October 17, 2025 • 62 mins
Freight enforcement headlines miss the real story: capacity shifts. DAT’s Dean Croke joins us to unpack how English-language crackdowns, CDL scrutiny, and chameleon carriers distort regional rates even as national averages stay flat. Shippers are squeezing savings while fleets run razor-thin, propped up by cheap diesel and slow repos—supports that could collapse fast. Flatbed stays strong thanks to AI-driven construction, and Q4 brings seasonal spikes from food and e-commerce hubs nationwide.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_03 (00:19):
Welcome back.
It's another episode of theFreight 360 podcast.
If you if you listen to us lastweek, we're going to continue
that conversation this week.
We are rejoined by Dean Croakfrom uh DAT.
We'll skip our news and sportsintro because we want to spend
as much time with Dean aspossible.
So, Dean, welcome back.
You just you just uh dealt withthe Nor'easter in Nantucket.
(00:41):
How'd that work out for you?
SPEAKER_02 (00:42):
Yeah, pretty good.
I feel like we've been at thisfor five years, right?
SPEAKER_03 (00:47):
Yeah.
SPEAKER_02 (00:48):
Haven't we been talking together like for during
the pandemic?
SPEAKER_03 (00:51):
Yeah.
I think that's when we've Ben,what do you think?
I think it was 2020, late 2020,right?
We first started doing all ofour stuff with uh DAT in
general, right?
With between Ken and Dean.
SPEAKER_02 (01:03):
So and someone that's how long we've been
talking together.
I was just sort of thinking itback to uh when we first started
talking together.
It's been that long.
SPEAKER_03 (01:12):
Yeah, one of our first, I think one of our first
conversations on a podcast, welearned all about like your
background in Australia anddoing those like uh the the
train basically like the themulti-trailer train runs, you
know, from one side of Australiato the other.
So we've come a long way.
Yeah, um, but uh good to haveyou back, Dean.
(01:33):
Um Ben, I'll let you kind ofkick things off.
You know, we're we're gonnawe're gonna pick up where we
left off talking about whathappened in the freight market
the last couple of weeks withenforcement and it's getting
national attention.
So this is kind of a obviouslyit's it's we're in the
spotlight, but um Ben, where doyou want to go with this?
SPEAKER_00 (01:51):
Yeah, I mean, to be honest, the driver enforcement
and just like what's been it'skind of crazy that I'm saying
this, that like most of this iswhat we're seeing on like
Twitter and X.
But I mean, I was telling Natethis and my wife, it's just like
I just I don't know, I have likean aversion to social media.
And I realized the other day, Ithink I know what it is because
(02:14):
I was trying to read, and Stevensends me a bunch of stuff, will
text me a link and then I'll goread it.
And I'm like, oh, most of whatpeople are talking about seems
to be here.
And it it literally made memotion sick.
Like scrolling and doing this, Igot up and I'm like, I'm like, I
really feel nauseous.
Like when you read in the car,right?
I'm like, oh, I'm like, this iswhy I just can't stare at this
(02:35):
all day.
But I mean, there's a ton ofinformation out there.
There's a lot going on, again,with enforcement, the, you know,
Secretary Duffy, and they'redoing more with the DOT and
FMCSA.
I'm curious, because you have aton of experience on both sides
of things, right?
Not just the freight side, butalso literally driving a truck,
speaking with drivers, you'reout there, you're talking with
(02:58):
folks literally being affectedby this.
Like, I mean, just tell us kindof what you think and where this
kind of came from, because I'mjust genuinely curious what your
point of view is on theenforcement alone and how and
where it's being applied.
And then we can talk a littlebit more on like what the
overall effects might be onrates and like the whole market,
I guess.
SPEAKER_02 (03:18):
Well, also as an immigrant CDL holder, right?
So there's another perspectivehere because there's a there's
more than a hint of racism aboutwhat's going on behind all of
this, because that's how thisstarted back in March.
Because remember, this startedwith English language
proficiency.
Like, so this didn't start as afederal program to improve the
(03:40):
one in five Americans that areconsidered illiterate, right?
This didn't start with let'simprove the 65 million Americans
who are considered illiterate.
Let's didn't let's help lift thestandard of a lot of people who
are you know problematic withthe English language.
That didn't, it started withlet's slash federal worker
numbers.
(04:01):
Right?
It did that's how it didn'tstart.
It started with some poortrucker who was trying to make a
living.
And it started on social mediaof all places, right?
So it started in the worstpossible place.
And I said from the get-go,well, if I'm a trucker and I'm
in Arkansas and I have a problemwith English language, the last
(04:22):
place I'm gonna be is on theroad in Arkansas.
I'm gonna go to ground.
So it's not so so therefore it'snot gonna have an impact on
rates because I'm gonna I'mgonna go to ground.
The effect, so so we so the ideathat we're suddenly gonna have
all of this enforcement and it'sgonna have an impact on
capacity, it already had animpact on capacity in early
(04:45):
March because everyone went toground.
Right?
So so the idea that we weregonna see some sort of impact on
capacity in April, May, and Junewas never gonna happen.
It already happened in March.
And that's why you never reallysaw the national rate needle
move, and why you're not seeinganything happen now with both
(05:07):
English language proficiency ornon-domicile CDL holders.
The numbers are just too small.
And so I'll move to my nextpoint, which is for two and a
half decades, we've beenrecruiting drivers from both
here and abroad in greatnumbers.
So is it any surprise most overthe road truckers are of a
(05:30):
second or third generation?
It just turns out they're notthe right type.
Lo and behold, after recruitingthem for the best part of 30
years.
So the problem now is that theit's like the squeaky wheel gets
the most attention on socialmedia.
That's where you kind ofstarted.
And I fear that the the peoplewith the loudest voices are
(05:54):
starting to win, right?
And they're starting to they'restarting to have a big effect.
And I'm part of me is a shame tosay this, but it's actually
starting to have a good effectbecause, and I'll say this as a
trucker with a CDL, because thefact that some people have got
(06:14):
trucker licenses and they canskate by and not have to go
through the same rigor to get aCDL and have a DOT physical that
I have to, that really getsunder my skin.
Because, you know, I have towork hard to keep my blood
pressure under, you know, 90under, you know, one uh 90 over
140, right?
That's that's just to hold aone-year card.
(06:36):
But these guys that can get bywith a CDL and and not have to
go through the same standards Ido, that's not right.
So I think there's some goodthings that are coming out of
this.
I just, it's a bit like theequalizer.
You have the movie with DenzelWashington.
Sometimes we have to do thewrong things to get to the right
place.
(06:56):
Remember that discussion on thestep, right?
We have to do the wrong thingsto get to the right place.
Well, I think this is what we'redoing here.
We're doing the wrong things toget to the right place.
And I think what we're gonna endup with is a much better
standard of trucker.
It's gonna be very hard forcompanies to get A, into this
industry and B to stay in thisindustry.
(07:17):
And it's gonna be very hard withbiometrics, with uh all of the
things that companies have to doto get through to get a DOT and
an MC number, same on the brokerside.
And then with drivers to getinto the industry.
So you won't be uh it'll beharder to get into the industry
with uh if you come from anothercountry, because now you're
(07:38):
gonna have to have a H2A, H2Bvisa, or an E2 visa.
Um but I also think thosenumbers are very small.
I don't think the non-domicileCDL numbers are anywhere near
the level that they're talkingabout.
SPEAKER_00 (07:51):
That was the one specific thing I was really
curious on your opinion on,because a lot of people would
reach out to us.
We did some episodes with abunch of folks that Steven's
been working with that have beenlooking and uncovering.
Oh, honestly, like it startedmostly with the fraud, chameleon
carriers, you know, reusing MCs.
Then it was a whole rabbit holeon ELD manipulation in this
(08:15):
giant back door where basicallyall of this data is basically
just getting sent to whomever tosteal freight.
Yeah.
And the more we dug in, like,honestly, like I was kind of
terrified because I'm like, thisis so much worse than I ever
would have guessed or expected.
So when these crap boundsstarted coming in, folks were
reaching out and asking me,like, well, what do you think
(08:36):
the numbers are?
And I was talking with JasonMiller about this, I think it's
like last week, where he waslike, you know, we've never seen
capacity, right?
A shortage of capacity reallyaffect the rates.
Like it's almost always from thedemand or the freight side,
right?
Like, and I was like, okay,well, we saw it temporarily with
the ELDs in 2017, where likecapacity temporarily shrank for
(08:57):
about four or five months, rateswent up, and then they kind of
came back down.
And the question I asked him,which is kind of the same
question I wanted your point on,is like, okay, we look at all of
the stats and everything JasonMiller puts out and everything
that all of us read, right?
And I think all that is greatinformation.
But the point I was making islike they all have an underlying
(09:18):
assumption that everybody'splaying by the rules.
And I was like, we're literallyseeing, again, some of it's
anecdotal, some of it is reallyobjective evidence of drivers
for sure violating ELDs, drivingway longer than the hour service
regulations.
We're seeing the FMCSAestimating 200,000 drivers they
think are non-domicile, thatmaybe will be removed over the
(09:40):
next year.
So I'm like, theoretically, justas like a thought experiment,
I'm like, if that number is400,000 drivers that are either
driving longer than thelegitimate regulated companies
playing by the rules are, thereis some argument to be made that
it could have an impact.
It's just how quickly and howmany of the violations are
(10:02):
really out there.
SPEAKER_02 (10:03):
I think the non-domicile CDL number, I
think, is I don't I I don'tthink it's anywhere near as much
as what they're making out.
Right.
I don't think that's I that'sthat's over two years, right?
That that number is sort of andI don't think it's as much as
what they're making out, right?
I think that's a separate numberto the illegal carriers that are
(10:27):
swapping MC numbers, DOTnumbers, drawing their numbers
on the side with crayons,crayola, right?
Or fake numbers.
There are a lot of trucks outthere that I think are not real,
but uh whipping up and down theroad.
So I think what you're whatyou're getting at, and Stephen's
getting at, is there are trucksout there that look like truck
(10:51):
companies that are not real.
Correct.
That is something that I findvery hard to quantify because
I've seen them.
SPEAKER_00 (10:57):
Yeah.
But we've all seen itanecdotally, and I'm like, the
thing I wanted to say that itkept coming back in my head, and
Nate and I, we've talked aboutthis a while, is like I have
brokers for the past two yearsthat have argued with me, right,
that like the transit times fortheir loads are wrong because
their drivers run 800 to 900miles a day.
(11:18):
And I'm like, I'm like, thatlike just physics.
I'm like, that is animpossibility unless they are
driving longer than they shouldor doing something that
shouldn't be happening, right?
SPEAKER_01 (11:29):
Oh, you're Australian.
Correct.
So seriously.
SPEAKER_00 (11:33):
Well, I thought about the stories you told us
years ago.
We were talking about this offair of like literally on the
convoys in Australia where youwere putting, I think you told
us you put hot sauce in youreyes to stay awake because you
guys were driving like 15, 20hours a day.
No, you pull your nose hairsout.
SPEAKER_03 (11:47):
That's what it was.
That'll do it.
SPEAKER_02 (11:50):
No, um, no, but seriously, you uh our logbooks
allow us to run 14 hours a day.
So so 700 miles is table stakes.
But seriously, um uh uh this iswhere this is where you have
three drivers in a tr in a caband you do all sorts of crazy
things, but um there issomething to this.
And I have sat in truck stopswhen I've been out driving my
(12:13):
truck, and I have seen thedrivers in the cabs doing this
and cooking their own meals inthe cabs.
And and when you're in a truckand you're talking to other
drivers, they let their guardsdown and they talk to you about
what you're doing.
And it helps when you've got anaccent like I do, because they
talk to you, they realize you'renot from here, as in the US.
(12:37):
And and I have learnt, I've seensome things, and I've thought,
holy crap, what are you guysdoing?
And and like and a lot of themare reefer carriers, they're
hauling produce, they're doingcross-country work, and and this
kind of gets to what I'm seeingin the rates, because it's not
necessarily dry van work,although I do know what happens.
(12:58):
We're seeing I'm seeing somestuff happening with dry van
rates.
And this is this theory that Kenand I've got about road check
weak effect that seemed to bemostly with with refrigerated
carriers, where we're seeingthis road check weak effect with
rates.
But I think there's something tothis where we're seeing a lot of
carriers um selling MC numbers.
(13:20):
There's there seemed to be someand I'll and I'll I'm I'm kind
of all over the place here.
I was in a truck stop going to aconvention uh in Wisconsin.
I was in uh on the west side ofChicago in a truck stop on I-94,
and I was listening to a coupleof um Middle Eastern carriers uh
talking about selling MC numbersin their trucks.
(13:40):
And I and I couldn't quite theirbroken English wasn't good, and
I couldn't quite grasp exactlywhat they were saying, but they
were doing a deal about sellingtheir freightliners and uh and
they were talking about their MCnumbers and a number of$19,000
was discussed.
And I kind of thought, holycrap.
Yeah, and I thought, holy crap,I'm I'm hearing this real.
(14:49):
Like this is what people are andI'm kind of and I'm trying to,
I'm not trying not to be a dork,you know, and I was standing
behind these guys and I'm tryingto eavesdrop without really
being so obvious about it.
And I thought, oh God, I wish Iwish my Russian was better
because I'm I gotta insertmyself into this deal somehow.
(15:12):
Yeah, I'm thinking, holy shit,if I could really get inside
this conversation, I've probablyuntapped the holy grail of
what's going on in thisindustry.
And of course, I'm in theepicenter of all of this stuff
that's going on in the in theChicago market that we heard
about for like three or fouryears.
And and then lo and behold, outcomes this article last week on
(15:33):
freight waves from the uhimmigration attorney that says
to um all of his drivers, uh thethe Serbian drivers, don't get
on the road this week becausethey're gonna arrest you.
