January 14, 2025 • 39 mins
Technology will be a driving force in shaping the transportation and logistics industry for years to come given the productivity improvements afforded by artificial intelligence and machine learning. It may also spur a new era of consolidation within the freight brokerage industry, as those companies without the scale and capital will find it increasingly difficult to compete. In this Talking Transports podcast, Ken Beyer, CEO of Transportation Insights (TI) and Nolan Transportation Group (NTG), joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to share his insights about where the freight markets are heading and how the company has leveraged technology to increase productivity by three-fold. Beyer also discusses where he sees trucking in 2025 and the importance of building a people-first organization.
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Episode Transcript
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Speaker 1 (00:07):
Hiverone. This is Lee Clasgow when We're Talking Transports. Welcome
to Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Klaskow,
Senior free transportation logistics Analysts at Bloomberg Intelligence, Bloomberg's in
house research arm of almost five hundred analysts and strategists.
Before diving in a little public service announcement, your support
is instrumental to keep bringing great guests onto podcasts like
(00:28):
the ones we have today. We need your support though,
so please if you enjoyed this podcast, please share it,
like it, and leave a comment. Also, if you have
any ideas for future episodes you just want to talk transports,
please hit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at logistics Lake. Now on to our episode.
We're delighted to have Ken Byer, CEO of Transportation Insights
(00:50):
and Nolan Transportation Group, leading the combined company to become
the fourth largest domestic transportation management provider in the US
with over five billion in revenue. Under his leadership, TI
and NTG have been recognized by Newsweek as one of
America's Greatest workplaces in twenty twenty four, driven by a
culture of innovation, growth and operational excellence. Kennice more than
(01:13):
twenty five years of experience driving growth in the technology
and logistics sectors. He previously served as president of Ingram
micro Commerce and life Cycle Services, a four billion global
logistics business later acquired by Several Logistics. He joined Ingram
following its acquisition of cloud Blue Technologies, a company he
co founded and built into a leading provider of reverse
(01:36):
logistics in IT asset disposition services. Ken began his career
at Ernest and Young as a management consultant. He holds
a degree in architectural engineering from Kansas State University. So
I guess that's go Wildcats.
Speaker 2 (01:49):
Go Wildcats. I like the purple you got on.
Speaker 1 (01:53):
Well, thanks for joining us today, Ken's good seeing you again.
I'm really interested to have this conversation. You know, not
everyone knows what you know. TI and NTG are and
the holding company beyond. Can you just give a little
little flavor of what these organizations are before we start
(02:13):
the conversation.
Speaker 2 (02:14):
Absolutely, we're focused on the domestic transportation market that is
within the US, So we focus on what we call
port to porch. When a container arrives at the port,
we provide trade services, full truckload services, less than truckload,
and final mile delivery including parcel. We do this both
(02:35):
transactionally and fully managed. So we have a brokerage business NTG,
which manages capacity across eighty thousand carriers for about fourteen
thousand shippers, and a fully managed solution with Transportation Insight,
where we focus on the mid market, helping customers with technology,
business analytics, and fully managing their supply chain.
Speaker 1 (02:57):
And you know, could you just talk about those those markets,
you know, the transportation management service markets and the brokerage
markets kind of like what the profiles are in terms
of growth, not only for you, but maybe more broader
for the industry. Yeah.
Speaker 2 (03:11):
Absolutely. You know, transportation is eight percent of the US GDP,
so it's only behind housing, food, and education. It's bigger
than healthcare, and you could argue that none of those
other industries exist without transportation. So you know, our vision
is that we keep the economy moving and that you know,
(03:32):
literally is the case for transportation. Is without transportation, the
US economy would grind to a halt. So what we
do is critically important both for the overall economy and
for our customers and their supply chains. We focus on
helping customers meet their customer demands, and that is ensuring
that the product arrives on time and high quality, and
(03:55):
that they're making the best decisions for their business. Primarily,
how do we help our customers grow their businesses and
hit their profit goals. And so that's everything from a
single shipment as I mentioned, maybe a full truckload shipment
or an LTL shipment all the way too. If a
customer doesn't have the resources in house, whether technology or people,
(04:18):
to manage their own supply chains, we can outsource their
entire supply chain to our team. Provide a TMS, provide
the people, procure the carriers on their behalf, manage that
those carriers provide audit services at the end of the
life cycle, and then the overall analytics to help them
understand exactly down to the skew level, what their most
(04:39):
profitable products are and how they can make them more profitable.
Speaker 1 (04:42):
You know, I was down well, you know this what
the listeners might not know. I was at offices a
couple of months ago. You know, you guys were moving
into a new headquarters and you know I can see why.
You know, you guys were acknowledged by Newsweek is a
great place to work because it was really you know,
I kind of felt a cool vibe with with your
(05:04):
with your folks. There can you talk about because you know,
the brokerage industry, we're hearing all about technology, technology, technology.
For for NTG, you know, what is the right mix
and NTI for that matter, what is the right mix
of technology and people moving forward as these great technology
innovations come to fruition.
Speaker 2 (05:27):
Well, I believe all businesses are people businesses. No one's
working for a computer yet, and that may happen in
the future, but right now, businesses are based on good
leaders who understand their people and connect and respond to
their needs, and so we are at people first business. However,
I also believe every company has to be a technology company,
(05:49):
and so our focus is using technology to enable our
people and our customers to be more productive than they
would be without the technology. Not only more productive, but
to make smarter decisions. And so our focus has been
investing in technology that really enhances the ability of our
team members to provide better service to their customers and
(06:12):
then provide those same analytics and insights directly to our customers.
We invested significant amounts of money in technology, and we're
a huge believer in it. We think it is transforming
the industry. My background is largely in technology, so I'm
a passionate believer in what technology can do. But at
the beginning, it all starts with people, and.
Speaker 3 (06:33):
That's our focus.
Speaker 2 (06:34):
And as you said, we built a great headquarters here
in Atlanta, consolidating five different offices we had in Atlanta
into one headquarters. And the focus is really creating a
space that makes our folks feel valuable and worthy to
be in a great work environment, because we believe that
translates into providing great services to our customers and to
(06:55):
our carriers, and it creates a great work environment where
our engagement is highest it's been in the history of
the company.
Speaker 1 (07:02):
And you led with people, you know, mentoring is obviously
a big part of the brokerage industry. I'm assuming you're
more or less in an office culture, that's correct.
Speaker 2 (07:15):
Yeah, we are primarily in office. We believe, especially within
the brokerage space, you get so much out of the
collaboration and working together with other people, particularly across functions.
So we're primarily in office. We do have some remote workers,
primarily in the tech tech sector, but we are a
believer in the in office.
Speaker 1 (07:34):
Culture and so you know, I'm assuming you're also use
a lot of technology to measure how your employees do.
Can you do you like just talk about how you
measure success for your employees on the brokerage side, and
I'm assuming that that is very different from someone who
is an entry level you know, first year in versus
you know more somebody that has significant experience.
Speaker 2 (07:58):
Absolutely, I'm a big believer in managing by metrics, and
so we have dashboards for every part of our business.
Every day we can pull up exactly what the metrics
are by a per person, by segment, by business. Everyone
has incentive compensation that is tied back to performance metrics.
(08:21):
On the brokerage side, it's primarily about the number of
loads brokers bring in the margin of those loads, and
then as you move across to other functions, we have
KPIs that measure their performance. And what I think is
important is everyone can see their performance in real time
and know where they stand. That helps us with mentoring.
So folks that are maybe missing from the threshold, we
(08:41):
can sit down and say, how can we help you
get to the level performance that we expect and it's
best for them because their incentive comp is tied to
performing and exceeding those metrics.
Speaker 1 (08:53):
Right, Okay, you know and you mentioned technology earlier and
how you're huge believer and you talked about how it
makes your people more productive. Can you just give some
examples of some technology that you implemented and how it
improved your overall production?
