Odd Lots - This Is What It Takes to Win in the World of Freight Brokerage

Episode Date: May 27, 2022

The world of trucking is extraordinarily complex. There are an untold number of players that need to ship goods around the country. And there are tens of thousands of carriers, large and small, who own the trucks that move the goods. Standing in the middle are freight brokerages, whose job is to find the right company to move the right goods. But what does it take to win in this space? What is the role of technology in making it all more efficient? And what is the market doing right now? On this episode, which was recorded at the Freightwaves Future Of Supply Chain Conference in Northwest Arkansas, we speak with Matt Pyatt, the CEO of Arrive Logistics, one of the fastest growing freight brokerages in the country. He walks through what his company does and how it's grown so fast. See omnystudio.com/listener for privacy information.

Thanks for listening to Odd Lots. Follow the show on Amazon Music for more future episodes or just ask, Alexa, play the Odd Lots podcast on Amazon Music. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real. Lots of firms throw a couple flashy funds your way and call it a day. But on Vanguard, at Vanguard, institutional quality isn't a tagline. It's a big line. It's a very big. It's a firm. commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio.

That's vanguard.com slash audio. All investing is subject to risk vanguard marketing corporation distributor. Life moves fast, and when you need more room, XYZ storage is here. Whether you're moving, decluttering, or just need extra space, clean, secure units are ready when you are. Students heading home or switching apartments between semesters, save 50% off your first three months. Make space for what's next. Visit xyz storage.ca. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Eisenhower. And I'm Tracy Alloway.

So, Tracy, this is a special episode of the podcast that we actually recorded at a recent conference. That's right. We recorded it live at the Freight Waves Future of Supply Chain Conference in Northwest Arkansas. We got to meet a bunch of people in the logistics and transport industry and really dive into some of the topics that we've been covering for the past year or two. Exactly right. And so at the conference, we recorded this episode live on stage with the CEO of one of the fastest growing truck, or freight brokerages in America, Arrive Logistics. Yep.

Here is our interview with Matt Piot. He's the CEO of Arrived. We hope you enjoy it. All right. Hello, I'm Jill Wisenthal. And I'm Tracy Allaway. Yeah, so we are the co-host of the Bloomberg Oblots podcast. We've been doing it for a while.

We cover all kinds of things, markets, finance, and economics. And we're going to record a live episode today. Yeah. Now, normally we do cover. finance and markets and economics, but over the past couple years, we've slowly transformed into supply chain correspondence because everything that's going on with logistics and transport at the moment has ended up having a really big impact on the economy as well as markets. And so the further we go into the supply chain, the more we discover that we don't actually

know. And we just go deeper and deeper until we finally end up at conferences like this. Exactly. So I'm really excited we're going to be speaking. to the CEO of one of the fastest growing freight brokerages in America. Founded in 2014, 1900 employees, raised $100 million, $2.4 billion in revenue. Matt, Pai, the CEO of Arrived Logistics in Austin, Texas. So Matt, thrilled to be here with you. Thanks a lot for having me. Thanks, freightways.

And thanks to you guys. I'm excited for the conversation. They can give me no heads up on how this is going to go. So we'll see. We'll figure it out. We're just talking. We're just chatting here. But, you know, I want to get into how the business works and what it takes to be one of

the fastest growing freight brokers. But before you, that, obviously, lots of concerns about a freight slowdown, a freight recession. We've read all the stories, many on freight waves. What's your sort of perch into the industry right now? And what's your view on what's happening right now? Yeah. I mean, I'm sure this whole conference, you know, the last couple of days has been around what's

going on in the market. There's been a lot of attention, the media, you know, people making predictions, especially freight waves, you know, where the market's heading. You know, what we're seeing is absolutely what you're seeing in the data. Those companies that have a high exposure to contractual freight, they're continuing to take all that demand. The freight's not coming to the spot market. So the spot market is getting more competitive. You saw that really accelerate when the fuel prices kind of jumped up to north of $5 a gallon.

So when that happened, not only with their contracts elevated, but then you got the elevated fuel surcharge, which made the contractual freight even more advantageous for the asset-based carriers and the brokers. And then you had a lot of supply that entered the market over the last 18 months. You heard about a lot of the new entrance, a lot of owner operators, obviously use equipment going super expensive these days. Insurance is high. Fuel is high. So you have the owner operators that are subjected to kind of a higher fit or variable cost per mile.

And that's really driving, you know, a lot of competition in spot market. And ultimately, you know, it will be a really challenging market for any company, whether it's a broker or an asset that is, you know, thriving in the spot environment. So, you know, really what we're looking at is how do we balance our portfolio, you know, do we diversify modes of transportation? But really right now, contract is where you want to be. And those that are in the contract market are thriving. Just on the rates question, I mean, the debate seems to be, is this a capacity issue? You know, lots of new entrants into the market when spot rates were really high. Or does this reflect some sort of genuine slowdown in consumer

demand? Can you give us like your gut take on that issue? I mean, there's like a hundred different data points that you can kind of follow and we look at all of them and obviously you can track all of them here as well. Right now you're seeing consumer spending normalize, right? So you kind of think about like a five-year trend line. It's kind of coming back down towards a more of a normal growth trajectory. Obviously spiked up in 2020 and 2021 when durable goods, you know, spending increased. Obviously service spending was hammered by COVID. You're starting to see a shift in the credit card data back to the service industry. But it's too early to tell, right? So, I mean, you've got a lot of inventory in the warehouses.

You've got a lot of pent-up demand from people that weren't able to get products over the last 18 months. You've got an economy that was doing pretty well that's been challenged over the last, you know, three to six months. So it'll be really interesting if we can get kind of the China supply chain under control, maybe some of the global conflict. You know, maybe there's some saving it, but as of now. So help me understand what happens in an environment where spot prices are rolling over? and diesel prices are going absolutely to the moon these days amid a capacity shortage.

