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Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transport Podcast.

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Speaker 1: I'm your host Lee Klaskal, senior freight transportation and logistics

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Speaker 1: analysts at Bloomberg Intelligence, Bloomberg's in house research arm. We're

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Speaker 1: delighted to have PAM Transportations President and CEO, Joe Vetrido.

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Speaker 1: PAM Transportation is a public transport company that trades under

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Speaker 1: the Teker PtSi and as a market cap about four

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Speaker 1: hundred million. Joe has served as president and chief executive

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Speaker 1: officer since August twenty twenty. Prior to his employment with PAM,

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Speaker 1: Joe served as senior vice president of Pricing and Network

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Speaker 1: Design for night Swift Transportation from April twenty nineteen to

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Speaker 1: August twenty twenty, and prior to that, he's been at

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Speaker 1: Night Transportation and its predecessors since two thousand and three.

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Speaker 1: Welcome to Talking Transports Podcast. Joe, thanks for joining us.

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Speaker 2: Thanks for having me, Lee, I'm excited to be here.

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Speaker 1: Well, I was really excited to start talking to you

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Speaker 1: about the truckload markets. That's what PAM operates. And can

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Speaker 1: you tell people a little bit about PAM Transportation?

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Speaker 2: Sure I can.

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Speaker 3: PAM was founded in nineteen eighty with five trucks and

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Speaker 3: fifteen trailers. Today we have approximately twenty four hundred trucks

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Speaker 3: and eight thousand trailers. We also have a large non

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Speaker 3: asset business and warehousing business. We do a mix across

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Speaker 3: border business and US domestic business.

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Speaker 1: And when you say non asset, you're talking about freight brokerage.

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Speaker 3: Brokerage, and I would say asset light meaning hey, we

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Speaker 3: have some power only, which you know we're we've got

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Speaker 3: third party carriers using our trailers. And then also to

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Speaker 3: we do some warehousing. So I would consider that in

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Speaker 3: sort of our non asset business too, because we use

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Speaker 3: it on the non asset side also to create truckloads.

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Speaker 1: And the truckload business is that over the road dedicated

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Speaker 1: a mix.

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Speaker 2: It's it's a mix, but it's a majority over the road. Okay.

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Speaker 1: And then you know what kind of markets does PAM

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Speaker 1: are They exposed.

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Speaker 3: To automotive, So we've been an automotive carrier for a

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Speaker 3: long time. It's it makes up about forty percent of

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Speaker 3: our total revenues. But we also do quite a bit

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Speaker 3: with CpG, retail, durable goods and industrial goods also.

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Speaker 1: Okay, and your business mix, you know, the spot market's

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Speaker 1: been hammered as of late, and the contractual market is

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Speaker 1: seen to be following. Are you mostly in the contractual

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Speaker 1: market or is it is it a split between spot

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Speaker 1: and contractual.

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Speaker 3: So I'll give you just sort of some high level numbers.

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Speaker 3: Or asset business is about ninety six percent contractual at

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Speaker 3: this time. We're a little flexible there when it makes

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Speaker 3: sense to be in the spot market will change that

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Speaker 3: mix some, but it's been it's proven out over time

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Speaker 3: that you know, keeping that percentage of contractual on the

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Speaker 3: asset business high, is it good, you know, good way

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Speaker 3: to protect your business in all cycles. Our non asset

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Speaker 3: business though, is about seventy five percent contractual now and

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Speaker 3: this is where we'll get some leverages the spot market

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Speaker 3: comes back up. Will de lever a little bit or

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Speaker 3: grow our business a little more on the spot side

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Speaker 3: and less on the contractual side to give us a

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Speaker 3: good mix there.

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Speaker 1: When you put your toe in the spot market, does

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Speaker 1: that end up becoming contractual business over the long term

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Speaker 1: when you're dealing with these customers for the first time.

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Speaker 3: I mean, that's our objective. I would say that anytime

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Speaker 3: you can turn something into more long term and meaningful

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Speaker 3: for a relationship with you and your customer. You're going

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Speaker 3: to it's going to benefit you if you stay focused

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Speaker 3: on it. Some of it is very transactional. You know,

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Speaker 3: a customer has a problem, fix it now, and you

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Speaker 3: use that as an opportunity to grow contractual business also

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Speaker 3: by getting in on a spot load or a transactional

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Speaker 3: load from time to time with maybe a customer that

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Speaker 3: doesn't understand what you can execute and they're willing just

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Speaker 3: to try you.

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Speaker 1: Out right and right now, you know the market, the

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Speaker 1: spot market is relatively loose. When conditions were tight eighteen

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Speaker 1: months ago with where was that ninety six percent that

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Speaker 1: was contractual? Was that below ninety percent?

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Speaker 3: It was below ninety it was it was in the

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Speaker 3: probably probably about eighty five percent. So we had about

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Speaker 3: fifteen percent of our asset based business in the spot

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Speaker 3: and if you look at the non asset it was

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Speaker 3: probably fifty five percent contraction spot.

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Speaker 1: So when you're looking at the market today, what are

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Speaker 1: you seeing and where do you expect this market to go?

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Speaker 1: Because conditions are pretty loose, Like I mentioned, rates are

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Speaker 1: are are taking a beating. So where do you think

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Speaker 1: things are going from here?

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Speaker 3: You know, Lee, I don't consider myself to be an

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Speaker 3: expert in predictions, but I think, hey, with my thirty

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Speaker 3: years of experience, I've been through quite a few ups

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Speaker 3: and downs in the market side of things, and I

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Speaker 3: would say that, you know, right now, it's really a

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Speaker 3: capacity problem freight. Actually, if you look at volumes in

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Speaker 3: some of the you know, publicly available information, uh, you

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Speaker 3: see that freight volumes are actually pretty decent. Where things

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Speaker 3: have you know, just ha been a little bit different,

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Speaker 3: is that, you know, capacity is been way stickier in

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Speaker 3: this down cycle than I've seen in past one. So

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Speaker 3: I think if you look at predicting, it's it's pretty cloudy. Still,

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Speaker 3: I think there are signs that things have to improve.

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Speaker 3: If you look at the cost side of the equation

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Speaker 3: for you know, trucking companies, there's going to have to

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Speaker 3: be increases in rates at some point because the rate

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Speaker 3: levels are not sustainable for most all carriers at this

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Speaker 3: you know, at this point in the cycle.

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Speaker 2: So I think, you know, when.