Speaker 2 (09:12):
Absolutely so. Across both TI and NTG, we invested in
a proprietary technology platform called Beyond. The goal of that
platform was to create a port to porch technology platform,
meaning all modes across both transactional and managed, where we
could have a single platform for both shippers and carriers
(09:33):
to interact with us digitally. That has, at a high level,
improved our productivity by almost three times since we implemented
the technology, So we are significantly more productive as a
result of the technology that we've implemented. But I would
argue the bigger impact is that we are providing better
service to our customers and to our carriers because we
(09:56):
have better intelligence at the fingertips of our employees, So
when they're interacting with their customers and their carriers and
their partners, they are more productive and provide better insights
than they would without the technology.
Speaker 1 (10:10):
In these technologies I'm assuming also help you price better,
so each load is a little more profitable for the company.
Speaker 3 (10:17):
That's correct.
Speaker 2 (10:19):
The first big use case of AI that we implemented
was in pricing. So we have built a proprietary pricing
model that helps us price at the load level as
I mentioned, you know, at the lane level, all the
way at the full supply chain level, so we can
optimize a customer's supply chain by using our pricing algorithms.
(10:42):
The other thing about the pricing algorithms is, you know,
we hire a lot of new salespeople out of college
and next Monday we have one hundred and thirty new
salespeople starting at the company. Without multiple years in the
industry knowing how to price, it would be impossible for them.
And they know how to price once they start selling.
(11:03):
And so this technology allows us to scale up our
new hires much more quickly than if we had to
train them without this tech.
Speaker 1 (11:12):
Right, and so you know, just as aside these these
one hundred and thirty employees, like you know, for those
that might be interested in training the industry, like how
long does it take somebody to ramp up to to
you know, be on their own if you if you will,
to go after customers and support customers.
Speaker 2 (11:31):
Well, we spend a significant amount of time in training,
so four weeks of intensive training to start. That's training
about the industry, the modes, the equipment types, the customer segments,
the types of carriers that we work with. So we
spend for four weeks if you will, in a classroom
setting with with using the technology, making mock calls, and
(11:56):
so a significant amount of training up front. Then we
go into about two months of you know, assisted training
where they're they're hitting the floor, they're on the phones,
they're making calls, but very involved you know, interaction from
a team leader that's that's next to them. So after
about the third month, we expect our brokers to be
fully up to speed, and we see most of our
(12:19):
new classes being fully ramped and profitable within six months
of hiring.
Speaker 1 (12:25):
And what's the retention like because obviously any person that
joins in new industry and they have no idea what
to expect, sometimes it doesn't meet their expectations. And you know,
the brokerage industry is that kind of eat which you
kill environment so you know, what kind of retention do
you have? I don't know if you measure it after
a year or two year, six months.
Speaker 2 (12:46):
Yeah, you know, this year our attention was the best
it's been and some time. And that might come as
a surprise because of you know, the state of the
freight market the last couple of years. But I think
that goes to the culture work that we've been doing
is coming alongside of our people and spending more time
training them on how to be successful, and so our
(13:06):
retention rates are at all time highs. It is a
significant turnover in the beginning, so mostly because folks decide,
as as you mentioned that it's just not the industry
for them, but those that want to succeed will succeed.
We provide the tools, the education, it's just a matter
of their own personal drive and commitment to being successful
(13:29):
in these new classes.
Speaker 1 (13:30):
Are they are? They? Are they just specifically for NTG
or they kind of feed up both organizations TI and NTG.
Speaker 2 (13:38):
The class I mentioned is specifically for NTG. We also
are hiring across the TI platform as well. The TI
sales process is significantly longer. It's typically a six to
nine month sales cycle. These are three to five year
contracts where we're providing very strategic solutions for our customers,
usually including a technology implementation. And so it's a different
(14:01):
level of salesperson, someone who's been in the industry a
while and really understands the ins and outs of the
supply chain. So we typically hire more experienced people to
join our TI sales team.
Speaker 1 (14:12):
And you know, we're on the managed transportation side. I
don't think like any pyone can maybe get their arms
around it exactly what that is? Could you do you
give like a case study, whether factor fiction about like
you know what TI actually does.
Speaker 2 (14:28):
Yes, So, if you're a small to medium sized business,
transportation has historically been something that's been really not well
understood and it's hard to find experienced people who really
know how to operate it. And so what we do
is we come alongside of these companies and we say
(14:49):
we've already got the expertise. We're managing fifteen billion dollars
a freight across companies just like you. We can come
in and look at your current data set, where your
warehouses are, where your imports are coming in, where you're shipping,
to put that into our large database with over twenty
years of historic data and provide to you what we
(15:09):
think is the optimal supply chain. With that, then we
can go out procure the carriers, whether that's asset based
carriers or brokers, to make sure we create the optimal
capacity network for the freight that you're shipping. Once we've
done that, we can optimize that with managing the service
levels of those carriers, providing you real time reporting on
(15:31):
how those carriers performing in terms of on time, delivery,
service quality, etc. And then we audit the freight bills
when they come in to make sure that what you're
getting build is what you signed up to invoice those customers.
And then finally we provide you the analytics to say, okay,
now that all of this is operating, by the way,
(15:53):
usually with our TMS, which we implement. So we provide
the tms and we actually execute the freight on their
behalf in some cases, then we can say, now we
can start to look at every skew within your within
your platform and are you shipping this particular skew the
right way?
Speaker 3 (16:10):
And so we call we call.
Speaker 2 (16:11):
That margin management, where we can actually get down to
the SKIU level and help help our customers decide should
I be shipping this product lt L versus parcel, et cetera,
to optimize a profitability of each SKU. So what you
have is, as a medium size to large business is
a fully outsourced solution if you choose, or it could
be co managed with with your own internal team where
(16:33):
it provides onboarding technology, audit and then we ultimately also
pay the carriers on your behalf, so we're managing the
cash flow and making that less of a burden on
the company.
Speaker 1 (16:44):
Gotcha? And then are there synergies between the two organizations
TI and NTG.
Speaker 2 (16:50):
Absolutely, the TI business is primarily focused on We are
a partner of our shipper and so our primary goal
as a managed service provider is the best interest of
our customer, and that means if we can find a
better rate in the market, then we will we will
go get that for our customer, whether that's NTG, another
(17:10):
broker or an asset carrier. However, there's many cases where
we know that NTG can provide the best rate in
the highest quality of service, and with the customer's permission,
will leverage our brokerage to provide that capacity.
Speaker 1 (17:24):
Gotcha, Okay? And then you know on on the on
the technology side, going back to technology and maybe more
so it probably related to NTG and t I. You know,
fraud within the freight markets, it's been a rising concern.
How do you use technology to kind of weed out
the bad actors UH that are that are in the marketplace.
Speaker 2 (17:46):
Yeah, fraud's been a rising concern across the industry, and
I think over the last four years what you've seen
is not only US, but everybody else in the industry
moved from more of a reactive stance to fraud to
a very proactive stance. And that means for US is
we've implemented several third party tools to help US vet
carriers before we onboard them. Once they're onboarded, we have
(18:07):
our own data where we have carrier personas where we
can flag carriers that we think are risky to provide
certain types of freight movement for us UH. And we
have scores where we know which which carriers are.
Speaker 3 (18:20):
Are higher risk than others.
Speaker 2 (18:22):
And so leveraging our data the third party tools that
we have, we've made significant progress in reducing fraud. I
don't think we'll ever see it a day when you
know there's there's zero fraud in this industry. I think
there's all the bad actors that are that are trying
to steal where they can, and it's become much more
sophisticated the last few years. As you know, you know,
(18:45):
carriers that aren't able to make it sell their MC
numbers to to a fraudulent player, and that that carrier
could have been a great carry in our network and
all of a sudden is now part of something that's uh,
that's fraudulent. So we're constantly monitoring this. And while I
said we will never get it to zero, we're moving
towards the case where it's probably one in one hundred
(19:05):
thousand modes where we see an issue versus where we've
been in the past.
Speaker 1 (19:11):
So you guys see a lot of different freight movements,
you know, whether it's ocean, air, trucking, rail, intermodal, what
have you. You know, given all the things that you
do at TI and TG, can you talk about the
state of the freight market here in North America? You know,
what are you seeing? What are you expecting for this
year versus last year?