How are carriers responding to what seems like an absolutely brutal combination of events? You're going to be in deflationary market until we get to what we call equilibrium. And equilibrium is when the rates have come down enough that people start to exit the market. They're going to exit the right. So right now they're still making enough to cover their costs, make a little bit of money. But for how long, who knows? I mean, obviously we've seen one of the historically fast. decline of spot rates. So you'll continue to see that downward pressure on spot rates

until enough people either take the capacity off the road or, you know, demand picks back up enough to offset and drive some volume back into the spot market. How unusual is this market? Because one of the things that Joe and I here just walking around this conference is every once in a while, you'll catch someone going like, oh, 2018, 2019. And that's the parallel that it feels like everyone reaches for it. But is it actually like that? Or, is it unique in some way? We talk about the freight cycle constantly. And you know, you obviously know that there's a three to five year period of time where it goes inflationary, gets the peak, comes deflationary, gets back to equilibrium. And then typically there's some type of shock,

whether it's a pandemic or a natural disaster or some type of, you know, bad weather event in a large part of the country that kind of sends it, you know, back in the other direction. But what I'll say is we've gotten so elevated. You know, if you look back to 2018, the highest spot rates got were 204 plus fuel. So today, we, we're, you know, we're going to be in the other than we'll be in a little four plus fuel. So today, we're talking about how rates have fallen extremely fast and they're at 2 to 204 in that range plus fuel. So rates are still elevated above where they were in the peak of 2018. So, you know, what's really interesting is, you know, how is the market going to react? Because in 2018 through 2019, you know, we saw rates come from 204 down to $1.40 plus fuel.

You know, a lot of people think there's going to be a new bottom, so to speak, from a rate environment. So we're definitely interested to watch because it is very different than 2018 because of how high and how elevated. and how much demand we saw in 2021. So why do we back up a little bit and talk about your background and arrive? And you started in 2014, why? Like, what did you see as the opportunity that there was space for what you wanted to build? Yeah, I wish I had a really crazy story, how we were going to just take over the industry. But back in 2014, I was working at another company called Command Transportation.

I was super happy. I was learning a lot. Co-founder and I met in college, Eric Dunningin, who's here. we really enjoyed the transportation market. And we had a group of friends that owned another health supplement business, and they were looking to make investments. So they reached out and they're like, hey, we want to make investments into startups. Like we worked with you when you're in college.

And I was like, well, I know transportation. You guys have a $5 million freight spend. So we kind of started with like this, hey, we're going to manage this shippers transportation network. And then we're going to grow from there. And so, you know, things have really rolled since 2014. We've had a lot of good momentum. The market's been in our favor a few different times. But yeah, we're really focusing on what the next five to seven years look like.

What was the attraction of freight brokerage? Because Joe and I, we've joked on the podcast before that we want to start our own owner-operator company. But actually, having walked around this conference, everyone's going maybe brokerage is the place to be. I mean, like high-profit margins. You don't actually own that many assets. Well, correct me if I'm wrong. Who has high-profit margins? Maybe the assets that have brokerage.

We've heard 20%. No. Is someone lying to us? Yeah, that's, I mean, that's not accurate. I would say if you look back historically, it's maybe been elevated. But with technology, all the investments that we're making, we can talk about that for hours. Obviously, technology is deflationary to margins. We're trying to eliminate as much cost of every single transaction.

And that gets passed on. So if you look at the big, you know, the big companies that do like North American surface transportation, middle mile trucking, I mean, you're at like 12 to 15%. Now, revenue per load, moves up, so the spread dollars are moving up. But 20% is not sustainable. I mean, it's too competitive of a market. There's too much money entering the space. People are willing to take the freight at a lower cost. I mean, there's a market clearing rate, right? All of our shipper partners work with 20 brokers or 50 brokers and 500 assets. So they're not paying us this huge premium to move the freight. We have to charge a market rate. And then it's really on us from a procurement

standpoint to drive margin. So before we came down here and I was like telling people, oh, we're going to interview the CEO of a freight brokerage. People who don't know anything about freight, they're like, really, there's brokers? Like, why isn't it all just done on an app, you know, like ride hailing or something? And obviously here, there's been, you know, tons of, lots of startups and lots of demos of technology. But, you know, when you go to the arrive website, a lot about people, the Salesforce, et cetera, talk to us about like your view of like, what is the sort of the people element in building

a successful brokerage? Yeah, so I think you've got two different ways to build a successful freight brokerage. You can go out and raise a lot of money and build great technology, and then you're going to realize when the customers come to you and say, well, you need good operations. You're going to go start hiring a bunch of people to do the operations far as far as the job. And then there's, you know, the other way of build great operations and then build technology to, you know, kind of augment that. But at the end of the day, a winner in this industry is going to have unbelievable technology, unbelievable people, right? It comes down to people processing technology. So, you know, we obviously have gone out and raised money over the last couple years.

And all of our capital raise that we've done has been allocated to technology development. We're spending about $30 million a year right now building, you know, proprietary technology, 250 full-time engineers. And it's never enough, right? There's, it's an unlimited opportunity to, you know, build better connectivity. But we are very big advocates that the people are everything in this business. And we spend so much time on not just talent acquisition, but on talent management, and talent retention.

It's, it's, it spends, I probably spend 70 to 80% of my time with the executive team talking about our people. And then obviously the rest of strategy and technology, but it is, it is the difference. And at the end of the day, we're business services. People come to us because they want to move their freight from point A to point B and they want to do it with least amount of friction as possible. So the people are a big part of that. Can you go into detail, as much detail as possible on why tech is important and why data is

important because, I mean, for instance, we listened to Billy Bean yesterday on the stage from Moneyball. And I know you've mentioned Moneyball as well as an inspiration behind your approach. And I'm wondering, like, exactly how do numbers and technology fit into the business model? Those are, I can answer two different questions there. One is how is Billy Bean and Moneyball relevant to our business model? And then how is technology? And I'll start with technology and then we can go to Moneyball if you want. So technology is everything. We look at, technology in three different pillars. You've got customer interaction. So basically, how are we connecting to our customers? How do we make that a more seamless transition? A large enterprise

shipper has very different needs and an SMB shipper, right? So we want to build different technology. We want to have the ability to interact with them differently. They care about different metrics and on-time percentages and different ways of getting quotes. So it's all about how do we connect them and make that experience seamless. And the second of the third pillar is around the carrier side. And you've heard a lot about the apps. And you just ask, why isn't it all odd? Well, if you could get all 500,000 plus carriers to use the same system, it would be pretty easy to automate this industry. But I can tell you, we've got carriers that refuse to do anything but over the phone.

Then we have carriers that only want to use our app. We have carriers that only want to go onto a web portal. We have carriers that want to use Gchat and Slack and all different, different modes of communication. So our technology is how do we connect with every single one of our providers to drive the most efficient connectivity between us and them? And then the third pillar of technology and obviously very important to the future of our industry is internal technology, is how do we operate? How do we make our operations more efficient?

