FreightWaves Today | September 9

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7:56. . . . . . . . . . . . . . . . . . . . year, I guess, if we didn't trade with Mexico. But I do feel like there is quite a bit of manufacturing that happens down there that we did. He did follow up and again say, I don't want to do that. We have a really good relationship with Mexico. So I guess you see it.

8:56See these rhetoric. Yeah, I was a rhetoric him. This is again a negotiation tactic for sure. Any, you talked about it earlier on what the truck, any takeaways from that? Let's say the biggest thing is just that obviously it's like, you know, near-shoring and things that are happening in Mexico. There has to be a component of this when it comes to China as well that we're not necessarily thinking about. Yeah, wouldn't we rather trade with Mexico than China? Every day. Every day. And Michael brought up a great point, too, is that, all right, like, hey, like there's so much happening within the space. This cannot not happen, right? I just think it's, hey, we're seeing this and this is almost quote unquote a warning shop for what's to come. And you got to think about security as well. We've talked about cargo theft. We talked about, you know, cartels and things of that nature. And not this is not just a Mexico issue. Canada as, I mean, we have talked about repeatedly drug bus that have happened in the last month. I mean, at least three or four at the Canadian border as well. So this is just kind of sharing up the hatches on both sides of the country, for sure.

9:57Interesting. Well, we'll watch and see what happens. Oh, I will be glued to the TV. Glue to the TV. So you guys should be glued to this next interview because I'm really excited for this one. All right. So ship, you just launched always on audit. All right. What this is is a product. And it's the calling of the next era of financial control, a ship for shippers replacing month old credit request and continuous real time auditing. Joining us now are Jason Murray, CEO and co founder of ship, and Penny Allen, SVP of AI, product and engineering at ship, and Jason, Penny, welcome to freight waves today. It's good to have you guys. How are you? I'm great. Great to be here. Hard to follow up the tomatoes and tamales, but we'll do our best. Listen, I think you guys are going to do more than your best. I'm really happy to see both of you all. And thank you guys so much for being here and a lot to discuss and a lot to talk about. So yeah, I want to hear more about always on audit, but can you back up a little bit first and tell us a little bit about ship, you know, as a whole, what you all offer, what you

11:00do and a little overview of your organization. Yeah, so my background was at Amazon for 20 years. I built the supply chain tech stack out there that powered prime. And ultimately left Amazon in 2018, started shipping them in 2019, and the concept was to kind of bring that technology to the rest of the market. And really what we think about ourselves as is kind of the rails for shipping. So we handle everything from promise to payment when it comes to shipping. We've traditionally been really focused on the parcel space, you know, to kind of match the Amazon energy. But we do all of the routing and decision making through that whole chain. And if you do a good job on those decisions, you get outsized savings and then also benefits to your customers in terms of customer experience. And so audit is kind of the completes the final piece of this where we're tying the financial records to the financial records to the ship and itself. Okay, so tell us how always on audit does things differently than maybe traditional freight

12:05audit or than what you were able to offer prior to releasing this? Yeah, so I mean, traditionally audit is kind of a human driven process, right? And there's horror stories about people with boxes of paper kind of going through these, et cetera. Some versions of it is more you're working through. You've got a big giant group of humans doing working through Excel spreadsheets to these comparisons and reconciliation, et cetera. We really stayed out of the space until 2022 when the kind of AI stuff started coming online and then it became very clearly, it became clear very early that this was this new technology, generative AI and agents in general. We're going to be a perfect solution for solving this problem. So we're kind of, our approach is really about a AI native approach to solving this problem, which we've got agents running 24 hours a day that are basically auditing and looking at your invoices and receipts and then handling the disputes, claims, et cetera, right? And very, very powerful because it allows us to kind of move that, you know, move the

13:09time it takes way forward and then really focus on kind of addressing root causes. Now, Penny, let's look at the opposite side of the coin. Now from the engineering side, what does it take to build an audit that runs continuously instead of monthly? So it's important to understand that monthly audit and continuous audit are not the same job at different speeds. They audit different objects. So monthly audit is a batch job. Over one artifact, the invoice, it's, it's archaeology. Continuous audit, the object is, is the shipment itself. From the moment it comes into existence to the moment it's delivered and invoice occurs, it's forensics. So when you're dealing with forensics, what I need is a record that opens at the start and is continually updated when it's created, rated, carrier selection, label printed. Every step needs to write to the same record in real time. That's the whole architectural bet. Then I need to be able to have a versioned reference state.

14:10What is the gold standard? What should have happened in this condition? Then I need a way to normalize at all. So what it really takes to make all of this go is compute power. It takes lots of compute power to do all of these calculations in real time and give findings in a timely enough matter for it to make a difference. It takes tremendous data engineering and data science. There are volumes and volumes of messy, inconsistent data. It used to be years of hand-built mappings with AI. I can do it in span of a heartbeat. It takes an intelligence layer that's trained on nuance. Knowing that this code on one carrier's bill matches that code on a different one, that's really interesting and really hard to nail down information. And AI is what's making this all possible. The advances in machine learning, specifically around classification, around pattern recognition,

15:10all of these play into the fact that I can have a relentless, always on system that is running every single decision we make against the gold standard and telling us what's wrong in the moment. I think it's very cool to have obviously those instant updates as things change. And I don't know as much about parcel as let's say truckload. You book a load, you know what you expect to be paid. But then later, as the soils are added, you add detention or fuel is different the way you expect it or whatever. And then it changes. So having that version history and understanding what changed and understanding it to the moment, because invoices aren't always static. Line items are added later or removed. I think that is very, very cool to be able to, like you mentioned, it's like a forensic file so you can look back and also see what changed if you need to. My question is, in most cases when we see these AI agents operating, they're doing the highly repeatable stuff. They're solving most of the problems, they're flagging anomalies and then people are still

16:13dealing with the exceptions in most of the cases. How much of this is truly automated and fully handled by agents versus being made more efficient and then having human interaction for exceptions? Well, I think the key thing here is that we do have humans to backstop some of this, right? And I think you think of them as being hyper-efficient in terms of they're only going to get the nastiest of nastiest of exceptions. But if you're really kind of like step back a little bit and think about this truly being an AI native workflow, what we're doing every time we have to deal with one of these exceptions is we're training the system to not kind of handle it the next time, right? And so with what this means technology is so great at is once you kind of have the human do at one time or maybe a couple times, maybe you need a couple data points to make it all tie out, right? The next time through the system is going to know what to do with it, right? And you can kind of continually over time automate more and more of this pieces. And this was something that just was impossible to get to by having to write down all those

17:17different code paths five years ago, right? Now, Jason, you said ship you already knows what a shipman is supposed to cost because obviously it makes the rating and routing decision in the first players. But guess what question I have is why does this matter so much in terms of for accuracy purposes? I mean, I think I just think of it as it's kind of the final step of making sure that you're tied up with what the carrier is doing. And then you also have these issues kind of centered around the virtual versus physical world, which is always true, right? We dealt with this at Amazon. And this whole notion that the carrier, ultimately when we're rating and costing it, we have a effectively a digital twin of what we believe the carrier contract is, kind of what we believe the physical dimensions of this item is kind of all of the constraints that we have around this. We then rate and make these decisions around this. But ultimately, when the invoice comes in, the carrier might say, well, this is actually

18:17a different size or it's been a different box or the contract didn't match, right? And you have to go through that final step of reconciliation to make sure that everything ties out into end. And this is how you keep budgets in line. And people don't go off the rails. And then you're continually improving and updating the upstream system as this new data emerges, right? You're kind of working in a bubble, if you will, where you don't exactly know how your virtual and physical world are divergent. Yeah, I think that makes a lot of sense. And then I imagine as credit and rebuilds happen because there are going to be errors in the data or whatever that is learning from those as well. And that's where reconciliation becomes such a pain. So having a system like this would be so cool. Exactly. Exactly. Speaking of that, and maybe this is a question for you, Penny, I feel like a lot of errors really start from errors in the data, not necessarily errors in the process. So it could be the carrier's data, but it's often the shipper's data as well. So how does this help actually catch that kind of error and correct it going forward?

19:22So agreed. About this is the half that like nobody wants to talk about. So many of the problems are somewhere inside the shipper's infrastructure. A meaningful share is inside the infrastructure declared way to dimension problem, something that doesn't match which actually ship. So Jason talked about the fact that we build a true digital twin of how good looks. What is the gold standard? And that looks quickly and accurately model what should have happened on that shipment. Every single data element, every single item in that forensic record gets compared against the twin. And the intelligence layer we built quickly determines the actual source of the problem, both based on what it understands about the digital twin, but also what it understands about the shape and of the shipper's actual traffic. That finding doesn't just land on a report somewhere, that finding gets handed to an agent that then moves to correct the problem. And if it can't, it alerts a human who can correct the problem for them. And because we hold all of the data, the entire forest, we can, when an assocorial does come

20:28in, something does slip through, something does get on an invoice, we can forensically recreate what actually happened. Not it happened out Wednesday at two o'clock. We can say it happened on this lane, on this dimensioner at this station with this operator, or it came in on this data stream from your tenant. We can really dial it down to the exact point at which the problem happened and then hand that to an agent to fix it. And then because we are able to gather this tremendous amount of data, I can trend over long time frames to catch drift. Pattern recognition across months of shipper's traffic, services, slow moving things, a cost creeping up on a lane that we weren't expecting, a carrier mix that's quietly changing and we're not sure why, a rule that's aging out from underneath you, and then you can act on it while it's still small before it becomes a big problem and a big recovery effort. So it makes a big difference when we can sit on that data and know exactly where it happened

21:29in the process. Welcome. I know you've got more questions. No, no, calm hands, but what I think is so interesting about this and where I think it is so valuable is to your point, like very little things start happening before it becomes a big issue that might actually trip a trigger because it's reached a specific dollar amount to have a person look into it. So being, I love this idea of this like forensic file that you can go back through to see it. And I used to see things as simple as a shipper was updating their fuel surcharge like weirdly on a Wednesday instead of a Monday or a Tuesday like everyone else. So we would have one day off and it would take forever to figure out why we have this $3 issue over and over and over and over again, right? And so to be able to pinpoint that quickly and easily at exactly what point it happened at what point in the shipment, which part of the invoice would be incredibly valuable. So I think that that is what's so cool about this constant updating and then to your point, the version history as well as the comparison of that gold standard of what this

22:30is what it should look like and this is what it does look like would be really cool. I'm like a nerd though, like I love putting that sort of effect. I've never been accounted like I don't care down to the penny, but I love understanding where went wrong and how to fix it, right? I don't want to compare them actual money. I just want to understand the problem. Well, I think that's what you got. Yeah, and you're kind of to the, I think you're kind of really touching on the point too is we believe we're going to be the first approach to this problem where we're really addressing it into end. We have the entire data set to do those forensics. And that's what I'm talking about when I'm talking about the rails, right? Is where, but as Penny was alluding to, we kind of, we know at decision time why we made these decisions, what lane, what rule, what machine learning model triggered this and then ultimately on the end, on the back end, you see the invoice and then we're going to have the entire data stream there to connect all that together and actually truly audit it and then solve any of these underlying problems. So it's really exciting. It's kind of something that we've been working towards for several years and to seeing it come to fruition is a huge moment for the company.