SPEAKER_00 (15:46):
And I thought even if you're legitimate, I think
the article he I think hisstatement was even if you are
playing by the rules, right, andhave the right documents.
SPEAKER_03 (15:55):
Yeah.
SPEAKER_00 (15:55):
Just because they have no idea how long you'll be
processed, you could be sittingin there for years, I think was
the sentence.
SPEAKER_02 (16:01):
So the week so two weeks ago, I I spent the week in
Salinas.
So I've been out in Salinastalking to all of the Punjab
seat drivers, meeting withfreight brokers, insurance
brokers, farmers, growers,coolers, the cooling houses, and
uh getting to getting deep intowhat's going on um in that
market.
Now, this is just morecoincidental that all of this
(16:22):
was blowing up.
And um and and the and I'mtalking to um, of course, the
Punjab Sikh drivers are Americancitizens, and some really cool
guys, like just they're greattruckers, these these guys can
drive, outdrive anybody.
And of course, they they'resaying, I'm not going anywhere
near the border, I'm not leavingFresno, I'm not leaving Salinas
(16:45):
for any money in the worldbecause they don't want to get
harassed.
Because guess what's guesswhat's happening to loads out of
McAllen?
You can you can get$1,000 morefor a load out of McAllen back
to Los Angeles this week thanyou could this time last year,
right?
Because they're not going there.
They won't go there.
So what you're seeing is so thatyou're seeing freight rates on
(17:05):
backhaul lanes back to the WestCoast where the capacity comes
from going up.
SPEAKER_00 (17:11):
So this is Yeah, like the lane we saw the most
that I I was asking Ken aboutthis because I'm like, we again,
it's anecdotal.
It was like six or seven loadslast week, but we saw massive
increases from Georgia and SouthCarolina to Texas.
Yep.
Like long haul heading back overto the West Coast.
We're like, and I'm asking myteam, the other thing that I
always say is I'm like, that'sone transaction, but like, what
(17:34):
are you guys hearing?
And I'm like, you know, whenyou've been running this lane
for two years, they're like, wewould have 30, 40 carriers reach
out to us for this load on adaily basis.
We're hearing three or four now.
So there's less interest andhigher rates.
And I'm like, again, it'sanecdotal, but I'm like, every
week I'm looking at the samesituation.
(17:55):
I'm like, we are seeing hugeincreases on these types of
lanes within us, right?
SPEAKER_02 (18:01):
Well, well, then it's like it's like go back to
March when the TikTok videopopped up about the poor driver
that was apparently arrested andfined five grand because he
couldn't speak English.
Whether it was true or not, noperson in their right mind would
have been on any interstate,anywhere in Oklahoma or Arkansas
ever again.
(18:22):
If you couldn't speak English.
He would have said, okay, thegig's up.
I'm the I'm done.
So now so and then apparently Iwhen I was in Salinas, um, the
guys said that they that ICEgrabbed three of them last week.
This this was two weeks ago.
So you know, this is a verytight-knit community.
(18:42):
They all have very strong socialnetworks, and they would have
said, okay, we are not going toMcAllen to load produce on
across I-8.
And and so what that means isthat capacity then diverts to
other markets.
And of course, they were allsaying, well, let's run to the
Northeast.
So plenty of trucks wanted torun to Boston, but no one wanted
to run to McAllen or Laredo orEl Paso.
(19:05):
And of course, on our loadpostson Saturday morning, I'm looking
at Nogales.
Brokers' loadposts were up 95%last week out of Nogales for
loads to the East Coast.
Nobody wanted to go to Nogalesin the Tucson market.
So when I look at our loadpostsacross all of our border
markets, the brokers were reallytrying to find capacity because
no one was wanting to go there.
SPEAKER_00 (19:26):
Yep.
SPEAKER_02 (19:27):
So that's what I'm finding is that there's you're
seeing capacity tightness inthose markets where you could
almost draw a, you know, throw anet over, it's probably the
worst thing to say, where ice isactive, right?
Where ice is active.
I'm sorry, but it was a reallyword.
It's an awful thing to say.
Again, we're we're doing, youknow, we're doing the wrong
thing to get to the right placehere.
(19:48):
But what what we're finding isthat I think wherever you're
seeing this enforcementactivity, you're finding
capacity is is adjusting.
And that's where I think thebackhaul lanes are uh really.
SPEAKER_00 (19:58):
Okay, so I had a question about that, right?
And this is one of the thingsthat I was messaging Jason, and
I was curious your and Ken'sthoughts on.
Is it like, I mean, I have apretty good understanding of
DAT's rate data.
Like we've literally interviewedalmost everybody in your
organization, had conversationon what is going into there,
what makes up these numbers,that it is the median, it isn't
the average, the top and bottom25 percentile are being excluded
(20:22):
on that range.
So you get a tighter, more sayit should be more likely you
will pay within that range,right?
Instead of the anomalous ones onthe top or bottom.
Now, the other thing that I readlast week and the week before
was everybody saying, like, thelarger trucking companies aren't
being affected yet.
And okay, so the thing that I Iwas curious, right, is I'm like,
(20:45):
that would make sense, right?
Because the smaller companies,right, or the people that are
driving in ways that theyshouldn't, whatever that bucket
is, right?
Whether it's the CDL, violationsof our service, whatever, like
that wouldn't affect the largercompanies first.
And also you have the invertedyield curve, if you will,
meaning like contract rates,right, are still higher than
(21:07):
spot rates, which has shouldnever happen economically, but
has persisted for three and ahalf years.
And I'm like, okay, normally themarket will shift and rates go
up because the spot marketspikes.
Contract drivers will jump tothe spot market to make a
premium and then tenderrejections go up.
But since we have an inverseeconomic situation, meaning like
(21:27):
spot rates are below contract,we first need them to go back in
line, which wouldn't happen withthe larger carriers first.
It would happen with the smallercarriers or individual either
owner ops or very small truckingcompanies.
And I'm like, okay, well, thosedrivers are one, more likely to
work in the spot market withsmaller brokers, right?
Less of them are reporting theirdata to anybody.
(21:49):
I mean, they are in one way,it's most of it's getting
factored.
So it's probably eventuallymaking its way into the bigger
models.
Right.
But there would be a time lag toseeing that, and you wouldn't
see the impact you would the wayyou normally do, because it's
not happening at that scale,right?
Because like literally what yousaid and what you're seeing is
what we're seeing.
(22:10):
And I'm like, I was not makingthe argument that it's going to
move the whole market up, butI'm making the argument, or I
guess I'm very curious yourthoughts on like if
theoretically enforcementincreased and became more
consistent across the country,just theoretically, right?
And now you don't have peopledodging areas where enforcement
(22:31):
is.
So you don't see less here andthen more here.
You would see all of the callit, I don't want to say I don't
want to even use the wordillegal, but like say like the
carriers or the driver.
SPEAKER_03 (22:42):
Capacity, those that are at risk of getting, yeah.
SPEAKER_00 (22:45):
Right.
If they exit the market, likeyou would likely, I think, see
spot rates finally go back abovecontract rates.
And then you would probably seewhen you have produce, because
this shopping season's beenterrible.
If it was a normal year, youprobably would have started to
see what we've normally seen inthe market for 40 years that we
haven't seen for four years, Iguess, is another way to ask it.
(23:06):
If that even means I know itseemed like a very long
question.
SPEAKER_02 (23:13):
Yeah.
There's something anomalous,right?
And I think what you've beenseeing is it's almost like the
waterfall effect, it's almostlike the waterfall's been
broken, stopped.
Right.
And because I think what'shappened is uh shippers have uh
routing guide compliance hasbeen exceptionally high, tender
(23:34):
ejections have been historicallylow.
And what we found with ourshippers is they they uh carved
out low volume lanes, whichhistorically had high levels of
tender ejections, and they wentto you guys with a strategic
buy.
So if they carved out highvolume lanes to to their
(23:57):
incumbents and and gave them totheir prime contract carriers,
and they have 98-99% acceptance,right?
And and awarded them to the andthat was a pan pre pan
post-pandemic deal, and that'sbeen pretty well you know
ongoing.
So and I think uh, you know, ifyou have like sort of maybe one
(24:19):
to one point two routing guidedepth, you have very little
tender failure.
SPEAKER_00 (24:24):
So basically, and for anyone out there that's just
from like, as Nate would say,like Barney style, right?
101 level, meaning all of thethe shipments that the large
companies have said they wouldgive to the trucking companies,
the trucking companies are notonly taking them, they're not
giving them back, which meansyou have a lot, a lot less
problems with large shippersmaking sure their freight gets
(24:47):
picked up, which usually doesn'thappen.
SPEAKER_02 (24:49):
Right.
So so then you've so yourwaterfall effect, you haven't
got loads falling down throughyour second, third, fourth
cheapest carrier and thenfalling out into the broker
market.
So so what you've got is thenyou've got all of these low
volume lanes that normally wouldbe high failure lanes going to
the broker market.
Instead, they were carved out ofthe bid and just directly going
(25:13):
to you guys buy.
SPEAKER_00 (25:17):
And I want to add something to it.
The other thing that I've heard,I mean, fairly large companies
that I've talked to, likeliterally that are our
customers, right?
And ask them some of thesequestions.
One of these companies is a verylarge um uh auto parts like
supplier, right, in the US.
They are doing no RFPs and likethey've never done that ever,
(25:37):
but have been for two years,meaning like literally they're
just pushing everything onto thespot market.
And they're on time expectation,meaning like normally a company
that large that has like 25 or30 distribution centers expects
like 97% of their loads pickedup on time.
Their benchmark, they said, was96 or 97 for their carrier
scorecards.
(25:57):
This is three or four years ago.
Now their expectation is 80%.
And they said we are literallyjust giving all of our freight
into the spot market becausewe've saved money.
So we're literally just notcontracting anything.
And I'm like, that to me, Ithought is pretty crazy for a
company that ships probably athousand loads a week, right?
Yeah, and then the other thing Isaw was a very large food
(26:21):
company in the US, like probablyFortune 200 company.
I ran probably a 4,000 lane bidwith them.
When we got our feedback, wewere at the low end of DAT on
every pretty much lane we wereputting a number on where we had
carriers that would run it.
Their feedback to us was you're15% higher than what we're what
(26:42):
we're paying.
And I'm like, I'm like, thenumber, right, of them, like
just the scale, literallyhundreds of lanes and thousands
of loads.
They're saying we were 15 to 20%too expensive.
And I checked, I looked atpredictive, I looked at DAT, I
look at historic, I'm like, weare on like the low end of the
(27:02):
collar, and they're saying everysingle one of ours are 20% too
expensive.
And I'm like, how is that evenpossible?
Like, because that's front haulfreight.
Like, that's not even backhauls.
Yeah.
SPEAKER_02 (27:11):
Like so now the other thing, the other thing,
Benjamin, we haven't talkedabout is finance companies.
So not only, not only have wesays the reason that um a lot of
companies are out there doingthe sort of rates that have been
supporting this what what you'reseeing, is finance companies
have been supporting a lot ofthese companies that are running
these rates that are supportingwhat you're talking about.
SPEAKER_03 (27:33):
When you say finance company, what what kind of
companies are you referring to?
SPEAKER_02 (27:37):
All the big finance companies that financed a lot of
these carriers into the industryin the last three or four years,
they haven't foreclosed on thembecause the trucks have been
worth nothing compared to whatthey financed them.
SPEAKER_03 (27:49):
Oh, okay.
So the people hold that are thatare holding the paper.
SPEAKER_02 (27:54):
The notes worth nothing compared to what they
financed them for.
So that'd be an artist.
SPEAKER_00 (27:59):
When all the valuations came down, everyone
went, There's going to be amassive foreclosure, and all the
banks went, We don't want theproperty back because we're
gonna we're gonna lose ourasses.
Pardon my French on this.
So basically what you normallysee is when you don't pay for
something, the bank takes itback, and that's not happening
with loans on truckingequipment.
SPEAKER_03 (28:17):
So there's not PMI when you buy a class 8 truck,
unfortunately.
SPEAKER_02 (28:20):
So that's the other wrinkle in this debate is that
what if that's if they start tocall in those notes and say, you
know, we're gonna cut ourlosses, that's when you'll start
to see some of this capacitydisappear also.
So it's it's been part of thereason that we've seen this
elongated freight market.
Um so yeah, we are we are at apoint where there will be a
clean out in this market.
(28:41):
And um I mean, it can't comesoon enough because some of the
stuff, those rates you'retalking about, that's just
absolutely crazy where a largeauto parts or a food
manufacturer can run with ratesso low and accept those sorts of
service levels.
SPEAKER_00 (28:58):
Like that's yeah, I was literally gonna email it to
you.
In fact, I think I might havesent you a few of these things a
couple months ago when I wasreally seeing more of it because
I'm like, again, I just keepcoming back to them, like
economically, this makes nosense.
I'm like, there is literally noexplanation as to how this could
occur.
And it's like, okay, if it's aload here, it's a lane here, it
changes a little bit, likethings happen, they're anomalous
(29:20):
that you can't understand.
But like when you're seeing thison thousands of loads, right?
Or hundreds of lanes with acompany that like everybody
would know their name, right?
If I said it, is like probably aFortune 100 company.
And I'm like, three or four ofthem that like I've now seen at
this point.
And I'm like, like, it can'teconomically the math can't not
math for years without somethingoccurring that shouldn't be
(29:44):
happening.
SPEAKER_02 (29:45):
Right.
Yeah, the problem we've all gothere, of course, is with the the
way geopolitic geopolitics areworking and uh and diesel prices
somewhat being artificially keptlow because of geopolitics, that
is not helping things either.
Right?
What you really need isgeopolitics doing what they
(30:07):
normally do and forcing dieselprices higher.