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Speaker 3: Is still up for debate, But I would say that

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Speaker 3: twenty twenty four we're going to see things on the

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Speaker 3: rate side start to move up. It's not gonna I

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Speaker 3: don't believe it's going to you know, take a rocket

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Speaker 3: ship ride up. But I think there's going to be

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Speaker 3: some pressure from all the asset based carriers to have

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Speaker 3: to move rates up to be able to cover the

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Speaker 3: increased cost and have enough leftover to reinvest in their business.

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Speaker 1: Yeah, the lifting rates, I would agree with you, is

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Speaker 1: probably going to come from the supply side. So why

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Speaker 1: do you think the supply has been so sticky? Why

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Speaker 1: do you think owner operators that might not even been

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Speaker 1: generating a profit are still around.

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Speaker 2: I think there's you know, I would I would probably

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Speaker 2: say there's a few things. A lot of times in

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Speaker 2: the past.

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Speaker 3: Maybe it was the the you know, the small guys

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Speaker 3: that were the problem, and they still they still can be.

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Speaker 3: But I think there's some things that have changed, probably

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Speaker 3: through the pandemic and even started to do that before.

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Speaker 3: Was you know, you've got this proliferation of brokerage. Okay,

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Speaker 3: so in essence, what I mean by that, it's not

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Speaker 3: a bad thing. We got a brokerage that grew during

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Speaker 3: the pandemic also, But what what's happened is there are

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Speaker 3: so many more brokers out there today than if you

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Speaker 3: look at five, ten years ago, and customers have changed

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Speaker 3: their thought process around how they're going to work with brokers.

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Speaker 3: It used to be that, hey, you'd have a few

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Speaker 3: brokers that were meaningful enough for customers that they get

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Speaker 3: put into routing guides. Well, nowadays I think it's become commonplace,

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Speaker 3: or at least during this down cycle for us, we've

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Speaker 3: seen more and more brokers get put into primary carrier

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Speaker 3: type positions which in the past they might not been

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Speaker 3: able to. So what that does is it gives the

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Speaker 3: small guy, like you were saying, the owner, operator and

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Speaker 3: so forth, so forth, access to more consistent freight. The

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Speaker 3: contractual stuff that has been has been rated a bit

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Speaker 3: higher obviously to this point in the market, and so

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Speaker 3: I think that's helped so or hurt the market a

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Speaker 3: little bit from the standpoint of the access is different

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Speaker 3: than it was maybe in other down cycles. Private fleet

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Speaker 3: editions have been very heavy and continue to be heavy

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Speaker 3: as they take risk off the table from the pandemic

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Speaker 3: and the challenges that many of our customers faced. I

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Speaker 3: think private fleets got quite a bit of investment and

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Speaker 3: growth over this time, and they've continued to grow. There's

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Speaker 3: data that would show that also. And then I think

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Speaker 3: what also happened is because of all the larger carriers

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Speaker 3: having excess capacity and it being tough to hire drivers

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Speaker 3: through the last i'd say two years before this year,

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Speaker 3: so twenty twenty one, twenty twenty two, it was tough

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Speaker 3: to find drivers, and so you had this this excess

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Speaker 3: capacity that might have been sitting on the fence or

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Speaker 3: it was just not working at the level it needed

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Speaker 3: to work at because there weren't enough drivers. You can

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Speaker 3: see it in the public company's numbers where we really

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Speaker 3: have not as a group, have not shrunk our truck

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Speaker 3: counts significantly. So you've got a bunch of different things.

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Speaker 3: You've got, hey, the brokers, you've got private fleets, and

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Speaker 3: you've got big trucking companies with five hundred or more

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Speaker 3: trucks that have added during this time. Because although it's

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Speaker 3: never been easy to find drivers, it's easier to find

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Speaker 3: drivers today.

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Speaker 1: All right. And then you know you mentioned drivers, So

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Speaker 1: you know, we like to talk about a driver shortage.

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Speaker 1: We think that's a structural problem. Maybe not so much

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Speaker 1: now as it was eighteen months ago. So what you're

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Speaker 1: saying is that it's easier for PAM to not only

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Speaker 1: attract but retain drivers.

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Speaker 3: I would say it's marginally easier to attract, it's still

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Speaker 3: difficult to retain. That's an area where I think all

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Speaker 3: trucking companies can get back, it can get better. And

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Speaker 3: I think one of the things that everybody you know,

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Speaker 3: for many years since I've been in this business, we've

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Speaker 3: talked about a driver shortage. I think it's I think

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Speaker 3: it's all predicated on a couple different things, but the

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Speaker 3: most important thing is a lot of people don't understand

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Speaker 3: the lifestyle of being out over the road and how

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Speaker 3: tough it can be on folks. And so people get

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Speaker 3: into this business thinking that it's going to be an

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Speaker 3: easy way for them to get a job, a steady job,

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Speaker 3: and make good money. But then they get into it

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Speaker 3: and see that they're out on the road and away

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Speaker 3: from families longer than expected. And I think there's been

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Speaker 3: a lot of good work that's been done by trucking

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Speaker 3: companies to try to get guys home more consistently with

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Speaker 3: decent paychecks.

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Speaker 2: But it's still we still haven't fixed the problem.

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Speaker 3: We still a guy can't, not all of the drivers

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Speaker 3: can get home every night. And so I think until

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Speaker 3: things change a little bit more or people become more accustomed,

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Speaker 3: which I think is going to be difficult to being

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Speaker 3: away from their families.

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Speaker 2: We're going to we're going to be living with us

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Speaker 2: for a while.

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Speaker 3: And you know, you see generational changes to where when

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Speaker 3: I came in this business back in the early nineties,

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Speaker 3: you had a lot of guys that they chose it

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Speaker 3: for a career and been around it for a long time,

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Speaker 3: and we kept adding those folks, and as they start

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Speaker 3: to retire, generationally, some folks are just not a customer

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Speaker 3: willing to be out on the road for long periods

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Speaker 3: of time. And then the way that they get treated

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Speaker 3: out over the road by the motoring public or by

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Speaker 3: you know, shippers or contines with all kinds of rules

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Speaker 3: and treated like they can't use their facilities. We still

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Speaker 3: have customers that we talked to about these kind of

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Speaker 3: things where a driver would go in and need to

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Speaker 3: use the restroom and the customer would say no. So

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Speaker 3: I think we all can continue to work on this.

