October 15, 2024 • 40 mins
The brokerage industry continues to leverage technology to improve processes, productivity and profitability. It will also help drive costs per load down, which can help brokers win share on price without sacrificing margins, and that could help consolidate the top end of the market. In this Talking Transports podcast, Matt Pyatt, CEO and founder of Arrive Logistics, joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to share his insights into how technology coupled with the company’s sales culture has helped fueled its explosive organic growth over the past decade. Pyatt expects a similar brokerage market next year to one seen this year, but with slightly better margins. He also discusses his entrepreneurial spirit, leading a data-centric company, fighting fraud and how a date at a BBQ joint landed the woman of his dreams.
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Episode Transcript
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Speaker 1 (00:07):
Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast.
I'm your host, Lee Klasko, senior freight, transportation and logistics
analysts at Bloomberg Intelligence, Bloomberg's in house research arm of
almost five hundred analysts and strategists around the globe. Before
diving in a little public service announcement, and your support
is instrumental to keep bringing great guests onto the podcast
(00:28):
like the one we have today. If you haven't already,
please do take a moment to follow rate and share
the Talking Transport podcast with your friends, family, and colleagues.
We really appreciate your support. Also, if you have an
idea for a future episode or just want to talk transports,
please hit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at logistics Late. So let's get down
(00:49):
to business today. We're delighted to have Matt Piatt, the
CEO of Arrive Logistics affirm he co founded in twenty fourteen.
Arrive is the thirty sixth largest logistic company in thirteenth
biggest freight broker according to Transport Topics. Hiatt earned a
degree in marketing and entrepreneurship from Miami University, so go
(01:11):
red Hawks. That's right, all right, Well, thanks for joining
us on the podcast. Matt. It's great to have you here,
and I know you're all caffeinated and ready to go.
I'll do my best, all right. Great, So Arrive might
not be a household name for a lot of folks listening.
Can you just give a little background about what kind
of company is, what do you do, how big you are,
what markets you serve?
Speaker 2 (01:31):
Yeah, yeah, absolutely, So we're freight broker, and so we
basically sit between people that need a ship products and
people that own the trucks that you see running down
the highway. Arrive really specializes in full truckload transportation and
so I think you said we're the thirteenth largest freight broker,
but if you look at just truckload freight, so like
full truckload, we're probably the fifth or sixth largest truckload
provider in North America in the brokersge industry. And so
(01:54):
we really focus on dry refrigerated Mexico, Canada over dimensional
and we have really you know, got into freight management.
Speaker 3 (02:01):
We don't do anything internationally and so.
Speaker 2 (02:04):
That's kind of our bread and butter and we've been
doing that since we started in twenty fourteen. All of
our growth has been one hundred percent organic, and we
obviously think we have a great model what we call
the Copilot model, which is a perfect balance of operational
excellence and technology that allows our people to be faster, better, smarter,
and allow us to connect better with our customers and
our carriers.
Speaker 1 (02:25):
Yeah, that's pretty impressive, growing so much over the last
ten years organically. Can you just talk about, you know,
before arrive, like, what made you Like, did you wake
up one morning and be like, you know, I wanted
to start a freight propridge. Yeah.
Speaker 2 (02:37):
So when I was in college, I had a company
called Miami Muscles, which is an online health supplement business,
and we had a bunch of our friends from high
school across different universities selling our products, getting a commission.
And then I ended up stumbling across this like handheld
portable drink mixer called the Vortex, which you may or
may not have seen.
Speaker 3 (02:53):
They've sold them in GNC and other.
Speaker 2 (02:54):
Locations across the country, and we saw about a million
of those mixers when I was in college, And so
that was like when I realized I wanted to be
an entrepreneur. And then I, you know, ended up all
the mixers became defective. They had to pull them off
the shelves, and so I didn't know what I was
going to do next. And so my co founder, Eric Dunagan,
was a fraternity brother of mine, and he was moving.
Speaker 3 (03:11):
He was up in Chicago.
Speaker 2 (03:12):
He was working at Command Transportation, which was later acquired
by Echo, and he was doing really, really well, and
he's like, why don't you come up with move in
with me and join the logistics industry and we can
kind of go from there. And so, you know, coming
out of college and you know, two thousand nine twenty
ten wasn't the best time and logistics was still hiring,
and so I joined Command. I was on the customer
side of the business, and I was there for about
(03:33):
three and a half years and I learned a lot.
Speaker 3 (03:35):
And then the guys that I work with in college that.
Speaker 2 (03:37):
Had the hell supplement company called Cellucor, which is like
C four the pre workout, the energy drinks, all those
different things, they basically reached out and they're like, hey,
we want to make investments into you know, startups.
Speaker 3 (03:47):
We want to be the seed investor. What do you
want to do? We loved working with you when you're
in college.
Speaker 2 (03:51):
And so I was like, look, I'm in logistics, and
you guys have a freight spend, So why don't we
just start a business that manages your freight spend and
then we'll bring all over customers over time and go
build you know more you know holistic logistics company. And
so that was the premise of it. You know, obviously
I wanted to be an entrepreneur. I was in college,
and I convinced Eric, who was doing really really well
at Command, to you know, come with me. And you know,
(04:12):
he had a fiance at the time or family was
from Chicago, and and so it was a big, you know,
big leap of faith to you know, quit his job
as one of the top reps in the company and
moved down to Austin, Texas and started arriving with me.
Speaker 3 (04:22):
So it's been it's been awesome.
Speaker 1 (04:25):
That's it's a great story. It's you know, it's really
great to have people on the podcast because it's not
you know, you just don't hear from you know, people
that are just in the c suite that move up
the corporate ladder, but also folks like you that start
businesses from nothing. And turn them into some into something special,
which it seems like you're in the process of doing. So,
what's what's the goal for a arrive. Do you want
(04:45):
to be bought out? Do you have private equity investors? Uh?
What's kind of the long term goal? Arrived from a
strategic standpoint?
Speaker 2 (04:54):
Yeah, So, honestly, what our goal is right now is
we want to get to the fourth largest truckload broker
in North am America from a truckload perspective. Obviously, h Robinson,
TQL and RXO Slash Coyote are are are very large
at this point and we think in the next two
to three years will be the fourth largest, moving you know,
eight to ten thousand full truckloads per day. And a
big focus for us is to continue to add modal diversification.
(05:18):
You know, we were really heavy in dry trailer, you know,
really expanding our drop trailer capabilities are refrigerated, our flatbed Mexico, Canada,
And so for us, we're very heads down, we know
what we want to accomplish.
Speaker 3 (05:28):
We want to continue to scale.
Speaker 2 (05:29):
We want to scale the right way, not by just
throwing money at it, but actually building a real business
with real relationships and so that's really what we're focused on. Yeah,
we do have private equity partner, they're a minority partner.
We've got great, great partners, they have great co investors,
our early investors are still very active on the board.
We've got a great growth equity partner. And so everyone
(05:50):
has a different you know, probably timeline, and so one
of my major jobs as a CEO is making sure
that we have the right board structure and the right
cap table that's there to support you know, the operators
of the business. And so for us, you know, in
the next couple of years, you know, maybe there's an
opportunity for us to clean things up and kind of
bring in a partner that you know is going to
be excited about the next you know, five to seven
year journey. And but right now, as you know, the
(06:11):
freight market is in the most conducive environment to do
a transaction or to swap out investors. And so you know,
for us, we're heads down and we've really improved our
business over the last thirty six months from a cost
structure perspective, from a growth perspective, from a hiring, a
retention a technology and so we're just focused on execution
and you know, things will happen along the way, and
so you know, our our long term goal is to
(06:33):
continue to scale to get that ten billion dollar type number,
and there's obviously my milestones along the way that we're
chasing internally.
Speaker 1 (06:41):
Okay, great, You know you mentioned drop drop trailers a
little bit. So do you guys own equipment or when
we talk job trailers, can you kind of explain what
you meant by that.
Speaker 2 (06:50):
Yeah, So, you know, I think that the world is
getting more asset light, and so like the big asset
players are starting their brokerages doing power only drop trailer,
and the brokers are star and to get their own trailers, right,
and so we have not actually botten any trailers currently.
And so our carrier capacity is carriers that have between
seven and one thousand trucks. We typically say twelve and
(07:10):
a thousand trucks, and most of it our average fleet size,
you know, fifty to two hundred and fifty trucks, and
so all of those carriers have trailer pools and so
we are roughly fifteen percent of our volume. So almost
seven hundred and fifty plus loads per day are drop
trailer loads utilizing our core carrier network's capacity, and so
we are not at a place where we've gone out
and actually broaden on the trailers. And now, look, when
(07:31):
we sit down with our customers, that's the number one
thing they ask us for like when are you guys
going to get trailers? And so for us, it's it's
definitely on the roadmap, but it's something that you don't
want to fail at, right and we don't have that
operational excellence inside the walls of Arrive. You need to
get someone that came from the asset world that understands
trailer utilization, that understands how to manage that trailer pool,
and that's just something that we don't have as an expertise.
(07:52):
And so the last thing we want to do is
go out and get a thousand trailers and you know,
deploy them into our customers network and then ultimately fail
and you know, create black eye for the for the business.
And so it's something we're actively working on, you know,
looking into twenty twenty five, you know, finding the right team,
finding the right leader that can go on and do that.
But even without having trailers, we're really really good at
getting our carrier networks to drop the trailers for US
(08:14):
and run those trailer pools. And obviously it doesn't work
for all customers because some customers like, no, we want
the arrived you know logo on the trailer.
Speaker 3 (08:21):
But a lot of customers are agnosted.
Speaker 2 (08:23):
They're like, hey, as long as it's one carrier that's
dropping four arrive and they're willing to service your lanes,
then we're good. And so we have a lot of
luck with those types of arrangements.
Speaker 1 (08:32):
You mentioned you wanted to get to the fourth largest
truckload broker in North America, and you know, you mentioned
RXO and Coyote, that combination. It seems like, you know,
we've been talking about consolidation in the industry and it
actually seems like it's it's actually starting to happen now.
And then you put that in with technology that might
(08:52):
push out the smaller brokers that maybe not be as
tech savvy. Where do you guys believe where we are
and consolidation and are you or has arrived? Do you
have any interest in being part of that consalidation or
is there like some cultural thing at rye that just
doesn't work if you bought a different someone else.
Speaker 2 (09:14):
Yeah, so everyone's talked about consolidation happening, and I think
people are surprised that it hasn't happened faster. You know,
what I what I will say is that technology adoption.
You know, there's been a lot of new technology entering
the space over the last five to ten years. You know,
the adoption from the shipper perspective and from the carrier
perspective is a little bit slower than you would expect.
You know, those are investments into like non core cost
centers for shippers. You know, their job is you know,
(09:36):
shipping product or you know, manufacturing or retail or whatever.
And so you know, transportation is sometimes not you know,
invested in heavily. But you're seeing a really big change there.
