August 11, 2025 • 45 mins
Our President and CEO, Ben Banks, hosts our second podcast featuring Martin Lew, CEO of Commtrex (https://www.commtrex.com/). The team talks about the core challenges of finding out who does what, and how to contact the right parties to design the best in class logistics solutions.
About Commtrex: Commtrex is a tech-enabled rail logistics provider with a team of experienced rail professionals, an extensive network of partners, and a best-in-class technology platform that simplifies the movement of freight and creates a competitive advantage. As a highly trusted, effective, and data-driven platform, Commtrex is improving how shippers manage their rail fleets and move freight across North America. Commtrex has grown to nearly 5,000 active members and has partnered with all six Class I Railroads.
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Episode Transcript
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Ben Banks (00:05):
Welcome to problem solvers episode two. My show
highlighting real world supplychain challenges and amazing and
brilliant people overcomingthose challenges for the benefit
of us all. I am Ben Banks,president and CEO of BNSF
Logistics coming to you from thecave at Lou Mink Drive in Fort
Worth, Texas. I've spent orendured, depending on the week,
eighteen years in supply chain.I've seen a lot.
(00:28):
I've done a lot, but still feellike a rookie compared to my
guest. Today's guest lives up tothat assertion as he definitely
makes me question what I've beendoing for the last eighteen
years. Martin Liu, the madscientist behind Commtrex, the
Angie's List of sorts for movingour goods from where they
Martin Lew (00:41):
are to where they need
Ben Banks (00:42):
to be, be the most environmentally friendly mode
possible. Rail, but we're gonnatalk a little bit two point o as
well, broadening that scope abit. Welcome, Martin. Thanks for
coming. So let's just start outjust you a little bit.
Tell us a little about you.Great. Well, thank you very
Martin Lew (00:54):
much for having me. Excited to be here. Problem
Solvers, by the way, is a greatname for this because
ultimately, as logisticians,feel I like our life is all
about solving problems, socouldn't have a more appropriate
name. So just a background onme. My first sort of profession
that I sort of went into beforestarting Commtrex was investment
banking, commodities trading outof law school.
I knew I didn't want to becorporate securities lawyer, so
(01:15):
I decided to go into investmentbanking and worked at Bear
Stearns on the on theirenvironmental markets and coal
trading desk. They were startingan energy trading group in
Houston. And shortly thereafter,the financial crisis happened.
JPMorgan acquires Bear Stearns,end up staying with JPMorgan for
another about seven years,leading origination for their
coal and environmental marketsgroup. Had no idea that I would
(01:37):
eventually end up trying tobuild a platform that connects
all rail service locations, youknow, moving several million
tons of coal per year, I was noton the logistics team.
I was on the commercial side ofthe business, pushing together
the different deals with thecoal mines and the utilities and
shippers. Really the the theconcept was how do you find the
best arbitrage opportunity forthe different types of coal that
(01:57):
we're moving, whether it beCentral Appalachian Coal,
Illinois Basin coal, Colorado,UNC coal or PRB. And what I
found while doing that was therewere several blind spots within
the rail supply chain or withinrail logistics that made it very
difficult for us to be able tomove quickly. And in the game of
trading, particularly sales andtrading in the bank side, the
two really competitiveadvantages that you have are are
(02:19):
really two things. Informationand insight and the ability to
be able to move quickly.
Obviously, balance sheet, youknow, that goes without saying
that you need a balance sheet tobe able to execute a lot of
these different arbitrageopportunities. But when thinking
about the real competitiveadvantage you have, it's, you
know, where can you findfragmentation or dislocation in
these different industries? Andas a trader on the coal desk, it
(02:40):
was always very difficult for usto be able to find rail cars if
we needed rail cars quickly, ifwe needed to find a terminal, a
port, a transload facility, ifwe needed to store cars -
a basic rate was difficult. Soafter hearing these complaints
and, you know, obviously havinga lot of friends on the
different various facets orsides of the industry, whether
it be, you know, folks at therailroads, whether it be
classmen or short line, or folksthat are at terminals, or folks
(03:02):
that are at leasing companies,everybody, you know, all pretty
much had the same complaint wasthere was a lack of visibility
and transparency to be able toidentify these different sort of
service providers and assets.And so to me, the light bulb
went off in 02/1415 that at somepoint, somebody needed to create
a platform or was gonna create aplatform that connected all
these rail server locations.Because, you know, when you
(03:23):
think about trucking, loadboards have historically been
around ocean freight, very, veryliquid, very visible market,
barging obviously, you know, notso much very opaque markets
similar to rail. But at somepoint, you know, when you think
about what's moving on rail, wegotta make it know, my thought
was there has to be an easierway to be able to move freight,
you know, on the one or twodifferent modes of
transportation by land.
Ben Banks: Right? Couldn't be any harder. It's only up from here. (03:44):
undefined
Martin Lew (03:45):
Couldn't be harder. Yeah. So that was the the the
real sort of genesis behind theidea was, number one is how do
you take all these fragmentedand disparate locations and put
them into one virtual sort of ordigital ecosystem, you know,
effectively creating almost kindof a virtual railroad, which,
you know, when you have anindustry that's been around so
long, you have all thesedifferent locations, but no
(04:05):
one's brought visibility to it,number one.
Number two, if you're thinkingabout the future down the road
and thinking about really wherethe value of a digital ecosystem
place is really two things. It'sgonna be the ability to be able
to connect the supply and thedemand sides of the industry,
number one, and the ability to,number two, is be able to
connect all the dots throughdata, which will provide
insights, which eventually willprovide more capabilities for
(04:27):
people to be able to movefreight, in theory, in a smarter
and more effective and efficientway. Back in 2015, you're
looking fast forward to now, andyou thought about sort of
artificial intelligence and whatdo you need in order to really
power artificial intelligence?You really need two things,
right? You need compute andpower, number one, and then you
need data, number two.
To me, rail is sitting on atreasure trove of data because
(04:48):
of all the different sort ofeverything from the CLM, ETA,
Waybill data. I mean, there'sjust so much data that is
sitting within the rail system,but it's so untapped, and no one
was taking and synthesizing allthose different data points to
be able to create a very clearpicture of how different freight
can be moved. So that was theconcept behind Commtrex, was how
do we create this sort ofdigital platform that connects
(05:09):
all the different serviceproviders? So we started first
with a railcar storagemarketplace and a railcar
leasing marketplace. The verysimplistic view was in a bull
market, leasing would always dowell, in a bear market, storage
would do well.
When you think about startupsand building a company, in
particularly sort of olderindustries, you always want to
figure out sort of where you canadd value on the peripheral, on
(05:31):
the outside, and work yourselfin versus going right after sort
of what you may believe is thetrue problem to solve. So for
me, the idea was, well, if I canstart connecting the dots with
the short lines across NorthAmerica, there's only, know, 600
short lines, at least it's avery defined market. And class
twos and class threes play avery integral role in being able
to support shippers movingfreight, particularly on the
carload side of business. Ithought that that would be a
(05:53):
great place to start becauseshort lines, are always very
open to new ideas, and they'reopen to any sort of support or
help they can get to grow theirvolume in their business. Versus
starting with the class andrailroads and going to the class
and railroads and saying, hey.
I have a great solution for you.Let's start with the Class twos
and Class threes. And then onthe other side of that was
trying to get as much railequipment on as possible, and I
started with the subleasingmarket, which was because I was
(06:13):
in the coal market, I knew allthe utilities, and, know, by
volume, coal moves more thananything else. So I went to all
the the friends that I had in inthe coal side of the business
as, hey, would you put your carsonto sublease? You know, would
you store your cars on thesystem?
So, you know, by default, I hada kind of a pre installed user
base of luckily one of thelargest volume, by bike volume
commodities that move on rail,which is coal. So I had a very
(06:34):
coal sensing platform to beginwith, and then eventually had to
sort of move out of that. So wewent from storage and leasing,
then we sort of, you know, therewas a lot of coal units that
were being retired. So myfriends at coal were coming to
me saying, can you help us scrapall these cars? So we built a
marketplace for, you know,effectively used rail equipment
to buy and sell, and theneventually moved to
transloading.
(06:55):
And once we sort of, you know,moved into transloading, that
was really where our focusshifted for pretty much the last
four or five years. And timingwise, it really sort of
coincided with the beginning ofthe pandemic. We launched
transloading at the end of 2019. The pandemic came around
at the 2020, and our transloadmarketplace was probably three
to four months old. And one ofthe things we optimized for is
(07:16):
it to be number one on Google,which we're number one on Google
in over 2,000 cities in NorthAmerica.
So when capacity started gettingtight at all the major ports,
what do people do is they go toGoogle and they type in
transloading terminals, portsand whatever city it may be, you
know, and people were lookingfor secondary and tertiary ports
to be able to move theircontainers and their capacity
to. So we were the one placethat existed that connected all
(07:38):
the dots. So timing wise, thatdid accelerate our growth and
that accelerated our ability toget more shippers onto the
system and then also sort ofmade it much easier for people
to get more of the supply sideonto the system. And so today,
you know, transloading hasreally become our main focus
because it's the one thing thatties all the modes of
transportation together. Andwhen thinking about where do you
(07:59):
sort of add the most value or asa platform where we add the most
value, it's in really being ableto help shippers think about how
can they move more freight byrail.
Because if you're a shippermoving primarily freight by
truck and you got caught offguard during the pandemic and
you want a little bit moreflexibility, resilience in your
supply chain, you know, youshould probably think about
diversifying and maybe moving25% of your freight over to rail
(08:20):
at minimum just to have someoptionality
Ben Banks (08:23):
Sure.
Martin Lew (08:23):
Or to hedge.
Ben Banks (08:24):
So I wanna double click a little bit on something
that I don't think I, in my ownmind, I really put all the dots
together. So you roll this thingout just a matter of months
before a worldwide shutdown.What's going through your head
just right let's just chase thatrabbit for a moment. A small
business owner going out on yourown for the first time, moving
into the transportation space,and really in 2019, things
(08:45):
aren't going well intransportation space.
You've got a freight recessionas we called it in 2019, a solid
four quarters of negative growththere. You're rolling this thing
out and then the whole worldshuts down. How surprising was
it to you that this actuallyended up being a tailwind for
your platform?
Martin Lew (08:59):
The first reaction as a founder of an investor
backed startup was, what happensif capital markets dry up and
I'm not able to raise morecapital to be able to continue
to build? You know, every techstartup has a roadmap, one, two
years out, and you're executingquarter by quarter, and
obviously you got to be a littlebit flexible in how you're
(09:20):
moving, but no one anticipates aglobal pandemic to shut the
entire world down. It's not likeit happened over a long period
of time. It happened over a fewmonths. What was going through
my head was first, capital wise,what do you do to be able to go
find additional capital if youneed to be able to effectively
add more capital to the balancesheet to keep growing, number
(09:40):
one.
And number two, strategically,how do you navigate in this new
environment? And it was veryclear to me that what we were
building with transit, you know,it took about nine months for us
to really sort of build out themarketplace, you know, three or
four months of user journey,three to four months of sort of
mapping out the functionalityand features. And this isn't
something that has been donebefore, so you really had to
(10:02):
understand the nuances oftransloading. And transloading,
you know, is quite diverse inwhat it can do. Well, on the
carload side, just by nature,there's over 12,000 commodities
or 12,000 STCC codes.
So, think about all thedifferent types of equipments
and permits and different sortof ways you can move freight.
And then you have the wholecontainer side of the business,
which is completely different.So, that was number one. And
number two was, Oh my God, thisis actually gonna be a
(10:23):
value add. There's actually sometailwinds here for us.
