May 6, 2025 • 44 mins
The uncertainty created by more protectionist policies out of Washington make supply-chain professional jobs increasingly more stressful and unpredictable. Shippers need to be nimble, patient and not overly reactive to headlines out of the White House. In this episode of the Talking Transports podcast, John Janson, vice president of global logistics at SanMar, joins Lee Klaskow, Bloomberg Intelligence’s senior transportation and logistics analyst, to share his insights about navigating today’s environment. Janson talks about SanMar’s ocean, parcel, less-than-truckload, intermodal and truckload strategies, rates and how its playbook during the pandemic may help it come out of current headwinds in a better position with its customers and transportation providers. The company has been proactively diversifying its exposure to China for some time.
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Episode Transcript
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Speaker 1 (00:06):
Hi everyone, this is Lee Klaskow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, Senior freight transportation logistics Analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. Before diving in a little
public service announcement, your support is instrumental to keep bringing
(00:27):
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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 League. Now on
to our episode we're delighted to have with us today.
(00:49):
John Jansen, Vice President of Global Logistics at Sandmar, a
privately held premiere supplier of whossale and printable clothing and accessories.
John has over thirty years of experience piloting global logistics
for industry leading companies. In twenty twenty two, he was
honored by DC Velocity with their rain Maker Award. He
(01:11):
has served on advisory boards for Nastrak, University of Auburn Logistics,
and the Parcel Forum. He has participated on numerous panels
and has been featured as a speaker at several of
CSCMP and JOC events. Actually, that's I think where John
and I met years and years ago at a JOC event.
He's also a graduate from Boise State University, so go Broncos.
(01:35):
And he's also a doting grandfather. So you are had
the distinction of being a return guest. So thank you
so much for joining us again. John. It's great to
see and hear you.
Speaker 2 (01:46):
Lee. It's great to be back.
Speaker 3 (01:47):
It's certainly challenging times and we've got a few topics
we could talk about today.
Speaker 1 (01:52):
Absolutely.
Speaker 2 (01:53):
You know.
Speaker 1 (01:54):
One of the reasons why I wanted to have you
on is, you know, there's a lot of things going
on with supply chain, with the more protectionist stance coming
out of the United States, and I love speaking to
you because you're kind of a straight shooter from all
the other shippers that I speak with, So you know,
I really appreciate your honesty and insights.
Speaker 2 (02:13):
Well, thank you.
Speaker 3 (02:13):
It's I mean, in today's world, I mean, all we
are we're trying to react, engauge and make sure that
we're able to continue to bring our product in and
support our customers.
Speaker 1 (02:26):
Okay, and can you like, you know, I gave Sandmar
a little introduction. It's a privately held company, so many
people might not know that they actually use it or
wearing some of your products. So can you talk a
little bit about Sandmar?
Speaker 2 (02:38):
Sure?
Speaker 3 (02:38):
I mean I always tell people when I'm speaking at
a conference that we're probably the largest company you've never
heard of. We are the largest producer and distributor of
blank apparel to the promotional industry. So you know, it
goes into a uniform, it goes into the shirt you
bought at a concert, goes into a fun run, and
(03:00):
so our product ends up all over the United States
and ends up but the name stand Mart doesn't show
up on anything, because we're either producing the product or
we're distributing a retail brand. And then it goes into
becoming a uniform in your store and or something that
you purchased, and so it's a really unique I didn't
(03:20):
know anything about Sandmar before I joined them nine years ago,
and then all of a sudden, you know, you realize
that they're this very very significant player in the logistics
world and provider of apparel.
Speaker 1 (03:33):
And because of that, you know, you get to see
and touch a lot of things when it comes to
freight transportation logistics. Can you talk about your supply chain?
Speaker 3 (03:42):
Sure? I mean you start at the very front end.
Apparel has long since left manufacturing in the United States,
and so today we manufacture in twenty five countries around
the world, and we import the product to East and
West Coast locations and then we distribute it from one
of ten distribution centers spread out of across the United States.
(04:06):
So we are a significant importer. Normally we're in the
top fifty importers in the United States. And then we
have a very large intermodal truckload LTL. And our largest
spend is in the parcel arena. It's the last mile
from our distribution center to our customer. And our primary
(04:26):
customer is a B to B customer.
Speaker 2 (04:28):
I mean, we.
Speaker 3 (04:29):
Support sixty five thousand small businesses that are printing and
delivering products to their customers.
Speaker 1 (04:38):
All right, that's great, And you know you mentioned that
you're manufacturing I think said in twenty five for countries
that I hear that five different countries, So is there
one that is the dominant country.
Speaker 3 (04:52):
Our largest port that we deal with is the port
of Cortez in Honduras, and so Honduras is our largest
manufacturing facilit But then spread out across the rest of
the world is everything from you know, Vietnam to Bangladesh,
to India, to Pakistan to me and mar to several
locations in Africa. Good I mean from a China perspective,
(05:17):
we have sourcing offices in Hong Kong, Dubai, in Honduras,
and in the United States. But production we have limited
our production in China to less than probably seven percent
at this point, and based on recent actions by the administration,
we'll probably be completely out of China before the end
(05:38):
of the year.
Speaker 1 (05:39):
I'm assuming those jobs aren't coming back to the United
States though.
Speaker 3 (05:42):
Right, No, they're not. I mean, if you just think
about trying to hire people to sew garments, there is
not enough sewers in the United States to begin to
support what sanmar.
Speaker 2 (05:55):
Does, right.
Speaker 1 (05:57):
Okay, So you have a very interesting perspective because you're
involved in a lot of different countries that are impacted
by the tariffs. So can you talk about you know,
your I guess your your your inbound supply chain or
is that considered outbound the stuff coming from that in that? Okay,
(06:18):
that was right? Your your I told you earlier before
the call, right, fifty two percent of the time inbound
supply chain. Can can you talk about how that's changed,
maybe from pre pandemic pandemic today?
Speaker 3 (06:36):
Sure, you know it's it's where we try to develop
these long standing relationships with our providers. And so during
the pandemic, when a lot of major customers were canceling pos,
we kept our factories going, We kept funding them, we
kept producing product because we were a firm believer that
(06:57):
our supply chain prowess lead us out of the pandemic
and help us jump the industry. And it worked because
we were not laying off people. They didn't have to
recall factory workers, and we were because our product, if
you think about it, it doesn't really age. So we're
always introducing new styles. But our number one selling polo
(07:19):
five years ago is our number one selling polo today
because companies don't like to change their uniforming, and so
it helped us out from a standpoint that when the
pandemic finally ended and during the pandemic, our business dropped
seventy percent. I mean, you think about that, that is
(07:39):
a horribly scary number because our business is built around
social gatherings and during the pandemic everything stopped. And so
we we did start producing ppe, which was a great
savior and helped out a lot, but we kept our
factories going. And so that's it go back to the
(08:00):
overall this private company philosophy that you know, business is
personal and we want to make sure that we're we're
operating that way. So you come out of COVID, business
has gone well, and then you know, we hit the
next uncertainty. You look at the Red Sea and you
look at all the challenges that hit the ocean industry,
(08:21):
and now we're dealing with the new administration and this
new world order of tariffs and you know, trying to
bring product back and manufacturing back to the United States.
And so that literally is the focus of where we're
at right now is how can we continue to produce
and have the less impact on our customer.
Speaker 1 (08:43):
And just for clarity, where you manufacture is sand Maar,
do you own the manufacturing or you you have partners
that you work with in these other countries.
Speaker 3 (08:53):
So in Honduras we're a joint partner. Everywhere else in
the world you would call it contract manufacturing, not in
the typical fashion because normally the people that were manufacturing
with the only product they've build to Sandmar. So it's
it's like having our own factories, you know, all these
different locations. And sand Mar has worked really hard to
(09:18):
be a very good steward in the apparel industry, an
industry that doesn't always have the best name for how
they manufacture and how they treat employees. So in that
set that we've worked really hard to elevate ourselves so
that we're at the top of the game.
Speaker 1 (09:33):
And you know, you mentioned about seven percent of your
production is in China right now, what was that number
if you can remember back before the pandemic, if.
Speaker 3 (09:41):
You go back to pre damp pandemic, we were probably
eighteen to twenty percent of our operation was out of China,
And so it's been a significant shift as we've moved
that toward Vietnam or we've moved that toward other countries.
And I mean, if you look at it today, we're
the second largest apparel distributor to the United States out
(10:04):
of Africa and so again based on the fact that
there's been trade friendly agreements established that allow us to
take production to those types of locations.
Speaker 1 (10:18):
And you know, so to get to zero, where does
the production go.
Speaker 2 (10:25):
You know, we'll be shifting to.