I think like five years ago, 10 years ago, they would tell you three loads per day per head was like the gold standard in transportation. And that number is just not sustainable. You've got to get your fixed costs down. So you've got to build technology that augments what a person can do. A person's job is to build relationships, to problem solve, to proactively communicate, to build a good relationship and to expand the business. The technology's job is to do everything else, whether it's decision support, pricing support, whether it's matching the right carrier or the right load every single time. It's all about the different things that we can do eternally that humans we're typically doing and we can take that part out of the process. And that allows us to have more transactions per day

employee, which ultimately lowers our cost per employee, which ultimately lowers the margin because we can go in more competitive and drive more volume. Oh, money ball. Moneyball is a longer question. But I'll answer as quickly as I can. One of the things that we've done that's really, really unique is like I said, we started from like an operational standpoint. We were all about building the best operations that we could build. So we didn't have great technology at the beginning,

but we perfected the art of hiring, training, and retaining. And so we have five cohorts. So we have new customer sales, new carrier sales, new customer, then within customer, you have SMV, mid-market and enterprise, new carrier, then you have carrier based on wallet size, and then you have corridor, which is OD pair, like origin destination, city to city,

how often we're running it. So we basically figured out all of the math behind every single one of those cohorts. We've never missed a monthly projection from a load per day perspective. Our investment banks actually told us we have the most predictable, defensible financial projections they've ever seen because it's detailed down to the actual person's name. And then future hires are by cohorts, right? So we know how many people to hire what their productivity is going to be, what the turnover

is going to look like, what our retained accounts are going to be, what the growth on those retained accounts are going to be, how many people we need to hire to fill those orders on the carrier side, how many people we need to hire on the operation side? So it's just one big financial model that we've, created. And the good thing about it is every single month, it gets better because every single person is another data point. So month 18 of person Y is another data point for that, you know, 18th month, 10 year on the customer side of the business. So it just continually gets better and better. So that's kind of the whole money ball approach and the predictability. And then what we do

is we overlay technology gain. So it's like, okay, on a baseline of 100% magical achievement on the carrier side, that was in April of last year. We're now at 162%. So it's a 62% increase in productivity across all 10-year bands. So that's kind of how we're underwriting our return on our investment because we know what our cohorts were doing before, and we can constantly monitor and see how they're improving each and every quarter as we build more and more technology. So how do you succeed as a broker or what do you look for in the characteristics of someone who comes to work for you and what does they have in them that makes them thrive and arrive? If you had asked me that five years ago is a very different answer. I mean, people today are

very different coming out of college. I mean, we'll hire 800 people this year and 750 of them come out of college. So what I would tell you is we look at it by role. So one of the things that we talked about is hire, train, retain. Within hiring, we have profiled. We looked at every single university, everything you can look at. We know everything, like where to go to get the best talent for each every role, whether it's customer sales, operations, or carrier sales, because they're completely different jobs. On the customer side, it's a little bit longer of a sales cycle. So it's, you know, you're selling it, a transportation manager, someone that's probably got a four-year degree, someone that's, you know,

has a supply chain major. So you're having to sell it a, you know, a different type of sales process. On the carrier side, you're selling into, with us, our core carriers have 12 to 1,000 trucks. We do some with the smaller market, but we've built all of our technology and our capability around the mid-market fleet. So you're talking to someone that, you know, is probably sitting in an office that's managing their carrier, so you're trying to build that relationship. And then operations, it's all about proactive communication. It's all about customer service, right? At the end of the day, the operations people, when we ship for a big shipper, they look at arrive based on the experience that they have with their rep that's managing the day-to-day of that account. So it's super imperative

to hire and train people to be like unbelievably good at that. You said it used to be different. What's that? You said it used to be different. What did it used to be like? Yeah. So our company was a lot different five years ago. We did zero contractual freight. It was all spot freight. And that was how we got off the ground. It was just, you know, LFG, like aggressive, sales culture, run through a wall, do it again, land a customer, grow a customer. So that was a different personality. Now we're in with 5,000 plus customers. It's all about expanding wallet share within those customers. And yes, we're going to continue to grow. I mean, we landed 23 Fortune 500 accounts last quarter alone. I only know that because my board being is on Thursday.

So it's one of the slides. But it's really about like maturing as a business, building out unbelievable operations, building out best in class technology. So it's just a different profile of people that are successful. How do you manage that culture change? Because in some respects, it kind of reminds me of what happened on Wall Street, right? Because in the 1980s, I mean, even up until the 2008 financial crisis, there was a certain type of trader who was typically quite aggressive, quite competitive, very sales focus, that sort of thing. And then in recent years, technology has come in and change the market. It feels like the requirements for what it takes to succeed have changed quite a lot. So how do you manage that transition from a people perspective? Yeah, I mean,

culture and engagement is huge. We never even talked about talent management seven years ago when we started the company. We didn't even know what that was. We didn't have a single person in HR until we had 150 employees. And now it's a huge part of our differentiation strategy. So what I would say is, you know, we've really focused on talent management. We've really, really focused on how do we build people. The people that we're getting today care about their career. They care about upward mobility. They care about seeing the progression in job titles and base salaries and earning opportunities and roles and responsibilities. So we as an organization have had to kind of take that aggressive sales culture and marry it with what people are looking for today. And honestly,

there's been turnover, right? And that's just part of scaling a business. And you know, some people are able to adapt and some people are able to join and be a part of like the kind of the new forward forward looking momentum. And then other people wanted to be what it used to be, 100% spot, aggressive, and those people don't ultimately make it. But from a culture standpoint, we try to,

you know, appeal to every single type of person. We still have really good, hungry salespeople, but we now have a lot of technology people. And technology people look for a lot of different things than a salesperson does. So, like, how we're involved in the community,

how we're doing career development, how we're going and bringing speakers and how we're doing, you know, extra, you know, happy hours for the salespeople because they love that, you know, extra curricular or sports.

So we're trying to do everything to appeal to a bunch of different subsets of the employee base, whereas before it was kind of like one personality. Can we go back to the question of like the limits to technology and the limits to apps? And so like what are the things right now in your business that simply just you just can't do it from an app? And what is what is the part, the employees, the sales force like customer service, like what do they pick up and what do they do they do on a day to day? basis that just can't be done via technology yet.

Well, we move 4,500 truckloads a day. Okay. And we don't do anything on an app. So I guess a lot. It can't be done on a website or a web portal. No, there's obviously a lot. At the end of the day, getting in front of customers, getting in front of carriers, understanding what they're looking for.