Speaker 2 (19:31):
Absolutely, And we publish our forecast every quarter. Our current
forecast for twenty twenty five is we expect that on
the truckload side, spot rates are going to increase around
fifteen percent in twenty twenty five. We see that starting
it has picked up in the fourth quarter or fourth quarters,
(19:51):
we saw tender rejections rise, rates rise, and with some
of the winter storms coming here in January, I expect
that to a stay somewhat sticky, but really in the
second quarter start to see a more material change in
spot rates. Contract rates will lag that our production is
about four percent increase in contract rates over the course
(20:12):
of twenty five on the LFL side, much more muted
maybe in the three to four percent increase in rates
on the LTL side.
Speaker 1 (20:21):
So on the demand, do you guys do any forecasts
with regards to demand for truckloads or you just more
focused on the pricing aspect of the markets.
Speaker 2 (20:33):
Now we look at both you demand as well as rate.
They're obviously interlinked, not only demand but capacity and what
we've seen as a significant amount of carriers leave the market,
which is driving some of the increase in tender rejections
and therefore the increase in rates. We think overall, with
interest rates coming down in the economy picking up, that
(20:56):
will drive some of the rate increase in twenty twenty five,
projecting volume increases as well as rate increases.
Speaker 1 (21:03):
Okay, great, And so you know, over the last couple
of years, you know, we've seen a lot of changes
of supply chains, whether it's just the pandemic and then
you know, getting to a new normal, and it seems
like things are continuing to shift to geopolitical concerns and
concerns over tariffs. You talk about how supply changes, supply
(21:23):
chains have changed over the last twelve months and kind
of where you're guiding some of your customers next year
because of those changes.
Speaker 2 (21:34):
Yeah, I think in general, you know, COVID taught everyone
that supply chains are critical to.
Speaker 3 (21:40):
Their business, and so there's there's been.
Speaker 2 (21:41):
An increased focus on making sure you have a resilient
supply chain that can perform well in any market. And
so what we've been doing with our customers and across
both NTG and TI is putting plans in place for
all of our customers to make sure they have very
resilient supply chains that perform in any condition. What that
(22:03):
means is having multiple sources of capacity, not being tied
to just a few carriers, but having access to broad
pools of carriers. And that's not just on the truckload side,
that's across the entire supply chain. So, for example, in drage,
when the ports started to back up, what is our
(22:24):
customers plan to deal with port congestion? And so we
have a very significant drage practice where we move about
twenty thousand containers a month from the port, and we've
helped our customers implement solutions at the port to make
sure that if anything happens, will say with a strike
at the ILA in January, we can help them with
(22:45):
the solution at the port and then all the way
to the final mile. You know, the final mile has
changed significantly in the last four years. Used to have
primarily two to three carriers with UPS, FedEx and USPS.
Speaker 3 (22:57):
In the parcel space.
Speaker 2 (22:59):
We manage over ten billion dollars a parcel freight in
the US, and our work with customers has been to
diversify some of that spend across some of the regional
carriers as well as the big three carriers. And so
those are the kind of strategies we're putting in place. Also,
where our Folks warehouse is located, how many warehouses do
they have and so we can optimize the spend even
(23:22):
within the redistribution of their inventory within the US.
Speaker 1 (23:26):
And so, you know, on the on the parcel business,
you mentioned that you're suggesting to your customers to diversified
as smaller players. Are smaller players more price competitive than
the larger players of FedEx and ups.
Speaker 2 (23:42):
In some cases, but you know, everyone is becoming very
price competitive. So our focus is, yes, we'd like to
find cost savings, but we want to create a resilient
supply chain that provides the best service to our customers.
So price is a component, but also having a diversified
strategy around how you deliver packages is also really important.
Speaker 1 (24:03):
Gotcha, And going back to the truckload market, you know,
with your outlook, you know, where are you guys thinking
like capacity is going to be Do you see more
coming out or do you think the price increases is
going to be more on the demand side or the
supply side. I guess the question is.
Speaker 2 (24:18):
We have seen a lot of capacity come out of
the market. We expect more will come out of the market,
but every cycle is really driven by demand, and so
our belief is we will see an increase in demand
in twenty twenty five, starting around Q two. As I mentioned,
we do think also that as capacity comes out of
(24:38):
the market, it's not just carrier capacity, but it's also brokers.
You know, we had almost thirty thousand brokerages in the
US at the peak of the post COVID cycle, and
almost five thousand of those brokers have now left the market.
And you know that also contributes to pricing in the
market where you know there's not as many people competing
(25:00):
the same.
Speaker 1 (25:00):
Loads, right, And what is the state of the brokerage industry?
Where do you see margins going going from here? And
maybe give a little bit of background if you will,
what they look like in twenty twenty four. Obviously, if
you don't want it, you don't have to give specifics,
it's your private company. But if you kind of want
to talk about directional where they were and where they're going,
(25:22):
where you think they're going.
Speaker 2 (25:25):
You know, we saw significant margin compression post twenty twenty two.
But I believe in general, the best companies are focused
on creating the most efficient operations, and so the name
of the game and brokerage going forward is having the
lowest cost to serve or cost per load in the business.
(25:48):
And so our focus on technology has been how do
we make our teams the most productive as possible. As
I mentioned, we're almost three times as productive as we
were previously due to the technology that we've implemented, and
so our focus is using the technology, the AI tools
that are available to make our teams more productive than
they were. That allows them to make more money individually,
(26:11):
and that allows us as a company to be more
price competitive for our shippers. So I think the future
of brokerage is you will see consolidation because you know,
a as a smaller broker, it's very difficult to get
the economies of scale that you see. At our size,
we're moving across both businesses almost ten thousand loads a
(26:32):
day in our platform, as I mentioned, almost fifteen billion
dollars afreight under management, and at that scale we can
drive significant efficiencies that allows us over time to be
much more price competitive. So no matter what happens with margins,
we are making money. And it's important to know that.
You know, even in the worst of the cycle, we
were always we've always been profitable, and so I think
(26:54):
that goes to the idea that scale matters, because in
a scaled organization, you can create significant efficiencies.
Speaker 1 (27:03):
Right you know, you mentioned that you guys were three
times more productive. That sounds like a home run in
terms of AI and technology. Are there any home runs
left or we talk about like the productivity from here
is going to be like singles and doubles.
Speaker 2 (27:17):
No, I think we're just getting started. I really believe
that some of these tools are just in the first inning.
You know, the tools that we've implemented are are good,
but we've got a significant amount of technology spend We're
going to continue to make this year in the coming
years because we believe, as I mentioned, we're just getting started.
I think ultimately, you know, the machine to machine aspect
(27:40):
of this business will continue to grow. We already see
it with our large customers where we're pricing completely automated,
We're we're covering completely automated, we're tracking tracking completely automated.
So you know, a load now can be fully digital
from from quote all the way to to invoice and
pain and I think as that continues to grow in
(28:02):
the industry, and more and more shippers adopt API and
and and dynamic pricing capabilities, then you're going to see
that that cost pro low continue to drop.
Speaker 1 (28:12):
Do you have any statistics at your organization in terms of,
you know, what percentage of your transactions are fully automated
like that from from quote to payment. Yeah.
Speaker 2 (28:23):
On the on the brokerage side, we're now almost half
of our transactions are are are fully digital. On the
on the transportation insight, you know, we manage that almost
completely on our TMS, so that we are on behalf
of our shippers fully digitally managing their freight.
Speaker 1 (28:43):
And when there's an issue, I guess just pick up
a phone and talk to a human being.
Speaker 2 (28:47):
Absolutely, That's where the people aspect comes in because at
the end of the day, people do business with people.
We build very trusting relationships with our customers, We have
long term relationships with our customers. On average, we have
a ninety eight percent retention rate across both the brokerage
and our TI customer base. And so at the end
of the day, as I mentioned at the beginning of
(29:08):
the call, this is a people business. We are investing
in our people and one of the ways we invest
in our people is through investing in technology.
Speaker 1 (29:16):
Right, and so you know we've talked about technology a lot.
I'm assuming everything you guys do is done in house.