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Speaker 3: The other thing. The other thing too is it's gotten better,

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Speaker 3: but delays at shippers and consones always create challenges for

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Speaker 3: our drivers. And I think the industry has done a

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Speaker 3: lot of work by trying to do pre load and

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Speaker 3: drop type situations with trailers, but there are still opportunities

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Speaker 3: to get better there, you know, to change the quality

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Speaker 3: of life for our drivers. And then the last thing

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Speaker 3: that i'd say on this too is their studies have

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Speaker 3: been done.

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Speaker 2: And I think the last one that I read, and

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Speaker 2: I can't remember where I read it from, that there's

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Speaker 2: eleven trucks for every parking truck parking spot out there

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Speaker 2: right now.

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Speaker 3: So it is I would say, it's a tough position

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Speaker 3: to be in and you're fighting for so few a

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Speaker 3: spots and it's important that we continue to invest there

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Speaker 3: because I think it drives frustration and inefficiencies into our

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Speaker 3: supply chain and I don't think there's enough being done

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Speaker 3: there and we don't.

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Speaker 2: You can't really tie.

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Speaker 3: Down to how it impacts the driver, but it's just

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Speaker 3: one more thing that creates you know, anxiety, I would say,

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Speaker 3: in the drivers, and so we've got to keep working

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Speaker 3: on that piece also.

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Speaker 1: Yeah, and that's you know, for those listening, you know,

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Speaker 1: that's why you always see trucks lined up on the

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Speaker 1: side of the highway. They're just trying to you know,

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Speaker 1: park somewhere and rest because they have mandates where they

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Speaker 1: can only drive a certain amount of time a day,

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Speaker 1: so it's very difficult for them to find a safe place,

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Speaker 1: not only a safe place for them, but safe place

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Speaker 1: for the for the general driving public. Is there one

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Speaker 1: or two things that Pam has done over the years

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Speaker 1: to improve that work life balance for driver?

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Speaker 3: You know, I think here, here's the way I would

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Speaker 3: look at work life balances, and really it comes for me.

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Speaker 2: I like to keep things simple.

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Speaker 3: I look at it like there's different things from you

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Speaker 3: know that you need to be really good at, and

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Speaker 3: it's really pay, home time, equipment and respect and respect

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Speaker 3: is really culture and what I when we talk about pay,

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Speaker 3: it's it's got to be competitive, and really the competition

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Speaker 3: in our business it's other trucking companies.

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Speaker 2: But then it's really the trades. So if the trades.

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Speaker 3: Are throwing you know, construction electricians, that kind of stuff,

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Speaker 3: If they're throwing money at this and paying more than

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Speaker 3: we are, and there's a disparity between what trucking companies

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Speaker 3: can pay pay and what a guy takes home versus

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Speaker 3: him working closer to home and going to a construction job,

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Speaker 3: he or her they will probably go work the construction

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Speaker 3: job so they can sleep in their own bed each night.

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Speaker 3: If there's a big pay gap. When it's pretty tight,

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Speaker 3: it's it's a different ballgame. So the last few years

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Speaker 3: there's been immense competition from the trade side, and I

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Speaker 3: don't think that's going to change anytime soon. So again,

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Speaker 3: you've got to have your pay has to be competitive

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Speaker 3: with your competition. And you know some of the other

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Speaker 3: industries that these that are drivers may come from. Home

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Speaker 3: time is really just creating a network and working with

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Speaker 3: customers that allow you to get your drivers home more consistently.

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Speaker 3: And what you typically see is if you can get

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Speaker 3: somebody home every seven to ten days, you've got a

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Speaker 3: high likelihood of your turnover being better than if you

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Speaker 3: keep them out for two or three weeks. And if

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Speaker 3: you can get them home nightly, you know it improves significantly.

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Speaker 2: So but the challenge is lee it's do you have.

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Speaker 3: The revenue on that individual truck to support that type

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Speaker 3: of business so you can still be profitable, reinvest in

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Speaker 3: your business and pay your driver a decent wage while

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Speaker 3: getting them home.

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Speaker 2: So you have to have the right type of freight

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Speaker 2: to be able to do that.

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Speaker 3: And then when it comes to equipment, you have you

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Speaker 3: need to have some of the best technology out on

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Speaker 3: the road. You know, newest equipment, clean equipment, it has

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Speaker 3: to have the right creature comforts in essence, I think

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Speaker 3: that's important. And there's got to be uptime, so meaning

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Speaker 3: they can't be broke down all the time. So you've

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Speaker 3: got to invest in a good preventative maintenance program on

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Speaker 3: a maintenance program overall. And then the last thing I

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Speaker 3: would say is really working on.

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Speaker 2: The culture is important.

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Speaker 3: So if you're and how you treat drivers and how

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Speaker 3: you listen to them and they get to feel like

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Speaker 3: they're part.

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Speaker 2: Of your team.

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Speaker 3: And so it's those four things that really help you

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Speaker 3: reduce turnover. Now, it doesn't fix it. There's a lot

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Speaker 3: of other things that have to go into that, but

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Speaker 3: those are the four that I look at that we

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Speaker 3: at PAM consistently are working on to improve every single day.

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Speaker 1: Are you able to lower the average age of your fleet?

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Speaker 1: Because I know equipment availability has been an issue.

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Speaker 2: I know it's gotten better.

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Speaker 1: Where do you guys stand on that to provide the

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Speaker 1: best equipment for your drivers?

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Speaker 3: Well, it's been a struggle, like you said, you know,

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Speaker 3: over the last since I've been here, truck deliveries were sporadic.

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Speaker 3: They've gotten much better, and we are refreshing the fleet

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Speaker 3: and getting back onto our regular cycle now, but age

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Speaker 3: is moved from our average tractor age used to be

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Speaker 3: one point five and it's well over two now one

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Speaker 3: point five years. And on the trailer front, it's been

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Speaker 3: even worse until recently. Now a lot of this is

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Speaker 3: changing and I think that, you know, the long term

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Speaker 3: looks positive for that, but the last couple of years,

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Speaker 3: I think all of us have a lot of work

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Speaker 3: to do to get the fleets refreshed to where we

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Speaker 3: need them to be right.

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Speaker 1: And on the equipment side, and we've seen across the

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Speaker 1: industry gains on equipment sales have gone down considerably from

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Speaker 1: the highs that we saw last year. Is the levels

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Speaker 1: that we're seeing today is that more normal or is it?

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Speaker 1: Would you characterize them as depressed year of a year?

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Speaker 1: It's obviously a very big headwind, but would you consider

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Speaker 1: where we are now a more normal number?