That would really help clean outsome of these marginal
companies.
Of course, they're not.
And diesel prices are helping,adding, you know, a real
tailwind to some of thesecompanies.
It sounds bizarre to say that,but diesel prices have been a
real tailwind to a lot of thesecarriers because they're
allowing them to keep theiroperating costs somewhat lower
(30:29):
than what you'd normally expect,given some of the craziness that
we've been seeing.
So again, we're in really weirdtimes where you would normally
see um, you know, you couldthere's a case, you know, it was
only a few years ago where umdiesel was$5.80 over the summer.
There was a case where you couldhave said, why aren't we seeing
(30:50):
diesel prices so much higherthan what we are now?
We're in the weirdest of timeswhere diesel prices are in the
$3.70 range when they could bemuch higher.
SPEAKER_04 (30:59):
So one of the things I want to put out like not to
add a whole bunch of otherfactors to the conversation.
But um like when you talkedabout the equipment loans, you
know, the the PvP loans alsocame out around that same time,
which which were forgiven.
And then to add into that, youknow, the CAS rating came out
and it's the lowest volumes havebeen um since what, 2020.
SPEAKER_03 (31:23):
Oh I mean, 2008, I thought, right?
SPEAKER_04 (31:26):
Wasn't it like 2008?
SPEAKER_00 (31:27):
It is just the same period.
It's basically bouncing off thelowest um number of freight, I
think.
And Dean could probably talk tothe specifics is like right
prior to pandemic or rightbeginning of pandemic and the
great recession.
So in the past 30 years, theleast amount of things being
made and purchased or moved inthe United States is where we're
at, like literally right now,going into the holiday season,
(31:48):
and like it should have beenpicking up and it just fell off
a clock.
SPEAKER_04 (31:52):
So I guess my question with that is do you
think with freight volumes beingso low, if if freight volumes
had started to come up the sametime enforcement was going in,
do you think that would havepainted a better picture?
SPEAKER_02 (32:05):
Oh, yeah, absolutely.
Yeah, so so Stephen, here's theproblem, right?
Because it this is like when thedrug enforcement uh deal came in
in the start of 2020.
We would have had a much morenoticeable effect if the
pandemic didn't happen.
Because the pandemic happenedand we really didn't notice the
whole deal, right?
And here we are, we've gotnon-domicile CDL, English
(32:26):
language proficiency, and andnow we've got demand sliding
south, and we're not gonna seethe effect that I think we would
normally expect to see.
And that's what I that's what Ithink is gonna happen.
We we've had a big pull forwardof inventory in July.
We've already had peak season.
We're gonna see very flatdemand.
Manufacturing is the biggestdriver of freight demand.
(32:49):
It's very flat.
Um, I did a presentationyesterday.
You know, backlogs ofmanufacturing backlogs are
decreasing.
They're a very strong predictorof dry-van rates.
Normally, when backlogs oforders go up, dry-van rates go
up a couple of months later, butbacklogs are going down.
So dry-van rates are gonna godown eventually.
(33:10):
So um things aren't going in theright direction, and that just
means that anything we do that'sgonna reduce capacity is it
we're just not gonna see theimpact of it on freight rates
because demand is just gonnaundermine all of those things
that we're doing on the supplyside.
SPEAKER_00 (33:27):
So let me ask a question and I want to make I'm
gonna I'm gonna approach thisfrom a no, my computer just like
stuttered on internet, so finishyour thought.
Go, sorry.
SPEAKER_03 (33:35):
All right.
So I'm gonna ask a question, andit's gonna be more of like a a
devil's advocate advocateperspective.
So earlier you guys were talkingabout um tender rejection rates
being you know one percent orlower, and from out an outside
(34:44):
perspective, couldn't a businessconsultant say, You're running a
very efficient operation, thisis a good thing, right?
And when trucking rates are aslow as they are, couldn't you
from an outside perspective saythis is a good thing for the
consumer?
SPEAKER_05 (35:00):
Right?
SPEAKER_03 (35:01):
Um, so here we are on the end, and I think it's
just an interesting uh point toto have because on the inside
we're like, yeah, but no one'smaking money and this can't
sustain forever.
But on the outside, shippers arelike, we're running efficient,
our transportation costs arelow, and as long as our
freight's not getting stolen,what does it matter?
(35:21):
Um, so what do you think it Iguess if you if you look
forward, what what are somepotential courses of action that
we might see here, whether it'ssomething bad happens and it
changes it or economic umactivity goes up and that
increases the the demand.
What are some of the realisticcourses of action that we can
(35:45):
expect to see in the next yearor so?
SPEAKER_02 (35:48):
So this is the this is the dangerous game that
shippers play.
And Derek Leathers tipped hishand to what's coming uh last
week at a conference.
Um tariffs, he was talking abouta 25% increase in the cost of
aluminum and steel.
And what he was saying was atthe bottom of this cycle where
everyone's margins arecompressed, when we start to buy
more trucks to replace the oneswe've got, if they start to cost
(36:11):
more money when we buy moretrucks during the next freight
cycle, everyone's rates aregoing to go up.
So what he was saying toshippers was when we start to
buy more trucks in the nextfreight cycle, it's gonna cost
you more money.
Right.
So he was very, it's veryinteresting discussion.
What he was saying is in thenext bid cycle to a to a
shipper.
He wasn't saying it to hisshippers, but he's starting to
(36:34):
telegraph the discussion in thenext bid cycle.
He's saying tariffs are goingup, cost of trucks is going up,
get ready.
Um so it's a very interestingdiscussion.
SPEAKER_03 (36:49):
It is going to all come to that at some point.
SPEAKER_02 (36:53):
So shippers have had pricing power for three years.
New rates coming into routingguides based on recent RFPs are
flat to down about 1%.
But what what's happening is umso so to answer your question,
Nate, um the bottom of thefreight cycle where your margins
and carrier margins have beencompressed to the lowest they
possibly can, carriers aresaying our costs are going up in
(37:16):
the order of range of 3% to 5%in the last couple of years.
Our rates, though, have gonedown about 1% over the same time
frame.
We can't absorb any more ratedecreases because our costs are
going up.
The danger for shippers is wecould go out of business.
So the carriers in that 200 to700 truck range are an accident
(37:39):
or a lost contract away fromgoing out of business, right?
That's the real danger here atthe bottom of this cycle is
capacity could exit rapidly.
SPEAKER_00 (37:48):
And you could see it twofold, right?
Because you were on our show, wetalked about this like two years
ago, because I've reiteratedwhat you told us two years ago,
where basically what we sawpost-pandemic was a carrier
market.
It was like a tale of twocities, meaning like you had
carriers that saved a bunch ofmoney, and you had also carriers
(38:08):
that bought cheap trucks reallycheap pre-peak in the pandemic.
And then you had other carriersthat bought trucks late in that
cycle spent a lot more money.
And you said, this is probablyabout a year and a half ago.
And I remember you're like, whatwe're likely to see is the
coffers are starting to runbare, meaning like the savings
are gone.
And also all of these trucks arenow been driven long enough that
(38:32):
they will need full rebuilds.
And you're like, you basicallyhave two choices.
You buy a new or more expensivetruck to keep running, or you
rebuild it and the cost for therebuild went up.
And you're like, economically,like, this is going basically
the chickens are going to haveto come home to roost because
like there's no way you can justkeep deferring costs.
Like as a trucking company,you're making less and it costs
(38:53):
you more to operate.
There's only a certain amount oftime.
And like that should have beenlike a year and a half or two
years ago, which is why we weretalking about in the first half
of this conversation of like,the math hasn't mathed for a
very long time.
And if this happens, meaning youget rid of everybody driving in
unregulated ways and thelegitimate companies go out of
(39:15):
business at the same time, youcould lose giant tranches of the
carrier market.
Like you're hearing it.
SPEAKER_02 (39:22):
And you're hearing it now, the uh Tindernoyer in
the cash shipment report talkingabout carriers deferring
maintenance costs, deferringmaintenance programs.
So you're hearing it now at anational level where fleets are
starting to do that.
Um Benjamin, at the FTRconference, they were talking
about this very thing.
Um carriers are talking about aneconomic recovery not happening
until 2027.
(39:43):
They were talking aboutoperating costs being cut to the
bone.
Like so, carriers are actuallytalking about being in a very
precarious situation wherecurrent operating costs are
unsustainable, absent rateincreases.
So, Nate, your pro your questionis if they don't see rate
increases in a material way inshort order, there'll be a
(40:04):
number of carriers forced out ofthis industry.
And what that means, I thinkBenjamin, you were getting at,
is a flip.
So if you don't see a rateincrease that starts to lift
carrier profitability, you seethe market flip quicker where
the gap between spot andcontract gets the gap closes
quickly and you see that rateinflection, and then you see
(40:26):
routing guide compliancefailures happen faster, and then
you see, you know, uh the markettake off.
And that and that could happensooner than later.
SPEAKER_00 (40:37):
And I would have made the argument that if you if
if the tariffs had not happened,if any of that just didn't
occur, meaning like we just keptgoing on as a country, like we
were coming out of the pandemicand things were growing, people
were building and things werepicking up, and then all of a
sudden we renegotiate all ofglobal trade in a short period
(40:59):
of time and everything justshrinks, right?
Because I think if had that notoccurred, what we're seeing, if
you layer on enforcement with anormal economic cycle, like this
would have flipped at the veryleast a year ago, if not
probably beginning of 2025, ifnot sooner.
SPEAKER_02 (41:16):
Well, you you go back and look at Jason Miller's
post about two weeks ago wherehe looked at the aggregation of
five Federal Reserve backlogorders.
And you look at the last threeor four freight cycles where
backlogs went up and then dryvan rates went up.
The start of this year for thethey were backlogs were going up
and dry van rates were going up,and then Liberation Day
(41:37):
happened, and backlogs startedto plummet.
SPEAKER_05 (41:39):
Yep.
SPEAKER_02 (41:40):
April, May, June, July.
And then dry van rates went likethat.
There's no question this marketwas improving December, January,
February, March.
No question about it.
We were all talking about it.
And then, of course, everybodyhit the pause button because
everyone said, oh crap, we needto start thinking about our
worst case scenarios in ourbusiness plans that we always
(42:02):
had on the back burner, becauseeveryone has a best case, bull
case, worst case in our businessplanning.
And uh, even my wife's cateringbusiness has a worst-case
scenario in their 2025 businessplan.
And everyone went, oh crap, weneed to think about what's the
worst thing that could happenthis year.
And of course, that even wasn'tgood enough because nobody
(42:24):
really knew.
SPEAKER_00 (42:25):
It's even worse than that, right?
And again, just for anyonelistening, right?
Like the one example, I wastalking with a furniture company
that basically sells furnitureand stuff for your child's
bedroom.
So, like the beds that arecartoons or Marvel or whatever,
and dressers and things.
And they're like, listen, wewere buying our furniture in the
(42:45):
90s in the North Carolina area.
Like they made it there and wewere able to buy it there.
But we haven't even been able tobuy it in the United States for
like 30 years.
And Jason put out a post and hewent, if you look at the
employment in just thatindustry, right, it was like at
90,000, I think, in NorthCarolina in the 90s at its peak,
(43:07):
and it's half that.
So what happened are thesecompanies that are selling
products and have been sellingthem for 25 years that have no
choice but to pay, in somecases, a 30% markup on the
things they're buying to sell tous.
And we're trying to act as iflike that wouldn't have an
effect on companies.
And then someone asked me theother day, they went, Well, why
(43:28):
is the stock market up?
I'm like, well, the stock marketis up because AI spending's up.
If you take that out, I thinkthere's an argument to be made
that like we are in for whatcould be like Well, let me give
you an example.
SPEAKER_02 (43:42):
Um, my wife's catering business uh relies a
lot on um large universitieshere in Boston.
Think about the attack onuniversity policies from the
current administration overtheir diversity policies.
Right.
So one of their big universitieshere, there's 50 universities in
Boston.
One of their universitycustomers have cut the number of
vendors in catering from 50 totwo.
They've cut their spend from 10million on catering to five
(44:05):
million in a year.
Haven't even spent anywhere nearthat.
Right.
So this is so now you're talkingabout food services, fresh
produce, right?
So this is this are truckloadsof produce, right?
Now multiply that by across 50universities, multiply that
across all of the cities in thecountry where they are afraid to
(44:28):
do catering of events just tostay off the radar of the
current administration.
Right.
So this ha this is why you areseeing such a big drop off in
truckload volume of just foodservices, right?
And and you multiply this acrossall the other industries and all
the other, you know, whether itbe manufacturing, um so there
(44:51):
there is so much less volumebeing moved of all types of
commodities because people aredoing the bare minimum, with the
exception of one area.
And it's got to do with AI andit's got to do with data
centers.
If you've got a flatbed or adrop deck or an extendable
without riggers and an RGN, youwill be driving the wheels off
(45:15):
that bad boy, and you'd behauling data centers and
powered, you know, anythingthat's wide and high and ugly to
the middle of nowhere.
Like if I had to come out ofretirement, that's what I'd be
hauling.
I'd be hauling those bad boysall over the country for the
next decade.
Like, nuclear power generationis going to be the next big
(45:36):
thing for like it's it'sphenomenal.
Um, guys, if you look at our dryuh our flatbed rates, they're
about 10 to 12 cents a milehigher.
Like, I I've been writing aboutit for about three weeks.
They're tracking 2017.
Remember, 2017 was a reallystrong industrial economy.
It's it's more than coincidencethat drive uh refer of sorry,
(45:56):
flatbed rates are identical to2017, but it's not the same
economy.
It's just the it's coincidencethe rates are about the same.
Uh, but it's because of when youlook at the underlying rates,
the spot market rates arebecause um of the uh data center
construction boom that's goingon, and it looks like that'll be
continued for some time.
