August 11, 2025 • 38 mins
What’s really going on in freight brokerage right now? Why are rates stuck, and how should we position ourselves as brokers for the next market shift?
Together with our guest today, Ken Adamo of DAT Freight & Analytics, we dig into the supply-and-demand imbalance that’s keeping rates flat, the impact of tariffs and interest rates on shipper behavior, and why DAT’s acquisition of Convoy’s tech could change how we approach automation!
Plus, the reality of cold calling in a stagnant market, how shorter RFP terms make sense right now, and why consistent service still beats chasing margin in building trust with shippers! Hear all these and more from today’s episode!
About Ken Adamo
Ken Adamo, Chief of Analytics and Vice President of Strategy and Business Development at DAT Freight & Analytics, leads strategy, customer engagement, and industry analysis. He played a key role in DAT’s acquisition of Trucker Tools, strengthening the company’s visibility solutions.
A recognized expert in freight market trends, Adamo has helped customers navigate shifting conditions by translating complex data into practical insights. He has led key strategic initiatives, advanced predictive analytics, and serves as a trusted resource for industry analysts, customers, and journalists.
Before DAT, he led pricing and decision science teams at FedEx, developing forecasting models to optimize decision-making and profitability.
He was named a 2025 Pro to Know (Rising Stars category) by Supply & Demand Chain Executive and has been quoted in the Wall Street Journal and trade publications.
Ken holds a bachelor's degree in Finance from the University of Akron and an MBA from The Ohio State University.
Connect with Ken
- Website: https://www.dat.com/
- LinkedIn: https://www.linkedin.com/in/ken-adamo-8481611a/ / https://www.linkedin.com/company/dat-freight-and-analytics/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Came back with a bank window down yelling now money anything hey oh got the foot on the gas pedal to the metal when I'm get to the back hey Got the foot on the gas pedal to the metal when the lane moving fast hey Let them all cross if they hate then let them hate them make a bigger balls.
Speaker 2 (00:24):
Hey what is up, ladies and gentlemen?
We are back.
We are live.
It is the Freight Coach Podcast, the top podcast in transportation coming to you guys every single weekday, 8:30am Pacific, 10:30 Central, to break down some industry headlines.
But most importantly, you guys provide some actual insight into what you can do with all of this information.
If this is your first time tuning in, welcome.
(00:45):
This is the real side of freight, ladies and gentlemen.
And I do say that before every single show.
And what I mean by that is I only speak with transportation professionals because at the end of the day, you guys, I want to talk to the right individuals who have done what you're looking to do or who are currently doing what you're trying to achieve, so you can take that information, apply it, utilize it, and see a meaningful difference in your business and your life.
Happy Monday, everybody.
(01:05):
I got a very special guest.
I am going to waste no time in bringing him up and talking about a bunch of stuff they got going on as well as the market.
And we really can only talk right now because it's not football season yet.
So I with, I got.
With that being said, I got my good friend Ken Adamo of DAT back on the show.
Ken, thank you so much for taking the time to join me today.
Speaker 3 (01:23):
Good morning.
Thanks for having me.
Speaker 2 (01:25):
No, absolutely, man.
And, you know, fall camps well underway and, you know, Wisconsin is probably getting ready for a solid eight and five year this year at best.
And, you know, you guys will be talked about in the top five in Ohio State as usual.
So.
Speaker 3 (01:41):
That'S pretty optimistic for Wisconsin schedule.
I don't know if you've taken a peek at it very much, but they've got quite the murderer's row of schedules this year.
Almost as bad as Rutgers.
Speaker 2 (01:52):
Yeah, I, I was actually looking at that yesterday because I pulled up Netflix this weekend and saw that they did an SEC thing on Netflix.
So I started watching that and I was like, oh, I wonder how Wisconsin's looking this year.
And I saw the schedule, man, and I'm like, yeah, 8 and 5 might be optimistic, especially with, you know, uncertainty at probably every position out there.
Speaker 3 (02:14):
Yeah, I think what the over and under would probably be five and a half losses for them.
We'll See, they got Ohio State, they got a run where they got to go.
Michigan, Iowa, Ohio State, Oregon, Washington, Indiana and Illinois.
So that's going to be pretty rough, I think for them.
Illinois is supposed to be pretty good this year.
Speaker 2 (02:28):
Yeah, it is.
And you know, with everything that's going on, man, it's.
I, I don't know.
I, I have to be optimistic as much as I can because maybe we'll get into the Energizer Bunny bowl or something like that at the end of the year.
Speaker 3 (02:39):
Yeah, there's so many bowls now.
I mean, you can pretty much get into the Duke's Mayonnaise bowl or whatever, dude.
Speaker 2 (02:46):
Yeah, I mean, that's the one that you generally make fun of us for because I think that's what were in last year at the end of the day.
Speaker 3 (02:50):
So, Yeah, I think 10 and two this year for Ohio State, beating Michigan, losing the second round of the playoffs would be a great year.
I think.
I don't, I don't think they're going to be in real contention for the Natty this year, but we'll see.
Speaker 2 (03:07):
Dude, that's a stark contrast, Ken, how you normally talk about Ohio State.
Speaker 3 (03:11):
But progress, I think it's, I mean, people don't.
Very few people realize like the joy and hangover you get from a Natty.
I brought my entire team to Columbus last week and to see all the banners hanging and everything, it's like a lot less pressure now at Ohio State.
You're supposed to win one every, I don't know, five to seven years.
So that'll start to build.
But next year should be the same expectation of the prior year with Jeremiah Smith as a third year player.
(03:37):
So we'll see.
Speaker 2 (03:40):
Dude, speaking of expectations, man, there's a.
You guys have kind of been, obviously, I mean, you have been on a acquisition thing for a while here.
You know, you guys are making some strategic acquisitions out there in the market.
And, you know, when everything that came out here with Convoy and I, you know, I waited to really even talk about it on the show because I'd like to not be the first one to have an opinion about stuff.
(04:03):
I like to see more information kind of come out and really see, like, where the cards have fallen after the fact.
Because one thing that a lot of people I think fail to understand is not every company is reaction based.
A lot of them are thinking the next three to five years, where are things going and how do we kind of build up and get ahead of that?
So what was so appealing about the convoy technology and platform where you guys were like we really need to bring this internal.
Speaker 3 (04:31):
I think one, it was built by a brokerage.
There's a term in software development called dog fooding where like you're using your own product for real, not like in beta or in a hackathon or whatever.
You're actually using it every day.
So I think the product had a lot of real time user feedback and feedback loops and tweaks and modifications also.
(04:54):
I mean it just kind of is objectively the best matching and negotiation tech out there.
It's built by world class engineers.
Like I said, it was used in their own brokerage carriers really seemed to like the experience.
And I think what it was really missing was like scale and neutrality.
And that's two things that we bring uniquely to the table.
(05:14):
Yeah, when we're looking at any acquisition.
Right.
We, the thing that we're looking for is what can we uniquely bring that the company doesn't have access today that really can springboard growth.
And that's the same with trucker tools without go and now with convoy platform.
Speaker 2 (05:30):
So I mean one of the big, I think one of the things that I saw out there was is are they just going to become a brokerage now with that?
And you know, obviously my, I just talked about this on the show.
I'm like, I don't know if alienating, assuming 50% of your customers are brokers and alienating them and becoming a direct contact with them is necessarily on the horizon for a business.
(05:52):
So what is it, you know, from that standpoint?
Is it to really bring it into the load matching tool internally that you guys already had and is it an upgrade and a refresh to that is what people can expect from this?
Speaker 3 (06:03):
Yeah, I think like that industry chatter came in two camps.
One, what do they, what do the kids say nowadays?
I think some of our competitors were pretty thirsty out there trying to like stir up some fud and you know, we, we have great customers.
So they just like flat out send us the text that they're getting from their sales people from these competitors of like, well DAT is going to start a brokerage.
(06:27):
It's like my first question, especially when you have a really good relationship with a client is like do you like being a broker?
Like if you had to pick between like end to end SaaS, software automation or kind of the grind of brokerage.
They're both great businesses but like they're very different.
Very operationally heavy versus very like Placing bets on software development.
So I think most of that's easily dispelled.
(06:49):
So D and T is not becoming a brokerage first and foremost.
I think what it comes down to in the big unlock for me, I've been one of the biggest scrooges about digital freight matching over the years dating back to my time at FedEx.
We looked at a lot of these technologies and just determined that like as a first party brokerage, which means you own a brokerage, it's nearly impossible to get the scale that you need because everyone's going to view you as a competitor.
(07:16):
Which I think solved point one also.