23:33Yeah, and to have the power of AI to look at that massive amount of data and all those invoices and draw those conclusions versus having a person to your point earlier, going through a spreadsheet looking at each invoice, trying to understand exactly how far it's often why we had a Prumb resolution department that I worked very closely with and it was like mind numbing, so to be able to hit at high points is amazing. That's awesome. That's awesome. Jason, I want to follow up because you recently mentioned earlier in the interview about your time at Amazon. So you spent 19 years there before founding of Gorshippingham in 2019. How did your experience kind of set the foundation for what you're currently doing infrastructurely right now? I think that being kind of in and around the supply chain space and I'm a technical person coming into supply chain space, that's kind of how I got my start. Obviously, I fell in love with this notion of using technology to solve these problems. That was my background in history.

24:33But we continuously saw at Amazon was this kind of the notion that a lot of the problems you could solve by better forecasting, better prediction, better try to do a better job of predicting what was going to happen. But a lot of the core structural problems came from the fact that there was just underlying miscommunication or misunderstanding between you and other parts of the supply chain. So I actually owned vendor chargebacks for a while in the early 2010s and we started charging vendors based on you're shipping at the wrong day or you're shipping the wrong time. So the thought was that was going to ultimately need to root cause resolution. It was going to lead to them structurally solving some of these problems. But the issue was a lot of the time it never did, because they didn't have the ability to go and actually change what needed to be changed. And so what I'm excited about in this kind of new world is that we're getting a chance

25:36to structurally solve some of these upstream issues that just continually put pressure on the system. And so we think about audit. Our goal here is that we're actually preventing problems before they happen. And I think the point of that is it's much easier for the shipper to put the correct dimensions and hand it off to the shipper at the correct time, expect it to be delivered at the correct time, then the carrier actually having to check that what you said was correct, check if the dimensions were correct, check all of the data to basically say is this the right thing. So that's possibly up and down the chain. And so my experience in Amazon was just that is where a lot of the cost and supply chain comes from. And this allows us to kind of start systematically fixing those things to pull costs out of the entire thing, including the carrier. That makes so much sense to be able to audit and catch it up front versus having to rebuild and reconcile and potentially rebuild again and credit or what, all of those back and

26:36forth. Yeah, you, you PS doesn't want to do it. The shipper doesn't. Yeah. Yeah. And you PS doesn't want to do it. The shipper doesn't want to do it. It's all the exactly. And so this is a really having this being done kind of in real time is going to be a game changer in terms of structurally fixing some of these problems. Jason, I want to hear a little bit more about Shippeeam's growth history and sort of background. You've become one of really the largest shipping platforms in the world. So what was that inflection point that really allowed you guys to take off and start growing and what have you learned through that process? Yeah, I mean, there's kind of two things I think that we're really, really good at Unicat is that it's first the approach and I've now brought up Rails three times. But basically this notion of like solving the system, the shipping problem in Dan. So everything from what you tell the customer delivery problem is through now payment and that kind of tying all those things together is extremely powerful and very unique to our approach to this problem. And that's always been kind of what's attracted people to this platform.

27:38I think the second piece is basically our use of data and data science and now AI to solve these problems with systematically, right? And obviously this was something that I did a lot of it Amazon and then kind of brought over to Shippeeam as a general approach to we have so much data in terms of how these shipments are moving through transportation networks. We can do a really good job of predicting how that flow is going to happen in terms of either providing a better customer experience, routing decisions or even like managing exceptions and kind of knowing ahead of time when things are going to go off the rails, right? And for us, part of this was we had to get to a certain scale before we had enough data to just make this seamless for our customers, right? And around 23, we started hit the point where we were kind of reaching that 100 million mark where we had enough coverage at least in the US that our predictions were quite a bit better than what you're going to get with a stock retail like presentation back from the carrier. That really started propelling growth as a lever for us.

28:39Penny, I want to talk about how the pairing right happens when it comes to execution technology with audit technology and how does this give Shippeeam an advantage that competitors, they really just can't replicate. So the 30,000-foot view, it comes down to this. One system, one record, one evidence change, no integration seam, no emailing one another spreadsheet, no waiting for a report to run, no trying to use archaeology to figure out what happened. It changes the entire math around this. And real-time forensics gives me options that I simply didn't have before. So if the finding arrives, for example, while the shipment is still in the building, I can intervene before it ever leaves with that bad data attached to it. For example, a cost way outside the norm or the dimensions on a package that you've never seen before and are way out of line with what you usually do, we can move an agent to act

29:41on that shipment before it leaves the facility, choose a different carrier or a service method, or in extreme cases, you stop the shipment and hold it until a human in the loop works out what's actually wrong with that. And again, the fact that I have all of the data means I can see the forest instead of just the trees. The shipment is the tree. I can see the whole forest. I can see exactly what's going on with the shipment. Understand the patterns. Understand where I need to deploy the agents in real time. In software, we joke about the best defect being one that never gets into the product. And the same thing applies here. The best case scenario is a bad charge never makes it onto the invoice. And that's what we can do when I have one system, one record, one evidence change, and no integration seam. That makes a lot of sense. So I want to talk a little bit about the results that you all are seeing so far. What does implementation time look like for something like this? And then what kind of results are you seeing that you can measure from defect rates or improvements

30:42in billing accuracy as well as that reconciliation? I'll talk a little bit about shipping in general, the core product that we've been shipping since 2021. We typically will see a 12% reduction in transportation costs, at least in the parcel spend. And then I think the audit space we're very, very early. And so Penny, do you want to talk a little bit about some examples of you found with some of the early runs of these agents through some of our beta customers? Yeah, absolutely. This is an on-rap run than a project. So the instant we start building your digital tune, we start finding things. One of our customers, we in a matter of moments, discovered that their carrier was charging in base rates. Instead of their contracted rates to the tune of many thousands of dollars, we were able to intervene immediately and correct that. In other cases, we discovered that surcharge applicability, and you mentioned this earlier, it was supposed to start on one day. The carrier started two days early.

31:42Were we able to catch that immediately? We've been able to dial in really quickly on where rate cards and rate tables have drifted from reality, or where the carrier simply wasn't doing what they promised to do in the contract. We've also been able to take what we've learned along this to make overall implementation happen much, much faster. We have automated ingestors. We have agents that do automated configuration. So what we're trying to get to is a shrinking exception pile, quickly identifying what happens and our early experiments have proved as the system is doing exactly that. Okay, so that was not in the notes, by the way, the thing about the surcharge. No. So it's just coincidence that that is what you found in something that I had seen in my past history as well, which seems like mind blowing. It's like in the contract, but it somehow gets missed. That's why we love free waves EV. You guys bring the heat. All right, last question, because we are unfortunately out of time.

32:42What's next for you guys? I mean, we're going to be rolling this out aggressively to a lot of our existing customers and then starting to launch it on new customers. But we're planning on going to other modes very quickly. We started at parcel because I firmly believe it's kind of the hardest one. As we continue to expand this out, it will be other modes, other countries, etc. And we're just really excited about how applicable this technology AI in general is to this space. And we feel like this is going to be a total rocket ship to attacking this space once and for all. So we're totally pumped about this. Jason Murray, CEO and co-founder of Shipium as well as pinny Allen, SVP of AI product and engineering at Shipium. Thank you both so much for being here on free waves today. You guys brought the heat. That wasn't us. We were just here. Thank you. Thank you very much. Thank you so much.

33:43Thank you guys. Thank you guys. Bye bye. And coming up when we get back a sonar deep dive that you can't afford to miss, stick around. Only here on free waves today. If you set the parcels at scale, you know the drill. One system quotes the delivery date, another picks the carrier, another prints the label, and some third party audits your invoice six weeks later. Shipium replaces all of it. Some platform from promise to payment, including their brand new always on audit product, which replaces your auditor with real time monitoring that never sleeps. Check it out right now at shipium.com. That's shipium.com. The world doesn't waste. So neither do they. Wheels on the interstate. Boots. On the sides. Hands. On the ship. We build for the world out here. And we build it with the people who live it.

34:46Ideas from the field made real by world class R&D. To keep the operation sharp, the front line safe, and the world moving from one cab to a global network. Billions of miles. Trillions of data points. Everyone making your operation better. And we never build a long. Samzara built with operators. Once a year, the entire freight industry stops what it's doing and comes to one place.

35:52Chattanooga, Tennessee. This is F3, the future of freight festival. It isn't just a conference. It's the largest festival in freight built to pull you all the way in. The energy, the ideas, the atmosphere, and the people who move this industry forward. Over 50 speakers. Four events across three days. Founders, executives, innovators, and disruptors. All under one roof. All asking the same question. What comes next? On the main stage, the sharpest minds in freight take on the biggest questions in the business. The trends, the technology, and the forces shaping what's ahead. Then the clock starts. Seven minutes. No exceptions. The cutting edge of freight tech goes head to head, live, battling for best in show. When the time's up, the lights go out. And in between, the conversations that don't happen anywhere else. The connections that change the trajectory of your business. The relationships you'll carry long after you leave. Because when the sessions end, the festival begins. Live entertainment. Unforgettable experiences.

36:53A celebration of the world of freight. And an energy you won't find at any other event in the industry. The leaders you need. The access you won't get anywhere else. This is where knowledge is shared. Where deals get done. Where the future of freight gets decided. F3. Future of freight festival. October 27th and 28th. The signal. Chattanooga, Tennessee. We'll see you there. Register now at live.fraithwaves.com. All right, welcome back. We are going to get into the Sonar Update. Blind spots cost some of fleets, costliest collisions. Simpsara's AI gives you 360 degree visibility into risks on the road. So you can protect your drivers in real time. Learn more at simpsara.com. High five�

38:23The world doesn't wait. So neither do they. Wheels on the interstate. Boots on the sights. Hands on the ship. We build for the world out here. And we build it with the people who live it. Ideas from the field made real by world's class R&D. To keep the operation sharp, the front line safe. And the world moving from one cab to a global network. Billions of mines. Trillions of data points. Everyone making your operation better. And we never build it alone.