Can you talk about your technology like how big of
how many people do you have sitting there working on
that stuff? Yeah.
Speaker 2 (29:30):
Absolutely. We made a significant investment in our technology platform,
building a micro services, cloud based proprietary operating system for
the entire business that was completed in twenty twenty two.
We did that in a way that we could also
plug in third party tools very easily because it is
(29:51):
an API driven platform, and so while our core system
is proprietary, we've also plugged in the best of breed
third party tools. And so what that allows us to
do is scale our technology organization very efficiently and use
people to develop the technology that is proprietary and we
(30:11):
think creates a competitive advantage for us, but at the
same time leverage the tools that are out there that
other really smart people and great companies are producing to
accelerate what we're doing. So my belief is that we
don't need to invent everything in house. There's a lot
of stuff external that we can integrate into our platform.
Speaker 3 (30:29):
That's what we've done.
Speaker 1 (30:30):
I think do you give any idea about you know,
obviously you're spending a lot on technology, you know as
part of your CAPEX. Can you talk about like is
it a percentage of your that revenue or anything like that.
Speaker 2 (30:44):
We didn't approach it that way in the beginning. Our
Our goal was what is it going to take for
us to become one of the top five organizations in
the in the country. And we laid out a multi
year plan and said, here's what we think it's going
to take, both in terms of growth and productivity, and therefore,
how can technology help us achieve those goals? And then
(31:05):
we set aside. We've invested north of one hundred million
dollars in tech in the last four years, to give
you a number, So it's a significant piece of our
our revenue and profit that we've reinvested in the company
because we believe in the long term of this business.
Speaker 3 (31:23):
We think that the.
Speaker 2 (31:23):
Growth projections over the next five years are staggering as
the big get bigger, we believe, and there's consolidation in
the space. So we've approached it less as you know,
we're going to spend a certain amount of our revenue
every year, and more about what do we need to
invest to achieve our goals?
Speaker 1 (31:40):
Gotcha? And you know I mentioned on the onset of
the conversation that the company is a private company. Kee,
you talk about the ownership, What are the plans if
are any.
Speaker 2 (31:53):
Yeah, we are backed by Griffin Investors out of San
Francisco as our private equity sponsor. They acquired Transportation Insight
and in TG in twenty eighteen. They've been a fantastic partner,
you know, investing alongside of us, as I mentioned, in
technology and growing the business. You can see by the
(32:15):
fact that we're hiring right now that they believe in
the future of the business. And so it's been a
great partnership with our owner, and I think they see
significant growth a head. And so our goal with Griffin
is to continue to invest in this business and make
it one of the best businesses in this space.
Speaker 1 (32:32):
Is there anything else facing the freight tranportation logistics industry
that's on your radar right now that we didn't talk about.
Speaker 2 (32:39):
I believe you know this industry as I mentioned, you know,
it's a very important industry to the US economy. So
number one, it's an exciting space to work in. Number Two,
there's significant challenges to be addressed. It's not a business
that is simple. Every day, our people are dealing with
(33:00):
all kinds of issues and so as you look at
the future of the space, I think taking a monitormdolistic
look at how it's going to evolve is a bit naive.
Every segment has a nuanced and a strategy that we're applying. So,
if it's at the port, how do we automate and
optimize the drage operations as best we can? Then all
(33:23):
the way at the final mile, how can we make
the final mile as efficient as possible so that our
customers once the container arrives at the port till it's
delivered to their customer, they have a very efficient supply chain.
I think AI is transforming the space. As I mentioned,
we're just in the first endings of that. But many
of the interfaces that we've seen historically with people logging
(33:46):
into systems don't need to exist in the future because
we can meet the customer or the carrier where they
are with voice for example, and they can just you know,
talk to us and we can put that into our
systems or send us email like they traditionally have, and
we can use AI to read those emails and automated response.
And so I think the future of this business is
(34:08):
really exciting. It's massive, it's a big problem solve and
it's something that I think is going to be continuing
to be a great place to work for a very
long time.
Speaker 1 (34:17):
And is there anything that keeps you up at night
running a large transportation organization.
Speaker 2 (34:22):
Not much keeps me up at night. I'd like to sleep,
but I would say, you know, as a leader, I'm
always focused on our people because that's what makes great organizations.
And so what I'm focused on is how can I
help our people serve their customers and their carriers in
the best way possible. So, you know, when we have
(34:43):
customer issues, I try to counsel our team. Those are
opportunities to provide better service. Some of the best experiences
I've ever had as a consumer is when a you know,
somebody messed up in the service they provided me, in
the way they responded and how they respond to fix
that made me a customer for life. And so I
(35:04):
see opportunities all over the place in this industry, and
what keeps you up at night is how we respond
to those opportunities and how do we enable our people
to respond to them in the best way.
Speaker 1 (35:15):
Gotcha and you know, just curious, how did you get
into the transportation industry? Because I find that most people
either born into it or they kind of step into it. So,
you know, how did you find your way into transportation?
Speaker 2 (35:26):
In two thousand and eight, I co founded a reverse
logistics business with a partner, and so it was a
space that I didn't have any experience in but decided
to get into because I saw the potential. At the time,
you know, with e commerce, reversed logistics really wasn't understood well.
(35:46):
Even folks like Amazon didn't have a strategy to take
back all of the stuff that they were shipping out.
And so we built a reverse logistics platform that we
ultimately sold to Ingram Micro in twenty thirteen. And so
through the course of that, you know, built out multiple warehouses,
leased a lot of trucks, and kind of backed my
(36:06):
way into transportation just by operating a reverse logistics business.
And then at Ingram, I ran the global logistics business
for Ingram and managed almost seven hundred million dollars of
a freight spend, and so I got a really close
look across all modes of what the transportation space was like.
And that's where I really saw the inefficiencies and the
(36:28):
opportunity to get in and apply technology and better processes
to make it more efficient. So that's that's what drew
me to come to transportation Insight in twenty twenty. Is
just the opportunity to optimize a lot of what I saw.
Speaker 1 (36:42):
As a shipwre And I do like to ask this question,
my guests, do you have a favorite book about the
transportation industry or leadership that you know really resonated with you.
Speaker 2 (36:52):
My favorite leadership book is Good to Great. I'll give
you a bit of a background on it. At twenty
nine years old, I was I became the CEO of
a company that I had no business leading.
Speaker 1 (37:04):
And.
Speaker 2 (37:06):
I read the book Good the Grade as a way
to kind of get up to speed on how I
could be a better leader. Because I'm an engineer, I
like to see, you know, more data driven ideas versus kind.
Speaker 3 (37:16):
Of self help books on leadership.
Speaker 2 (37:19):
And I really liked Jim collins approach to the way
he approached looking at companies from a data lens. And
so I applied the principles of Good to Great as
a twenty nine year old CEO and had had great
success doing it. And that's become you know, one of
the core foundational principles that I've built my own personal
(37:40):
leadership principles from is that book? So's that's the book
that everything started from for me, and I continue to
believe it's very relevant.
Speaker 1 (37:47):
All right. And before we wrap it up, I like
to ask this one as well, So what do you
like to do outside of work? For fun?
Speaker 2 (37:54):
You know, I for stress relief.
Speaker 3 (37:56):
I play the guitar.
Speaker 2 (37:57):
I'm not very good at it, but it's I'm a
huge music lover and I love to play guitar. But
mostly I just like to spend time with my wife
and my kids, all right. You know, my wife and
I have been married twenty eight years, and our best friends,
and we just like spending time together. So the time
that I do have off of work, I like to
prioritize for my family.
Speaker 1 (38:18):
All right. So then who's your favorite guitarist? Oh?
Speaker 2 (38:21):
Boy, I'll tell you my favorite artist. He's not my
favorite guitarist, but John Prine is a great song writer
and all of his songs are more of a fingerpicking
style and the guitar, and that's where I started learning guitar.
So that's the kind of style that I play.
Speaker 1 (38:43):
All right. That's great, Well, Ken, I really enjoyed the
conversation as I catching up with you again and I
hope to do it again soon.
Speaker 2 (38:51):
Thanks Lee, great catching up with you.