But if you look at why this hasn't largely been successful at scale previously, whether it's Uber, freight convoy, you Name it, Convoy 1.0, is because they had a brokerage and what broker is going to give their freight to another brokerage?
Very, very, very few.
So we brought that neutrality.
We've always been a neutral platform for 47 years and counting.
(07:37):
And it is an elevated experience.
And again that unlock for me was you don't need 50% automated loads.
I think in a perfect world in the next decade we might get to 20% automated broker loads.
And so it really is just like that upper echelon where you know, maybe you're about to head out of the office as a broker, you know, you're not usually 24, 7 and you throw the load up on the convoy platform and you head out and it's hands free.
(08:01):
That's a great example that Bill Triegert likes to use of just put it out there and see what happens.
And then maybe tomorrow you start having to work it manually if you need to.
Speaker 2 (08:10):
Yeah, I'm right there with you.
I like, I think that there's a large group of people in this industry that don't think that it's going or could happen inside of transportation.
And you know, from my perspective, what you guys are talking about there, like everything between hypothetically Atlanta and Chicago, that's 26 pallets, £35,000, first come, first serve, nothing changes.
(08:33):
It's the exact same stuff.
And if you're out there operating in a spot market mentality, you guys, I've been on the high volume contract side.
There is a lot of freight that never changes.
It's the exact same stuff, repeatable, scalable, day in and day out.
So that's where I see something like this really fitting in earlier than later, Ken.
And it does, you give those drivers that, you know, because again I practice What I preach on this show, we have core carriers, you guys, I have carriers that I trust with.
(09:02):
They have direct contact, they know who the decision makers are at our customers because they work with them just as much as we do and we want that seamless transaction to come through.
I will have no problem setting them up on that freight that is just like that.
It give them the ability to go in there, see as soon as we build it up and if that gives us an opportunity because that's one of our biggest bottlenecks inside of our organization.
(09:25):
Ken is the data entry piece of our business.
Right.
It's the manual having to reach out to our carriers and stuff, reaching out to our customers.
Regard like that's a bottleneck that we're looking for an automation piece to come in to help us scale.
Right.
Because we're trying to remain as lean as we possibly can.
And I'm sure this is a conversation you probably have with a lot of people out there.
(09:48):
Hey, we look, we're looking to remain lean, we're looking to come out there and automate as much as we can.
There's a large majority of the freight out there that can and should be automated.
And I feel like as the driver demographic becomes younger, wanting to be on the apps and everything else, this is going to be a seamless transition to come along with it.
Because one thing that I saw out there from the driver community in regards to the technology of convoy, they were a massive fan of the ability to go in there and just book it like that.
Speaker 3 (10:21):
Yeah, I think long lead times, FA K type freight, repeatable lanes, I think those are all things that suit really well for automation platforms.
I think where the pitch didn't land historically is trying to pitch brokers that they're going to cost save their way to success.
(10:41):
No broker in the history of brokerage has ever cost saved their way to success.
Right.
These tools should arm you with the ability to go get more revenue, spend time on the value added activities that grow your business which is getting more revenue, meeting with more customers, building carrier relationships.
And so what you see when you really dive deep into these tech platforms is convincing a broker that they're gonna be able to reduce one carrier sales rep is probably like falling on deaf ears.
(11:06):
But if you convince them they can book like 2 to 3% more loads and you know, operate on maybe 50 to 70% better basis point on a per load basis, that's transformative for their business.
So I think it's growth minded tech forward brokers are the ones that are adopting these things and it really puts them on par with the big top 10.
(11:29):
Right.
That have built a lot of this in house.
Right.
Your nameless, faceless top 10 top 15 broker.
They have excellent matching tech for their repeatable core lanes for carriers in their ecosystem.
This really democratizes it out for everyone.
Speaker 2 (11:43):
Yeah.
And that to me is where a lot of individuals need to be thinking about their operations internally.
This get because like I see it is like it's just me and my business partner and our brokerage.
We're building it up, we're bootstrapping it.
We're trying like again lean as possible for as long as possible with technology and the way that it is evolving inside of this industry.
(12:05):
We're going to be able to pack a bigger punch as any of the top 10 providers out there in due time with probably a quarter of the workforce.
Because we're going to be very automation tech focused inside of our operation.
Because 95% of my day can be automated.
As a broker, the only thing that in my opinion is, cannot and should not be automated is the customer experience, the sales rep experience and getting out there and building those relationships.
(12:33):
I don't want to automate that.
I understand there's a big push for that.
I've been reminded multiple times here over the last probably six months about how some people will.
You can choose to do that.
I think that human connection will always remain the competitive advantage out there in the landscape of business development.
Because.
Because I think people are going to over automate.
(12:53):
People are going to under automate and the ones who are going to try and balance it out as best as possible I think are going to be the ones that win the most over the next probably decade.
Speaker 3 (13:03):
Yeah, I think building it into a strategy is what I think is important.
Right.
I mean how much, how many freight technologies have ever existed that you just turn them on and they work exactly like the sales rep told you and your business has changed day one.
It's like no, it's got to be part of your overall strategy.
If you're looking to bring rating and analytics tools in, you're looking to bring an appointment scheduling tool in, you're looking to onboard convoy and go a bit more automated for some of your loads.
(13:28):
If it's, if it's just like haphazard things that you're puzzle piecing together, I don't care how good the tech is, it's probably not going to work out super well for you.
But if you're really being deliberate, we Had a customer meeting a couple weeks ago when I brought my team down to Columbus and they're really thinking of things like way far out, like whiteboarding.
Hey, we want to enter into a long term relationship with X, Y and Z because these are the outcomes we want more per se, let's say contract, regular freight or we want to figure out how to get more return trips to keep our trailers loaded or things we hear all the time.
(14:02):
So those are things I think is if it's part of a strategy, it's much more likely to succeed.
Speaker 2 (14:09):
Do you think that strategy is something that might be lacking overall because of, you know, I just look at it as I talk to a lot of people, Ken, and I know a lot of people in the industry and it seems like the general consensus is things aren't going to change in this industry and they want to keep it in that reactionary spot market mentality where I feel like the overwhelming majority of the competitors sit and fight for a small percentage of the market.
(14:39):
And you know, getting that repeatable, scalable consistency is like my, that's my main focus here in business development.
As I'm out there cold calling and prospecting customers, I know exactly what I'm going after because I need that to be able to build and scale.
And I think a lot of people sit inside of that spot market mentality that last minute and then they try and bring that into a contracted freight relationship out there.
Speaker 3 (15:06):
Yeah, I mean I think it all breaks down to a bunch of buckets.
You and I were talking off air before we started.
You've got like the freight X contingent.
I don't know how productive they're being.
Like, yeah, I don't know.
You're going to automate the time that you're spending out there.
I don't know.
I think this mile and dial is a good way to get started.
Right.
I think how many brokers have, I mean, so if you think about like broker archetypes, how many have like aged out their non compete and then teamed up with three or four others in the Chicago area and started a brokerage based on all their prior connections and then like a year or two into it they're able to pivot into like the more strategic and be a little bit more disciplined and more focused.
(15:42):
I think that's a pretty tried and true archetype.
I also think like some of the big legacy brands, they're struggling to find their place.
I mean, I think there's this thought of, I Think some people pushing the narrative that the industry is not going to change or hoping it doesn't change, if that makes any sense.
Because you know, if you're moving a couple billion dollars worth of freight a year, doing well, you might be happy if things don't change all that much.
(16:06):
So it's a diverse industry.
It's not, you know, I don't think it's impolite to say it's behind the times a little bit.
And I think struggling to catch up.
I think Covid was the jolt in the arm to get the industry to catch up a bit.
Because Sheriff, brokered loads I don't think are going to go back down.
I think if anything, that's up and to the right.
I think the way shippers are changing their operations, adding more digitization to their tendering, I see no reason why brokers don't, you know, reach that 30% of loads moved in the next 10 years, which would be huge.
(16:39):
It'd be absolutely huge.
Speaker 2 (16:41):
Where does that sit currently, just for context, out there.
Speaker 3 (16:45):
So it oscillates based on the freight market.
It's going to be at a low right now, probably just shy of 20%.
But if you look at like pre Covid, it was under 10, not pre Covid, like the pre ELD, the last two volatile cycles.
So if you look at like 10 years ago, give or take, you're probably 9 to 11% depending on industry.
And you know, certain types of shippers use brokers more in a more forward way.
(17:05):
So like your retailers, your bottling companies, et cetera.
But I think during COVID it peaked at almost a quarter of all loads were going through brokers.
Speaker 2 (17:15):
What, what do you think the way that, I mean just hearing that right, what do you think most people's biggest misconception is about how much freight is actually available out there in the market?