39:23Thames are built with operators. Once a year, the entire freight industry stops what it's doing and comes to one place, Chattanooga Tennessee. This is F3, the future of freight festival. It isn't just a conference. It's the largest festival in freight built to pull you all the way in, the energy, the ideas, the atmosphere, and the people who move this industry forward. Over 50 speakers, four events across three days. Founders, executives, innovators, and disruptors. All under one roof. All asking the same question. What comes next? On the main stage, the sharpest mines in freight take on the biggest questions in the business. The trends, the technology, and the forces shaping what's ahead. Then the clock starts, seven minutes, no exceptions. The cutting edge of freight tech goes head-to-head, live, battling for best in show. When the time's up, the lights go out. And in between, the conversations that don't happen anywhere else, the connections that change the trajectory

40:25of your business, the relationships you'll carry long after you leave. Because when the sessions end, the festival begins. Live entertainment, unforgettable experiences, a celebration of the world of freight, and an energy you won't find at any other event in the industry. The leaders you need, the access you won't get anywhere else. This is where knowledge is shared, where deals get done, where the future of freight gets decided. F3, future of freight festival, October 27th and 28th. The signal, Chad and Nougat Tennessee. We'll see you there. Register now at live.fraitwaves.com. All right, so we had a little technical issue with the Sonar Update, and it was a good one today. I made it this morning, so we'll still make sure that if we don't get it out by the end of the show, that we will put it out in clips both on YouTube and on our social media. But really, the overlying theme of the Sonar Update today was one how cool market monitor is that I used it to really give me a briefing of what was happening today and help me make notes for that Sonar Update.

41:26There's an AI agent, oh, we got a graphic of it, that really can give you a really cool update on what's going on. So you can get this for a monthly subscription at getfraitdata.com. It's F3Waves Market Monitor. It gives really good macro level information on what's happening in the freight market. But the overlying theme of the update today was that we're seeing a little bit of a demand fall after a little bit of a pick up prior to Labor Day. And we're seeing rejections really kind of normal out still at that 14.5%, but we're continuing to see spot rates to rising, especially if you look at that NTID, which is the daily spot rate. They have not taken a hit even with volumes coming down that would demand. So spot prices remain elevated. And then really I think the only other interesting fact I'm trying to remember what I talked about was we're continuing to see strong intermodal,

42:26ocean rates are incredibly high. And I think that was really sort of the crux of it. We'll know more next week about really what's happening with Labor Day since some of our indices are on a seven day rolling average that we don't see too much volatility if one weird day happens. Like a Monday, like Monday was Labor Day in a holiday, so there was not too much shipping. You don't want it to throw off. But you see a Delta like Tuesday, what's that next week? Yeah, so I think that by Monday and next week we'll really have a good idea of what is happening in the market as a whole. But in lieu of the sonar update, we want to make sure we still have time even without Bill Stevens. So it will not be as good as usual to talk about the newly released rail numbers. The AR report came out since we've been on here today. So I am going to reference my notes from my computer because I think it's to look at it before this last break. But really, US rail traffic was up strongly across the board. Up 13.8% year over year, total car loads rose 8.9%

43:27and our model surge 18% and really the ones leading the car load gains are grain up 24% metallic ores and metals up 26%. And coal was the lone decliner, which has been sort of the ongoing story when it comes to US railroads. That just answered a question I had about car loads. All like from a commodity standpoint, what groups are the most concerning from I guess a demand and you just said an excellent job? Yeah, so metallic ores, metals and grains were the commodities that were up coal was down, which coal has been down significantly for as long as I can remember. Of course. And that was for the US railroads, for the Canada, they're still showing strength as well. Total traffic up 9.7%, car loads up 10.4%, and our model up 8.9%. Again, the strong commodities there are grain up 29%. Motor vehicles and parts up 26%, which that is something that is going to be part of the tariffs.

44:28So we'll be watching that. coal and other were down for Canada when it came to Mexico. Their total traffic was up less than the other two. So it was up just 1.5%. Car loads actually fell 7.4%. Primarily a huge collapse in coal, like non-ship, last week, down 100%. And it declined in petroleum as well as chemical. But their intermodal versus car load was up 10%. So when you look at North America overall, intermodal was up 12.4% year over year, which is crazy, that's huge growth. Car loads were up 8.7%, sorry, intermodal units were up 12.4. Car loads were up 8.7 and intermodal as a whole was up 15.9. So when you look at sort of year to date, traffic is running 3.5% ahead of 2025.

45:30So intermodal continues to take market share, continues to show strong industrial strength for the US with those commodities. Julie, is there a particular real metric that you would just identify as like a hey, like this is something that folks in our industry should be paying more attention to that necessarily aren't doing that today? So I mean, I like, I used intermodal dashboard and so on our a lot. I like to see what's happening and that's different than this car load, which is truly this data is really, let's you know what's happening later, right? These are commodities coming in that will be manufactured and turned into goods and that should create freight down the road. So I like this for that. For just kind of understanding what's happening with intermodal, I like to watch the mode shifts and if it's taking volume from the roads to the rails. That makes sense. So I use our intermodal dashboard and so on our to do that a little bit and I look at those O rail numbers, the domestic loaded rail containers to see sort of what's happening with intermodal volume and then tracking the rates to see the cost savings from truck to intermodal,

46:32which is our IMCSI ticker. Cause that's just, cause I don't know, I guess because I'm a trucker at heart, I like to like the part that I can associate the intermodal with the road traffic as well with the van traffic. If you could sum this up in one sentence about this week's report and for what's to come. I know that's very hard. So I'm gonna give you that. Especially since I got a five minute, it's gonna be a big thing. If you could sum it up in one sentence, or what would that one sentence be? Or I'll give you two sentences. Continued strength overall intermodal is outpacing, you know, car load growth. I wanna look deeper into what happened in Mexico. That those numbers surprised me a little bit for Mexico to not show a strong of an increase in volumes that had been showing. So I would like to dig into that a little bit more and maybe ask a different expert. I think we have many experts on standby. And for, by the way, fantastic jobs. That was really, really good.

47:33I mean, I'm sorry I had to read it. No, no, no, I didn't. That's what happens when you don't really get it. Well, they don't release it until we're already on the air. Yeah, so you got that in real time. We don't wanna sit on the news. Yeah, we'll get it right out the good. We got that in real time. And in real time now, of course, we mentioned this over the course of the last few days, but Eric Kuhlish has been covering the deadly crash of an Amazon cargo jet that overran the runway. Of course, that Miami International, leaving what the NTSB chairwoman has called other devastation, which in in fact is. And joining us now is Eric. Of course, our parcel, as well as air expert to give us the latest. Eric, it's good to see you. Of course, not under these circumstances, but good to see you nonetheless. I hope everything is going well. This be role of the drone footage showing the actual like. Yeah. Reckage. Let's check that out. We were crazy. I saw it out of the corner of my eye, but this is a.

48:33I had to give it a four now. It is a wow. Yeah, that's an incredible. The National Transportation Safety Board investigators trying to document as much as they can about the crash, taking photographs, measurements. Yesterday. So Eric, we saw this happen. And I remember because got the notification from you over the weekend. And I couldn't believe what I was I was witnessing. Walk us through the current scene right now at Miami International. And really, how do we get here as a whole Eric? Well, you know, a Sunday afternoon, this Amazon cargo jet, a Boeing 767 300. It's a converted freighter. Used to be a passenger plane. And it was on its third flight of the day coming in from San Juan Puerto Rico. And the plane is operated by a small contractor called 21 Air

49:37based in North Carolina. Amazon has a large fleet and to support its parcel and logistics network around the country. But it doesn't actually fly the planes itself. So it outsources that to companies like 21 Air. And, you know, from the flight data recorders and what the MTSB has said and from video, you know, it appears the pilots, I think there were some storminess in the area at the time. The pilots seem to have trouble getting the plane down or, you know, on the proper flight path. They kind of overshot the target landing zone by about a thousand feet. So they were well down the runway when they finally touched down. And then yesterday, the MTSB had a press conference and they described, you know, how they only got one wheel down or two. They had trouble getting all three wheels down. Then they, you know, they were coming in at about 150, 160 miles per hour.

50:39And it took them a long time to try and break and slow down. And then they finally got the third wheel down. But at some point it looked like they actually tried to abort the takeoff because the thrusters went into full thrust to try and maybe do a go-around. That didn't happen. And they also said it didn't look like the pilots were able to activate some other safety systems like the thruster versors or the speed brakes, which are like kind of little flaps on the tail that kind of creates some drag. So, you know, the plane was going in a pretty bad and pretty high speed going to cariend off the runway. It crashed into an economy line van carrying seven people that were contractors for like a cleaning company, the clean airplanes. Five people in that van died and went through a fence across the road, hit a Toyota, crossed another fence, and ended up in a grassy field across the road. So yeah, a lot of chaos and destruction in its wake.

51:42Derek, I noticed that the article mentioned that they didn't deploy some of the landing. You mentioned that the thrusters, some of the systems that should have slowed the plane down. Do we know if the pilots actually didn't deploy them or if they just didn't work when they tried to deploy them? Yeah, I don't think we know that yet. They're going to interview the pilots today. That's the expectation. And so all they can go off is the flight data and what it shows them. So yeah, that's more to come in the investigation. So what do we learn about the briefing that we necessarily didn't have that information Sunday, of course, Monday was the hollow day. But is there any just new information that you can share with us that we necessarily weren't privy to yesterday as you've continued to update the article throughout the duration of the week? Yeah, we've had three articles since the crash. And we keep providing updates for our readers and viewers. I think we've covered most of the technical aspects of what happened.

52:44But I will note, it was an interesting tidbit that I led my story off last night with which is that the plane was coming fully loaded with... It didn't seem like it was having mostly e-commerce type of Amazon packages. The NTSB said it was mostly loaded with contact lenses. So yeah, a lot of contact lenses. And so I checked it, Puerto Rico's a big manufacturing hub for the pharmaceutical industry and it turns out there are a lot of contact lens manufacturer based there. So it probably... It sounds like this plane was outso... Or Amazon is starting to share its logistics network with third party. So not just for Amazon free. And so this was probably an Amazon air cargo load where it was a shipper at book space. There was available capacity in book space and put these contact lenses on there

53:47for shipping to the US. And you imagine 32,000 pounds of contact? Like my little box of dailies, I feel like is a massive number of contact. That's a lot of contact. So two of Miami's four runways are still closed. Have you come across any information about when they might reopen? I think so yesterday the NTSB said one of the runways they were able to finish and you know, measuring the tire with skid marks and other things. So one of the runways in the Easterly direction is now open. So the airport... Yeah, so I think there's one runway down completely. The other one is partially available. I talked to DHL Express, a big cargo carrier out of Miami. They said they're not experiencing any delays right now. So I'm sure there's some delays with as many passengers and cargo flights that go through there, but it's probably case by case. But it's still running at below capacity,

54:49but the NTSB said they're hoping to wrap up their investigation as quickly as possible once they get all the perishable evidence, they can move out of the area and let this final runway reopen. But not exactly sure when that'll take place. It might still be a couple days. I also imagine that like in addition to the investigation, there was a lot of cleanup work that had to be done on those runways. Fuel remediation and other things before they could reopen them. And I don't know how long it will take. But yeah, there was a fuel spill or fuel in the plane that they have to take care of. So I'm sure that'll take a while before they can actually move the plane. I don't think that's all been completed, but it's obviously safe enough for the investigators to go alongside the plane or go in the plane. So it's not a critical hazard at the moment, but if they're going to move the fuselage, they'll have to remove the fuel. Eric, it seems that the flight data and cockpit voice recorders were recovered and sent to the NTSB.

