker 1: and thirty five two forty, when we have autonomous or

890
00:51:51,800 --> 00:51:55,399
Speaker 1: driver lest trucks, that's when I think it's an attractive

891
00:51:55,760 --> 00:51:59,240
Speaker 1: industry for private equity. That's when it's an attractive industry

892
00:51:59,280 --> 00:52:02,640
Speaker 1: for technology g As you mentioned, Joe, why don't we

893
00:52:02,680 --> 00:52:06,560
Speaker 1: build a digital experience and marketplace and put it into

894
00:52:06,719 --> 00:52:10,600
Speaker 1: a private equity roll up. When we get there, when

895
00:52:10,600 --> 00:52:15,040
Speaker 1: we get to eliminating the driver as the factor in

896
00:52:15,440 --> 00:52:20,439
Speaker 1: the industry, that's when we will see big dollars into

897
00:52:20,480 --> 00:52:24,759
Speaker 1: the industry and private equity really make some significant plays. Um.

898
00:52:24,800 --> 00:52:27,000
Speaker 1: And frankly, a lot of the carriers that exist today

899
00:52:27,040 --> 00:52:30,680
Speaker 1: just won't survive that. H what is the state of that?

900
00:52:31,320 --> 00:52:37,399
Speaker 1: And like how much does the planning for that theoretical eventuality? Um,

901
00:52:37,480 --> 00:52:39,520
Speaker 1: how much is that affecting the industry today? And like

902
00:52:39,560 --> 00:52:41,279
Speaker 1: sort of like what are you watching there? Like how

903
00:52:41,320 --> 00:52:44,520
Speaker 1: realistic it is it? What's the time frame and what's

904
00:52:44,560 --> 00:52:49,040
Speaker 1: your what's your what's your sense of it? It's very speculative.

905
00:52:49,760 --> 00:52:54,200
Speaker 1: It has been a lot of InterCapital poured into autonomous driving.

906
00:52:55,040 --> 00:52:58,839
Speaker 1: There's been some facts that have gone public for autonomous

907
00:52:58,920 --> 00:53:02,200
Speaker 1: trucking service. Is there's a lot of reasons to be

908
00:53:02,280 --> 00:53:06,239
Speaker 1: bullish on the economics of autonomous talking for many of

909
00:53:06,280 --> 00:53:09,239
Speaker 1: the reasons I've talked about, eliminates the driver and sort

910
00:53:09,280 --> 00:53:11,080
Speaker 1: of the factor in the industry, and then you can

911
00:53:11,160 --> 00:53:14,640
Speaker 1: get economies of scale and you can optimize this this industry.

912
00:53:15,360 --> 00:53:19,200
Speaker 1: But it is is not a technological limitation. So if

913
00:53:19,200 --> 00:53:22,120
Speaker 1: you if you look at it, the technology will be here.

914
00:53:22,480 --> 00:53:25,880
Speaker 1: Autonomous driving and there are you know, around ports and

915
00:53:26,000 --> 00:53:30,600
Speaker 1: closed loop environments, there are autonomous trucking or autonomous freight

916
00:53:30,719 --> 00:53:34,200
Speaker 1: operations happening right now. The port of rodert m is

917
00:53:34,360 --> 00:53:39,520
Speaker 1: largely an automated or semi autonomous facility. You see the

918
00:53:39,560 --> 00:53:43,080
Speaker 1: ports in different parts of the world which have built

919
00:53:43,120 --> 00:53:46,040
Speaker 1: some level of autonomy. So we do see the ability

920
00:53:46,080 --> 00:53:48,799
Speaker 1: and the technology is certainly we're on the cusp of

921
00:53:48,840 --> 00:53:51,879
Speaker 1: having the technology to be able to do this. That's

922
00:53:51,880 --> 00:53:54,640
Speaker 1: not your issue. The issue is the regulatory environment. So

923
00:53:56,000 --> 00:53:59,759
Speaker 1: twenty nine in nine states, the number one job is

924
00:53:59,800 --> 00:54:07,040
Speaker 1: trying driving. And so when you create autonomy and that

925
00:54:07,160 --> 00:54:12,160
Speaker 1: autonomy allows a trucking company to haul freight without a driver,

926
00:54:13,239 --> 00:54:16,520
Speaker 1: then you put those jobs at risk. Those jobs happen

927
00:54:16,600 --> 00:54:20,440
Speaker 1: to be in red states, or the predominance of trucking

928
00:54:20,520 --> 00:54:23,240
Speaker 1: jobs happen to be in states that tend to vote

929
00:54:23,320 --> 00:54:28,080
Speaker 1: Republican or vote read and so an environment which would

930
00:54:28,120 --> 00:54:32,600
Speaker 1: you would expect to be pro business uh and support autonomy,

931
00:54:32,800 --> 00:54:35,319
Speaker 1: happens to be in states where a large percent of

932
00:54:35,320 --> 00:54:38,440
Speaker 1: the population or a represented percent of population have to

933
00:54:38,600 --> 00:54:41,040
Speaker 1: truck drivers. And so it's going to be a really

934
00:54:41,040 --> 00:54:43,840
Speaker 1: difficult thing. And if you just look at our government constructs.