Right, Because I think that, because you know, I have a unique perspective in the sense of like, I've been doing this for a very long time.
I've seen the cyclical nature.
(17:35):
I know what it takes to kind of build a book of business and build a business in the industry out there.
And I think that there's a big misconception on how much freight brokers control compared to like what's moved out there.
Because I think people hang on that trillion dollar number, Ken.
They're like, oh, it's a trillion dollar industry.
(17:56):
Brokers are moving all this freight or people got their hands in all of this stuff out there.
But you know, One thing I like about what you guys have and like the amount of data that you guys put out there is it gives a very clear picture on how much people are actually moving in the market.
So it's like, if we're looking at you, let's just use the 25% or the 20% mark of brokered freight.
Of that 20% that brokers move can.
(18:18):
How much of that is like, considered spot market compared to contract?
Speaker 3 (18:23):
That's a good question.
I think it very much depends on your brokerage size.
I mean, there's, let's just say the top 1,000 makes up 90% of all brokers.
Even within the top 1,000, there's not more than a few hundred that are even getting a bite at the apple of contracted freight from shippers.
Right.
I mean, I think that's all.
And if you are, it's.
You're lucky to get a couple lanes on an RFP if you.
(18:46):
Ch.
Robinson is a great proxy for this because in a lot of their statements, they'll disclose their percentage contract versus spot.
And that just generally, if you pull their public financial statements, ranges from 45 to 55, depending on market cycle.
Speaker 2 (18:57):
Yeah.
Speaker 3 (18:58):
I would say if I was forming a brokerage and I had a genie or whatever, you know, I had control of the universe, I would probably build it about 50 contract revenue and about 50 spot.
I think that's probably the best in terms because, like, if you go too far, contract, you're going to be exposed when the market turns.
If you go too far spot, you're going to be exposed when the market turns.
Right.
So I think probably some blend and if you were a super genius, you would lock in more contracts when the market's at its peak.
(19:25):
And you would lock, you know, not lock in any contracts when the market's low.
Right.
So if you had true omniscience, you would be 100 contract in February of 2022 and you'd be 100% spot right now.
Speaker 2 (19:40):
Yeah, it's, you know, I look at it as, you know, speaking of spot and contract, where, you know, everything, all the data, all the reports, all the tweets and headlines and everything that you see out there is things should have been booming by now.
If, you know, for the last 12 months, that's all you heard is, oh, we're right on the verge.
We're right on the verge.
And, you know, I've tried to take kind of a very central standpoint where it's like, I, I don't see anything changing anytime soon.
(20:08):
And, and I think that we're going to continue like this might be the norm moving forward.
Like I don't see any drastic spike, I don't see any drastic drop coming.
I think that we're kind of in an inflection point right now where I think if you break it down in its simplest form, to me supply versus demand is the most pivotal point right now.
(20:31):
There's excess capacity and until that excess capacity leaves, there's going to be minimal desire on the shipper and manufacturer side to make any change in their operations.
Speaker 3 (20:44):
Yeah, I think the market was really poised for, I think a very modest recovery.
If you were in the industry, which you were, and I was from that like 2013 to 2017 cycle, that was probably what it was most poised to do is like by now we would have seen, I don't know, 7 to 10% year over year inflation and spot rates and really tight 4th of July and people holding on for a pretty tight retail peak.
(21:09):
I just think that these tariffs and just the economic uncertainty has just beat the optimism out of shippers and interest rates haven't come down like expected.
So I think the market was probably pretty poised and then demand just didn't come in.
I think that's the biggest mistake that a lot of people make when looking at these markets is like a demand purely supply.
(21:29):
Supply being trucks driven.
Recovery is probably not what we should all be hoping for.
That's going to be very modest, very treading water, very much like we're seeing right now.
We need demand to come in droves and I don't think we're going to see that until we have more certainty around tariffs and certainly lower interest rates.
Lower interest rates are very good for shipping things around.
Speaker 2 (21:50):
Yes, no, I agree with that.
And those are two key points that I've been speaking about here on the show is like as long as the feds don't drop interest rate, that's like people are going to be extremely apprehensive to spend any money at all.
And then speaking about tariffs as well, I think that's one thing that is.
It's been highly irresponsible by the current administration in my opinion to flip flop as much as they have because all of the flip flopping does is create more apprehension because it's like if a Tariff is at 25 today and then I want to order more inventory and then somebody spouts off, now it's going up to 50.
(22:26):
Do I wait, do I buy?
What do I do here and then that also just creates more and more uncertainty.
And I think that is another large hurdle that we're being faced with right there and in the market.
And you know, I, I talk about often is, you know, from like a pricing strategy because again the majority, like when you're out there cold calling and you're developing business, at the end of the day you're going to get started in the spot market.
(22:51):
Very rarely do you get onboarded, fill out an RFP and just start moving contracted freight for a customer.
Not saying it's impossible, but it's rare, right?
So it's like when you're out there and you're looking at this stuff, to me it's always going to be like this.
You have to use data to use the best pricing decision to keep your rates as consistent as possible across the board.
(23:12):
Right.
Like you got to remove any and all spikes and variables from your customer when you're out there pricing their freight.
Especially right now.
Because if you're out there moving a load for hypothetical $1,000 every single time and, or like you move it forward a couple of times and then the day of the week changes that it picks up.
And now your carriers want 1300 and you go and try and raise your rate, your customer is going to kick you out or they're going to not give you the load and they're going to look for that consistency.
(23:41):
And I think like if we're looking at all the macro data and trying to apply it into the micro daily tasks and stuff like that's one thing that is of our, like top of our mind right now is how do we same rate across the board every single time.
We might lose a little bit, a bit of money on that when the market dictates that.
(24:01):
But I think it's bringing that consistency across the board right now no matter what.
Because as markets flip as things change, capacity tightens up throughout the week or the month.
I think people are gung ho to raise their rate even if it's just for one to keep their profit margin the same.
Speaker 3 (24:17):
Yeah, it's tough.
I mean it's, we've got a lot of customers running pricing tests and the market's just not budging.
It's just not, there's no, you know, one of the things I was writing a little bit about last week is the sense of like well, carriers are taking rates below market.
It's like, well no, they're not in a, in a, in A free, you know, a free market.
(24:38):
The, the rate at which you agree and the rate at which you're willing to pay equal each other and that's the market rate.
Right.
So there's just nothing to move rates in one direction.
I do agree we're at equilibrium because you see things like road check or the holiday happening on a Friday for the 4th of July and I think peak this year we'll see rates go up but then probably collapse right back down because there's no systemic reason for rates.
(25:03):
I'm shocked, I'm frankly shocked and disturbed that we haven't seen more of a back to school push.
I, I think it's going to be a pretty like ugly Q3, Q4 for carriers and small brokers.
Broker margins are compressed.
It's not great out here.
Speaker 2 (25:25):
I, I'm right there with you.
And you know, from somebody who develops business every single day.
Right.
Like I cold call every single day, you guys.
I have heard this is the most like rejection and like don't even call us that I've ever heard in my career because of every like a lot of what you're describing there, Candace, is there's no need to look outside of their current network because service is good, everything's good right now.
(25:53):
Right.
So it's like if you look at it and you're like volumes and prices aren't changing much, things aren't pricing and like aren't changing much, people aren't going to be forced to look outside of their current network.
And Robert Cowton had a question.
He wanted us touch on RFP and how it's almost impossible to win when shippers list number of loads.
Lane but schedule example.
Wayne has 62 loads, but it's over 12 months or in four months.
(26:16):
And I think what he's talking about is like if you're going out there and you're bidding on RFPs, how is it like how would you accurately price something right now when it lists out the amount of loads but it doesn't list out like when they're going to actually ship because if I'm going to bid on a load can and then it turns out on an rfp and then it turns out, oh hey, this is only shipping on Memorial Day, fourth of July, Labor Day, and it's all like holiday based freight.
(26:45):
You're bidding wrong.
Speaker 3 (26:48):
There's a phrase in any pricing.
This was true when I was in electricity.
I've studied it in hotels.
In pricing, you're only as good as your dumbest competitor, right?
Like, and that is very true in freight brokerage pricing.
Right.
Because people who don't take into it like the market, I think it's relatively impossible to assume that the rates will be lower than they are today, 12 months from now.
(27:12):
So when you're pricing an RFP you're going to have to, your job's a lot harder because you're going to have to convince a shipper if they want 12 month rates that rates are going to go up over that 12 month period when they haven't done anything but go down or stay flat for the last three years.
Right.
So that's tough, it's a tough sell.
One of the things we encourage folks to do is try to negotiate a shorter term length.
If you can negotiate a way to lock in rates for three or six months and then renegotiate index price pricing has never pop more been more popular than it is right now.