55:49Guess for professional curiosity, how does that process exactly work? And how does it look and what does it timeline for that? It looks like today they're going to release some more preliminary information or read out of what they found on the flight data recorder. So we might get some partial information today. I don't know about the cockpit recorder, so that could take a while. The generally takes about 30 days for the NTSB to do a preliminary findings. We'll get some partial idea of what happened in about a month, but then the full report could take a year or more. So I would point out it's just interesting how this airline operated for Amazon. They've got several cargo contractors that work for them.

56:49And so we reported on some of the management changes at 21air earlier this year with a new CEO and a Canadian airline that had a 25% stake selling its stake. It's interesting the owner of 21air, you'll like this Malcolm. The owner of 21air is also the owner of the Houston Astros baseball team. He's a huge big galundary in the logistics industry, heads a crane worldwide logistics, but he owns a Houston Astros. I had no idea. I learned something new every single day with you. Well, I learned something reading the articles prior to this that I want to ask about. So I learned, I didn't even know this was a thing, but apparently Miami doesn't have, is it an EMS system, which is like a crushable material bed? That's what it is for whatever. If a plane does over, I imagine like a runway truck ramp. But for planes, I don't know if that's what it is.

57:50Eric, can you tell us what it is? Yeah, I think it's called the end year run. Who is it common? Do most airports have it? And what? Yeah, I don't think it's that common yet. It's an engineered mass arresting system. I believe is what EMS stands for. And it's basically kind of these crushable sections of soft sections of materials that are put at the end of the runway that if the wheels go off the hard surface, they kind of dig in and get slowed down a lot faster. The NTSB said that about 72 airports in the US have that in some fashion on runway. So I don't know how those are major airports or smaller ones. But obviously it's not universal. So it could have helped.

58:50But I'm sure the NTSB, I think they recommended that. Have there been other issues like this in Miami? I feel like someone when I was talking about this yesterday mentioned that they remembered having some other like, you know, overruns in Miami. I haven't tracked it so I don't know. Do you know Eric? I don't know about Miami specifically, but it's interesting that another Amazon plan, I was doing a little research on this this morning. I recall the reporting on it two years ago in November of 2024, a Amazon cargo plane operated by cargo jet, a Canadian carrier, overrun the runway at Vancouver airport up in Canada. So different contractor and different situation, but another overrun. So I guess Eric, my final question here for me, at least, is how is this affecting operations overall in Miami given it is a major hub in a connector when it comes to North America, South America, as well as Europe?

59:56Right. You know, I think there's still going to be some delays, especially on the passenger side. I've not pulsed all the cargo airlines, but I did hear back, like I said, from DHL Express, and they said things are pretty going pretty smoothly with their take-offs and landings, but you know, they're just one actor there. If you still have a runway down or one and a half runways down, that's going to slow things or cause some delays. So hopefully, everything gets back to normal here in the next, by the end of the week, but yeah, I'm sure there's still some delays. Now, I was thinking about it earlier. We covered this again with this morning on what the truck with Mike, and I was like, man, like just getting this story from you. Michael Vincent told me to tell you, hey, by the way, that you are one of the best in the game, and hates that we always have to talk when it's news that's as tragic as this, but you're doing really good at what you do. So, appreciate that. Say hi to Mike for me. I will. Yeah, Eric. Thanks for keeping us updated on this, and we will be watching as the story continues

1:01:00to unfold, and you will no doubt be reporting on it. Absolutely. So there's one other thing I want to talk about. Malcolm, I have you here. So we got to do a really cool thing last night. The freeways crew in the Sonao crew, and times repressed Craig's business. We got to go to the local baseball game here. The lookout stadium. The new one at Erlinger Park, and it was really cool. It was a great experience. What a cool venue. Do you want to know why I'm most excited about it? Why is that? Because at F3, one of our night, one of the evening activities is going to be under the lights. They're at Erlinger Stadium. Oh, that's the atmosphere. I see how it looks. So cool to be able to be there and be on the field and enjoy that venue. One evening at F3. That's awesome. See, I had no idea. That's going to be a fantastic time. I mean, Erlinger Park, one of... If not, I'm just going to say it's the best ballpark in the minor leagues. Yeah, I'm just about to... I'm working on ordering my team, matching baseball jerseys. Okay. Well, you're not going to outdo the team over here.

1:02:00So we're going to... I'll be ready. I'll be ready. I'll be ready. Fly and looking good. We'll be ready. Yeah. So F3 is coming up. Ensure that you go ahead and get your tickets. There are some promos running right now. It is October 27th and 28th right here in Chad and Nuga. And we're really excited about it. The lineup is great. As I've seen the agenda continue to fill out and we've been working on Supply Chain Day as well, which is the day prior for our shippers, it's going to be a great event. It's going to be a good turn out, really good content to you. So many different folks are going to be there. Of course, you have the FreightSec 100. New awards dinners are going to be taking place. And the signal. I mean, one of... And are you going to be the MC? I have a feeling. I hope so. I have a feeling. I mean, for someone like that... I mean, I hope so because I want it to be you and not me. Oh, God. But now I got a pretty good hunch. I'll be in the building. Yes, it'll be great. It's going to be good, so. All right, well, we're looking forward to that in October, best time of year to be here in Chad and Nuga. So coming up on our second hour,

1:03:02we're going to take a break. Then we'll come back on our second hour. We're going to take a look back at some of our most memorable conversations this summer. We've got Bob Lewis, the vice president at Intercoastal Trucking, joining us with his take on the state of Freight. RxO's chief strategy officer, Jared Weisfeld, breaks down what's driving capacity right now, and what's going on in the freight market, and Kirkman, the executive vice president and general manager of transportation vendor solutions at Mitsubishi HC Capital America, will be on talking about financing in today's market. So stick around for our second hour, and we will see you back tomorrow. And freight, again, your customer experience is everything. Every quote, order, and status update is a chance to win or lose a customer, but that will still, again, run on manual disconnected systems. Palette is the leading enterprise AI built for the supply chain, automated costly operations from Cota Cash across brokerages, carriers, forwarders, shippers, and warehouses. Valerie Alexander serves three times more customers per operator, deliver an exceptional customer experience at scale.

1:04:03Visit them right now at palette.com. In today's supply chain, every mile and every minute matters. Shippers, less sores, and railroads count on performance they can trust. That's where Trinity Rail delivers, with integrated railcar solutions, including manufacturing, maintenance, parts, fleet management, and leasing, helping you reduce downtime, optimize your fleet, and stay ahead of demand. Because efficiency isn't a goal. It's a competitive edge. Trinity Rail built to deliver. The world doesn't wait. So neither do they. Wheels on the interstate. Boots on the sides. Hands on the shipment. We build for the world out here, and we build it with the people who live it. Ideas from the field made real by world's class R&D.

1:05:07To keep the operation sharp, the front line is safe, and the world moving. From one cab to a global network, billions of miles, trillions of data points, everyone making your operation better. And we never build it alone. Sam Zara built with operators. Once a year, the entire freight industry stops what it's doing and comes to one place, Chattanooga, Tennessee. This is F3, the future of freight festival. It isn't just a conference. It's the largest festival in freight built to pull you all the way in. The energy, the ideas, the atmosphere, and the people who move this industry forward. Over 50 speakers, four events across three days, founders, executives, innovators, and disruptors, all under one roof, all asking the same question. What comes next?

1:06:07On the main stage, the sharpest minds in freight take on the biggest questions in the business, the trends, the technology, and the forces shaping what's ahead. Then the clock starts, seven minutes, no exceptions. The cutting edge of freight tech goes head-to-head, live, battling for best in show. When the time's up, the lights go out. And in between, the conversations that don't happen anywhere else. The connections that change the trajectory of your business. The relationships you'll carry long after you leave. Because when the sessions end, the festival begins. Live entertainment, unforgettable experiences, a celebration of the world of freight, and an energy you won't find at any other event in the industry. The leaders you need, the access you won't get anywhere else. This is where knowledge is shared, where deals get done, where the future of freight gets decided. F3, future of freight festival, October 27th and 28th, the signal, Chattanooga, Tennessee. We'll see you there, register now at live.fraithwaves.com. Let's talk about Tesla semi.

1:07:08Because this is really another polarizing conversation in terms of the trucking community. To talk about what we're seeing right on the ground, someone who's actually experienced the Tesla semi, we have intercultural truckings. Bob Lewis is going to tell us all about their experience with a Tesla semi. Bob, how are you? I'm fine. How are you? Thanks for happening. Doing well. So a little bit about intercultural, 600 traders, you guys are a Northeast-based carrier. You've gone out and you are in the process of implementing Tesla semi. So you're test driving them. Tell us a little bit about it. Yeah, so we're 57 years in business. Truckload carrier in Northeast. And we go on some of the hardest quarter deliveries, you know, places to deliver the race. We wanted to see if this Tesla truck is really something that is going to work here in the areas that we specifically deliver to. The markets we go to, hard deliveries. And so right now we are in, we're still in a two-week demo

1:08:13for this truck. So we're still demoing it. Actually, the truck was out this morning. And so we're getting a good feel of what the truck can do in our market. So it's been kind of neat because I can actually, on my phone, I can actually watch every day what this truck is doing. Right now, you can see it's charging. It's the temperature inside that the cab is 84 degrees. And so I can watch, you know, how this thing moves during the day, what speed it's going. Pretty much just everything, how much power it's using. And it's been something just to watch it even from my perspective, you know, when the driver's in the cab just what I can see here from my desk. So what made you decide that you wanted to run this demo in your operation? What made you want to be on the forefront of working with Tesla and autonomous trucking? So great question. We were approached by a customer that has,

1:09:15that's very concerned, like most companies about zero emissions. So of course, you know, the electric truck is zero emissions. We have a customer that wanted to partner with us. And would we be interested? And of course, we were interested. And we got hooked up with the Tesla folks. And we got the demo. They actually brought a truck up here once for a dog and pony show. And there's the picture right there. You can see it next to our 71 white. So there's quite a difference in technology. And you know, and from a 71 to what you're seeing there on the screen. So that was up here for just a dog and pony show on our yard. And we got to, we were able to take it on the road and experience the demo now. They actually brought two of our drivers down to the facility. And we did an orientation from like 10 in the morning to 1 o'clock to really go over the truck. There's the motor right there. It's, it's, there's actually three motors on the truck.