Every carrier has 100 brokers calling them, right? So how do you differentiate? How do you build that relationship? How do you offer them the right load every single time? because so many people can call a carrier and be like, hey, I know you want Dallas to St. Louis. But not knowing they don't want a night delivery, not knowing they don't want a certain commodity, not knowing that they don't want a certain weight, not knowing they want the 15 different characteristics of every single load that's different. And there's actually more than 15.

It's like 40. But, you know, it's really, really focusing on how do you bring the right opportunity to every single one of your customers and carriers? And that's really hard to do on an app. Now, we're trying to. We're doing as much as we humanly can. But that obviously means that the customers need to be integrated into the app and that the carriers need to. to be integrated into the app. And there's a lot of pushback on that side as well.

So we're automating as much as we humanly can as fast as we can because we're obviously focusing on driving rep level productivity and automation is is the best way to do that. So, you know, as in what you've seen though is over the last, you know, couple of years, the adoption of the technology is, is increased significantly across the entire industry. And it's an amazing trend, especially for the big companies here in the audience or in the industry because we're the ones that have the technology that's, you know, out there. that's able to connect all the parties to make it more efficient, to drive more volume,

and then obviously increase, you know, profitability on our end for the shippers and carriers. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real. Lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline.

It's a commitment to your client. We're talking top grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing is subject to risk vanguard marketing corporation distributor.

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So, I'll repeat that question. I'm sorry. I guess the question is, like, how do you balance price versus quality and reliability? Yeah, I mean, at the end of the day, there's a market clearing price, like I said earlier. there's not this magic ability to just charge an unlimited amount of money. So really it comes down to, hey, who is the person that we know can get it done? A lot of these shippers, they actually look at pricing on an RFP with like a landed cost adjustment, which is like how often did that carrier give out, give back the load?

How much do they charge us in accessories? You know, what did the late deliveries cost us? So really making sure that you're focusing on best in class service will allow you to have a little bit more pricing power. But at the end of the day, you know, it's a competitive marketplace. And there's 20,000 brokers, there's 500,000 assets. Everyone wants the business. Everyone wants to grow. So it really comes down to how do we build that relationship and how do we get in front of

them and offer the best solution. Going back to the macro environment and one of the conversations has been this gap between spot and contract rates. And so what do you see? Like how does that close and in what direction and how does that affect a business right now? So how does that close? So what you're going to see is every shipper right now is discussing internally what to do about their contractual. You've got a lot of shippers that move to quarterly bids.

So during COVID, a lot of shippers started to do shorter bid time. So all of those bids are going to come due. The prices are going to come down. So you're going to see margin pressure on contractual freight. So that will pull it down. Then you'll have the yearly bids that come due. Then you've got, you know, 25% of shippers probably out there that are willing to rebid their network for lower cost because they know the spot market's lower than contractual market is. So what you're going to see is month over month, over month, over month, contractual pressure.

So that's going to bring it down over time. But the question is, is how do you get spot back above contract? It's going to take, I mean, the delta is so big right now. It's going to be really interesting. It's going to take a lot of capacity leaving the market. I don't see it happening because of an increase in demand because you've had such a run on durable goods that I don't see that it being this massive demand shock that moves it back in the other direction. So it's going to have to be a, you know, supply leaving the market. over time bringing those lines together, contract moves back up once it finds the bottom,

and then some type of disruption will happen and it'll move it back in the other direction up. So it could be a while. I mean, but once again, we can't accurately forecast, you know, when spots are going to come back up because it's typically driven by something we can't predict. So speaking of capacity, leaving the market, I have a really basic question that probably a lot of people in the free industry will already know the answer to, but if you could please humor me, you talk about market fragmentation, right? And everyone's like, oh, thousands of brokers in the space.

Why is that? Why hasn't someone just come in and started? I know there have been a few who've started consolidating. But like, why don't we see that kind of consolidation in the market? Well, there's very low barriers to entry, right? To start a brokerage. And it's getting a little bit harder these days, but not that much harder. So and then everyone that has assets, they're like looking at their friends that have assets that have a brokerage.

So you've got a lot of people that are starting brokerages. So I just don't see that trend stopping because there's an opportunity to make incremental money off of their relationships. Now you're starting to see shippers start brokerages. You're starting to see all sorts of different people try to find a way to have more predictable capacity, manage their costs more efficiently, drive incremental growth. So, you know, it's a great question. Now, what you will see, though, is that the top 10 to top 20 brokers are taking significantly more of the market share. And that's a function of, like I said, it all comes down to lower cost per load. better technology and better service.

And the people that have large scale, it allows them to take that market up, you know, that market growth a lot easier. Does technology factor into that as well? I imagine, you know, if technology becomes a more important part of the business,

you have to spend more and more to develop it. It feels like those with access to lots of capital will have a competitive advantage in a way that, you know, that didn't necessarily happen before, low barriers to entry, as you mentioned. Yeah, that's,

you're already seeing that. seeing the bigger getting bigger and you're seeing the smaller able to kind of they're going after probably a much different subset of business right so there's there's a lot of freight out there there's a hundred thousand shippers so there's a lot of SMB guys out there there's a lot of small brokers that can make a really great livelihood working on them you know we're all fighting for the fortune 1,000 the ones that can really drive a lot of scale that can really a lot because technology is useless without scale which is why all these companies are raising money to get to scale because that's a lot it gives you more data every transaction allows you to offer more

freight to your carriers, which gets your carriers to be more sticky within your network, which drives better service and better purchasing. So just this huge flywheel. So do I see like consolidation continue to happen? Yeah, it's absolutely, the large players are going to continue to take an outsized portion of the market. But there's definitely a place out there for the smaller guys to continue to exist and be successful.

And is that largely a function of the fact that, setting aside, brokerage is just the shipper, there's just so many different types of shippers and carers. that there's just always going to be a need for lots of different kinds of players to connect them? Fast forward 20, 30 years. Maybe there's more of a connected ecosystem. You know, I think that you're starting to see that already with the marketplaces. You know, what we're trying to build from an automation of like we can give a price on any loan on any lane at any lead time in the country. And we're going to guarantee that we're going to cover that now. The price might not be great, right?