(27:40):
We've got several large brokers and carriers that are coming to us with help to build index pricing.
You know, maybe they're locking in 50% of the rate and let 50% of it float with the DAT national average or any national average for that matter.
Anything that's kind of comprehensive of the market you could use CAS or anything like that.
But yeah, it's tough.
(28:01):
This is the most difficult time to be a pricing person at a freight brokerage.
Like there's no and it's been that way for 12 to 18 months.
So yeah, I, I, I, I, I.
Speaker 2 (28:14):
Don'T know, I was gonna say I, I look at it from like a pricing perspective like even though it hasn't changed over the last 12 to 18 months.
Ken, like you're talking about like a lot of confidence for those individuals who are developing new business right now that the prices that you see out there are probably going to remain very consistent over the next I mean I would argue, I'll just say for conversation piece throughout the end of the year, right?
(28:36):
Yes, there's going to be some seasonal spikes that come along with it but if you're looking for a long term partnership with a customer, you're going to eat it during that time to keep the freight and keep that volume running through your books.
Because I think that the longer everything draws out here the when it happens people are going to be panicked for new providers when capacity tightens up.
(28:58):
Because I like, I'm convinced now can we're going to go to leave on a Friday and we're going to come back on a Monday and it's going to be like, where did all the trucks go?
Why is there no trucks there?
You know, and all of this stuff happened.
But I think that from a pricing perspective, the fact that it hasn't changed I think should give a lot of sellers a lot of confidence as they're developing new business here that when they do get that opportunity, when they go out there and use a tool like DAT to look at historical pricing over the last 12 months, that's probably going to be the rate for the foreseeable future here.
(29:27):
And that should give you enough time to build up that trust with that shipper to when things change out there, you're going to be brought into that conversation of hey, we want to keep you, we know rates are going to change.
What's going to be your price here for the next six months?
Speaker 3 (29:42):
Yeah, I mean I think it's all great advice.
I think we're in a period of such uncertainty that it's a double edged sword.
Right.
So we'd love it if the shipper was committed contractually to provide what they say they're going to give us as brokers.
Right.
And that almost never happens.
Right.
Like when's the last time?
And if you're not doing this as a broker, you probably should like go total up.
(30:05):
If the shipper said they were going to give you 150 loads over the next 52 weeks, go see how many loads they gave you.
Sometimes it's more, sometimes it's less.
Very rarely is it ever what was written in the rfp.
But then if things go absolutely crazy, I mean there are things that the government could do that I think wouldn't shock any of us right now.
Which is like nullify all legal foreign visas as an example.
(30:25):
Right.
Which would take probably hundreds of thousands of carriers off the road and trigger an ELD esque capacity event.
But I think in that case, if you just signed a con 12 month contract, I think you're very well aware and your shipper is very well aware that everyone's going to be coming to them, renegotiating their prices.
Right.
So when it's a market level event, the only time you can't really wriggle out of that is when you made a mistake, you price something too low or you weren't aware of this, that or the other thing or that it had special requirements that gives you a really kind of bad mark with the shipper.
(30:57):
But if the entire market goes crazy, generally speaking you have a way to negotiate yourself into a better place.
Speaker 2 (31:05):
Yeah, I think that when it does happen, people need to rest assured that it's going to happen to everybody and it's not just going to be a you thing.
And when that has happened historically in my career, shippers will trigger a rebid.
They'll redo their entire rfp because service failure is not going to just hit one person when a market flips.
(31:25):
It's going to kind of hit everybody at that time and they're going to be way more open to doing what Ken's talking about right here.
Speaker 3 (31:31):
Yeah.
And they've enjoyed, I mean, shippers have, of course, just to kind of bury that point.
Like the reason it is because bad service hurts more than bad rates.
That's just a universal truth.
Right.
Speaker 2 (31:42):
A ship.
Speaker 3 (31:42):
Right.
So what happens is their service starts to lag and then they're willing to throw more money at the problem to make their service get better.
Yeah, we should write a book of like universal freight truths.
Speaker 2 (31:53):
Yeah, we should, Ken.
And that's something that I try and do on this show all the time, man, is just talk about universal freight truths that never change in the entirety of my career.
Because it's like, I think that a lot of people are thinking there's a different way or an easier way out there.
But it's like what you just said there, Ken, sums up everything personal, like perfectly.
(32:15):
Is this like, bad service will hurt a cheaper price like any day of the week?
Because I think transportation providers at times think that every food manufacturer out there doesn't have a massive competitors who are all competing for that business.
And last time I checked, nobody makes money if the product's not on the shelves.
Right.
(32:35):
So it's like there's a big thing out there that comes down the pipe if you aren't out there actively servicing these accounts.
Because when it boils down to it, man, they need the trucks to pick up, they need them to deliver.
You got to lose money at times.
You got to service the account.
You can't always think, how is it that I only make money in this transaction?
Speaker 3 (32:56):
Yeah, my favorite is make it up in volume.
That is my favorite freight ism of all time.
Is like when you got a customer that's coming on board at like negative 3% GP across all of their lanes.
And you're like, I'll just make it up in volume.
It's like, no, you won't.
Speaker 2 (33:11):
Yeah, I went to public school, Ken, so last time I didn't.
They used to tell us two negatives make a positive is that what?
Speaker 3 (33:16):
Yeah, yeah.
Because you and I have talked about this a lot before is like the single worst behavior of a freight broker, whether you have a pricing department or not, is being unwilling to take losses at a load level.
Speaker 2 (33:30):
Yes.
Speaker 3 (33:30):
It's the number one thing that's holding you back from your pricing strategy.
Like you, there is no magical bell curve that any mathematician has ever found that magically stops at zero.
If you want to run a brokerage with a 15 average gross profit, given the variability in this market, you're going to have 8 to 10% of your loads, sometimes you hope less than 2 to 5% most times coming in below cost.
Speaker 2 (33:52):
Yeah, yeah.
Speaker 3 (33:53):
That's just kind of the way it is.
Speaker 2 (33:55):
Oh, that's it too, Roman.
Because it's like, I mean things happen as well.
Right.
And if you have a service failure where a driver's not able to pick up a load and you're unwilling to lose money on it to move it at your shipper schedule, your competition is willing to lose money on it for a load to move it to make sure that customer is taken care of.
Because the best brokers out there understand that point, that at the end of the day, yes, we might lose on this one, but I will make that lost up by continuing to move freight for that customer because that just gives them a reason to take my phone call, you guys, at the end of the day, I'm calling them.
(34:30):
I know a lot of sharks out there who are prospecting non stop right now, hoping you don't take a loss on a load so we can get in the door and start moving their freight.
Because that's what just cracks that door open and gives a guy like me an opportunity to start moving their freight.
Speaker 3 (34:46):
I personally know multiple brokers that have lost million dollar accounts because they refuse to take a loss on a single shipment.
Speaker 2 (34:53):
God.
Speaker 3 (34:54):
And very rarely is it ever one time.
It's usually the straw that's always the story you hear like at Tia, at the bar, like it's that one, oh one time.
But usually it's a pattern of quoting back multiple times.
And then the shipper eventually just gets pissed enough where they just say, you know what, I don't like this.
(35:14):
And I'm not, you know, I'm not willing to do this anymore.
Speaker 2 (35:17):
So Ken, I'm gonna have to have you back on next month.
And we'll just like, we'll choose one topic, Ken, and like of the freitisms and we'll just do an entire episode and break that down.
Speaker 3 (35:30):
I love it because I.
There's just so many, right, that these just beat into people's heads and it's just holding them back.
Speaker 2 (35:39):
Yeah, dude.
100, man.
But, Ken, thank you so much for taking the time to.
To join me today.
How does everybody need to, like, where should they go to find out more if they want to do their own research on the convoy stuff or anything that you guys got going on at dat?
Where's the best spot to find all that?
Speaker 3 (35:55):
If you want civilized discourse and some meaningful chatter about this, you can find us on LinkedIn.
You hit up my page.
Kerry Jablonski, Bill Treeger, we've all posted some of the blogs.
Bill did a great piece on kind of the whole journey because he's coyote, uber freight, Amazon logistics, and then I know convoy, and now dat.
So he's kind of seen the whole thread of it.
(36:15):
So I think there's a lot that you can kind of glean from that.
I think it's pretty apparent that we have no interest in becoming a brokerage.
Bill coined a new term, the bad sauce dealers.
All these kind of angsty LinkedIn poets that are out there nowadays that are writing like 1500 characters about how, you know, mean dat is.
Speaker 2 (36:35):
I look at it as is.
You know, here's also something that people should try adopting.
Unless the person or the company says it directly.