1:10:17So it's, it's, I don't want to be a commercial for Tesla, but I can, I can tell you how it's worked for us. So, um, that's how we got. That's how we got. How often you have plates, it looks like again, the screens that we're looking at are small. But it looks like California plates on that. Is that your vehicle that you, or the vehicle they've loaned you with California tags? Or is this, is this just like a file of a picture? Yeah, it's, no, it's, this is the vehicle that we're using in California plates. Again, we're just demoing the truck. So it's not our vehicle. You know, we won't see vehicles on site here until 2027. Gotcha. So let's talk a little bit about the feedback that I hear and go through each of these because, you know, you're on X, I believe. We've, we've talked a few times on there. Drivers love to hate Tesla's MI. So how are your drivers reacting to it? So we had two drivers on this, or currently doing it, we had one that is kind of doing the

1:11:18a shuttle operation. And then we had one that is doing more of kind of the work we do, like, you know, maybe 180 mile length of haul type of thing. So the, and each had two different perspectives. So the, the shuttle guy who does more of a stop and go type of thing, he, he was very happy with the acceleration, the quietness of the cab, how smooth it ran, the visibility. The visibility is, is, is, I have to say it's a huge safety thing. I'm going to put it up to my, if you can see the visibility, the windows. So the driver actually sits in the middle of the truck. And then he has all that, all that visibility to see, you know, usually get those guys coming in on the side trying to get ahead of the truck. These windows with the driver sitting so far up in the, up in the truck, he gets great visibility. And the cameras that they have are just, I've been fantastic. The driver's really started to, to learn about the camera.

1:12:19So this experience is, I think the drivers came in with a little PTSD for driving the truck. And as they, as they, you know, as they experienced it more, they, they really got to, to like it more. And the biggest thing to get used to is probably being in the center of the truck. So not being on the left side of the truck, they always find themselves compensating where they are in the lane to, you know, compared to where they are on the left side of the truck. But, but again, after being in the truck just for a day or so, that kind of seems to go away. So, yeah. So that was the local guy. I can tell you about what the, what the other guy experienced if you want me to go into that. Yeah, we'd like to hear it and how the battery ran child up on those longer. So, so yeah. So we had, we had the, the other guy who does more of the length of hall, we did not the shuttle, not the shuttle arrangement we have with the customer. So, this first day, we actually threw him to the dog. So, he picked up in Patterson, New Jersey. We took him out to Astoria Queens. Okay. So, I, and then when he got into Astoria Queens,

1:13:25it was a tight deliver. So we wanted to see how that handled. And actually the turning radius, reported back was fine from the driver. So, of course, we got to that stop and they said, oh, half the stuff. On the truck, we needed to go to Long Island now. So, again, not plan for, but this is trucking. So, the driver's like, oh, jeez, now I got to go to Long Island. So, and we did it. But we did it. And we wound up coming back into, you know, back over the cross box expressway. And I know this truck had a lot of, had a lot of media coverage with the donor pass. Well, if you've never been on the cross-bong expressway, the rush hour, it's, it makes the donor pass seem like a cakewalk. And so it was, it was quite a day. And actually the, one of the key to the thing is to the truck is the regenerative braking. So every time, you're hardly touched the brake. The motor slows you down enough where it just, it breaks the truck automatically. And actually, when it breaks the truck, it repowers the battery while it's doing

1:14:28that. So this driver on the 180 length of haul or the kind of what we really do, he was more and said that the truck has to be managed. So that was his first take. So he was more of a manage the truck. So it was, we had him out another day where he actually pressed the, where he actually pressed the battery charge and, you know, and almost didn't get back. So he found that he had to, again, manage the truck by using more, more of the cruise control, the regenerative braking is definitely a thing. Maybe lay it off the brake and let the truck do the work. And, you know, Tesla's been really great. They were coaching my guys like you actually had to get back. So it was, it's definitely been a learning experience. So Bob, I have an electric car that I drive. And I love it, by the way, for local around town. I've talked about this a few times. I rented it in Salt Lake City and rented the exact same car in an internal combustion because the,

1:15:28it's a BMW and they make both the electric version and the internal combustion version. And I was grossly disappointed with the acceleration and the internal combustion version because I just, I got so used to the electric that you notice it immediately. It's quieter, it's smoother. Electric is amazing around town. But I'll tell you, I've told this story on air before, is going away from Chattanooga to the NAT to Nashville at Lanna, which we occasionally do. It's about two hours away. We're right in the center of both cities. That's when the problems start because they range even though when they, when I bought the car, they said it would get 300 miles. That isn't true. It gets about 230 to 240. But I was going from Nashville a couple of weekends ago. I took my daughters up to the American Doll Store in Nashville. We were on the way back. I thought I had enough range, but the time we got back about 30 miles away, and the whole time I was watching it, I started to lose range and it wasn't going to make it home. Luckily, there was a charging charger on my route home, but I planned that I would have enough

1:16:34time. And according to my car, it said I would have enough time, but you know, it was hot, we're through the mountains. It just didn't know. That strikes me as the biggest knock that Tesla's going to have. I am interested in the tree by the fact that the drivers are enjoying the higher visibility because sitting in the middle always felt weird to me. I'm not a driver, but that was sort of the big thing. It felt different. It seems like that's not the issue. It's the range that's going to be the problem. So it's a great point. So the truck we had, the range is supposed to be 525 miles. That's the long range truck. And they're making another truck that has a smaller range, a lesser range of 325. We haven't seen 525. Again, I think it's a lot of managing it. We weren't getting 525. So your point is, so right now, it has to be more unpredictable runs. So we're looking in our network

1:17:40what is the predictable run? So exactly. You just can't run as far as you did with your car. And we just can't send this thing to Massachusetts from Jersey. And think we're going to get back. And just hope we're going to get back. So it's predictable runs at this point. The infrastructure for the charging is simply not there, especially, you know, it may be out west. I know it's a little better, but here the only place we can charge this truck right now is in Elizabeth, New Jersey. So there's no place to even charge it in the Lehigh Valley where we do a lot of our running. So we've been kind of splitting it between both drivers, the Jersey driver and the Pempsle, and the Pennsylvania driver, just to get it back for charging. So charging is a problem. However, with that said, our our facility here is an old from myka plant. When from myka was all the rage in like the late 80s and 90s. And we have a ton of power come in facility and we can handle a mega charger. So there is savings, you know, at the end of the day, we want to make sure this is truck makes us money. So it's it's all nice to be out there, you know, looking pretty and

1:18:41believe me, the drivers are getting people just hockin the horn and every place they go, it's just it's like a spaceship pull it in. It's it's it's amazing. But at the end of the day, but it doesn't make money for us. It doesn't make any sense. And there is considerable savings in the main inside and in the fuel side. Yeah, I mean, look, I was talking to somebody that works with car dealers. And they will the car dealers are telling consumers not to buy electric. Frankly, because of the fact that they're not having to go to the shop that often. So since I've had my electric car, I've had it three years. The only thing I've ever had to deal with is tires, which is actually far worse by the way. I'm curious. You don't know this because you haven't owned this, but I am curious what this will do on the tires because I know in my car, of course, wait. You've always had to contend with, but this is a heavier vehicle than your traditional diesel truck. I am sure is what that means for the tires because my electric car eats up tires. It's just a problem. And it's something that I've had to do. I had to replace them. I've only on

1:19:43the car for three years. Four sets of tires. Four sets of tires in three years. In saying. Because they only draw back. I see, but only the acceleration. Yeah, I can't speak to the tires because we haven't had it long enough. But there's no engine here. These are motors. There's no oil, there's no filters. There's no transmission. There's no turbocharger. There's no DPS. There's no D-EF system. So the maintenance figure is very enticing. The tires, I've heard the same thing, the maintenance feature is definitely a savings. And I think downtime, people don't really measure downtime. But I think the downtime on this could really, there's maybe little downtime. So it's not uncommon for us to have a truck down for a week waiting for parts or whatever. And it's expensive to be in the shop. Even if it's warranty stuff takes a long time. So just in downtime alone,

1:20:49you know, saving downtime could really help. And between the maintenance and the fuel, I mean, we're looking at probably maybe 65 cents per mile. Wow. It's huge. And only if you could get the range, I mean, we have value to you know, three hours away. I mean, you're talking about if you have a problem, you know, you're hours away from the nearest and the difference is a car. There are charging stations, but they're sparse. They're never seem to be where you need them to be as somebody owns an electric car. We'll talk about a totally different power train and level of charging. You can't just pull up to your community. First of all, what do you fit at the grocery store or the bank that has charging? But the other issues, you need a supercharger to charge these vehicles. Am I right on that? Yeah. Well, there's two type of charging. There's what they have. We'll test love. Specific has a megacharger, which we actually could install here at our facility. And that'll charge

1:21:52that'll charge up that'll charge in 20 minutes. So the charge that that we're doing in Elizabeth, New Jersey, that's an eight hour charge. I call a 2.0 charge. And that's a longer charge. And so, we have to, we're down eight or 10 hours to charge that thing back up to, you know, up to 96%. So, yeah, so that's, but with the Tesla megacharger, you're talking 20 minutes. So, there's just no infrastructure right now in this area. Although Tesla says it's coming on stream, they're going to put these things in truck stops. All food, Pennsylvania, here in New Jersey. So, they seem to be making a big play. I think it's going to be a, I think it's going to be a thing here. I think a lot of customers are very interested in it. I've, I've, other customers that I'm not even doing business with that they know that we're demoing this truck or reaching out to me and say, hey, maybe we should be doing some business together because we're very, we're very interested in,

1:22:53you know, zero emissions. So, I think it is a thing. So, you know, as a business, as we're very interested in providing this for customers that are asking for it. I think it's cool. I mean, I, I know there's a lot of opinion on them. I think, look, it looks cool. It's a beautiful truck. I love technology. I love the fact that on your phone, you can track your, your device. It's amazing. But, you know, there's, there's a practical application. Real, real quick. Do you think that this is something that you would adopt in your fleet? 100%. We're looking to take on five trucks next year for this, for this predictable shuttle, for this, it's a predictable run. It's an eight mile run. We do 6,000 loads a year from the, from a manufacturing plant out to a co-packer. And it's, it's a lot of, it's a lot of, it's a lot of loads. And we could definitely manage the, you know, the charging with that, with just because

1:23:56we're just going to run eight miles and wouldn't need to charge every night. So, for that predictable run, 100%. I think it's, we'll, we'll save, we'll make money, we'll save money. And the customer's going to get what they want for the zero emissions. No, you know, no tailpipe exposure with I think it's cool. I think it's just so cool. And I love the innovation. And like I never bet against Elon Musk. Totally. That's it. Like that's, I did either the day. That's what you, you love them to hate them. You shouldn't bet against them. So too many people have tried that and lost a lot of money. Thank you, Bob. So Bob, I appreciate it. Keep us up to date as you, as you look at these four or five trucks or six trucks, whatever it is that you're implementing. Keep us up to date. In terms of what you're doing, we'd love to hear how they're working practically in the field. We'll really appreciate coming on. Great ways to date. Line spots cost some of fleets, costliest collisions. SamSara's AI gives you 360 degree visibility into risks on the road. So you can protect your drivers in real time. Learn more at samsara.com. What's the masterclass all about? Well, here's what I'm going to tell you. If you are a driver,

1:25:00you're an owner operator, you're a fleet owner, whether you're in compliance services, dispatch, and no matter what it is, masterclass for you. Every two weeks, you're going to sit down with me, and we're going to go over certain business topics that relate to specifically to your small trucking company operations. We're going to help you with everything from compliance to how to negotiate better on a spot board, how to find direct freight, and everything in between. This is the reason why you don't want to miss out on masterclass. It's about an hour to an hour and a half and then on top of that, you have the library to use for that way. You can always research and reflect back on it. Don't miss out this opportunity. This is built specifically for you. I'm excited and I hope to see you in class. The world doesn't wait. So neither do they. Wheels on the interstate. Boots on the sides.