And so the technology to allow us to improve the connectivity,
which ultimately lowers the cost structure to serve our customers
and our carriers, which allows us to price more aggressively
and take more market share, is starting to happen. And
so what that's going to do is it's really going
(09:58):
to be like the haves and the have nots. Right,
the companies that have that cost structure and they have
the scale, and they have the carrier network, and they
have all the technology it's going to be really really
hard to compete on the enterprise level. On the mid
market level. Now, look, there's a long tail of brokers.
There's thirty thousand or so brokers, and there's always going
to be a bunch of small, mom and pop brokers
with one employee to ten employees to fifteen employees that
(10:18):
have a you know, one or two customers in the
local area. And that's awesome. Like, those are great, great businesses,
great family owned companies. But I do believe that you're
going to see an acceleration to the top of the
food PERIODID. You know, the top ten brokers are going
to take a lot of the market share growth.
Speaker 1 (10:33):
You know.
Speaker 2 (10:33):
Another thing is is like, if you think about COVID,
things were good for so long in twenty twenty, twenty
one and twenty two that brokers made a lot of money,
and they invested into technology, and they grew their head count,
and everyone was opening a brokerage.
Speaker 3 (10:43):
Every asset had a brokerage, and then you know it obviously.
Speaker 2 (10:46):
Turned in twenty three and twenty four have been really
really challenging freight environments, and you know, some could argue
that twenty five is probably going to be equally as challenging.
And so you're starting to see not people going out
of business, but you're seeing a lot of headcount reductions. Right,
So a broker that used to have one hundred employees,
they're not out of business, but they only have twenty employees,
and so they're not able to flex up and be
able to manage the amount of business they used to
(11:07):
and all that market share is moving up. Additionally, what
you're seeing is shippers are trying to consolidate their network. Right, Like,
if you're a shipper and you spend a billion dollars
on freight and you spend two hundred million of that
with brokers, you don't want one hundred brokers calling your
people every single day asking for freight and doing this
and that. And so what we're seeing is a huge
consolidation of networks where you know, they typically used to
(11:28):
work with fifty or sixty or seventy providers and now
they're like, look, we want to work with five or
ten providers and go bigger with them. And so that's
going to further drive the consolidation within the network that
these big shippers are trying to make their lives easier.
Have trusted providers, because you know, giving someone a half
a million dollars in business, you're not going to get
that top serier at service. But giving your eight to
ten best brokers twenty million of business, you're going to
(11:49):
see that loyalty and dedication to the account. And so
that's one of the big trends that we're seeing within
our customer portfolio.
Speaker 1 (11:55):
Right, great, So any invention technology a bunch during that point,
you know, and you mentioned earlier, you know your copilot
strategy where you kind of balance technology and people. So
the technology that arrive has is that all built in house?
Can you talk about like how mud you guys spend
on technology year? Yeah?
Speaker 3 (12:16):
Yeah, so absolutely.
Speaker 2 (12:17):
So our technology was off the shelf until twenty twenty
March of twenty twenty with COVID, and it was basically
an on premise system and we've been working to build
our own technology starting in twenty seventeen twenty eighteen. But
when we went remote during COVID, we wouldn't have been
able to do that with our off the shelf on
premise system, and so we were able to convert over
to what was called Accelerate at the time, which has
now arrived now, and so one hundred percent of our
(12:39):
technology has been built in house.
Speaker 3 (12:42):
Obviously, we have a.
Speaker 2 (12:43):
Lot of integrations to third party softwares, but everything the
reps do from a day to day perspective is a
homegrown system. And then we also have carrier Now, which
is for our carrier partners. We have shipper now, which
is for our shipper partners, and so yeah, everything had arrived.
We want to own the way our ployees see the data,
get the data, and are able to interact and service
(13:04):
their customers and their carriers. And so the only way
to be able to do it the way that we
want to do it is by being able to build
it ourselves. And from a tech men perspective, you know,
it ranges anywhere from twenty five to thirty five million
a year, and tech development that's just tech development that
doesn't include infrastructure, subscriptions, phones, et cetera. But from like
a personnel perspective, that's that's our investment on an annualized basis.
(13:26):
And most of our tech resources are located in Austin.
We've got some in Chicago, and then we've got few
in South America.
Speaker 4 (13:32):
Okay, so could you share like any productivity improvements that
you've been getting with the tech that you've been building out,
Like you know, like how many loads per day could
a typical broker or handle I don't know a couple
of years ago versus what they're doing today.
Speaker 2 (13:45):
Yeah, So we have our cohorts REP level Productivity cohort,
and we have twenty thousand plus data points that support
our cohorts because every single month, the employees add a
new data point for whatever month they've been at the company. Right,
So if you've got four hundred customer reps and four
hundred carrier reps every month, I'm atting eight hundred data
points to my model, right. And so what we're doing
(14:06):
is we're saying, Okay, how are the productivity at all
of the bands of tenure getting more productive over time?
And so what we have are what's called managed goals.
And so managed goals are basically the average productivity that
you should see through a cycle. Because when things are
good inflationary environment or a deflationary environment, we can outperform
the managed goal curve. When it's equilibrium like we are, now,
(14:27):
you're going to underperform. So at the aggregate level, it's
one hundred percent achievement, if that makes sense. And so
every single year we're re looking at our managed goal
curves and saying how much more productive are we getting
as an organization. A lot of that is technology, a
lot of that is better processes, better managers, better training,
better hiring. All those things layer into it. But if
you think back to like the last cycle, the last cycle,
(14:49):
if you would use today's manage goal curve, we were
at like sixty five percent of today's curve. And so
when you think of it from that perspective, it's north
of a fifty percent increase in productivity across all tenure bands.
And the reason that you can't just talk about load
per day per head because a big driver of load
per day per head is how many people you hired
in that calendar year. What percent of your reps are
under a year, what percent of your reps are under
(15:11):
two years? Because there's a massive drain on productivity. If
you say, hey, I'm going to go hire four hundred
new employees, that's going to drag down the aggregate number,
and it's going to be a little bit misleading, right,
And so the way that you always want to look
at productivity improvements is across the entirety of the tenure bands,
and how are you lifting it up, How are you
making a more productive faster, and how are you making
a more productive through the entirety of the curve. And
(15:31):
so everything we do within technology is linked back to
the productivity curves. Whether it's increasing load count, whether it's
increasing margin, whether it's increasing connectivity. And so those are
all the ways when we build an ROI analysis, for
every single thing that goes on our roadmap, it's always
tied back to one of those key lovers.
Speaker 1 (15:48):
And so I'm just curious. So when you hire a
new broker, call like an entry level someone that's just
right out of college or grad school, I don't know
where you're hiring from, how long does it take them
to ramp up to get to a certain level of productivity?
Is it months? Is it years?
Speaker 3 (16:05):
Yeah?
Speaker 2 (16:05):
So, I mean it's an open ended question because it's
how do you define the productive?
Speaker 3 (16:10):
Right?
Speaker 2 (16:11):
So, right now, they train anywhere from six to nine months,
depending on what department they go on. And so in
the first six to nine months, we don't even expect
them to have customers or have carriers. They're simply learning
the business because at the end of the day, the
operations of what we do is what sets us apart.
Everyone can get on the phone and landed carrier. Everyone
can get on the phone and land to customer if
you're willing to try hard enough. How do you take
it from that first transaction to your one hundred through
(16:32):
your thousandth to where you're getting ten loads a day,
twenty loads a day. That is what's really complicated. And
so we make sure that our employees are operationally excellent
before we.
Speaker 3 (16:40):
Put them in those positions.
Speaker 2 (16:42):
And so that's a huge investment that we put into
our people, which is very different than a lot of
people in the industry. And then so when you look
at it, it's like from a cumulative break even perspective,
it's like month eighteen for us, right, And then obviously
it's very accreative from a P and L perspective on
a go forward basis. But you know, we're investing pretty
heavily in the first call eighteen months of a rep.
And then when a rep probably gets like that twenty
(17:03):
four to thirty month mark, they're pretty self sufficient, like
they don't have to ask fifty questions a day. You know,
maybe it's five questions a day, and so it really
is a tenure based business, which is why, like people
don't even understand like how hard it is to build
an organic business the way that we did, because it's
all about tenure. Like we're competing against the big companies.
If you look at their LinkedIn, their average tenures four
and a half, five and a half, six and a
(17:23):
half years. Our average tenures two years, right, because we're
constantly hiring new people and bringing down that average. And
so as an organization across the board, we're competing against
people that just have significantly more experience than us, and
so it makes it challenging.
Speaker 1 (17:37):
And I'm assuming because mentoring is an important part of
the training process for these new entry level brokers that
are coming in or you know, wherever they're going to
give they're on the carrier side, I'm assuming arrive as
like an in office culture, like are you people virtual
or you're in the office and you're all working together collaborating,
So we are.
Speaker 3 (17:56):
In office culture.
Speaker 2 (17:57):
And obviously, you know, some people aren't on board for that,
but the numbers don't lie, you know, we obviously did
a great job during twenty twenty twenty one and twenty two,
when when COVID was there, every broker did right, everyone
had a good financial outcome. But if you look at
our cohorts, if you look at the people we hired
remotely starting in March of twenty twenty through basically the
end of twenty twenty two. Now we came back to
the office in twenty two, but very loosely, like way
(18:20):
more flexibility, right, and so maybe half in the office.
Almost all of those cohorts have failed, Almost all of
them are gone out of our business. And so we
have like this three year lost generation of like all
of our cohorts that we were hiring because they went
through this terrible onboarding experience, this terrible training experience, and
they were just thrown into it and they saw success
quickly because anyone with a pulse could be successful during
(18:42):
COVID because they were so much free. And then obviously
the market changed, they had this realization, oh man, I
wasn't actually trained, and I don't like this job as
much as I thought because I'm not as good as
I should be. And we lost i mean, our attrition
in twenty one and twenty two, even into twenty three
because of the twenty two hires was the highest we've
ever seen across our cohorts. We've really right sized. Our
(19:02):
attrition is down massively, thirty some percent year over year.
It's down since from twenty three to twenty four, and
we think it's going to come down even more in
twenty five because it comes down to, like all of
the attrition really happens in that first twelve to twenty
four months, Right, if someone stays for twenty four months,
they typically are going to stay and grow their career
here and arrive and so like during that period of time,
those people had just bad experiences. They weren't trained, and so,
(19:26):
like I said, I bet we lost ninety percent of
those hires. And so I'm not against remote work for
the right positions, for the right companies.
Speaker 3 (19:32):
I'm not one of those people that thinks that if.
Speaker 2 (19:34):
You have twenty years of experiencing you don't have to
develop people, that you have to be in an office seat.
Speaker 3 (19:38):
But I am for our business model.
Speaker 2 (19:40):
It's all about young people right out of college, putting
them in a sales training program and making them successful
in their career.
Speaker 3 (19:46):
And you cannot do that remotely.