Might want to double check your sources because trust me, there's not that much inside information that gets leaked out there about people's business strategies.
Hate to break it to you guys, it doesn't necessarily exist at the levels that some LinkedIn warriors try and put out there, but Ken, thank you so much for taking the time.
(37:05):
If you guys can't find Ken or anybody at dat, hit me up.
I will gladly put you guys in contact with them, but that's going to be it for today, ladies and gentlemen.
As always, if you got value in what you heard, subscribe to the show.
You guys.
And for feeling really ambitious after this one, rank the show on itunes and Spotify.
Because if you saw value, your network's going to see value as well.
I appreciate you guys.
I love you guys and we'll be talking to you soon.
Speaker 1 (37:30):
Came back with a bank Got the foot on the gas pedal to the metal when the blood make a bigger boss.
Speaker 2 (37:51):
Hey.
Came back with a bank window down yelling now money anything hey oh got the foot on the gas pedal to the metal when I'm get to the back hey Got the foot on the gas pedal to the metal when the lane moving fast hey Let them all cross if they hate then let them hate them make a bigger balls.
Speaker 2 (00:24):
Hey what is up, ladies and gentlemen?
We are back.
We are live.
It is the Freight Coach Podcast, the top podcast in transportation coming to you guys every single weekday, 8:30am Pacific, 10:30 Central, to break down some industry headlines.
But most importantly, you guys provide some actual insight into what you can do with all of this information.
If this is your first time tuning in, welcome.
(00:45):
This is the real side of freight, ladies and gentlemen.
And I do say that before every single show.
And what I mean by that is I only speak with transportation professionals because at the end of the day, you guys, I want to talk to the right individuals who have done what you're looking to do or who are currently doing what you're trying to achieve, so you can take that information, apply it, utilize it, and see a meaningful difference in your business and your life.
Happy Monday, everybody.
(01:05):
I got a very special guest.
I am going to waste no time in bringing him up and talking about a bunch of stuff they got going on as well as the market.
And we really can only talk right now because it's not football season yet.
So I with, I got.
With that being said, I got my good friend Ken Adamo of DAT back on the show.
Ken, thank you so much for taking the time to join me today.
Speaker 3 (01:23):
Good morning.
Thanks for having me.
Speaker 2 (01:25):
No, absolutely, man.
And, you know, fall camps well underway and, you know, Wisconsin is probably getting ready for a solid eight and five year this year at best.
And, you know, you guys will be talked about in the top five in Ohio State as usual.
So.
Speaker 3 (01:41):
That'S pretty optimistic for Wisconsin schedule.
I don't know if you've taken a peek at it very much, but they've got quite the murderer's row of schedules this year.
Almost as bad as Rutgers.
Speaker 2 (01:52):
Yeah, I, I was actually looking at that yesterday because I pulled up Netflix this weekend and saw that they did an SEC thing on Netflix.
So I started watching that and I was like, oh, I wonder how Wisconsin's looking this year.
And I saw the schedule, man, and I'm like, yeah, 8 and 5 might be optimistic, especially with, you know, uncertainty at probably every position out there.
Speaker 3 (02:14):
Yeah, I think what the over and under would probably be five and a half losses for them.
We'll See, they got Ohio State, they got a run where they got to go.
Michigan, Iowa, Ohio State, Oregon, Washington, Indiana and Illinois.
So that's going to be pretty rough, I think for them.
Illinois is supposed to be pretty good this year.
Speaker 2 (02:28):
Yeah, it is.
And you know, with everything that's going on, man, it's.
I, I don't know.
I, I have to be optimistic as much as I can because maybe we'll get into the Energizer Bunny bowl or something like that at the end of the year.
Speaker 3 (02:39):
Yeah, there's so many bowls now.
I mean, you can pretty much get into the Duke's Mayonnaise bowl or whatever, dude.
Speaker 2 (02:46):
Yeah, I mean, that's the one that you generally make fun of us for because I think that's what were in last year at the end of the day.
Speaker 3 (02:50):
So, Yeah, I think 10 and two this year for Ohio State, beating Michigan, losing the second round of the playoffs would be a great year.
I think.
I don't, I don't think they're going to be in real contention for the Natty this year, but we'll see.
Speaker 2 (03:07):
Dude, that's a stark contrast, Ken, how you normally talk about Ohio State.
Speaker 3 (03:11):
But progress, I think it's, I mean, people don't.
Very few people realize like the joy and hangover you get from a Natty.
I brought my entire team to Columbus last week and to see all the banners hanging and everything, it's like a lot less pressure now at Ohio State.
You're supposed to win one every, I don't know, five to seven years.
So that'll start to build.
But next year should be the same expectation of the prior year with Jeremiah Smith as a third year player.
(03:37):
So we'll see.
Speaker 2 (03:40):
Dude, speaking of expectations, man, there's a.
You guys have kind of been, obviously, I mean, you have been on a acquisition thing for a while here.
You know, you guys are making some strategic acquisitions out there in the market.
And, you know, when everything that came out here with Convoy and I, you know, I waited to really even talk about it on the show because I'd like to not be the first one to have an opinion about stuff.
(04:03):
I like to see more information kind of come out and really see, like, where the cards have fallen after the fact.
Because one thing that a lot of people I think fail to understand is not every company is reaction based.
A lot of them are thinking the next three to five years, where are things going and how do we kind of build up and get ahead of that?
So what was so appealing about the convoy technology and platform where you guys were like we really need to bring this internal.
Speaker 3 (04:31):
I think one, it was built by a brokerage.
There's a term in software development called dog fooding where like you're using your own product for real, not like in beta or in a hackathon or whatever.
You're actually using it every day.
So I think the product had a lot of real time user feedback and feedback loops and tweaks and modifications also.
(04:54):
I mean it just kind of is objectively the best matching and negotiation tech out there.
It's built by world class engineers.
Like I said, it was used in their own brokerage carriers really seemed to like the experience.
And I think what it was really missing was like scale and neutrality.
And that's two things that we bring uniquely to the table.
(05:14):
Yeah, when we're looking at any acquisition.
Right.
We, the thing that we're looking for is what can we uniquely bring that the company doesn't have access today that really can springboard growth.
And that's the same with trucker tools without go and now with convoy platform.
Speaker 2 (05:30):
So I mean one of the big, I think one of the things that I saw out there was is are they just going to become a brokerage now with that?
And you know, obviously my, I just talked about this on the show.
I'm like, I don't know if alienating, assuming 50% of your customers are brokers and alienating them and becoming a direct contact with them is necessarily on the horizon for a business.
(05:52):
So what is it, you know, from that standpoint?
Is it to really bring it into the load matching tool internally that you guys already had and is it an upgrade and a refresh to that is what people can expect from this?
Speaker 3 (06:03):
Yeah, I think like that industry chatter came in two camps.
One, what do they, what do the kids say nowadays?
I think some of our competitors were pretty thirsty out there trying to like stir up some fud and you know, we, we have great customers.
So they just like flat out send us the text that they're getting from their sales people from these competitors of like, well DAT is going to start a brokerage.
(06:27):
It's like my first question, especially when you have a really good relationship with a client is like do you like being a broker?
Like if you had to pick between like end to end SaaS, software automation or kind of the grind of brokerage.
They're both great businesses but like they're very different.
Very operationally heavy versus very like Placing bets on software development.
So I think most of that's easily dispelled.
(06:49):
So D and T is not becoming a brokerage first and foremost.
I think what it comes down to in the big unlock for me, I've been one of the biggest scrooges about digital freight matching over the years dating back to my time at FedEx.
We looked at a lot of these technologies and just determined that like as a first party brokerage, which means you own a brokerage, it's nearly impossible to get the scale that you need because everyone's going to view you as a competitor.
(07:16):
Which I think solved point one also.
But if you look at why this hasn't largely been successful at scale previously, whether it's Uber, freight convoy, you Name it, Convoy 1.0, is because they had a brokerage and what broker is going to give their freight to another brokerage?
Very, very, very few.
So we brought that neutrality.
We've always been a neutral platform for 47 years and counting.
(07:37):
And it is an elevated experience.
And again that unlock for me was you don't need 50% automated loads.
I think in a perfect world in the next decade we might get to 20% automated broker loads.
And so it really is just like that upper echelon where you know, maybe you're about to head out of the office as a broker, you know, you're not usually 24, 7 and you throw the load up on the convoy platform and you head out and it's hands free.
(08:01):
That's a great example that Bill Triegert likes to use of just put it out there and see what happens.
And then maybe tomorrow you start having to work it manually if you need to.
Speaker 2 (08:10):
Yeah, I'm right there with you.
I like, I think that there's a large group of people in this industry that don't think that it's going or could happen inside of transportation.