1:26:00Hands on the ship. We build for the world out here and we build it with the people who live it. Ideas from the field made real by world-class R&D. To keep the operation sharp, the front line's safe and the world moving from one cab to a global network, billions of miles, trillions of data points, everyone making your operation better and we never build it alone. Sam Zara built with operators. Once a year, the entire freight industry stops what it's doing and comes to one place, Chattanooga Tennessee. This is F3, the future of freight festival. It isn't just a conference. It's the largest festival in freight built to pull you all the way in, the energy, the ideas, the atmosphere, and the

1:27:04people who move this industry forward. Over 50 speakers, four events across three days, founders, executives, innovators, and disruptors, all under one roof, all asking the same question. What comes next? On the main stage, the sharpest minds in freight take on the biggest questions in the business, the trends, the technology, and the forces shaping what's ahead. Then the clock starts, seven minutes, no exceptions. The cutting edge of freight tech goes head-to-head, live, battling for best-in-show. When the time's up, the lights go out. And in between, the conversations that don't happen anywhere else. The connections that change the trajectory of your business. The relationships you'll carry long after you leave. Because when the sessions end, the festival begins. Live entertainment, unforgettable experiences, a celebration of the world of freight, and an energy you won't find at any other event in the industry. The leaders you need, the access you won't get anywhere else. This is where knowledge is shared, where deals get done, where the future of freight gets decided. F3, future of freight festival.

1:28:07October 27th and 28th. The signal, Chattanooga, Tennessee. We'll see you there. Register now at live.fraitwaves.com. We have Jared Weissfeld. He is the chief strategy officer of our exos coming us to us from Greenwich, Connecticut. Jared, is the party over with, or do we have more time on the clock? Great to see you, Greg. Hey, Julie, how are you? I think it's an aggressive call to say the party's over, considering we're coming out of a almost four-year freight downturn. But I also want to put things in perspective that we look through and we look to the long term. And from our standpoint, we actually believe that we're setting up for multi-year recovery in freight when you think about just how much capacities come out. And you guys have talked about this extensively. And I think you've been spot on. But just to put it in perspective, we think as much as 20 to 25% of the four-higher truckload market is likely to come out from a supply perspective. And that's not a

1:29:12trivial amount. So what we've seen here to date has absolutely been a supply-driven recovery. So I think it's really important to point out that even though we've seen improvements in the industrial sector year-to-date with the ISM in expansionary territory all year, we're still talking about what is still a subdued freight environment from a advanced standpoint. This has been primarily supply-driven. Well, I don't think there's anyone that disagrees in that. The yesterday we had a really interesting conversation with Ken Atomo, formerly the DAT, not East Logistics. And Jason Miller, a professor of supply chain at Michigan State, they were making the case that they believed the cycle is going to be short-lived, or at least is going to roll over sometime the next year, largely due to capacity expansion. I think is, Dr. Miller is making the case that drivers, fleets always have a correct. I think Ken Atomo believes that the government is going to let off the, is going to ease some of the regulatory

1:30:15crackdowns due to pressure from the Shippard community. But you're talking about something completely different. You're talking about the fact that it's going the opposite direction than what they're referring to, a 20 to 25 percent crackdown is a massive and substantial correction. Tell us a little bit why you think that's the case. Yeah, our view is that recent government enforcement action is here to stay. And at the end of the day, the enforcement action is taken from the standpoint of improving the safety of our roads, decreasing theft on our roads, which we certainly support. So when we think about the actions that have occurred between non-domiciled CDLs, English language proficiency, the CDL mill crackdown, ELDs, everything from a cabitage standpoint, these have been ongoing for about 12 months now. And our view is that this is structural in nature. And it's the largest structural change to occur in the market since

1:31:15deregulation in 1980. So to your point, that is a, it's a different view. And I think we've, we've seen, you know, if you, if you look at your to date, the fact that spot rates, depending on the week that you're talking about, are up anywhere between 30 and 50 percent year over year, despite muted demand, speaks to how much capacity has come out. And I think there is more capacity that will continue to come out on a go-forward or a prospective basis. And then the new, there will be a supply response at some point to be clearer. But we think it's going to be a rational supply response, not shadow capacity that's operating at unsustainable unit economics. Jared, we agree. I mean, yeah. And I think another thing, you know, that I read, and I want to talk more about what, what you saw in the curve in Q2 was that while rates did go up, they're really not there, there's, and line with the last peak, whereas the cost to operate a truck is up 26 percent. So I think that that's another indicator that we aren't done yet, if we're going to be able to

1:32:17operate safely and profitably. I mean, we've interviewed what 70, 80 CEOs and certainly as many sea level executives on freightways the day across this industry, you know, lots of freight. And, and even the largest asset carriers, we consistently hear that they're not adding trucks because they can't find drivers. They would like to add, but they can't. And so Jared, it seems consistent. And across the rising, even if rates are rising, costs have also risen. And they weren't, they want to return cash. For the last three, four. Those are, those are such great points. I mean, number one, if you look at the capital investments that are occurring right now on behalf of the asset based carriers, we think that is more replacement than anything else in terms of just the fleet. So very much agree in terms of the issue is are there actual bodies to go into the trucks as you think about just the current supply demand balance. And the reality is, right, I mean, you talk about where, and Julia, at such a great point, you look at from a few years ago, even though all the in rates, including fuel,

1:33:20eclipsed or in parity with where we were in the first half of 2022, the operating costs were up, we call it 26%. You think about insurance tires, maintenance. These are all going to fire in their structural in nature. And ultimately, the industry needs to, in these to deal with those higher operating costs and it will come in the form of higher rates over time. Yeah, I think that's another indicator that we aren't done yet. We can't be done yet. I don't think we're done. I think this is a super cycle, but Jared, I do wonder, you know, Julian, I both come from the assets side of the world. You guys have a pet agrees part of XBO and you know, and understand probably the best capital allocator in the entire history of the industry is the person that helped found your business. Do you think the reason that a lot of the sort of prognestication about cycles and the fact that this is short is going to be short lived? Do you think a lot of that has to do with the fact that the perspective is not from people who are allocating capital. They don't understand the need to be trying capital. Do you think this is

1:34:20driving some of this or do you think it's just we're so burned so often that we have gotten it wrong during the recovery and these multiple sort of headaches that that's driving some of it. It just feels like what you're talking about, what we've been talking about, it's kind of out of, we're out of sync with some of the other parties around the table. I think the framework in which we need to evaluate cycles needs to fundamentally change when you have a capacity situation that has structurally changed in a way that we haven't really seen in 50 years. So prior cycle analysis, while interesting, may not be completely relevant in the context of a population pool that is structurally lower given recent government actions. So I think that is guiding principle that needs to really be put in perspective and our view is we're setting up for a multi-year recovery and the next downturn, whenever it's likely to happen, by definition, is likely to be more shallow than what we've seen, not to mention the fact that cost the capital, which we haven't talked about, is just so much higher than the prior cycle. So we think about the

1:35:23ability to invest in new fleets, the ability to start a new brokerage, to start a new carrier when you look at where the 30-year is right now and you look at where more rates are at almost 7%. It just becomes very difficult in terms of barriers to entry in the industry. I agree with all this. I think that people are looking at Preston and what has happened in the past and and how, probably what I said, but there's been a fundamental change in regulation. I think what's been missed in this. We talked about it yesterday briefly, was the fact that anytime an industry goes from very low regulation, there's like a pendulum of deregulation that happens all across every industry, the banking regulations that we saw. And then some crisis happens and there's a massive pendulum swing towards more regulation. And I think that's where tracking really is. And frankly, a lot of folks have not seen a regulatory tightening cycle that's happened in trucking-since deregulation. And it feels new and it feels unusual. So it's sort of surprising a lot of people. But, Jared, I agree with everything you're saying. I find it hard to

1:36:28make the case that we're going to find out if we see the government continue to crack down and it's not just at the federal level, it's happened at the States, too. Then where are all these truck drivers going to come from? And I don't see how we're going to discover a new batch of drivers. That's exactly right. And I think it's also important to put in context relative to what your prior guest was saying, even if he's right, in terms of potential slowdown in certain sectors of the economy like the industrial, right? From a free economy standpoint, it's not just about aggregate demand. It's about where that demand is intersecting supply on that curve. And I think year-to-date has been a great proxy for that because let's be clear, everything we've seen year-to-date has been very soft from a demand standpoint. You look at overall shipment data still down year-over-year every single month for the industry. RxO is outperforming that. We've got some idiosyncratic levers that have been disfueling that growth. But the industry is still soft from a demand standpoint. But because so much capacity has come out, despite that, we're still

1:37:31dealing with, and I was looking even on sonar data this morning, even though it's come down versus, you know, call it July 4th highs, industry tender rejections are still at 13 percent, multi-year highs. And it just speaks to the fact that we're still in a tighter market and we've been in over the last few years, and it's not because of demand, it's because of supply. Yeah, no, I agree with everything you're saying. I mean, you look here at the data, you know, 13 and a half percent is where we're trending above. But this is what they're called normal seasonality, just at a much elevated level. And it's interesting because there have been some folks, X is such a cesspool of opinion in some ways, even though I am a prolific X user. The reality is that a lot of people have gotten nervous about the lack of momentum in the market and they're like, oh, this is down. I think it's we're just so burned from the brutality of the great freight recession that is hard to believe that this could go on longer. And I think it's driving a lot of the sort of, you know, the cheap seat paranoia that's out there.

1:38:36Well, I think also got to be careful. I mean, to your point, July and early part of August are notoriously soft, just from a seasonality perspective. I mean, you look at any given month in the calendar year, I mean, I think January and February and July are the 10th, 11th and 12th best freight months of the year, right? So put things in perspective, right? It's seasonally weak. We used to always say, now January is different because of sort of returns and gift card season that's changed January, but it used to be you lost money in trucking in January and February, and then you sort of broke even in July. And then the rest of the months were there. It's sort of shifted now where July and August are kind of pretty weak. I think I've always been historically weak, but feels like it's even weaker relative to what it's been a lot because supply chains are more orderly than they used to be where companies would plan, particularly, inter-banting of cheaper freight to move a lot of that freight. What do you think in terms of the second half, in terms of peak season?

1:39:37There's, we have different opinions on here about whether there's going to be a super strong peak season or whether it's a lot of the inventories already moving across the country, and therefore it's not going to be as much peak. What are you thinking? Did we lose Jared? I think he was like, I think he was like, I'm going to throw that. So you hear me now? He's back. We're back. Yes. We're back. Yes. Where are you going to be? I'm here, Nick. Yep. Okay, great. So from a peak season standpoint, I'd say it's too early to tell, but we do think that the market is going to tighten between now and the end of September. That, ultimately, we are dealing with soft seasonality right now, but that is to the earlier point. That is what we see all the time in the month of July and August. And our expectation is that we tighten between now and the end of September. And then from September through the end of Q4, I think it's really going to be a function of whether or not the consumer shows up. We haven't had a peak season in four years.