Speaker 3 (10:28):
Probably add you know, adding more to places that we
already are and then we're looking at countries like Jordan,
We're looking at countries like Egypt, and we're looking at
maybe increasing the volume in Honduras and Latin America and
locations like Haiti. So it and one of the benefits
(10:51):
of those are it's a very short supply chain and
we're able to claim a KAFTA certificate because we export
US yarn into those regions, produce product and bring it
back to the United States. So it's, uh, it's a
relatively stable from a tariff position.
Speaker 2 (11:11):
Right.
Speaker 1 (11:12):
Can you share what CAFTA is.
Speaker 2 (11:14):
It's the it's.
Speaker 1 (11:17):
You don't have to say with you, I don't I
don't know what it's stands.
Speaker 3 (11:19):
But what is America free trade? Okay, it's geared around
the fact that we're as long as we're providing the
product from the United States and then they're just providing labor,
then we can bring it back in at a very
low duty rate, if any duty rate at all.
Speaker 1 (11:35):
Okay, So you're so you're supplying the raw materials to
all these different places.
Speaker 3 (11:40):
Only place, you know, we control the raw materials to
lots of places, but like in Honduras, we provide the garment,
We provide the yarn and the fabric going in and
so then they can produce.
Speaker 2 (11:53):
So when bring it back to the United States, I.
Speaker 1 (11:56):
Mean, you named a lot of interesting places to do business.
It must be very, very very interesting to do.
Speaker 3 (12:02):
So it is, it's it's it's always, it's really rewarding.
At a conference at one point, one of our standmar
executives was asked, when will you quit chasing poverty? And
the moderator literally looked at our said, hey, you don't
have to answer that, And the answer was, we want
(12:24):
to answer that because we're making a difference.
Speaker 2 (12:28):
When you look at countries.
Speaker 3 (12:30):
Like you know, Madagascar and Tons and thea and you
look at the social economic growth in those communities that
have been provided by stable, good jobs, it's incredible. I've
been to Hunduras multiple times and to see the impact
of providing housing and a stable job for the for
(12:53):
the people of that country. If if they have education
and we're building schools down there, If they have education
and they have healthcare and they have a job, they're
not going to show up on the southern border. And
so it really is making an impact outside of the
four walls of the factories that we're in, and it's
something that's it's very rewarding to work for a company
(13:16):
that's invested in that.
Speaker 1 (13:18):
Yeah, it's great to be part of organizations that give back.
Bloomberg is definitely one of those organizations as well. Let's
talk transports, because it's the name of the podcast. Tell
us what you're doing, Like, so, I'm assuming you use
predominantly ocean to get your product here back to the
United States.
Speaker 2 (13:34):
We do.
Speaker 3 (13:35):
The very first point that hit was when the tariffs
first came out. The ten percent took effect in a
very short time period. So it was like full court pressure.
Can we get product on the water before the tariffs hit?
And are we able to make sure that we're doing
that to save some money. And then the other side
(13:56):
of it is as this supply chain changes and we
move product from one country to another, that impacts all
of our ocean sourcing. And so we've had to be
really leaning into some relationships with our ocean carriers. So
normally not we would contract for specific lanes, and we're
telling them, you got to be flexible this year. You
(14:18):
know today we may be manufacturing here. Tomorrow we may
need manufacturing here, and we need your support. And then
a lot of it comes down to some of these
a tariff when they say that expires in ninety days,
well then we need to do whatever we can do
to try to move the product and get it on
(14:38):
the water or to the United States before those tariffs
are implicated. Because if you look at the cost of
the tariff times of product, it allows a pretty good
freight budget to try and move some of this stuff.
Speaker 1 (14:51):
Right and for your ocean capacity, are you going through
freight forwarders? Are you going directly to the liners?
Speaker 3 (14:58):
We've contracted ninety five percent z of our volume direct
and our belief is that that and we keep like
the five percent out for some of the strange places
where maybe a forwarder has expertise over a direct relationship,
but the fact that we've built long term relationships. This
(15:20):
last year, we spent three days in Taiwan visiting with
two of our carriers there Earlier in the year, we
spent time in France visiting with one of our strategic partners,
and so the fact that we're we're trying to edge
it go all the way to their corporate headquarters and
then spend time with them. We believe investing that relationship
(15:42):
really pays off at the end of the day.
Speaker 1 (15:45):
You know, the spot market's really weak recently, it's down
around sixty five seventy five percent from the July peaks.
You know, obviously you're you're contracting, so you're not really
playing that much in the spot market. Can you tell
talk about, you know, your bid season this year. Did
you did you have are you paying more? Are you
(16:06):
paying less?
Speaker 3 (16:07):
You know, we we we relatively held serve this year
as far as from the contract where we were toward
the end of last year. And our goal is to
try to be within a couple hundred dollars of the
big boys that are out there, because you know, that
puts us in a great position that you know, the
(16:28):
carriers still making money and by us playing what I
call the long game, we're not chasing the spot market.
And so when we have requests and capacity can be
king at times. Right now, capacity is king, So we
want to make sure that our containers are getting on
the vessels, and that only happens really either one if
(16:50):
you're a mega shipper and can leverage volume, or two
we leverage relationship.
Speaker 1 (16:55):
It's interesting you said you're usually like a top fifty importer,
but you're not one of the boys.
Speaker 3 (17:01):
I mean, it's there's such a drop off when you
go Amazon, Walmart, Home Depot, all those guys, and they're
talking hundreds of thousands of containers and then you drop
down to the mid tiers. And we're a solid mid
tier player. I mean, we we certainly have enough volume
that did that gets everybody's attention, but we're we're not
(17:23):
anywhere near the the megas like Costco and Walmart and
Home Goods and all those guys.
Speaker 1 (17:30):
And is your is your freight kind of balance because
you're bringing in the yarn and all that stuff to
some of these places.
Speaker 3 (17:38):
Uh, trans Pacific and out of the into the East Coast.
We're definitely one way, so we're not exporting anything. Our
only exports go to Latin America, So we do some
to Europe, really small amounts, but that comes from Honduras.
So we're a we're a one way shipper, but where
we attract value is we tell them three things. You know, One,
(18:03):
our volumes year round. We're not a big peak season shipper. Two,
we are going to be a good steward of your asset,
so when it comes to the United States, we unload it,
we put it into our transload program and give it
back to you. And three we've pay our bills on time.
So if we can do those three things, we think
it makes us a very attractive shipper.
Speaker 2 (18:25):
Right.
Speaker 1 (18:26):
You know, with the tariffs, you're talking about telling your
your your partners on the water that you need to
be flexible. Where do you see the long term shift?
Do you do you guys see yourself consolidating to other places.
I know you mentioned you're you're you're in a lot
of different places, but like, are there areas where you
(18:47):
can see you growing at the cost of other geographic locations.
Speaker 3 (18:52):
I think the Latin American countries of Honduras and Haiti
will continue to garnish volume. I think the Vietnams of
the world, the India, Bangladesh, Pakistan, the Jordan and Egypt.
I think those are all going to continue to be
areas that the tariffs hopefully are going to be minimal.
(19:17):
I mean, we are making decisions about Africa, and that's
a tough decision because the AGOA, which is the African
Growth and Opportunity Act, expires in September and we have
to try to decide do we stay in those AGOA
countries or do we leave? And those are discussions that
(19:40):
we're having on a day to day basis right now,
because it's kind of before we jumped on here, you're
trying to predict the direction and the bipartisanship of the
administration in Congress, and so we're not certain on some
of those things.
Speaker 1 (19:55):
And so let's talk Turkey. So the tariffs, what has
been the impact to business? If from a cost perspective,
and you know what you're seeing your customers do.
Speaker 3 (20:07):
So if you were to do worst case and worst
case be is that all the reciprocal terrorists were put
into place as announced back on whatever the date was,
that would be a hundreds of millions of dollars impact
to a company like us. Now, we don't think any
of that. We don't think that's the level what's going
(20:27):
to hit. So, I mean we think that based on
our supply chain based on inventory that we've already imported.
We think that we can minimize the impact to our customers.
We think it's you know, we've taken We've announced once
relatively small increase going into starting in June, and we
(20:49):
hope that's the only increase we take for the year.
So again, we're we're banking on the fact that we
can manage the supply chain and the tariffs don't go wild.
Speaker 1 (21:02):
So are you able to share about, you know, roughly
what that increase was we were going to get.
Speaker 2 (21:07):
Out with it.
Speaker 3 (21:08):
We came out with a three and a half percent
increase on some of our products, not all of the products,
and we think that's the industry. We think that's a
number that we can support and we can operate within.
And again that we want to play the long game
as a company. And so the fact that we can
(21:29):
try to provide stable product and pricing to our customers
makes it really a much better deal.