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Speaker 3: I think it's depressed, Lee, I think, and especially if

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Speaker 3: we think about what we paid for the equipment versus

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Speaker 3: what we can get for it today. You know, I

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Speaker 3: think there's going to be some room at some point

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Speaker 3: as everybody gets back into the normal cycle. Where use

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Speaker 3: truck and trailer prices move up, But again, you need

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Speaker 3: a good backdrop from a freight environment before you see

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Speaker 3: that happen.

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Speaker 2: And again I think, you know, I think we're.

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Speaker 3: Going to go through a few years of where everybody's

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Speaker 3: catching up and there's going to be pressure on the

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Speaker 3: used truck and trailer market for some fleets if they

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Speaker 3: don't get back on their cycle quick enough, where they're

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Speaker 3: having to sell too much in a depressed market. And

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Speaker 3: so I think that it's, you know, we we'll have

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Speaker 3: to wait and see. I don't think where the equipment

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Speaker 3: prices are now stays what it's going to go up

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Speaker 3: over the long term.

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Speaker 2: All right.

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Speaker 1: And on the equipment side, just sticking with this or

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Speaker 1: you guys at PAM looking at electric vehicles or any

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Speaker 1: other technologies to reduce emissions, is it something that your

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Speaker 1: customers want you to do?

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Speaker 2: Yeah, most definitely.

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Speaker 3: And I think you know, we're definitely talking to the

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Speaker 3: OEMs that we work with about EV's and stand on

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Speaker 3: top of it and other emission reducing technologies. The issue

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Speaker 3: right now for us, because we're truly in over the

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Speaker 3: road longer like the Hall carrier, is that the range

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Speaker 3: of the EV vehicles, although it's gotten better, is not

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Speaker 3: where it needs to be. And then the infrastructure in

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Speaker 3: order to charge those vehicles is definitely not built out

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Speaker 3: and that it's going to take time. So I think

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Speaker 3: the key for all of us is to really keep

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Speaker 3: pushing with the OEMs to get that range developed out

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Speaker 3: as technology improves too. That's that's the other thing, right

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Speaker 3: the the technology still has to improve so the range

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Speaker 3: can go up, and then you know, the charging infrastructure

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Speaker 3: is going to be crucially important.

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Speaker 2: And it's just like.

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Speaker 3: If if you don't have enough charging infrastructure, it'll be

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Speaker 3: just like truck parking today, what do you do? How

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Speaker 3: do you find someplace that you can go charge a

375
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Speaker 3: vehicle if there's ten guys waiting in line and you

376
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Speaker 3: got a you know, an important load for a customer

377
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Speaker 3: that's got to deliver on time or a driver that

378
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Speaker 3: needs to get home, but he's got to wait, you know.

379
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Speaker 2: Two days before he can charge his vehicle.

380
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Speaker 3: So I think that's that's one of the things that

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Speaker 3: we're having to you know, I think we've got a

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Speaker 3: lot of work to do in the in the country

383
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Speaker 3: to get that figured out. Evs our debt can definitely

384
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Speaker 3: work in the short haul and local dedicated market, we're

385
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Speaker 3: starting to.

386
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Speaker 2: See more and more of that.

387
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Speaker 3: So really short length the hall close to home, where

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Speaker 3: folks can charge the truck at their terminals. That's getting

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Speaker 3: some a little bit of traction. But I would say,

390
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Speaker 3: you know, there's other technology that looks to be at

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Speaker 3: some point it might be viable, like hydrogen and other

392
00:23:16,560 --> 00:23:21,120
Speaker 3: things like that. But again, infrastructure and then the technology

393
00:23:21,200 --> 00:23:25,240
Speaker 3: catching up with what we need from an application standpoint

394
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Speaker 3: to support our customers and their needs. I would tell

395
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Speaker 3: you Pam's been on a path for a long time

396
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Speaker 3: now to really reduce emissions. We've written since in the

397
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Speaker 3: past decade, our trucks today are we've been able to

398
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Speaker 3: take twenty two percent of CO two emissions out by

399
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Speaker 3: just investing in you know, working on deadhead, working on

400
00:23:55,520 --> 00:24:01,400
Speaker 3: the newest engine technology in our trucks, skirts on our trailers.

401
00:24:01,400 --> 00:24:03,439
Speaker 3: There's all kinds of things that we've continue to do.

402
00:24:04,000 --> 00:24:07,960
Speaker 3: Idle reducing technology is also another one that we've invested

403
00:24:08,000 --> 00:24:11,680
Speaker 3: heavily in and so I think those are those are

404
00:24:11,720 --> 00:24:14,760
Speaker 3: the things that we've seen the biggest benefit so far

405
00:24:15,040 --> 00:24:18,440
Speaker 3: and be commercially available and have the support that you

406
00:24:18,560 --> 00:24:21,359
Speaker 3: need to put it on, you know, twenty five hundred trucks.

407
00:24:22,000 --> 00:24:25,960
Speaker 3: Evs we get will be will be right on the

408
00:24:26,480 --> 00:24:29,639
Speaker 3: right on the front edge of understanding what's going on

409
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Speaker 3: and when it becomes available and the infrastructures there, I

410
00:24:35,200 --> 00:24:38,280
Speaker 3: think that you'll see more and more companies jump in there.

411
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Speaker 1: And on the truck technology side, autonomous trucking is that

412
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Speaker 1: something that PAM has been looking at. Is it a

413
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Speaker 1: technology that maybe doesn't fit your model for one reason

414
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Speaker 1: or another. Can you talk about where you see autonomous trucking?

415
00:24:53,760 --> 00:24:57,399
Speaker 3: I think again, it's at some point it's going to

416
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Speaker 3: be commercially available and I think it could be a

417
00:25:01,640 --> 00:25:04,440
Speaker 3: good game changer if if it's used the right way.

418
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Speaker 3: I don't want to see it eliminate jobs, right, I

419
00:25:06,680 --> 00:25:10,800
Speaker 3: want to see it make make our driver more productive

420
00:25:11,040 --> 00:25:16,200
Speaker 3: and then also to increase the safety technology that's currently

421
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Speaker 3: out there to make the road safer.

422
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Speaker 2: Also. I think that's where a big benefit's going to come.