(46:17):
So interesting.
Flatbed flatbed is been having apretty good year this year.
SPEAKER_03 (46:21):
So his historically, because I I was looking up the
rates earlier, and flatbed is Iwant to say the national average
is like about 240 a mile withfuel.
Does that sound about right?
And that's for 40 cents higherthan dry van.
Yeah.
Historically, though, if you goback like five, 10 years ago, is
is flatbed usually thatdifferent compared to dry van?
SPEAKER_02 (46:45):
It's a good question.
I'd have to pull that up.
SPEAKER_03 (46:47):
Uh yeah, I don't think you know when you look at
open deck, the more specializedit gets, it totally makes sense
for rates, right?
Because I mean that's just yourbasic supply and demand.
This some the supply of ofspecialized equipment is gonna
be uh very, very differentversus you know a dry van or a
standard 48-foot black flatbed.
SPEAKER_02 (47:05):
But yeah, I'm I'm no, I'm talking more open deck,
(48:27):
not necessarily highlyspecialized.
SPEAKER_03 (48:29):
Just like a flat 48-foot flatbed.
SPEAKER_02 (48:31):
Yeah, yeah, drop deck.
Maybe drop deck is about asspecialized as I'm getting.
SPEAKER_03 (48:35):
Okay.
SPEAKER_02 (48:37):
But so yeah, they've had a great year.
Uh but as for the rest, um,yeah.
We're I mean, we're kind ofrunning about three to maybe
three and a half percent higheryear over year on the dry van
and reefer side, but flatbedsprobably gonna have a much
better year on the spot rateside.
Contract rates are running aboutprobably one percent higher year
(48:57):
over year.
But I think the the bigger thebigger tell is that contract
rates entering routing guidesare still flat to maybe negative
on the dry van and reefer side.
They're not carriers are stillnot getting a lot of joy at the
moment.
SPEAKER_03 (49:11):
So speaking of flatbed, did you um a little
unrelated here?
Did you see the Montgomerytransport situation?
So I'm curious.
I I I heard about it, I read alittle bit on it.
I know it was pending a sale andit didn't go through.
Would your analysis on that bethat the sale fell through based
on their lack of profits, basedon the current market and what's
(49:34):
going on, or is there is theresomething else in there that
they're a huge it's it was ahuge company, right?
We're talking like thousandthousand trucks.
SPEAKER_02 (49:41):
I think it was I think it was a thousand.
SPEAKER_04 (49:44):
Yeah, six hundred drivers, a thousand employees.
SPEAKER_02 (49:46):
Yeah, I think Steven's right.
Um something else, Nate, becausePNS has uh been very astute at
rolling up a lot of companiesover the years, and there's
something else going on there.
Um normally PS roll up somepretty good companies, that's a
very good operation.
There's something else going onthere that would normally have
said if PNS were involved, thatshould have been.
(50:09):
So I I I don't know enough totell you exactly why.
I saw their name mentioned.
So there's something else that'sneeds to be explored there, and
I don't know why.
SPEAKER_04 (50:21):
Gotcha.
So one of the things I wanted toadd, have you ever seen the
channel uh Smarter Everyday onYouTube?
Brilliant guy.
He he worked at NASA.
Uh he does like a lot of sciencevideos, whatever.
He did a video um right aroundthe time tariffs like with a big
talk.
And uh he was trying to producehis own like grill cleaner that
(50:43):
didn't have the metal wires thatyou know for people.
Uh and it was next to impossibleto get done in the States
because it was too costly.
Um or one of the issues he raninto is the technology for
manufacturing, like the tool anddie process that um uh just
doesn't exist in the Statesanymore because we've moved so
(51:05):
much of this stuff out of thecountry.
Um and one of the other issueswe have, I mean the video is
like almost an hour long, butit's fantastic to watch.
Uh they were talking to Chinesecompanies where they they had
the plans, they would send themto them, and then they would uh
produce it for you and send itback.
And they found on Amazon wherethey would take the plans and
(51:27):
they would reproduce yourproduct with slightly different
material so it's not the samething, and then they would
resell it.
So they'd use the same process,they would change a little
thing, and then they would sellit.
And that was kind of part of theissue that was being addressed
with tariffs and all that stuff.
So kind of leading into theflatbed and the manufacturing
thing, do we think if thistariff thing is a a long-term
(51:49):
thing with the administration,data centers being a big thing,
are we gonna see a return ofmanufacturing in the States, or
is it gonna be something southof the border that comes up
where we start bringing thatspecialized tooling process and
making it?
SPEAKER_02 (52:05):
Yeah.
It's a great question.
I don't I think that I tend toagree with what Jason Miller
says.
Anything that's highlyspecialized, I don't think you
see it come back here for many,many years.
Just the cost of investment.
Um if it's if it involves labor,it doesn't come back here.
If it involves some biginvestment, yeah.
(52:27):
I think I think over time,Stephen, I think you'll
definitely see some of it comeback.
We're already seeing some ofthat manufacturing come back.
Um I think but labor's the bigpart of it.
So it's maybe where Mexico comesback in because it's got lower
labor costs.
But wherever you've got umsomething that involves people,
we're always going to strugglewith other countries that have
lower labor costs.
Footwear's a big one.
(52:48):
You know, the cunt that youknow, uh we're having a big war
with the Italian company thatmakes the handmade pasta in
Italy right now.
So I think I think it depends onthe commodity.
But if if we can demonstratethat we can produce lower cost
goods here with a big investmentin technology, I think our
challenge is how do we do sospanning this administration
(53:09):
into the next administration?
Like I think that's where that'sjust not this current
administration and the UnitedStates.
That's a global phenomenon.
Because that that's been I'veI've seen that in my lifetime
where I'm from in Australia,where you know you have a
two-year window where, you know,where you've got a four-year,
you know, period of power, butuh you've you've got two years
(53:32):
to make policy work, and thenanother two years to hold on to
the next election period, andnobody really, you know, gets
anything done in two years, andand then you're kind of nothing
ever gets achieved.
So I think that's sort of thethe problem that we've got here
is that nobody seems to want tomake the right decision for the
country, as opposed to adecision that benefits them
(53:56):
staying in power.
I would love to see a decisionthat's made for the country that
spans multiple administrations.
That would be the best possibleoutcome.
That might be what we're seeinghere.
You know, um a lot of people inthe country voted for change,
and uh we'll we will be um I'llbe I'll be pleasantly surprised
(54:16):
if we can bring manufacturingback to what Benjamin was
talking about that seesmanufacturing come back to the
south where furniture used to bethe big the big thing.
Like that would be great.
Heck, I was in Salinas for for aweek and you know, picking
produce is back breaking work.
I don't see I don't see peopledoing that.
(54:38):
Like there are some jobs that umare just hard work.
I just I don't know, we we needlabor for other countries to do
that sort of work.
SPEAKER_03 (54:47):
All right.
So I'm go ahead, Stephen, sorry.
SPEAKER_04 (54:50):
I'm in Cincinnati, Ohio.
My my in-laws are inIndianapolis, so like one of the
things that's like anecdotal tome but odd to see is like the
expansion of Indianapolis overthe last couple of years is
insane.
And completely like backwards tothe rest of the country.
Right.
Um but one of the things thatI'd be curious, I mean I don't
know if anyone has it here, butlike has any like Jason Miller
(55:13):
or anyone looked at like themargins on products and
commodities to predict if thatmanufacturing would come back
first?
Like I know like clothing is oneof those things where um people
have started, you know,American-made brands and and
they are here because it's ait's a higher margin that
e-commerce, it's likeforty-fifty, whatever percent
(55:33):
margin.
So there's a little enough meaton the bones to like cut that
down to 1520 and still beprofitable.
But I'd be curious if anyone hasit like mapped out those
commodities to like predict.
The other thing I was gonna say,uh you were talking about AI and
and the uh the market.
Um there was a report that cameout today that 80% of the S P
(55:55):
500 was related to AI companies,to growth.
SPEAKER_02 (55:58):
Right.
unknown (55:59):
Yeah.
SPEAKER_02 (55:59):
You know, uh Stephen, it's been funny.
Over the last week, the wordbubble has popped up.
I have you noticed that.
Like we were talking about lastmonth it was all about the AI
boom, and now the word bubblehas popped up.
So I can't wait to see whatnext.
SPEAKER_03 (56:10):
It reminds me of the dot-com era if you go back 25
years ago, right?
Um, Dean, I wanted to I wantedto wrap up and um with you know,
we're we're just entering Q4here, and given what you've seen
this year, currently, and yearspast, for brokers and carriers
(56:33):
that are tuning in, what wouldyou say to them as far as how to
set their expectations for whatQ4 and the rest of 2025 should
look like?
Uh, what would be your your uhexplanation or prediction on
that?
SPEAKER_02 (56:49):
I think uh yeah, I I'm actually really optimistic.
I think there's going to be someextreme volatility on regional
lanes.
So, particularly reefer, right?
So I think you'll have yournormal volatility for dry van
lanes, e-commerce lanes, soAllentown, Boston, you know, any
of those e-commercereplenishment lanes where Steven
is in the mid in the Midwestlanes, like, you know, Columbus,
(57:12):
Chicago, all of thosedistribution markets like uh
Phoenix, you know, anywherewhere you've got big warehouse
markets, though they'll be alltrying to run those e-commerce
replenishment lanes.
They'll be very, very busybecause people have got
warehouses that are incrediblypacked and those last-minute
replenishment uh moves.
So they'll be busy.
Um I think you'll see a lot ofuh high volume uh early uh
(57:39):
Thanksgiving moves, hams,turkeys, Christmas trees, as per
usual, starting um in November1.
So Pacific Northwest, NorthCarolina, Minnesota, Joplin.
Fresh turkeys start moving earlyNovember, Christmas trees out of
the Pacific Northwest.
So I think all of those typicalthings will happen.
I think you'll see some reallygood volumes and rates for
(58:01):
anybody that's got arefrigerated trailer out of the
north, out of the out of theMidwest Joplin, out of uh
Minnesota, and out of NorthCarolina, all the way through to
Thanksgiving.
So I think you're gonna see somepretty good uh volumes and rates
for those carriers because atthe bottom of this market where
we're at equilibrium, any surgein demand is gonna see some
(58:21):
pretty good rate volatility forcarriers and brokers.
So I think I think we're gonnasee some pretty good um
seasonality um through the endof this year.
I think it's gonna be a prettygood market for carriers and
brokers.
SPEAKER_03 (58:32):
Awesome.
Well, I'm looking forward to it.
Yeah.
Um cool.
Well, Dean, we appreciate it.
I don't know what happened toBen with his technical
difficulties, but uh he uh he'sno longer in the conversation
with us.
What's going on?
I don't know.
He was texting me on this side.
I think he uh he had someinternet issues and then um who
(58:52):
knows?
Hurricane season in Florida,even though there's no
hurricanes there right now.
But anyway, Dean, we're we'rehappy to have you on.
Um we we love what you do everyevery Thursday in our in our
twice-a-week newsletter.
We your all your rate data forthe market, uh dry flat and and
(59:13):
um reefer, we we share that inthere, and it's super helpful.
So thanks for that.
And if you guys aren'tsubscribed to the newsletter,
please do so.
Dean does a lot of work to totake all the minutia out there
and put it in a digestible form.
So make sure to check that out.
Um, any other anything else,Dean, you want to wrap up with?
SPEAKER_02 (59:32):
Uh it's truck show season.
So uh there's a bunch of truckshows on uh here in New England,
lots of good causes.
So uh if you don't follow me onsocial media at the Grumpy Pete,
um there's a lot of good uhcauses that we've got going on
to support.
Um lot of uh sick kids, there'stoys for tots, um, a bunch of
things.
We're always raising monies, butI think uh Toys for Tots is the
(59:55):
big thing we're doing uh thisyear, as always, raising
awareness for all of theunderprivileged kids that need
help this Christmas.
SPEAKER_03 (01:00:03):
Awesome.
Yeah.
I feel like Toys for Tots has tohave been around for a hundred
years now.
Yeah, yeah.
Yeah, and Stephen, when you wereuh you were a corpsman, right?
And is that like I know that'sNavy, but you're attached to the
Marines, that was like a thingevery year that uh kind of like
a uh I don't want to call itforced volunteering, but that
was always a big push for thethe Marine Corps side of things.
SPEAKER_04 (01:00:27):
Soys for Tots.
It was what it was with the so Iwas in the Navy for five years.
Yeah, the only time I was on aboat was related to Toys for
Todds.
Yeah.
Uh for two for two weeks.
I gotta get my uh dirt.
SPEAKER_02 (01:00:41):
I gotta get my uh Peterbilt cleaned up and waxed
and polished the next couple ofdays for a truck show Saturday.
So I think we've got truck showsevery uh Saturday now for the
next six weeks.
Kind of like this is kind ofpeak truck show season in fall
up here in New England.
It's a pretty big deal for uhraising awareness for um Toys
for Tots and all those sorts ofevents.
SPEAKER_03 (01:01:03):
Awesome.
SPEAKER_02 (01:01:04):
Yeah, well, cool.
SPEAKER_03 (01:01:06):
Thanks again, Dean, for being on with us, and uh
we'll we'll definitely catch upwith you um, if not later this
year, into the beginning of nextyear, and we'll we'll see if any
of our predictions or thoughtswere were remotely accurate,
right?
That's the one thing too thatlike, you know, we we try to
like look at what's going on,what's happened in the past, and
predict what the future willlook like.
(01:01:27):
But there's the unknown thingsthat can just pop out of nowhere
that like COVID, nobody nobodysaw that coming six months ahead
of time.
SPEAKER_02 (01:01:33):
So we have an eerily quiet hurricane season, so that
might be very strange.