So, how do you capitalize onthis real demand for people to
find new capacity and be able todo it in a way that really is
supportive to shippers trying tofind new capacity while also
providing sort of a way for thetransloaders and terminals and
ports to be able to find thedemand. Because at the end of
the day, you know, this is nodifferent than any other
(10:45):
marketplace, right? Somarketplace is either gonna be
supply side driven or demandside driven. In our industry,
shippers are the demand side,and shippers drive everything in
logistics. If you have astrategy, you have to make sure
it aligns with the demand side,and demand side of our system is
completely free.
So since day one, we always knewwe wanted to create very low
(11:06):
friction for demand side to jumponto the system and utilize it,
so we've never monetized thedemand side. It's always been
about the supply side, and thesupply side subsidizing the
demand side has been able to usto be able to, now we have over
2,500 shipping companies thatuse our system. We've never
invested a dollar into reallyuser acquisition. We've never
advertised. Everything hasreally been organic and through
(11:27):
referrals and marketing and someconferences, really thought
leadership and content has beena way we've been trying to get
out there and educate shippers.
But I would say that's probablythe second thing that came up
with the pandemic is, wow, nowwe're actually adding value, and
it's very clear what the valueprop is for us is providing
visibility and connectivity. Andwhat my next sort of idea was,
how do you take that, and thennow that you're moving into a
(11:49):
world where AI is becoming moreubiquitous and pervasive, now
you have to kind of reimaginewhat you think the future of
logistics is going to be like.So that's the hardest part to me
of being an entrepreneur is youhave to build for the future
while building for today. Now,with AI moving so fast, I don't
know what six months, twelvemonths, what AI is going to look
like. Mean, even, you know,every week by week, ChatGPT or
(12:10):
Perplexity or Cloud, they'readding new features and
functionalities that even threemonths ago, you would have
imagined they'd been able tobuild.
So everything that we builtbefore, at minimum, everything
we did was all about to try toaggregate as much data and
information on the supply sideas possible because at the end
of the day, that information iswhat fuels the visibility and
the information that's gonnahelp shippers make a better
(12:31):
decision as to how can theytake, you know, convert some
truckloads to rail loads acrosstheir supply chain.
Ben Banks (12:36):
So when you think about your target demographic of
your platform, initially, it wasstarted out basically you were
targeting you just ten yearsprior. You're thinking about
yourself and what would havebeen so much easier if you'd had
access to a Commtrex at thetime. And of course, you're
thinking about, and even the waythat you talk, and sometimes you
and I talk outside of somethinglike this, and you can tell
(12:57):
we've been in the industry for along time. So all the words that
we're using makes a lot of senseto us. But the reality is I'm
even as I'm sitting herelistening to you, I'm thinking
about there's a portion of yourclientele that's just like you
and me.
We are entrenched in supplychain. We have at least a
tertiary knowledge of what raildoes, how it works, and we're
coming to Commtrex to say,please help me find an
(13:17):
alternative port. It's acapacity play. It's a reducing
friction play. And there's allall types of things there for
those of us who've been in thesupply chain.
But there's also a and probablypeople listening to this podcast
even today, there are a lot ofindividuals who don't know a lot
about rail. They don't know alot about how to even get into
rail and what do the railroadsdo and all that type of thing.
(13:40):
But they are very aware of 2021and what that did to them, where
you had 50% tender rejections inthe truck market, and if you
were moving reefer freight, itwas 75% tender rejections.
They're fully aware of the painof this whipsaw of capacity in
the trucking market. Is there anopportunity for those folks as
well?
When you are building thisplatform, are you also building
(14:02):
it to help folks that knownothing about the rail?
Martin Lew (14:04):
It's a great question. To answer that
question, let me back up and letme talk about the investment
thesis behind the concept whenwe started this business. There
were two primary investmentthesis drivers for us when we
started the business, and thisis what when I was articulating
the vision to our investors,this is what I was sort of
explaining. Number one was thedemographic shift. By 2025,
which is today, 75% of theglobal workforce will be
(14:26):
millennials.
Now, millennials are verydifferent than baby boomers and
different than Gen Xers. So bythe time you have sort of now
you're at 2025, you have babyboomers sort of moving out to
the retirement. Gen X is a very,very small generation squeezed
in between millennials and babyboomers. But once you get to
2025 , you really now have yourfirst generation of digital
natives, And these are peoplethat grew up with iPads and
(14:49):
iPhones and technology was thefirst thing in their mind when
they're thinking about solving aproblem. So if that is the
demographic that's gonna be themajority of the workforce, you
know, quite frankly, we need tobuild tools and have information
at their fingertips that canhelp them make decisions the way
they're used to makingdecisions, which is taking a
bunch of data points, analyzingit, looking at their options,
and then being able to executebased upon those decisions.
(15:11):
Very, very differenthistorically where you grew up
in the industry, you had yourrelationships, you had your
networking events, and you werecalling your buddy at the
railroad and they were givingyou some pricing. You're like,
okay, great, well, the pricingworks out, let's do it. The next
generation just functionsdifferently. And back in 2016,
2017, when I started thisbusiness, that's exactly what I
was building for. So that wasnumber one.
Investment thesis number one wasyou have this demographic shift.
(15:34):
Whether industries want to ornot, they're going to force
change. And there's otherbehavior patterns as well that
sort of move into that, which ishow long millennials stay in a
job is two to three years, andhow they think about the first
thing they do when they wannasolve a problem, you know,
historically is Google. Maybethat's now gonna shift over to
ChatGPT and other AI platforms.And then number two was really
data.
(15:54):
And back then, I knew that youhad to be able to create a very,
you know, structured andthoughtful way of collecting
data and content to be able todo two things. Number one, to be
able to educate the nextgeneration of shippers about
rail through thought leadership,through courses. So we created
this thing called the ResourcesCenter, and we started out with
(16:15):
Rail one on ones. And so wecreated Rail one on one for
transloading, for storage, forleasing, for rail services, for
warehousing. And then we createdthis thing called Ask the
Experts, which to me was at thevery beginning of five or six
years ago was how do you takeall of this intellectual
property and knowledge that hasbeen collected over these
several decades, and then takethat corpus of knowledge and put
(16:35):
it into a digital platform sothat one day you can effectively
create almost a super hyperintelligent sort of AI brain
that can synthesize and take theknowledge that has been
accumulated over these pastdecades and then help synthesize
it for the next generation ofshippers.
And in order to do that, no onereally sort of created, for lack
of a better word, a time capsuleof this information. And
(16:57):
succession planning also was oneof the reasons why I started
this business, because Iinterviewed about seven to eight
different shippers before I evenraised my first dollar of
capital. And I said, How are youthinking about succession
planning? And what was veryclear is on the shipper side of
the business, successionplanning wasn't something that
was top of mind. And if that wasthe case and all of this sort of
brainpower and knowledge wasmoving out, to me, it was a very
(17:18):
obvious thing that someone hadto create this repository of
information so that thisknowledge and information could
live on past the generation ofpeople that had sort of a fully
built industry.
So those were the two thingsthat were really sort of at the
core of our idea. Now, I realizethat AI would come on so strong
and so fast and heavy? No, Ididn't, but I knew that
eventually AI was gonna be apart of the platform solution.
(17:40):
That's exactly right. Back then,the idea was let's launch a
newsletter.
So we launched our firstnewsletter in 2019, and let's
create user generated content,and let's go out to the market,
have shippers ask questionsabout what they wanna learn
about, and let's go out to alltheir subject matter experts and
ask them to answer thequestions. So, you know, since
2019, we've created, you know,several thousand pages of
content information, laying thefoundation to be able to feed
(18:00):
that into a large language modeland sort of, you know, sort
of an AI brain.
Ben Banks (18:04):
What do you think has been the impact on rail to the
fact that we're talking aboutthis shifting demographic, which
as you talked about, you've got,you know, different habits and
different approaches and how,the millennials approach work,
how they approach exploringalternative solutions to their
problems. And it's very like yousaid, it was Google at first,
and it moves into more of a chatworld, it's gonna move into AI
as we see this progress versushow the baby boomers and the the
(18:26):
gen xers, they approach this.But over time, there's also this
just reality, and so I'm doubleclicking a little bit on what
you said there, there's been alot of retirements going on as
this knowledge has been leavingthe industry of how to rely on
rail. And no doubt, as you and Iwere growing up in the industry,
having multimodal expertise andand at your fingertips, you
(18:48):
could call that buddy at therailroad, say, hey, truck didn't
show up.
I've got six truckloads worth offreight sitting. I've got a rail
served dock here. Hey, let's seeif can get a boxcar in here in
the next couple of days. Thatwasn't an unusual conversation
back then. Now that thatknowledge and experience and
those relationships have leftthe industry, what's been the
impact on rail from yourperspective, what you've seen?
Martin Lew (19:09):
This isn't just for rail, but I think for any
industry that's undergone thattransformation, you go through
them from a very relationshipdriven process to a very
transaction oriented process.You go from who do I know and
who do I trust and who do Ithink could do the best job to
who do I think can provide thebest price? And economics has
always been an important part ofthe decision making process when
(19:30):
you're piecing together thatdelivered cost. But I think if
it was apples to apples, and myboss used to always say, your
job is to win the tip ball. Youknow?
And a lot of times in business,particularly in transportation,
it's really who's gonna win thattip ball, and typically the tip
ball is gonna be go to therelationship. If that's the
case, what happens in a worldwhere relationships aren't as
(19:51):
key? And that's the beauty tome, the beauty of AI is a lot of
the time that's spent on thecommercial side, on the
administrative processes, on theoperational processes, you know,
just entering data into a CRMsystem, doing analytics. If you
can apply AI to be able to solvethose problems, what you do is
you free up time for thosecommercial team members to focus
on the higher EQ work and focuson that relationship building.
(20:13):
Because I think in a new worldwhere digital first and then
relationship second, there'sgonna be a lot more concerted
effort that has to be investedinto that relationship than
before because the generationthat we're moving to now wants
to be home by 05:00.
They don't wanna be out atconferences or going to the
Masters or the NBA Championship.They don't want to be doing that
as much because the prioritiesare different. And so if that's
(20:36):
the case, then you have to be,as a commercial person, you have
to be a lot more thoughtfulabout how you're spending your
time, and that's where I thinkAI can be interjected and really
sort of can pick up the slack orreally sort of automate a lot of
those workflows for thecommercial people to focus on,
number one. And number two, onthe shipper side of the
business, I think it alsobehooves them to be able to
still continue to build thoserelationships. Now, the average
(20:58):
amount of time that a millennialstays in a job, it stays about
two to three years.
And if if if you believe thatthat statistic is true, the
obvious thing is, well, how arethey ever gonna build
relationships if they're movingfrom job to job or from role to
role? Number one, how are theygonna build those long term
relationships? Right? And andnumber two, if they aren't going
to be in those roles that longand they aren't going to have
that sort of long term tribalknowledge and that long term
(21:19):
relationships, how do you stillcreate a very effective and
efficient sort of supply chainprogram when it's no longer
relationships driving everythingand it's more information and
data and algorithms that aresupporting the decision making.
So that's why, you know, I thinkwhere we sit today,
relationships are going to haveto be there's going be more
investments into it because youjust have a generation that
(21:42):
thinks about it or functionsdifferently under that dynamic.
But at the same time, that'swhere AI steps in. And that's
what I'm super excited about ishow AI can really sort of jump
into all these different aspectsof commercial operations, back
office, mid office, and reallysort of free up time for humans
to focus on problem solving,strategizing, a higher EQ
(22:02):
relationship work. Really, tome, the things that today AI
can't replicate and the thingsthat don't, you know, really is
is unique to humans.