935
00:54:43,880 --> 00:54:48,880
Speaker 1: We can't. You have to get the the state, municipalities,

936
00:54:49,120 --> 00:54:52,200
Speaker 1: and federal laws all to work together to allow point

937
00:54:52,200 --> 00:54:56,080
Speaker 1: to point autonomy, and we can't even make federal laws

938
00:54:56,680 --> 00:55:00,360
Speaker 1: with It's a very dysfunctional government. So for that to happen,

939
00:55:00,600 --> 00:55:02,880
Speaker 1: it just doesn't seem very likely in the next decade.

940
00:55:03,200 --> 00:55:07,120
Speaker 1: So I think autonomy we will see layers of autonomy,

941
00:55:07,200 --> 00:55:10,800
Speaker 1: highway only autonomy within the next decade, but point to

942
00:55:10,960 --> 00:55:15,440
Speaker 1: point being able to see a completely driverless Cavils truck

943
00:55:15,960 --> 00:55:21,000
Speaker 1: is probably twenty years out. Craig. I think that's a

944
00:55:21,040 --> 00:55:25,239
Speaker 1: great place to drop it. That was a fantastic conversation.

945
00:55:25,280 --> 00:55:29,520
Speaker 1: I learned so much and I really appreciate you coming up. Yeah,

946
00:55:29,560 --> 00:55:32,279
Speaker 1: I appreciate it. And Tracy, if you ever want to

947
00:55:32,880 --> 00:55:36,200
Speaker 1: drive a truck for a day, just let me know.

948
00:55:36,560 --> 00:55:39,440
Speaker 1: I will help make those arrangements. You can do a

949
00:55:39,440 --> 00:55:43,120
Speaker 1: whole episode in the truck. I would love to do that.

950
00:55:43,640 --> 00:55:45,920
Speaker 1: We're going to do you should do it. I'm going

951
00:55:46,000 --> 00:55:49,160
Speaker 1: to start thinking about my my trucking handle right now,

952
00:55:50,040 --> 00:55:52,520
Speaker 1: so let me know and I will make those radios. Yes,

953
00:55:54,160 --> 00:55:58,080
Speaker 1: thanks Craig, that was great, Thanks so much, all right, Tracy,

954
00:55:58,200 --> 00:56:13,040
Speaker 1: Thanks Jo Tracy, I kind of feel like, I know,

955
00:56:13,120 --> 00:56:15,520
Speaker 1: I so many people told us we had to talk

956
00:56:15,560 --> 00:56:19,279
Speaker 1: to Craig. Oh totally. That was a fascinating conversation, and

957
00:56:19,320 --> 00:56:21,440
Speaker 1: he was really good at digging into you know, I

958
00:56:21,520 --> 00:56:23,879
Speaker 1: kind of expected us to talk more about the truck

959
00:56:23,960 --> 00:56:27,440
Speaker 1: driver shortage and the experience of being a truck driver

960
00:56:27,640 --> 00:56:30,080
Speaker 1: and whether or not higher wages would solve the problem

961
00:56:30,120 --> 00:56:32,399
Speaker 1: and that sort of thing, but Craig was very good

962
00:56:32,440 --> 00:56:37,160
Speaker 1: at giving an industry level overview of how the entire

963
00:56:37,200 --> 00:56:41,080
Speaker 1: trucking landscape works. So that was great. Yeah, that was

964
00:56:41,120 --> 00:56:44,640
Speaker 1: really interesting. And obviously, like it's clear, like it's just

965
00:56:44,680 --> 00:56:47,200
Speaker 1: such a mess. I mean, the fact that like twenty nineteen,

966
00:56:47,840 --> 00:56:51,000
Speaker 1: which for the rest of the economy was I don't

967
00:56:51,000 --> 00:56:52,319
Speaker 1: think you know it was it was a good it

968
00:56:52,400 --> 00:56:54,880
Speaker 1: was a good year for the economy, and so the

969
00:56:54,920 --> 00:56:57,160
Speaker 1: fact that in what was what was a good year

970
00:56:57,280 --> 00:57:01,359
Speaker 1: for the U. S economy was the worst year for

971
00:57:01,480 --> 00:57:06,040
Speaker 1: truck driving bankruptcy since the Great Depression is just sort

972
00:57:06,040 --> 00:57:08,920
Speaker 1: of like an astonishing fact that speaks to how brutal

973
00:57:09,000 --> 00:57:13,600
Speaker 1: this area already was all going into the coronavirus crisis.