Speaker 1 (21:36):
And even though you're you're you're you're announcing these increases,
is it still hurting on the margin side, because maybe
you're not willing or you're not wanting to pass off
all those costs.
Speaker 3 (21:47):
Yeah, And and I think we have to really lean
on our supply chain execution and our suppliers and us
our carriers and trying to put together the programs that
allow us to continue to do what we do. If
you're looking at right now, ocean volume is down. I mean,
carriers have had multiple blank sailings. The volume coming from
(22:12):
China's dried up, and so the carriers are trying to
drive capacity at this point by removing volume from the marketplace.
And so how does that play out long term?
Speaker 2 (22:23):
I don't know.
Speaker 3 (22:25):
I would much rather be an importer than an exporter
right now. I think the export market could really suffer
based upon the reciprocal tariffs from the other end and
the availability of equipment coming in.
Speaker 1 (22:39):
And I know you like to be consistent with your
supply chains, and you know you kind of mentioned your
inventories are pretty good. Are you guys at a position to,
you know, if the tariffs get a little crazy, to
hold off on taking on new inventory for a while.
Speaker 3 (22:58):
There are some areas think that you know, we've looked at.
How do you can you postpone using a bonded warehouse?
Can you postpone by delaying orders that only happens only
can work for so long, because the key to our
business is available inventory, and especially for some of the
(23:19):
larger orders. When the Sacramento Kings call and they want
a T shirt on every chair in the arena for
a playoff game, well, there's one place that can do that,
it's us. And to do that, we have to have inventory.
So our goal is that we're going to continue to
keep inventory on hand to support our business.
Speaker 1 (23:41):
Right okay, and so if you know, if we can
change gears and talk about your your domestic supply chains.
You know you mentioned I think you said you had
ten distribution or warehouses across the country. You mentioned the
use particularly more parcel. Can you talk about, you know,
what you're doing the parcel market. Do you just use
(24:02):
the big players like the FedEx's and the ups is
or are you using some of these Gay Economies providers
or other alternatives that are out there in the parcel world.
Speaker 3 (24:12):
Sure, we've had a long, long standing relationship with UPS
and so they are our primary provider by far. With
that said, we do utilize some of the regional carriers
in the marketplace where the regional carrier can provide us
a service advantage, either like a one day time in
(24:35):
transit advantage or in that type of setting. I think
as you look at the parcel industry, it's a crazy landscape.
Right now, UPS announced they were going to lay off
twenty thousand employees close seventy four facilities. That's a significant impact. Now,
the good news is because of the fact that we've
(24:57):
had a strategic relationship. We've been working with them on
how to make sure there's the least amount of impact
to Sandmar on our customers. But at the same time,
we have to look at some of the other solutions
that are out there, and the regional marketplace is growing.
There's players in that space that I think are going
(25:19):
to be more competitive, and I think at the end
of the day, you've got a couple of very large,
looming companies that as they enter the parcel world, they
could be disruptors in the next.
Speaker 2 (25:33):
Two to three years.
Speaker 3 (25:34):
And those are Amazon and the United States Postal Service.
And I think one of those two has the potential
to be a serious disruptor.
Speaker 1 (25:43):
Yeah, no, absolutely, it may take some time from the
Amazon side.
Speaker 2 (25:49):
From both Yeah, do you.
Speaker 1 (25:50):
Guys leverage the US Postal Service?
Speaker 3 (25:53):
We do. I just recently got back from where were
we were national and we met with US Postal Service
and that they are certainly their goal is to become
more of a parcel carrier. They have to fight themselves
to become more of a parcel company. And I think
(26:16):
their former Postmaster General de Joy was very committed to
the parcel industry. I think the question is will that
carry on and then can they do what it takes
to become a parcel carrier, both in technology, equipment, infrastructure
(26:38):
and all those things. And I think they can. I
think it's probably in that one to six pound arena
and I think it's more of a B two C play,
But I do think that they have the ability to
impact the market absolutely.
Speaker 1 (26:59):
And do you guys, I mean, do you guys go
through Amazon? Is Amazon? Are you on Amazon? And Sanmar
on Amazon?
Speaker 3 (27:06):
We are on Amazon as an Amazon, We're on the
Amazon Seller. It's a smaller percentage of our business, but
we we do, and then we deal with them in
a couple of other their business segments. But yeah, it's
certainly is an area that we're we've explored we can.
We're primarily B to B so the B two C
(27:28):
is not a major market for us, but we've explored it.
And Amazon as a carrier is an interesting perspective. We've
been approached by their intermodal and their truckload. We've not
been approached by their parcel division yet. And from an
intermodal and truckload, our volumes aren't going to the locations
that are best to where they're looking for volume, and
(27:52):
we're in the same boat there. I would rather work
with the JB Hunts and the Schneiders of the world
and have consistent, committed relationships then diving into the spot
market and saving a few hundred dollars on a container
to the West to East.
Speaker 1 (28:12):
Yeah, it seems like those offerings for Amazon and more
commoditized than you know, folks that need that higher level
of service and consistency.
Speaker 3 (28:20):
I think if you're a major shipper and you're trying
to get back to the east, the West coast, or
you're trying to reposition equipment to where Amazon is trying
to get empties back, I think it's a great opportunity.
And I think that they're marketing that and some shippers
will be able to take advantage of it. That's not
really our game, so but but we certainly have had discussions.
Speaker 1 (28:45):
You know, a lot of these parcel carriers on their calls,
they talk about pricing, and you know how they're trying
to increase pricing, whether through service or other means. You know, obviously,
you know you mentioned you're a big shipper, especially with
the UPS and some others. Where's icing been for you?
What have I mean, I'm assuming you're not paying the GRI.
Speaker 3 (29:04):
I well, it's it's what's interesting now rating for those
that don't. You know, we've we've signed some long term
contracts and uh, we're certainly not going to pay the
mark gr I But I think the challenges are that
carriers have learned, and the parcel industry started it, and
(29:25):
now it's carried into other industries ascessorials are profit margin
and their margin enhancers, and the fact that you know,
you can have an extended area or a super extended
area or all the rest of the whatever comes up.
As far as ascessorials, those are the ones that really
(29:46):
determine where your pricing is going. And I think those
are as UPS continues to make changes where you know,
I think it really inherent on staying in close contact
with what they're doing, because they've made some decisions where
a rural point may only get serviced three days a
(30:08):
week and it's an extra fee to go there. Well,
those are the ones where USPS has a chance to
really steal some market share because they're dictated to serve
every zip code in the United States five days a week,
and if they can effectively inefficiently figure out how to
do it, there's an opportunity for him there. But that's
(30:29):
not a small chasm that USPS has to cross before
they get there.
Speaker 1 (30:34):
Right and Amazon just announced plans to kind of go
deeper into to rural America and expand their footprint. So
that's something to watch in the months and years to come.
Can you talk about your LTL business less than truckload?
About how much of your domestics spend is LTL.
Speaker 3 (30:54):
It's probably our third largest spend and unlike our other
business again, you know, we have partnered with one national
carrier and we work with rn L. Then we sub
We've backed that up with regional players on each side
of the coast and in the regions where we where
they give us an advantage on service and cost and services. Primarily,
(31:19):
if somebody can do it in one day versus two,
they win and so but again, you know here we've
probably we've partnered with a region what I would call
a national privately held company that looks and feels a
lot like Sandmar And so normally you don't hear, maybe
you don't hear a lot of major shippers coming out
and say, yep, we name RNL is our carrier. But
(31:41):
they do a fantastic job, and uh that again it
lines up with our business.
Speaker 1 (31:48):
So what's this the second biggest bucket that you're spending Domesica,
so it's parcels and then al.
Speaker 3 (31:54):
Tahia it's intermodal and ocean are they're they're a jump
ball between the two of them.
Speaker 1 (32:00):
So right, talk about innermodial. What do you guys do there?
Like are you one carrier? You're using multiple carriers.
Speaker 3 (32:09):
We bring all product into two coasts, so either the
east coast flows into Savannah and down to Jacksonville, which
is our crosstock, and the west coast flows into Seattle
and from there we unload all of our containers and
then we shoot intermobile to our ten distribution centers. So
you look at us, we're a pretty balanced east to
(32:31):
west and west to east, and we participate with both
Schneider and Hunt, which puts us as a major player
both on the BNSF and the UP and we probably
were a little more BNSF loaded than we are up
but they're both are are very solid partners. And the
(32:54):
same thing with CSX and the Norfolk Southern up and
down the.
Speaker 1 (32:58):
Coast, and where in our model pricing event.