Ben Banks (22:10):
Right. So describing the problem that we're seeing
here and that Commtrex isdefinitely trying to tackle, you
have all of these headwindsreally to the supply chain
industry overall. And maybe felteven more on the rail side and
get to that here in a moment,just circling back to what you
were saying earlier. But thereality is with all of that
knowledge has left the building,if you will, in the industry.
(22:30):
Knowledge of barge, knowledge ofrail, really the easy button
because it's becometransactional, it's become
truck.
And despite what's been going onhere recently, the the reality
is is that truck continues togrow. And that's problematic
because as these shifts comeback and forth, these the
pendulum swings from a capacitystandpoint, you have shippers
(22:52):
that get hung out to drivebecause their truckers aren't
showing up. There's three toone, two to one for every
available trailer. And ifthey're used to hitting that
easy button, might be workingright now, but it didn't work in
2021 very well. It wasn'tworking in 2022.
It didn't work in 2018 verywell. And as you think about the
long term trajectory of thetrucking industry itself,
whether you argue right now thatthere's a driver shortage or
(23:14):
not, everybody admits that therewill be over time. So continue
to hit the easy button because Idon't know how to hit any other
button. And that's really whereit seems like Commtrex is trying
to step into. You know, folkslike you and me, we can use
Commtrex for sure.
We know how to use it.Specifically, how does it work?
So if you're a new user toCommtrex, how does it work? I've
(23:35):
got an opportunity to movesomething from where it is to
where it needs to be. How doesCommtrex work?
Martin Lew (23:40):
The typical workflow for a shipper is most shippers,
just as they are in theirpersonal life, they'll typically
start at the Google toolbar. Andthen they'll go to the toolbar
and they'll type in anytransloading. warehousing, you
know, terminals ports, and thenthey'll type in the city. So,
you know, call it Charleston,Mobile, Atlanta, Houston, you
know, whatever the city is.Because Commtrex is organic
position number one in over2,000 cities, Commtrex is gonna
(24:02):
the first exact, that's gonna betypically be the first link they
see. So they'll say, forexample, you know, 30 top
transloaders in Houston.
So they'll click into that linkand then they'll be able to see
a whole list of transloaders,terminals, ports, warehouses
that are in that area. And whatwe effectively did is we just
organized a bunch of informationand data that wasn't readily
available for. So we take allthat information, we take all of
(24:24):
our subscribers, there's twodifferent categories of
subscribers, there's a featuredand a verified. And just as you
would think in a directory, wecreate a profile page that has
all this different informationon each particular facility. So
everything from how many daysit's served by rail, what type
of transloading equipment doesit have, safety features, what
type of services, do you haveoutdoor, indoor storage, and
(24:45):
there's a whole profile that thelocation can put on about
themselves.
But very, very fundamentalmarketing advertising 101 is if
your customer can't find you,you're not gonna get that
business. So if you believe thatthat sort of very basic core
tenet of marketing is the case,our job is to kind of get these
particular transloaders,terminals, and ports, and
warehouses in front of theseshippers as quick and as easy as
(25:08):
possible, number one. And quitefrankly, when you think about
sort of, you know, all thedifferent industries that exist,
this industry is the one thathas invested heavily into
digital marketing or digitalstrategy. So That's right. You
chuckle because that's probablyan understatement.
But I think people realize, youknow, because historically, if
you think about transloading asan industry or just, you know,
terminals, ports, andwarehouses, you know, you're
(25:29):
really capturing business thatis moving within 150 miles of
that area. And, you know, youprobably have 10, 15, 20
customers, and Pareto'sprinciple, 20% of those
customers are 80% near volume.So, so long as that capacity is
moving, you know, you'reprobably sitting fairly well.
But what happens in a worldwhere you don't have that same
sort of luxury of a shipperbeing that dedicated to that
(25:52):
specific region. And instead offocusing on one region, now
they're taking their supplychain and spreading instead of
having 3 or 4 hubs across thecountry, now they have 20
different mini hubs.
So that capacity that they usedto use your location for 40%,
50% of their business in theSouth is now 10% because now
they're diversifying their mixand they're trying to create
some flexibility and sort ofresilience in their supply
(26:14):
chain. Now, all of a sudden,your capacity opens up and you
have to figure out a way to gofind new business, and you have
to be a little bit moreinnovative about how you get
people's attention. So, if youbelieve all that's the case,
then that's where our platformcomes into place, because you
list your location on ourplatform, we create a very easy
way for shippers to find you.And then once the location is
found and a shipper wants toeither connect with you or a
(26:35):
shipper just wants to sort of goto a city page and then find a
location that matches them,letting the algorithm run, the
shippers will then fill out whatwe call a Transload Request. And
a Transload Request is gonna beabout 11 different data points.
So it's gonna be origin,destination, are you moving
containers, are you movingcommodities, then we have a STCC
code finder. And then what's thevolume, what's the term, what
(26:56):
specialty requirements do youhave? Do you need trucking? Do
you need warehousing? You know,all the basic high level
commercial parameters that you'dwanna know as a
Ben Banks (27:02):
And once again, this is free for the shippers.
Martin Lew (27:04):
It's a 100% free for the shippers
Ben Banks (27:05):
They come in, they can fill out 11 questions that
they hopefully, I assume, andyou can correct me if I'm wrong,
but the questions that are beingasked could be answered by
anybody. You don't have to bedefinitely don't have to be a
rail expert, for instance.
Martin Lew (27:17):
No. No. No. As long as you know where your product
is starting and where it'sgoing, what the volume is, what
exactly, know, it is. Usually,you have a safety data sheet
that can can spell out exactlywhat that seven digit STCC code
is.
As long as you know the basicparameters of what you wanna do,
that's good enough to be able tostart the conversation with the
transloader. Now, and I alwayssay, we're match.com. We're not
eHarmony or Tinder. Thatprobably dates me, the fact I'm
(27:39):
saying those things. But thevote for match.com for for, you
know, initially rail, but nowsort of more sort of land-side
logistics.
Our goal is to be able toconnect the shipper with the
supply side that can help managetheir their movement, but we
don't intermediate it. We're nota 3PL. We're not an exchange to
where, you know, we have astandardized contract and
everything flows through ourmarketplace. Our goal is to be
(28:01):
able to get the shipper and thesupply side to match up, you
know, after the sort of basicfew correspondences, then they
take it offline and execute acontract together. And I think
that was one of the reasons whyI was able to be able to get so
much adoption in the industry soquickly is because they viewed
us as a matchmaker versus, youknow, a broker or an
intermediary.
Historically, if you're a brokeror if you're a 3PL, you're
(28:22):
typically not allowing thesupply side to know who your
shipper is. You're giving allthe details and facts of what
they wanna move without tellingthe supply side who the shipper
is. We're the opposite. Onceconnect with the transloader,
once the shipper connects to thetransloader we want that sort of
shipper to disclose who they areto the transloader or to the
provider of the short line, thewarehouse, the Class I railroad,
(28:43):
and you want that sort ofinformation flow to happen so
that the transloader or thestores on the supply side
quickly knows, A, is this a newcustomer to rail? B, is this an
existing customer?
C, do they already move by railor are they new by rail? Just
those very basic details arevery helpful. So, some of the
questions we ask when you're amember are, you know, have you
ever moved by rail before? Ifnot, you know, do you have
existing rail contracts? Do youhave rail cars in your fleet?
(29:07):
When you fill out a membershipprofile, we're trying to capture
all the basic details of who youare as a shipper, how big is
your fleet, what type of cars doyou have in your fleet? If you
don't know the answer to thisquestion, you can still
register. But the moreinformation you give the system,
the better the match. That'sexactly right. So, you know, in
order for a marketplace tofunction, you need effectively
(29:27):
clean, high integrity data onthe supply side so the shipper
knows what they're looking for.
And then conversely, you needthat on the shipper side so that
as the algorithm is gettingsmarter over time, and this is
even pre AI, you can match upthe shipper and their needs and
services much better with whothey're looking for on the
service provider side. Verydifficult business model.
Marketplaces are probably one ofthe hardest models. Anybody who
(29:48):
asks me, Hey, I want to start amarketplace for insert the
industry, I typically dissuadethem to do it because I think
having one customer is hard, butthink about having two customers
that have two completelydifferent motives and
objectives. And then you alsohave to think about creating
functions and features that canservice both, and you're
constantly updating thesefeatures and functions to create
a very fluid technology.
(30:09):
But if you can nail themarketplace model, you've got an
amazing business because then ifyou think about the 10 largest
tech companies in the world, 7or 8 of those 10 companies are
marketplace businesses. Thinkabout Google, Apple, Facebook,
Amazon, these are allmarketplaces. And why are they
so critical to the industriesthat they serve? It's because
it's extremely difficult tobring the supply and demand side
(30:29):
into one digital ecosystem andget them to use that as their
sort of first place to go to forwhatever service or product
they're looking for. And that'sbeen sort of the North Star for
us this whole time is how do youcreate easy enough functionality
to where someone who doesn'tknow how to move by rail can
jump into the system?
And if they want to learn aboutrail, you have rail 101s you
have resources center, you haveask the experts, you have all
(30:51):
these different sort of topicsthat could help inform the
shipoer. Because at the end theday, nobody's gonna move freight
by rail if they don't understandit, because they're gonna have
to go to their boss, and theirboss's boss will say, Hey,
listen, that 20% of our freightthat's currently moving all by
truck, we wanna actually shiftthat over by rail. And things
like accessorials and demurrage,you know, and all these
different fees that sort of popup.
Ben Banks (31:12):
Yeah. A plethora of words that are unique to this
industry for sure. Let's doubleclick on that right there.
There's an assumption inbasically our entire
conversation to this point thatwhen they went to Google and
Commtrex came up that as theydrilled down in this, now you're
you're expanding well beyondrail at this point too. But if a
rail solution is the underlyingsolution that Commtrex is
building, how does a shipperknow that their type of freight
(31:37):
is potentially a good fit forrail?
So as I'm Commtrex comes up, I'mlogging in there. I'm starting
to fill out this form. Maybe Idon't even fill out the form
because I just assume rail isnot a good fit for me because I
don't know anything about it. Sofrom your perspective, what
makes a good rail shipper?
Martin Lew (31:51):
That's a very loaded question. I'm gonna answer the
first part of the question. Sothe first part of the question,
how do they know that they'refreight or their product is
appropriate for rail? I don'tthink you know that unless you
go through the discoveryprocess. Obviously, there's very
sort of easy eliminators.
A)do you have the volume to justify
moving by rail, right? Do youhave enough to I'm talking
carload side of that business,not intermodal.
Ben Banks (32:11):
Because rail works best with bulk.
Martin Lew (32:13):
That's exactly right
That's exactly right, right?Historically, we focused more on
the carload side, and then westarted moving more into the
container intermodal side ofbusiness with transloading. But
that that's exactly right. Doyou a, do you have enough
volume? And then b, let's justbe quite frank, do you have the
balance sheet to support thecredit that's needed to get the
Class I Railroad to move foryou?
I can pick up the phone tomorrowand call any 3PL or any broker
(32:34):
and move product from Chicago toLA in two seconds without a
heavy credit background check.Moving rail, there's a fairly
stringent and scrutinizingbackground check that happens or
or or balance sheet sort of thatthey're looking at. So, you
know, a volume b do you have thebalance sheet and c and to me,
this is kind of the morenuancing is, do you have the
expertise to understand all thenuances of rail, right? How do
(32:55):
you source the equipment? How doyou bill out a car?
How do you manageaccessorial and demurrage fees?
How do you negotiate a freightrate? How do you negotiate a
transload rate? How do you enterinto a contract with a leasing
company? How do you manage athree year leasing contract?