And you know, from my perspective, what you guys are talking about there, like everything between hypothetically Atlanta and Chicago, that's 26 pallets, £35,000, first come, first serve, nothing changes.
(08:33):
It's the exact same stuff.
And if you're out there operating in a spot market mentality, you guys, I've been on the high volume contract side.
There is a lot of freight that never changes.
It's the exact same stuff, repeatable, scalable, day in and day out.
So that's where I see something like this really fitting in earlier than later, Ken.
And it does, you give those drivers that, you know, because again I practice What I preach on this show, we have core carriers, you guys, I have carriers that I trust with.
(09:02):
They have direct contact, they know who the decision makers are at our customers because they work with them just as much as we do and we want that seamless transaction to come through.
I will have no problem setting them up on that freight that is just like that.
It give them the ability to go in there, see as soon as we build it up and if that gives us an opportunity because that's one of our biggest bottlenecks inside of our organization.
(09:25):
Ken is the data entry piece of our business.
Right.
It's the manual having to reach out to our carriers and stuff, reaching out to our customers.
Regard like that's a bottleneck that we're looking for an automation piece to come in to help us scale.
Right.
Because we're trying to remain as lean as we possibly can.
And I'm sure this is a conversation you probably have with a lot of people out there.
(09:48):
Hey, we look, we're looking to remain lean, we're looking to come out there and automate as much as we can.
There's a large majority of the freight out there that can and should be automated.
And I feel like as the driver demographic becomes younger, wanting to be on the apps and everything else, this is going to be a seamless transition to come along with it.
Because one thing that I saw out there from the driver community in regards to the technology of convoy, they were a massive fan of the ability to go in there and just book it like that.
Speaker 3 (10:21):
Yeah, I think long lead times, FA K type freight, repeatable lanes, I think those are all things that suit really well for automation platforms.
I think where the pitch didn't land historically is trying to pitch brokers that they're going to cost save their way to success.
(10:41):
No broker in the history of brokerage has ever cost saved their way to success.
Right.
These tools should arm you with the ability to go get more revenue, spend time on the value added activities that grow your business which is getting more revenue, meeting with more customers, building carrier relationships.
And so what you see when you really dive deep into these tech platforms is convincing a broker that they're gonna be able to reduce one carrier sales rep is probably like falling on deaf ears.
(11:06):
But if you convince them they can book like 2 to 3% more loads and you know, operate on maybe 50 to 70% better basis point on a per load basis, that's transformative for their business.
So I think it's growth minded tech forward brokers are the ones that are adopting these things and it really puts them on par with the big top 10.
(11:29):
Right.
That have built a lot of this in house.
Right.
Your nameless, faceless top 10 top 15 broker.
They have excellent matching tech for their repeatable core lanes for carriers in their ecosystem.
This really democratizes it out for everyone.
Speaker 2 (11:43):
Yeah.
And that to me is where a lot of individuals need to be thinking about their operations internally.
This get because like I see it is like it's just me and my business partner and our brokerage.
We're building it up, we're bootstrapping it.
We're trying like again lean as possible for as long as possible with technology and the way that it is evolving inside of this industry.
(12:05):
We're going to be able to pack a bigger punch as any of the top 10 providers out there in due time with probably a quarter of the workforce.
Because we're going to be very automation tech focused inside of our operation.
Because 95% of my day can be automated.
As a broker, the only thing that in my opinion is, cannot and should not be automated is the customer experience, the sales rep experience and getting out there and building those relationships.
(12:33):
I don't want to automate that.
I understand there's a big push for that.
I've been reminded multiple times here over the last probably six months about how some people will.
You can choose to do that.
I think that human connection will always remain the competitive advantage out there in the landscape of business development.
Because.
Because I think people are going to over automate.
(12:53):
People are going to under automate and the ones who are going to try and balance it out as best as possible I think are going to be the ones that win the most over the next probably decade.
Speaker 3 (13:03):
Yeah, I think building it into a strategy is what I think is important.
Right.
I mean how much, how many freight technologies have ever existed that you just turn them on and they work exactly like the sales rep told you and your business has changed day one.
It's like no, it's got to be part of your overall strategy.
If you're looking to bring rating and analytics tools in, you're looking to bring an appointment scheduling tool in, you're looking to onboard convoy and go a bit more automated for some of your loads.
(13:28):
If it's, if it's just like haphazard things that you're puzzle piecing together, I don't care how good the tech is, it's probably not going to work out super well for you.
But if you're really being deliberate, we Had a customer meeting a couple weeks ago when I brought my team down to Columbus and they're really thinking of things like way far out, like whiteboarding.
Hey, we want to enter into a long term relationship with X, Y and Z because these are the outcomes we want more per se, let's say contract, regular freight or we want to figure out how to get more return trips to keep our trailers loaded or things we hear all the time.
(14:02):
So those are things I think is if it's part of a strategy, it's much more likely to succeed.
Speaker 2 (14:09):
Do you think that strategy is something that might be lacking overall because of, you know, I just look at it as I talk to a lot of people, Ken, and I know a lot of people in the industry and it seems like the general consensus is things aren't going to change in this industry and they want to keep it in that reactionary spot market mentality where I feel like the overwhelming majority of the competitors sit and fight for a small percentage of the market.
(14:39):
And you know, getting that repeatable, scalable consistency is like my, that's my main focus here in business development.
As I'm out there cold calling and prospecting customers, I know exactly what I'm going after because I need that to be able to build and scale.
And I think a lot of people sit inside of that spot market mentality that last minute and then they try and bring that into a contracted freight relationship out there.
Speaker 3 (15:06):
Yeah, I mean I think it all breaks down to a bunch of buckets.
You and I were talking off air before we started.
You've got like the freight X contingent.
I don't know how productive they're being.
Like, yeah, I don't know.
You're going to automate the time that you're spending out there.
I don't know.
I think this mile and dial is a good way to get started.
Right.
I think how many brokers have, I mean, so if you think about like broker archetypes, how many have like aged out their non compete and then teamed up with three or four others in the Chicago area and started a brokerage based on all their prior connections and then like a year or two into it they're able to pivot into like the more strategic and be a little bit more disciplined and more focused.
(15:42):
I think that's a pretty tried and true archetype.
I also think like some of the big legacy brands, they're struggling to find their place.
I mean, I think there's this thought of, I Think some people pushing the narrative that the industry is not going to change or hoping it doesn't change, if that makes any sense.
Because you know, if you're moving a couple billion dollars worth of freight a year, doing well, you might be happy if things don't change all that much.
(16:06):
So it's a diverse industry.
It's not, you know, I don't think it's impolite to say it's behind the times a little bit.
And I think struggling to catch up.
I think Covid was the jolt in the arm to get the industry to catch up a bit.
Because Sheriff, brokered loads I don't think are going to go back down.
I think if anything, that's up and to the right.
I think the way shippers are changing their operations, adding more digitization to their tendering, I see no reason why brokers don't, you know, reach that 30% of loads moved in the next 10 years, which would be huge.
(16:39):
It'd be absolutely huge.
Speaker 2 (16:41):
Where does that sit currently, just for context, out there.
Speaker 3 (16:45):
So it oscillates based on the freight market.
It's going to be at a low right now, probably just shy of 20%.
But if you look at like pre Covid, it was under 10, not pre Covid, like the pre ELD, the last two volatile cycles.
So if you look at like 10 years ago, give or take, you're probably 9 to 11% depending on industry.
And you know, certain types of shippers use brokers more in a more forward way.
(17:05):
So like your retailers, your bottling companies, et cetera.
But I think during COVID it peaked at almost a quarter of all loads were going through brokers.
Speaker 2 (17:15):
What, what do you think the way that, I mean just hearing that right, what do you think most people's biggest misconception is about how much freight is actually available out there in the market?
Right, Because I think that, because you know, I have a unique perspective in the sense of like, I've been doing this for a very long time.
I've seen the cyclical nature.
(17:35):
I know what it takes to kind of build a book of business and build a business in the industry out there.
And I think that there's a big misconception on how much freight brokers control compared to like what's moved out there.
Because I think people hang on that trillion dollar number, Ken.
They're like, oh, it's a trillion dollar industry.
(17:56):
Brokers are moving all this freight or people got their hands in all of this stuff out there.
But you know, One thing I like about what you guys have and like the amount of data that you guys put out there is it gives a very clear picture on how much people are actually moving in the market.
So it's like, if we're looking at you, let's just use the 25% or the 20% mark of brokered freight.
Of that 20% that brokers move can.
(18:18):
How much of that is like, considered spot market compared to contract?
Speaker 3 (18:23):
That's a good question.