1:40:42So I think it's still too early to tell whether or not we'll have one this year, but our expectation is certainly that we're going to go ahead and tighten from a capacity and demand standpoint between now and the end of Q3. What are your shipper customers asking for? I mean, we're hearing that they're, you know, a lot of them coming in early or, you know, planning earlier than they typically planned. What are you hearing right now? What are you guys seeing? I will say that the most interesting thing that we're hearing from shippers right now is that shippers want to be doing business with large-scale providers of transportation. In the context of everything we've been talking about here today, Greg and Julie, with respect to several enforcement actions, etc. Are they dealing with a carrier with a large-scale broker like an RX-O that has the ability to go ahead and have, you know, the best technology that's out there, the ability to source capacity. We've got 120,000 plus carriers. The ability to go ahead and, you know, do that in a way with best-in-class betting from a carrier standpoint, best-in-class, safety metrics. And that is palpable in terms

1:41:46of recent conversations with shippers in terms of ultimately consolidating the amount of freight that they are moving with large-brokers like an RX-O. I think that is single-handedly the largest, or the most prevalent theme that we're hearing from our customers right now. And I think it's also in the context of the current market that we're thinking about. I think shippers want to make sure that they are prepared to the extent that there is a peak season. The market is very fragile right now from a supply-demand standpoint. And any movement in men could go ahead and alter that balance, so preparing for routing guide failures, etc. It's interesting talking to the large freight brokers because we're getting differing opinions about sort of what people are through this new environment post-mortem gallery, post-cotus, just a lot of sort of different opinions. And frankly, I'm always, I wouldn't say confused by it, but there just seems to be a lot of sort of differing opinion. But it does strike me that the larger companies are in a much better position

1:42:51to navigate this stuff than the smaller providers. How much are shippers leading into diligence? You guys are public. That is both going to be painful being a public officer because you've got to answer to shareholders every quarter. But in an answer to an environment where shippers are really, really gun shy on whom they're doing business with and really validating that they have a trusted provider, I got to imagine that that is an enormous advantage right now. It is a huge strategic advantage. And we love being public. We love reporting the success that we've had over the last four years after spinning out from XBO in the transformative acquisition that we had with with Coyote. There were now the third largest provider of corporate transportation in North America. And that is a crag your spot on. It is an enormous strategic advantage having access to such a huge carrier base, having access to a strong balance sheet with significant liquidity, with the ability to go ahead and leverage our technology. We spend so much a year on technology,

1:43:52on leading NJI and doing that all with the best in class safety, writing and carrier compliance program in today's world post-month summary. That is a huge strategic advantage. And when we think about the composition of the brokerage market, right now about the top 10 brokers represent about half the market, we think longer term that's going to be maybe top five represent more than half. So we think about the ability for the industry to consolidate longer term, organically and in organically. And we think that ultimately shippers are going to help facilitate that consolidation because they are going to want to do business with the larger brokers. Yeah, I agree with that. I mean, I would certainly be hedging my vets, I guess, as to say, and ensuring that I am partnered with future shipper with you. You think you would have cared three years ago as much? I don't think so. Because why would I mean three years ago why would I have? If you're a public shipper, you're worried about like your name being an annual. Reditation risk. Right. But that's it. Now you're worried about the company continuing to,

1:44:56I mean, you know what you're freight stranded and you don't want it and so I don't know. It feels like if I am, you know, I was in financial services and we went through the ringer and we would get to the CFO and we were much smaller, smaller company. You know, you get to the CFO and you've got to choose between Bank of America, Wells Fargo and this tiny company called Transguired who had, you know, had great, a great product. We would always get knocked out because they buy the parties that they trust. They can look through the financial statements being a public company that they just don't know how much value we described. It didn't matter when it came to a CFO. They wanted to know that the company was going to be around. And by the way, Craig, we're having those C-suite conversations precisely because of that. We're ultimately, you know, let's educate the shipper community in terms of what's happening right now in the current market environment and why doing business with someone like RX-O is a strategic advantage for that shipper. You think about just the durability of RX-O throughout market cycles and the access to the capacity that we have,

1:45:56access to resources and investments that we have to your earlier point. It's a huge strategic advantage in this environment and I think it's only going to become increasingly strategic because ultimately I think these structural changes are here to stay and it's going to certainly benefit the largest carriers and largest brokers. So Jared, speaking of the access to resources you all have, so we obviously track spot rates. You guys report on it in your curve as well and they have been significantly higher than contract rates all year every month. So what are you seeing as far as routing guide breakdowns and then how is RX-O helping cover that spot freight for shippers and what resources do you all use to that to do that and then I have followed also actually but I'll pause there. Sure, in Q2 we saw based on our RX-O curved data spot was at an average premium relative to contract at about 20% to everything we've been talking

1:46:58about for the last 20 minutes or so. You've seen industry-wide line haul spot rates come in a little bit over the last few weeks. So that's probably at around, you know, called a mid-teens premium right now and ultimately what did that lead to in the overall industry? I mean I think your own tender rejections from a sonar standpoint reached as high as 17 to 18% around July 4th. You started to see routing guide failures for the industry at RX-O, you know, how we think about where we are in this cycle. We need to service our freight incredibly well. So our industry acceptance levels were high. Our acceptance levels were high relative to industry. We had, you know, so we continue to maintain those strong relationships and, you know, our view also is, you don't win the spot volumes unless you maintain those strong contract customer relationships. So we actually saw a significant increase in Q2 on our spots, our special projects, our mini-bids. To the extent that our Q2 spot volume was up 900 basis points sequentially, 1500 basis points

1:48:01year over year to about 42% of the mix that further increased in July to about 50% of the mix where we are proving to be the broker of choice in the community with respect to spot loads, projects and mini-bids because we are servicing that freight so exceptionally well and we are staff for growth. We've got the resources to go ahead and handle that spot freight and we're also investing aggressively in technology and leveraging tools to capture all of that tech, all of that volume. So we are positioned incredibly well to make sure that we're capturing that spot freight. Well that was reflected in your earnings, right? When you talk about the spot to contract percentages, one further question on that. As we look towards peak, what would you advise shippers to be thinking about their contract versus spot mix? I think shippers should be making sure that they are preparing for any type of environment whereby to the extent that there is any improvement in consumer demand that they are, that they've got the right carrier partners to help facilitate because at the end of the day,

1:49:04if they're like we've talked about here, we've seen spot rates up 30 to 50% year over year despite new demand. Any improvement in consumer demand could really go ahead and increase freight rate volatility and shippers need to be prepared because they're going to want that predictability and visibility that comes with contract-related volume. So make sure that they've got the ability to partner with strategic carriers and brokers like an RxO because ultimately, if you do start to see an improvement in demand, you can absolutely start to see an erosion in routing guides and that could be problematic for their service levels. So making sure that they're forward thinking and making sure that they're aligning up the capacity necessary to the extent that there is a peat season. And, Jared, I know that you guys would love for capacity now, sponsoring the segment for RxO to be there when an asset carrier can't deliver the trucks when they are leaving the freight on the ducks. You guys want to be the first call?

1:50:04The we want to be the first call, Greg, and we are the first call. And I think that our second quarter results showed that in terms of our 1500 basis point improvement year over year in spot volume and saw another 800 basis point improvement in the month of July alone to up 50% at 50% of the mix. So, and I think that goes and builds on what we talked about earlier. To win the spot volume in this kind of market, you need to make sure that you are servicing your contract freight exceptionally well and you have those deep customer relationships so that you are that first call. I always said I wanted to be the first last call, Julie. I didn't want to be the first call. I wanted to be the first last call. Like, because I get a little desperate. Yeah. A little bit of desperate. I don't want to be the guy I know the first call. So, anyways, you know, Jerry, appreciate your time. Thanks for coming in and we'll get into Grimich. Grimich is a beautiful place. You're welcome anytime. I guess we should do it. We should come out up anytime. I appreciate it. We'll go visit you guys. We'll visit your

1:51:04other companies, the XOs. We'll just do a full tour of the Brad Jacobs companies. What do you think, Julie? Sounds good to me. If you shut the parcels at scale, you know the drill. One system quotes the delivery date, another picks the carrier, another prints the label, and some third party audits your invoice six weeks later. Shippium replaces all of it. One platform from promise to payment, including their brand new, always on audit product, which replaces your auditor with real-time monitoring that never sleeps. Check it out right now at shippium.com. That's Shippium.com. The world doesn't wait.

1:52:18We build it with the people who live it. Ideas from the field made real by world-class R&D. To keep the operation sharp, the front line is safe, and the world moving. From one cab to a global network, billions of miles, trillions of data points, everyone making your operation better. And we never build it alone. Samzara, built with operators.

1:53:34Over 50 speakers. Four events across three days. Founders, executives, innovators, and disruptors. All under one roof. All asking the same question. What comes next? On the main stage, the sharpest minds and freight take on the biggest questions in the business. The trends, the technology, and the forces shaping what's ahead. Then the clock starts. Seven minutes. No exceptions. The cutting edge of freight tech goes head-to-head live battling for best-in-show. When the time's up, the lights go out. And in between, the conversations that don't happen anywhere else. The connections that change the trajectory of your business. The relationships you'll carry long after you leave. Because when the sessions end, the festival begins. Live entertainment. Unforgettable experiences. A celebration of the world of freight. And an energy you won't find at any other event in the industry. The leaders you need. The access you won't get anywhere else. This is where knowledge is shared. Where deals get done. Where the future of freight gets decided. F3. Future of freight festival. October 27th and 28th. The signal. Chattanooga, Tennessee.

1:54:39We'll see you there. Register now at live.fratewaves.com. We're going to move into the equipment side of it. And to finance side of a Kurt Mann. He is the head of transportation and binner solution that meets a BGAC capital. Welcome. How are you doing, sir? Thank you, Craig, doing great. My wife says hello. We'll tell her pass it on to from me. How are things going in terms of the market? It's going good. We certainly saw a significant downturn there for probably three and a half years. We've seen us supply side recovery with the administration's policy efforts. We've seen some increase in the spot rate. You pointed out some time ago that freight rejections were high. That has certainly played in to I think the health of the industry over the last six months or so.