423
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Speaker 3: And and so we've looked at them and we've seen

424
00:25:25,400 --> 00:25:29,159
Speaker 3: them and they're they're pretty interesting to you know, to

425
00:25:29,240 --> 00:25:33,879
Speaker 3: be around and get to experience. Uh, there are still

426
00:25:34,040 --> 00:25:38,440
Speaker 3: challenges there and I think that you know, you've seen

427
00:25:38,480 --> 00:25:40,919
Speaker 3: it with some of the some of the companies that

428
00:25:40,960 --> 00:25:46,960
Speaker 3: were the early adopters have had, you know, stubbed their

429
00:25:47,000 --> 00:25:50,639
Speaker 3: toe a little bit as the technology wasn't fully ready

430
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Speaker 3: to be implemented the way that maybe it was intended.

431
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Speaker 3: But that's going to change, Lee, I think over time,

432
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Speaker 3: you know, whether it be next year or five years

433
00:26:00,560 --> 00:26:03,080
Speaker 3: from now, I think it's going to continue to keep

434
00:26:03,119 --> 00:26:08,720
Speaker 3: moving forward, and you know, we we definitely keep our

435
00:26:09,200 --> 00:26:11,520
Speaker 3: light in the water there to see what's going on

436
00:26:11,640 --> 00:26:15,000
Speaker 3: because I think there are going to be some opportunities

437
00:26:15,440 --> 00:26:19,160
Speaker 3: for it to help, you know, make driver jobs better.

438
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Speaker 1: For sure, Yeah, I would agree. I think the evolution

439
00:26:22,840 --> 00:26:24,639
Speaker 1: is going to be slow and steady. I don't know

440
00:26:24,680 --> 00:26:27,760
Speaker 1: if it'll be we'll have fully autonomous trucks you know,

441
00:26:27,880 --> 00:26:30,359
Speaker 1: in my lifetime, but we'll see what happens at least

442
00:26:30,520 --> 00:26:33,439
Speaker 1: across the United States. Obviously there's some applications where it

443
00:26:33,640 --> 00:26:36,359
Speaker 1: definitely does work in some geographies that work better than

444
00:26:36,400 --> 00:26:41,720
Speaker 1: the others. So let's talk about demand peak season. You

445
00:26:41,800 --> 00:26:45,840
Speaker 1: mentioned earlier a lot of your customers are retail facing.

446
00:26:45,880 --> 00:26:49,719
Speaker 1: If you will, are you seeing any sort of peak

447
00:26:49,920 --> 00:26:50,800
Speaker 1: demand increase?

448
00:26:51,600 --> 00:26:55,959
Speaker 3: I would say that so, like I said, thirty years

449
00:26:55,960 --> 00:26:59,520
Speaker 3: now the last year and this year, this year's this

450
00:26:59,600 --> 00:27:03,080
Speaker 3: year's but last year and this year is the peak

451
00:27:03,240 --> 00:27:07,760
Speaker 3: was muted, right, and it's not over yet.

452
00:27:07,880 --> 00:27:09,679
Speaker 2: But by now.

453
00:27:09,640 --> 00:27:14,600
Speaker 3: You would typically see things getting much stronger for a

454
00:27:14,640 --> 00:27:17,600
Speaker 3: short period of time. We're seeing some of that, but

455
00:27:17,760 --> 00:27:20,480
Speaker 3: pockets of it. It isn't like across the board. So

456
00:27:21,240 --> 00:27:26,160
Speaker 3: I think that you know, peak season is better than

457
00:27:26,240 --> 00:27:30,000
Speaker 3: last year, which is a plus, but it's not back

458
00:27:30,080 --> 00:27:33,440
Speaker 3: to where it normally has been and a lot there's

459
00:27:33,480 --> 00:27:35,080
Speaker 3: a lot of things that go into that, right.

460
00:27:35,240 --> 00:27:36,840
Speaker 2: It's inventories.

461
00:27:36,960 --> 00:27:44,000
Speaker 3: I think customers are being more cautious about being overstocked, right,

462
00:27:44,200 --> 00:27:48,920
Speaker 3: and not as willing to reduce prices to move through

463
00:27:48,920 --> 00:27:52,320
Speaker 3: their inventory because they can't.

464
00:27:52,600 --> 00:27:56,280
Speaker 2: And so I think that.

465
00:27:55,280 --> 00:27:58,840
Speaker 3: That's what we've come across, as customers have really gotten

466
00:27:58,880 --> 00:28:04,359
Speaker 3: comfortable with having inventories and the consumer, although they've the

467
00:28:04,400 --> 00:28:08,520
Speaker 3: consumers held in strong, I think they're being more selective

468
00:28:08,600 --> 00:28:11,480
Speaker 3: now and so you're going to see some We've seen

469
00:28:11,520 --> 00:28:15,520
Speaker 3: some customers that are definitely busier this year than last year,

470
00:28:16,400 --> 00:28:20,639
Speaker 3: and then some customers that a peak just didn't materialize

471
00:28:20,720 --> 00:28:26,320
Speaker 3: for and because they've been I think cautious to this point, so.

472
00:28:26,280 --> 00:28:28,560
Speaker 2: That they don't get this overhang into.

473
00:28:28,440 --> 00:28:31,520
Speaker 3: Twenty twenty four, which I think plays out good for

474
00:28:32,640 --> 00:28:38,640
Speaker 3: the industry as restocking has to happen at some point,

475
00:28:38,800 --> 00:28:44,120
Speaker 3: and especially if the consumer stays strong through whatever challenges

476
00:28:44,160 --> 00:28:45,120
Speaker 3: may be in front of us.

477
00:28:45,320 --> 00:28:46,120
Speaker 2: Okay, And when.

478
00:28:46,000 --> 00:28:49,920
Speaker 1: You guys are looking at your long term strategic plans,

479
00:28:50,520 --> 00:28:52,760
Speaker 1: where is the growth coming from. Is it coming from

480
00:28:52,800 --> 00:28:56,240
Speaker 1: your truckload business, your logistics business, and which sub segments

481
00:28:56,240 --> 00:28:58,120
Speaker 1: of those businesses the growth coming.

482
00:28:57,840 --> 00:29:00,640
Speaker 2: From, Well, I would say long term to come from

483
00:29:00,640 --> 00:29:04,360
Speaker 2: all of it. We here's here's what I would say.