How do you manage your fleet?And I say all these things
because those are all realtopics that people have to think
(33:15):
about when they're movingfreight by rail. Now, if they're
using system cars and they'removing, you know, a very
fungible commodity like grain,and it's fairly straightforward,
I don't think there's as muchcomplexity to it. But if you're
moving a hazardous liquid andthere's environmental permits
and there's special types ofrail equipment that you need,
and there's a special type oftransloader you need that can
(33:37):
handle equipment, and then youneed to understand what happens
if for some reason there's aspill or there's some sort of
accident. There's all thesecontingencies that you have to
think about depending upon whatthe product is.
And so my first answer wasdiscovery. I think you really
have to sort of go through thatprocess of piecing together what
that supply chain is like. Idon't think it's as easy as, Oh,
(33:57):
well, I have lumber, so I'mgoing move it, because I know
lumber moves easy by rail. Ithink you really have to think
about what your origin point is,what your destination point is,
what your time requirements are,you know, who are your
customers, how does it changeyour business model? But I don't
think that all those things arehard to figure out if you know
where to go to be able to getthose answers.
(34:18):
Class I railroads, short linerailroads, transloader, lessors,
everybody in the rail ecosystemwants you to be successful.
Everybody wants you to be morefreight by rail. So everyone's
gonna try their best to help youout. Now, some people will have
more time than others to be ableto train you. And unlike
intermodal, there's notubiquitous 3PL on the commodity
side of business that can handleall types of commodities, right?
(34:41):
It's very specialized and veryunique. There is a bit of
navigating you have to do, buthence that's where sort of
interject Commtrex, you know,our job is to be able to help
sort of make those connectionsfor you at minimum for you to be
able to go through thatdiscovery process and have the
conversation. I think that'swhere the very first step is, is
how do I have the conversationand how do I, at the very least,
(35:03):
get all the inputs to be able toput into my model, whether just
on economics alone, just onstraight up economics, does it
make sense? Is rail at leastflat to truck? And even if it's
a bit of a premium over truck,can you justify it as a hedge
against any sort of disruptionon the trucking side of the
business?
And I think for most cases,people can justify, at the very
(35:26):
least, testing it out for atleast a year with some small
percentage of their freight. Andif it works, then they sort of
incrementally will sort of movemore and more freight over. But
if you have the balance sheet,you have the volume, you have
the desire to learn, and yourmanagement is supportive of you
sort of taking some Nothing isrisk free, right? It's called
risk reward for a reason, right?So if you're going to take a
(35:47):
risk on moving to another mode,you just have to build in some
buffer cushion for accessorialsor other issues to come up.
But whatever you may lose inthat buffer, you're probably
going to gain on the other sidethrough flexibility, resilience,
optionality, and to potentiallysort of finding routes that you
may not have access to for,through transloader or other
(36:07):
sort of third parties that canhelp you create more sort of
solutions to look at versus,hey, where are we gonna move
this over the road?
Ben Banks (36:14):
Yeah. If I were to answer that question too, I
would just add on to that. Imean, you just think about the
different modes even withinrail. You have intermodal. It's
the most truck like service thatyou're gonna find.
It's a natural progression outof truck into rail to dip your
toe in rail. The carrier networkor the IMCs that that work in
that space, the Intermodalmarketing companies, they will
(36:34):
hold your hand in a lot of ways.And your platform helps even in
that space now. You're in theyou're in the container space as
well. You get into the carloadspace.
It gets into a lot of the thingsthat Martin and I are talking
about here where theseaccessorials and demurrage and
things like that. You'll havesome of that in the trucking
space. You you're familiar withaccessorials in the trucking
space too, but it's a bit morenuanced in the rail space. But
you have these conversationswith the transloader. You have
(36:55):
the conversation that may makean introduction to a rail
centric 3PL .
Anyway, the the discussionhappens. Have the discussion.
But likely, you know, theintermodal space, think anything
that's gonna be palletized isgonna move well in the
intermodal space. And they haveexpedited intermodal. They've
got standard intermodal.
And, you know, the expeditedspace, it can be within is is
gonna be single drivercompetitive. Not usually team
(37:16):
truck competitive, but it'sgonna be somewhere in between
there. In the boxcar space,still a lot of palletized
freight, but anything that'sbulk is probably something you
ought to be thinking through.Right, Martin?
Martin Lew (37:27):
That's exactly right.
Ben Banks (37:27):
And anything that if you've got three or four
truckloads that you're releasingon a especially on a daily
basis, there's probably anopportunity to explore a
transload model. And bytransload, of course, what we
mean by that is if you're notcurrently rail served, there's
probably a location near youwhere you could dray a small
distance and and have thetransloader unload the truck and
put it onto a railcar of sometype and do the same thing on
(37:49):
the other end. Now that'sadditional touches, additional
cost, But to Martin's point, youhave, an expectation that the
railroads understand that. Sothey're gonna try to price that
as effectively as they can, andthey get the economics of bulk
as well on their end. You know,the message I think for Martin
and I today for sure is thatthere's an opportunity to have a
conversation.
And if you are moving anythingthat's bulk related at all, you
(38:10):
should definitely be thinkingabout rail and a great place to
make those introductions. If youdon't know anybody in the rail
industry, a great place to findsomeone in the rail industry is
to come to Commtrex. Now let'stalk a little bit about outside
of rail, though. You've you'vegot 2.0 here. I assume your
clients have requested you tomove maybe in this broader
direction.
But talk a little bit aboutthat, Martin.
Martin Lew (38:30):
When we started the business, really, the business
objective was to be able to findan easy way to connect the
supply and demand side. And, youknow, eight years ago, that was
through creating a verystructured directory, you know,
and and and the directory wasexactly what I explained, right?
You find a city, then you findthe locations of that city, and
then answer some questions,algorithm runs, and it matches
you up. Now, if you ask me whatis the future of logistics and
(38:55):
what where is that headed? AndI'm not going even just say
logistics, I'm going say thefuture of most industries or
every industry down the road.
I'm going to use the analogy ofwhat you're seeing in human
resources today. Historically,whenever you wanted to find a
job, you would be building aresume and a cover letter for
that human resources coordinatorto be able to evaluate and then
(39:15):
be able to pass you along andget you, at the very least, that
first interview. Nowadays, ifyou're looking for a job, you're
not building a resume and coverletter for a human, you're
building it for an AI algorithm.Whether it be on LinkedIn, or
whether it be, you know,submitting it directly to the
company, AI is probablyfiltering out, at least at the
Fortune 500 companies and mostlarge companies, AI is probably
filtering out 90% of all theresumes. So now, as a human,
(39:39):
you're not thinking about whatis the human sort of component
that I need to think about.
Now you're thinking about whatare those keywords that I need
to do to filter to get past thatvery to get to that first
interview. Now let's think aboutwhy are companies using an AI
algorithm to be able to use as afilter? Well, they're doing it
because they're taking all thedifferent inputs that a human
would, and they're saying, Wecan train an AI algorithm to be
(40:02):
able to do the same thing as ahuman, but at a much larger
scale and much faster. And wecan do it to also ingest a lot
more data points, not just theresume and cover letter, not
just, you know, maybe someLinkedIn profile information,
but you can ingest all theseother data points that could
help you make a much moreinformed decision. So I use that
analogy because that is to meone of the sort of first
(40:24):
frontiers where humans are nowmarketing to an AI agent or an
AI algorithm at scale.
So if you believe that sort ofthat same sort of mental model
of all these data points arebeing ingested and we've trained
an algorithm to be able tofilter out for all these
different roles, why wouldn'tyou think that that same exact
mental model will apply to otherindustries and other facets of
(40:47):
that company? Let's just playthis out a little bit. Let's
just say that same model movesinto supply chain. And let's
just say Fortune 500 companiesstart to integrate different
parts of their procurementprocess and using AI agents or
AI workflows to be able toprocure different products or
different services. Now, as aservice provider, you're doing
(41:08):
the same thing as a jobapplicant.
Now you're saying, okay, now Idon't have to sort of think
about how do I market to thehuman that sits in those seats?
Now you're talking about aprocurement AI agent. That's
exactly right. So if you believethat that is the natural
evolution and everything isgoing to be driven, like I said,
everything is driven by demandside and Fortune 500 companies
(41:29):
are already doing it in theirhuman resources department, why
wouldn't you think Fortune 500companies wouldn't start moving
that exact same model to all theother departments within their
company? So if you're plowingalong with me and you think that
that's the case, it's only amatter of time for that same
model to hit procurement.
So if that same model hitsprocurement, then as a service
provider in supply chainlogistics, now you have to think
(41:51):
about, well, how do I now marketmy service when it's not to a
human that I meet at aconference or a human that I
show up to the door, knock onthe door, or
Ben Banks (41:59):
It's a like key word turn gatekeeper.
Martin Lew (42:01):
A gatekeeper. And now when the gatekeeper is an
algorithm versus a human, nowthe whole way you think about
your business has to changebecause the way you market and
sell and your strategycommercially has to change. So I
say all that to be because aswe're trying to build this
virtual ecosystem, we're tryingto sort of match supply and
demand side. As the CEO of acompany thinking about where the
(42:24):
future is, I believe that thefuture is going to be initially.
Agents will seep into the demandside in different parts of the
procurement process. And then onthe supply side, there's going
be start to be a sort of a slowsort of assimilation to in
everything from, I'm not justtalking logistics, I'm talking
everything from procuringpencils to toilet paper to
services. You're going to startto think about, okay, how do I
(42:46):
now sort of sell to this companythat isn't using a human to make
the decisions, but is using anAI agent to do it? So, you know,
fast forward to Commtrex, we'retrying to piece together exactly
in a marketplace where therepotentially are agents that are
making procurement decisions.How do you now help service
(43:06):
providers market to thoseagents?
And that is part of CommtrexStudio. How do you take all the
data that we're ingesting andcapturing and create a much more
strategic way for the supplyside to actively sort of market
to the shippers? And then also,how do you help shippers in a
world where they're leveragingAI to be able to find those
right service providers? But allof that relies on data, and
that's what we're collecting at,at scale is data.
Ben Banks (43:28):
So the value for the shippers especially, because I
definitely can understand thevalue to the to the supplier of
the services, but you want theabsolute best match for the
shipper. And that's anopportunity for AI. As long as
you have a human being thinkingas human beings do in a million
different ways. But an AI cantake the data and just frankly,
in some ways be smarter thanthan I am if I'm performing the
(43:48):
procurement process from end toend. So introducing AI as we
expect they're going to do, youand I both do, on the
procurement side and matchingthat capability on the vendor
side, just make sure thatthey're getting the right match.
Everybody's matching with asclose to a perfect match as
possible. And that's gonna beincredibly valued to the supply
chain. Because there's no doubteven from a supplier, I'm a
(44:11):
vendor, that's what my companydoes. There's a lot of wasted
conversations that we have, andI only have so many salespeople.
And if they're out there havingconversations with potential
customer and we're not a goodmatch, we just wasted
everybody's time there.
So that's a very interestingconcept, Martin, where you all
are headed. And frankly, I'venot heard anybody else talk like
that yet. So very excited to seewhere Commtrex goes. Martin, we
are out of time. That was thatwas fast.
(44:32):
That was a lot of fun. I'm sothankful for you, Martin. You
are a true problem solver, andI'm thankful for people like you
out in the industry that areseeing the problems that we
have, seeing the demographicshifts, seeing the changes and
from, from a relationship drivenmodel to a transactional model,
and everybody's doing more withless. We need we need solutions
like what you're providing. Sothank you very much for what you
(44:53):
do.
Martin, thanks for coming on theshow today. And for all of those
of you who are listening in thatand you're serving in the supply
chain, we salute you. We knowthat we have a little idea of
what facing every day, and it'sa challenge, but we we
appreciate what you do. You areall problem solvers, and we just
encourage you to keep keep ongoing on. Keep on what's what am
I trying to say, Martin?