Speaker 1 (19:48):
And then so you know when you're hiring these recent
college graduates, what are you guys looking for? So if
there's like, you know, some college kids listening to this podcast,
I'm huge. I'm huge with the college kids. There's college
caisses into this podcast, like what kind of like traits
are you looking for?
Speaker 3 (20:06):
So everything we do at Arrive is very data focused.
Speaker 2 (20:09):
I think you can probably hear when I get excited
the most is when we talk about data.
Speaker 3 (20:14):
But our hiring is no differently.
Speaker 2 (20:15):
We've profiled every single employee we've ever hired, how they've done,
where they came from, what their backgrounds are. You know,
who they trained under, what office they were in, what
university they went to. And so we've basically built one
of the biggest databases of like attributes of what we're
looking for because of what we've seen have worked at Arrive,
and so we're constantly refining that. And so every role
is different. Whether you're hiring for customer sales, you're hiring
(20:36):
for carrier sales, or you're hiring for operations. They're all
three very different people and a lot of them come
from different parts of the country, from different universities, with
different upbringings and so, but at the foundation of what
you're looking for across everything are people that are hard working,
money motivated, They have great time management, and they are
able to deal with rejection and failure and come back
the next day and when, and so like, this is
(20:58):
a very competitive business and there are so many people
that want to be successful at all of our competitors.
I mean, look at it, and that's just you're not
just competing against thirty thousand brokers. You're competing against four
hundred thousand asset based companies that would love to get
that freight from that enterprise shipper directly, right, And so
you've got to come in, you've got to be willing
to work hard, you've got to be super organized, you've
got to be able to make sure you're allocating your
(21:18):
time to the right things, you're not wasting it on
things that don't matter.
Speaker 3 (21:21):
And so those are really.
Speaker 2 (21:22):
The traits that we're looking for at a high level.
And then there's a lot more detail that gets into
the weeds that we probably don't have time.
Speaker 1 (21:29):
To talk about, right, And so you know, let's change
gears a little bit. Let's talk about the trucking market.
Something that's near and dear to my heart and I'm sure,
near and dear to yours as well. You know, what
are you seeing from a from a demand standpoint, from
a pricing standpoint, what are your expectations heading into peak season?
Do you think there's going to be a peak season
(21:49):
this year? What are your thoughts on the market.
Speaker 2 (21:52):
So obviously there's two significant hurricanes in the last two
or three weeks, right and there's still to be determined
of what the are going to be of those hurricanes.
They were substantial, you know, a lot of destruction which
is extremely unfortunate, which you know, shuts down warehouses, it
shuts downs manufacturing facilities. It really increases you know, the
(22:12):
emergency response, and so you know, assume those didn't happen.
I can tell you what my thoughts are on the market.
You know, we don't know what the effects are quite
yet of the hurricane as we're talking to each other
right now, a couple of days after it hit, right
And so it's a little bit of like ambiguity right now.
And what I would tell you is that during COVID,
a historically high number of carriers entered the market, and
(22:34):
we were burning that capacity off very slowly because carriers
made a massive amount of money in twenty twenty, twenty one,
twenty two. Additionally, they got government assistance through the COVID programs,
and so they all had pretty strong balance sheets going
into a down market, and so a lot of people
were holding on like, hey, it's going to change in
twenty four. I think everyone's realized that it's not going
to change in twenty four and so you're starting to
(22:55):
see the acceleration of capacity leaving the market. But the
end of the day, the trucking industry is the most
simple industry in the world to understand it's supply and demand.
And at the end of the day, we can talk
about a recession, we can, you know not, but like
durable goods is the only thing that you ship on
a truck. You don't ship services, right, you don't ship flights,
you don't ship those things, right, And so like durable
good demand is pretty consistent even in a recessionary environment,
(23:16):
and so we can really understand what demand's going to
look like. It really is how much capacity is there
in the market. And so if there's continually to be
too much capacity, it's really hard for the market to
be more advantageous for the carriers and the brokers. It
continues to be a shipper's market right now. What you're
seeing as shippers are continually bidding it down. We're going
to our third bid cycle in a down market, which
means rates are probably going to get as close to
(23:37):
the bottom as humanly possible. And so that's going to
put the market in a position that if there is
some type of event, some type of volatility, you know,
it will create the.
Speaker 3 (23:46):
Opportunity for rates to be inflationary.
Speaker 2 (23:48):
But you know, I'm not in the business of predicting
active god, I'm not in the business of predicting pandemics
or things of that nature. And so from our perspective,
twenty twenty five is going to look very similar to
twenty twenty four. I think you're going to see contract
rates stay pretty flat on a year over your basis.
I think you're going to see spot rates up five
to seven percent on a year over year basis. I
(24:08):
think you're going to see the spot to contract gap,
which is really important, like how much is the average
contract rate versus how much is the average spot rate
that right now is still at like where it used
to be at the top of the market, like in
previous cycles, it's like in the mid thirty cents right now.
It was as high as like forty five to fifty cents,
you know, at the peak of it. And so we're
still in a place where the spot to contract gap
(24:29):
is pretty sizable, which means if there is a disruption,
a hurricane like what we had, it could really increase
spot rates temporarily, but it's probably not going to be
a big enough disruption to inverse out the supply and
demand issue that we have right now. And so you know,
I still in a summary, I still think we're oversupplied slightly,
and I think you're going to continue to see a
(24:49):
challenging for environment. I do think that twenty five will
be better than twenty four from like a margin percentage
and a margin per load, but very slightly.
Speaker 3 (24:57):
And but there are growth opportunities.
Speaker 2 (24:59):
And so for a rad of like you know, we
we kind of like we don't care where the market
is yet.
Speaker 3 (25:03):
Yeah, it's great when it's infla shary.
Speaker 2 (25:04):
Yes, it's great when it's inflay shary from like a
spread proload perspective, But these environments, like you know, we
always say, never waste a good crisis. There's a lot
of opportunity to get better as an organization during these
challenging environments. Because if it's challenging for us, and we've
got the balance sheet that we have and the technology
we have and the people we have, it's really challenging
for the bottom twenty nine thousand, nine hundred brokers. So
there's a lot of opportunity for us to take market share,
(25:26):
which what's we're doing right now? Right?
Speaker 1 (25:30):
Okay, that's a great perspective. You mentioned, you know, there's
too much supply in the market and the fact that
you know, these two hurricanes, it's kind of unknown right now,
so you're not seeing that, you know, surge and demand
for relief efforts of expedited freight goat going down to
the affected areas. That's not something that you know, you
(25:52):
guys typically see.
Speaker 2 (25:53):
No, No, we're seeing that across you know, the major players.
You know, obviously we don't move one hundred percent of it,
but we're only seeing it. We're getting the email requests
multiple times a day across you know, big retailers that
you know do disaster relief, and then obviously the government
organizations that we work with as well. But at the
same time, there's still a lack of freight coming out
(26:14):
of those areas, and so like from a total demand perspective,
you know, you can look at tender rejections. It's up
a little bit. It's up until like five percent, right,
it's not up to ten percent tender rejections. Typically for
rates to get super inflationary need to stay above ten
percent for a period of time, and we're just not
there yet.
Speaker 3 (26:30):
So, like I said, I'm kind of waiting and seeing
what's going on.
Speaker 2 (26:33):
You know, I don't want to make any predictions with
where we are in the information cycle related to this
hurricane yet.
Speaker 3 (26:40):
I think it's to be determined.
Speaker 2 (26:41):
And then in terms of peak season you asked earlier,
you know, I think that the shippers did a pretty
big pull pull forward the amount of containers that came
in during August. In September. I think shippers were preparing
for a port strike. I think they were getting their
inventories where they needed to be. So, you know, I'm
not predicting a massive, massive peak season, but you know,
(27:02):
I could be wrong, especially with the volatility of the weather, right,
you know, continue weather disruption is going to create volatility,
even if it's not a big peak season from a
from a number of load perspective, right, it's going to
just complicate the market. So you know, as of right now,
like if there wasn't those hurricanes, I would have not
been expecting a massive peak season.
Speaker 1 (27:20):
So did you when you saw the port strikes, did you,
guys see any changes in demand around the East Coast
and Gulf Coast regions? Was there like like people panicking.
I got to get stuff out of the ports just
before they start striking.
Speaker 3 (27:36):
So we do a little bit of draage.
Speaker 2 (27:39):
We don't do a whole lot at the port level,
so we didn't see a whole lot honestly, And honestly,
I think it would have taken a couple of weeks
for us to see, like, you know, shippers behavior. I
think a lot of shippers were standing by waiting to
see what was going to happen, and so they weren't diverting,
you know, product to LA. You know, if it would
have lasted a couple of weeks, I think you would
have seen a lot of freight diverts to the West Coast,
(27:59):
which would have created a lot of long haul expedited opportunities.
But obviously the port strike didn't last long enough for
that to happen, and I think a lot of the
shippers were probably like sitting around waiting for that first week, saying, Okay,
let's let's see where this goes.
Speaker 1 (28:11):
You know.
Speaker 2 (28:11):
We definitely saw some changes, but nothing like dramatically. You know,
some of the export business that used to go to
those ports, we definitely saw them diverting to other ports.
The other one that we saw are like carriers that
do drayage on the wet on the East Coast started
reaching out saying, hey, we'll do over the road and
so we saw little things like that, but nothing major.
Speaker 1 (28:29):
Okay, So, you know, I hear a lot about you know,
fraud within the trucking industry. How are you guys battling that?
At arrive?
Speaker 3 (28:39):
So if you would have gone.
Speaker 2 (28:40):
And talked to customers back in twenty twenty two, every
single customer would be like, how do you get me
more trailers? If you go to talk to customers now,
they're saying, how are you protecting against fraud? It is
absolutely the hottest topic in the industry. We have an
unbelievable compliance team led by Kenneth Hall and he is
all over it, and so it really starts with our
end internal processes. Right, we can't prevent everything in the world. Right,
(29:04):
our job is to do everything we can, and the
shippers also can contribute and do things on their end
as well, and so we as a team need to
be doing all these necessary steps and it adds a
little bit of complexity. It definitely can take out some
of the capacity, but it really comes down to, like, hey,
we won't work with carriers that have been in business
for less than a year. We won't work with carriers
that haven't had inspections. We won't give a carrier a
multi state run that hasn't had inspections in those states
(29:26):
because we don't think it's legitimate. There's so many different
things we're doing as an organization, literally, like twenty plus
things to try to prevent that. Whether it's auto tracking,
whether it's alerts within our system when a carrier goes
out of route that they shouldn't be going out of,
or if it's a high value value lane, making sure
the driver's driving two hundred and fifty miles before they
make their first stop, making sure.
Speaker 3 (29:45):
They're fueled up before the pickup location, and.
Speaker 2 (29:48):
So there's a lot of little things that we're doing
as an organization to try to be a leader in
that world of high value and obviously fraud and theft.