But that's really what we're trying to build is how do we build a marketplace where all of our capacity is available for all of our shippers. And yes, I think what you'll see over time is the small SMB shippers starting to use more of the marketplaces going on, getting their own quotes. And that will lead to, like, obviously, the smaller, you know, the less competitive, like their friend and, you know, that lives next door, probably not being the best option for them in the future. Eating well shouldn't be complicated. But somehow it turns into recipes, prep, cleanup, and half your Sunday gone. Factor solves all that. These are fresh, ready-to-eat meals designed by dieticians delivered to your door and ready in just minutes. No prep, no cleanup, no excuses. And it's not just about convenience.

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Make space for what's next. Visit xyz storage.ca. I have a slightly weird question, but again, if you could just humor me, there is an executive on the stage yesterday who was talking about supply chain congestion and just general chaos that we've seen over the past couple of years or so and talking about the need for cooperation in the market. And when I think freight brokerage, I don't necessarily think like kumbaya, everyone's going to cooperate. I think like cutthroat competition, everyone going after each other, winner takes all kind of thing. Is there opportunity or space for working together to try to make things more efficient? Yeah, I mean, the supply chain is a lot better than what I, what we plan at arrive is middle mile trucking, right? Full truckload, middle mile. The supply chain is so much bigger.

You've got the international component. You have the air component. You have the drayage. You have the warehousing. You have the transloving facilities. You've got final mile, middle mile, LTL. So I definitely think that, you know, you're going to see a lot more collaboration. Now, what you're seeing also is that the big companies are buying those capabilities.

I mean, we've all seen the big steamship lines and some of their, you know, acquisitions they've made recently. You know, so I think you're going to continue to see where they're trying to make it a seamless, you know, seamless transaction for the shipper where they're getting one bill of lading. So they're going to partner with different parts of the supply chain to be able to do that. So I definitely think you're going to continue to see it. But I also think you're going to continue to see it. but I also think you're going to see more acquisitions and kind of like creations of companies that can do way more of the supply chain instead of just being one, you know, one part of it.

And by bringing all that together, the thesis would be better connectivity, cost savings, productivity, et cetera. Will you be an acquirer? We just did our first ever acquisition. It was a small one about, you know, 30 million of revenue, not of cost. And what I would say is we're going to be opportunistic. Like we are really, really good at middle mile trucking. Like we love the middle mile.

It's a huge space to play in. And so we bought a cross-border asset. And cross-border is an awesome opportunity for us. We've integrated the company over the last 90 days. We just had the 90-day update on Monday. Things are going amazing. So that's been a good experience for our executive team to learn how to do M&A and to do a tuck-in. And we've already put them into all of our silos within the organization.

So that's been great. So we're going to continue to look at some opportunities. And then when we look out five, seven years, there's a lot of things that we're looking at, you know, large trailer pools, things of that nature. You know, shippers want assets. They want the ability to have drop trailers on their yards. I mean, we do, you know, 15 to 20 percent of our freight is drop trailer, but it's not our trailers. It's our partner carriers, right? So having the ability to have trailer pools is a huge differentiator.

Wait, what's a trailer? This is a, I need to back up. This is outside of my knowledge. So trailer pool is just the trailer, not the truck. Right. So having extra trailers where you can drop those at a big ship or they can load them with product to go wherever you want and you can move that power only. So you assign a truck driver to come in and pick up your trailer and move it. And what's the appeal of the cross-border business?

When you said that's a big opportunity. Yeah, cross-border. I mean, I think you're seeing a lot of fragmentation over in Asia. You've seen a lot of different issues. So, you know, whether or not I'm right, I don't know. I would assume that Mexico is going to be a big winner over the next 10 years with that. They're already one of our biggest trade partners. So just the amount of truckload freight that goes north-south, south, north is absolutely huge.

And there's not that many companies that are great at it, right? So like really trying to build a core competency where we're one of the leading cross-border companies is a huge niche market for us. And the good thing is we already have the customers and we already work with the carriers. We move more than, I think it's like 250 loads a day inbound Laredo, which all of that freight's ending up, you know, most likely south of the border. So it's like we already have the customers. We're already doing a lot of that transit.

actions. How do we just complete that and make it a more seamless experience for our customers? So two questions based on that. But we hear a lot of people talking about making their supply chains more resilient, maybe moving some production and manufacturing from places like China closer to home to avoid the problems that we've seen for the past couple of years. So one, do you think that's actually going to happen? And then two, as a freight broker, how do you actually position for that? And do you start building up that business now? It sounds like you are. Yeah, I mean, are we, did we see the peak of globalization, I think is the question, right? And I don't know the answer to that.

I don't think I have a crystal ball. But I don't see that people don't get a little bit more resilient with some areas of the world that might not have as much faith in long term. So I don't see how people don't diversify their supply chain a little bit over the coming years. But there's a huge cost to that. And we understand, you know, there's a lot of infrastructure already set up in Asia. And, you know, it's a huge. You know, investment. I mean, obviously you've seen Intel making that 100 billion dollar commitment between a few different cities in America. So I think you'll continue to see

that. And as a freight broker, it's great. We love when more manufacturing is in America, North America, Canada, or Mexico, you know, in the North America. But, you know, I think that the way you prepare for that is you buy those capabilities, you build those capabilities, you have the capacity. And so all that freight that's moving in Asia will hopefully come back to this part of the world. And that's just going to increase the demand in our marketplace. some of that will go rail, some of that will go, you know, us. So obviously, like the last two years have been totally unprecedented for basically everyone in the industry. And one of the questions, of course, is, will it change the global geography of supply chains?

Are there any other things that you see that happened in the last two years, changing ways of doing business in response to all the ups and downs that will persist post-pandemic? That's going to permanently sort of change the way this business operates. it's I mean, you can make assumptions, right? Because you would assume, you know, I think you saw a lot of companies that ran really lean inventories. Now you're going to say, are they going to continue to run with inflated inventories for deployment of inventory, you know, are they going to continue to expand warehouse footprint? I mean, those are all real expenses.