Martin Lew (45:13):
Keep on going on. There you go. A little bit out
here,
Ben Banks (45:15):
but keep going. We're counting on you. The United
States needs you, the NorthAmerica needs you, and the
worldwide global supply chainneeds you. And we appreciate you
very much. So thanks for joiningus today, and we'll see you next
time.
Martin Lew (45:27):
Thank you, Ben.
Welcome to problem solvers episode two. My show
highlighting real world supplychain challenges and amazing and
brilliant people overcomingthose challenges for the benefit
of us all. I am Ben Banks,president and CEO of BNSF
Logistics coming to you from thecave at Lou Mink Drive in Fort
Worth, Texas. I've spent orendured, depending on the week,
eighteen years in supply chain.I've seen a lot.
(00:28):
I've done a lot, but still feellike a rookie compared to my
guest. Today's guest lives up tothat assertion as he definitely
makes me question what I've beendoing for the last eighteen
years. Martin Liu, the madscientist behind Commtrex, the
Angie's List of sorts for movingour goods from where they
Martin Lew (00:41):
are to where they need
Ben Banks (00:42):
to be, be the most environmentally friendly mode
possible. Rail, but we're gonnatalk a little bit two point o as
well, broadening that scope abit. Welcome, Martin. Thanks for
coming. So let's just start outjust you a little bit.
Tell us a little about you.Great. Well, thank you very
Martin Lew (00:54):
much for having me. Excited to be here. Problem
Solvers, by the way, is a greatname for this because
ultimately, as logisticians,feel I like our life is all
about solving problems, socouldn't have a more appropriate
name. So just a background onme. My first sort of profession
that I sort of went into beforestarting Commtrex was investment
banking, commodities trading outof law school.
I knew I didn't want to becorporate securities lawyer, so
(01:15):
I decided to go into investmentbanking and worked at Bear
Stearns on the on theirenvironmental markets and coal
trading desk. They were startingan energy trading group in
Houston. And shortly thereafter,the financial crisis happened.
JPMorgan acquires Bear Stearns,end up staying with JPMorgan for
another about seven years,leading origination for their
coal and environmental marketsgroup. Had no idea that I would
(01:37):
eventually end up trying tobuild a platform that connects
all rail service locations, youknow, moving several million
tons of coal per year, I was noton the logistics team.
I was on the commercial side ofthe business, pushing together
the different deals with thecoal mines and the utilities and
shippers. Really the the theconcept was how do you find the
best arbitrage opportunity forthe different types of coal that
(01:57):
we're moving, whether it beCentral Appalachian Coal,
Illinois Basin coal, Colorado,UNC coal or PRB. And what I
found while doing that was therewere several blind spots within
the rail supply chain or withinrail logistics that made it very
difficult for us to be able tomove quickly. And in the game of
trading, particularly sales andtrading in the bank side, the
two really competitiveadvantages that you have are are
(02:19):
really two things. Informationand insight and the ability to
be able to move quickly.
Obviously, balance sheet, youknow, that goes without saying
that you need a balance sheet tobe able to execute a lot of
these different arbitrageopportunities. But when thinking
about the real competitiveadvantage you have, it's, you
know, where can you findfragmentation or dislocation in
these different industries? Andas a trader on the coal desk, it
(02:40):
was always very difficult for usto be able to find rail cars if
we needed rail cars quickly, ifwe needed to find a terminal, a
port, a transload facility, ifwe needed to store cars -
a basic rate was difficult. Soafter hearing these complaints
and, you know, obviously havinga lot of friends on the
different various facets orsides of the industry, whether
it be, you know, folks at therailroads, whether it be
classmen or short line, or folksthat are at terminals, or folks
(03:02):
that are at leasing companies,everybody, you know, all pretty
much had the same complaint wasthere was a lack of visibility
and transparency to be able toidentify these different sort of
service providers and assets.And so to me, the light bulb
went off in 02/1415 that at somepoint, somebody needed to create
a platform or was gonna create aplatform that connected all
these rail server locations.Because, you know, when you
(03:23):
think about trucking, loadboards have historically been
around ocean freight, very, veryliquid, very visible market,
barging obviously, you know, notso much very opaque markets
similar to rail. But at somepoint, you know, when you think
about what's moving on rail, wegotta make it know, my thought
was there has to be an easierway to be able to move freight,
you know, on the one or twodifferent modes of
transportation by land.
Ben Banks: Right? Couldn't be any harder. It's only up from here. (03:44):
undefined
Martin Lew (03:45):
Couldn't be harder. Yeah. So that was the the the
real sort of genesis behind theidea was, number one is how do
you take all these fragmentedand disparate locations and put
them into one virtual sort of ordigital ecosystem, you know,
effectively creating almost kindof a virtual railroad, which,
you know, when you have anindustry that's been around so
long, you have all thesedifferent locations, but no
(04:05):
one's brought visibility to it,number one.
Number two, if you're thinkingabout the future down the road
and thinking about really wherethe value of a digital ecosystem
place is really two things. It'sgonna be the ability to be able
to connect the supply and thedemand sides of the industry,
number one, and the ability to,number two, is be able to
connect all the dots throughdata, which will provide
insights, which eventually willprovide more capabilities for
(04:27):
people to be able to movefreight, in theory, in a smarter
and more effective and efficientway. Back in 2015, you're
looking fast forward to now, andyou thought about sort of
artificial intelligence and whatdo you need in order to really
power artificial intelligence?You really need two things,
right? You need compute andpower, number one, and then you
need data, number two.
To me, rail is sitting on atreasure trove of data because
(04:48):
of all the different sort ofeverything from the CLM, ETA,
Waybill data. I mean, there'sjust so much data that is
sitting within the rail system,but it's so untapped, and no one
was taking and synthesizing allthose different data points to
be able to create a very clearpicture of how different freight
can be moved. So that was theconcept behind Commtrex, was how
do we create this sort ofdigital platform that connects
(05:09):
all the different serviceproviders? So we started first
with a railcar storagemarketplace and a railcar
leasing marketplace. The verysimplistic view was in a bull
market, leasing would always dowell, in a bear market, storage
would do well.
When you think about startupsand building a company, in
particularly sort of olderindustries, you always want to
figure out sort of where you canadd value on the peripheral, on
(05:31):
the outside, and work yourselfin versus going right after sort
of what you may believe is thetrue problem to solve. So for
me, the idea was, well, if I canstart connecting the dots with
the short lines across NorthAmerica, there's only, know, 600
short lines, at least it's avery defined market. And class
twos and class threes play avery integral role in being able
to support shippers movingfreight, particularly on the
carload side of business. Ithought that that would be a
(05:53):
great place to start becauseshort lines, are always very
open to new ideas, and they'reopen to any sort of support or
help they can get to grow theirvolume in their business. Versus
starting with the class andrailroads and going to the class
and railroads and saying, hey.
I have a great solution for you.Let's start with the Class twos
and Class threes. And then onthe other side of that was
trying to get as much railequipment on as possible, and I
started with the subleasingmarket, which was because I was
(06:13):
in the coal market, I knew allthe utilities, and, know, by
volume, coal moves more thananything else. So I went to all
the the friends that I had in inthe coal side of the business
as, hey, would you put your carsonto sublease? You know, would
you store your cars on thesystem?
So, you know, by default, I hada kind of a pre installed user
base of luckily one of thelargest volume, by bike volume
commodities that move on rail,which is coal. So I had a very
(06:34):
coal sensing platform to beginwith, and then eventually had to
sort of move out of that. So wewent from storage and leasing,
then we sort of, you know, therewas a lot of coal units that
were being retired. So myfriends at coal were coming to
me saying, can you help us scrapall these cars? So we built a
marketplace for, you know,effectively used rail equipment
to buy and sell, and theneventually moved to
transloading.
(06:55):
And once we sort of, you know,moved into transloading, that
was really where our focusshifted for pretty much the last
four or five years. And timingwise, it really sort of
coincided with the beginning ofthe pandemic. We launched
transloading at the end of 2019. The pandemic came around
at the 2020, and our transloadmarketplace was probably three
to four months old. And one ofthe things we optimized for is
(07:16):
it to be number one on Google,which we're number one on Google
in over 2,000 cities in NorthAmerica.
So when capacity started gettingtight at all the major ports,
what do people do is they go toGoogle and they type in
transloading terminals, portsand whatever city it may be, you
know, and people were lookingfor secondary and tertiary ports
to be able to move theircontainers and their capacity
to. So we were the one placethat existed that connected all
(07:38):
the dots. So timing wise, thatdid accelerate our growth and
that accelerated our ability toget more shippers onto the
system and then also sort ofmade it much easier for people
to get more of the supply sideonto the system. And so today,
you know, transloading hasreally become our main focus
because it's the one thing thatties all the modes of
transportation together. Andwhen thinking about where do you
(07:59):
sort of add the most value or asa platform where we add the most
value, it's in really being ableto help shippers think about how
can they move more freight byrail.
Because if you're a shippermoving primarily freight by
truck and you got caught offguard during the pandemic and
you want a little bit moreflexibility, resilience in your
supply chain, you know, youshould probably think about
diversifying and maybe moving25% of your freight over to rail
(08:20):
at minimum just to have someoptionality
Ben Banks (08:23):
Sure.
Martin Lew (08:23):
Or to hedge.
Ben Banks (08:24):
So I wanna double click a little bit on something
that I don't think I, in my ownmind, I really put all the dots
together. So you roll this thingout just a matter of months
before a worldwide shutdown.What's going through your head
just right let's just chase thatrabbit for a moment. A small
business owner going out on yourown for the first time, moving
into the transportation space,and really in 2019, things
(08:45):
aren't going well intransportation space.
You've got a freight recessionas we called it in 2019, a solid
four quarters of negative growththere. You're rolling this thing
out and then the whole worldshuts down. How surprising was
it to you that this actuallyended up being a tailwind for
your platform?
Martin Lew (08:59):
The first reaction as a founder of an investor
backed startup was, what happensif capital markets dry up and
I'm not able to raise morecapital to be able to continue
to build? You know, every techstartup has a roadmap, one, two
years out, and you're executingquarter by quarter, and
obviously you got to be a littlebit flexible in how you're
(09:20):
moving, but no one anticipates aglobal pandemic to shut the
entire world down. It's not likeit happened over a long period
of time. It happened over a fewmonths. What was going through
my head was first, capital wise,what do you do to be able to go
find additional capital if youneed to be able to effectively
add more capital to the balancesheet to keep growing, number
(09:40):
one.
And number two, strategically,how do you navigate in this new
environment? And it was veryclear to me that what we were
building with transit, you know,it took about nine months for us
to really sort of build out themarketplace, you know, three or
four months of user journey,three to four months of sort of
mapping out the functionalityand features. And this isn't
something that has been donebefore, so you really had to
(10:02):
understand the nuances oftransloading. And transloading,
you know, is quite diverse inwhat it can do. Well, on the
carload side, just by nature,there's over 12,000 commodities
or 12,000 STCC codes.
So, think about all thedifferent types of equipments
and permits and different sortof ways you can move freight.
And then you have the wholecontainer side of the business,
which is completely different.So, that was number one. And
number two was, Oh my God, thisis actually gonna be a
(10:23):
value add. There's actually sometailwinds here for us.
So, how do you capitalize onthis real demand for people to
find new capacity and be able todo it in a way that really is
supportive to shippers trying tofind new capacity while also
providing sort of a way for thetransloaders and terminals and
ports to be able to find thedemand. Because at the end of
the day, you know, this is nodifferent than any other
(10:45):
marketplace, right? Somarketplace is either gonna be
supply side driven or demandside driven. In our industry,
shippers are the demand side,and shippers drive everything in
logistics. If you have astrategy, you have to make sure
it aligns with the demand side,and demand side of our system is
completely free.