And so we obviously work with Reliance Partners, which is
one of the largest insurance providers to the brokerage community,
and I think they've been on record and said that
we have one of the lowest UH lost runs of
any broker in the space. And so you know, we're
(30:09):
not we're not perfect. We've definitely had fraudulent we've definitely
had pillaged loads, but we from a percentage perspective, we
feel like we're top of class and we're making those
necessary steps. And it really is a time investment internally
to dot all your eyes and top across your t's
every single time you work with the carrier.
Speaker 1 (30:28):
And what in your experience, whether it's an arrive or
just the industry in general, what's the most common fraud
that you're that the the industry is experiencing.
Speaker 3 (30:38):
So there's a lot.
Speaker 2 (30:39):
So if there's high value, it's people that are watching
the high value trucks leave the facilities and then they're
going to a truck stop and they're pulling the doors
off and they're pulling a powder two OLF like they
can that that happens all the time. The ones that's
really unique right now and it's really hard to fight
is the scammers are buying mcs that are legitimate mcs.
And so let's just say you've got three trucks and
you've been a business for thirty or ten years, and
(31:01):
you're about to go out of business, and someone gives
you five thousand bucks and says, hey, give me your
email and your phone number for the next week while
I do the transition, and then they literally can go
pick up a bunch of loads, steel them and shut
the company down and never find them ever again. And
so those are the ones that are really really challenging
to fight against. And so those are where the fraudulent
actors are probably getting the brokers at the highest level.
(31:24):
And so once again it goes down to kind of
our core carrier network, Like we work with carriers that
are between that twelve to nine hundred and ninety nine.
A lot of this fraud is happening on the smaller
fleet size, and so we're trying to make sure that
you know, those carriers aren't going out of business and
selling their MC to someone that you know is going
to be doing nefarious acts and so you can't be perfect,
but you know, we do everything we can, all right.
Speaker 1 (31:46):
Do you think there's anything the industry can do to
kind of because it's, like you said earlier, like it's
what shippers are talking about all the time, you and
I are talking about it. So it seems to be
a real mark for brokers. So is there something that
the broker industry can do or regulators can can help
out with?
Speaker 2 (32:05):
You know, I think it's a it's a team effort
between the brokers, the shippers, and you know law enforcement.
Right at the end of the day, when when we
call law enforcement, they have to you know, be responsive,
they have to care, they have to be present. You know,
Overhaul is a company that's got really great relationships with
with law enforcement. So if you're using Overhaul as a
tracking service, if you have high value freight, you know,
their recovery rate is like nearly one hundred percent, right,
(32:26):
and that's because they know who to call they can
get the action going from a from a shipper perspective,
you know, obviously making sure you're working with legitimate brokers,
making sure that you know, we're validating pickup numbers. I
mean even going as far as validating, hey, broker, what's
the MC of this of this carrier and just checking
at the gate, right, because a lot of the fraud
happens where it's getting double broker, right, it's going to
(32:46):
an asset based carrier that's then brokering it and stealing
the load. And so there's a lot of things that
you can do. There's things that you can do around
seals on the on the doors, not just like on
the on the side, because a lot of these people
are taking the doors clean off the trailer, taking the
product off, and then putting the doors clean back on,
so the seals never even getting broken. And so there's
just a lot of little things that we can do,
but like I said, it requires a team effort. I
(33:07):
mean the most expensive but highest you know value is
you can have tracking devices on one of the palettes
within the within the trailer, right, but that costs you know,
forty to fifty sixty seventy dollars a shipment, and so
really it just comes down to like what level of
investment are people willing to make?
Speaker 1 (33:23):
Is is there anything else you know, outside of fraud
that's facing the industry that you view as a challenge
for the brokerage industry and derive.
Speaker 3 (33:34):
Yeah.
Speaker 2 (33:34):
I mean, at the end of the day, it's a
people business. And obviously we're going to continue to build
great technology. Our technologies can continue to lift our productivity curve.
But you know, for me, it's is the next generation
wanting to come out as college and be in sales.
Speaker 3 (33:47):
Do they want to be in the office?
Speaker 2 (33:48):
Do they want to you know, work the hours that
it takes to work to be successful. You know, culturally
we're seeing you know, pretty large shifts of college kids
coming out, and so, you know, are we able to
continue across the entirety of the industry, continue to fill
our seats with people that are super hungry and super
willing to you know, do a very blue collar business,
right like trucking at the end of the day is
one of the most blue collar industries there are. And
(34:09):
so making sure we're attracting the right talent, making sure
we're showing people that it's an unbelievable place to build
a career where you can have a lot of success
and you can have a family and you know, do
all the things that you want to do and have
a great career of.
Speaker 3 (34:22):
Brokers whether it's arrived or wherever they go.
Speaker 2 (34:24):
And so for us, it's about continuing to hire the
right people, continue to build our team the right way.
Speaker 3 (34:29):
And for us, it's an incremental load business, right.
Speaker 2 (34:31):
So like, if you don't have that drive where the
average person used to go, take that incremental one load,
that is where all the ebadeh falls to the bottom line.
If you've got two thousand employees and you can add
one load a day, that like literally increases your ebadeb
hi fifty sixty seventy percent. It's massively a creative right.
And so like making sure that you have the right
employees with the right culture and the right effort. You know,
that's the biggest thing that we worry about at Arrive
(34:53):
is continuing to hire the right people and then retaining
our people once they get here. I think our executive
team at Arrive spends more time talking about attention than
almost anything else because the amount of productivity improvement, the
quality of the service that we give our cares, the
quality of service we give our customers with that rep
at the year, year, two, year, three, year, four, year
five is exponential. And so you know, those are the
(35:14):
big things that keep me up.
Speaker 1 (35:16):
And so you know, outside of you know, writing checks
and paying people, what is the biggest driver do you
think for the younger generation coming in to retain them?
Speaker 2 (35:26):
Yeah, I mean they have to see it's a place
where they can. At the end of the day, this
is a sales culture and you're here to make You're
not going to be here unless you want to make money.
And that this is from a sales perspective. From a
from an operations perspective, you've got to have career pathing.
You've got a lot you have to see a lot
of opportunity. There's so many different places within the organization
that you can move within our operational department. But from
a sales perspective, you have to be money motivated. And
(35:48):
the draw is you got to work for a company
that gives you the most opportunity to have a lucrative
you know, compensation program. And so when we look at
our compensation and we benchmark our average earnings by year
versus all of our peers, we're in.
Speaker 3 (36:00):
Like the top percentile.
Speaker 2 (36:01):
And so making sure that they feel like the company
that they're at is investing in them if they work
hard and they stay that there's financial rewards for that,
and so you know, obviously it's not just about margin,
like we pay our people based off of services too,
like how are you servicing your customer?
Speaker 3 (36:14):
How are you servicing your carrier? And so it's driving
the right behavior.
Speaker 2 (36:17):
But ultimately it's a sales company and they need to
be rewarded if they do what the company expects of them. Right.
Speaker 1 (36:22):
So you know, since since founding the company, you know,
around ten years ago, obviously you've had a lot of
wins because you've grown it to a successful company. Was
there a moment in time where you're just like, oh
my god, I made it, Like this is really gonna
this is really going to happen.
Speaker 2 (36:38):
So you know, what I will say is we are
like this relentless pursuit of perfection is what we say
all the time on the leadership team, Like we know
we can always be better, we can get better every
single day. But I will say that I think one
of the most satisfying things that I know this sounds stupid,
but we got to a point where even in the
worst of the cycle, like right now, we are still profitable, right,
And I think that's a huge testament. There's so many
(36:59):
companies that start came into the industry, we almost got
looped into like the digital freight broker because of when
we started arrive and none of those companies have ever
been able to get to ibadah or cash flow positive.
And so for us to be able to grow, I mean,
we're going to be up fifteen percent in volume in
Q four year over year, and for us to be
able to take market share the way that we are
grow organically, the way that we have, which no one's
ever done before, and do it with positive cash flow
(37:24):
is truly remarkable. And so like, we're not a business
that just buys market share and does all these things
and throws money at the wall. We've built a really
sustainable business, a business that's going to be here no
matter how bad the industry is or how good the
industry is. And so for us, you know, that takes
such a it's such a cyber relief knowing that you
don't need to go raise capital. You're not going to
be in this position where you're like, oh man, we
(37:44):
got to push out payables.
Speaker 3 (37:45):
We can't pay our employees. Like it's it's a really
good place to be.
Speaker 1 (37:49):
Now.
Speaker 2 (37:49):
Obviously our expectations haven't changed. We want to continue to
obviously maximize shareholder value over time, but being in a
position that our cost structure is at such a place
that our loads and our scales that such a place
that even in the worst of times, we're profitable has
been a huge cyberlief for myself, for my board, and
for all of the leadership team here and Arrived.
Speaker 1 (38:08):
And as a founder and leader at Arrive. Is there
anything that keeps you up at night?
Speaker 3 (38:13):
You know, I kind of touched on it.
Speaker 2 (38:15):
It's a people business, and I think at the end
of the day, the things that keep me up is
are people happy? Are we doing everything we can to
be an employer of choice? Are we having the right compensation?
Do we have the right incentives? Do we have the
right like engagement? Internally? Are our managers bought in? Are
the directors bought in? Are the vps bought in? And
then if they're all bought in, how are they buying,
you know, creating that culture within their teams? And so
(38:37):
for me, all of my stress, all my worries always
go back to the people, because I know that if
our people are dialed in and they're bought in and
they're excited, no one's better than us. I mean a
way to you know, kind of like prove that is,
in the last eighteen months, we've won twenty five care
of the Year awars from fourtune five hundred companies.
Speaker 3 (38:54):
The next closest person is six.
Speaker 2 (38:57):
So I mean we've won by a factor of like
four hundred percent that and so like when our people
are excited and they're dialed in, we've got the best
service in the in the industry, obviously approved being the
number of awards we get from top companies every single day.
And so for me, it's how do you keep that
that vision, how do you keep that mentality that buy
in and if you lose it, it's it's it's detrimental
long term of the business.
Speaker 1 (39:17):
That's great, This was a great conversation. I just had
one last question for you. It might be a little controversial.
You know, you're you're you're out of base, out of Austin.
What's your favorite barbecue place in Austin, Texas?
Speaker 2 (39:30):
You know what A lot of people like Terry Blacks
and obviously Lambert's and all the other ones. Salt Like
to me is like near and dear to my heart.
It's just like so authentic. It's a great experience. It's
outside of Austin. It was the first place I took
my wife on a date. So I love Salt Lake
just because of that.
Speaker 1 (39:49):
Okay, so what you're saying is if you really like
somebody taking the salt.
Speaker 2 (39:53):
Like no, no, it's I mean if she was from Boston.
So it was an eye opening experience, that's for sure.
So it was a test I think.
Speaker 1 (40:03):
Well fantastic. I'm glad it worked out for it. I
really want to thank you for your time and insights today, Matt.
