December 10, 2024 • 44 mins
Refocusing Roadrunner into an asset-light less-than-truckload (LTL) provider over the past four years may have been key to turning the company around. In this Talking Transports podcast, Chris Jamroz, Roadrunner’s executive chairman and chief executive officer, joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to share his insights about the strategic steps the company took to bring it back from the brink. A focus on expedited LTL movements in the largest freight markets has helped it improved operations, which has elevated service and could drive share gains. Jamroz also discusses how autonomous trucks may be a perfect fit for Roadrunner, looking at M&A for growth, technology as a tool and his dream to return to kite surfing
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
Hi everyone, this is Lee Clasgal when we are Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, Senior Freight Transportation let'gisic ounce of 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 and
(00:29):
conversations to you, our listeners, and we need your support.
So please, if you enjoy this podcast, share it, like it,
and leave a comment. Also, if you have any ideas
for future episodes or just want to talk transports, please
hit me up on the Bloomberg terminal or on LinkedIn
or on Twitter at logistics Late. Now on to our episode,
We're delighted to have Chris Jamraz, executive Chairman of the
(00:52):
board and CEO of Roadrunner. Previously, Chris served as the
executive chairman of the board and CEO of Ascent, a
privately owned freight forwarding and domestic brokerage service provider. Chris
has led the transfer transformative investment in global X, a
full service passenger and cargo airline headquartered in Miami, Florida.
He's a founding partner of Lyon nine Holdings, a specialty investment,
(01:18):
equipment leasing and direct operations private fund, and before coming
a Roadrunner, Chris served in executive roles at Emerging Cold
STG Logistics and Guarda Cash Logistics. He also serves as
governor of the Royal Ontario Museum, Canada's largest museum. He
holds a BA in Business Studies with first class honors
(01:40):
from Birmingham City University in the UK, as well as
an MBA with distinctions from York University in Canada. Thanks
for joining us on the Talking Transport podcast, Chris.
Speaker 2 (01:51):
Thank you very much for having me me.
Speaker 3 (01:54):
It's great. It's great to have you on.
Speaker 1 (01:56):
You know, Roadrunner, it is a publicly traded company trades
at ticker RTS.
Speaker 3 (02:02):
Maybe not everyone is familiar with Roadrunner.
Speaker 1 (02:05):
Can you let us know exactly what services and products
road Rudder provides?
Speaker 2 (02:12):
Surely, Roadrunner is a specialist metro to metro long line
haul carrier in any LTL space, serving major metros across
the entire continent here in North America.
Speaker 1 (02:24):
All right, and so are you doing more than just
the line hall or are you doing the line hall
and then pick up a delivery stuff as well.
Speaker 2 (02:33):
We do everything door to door. The specialty comes from
being that expedited line LINEHLE carrier. Where effective, we run
loads directly by passing the hob and spoke networks of
other LTL carriers and that sort of helps increase the
quality and speed of delivery.
Speaker 1 (02:54):
And this this an asset light business, an asset based business.
Speaker 2 (02:58):
It is an asset light logistics business industry's favorite.
Speaker 1 (03:02):
Right, that's for sure. Can you talk about the markets
that you serve? You know, you mentioned you specialize in
the LTL space. Do you do any truckload or anything
outside of LTL?
Speaker 2 (03:14):
No, we don't. We used to go Runner in its
original form wasn't actually a specialist, pure play LTL carrier.
And over the years that sort of nission and vision
got a little bit disturbed and expanded into many, many
modes of transport that did not serve company well. So
over the last four years we've spent considered effort and
(03:37):
time and resources to actually become a back back to
our roots and becoming a pure play LTL area. And
that's what we are today and that's what we want
to be tomorrow and.
Speaker 1 (03:48):
When you say asset light, So what kind of assets
do you own?
Speaker 2 (03:52):
We own trailers, and we own all the equipments on
our docks or you know, forklift equipment, all the trucks
that serve the local terminal operations, et cetera. But when
you think about the drivers and the rolling equipment, we
partner with owner operators and teams drivers predominantly.
Speaker 1 (04:13):
Right, So you're doing all this stuff in your own
facilities or facilities that you lease, and is that fair
to say? Or are you taking are you taking freight
from other LTL carriers in moving it?
Speaker 2 (04:26):
No, we work directly with shippers, so we take everything
from pick up and delivery all the way through light
bulb ultimately to the destination point.
Speaker 1 (04:37):
And so then how many service centers do you, guys?
Speaker 2 (04:39):
Have? We present in over fourteen major metros. So when
you think about it, think about a professional sports team,
ideally a good one, and that's sort of the market
what would be in So we run direct We connect
directly major metros across the entire continent, including Canada and
the border with Mexico.
Speaker 1 (05:00):
Right well, here in New York we have two major
sports teams playing football. But some people might argue if
they're if they're really professional teams and the giants and
the jets. But I digress. So what kind of growth
profile do you have at road Runner? You know, because
obviously the LTL business has not been great on a
(05:21):
demand side, pricing has been pretty good. We saw a
couple of your competitors or I guess the more asset
based players come out with their No November numbers and
you know, tonnage declines kind of a moderate which is
a good sign, and and rates continue to be up
a little of mid single digits. What is your your
(05:41):
growth profile in this difficult market?
Speaker 2 (05:45):
So we were following a slightly different trajectoryly because in
twenty twenty one, we've we undertook a very ambitious plan
of completely redesigning our network, and we exited a lot
of markets where we didn't have our own operations or
our own brick and mortars, and the service quality was
(06:07):
just simply terrible. And we focused on the markets where
we have our own technology on equipment, our own drivers,
and we really sort of doubled down on growing in
these markets, and that effectively reduced our business volume by
about thirty percent. And then we had a few customers
(06:29):
who were probably not a good fit for us. There
was retail aggregator types and we agnited that business as well,
which had another thirty percent reduction on our volume. So
we've we've really kind of kind of cut deep to
the bone, effectively wanted to re emerge as a super
high quality carrier, focusing what we do best and serving
(06:52):
the shippers that had the right to fit for us.
So since that, we really have been growing quite nicely. So,
you know, as most of the carriers would have experienced
a recessionary trend since twenty twenty two and now entering
sort of you know, sort of the third year of
a freight recession. Then that was boosted last August or
(07:15):
August of twenty twenty three by the Yellow exit and
that bankruptcy, which you know, basically enabled a lot of
asset based carrier to wash up with eight percent more
freight on the dogs. We didn't really participate in that,
but we're following our own trajectory. So when you look
at the comps year of the year, we continue to
grow and hour November it was one of the best
(07:37):
months we have had in our history. So we had
a you know, we had the second highest volume of
per day sales and business excluding fuel search charges in
our history. So extremely extremely good month, and we're very
happy with what the yields are peeping up to be,
and generally happy with our growth trajectory.
Speaker 1 (08:00):
Can you share any tonnage numbers for November? I don't
know if you guys provide that.
Speaker 2 (08:05):
We don't, and that's sort of we only provide that
once a year, and that's due to the hour sort
of OTC filing requirement. So I'm going to sort of
just tell you that it was the second best months
we've had on a per day.
Speaker 1 (08:20):
Basis, Okay, even before the restructuring of twenty twenty one.
Speaker 2 (08:25):
No, No, that would be post post restructure. Okay, but
that makes that's a fair comment. So when we kind
of compare apples to apples, I guess I should have
said that.
Speaker 3 (08:35):
And so, you know you mentioned yellow.
Speaker 1 (08:38):
You know, some LTL carriers not only took advantage of
the available freight that was out there, a lot of them,
you know, went to go try to buy facilities, either
to upgrade their current facility or to expand it to
do market.
Speaker 3 (08:52):
Did you guys play in that at all? Did you
were you able to buy any facilities, were you interested
in any facilities?
Speaker 2 (08:58):
So we don't facilities released them. So we partner up
with the few real estate fans who went after that
rather heavily, and we picked up a brand new facility
in Atlanta. We spent bulk of last year and early
this year renovating and now we have a phenomenal one
(09:19):
of the best in class service centers in the heart
of Georgia.
Speaker 1 (09:24):
Great And I'm just curious, So these leases am assuming
their long term leases roughly how long are those leases
for those these types of facilities.
Speaker 2 (09:33):
We sort of have an average average lease I've now
around seven years now and that's sort of you can
imagine that's sort of a lot of ten year leases
in some of the leases that are coming to maturity.
We definitely are upgrading our terminal footprint because a to
support our growth and the support the quality because of
(09:58):
the road runners you know, history as a commonly referred
to as a roll up blow up, and the different
type of transportation activity the company got itself into. Some
of those dogs are not really textbook LTL terminals, And
you know that better than anyone that you know. You
(10:18):
normally you're looking for if you're LTL carrier, for you know,
something between seventy and two hundred doors with you know,
nicely rectangular buildings with doors on two side one hundred
and twenty five feet across the stock. And you know,
we have some terminals that are not ideal LTL terminals,
so we editing those and we're upgrading to to something
(10:40):
that would be more conducive to the quality and the
type of business we do. And at the same time
we partner up with real estate firms, we're going to
be developing our own terminals to serve the markets we
don't expand to.