SPEAKER_03 (01:01:39):
Very strange.
But all right.
Thanks again, Dean.
We'll see you again soon.
Uh Ben's not here to do his signoff, but uh thanks for
listening, everybody.
And until next time, go bills.
Welcome back.
It's another episode of theFreight 360 podcast.
If you if you listen to us lastweek, we're going to continue
that conversation this week.
We are rejoined by Dean Croakfrom uh DAT.
We'll skip our news and sportsintro because we want to spend
as much time with Dean aspossible.
So, Dean, welcome back.
You just you just uh dealt withthe Nor'easter in Nantucket.
(00:41):
How'd that work out for you?
SPEAKER_02 (00:42):
Yeah, pretty good.
I feel like we've been at thisfor five years, right?
SPEAKER_03 (00:47):
Yeah.
SPEAKER_02 (00:48):
Haven't we been talking together like for during
the pandemic?
SPEAKER_03 (00:51):
Yeah.
I think that's when we've Ben,what do you think?
I think it was 2020, late 2020,right?
We first started doing all ofour stuff with uh DAT in
general, right?
With between Ken and Dean.
SPEAKER_02 (01:03):
So and someone that's how long we've been
talking together.
I was just sort of thinking itback to uh when we first started
talking together.
It's been that long.
SPEAKER_03 (01:12):
Yeah, one of our first, I think one of our first
conversations on a podcast, welearned all about like your
background in Australia anddoing those like uh the the
train basically like the themulti-trailer train runs, you
know, from one side of Australiato the other.
So we've come a long way.
Yeah, um, but uh good to haveyou back, Dean.
(01:33):
Um Ben, I'll let you kind ofkick things off.
You know, we're we're gonnawe're gonna pick up where we
left off talking about whathappened in the freight market
the last couple of weeks withenforcement and it's getting
national attention.
So this is kind of a obviouslyit's it's we're in the
spotlight, but um Ben, where doyou want to go with this?
SPEAKER_00 (01:51):
Yeah, I mean, to be honest, the driver enforcement
and just like what's been it'skind of crazy that I'm saying
this, that like most of this iswhat we're seeing on like
Twitter and X.
But I mean, I was telling Natethis and my wife, it's just like
I just I don't know, I have likean aversion to social media.
And I realized the other day, Ithink I know what it is because
(02:14):
I was trying to read, and Stevensends me a bunch of stuff, will
text me a link and then I'll goread it.
And I'm like, oh, most of whatpeople are talking about seems
to be here.
And it it literally made memotion sick.
Like scrolling and doing this, Igot up and I'm like, I'm like, I
really feel nauseous.
Like when you read in the car,right?
I'm like, oh, I'm like, this iswhy I just can't stare at this
(02:35):
all day.
But I mean, there's a ton ofinformation out there.
There's a lot going on, again,with enforcement, the, you know,
Secretary Duffy, and they'redoing more with the DOT and
FMCSA.
I'm curious, because you have aton of experience on both sides
of things, right?
Not just the freight side, butalso literally driving a truck,
speaking with drivers, you'reout there, you're talking with
(02:58):
folks literally being affectedby this.
Like, I mean, just tell us kindof what you think and where this
kind of came from, because I'mjust genuinely curious what your
point of view is on theenforcement alone and how and
where it's being applied.
And then we can talk a littlebit more on like what the
overall effects might be onrates and like the whole market,
I guess.
SPEAKER_02 (03:18):
Well, also as an immigrant CDL holder, right?
So there's another perspectivehere because there's a there's
more than a hint of racism aboutwhat's going on behind all of
this, because that's how thisstarted back in March.
Because remember, this startedwith English language
proficiency.
Like, so this didn't start as afederal program to improve the
(03:40):
one in five Americans that areconsidered illiterate, right?
This didn't start with let'simprove the 65 million Americans
who are considered illiterate.
Let's didn't let's help lift thestandard of a lot of people who
are you know problematic withthe English language.
That didn't, it started withlet's slash federal worker
numbers.
(04:01):
Right?
It did that's how it didn'tstart.
It started with some poortrucker who was trying to make a
living.
And it started on social mediaof all places, right?
So it started in the worstpossible place.
And I said from the get-go,well, if I'm a trucker and I'm
in Arkansas and I have a problemwith English language, the last
(04:22):
place I'm gonna be is on theroad in Arkansas.
I'm gonna go to ground.
So it's not so so therefore it'snot gonna have an impact on
rates because I'm gonna I'mgonna go to ground.
The effect, so so we so the ideathat we're suddenly gonna have
all of this enforcement and it'sgonna have an impact on
capacity, it already had animpact on capacity in early
(04:45):
March because everyone went toground.
Right?
So so the idea that we weregonna see some sort of impact on
capacity in April, May, and Junewas never gonna happen.
It already happened in March.
And that's why you never reallysaw the national rate needle
move, and why you're not seeinganything happen now with both
(05:07):
English language proficiency ornon-domicile CDL holders.
The numbers are just too small.
And so I'll move to my nextpoint, which is for two and a
half decades, we've beenrecruiting drivers from both
here and abroad in greatnumbers.
So is it any surprise most overthe road truckers are of a
(05:30):
second or third generation?
It just turns out they're notthe right type.
Lo and behold, after recruitingthem for the best part of 30
years.
So the problem now is that theit's like the squeaky wheel gets
the most attention on socialmedia.
That's where you kind ofstarted.
And I fear that the the peoplewith the loudest voices are
(05:54):
starting to win, right?
And they're starting to they'restarting to have a big effect.
And I'm part of me is a shame tosay this, but it's actually
starting to have a good effectbecause, and I'll say this as a
trucker with a CDL, because thefact that some people have got
(06:14):
trucker licenses and they canskate by and not have to go
through the same rigor to get aCDL and have a DOT physical that
I have to, that really getsunder my skin.
Because, you know, I have towork hard to keep my blood
pressure under, you know, 90under, you know, one uh 90 over
140, right?
That's that's just to hold aone-year card.
(06:36):
But these guys that can get bywith a CDL and and not have to
go through the same standards Ido, that's not right.
So I think there's some goodthings that are coming out of
this.
I just, it's a bit like theequalizer.
You have the movie with DenzelWashington.
Sometimes we have to do thewrong things to get to the right
place.
(06:56):
Remember that discussion on thestep, right?
We have to do the wrong thingsto get to the right place.
Well, I think this is what we'redoing here.
We're doing the wrong things toget to the right place.
And I think what we're gonna endup with is a much better
standard of trucker.
It's gonna be very hard forcompanies to get A, into this
industry and B to stay in thisindustry.
(07:17):
And it's gonna be very hard withbiometrics, with uh all of the
things that companies have to doto get through to get a DOT and
an MC number, same on the brokerside.
And then with drivers to getinto the industry.
So you won't be uh it'll beharder to get into the industry
with uh if you come from anothercountry, because now you're
(07:38):
gonna have to have a H2A, H2Bvisa, or an E2 visa.
Um but I also think thosenumbers are very small.
I don't think the non-domicileCDL numbers are anywhere near
the level that they're talkingabout.
SPEAKER_00 (07:51):
That was the one specific thing I was really
curious on your opinion on,because a lot of people would
reach out to us.
We did some episodes with abunch of folks that Steven's
been working with that have beenlooking and uncovering.
Oh, honestly, like it startedmostly with the fraud, chameleon
carriers, you know, reusing MCs.
Then it was a whole rabbit holeon ELD manipulation in this
(08:15):
giant back door where basicallyall of this data is basically
just getting sent to whomever tosteal freight.
Yeah.
And the more we dug in, like,honestly, like I was kind of
terrified because I'm like, thisis so much worse than I ever
would have guessed or expected.
So when these crap boundsstarted coming in, folks were
reaching out and asking me,like, well, what do you think
(08:36):
the numbers are?
And I was talking with JasonMiller about this, I think it's
like last week, where he waslike, you know, we've never seen
capacity, right?
A shortage of capacity reallyaffect the rates.
Like it's almost always from thedemand or the freight side,
right?
Like, and I was like, okay,well, we saw it temporarily with
the ELDs in 2017, where likecapacity temporarily shrank for
(08:57):
about four or five months, rateswent up, and then they kind of
came back down.
And the question I asked him,which is kind of the same
question I wanted your point on,is like, okay, we look at all of
the stats and everything JasonMiller puts out and everything
that all of us read, right?
And I think all that is greatinformation.
But the point I was making islike they all have an underlying
(09:18):
assumption that everybody'splaying by the rules.
And I was like, we're literallyseeing, again, some of it's
anecdotal, some of it is reallyobjective evidence of drivers
for sure violating ELDs, drivingway longer than the hour service
regulations.
We're seeing the FMCSAestimating 200,000 drivers they
think are non-domicile, thatmaybe will be removed over the
(09:40):
next year.
So I'm like, theoretically, justas like a thought experiment,
I'm like, if that number is400,000 drivers that are either
driving longer than thelegitimate regulated companies
playing by the rules are, thereis some argument to be made that
it could have an impact.
It's just how quickly and howmany of the violations are
(10:02):
really out there.
SPEAKER_02 (10:03):
I think the non-domicile CDL number, I
think, is I don't I I don'tthink it's anywhere near as much
as what they're making out.
Right.
I don't think that's I that'sthat's over two years, right?
That that number is sort of andI don't think it's as much as
what they're making out, right?
I think that's a separate numberto the illegal carriers that are
(10:27):
swapping MC numbers, DOTnumbers, drawing their numbers
on the side with crayons,crayola, right?
Or fake numbers.
There are a lot of trucks outthere that I think are not real,
but uh whipping up and down theroad.
So I think what you're whatyou're getting at, and Stephen's
getting at, is there are trucksout there that look like truck
(10:51):
companies that are not real.
Correct.
That is something that I findvery hard to quantify because
I've seen them.
SPEAKER_00 (10:57):
Yeah.
But we've all seen itanecdotally, and I'm like, the
thing I wanted to say that itkept coming back in my head, and
Nate and I, we've talked aboutthis a while, is like I have
brokers for the past two yearsthat have argued with me, right,
that like the transit times fortheir loads are wrong because
their drivers run 800 to 900miles a day.
(11:18):
And I'm like, I'm like, thatlike just physics.
I'm like, that is animpossibility unless they are
driving longer than they shouldor doing something that
shouldn't be happening, right?
SPEAKER_01 (11:29):
Oh, you're Australian.
Correct.
So seriously.
SPEAKER_00 (11:33):
Well, I thought about the stories you told us
years ago.
We were talking about this offair of like literally on the
convoys in Australia where youwere putting, I think you told
us you put hot sauce in youreyes to stay awake because you
guys were driving like 15, 20hours a day.
No, you pull your nose hairsout.
SPEAKER_03 (11:47):
That's what it was.
That'll do it.
SPEAKER_02 (11:50):
No, um, no, but seriously, you uh our logbooks
allow us to run 14 hours a day.
So so 700 miles is table stakes.
But seriously, um uh uh this iswhere this is where you have
three drivers in a tr in a caband you do all sorts of crazy
things, but um there issomething to this.
And I have sat in truck stopswhen I've been out driving my
(12:13):
truck, and I have seen thedrivers in the cabs doing this
and cooking their own meals inthe cabs.
And and when you're in a truckand you're talking to other
drivers, they let their guardsdown and they talk to you about
what you're doing.
And it helps when you've got anaccent like I do, because they
talk to you, they realize you'renot from here, as in the US.
(12:37):
And and I have learnt, I've seensome things, and I've thought,
holy crap, what are you guysdoing?
And and like and a lot of themare reefer carriers, they're
hauling produce, they're doingcross-country work, and and this
kind of gets to what I'm seeingin the rates, because it's not
necessarily dry van work,although I do know what happens.
(12:58):
We're seeing I'm seeing somestuff happening with dry van
rates.
And this is this theory that Kenand I've got about road check
weak effect that seemed to bemostly with with refrigerated
carriers, where we're seeingthis road check weak effect with
rates.
But I think there's something tothis where we're seeing a lot of
carriers um selling MC numbers.
(13:20):
There's there seemed to be someand I'll and I'll I'm I'm kind
of all over the place here.
I was in a truck stop going to aconvention uh in Wisconsin.
I was in uh on the west side ofChicago in a truck stop on I-94,
and I was listening to a coupleof um Middle Eastern carriers uh
talking about selling MC numbersin their trucks.
(13:40):
And I and I couldn't quite theirbroken English wasn't good, and
I couldn't quite grasp exactlywhat they were saying, but they
were doing a deal about sellingtheir freightliners and uh and
they were talking about their MCnumbers and a number of$19,000
was discussed.
And I kind of thought, holycrap.
Yeah, and I thought, holy crap,I'm I'm hearing this real.
(14:49):
Like this is what people are andI'm kind of and I'm trying to,
I'm not trying not to be a dork,you know, and I was standing
behind these guys and I'm tryingto eavesdrop without really
being so obvious about it.
And I thought, oh God, I wish Iwish my Russian was better
because I'm I gotta insertmyself into this deal somehow.
(15:12):
Yeah, I'm thinking, holy shit,if I could really get inside
this conversation, I've probablyuntapped the holy grail of
what's going on in thisindustry.
And of course, I'm in theepicenter of all of this stuff
that's going on in the in theChicago market that we heard
about for like three or fouryears.
And and then lo and behold, outcomes this article last week on
(15:33):
freight waves from the uhimmigration attorney that says
to um all of his drivers, uh thethe Serbian drivers, don't get
on the road this week becausethey're gonna arrest you.
SPEAKER_00 (15:46):
And I thought even if you're legitimate, I think
the article he I think hisstatement was even if you are
playing by the rules, right, andhave the right documents.
SPEAKER_03 (15:55):
Yeah.