Speaker 3 (40:09):
Absolutely, thank you so much. I really appreciate you having
me on the show today.
Speaker 1 (40:13):
Yeah, and I want to thank you for tuning in.
If you'd liked the episode, please subscribe and leave a review.
We've lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal, at bi go
(40:34):
and on social media. Take care and keep those supply
chains moving. Thanks a lot, everyone, and be well.
Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast.
I'm your host, Lee Klasko, senior freight, transportation and logistics
analysts at Bloomberg Intelligence, Bloomberg's in house research arm of
almost five hundred analysts and strategists around the globe. Before
diving in a little public service announcement, and your support
is instrumental to keep bringing great guests onto the podcast
(00:28):
like the one we have today. If you haven't already,
please do take a moment to follow rate and share
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We really appreciate your support. Also, if you have an
idea for a future episode or just want to talk transports,
please hit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at logistics Late. So let's get down
(00:49):
to business today. We're delighted to have Matt Piatt, the
CEO of Arrive Logistics affirm he co founded in twenty fourteen.
Arrive is the thirty sixth largest logistic company in thirteenth
biggest freight broker according to Transport Topics. Hiatt earned a
degree in marketing and entrepreneurship from Miami University, so go
(01:11):
red Hawks. That's right, all right, Well, thanks for joining
us on the podcast. Matt. It's great to have you here,
and I know you're all caffeinated and ready to go.
I'll do my best, all right. Great, So Arrive might
not be a household name for a lot of folks listening.
Can you just give a little background about what kind
of company is, what do you do, how big you are,
what markets you serve?
Speaker 2 (01:31):
Yeah, yeah, absolutely, So we're freight broker, and so we
basically sit between people that need a ship products and
people that own the trucks that you see running down
the highway. Arrive really specializes in full truckload transportation and
so I think you said we're the thirteenth largest freight broker,
but if you look at just truckload freight, so like
full truckload, we're probably the fifth or sixth largest truckload
provider in North America in the brokersge industry. And so
(01:54):
we really focus on dry refrigerated Mexico, Canada over dimensional
and we have really you know, got into freight management.
Speaker 3 (02:01):
We don't do anything internationally and so.
Speaker 2 (02:04):
That's kind of our bread and butter and we've been
doing that since we started in twenty fourteen. All of
our growth has been one hundred percent organic, and we
obviously think we have a great model what we call
the Copilot model, which is a perfect balance of operational
excellence and technology that allows our people to be faster, better, smarter,
and allow us to connect better with our customers and
our carriers.
Speaker 1 (02:25):
Yeah, that's pretty impressive, growing so much over the last
ten years organically. Can you just talk about, you know,
before arrive, like, what made you Like, did you wake
up one morning and be like, you know, I wanted
to start a freight propridge. Yeah.
Speaker 2 (02:37):
So when I was in college, I had a company
called Miami Muscles, which is an online health supplement business,
and we had a bunch of our friends from high
school across different universities selling our products, getting a commission.
And then I ended up stumbling across this like handheld
portable drink mixer called the Vortex, which you may or
may not have seen.
Speaker 3 (02:53):
They've sold them in GNC and other.
Speaker 2 (02:54):
Locations across the country, and we saw about a million
of those mixers when I was in college, And so
that was like when I realized I wanted to be
an entrepreneur. And then I, you know, ended up all
the mixers became defective. They had to pull them off
the shelves, and so I didn't know what I was
going to do next. And so my co founder, Eric Dunagan,
was a fraternity brother of mine, and he was moving.
Speaker 3 (03:11):
He was up in Chicago.
Speaker 2 (03:12):
He was working at Command Transportation, which was later acquired
by Echo, and he was doing really, really well, and
he's like, why don't you come up with move in
with me and join the logistics industry and we can
kind of go from there. And so, you know, coming
out of college and you know, two thousand nine twenty
ten wasn't the best time and logistics was still hiring,
and so I joined Command. I was on the customer
side of the business, and I was there for about
(03:33):
three and a half years and I learned a lot.
Speaker 3 (03:35):
And then the guys that I work with in college that.
Speaker 2 (03:37):
Had the hell supplement company called Cellucor, which is like
C four the pre workout, the energy drinks, all those
different things, they basically reached out and they're like, hey,
we want to make investments into you know, startups.
Speaker 3 (03:47):
We want to be the seed investor. What do you
want to do? We loved working with you when you're
in college.
Speaker 2 (03:51):
And so I was like, look, I'm in logistics, and
you guys have a freight spend, So why don't we
just start a business that manages your freight spend and
then we'll bring all over customers over time and go
build you know more you know holistic logistics company. And
so that was the premise of it. You know, obviously
I wanted to be an entrepreneur. I was in college,
and I convinced Eric, who was doing really really well
at Command, to you know, come with me. And you know,
(04:12):
he had a fiance at the time or family was
from Chicago, and and so it was a big, you know,
big leap of faith to you know, quit his job
as one of the top reps in the company and
moved down to Austin, Texas and started arriving with me.
Speaker 3 (04:22):
So it's been it's been awesome.
Speaker 1 (04:25):
That's it's a great story. It's you know, it's really
great to have people on the podcast because it's not
you know, you just don't hear from you know, people
that are just in the c suite that move up
the corporate ladder, but also folks like you that start
businesses from nothing. And turn them into some into something special,
which it seems like you're in the process of doing. So,
what's what's the goal for a arrive. Do you want
(04:45):
to be bought out? Do you have private equity investors? Uh?
What's kind of the long term goal? Arrived from a
strategic standpoint?
Speaker 2 (04:54):
Yeah, So, honestly, what our goal is right now is
we want to get to the fourth largest truckload broker
in North am America from a truckload perspective. Obviously, h Robinson,
TQL and RXO Slash Coyote are are are very large
at this point and we think in the next two
to three years will be the fourth largest, moving you know,
eight to ten thousand full truckloads per day. And a
big focus for us is to continue to add modal diversification.
(05:18):
You know, we were really heavy in dry trailer, you know,
really expanding our drop trailer capabilities are refrigerated, our flatbed Mexico, Canada,
And so for us, we're very heads down, we know
what we want to accomplish.
Speaker 3 (05:28):
We want to continue to scale.
Speaker 2 (05:29):
We want to scale the right way, not by just
throwing money at it, but actually building a real business
with real relationships and so that's really what we're focused on. Yeah,
we do have private equity partner, they're a minority partner.
We've got great, great partners, they have great co investors,
our early investors are still very active on the board.
We've got a great growth equity partner. And so everyone
(05:50):
has a different you know, probably timeline, and so one
of my major jobs as a CEO is making sure
that we have the right board structure and the right
cap table that's there to support you know, the operators
of the business. And so for us, you know, in
the next couple of years, you know, maybe there's an
opportunity for us to clean things up and kind of
bring in a partner that you know is going to
be excited about the next you know, five to seven
year journey. And but right now, as you know, the
(06:11):
freight market is in the most conducive environment to do
a transaction or to swap out investors. And so you know,
for us, we're heads down and we've really improved our
business over the last thirty six months from a cost
structure perspective, from a growth perspective, from a hiring, a
retention a technology and so we're just focused on execution
and you know, things will happen along the way, and
so you know, our our long term goal is to
(06:33):
continue to scale to get that ten billion dollar type number,
and there's obviously my milestones along the way that we're
chasing internally.
Speaker 1 (06:41):
Okay, great, You know you mentioned drop drop trailers a
little bit. So do you guys own equipment or when
we talk job trailers, can you kind of explain what
you meant by that.
Speaker 2 (06:50):
Yeah, So, you know, I think that the world is
getting more asset light, and so like the big asset
players are starting their brokerages doing power only drop trailer,
and the brokers are star and to get their own trailers, right,
and so we have not actually botten any trailers currently.
And so our carrier capacity is carriers that have between
seven and one thousand trucks. We typically say twelve and
(07:10):
a thousand trucks, and most of it our average fleet size,
you know, fifty to two hundred and fifty trucks, and
so all of those carriers have trailer pools and so
we are roughly fifteen percent of our volume. So almost
seven hundred and fifty plus loads per day are drop
trailer loads utilizing our core carrier network's capacity, and so
we are not at a place where we've gone out
and actually broaden on the trailers. And now, look, when
(07:31):
we sit down with our customers, that's the number one
thing they ask us for like when are you guys
going to get trailers? And so for us, it's it's
definitely on the roadmap, but it's something that you don't
want to fail at, right and we don't have that
operational excellence inside the walls of Arrive. You need to
get someone that came from the asset world that understands
trailer utilization, that understands how to manage that trailer pool,
and that's just something that we don't have as an expertise.
(07:52):
And so the last thing we want to do is
go out and get a thousand trailers and you know,
deploy them into our customers network and then ultimately fail
and you know, create black eye for the for the business.
And so it's something we're actively working on, you know,
looking into twenty twenty five, you know, finding the right team,
finding the right leader that can go on and do that.
But even without having trailers, we're really really good at
getting our carrier networks to drop the trailers for US
(08:14):
and run those trailer pools. And obviously it doesn't work
for all customers because some customers like, no, we want
the arrived you know logo on the trailer.
Speaker 3 (08:21):
But a lot of customers are agnosted.
Speaker 2 (08:23):
They're like, hey, as long as it's one carrier that's
dropping four arrive and they're willing to service your lanes,
then we're good. And so we have a lot of
luck with those types of arrangements.
Speaker 1 (08:32):
You mentioned you wanted to get to the fourth largest
truckload broker in North America, and you know, you mentioned
RXO and Coyote, that combination. It seems like, you know,
we've been talking about consolidation in the industry and it
actually seems like it's it's actually starting to happen now.
And then you put that in with technology that might
(08:52):
push out the smaller brokers that maybe not be as
tech savvy. Where do you guys believe where we are
and consolidation and are you or has arrived? Do you
have any interest in being part of that consalidation or
is there like some cultural thing at rye that just
doesn't work if you bought a different someone else.
Speaker 2 (09:14):
Yeah, so everyone's talked about consolidation happening, and I think
people are surprised that it hasn't happened faster. You know,
what I what I will say is that technology adoption.
You know, there's been a lot of new technology entering
the space over the last five to ten years. You know,
the adoption from the shipper perspective and from the carrier
perspective is a little bit slower than you would expect.
You know, those are investments into like non core cost
centers for shippers. You know, their job is you know,
(09:36):
shipping product or you know, manufacturing or retail or whatever.
And so you know, transportation is sometimes not you know,
invested in heavily. But you're seeing a really big change there.
And so the technology to allow us to improve the connectivity,
which ultimately lowers the cost structure to serve our customers
and our carriers, which allows us to price more aggressively
and take more market share, is starting to happen. And
so what that's going to do is it's really going
(09:58):
to be like the haves and the have nots. Right,
the companies that have that cost structure and they have
the scale, and they have the carrier network, and they
have all the technology it's going to be really really
hard to compete on the enterprise level. On the mid
market level. Now, look, there's a long tail of brokers.