484
00:29:05,480 --> 00:29:09,440
Speaker 3: We have a big Mexico presence and that is going

485
00:29:09,480 --> 00:29:12,880
Speaker 3: to continue to get investments. And we've seen it grow

486
00:29:13,080 --> 00:29:18,200
Speaker 3: over the last you know, ten years, significantly, most importantly

487
00:29:18,280 --> 00:29:22,760
Speaker 3: the last three. And then on the US truckload side,

488
00:29:24,560 --> 00:29:27,840
Speaker 3: it's been the most challenged of all our businesses because

489
00:29:27,880 --> 00:29:32,760
Speaker 3: of just the overall environment, but it is it is

490
00:29:32,800 --> 00:29:36,840
Speaker 3: a growth engine for us. And then you know on

491
00:29:36,880 --> 00:29:41,600
Speaker 3: the non asset side that we've seen that grow almost

492
00:29:41,600 --> 00:29:46,280
Speaker 3: one hundred percent in the last four years, Okay, from

493
00:29:46,680 --> 00:29:51,320
Speaker 3: from the twenty nineteen range to now we're we're much

494
00:29:51,360 --> 00:29:55,000
Speaker 3: bigger than we were there. It makes up about thirty

495
00:29:55,400 --> 00:29:58,960
Speaker 3: thirty four percent of our revenue back you know, four

496
00:29:59,080 --> 00:30:04,080
Speaker 3: years ago made up probably twelve to fifteen percent of

497
00:30:04,120 --> 00:30:06,560
Speaker 3: our revenue. So we're going to continue to invest there.

498
00:30:06,840 --> 00:30:10,000
Speaker 3: We're also too going to look at organic. We need

499
00:30:10,040 --> 00:30:12,200
Speaker 3: to be able to show that we can grow organically,

500
00:30:12,280 --> 00:30:16,160
Speaker 3: and we did the last probably.

501
00:30:16,080 --> 00:30:17,400
Speaker 2: Two of the last three years.

502
00:30:17,400 --> 00:30:21,960
Speaker 3: This year it's been it's been tougher, way tougher than

503
00:30:22,240 --> 00:30:26,080
Speaker 3: it was the previous two years. But our team is

504
00:30:26,160 --> 00:30:30,160
Speaker 3: committed to growing the you know, the asset business in

505
00:30:30,200 --> 00:30:35,720
Speaker 3: the US over the long haul, and then on the

506
00:30:35,840 --> 00:30:38,920
Speaker 3: M and A side. We made our first acquisition last

507
00:30:39,000 --> 00:30:43,640
Speaker 3: year in twenty years and learned a lot through the process,

508
00:30:44,040 --> 00:30:48,600
Speaker 3: and it's put us in a position where we've got

509
00:30:48,640 --> 00:30:53,760
Speaker 3: a blueprint on how to do it multiple times over

510
00:30:54,240 --> 00:30:57,120
Speaker 3: when the time is right and when the right type

511
00:30:57,120 --> 00:31:00,800
Speaker 3: of asset becomes available. So I think, you know, what

512
00:31:01,480 --> 00:31:06,240
Speaker 3: our objective really is to get back into the mid

513
00:31:06,360 --> 00:31:11,640
Speaker 3: teens or higher growth wise over the long term. And

514
00:31:11,680 --> 00:31:13,719
Speaker 3: I think there's a lot of runway for us to

515
00:31:13,720 --> 00:31:17,080
Speaker 3: do that. And the reason why is we really run

516
00:31:17,120 --> 00:31:21,400
Speaker 3: our business in the eastern half of the United States.

517
00:31:21,520 --> 00:31:24,920
Speaker 3: We don't do much in the West at all and

518
00:31:25,160 --> 00:31:28,200
Speaker 3: we do Mexico. So Canada is going to be an

519
00:31:28,280 --> 00:31:31,240
Speaker 3: opportunity for us at some point because we've learned how

520
00:31:31,840 --> 00:31:34,560
Speaker 3: to do the cross border business really well in and

521
00:31:34,560 --> 00:31:35,360
Speaker 3: out of Mexico.

522
00:31:36,440 --> 00:31:39,120
Speaker 2: I think that can parley into.

523
00:31:39,000 --> 00:31:41,280
Speaker 3: Being able to do it extremely well in and out

524
00:31:41,280 --> 00:31:42,600
Speaker 3: of Canada all ot different.

525
00:31:43,240 --> 00:31:45,000
Speaker 2: I think there's an opportunity for us.

526
00:31:45,000 --> 00:31:49,560
Speaker 3: So it's I think for us Lee, it's like all

527
00:31:49,600 --> 00:31:53,120
Speaker 3: of all of the things that we all the businesses

528
00:31:53,160 --> 00:31:57,560
Speaker 3: that we are currently have all have a lot of

529
00:31:57,640 --> 00:32:02,400
Speaker 3: opportunity to grow over the next ten fifteen years at

530
00:32:02,440 --> 00:32:03,080
Speaker 3: a minimum.

531
00:32:03,840 --> 00:32:08,720
Speaker 1: Is it different to operate west of the Mississippi? Is

532
00:32:08,720 --> 00:32:12,360
Speaker 1: that like an area where you can increase your overall

533
00:32:12,400 --> 00:32:16,400
Speaker 1: coverage by maybe buying smaller regional players. I mean, obviously

534
00:32:16,440 --> 00:32:19,560
Speaker 1: California is a whole different story operating in that state.

535
00:32:19,640 --> 00:32:22,920
Speaker 1: But outside of that, is that an area of growth

536
00:32:23,040 --> 00:32:26,240
Speaker 1: or you would rather grow going north and south?

537
00:32:26,960 --> 00:32:30,680
Speaker 3: I would say that we want to grow by looking

538
00:32:30,760 --> 00:32:35,560
Speaker 3: at the West. I grew up my trucking experience, not

539
00:32:35,720 --> 00:32:37,840
Speaker 3: all of it, but most of it was in the West.

540
00:32:39,360 --> 00:32:43,160
Speaker 3: But it wasn't in Pam's wheelhouse. It just wasn't what

541
00:32:43,240 --> 00:32:45,360
Speaker 3: we were good at or what our network was. So

542
00:32:45,960 --> 00:32:52,200
Speaker 3: rather than disrupting during a disruptful time, we stuck with

543
00:32:52,240 --> 00:32:54,640
Speaker 3: our strategy and grew where we already were.

544
00:32:55,560 --> 00:32:56,480
Speaker 2: In the coming.

545
00:32:56,240 --> 00:33:00,160
Speaker 3: Years, we'll be able to add some trucks in to

546
00:33:00,240 --> 00:33:04,280
Speaker 3: the West organically and grow on our own, and then

547
00:33:04,880 --> 00:33:08,080
Speaker 3: you know, look for strategic acquisitions open up the door there.