SPEAKER_00 (15:55):
Just because they have no idea how long you'll be
processed, you could be sittingin there for years, I think was
the sentence.
SPEAKER_02 (16:01):
So the week so two weeks ago, I I spent the week in
Salinas.
So I've been out in Salinastalking to all of the Punjab
seat drivers, meeting withfreight brokers, insurance
brokers, farmers, growers,coolers, the cooling houses, and
uh getting to getting deep intowhat's going on um in that
market.
Now, this is just morecoincidental that all of this
(16:22):
was blowing up.
And um and and the and I'mtalking to um, of course, the
Punjab Sikh drivers are Americancitizens, and some really cool
guys, like just they're greattruckers, these these guys can
drive, outdrive anybody.
And of course, they they'resaying, I'm not going anywhere
near the border, I'm not leavingFresno, I'm not leaving Salinas
(16:45):
for any money in the worldbecause they don't want to get
harassed.
Because guess what's guesswhat's happening to loads out of
McAllen?
You can you can get$1,000 morefor a load out of McAllen back
to Los Angeles this week thanyou could this time last year,
right?
Because they're not going there.
They won't go there.
So what you're seeing is so thatyou're seeing freight rates on
(17:05):
backhaul lanes back to the WestCoast where the capacity comes
from going up.
SPEAKER_00 (17:11):
So this is Yeah, like the lane we saw the most
that I I was asking Ken aboutthis because I'm like, we again,
it's anecdotal.
It was like six or seven loadslast week, but we saw massive
increases from Georgia and SouthCarolina to Texas.
Yep.
Like long haul heading back overto the West Coast.
We're like, and I'm asking myteam, the other thing that I
always say is I'm like, that'sone transaction, but like, what
(17:34):
are you guys hearing?
And I'm like, you know, whenyou've been running this lane
for two years, they're like, wewould have 30, 40 carriers reach
out to us for this load on adaily basis.
We're hearing three or four now.
So there's less interest andhigher rates.
And I'm like, again, it'sanecdotal, but I'm like, every
week I'm looking at the samesituation.
(17:55):
I'm like, we are seeing hugeincreases on these types of
lanes within us, right?
SPEAKER_02 (18:01):
Well, well, then it's like it's like go back to
March when the TikTok videopopped up about the poor driver
that was apparently arrested andfined five grand because he
couldn't speak English.
Whether it was true or not, noperson in their right mind would
have been on any interstate,anywhere in Oklahoma or Arkansas
ever again.
(18:22):
If you couldn't speak English.
He would have said, okay, thegig's up.
I'm the I'm done.
So now so and then apparently Iwhen I was in Salinas, um, the
guys said that they that ICEgrabbed three of them last week.
This this was two weeks ago.
So you know, this is a verytight-knit community.
(18:42):
They all have very strong socialnetworks, and they would have
said, okay, we are not going toMcAllen to load produce on
across I-8.
And and so what that means isthat capacity then diverts to
other markets.
And of course, they were allsaying, well, let's run to the
Northeast.
So plenty of trucks wanted torun to Boston, but no one wanted
to run to McAllen or Laredo orEl Paso.
(19:05):
And of course, on our loadpostson Saturday morning, I'm looking
at Nogales.
Brokers' loadposts were up 95%last week out of Nogales for
loads to the East Coast.
Nobody wanted to go to Nogalesin the Tucson market.
So when I look at our loadpostsacross all of our border
markets, the brokers were reallytrying to find capacity because
no one was wanting to go there.
SPEAKER_00 (19:26):
Yep.
SPEAKER_02 (19:27):
So that's what I'm finding is that there's you're
seeing capacity tightness inthose markets where you could
almost draw a, you know, throw anet over, it's probably the
worst thing to say, where ice isactive, right?
Where ice is active.
I'm sorry, but it was a reallyword.
It's an awful thing to say.
Again, we're we're doing, youknow, we're doing the wrong
thing to get to the right placehere.
(19:48):
But what what we're finding isthat I think wherever you're
seeing this enforcementactivity, you're finding
capacity is is adjusting.
And that's where I think thebackhaul lanes are uh really.
SPEAKER_00 (19:58):
Okay, so I had a question about that, right?
And this is one of the thingsthat I was messaging Jason, and
I was curious your and Ken'sthoughts on.
Is it like, I mean, I have apretty good understanding of
DAT's rate data.
Like we've literally interviewedalmost everybody in your
organization, had conversationon what is going into there,
what makes up these numbers,that it is the median, it isn't
the average, the top and bottom25 percentile are being excluded
(20:22):
on that range.
So you get a tighter, more sayit should be more likely you
will pay within that range,right?
Instead of the anomalous ones onthe top or bottom.
Now, the other thing that I readlast week and the week before
was everybody saying, like, thelarger trucking companies aren't
being affected yet.
And okay, so the thing that I Iwas curious, right, is I'm like,
(20:45):
that would make sense, right?
Because the smaller companies,right, or the people that are
driving in ways that theyshouldn't, whatever that bucket
is, right?
Whether it's the CDL, violationsof our service, whatever, like
that wouldn't affect the largercompanies first.
And also you have the invertedyield curve, if you will,
meaning like contract rates,right, are still higher than
(21:07):
spot rates, which has shouldnever happen economically, but
has persisted for three and ahalf years.
And I'm like, okay, normally themarket will shift and rates go
up because the spot marketspikes.
Contract drivers will jump tothe spot market to make a
premium and then tenderrejections go up.
But since we have an inverseeconomic situation, meaning like
(21:27):
spot rates are below contract,we first need them to go back in
line, which wouldn't happen withthe larger carriers first.
It would happen with the smallercarriers or individual either
owner ops or very small truckingcompanies.
And I'm like, okay, well, thosedrivers are one, more likely to
work in the spot market withsmaller brokers, right?
Less of them are reporting theirdata to anybody.
(21:49):
I mean, they are in one way,it's most of it's getting
factored.
So it's probably eventuallymaking its way into the bigger
models.
Right.
But there would be a time lag toseeing that, and you wouldn't
see the impact you would the wayyou normally do, because it's
not happening at that scale,right?
Because like literally what yousaid and what you're seeing is
what we're seeing.
(22:10):
And I'm like, I was not makingthe argument that it's going to
move the whole market up, butI'm making the argument, or I
guess I'm very curious yourthoughts on like if
theoretically enforcementincreased and became more
consistent across the country,just theoretically, right?
And now you don't have peopledodging areas where enforcement
(22:31):
is.
So you don't see less here andthen more here.
You would see all of the callit, I don't want to say I don't
want to even use the wordillegal, but like say like the
carriers or the driver.
SPEAKER_03 (22:42):
Capacity, those that are at risk of getting, yeah.
SPEAKER_00 (22:45):
Right.
If they exit the market, likeyou would likely, I think, see
spot rates finally go back abovecontract rates.
And then you would probably seewhen you have produce, because
this shopping season's beenterrible.
If it was a normal year, youprobably would have started to
see what we've normally seen inthe market for 40 years that we
haven't seen for four years, Iguess, is another way to ask it.
(23:06):
If that even means I know itseemed like a very long
question.
SPEAKER_02 (23:13):
Yeah.
There's something anomalous,right?
And I think what you've beenseeing is it's almost like the
waterfall effect, it's almostlike the waterfall's been
broken, stopped.
Right.
And because I think what'shappened is uh shippers have uh
routing guide compliance hasbeen exceptionally high, tender
(23:34):
ejections have been historicallylow.
And what we found with ourshippers is they they uh carved
out low volume lanes, whichhistorically had high levels of
tender ejections, and they wentto you guys with a strategic
buy.
So if they carved out highvolume lanes to to their
(23:57):
incumbents and and gave them totheir prime contract carriers,
and they have 98-99% acceptance,right?
And and awarded them to the andthat was a pan pre pan
post-pandemic deal, and that'sbeen pretty well you know
ongoing.
So and I think uh, you know, ifyou have like sort of maybe one
(24:19):
to one point two routing guidedepth, you have very little
tender failure.
SPEAKER_00 (24:24):
So basically, and for anyone out there that's just
from like, as Nate would say,like Barney style, right?
101 level, meaning all of thethe shipments that the large
companies have said they wouldgive to the trucking companies,
the trucking companies are notonly taking them, they're not
giving them back, which meansyou have a lot, a lot less
problems with large shippersmaking sure their freight gets
(24:47):
picked up, which usually doesn'thappen.
SPEAKER_02 (24:49):
Right.
So so then you've so yourwaterfall effect, you haven't
got loads falling down throughyour second, third, fourth
cheapest carrier and thenfalling out into the broker
market.
So so what you've got is thenyou've got all of these low
volume lanes that normally wouldbe high failure lanes going to
the broker market.
Instead, they were carved out ofthe bid and just directly going
(25:13):
to you guys buy.
SPEAKER_00 (25:17):
And I want to add something to it.
The other thing that I've heard,I mean, fairly large companies
that I've talked to, likeliterally that are our
customers, right?
And ask them some of thesequestions.
One of these companies is a verylarge um uh auto parts like
supplier, right, in the US.
They are doing no RFPs and likethey've never done that ever,
(25:37):
but have been for two years,meaning like literally they're
just pushing everything onto thespot market.
And they're on time expectation,meaning like normally a company
that large that has like 25 or30 distribution centers expects
like 97% of their loads pickedup on time.
Their benchmark, they said, was96 or 97 for their carrier
scorecards.
(25:57):
This is three or four years ago.
Now their expectation is 80%.
And they said we are literallyjust giving all of our freight
into the spot market becausewe've saved money.
So we're literally just notcontracting anything.
And I'm like, that to me, Ithought is pretty crazy for a
company that ships probably athousand loads a week, right?
Yeah, and then the other thing Isaw was a very large food
(26:21):
company in the US, like probablyFortune 200 company.
I ran probably a 4,000 lane bidwith them.
When we got our feedback, wewere at the low end of DAT on
every pretty much lane we wereputting a number on where we had
carriers that would run it.
Their feedback to us was you're15% higher than what we're what
(26:42):
we're paying.
And I'm like, I'm like, thenumber, right, of them, like
just the scale, literallyhundreds of lanes and thousands
of loads.
They're saying we were 15 to 20%too expensive.
And I checked, I looked atpredictive, I looked at DAT, I
look at historic, I'm like, weare on like the low end of the
(27:02):
collar, and they're saying everysingle one of ours are 20% too
expensive.
And I'm like, how is that evenpossible?
Like, because that's front haulfreight.
Like, that's not even backhauls.
Yeah.
SPEAKER_02 (27:11):
Like so now the other thing, the other thing,
Benjamin, we haven't talkedabout is finance companies.
So not only, not only have wesays the reason that um a lot of
companies are out there doingthe sort of rates that have been
supporting this what what you'reseeing, is finance companies
have been supporting a lot ofthese companies that are running
these rates that are supportingwhat you're talking about.
SPEAKER_03 (27:33):
When you say finance company, what what kind of
companies are you referring to?
SPEAKER_02 (27:37):
All the big finance companies that financed a lot of
these carriers into the industryin the last three or four years,
they haven't foreclosed on thembecause the trucks have been
worth nothing compared to whatthey financed them.
SPEAKER_03 (27:49):
Oh, okay.
So the people hold that are thatare holding the paper.
SPEAKER_02 (27:54):
The notes worth nothing compared to what they
financed them for.
So that'd be an artist.
SPEAKER_00 (27:59):
When all the valuations came down, everyone
went, There's going to be amassive foreclosure, and all the
banks went, We don't want theproperty back because we're
gonna we're gonna lose ourasses.
Pardon my French on this.
So basically what you normallysee is when you don't pay for
something, the bank takes itback, and that's not happening
with loans on truckingequipment.
SPEAKER_03 (28:17):
So there's not PMI when you buy a class 8 truck,
unfortunately.
SPEAKER_02 (28:20):
So that's the other wrinkle in this debate is that
what if that's if they start tocall in those notes and say, you
know, we're gonna cut ourlosses, that's when you'll start
to see some of this capacitydisappear also.
So it's it's been part of thereason that we've seen this
elongated freight market.
Um so yeah, we are we are at apoint where there will be a
clean out in this market.
(28:41):
And um I mean, it can't comesoon enough because some of the
stuff, those rates you'retalking about, that's just
absolutely crazy where a largeauto parts or a food
manufacturer can run with ratesso low and accept those sorts of
service levels.
SPEAKER_00 (28:58):
Like that's yeah, I was literally gonna email it to
you.
In fact, I think I might havesent you a few of these things a
couple months ago when I wasreally seeing more of it because
I'm like, again, I just keepcoming back to them, like
economically, this makes nosense.
I'm like, there is literally noexplanation as to how this could
occur.
And it's like, okay, if it's aload here, it's a lane here, it
changes a little bit, likethings happen, they're anomalous
(29:20):
that you can't understand.
But like when you're seeing thison thousands of loads, right?
Or hundreds of lanes with acompany that like everybody
would know their name, right?
If I said it, is like probably aFortune 100 company.
And I'm like, three or four ofthem that like I've now seen at
this point.
And I'm like, like, it can'teconomically the math can't not
math for years without somethingoccurring that shouldn't be
(29:44):
happening.
SPEAKER_02 (29:45):
Right.
Yeah, the problem we've all gothere, of course, is with the the
way geopolitic geopolitics areworking and uh and diesel prices
somewhat being artificially keptlow because of geopolitics, that
is not helping things either.
Right?
What you really need isgeopolitics doing what they
(30:07):
normally do and forcing dieselprices higher.
That would really help clean outsome of these marginal
companies.
Of course, they're not.
And diesel prices are helping,adding, you know, a real
tailwind to some of thesecompanies.