There's thirty thousand or so brokers, and there's always going
to be a bunch of small, mom and pop brokers
with one employee to ten employees to fifteen employees that
(10:18):
have a you know, one or two customers in the
local area. And that's awesome. Like, those are great, great businesses,
great family owned companies. But I do believe that you're
going to see an acceleration to the top of the
food PERIODID. You know, the top ten brokers are going
to take a lot of the market share growth.
Speaker 1 (10:33):
You know.
Speaker 2 (10:33):
Another thing is is like, if you think about COVID,
things were good for so long in twenty twenty, twenty
one and twenty two that brokers made a lot of money,
and they invested into technology, and they grew their head count,
and everyone was opening a brokerage.
Speaker 3 (10:43):
Every asset had a brokerage, and then you know it obviously.
Speaker 2 (10:46):
Turned in twenty three and twenty four have been really
really challenging freight environments, and you know, some could argue
that twenty five is probably going to be equally as challenging.
And so you're starting to see not people going out
of business, but you're seeing a lot of headcount reductions. Right,
So a broker that used to have one hundred employees,
they're not out of business, but they only have twenty employees,
and so they're not able to flex up and be
able to manage the amount of business they used to
(11:07):
and all that market share is moving up. Additionally, what
you're seeing is shippers are trying to consolidate their network. Right, Like,
if you're a shipper and you spend a billion dollars
on freight and you spend two hundred million of that
with brokers, you don't want one hundred brokers calling your
people every single day asking for freight and doing this
and that. And so what we're seeing is a huge
consolidation of networks where you know, they typically used to
(11:28):
work with fifty or sixty or seventy providers and now
they're like, look, we want to work with five or
ten providers and go bigger with them. And so that's
going to further drive the consolidation within the network that
these big shippers are trying to make their lives easier.
Have trusted providers, because you know, giving someone a half
a million dollars in business, you're not going to get
that top serier at service. But giving your eight to
ten best brokers twenty million of business, you're going to
(11:49):
see that loyalty and dedication to the account. And so
that's one of the big trends that we're seeing within
our customer portfolio.
Speaker 1 (11:55):
Right, great, So any invention technology a bunch during that point,
you know, and you mentioned earlier, you know your copilot
strategy where you kind of balance technology and people. So
the technology that arrive has is that all built in house?
Can you talk about like how mud you guys spend
on technology year? Yeah?
Speaker 3 (12:16):
Yeah, so absolutely.
Speaker 2 (12:17):
So our technology was off the shelf until twenty twenty
March of twenty twenty with COVID, and it was basically
an on premise system and we've been working to build
our own technology starting in twenty seventeen twenty eighteen. But
when we went remote during COVID, we wouldn't have been
able to do that with our off the shelf on
premise system, and so we were able to convert over
to what was called Accelerate at the time, which has
now arrived now, and so one hundred percent of our
(12:39):
technology has been built in house.
Speaker 3 (12:42):
Obviously, we have a.
Speaker 2 (12:43):
Lot of integrations to third party softwares, but everything the
reps do from a day to day perspective is a
homegrown system. And then we also have carrier Now, which
is for our carrier partners. We have shipper now, which
is for our shipper partners, and so yeah, everything had arrived.
We want to own the way our ployees see the data,
get the data, and are able to interact and service
(13:04):
their customers and their carriers. And so the only way
to be able to do it the way that we
want to do it is by being able to build
it ourselves. And from a tech men perspective, you know,
it ranges anywhere from twenty five to thirty five million
a year, and tech development that's just tech development that
doesn't include infrastructure, subscriptions, phones, et cetera. But from like
a personnel perspective, that's that's our investment on an annualized basis.
(13:26):
And most of our tech resources are located in Austin.
We've got some in Chicago, and then we've got few
in South America.
Speaker 4 (13:32):
Okay, so could you share like any productivity improvements that
you've been getting with the tech that you've been building out,
Like you know, like how many loads per day could
a typical broker or handle I don't know a couple
of years ago versus what they're doing today.
Speaker 2 (13:45):
Yeah, So we have our cohorts REP level Productivity cohort,
and we have twenty thousand plus data points that support
our cohorts because every single month, the employees add a
new data point for whatever month they've been at the company. Right,
So if you've got four hundred customer reps and four
hundred carrier reps every month, I'm atting eight hundred data
points to my model, right. And so what we're doing
(14:06):
is we're saying, Okay, how are the productivity at all
of the bands of tenure getting more productive over time?
And so what we have are what's called managed goals.
And so managed goals are basically the average productivity that
you should see through a cycle. Because when things are
good inflationary environment or a deflationary environment, we can outperform
the managed goal curve. When it's equilibrium like we are, now,
(14:27):
you're going to underperform. So at the aggregate level, it's
one hundred percent achievement, if that makes sense. And so
every single year we're re looking at our managed goal
curves and saying how much more productive are we getting
as an organization. A lot of that is technology, a
lot of that is better processes, better managers, better training,
better hiring. All those things layer into it. But if
you think back to like the last cycle, the last cycle,
(14:49):
if you would use today's manage goal curve, we were
at like sixty five percent of today's curve. And so
when you think of it from that perspective, it's north
of a fifty percent increase in productivity across all tenure bands.
And the reason that you can't just talk about load
per day per head because a big driver of load
per day per head is how many people you hired
in that calendar year. What percent of your reps are
under a year, what percent of your reps are under
(15:11):
two years? Because there's a massive drain on productivity. If
you say, hey, I'm going to go hire four hundred
new employees, that's going to drag down the aggregate number,
and it's going to be a little bit misleading, right,
And so the way that you always want to look
at productivity improvements is across the entirety of the tenure bands,
and how are you lifting it up, How are you
making a more productive faster, and how are you making
a more productive through the entirety of the curve. And
(15:31):
so everything we do within technology is linked back to
the productivity curves. Whether it's increasing load count, whether it's
increasing margin, whether it's increasing connectivity. And so those are
all the ways when we build an ROI analysis, for
every single thing that goes on our roadmap, it's always
tied back to one of those key lovers.
Speaker 1 (15:48):
And so I'm just curious. So when you hire a
new broker, call like an entry level someone that's just
right out of college or grad school, I don't know
where you're hiring from, how long does it take them
to ramp up to get to a certain level of productivity?
Is it months? Is it years?
Speaker 3 (16:05):
Yeah?
Speaker 2 (16:05):
So, I mean it's an open ended question because it's
how do you define the productive?
Speaker 3 (16:10):
Right?
Speaker 2 (16:11):
So, right now, they train anywhere from six to nine months,
depending on what department they go on. And so in
the first six to nine months, we don't even expect
them to have customers or have carriers. They're simply learning
the business because at the end of the day, the
operations of what we do is what sets us apart.
Everyone can get on the phone and landed carrier. Everyone
can get on the phone and land to customer if
you're willing to try hard enough. How do you take
it from that first transaction to your one hundred through
(16:32):
your thousandth to where you're getting ten loads a day,
twenty loads a day. That is what's really complicated. And
so we make sure that our employees are operationally excellent
before we.
Speaker 3 (16:40):
Put them in those positions.
Speaker 2 (16:42):
And so that's a huge investment that we put into
our people, which is very different than a lot of
people in the industry. And then so when you look
at it, it's like from a cumulative break even perspective,
it's like month eighteen for us, right, And then obviously
it's very accreative from a P and L perspective on
a go forward basis. But you know, we're investing pretty
heavily in the first call eighteen months of a rep.
And then when a rep probably gets like that twenty
(17:03):
four to thirty month mark, they're pretty self sufficient, like
they don't have to ask fifty questions a day. You know,
maybe it's five questions a day, and so it really
is a tenure based business, which is why, like people
don't even understand like how hard it is to build
an organic business the way that we did, because it's
all about tenure. Like we're competing against the big companies.
If you look at their LinkedIn, their average tenures four
and a half, five and a half, six and a
(17:23):
half years. Our average tenures two years, right, because we're
constantly hiring new people and bringing down that average. And
so as an organization across the board, we're competing against
people that just have significantly more experience than us, and
so it makes it challenging.
Speaker 1 (17:37):
And I'm assuming because mentoring is an important part of
the training process for these new entry level brokers that
are coming in or you know, wherever they're going to
give they're on the carrier side, I'm assuming arrive as
like an in office culture, like are you people virtual
or you're in the office and you're all working together collaborating,
So we are.
Speaker 3 (17:56):
In office culture.
Speaker 2 (17:57):
And obviously, you know, some people aren't on board for that,
but the numbers don't lie, you know, we obviously did
a great job during twenty twenty twenty one and twenty two,
when when COVID was there, every broker did right, everyone
had a good financial outcome. But if you look at
our cohorts, if you look at the people we hired
remotely starting in March of twenty twenty through basically the
end of twenty twenty two. Now we came back to
the office in twenty two, but very loosely, like way
(18:20):
more flexibility, right, and so maybe half in the office.
Almost all of those cohorts have failed, Almost all of
them are gone out of our business. And so we
have like this three year lost generation of like all
of our cohorts that we were hiring because they went
through this terrible onboarding experience, this terrible training experience, and
they were just thrown into it and they saw success
quickly because anyone with a pulse could be successful during
(18:42):
COVID because they were so much free. And then obviously
the market changed, they had this realization, oh man, I
wasn't actually trained, and I don't like this job as
much as I thought because I'm not as good as
I should be. And we lost i mean, our attrition
in twenty one and twenty two, even into twenty three
because of the twenty two hires was the highest we've
ever seen across our cohorts. We've really right sized. Our
(19:02):
attrition is down massively, thirty some percent year over year.
It's down since from twenty three to twenty four, and
we think it's going to come down even more in
twenty five because it comes down to, like all of
the attrition really happens in that first twelve to twenty
four months, Right, if someone stays for twenty four months,
they typically are going to stay and grow their career
here and arrive and so like during that period of time,
those people had just bad experiences. They weren't trained, and so,
(19:26):
like I said, I bet we lost ninety percent of
those hires. And so I'm not against remote work for
the right positions, for the right companies.
Speaker 3 (19:32):
I'm not one of those people that thinks that if.
Speaker 2 (19:34):
You have twenty years of experiencing you don't have to
develop people, that you have to be in an office seat.
Speaker 3 (19:38):
But I am for our business model.
Speaker 2 (19:40):
It's all about young people right out of college, putting
them in a sales training program and making them successful
in their career.
Speaker 3 (19:46):
And you cannot do that remotely.
Speaker 1 (19:48):
And then so you know when you're hiring these recent
college graduates, what are you guys looking for? So if
there's like, you know, some college kids listening to this podcast,
I'm huge. I'm huge with the college kids. There's college
caisses into this podcast, like what kind of like traits
are you looking for?
Speaker 3 (20:06):
So everything we do at Arrive is very data focused.
Speaker 2 (20:09):
I think you can probably hear when I get excited
the most is when we talk about data.