Speaker 3 (33:02):
You know, if it is really flattened out, and you know,
you look at the fact that one of the CEOs
of one of the larger truckload companies came out and
it's talking about ending this freight recession, and we've not
seen the pricing impact. And I think until something happens
(33:23):
to move markets, to move capacity, then we're still staying
in the same market, the same area. And I just
don't know what is going to happen in the near
future that's going to change capacity in the truckload marketplace.
I mean, I think you still continue to see maybe
the owner operators and the independence falling out of it
because they can't make money. But I don't see the
(33:46):
market shifting from where it's at today. And again, we've
played this very long game where we've tried to bucket
with our business. So it's meaningful to the large players
that we're dealing with, and we play in multiple areas,
So we may play with them as a intermodial player,
a truckload player, and a DRE player, or we may
(34:08):
play with them as a intermodial player and their brokerage division,
so that we're putting dollars in multiple buckets. But it's
all rolling up to the corporate end. And again, I
think it makes us a desirable customer. And then we've
had a huge commitment to being driver friendly and so
(34:31):
from the standpoint that when drivers come into our facilities,
they like coming there. They're they're dropping their equipment, they're
hooking their equipment, they have access to our facilities. And
you know, we're planning right now for what does truck
driver appreciation we look like when it hits this next year.
What can we do And so again it's it's all
(34:53):
about how do we make ourselves a very attractive customer.
Speaker 1 (34:58):
You know, you mentioned supplying the truckload side. You know,
falling fuel prices with WTI coming down is going to
kind of prolong that that recovery because it'll keep those
truckers that are struggling on life support for for a
little longer. So yeah, I agree. In January I was
very bullish on the freight recovery. And you know, with
(35:21):
Trump getting elected, you know, low taxes, low regulations, that's
good for freight. You know, this should be great. And
then you know Blamo that that just kind of blew up,
and it just seems like the freight recovery is getting
pushed off further and further off into twenty twenty five.
Speaker 3 (35:39):
Well, I think if you look at like John Wolf,
the CEO of the Northwest Seaport, or you look at
Gene Soroka, the CEO of the l A Long Beach,
their volumes are down, the import volumes are down. And
if import volumes are down, it's like that snake eating
a rat. It just worked itself across the supply chains
(36:00):
are down. UPS's earnings call this week their margins and
their their package dollars per package were up, but their
volume was down. Yeah, that's the indication that this freight
recession continues.
Speaker 1 (36:16):
Yeah, and just you know, a lot of people have
been talking about air pockets of freight. You know, we
have data on the Bloomberg Terminal that kind of is
hinting that ships leaving China for the US UH in
terms of capacity, it's down around thirty five percent just
in the last couple of months. So you're seeing a
(36:37):
huge decline and stuff leaving China, and like you said,
that's gonna you know, create an air pocket if you will,
of demand, which is gonna, you know, not be great
for for freight economics.
Speaker 3 (36:51):
Well, and I think what happens if the pocket, if
the bubble breaks, if we restore trading with China, and
now you have this huge end up supply of business
sitting there that all comes trying to hit the market
at one time, that could be that could be up
a market changer if it were to occur, right.
Speaker 1 (37:11):
And so on the truckload side, I guess you're not
You're not really using that much on the truckload side.
That's the fourth.
Speaker 3 (37:19):
Primarily it's it's it's it's our smallest spin and it's
mostly out of one location in Dallas that goes out
to some of our larger customers. And uh so it's
and and we deal almost exclusively with a brokerage division
of one of the larger truckload carriers.
Speaker 1 (37:39):
Okay, do you want to share where that is or
you'd rather.
Speaker 3 (37:42):
Not it's a I mean, we deal with Schneider and
their brokerage division and they do a wonderful job. And
so again we're trying to make it look like very
much almost it's you know, it's drop hooks drivers in
and out going to the same locations. It's it's c
spot run type of freight. So it's very attractive to
(38:03):
the brokerage marketplace. They can align carriers that want to
come to deck Texas and they know they're going to
get a load back to some other desirable area. And
you know, as far as a dedicated we got into
the dedicated business just over three years ago and we
use it for our dre and we have dedicated drey
(38:25):
on both ends of the country and that has proved
to be very effective for us. It allows us to
clear the port with volume when we get it in
and avoid to merge and it's been a it's been
a big win for us.
Speaker 1 (38:40):
So do you do you use one of the large
publicly traded carriers for dredge. We just dedicated drage we do.
Speaker 2 (38:47):
JB.
Speaker 3 (38:47):
Hunt manages our dre on the West coast and Cargo
Matic manages our dre on the East coast.
Speaker 1 (38:56):
Cargo Matic. I don't think I'm familiar with them. I
have to go look them up.
Speaker 3 (38:59):
They ended up with one of The Ocean's former CEOs
that went into their company and really has brought them
around into a very effective dre partner.
Speaker 1 (39:11):
Okay, so you know, I hate to ask you this
question because I don't know. I don't know what your
answer is going to be, if it's going to be
an answer. But so, you know, a lot there's a
lot of talk about tech and AI. Are you leveraging
that in your supply chain in your day to day
At Sandmar.
Speaker 3 (39:30):
We're you know, there's parts of the company that are
certainly leveraging AI, the marketing, and there's some of those
other areas that are We've not really figured it out.
On the logistics side, I don't. I don't know if
that's due to the fact that our senior executive in
charge of global logistics is an age away from AI.
(39:53):
But but no, I think we're we're looking I think
we have to look at it. We're not today as
far as logistics as a company. We certainly are across
customer service and sales and all the other areas, but
we it has not spun into global logistics.
Speaker 2 (40:11):
Hit right, And.
Speaker 1 (40:13):
You know, I forgot to ask you when we were
talking about truckload and your brokerage and all that stuff.
Do you guys use like the dropping hook? A lot
of the publicly traded companies like to talk about it,
how it's a growing business. Can you talk are you
using that service and kind of how you're using that
service and how you're benefiting from that service.
Speaker 3 (40:31):
It's well with Schneider and Hunt specifically our two largest
everything's drop hook. So that drivers entering our facilities are
dropping a trailer, grabbing and empty and leaving our yard
so that their their drivers. They're not working in our
(40:53):
yard as yard hustlers.
Speaker 1 (40:56):
That's good and it's good. It's good for them because
they can just hit the road. Do they use your facilities,
hit the road and it and get back back there.
Speaker 3 (41:03):
Well, it's funny because both of them, you'll kind of
give you that driver ratings. Do drivers like come into
your facilities? Drivers love coming to our facilities, you know
they again, we treat them like they should be and
their time is valuable and getting them in and out
and it doesn't take that much. I mean the fact
(41:25):
that you're being a good steward of their time. You're
giving them restrooms to use, access to your braakerooms, access
to the Internet, and putting them back on the road.
So no, it's a it's a very big commitment that
we made as a company to be a shipper of
choice several years ago and one that we're pretty proud of.
Speaker 1 (41:49):
And so you know, you're, as we mentioned in the intro,
you've been in the industry for a long time in
transportation supply chains. How did you stumble your way into
the roles for the initially into transportation?
Speaker 3 (42:05):
Kind of a funny story, I guess if you look
at where it really started. In college, I was a
partial scholarship football player and in an effort to try
to make ends meet that, they got me a job
as a school bus driver. So I guess that launched
my transportation career. But I came out of college in
(42:26):
nineteen eighty three and with a degree in communications and
planning to be the next Chris Berman before there was
a Chris Berman, and the unemployment rate was huge then,
and so I ended up getting a job with May
Trucking and I interviewed for an HR job. They hired
me as a sales guy, and I told him at
(42:47):
the time, I've never sold a thing in my life.
I don't know anything about trucking. And I ended up
working with May Trucking as a truckload carrier and got
a great appreciation for the industry and went from there
to consolidated freightways to yellow Freight, and then from yellow Freight,
I jumped to the other side of the fence and
(43:08):
have worked for significant shippers ever since. And so started
out of college, and I have been in this industry
a long time.
Speaker 1 (43:17):
All right, great, and John, we're coming up on the
end of our time. So I just really want to
thank you for your insights, if you can just leave
us with some words of wisdom of you know, how
you think shippers should be dealing with these tariffs or
you know the risk of tariffs.
Speaker 2 (43:36):
You know.
Speaker 3 (43:36):
I think it's being nimble is probably one of the things.
I think, being patient, not jerking the wheel too hard
to be left at one time. And again, I believe
in leaning on our professional relationships in this industry that
are closer to the situation than we are.
Speaker 2 (43:57):
And I think that's going to get us by.
Speaker 1 (44:00):
All right, great, well, John, I really want to thank
you for your timing your insights today. I really appreciate it.
Speaker 2 (44:06):
Thank you, sir.
Speaker 3 (44:06):
It's always good to talk to you. I know we
see each other at conferences across America, but it's always
good to talk to you.