So since day one, we always knewwe wanted to create very low
(11:06):
friction for demand side to jumponto the system and utilize it,
so we've never monetized thedemand side. It's always been
about the supply side, and thesupply side subsidizing the
demand side has been able to usto be able to, now we have over
2,500 shipping companies thatuse our system. We've never
invested a dollar into reallyuser acquisition. We've never
advertised. Everything hasreally been organic and through
(11:27):
referrals and marketing and someconferences, really thought
leadership and content has beena way we've been trying to get
out there and educate shippers.
But I would say that's probablythe second thing that came up
with the pandemic is, wow, nowwe're actually adding value, and
it's very clear what the valueprop is for us is providing
visibility and connectivity. Andwhat my next sort of idea was,
how do you take that, and thennow that you're moving into a
(11:49):
world where AI is becoming moreubiquitous and pervasive, now
you have to kind of reimaginewhat you think the future of
logistics is going to be like.So that's the hardest part to me
of being an entrepreneur is youhave to build for the future
while building for today. Now,with AI moving so fast, I don't
know what six months, twelvemonths, what AI is going to look
like. Mean, even, you know,every week by week, ChatGPT or
(12:10):
Perplexity or Cloud, they'readding new features and
functionalities that even threemonths ago, you would have
imagined they'd been able tobuild.
So everything that we builtbefore, at minimum, everything
we did was all about to try toaggregate as much data and
information on the supply sideas possible because at the end
of the day, that information iswhat fuels the visibility and
the information that's gonnahelp shippers make a better
(12:31):
decision as to how can theytake, you know, convert some
truckloads to rail loads acrosstheir supply chain.
Ben Banks (12:36):
So when you think about your target demographic of
your platform, initially, it wasstarted out basically you were
targeting you just ten yearsprior. You're thinking about
yourself and what would havebeen so much easier if you'd had
access to a Commtrex at thetime. And of course, you're
thinking about, and even the waythat you talk, and sometimes you
and I talk outside of somethinglike this, and you can tell
(12:57):
we've been in the industry for along time. So all the words that
we're using makes a lot of senseto us. But the reality is I'm
even as I'm sitting herelistening to you, I'm thinking
about there's a portion of yourclientele that's just like you
and me.
We are entrenched in supplychain. We have at least a
tertiary knowledge of what raildoes, how it works, and we're
coming to Commtrex to say,please help me find an
(13:17):
alternative port. It's acapacity play. It's a reducing
friction play. And there's allall types of things there for
those of us who've been in thesupply chain.
But there's also a and probablypeople listening to this podcast
even today, there are a lot ofindividuals who don't know a lot
about rail. They don't know alot about how to even get into
rail and what do the railroadsdo and all that type of thing.
(13:40):
But they are very aware of 2021and what that did to them, where
you had 50% tender rejections inthe truck market, and if you
were moving reefer freight, itwas 75% tender rejections.
They're fully aware of the painof this whipsaw of capacity in
the trucking market. Is there anopportunity for those folks as
well?
When you are building thisplatform, are you also building
(14:02):
it to help folks that knownothing about the rail?
Martin Lew (14:04):
It's a great question. To answer that
question, let me back up and letme talk about the investment
thesis behind the concept whenwe started this business. There
were two primary investmentthesis drivers for us when we
started the business, and thisis what when I was articulating
the vision to our investors,this is what I was sort of
explaining. Number one was thedemographic shift. By 2025,
which is today, 75% of theglobal workforce will be
(14:26):
millennials.
Now, millennials are verydifferent than baby boomers and
different than Gen Xers. So bythe time you have sort of now
you're at 2025, you have babyboomers sort of moving out to
the retirement. Gen X is a very,very small generation squeezed
in between millennials and babyboomers. But once you get to
2025 , you really now have yourfirst generation of digital
natives, And these are peoplethat grew up with iPads and
(14:49):
iPhones and technology was thefirst thing in their mind when
they're thinking about solving aproblem. So if that is the
demographic that's gonna be themajority of the workforce, you
know, quite frankly, we need tobuild tools and have information
at their fingertips that canhelp them make decisions the way
they're used to makingdecisions, which is taking a
bunch of data points, analyzingit, looking at their options,
and then being able to executebased upon those decisions.
(15:11):
Very, very differenthistorically where you grew up
in the industry, you had yourrelationships, you had your
networking events, and you werecalling your buddy at the
railroad and they were givingyou some pricing. You're like,
okay, great, well, the pricingworks out, let's do it. The next
generation just functionsdifferently. And back in 2016,
2017, when I started thisbusiness, that's exactly what I
was building for. So that wasnumber one.
Investment thesis number one wasyou have this demographic shift.
(15:34):
Whether industries want to ornot, they're going to force
change. And there's otherbehavior patterns as well that
sort of move into that, which ishow long millennials stay in a
job is two to three years, andhow they think about the first
thing they do when they wannasolve a problem, you know,
historically is Google. Maybethat's now gonna shift over to
ChatGPT and other AI platforms.And then number two was really
data.
(15:54):
And back then, I knew that youhad to be able to create a very,
you know, structured andthoughtful way of collecting
data and content to be able todo two things. Number one, to be
able to educate the nextgeneration of shippers about
rail through thought leadership,through courses. So we created
this thing called the ResourcesCenter, and we started out with
(16:15):
Rail one on ones. And so wecreated Rail one on one for
transloading, for storage, forleasing, for rail services, for
warehousing. And then we createdthis thing called Ask the
Experts, which to me was at thevery beginning of five or six
years ago was how do you takeall of this intellectual
property and knowledge that hasbeen collected over these
several decades, and then takethat corpus of knowledge and put
(16:35):
it into a digital platform sothat one day you can effectively
create almost a super hyperintelligent sort of AI brain
that can synthesize and take theknowledge that has been
accumulated over these pastdecades and then help synthesize
it for the next generation ofshippers.
And in order to do that, no onereally sort of created, for lack
of a better word, a time capsuleof this information. And
(16:57):
succession planning also was oneof the reasons why I started
this business, because Iinterviewed about seven to eight
different shippers before I evenraised my first dollar of
capital. And I said, How are youthinking about succession
planning? And what was veryclear is on the shipper side of
the business, successionplanning wasn't something that
was top of mind. And if that wasthe case and all of this sort of
brainpower and knowledge wasmoving out, to me, it was a very
(17:18):
obvious thing that someone hadto create this repository of
information so that thisknowledge and information could
live on past the generation ofpeople that had sort of a fully
built industry.
So those were the two thingsthat were really sort of at the
core of our idea. Now, I realizethat AI would come on so strong
and so fast and heavy? No, Ididn't, but I knew that
eventually AI was gonna be apart of the platform solution.
(17:40):
That's exactly right. Back then,the idea was let's launch a
newsletter.
So we launched our firstnewsletter in 2019, and let's
create user generated content,and let's go out to the market,
have shippers ask questionsabout what they wanna learn
about, and let's go out to alltheir subject matter experts and
ask them to answer thequestions. So, you know, since
2019, we've created, you know,several thousand pages of
content information, laying thefoundation to be able to feed
(18:00):
that into a large language modeland sort of, you know, sort
of an AI brain.
Ben Banks (18:04):
What do you think has been the impact on rail to the
fact that we're talking aboutthis shifting demographic, which
as you talked about, you've got,you know, different habits and
different approaches and how,the millennials approach work,
how they approach exploringalternative solutions to their
problems. And it's very like yousaid, it was Google at first,
and it moves into more of a chatworld, it's gonna move into AI
as we see this progress versushow the baby boomers and the the
(18:26):
gen xers, they approach this.But over time, there's also this
just reality, and so I'm doubleclicking a little bit on what
you said there, there's been alot of retirements going on as
this knowledge has been leavingthe industry of how to rely on
rail. And no doubt, as you and Iwere growing up in the industry,
having multimodal expertise andand at your fingertips, you
(18:48):
could call that buddy at therailroad, say, hey, truck didn't
show up.
I've got six truckloads worth offreight sitting. I've got a rail
served dock here. Hey, let's seeif can get a boxcar in here in
the next couple of days. Thatwasn't an unusual conversation
back then. Now that thatknowledge and experience and
those relationships have leftthe industry, what's been the
impact on rail from yourperspective, what you've seen?
Martin Lew (19:09):
This isn't just for rail, but I think for any
industry that's undergone thattransformation, you go through
them from a very relationshipdriven process to a very
transaction oriented process.You go from who do I know and
who do I trust and who do Ithink could do the best job to
who do I think can provide thebest price? And economics has
always been an important part ofthe decision making process when
(19:30):
you're piecing together thatdelivered cost. But I think if
it was apples to apples, and myboss used to always say, your
job is to win the tip ball. Youknow?
And a lot of times in business,particularly in transportation,
it's really who's gonna win thattip ball, and typically the tip
ball is gonna be go to therelationship. If that's the
case, what happens in a worldwhere relationships aren't as
(19:51):
key? And that's the beauty tome, the beauty of AI is a lot of
the time that's spent on thecommercial side, on the
administrative processes, on theoperational processes, you know,
just entering data into a CRMsystem, doing analytics. If you
can apply AI to be able to solvethose problems, what you do is
you free up time for thosecommercial team members to focus
on the higher EQ work and focuson that relationship building.
(20:13):
Because I think in a new worldwhere digital first and then
relationship second, there'sgonna be a lot more concerted
effort that has to be investedinto that relationship than
before because the generationthat we're moving to now wants
to be home by 05:00.
They don't wanna be out atconferences or going to the
Masters or the NBA Championship.They don't want to be doing that
as much because the prioritiesare different. And so if that's
(20:36):
the case, then you have to be,as a commercial person, you have
to be a lot more thoughtfulabout how you're spending your
time, and that's where I thinkAI can be interjected and really
sort of can pick up the slack orreally sort of automate a lot of
those workflows for thecommercial people to focus on,
number one. And number two, onthe shipper side of the
business, I think it alsobehooves them to be able to
still continue to build thoserelationships. Now, the average
(20:58):
amount of time that a millennialstays in a job, it stays about
two to three years.
And if if if you believe thatthat statistic is true, the
obvious thing is, well, how arethey ever gonna build
relationships if they're movingfrom job to job or from role to
role? Number one, how are theygonna build those long term
relationships? Right? And andnumber two, if they aren't going
to be in those roles that longand they aren't going to have
that sort of long term tribalknowledge and that long term
(21:19):
relationships, how do you stillcreate a very effective and
efficient sort of supply chainprogram when it's no longer
relationships driving everythingand it's more information and
data and algorithms that aresupporting the decision making.
So that's why, you know, I thinkwhere we sit today,
relationships are going to haveto be there's going be more
investments into it because youjust have a generation that
(21:42):
thinks about it or functionsdifferently under that dynamic.
But at the same time, that'swhere AI steps in. And that's
what I'm super excited about ishow AI can really sort of jump
into all these different aspectsof commercial operations, back
office, mid office, and reallysort of free up time for humans
to focus on problem solving,strategizing, a higher EQ
(22:02):
relationship work. Really, tome, the things that today AI
can't replicate and the thingsthat don't, you know, really is
is unique to humans.
Ben Banks (22:10):
Right. So describing the problem that we're seeing
here and that Commtrex isdefinitely trying to tackle, you
have all of these headwindsreally to the supply chain
industry overall. And maybe felteven more on the rail side and
get to that here in a moment,just circling back to what you
were saying earlier. But thereality is with all of that
knowledge has left the building,if you will, in the industry.
(22:30):
Knowledge of barge, knowledge ofrail, really the easy button
because it's becometransactional, it's become
truck.