And as we know that, you know, we're all about driving, you know, as a public company, not us, but as a lot of public companies, it's all about the bottom line. Yeah. And, you know, a lot of those investments are expensive. So it will be interesting to see how it plays out. I'm not going to, you know, take a guess out of my crystal ball, how many of those things don't get reversed. But it'd be interesting. It's going to be interesting over the next couple of years. So speaking of the past couple of years, I mean, one of the things that's happened is that attention

has been focused on supply chains, possibly like never before. And I know Craig Fuller from Freight Waves was making this point yesterday, but he was basically saying that it's almost like what you saw with FinTech post the 2008 financial crisis. People saw what was. broken in the system, started talking about solutions to fixing it, and there was lots of interest from the markets, so from venture capital, private equity, just lots of money flowing into that space. Is that something that you see potentially happening now? I think it already has happened. In fact, you can find some pretty good information, I think, on freight waves about how much capital has been deployed into the supply chain industry over the last

couple years. Do I see it slowing down? No, I mean, if you even just look at the financial financial markets. I mean, there's so much dry powder and private equity, whether it's going to logistics or, you know, fintech or whatever, there's just so much liquidity out there in the market that needs deployed into quality companies. And, you know, in transportation, there's a huge opportunity. There's a lot of fragmentation. Investors love big Tams. And this is probably one of the biggest tam's there are. There's a lot of fragmentation. There hasn't been a lot of technology until, you know, the last five to 10 years. So I do think you're going to continue to see a lot of companies that have a thesis around, you know,

consolidation or supply chain or software that supports the industry. I think one of the most surprising things for me still, and even hearing you talk about like, oh, there are some players that just want to do by phone. And we've heard the word fax machine multiple times over the last couple of, I don't know if that's still a thing. But what is,

why is there still so much reluctance on the part of some players to move on? And why is there so much that's still done by what feels like, you know, pretty ancient tech at this point? Yeah. I mean, it's a good question to ask to the entire, you know, marketplace. But what else says is I grew up in West Virginia. So I grew up in a tiny town in West Virginia.

Our only claim to fame was that DuPont poisoned our water. If you've seen the movie Dark Waters, that's our claim to fame. But, you know, it's very blue collar, right? So I grew up very blue collar. And this industry is still very blue collar at the end of the day. I mean, transportation, trucking, warehousing, supply chain. It's a blue collar industry. So I think you definitely have some hesitancy from technology.

A lot of people, you know, don't want to adopt it quite as much as they probably could. But you are seeing the change. You are definitely seeing the change. We have so many of our carriers that used to be adamant about, oh, just call me. Now they don't even call us. They just go to our portal and they book all their loads. So, like, I do think you're seeing a changing landscape. As people see that it's more efficient as, you know, they see that their earnings can be increased.

It makes them, you know, have less employees to be able to manage more of their fleet. So, you know, technology is a great thing for the entire. I mean, Donald Braun, who's a big, he talks about. a lot in this industry and he always says technology is deflationary by nature, right? Technology, whether it's in supply chain or in any part of our lives, is deflationary. It makes us more efficient as it gets better and better. It gets cheaper and cheaper. So you're going to continue to see that.

So how do freight brokers actually make that up then? Because when I think technology, I think price deflation, transparency, which in general might not be good for someone taking a sort of like middleman position in the market. So what happens to brokers and their margins in that scenario? Do you try to make it up in scale? It's all about scale. It's all about productivity. Now, look, if you move specialized freight, there's a hundred different, you know, parts

of the transportation market. But for people like us with what we're trying to accomplish and, you know, getting to, you know, being one of the leading middle mile transportation providers in North America, it's all scale. And scale drives productivity. It's every single time we pick up the phone and call it here that has 100 trucks, we have 100 things to offer them, right? And you can't do that.

you're moving 1,000 loads a day. You just can't. So really focusing on, you know, productivity, automation, getting that cost. I mean, if you look at, I mean, generally speaking, a cost per load in the industry might have been 150 to 225, depending on the size of the brokerage. I mean, we're working to getting it to 100 and below, right? So how do you make that cost per load as low as possible so that you can drive more transactions? Because then you're going to go and pass that savings along and you're going to get more and more business and it's just going to continue to grow. So what's a day like at the offices for me or for our employees well for wait if I were someone walking around and I want to do that

sometime I want to visit you promised you wasn't and he didn't come I know I I we never made it we'll make it happen at some point he's from he's from I see so I know I flaked no I got COVID that's my excuse I didn't want to leave all in COVID yeah but what uh what's the what's the vibe like and what's the day to day like for someone who's a broker yeah I mean we have so many different people that come and one of the things is we talked about a lot today is this the culture and the engagement and the, all the employees, it is a lot of fun. It is a fun. It's allowed.

It's an outgoing atmosphere. You know, a lot of people think the office is dead. And, you know, we're, we're allowing for a lot more flexibility than we ever thought we would. People have a couple of days a week that they can work remotely. And then as they get more and more experience, they have even more flexibility. But all of our top performers still come to the office every single day. It's, it's such an environment that makes people want to be successful, drives them forward.

And if you think about what we're doing is it's a team sport. You've got customer sales operations and carrier sales, right? And they're all working together to effectively, you know, deliver the load on time. So it's so much more effective. It's so much more fun when you're working with your peers. So when you walk into our office, every single person says the buzz is awesome. Is it still, is it like open outcry? Like are people calling out, you know, loads on offer and prices? It depends. Yeah. I mean, but our office, I mean, we've got like 160,000. square feet in Austin. So it's really hard to scream that, you know, across the office. But you're working, really what we do is we do it in pods. So it's like sales team and ops team procurement team. We're constantly moving around and letting him get to know other people because you really only are interacting with the people in that area of the office that you're at because it's just so big. But yeah, we do a pretty good job of trying to move people around. And so you're dealing with a lot of like interaction on Slack. But then you're talking to people, you know, throughout whereas at home, your interaction is very limited. And the problem is, is our industry,

you need real-time decisions. Like, do you want to do this or not? And then if you have to send someone to slack and they don't get back to you for seven minutes, it's too late. So productivity we've seen in the office is significantly better. So what are the other areas that you're excited about? We talked a little bit about the cross-border opportunity. Like what other areas of the market do you see yourself going into?

Yeah. So I think that if you, there's four or five different ones we're looking at. First and foremost, uh, drayage. it's the next kind of obvious step for us. We already have the carriers. We already have the customers. It's just, you know, different understanding of how to move it. So we're looking at that.