Speaker 1 (10:54):
Right, it sounds like you have a relatively unique model
in the LTL space. So would you consider your comps
more freight brokers or traditional LTL carriers?
Speaker 2 (11:05):
Okay, so basically we are definitely an LTL carrier. We
are definitely and we are considered in a sort of
all tens and purposes an asset to carry because we
do have our own dedicated drivers now the owner operators,
but they our drivers now. Our specialty lies in a
(11:26):
way that we execute the freight movement. So as opposed
to the large national carriers that have densely populated terminal
networks which execute the moves through their own shuttle networks
and hab and spokes. We connect metros directly. So imagine
if you go with one of the big nationals and
you want to make a shipment from LA to Chicago,
(11:49):
it wouldn't be unusual for this to kind of hit
three or four different hubs along the way. We run
Chicago to LA direct, so that sort of expedites the
the speed of service and effectively helps with the quality
because the less touch points along the way, the less damage,
the less lost, all other things that usually happen in LTL, which,
(12:12):
by the way, I coined that phrase stands for less
than likely to go perfect. So our specialty lies in
executing flawlessly long haul line haul moves.
Speaker 1 (12:23):
What other issues I guess can shippers avoid using a
road runner versus you know, one of these larger national
players that you mentioned. You know, besides, so is it more?
Is there anything else other than service?
Speaker 3 (12:40):
Is it?
Speaker 1 (12:41):
Are you guys able to be a little more competitive
on pricing? Because I don't know, you don't have the
company drivers you have, you have the owner operator model.
Speaker 2 (12:52):
The speed comes from bypassing the hop and spoke and
running direct, so we have those disadvantage our value. While
we do not necessarily like to compete on price, we
still an incredibly value priced carrier and that's because we're
(13:12):
working on getting our brand into the sort of the
major major direct shippers, and we're working on our brand recognition,
et cetera. But that's sort of a long term. Long
term objective would be to be on power with the
best in an industry. You do pick up a lot
of time is because you do not have to deconsolidate
(13:33):
and reload shipments at every hub that the container or
the trailer touches along along its route to the final destination.
So for us, it's speed and quality that we compede up.
Speaker 1 (13:50):
Okay, and you know you mentioned you know you're you're
I guess more of a value play because you're trying
to build scale.
Speaker 3 (13:59):
What what what?
Speaker 1 (14:00):
What are your long term goals in terms of growth
and is that growth going to come all organically? Does
your model suit acquisitions or is it not well suited
for acquisitions.
Speaker 2 (14:11):
You know, we spent the last four years kind of
cleaning up the business and getting back to the sort
of pu PLT help play and kind of untangling all
the sort of very bizarre acquisitions that were made in
the past, but right now with them with the news
that we announced two weeks ago in myself effectively you know,
buying Roadrunner with my partner through my private equity fund,
(14:34):
we are returning to the acquisition trail and we've put
significant capital on the balance sheet to serve as a
war chest, and we have publicly announced we now some
team for acquisitions quite aggressively. So we would love to
have an announcement in the first part of next year
of someone that would be considered a focused taking acquisition
(14:57):
for us and effectively announced the big reach to the
M and A right.
Speaker 3 (15:03):
And so what what type of I guess target would
that be?
Speaker 1 (15:06):
Would that be a geographic focus, would it be a
you know, and market vertical focus?
Speaker 2 (15:14):
It could be both, because it's a what we We're
looking definitely at some geographical markets when we would like
to expand and that's definitely your home turf, that's that's
our you know, that's really what we want to go
in New York, New Jersey, and this is sort of
somewhere we would love to expand into. But we're also
looking more aggressively in southern California when we already have
(15:36):
a very big presence and everywhere across and so there
could be geographical opportunities. But also, you know, as we're
trying to we're not trying to. We started to respond
to a lot of greatfowarders who are looking for a
great hup to have LTL carrier. We're looking at people
who specialize in expert I'd have to have transport very
(15:58):
much the way we do, So it could be could
be geographic and could be sort of deeper into the
vertical functionality of HOP to help connectivity.
Speaker 1 (16:07):
Okay, and I'm sorry if I misheard you. So you
guys would open to other businesses like a freight forwarder.
Speaker 2 (16:14):
No, no, no, no, we just we're going to We
started to serve freight forwarders, which traditionally was not part
of our customer mix. But the freight folds are looking
for HOP to have connectivity. So imagine you have all
these importers who bring freight into the Los Angeles Long
Beach Port or New York New Jersey Port, and from
that they needs to get to some point in inland,
(16:36):
and then the freight folds are looking for reliable LTL
carriers to take that fraight into and I think we
are phenomenally positioned to grow and capture that market, and
we're going to be looking at potential acquisitions coming from
that functional area.
Speaker 1 (16:51):
And a potential regional acquisition target where they have to
have a similar model to Roadrunner, like an owner operator
type model or.
Speaker 2 (17:00):
Ideally, I do we do like it? Like listen, I'm
I'm I'm a big sort of fun of certain quality,
certain type of assets. We do like real estate, and
we may at some point own the underlying real state
that we that we operate out of. But I'm not
a huge fan of rolling. So I don't like buying
things that depreciate. That's just not my game. I've never
(17:22):
I've never embraced that that concept. I know there's a
lot of people who play on depreciation and all the motilization,
all those kind of things. This is really to me,
you know, I don't people say that in rust we trust.
I don't, and I kind of I like very much
the owner operated the flexibility, the agility, and the kind
of less capital intensive business model that increases the cash
(17:46):
flows that generated to the shareholders. So I don't think
you'll ever see us going aggressively into any sort of
company drivers or rolling asset ownership models. Right.
Speaker 1 (17:59):
You know, earlier conversation, you mentioned the fact that you know,
you got out of some businesses that didn't make sense,
whether it was you know, I guess an ROI standpoint,
or or you didn't have the density.
Speaker 3 (18:12):
Can you talk about.
Speaker 1 (18:13):
You know, your end markets, are you like sixty forty
like industrial manufacturing to retail or is your mix a
little different than that?
Speaker 2 (18:23):
Oh, you got it. It's a predominantly industrial manufacturer. Think
about all these guys that need to import import things
into the US, and that's traditionally it was seaports, you know,
like mentioned the southern California and the Northeast ports. Today
the largest port is Larreto. That's pretty much at large port,
and you know that that's the biggest border crossing in
(18:45):
the world, and obviously we have a huge presence. We
opened that market a couple months ago. It was absolutely
shocking to all of us how quickly this sort of
exploded on us. In the volume coming through that eight
ways is just nothing short of spectacular. But it's a
you know, imagine all these all these customers who need
(19:08):
need those parts or machinery or anything else that's needed
for either final manufacturing or final assembly, and that comes
either from Canada or Mexico or Ocean ocean. And you know,
when you think about these guys, they they probably are
budget conscious customers, so they they like the speed, but
they do not want to pay for expedite service because
(19:31):
that would kind of be a very very expensive part
of manufacturing supply chain. So you know, they're very patient
to wait, you know, eight twelve weeks for the freight
on the ocean, but the minute it touches continental the US,
they really want it fast in the warehouse, in the
in the assembly or factory. And that's where roadrun it
(19:52):
comes to play because we effect we offer the expedited
LTL service at the standard rate because we do not pay,
we don't charge our customers for expedite rights. We just
executed in a very expedited way, and that's where we
kind of come, you know, extremely relevant to that constituency
of shippers. On the other hand, you have a lot
of retailers, the e commerce and those really lend themselves
(20:15):
extremely well to the LTL model. Some of these you know,
the sort of shorter runs or smaller number of pilots
that they did not really require the whole truckload trailer
to be filled out. So we kind of we do
a lot of business with the retailers as well, so
that you have a lot of a lot of these
kind of constituencies of customers that contribute to our verall
(20:35):
business makes.
Speaker 1 (20:37):
And you know you're mentioning cross border business and international trade.
Do you have like a percentage, like roughly how much
of that is your business?
Speaker 2 (20:47):
It would be probably closer to what you said, the
sort of you know, sixty forty but sort of industrial
manufacturing import type customers versus the retailers.
Speaker 1 (20:58):
Are you are you guys concerned Are you hearing concerns
from your customers about you know, the incoming Trump administration
and there are more protection of stance and and you know,
use of tariffs or at least the thread of use
of tariffs. Are you concerned at all about volumes or.
Speaker 2 (21:16):
I think everybody is concerned. We definitely have heard from
our shippers that they're trying to accelerate in front front
load the imports ahead of the change in administration. But
at the same time, I don't think a lot of
people exactly know what they are to expect, and I
(21:36):
think they just certainly fearful of the chance and whatever
disruption the global supply chain. So that's that's we're definitely
hearing that. Whether it has impact our business today, it's
kind of tough to say, well, you know, how much
is that sort of our internal efforts of you know,
you know, improving service and quality, and how much is
(21:57):
that of a broader, broader market help reading you know,
reading the announcements from the large LTL place. As you've
noticed at the beginning of the call lead, they don't
really see a lot of tonnage increases. So I would
imagine that most of most of our improvement and growth
comes from our all organic initiatives. But people are definitely
(22:18):
very very cautious going into twenty twenty five.