It sounds bizarre to say that,but diesel prices have been a
real tailwind to a lot of thesecarriers because they're
allowing them to keep theiroperating costs somewhat lower
(30:29):
than what you'd normally expect,given some of the craziness that
we've been seeing.
So again, we're in really weirdtimes where you would normally
see um, you know, you couldthere's a case, you know, it was
only a few years ago where umdiesel was$5.80 over the summer.
There was a case where you couldhave said, why aren't we seeing
(30:50):
diesel prices so much higherthan what we are now?
We're in the weirdest of timeswhere diesel prices are in the
$3.70 range when they could bemuch higher.
SPEAKER_04 (30:59):
So one of the things I want to put out like not to
add a whole bunch of otherfactors to the conversation.
But um like when you talkedabout the equipment loans, you
know, the the PvP loans alsocame out around that same time,
which which were forgiven.
And then to add into that, youknow, the CAS rating came out
and it's the lowest volumes havebeen um since what, 2020.
SPEAKER_03 (31:23):
Oh I mean, 2008, I thought, right?
SPEAKER_04 (31:26):
Wasn't it like 2008?
SPEAKER_00 (31:27):
It is just the same period.
It's basically bouncing off thelowest um number of freight, I
think.
And Dean could probably talk tothe specifics is like right
prior to pandemic or rightbeginning of pandemic and the
great recession.
So in the past 30 years, theleast amount of things being
made and purchased or moved inthe United States is where we're
at, like literally right now,going into the holiday season,
(31:48):
and like it should have beenpicking up and it just fell off
a clock.
SPEAKER_04 (31:52):
So I guess my question with that is do you
think with freight volumes beingso low, if if freight volumes
had started to come up the sametime enforcement was going in,
do you think that would havepainted a better picture?
SPEAKER_02 (32:05):
Oh, yeah, absolutely.
Yeah, so so Stephen, here's theproblem, right?
Because it this is like when thedrug enforcement uh deal came in
in the start of 2020.
We would have had a much morenoticeable effect if the
pandemic didn't happen.
Because the pandemic happenedand we really didn't notice the
whole deal, right?
And here we are, we've gotnon-domicile CDL, English
(32:26):
language proficiency, and andnow we've got demand sliding
south, and we're not gonna seethe effect that I think we would
normally expect to see.
And that's what I that's what Ithink is gonna happen.
We we've had a big pull forwardof inventory in July.
We've already had peak season.
We're gonna see very flatdemand.
Manufacturing is the biggestdriver of freight demand.
(32:49):
It's very flat.
Um, I did a presentationyesterday.
You know, backlogs ofmanufacturing backlogs are
decreasing.
They're a very strong predictorof dry-van rates.
Normally, when backlogs oforders go up, dry-van rates go
up a couple of months later, butbacklogs are going down.
So dry-van rates are gonna godown eventually.
(33:10):
So um things aren't going in theright direction, and that just
means that anything we do that'sgonna reduce capacity is it
we're just not gonna see theimpact of it on freight rates
because demand is just gonnaundermine all of those things
that we're doing on the supplyside.
SPEAKER_00 (33:27):
So let me ask a question and I want to make I'm
gonna I'm gonna approach thisfrom a no, my computer just like
stuttered on internet, so finishyour thought.
Go, sorry.
SPEAKER_03 (33:35):
All right.
So I'm gonna ask a question, andit's gonna be more of like a a
devil's advocate advocateperspective.
So earlier you guys were talkingabout um tender rejection rates
being you know one percent orlower, and from out an outside
(34:44):
perspective, couldn't a businessconsultant say, You're running a
very efficient operation, thisis a good thing, right?
And when trucking rates are aslow as they are, couldn't you
from an outside perspective saythis is a good thing for the
consumer?
SPEAKER_05 (35:00):
Right?
SPEAKER_03 (35:01):
Um, so here we are on the end, and I think it's
just an interesting uh point toto have because on the inside
we're like, yeah, but no one'smaking money and this can't
sustain forever.
But on the outside, shippers arelike, we're running efficient,
our transportation costs arelow, and as long as our
freight's not getting stolen,what does it matter?
(35:21):
Um, so what do you think it Iguess if you if you look
forward, what what are somepotential courses of action that
we might see here, whether it'ssomething bad happens and it
changes it or economic umactivity goes up and that
increases the the demand.
What are some of the realisticcourses of action that we can
(35:45):
expect to see in the next yearor so?
SPEAKER_02 (35:48):
So this is the this is the dangerous game that
shippers play.
And Derek Leathers tipped hishand to what's coming uh last
week at a conference.
Um tariffs, he was talking abouta 25% increase in the cost of
aluminum and steel.
And what he was saying was atthe bottom of this cycle where
everyone's margins arecompressed, when we start to buy
more trucks to replace the oneswe've got, if they start to cost
(36:11):
more money when we buy moretrucks during the next freight
cycle, everyone's rates aregoing to go up.
So what he was saying toshippers was when we start to
buy more trucks in the nextfreight cycle, it's gonna cost
you more money.
Right.
So he was very, it's veryinteresting discussion.
What he was saying is in thenext bid cycle to a to a
shipper.
He wasn't saying it to hisshippers, but he's starting to
(36:34):
telegraph the discussion in thenext bid cycle.
He's saying tariffs are goingup, cost of trucks is going up,
get ready.
Um so it's a very interestingdiscussion.
SPEAKER_03 (36:49):
It is going to all come to that at some point.
SPEAKER_02 (36:53):
So shippers have had pricing power for three years.
New rates coming into routingguides based on recent RFPs are
flat to down about 1%.
But what what's happening is umso so to answer your question,
Nate, um the bottom of thefreight cycle where your margins
and carrier margins have beencompressed to the lowest they
possibly can, carriers aresaying our costs are going up in
(37:16):
the order of range of 3% to 5%in the last couple of years.
Our rates, though, have gonedown about 1% over the same time
frame.
We can't absorb any more ratedecreases because our costs are
going up.
The danger for shippers is wecould go out of business.
So the carriers in that 200 to700 truck range are an accident
(37:39):
or a lost contract away fromgoing out of business, right?
That's the real danger here atthe bottom of this cycle is
capacity could exit rapidly.
SPEAKER_00 (37:48):
And you could see it twofold, right?
Because you were on our show, wetalked about this like two years
ago, because I've reiteratedwhat you told us two years ago,
where basically what we sawpost-pandemic was a carrier
market.
It was like a tale of twocities, meaning like you had
carriers that saved a bunch ofmoney, and you had also carriers
(38:08):
that bought cheap trucks reallycheap pre-peak in the pandemic.
And then you had other carriersthat bought trucks late in that
cycle spent a lot more money.
And you said, this is probablyabout a year and a half ago.
And I remember you're like, whatwe're likely to see is the
coffers are starting to runbare, meaning like the savings
are gone.
And also all of these trucks arenow been driven long enough that
(38:32):
they will need full rebuilds.
And you're like, you basicallyhave two choices.
You buy a new or more expensivetruck to keep running, or you
rebuild it and the cost for therebuild went up.
And you're like, economically,like, this is going basically
the chickens are going to haveto come home to roost because
like there's no way you can justkeep deferring costs.
Like as a trucking company,you're making less and it costs
(38:53):
you more to operate.
There's only a certain amount oftime.
And like that should have beenlike a year and a half or two
years ago, which is why we weretalking about in the first half
of this conversation of like,the math hasn't mathed for a
very long time.
And if this happens, meaning youget rid of everybody driving in
unregulated ways and thelegitimate companies go out of
(39:15):
business at the same time, youcould lose giant tranches of the
carrier market.
Like you're hearing it.
SPEAKER_02 (39:22):
And you're hearing it now, the uh Tindernoyer in
the cash shipment report talkingabout carriers deferring
maintenance costs, deferringmaintenance programs.
So you're hearing it now at anational level where fleets are
starting to do that.
Um Benjamin, at the FTRconference, they were talking
about this very thing.
Um carriers are talking about aneconomic recovery not happening
until 2027.
(39:43):
They were talking aboutoperating costs being cut to the
bone.
Like so, carriers are actuallytalking about being in a very
precarious situation wherecurrent operating costs are
unsustainable, absent rateincreases.
So, Nate, your pro your questionis if they don't see rate
increases in a material way inshort order, there'll be a
(40:04):
number of carriers forced out ofthis industry.
And what that means, I thinkBenjamin, you were getting at,
is a flip.
So if you don't see a rateincrease that starts to lift
carrier profitability, you seethe market flip quicker where
the gap between spot andcontract gets the gap closes
quickly and you see that rateinflection, and then you see
(40:26):
routing guide compliancefailures happen faster, and then
you see, you know, uh the markettake off.
And that and that could happensooner than later.
SPEAKER_00 (40:37):
And I would have made the argument that if you if
if the tariffs had not happened,if any of that just didn't
occur, meaning like we just keptgoing on as a country, like we
were coming out of the pandemicand things were growing, people
were building and things werepicking up, and then all of a
sudden we renegotiate all ofglobal trade in a short period
(40:59):
of time and everything justshrinks, right?
Because I think if had that notoccurred, what we're seeing, if
you layer on enforcement with anormal economic cycle, like this
would have flipped at the veryleast a year ago, if not
probably beginning of 2025, ifnot sooner.
SPEAKER_02 (41:16):
Well, you you go back and look at Jason Miller's
post about two weeks ago wherehe looked at the aggregation of
five Federal Reserve backlogorders.
And you look at the last threeor four freight cycles where
backlogs went up and then dryvan rates went up.
The start of this year for thethey were backlogs were going up
and dry van rates were going up,and then Liberation Day
(41:37):
happened, and backlogs startedto plummet.
SPEAKER_05 (41:39):
Yep.
SPEAKER_02 (41:40):
April, May, June, July.
And then dry van rates went likethat.
There's no question this marketwas improving December, January,
February, March.
No question about it.
We were all talking about it.
And then, of course, everybodyhit the pause button because
everyone said, oh crap, we needto start thinking about our
worst case scenarios in ourbusiness plans that we always
(42:02):
had on the back burner, becauseeveryone has a best case, bull
case, worst case in our businessplanning.
And uh, even my wife's cateringbusiness has a worst-case
scenario in their 2025 businessplan.
And everyone went, oh crap, weneed to think about what's the
worst thing that could happenthis year.
And of course, that even wasn'tgood enough because nobody
(42:24):
really knew.
SPEAKER_00 (42:25):
It's even worse than that, right?
And again, just for anyonelistening, right?
Like the one example, I wastalking with a furniture company
that basically sells furnitureand stuff for your child's
bedroom.
So, like the beds that arecartoons or Marvel or whatever,
and dressers and things.
And they're like, listen, wewere buying our furniture in the
(42:45):
90s in the North Carolina area.
Like they made it there and wewere able to buy it there.
But we haven't even been able tobuy it in the United States for
like 30 years.
And Jason put out a post and hewent, if you look at the
employment in just thatindustry, right, it was like at
90,000, I think, in NorthCarolina in the 90s at its peak,
(43:07):
and it's half that.
So what happened are thesecompanies that are selling
products and have been sellingthem for 25 years that have no
choice but to pay, in somecases, a 30% markup on the
things they're buying to sell tous.
And we're trying to act as iflike that wouldn't have an
effect on companies.
And then someone asked me theother day, they went, Well, why
(43:28):
is the stock market up?
I'm like, well, the stock marketis up because AI spending's up.
If you take that out, I thinkthere's an argument to be made
that like we are in for whatcould be like Well, let me give
you an example.
SPEAKER_02 (43:42):
Um, my wife's catering business uh relies a
lot on um large universitieshere in Boston.
Think about the attack onuniversity policies from the
current administration overtheir diversity policies.
Right.
So one of their big universitieshere, there's 50 universities in
Boston.
One of their universitycustomers have cut the number of
vendors in catering from 50 totwo.
They've cut their spend from 10million on catering to five
(44:05):
million in a year.
Haven't even spent anywhere nearthat.
Right.
So this is so now you're talkingabout food services, fresh
produce, right?
So this is this are truckloadsof produce, right?
Now multiply that by across 50universities, multiply that
across all of the cities in thecountry where they are afraid to
(44:28):
do catering of events just tostay off the radar of the
current administration.
Right.
So this ha this is why you areseeing such a big drop off in
truckload volume of just foodservices, right?
And and you multiply this acrossall the other industries and all
the other, you know, whether itbe manufacturing, um so there
(44:51):
there is so much less volumebeing moved of all types of
commodities because people aredoing the bare minimum, with the
exception of one area.
And it's got to do with AI andit's got to do with data
centers.
If you've got a flatbed or adrop deck or an extendable
without riggers and an RGN, youwill be driving the wheels off
(45:15):
that bad boy, and you'd behauling data centers and
powered, you know, anythingthat's wide and high and ugly to
the middle of nowhere.
Like if I had to come out ofretirement, that's what I'd be
hauling.
I'd be hauling those bad boysall over the country for the
next decade.
Like, nuclear power generationis going to be the next big
(45:36):
thing for like it's it'sphenomenal.
Um, guys, if you look at our dryuh our flatbed rates, they're
about 10 to 12 cents a milehigher.
Like, I I've been writing aboutit for about three weeks.
They're tracking 2017.
Remember, 2017 was a reallystrong industrial economy.
It's it's more than coincidencethat drive uh refer of sorry,
(45:56):
flatbed rates are identical to2017, but it's not the same
economy.
It's just the it's coincidencethe rates are about the same.
Uh, but it's because of when youlook at the underlying rates,
the spot market rates arebecause um of the uh data center
construction boom that's goingon, and it looks like that'll be
continued for some time.
(46:17):
So interesting.
Flatbed flatbed is been having apretty good year this year.
SPEAKER_03 (46:21):
So his historically, because I I was looking up the
rates earlier, and flatbed is Iwant to say the national average
is like about 240 a mile withfuel.