Speaker 1 (44:13):
Absolutely, and I want to thank you for tuning in.
If you'd liked the episode, please subscribe and leave a review.
We've lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal at BIGO or
(44:34):
on social media. Take care and let's keep those supply
chains moving.
Hi everyone, this is Lee Klaskow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klaskow, Senior freight transportation logistics Analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. Before diving in a little
public service announcement, your support is instrumental to keep bringing
(00:27):
great guests and conversations to You are listeners, and we
need your support. So please, if you enjoyed this podcast,
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 League. Now on
to our episode we're delighted to have with us today.
(00:49):
John Jansen, Vice President of Global Logistics at Sandmar, a
privately held premiere supplier of whossale and printable clothing and accessories.
John has over thirty years of experience piloting global logistics
for industry leading companies. In twenty twenty two, he was
honored by DC Velocity with their rain Maker Award. He
(01:11):
has served on advisory boards for Nastrak, University of Auburn Logistics,
and the Parcel Forum. He has participated on numerous panels
and has been featured as a speaker at several of
CSCMP and JOC events. Actually, that's I think where John
and I met years and years ago at a JOC event.
He's also a graduate from Boise State University, so go Broncos.
(01:35):
And he's also a doting grandfather. So you are had
the distinction of being a return guest. So thank you
so much for joining us again. John. It's great to
see and hear you.
Speaker 2 (01:46):
Lee. It's great to be back.
Speaker 3 (01:47):
It's certainly challenging times and we've got a few topics
we could talk about today.
Speaker 1 (01:52):
Absolutely.
Speaker 2 (01:53):
You know.
Speaker 1 (01:54):
One of the reasons why I wanted to have you
on is, you know, there's a lot of things going
on with supply chain, with the more protectionist stance coming
out of the United States, and I love speaking to
you because you're kind of a straight shooter from all
the other shippers that I speak with, So you know,
I really appreciate your honesty and insights.
Speaker 2 (02:13):
Well, thank you.
Speaker 3 (02:13):
It's I mean, in today's world, I mean, all we
are we're trying to react, engauge and make sure that
we're able to continue to bring our product in and
support our customers.
Speaker 1 (02:26):
Okay, and can you like, you know, I gave Sandmar
a little introduction. It's a privately held company, so many
people might not know that they actually use it or
wearing some of your products. So can you talk a
little bit about Sandmar?
Speaker 2 (02:38):
Sure?
Speaker 3 (02:38):
I mean I always tell people when I'm speaking at
a conference that we're probably the largest company you've never
heard of. We are the largest producer and distributor of
blank apparel to the promotional industry. So you know, it
goes into a uniform, it goes into the shirt you
bought at a concert, goes into a fun run, and
(03:00):
so our product ends up all over the United States
and ends up but the name stand Mart doesn't show
up on anything, because we're either producing the product or
we're distributing a retail brand. And then it goes into
becoming a uniform in your store and or something that
you purchased, and so it's a really unique I didn't
(03:20):
know anything about Sandmar before I joined them nine years ago,
and then all of a sudden, you know, you realize
that they're this very very significant player in the logistics
world and provider of apparel.
Speaker 1 (03:33):
And because of that, you know, you get to see
and touch a lot of things when it comes to
freight transportation logistics. Can you talk about your supply chain?
Speaker 3 (03:42):
Sure? I mean you start at the very front end.
Apparel has long since left manufacturing in the United States,
and so today we manufacture in twenty five countries around
the world, and we import the product to East and
West Coast locations and then we distribute it from one
of ten distribution centers spread out of across the United States.
(04:06):
So we are a significant importer. Normally we're in the
top fifty importers in the United States. And then we
have a very large intermodal truckload LTL. And our largest
spend is in the parcel arena. It's the last mile
from our distribution center to our customer. And our primary
(04:26):
customer is a B to B customer.
Speaker 2 (04:28):
I mean, we.
Speaker 3 (04:29):
Support sixty five thousand small businesses that are printing and
delivering products to their customers.
Speaker 1 (04:38):
All right, that's great, And you know you mentioned that
you're manufacturing I think said in twenty five for countries
that I hear that five different countries, So is there
one that is the dominant country.
Speaker 3 (04:52):
Our largest port that we deal with is the port
of Cortez in Honduras, and so Honduras is our largest
manufacturing facilit But then spread out across the rest of
the world is everything from you know, Vietnam to Bangladesh,
to India, to Pakistan to me and mar to several
locations in Africa. Good I mean from a China perspective,
(05:17):
we have sourcing offices in Hong Kong, Dubai, in Honduras,
and in the United States. But production we have limited
our production in China to less than probably seven percent
at this point, and based on recent actions by the administration,
we'll probably be completely out of China before the end
(05:38):
of the year.
Speaker 1 (05:39):
I'm assuming those jobs aren't coming back to the United
States though.
Speaker 3 (05:42):
Right, No, they're not. I mean, if you just think
about trying to hire people to sew garments, there is
not enough sewers in the United States to begin to
support what sanmar.
Speaker 2 (05:55):
Does, right.
Speaker 1 (05:57):
Okay, So you have a very interesting perspective because you're
involved in a lot of different countries that are impacted
by the tariffs. So can you talk about you know,
your I guess your your your inbound supply chain or
is that considered outbound the stuff coming from that in that? Okay,
(06:18):
that was right? Your your I told you earlier before
the call, right, fifty two percent of the time inbound
supply chain. Can can you talk about how that's changed,
maybe from pre pandemic pandemic today?
Speaker 3 (06:36):
Sure, you know it's it's where we try to develop
these long standing relationships with our providers. And so during
the pandemic, when a lot of major customers were canceling pos,
we kept our factories going, We kept funding them, we
kept producing product because we were a firm believer that
(06:57):
our supply chain prowess lead us out of the pandemic
and help us jump the industry. And it worked because
we were not laying off people. They didn't have to
recall factory workers, and we were because our product, if
you think about it, it doesn't really age. So we're
always introducing new styles. But our number one selling polo
(07:19):
five years ago is our number one selling polo today
because companies don't like to change their uniforming, and so
it helped us out from a standpoint that when the
pandemic finally ended and during the pandemic, our business dropped
seventy percent. I mean, you think about that, that is
(07:39):
a horribly scary number because our business is built around
social gatherings and during the pandemic everything stopped. And so
we we did start producing ppe, which was a great
savior and helped out a lot, but we kept our
factories going. And so that's it go back to the
(08:00):
overall this private company philosophy that you know, business is
personal and we want to make sure that we're we're
operating that way. So you come out of COVID, business
has gone well, and then you know, we hit the
next uncertainty. You look at the Red Sea and you
look at all the challenges that hit the ocean industry,
(08:21):
and now we're dealing with the new administration and this
new world order of tariffs and you know, trying to
bring product back and manufacturing back to the United States.
And so that literally is the focus of where we're
at right now is how can we continue to produce
and have the less impact on our customer.
Speaker 1 (08:43):
And just for clarity, where you manufacture is sand Maar,
do you own the manufacturing or you you have partners
that you work with in these other countries.
Speaker 3 (08:53):
So in Honduras we're a joint partner. Everywhere else in
the world you would call it contract manufacturing, not in
the typical fashion because normally the people that were manufacturing
with the only product they've build to Sandmar. So it's
it's like having our own factories, you know, all these
different locations. And sand Mar has worked really hard to
(09:18):
be a very good steward in the apparel industry, an
industry that doesn't always have the best name for how
they manufacture and how they treat employees. So in that
set that we've worked really hard to elevate ourselves so
that we're at the top of the game.
Speaker 1 (09:33):
And you know, you mentioned about seven percent of your
production is in China right now, what was that number
if you can remember back before the pandemic, if.
Speaker 3 (09:41):
You go back to pre damp pandemic, we were probably
eighteen to twenty percent of our operation was out of China,
And so it's been a significant shift as we've moved
that toward Vietnam or we've moved that toward other countries.
And I mean, if you look at it today, we're
the second largest apparel distributor to the United States out
(10:04):
of Africa and so again based on the fact that
there's been trade friendly agreements established that allow us to
take production to those types of locations.
Speaker 1 (10:18):
And you know, so to get to zero, where does
the production go.
Speaker 2 (10:25):
You know, we'll be shifting to.
Speaker 3 (10:28):
Probably add you know, adding more to places that we
already are and then we're looking at countries like Jordan,
We're looking at countries like Egypt, and we're looking at
maybe increasing the volume in Honduras and Latin America and
locations like Haiti. So it and one of the benefits
(10:51):
of those are it's a very short supply chain and
we're able to claim a KAFTA certificate because we export
US yarn into those regions, produce product and bring it
back to the United States. So it's, uh, it's a
relatively stable from a tariff position.