Speaker 3 (22:21):
Yeah, that's that's for sure.
Speaker 1 (22:23):
And one thing is for certain is uncertainty in the
coming months ahead. You know, we talked about you know,
tarifs as being a risk. Can you talk about other
risks to demand in your world? Like what are you
looking at? What kind of keeps you up at night?
Speaker 2 (22:41):
I think, listen, I think the since twenty twenty, uncertainty
has become you know, the name of the game of
one sort or another. You know, we've been first worried
about the you know, the pandemic, then we enjoy the
post pandemic. Then we entered the freight recession as the
industry for the last you know, nearly three years, which
is the longest recession on record. And I think people
(23:02):
are generally generally concerned about just about any any aspect
of either regilatory environment or changing commercial reality or the
macroeconomic environment. And you know, we were worried about the rates.
You know, then the FED started you know, helping helping
the rates. Were worried about the you know, intensity of
the manufacturing space. You know, we're watching the ism indexes
(23:26):
still kind of you know, providing readings in a negative
territory of you know, not supporting expansionary anticipated trends. We're
worried about, you know, potential change of administration, what it
could do from a you know, organized labor perspective, wre
labor about you know, we were worried about manufacturing and
what it does to availability of rolling equipment for our drivers.
(23:48):
I think it's just you know, as you said, you know,
in anxiety and uncertainty are just here to stay, and
you know, we kind of we try to you know,
operate within our own four walls and do the best
work we count for the shippers and let the you know,
the environment play itself out as it would.
Speaker 1 (24:07):
Not to totally change the subject, because sometimes that's just
how my brain works. You know, you're mentioning your network
is mostly with owner operators. Are these owner operators do
they just own one truck or are these like you
know companies that have you know, ten or more trucks.
Are most of the people just one one person, one truck.
Speaker 2 (24:28):
So that's a very interesting part of our business. So
some of them is one person, one truck, some of
them is they you know, as a team, because we
work predominantly with teams because as you imagine, if you're
running direct from LA to Chicago, you know, the teams
drivers is what you pick up to speak is you know,
otherwise you couldn't execute it faster than others. But you know,
(24:49):
the biggest part of I think the fund that like
we have here a roadrunner is to see those owner
operators that started with one truck and now up to
five trucks or ten trucks. I think the largest owner
operator we work with is now up to fifteen trucks,
but they've started with one with us. So this is
definitely a huge part of the fund that we have
(25:12):
working with these business business people who affected We really
pride ourselves enabling entrepreneurs and obviously it's it's it's a
hugely satisfying part of what we do.
Speaker 1 (25:25):
And do they benefit from road Runner scale, like do
you like like you know, are able to get like
trucks at at maybe a lower price, and they're able
to get and gas, cars and tires and all that stuff.
Speaker 2 (25:37):
Yeah, I mean there's no question they get they get
the benefits of the scale and now are purchasing power,
et cetera. But it's you know, the more you know,
I think the more impactful is that they have ability
to choose their own loads. We have incredible technology. We
have a driver app that was ranked and functionality ahead
of Uber Freight app and that's quite the feat. As
(25:57):
you can imagine, they can and you know, think about
it that they look at they look at the dispatch
options and they can pick lanes, you know exactly how
much they're gonna make, how much likely the fuel is
going to be. They can have their own P and L,
so they run their own businesses. And I think the biggest,
you know, the biggest appeal is for them to be
really enabled entrepreneurs deciding you know, how and how much
(26:20):
they work and how much money they can make and
how they can grow with us. And I that's that's
probably the most impactful aspect of being part of the
proadoun You.
Speaker 1 (26:30):
Know, you mentioned technology. You know, I'd like to pivot
a little towards that. You know, you just you just
mentioned that you said your your app better usability or
rated that better usability.
Speaker 3 (26:41):
And Uber freight.
Speaker 1 (26:43):
Can you talk about you know, your technology? Is it
everything done in house? Are you using something off the
shelf and then kind of putting your own front end?
Speaker 3 (26:53):
Uh?
Speaker 1 (26:53):
And it's not, you know, and I'm not just talking
about the app. I'm talking about, you know, how you
optimize your network and and and all all that technology
brings to bear on the organization.
Speaker 2 (27:04):
Technology. It's a one of the most interesting part of
our journey because you know, when we first came here
at the beginning of twenty twenty, Rodrun was an absolute laggard.
I mean, it's a physical servers as four hundred equipment
I mean the staff that you would not believe still exists.
It's operational, absolutely manual, manual processes on the dark and
(27:29):
lack of thereof to be honest. And we've done a
lot of things now mind mind you, our COO is
a former head of AI for one of the largest
consulting companies in the world. So that's that's obviously has
been a massive boost in terms of how we're ented.
And that's also our scale. Well, we obviously a national player.
(27:50):
We are a lot smaller than than you know, the
biggest national carriers in the US, and scale matters here
just because it's extremely difficult quote to effect to it
an enterprise wide technology change when you have a very
very large network. So when you think about these you know,
the big heavy hitters in industry, they have three hundred
(28:10):
plus terminals, you know, the ERP systems. It's it's a
very heavy lift. We're talking about three to five year
projects to effect to it and technological change. With us,
it's a lot faster. We can accomplish most of things
within the twelve month timeframe. So we've done anything from
dark uptimation, you know, complete you know, enablement of real
(28:32):
time tracking, ERP consolidation and integrations, all these things that
are really unattainable for the larger logic companies. And that's
really not fault of the own it's just the scale
is it becomes a major stumbling block to accomplish it
because the complexity and the risk of execution become unmanageable
(28:53):
at some point, and those things rarely get executed. We've
really accelerated our game. We have a lot of you know,
we have our machine learning algorithms that drive our static
load plant design, and we have actual AI algorithm managing
our dispatch functionality. And we're really accelerating down the technology path,
(29:15):
that's for sure, and that's really really cool. Now, what
I get very excited about is that when you look
at about our network, it really is a perfect target
for other autonomous drivers vehicles and other very sort of
you know, very forward leaning technologies because it provides that
sort of statistically you know, statistically viable sample on a
(29:40):
national footprint without the complexities of a very entangled, you
know network that comes with it. So I wouldn't be
surprised if one day we're going to get a knock
from one of those sort of silk and Valley or
now increasing in Texas players who want to test their
driving technology or doc technologies, et cetera. Because I think
(30:02):
we are perfect fit and a perfect partner for those
very technology and a sort of advanced technologies to effectly
become become testing ground for broader applicability I.
Speaker 3 (30:15):
Guess an autonomous truck.
Speaker 1 (30:17):
I always love to hear industry folks thoughts on it.
Do you think it's ever going to be widespread across
the United States in our lifetime. I'm in my mid fifties,
so hopefully at twenty twenty five more good years.
Speaker 2 (30:32):
Well hopefully hopefully another fifty. But the I think I
think that you I would not be surprised to see
a road Runner being a significantly autonomously enniable the company
in the next five to five to ten years. Mark
my words. This will this is, this is going to
(30:53):
happen because that business model is just perfect for those
kind of applications. You know, we you know, as we
started this conversation, we specialize in lining long haul, so
I mean, it doesn't get more perfect than that. We
obviously have a very sophisticated P and D operations, but
they are managed by a very sophisticated technology that was
(31:13):
not in house development. We partnered with one of the
best in the industry. But it's that linehole component. I
bet you're going to see a lot of autonomous vehicles
in the next decade and road around. It will probably
be at the at the at the leading edge of this.
Speaker 1 (31:31):
Yeah, I mean this might be like a weird question
is given the how soft the truckload market is.
Speaker 3 (31:37):
Right now, but.
Speaker 1 (31:39):
Is it is it easier to find line all capacity
versus the pickup and delivery folks?
Speaker 2 (31:47):
I think you know that it's a complex and it's
a complex question. I mean, if you're a good partner,
it's it's it's easier. But it's always difficult to find
good drivers. It doesn't matter who you are, because good
drivers like to stay with good companies. They don't like
to switch. And if you have a reputation for you know,
(32:08):
so also or not not a great partner, you have
this kind of brutal attrition rates. I mean when we started,
we were, you know, one hundred and twenty percent turnover.
It was just it was it's brutal now in a
sort of a seventies, so we absolutely out performing all
the truckloads benchmarks US. But you still, you know, you're
(32:31):
still turning seventy percent of drivers every year. So it
is start now between pick up and delivery. The pickup
and delivery guys, I would say that are easier to
work with and recruit because you do provide certain stability
and sort of predictability of what's happening, right because you
(32:52):
don't deal with you know, you know, sort of weeks
at the time land hauls you deal with, you know,
less than four hundred miles every day. You know, there's
specific geographic areas that you partner with. Those drivers who
like those areas that they understand. They have a lot
of technology, I mean our dispatch technology. Again, as I mentioned,
we've partner with one of the best industries. But it's
(33:14):
it's a killer. I mean, it's just so phenomenal. So
these people make a lot of money very quickly. They
enjoy the lifestyle of being at home every night. And
then again it comes down to a sort of lifestyle decisions.