I think it very much depends on your brokerage size.
I mean, there's, let's just say the top 1,000 makes up 90% of all brokers.
Even within the top 1,000, there's not more than a few hundred that are even getting a bite at the apple of contracted freight from shippers.
Right.
I mean, I think that's all.
And if you are, it's.
You're lucky to get a couple lanes on an RFP if you.
(18:46):
Ch.
Robinson is a great proxy for this because in a lot of their statements, they'll disclose their percentage contract versus spot.
And that just generally, if you pull their public financial statements, ranges from 45 to 55, depending on market cycle.
Speaker 2 (18:57):
Yeah.
Speaker 3 (18:58):
I would say if I was forming a brokerage and I had a genie or whatever, you know, I had control of the universe, I would probably build it about 50 contract revenue and about 50 spot.
I think that's probably the best in terms because, like, if you go too far, contract, you're going to be exposed when the market turns.
If you go too far spot, you're going to be exposed when the market turns.
Right.
So I think probably some blend and if you were a super genius, you would lock in more contracts when the market's at its peak.
(19:25):
And you would lock, you know, not lock in any contracts when the market's low.
Right.
So if you had true omniscience, you would be 100 contract in February of 2022 and you'd be 100% spot right now.
Speaker 2 (19:40):
Yeah, it's, you know, I look at it as, you know, speaking of spot and contract, where, you know, everything, all the data, all the reports, all the tweets and headlines and everything that you see out there is things should have been booming by now.
If, you know, for the last 12 months, that's all you heard is, oh, we're right on the verge.
We're right on the verge.
And, you know, I've tried to take kind of a very central standpoint where it's like, I, I don't see anything changing anytime soon.
(20:08):
And, and I think that we're going to continue like this might be the norm moving forward.
Like I don't see any drastic spike, I don't see any drastic drop coming.
I think that we're kind of in an inflection point right now where I think if you break it down in its simplest form, to me supply versus demand is the most pivotal point right now.
(20:31):
There's excess capacity and until that excess capacity leaves, there's going to be minimal desire on the shipper and manufacturer side to make any change in their operations.
Speaker 3 (20:44):
Yeah, I think the market was really poised for, I think a very modest recovery.
If you were in the industry, which you were, and I was from that like 2013 to 2017 cycle, that was probably what it was most poised to do is like by now we would have seen, I don't know, 7 to 10% year over year inflation and spot rates and really tight 4th of July and people holding on for a pretty tight retail peak.
(21:09):
I just think that these tariffs and just the economic uncertainty has just beat the optimism out of shippers and interest rates haven't come down like expected.
So I think the market was probably pretty poised and then demand just didn't come in.
I think that's the biggest mistake that a lot of people make when looking at these markets is like a demand purely supply.
(21:29):
Supply being trucks driven.
Recovery is probably not what we should all be hoping for.
That's going to be very modest, very treading water, very much like we're seeing right now.
We need demand to come in droves and I don't think we're going to see that until we have more certainty around tariffs and certainly lower interest rates.
Lower interest rates are very good for shipping things around.
Speaker 2 (21:50):
Yes, no, I agree with that.
And those are two key points that I've been speaking about here on the show is like as long as the feds don't drop interest rate, that's like people are going to be extremely apprehensive to spend any money at all.
And then speaking about tariffs as well, I think that's one thing that is.
It's been highly irresponsible by the current administration in my opinion to flip flop as much as they have because all of the flip flopping does is create more apprehension because it's like if a Tariff is at 25 today and then I want to order more inventory and then somebody spouts off, now it's going up to 50.
(22:26):
Do I wait, do I buy?
What do I do here and then that also just creates more and more uncertainty.
And I think that is another large hurdle that we're being faced with right there and in the market.
And you know, I, I talk about often is, you know, from like a pricing strategy because again the majority, like when you're out there cold calling and you're developing business, at the end of the day you're going to get started in the spot market.
(22:51):
Very rarely do you get onboarded, fill out an RFP and just start moving contracted freight for a customer.
Not saying it's impossible, but it's rare, right?
So it's like when you're out there and you're looking at this stuff, to me it's always going to be like this.
You have to use data to use the best pricing decision to keep your rates as consistent as possible across the board.
(23:12):
Right.
Like you got to remove any and all spikes and variables from your customer when you're out there pricing their freight.
Especially right now.
Because if you're out there moving a load for hypothetical $1,000 every single time and, or like you move it forward a couple of times and then the day of the week changes that it picks up.
And now your carriers want 1300 and you go and try and raise your rate, your customer is going to kick you out or they're going to not give you the load and they're going to look for that consistency.
(23:41):
And I think like if we're looking at all the macro data and trying to apply it into the micro daily tasks and stuff like that's one thing that is of our, like top of our mind right now is how do we same rate across the board every single time.
We might lose a little bit, a bit of money on that when the market dictates that.
(24:01):
But I think it's bringing that consistency across the board right now no matter what.
Because as markets flip as things change, capacity tightens up throughout the week or the month.
I think people are gung ho to raise their rate even if it's just for one to keep their profit margin the same.
Speaker 3 (24:17):
Yeah, it's tough.
I mean it's, we've got a lot of customers running pricing tests and the market's just not budging.
It's just not, there's no, you know, one of the things I was writing a little bit about last week is the sense of like well, carriers are taking rates below market.
It's like, well no, they're not in a, in a, in A free, you know, a free market.
(24:38):
The, the rate at which you agree and the rate at which you're willing to pay equal each other and that's the market rate.
Right.
So there's just nothing to move rates in one direction.
I do agree we're at equilibrium because you see things like road check or the holiday happening on a Friday for the 4th of July and I think peak this year we'll see rates go up but then probably collapse right back down because there's no systemic reason for rates.
(25:03):
I'm shocked, I'm frankly shocked and disturbed that we haven't seen more of a back to school push.
I, I think it's going to be a pretty like ugly Q3, Q4 for carriers and small brokers.
Broker margins are compressed.
It's not great out here.
Speaker 2 (25:25):
I, I'm right there with you.
And you know, from somebody who develops business every single day.
Right.
Like I cold call every single day, you guys.
I have heard this is the most like rejection and like don't even call us that I've ever heard in my career because of every like a lot of what you're describing there, Candace, is there's no need to look outside of their current network because service is good, everything's good right now.
(25:53):
Right.
So it's like if you look at it and you're like volumes and prices aren't changing much, things aren't pricing and like aren't changing much, people aren't going to be forced to look outside of their current network.
And Robert Cowton had a question.
He wanted us touch on RFP and how it's almost impossible to win when shippers list number of loads.
Lane but schedule example.
Wayne has 62 loads, but it's over 12 months or in four months.
(26:16):
And I think what he's talking about is like if you're going out there and you're bidding on RFPs, how is it like how would you accurately price something right now when it lists out the amount of loads but it doesn't list out like when they're going to actually ship because if I'm going to bid on a load can and then it turns out on an rfp and then it turns out, oh hey, this is only shipping on Memorial Day, fourth of July, Labor Day, and it's all like holiday based freight.
(26:45):
You're bidding wrong.
Speaker 3 (26:48):
There's a phrase in any pricing.
This was true when I was in electricity.
I've studied it in hotels.
In pricing, you're only as good as your dumbest competitor, right?
Like, and that is very true in freight brokerage pricing.
Right.
Because people who don't take into it like the market, I think it's relatively impossible to assume that the rates will be lower than they are today, 12 months from now.
(27:12):
So when you're pricing an RFP you're going to have to, your job's a lot harder because you're going to have to convince a shipper if they want 12 month rates that rates are going to go up over that 12 month period when they haven't done anything but go down or stay flat for the last three years.
Right.
So that's tough, it's a tough sell.
One of the things we encourage folks to do is try to negotiate a shorter term length.
If you can negotiate a way to lock in rates for three or six months and then renegotiate index price pricing has never pop more been more popular than it is right now.
(27:40):
We've got several large brokers and carriers that are coming to us with help to build index pricing.
You know, maybe they're locking in 50% of the rate and let 50% of it float with the DAT national average or any national average for that matter.
Anything that's kind of comprehensive of the market you could use CAS or anything like that.
But yeah, it's tough.
(28:01):
This is the most difficult time to be a pricing person at a freight brokerage.
Like there's no and it's been that way for 12 to 18 months.
So yeah, I, I, I, I, I.
Speaker 2 (28:14):
Don'T know, I was gonna say I, I look at it from like a pricing perspective like even though it hasn't changed over the last 12 to 18 months.
Ken, like you're talking about like a lot of confidence for those individuals who are developing new business right now that the prices that you see out there are probably going to remain very consistent over the next I mean I would argue, I'll just say for conversation piece throughout the end of the year, right?