Speaker 3 (20:14):
But our hiring is no differently.
Speaker 2 (20:15):
We've profiled every single employee we've ever hired, how they've done,
where they came from, what their backgrounds are. You know,
who they trained under, what office they were in, what
university they went to. And so we've basically built one
of the biggest databases of like attributes of what we're
looking for because of what we've seen have worked at Arrive,
and so we're constantly refining that. And so every role
is different. Whether you're hiring for customer sales, you're hiring
(20:36):
for carrier sales, or you're hiring for operations. They're all
three very different people and a lot of them come
from different parts of the country, from different universities, with
different upbringings and so, but at the foundation of what
you're looking for across everything are people that are hard working,
money motivated, They have great time management, and they are
able to deal with rejection and failure and come back
the next day and when, and so like, this is
(20:58):
a very competitive business and there are so many people
that want to be successful at all of our competitors.
I mean, look at it, and that's just you're not
just competing against thirty thousand brokers. You're competing against four
hundred thousand asset based companies that would love to get
that freight from that enterprise shipper directly, right, And so
you've got to come in, you've got to be willing
to work hard, you've got to be super organized, you've
got to be able to make sure you're allocating your
(21:18):
time to the right things, you're not wasting it on
things that don't matter.
Speaker 3 (21:21):
And so those are really.
Speaker 2 (21:22):
The traits that we're looking for at a high level.
And then there's a lot more detail that gets into
the weeds that we probably don't have time.
Speaker 1 (21:29):
To talk about, right, And so you know, let's change
gears a little bit. Let's talk about the trucking market.
Something that's near and dear to my heart and I'm sure,
near and dear to yours as well. You know, what
are you seeing from a from a demand standpoint, from
a pricing standpoint, what are your expectations heading into peak season?
Do you think there's going to be a peak season
(21:49):
this year? What are your thoughts on the market.
Speaker 2 (21:52):
So obviously there's two significant hurricanes in the last two
or three weeks, right and there's still to be determined
of what the are going to be of those hurricanes.
They were substantial, you know, a lot of destruction which
is extremely unfortunate, which you know, shuts down warehouses, it
shuts downs manufacturing facilities. It really increases you know, the
(22:12):
emergency response, and so you know, assume those didn't happen.
I can tell you what my thoughts are on the market.
You know, we don't know what the effects are quite
yet of the hurricane as we're talking to each other
right now, a couple of days after it hit, right
And so it's a little bit of like ambiguity right now.
And what I would tell you is that during COVID,
a historically high number of carriers entered the market, and
(22:34):
we were burning that capacity off very slowly because carriers
made a massive amount of money in twenty twenty, twenty one,
twenty two. Additionally, they got government assistance through the COVID programs,
and so they all had pretty strong balance sheets going
into a down market, and so a lot of people
were holding on like, hey, it's going to change in
twenty four. I think everyone's realized that it's not going
to change in twenty four and so you're starting to
(22:55):
see the acceleration of capacity leaving the market. But the
end of the day, the trucking industry is the most
simple industry in the world to understand it's supply and demand.
And at the end of the day, we can talk
about a recession, we can, you know not, but like
durable goods is the only thing that you ship on
a truck. You don't ship services, right, you don't ship flights,
you don't ship those things, right, And so like durable
good demand is pretty consistent even in a recessionary environment,
(23:16):
and so we can really understand what demand's going to
look like. It really is how much capacity is there
in the market. And so if there's continually to be
too much capacity, it's really hard for the market to
be more advantageous for the carriers and the brokers. It
continues to be a shipper's market right now. What you're
seeing as shippers are continually bidding it down. We're going
to our third bid cycle in a down market, which
means rates are probably going to get as close to
(23:37):
the bottom as humanly possible. And so that's going to
put the market in a position that if there is
some type of event, some type of volatility, you know,
it will create the.
Speaker 3 (23:46):
Opportunity for rates to be inflationary.
Speaker 2 (23:48):
But you know, I'm not in the business of predicting
active god, I'm not in the business of predicting pandemics
or things of that nature. And so from our perspective,
twenty twenty five is going to look very similar to
twenty twenty four. I think you're going to see contract
rates stay pretty flat on a year over your basis.
I think you're going to see spot rates up five
to seven percent on a year over year basis. I
(24:08):
think you're going to see the spot to contract gap,
which is really important, like how much is the average
contract rate versus how much is the average spot rate
that right now is still at like where it used
to be at the top of the market, like in
previous cycles, it's like in the mid thirty cents right now.
It was as high as like forty five to fifty cents,
you know, at the peak of it. And so we're
still in a place where the spot to contract gap
(24:29):
is pretty sizable, which means if there is a disruption,
a hurricane like what we had, it could really increase
spot rates temporarily, but it's probably not going to be
a big enough disruption to inverse out the supply and
demand issue that we have right now. And so you know,
I still in a summary, I still think we're oversupplied slightly,
and I think you're going to continue to see a
(24:49):
challenging for environment. I do think that twenty five will
be better than twenty four from like a margin percentage
and a margin per load, but very slightly.
Speaker 3 (24:57):
And but there are growth opportunities.
Speaker 2 (24:59):
And so for a rad of like you know, we
we kind of like we don't care where the market
is yet.
Speaker 3 (25:03):
Yeah, it's great when it's infla shary.
Speaker 2 (25:04):
Yes, it's great when it's inflay shary from like a
spread proload perspective, But these environments, like you know, we
always say, never waste a good crisis. There's a lot
of opportunity to get better as an organization during these
challenging environments. Because if it's challenging for us, and we've
got the balance sheet that we have and the technology
we have and the people we have, it's really challenging
for the bottom twenty nine thousand, nine hundred brokers. So
there's a lot of opportunity for us to take market share,
(25:26):
which what's we're doing right now? Right?
Speaker 1 (25:30):
Okay, that's a great perspective. You mentioned, you know, there's
too much supply in the market and the fact that
you know, these two hurricanes, it's kind of unknown right now,
so you're not seeing that, you know, surge and demand
for relief efforts of expedited freight goat going down to
the affected areas. That's not something that you know, you
(25:52):
guys typically see.
Speaker 2 (25:53):
No, No, we're seeing that across you know, the major players.
You know, obviously we don't move one hundred percent of it,
but we're only seeing it. We're getting the email requests
multiple times a day across you know, big retailers that
you know do disaster relief, and then obviously the government
organizations that we work with as well. But at the
same time, there's still a lack of freight coming out
(26:14):
of those areas, and so like from a total demand perspective,
you know, you can look at tender rejections. It's up
a little bit. It's up until like five percent, right,
it's not up to ten percent tender rejections. Typically for
rates to get super inflationary need to stay above ten
percent for a period of time, and we're just not
there yet.
Speaker 3 (26:30):
So, like I said, I'm kind of waiting and seeing
what's going on.
Speaker 2 (26:33):
You know, I don't want to make any predictions with
where we are in the information cycle related to this
hurricane yet.
Speaker 3 (26:40):
I think it's to be determined.
Speaker 2 (26:41):
And then in terms of peak season you asked earlier,
you know, I think that the shippers did a pretty
big pull pull forward the amount of containers that came
in during August. In September. I think shippers were preparing
for a port strike. I think they were getting their
inventories where they needed to be. So, you know, I'm
not predicting a massive, massive peak season, but you know,
(27:02):
I could be wrong, especially with the volatility of the weather, right,
you know, continue weather disruption is going to create volatility,
even if it's not a big peak season from a
from a number of load perspective, right, it's going to
just complicate the market. So you know, as of right now,
like if there wasn't those hurricanes, I would have not
been expecting a massive peak season.
Speaker 1 (27:20):
So did you when you saw the port strikes, did you,
guys see any changes in demand around the East Coast
and Gulf Coast regions? Was there like like people panicking.
I got to get stuff out of the ports just
before they start striking.
Speaker 3 (27:36):
So we do a little bit of draage.
Speaker 2 (27:39):
We don't do a whole lot at the port level,
so we didn't see a whole lot honestly, And honestly,
I think it would have taken a couple of weeks
for us to see, like, you know, shippers behavior. I
think a lot of shippers were standing by waiting to
see what was going to happen, and so they weren't diverting,
you know, product to LA. You know, if it would
have lasted a couple of weeks, I think you would
have seen a lot of freight diverts to the West Coast,
(27:59):
which would have created a lot of long haul expedited opportunities.
But obviously the port strike didn't last long enough for
that to happen, and I think a lot of the
shippers were probably like sitting around waiting for that first week, saying, Okay,
let's let's see where this goes.
Speaker 1 (28:11):
You know.
Speaker 2 (28:11):
We definitely saw some changes, but nothing like dramatically. You know,
some of the export business that used to go to
those ports, we definitely saw them diverting to other ports.
The other one that we saw are like carriers that
do drayage on the wet on the East Coast started
reaching out saying, hey, we'll do over the road and
so we saw little things like that, but nothing major.
Speaker 1 (28:29):
Okay, So, you know, I hear a lot about you know,
fraud within the trucking industry. How are you guys battling that?
At arrive?
Speaker 3 (28:39):
So if you would have gone.
Speaker 2 (28:40):
And talked to customers back in twenty twenty two, every
single customer would be like, how do you get me
more trailers? If you go to talk to customers now,
they're saying, how are you protecting against fraud? It is
absolutely the hottest topic in the industry. We have an
unbelievable compliance team led by Kenneth Hall and he is
all over it, and so it really starts with our
end internal processes. Right, we can't prevent everything in the world. Right,
(29:04):
our job is to do everything we can, and the
shippers also can contribute and do things on their end
as well, and so we as a team need to
be doing all these necessary steps and it adds a
little bit of complexity. It definitely can take out some
of the capacity, but it really comes down to, like, hey,
we won't work with carriers that have been in business
for less than a year. We won't work with carriers
that haven't had inspections. We won't give a carrier a
multi state run that hasn't had inspections in those states
(29:26):
because we don't think it's legitimate. There's so many different
things we're doing as an organization, literally, like twenty plus
things to try to prevent that. Whether it's auto tracking,
whether it's alerts within our system when a carrier goes
out of route that they shouldn't be going out of,
or if it's a high value value lane, making sure
the driver's driving two hundred and fifty miles before they
make their first stop, making sure.
Speaker 3 (29:45):
They're fueled up before the pickup location, and.
Speaker 2 (29:48):
So there's a lot of little things that we're doing
as an organization to try to be a leader in
that world of high value and obviously fraud and theft.
And so we obviously work with Reliance Partners, which is
one of the largest insurance providers to the brokerage community,
and I think they've been on record and said that
we have one of the lowest UH lost runs of
any broker in the space. And so you know, we're
(30:09):
not we're not perfect. We've definitely had fraudulent we've definitely
had pillaged loads, but we from a percentage perspective, we
feel like we're top of class and we're making those
necessary steps. And it really is a time investment internally
to dot all your eyes and top across your t's
every single time you work with the carrier.