548
00:33:08,720 --> 00:33:10,840
Speaker 3: And there's been options for us to look at that

549
00:33:10,880 --> 00:33:14,040
Speaker 3: from an acquisition standpoint over the last three years.

550
00:33:14,240 --> 00:33:18,560
Speaker 2: But nothing that was that was going to fit with.

551
00:33:18,600 --> 00:33:23,920
Speaker 3: Our model the way that I believed you needed to

552
00:33:23,960 --> 00:33:27,880
Speaker 3: happen for us to be successful by going out and

553
00:33:27,920 --> 00:33:31,560
Speaker 3: spending the capital, but then also to executing at a

554
00:33:31,600 --> 00:33:34,120
Speaker 3: high level with the type of support that you can

555
00:33:34,200 --> 00:33:39,320
Speaker 3: have by doing an acquisition that is already in your network,

556
00:33:39,600 --> 00:33:43,360
Speaker 3: and you can help to get synergies by doing certain

557
00:33:43,400 --> 00:33:46,520
Speaker 3: things that fit with your network. So we're going to

558
00:33:46,600 --> 00:33:49,680
Speaker 3: have to we're going to have to really focus in

559
00:33:49,760 --> 00:33:53,280
Speaker 3: on Hey, we've got plenty of opportunity in the still

560
00:33:54,440 --> 00:33:58,040
Speaker 3: as we move out one, two, three years. Starting to

561
00:33:58,240 --> 00:34:03,080
Speaker 3: get ourselves into the West is a great opportunity while

562
00:34:03,160 --> 00:34:06,000
Speaker 3: focusing on the fact that we're really good on the

563
00:34:06,040 --> 00:34:09,480
Speaker 3: north and South part of our business already.

564
00:34:10,480 --> 00:34:14,360
Speaker 1: Right, and you know everybody has been hit by inflation.

565
00:34:14,640 --> 00:34:19,120
Speaker 1: Can you talk about how higher costs have impacted your business?

566
00:34:19,920 --> 00:34:25,200
Speaker 3: Yeah, And I think, uh, you know, it's widely known

567
00:34:25,239 --> 00:34:28,000
Speaker 3: and been talked about. I think I'll be repeating a

568
00:34:28,040 --> 00:34:30,440
Speaker 3: lot of things, but I would say that, you know,

569
00:34:30,600 --> 00:34:36,279
Speaker 3: equipment is significantly more expensive trucks and trailers than it was,

570
00:34:36,920 --> 00:34:40,520
Speaker 3: you know, three or four years ago. That's that's been

571
00:34:41,080 --> 00:34:44,560
Speaker 3: and it's they've they've started to come down a little

572
00:34:44,600 --> 00:34:47,520
Speaker 3: bit as far as the pace of change in the

573
00:34:47,560 --> 00:34:51,480
Speaker 3: inflation side of it, but there's still more. They're still

574
00:34:51,719 --> 00:34:57,360
Speaker 3: becoming more and more expensive each year. Trailers we've seen

575
00:34:57,680 --> 00:35:04,560
Speaker 3: the biggest inflation on and I think that's that's going

576
00:35:04,600 --> 00:35:08,040
Speaker 3: to change over time. I think is every especially as

577
00:35:08,080 --> 00:35:09,799
Speaker 3: you go through a tougher cycle, and I think it's

578
00:35:09,840 --> 00:35:13,279
Speaker 3: been slow to that. The equipment market's been slower to

579
00:35:13,320 --> 00:35:15,920
Speaker 3: react because of all the refreshments that needed to have

580
00:35:16,719 --> 00:35:20,000
Speaker 3: or happen, and so all this backlog that people are,

581
00:35:20,080 --> 00:35:22,360
Speaker 3: you know, the big companies haven't been able to replace

582
00:35:22,400 --> 00:35:26,400
Speaker 3: equipment on their normal cycle for two and a half

583
00:35:26,440 --> 00:35:30,399
Speaker 3: three years. So I think it's still it's there's still

584
00:35:30,480 --> 00:35:32,719
Speaker 3: going to be some upward pressure over the course of

585
00:35:32,760 --> 00:35:35,640
Speaker 3: the next couple of years, but I think it's going

586
00:35:35,680 --> 00:35:37,880
Speaker 3: to come down some from where it is and hopefully

587
00:35:37,920 --> 00:35:41,960
Speaker 3: get back to more equilibrium a little bit where we

588
00:35:42,000 --> 00:35:45,799
Speaker 3: don't have to take big increases every year. Insurance is

589
00:35:46,000 --> 00:35:48,840
Speaker 3: continuing to be a challenge, It will be a challenge,

590
00:35:49,360 --> 00:35:54,600
Speaker 3: I think for the foreseeable future. Maintenance is a big

591
00:35:54,640 --> 00:35:58,439
Speaker 3: thing too, and it's not just the aging equipment. It's

592
00:35:58,480 --> 00:36:02,120
Speaker 3: now labor rates are much higher than they used to

593
00:36:02,160 --> 00:36:05,840
Speaker 3: be three years ago. So you're seeing parts in labor

594
00:36:06,719 --> 00:36:11,440
Speaker 3: inflation that are significant on the maintenance side. As you

595
00:36:11,480 --> 00:36:14,200
Speaker 3: bring newer equipment in, you can reduce some of that,

596
00:36:14,280 --> 00:36:16,799
Speaker 3: but you're not going to get passed at all. And

597
00:36:16,840 --> 00:36:20,360
Speaker 3: the thing I didn't say too finance. Financing your business

598
00:36:20,440 --> 00:36:24,960
Speaker 3: has gotten significantly more expensive also, So you got this,

599
00:36:25,560 --> 00:36:27,480
Speaker 3: You got all these things that are hit us at

600
00:36:27,480 --> 00:36:31,080
Speaker 3: the right at the same time when normally in a

601
00:36:31,160 --> 00:36:34,200
Speaker 3: cycle like this you'd see things start. You had some

602
00:36:34,280 --> 00:36:38,480
Speaker 3: wiggle room through some of these areas to reduce cost

603
00:36:38,560 --> 00:36:42,319
Speaker 3: and then you add the high cost of fuel. It's

604
00:36:42,440 --> 00:36:46,160
Speaker 3: just made it, you know, really tough to reduce costs

605
00:36:46,200 --> 00:36:47,880
Speaker 3: as rates are going.