I mean, you're not going to have a you know,
if somebody likes to be on the road, that loves
the open road, loves and the adventure aspect, loves the
kind of being the outdoors and traversing and crisscrossing the continent.
(33:35):
I mean, they would die being a P and D
drivers and vice versa. Right, So there's definitely you know,
you would imagine there's a broader pool of drivers to
hire from. But again, the competition for the top drivers,
the very good owner operators is stiff and fierce, and
I don't think that ever gets particularly easy.
Speaker 1 (33:53):
Right, And so I'm just curious. So I'm assuming the
line haul folks you pay per mile, I'm assuming, and
then the pick them and delivery, how did they get paid?
They get paid per mile, per stop.
Speaker 2 (34:05):
They get so you correct, So we pay our lifel
drives per per mile. So the more to drive them,
the more money they make, and they like, they like it.
The P and D drivers they get paid per load
and how many loads they pick up, and so the
harder they work than the more money they make. So
kind of conceptually it's the same, even though the sort
(34:25):
of the denominator is a little different, but it is
sort of the harder you work, the more you want
to work, the more money you.
Speaker 1 (34:31):
Make, right, gotcha.
Speaker 3 (34:36):
So I'm just curious.
Speaker 1 (34:38):
So you know you've you've worked at a different number
of transportation related companies. How did you first get into transportation?
Were you born into it? Did you step into it?
Did you fall into it?
Speaker 2 (34:49):
Like?
Speaker 1 (34:49):
How did you How did you start a career in transportation?
Speaker 2 (34:53):
No? I was born at least I was born in
Poland under the Communists regime in the late seventies. It
kind of took a lot of hard work to dig
myself out of that problem. So definitely not born into it,
and so it is definitely a journey of passion and resolve.
(35:14):
But I actually started an investment banker, working with one
of the major Wall Street firms, and in the sort
of in twenty and nine twenty ten, one of my
investment banking clients who attempted a consolidation of a space,
asked me to come in and cross the line of
(35:36):
being a consultant or a banker and become operator. And
I thought it was a preposterous idea thought was terrible,
But it turned out to be my life's passion. Now
now a decade and a half, I've been a logistics
and supply chain expert.
Speaker 1 (35:51):
Gotcha, and do you miss anything about investment banking?
Speaker 2 (35:56):
I do miss the precision and the elegance and the
work ethic that it's just unrivaled in any other industry
that I've experienced. But I do absolutely thrive in operating
environments and being not a consultant by the owner owner
operator myself effectively, It's just it's just an unrivaled, unparalleled
(36:20):
rive and source of satisfaction to me.
Speaker 1 (36:23):
And I guess you know, you're talking about the satisfactions
you get in your current role. So what is the
favorite part of your role there at road Runner?
Speaker 2 (36:33):
You know, there's so many aspects of it. You know. First,
you know, first it was you know, coming into a
very difficult situation. I mean the business was, you know,
a dumpster fire. I mean equity research analysts that consulted
before kind of agreeing to come in. They told me that, hey, listen, Chris,
if you keep it running for ninety days before you file,
(36:53):
that's sixty days longer that this business should survive. I
mean this, These were like literally very serious people telling
me that. So this was not a joke. And and
you know, but when you look at this thing, the
people's lives on online, this is not just a you know,
just a business, and it's you know, it's it's people's
mortgage with vacations, christmases. I mean, it's just people's lives.
(37:14):
I really really love the fact that those people who
stuck with us, and you know, we have incredible loyalty
in our in our workforce, and we kind of celebrate
our anniversaries every Thursday. I mean, you know, the number
of people in double digits and in like in high thirties,
you know, celebrating people in decades and decades with roadrunners
(37:35):
not only humbling, but it's extremely i mean joyful to me.
But to see these folks kind of emerge like a
phoenix from the ashes and being again proud of association,
proud of our brand, it's phenomenal. I mean, that's just phenomenal.
But seeing you know, seeing drivers come in and you know,
they're kind of telling the stories of how they started
(37:57):
as a sort of a as a least purchase driver
and now they they own their own truck and now
they have a team, or they bring the first truck
driver fleet driver for the growing business. Those things are
just just the best. So going to the dog terminals
and you know, across the country and just seeing the
pride of ownership and it's you know, and you know,
(38:18):
every every every employee Roadrun, including the powerly gets an
opportunity to make monthly bonuses. So kind of seeing people
work hard and kind of proving to everybody else that
they are high performers, top performers and kind of going
home being proud. Just the best days of my life.
Speaker 1 (38:37):
That's good. And you know we didn't really talk about earlier.
Is you know, are you guys profitable? Do you do
you have do you have any sort of like longer
term profit goals for the company.
Speaker 2 (38:50):
Yeah, so I wouldn't be careful because we are we
are you know, we are the sort of a publicly
traded business, and I want to be careful because the
guidance we think. But let's assume hypothetic that this is
the first profitable YEA the companies had and you know
since the since the financial restatement of twenty twenty sixteen
when it was sort of the biggest sec accounting fraud
(39:10):
of the year. So to be honest, I don't know
if that company was ever profitable because you know, you
have CFOs in jail and you know, endless prosecution, et cetera.
But yeah, so let's assume hypothetically, the twenty twenty four
is maybe the first profitably in the company's history. So
you can just imagine how excited we all are about this.
Speaker 1 (39:34):
Well, that's great, that's great to hear. You know, we're
kind of coming towards the end of the episode. And
I always like to ask guests that come on, you know,
if you have a favorite book about the transportation industry
or about leadership that you know you read over the years
that you know really resonated with you. You know, because
I know some of our listeners like to you know,
(39:55):
when they're flying, they like to read. So, you know,
do you have any recommendations?
Speaker 2 (40:02):
You know what it's in my case, I you know,
I haven't really read a lot of books about transportation.
Is just such a cyclical industry, and I think you
can if you become enamored with with this and you
kind of lose your edge and your low subjectivity, and
this kind of inevailability of a you know, you know,
incredible peaks very quickly turning into uh, you know, troughs,
(40:25):
and and if you for any moment you start believing
that you are better than than anyone else, and this
will not end up in tears this time around. It's
just that's that's a risky problems. I really haven't. But
my one of I love reading biographies, and I love
reading biographies of people who are who are very very
(40:45):
good operators. And that's you know, very sort of maybe
my opic of my part, but it's it's a I
hold an incredible respect and admiration for those executives who become,
you know, very successful, sustainably incredibly successful operators, just because
it's I drive a very big distinction between one Buick
(41:11):
Wonders or you know, those kind of things who came
up with a great idea and you know, I had
to turn into a technology play or some sort of
royalty things, and operations is very difficult and at risk adjusted,
basically delivering equitable returns is very difficult. And Jamie Diamond,
who was a see of of of JP Morgan and
(41:32):
who was effectively the executive who hired me in twenty
twenty eight, two thousand and two into what was back
then Bank one in Chicago, and he left City Bank
under Sandy Whale and became the boss of Bank one,
and that was an unknown institution. That's where I've met him.
(41:53):
I've been reading about him. I've been, you know, reader
of his annual letters to shareholders and everything. I was
never driven and written about him. I find an extremely
educational and that's my favorite favorite read of any time.
Speaker 3 (42:08):
Gotcha?
Speaker 1 (42:08):
And then besides, you know, when you're not putting out
dumpster fires, what do you like to do for fun?
Speaker 2 (42:16):
I have not been very good at this, LEON have
to be honest. I've become this sort of a serial
unlocking value specialist. You know, I've always had you know,
a minimum two or three companies and any time of
the last fifteen years. So I'm actually, you know, my
I just turned fifty. So my my strong promise to
(42:37):
myself is to develop hobbies that do not involve fixing broken,
broken operations and kind of starting during life. I used
to be a very very good kite boarder, if you
believe that, But I think I've lost the privilege of
calling myself one after sort of not being on a
on a board for five years. But I do I
did promise myself the twenty twenty five is the year
(42:59):
of return to my surfboard and getting out in the
ocean and and just doing some kiteboarding for the first
time and you know, and that would be six years
by that.
Speaker 1 (43:09):
Yeah, are you based on what? Are you based on?
One of the coasts?
Speaker 2 (43:13):
I am at my Florida resident and unfortunately, my business
and my work takes me, you know, to the industrial
suburbs of the Midwest predominant. But I do have I
do have a geography that does not lend itself well
to trying to come up with excuses why I don't
do that more frequently than once every five years.
Speaker 1 (43:35):
All right, Well, hopefully next time I see you, you
can you can tell me about your your your kite
surfing exploits.
Speaker 2 (43:43):
I hope, I certainly hope.
Speaker 1 (43:45):
So all right, I really want to thank you for
your time, Chris and your insights. This was a great conversation.
Speaker 3 (43:50):
Thank you, Lee.
Speaker 2 (43:51):
I had a great time. Thank you very much for having.
Speaker 1 (43:53):
Me, and I want to thank you for tuning in.