And despite what's been going onhere recently, the the reality
is is that truck continues togrow. And that's problematic
because as these shifts comeback and forth, these the
pendulum swings from a capacitystandpoint, you have shippers
(22:52):
that get hung out to drivebecause their truckers aren't
showing up. There's three toone, two to one for every
available trailer. And ifthey're used to hitting that
easy button, might be workingright now, but it didn't work in
2021 very well. It wasn'tworking in 2022.
It didn't work in 2018 verywell. And as you think about the
long term trajectory of thetrucking industry itself,
whether you argue right now thatthere's a driver shortage or
(23:14):
not, everybody admits that therewill be over time. So continue
to hit the easy button because Idon't know how to hit any other
button. And that's really whereit seems like Commtrex is trying
to step into. You know, folkslike you and me, we can use
Commtrex for sure.
We know how to use it.Specifically, how does it work?
So if you're a new user toCommtrex, how does it work? I've
(23:35):
got an opportunity to movesomething from where it is to
where it needs to be. How doesCommtrex work?
Martin Lew (23:40):
The typical workflow for a shipper is most shippers,
just as they are in theirpersonal life, they'll typically
start at the Google toolbar. Andthen they'll go to the toolbar
and they'll type in anytransloading. warehousing, you
know, terminals ports, and thenthey'll type in the city. So,
you know, call it Charleston,Mobile, Atlanta, Houston, you
know, whatever the city is.Because Commtrex is organic
position number one in over2,000 cities, Commtrex is gonna
(24:02):
the first exact, that's gonna betypically be the first link they
see. So they'll say, forexample, you know, 30 top
transloaders in Houston.
So they'll click into that linkand then they'll be able to see
a whole list of transloaders,terminals, ports, warehouses
that are in that area. And whatwe effectively did is we just
organized a bunch of informationand data that wasn't readily
available for. So we take allthat information, we take all of
(24:24):
our subscribers, there's twodifferent categories of
subscribers, there's a featuredand a verified. And just as you
would think in a directory, wecreate a profile page that has
all this different informationon each particular facility. So
everything from how many daysit's served by rail, what type
of transloading equipment doesit have, safety features, what
type of services, do you haveoutdoor, indoor storage, and
(24:45):
there's a whole profile that thelocation can put on about
themselves.
But very, very fundamentalmarketing advertising 101 is if
your customer can't find you,you're not gonna get that
business. So if you believe thatthat sort of very basic core
tenet of marketing is the case,our job is to kind of get these
particular transloaders,terminals, and ports, and
warehouses in front of theseshippers as quick and as easy as
(25:08):
possible, number one. And quitefrankly, when you think about
sort of, you know, all thedifferent industries that exist,
this industry is the one thathas invested heavily into
digital marketing or digitalstrategy. So That's right. You
chuckle because that's probablyan understatement.
But I think people realize, youknow, because historically, if
you think about transloading asan industry or just, you know,
terminals, ports, andwarehouses, you know, you're
(25:29):
really capturing business thatis moving within 150 miles of
that area. And, you know, youprobably have 10, 15, 20
customers, and Pareto'sprinciple, 20% of those
customers are 80% near volume.So, so long as that capacity is
moving, you know, you'reprobably sitting fairly well.
But what happens in a worldwhere you don't have that same
sort of luxury of a shipperbeing that dedicated to that
(25:52):
specific region. And instead offocusing on one region, now
they're taking their supplychain and spreading instead of
having 3 or 4 hubs across thecountry, now they have 20
different mini hubs.
So that capacity that they usedto use your location for 40%,
50% of their business in theSouth is now 10% because now
they're diversifying their mixand they're trying to create
some flexibility and sort ofresilience in their supply
(26:14):
chain. Now, all of a sudden,your capacity opens up and you
have to figure out a way to gofind new business, and you have
to be a little bit moreinnovative about how you get
people's attention. So, if youbelieve all that's the case,
then that's where our platformcomes into place, because you
list your location on ourplatform, we create a very easy
way for shippers to find you.And then once the location is
found and a shipper wants toeither connect with you or a
(26:35):
shipper just wants to sort of goto a city page and then find a
location that matches them,letting the algorithm run, the
shippers will then fill out whatwe call a Transload Request. And
a Transload Request is gonna beabout 11 different data points.
So it's gonna be origin,destination, are you moving
containers, are you movingcommodities, then we have a STCC
code finder. And then what's thevolume, what's the term, what
(26:56):
specialty requirements do youhave? Do you need trucking? Do
you need warehousing? You know,all the basic high level
commercial parameters that you'dwanna know as a
Ben Banks (27:02):
And once again, this is free for the shippers.
Martin Lew (27:04):
It's a 100% free for the shippers
Ben Banks (27:05):
They come in, they can fill out 11 questions that
they hopefully, I assume, andyou can correct me if I'm wrong,
but the questions that are beingasked could be answered by
anybody. You don't have to bedefinitely don't have to be a
rail expert, for instance.
Martin Lew (27:17):
No. No. No. As long as you know where your product
is starting and where it'sgoing, what the volume is, what
exactly, know, it is. Usually,you have a safety data sheet
that can can spell out exactlywhat that seven digit STCC code
is.
As long as you know the basicparameters of what you wanna do,
that's good enough to be able tostart the conversation with the
transloader. Now, and I alwayssay, we're match.com. We're not
eHarmony or Tinder. Thatprobably dates me, the fact I'm
(27:39):
saying those things. But thevote for match.com for for, you
know, initially rail, but nowsort of more sort of land-side
logistics.
Our goal is to be able toconnect the shipper with the
supply side that can help managetheir their movement, but we
don't intermediate it. We're nota 3PL. We're not an exchange to
where, you know, we have astandardized contract and
everything flows through ourmarketplace. Our goal is to be
(28:01):
able to get the shipper and thesupply side to match up, you
know, after the sort of basicfew correspondences, then they
take it offline and execute acontract together. And I think
that was one of the reasons whyI was able to be able to get so
much adoption in the industry soquickly is because they viewed
us as a matchmaker versus, youknow, a broker or an
intermediary.
Historically, if you're a brokeror if you're a 3PL, you're
(28:22):
typically not allowing thesupply side to know who your
shipper is. You're giving allthe details and facts of what
they wanna move without tellingthe supply side who the shipper
is. We're the opposite. Onceconnect with the transloader,
once the shipper connects to thetransloader we want that sort of
shipper to disclose who they areto the transloader or to the
provider of the short line, thewarehouse, the Class I railroad,
(28:43):
and you want that sort ofinformation flow to happen so
that the transloader or thestores on the supply side
quickly knows, A, is this a newcustomer to rail? B, is this an
existing customer?
C, do they already move by railor are they new by rail? Just
those very basic details arevery helpful. So, some of the
questions we ask when you're amember are, you know, have you
ever moved by rail before? Ifnot, you know, do you have
existing rail contracts? Do youhave rail cars in your fleet?
(29:07):
When you fill out a membershipprofile, we're trying to capture
all the basic details of who youare as a shipper, how big is
your fleet, what type of cars doyou have in your fleet? If you
don't know the answer to thisquestion, you can still
register. But the moreinformation you give the system,
the better the match. That'sexactly right. So, you know, in
order for a marketplace tofunction, you need effectively
(29:27):
clean, high integrity data onthe supply side so the shipper
knows what they're looking for.
And then conversely, you needthat on the shipper side so that
as the algorithm is gettingsmarter over time, and this is
even pre AI, you can match upthe shipper and their needs and
services much better with whothey're looking for on the
service provider side. Verydifficult business model.
Marketplaces are probably one ofthe hardest models. Anybody who
(29:48):
asks me, Hey, I want to start amarketplace for insert the
industry, I typically dissuadethem to do it because I think
having one customer is hard, butthink about having two customers
that have two completelydifferent motives and
objectives. And then you alsohave to think about creating
functions and features that canservice both, and you're
constantly updating thesefeatures and functions to create
a very fluid technology.
(30:09):
But if you can nail themarketplace model, you've got an
amazing business because then ifyou think about the 10 largest
tech companies in the world, 7or 8 of those 10 companies are
marketplace businesses. Thinkabout Google, Apple, Facebook,
Amazon, these are allmarketplaces. And why are they
so critical to the industriesthat they serve? It's because
it's extremely difficult tobring the supply and demand side
(30:29):
into one digital ecosystem andget them to use that as their
sort of first place to go to forwhatever service or product
they're looking for. And that'sbeen sort of the North Star for
us this whole time is how do youcreate easy enough functionality
to where someone who doesn'tknow how to move by rail can
jump into the system?
And if they want to learn aboutrail, you have rail 101s you
have resources center, you haveask the experts, you have all
(30:51):
these different sort of topicsthat could help inform the
shipoer. Because at the end theday, nobody's gonna move freight
by rail if they don't understandit, because they're gonna have
to go to their boss, and theirboss's boss will say, Hey,
listen, that 20% of our freightthat's currently moving all by
truck, we wanna actually shiftthat over by rail. And things
like accessorials and demurrage,you know, and all these
different fees that sort of popup.
Ben Banks (31:12):
Yeah. A plethora of words that are unique to this
industry for sure. Let's doubleclick on that right there.
There's an assumption inbasically our entire
conversation to this point thatwhen they went to Google and
Commtrex came up that as theydrilled down in this, now you're
you're expanding well beyondrail at this point too. But if a
rail solution is the underlyingsolution that Commtrex is
building, how does a shipperknow that their type of freight
(31:37):
is potentially a good fit forrail?
So as I'm Commtrex comes up, I'mlogging in there. I'm starting
to fill out this form. Maybe Idon't even fill out the form
because I just assume rail isnot a good fit for me because I
don't know anything about it. Sofrom your perspective, what
makes a good rail shipper?
Martin Lew (31:51):
That's a very loaded question. I'm gonna answer the
first part of the question. Sothe first part of the question,
how do they know that they'refreight or their product is
appropriate for rail? I don'tthink you know that unless you
go through the discoveryprocess. Obviously, there's very
sort of easy eliminators.
A)do you have the volume to justify
moving by rail, right? Do youhave enough to I'm talking
carload side of that business,not intermodal.
Ben Banks (32:11):
Because rail works best with bulk.
Martin Lew (32:13):
That's exactly right
That's exactly right, right?Historically, we focused more on
the carload side, and then westarted moving more into the
container intermodal side ofbusiness with transloading. But
that that's exactly right. Doyou a, do you have enough
volume? And then b, let's justbe quite frank, do you have the
balance sheet to support thecredit that's needed to get the
Class I Railroad to move foryou?
I can pick up the phone tomorrowand call any 3PL or any broker
(32:34):
and move product from Chicago toLA in two seconds without a
heavy credit background check.Moving rail, there's a fairly
stringent and scrutinizingbackground check that happens or
or or balance sheet sort of thatthey're looking at. So, you
know, a volume b do you have thebalance sheet and c and to me,
this is kind of the morenuancing is, do you have the
expertise to understand all thenuances of rail, right? How do
(32:55):
you source the equipment? How doyou bill out a car?
How do you manageaccessorial and demurrage fees?
How do you negotiate a freightrate? How do you negotiate a
transload rate? How do you enterinto a contract with a leasing
company? How do you manage athree year leasing contract?
How do you manage your fleet?And I say all these things
because those are all realtopics that people have to think
(33:15):
about when they're movingfreight by rail. Now, if they're
using system cars and they'removing, you know, a very
fungible commodity like grain,and it's fairly straightforward,
I don't think there's as muchcomplexity to it. But if you're
moving a hazardous liquid andthere's environmental permits
and there's special types ofrail equipment that you need,
and there's a special type oftransloader you need that can
(33:37):
handle equipment, and then youneed to understand what happens
if for some reason there's aspill or there's some sort of
accident. There's all thesecontingencies that you have to
think about depending upon whatthe product is.