Speaker 2 (11:11):
Right.
Speaker 1 (11:12):
Can you share what CAFTA is.
Speaker 2 (11:14):
It's the it's.
Speaker 1 (11:17):
You don't have to say with you, I don't I
don't know what it's stands.
Speaker 3 (11:19):
But what is America free trade? Okay, it's geared around
the fact that we're as long as we're providing the
product from the United States and then they're just providing labor,
then we can bring it back in at a very
low duty rate, if any duty rate at all.
Speaker 1 (11:35):
Okay, So you're so you're supplying the raw materials to
all these different places.
Speaker 3 (11:40):
Only place, you know, we control the raw materials to
lots of places, but like in Honduras, we provide the garment,
We provide the yarn and the fabric going in and
so then they can produce.
Speaker 2 (11:53):
So when bring it back to the United States, I.
Speaker 1 (11:56):
Mean, you named a lot of interesting places to do business.
It must be very, very very interesting to do.
Speaker 3 (12:02):
So it is, it's it's it's always, it's really rewarding.
At a conference at one point, one of our standmar
executives was asked, when will you quit chasing poverty? And
the moderator literally looked at our said, hey, you don't
have to answer that, And the answer was, we want
(12:24):
to answer that because we're making a difference.
Speaker 2 (12:28):
When you look at countries.
Speaker 3 (12:30):
Like you know, Madagascar and Tons and thea and you
look at the social economic growth in those communities that
have been provided by stable, good jobs, it's incredible. I've
been to Hunduras multiple times and to see the impact
of providing housing and a stable job for the for
(12:53):
the people of that country. If if they have education
and we're building schools down there, If they have education
and they have healthcare and they have a job, they're
not going to show up on the southern border. And
so it really is making an impact outside of the
four walls of the factories that we're in, and it's
something that's it's very rewarding to work for a company
(13:16):
that's invested in that.
Speaker 1 (13:18):
Yeah, it's great to be part of organizations that give back.
Bloomberg is definitely one of those organizations as well. Let's
talk transports, because it's the name of the podcast. Tell
us what you're doing, Like, so, I'm assuming you use
predominantly ocean to get your product here back to the
United States.
Speaker 2 (13:34):
We do.
Speaker 3 (13:35):
The very first point that hit was when the tariffs
first came out. The ten percent took effect in a
very short time period. So it was like full court pressure.
Can we get product on the water before the tariffs hit?
And are we able to make sure that we're doing
that to save some money. And then the other side
(13:56):
of it is as this supply chain changes and we
move product from one country to another, that impacts all
of our ocean sourcing. And so we've had to be
really leaning into some relationships with our ocean carriers. So
normally not we would contract for specific lanes, and we're
telling them, you got to be flexible this year. You
(14:18):
know today we may be manufacturing here. Tomorrow we may
need manufacturing here, and we need your support. And then
a lot of it comes down to some of these
a tariff when they say that expires in ninety days,
well then we need to do whatever we can do
to try to move the product and get it on
(14:38):
the water or to the United States before those tariffs
are implicated. Because if you look at the cost of
the tariff times of product, it allows a pretty good
freight budget to try and move some of this stuff.
Speaker 1 (14:51):
Right and for your ocean capacity, are you going through
freight forwarders? Are you going directly to the liners?
Speaker 3 (14:58):
We've contracted ninety five percent z of our volume direct
and our belief is that that and we keep like
the five percent out for some of the strange places
where maybe a forwarder has expertise over a direct relationship,
but the fact that we've built long term relationships. This
(15:20):
last year, we spent three days in Taiwan visiting with
two of our carriers there Earlier in the year, we
spent time in France visiting with one of our strategic partners,
and so the fact that we're we're trying to edge
it go all the way to their corporate headquarters and
then spend time with them. We believe investing that relationship
(15:42):
really pays off at the end of the day.
Speaker 1 (15:45):
You know, the spot market's really weak recently, it's down
around sixty five seventy five percent from the July peaks.
You know, obviously you're you're contracting, so you're not really
playing that much in the spot market. Can you tell
talk about, you know, your bid season this year. Did
you did you have are you paying more? Are you
(16:06):
paying less?
Speaker 3 (16:07):
You know, we we we relatively held serve this year
as far as from the contract where we were toward
the end of last year. And our goal is to
try to be within a couple hundred dollars of the
big boys that are out there, because you know, that
puts us in a great position that you know, the
(16:28):
carriers still making money and by us playing what I
call the long game, we're not chasing the spot market.
And so when we have requests and capacity can be
king at times. Right now, capacity is king, So we
want to make sure that our containers are getting on
the vessels, and that only happens really either one if
(16:50):
you're a mega shipper and can leverage volume, or two
we leverage relationship.
Speaker 1 (16:55):
It's interesting you said you're usually like a top fifty importer,
but you're not one of the boys.
Speaker 3 (17:01):
I mean, it's there's such a drop off when you
go Amazon, Walmart, Home Depot, all those guys, and they're
talking hundreds of thousands of containers and then you drop
down to the mid tiers. And we're a solid mid
tier player. I mean, we we certainly have enough volume
that did that gets everybody's attention, but we're we're not
(17:23):
anywhere near the the megas like Costco and Walmart and
Home Goods and all those guys.
Speaker 1 (17:30):
And is your is your freight kind of balance because
you're bringing in the yarn and all that stuff to
some of these places.
Speaker 3 (17:38):
Uh, trans Pacific and out of the into the East Coast.
We're definitely one way, so we're not exporting anything. Our
only exports go to Latin America, So we do some
to Europe, really small amounts, but that comes from Honduras.
So we're a we're a one way shipper, but where
we attract value is we tell them three things. You know, One,
(18:03):
our volumes year round. We're not a big peak season shipper. Two,
we are going to be a good steward of your asset,
so when it comes to the United States, we unload it,
we put it into our transload program and give it
back to you. And three we've pay our bills on time.
So if we can do those three things, we think
it makes us a very attractive shipper.
Speaker 2 (18:25):
Right.
Speaker 1 (18:26):
You know, with the tariffs, you're talking about telling your
your your partners on the water that you need to
be flexible. Where do you see the long term shift?
Do you do you guys see yourself consolidating to other places.
I know you mentioned you're you're you're in a lot
of different places, but like, are there areas where you
(18:47):
can see you growing at the cost of other geographic locations.
Speaker 3 (18:52):
I think the Latin American countries of Honduras and Haiti
will continue to garnish volume. I think the Vietnams of
the world, the India, Bangladesh, Pakistan, the Jordan and Egypt.
I think those are all going to continue to be
areas that the tariffs hopefully are going to be minimal.
(19:17):
I mean, we are making decisions about Africa, and that's
a tough decision because the AGOA, which is the African
Growth and Opportunity Act, expires in September and we have
to try to decide do we stay in those AGOA
countries or do we leave? And those are discussions that
(19:40):
we're having on a day to day basis right now,
because it's kind of before we jumped on here, you're
trying to predict the direction and the bipartisanship of the
administration in Congress, and so we're not certain on some
of those things.
Speaker 1 (19:55):
And so let's talk Turkey. So the tariffs, what has
been the impact to business? If from a cost perspective,
and you know what you're seeing your customers do.
Speaker 3 (20:07):
So if you were to do worst case and worst
case be is that all the reciprocal terrorists were put
into place as announced back on whatever the date was,
that would be a hundreds of millions of dollars impact
to a company like us. Now, we don't think any
of that. We don't think that's the level what's going
(20:27):
to hit. So, I mean we think that based on
our supply chain based on inventory that we've already imported.
We think that we can minimize the impact to our customers.
We think it's you know, we've taken We've announced once
relatively small increase going into starting in June, and we
(20:49):
hope that's the only increase we take for the year.
So again, we're we're banking on the fact that we
can manage the supply chain and the tariffs don't go wild.
Speaker 1 (21:02):
So are you able to share about, you know, roughly
what that increase was we were going to get.
Speaker 2 (21:07):
Out with it.
Speaker 3 (21:08):
We came out with a three and a half percent
increase on some of our products, not all of the products,
and we think that's the industry. We think that's a
number that we can support and we can operate within.
And again that we want to play the long game
as a company. And so the fact that we can
(21:29):
try to provide stable product and pricing to our customers
makes it really a much better deal.
Speaker 1 (21:36):
And even though you're you're you're you're announcing these increases,
is it still hurting on the margin side, because maybe
you're not willing or you're not wanting to pass off
all those costs.