974
00:57:13,640 --> 00:57:15,719
Speaker 1: But this is the thing that I was sort of

975
00:57:15,760 --> 00:57:19,600
Speaker 1: trying to get to with the question about scale and logistics, Like,

976
00:57:19,680 --> 00:57:23,400
Speaker 1: it just seems so strange that industries that are all

977
00:57:23,440 --> 00:57:27,960
Speaker 1: about getting efficiently from point A to point B seem

978
00:57:28,080 --> 00:57:33,760
Speaker 1: to be so prone to their own idiosyncratic chaos and

979
00:57:34,040 --> 00:57:38,200
Speaker 1: you know, um problems. And I guess, I guess what

980
00:57:38,200 --> 00:57:41,080
Speaker 1: what we're learning from the entire past year is that

981
00:57:41,160 --> 00:57:45,000
Speaker 1: it's really hard to make forecasts. And the higher up

982
00:57:45,040 --> 00:57:48,280
Speaker 1: you go on the supply chain, or maybe the further

983
00:57:48,680 --> 00:57:51,720
Speaker 1: along you go on the supply chain, the more difficult

984
00:57:51,840 --> 00:57:54,280
Speaker 1: making those forecasts actually is because you have to take

985
00:57:54,320 --> 00:57:57,120
Speaker 1: into account more and more variables. And I feel like

986
00:57:57,640 --> 00:58:00,400
Speaker 1: logistics and transport sort of sit at the very very

987
00:58:00,600 --> 00:58:03,800
Speaker 1: end of the supply chain. They're the last step between

988
00:58:03,960 --> 00:58:07,640
Speaker 1: goods getting from you know, a factory or a shop

989
00:58:07,720 --> 00:58:10,959
Speaker 1: to an individual, and so I feel like for them,

990
00:58:11,120 --> 00:58:17,160
Speaker 1: it just becomes even more challenging to figure out future capacity,

991
00:58:17,200 --> 00:58:18,960
Speaker 1: and that seems to be one of the reasons for

992
00:58:19,040 --> 00:58:21,840
Speaker 1: getting these big booms and bus You know, it's so

993
00:58:21,920 --> 00:58:25,680
Speaker 1: interesting too, because from a market structure standpoint, like it

994
00:58:25,760 --> 00:58:28,280
Speaker 1: seems like the exact opposite of shipping, where it's like

995
00:58:28,280 --> 00:58:30,800
Speaker 1: there's like three or four big players and it's all

996
00:58:30,840 --> 00:58:33,360
Speaker 1: relationships and you've got to know the guy at marisk

997
00:58:33,800 --> 00:58:38,440
Speaker 1: in Copenhagen or whatever. Versus tens of thousands of trucking companies.

998
00:58:38,800 --> 00:58:41,320
Speaker 1: It's all just sort of done like on electronic message

999
00:58:41,320 --> 00:58:45,080
Speaker 1: boards that still resemble that still resemble Craigslist. But none

1000
00:58:45,080 --> 00:58:48,800
Speaker 1: of them really seemed to like be none of them

1001
00:58:48,840 --> 00:58:53,760
Speaker 1: feel like one solutions, like how you imagine things should

1002
00:58:53,800 --> 00:58:56,520
Speaker 1: work in the modern era. No. Absolutely, it's sort of

1003
00:58:56,560 --> 00:59:03,080
Speaker 1: like two different extremes of not one solutions. Yeah, but yeah, well,

1004
00:59:03,240 --> 00:59:06,040
Speaker 1: we have to take Craig up on his truck driving offer.

1005
00:59:06,080 --> 00:59:08,880
Speaker 1: I feel like that's the next stage. We're definitely taking

1006
00:59:09,000 --> 00:59:11,200
Speaker 1: Craig up on that. All right, We're going truck driving,

1007
00:59:11,360 --> 00:59:15,400
Speaker 1: and then we're taking a barge up the Mississippi. Yeah yeah, okay,

1008
00:59:15,400 --> 00:59:19,600
Speaker 1: and then Coracle journeys next. It's like planes, trains and

1009
00:59:19,640 --> 00:59:23,919
Speaker 1: automobiles with All Thoughts. Let's do it. Okay. This has

1010
00:59:23,960 --> 00:59:27,400
Speaker 1: been another episode of the All Thoughts Podcast. I'm Tracy Alloway.

1011
00:59:27,480 --> 00:59:30,960
Speaker 1: You can follow me on Twitter at Tracy Alloway and

1012
00:59:31,000 --> 00:59:33,440
Speaker 1: I'm Joe Wisn't Thought. You can follow me on Twitter

1013
00:59:33,560 --> 00:59:36,360
Speaker 1: at the Stalwart and be sure to follow our guests

1014
00:59:36,440 --> 00:59:40,880
Speaker 1: on Twitter Craig Fuller He's at Freight Alley, and follow

1015
00:59:40,880 --> 00:59:44,680
Speaker 1: our producer Laura Carlson. She's at Laura M. Carlson. Follow

1016
00:59:44,720 --> 00:59:48,680
Speaker 1: the Bloomberg Head of podcast, Francesca Levi at Francesca Today,

1017
00:59:48,800 --> 00:59:51,760
Speaker 1: and check out all of our podcast at Bloomberg onto

1018
00:59:51,800 --> 01:00:19,240
Speaker 1: the handle at podcasts. Thanks for listening.