And so my first answer wasdiscovery. I think you really
have to sort of go through thatprocess of piecing together what
that supply chain is like. Idon't think it's as easy as, Oh,
(33:57):
well, I have lumber, so I'mgoing move it, because I know
lumber moves easy by rail. Ithink you really have to think
about what your origin point is,what your destination point is,
what your time requirements are,you know, who are your
customers, how does it changeyour business model? But I don't
think that all those things arehard to figure out if you know
where to go to be able to getthose answers.
(34:18):
Class I railroads, short linerailroads, transloader, lessors,
everybody in the rail ecosystemwants you to be successful.
Everybody wants you to be morefreight by rail. So everyone's
gonna try their best to help youout. Now, some people will have
more time than others to be ableto train you. And unlike
intermodal, there's notubiquitous 3PL on the commodity
side of business that can handleall types of commodities, right?
(34:41):
It's very specialized and veryunique. There is a bit of
navigating you have to do, buthence that's where sort of
interject Commtrex, you know,our job is to be able to help
sort of make those connectionsfor you at minimum for you to be
able to go through thatdiscovery process and have the
conversation. I think that'swhere the very first step is, is
how do I have the conversationand how do I, at the very least,
(35:03):
get all the inputs to be able toput into my model, whether just
on economics alone, just onstraight up economics, does it
make sense? Is rail at leastflat to truck? And even if it's
a bit of a premium over truck,can you justify it as a hedge
against any sort of disruptionon the trucking side of the
business?
And I think for most cases,people can justify, at the very
(35:26):
least, testing it out for atleast a year with some small
percentage of their freight. Andif it works, then they sort of
incrementally will sort of movemore and more freight over. But
if you have the balance sheet,you have the volume, you have
the desire to learn, and yourmanagement is supportive of you
sort of taking some Nothing isrisk free, right? It's called
risk reward for a reason, right?So if you're going to take a
(35:47):
risk on moving to another mode,you just have to build in some
buffer cushion for accessorialsor other issues to come up.
But whatever you may lose inthat buffer, you're probably
going to gain on the other sidethrough flexibility, resilience,
optionality, and to potentiallysort of finding routes that you
may not have access to for,through transloader or other
(36:07):
sort of third parties that canhelp you create more sort of
solutions to look at versus,hey, where are we gonna move
this over the road?
Ben Banks (36:14):
Yeah. If I were to answer that question too, I
would just add on to that. Imean, you just think about the
different modes even withinrail. You have intermodal. It's
the most truck like service thatyou're gonna find.
It's a natural progression outof truck into rail to dip your
toe in rail. The carrier networkor the IMCs that that work in
that space, the Intermodalmarketing companies, they will
(36:34):
hold your hand in a lot of ways.And your platform helps even in
that space now. You're in theyou're in the container space as
well. You get into the carloadspace.
It gets into a lot of the thingsthat Martin and I are talking
about here where theseaccessorials and demurrage and
things like that. You'll havesome of that in the trucking
space. You you're familiar withaccessorials in the trucking
space too, but it's a bit morenuanced in the rail space. But
you have these conversationswith the transloader. You have
(36:55):
the conversation that may makean introduction to a rail
centric 3PL .
Anyway, the the discussionhappens. Have the discussion.
But likely, you know, theintermodal space, think anything
that's gonna be palletized isgonna move well in the
intermodal space. And they haveexpedited intermodal. They've
got standard intermodal.
And, you know, the expeditedspace, it can be within is is
gonna be single drivercompetitive. Not usually team
(37:16):
truck competitive, but it'sgonna be somewhere in between
there. In the boxcar space,still a lot of palletized
freight, but anything that'sbulk is probably something you
ought to be thinking through.Right, Martin?
Martin Lew (37:27):
That's exactly right.
Ben Banks (37:27):
And anything that if you've got three or four
truckloads that you're releasingon a especially on a daily
basis, there's probably anopportunity to explore a
transload model. And bytransload, of course, what we
mean by that is if you're notcurrently rail served, there's
probably a location near youwhere you could dray a small
distance and and have thetransloader unload the truck and
put it onto a railcar of sometype and do the same thing on
(37:49):
the other end. Now that'sadditional touches, additional
cost, But to Martin's point, youhave, an expectation that the
railroads understand that. Sothey're gonna try to price that
as effectively as they can, andthey get the economics of bulk
as well on their end. You know,the message I think for Martin
and I today for sure is thatthere's an opportunity to have a
conversation.
And if you are moving anythingthat's bulk related at all, you
(38:10):
should definitely be thinkingabout rail and a great place to
make those introductions. If youdon't know anybody in the rail
industry, a great place to findsomeone in the rail industry is
to come to Commtrex. Now let'stalk a little bit about outside
of rail, though. You've you'vegot 2.0 here. I assume your
clients have requested you tomove maybe in this broader
direction.
But talk a little bit aboutthat, Martin.
Martin Lew (38:30):
When we started the business, really, the business
objective was to be able to findan easy way to connect the
supply and demand side. And, youknow, eight years ago, that was
through creating a verystructured directory, you know,
and and and the directory wasexactly what I explained, right?
You find a city, then you findthe locations of that city, and
then answer some questions,algorithm runs, and it matches
you up. Now, if you ask me whatis the future of logistics and
(38:55):
what where is that headed? AndI'm not going even just say
logistics, I'm going say thefuture of most industries or
every industry down the road.
I'm going to use the analogy ofwhat you're seeing in human
resources today. Historically,whenever you wanted to find a
job, you would be building aresume and a cover letter for
that human resources coordinatorto be able to evaluate and then
(39:15):
be able to pass you along andget you, at the very least, that
first interview. Nowadays, ifyou're looking for a job, you're
not building a resume and coverletter for a human, you're
building it for an AI algorithm.Whether it be on LinkedIn, or
whether it be, you know,submitting it directly to the
company, AI is probablyfiltering out, at least at the
Fortune 500 companies and mostlarge companies, AI is probably
filtering out 90% of all theresumes. So now, as a human,
(39:39):
you're not thinking about whatis the human sort of component
that I need to think about.
Now you're thinking about whatare those keywords that I need
to do to filter to get past thatvery to get to that first
interview. Now let's think aboutwhy are companies using an AI
algorithm to be able to use as afilter? Well, they're doing it
because they're taking all thedifferent inputs that a human
would, and they're saying, Wecan train an AI algorithm to be
(40:02):
able to do the same thing as ahuman, but at a much larger
scale and much faster. And wecan do it to also ingest a lot
more data points, not just theresume and cover letter, not
just, you know, maybe someLinkedIn profile information,
but you can ingest all theseother data points that could
help you make a much moreinformed decision. So I use that
analogy because that is to meone of the sort of first
(40:24):
frontiers where humans are nowmarketing to an AI agent or an
AI algorithm at scale.
So if you believe that sort ofthat same sort of mental model
of all these data points arebeing ingested and we've trained
an algorithm to be able tofilter out for all these
different roles, why wouldn'tyou think that that same exact
mental model will apply to otherindustries and other facets of
(40:47):
that company? Let's just playthis out a little bit. Let's
just say that same model movesinto supply chain. And let's
just say Fortune 500 companiesstart to integrate different
parts of their procurementprocess and using AI agents or
AI workflows to be able toprocure different products or
different services. Now, as aservice provider, you're doing
(41:08):
the same thing as a jobapplicant.
Now you're saying, okay, now Idon't have to sort of think
about how do I market to thehuman that sits in those seats?
Now you're talking about aprocurement AI agent. That's
exactly right. So if you believethat that is the natural
evolution and everything isgoing to be driven, like I said,
everything is driven by demandside and Fortune 500 companies
(41:29):
are already doing it in theirhuman resources department, why
wouldn't you think Fortune 500companies wouldn't start moving
that exact same model to all theother departments within their
company? So if you're plowingalong with me and you think that
that's the case, it's only amatter of time for that same
model to hit procurement.
So if that same model hitsprocurement, then as a service
provider in supply chainlogistics, now you have to think
(41:51):
about, well, how do I now marketmy service when it's not to a
human that I meet at aconference or a human that I
show up to the door, knock onthe door, or
Ben Banks (41:59):
It's a like key word turn gatekeeper.
Martin Lew (42:01):
A gatekeeper. And now when the gatekeeper is an
algorithm versus a human, nowthe whole way you think about
your business has to changebecause the way you market and
sell and your strategycommercially has to change. So I
say all that to be because aswe're trying to build this
virtual ecosystem, we're tryingto sort of match supply and
demand side. As the CEO of acompany thinking about where the
(42:24):
future is, I believe that thefuture is going to be initially.
Agents will seep into the demandside in different parts of the
procurement process. And then onthe supply side, there's going
be start to be a sort of a slowsort of assimilation to in
everything from, I'm not justtalking logistics, I'm talking
everything from procuringpencils to toilet paper to
services. You're going to startto think about, okay, how do I
(42:46):
now sort of sell to this companythat isn't using a human to make
the decisions, but is using anAI agent to do it? So, you know,
fast forward to Commtrex, we'retrying to piece together exactly
in a marketplace where therepotentially are agents that are
making procurement decisions.How do you now help service
(43:06):
providers market to thoseagents?
And that is part of CommtrexStudio. How do you take all the
data that we're ingesting andcapturing and create a much more
strategic way for the supplyside to actively sort of market
to the shippers? And then also,how do you help shippers in a
world where they're leveragingAI to be able to find those
right service providers? But allof that relies on data, and
that's what we're collecting at,at scale is data.
Ben Banks (43:28):
So the value for the shippers especially, because I
definitely can understand thevalue to the to the supplier of
the services, but you want theabsolute best match for the
shipper. And that's anopportunity for AI. As long as
you have a human being thinkingas human beings do in a million
different ways. But an AI cantake the data and just frankly,
in some ways be smarter thanthan I am if I'm performing the
(43:48):
procurement process from end toend. So introducing AI as we
expect they're going to do, youand I both do, on the
procurement side and matchingthat capability on the vendor
side, just make sure thatthey're getting the right match.
Everybody's matching with asclose to a perfect match as
possible. And that's gonna beincredibly valued to the supply
chain. Because there's no doubteven from a supplier, I'm a
(44:11):
vendor, that's what my companydoes. There's a lot of wasted
conversations that we have, andI only have so many salespeople.
And if they're out there havingconversations with potential
customer and we're not a goodmatch, we just wasted
everybody's time there.
So that's a very interestingconcept, Martin, where you all
are headed. And frankly, I'venot heard anybody else talk like
that yet. So very excited to seewhere Commtrex goes. Martin, we
are out of time. That was thatwas fast.
(44:32):
That was a lot of fun. I'm sothankful for you, Martin. You
are a true problem solver, andI'm thankful for people like you
out in the industry that areseeing the problems that we
have, seeing the demographicshifts, seeing the changes and
from, from a relationship drivenmodel to a transactional model,
and everybody's doing more withless. We need we need solutions
like what you're providing. Sothank you very much for what you
(44:53):
do.
Martin, thanks for coming on theshow today. And for all of those
of you who are listening in thatand you're serving in the supply
chain, we salute you. We knowthat we have a little idea of
what facing every day, and it'sa challenge, but we we
appreciate what you do. You areall problem solvers, and we just
encourage you to keep keep ongoing on. Keep on what's what am
I trying to say, Martin?
Martin Lew (45:13):
Keep on going on. There you go. A little bit out
here,
Ben Banks (45:15):
but keep going. We're counting on you. The United
States needs you, the NorthAmerica needs you, and the
worldwide global supply chainneeds you. And we appreciate you
very much. So thanks for joiningus today, and we'll see you next
time.
Martin Lew (45:27):
Thank you, Ben.
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