Speaker 1 (38:53):
All right, and I also want to thank you for
tuning in. If you'd like the episode, please subscribe and
leave a review. We've lined up a number of guests
for the podcast, so please check back to your 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 big and on social media. Take care,
(39:15):
let's keep those supply chains moving. Thanks everyone,
Hiverone. This is Lee Clasgow when We're Talking Transports. Welcome
to Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Klaskow,
Senior free transportation logistics Analysts at Bloomberg Intelligence, Bloomberg's in
house research arm of almost five hundred analysts and strategists.
Before diving in a little public service announcement, your support
is instrumental to keep bringing great guests onto podcasts like
(00:28):
the ones we have today. We need your support though,
so please if you enjoyed this podcast, please share it,
like it, and leave a comment. Also, if you have
any ideas for future episodes you just want to talk transports,
please hit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at logistics Lake. Now on to our episode.
We're delighted to have Ken Byer, CEO of Transportation Insights
(00:50):
and Nolan Transportation Group, leading the combined company to become
the fourth largest domestic transportation management provider in the US
with over five billion in revenue. Under his leadership, TI
and NTG have been recognized by Newsweek as one of
America's Greatest workplaces in twenty twenty four, driven by a
culture of innovation, growth and operational excellence. Kennice more than
(01:13):
twenty five years of experience driving growth in the technology
and logistics sectors. He previously served as president of Ingram
micro Commerce and life Cycle Services, a four billion global
logistics business later acquired by Several Logistics. He joined Ingram
following its acquisition of cloud Blue Technologies, a company he
co founded and built into a leading provider of reverse
(01:36):
logistics in IT asset disposition services. Ken began his career
at Ernest and Young as a management consultant. He holds
a degree in architectural engineering from Kansas State University. So
I guess that's go Wildcats.
Speaker 2 (01:49):
Go Wildcats. I like the purple you got on.
Speaker 1 (01:53):
Well, thanks for joining us today, Ken's good seeing you again.
I'm really interested to have this conversation. You know, not
everyone knows what you know. TI and NTG are and
the holding company beyond. Can you just give a little
little flavor of what these organizations are before we start
(02:13):
the conversation.
Speaker 2 (02:14):
Absolutely, we're focused on the domestic transportation market that is
within the US, So we focus on what we call
port to porch. When a container arrives at the port,
we provide trade services, full truckload services, less than truckload,
and final mile delivery including parcel. We do this both
(02:35):
transactionally and fully managed. So we have a brokerage business NTG,
which manages capacity across eighty thousand carriers for about fourteen
thousand shippers, and a fully managed solution with Transportation Insight,
where we focus on the mid market, helping customers with technology,
business analytics, and fully managing their supply chain.
Speaker 1 (02:57):
And you know, could you just talk about those those markets,
you know, the transportation management service markets and the brokerage
markets kind of like what the profiles are in terms
of growth, not only for you, but maybe more broader
for the industry. Yeah.
Speaker 2 (03:11):
Absolutely. You know, transportation is eight percent of the US GDP,
so it's only behind housing, food, and education. It's bigger
than healthcare, and you could argue that none of those
other industries exist without transportation. So you know, our vision
is that we keep the economy moving and that you know,
(03:32):
literally is the case for transportation. Is without transportation, the
US economy would grind to a halt. So what we
do is critically important both for the overall economy and
for our customers and their supply chains. We focus on
helping customers meet their customer demands, and that is ensuring
that the product arrives on time and high quality, and
(03:55):
that they're making the best decisions for their business. Primarily,
how do we help our customers grow their businesses and
hit their profit goals. And so that's everything from a
single shipment as I mentioned, maybe a full truckload shipment
or an LTL shipment all the way too. If a
customer doesn't have the resources in house, whether technology or people,
(04:18):
to manage their own supply chains, we can outsource their
entire supply chain to our team. Provide a TMS, provide
the people, procure the carriers on their behalf, manage that
those carriers provide audit services at the end of the
life cycle, and then the overall analytics to help them
understand exactly down to the skew level, what their most
(04:39):
profitable products are and how they can make them more profitable.
Speaker 1 (04:42):
You know, I was down well, you know this what
the listeners might not know. I was at offices a
couple of months ago. You know, you guys were moving
into a new headquarters and you know I can see why.
You know, you guys were acknowledged by Newsweek is a
great place to work because it was really you know,
I kind of felt a cool vibe with with your
(05:04):
with your folks. There can you talk about because you know,
the brokerage industry, we're hearing all about technology, technology, technology.
For for NTG, you know, what is the right mix
and NTI for that matter, what is the right mix
of technology and people moving forward as these great technology
innovations come to fruition.
Speaker 2 (05:27):
Well, I believe all businesses are people businesses. No one's
working for a computer yet, and that may happen in
the future, but right now, businesses are based on good
leaders who understand their people and connect and respond to
their needs, and so we are at people first business. However,
I also believe every company has to be a technology company,
(05:49):
and so our focus is using technology to enable our
people and our customers to be more productive than they
would be without the technology. Not only more productive, but
to make smarter decisions. And so our focus has been
investing in technology that really enhances the ability of our
team members to provide better service to their customers and
(06:12):
then provide those same analytics and insights directly to our customers.
We invested significant amounts of money in technology, and we're
a huge believer in it. We think it is transforming
the industry. My background is largely in technology, so I'm
a passionate believer in what technology can do. But at
the beginning, it all starts with people, and.
Speaker 3 (06:33):
That's our focus.
Speaker 2 (06:34):
And as you said, we built a great headquarters here
in Atlanta, consolidating five different offices we had in Atlanta
into one headquarters. And the focus is really creating a
space that makes our folks feel valuable and worthy to
be in a great work environment, because we believe that
translates into providing great services to our customers and to
(06:55):
our carriers, and it creates a great work environment where
our engagement is highest it's been in the history of
the company.
Speaker 1 (07:02):
And you led with people, you know, mentoring is obviously
a big part of the brokerage industry. I'm assuming you're
more or less in an office culture, that's correct.
Speaker 2 (07:15):
Yeah, we are primarily in office. We believe, especially within
the brokerage space, you get so much out of the
collaboration and working together with other people, particularly across functions.
So we're primarily in office. We do have some remote workers,
primarily in the tech tech sector, but we are a
believer in the in office.
Speaker 1 (07:34):
Culture and so you know, I'm assuming you're also use
a lot of technology to measure how your employees do.
Can you do you like just talk about how you
measure success for your employees on the brokerage side, and
I'm assuming that that is very different from someone who
is an entry level you know, first year in versus
you know more somebody that has significant experience.
Speaker 2 (07:58):
Absolutely, I'm a big believer in managing by metrics, and
so we have dashboards for every part of our business.
Every day we can pull up exactly what the metrics
are by a per person, by segment, by business. Everyone
has incentive compensation that is tied back to performance metrics.
(08:21):
On the brokerage side, it's primarily about the number of
loads brokers bring in the margin of those loads, and
then as you move across to other functions, we have
KPIs that measure their performance. And what I think is
important is everyone can see their performance in real time
and know where they stand. That helps us with mentoring.
So folks that are maybe missing from the threshold, we
(08:41):
can sit down and say, how can we help you
get to the level performance that we expect and it's
best for them because their incentive comp is tied to
performing and exceeding those metrics.
Speaker 1 (08:53):
Right, Okay, you know and you mentioned technology earlier and
how you're huge believer and you talked about how it
makes your people more productive. Can you just give some
examples of some technology that you implemented and how it
improved your overall production?
Speaker 2 (09:12):
Absolutely so. Across both TI and NTG, we invested in
a proprietary technology platform called Beyond. The goal of that
platform was to create a port to porch technology platform,
meaning all modes across both transactional and managed, where we
could have a single platform for both shippers and carriers
(09:33):
to interact with us digitally. That has, at a high level,
improved our productivity by almost three times since we implemented
the technology, So we are significantly more productive as a
result of the technology that we've implemented. But I would
argue the bigger impact is that we are providing better
service to our customers and to our carriers because we
(09:56):
have better intelligence at the fingertips of our employees, So
when they're interacting with their customers and their carriers and
their partners, they are more productive and provide better insights
than they would without the technology.