If you 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 your conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets.
Speaker 3 (44:10):
Also, if you want to learn more about.
Speaker 1 (44:11):
Freight transportation markets, check out our work on the Bloomberg terminal,
at big or on social media. Take care and let's
keep those supply chains moving. Thanks everyone,
Hi everyone, this is Lee Clasgal when we are Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, Senior Freight Transportation let'gisic ounce of 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 and
(00:29):
conversations to you, our listeners, and we need your support.
So please, if you enjoy this podcast, share it, like it,
and leave a comment. Also, if you have any ideas
for future episodes or just want to talk transports, please
hit me up on the Bloomberg terminal or on LinkedIn
or on Twitter at logistics Late. Now on to our episode,
We're delighted to have Chris Jamraz, executive Chairman of the
(00:52):
board and CEO of Roadrunner. Previously, Chris served as the
executive chairman of the board and CEO of Ascent, a
privately owned freight forwarding and domestic brokerage service provider. Chris
has led the transfer transformative investment in global X, a
full service passenger and cargo airline headquartered in Miami, Florida.
He's a founding partner of Lyon nine Holdings, a specialty investment,
(01:18):
equipment leasing and direct operations private fund, and before coming
a Roadrunner, Chris served in executive roles at Emerging Cold
STG Logistics and Guarda Cash Logistics. He also serves as
governor of the Royal Ontario Museum, Canada's largest museum. He
holds a BA in Business Studies with first class honors
(01:40):
from Birmingham City University in the UK, as well as
an MBA with distinctions from York University in Canada. Thanks
for joining us on the Talking Transport podcast, Chris.
Speaker 2 (01:51):
Thank you very much for having me me.
Speaker 3 (01:54):
It's great. It's great to have you on.
Speaker 1 (01:56):
You know, Roadrunner, it is a publicly traded company trades
at ticker RTS.
Speaker 3 (02:02):
Maybe not everyone is familiar with Roadrunner.
Speaker 1 (02:05):
Can you let us know exactly what services and products
road Rudder provides?
Speaker 2 (02:12):
Surely, Roadrunner is a specialist metro to metro long line
haul carrier in any LTL space, serving major metros across
the entire continent here in North America.
Speaker 1 (02:24):
All right, and so are you doing more than just
the line hall or are you doing the line hall
and then pick up a delivery stuff as well.
Speaker 2 (02:33):
We do everything door to door. The specialty comes from
being that expedited line LINEHLE carrier. Where effective, we run
loads directly by passing the hob and spoke networks of
other LTL carriers and that sort of helps increase the
quality and speed of delivery.
Speaker 1 (02:54):
And this this an asset light business, an asset based business.
Speaker 2 (02:58):
It is an asset light logistics business industry's favorite.
Speaker 1 (03:02):
Right, that's for sure. Can you talk about the markets
that you serve? You know, you mentioned you specialize in
the LTL space. Do you do any truckload or anything
outside of LTL?
Speaker 2 (03:14):
No, we don't. We used to go Runner in its
original form wasn't actually a specialist, pure play LTL carrier.
And over the years that sort of nission and vision
got a little bit disturbed and expanded into many, many
modes of transport that did not serve company well. So
over the last four years we've spent considered effort and
(03:37):
time and resources to actually become a back back to
our roots and becoming a pure play LTL area. And
that's what we are today and that's what we want
to be tomorrow and.
Speaker 1 (03:48):
When you say asset light, So what kind of assets
do you own?
Speaker 2 (03:52):
We own trailers, and we own all the equipments on
our docks or you know, forklift equipment, all the trucks
that serve the local terminal operations, et cetera. But when
you think about the drivers and the rolling equipment, we
partner with owner operators and teams drivers predominantly.
Speaker 1 (04:13):
Right, So you're doing all this stuff in your own
facilities or facilities that you lease, and is that fair
to say? Or are you taking are you taking freight
from other LTL carriers in moving it?
Speaker 2 (04:26):
No, we work directly with shippers, so we take everything
from pick up and delivery all the way through light
bulb ultimately to the destination point.
Speaker 1 (04:37):
And so then how many service centers do you, guys?
Speaker 2 (04:39):
Have? We present in over fourteen major metros. So when
you think about it, think about a professional sports team,
ideally a good one, and that's sort of the market
what would be in So we run direct We connect
directly major metros across the entire continent, including Canada and
the border with Mexico.
Speaker 1 (05:00):
Right well, here in New York we have two major
sports teams playing football. But some people might argue if
they're if they're really professional teams and the giants and
the jets. But I digress. So what kind of growth
profile do you have at road Runner? You know, because
obviously the LTL business has not been great on a
(05:21):
demand side, pricing has been pretty good. We saw a
couple of your competitors or I guess the more asset
based players come out with their No November numbers and
you know, tonnage declines kind of a moderate which is
a good sign, and and rates continue to be up
a little of mid single digits. What is your your
(05:41):
growth profile in this difficult market?
Speaker 2 (05:45):
So we were following a slightly different trajectoryly because in
twenty twenty one, we've we undertook a very ambitious plan
of completely redesigning our network, and we exited a lot
of markets where we didn't have our own operations or
our own brick and mortars, and the service quality was
(06:07):
just simply terrible. And we focused on the markets where
we have our own technology on equipment, our own drivers,
and we really sort of doubled down on growing in
these markets, and that effectively reduced our business volume by
about thirty percent. And then we had a few customers
(06:29):
who were probably not a good fit for us. There
was retail aggregator types and we agnited that business as well,
which had another thirty percent reduction on our volume. So
we've we've really kind of kind of cut deep to
the bone, effectively wanted to re emerge as a super
high quality carrier, focusing what we do best and serving
(06:52):
the shippers that had the right to fit for us.
So since that, we really have been growing quite nicely. So,
you know, as most of the carriers would have experienced
a recessionary trend since twenty twenty two and now entering
sort of you know, sort of the third year of
a freight recession. Then that was boosted last August or
(07:15):
August of twenty twenty three by the Yellow exit and
that bankruptcy, which you know, basically enabled a lot of
asset based carrier to wash up with eight percent more
freight on the dogs. We didn't really participate in that,
but we're following our own trajectory. So when you look
at the comps year of the year, we continue to
grow and hour November it was one of the best
(07:37):
months we have had in our history. So we had
a you know, we had the second highest volume of
per day sales and business excluding fuel search charges in
our history. So extremely extremely good month, and we're very
happy with what the yields are peeping up to be,
and generally happy with our growth trajectory.
Speaker 1 (08:00):
Can you share any tonnage numbers for November? I don't
know if you guys provide that.
Speaker 2 (08:05):
We don't, and that's sort of we only provide that
once a year, and that's due to the hour sort
of OTC filing requirement. So I'm going to sort of
just tell you that it was the second best months
we've had on a per day.
Speaker 1 (08:20):
Basis, Okay, even before the restructuring of twenty twenty one.
Speaker 2 (08:25):
No, No, that would be post post restructure. Okay, but
that makes that's a fair comment. So when we kind
of compare apples to apples, I guess I should have
said that.
Speaker 3 (08:35):
And so, you know you mentioned yellow.
Speaker 1 (08:38):
You know, some LTL carriers not only took advantage of
the available freight that was out there, a lot of them,
you know, went to go try to buy facilities, either
to upgrade their current facility or to expand it to
do market.
Speaker 3 (08:52):
Did you guys play in that at all? Did you
were you able to buy any facilities, were you interested
in any facilities?
Speaker 2 (08:58):
So we don't facilities released them. So we partner up
with the few real estate fans who went after that
rather heavily, and we picked up a brand new facility
in Atlanta. We spent bulk of last year and early
this year renovating and now we have a phenomenal one
(09:19):
of the best in class service centers in the heart
of Georgia.
Speaker 1 (09:24):
Great And I'm just curious, So these leases am assuming
their long term leases roughly how long are those leases
for those these types of facilities.
Speaker 2 (09:33):
We sort of have an average average lease I've now
around seven years now and that's sort of you can
imagine that's sort of a lot of ten year leases
in some of the leases that are coming to maturity.
We definitely are upgrading our terminal footprint because a to
support our growth and the support the quality because of
(09:58):
the road runners you know, history as a commonly referred
to as a roll up blow up, and the different
type of transportation activity the company got itself into. Some
of those dogs are not really textbook LTL terminals, And
you know that better than anyone that you know. You
(10:18):
normally you're looking for if you're LTL carrier, for you know,
something between seventy and two hundred doors with you know,
nicely rectangular buildings with doors on two side one hundred
and twenty five feet across the stock. And you know,
we have some terminals that are not ideal LTL terminals,
so we editing those and we're upgrading to to something
(10:40):
that would be more conducive to the quality and the
type of business we do. And at the same time
we partner up with real estate firms, we're going to
be developing our own terminals to serve the markets we
don't expand to.
Speaker 1 (10:54):
Right, it sounds like you have a relatively unique model
in the LTL space. So would you consider your comps
more freight brokers or traditional LTL carriers?