606
00:36:47,680 --> 00:36:51,520
Speaker 1: Down so behind you through your office window. I see

607
00:36:51,680 --> 00:36:53,520
Speaker 1: a bunch of trucks or those PAMs trucks.

608
00:36:54,000 --> 00:36:59,279
Speaker 3: Yeah, so those trucks there are trucks we pulled out.

609
00:36:59,440 --> 00:37:02,120
Speaker 3: So we're in our trade cycle right now. Those are

610
00:37:02,160 --> 00:37:05,959
Speaker 3: trucks where we've pulled out. We're replacing them with new,

611
00:37:06,280 --> 00:37:10,799
Speaker 3: new equipment and so those, once they get worked on,

612
00:37:11,040 --> 00:37:14,080
Speaker 3: will be out of here and into the use into

613
00:37:14,120 --> 00:37:15,120
Speaker 3: the use truck market.

614
00:37:15,960 --> 00:37:17,399
Speaker 1: Gotcha, it looks like a lot of them.

615
00:37:17,920 --> 00:37:18,799
Speaker 2: Yeah, there's that.

616
00:37:19,280 --> 00:37:23,080
Speaker 3: I think it's we have four hundred trucks we're trading

617
00:37:23,160 --> 00:37:27,399
Speaker 3: between the first October and the end of the year,

618
00:37:28,400 --> 00:37:29,640
Speaker 3: so it's a lot.

619
00:37:29,719 --> 00:37:32,400
Speaker 2: That's a lot of equipment to pull in and out.

620
00:37:32,480 --> 00:37:36,680
Speaker 3: So and it's that's definitely not all of it, but

621
00:37:36,719 --> 00:37:40,440
Speaker 3: it's you know, it's spread out and we're making some progress,

622
00:37:40,440 --> 00:37:43,200
Speaker 3: which to me, I don't like to see it sitting

623
00:37:43,200 --> 00:37:45,600
Speaker 3: out there, but it means we're making progress and getting

624
00:37:45,600 --> 00:37:47,839
Speaker 3: our fleet age down, which is good.

625
00:37:48,800 --> 00:37:53,640
Speaker 1: Okay, great. Do you have any bold predictions for twenty

626
00:37:53,680 --> 00:37:54,200
Speaker 1: twenty four.

627
00:37:56,680 --> 00:37:57,279
Speaker 2: Here's the thing.

628
00:37:57,320 --> 00:38:00,719
Speaker 3: I don't know about bold predictions, but I I do.

629
00:38:01,120 --> 00:38:04,560
Speaker 3: I am a firm believer though that things are going

630
00:38:04,600 --> 00:38:10,080
Speaker 3: to get better, okay for for us on the trucking side.

631
00:38:10,560 --> 00:38:16,240
Speaker 2: And I think that it's because it's all.

632
00:38:16,120 --> 00:38:19,440
Speaker 3: A supply and demand type problem in this industry, and

633
00:38:19,480 --> 00:38:24,200
Speaker 3: it's very cyclical. And you know, I think that going

634
00:38:24,239 --> 00:38:28,160
Speaker 3: through in an environment like this, because you've got this

635
00:38:28,360 --> 00:38:31,160
Speaker 3: recency bias, you tend to think it's the worst you've

636
00:38:31,200 --> 00:38:35,000
Speaker 3: been through, Right. But I always tell our team, like, hey,

637
00:38:36,760 --> 00:38:40,799
Speaker 3: we I remember the Great Recession, and I remember going

638
00:38:40,840 --> 00:38:43,480
Speaker 3: through that and I felt that same that the same

639
00:38:43,520 --> 00:38:48,520
Speaker 3: way I did I did today, and it it got better, right,

640
00:38:48,719 --> 00:38:52,040
Speaker 3: And I think that's the thing that we're we're talking about,

641
00:38:52,160 --> 00:38:54,160
Speaker 3: is hey, we got to do a lot of things

642
00:38:54,239 --> 00:38:59,560
Speaker 3: now to continue to fight through this stubbornly tough market.

643
00:38:59,719 --> 00:39:03,560
Speaker 3: But ultimately what we do now will set us up

644
00:39:03,600 --> 00:39:06,600
Speaker 3: to have more success as the sun starts shining on

645
00:39:07,280 --> 00:39:09,680
Speaker 3: you know, the asset based carriers a bit more as

646
00:39:09,719 --> 00:39:13,759
Speaker 3: we move through the cycle. And knowing when if it's

647
00:39:13,800 --> 00:39:16,560
Speaker 3: twenty twenty four, ly I sure hope it is, right.

648
00:39:16,640 --> 00:39:20,279
Speaker 3: I sure hope that things, you know, we don't run

649
00:39:20,280 --> 00:39:24,280
Speaker 3: into a full blown recession and the consumer becomes weak,

650
00:39:24,719 --> 00:39:26,879
Speaker 3: that it gets a little bit more tough. And that's

651
00:39:26,880 --> 00:39:29,879
Speaker 3: why it's cloudy. Who know, the consumer is to fight

652
00:39:29,960 --> 00:39:33,560
Speaker 3: all odds a little bit. In the last I would say,

653
00:39:33,719 --> 00:39:38,600
Speaker 3: you know, year or so, and I hopefully that you know,

654
00:39:39,040 --> 00:39:42,319
Speaker 3: people keep spending money. That's that's what I hope. That's

655
00:39:42,360 --> 00:39:45,040
Speaker 3: what my prediction would be, is people will keep spending money.

656
00:39:46,360 --> 00:39:48,600
Speaker 1: Well, I always like to end things in a high note,

657
00:39:48,680 --> 00:39:51,520
Speaker 1: so I think we're going to wrap things up there, Joe.

658
00:39:51,640 --> 00:39:54,760
Speaker 1: I really appreciate your time and telling us more about

659
00:39:55,000 --> 00:39:59,319
Speaker 1: PAM transportation, the truckload industry, and the brokerage industry. And

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Speaker 1: I want to thank everyone for tuning in. If you

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Speaker 1: like the episode, please subscribe and leave a review. We've

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Speaker 1: lined up a number of great guests for the podcast.

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Speaker 1: Check back to hear conversations with C suite executives and

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Speaker 1: other freight transportation thought leaders. Also, if you have any

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Speaker 1: ideas for future episodes, please hit me up on the

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Speaker 1: terminal or on Twitter at logistics Lee. Until next time,

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Speaker 1: take care of everyone,