Speaker 1 (10:10):
In these technologies I'm assuming also help you price better,
so each load is a little more profitable for the company.
Speaker 3 (10:17):
That's correct.
Speaker 2 (10:19):
The first big use case of AI that we implemented
was in pricing. So we have built a proprietary pricing
model that helps us price at the load level as
I mentioned, you know, at the lane level, all the
way at the full supply chain level, so we can
optimize a customer's supply chain by using our pricing algorithms.
(10:42):
The other thing about the pricing algorithms is, you know,
we hire a lot of new salespeople out of college
and next Monday we have one hundred and thirty new
salespeople starting at the company. Without multiple years in the
industry knowing how to price, it would be impossible for them.
And they know how to price once they start selling.
(11:03):
And so this technology allows us to scale up our
new hires much more quickly than if we had to
train them without this tech.
Speaker 1 (11:12):
Right, and so you know, just as aside these these
one hundred and thirty employees, like you know, for those
that might be interested in training the industry, like how
long does it take somebody to ramp up to to
you know, be on their own if you if you will,
to go after customers and support customers.
Speaker 2 (11:31):
Well, we spend a significant amount of time in training,
so four weeks of intensive training to start. That's training
about the industry, the modes, the equipment types, the customer segments,
the types of carriers that we work with. So we
spend for four weeks if you will, in a classroom
setting with with using the technology, making mock calls, and
(11:56):
so a significant amount of training up front. Then we
go into about two months of you know, assisted training
where they're they're hitting the floor, they're on the phones,
they're making calls, but very involved you know, interaction from
a team leader that's that's next to them. So after
about the third month, we expect our brokers to be
fully up to speed, and we see most of our
(12:19):
new classes being fully ramped and profitable within six months
of hiring.
Speaker 1 (12:25):
And what's the retention like because obviously any person that
joins in new industry and they have no idea what
to expect, sometimes it doesn't meet their expectations. And you know,
the brokerage industry is that kind of eat which you
kill environment so you know, what kind of retention do
you have? I don't know if you measure it after
a year or two year, six months.
Speaker 2 (12:46):
Yeah, you know, this year our attention was the best
it's been and some time. And that might come as
a surprise because of you know, the state of the
freight market the last couple of years. But I think
that goes to the culture work that we've been doing
is coming alongside of our people and spending more time
training them on how to be successful, and so our
(13:06):
retention rates are at all time highs. It is a
significant turnover in the beginning, so mostly because folks decide,
as as you mentioned that it's just not the industry
for them, but those that want to succeed will succeed.
We provide the tools, the education, it's just a matter
of their own personal drive and commitment to being successful
(13:29):
in these new classes.
Speaker 1 (13:30):
Are they are? They? Are they just specifically for NTG
or they kind of feed up both organizations TI and NTG.
Speaker 2 (13:38):
The class I mentioned is specifically for NTG. We also
are hiring across the TI platform as well. The TI
sales process is significantly longer. It's typically a six to
nine month sales cycle. These are three to five year
contracts where we're providing very strategic solutions for our customers,
usually including a technology implementation. And so it's a different
(14:01):
level of salesperson, someone who's been in the industry a
while and really understands the ins and outs of the
supply chain. So we typically hire more experienced people to
join our TI sales team.
Speaker 1 (14:12):
And you know, we're on the managed transportation side. I
don't think like any pyone can maybe get their arms
around it exactly what that is? Could you do you
give like a case study, whether factor fiction about like
you know what TI actually does.
Speaker 2 (14:28):
Yes, So, if you're a small to medium sized business,
transportation has historically been something that's been really not well
understood and it's hard to find experienced people who really
know how to operate it. And so what we do
is we come alongside of these companies and we say
(14:49):
we've already got the expertise. We're managing fifteen billion dollars
a freight across companies just like you. We can come
in and look at your current data set, where your
warehouses are, where your imports are coming in, where you're shipping,
to put that into our large database with over twenty
years of historic data and provide to you what we
(15:09):
think is the optimal supply chain. With that, then we
can go out procure the carriers, whether that's asset based
carriers or brokers, to make sure we create the optimal
capacity network for the freight that you're shipping. Once we've
done that, we can optimize that with managing the service
levels of those carriers, providing you real time reporting on
(15:31):
how those carriers performing in terms of on time, delivery,
service quality, etc. And then we audit the freight bills
when they come in to make sure that what you're
getting build is what you signed up to invoice those customers.
And then finally we provide you the analytics to say, okay,
now that all of this is operating, by the way,
(15:53):
usually with our TMS, which we implement. So we provide
the tms and we actually execute the freight on their
behalf in some cases, then we can say, now we
can start to look at every skew within your within
your platform and are you shipping this particular skew the
right way?
Speaker 3 (16:10):
And so we call we call.
Speaker 2 (16:11):
That margin management, where we can actually get down to
the SKIU level and help help our customers decide should
I be shipping this product lt L versus parcel, et cetera,
to optimize a profitability of each SKU. So what you
have is, as a medium size to large business is
a fully outsourced solution if you choose, or it could
be co managed with with your own internal team where
(16:33):
it provides onboarding technology, audit and then we ultimately also
pay the carriers on your behalf, so we're managing the
cash flow and making that less of a burden on
the company.
Speaker 1 (16:44):
Gotcha? And then are there synergies between the two organizations
TI and NTG.
Speaker 2 (16:50):
Absolutely, the TI business is primarily focused on We are
a partner of our shipper and so our primary goal
as a managed service provider is the best interest of
our customer, and that means if we can find a
better rate in the market, then we will we will
go get that for our customer, whether that's NTG, another
(17:10):
broker or an asset carrier. However, there's many cases where
we know that NTG can provide the best rate in
the highest quality of service, and with the customer's permission,
will leverage our brokerage to provide that capacity.
Speaker 1 (17:24):
Gotcha, Okay? And then you know on on the on
the technology side, going back to technology and maybe more
so it probably related to NTG and t I. You know,
fraud within the freight markets, it's been a rising concern.
How do you use technology to kind of weed out
the bad actors UH that are that are in the marketplace.
Speaker 2 (17:46):
Yeah, fraud's been a rising concern across the industry, and
I think over the last four years what you've seen
is not only US, but everybody else in the industry
moved from more of a reactive stance to fraud to
a very proactive stance. And that means for US is
we've implemented several third party tools to help US vet
carriers before we onboard them. Once they're onboarded, we have
(18:07):
our own data where we have carrier personas where we
can flag carriers that we think are risky to provide
certain types of freight movement for us UH. And we
have scores where we know which which carriers are.
Speaker 3 (18:20):
Are higher risk than others.
Speaker 2 (18:22):
And so leveraging our data the third party tools that
we have, we've made significant progress in reducing fraud. I
don't think we'll ever see it a day when you
know there's there's zero fraud in this industry. I think
there's all the bad actors that are that are trying
to steal where they can, and it's become much more
sophisticated the last few years. As you know, you know,
(18:45):
carriers that aren't able to make it sell their MC
numbers to to a fraudulent player, and that that carrier
could have been a great carry in our network and
all of a sudden is now part of something that's uh,
that's fraudulent. So we're constantly monitoring this. And while I
said we will never get it to zero, we're moving
towards the case where it's probably one in one hundred
(19:05):
thousand modes where we see an issue versus where we've
been in the past.
Speaker 1 (19:11):
So you guys see a lot of different freight movements,
you know, whether it's ocean, air, trucking, rail, intermodal, what
have you. You know, given all the things that you
do at TI and TG, can you talk about the
state of the freight market here in North America? You know,
what are you seeing? What are you expecting for this
year versus last year?
Speaker 2 (19:31):
Absolutely, And we publish our forecast every quarter. Our current
forecast for twenty twenty five is we expect that on
the truckload side, spot rates are going to increase around
fifteen percent in twenty twenty five. We see that starting
it has picked up in the fourth quarter or fourth quarters,
(19:51):
we saw tender rejections rise, rates rise, and with some
of the winter storms coming here in January, I expect
that to a stay somewhat sticky, but really in the
second quarter start to see a more material change in
spot rates. Contract rates will lag that our production is
about four percent increase in contract rates over the course
(20:12):
of twenty five on the LFL side, much more muted
maybe in the three to four percent increase in rates
on the LTL side.