Speaker 2 (11:05):
Okay, so basically we are definitely an LTL carrier. We
are definitely and we are considered in a sort of
all tens and purposes an asset to carry because we
do have our own dedicated drivers now the owner operators,
but they our drivers now. Our specialty lies in a
(11:26):
way that we execute the freight movement. So as opposed
to the large national carriers that have densely populated terminal
networks which execute the moves through their own shuttle networks
and hab and spokes. We connect metros directly. So imagine
if you go with one of the big nationals and
you want to make a shipment from LA to Chicago,
(11:49):
it wouldn't be unusual for this to kind of hit
three or four different hubs along the way. We run
Chicago to LA direct, so that sort of expedites the
the speed of service and effectively helps with the quality
because the less touch points along the way, the less damage,
the less lost, all other things that usually happen in LTL, which,
(12:12):
by the way, I coined that phrase stands for less
than likely to go perfect. So our specialty lies in
executing flawlessly long haul line haul moves.
Speaker 1 (12:23):
What other issues I guess can shippers avoid using a
road runner versus you know, one of these larger national
players that you mentioned. You know, besides, so is it more?
Is there anything else other than service?
Speaker 3 (12:40):
Is it?
Speaker 1 (12:41):
Are you guys able to be a little more competitive
on pricing? Because I don't know, you don't have the
company drivers you have, you have the owner operator model.
Speaker 2 (12:52):
The speed comes from bypassing the hop and spoke and
running direct, so we have those disadvantage our value. While
we do not necessarily like to compete on price, we
still an incredibly value priced carrier and that's because we're
(13:12):
working on getting our brand into the sort of the
major major direct shippers, and we're working on our brand recognition,
et cetera. But that's sort of a long term. Long
term objective would be to be on power with the
best in an industry. You do pick up a lot
of time is because you do not have to deconsolidate
(13:33):
and reload shipments at every hub that the container or
the trailer touches along along its route to the final destination.
So for us, it's speed and quality that we compede up.
Speaker 1 (13:50):
Okay, and you know you mentioned you know you're you're
I guess more of a value play because you're trying
to build scale.
Speaker 3 (13:59):
What what what?
Speaker 1 (14:00):
What are your long term goals in terms of growth
and is that growth going to come all organically? Does
your model suit acquisitions or is it not well suited
for acquisitions.
Speaker 2 (14:11):
You know, we spent the last four years kind of
cleaning up the business and getting back to the sort
of pu PLT help play and kind of untangling all
the sort of very bizarre acquisitions that were made in
the past, but right now with them with the news
that we announced two weeks ago in myself effectively you know,
buying Roadrunner with my partner through my private equity fund,
(14:34):
we are returning to the acquisition trail and we've put
significant capital on the balance sheet to serve as a
war chest, and we have publicly announced we now some
team for acquisitions quite aggressively. So we would love to
have an announcement in the first part of next year
of someone that would be considered a focused taking acquisition
(14:57):
for us and effectively announced the big reach to the
M and A right.
Speaker 3 (15:03):
And so what what type of I guess target would
that be?
Speaker 1 (15:06):
Would that be a geographic focus, would it be a
you know, and market vertical focus?
Speaker 2 (15:14):
It could be both, because it's a what we We're
looking definitely at some geographical markets when we would like
to expand and that's definitely your home turf, that's that's
our you know, that's really what we want to go
in New York, New Jersey, and this is sort of
somewhere we would love to expand into. But we're also
looking more aggressively in southern California when we already have
(15:36):
a very big presence and everywhere across and so there
could be geographical opportunities. But also, you know, as we're
trying to we're not trying to. We started to respond
to a lot of greatfowarders who are looking for a
great hup to have LTL carrier. We're looking at people
who specialize in expert I'd have to have transport very
(15:58):
much the way we do, So it could be could
be geographic and could be sort of deeper into the
vertical functionality of HOP to help connectivity.
Speaker 1 (16:07):
Okay, and I'm sorry if I misheard you. So you
guys would open to other businesses like a freight forwarder.
Speaker 2 (16:14):
No, no, no, no, we just we're going to We
started to serve freight forwarders, which traditionally was not part
of our customer mix. But the freight folds are looking
for HOP to have connectivity. So imagine you have all
these importers who bring freight into the Los Angeles Long
Beach Port or New York New Jersey Port, and from
that they needs to get to some point in inland,
(16:36):
and then the freight folds are looking for reliable LTL
carriers to take that fraight into and I think we
are phenomenally positioned to grow and capture that market, and
we're going to be looking at potential acquisitions coming from
that functional area.
Speaker 1 (16:51):
And a potential regional acquisition target where they have to
have a similar model to Roadrunner, like an owner operator
type model or.
Speaker 2 (17:00):
Ideally, I do we do like it? Like listen, I'm
I'm I'm a big sort of fun of certain quality,
certain type of assets. We do like real estate, and
we may at some point own the underlying real state
that we that we operate out of. But I'm not
a huge fan of rolling. So I don't like buying
things that depreciate. That's just not my game. I've never
(17:22):
I've never embraced that that concept. I know there's a
lot of people who play on depreciation and all the motilization,
all those kind of things. This is really to me,
you know, I don't people say that in rust we trust.
I don't, and I kind of I like very much
the owner operated the flexibility, the agility, and the kind
of less capital intensive business model that increases the cash
(17:46):
flows that generated to the shareholders. So I don't think
you'll ever see us going aggressively into any sort of
company drivers or rolling asset ownership models. Right.
Speaker 1 (17:59):
You know, earlier conversation, you mentioned the fact that you know,
you got out of some businesses that didn't make sense,
whether it was you know, I guess an ROI standpoint,
or or you didn't have the density.
Speaker 3 (18:12):
Can you talk about.
Speaker 1 (18:13):
You know, your end markets, are you like sixty forty
like industrial manufacturing to retail or is your mix a
little different than that?
Speaker 2 (18:23):
Oh, you got it. It's a predominantly industrial manufacturer. Think
about all these guys that need to import import things
into the US, and that's traditionally it was seaports, you know,
like mentioned the southern California and the Northeast ports. Today
the largest port is Larreto. That's pretty much at large port,
and you know that that's the biggest border crossing in
(18:45):
the world, and obviously we have a huge presence. We
opened that market a couple months ago. It was absolutely
shocking to all of us how quickly this sort of
exploded on us. In the volume coming through that eight
ways is just nothing short of spectacular. But it's a
you know, imagine all these all these customers who need
(19:08):
need those parts or machinery or anything else that's needed
for either final manufacturing or final assembly, and that comes
either from Canada or Mexico or Ocean ocean. And you know,
when you think about these guys, they they probably are
budget conscious customers, so they they like the speed, but
they do not want to pay for expedite service because
(19:31):
that would kind of be a very very expensive part
of manufacturing supply chain. So you know, they're very patient
to wait, you know, eight twelve weeks for the freight
on the ocean, but the minute it touches continental the US,
they really want it fast in the warehouse, in the
in the assembly or factory. And that's where roadrun it
(19:52):
comes to play because we effect we offer the expedited
LTL service at the standard rate because we do not pay,
we don't charge our customers for expedite rights. We just
executed in a very expedited way, and that's where we
kind of come, you know, extremely relevant to that constituency
of shippers. On the other hand, you have a lot
of retailers, the e commerce and those really lend themselves
(20:15):
extremely well to the LTL model. Some of these you know,
the sort of shorter runs or smaller number of pilots
that they did not really require the whole truckload trailer
to be filled out. So we kind of we do
a lot of business with the retailers as well, so
that you have a lot of a lot of these
kind of constituencies of customers that contribute to our verall
(20:35):
business makes.
Speaker 1 (20:37):
And you know you're mentioning cross border business and international trade.
Do you have like a percentage, like roughly how much
of that is your business?
Speaker 2 (20:47):
It would be probably closer to what you said, the
sort of you know, sixty forty but sort of industrial
manufacturing import type customers versus the retailers.
Speaker 1 (20:58):
Are you are you guys concerned Are you hearing concerns
from your customers about you know, the incoming Trump administration
and there are more protection of stance and and you know,
use of tariffs or at least the thread of use
of tariffs. Are you concerned at all about volumes or.
Speaker 2 (21:16):
I think everybody is concerned. We definitely have heard from
our shippers that they're trying to accelerate in front front
load the imports ahead of the change in administration. But
at the same time, I don't think a lot of
people exactly know what they are to expect, and I
(21:36):
think they just certainly fearful of the chance and whatever
disruption the global supply chain. So that's that's we're definitely
hearing that. Whether it has impact our business today, it's
kind of tough to say, well, you know, how much
is that sort of our internal efforts of you know,
you know, improving service and quality, and how much is
(21:57):
that of a broader, broader market help reading you know,
reading the announcements from the large LTL place. As you've
noticed at the beginning of the call lead, they don't
really see a lot of tonnage increases. So I would
imagine that most of most of our improvement and growth
comes from our all organic initiatives. But people are definitely
(22:18):
very very cautious going into twenty twenty five.
Speaker 3 (22:21):
Yeah, that's that's for sure.