(28:36):
Yes, there's going to be some seasonal spikes that come along with it but if you're looking for a long term partnership with a customer, you're going to eat it during that time to keep the freight and keep that volume running through your books.
Because I think that the longer everything draws out here the when it happens people are going to be panicked for new providers when capacity tightens up.
(28:58):
Because I like, I'm convinced now can we're going to go to leave on a Friday and we're going to come back on a Monday and it's going to be like, where did all the trucks go?
Why is there no trucks there?
You know, and all of this stuff happened.
But I think that from a pricing perspective, the fact that it hasn't changed I think should give a lot of sellers a lot of confidence as they're developing new business here that when they do get that opportunity, when they go out there and use a tool like DAT to look at historical pricing over the last 12 months, that's probably going to be the rate for the foreseeable future here.
(29:27):
And that should give you enough time to build up that trust with that shipper to when things change out there, you're going to be brought into that conversation of hey, we want to keep you, we know rates are going to change.
What's going to be your price here for the next six months?
Speaker 3 (29:42):
Yeah, I mean I think it's all great advice.
I think we're in a period of such uncertainty that it's a double edged sword.
Right.
So we'd love it if the shipper was committed contractually to provide what they say they're going to give us as brokers.
Right.
And that almost never happens.
Right.
Like when's the last time?
And if you're not doing this as a broker, you probably should like go total up.
(30:05):
If the shipper said they were going to give you 150 loads over the next 52 weeks, go see how many loads they gave you.
Sometimes it's more, sometimes it's less.
Very rarely is it ever what was written in the rfp.
But then if things go absolutely crazy, I mean there are things that the government could do that I think wouldn't shock any of us right now.
Which is like nullify all legal foreign visas as an example.
(30:25):
Right.
Which would take probably hundreds of thousands of carriers off the road and trigger an ELD esque capacity event.
But I think in that case, if you just signed a con 12 month contract, I think you're very well aware and your shipper is very well aware that everyone's going to be coming to them, renegotiating their prices.
Right.
So when it's a market level event, the only time you can't really wriggle out of that is when you made a mistake, you price something too low or you weren't aware of this, that or the other thing or that it had special requirements that gives you a really kind of bad mark with the shipper.
(30:57):
But if the entire market goes crazy, generally speaking you have a way to negotiate yourself into a better place.
Speaker 2 (31:05):
Yeah, I think that when it does happen, people need to rest assured that it's going to happen to everybody and it's not just going to be a you thing.
And when that has happened historically in my career, shippers will trigger a rebid.
They'll redo their entire rfp because service failure is not going to just hit one person when a market flips.
(31:25):
It's going to kind of hit everybody at that time and they're going to be way more open to doing what Ken's talking about right here.
Speaker 3 (31:31):
Yeah.
And they've enjoyed, I mean, shippers have, of course, just to kind of bury that point.
Like the reason it is because bad service hurts more than bad rates.
That's just a universal truth.
Right.
Speaker 2 (31:42):
A ship.
Speaker 3 (31:42):
Right.
So what happens is their service starts to lag and then they're willing to throw more money at the problem to make their service get better.
Yeah, we should write a book of like universal freight truths.
Speaker 2 (31:53):
Yeah, we should, Ken.
And that's something that I try and do on this show all the time, man, is just talk about universal freight truths that never change in the entirety of my career.
Because it's like, I think that a lot of people are thinking there's a different way or an easier way out there.
But it's like what you just said there, Ken, sums up everything personal, like perfectly.
(32:15):
Is this like, bad service will hurt a cheaper price like any day of the week?
Because I think transportation providers at times think that every food manufacturer out there doesn't have a massive competitors who are all competing for that business.
And last time I checked, nobody makes money if the product's not on the shelves.
Right.
(32:35):
So it's like there's a big thing out there that comes down the pipe if you aren't out there actively servicing these accounts.
Because when it boils down to it, man, they need the trucks to pick up, they need them to deliver.
You got to lose money at times.
You got to service the account.
You can't always think, how is it that I only make money in this transaction?
Speaker 3 (32:56):
Yeah, my favorite is make it up in volume.
That is my favorite freight ism of all time.
Is like when you got a customer that's coming on board at like negative 3% GP across all of their lanes.
And you're like, I'll just make it up in volume.
It's like, no, you won't.
Speaker 2 (33:11):
Yeah, I went to public school, Ken, so last time I didn't.
They used to tell us two negatives make a positive is that what?
Speaker 3 (33:16):
Yeah, yeah.
Because you and I have talked about this a lot before is like the single worst behavior of a freight broker, whether you have a pricing department or not, is being unwilling to take losses at a load level.
Speaker 2 (33:30):
Yes.
Speaker 3 (33:30):
It's the number one thing that's holding you back from your pricing strategy.
Like you, there is no magical bell curve that any mathematician has ever found that magically stops at zero.
If you want to run a brokerage with a 15 average gross profit, given the variability in this market, you're going to have 8 to 10% of your loads, sometimes you hope less than 2 to 5% most times coming in below cost.
Speaker 2 (33:52):
Yeah, yeah.
Speaker 3 (33:53):
That's just kind of the way it is.
Speaker 2 (33:55):
Oh, that's it too, Roman.
Because it's like, I mean things happen as well.
Right.
And if you have a service failure where a driver's not able to pick up a load and you're unwilling to lose money on it to move it at your shipper schedule, your competition is willing to lose money on it for a load to move it to make sure that customer is taken care of.
Because the best brokers out there understand that point, that at the end of the day, yes, we might lose on this one, but I will make that lost up by continuing to move freight for that customer because that just gives them a reason to take my phone call, you guys, at the end of the day, I'm calling them.
(34:30):
I know a lot of sharks out there who are prospecting non stop right now, hoping you don't take a loss on a load so we can get in the door and start moving their freight.
Because that's what just cracks that door open and gives a guy like me an opportunity to start moving their freight.
Speaker 3 (34:46):
I personally know multiple brokers that have lost million dollar accounts because they refuse to take a loss on a single shipment.
Speaker 2 (34:53):
God.
Speaker 3 (34:54):
And very rarely is it ever one time.
It's usually the straw that's always the story you hear like at Tia, at the bar, like it's that one, oh one time.
But usually it's a pattern of quoting back multiple times.
And then the shipper eventually just gets pissed enough where they just say, you know what, I don't like this.
(35:14):
And I'm not, you know, I'm not willing to do this anymore.
Speaker 2 (35:17):
So Ken, I'm gonna have to have you back on next month.
And we'll just like, we'll choose one topic, Ken, and like of the freitisms and we'll just do an entire episode and break that down.
Speaker 3 (35:30):
I love it because I.
There's just so many, right, that these just beat into people's heads and it's just holding them back.
Speaker 2 (35:39):
Yeah, dude.
100, man.
But, Ken, thank you so much for taking the time to.
To join me today.
How does everybody need to, like, where should they go to find out more if they want to do their own research on the convoy stuff or anything that you guys got going on at dat?
Where's the best spot to find all that?
Speaker 3 (35:55):
If you want civilized discourse and some meaningful chatter about this, you can find us on LinkedIn.
You hit up my page.
Kerry Jablonski, Bill Treeger, we've all posted some of the blogs.
Bill did a great piece on kind of the whole journey because he's coyote, uber freight, Amazon logistics, and then I know convoy, and now dat.
So he's kind of seen the whole thread of it.
(36:15):
So I think there's a lot that you can kind of glean from that.
I think it's pretty apparent that we have no interest in becoming a brokerage.
Bill coined a new term, the bad sauce dealers.
All these kind of angsty LinkedIn poets that are out there nowadays that are writing like 1500 characters about how, you know, mean dat is.
Speaker 2 (36:35):
I look at it as is.
You know, here's also something that people should try adopting.
Unless the person or the company says it directly.
Might want to double check your sources because trust me, there's not that much inside information that gets leaked out there about people's business strategies.
Hate to break it to you guys, it doesn't necessarily exist at the levels that some LinkedIn warriors try and put out there, but Ken, thank you so much for taking the time.
(37:05):
If you guys can't find Ken or anybody at dat, hit me up.
I will gladly put you guys in contact with them, but that's going to be it for today, ladies and gentlemen.
As always, if you got value in what you heard, subscribe to the show.
You guys.
And for feeling really ambitious after this one, rank the show on itunes and Spotify.
Because if you saw value, your network's going to see value as well.
I appreciate you guys.
I love you guys and we'll be talking to you soon.
Speaker 1 (37:30):
Came back with a bank Got the foot on the gas pedal to the metal when the blood make a bigger boss.
Speaker 2 (37:51):
Hey.
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