Speaker 1 (20:21):
So on the demand, do you guys do any forecasts
with regards to demand for truckloads or you just more
focused on the pricing aspect of the markets.
Speaker 2 (20:33):
Now we look at both you demand as well as rate.
They're obviously interlinked, not only demand but capacity and what
we've seen as a significant amount of carriers leave the market,
which is driving some of the increase in tender rejections
and therefore the increase in rates. We think overall, with
interest rates coming down in the economy picking up, that
(20:56):
will drive some of the rate increase in twenty twenty five,
projecting volume increases as well as rate increases.
Speaker 1 (21:03):
Okay, great, And so you know, over the last couple
of years, you know, we've seen a lot of changes
of supply chains, whether it's just the pandemic and then
you know, getting to a new normal, and it seems
like things are continuing to shift to geopolitical concerns and
concerns over tariffs. You talk about how supply changes, supply
(21:23):
chains have changed over the last twelve months and kind
of where you're guiding some of your customers next year
because of those changes.
Speaker 2 (21:34):
Yeah, I think in general, you know, COVID taught everyone
that supply chains are critical to.
Speaker 3 (21:40):
Their business, and so there's there's been.
Speaker 2 (21:41):
An increased focus on making sure you have a resilient
supply chain that can perform well in any market. And
so what we've been doing with our customers and across
both NTG and TI is putting plans in place for
all of our customers to make sure they have very
resilient supply chains that perform in any condition. What that
(22:03):
means is having multiple sources of capacity, not being tied
to just a few carriers, but having access to broad
pools of carriers. And that's not just on the truckload side,
that's across the entire supply chain. So, for example, in drage,
when the ports started to back up, what is our
(22:24):
customers plan to deal with port congestion? And so we
have a very significant drage practice where we move about
twenty thousand containers a month from the port, and we've
helped our customers implement solutions at the port to make
sure that if anything happens, will say with a strike
at the ILA in January, we can help them with
(22:45):
the solution at the port and then all the way
to the final mile. You know, the final mile has
changed significantly in the last four years. Used to have
primarily two to three carriers with UPS, FedEx and USPS.
Speaker 3 (22:57):
In the parcel space.
Speaker 2 (22:59):
We manage over ten billion dollars a parcel freight in
the US, and our work with customers has been to
diversify some of that spend across some of the regional
carriers as well as the big three carriers. And so
those are the kind of strategies we're putting in place. Also,
where our Folks warehouse is located, how many warehouses do
they have and so we can optimize the spend even
(23:22):
within the redistribution of their inventory within the US.
Speaker 1 (23:26):
And so, you know, on the on the parcel business,
you mentioned that you're suggesting to your customers to diversified
as smaller players. Are smaller players more price competitive than
the larger players of FedEx and ups.
Speaker 2 (23:42):
In some cases, but you know, everyone is becoming very
price competitive. So our focus is, yes, we'd like to
find cost savings, but we want to create a resilient
supply chain that provides the best service to our customers.
So price is a component, but also having a diversified
strategy around how you deliver packages is also really important.
Speaker 1 (24:03):
Gotcha, And going back to the truckload market, you know,
with your outlook, you know, where are you guys thinking
like capacity is going to be Do you see more
coming out or do you think the price increases is
going to be more on the demand side or the
supply side. I guess the question is.
Speaker 2 (24:18):
We have seen a lot of capacity come out of
the market. We expect more will come out of the market,
but every cycle is really driven by demand, and so
our belief is we will see an increase in demand
in twenty twenty five, starting around Q two. As I mentioned,
we do think also that as capacity comes out of
(24:38):
the market, it's not just carrier capacity, but it's also brokers.
You know, we had almost thirty thousand brokerages in the
US at the peak of the post COVID cycle, and
almost five thousand of those brokers have now left the market.
And you know that also contributes to pricing in the
market where you know there's not as many people competing
(25:00):
the same.
Speaker 1 (25:00):
Loads, right, And what is the state of the brokerage industry?
Where do you see margins going going from here? And
maybe give a little bit of background if you will,
what they look like in twenty twenty four. Obviously, if
you don't want it, you don't have to give specifics,
it's your private company. But if you kind of want
to talk about directional where they were and where they're going,
(25:22):
where you think they're going.
Speaker 2 (25:25):
You know, we saw significant margin compression post twenty twenty two.
But I believe in general, the best companies are focused
on creating the most efficient operations, and so the name
of the game and brokerage going forward is having the
lowest cost to serve or cost per load in the business.
(25:48):
And so our focus on technology has been how do
we make our teams the most productive as possible. As
I mentioned, we're almost three times as productive as we
were previously due to the technology that we've implemented, and
so our focus is using the technology, the AI tools
that are available to make our teams more productive than
they were. That allows them to make more money individually,
(26:11):
and that allows us as a company to be more
price competitive for our shippers. So I think the future
of brokerage is you will see consolidation because you know,
a as a smaller broker, it's very difficult to get
the economies of scale that you see. At our size,
we're moving across both businesses almost ten thousand loads a
(26:32):
day in our platform, as I mentioned, almost fifteen billion
dollars afreight under management, and at that scale we can
drive significant efficiencies that allows us over time to be
much more price competitive. So no matter what happens with margins,
we are making money. And it's important to know that.
You know, even in the worst of the cycle, we
were always we've always been profitable, and so I think
(26:54):
that goes to the idea that scale matters, because in
a scaled organization, you can create significant efficiencies.
Speaker 1 (27:03):
Right you know, you mentioned that you guys were three
times more productive. That sounds like a home run in
terms of AI and technology. Are there any home runs
left or we talk about like the productivity from here
is going to be like singles and doubles.
Speaker 2 (27:17):
No, I think we're just getting started. I really believe
that some of these tools are just in the first inning.
You know, the tools that we've implemented are are good,
but we've got a significant amount of technology spend We're
going to continue to make this year in the coming
years because we believe, as I mentioned, we're just getting started.
I think ultimately, you know, the machine to machine aspect
(27:40):
of this business will continue to grow. We already see
it with our large customers where we're pricing completely automated,
We're we're covering completely automated, we're tracking tracking completely automated.
So you know, a load now can be fully digital
from from quote all the way to to invoice and
pain and I think as that continues to grow in
(28:02):
the industry, and more and more shippers adopt API and
and and dynamic pricing capabilities, then you're going to see
that that cost pro low continue to drop.
Speaker 1 (28:12):
Do you have any statistics at your organization in terms of,
you know, what percentage of your transactions are fully automated
like that from from quote to payment. Yeah.
Speaker 2 (28:23):
On the on the brokerage side, we're now almost half
of our transactions are are are fully digital. On the
on the transportation insight, you know, we manage that almost
completely on our TMS, so that we are on behalf
of our shippers fully digitally managing their freight.
Speaker 1 (28:43):
And when there's an issue, I guess just pick up
a phone and talk to a human being.
Speaker 2 (28:47):
Absolutely, That's where the people aspect comes in because at
the end of the day, people do business with people.
We build very trusting relationships with our customers, We have
long term relationships with our customers. On average, we have
a ninety eight percent retention rate across both the brokerage
and our TI customer base. And so at the end
of the day, as I mentioned at the beginning of
(29:08):
the call, this is a people business. We are investing
in our people and one of the ways we invest
in our people is through investing in technology.
Speaker 1 (29:16):
Right, and so you know we've talked about technology a lot.
I'm assuming everything you guys do is done in house.
Can you talk about your technology like how big of
how many people do you have sitting there working on
that stuff? Yeah.
Speaker 2 (29:30):
Absolutely. We made a significant investment in our technology platform,
building a micro services, cloud based proprietary operating system for
the entire business that was completed in twenty twenty two.