Speaker 1 (30:28):
And what in your experience, whether it's an arrive or
just the industry in general, what's the most common fraud
that you're that the the industry is experiencing.
Speaker 3 (30:38):
So there's a lot.
Speaker 2 (30:39):
So if there's high value, it's people that are watching
the high value trucks leave the facilities and then they're
going to a truck stop and they're pulling the doors
off and they're pulling a powder two OLF like they
can that that happens all the time. The ones that's
really unique right now and it's really hard to fight
is the scammers are buying mcs that are legitimate mcs.
And so let's just say you've got three trucks and
you've been a business for thirty or ten years, and
(31:01):
you're about to go out of business, and someone gives
you five thousand bucks and says, hey, give me your
email and your phone number for the next week while
I do the transition, and then they literally can go
pick up a bunch of loads, steel them and shut
the company down and never find them ever again. And
so those are the ones that are really really challenging
to fight against. And so those are where the fraudulent
actors are probably getting the brokers at the highest level.
(31:24):
And so once again it goes down to kind of
our core carrier network, Like we work with carriers that
are between that twelve to nine hundred and ninety nine.
A lot of this fraud is happening on the smaller
fleet size, and so we're trying to make sure that
you know, those carriers aren't going out of business and
selling their MC to someone that you know is going
to be doing nefarious acts and so you can't be perfect,
but you know, we do everything we can, all right.
Speaker 1 (31:46):
Do you think there's anything the industry can do to
kind of because it's, like you said earlier, like it's
what shippers are talking about all the time, you and
I are talking about it. So it seems to be
a real mark for brokers. So is there something that
the broker industry can do or regulators can can help
out with?
Speaker 2 (32:05):
You know, I think it's a it's a team effort
between the brokers, the shippers, and you know law enforcement.
Right at the end of the day, when when we
call law enforcement, they have to you know, be responsive,
they have to care, they have to be present. You know,
Overhaul is a company that's got really great relationships with
with law enforcement. So if you're using Overhaul as a
tracking service, if you have high value freight, you know,
their recovery rate is like nearly one hundred percent, right,
(32:26):
and that's because they know who to call they can
get the action going from a from a shipper perspective,
you know, obviously making sure you're working with legitimate brokers,
making sure that you know, we're validating pickup numbers. I
mean even going as far as validating, hey, broker, what's
the MC of this of this carrier and just checking
at the gate, right, because a lot of the fraud
happens where it's getting double broker, right, it's going to
(32:46):
an asset based carrier that's then brokering it and stealing
the load. And so there's a lot of things that
you can do. There's things that you can do around
seals on the on the doors, not just like on
the on the side, because a lot of these people
are taking the doors clean off the trailer, taking the
product off, and then putting the doors clean back on,
so the seals never even getting broken. And so there's
just a lot of little things that we can do,
but like I said, it requires a team effort. I
(33:07):
mean the most expensive but highest you know value is
you can have tracking devices on one of the palettes
within the within the trailer, right, but that costs you know,
forty to fifty sixty seventy dollars a shipment, and so
really it just comes down to like what level of
investment are people willing to make?
Speaker 1 (33:23):
Is is there anything else you know, outside of fraud
that's facing the industry that you view as a challenge
for the brokerage industry and derive.
Speaker 3 (33:34):
Yeah.
Speaker 2 (33:34):
I mean, at the end of the day, it's a
people business. And obviously we're going to continue to build
great technology. Our technologies can continue to lift our productivity curve.
But you know, for me, it's is the next generation
wanting to come out as college and be in sales.
Speaker 3 (33:47):
Do they want to be in the office?
Speaker 2 (33:48):
Do they want to you know, work the hours that
it takes to work to be successful. You know, culturally
we're seeing you know, pretty large shifts of college kids
coming out, and so, you know, are we able to
continue across the entirety of the industry, continue to fill
our seats with people that are super hungry and super
willing to you know, do a very blue collar business,
right like trucking at the end of the day is
one of the most blue collar industries there are. And
(34:09):
so making sure we're attracting the right talent, making sure
we're showing people that it's an unbelievable place to build
a career where you can have a lot of success
and you can have a family and you know, do
all the things that you want to do and have
a great career of.
Speaker 3 (34:22):
Brokers whether it's arrived or wherever they go.
Speaker 2 (34:24):
And so for us, it's about continuing to hire the
right people, continue to build our team the right way.
Speaker 3 (34:29):
And for us, it's an incremental load business, right.
Speaker 2 (34:31):
So like, if you don't have that drive where the
average person used to go, take that incremental one load,
that is where all the ebadeh falls to the bottom line.
If you've got two thousand employees and you can add
one load a day, that like literally increases your ebadeb
hi fifty sixty seventy percent. It's massively a creative right.
And so like making sure that you have the right
employees with the right culture and the right effort. You know,
that's the biggest thing that we worry about at Arrive
(34:53):
is continuing to hire the right people and then retaining
our people once they get here. I think our executive
team at Arrive spends more time talking about attention than
almost anything else because the amount of productivity improvement, the
quality of the service that we give our cares, the
quality of service we give our customers with that rep
at the year, year, two, year, three, year, four, year
five is exponential. And so you know, those are the
(35:14):
big things that keep me up.
Speaker 1 (35:16):
And so you know, outside of you know, writing checks
and paying people, what is the biggest driver do you
think for the younger generation coming in to retain them?
Speaker 2 (35:26):
Yeah, I mean they have to see it's a place
where they can. At the end of the day, this
is a sales culture and you're here to make You're
not going to be here unless you want to make money.
And that this is from a sales perspective. From a
from an operations perspective, you've got to have career pathing.
You've got a lot you have to see a lot
of opportunity. There's so many different places within the organization
that you can move within our operational department. But from
a sales perspective, you have to be money motivated. And
(35:48):
the draw is you got to work for a company
that gives you the most opportunity to have a lucrative
you know, compensation program. And so when we look at
our compensation and we benchmark our average earnings by year
versus all of our peers, we're in.
Speaker 3 (36:00):
Like the top percentile.
Speaker 2 (36:01):
And so making sure that they feel like the company
that they're at is investing in them if they work
hard and they stay that there's financial rewards for that,
and so you know, obviously it's not just about margin,
like we pay our people based off of services too,
like how are you servicing your customer?
Speaker 3 (36:14):
How are you servicing your carrier? And so it's driving
the right behavior.
Speaker 2 (36:17):
But ultimately it's a sales company and they need to
be rewarded if they do what the company expects of them. Right.
Speaker 1 (36:22):
So you know, since since founding the company, you know,
around ten years ago, obviously you've had a lot of
wins because you've grown it to a successful company. Was
there a moment in time where you're just like, oh
my god, I made it, Like this is really gonna
this is really going to happen.
Speaker 2 (36:38):
So you know, what I will say is we are
like this relentless pursuit of perfection is what we say
all the time on the leadership team, Like we know
we can always be better, we can get better every
single day. But I will say that I think one
of the most satisfying things that I know this sounds stupid,
but we got to a point where even in the
worst of the cycle, like right now, we are still profitable, right,
And I think that's a huge testament. There's so many
(36:59):
companies that start came into the industry, we almost got
looped into like the digital freight broker because of when
we started arrive and none of those companies have ever
been able to get to ibadah or cash flow positive.
And so for us to be able to grow, I mean,
we're going to be up fifteen percent in volume in
Q four year over year, and for us to be
able to take market share the way that we are
grow organically, the way that we have, which no one's
ever done before, and do it with positive cash flow
(37:24):
is truly remarkable. And so like, we're not a business
that just buys market share and does all these things
and throws money at the wall. We've built a really
sustainable business, a business that's going to be here no
matter how bad the industry is or how good the
industry is. And so for us, you know, that takes
such a it's such a cyber relief knowing that you
don't need to go raise capital. You're not going to
be in this position where you're like, oh man, we
(37:44):
got to push out payables.
Speaker 3 (37:45):
We can't pay our employees. Like it's it's a really
good place to be.
Speaker 1 (37:49):
Now.
Speaker 2 (37:49):
Obviously our expectations haven't changed. We want to continue to
obviously maximize shareholder value over time, but being in a
position that our cost structure is at such a place
that our loads and our scales that such a place
that even in the worst of times, we're profitable has
been a huge cyberlief for myself, for my board, and
for all of the leadership team here and Arrived.
Speaker 1 (38:08):
And as a founder and leader at Arrive. Is there
anything that keeps you up at night?
Speaker 3 (38:13):
You know, I kind of touched on it.
Speaker 2 (38:15):
It's a people business, and I think at the end
of the day, the things that keep me up is
are people happy? Are we doing everything we can to
be an employer of choice? Are we having the right compensation?
Do we have the right incentives? Do we have the
right like engagement? Internally? Are our managers bought in? Are
the directors bought in? Are the vps bought in? And
then if they're all bought in, how are they buying,
you know, creating that culture within their teams? And so
(38:37):
for me, all of my stress, all my worries always
go back to the people, because I know that if
our people are dialed in and they're bought in and
they're excited, no one's better than us. I mean a
way to you know, kind of like prove that is,
in the last eighteen months, we've won twenty five care
of the Year awars from fourtune five hundred companies.
Speaker 3 (38:54):
The next closest person is six.
Speaker 2 (38:57):
So I mean we've won by a factor of like
four hundred percent that and so like when our people
are excited and they're dialed in, we've got the best
service in the in the industry, obviously approved being the
number of awards we get from top companies every single day.
And so for me, it's how do you keep that
that vision, how do you keep that mentality that buy
in and if you lose it, it's it's it's detrimental
long term of the business.
Speaker 1 (39:17):
That's great, This was a great conversation. I just had
one last question for you. It might be a little controversial.
You know, you're you're you're out of base, out of Austin.
What's your favorite barbecue place in Austin, Texas?
Speaker 2 (39:30):
You know what A lot of people like Terry Blacks
and obviously Lambert's and all the other ones. Salt Like
to me is like near and dear to my heart.
It's just like so authentic. It's a great experience. It's
outside of Austin. It was the first place I took
my wife on a date. So I love Salt Lake
just because of that.
Speaker 1 (39:49):
Okay, so what you're saying is if you really like
somebody taking the salt.
Speaker 2 (39:53):
Like no, no, it's I mean if she was from Boston.
So it was an eye opening experience, that's for sure.
So it was a test I think.
Speaker 1 (40:03):
Well fantastic. I'm glad it worked out for it. I
really want to thank you for your time and insights today, Matt.
Speaker 3 (40:09):
Absolutely, thank you so much. I really appreciate you having
me on the show today.
Speaker 1 (40:13):
Yeah, and I want to thank you for tuning in.
If you'd liked the episode, please subscribe and leave a review.
We've lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal, at bi go
(40:34):
and on social media. Take care and keep those supply
chains moving. Thanks a lot, everyone, and be well.
Host
Lee Klaskow
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