LTF has been something that we've been focusing on over the last 12 months, not, you know, we haven't grown that as quickly as we'd like, but something that we're going to continue to be, you know, watching. Cross border Mexico is one. Now we're going cross border Canada. You know, freight management is something that we constantly hear about. But we kind of, you know, if we get into that, that would be more around building a software for SMB shippers, for mid-market shippers, to give them, you know, a procurement

system, a TMS for them to be more efficient to try to, you know, capitalize and take wallet share that way. So those are some of the different areas of the supply chain that we're looking at getting into. This reminds me of something I wanted to ask you, which is how much does customer segmentation matter in this market? Because my understanding is that you tend to target mid-sized firms versus like individual drivers or owner-operators. For carriers or customers. either. We'll go both. All right. So from like a customer standpoint, like I said, we were a very SMB, small, medium business. And now 65% of our revenue in 2021 and like 67% in 2022 is going to be enterprise. So a billion or above. And by 2027, that will probably be 80%. So those are the companies

where you can really get scale. They have consistency. We're able to come in and offer them a service. We're able to connect to them with our technology. And so that that's really where our growth will continue to be on the shipper side. We'll continue to build technology and products for the SMB market. But it's a much higher attrition of the customer. I mean, our board meetings on Thursday or else I wouldn't know this stat. But we had 0% turnover in a customer that gave us 10 or more loads last year. So if a customer gave us 10 loads a day, we lost zero of those customers year over year.

And we doubled the number of customers that gave us 10 or more loads year over year. And about 80% of our growth came from those customers that gave us 10 or more loads. So we don't lose customers once we get in the door. with them. We service and we build teams around and we build around the clock support for them. And then on the SMV side, it's just a lot more of a churn. You know, they're a little more, you know, price sensitive. They're going to go to a few different portals. So we're going to build the technology for them, but that's not going to be the growth engine of our company. And then on the carrier side, you know, we, we love the 12 to 1,000 truck carrier. I mean, a lot of people always say, well, 90% of carriers

are under six trucks or something like that is the stat, but it's only like 22% of the trucks on the highway. So we are really focusing on the 60% of the trucks that fall. between the 12 and the 1,000 because our shippers don't need us to have a relationship with the mega fleets. They already have a relationship with the mega fleets. You know, they're really looking at us as a way to aggregate that capacity on the 12 to the thousand truck. They can do drop trailer. They have more capacity. We can really build corridors. So our entire business is how do we build lane level corridors? And that's really, really challenging to do with a smaller fleet. Smaller fleet is still going to be called 10% of our

business. But over time, we're continuing to really focus on building that consistency so that when we go to a carrier, they know that we're going to give them what they need each and every time. These might be sort of a naive question, but you mentioned SMBs, perhaps looking at multiple portals. How wide can the spread be? Or, you know, a quote for Elaine, Dallas to L.A., Dallas to Juliet or something. How wide can the potential price difference be? Yeah. So I'll just, I know Freightways has a pricing tool, but I'm going to reference one of their competitors is, you know, DAT's got a pricing tool. And on there, you can see shipper to broker, or sorry, shipper to carrier rates and then you can see broker to carrier rates. And there's a 25% band, a 50 band, and a 75 man.

And that delta can be really significant. I mean, depending on the lane and how volatile it is, let's just make up a lane. L.A. to the Midwest and Q4 during peak retail season, you might, the best broker might be paying, I'm just making it up $2 a mile. But there's the top quartile is paying $350 a mile. So across that many miles, there's huge deltas, right? And it all comes down to your personal network as a transportation provider. Like, that's what we talked about our corridors. We have to know where our capacity is, what our capacity costs so that we can offer that capacity to our shippers in real time.

That's where the technology comes in. So not, you know, there's a lot of really good brokers out there that are really great at specific parts of the country, but they're not great at other parts of the country. They don't have the density and the consistency to build that carrier base. So really focusing, like there's going to be, so that's why having multiple providers is the prudent thing to do because not everyone can be the best at everything. This is actually something I wanted to ask about pricing data as well. So Joe and I were playing around with the Freight Waves product yesterday and I was trying to see how much we could earn

driving a truck from Rogers back to New York. And I think it said something like almost $5,000, but like obviously. For a reefer? I have no idea. That's an expensive drive. Well, you know, we're worth it, obviously, with all our experience. But the thing I wanted to ask is like, A, how realistic is that pricing data? Like when someone calls you up, with a quote, are you actually going to get that rate or like, can it vary between like when you actually undertake the trip or not? So on the shipper side or the carrier side? Again, either. Okay. Sorry. I'm trying not to be detailed. But, um, no, be as detailed as you want. Okay. So please. Let's just talk about from the carrier side. The carrier side, depending on the fleet.

So if you're dealing with a carrier that's probably what I would consider driver dispatch, they're using all the tools or using trucks stop and DAT and freightways to get all of the market information. So every time they put an offer in, it's going to be at market or above rate for the most part, right? Unless they really need to get to somewhere. Got it. When you think about what we're trying to build us, and I know everyone says the back haul is dead, but when you've got a thousand trucks or 100 trucks or 500 trucks, you still have empty miles, really trying to find the right load for that carrier every single time, you know,

they're not going to try to get the market if it fits exactly what they're looking for. They might give you a 7% discount to the market or they might give you a 10% or a 4% So really finding that perfect load is an integral part of driving margins from the procurement standpoint. And then from the customer standpoint, you know, to the question earlier, like, it just depends on the cut. Like, let's just use a Rive as an example, Dallas-Sillaredo. One of the highest volume lanes that we have, we used to pay 700 on that lane. And so we would have quoted off of that cost. But now that we run that so much, our cost is now at 600.

So we're quoting off of a completely different number, whereas a company that doesn't run Dallas-Lorado 50 times a day. they're not going to quote as aggressively as us because they don't have that consistent carrier capacity to offer that price. So this is what you talk about when you're like, you really want to own a lane because then you can, if you can sort of like build up consistent capacity that you can always access between two key locations. So you have a more economical product to offer. Yeah, we call. So there's three types of lanes. There's low volume lanes, which are under one load a day throughout a 365 day period of time. There's a mature lane, which is one load a day or more.

And then there's a power lane, which is two and a half loads a day. or more. And we're constantly focusing on how much of our freight is on one of those mature or power lanes, right? If you look back five years ago, maybe 20% are on what we would consider mature or power. Today, it's like 75%. So that's how you drive a lot of margin expansions. You drive consistency. You drive procurement capabilities. You can then pass that savings onto your customers, and everyone wins because the carriers are getting what they're needing and the customers are getting their freight at a competitive rate. A big picture question for you. So one of the reasons Joe and I are here is because obviously the mainstream media are suddenly all over supply chains,

and I know you all have been doing it for many, many years, even decades in some cases, but given what we've seen over the past couple of years since the onset of the pandemic, and I know there's been a lot of talk, especially in the government, about how to improve things. From your perspective, from a freight brokerage perspective, if you could do anything to supply chains, transport logistics to make things better or easier for supply chains as a whole, whether it's building out the ports, improving the roads, I don't know, what would it be? So you said the thing that there's always a lot of chatter on the throughput through the ports, but I don't, we are very focused on the middle miles.