Speaker 3 (21:47):
Yeah, And and I think we have to really lean
on our supply chain execution and our suppliers and us
our carriers and trying to put together the programs that
allow us to continue to do what we do. If
you're looking at right now, ocean volume is down. I mean,
carriers have had multiple blank sailings. The volume coming from
(22:12):
China's dried up, and so the carriers are trying to
drive capacity at this point by removing volume from the marketplace.
And so how does that play out long term?
Speaker 2 (22:23):
I don't know.
Speaker 3 (22:25):
I would much rather be an importer than an exporter
right now. I think the export market could really suffer
based upon the reciprocal tariffs from the other end and
the availability of equipment coming in.
Speaker 1 (22:39):
And I know you like to be consistent with your
supply chains, and you know you kind of mentioned your
inventories are pretty good. Are you guys at a position to,
you know, if the tariffs get a little crazy, to
hold off on taking on new inventory for a while.
Speaker 3 (22:58):
There are some areas think that you know, we've looked at.
How do you can you postpone using a bonded warehouse?
Can you postpone by delaying orders that only happens only
can work for so long, because the key to our
business is available inventory, and especially for some of the
(23:19):
larger orders. When the Sacramento Kings call and they want
a T shirt on every chair in the arena for
a playoff game, well, there's one place that can do that,
it's us. And to do that, we have to have inventory.
So our goal is that we're going to continue to
keep inventory on hand to support our business.
Speaker 1 (23:41):
Right okay, and so if you know, if we can
change gears and talk about your your domestic supply chains.
You know you mentioned I think you said you had
ten distribution or warehouses across the country. You mentioned the
use particularly more parcel. Can you talk about, you know,
what you're doing the parcel market. Do you just use
(24:02):
the big players like the FedEx's and the ups is
or are you using some of these Gay Economies providers
or other alternatives that are out there in the parcel world.
Speaker 3 (24:12):
Sure, we've had a long, long standing relationship with UPS
and so they are our primary provider by far. With
that said, we do utilize some of the regional carriers
in the marketplace where the regional carrier can provide us
a service advantage, either like a one day time in
(24:35):
transit advantage or in that type of setting. I think
as you look at the parcel industry, it's a crazy landscape.
Right now, UPS announced they were going to lay off
twenty thousand employees close seventy four facilities. That's a significant impact. Now,
the good news is because of the fact that we've
(24:57):
had a strategic relationship. We've been working with them on
how to make sure there's the least amount of impact
to Sandmar on our customers. But at the same time,
we have to look at some of the other solutions
that are out there, and the regional marketplace is growing.
There's players in that space that I think are going
(25:19):
to be more competitive, and I think at the end
of the day, you've got a couple of very large,
looming companies that as they enter the parcel world, they
could be disruptors in the next.
Speaker 2 (25:33):
Two to three years.
Speaker 3 (25:34):
And those are Amazon and the United States Postal Service.
And I think one of those two has the potential
to be a serious disruptor.
Speaker 1 (25:43):
Yeah, no, absolutely, it may take some time from the
Amazon side.
Speaker 2 (25:49):
From both Yeah, do you.
Speaker 1 (25:50):
Guys leverage the US Postal Service?
Speaker 3 (25:53):
We do. I just recently got back from where were
we were national and we met with US Postal Service
and that they are certainly their goal is to become
more of a parcel carrier. They have to fight themselves
to become more of a parcel company. And I think
(26:16):
their former Postmaster General de Joy was very committed to
the parcel industry. I think the question is will that
carry on and then can they do what it takes
to become a parcel carrier, both in technology, equipment, infrastructure
(26:38):
and all those things. And I think they can. I
think it's probably in that one to six pound arena
and I think it's more of a B two C play,
But I do think that they have the ability to
impact the market absolutely.
Speaker 1 (26:59):
And do you guys, I mean, do you guys go
through Amazon? Is Amazon? Are you on Amazon? And Sanmar
on Amazon?
Speaker 3 (27:06):
We are on Amazon as an Amazon, We're on the
Amazon Seller. It's a smaller percentage of our business, but
we we do, and then we deal with them in
a couple of other their business segments. But yeah, it's
certainly is an area that we're we've explored we can.
We're primarily B to B so the B two C
(27:28):
is not a major market for us, but we've explored it.
And Amazon as a carrier is an interesting perspective. We've
been approached by their intermodal and their truckload. We've not
been approached by their parcel division yet. And from an
intermodal and truckload, our volumes aren't going to the locations
that are best to where they're looking for volume, and
(27:52):
we're in the same boat there. I would rather work
with the JB Hunts and the Schneiders of the world
and have consistent, committed relationships then diving into the spot
market and saving a few hundred dollars on a container
to the West to East.
Speaker 1 (28:12):
Yeah, it seems like those offerings for Amazon and more
commoditized than you know, folks that need that higher level
of service and consistency.
Speaker 3 (28:20):
I think if you're a major shipper and you're trying
to get back to the east, the West coast, or
you're trying to reposition equipment to where Amazon is trying
to get empties back, I think it's a great opportunity.
And I think that they're marketing that and some shippers
will be able to take advantage of it. That's not
really our game, so but but we certainly have had discussions.
Speaker 1 (28:45):
You know, a lot of these parcel carriers on their calls,
they talk about pricing, and you know how they're trying
to increase pricing, whether through service or other means. You know, obviously,
you know you mentioned you're a big shipper, especially with
the UPS and some others. Where's icing been for you?
What have I mean, I'm assuming you're not paying the GRI.
Speaker 3 (29:04):
I well, it's it's what's interesting now rating for those
that don't. You know, we've we've signed some long term
contracts and uh, we're certainly not going to pay the
mark gr I But I think the challenges are that
carriers have learned, and the parcel industry started it, and
(29:25):
now it's carried into other industries ascessorials are profit margin
and their margin enhancers, and the fact that you know,
you can have an extended area or a super extended
area or all the rest of the whatever comes up.
As far as ascessorials, those are the ones that really
(29:46):
determine where your pricing is going. And I think those
are as UPS continues to make changes where you know,
I think it really inherent on staying in close contact
with what they're doing, because they've made some decisions where
a rural point may only get serviced three days a
(30:08):
week and it's an extra fee to go there. Well,
those are the ones where USPS has a chance to
really steal some market share because they're dictated to serve
every zip code in the United States five days a week,
and if they can effectively inefficiently figure out how to
do it, there's an opportunity for him there. But that's
(30:29):
not a small chasm that USPS has to cross before
they get there.
Speaker 1 (30:34):
Right and Amazon just announced plans to kind of go
deeper into to rural America and expand their footprint. So
that's something to watch in the months and years to come.
Can you talk about your LTL business less than truckload?
About how much of your domestics spend is LTL.
Speaker 3 (30:54):
It's probably our third largest spend and unlike our other
business again, you know, we have partnered with one national
carrier and we work with rn L. Then we sub
We've backed that up with regional players on each side
of the coast and in the regions where we where
they give us an advantage on service and cost and services. Primarily,
(31:19):
if somebody can do it in one day versus two,
they win and so but again, you know here we've
probably we've partnered with a region what I would call
a national privately held company that looks and feels a
lot like Sandmar And so normally you don't hear, maybe
you don't hear a lot of major shippers coming out
and say, yep, we name RNL is our carrier. But
(31:41):
they do a fantastic job, and uh that again it
lines up with our business.
Speaker 1 (31:48):
So what's this the second biggest bucket that you're spending Domesica,
so it's parcels and then al.
Speaker 3 (31:54):
Tahia it's intermodal and ocean are they're they're a jump
ball between the two of them.
Speaker 1 (32:00):
So right, talk about innermodial. What do you guys do there?
Like are you one carrier? You're using multiple carriers.
Speaker 3 (32:09):
We bring all product into two coasts, so either the
east coast flows into Savannah and down to Jacksonville, which
is our crosstock, and the west coast flows into Seattle
and from there we unload all of our containers and
then we shoot intermobile to our ten distribution centers. So
you look at us, we're a pretty balanced east to
(32:31):
west and west to east, and we participate with both
Schneider and Hunt, which puts us as a major player
both on the BNSF and the UP and we probably
were a little more BNSF loaded than we are up
but they're both are are very solid partners. And the
(32:54):
same thing with CSX and the Norfolk Southern up and
down the.
Speaker 1 (32:58):
Coast, and where in our model pricing event.
Speaker 3 (33:02):
You know, if it is really flattened out, and you know,
you look at the fact that one of the CEOs
of one of the larger truckload companies came out and
it's talking about ending this freight recession, and we've not
seen the pricing impact. And I think until something happens
(33:23):
to move markets, to move capacity, then we're still staying
in the same market, the same area. And I just
don't know what is going to happen in the near
future that's going to change capacity in the truckload marketplace.