Speaker 1 (22:23):
And one thing is for certain is uncertainty in the
coming months ahead. You know, we talked about you know,
tarifs as being a risk. Can you talk about other
risks to demand in your world? Like what are you
looking at? What kind of keeps you up at night?
Speaker 2 (22:41):
I think, listen, I think the since twenty twenty, uncertainty
has become you know, the name of the game of
one sort or another. You know, we've been first worried
about the you know, the pandemic, then we enjoy the
post pandemic. Then we entered the freight recession as the
industry for the last you know, nearly three years, which
is the longest recession on record. And I think people
(23:02):
are generally generally concerned about just about any any aspect
of either regilatory environment or changing commercial reality or the
macroeconomic environment. And you know, we were worried about the rates.
You know, then the FED started you know, helping helping
the rates. Were worried about the you know, intensity of
the manufacturing space. You know, we're watching the ism indexes
(23:26):
still kind of you know, providing readings in a negative
territory of you know, not supporting expansionary anticipated trends. We're
worried about, you know, potential change of administration, what it
could do from a you know, organized labor perspective, wre
labor about you know, we were worried about manufacturing and
what it does to availability of rolling equipment for our drivers.
(23:48):
I think it's just you know, as you said, you know,
in anxiety and uncertainty are just here to stay, and
you know, we kind of we try to you know,
operate within our own four walls and do the best
work we count for the shippers and let the you know,
the environment play itself out as it would.
Speaker 1 (24:07):
Not to totally change the subject, because sometimes that's just
how my brain works. You know, you're mentioning your network
is mostly with owner operators. Are these owner operators do
they just own one truck or are these like you
know companies that have you know, ten or more trucks.
Are most of the people just one one person, one truck.
Speaker 2 (24:28):
So that's a very interesting part of our business. So
some of them is one person, one truck, some of
them is they you know, as a team, because we
work predominantly with teams because as you imagine, if you're
running direct from LA to Chicago, you know, the teams
drivers is what you pick up to speak is you know,
otherwise you couldn't execute it faster than others. But you know,
(24:49):
the biggest part of I think the fund that like
we have here a roadrunner is to see those owner
operators that started with one truck and now up to
five trucks or ten trucks. I think the largest owner
operator we work with is now up to fifteen trucks,
but they've started with one with us. So this is
definitely a huge part of the fund that we have
(25:12):
working with these business business people who affected We really
pride ourselves enabling entrepreneurs and obviously it's it's it's a
hugely satisfying part of what we do.
Speaker 1 (25:25):
And do they benefit from road Runner scale, like do
you like like you know, are able to get like
trucks at at maybe a lower price, and they're able
to get and gas, cars and tires and all that stuff.
Speaker 2 (25:37):
Yeah, I mean there's no question they get they get
the benefits of the scale and now are purchasing power,
et cetera. But it's you know, the more you know,
I think the more impactful is that they have ability
to choose their own loads. We have incredible technology. We
have a driver app that was ranked and functionality ahead
of Uber Freight app and that's quite the feat. As
(25:57):
you can imagine, they can and you know, think about
it that they look at they look at the dispatch
options and they can pick lanes, you know exactly how
much they're gonna make, how much likely the fuel is
going to be. They can have their own P and L,
so they run their own businesses. And I think the biggest,
you know, the biggest appeal is for them to be
really enabled entrepreneurs deciding you know, how and how much
(26:20):
they work and how much money they can make and
how they can grow with us. And I that's that's
probably the most impactful aspect of being part of the
proadoun You.
Speaker 1 (26:30):
Know, you mentioned technology. You know, I'd like to pivot
a little towards that. You know, you just you just
mentioned that you said your your app better usability or
rated that better usability.
Speaker 3 (26:41):
And Uber freight.
Speaker 1 (26:43):
Can you talk about you know, your technology? Is it
everything done in house? Are you using something off the
shelf and then kind of putting your own front end?
Speaker 3 (26:53):
Uh?
Speaker 1 (26:53):
And it's not, you know, and I'm not just talking
about the app. I'm talking about, you know, how you
optimize your network and and and all all that technology
brings to bear on the organization.
Speaker 2 (27:04):
Technology. It's a one of the most interesting part of
our journey because you know, when we first came here
at the beginning of twenty twenty, Rodrun was an absolute laggard.
I mean, it's a physical servers as four hundred equipment
I mean the staff that you would not believe still exists.
It's operational, absolutely manual, manual processes on the dark and
(27:29):
lack of thereof to be honest. And we've done a
lot of things now mind mind you, our COO is
a former head of AI for one of the largest
consulting companies in the world. So that's that's obviously has
been a massive boost in terms of how we're ented.
And that's also our scale. Well, we obviously a national player.
(27:50):
We are a lot smaller than than you know, the
biggest national carriers in the US, and scale matters here
just because it's extremely difficult quote to effect to it
an enterprise wide technology change when you have a very
very large network. So when you think about these you know,
the big heavy hitters in industry, they have three hundred
(28:10):
plus terminals, you know, the ERP systems. It's it's a
very heavy lift. We're talking about three to five year
projects to effect to it and technological change. With us,
it's a lot faster. We can accomplish most of things
within the twelve month timeframe. So we've done anything from
dark uptimation, you know, complete you know, enablement of real
(28:32):
time tracking, ERP consolidation and integrations, all these things that
are really unattainable for the larger logic companies. And that's
really not fault of the own it's just the scale
is it becomes a major stumbling block to accomplish it
because the complexity and the risk of execution become unmanageable
(28:53):
at some point, and those things rarely get executed. We've
really accelerated our game. We have a lot of you know,
we have our machine learning algorithms that drive our static
load plant design, and we have actual AI algorithm managing
our dispatch functionality. And we're really accelerating down the technology path,
(29:15):
that's for sure, and that's really really cool. Now, what
I get very excited about is that when you look
at about our network, it really is a perfect target
for other autonomous drivers vehicles and other very sort of
you know, very forward leaning technologies because it provides that
sort of statistically you know, statistically viable sample on a
(29:40):
national footprint without the complexities of a very entangled, you
know network that comes with it. So I wouldn't be
surprised if one day we're going to get a knock
from one of those sort of silk and Valley or
now increasing in Texas players who want to test their
driving technology or doc technologies, et cetera. Because I think
(30:02):
we are perfect fit and a perfect partner for those
very technology and a sort of advanced technologies to effectly
become become testing ground for broader applicability I.
Speaker 3 (30:15):
Guess an autonomous truck.
Speaker 1 (30:17):
I always love to hear industry folks thoughts on it.
Do you think it's ever going to be widespread across
the United States in our lifetime. I'm in my mid fifties,
so hopefully at twenty twenty five more good years.
Speaker 2 (30:32):
Well hopefully hopefully another fifty. But the I think I
think that you I would not be surprised to see
a road Runner being a significantly autonomously enniable the company
in the next five to five to ten years. Mark
my words. This will this is, this is going to
(30:53):
happen because that business model is just perfect for those
kind of applications. You know, we you know, as we
started this conversation, we specialize in lining long haul, so
I mean, it doesn't get more perfect than that. We
obviously have a very sophisticated P and D operations, but
they are managed by a very sophisticated technology that was
(31:13):
not in house development. We partnered with one of the
best in the industry. But it's that linehole component. I
bet you're going to see a lot of autonomous vehicles
in the next decade and road around. It will probably
be at the at the at the leading edge of this.
Speaker 1 (31:31):
Yeah, I mean this might be like a weird question
is given the how soft the truckload market is.
Speaker 3 (31:37):
Right now, but.
Speaker 1 (31:39):
Is it is it easier to find line all capacity
versus the pickup and delivery folks?
Speaker 2 (31:47):
I think you know that it's a complex and it's
a complex question. I mean, if you're a good partner,
it's it's it's easier. But it's always difficult to find
good drivers. It doesn't matter who you are, because good
drivers like to stay with good companies. They don't like
to switch. And if you have a reputation for you know,
(32:08):
so also or not not a great partner, you have
this kind of brutal attrition rates. I mean when we started,
we were, you know, one hundred and twenty percent turnover.
It was just it was it's brutal now in a
sort of a seventies, so we absolutely out performing all
the truckloads benchmarks US. But you still, you know, you're
(32:31):
still turning seventy percent of drivers every year. So it
is start now between pick up and delivery. The pickup
and delivery guys, I would say that are easier to
work with and recruit because you do provide certain stability
and sort of predictability of what's happening, right because you
(32:52):
don't deal with you know, you know, sort of weeks
at the time land hauls you deal with, you know,
less than four hundred miles every day. You know, there's
specific geographic areas that you partner with. Those drivers who
like those areas that they understand. They have a lot
of technology, I mean our dispatch technology. Again, as I mentioned,
we've partner with one of the best industries. But it's
(33:14):
it's a killer. I mean, it's just so phenomenal. So
these people make a lot of money very quickly. They
enjoy the lifestyle of being at home every night. And
then again it comes down to a sort of lifestyle decisions.
I mean, you're not going to have a you know,
if somebody likes to be on the road, that loves
the open road, loves and the adventure aspect, loves the
kind of being the outdoors and traversing and crisscrossing the continent.