We did that in a way that we could also
plug in third party tools very easily because it is
(29:51):
an API driven platform, and so while our core system
is proprietary, we've also plugged in the best of breed
third party tools. And so what that allows us to
do is scale our technology organization very efficiently and use
people to develop the technology that is proprietary and we
(30:11):
think creates a competitive advantage for us, but at the
same time leverage the tools that are out there that
other really smart people and great companies are producing to
accelerate what we're doing. So my belief is that we
don't need to invent everything in house. There's a lot
of stuff external that we can integrate into our platform.
Speaker 3 (30:29):
That's what we've done.
Speaker 1 (30:30):
I think do you give any idea about you know,
obviously you're spending a lot on technology, you know as
part of your CAPEX. Can you talk about like is
it a percentage of your that revenue or anything like that.
Speaker 2 (30:44):
We didn't approach it that way in the beginning. Our
Our goal was what is it going to take for
us to become one of the top five organizations in
the in the country. And we laid out a multi
year plan and said, here's what we think it's going
to take, both in terms of growth and productivity, and therefore,
how can technology help us achieve those goals? And then
(31:05):
we set aside. We've invested north of one hundred million
dollars in tech in the last four years, to give
you a number, So it's a significant piece of our
our revenue and profit that we've reinvested in the company
because we believe in the long term of this business.
Speaker 3 (31:23):
We think that the.
Speaker 2 (31:23):
Growth projections over the next five years are staggering as
the big get bigger, we believe, and there's consolidation in
the space. So we've approached it less as you know,
we're going to spend a certain amount of our revenue
every year, and more about what do we need to
invest to achieve our goals?
Speaker 1 (31:40):
Gotcha? And you know I mentioned on the onset of
the conversation that the company is a private company. Kee,
you talk about the ownership, What are the plans if
are any.
Speaker 2 (31:53):
Yeah, we are backed by Griffin Investors out of San
Francisco as our private equity sponsor. They acquired Transportation Insight
and in TG in twenty eighteen. They've been a fantastic partner,
you know, investing alongside of us, as I mentioned, in
technology and growing the business. You can see by the
(32:15):
fact that we're hiring right now that they believe in
the future of the business. And so it's been a
great partnership with our owner, and I think they see
significant growth a head. And so our goal with Griffin
is to continue to invest in this business and make
it one of the best businesses in this space.
Speaker 1 (32:32):
Is there anything else facing the freight tranportation logistics industry
that's on your radar right now that we didn't talk about.
Speaker 2 (32:39):
I believe you know this industry as I mentioned, you know,
it's a very important industry to the US economy. So
number one, it's an exciting space to work in. Number Two,
there's significant challenges to be addressed. It's not a business
that is simple. Every day, our people are dealing with
(33:00):
all kinds of issues and so as you look at
the future of the space, I think taking a monitormdolistic
look at how it's going to evolve is a bit naive.
Every segment has a nuanced and a strategy that we're applying. So,
if it's at the port, how do we automate and
optimize the drage operations as best we can? Then all
(33:23):
the way at the final mile, how can we make
the final mile as efficient as possible so that our
customers once the container arrives at the port till it's
delivered to their customer, they have a very efficient supply chain.
I think AI is transforming the space. As I mentioned,
we're just in the first endings of that. But many
of the interfaces that we've seen historically with people logging
(33:46):
into systems don't need to exist in the future because
we can meet the customer or the carrier where they
are with voice for example, and they can just you know,
talk to us and we can put that into our
systems or send us email like they traditionally have, and
we can use AI to read those emails and automated response.
And so I think the future of this business is
(34:08):
really exciting. It's massive, it's a big problem solve and
it's something that I think is going to be continuing
to be a great place to work for a very
long time.
Speaker 1 (34:17):
And is there anything that keeps you up at night
running a large transportation organization.
Speaker 2 (34:22):
Not much keeps me up at night. I'd like to sleep,
but I would say, you know, as a leader, I'm
always focused on our people because that's what makes great organizations.
And so what I'm focused on is how can I
help our people serve their customers and their carriers in
the best way possible. So, you know, when we have
(34:43):
customer issues, I try to counsel our team. Those are
opportunities to provide better service. Some of the best experiences
I've ever had as a consumer is when a you know,
somebody messed up in the service they provided me, in
the way they responded and how they respond to fix
that made me a customer for life. And so I
(35:04):
see opportunities all over the place in this industry, and
what keeps you up at night is how we respond
to those opportunities and how do we enable our people
to respond to them in the best way.
Speaker 1 (35:15):
Gotcha and you know, just curious, how did you get
into the transportation industry? Because I find that most people
either born into it or they kind of step into it. So,
you know, how did you find your way into transportation?
Speaker 2 (35:26):
In two thousand and eight, I co founded a reverse
logistics business with a partner, and so it was a
space that I didn't have any experience in but decided
to get into because I saw the potential. At the time,
you know, with e commerce, reversed logistics really wasn't understood well.
(35:46):
Even folks like Amazon didn't have a strategy to take
back all of the stuff that they were shipping out.
And so we built a reverse logistics platform that we
ultimately sold to Ingram Micro in twenty thirteen. And so
through the course of that, you know, built out multiple warehouses,
leased a lot of trucks, and kind of backed my
(36:06):
way into transportation just by operating a reverse logistics business.
And then at Ingram, I ran the global logistics business
for Ingram and managed almost seven hundred million dollars of
a freight spend, and so I got a really close
look across all modes of what the transportation space was like.
And that's where I really saw the inefficiencies and the
(36:28):
opportunity to get in and apply technology and better processes
to make it more efficient. So that's that's what drew
me to come to transportation Insight in twenty twenty. Is
just the opportunity to optimize a lot of what I saw.
Speaker 1 (36:42):
As a shipwre And I do like to ask this question,
my guests, do you have a favorite book about the
transportation industry or leadership that you know really resonated with you.
Speaker 2 (36:52):
My favorite leadership book is Good to Great. I'll give
you a bit of a background on it. At twenty
nine years old, I was I became the CEO of
a company that I had no business leading.
Speaker 1 (37:04):
And.
Speaker 2 (37:06):
I read the book Good the Grade as a way
to kind of get up to speed on how I
could be a better leader. Because I'm an engineer, I
like to see, you know, more data driven ideas versus kind.
Speaker 3 (37:16):
Of self help books on leadership.
Speaker 2 (37:19):
And I really liked Jim collins approach to the way
he approached looking at companies from a data lens. And
so I applied the principles of Good to Great as
a twenty nine year old CEO and had had great
success doing it. And that's become you know, one of
the core foundational principles that I've built my own personal
(37:40):
leadership principles from is that book? So's that's the book
that everything started from for me, and I continue to
believe it's very relevant.
Speaker 1 (37:47):
All right. And before we wrap it up, I like
to ask this one as well, So what do you
like to do outside of work? For fun?
Speaker 2 (37:54):
You know, I for stress relief.
Speaker 3 (37:56):
I play the guitar.
Speaker 2 (37:57):
I'm not very good at it, but it's I'm a
huge music lover and I love to play guitar. But
mostly I just like to spend time with my wife
and my kids, all right. You know, my wife and
I have been married twenty eight years, and our best friends,
and we just like spending time together. So the time
that I do have off of work, I like to
prioritize for my family.
Speaker 1 (38:18):
All right. So then who's your favorite guitarist? Oh?
Speaker 2 (38:21):
Boy, I'll tell you my favorite artist. He's not my
favorite guitarist, but John Prine is a great song writer
and all of his songs are more of a fingerpicking
style and the guitar, and that's where I started learning guitar.
So that's the kind of style that I play.
Speaker 1 (38:43):
All right. That's great, Well, Ken, I really enjoyed the
conversation as I catching up with you again and I
hope to do it again soon.
Speaker 2 (38:51):
Thanks Lee, great catching up with you.
Speaker 1 (38:53):
All right, and I also want to thank you for
tuning in. If you'd like the episode, please subscribe and
leave a review. We've lined up a number of guests
for the podcast, so please check back to your 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 big and on social media. Take care,
(39:15):
let's keep those supply chains moving. Thanks everyone,
Host
Lee Klaskow
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