1:55:43So it's gone much better, I would say. I mean, I'm sure that's in terms of what you're seeing relative to where we were. Is the capital situation or balance sheets in better shape? You know, well, they're certainly going to improve. Would I say that fiscal year end 25 was fantastic. If you're looking at the publics, maybe, but if you're looking at medium, large fleets, they're tight, but they're not just awful. I mean, it's better than what we would have expected about this time. But we can do better. They can do better, and that's what we're hoping for is that things will get a supply side. We need freight demand. We need more freight demand. I think it's coming. You and I met when your wife was at triumph. I know she's moved on to other businesses

1:56:47in this industry, serving our industry well, the market at helping helping help us figure out the go-to-market. So let's describe this cycle that we just came from, the Great Freight Recession, compared to other cycles that you've lived through, particularly in the equipment and finance side. Would you describe that as the worst downturn in history, or would you rank it to the financial crisis? How would you compare the significance of it? Yeah, I think it was the longest for sure. And what made it particularly challenging? I'm afraid to say it was the absolute worst, because you say that, you might get one that is really, really, really bad. It's been tough. It's been very difficult. But the thing that made this one extra difficult was in 21-22, and you had a ton of demand, and people needed equipment. They couldn't get it, so the stuff that you could get was very high. I remember sitting in a conference room. I can't remember what month it was, but and I was talking to our chief risk officer, and I said, in your mind, what is a four-year-old

1:57:52Freightliner Cascadia worth? With less than 500,000 miles, and he said, well, it's about $45,000. I said, what are we financed in a amount? He said about 110. That's a good thing. I remember we were way bubble. It was an asset bubble of enormous proportions. I never watched, and we have this data inside of Sonar, where pre-COVID prices on equipment that was five years old was something like $34,000. You look at the peak. It got up to 120,000 to your point. It's come back down, but I imagine how did that for fleets that may have expanded or insurance that got into the business? Have any of them survived? Or they've all washed out? Well, I mean, look, Craig, if you look at the, and this is a commentary about the smaller guys, if you look at the numbers, the average failure rate for anyone that had less than two years of

1:58:56experience, and they had their ICC Motor Carry Authority, was 85%. The failure rate on average, over three-year period, was 85%. You can imagine how that reflects in the portfolio of a lender like us that is financing those guys. We're still here. We're still lending capacity into the marketplace, we didn't leave, but it has not been easy. It's been a big challenge. And what about a normal cycle? Is that you talk about three-year failure rate of 85% during those peak years? But what does a normal cycle look like in terms of failure rate? Yeah, look, in terms of failure rate, well, that's a good question. Heck, I, you know what? I mean, I hate to just lie to you. I think a normal cycle is 12 to 18 months. And I wouldn't think that it would, it would get as high as 85% because it's not lasting as long. But, you know, I,

2:00:02I don't want to quote something that would be inaccurate, but I can tell you over three years, on average, the rate was 85%. You guys know better than me on that probably. Yeah, do you, I mean, do you guys foreclose on the equipment? What happens through a fleet that is in default? And one of the things that I understand that's happened over the last couple of years is that guys just stop driving. They didn't even bother filing bankruptcy. They just basically would hand the keys back. I'm curious, what does that look like for you guys or general owners overall? Well, I mean, look, the first thing we always try to do, and if you, if you go back to 2020, we initiated a customer assistance program back then when, when COVID hit. And I think we restructured something like 75% of our loans. But 95% of those people began paying again after 90 days.

2:01:03So we gave them a little time to recover. And, and then they did. They recovered. And, of course, you know what happened. I mean, freight demand went through the roof. So I think if you look at, you compare 2010, 2016 to 2000 and 2345. I think that it probably wasn't immeasurably worse. Some people would argue with that. But we get back equipment. And at the end of the day, Craig, we first of all, we try to work with our customers and keep them on their feet. If that doesn't work and we need to take the equipment back, we do. And we use various methods of distributing that equipment across the spectrum all over the country. Sometimes our dealer helps us.

2:02:04Sometimes we send to auction. You know, sometimes we take the inventory and we have people on the inside that are selling into the marketplace as that equipment is needed. But, you know, we, as you can imagine, we sat on quite a bit of inventory for quite a long time. And it's, it has thanked goodness deteriorated in a positive way. But I guess the question, and we've followed this story, you know, when the great recession really hit, we was expectation by so many people, including ourselves, that this recession would wash out a lot of capacity. We didn't see the kinds of expected exits that you would normally see. And I, we sort of, we now know the immigration story, the non-domicile, was a big, significant contributor to excess capacity. But the other things that we cut down was the amount of stimulus dollars, whether it was triple p-lones or one of the ones that didn't get a lot of attention, we covered it was these SBA loans that were essentially zero cost loans that you didn't have

2:03:09to service for a couple of years. It strikes me that that really probably, as you talk about companies remaking payments, probably saved a lot of the capacity that otherwise would have gone out during that really strong downturn. Yeah, I think that's probably part of it. But on your, your previous guests, you talked about private fleets and the, and the backhaul, right? So, private fleets who are typically hauling their own goods, we saw them coming into the four higher market to take those backhauls, and that increased capacity, maybe the levels that it wouldn't have been, if they weren't doing that. But they were in the same boat, they weren't selling as much, their freight was not in demand, they're good, service or whatever. And so, you saw some of the capacity really kind of a, it shouldn't have been there the way it was. But the SBA loans,

2:04:14yeah, yeah, say it again. Some of the demand was sucked up by that additional capacity because that's right. That's right. It's had trucks to keep running themselves, and we're acting as four higher versus only hauling their own goods. Yeah, that's right, that's right. And that caused some challenges for the four higher space, and for lenders like us, independent lenders, mostly focused in the four higher segment, although we do have a lot of private fleets on the books as well, but we have a big portion of our book that is in that four higher segment. So, it did create some challenges. So, Kirk, now that we're coming out of this, and you are seeing a bit more, I would imagine demand for equipment and financing. Are you seeing more replacement, or are you also seeing new entrants? So, I think fleets are in general, this is anecdotal, but we feel I can general that fleets are resisting increasing their fleet size. We are seeing replacement demand, but I don't

2:05:21think we're seeing 100% replacement demand. I really think folks are, for us to get to that growth phase again, I think folks are looking for the freight side or the demand of freight to increase before they decide to increase the size of their fleet, or even replace some units. I mean, that's the, we have the opportunity here at Freightways the day to interview CEO after CEO across the space. And the question we always ask is, because the question isn't whether or not this is a cycle, because we all know it is, as long as you've been around this industry, and long as I've been around it, as Julie's been around it, we all know this is a cycle, but you don't know how long this cycle is going to take before we sort of get to a downturn. And I think it all depends on how fast capacity returns. But what you're talking about is consistent with what we're hearing, but it's at least talking to CEOs of large companies. Now, some of the analysts that

2:06:24we've had on the show believe it's going to reset much faster. Dr. Jason Miller is one of those, you know, Ken Atomo has made that point. We've heard others that have talked about the fact that the cycle is not going to stay on long. I'm not hearing from any of the folks that we interview that, you know, larger players that they're adding trucks. A lot of it will say because I can't find drivers. But, Kirk, what you're seeing is reinforcing my belief is a super cycle. Yeah, it's been a long one. And, you know, we're not happy about it. I don't think anybody is. But I'm not saying that we're not going to recover. I just don't think that it's going to happen to where I want to be clear as there are audiences not confused. When you say recover, you mean capacity, loans in your world. Yeah. In some ways, you're on the, you know, your business is interesting because you want expansion for loan volume. But you don't want to overcorrect to the point

2:07:25you have a bunch of defaults. But in our world, Kirk, we just want tight markets because that brings rates to doing better capacities, tight. So you're on the other end of that where you want more volume. I'm not sure we agree here. Well, look, we want more volume when it makes sense, right? Because if we take it before the market is tight, as you say, I think it's a great way to look at it where you have good prices and great capacity. That's a perfect world. And we want that balance. So I mean, I'm owned by a Japanese company. They are methodical in the way that they look at everything and they like controlled profitable growth. And I think in a tight environment, like you're talking about, that's where we can, we can, we can do what our owners love for us to do, which is to grow controllably and profitably. Asian companies, Japanese specifically, but also

2:08:27Chinese. I mean, they're thinking 50-year plans. Something that America executives are always like, what's happening next quarter? They're like, what's the quarter? Doesn't matter. Let's talk about the next decade. Yeah, yeah. They are fantastic, I think. And one, two, three, six, ten, you name it. I mean, yes, they have 50-year plans. And that's the mega trends category. You know, the 50-year plans are really focused on what are the mega trends going to be over the next 10, 20, 30 years. And they try to play into that as best they can strategically. But look, where I live, we're focused on one year, two year, three year, five year at best. And we certainly are looking to the future. But right now, we're meeting the needs of our customers. We're still in the mark that we didn't leave. And it's, I think, a big benefit to our dealer customers and to our

2:09:27end-user customers as well. So, Kurt, you're business is specifically, you're business is, two hours is Monday still. You're business specifically, is it focused on small operators or large fleet? Well, that's a great question. I would say historically, we've mostly been focused on the smaller operators, you know, one to five, sometimes 15 to 20 to 25. That's to me, as a smaller operator. But we're seeing more and more of the 50 unit fleets, 150, 200 unit fleets coming to us through the dealers. And we're doing those loans. And it's just a capacity issue, liquidity issue among lenders. They're looking for people that will actually lend money in the transportation space and we're doing it. And what's the rate? I know that you're going to tell me it's all credit dependent. I know that I take out. I do lots of borrow lots of money. But rates in terms of where they were relative to a couple of years ago,

2:10:32I mean, obviously we're not longer in Zerr. I imagine like what's a good rate? What would be someone with the sort of top paper look like in your lend day if you can show that? Well, if it's a private fleet and it's investment grade, I mean, banks are coming in at probably five and a quarter in some cases. I mean, we're not going to quite be there, but we can get pretty froggy. And all the way down to the lowest credit grades for us, probably in the 12% range. If we're talking about a small operator and very little capacity, it's going to be a little higher rate. We're going to ask for a down payment. So we keep him good on the equity and we keep his payment where it needs to be for him to be successful or her successful. So, you know, it's a big range, correct? I always tell people the same thing every time they ask me what my price is. And I tell I'm going to charge you as much as I possibly can because we need to. Well said, I love that.

2:11:37And the word froggy, we're getting froggy right here, Kirk. Yeah, I appreciate you coming in. The only thing I'm a little worried about is I did not get the memo on the powder blue jacket. You know, it's not intentional. The weird thing is that Julie and I were talking about this earlier, is we don't we don't have a coordinate you like stuff. But somehow maybe because we're on the show every day, we kind of just have the same, uh, yeah, in clothes. Both very pale people. You do get a graduate with the blue. My wife is obsessed with blue. So everything, anytime I buy something blue, I get a hard time. And so it's you look great. And I'll tell you how you look great. And I'll tell you, Gina is now just so you know she's a full-time GG. And she is. Congrats. I mean, I was afraid to say that because I know that she went to lean and now is being full-time grandmother. So congrats to Gina. She's got the right into the bar. Yeah. Yeah. And Dylan was great. She's a good lady. She looks good. She was

2:12:41bigger than in some of her transportation. Yeah. Yeah. She was bigger in transportation than I'll ever be. But you know, she wants to be a full-time grandmother. So I don't blame her. I mean, look, Frate is, uh, Frate will always be here, but grandchildren, you know, I'm a father of five children and it's sad to see them get older. And you kind of miss the days when you know they're not going to be that way. I mean, we, you do, you do. So well, congratulations, Kurt. Uh, tell Gina, congratulations. She's got the better end of the deal there. You got it.