(33:35):
I mean, they would die being a P and D
drivers and vice versa. Right, So there's definitely you know,
you would imagine there's a broader pool of drivers to
hire from. But again, the competition for the top drivers,
the very good owner operators is stiff and fierce, and
I don't think that ever gets particularly easy.
Speaker 1 (33:53):
Right, And so I'm just curious. So I'm assuming the
line haul folks you pay per mile, I'm assuming, and
then the pick them and delivery, how did they get paid?
They get paid per mile, per stop.
Speaker 2 (34:05):
They get so you correct, So we pay our lifel
drives per per mile. So the more to drive them,
the more money they make, and they like, they like it.
The P and D drivers they get paid per load
and how many loads they pick up, and so the
harder they work than the more money they make. So
kind of conceptually it's the same, even though the sort
(34:25):
of the denominator is a little different, but it is
sort of the harder you work, the more you want
to work, the more money you.
Speaker 1 (34:31):
Make, right, gotcha.
Speaker 3 (34:36):
So I'm just curious.
Speaker 1 (34:38):
So you know you've you've worked at a different number
of transportation related companies. How did you first get into transportation?
Were you born into it? Did you step into it?
Did you fall into it?
Speaker 2 (34:49):
Like?
Speaker 1 (34:49):
How did you How did you start a career in transportation?
Speaker 2 (34:53):
No? I was born at least I was born in
Poland under the Communists regime in the late seventies. It
kind of took a lot of hard work to dig
myself out of that problem. So definitely not born into it,
and so it is definitely a journey of passion and resolve.
(35:14):
But I actually started an investment banker, working with one
of the major Wall Street firms, and in the sort
of in twenty and nine twenty ten, one of my
investment banking clients who attempted a consolidation of a space,
asked me to come in and cross the line of
(35:36):
being a consultant or a banker and become operator. And
I thought it was a preposterous idea thought was terrible,
But it turned out to be my life's passion. Now
now a decade and a half, I've been a logistics
and supply chain expert.
Speaker 1 (35:51):
Gotcha, and do you miss anything about investment banking?
Speaker 2 (35:56):
I do miss the precision and the elegance and the
work ethic that it's just unrivaled in any other industry
that I've experienced. But I do absolutely thrive in operating
environments and being not a consultant by the owner owner
operator myself effectively, It's just it's just an unrivaled, unparalleled
(36:20):
rive and source of satisfaction to me.
Speaker 1 (36:23):
And I guess you know, you're talking about the satisfactions
you get in your current role. So what is the
favorite part of your role there at road Runner?
Speaker 2 (36:33):
You know, there's so many aspects of it. You know. First,
you know, first it was you know, coming into a
very difficult situation. I mean the business was, you know,
a dumpster fire. I mean equity research analysts that consulted
before kind of agreeing to come in. They told me that, hey, listen, Chris,
if you keep it running for ninety days before you file,
(36:53):
that's sixty days longer that this business should survive. I
mean this, These were like literally very serious people telling
me that. So this was not a joke. And and
you know, but when you look at this thing, the
people's lives on online, this is not just a you know,
just a business, and it's you know, it's it's people's
mortgage with vacations, christmases. I mean, it's just people's lives.
(37:14):
I really really love the fact that those people who
stuck with us, and you know, we have incredible loyalty
in our in our workforce, and we kind of celebrate
our anniversaries every Thursday. I mean, you know, the number
of people in double digits and in like in high thirties,
you know, celebrating people in decades and decades with roadrunners
(37:35):
not only humbling, but it's extremely i mean joyful to me.
But to see these folks kind of emerge like a
phoenix from the ashes and being again proud of association,
proud of our brand, it's phenomenal. I mean, that's just phenomenal.
But seeing you know, seeing drivers come in and you know,
they're kind of telling the stories of how they started
(37:57):
as a sort of a as a least purchase driver
and now they they own their own truck and now
they have a team, or they bring the first truck
driver fleet driver for the growing business. Those things are
just just the best. So going to the dog terminals
and you know, across the country and just seeing the
pride of ownership and it's you know, and you know,
(38:18):
every every every employee Roadrun, including the powerly gets an
opportunity to make monthly bonuses. So kind of seeing people
work hard and kind of proving to everybody else that
they are high performers, top performers and kind of going
home being proud. Just the best days of my life.
Speaker 1 (38:37):
That's good. And you know we didn't really talk about earlier.
Is you know, are you guys profitable? Do you do
you have do you have any sort of like longer
term profit goals for the company.
Speaker 2 (38:50):
Yeah, so I wouldn't be careful because we are we
are you know, we are the sort of a publicly
traded business, and I want to be careful because the
guidance we think. But let's assume hypothetic that this is
the first profitable YEA the companies had and you know
since the since the financial restatement of twenty twenty sixteen
when it was sort of the biggest sec accounting fraud
(39:10):
of the year. So to be honest, I don't know
if that company was ever profitable because you know, you
have CFOs in jail and you know, endless prosecution, et cetera.
But yeah, so let's assume hypothetically, the twenty twenty four
is maybe the first profitably in the company's history. So
you can just imagine how excited we all are about this.
Speaker 1 (39:34):
Well, that's great, that's great to hear. You know, we're
kind of coming towards the end of the episode. And
I always like to ask guests that come on, you know,
if you have a favorite book about the transportation industry
or about leadership that you know you read over the years
that you know really resonated with you. You know, because
I know some of our listeners like to you know,
(39:55):
when they're flying, they like to read. So, you know,
do you have any recommendations?
Speaker 2 (40:02):
You know what it's in my case, I you know,
I haven't really read a lot of books about transportation.
Is just such a cyclical industry, and I think you
can if you become enamored with with this and you
kind of lose your edge and your low subjectivity, and
this kind of inevailability of a you know, you know,
incredible peaks very quickly turning into uh, you know, troughs,
(40:25):
and and if you for any moment you start believing
that you are better than than anyone else, and this
will not end up in tears this time around. It's
just that's that's a risky problems. I really haven't. But
my one of I love reading biographies, and I love
reading biographies of people who are who are very very
(40:45):
good operators. And that's you know, very sort of maybe
my opic of my part, but it's it's a I
hold an incredible respect and admiration for those executives who become,
you know, very successful, sustainably incredibly successful operators, just because
it's I drive a very big distinction between one Buick
(41:11):
Wonders or you know, those kind of things who came
up with a great idea and you know, I had
to turn into a technology play or some sort of
royalty things, and operations is very difficult and at risk adjusted,
basically delivering equitable returns is very difficult. And Jamie Diamond,
who was a see of of of JP Morgan and
(41:32):
who was effectively the executive who hired me in twenty
twenty eight, two thousand and two into what was back
then Bank one in Chicago, and he left City Bank
under Sandy Whale and became the boss of Bank one,
and that was an unknown institution. That's where I've met him.
(41:53):
I've been reading about him. I've been, you know, reader
of his annual letters to shareholders and everything. I was
never driven and written about him. I find an extremely
educational and that's my favorite favorite read of any time.
Speaker 3 (42:08):
Gotcha?
Speaker 1 (42:08):
And then besides, you know, when you're not putting out
dumpster fires, what do you like to do for fun?
Speaker 2 (42:16):
I have not been very good at this, LEON have
to be honest. I've become this sort of a serial
unlocking value specialist. You know, I've always had you know,
a minimum two or three companies and any time of
the last fifteen years. So I'm actually, you know, my
I just turned fifty. So my my strong promise to
(42:37):
myself is to develop hobbies that do not involve fixing broken,
broken operations and kind of starting during life. I used
to be a very very good kite boarder, if you
believe that, But I think I've lost the privilege of
calling myself one after sort of not being on a
on a board for five years. But I do I
did promise myself the twenty twenty five is the year
(42:59):
of return to my surfboard and getting out in the
ocean and and just doing some kiteboarding for the first
time and you know, and that would be six years
by that.
Speaker 1 (43:09):
Yeah, are you based on what? Are you based on?
One of the coasts?
Speaker 2 (43:13):
I am at my Florida resident and unfortunately, my business
and my work takes me, you know, to the industrial
suburbs of the Midwest predominant. But I do have I
do have a geography that does not lend itself well
to trying to come up with excuses why I don't
do that more frequently than once every five years.
Speaker 1 (43:35):
All right, Well, hopefully next time I see you, you
can you can tell me about your your your kite
surfing exploits.
Speaker 2 (43:43):
I hope, I certainly hope.
Speaker 1 (43:45):
So all right, I really want to thank you for
your time, Chris and your insights. This was a great conversation.
Speaker 3 (43:50):
Thank you, Lee.
Speaker 2 (43:51):
I had a great time. Thank you very much for having.
Speaker 1 (43:53):
Me, and I want to thank you for tuning in.
If you 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 your conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets.
Speaker 3 (44:10):
Also, if you want to learn more about.
Speaker 1 (44:11):
Freight transportation markets, check out our work on the Bloomberg terminal,
at big or on social media. Take care and let's
keep those supply chains moving. Thanks everyone,
Host
Lee Klaskow
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com