I mean, I think you still continue to see maybe
the owner operators and the independence falling out of it
because they can't make money. But I don't see the
(33:46):
market shifting from where it's at today. And again, we've
played this very long game where we've tried to bucket
with our business. So it's meaningful to the large players
that we're dealing with, and we play in multiple areas,
So we may play with them as a intermodial player,
a truckload player, and a DRE player, or we may
(34:08):
play with them as a intermodial player and their brokerage division,
so that we're putting dollars in multiple buckets. But it's
all rolling up to the corporate end. And again, I
think it makes us a desirable customer. And then we've
had a huge commitment to being driver friendly and so
(34:31):
from the standpoint that when drivers come into our facilities,
they like coming there. They're they're dropping their equipment, they're
hooking their equipment, they have access to our facilities. And
you know, we're planning right now for what does truck
driver appreciation we look like when it hits this next year.
What can we do And so again it's it's all
(34:53):
about how do we make ourselves a very attractive customer.
Speaker 1 (34:58):
You know, you mentioned supplying the truckload side. You know,
falling fuel prices with WTI coming down is going to
kind of prolong that that recovery because it'll keep those
truckers that are struggling on life support for for a
little longer. So yeah, I agree. In January I was
very bullish on the freight recovery. And you know, with
(35:21):
Trump getting elected, you know, low taxes, low regulations, that's
good for freight. You know, this should be great. And
then you know Blamo that that just kind of blew up,
and it just seems like the freight recovery is getting
pushed off further and further off into twenty twenty five.
Speaker 3 (35:39):
Well, I think if you look at like John Wolf,
the CEO of the Northwest Seaport, or you look at
Gene Soroka, the CEO of the l A Long Beach,
their volumes are down, the import volumes are down. And
if import volumes are down, it's like that snake eating
a rat. It just worked itself across the supply chains
(36:00):
are down. UPS's earnings call this week their margins and
their their package dollars per package were up, but their
volume was down. Yeah, that's the indication that this freight
recession continues.
Speaker 1 (36:16):
Yeah, and just you know, a lot of people have
been talking about air pockets of freight. You know, we
have data on the Bloomberg Terminal that kind of is
hinting that ships leaving China for the US UH in
terms of capacity, it's down around thirty five percent just
in the last couple of months. So you're seeing a
(36:37):
huge decline and stuff leaving China, and like you said,
that's gonna you know, create an air pocket if you will,
of demand, which is gonna, you know, not be great
for for freight economics.
Speaker 3 (36:51):
Well, and I think what happens if the pocket, if
the bubble breaks, if we restore trading with China, and
now you have this huge end up supply of business
sitting there that all comes trying to hit the market
at one time, that could be that could be up
a market changer if it were to occur, right.
Speaker 1 (37:11):
And so on the truckload side, I guess you're not
You're not really using that much on the truckload side.
That's the fourth.
Speaker 3 (37:19):
Primarily it's it's it's it's our smallest spin and it's
mostly out of one location in Dallas that goes out
to some of our larger customers. And uh so it's
and and we deal almost exclusively with a brokerage division
of one of the larger truckload carriers.
Speaker 1 (37:39):
Okay, do you want to share where that is or
you'd rather.
Speaker 3 (37:42):
Not it's a I mean, we deal with Schneider and
their brokerage division and they do a wonderful job. And
so again we're trying to make it look like very
much almost it's you know, it's drop hooks drivers in
and out going to the same locations. It's it's c
spot run type of freight. So it's very attractive to
(38:03):
the brokerage marketplace. They can align carriers that want to
come to deck Texas and they know they're going to
get a load back to some other desirable area. And
you know, as far as a dedicated we got into
the dedicated business just over three years ago and we
use it for our dre and we have dedicated drey
(38:25):
on both ends of the country and that has proved
to be very effective for us. It allows us to
clear the port with volume when we get it in
and avoid to merge and it's been a it's been
a big win for us.
Speaker 1 (38:40):
So do you do you use one of the large
publicly traded carriers for dredge. We just dedicated drage we do.
Speaker 2 (38:47):
JB.
Speaker 3 (38:47):
Hunt manages our dre on the West coast and Cargo
Matic manages our dre on the East coast.
Speaker 1 (38:56):
Cargo Matic. I don't think I'm familiar with them. I
have to go look them up.
Speaker 3 (38:59):
They ended up with one of The Ocean's former CEOs
that went into their company and really has brought them
around into a very effective dre partner.
Speaker 1 (39:11):
Okay, so you know, I hate to ask you this
question because I don't know. I don't know what your
answer is going to be, if it's going to be
an answer. But so, you know, a lot there's a
lot of talk about tech and AI. Are you leveraging
that in your supply chain in your day to day
At Sandmar.
Speaker 3 (39:30):
We're you know, there's parts of the company that are
certainly leveraging AI, the marketing, and there's some of those
other areas that are We've not really figured it out.
On the logistics side, I don't. I don't know if
that's due to the fact that our senior executive in
charge of global logistics is an age away from AI.
(39:53):
But but no, I think we're we're looking I think
we have to look at it. We're not today as
far as logistics as a company. We certainly are across
customer service and sales and all the other areas, but
we it has not spun into global logistics.
Speaker 2 (40:11):
Hit right, And.
Speaker 1 (40:13):
You know, I forgot to ask you when we were
talking about truckload and your brokerage and all that stuff.
Do you guys use like the dropping hook? A lot
of the publicly traded companies like to talk about it,
how it's a growing business. Can you talk are you
using that service and kind of how you're using that
service and how you're benefiting from that service.
Speaker 3 (40:31):
It's well with Schneider and Hunt specifically our two largest
everything's drop hook. So that drivers entering our facilities are
dropping a trailer, grabbing and empty and leaving our yard
so that their their drivers. They're not working in our
(40:53):
yard as yard hustlers.
Speaker 1 (40:56):
That's good and it's good. It's good for them because
they can just hit the road. Do they use your facilities,
hit the road and it and get back back there.
Speaker 3 (41:03):
Well, it's funny because both of them, you'll kind of
give you that driver ratings. Do drivers like come into
your facilities? Drivers love coming to our facilities, you know
they again, we treat them like they should be and
their time is valuable and getting them in and out
and it doesn't take that much. I mean the fact
(41:25):
that you're being a good steward of their time. You're
giving them restrooms to use, access to your braakerooms, access
to the Internet, and putting them back on the road.
So no, it's a it's a very big commitment that
we made as a company to be a shipper of
choice several years ago and one that we're pretty proud of.
Speaker 1 (41:49):
And so you know, you're, as we mentioned in the intro,
you've been in the industry for a long time in
transportation supply chains. How did you stumble your way into
the roles for the initially into transportation?
Speaker 3 (42:05):
Kind of a funny story, I guess if you look
at where it really started. In college, I was a
partial scholarship football player and in an effort to try
to make ends meet that, they got me a job
as a school bus driver. So I guess that launched
my transportation career. But I came out of college in
(42:26):
nineteen eighty three and with a degree in communications and
planning to be the next Chris Berman before there was
a Chris Berman, and the unemployment rate was huge then,
and so I ended up getting a job with May
Trucking and I interviewed for an HR job. They hired
me as a sales guy, and I told him at
(42:47):
the time, I've never sold a thing in my life.
I don't know anything about trucking. And I ended up
working with May Trucking as a truckload carrier and got
a great appreciation for the industry and went from there
to consolidated freightways to yellow Freight, and then from yellow Freight,
I jumped to the other side of the fence and
(43:08):
have worked for significant shippers ever since. And so started
out of college, and I have been in this industry
a long time.
Speaker 1 (43:17):
All right, great, and John, we're coming up on the
end of our time. So I just really want to
thank you for your insights, if you can just leave
us with some words of wisdom of you know, how
you think shippers should be dealing with these tariffs or
you know the risk of tariffs.
Speaker 2 (43:36):
You know.
Speaker 3 (43:36):
I think it's being nimble is probably one of the things.
I think, being patient, not jerking the wheel too hard
to be left at one time. And again, I believe
in leaning on our professional relationships in this industry that
are closer to the situation than we are.
Speaker 2 (43:57):
And I think that's going to get us by.
Speaker 1 (44:00):
All right, great, well, John, I really want to thank
you for your timing your insights today. I really appreciate it.
Speaker 2 (44:06):
Thank you, sir.
Speaker 3 (44:06):
It's always good to talk to you. I know we
see each other at conferences across America, but it's always
good to talk to you.
Speaker 1 (44:13):
Absolutely, and I want to thank you for tuning in.
If you'd liked the episode, please subscribe and leave a review.
We've lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, check
out our work on the Bloomberg Terminal at BIGO or
(44:34):
on social media. Take care and let's keep those supply
chains moving.
Host
Lee Klaskow
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