I'm going to talk about that part of the supply chain because I have a lot more intel into that. You know, I think it's a lot about what we talked about as tech adoptions. How do we get every, you know, shipper to be able to connect. via rate APIs, to be able to get all of our updates via APIs, to be able to interact and not have to have a lot of the manual back and forth processes, which you're starting to see. And then on the carrier side is adoption of technology, right? It's getting the people that live in West Virginia where I grew up to, you know, where I grew up, to, you know, want to use the app, to want to use the portal, to want to put in the

preferences, to want to be able to accept and reject via email rather than having to take a phone call and negotiate every single thing. So it's all around adoption of technology for the middle mile. And then you're going to, it's such a fragmented market. You're still going to have the ebbs and flows and, you know, equilibrium versus inflationary versus deflationary. That's not going to go away. It's such as, it's such a large market and it moves in so many different directions that even a small move in one direction causes crazy, you know, ripple effects. But I think technology and integration and connectivity between customers and brokers and carriers is going to drive to a much better experience for everyone.

And is it just a matter of time? Are there policies that could accelerate them? process of getting in technological alignment or is it just like sort of slugging it out and one platform tries to win? I mean, rolling out ELDs in 2018 was like crazy, crazy talk to a lot of assets. So I definitely think the industry is a lot, lags a little bit. But once again, like I've said a lot, you know, it's definitely catching up and it's happening. So one more question for me about the future. And again, based on something that Joe and I have learned just being at this conference, But the industry itself sounds very, very cyclical, right?

Like boom bust cycles, low barriers to entry, lots of fragmentation, as we've been discussing. Is it always going to be that way? Still my question. I'm sorry. No, it's good. Yeah. Yeah. I mean, you would think that eventually with, you know, autonomous technology and more trailer

pools and more equilibrium of from a capacity. So better efficiency at the shippers and the consignees. So to where it's not having, we always hear about the driver shortage, but really we just have a misuse of capacity, a lot of inefficiencies, you know, four hours on every single load, is that a shipper and constantly that's without a delay? So really focusing on those different things

that can drive efficiency, you know, I think that will take some of the cyclicality out of it and that will make it more of a consistent volume play. But as long as there's continuing to be, you know, capacity challenges, it's going to be cyclical. So obviously Tracy and I are thinking of starting

a freight brokerage after this, And you mentioned that whoever said there's 20% margins in this business are lying. But what can you get? Yeah, I mean, it depends on the type of freight. Right. So when I always, one of the things I always focus on with our investors and with our board is really spread per load. What is our cost per load?

What is our spread per load? And what is our EBITDA per load? So from a percentage, if revenue proloads $3,000, because it's a, you know, a longer length of haul, you're not going to make 15% on that. You're not going to make 450 forever. It's too competitive. Right. So really like trying to triangulate and understand from a spread per load dollar where the market, where the industry is going to be over time, that's really what we focus on. So like to answer your question, you know, we have long length of haul that can be as low as five or six percent margin.

And we've got short haul that can be 20 percent margin, but the revenue is only 250. And then we lose on 10 percent of our trucks or, you know, our lows. So that's negative margins, right? So like from a bled out average, you know, kind of what I think the market take rate that people constantly talk about is, you know, getting to. world of like 10 to 12% margins and driving enough automation to be able to still drop 5% to the bottom. All right. So another question for the brokerage we're going to start.

I mean, our podcast is called odd lots. And so, you know, we're obviously not going to be competing on like the really major lanes. We'll like leave that to you. But like, are there big opportunities in the sort of in the really small lanes that do not have, you know, very much back and forth traffic and maybe their supply imbalances in one city versus a destination city. It sounds like a board member. Yeah, it feels like there must be opportunities in those in those markets.

You want to come to the meeting? Absolutely. I'd love to. Yeah. So one of the things that we do, and it's a great question is we're not going to always be great at the high volume regional because the large assets are super good at that, right? That is their wheelhouse. Right.

As a broker, our average length of halls almost 700 miles. So we're going after the tweener lanes, you know, that 500 to 1,000, the long length of hall over the road driving is is not what it once was. So we have to be good at those one-off lanes. We have to be good at those lanes that a lot of the assets don't want to build their network around. That's where our value comes in. So one of the things that we really constantly do is we basically look for arbitrage on what are lanes that are hard for shippers to cover but are easy for us to cover, right? That's that's what's a lane?

So I used Dallas-Cillaredo earlier, right? So Dallas-Lerato, if you look at the shipper-to-carrier rate, there's about a 200, I'll just make a, I'll just make a, I've called $150 delta between shipper to carrier from broker to carrier. So there's margin opportunity there. But Laredo to Dallas, if you look overly those two rates, they're almost equal. So that's a rate that there's not going to be a whole lot of opportunity to drive significant volume on. So looking at the like the basically the market of where we can drive incremental margin because we have the right capacity at the right cost is a big part of what we do. So Joe, we just don't blindly quote everything.

We need to develop an app or a web-based portal. We need to identify some quiet lanes, preferably short haul, to maybe get 20% margins. And then we need to go head to head with Matt. The problem with short haul is you're making like $50 to $100 and your cost for a load is going to be tough. So I wouldn't build a business on that. So we just have a couple of minutes left. But any sort of, you know, I want to just go back to the macro situation. Like what's your feel?

Like what are you watching for over the next few months? Yeah. I mean, you know, obviously we're coming into produce season. We're coming into 100 days of summer. It's going to be really interesting to see what happens. You know, our service is going to continue to, you know, gain market share over durable goods. Is there a pent-up inventory of, you know,

people weren't buying autos because that industry has been really hit with the silicon issues? You know, so we're just looking at all the things that we talked about earlier. It's too early to make a call on like what the future looks like in 12 months. But, you know, every single day, every single week, we feel like we're building more and more confidence in what our, you know, 12 month, 24 month outlook looks like. But I don't want to go on record and make any crazy predictions. But it's definitely there's a lot of variables.

There's a lot of things moving around. And as of this minute, it indicates that we're going to continue to feel a lot of downward pressure on both spot and contract rates over the next nine to 12 months. All right. Well, Matt Piot, thank you so much for participating in this live episode of the podcast with us. This is really fun. I learned a ton. Thank you.

Thanks for having me. Absolutely. And thank you to freight waves as well for inviting us over to be logistics and transport tourists for a couple of days. Yeah, super fun. Thank you very much. Thank you.