Does that sound about right?
And that's for 40 cents higherthan dry van.
Yeah.
Historically, though, if you goback like five, 10 years ago, is
is flatbed usually thatdifferent compared to dry van?
SPEAKER_02 (46:45):
It's a good question.
I'd have to pull that up.
SPEAKER_03 (46:47):
Uh yeah, I don't think you know when you look at
open deck, the more specializedit gets, it totally makes sense
for rates, right?
Because I mean that's just yourbasic supply and demand.
This some the supply of ofspecialized equipment is gonna
be uh very, very differentversus you know a dry van or a
standard 48-foot black flatbed.
SPEAKER_02 (47:05):
But yeah, I'm I'm no, I'm talking more open deck,
(48:27):
not necessarily highlyspecialized.
SPEAKER_03 (48:29):
Just like a flat 48-foot flatbed.
SPEAKER_02 (48:31):
Yeah, yeah, drop deck.
Maybe drop deck is about asspecialized as I'm getting.
SPEAKER_03 (48:35):
Okay.
SPEAKER_02 (48:37):
But so yeah, they've had a great year.
Uh but as for the rest, um,yeah.
We're I mean, we're kind ofrunning about three to maybe
three and a half percent higheryear over year on the dry van
and reefer side, but flatbedsprobably gonna have a much
better year on the spot rateside.
Contract rates are running aboutprobably one percent higher year
(48:57):
over year.
But I think the the bigger thebigger tell is that contract
rates entering routing guidesare still flat to maybe negative
on the dry van and reefer side.
They're not carriers are stillnot getting a lot of joy at the
moment.
SPEAKER_03 (49:11):
So speaking of flatbed, did you um a little
unrelated here?
Did you see the Montgomerytransport situation?
So I'm curious.
I I I heard about it, I read alittle bit on it.
I know it was pending a sale andit didn't go through.
Would your analysis on that bethat the sale fell through based
on their lack of profits, basedon the current market and what's
(49:34):
going on, or is there is theresomething else in there that
they're a huge it's it was ahuge company, right?
We're talking like thousandthousand trucks.
SPEAKER_02 (49:41):
I think it was I think it was a thousand.
SPEAKER_04 (49:44):
Yeah, six hundred drivers, a thousand employees.
SPEAKER_02 (49:46):
Yeah, I think Steven's right.
Um something else, Nate, becausePNS has uh been very astute at
rolling up a lot of companiesover the years, and there's
something else going on there.
Um normally PS roll up somepretty good companies, that's a
very good operation.
There's something else going onthere that would normally have
said if PNS were involved, thatshould have been.
(50:09):
So I I I don't know enough totell you exactly why.
I saw their name mentioned.
So there's something else that'sneeds to be explored there, and
I don't know why.
SPEAKER_04 (50:21):
Gotcha.
So one of the things I wanted toadd, have you ever seen the
channel uh Smarter Everyday onYouTube?
Brilliant guy.
He he worked at NASA.
Uh he does like a lot of sciencevideos, whatever.
He did a video um right aroundthe time tariffs like with a big
talk.
And uh he was trying to producehis own like grill cleaner that
(50:43):
didn't have the metal wires thatyou know for people.
Uh and it was next to impossibleto get done in the States
because it was too costly.
Um or one of the issues he raninto is the technology for
manufacturing, like the tool anddie process that um uh just
doesn't exist in the Statesanymore because we've moved so
(51:05):
much of this stuff out of thecountry.
Um and one of the other issueswe have, I mean the video is
like almost an hour long, butit's fantastic to watch.
Uh they were talking to Chinesecompanies where they they had
the plans, they would send themto them, and then they would uh
produce it for you and send itback.
And they found on Amazon wherethey would take the plans and
(51:27):
they would reproduce yourproduct with slightly different
material so it's not the samething, and then they would
resell it.
So they'd use the same process,they would change a little
thing, and then they would sellit.
And that was kind of part of theissue that was being addressed
with tariffs and all that stuff.
So kind of leading into theflatbed and the manufacturing
thing, do we think if thistariff thing is a a long-term
(51:49):
thing with the administration,data centers being a big thing,
are we gonna see a return ofmanufacturing in the States, or
is it gonna be something southof the border that comes up
where we start bringing thatspecialized tooling process and
making it?
SPEAKER_02 (52:05):
Yeah.
It's a great question.
I don't I think that I tend toagree with what Jason Miller
says.
Anything that's highlyspecialized, I don't think you
see it come back here for many,many years.
Just the cost of investment.
Um if it's if it involves labor,it doesn't come back here.
If it involves some biginvestment, yeah.
(52:27):
I think I think over time,Stephen, I think you'll
definitely see some of it comeback.
We're already seeing some ofthat manufacturing come back.
Um I think but labor's the bigpart of it.
So it's maybe where Mexico comesback in because it's got lower
labor costs.
But wherever you've got umsomething that involves people,
we're always going to strugglewith other countries that have
lower labor costs.
Footwear's a big one.
(52:48):
You know, the cunt that youknow, uh we're having a big war
with the Italian company thatmakes the handmade pasta in
Italy right now.
So I think I think it depends onthe commodity.
But if if we can demonstratethat we can produce lower cost
goods here with a big investmentin technology, I think our
challenge is how do we do sospanning this administration
(53:09):
into the next administration?
Like I think that's where that'sjust not this current
administration and the UnitedStates.
That's a global phenomenon.
Because that that's been I'veI've seen that in my lifetime
where I'm from in Australia,where you know you have a
two-year window where, you know,where you've got a four-year,
you know, period of power, butuh you've you've got two years
(53:32):
to make policy work, and thenanother two years to hold on to
the next election period, andnobody really, you know, gets
anything done in two years, andand then you're kind of nothing
ever gets achieved.
So I think that's sort of thethe problem that we've got here
is that nobody seems to want tomake the right decision for the
country, as opposed to adecision that benefits them
(53:56):
staying in power.
I would love to see a decisionthat's made for the country that
spans multiple administrations.
That would be the best possibleoutcome.
That might be what we're seeinghere.
You know, um a lot of people inthe country voted for change,
and uh we'll we will be um I'llbe I'll be pleasantly surprised
(54:16):
if we can bring manufacturingback to what Benjamin was
talking about that seesmanufacturing come back to the
south where furniture used to bethe big the big thing.
Like that would be great.
Heck, I was in Salinas for for aweek and you know, picking
produce is back breaking work.
I don't see I don't see peopledoing that.
(54:38):
Like there are some jobs that umare just hard work.
I just I don't know, we we needlabor for other countries to do
that sort of work.
SPEAKER_03 (54:47):
All right.
So I'm go ahead, Stephen, sorry.
SPEAKER_04 (54:50):
I'm in Cincinnati, Ohio.
My my in-laws are inIndianapolis, so like one of the
things that's like anecdotal tome but odd to see is like the
expansion of Indianapolis overthe last couple of years is
insane.
And completely like backwards tothe rest of the country.
Right.
Um but one of the things thatI'd be curious, I mean I don't
know if anyone has it here, butlike has any like Jason Miller
(55:13):
or anyone looked at like themargins on products and
commodities to predict if thatmanufacturing would come back
first?
Like I know like clothing is oneof those things where um people
have started, you know,American-made brands and and
they are here because it's ait's a higher margin that
e-commerce, it's likeforty-fifty, whatever percent
(55:33):
margin.
So there's a little enough meaton the bones to like cut that
down to 1520 and still beprofitable.
But I'd be curious if anyone hasit like mapped out those
commodities to like predict.
The other thing I was gonna say,uh you were talking about AI and
and the uh the market.
Um there was a report that cameout today that 80% of the S P
(55:55):
500 was related to AI companies,to growth.
SPEAKER_02 (55:58):
Right.
unknown (55:59):
Yeah.
SPEAKER_02 (55:59):
You know, uh Stephen, it's been funny.
Over the last week, the wordbubble has popped up.
I have you noticed that.
Like we were talking about lastmonth it was all about the AI
boom, and now the word bubblehas popped up.
So I can't wait to see whatnext.
SPEAKER_03 (56:10):
It reminds me of the dot-com era if you go back 25
years ago, right?
Um, Dean, I wanted to I wantedto wrap up and um with you know,
we're we're just entering Q4here, and given what you've seen
this year, currently, and yearspast, for brokers and carriers
(56:33):
that are tuning in, what wouldyou say to them as far as how to
set their expectations for whatQ4 and the rest of 2025 should
look like?
Uh, what would be your your uhexplanation or prediction on
that?
SPEAKER_02 (56:49):
I think uh yeah, I I'm actually really optimistic.
I think there's going to be someextreme volatility on regional
lanes.
So, particularly reefer, right?
So I think you'll have yournormal volatility for dry van
lanes, e-commerce lanes, soAllentown, Boston, you know, any
of those e-commercereplenishment lanes where Steven
is in the mid in the Midwestlanes, like, you know, Columbus,
(57:12):
Chicago, all of thosedistribution markets like uh
Phoenix, you know, anywherewhere you've got big warehouse
markets, though they'll be alltrying to run those e-commerce
replenishment lanes.
They'll be very, very busybecause people have got
warehouses that are incrediblypacked and those last-minute
replenishment uh moves.
So they'll be busy.
Um I think you'll see a lot ofuh high volume uh early uh
(57:39):
Thanksgiving moves, hams,turkeys, Christmas trees, as per
usual, starting um in November1.
So Pacific Northwest, NorthCarolina, Minnesota, Joplin.
Fresh turkeys start moving earlyNovember, Christmas trees out of
the Pacific Northwest.
So I think all of those typicalthings will happen.
I think you'll see some reallygood volumes and rates for
(58:01):
anybody that's got arefrigerated trailer out of the
north, out of the out of theMidwest Joplin, out of uh
Minnesota, and out of NorthCarolina, all the way through to
Thanksgiving.
So I think you're gonna see somepretty good uh volumes and rates
for those carriers because atthe bottom of this market where
we're at equilibrium, any surgein demand is gonna see some
(58:21):
pretty good rate volatility forcarriers and brokers.
So I think I think we're gonnasee some pretty good um
seasonality um through the endof this year.
I think it's gonna be a prettygood market for carriers and
brokers.
SPEAKER_03 (58:32):
Awesome.
Well, I'm looking forward to it.
Yeah.
Um cool.
Well, Dean, we appreciate it.
I don't know what happened toBen with his technical
difficulties, but uh he uh he'sno longer in the conversation
with us.
What's going on?
I don't know.
He was texting me on this side.
I think he uh he had someinternet issues and then um who
(58:52):
knows?
Hurricane season in Florida,even though there's no
hurricanes there right now.
But anyway, Dean, we're we'rehappy to have you on.
Um we we love what you do everyevery Thursday in our in our
twice-a-week newsletter.
We your all your rate data forthe market, uh dry flat and and
(59:13):
um reefer, we we share that inthere, and it's super helpful.
So thanks for that.
And if you guys aren'tsubscribed to the newsletter,
please do so.
Dean does a lot of work to totake all the minutia out there
and put it in a digestible form.
So make sure to check that out.
Um, any other anything else,Dean, you want to wrap up with?
SPEAKER_02 (59:32):
Uh it's truck show season.
So uh there's a bunch of truckshows on uh here in New England,
lots of good causes.
So uh if you don't follow me onsocial media at the Grumpy Pete,
um there's a lot of good uhcauses that we've got going on
to support.
Um lot of uh sick kids, there'stoys for tots, um, a bunch of
things.
We're always raising monies, butI think uh Toys for Tots is the
(59:55):
big thing we're doing uh thisyear, as always, raising
awareness for all of theunderprivileged kids that need
help this Christmas.
SPEAKER_03 (01:00:03):
Awesome.
Yeah.
I feel like Toys for Tots has tohave been around for a hundred
years now.
Yeah, yeah.
Yeah, and Stephen, when you wereuh you were a corpsman, right?
And is that like I know that'sNavy, but you're attached to the
Marines, that was like a thingevery year that uh kind of like
a uh I don't want to call itforced volunteering, but that
was always a big push for thethe Marine Corps side of things.
SPEAKER_04 (01:00:27):
Soys for Tots.
It was what it was with the so Iwas in the Navy for five years.
Yeah, the only time I was on aboat was related to Toys for
Todds.
Yeah.
Uh for two for two weeks.
I gotta get my uh dirt.
SPEAKER_02 (01:00:41):
I gotta get my uh Peterbilt cleaned up and waxed
and polished the next couple ofdays for a truck show Saturday.
So I think we've got truck showsevery uh Saturday now for the
next six weeks.
Kind of like this is kind ofpeak truck show season in fall
up here in New England.
It's a pretty big deal for uhraising awareness for um Toys
for Tots and all those sorts ofevents.
SPEAKER_03 (01:01:03):
Awesome.
SPEAKER_02 (01:01:04):
Yeah, well, cool.
SPEAKER_03 (01:01:06):
Thanks again, Dean, for being on with us, and uh
we'll we'll definitely catch upwith you um, if not later this
year, into the beginning of nextyear, and we'll we'll see if any
of our predictions or thoughtswere were remotely accurate,
right?
That's the one thing too thatlike, you know, we we try to
like look at what's going on,what's happened in the past, and
predict what the future willlook like.
(01:01:27):
But there's the unknown thingsthat can just pop out of nowhere
that like COVID, nobody nobodysaw that coming six months ahead
of time.
SPEAKER_02 (01:01:33):
So we have an eerily quiet hurricane season, so that
might be very strange.
SPEAKER_03 (01:01:39):
Very strange.
But all right.
Thanks again, Dean.
We'll see you again soon.
Uh Ben's not here to do his signoff, but uh thanks for
listening, everybody.
And until next time, go bills.
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