Freight costs have been a central focus for understanding the economy over the last year. But within freight there are several moving parts. At the center of it all, sit thousands of freight brokerages, big and small, attempting to connect shippers and carriers. And in many ways their businesses resemble Wall Street brokerage houses, except their selling trucking capacity instead of stocks or bonds. This episode was recorded live in early May at the Freightwaves: Future Of Supply Chain conference in Northwest Arkansas. Our guest Matt Pyatt is the CEO of Arrive Logistics, one of the fastest growing freight brokerages in the country. He explains the business model, what it takes to win, and what's happening in the market right now. Transcripts have been lightly edited for clarity.
Points of interest in the pod:
The state of freight right now — 1:43
How Arrive Logistics got started — 6:39
What are the margins in freight brokerage? — 7:55
The importance of data and scale — 12:15
Why you can't just do it all on an app — 19:40
Have we seen peak globalization? — 32: 11
What it's like working at a freight brokerage — 32:15
How wide are spreads on given lanes — 44:17
Joe Weisenthal: (00:10)
Hello. I'm Joe Weisenthal.
Tracy Alloway: (00:12)
And I'm Tracy Alloway.
Joe: (00:13)
Yeah. So we are the co-hosts of the Bloomberg Odd Lots podcast. We've been doing it for a while. We cover all kinds of things, markets, finance, and economics. And we are gonna record a live episode today.
Tracy: (00:26)
Now, normally we do cover finance and markets and economics, but over the past couple years, we've slowly transformed into supply chain correspondents because everything that's going on with logistics and transport at the moment has ended up having a really big impact on the economy as well as markets. And so the further we go into the supply chain, the more we discover that we don't actually know, and we just go deeper and deeper until we finally end up at conferences like this.
Joe: (00:54)
So I'm really excited. We're gonna be speaking to the CEO of one of the fastest growing freight brokerages in America. It was founded in 2014. It has 1900 employees, it has raised $100 million, it has $2.4 billion in revenue, Matt Pyatt, the CEO of Arrive Logistics in Austin Texas. So, Matt, we're thrilled to be here with you.
Matt Pyatt: (01:12)
Thanks a lot for having me. Thanks Freightwaves and thanks to you guys. I'm excited for the conversation. They didn’t give me a heads up on how this is gonna go. So we’ll figure it out.
Joe: (01:20)
We're just talking, we're just chatting here. But, you know, I wanna get into how the business works and what it takes to be one of the fastest growing freight brokers. But before that, obviously lots of concerns about freight slowdown, a freight recession. We've read all the stories many on Freightwaves. What's your sort of perch into the industry right now. And what's your view on what's happening right now?
Matt: (01:43)
Yeah, I mean, I'm sure this whole conference, you know, the last couple days has been around what's going on in the market. There's been a lot of attention. The media, you know, people making predictions, especially Freightwaves. You know, where the market's heading, you know, what we're seeing is absolutely what you're seeing in the data. Those companies that have a high exposure to contractual freight, they're continuing to take all that demand.
The freight's not coming to the spot market. So the spot market's getting more competitive, you saw that really accelerate when the fuel prices kind of jumped up to north of $5 a gallon. So when that happened, not only were there contracts elevated, but then you got the elevated fuel surcharge, which made the contractual freight even more advantageous for the asset based carriers and the brokers.
And then you had a lot of supply that entered the market over the last 18 months. You've heard about a lot of the new entrants. A lot of owner operators obviously use equipment that's super expensive. These days, insurance is high, fuel is high. So you have the owner operators that are subject to kind of a higher fixed or variable cost per mile.
And that's really driving, you know, a lot of competition in spot market and ultimately, you know, it will be a really challenging market for any company, whether it's a broker or an asset that is, you know, thriving in this spot environment. So, you know, really what we're looking at is how do we balance our portfolio? You know, how do we diversify modes of transportation? But really right now contract is where you want to be. And those that are in the contract market are thriving.
Tracy: (03:05)
Just on the rates question. I mean, the debate seems to be, is this a capacity issue — lots of new entrance into the market when spot rates were really high — or does this reflect some sort of genuine slowdown in consumer demand? Can you give us like your gut take on that issue?
Matt: (03:23)
I mean, there's like a hundred different data points that you can kind of follow and we look at all of them and, and obviously you can track all of them here as well.
Right now you're seeing consumer spending normalize, right? So you kind of think about like a five-year trend line it's kind of coming back down towards a more of a normal growth trajectory, obviously spiked up in 2020 and 2021 when durable goods, you know, spending increased obviously. Service spending was hammered by Covid.
You're starting to see a shift in the credit card data back to the service industry. But it's too early to tell, right? So, I mean, you've got a lot of warehouse, a lot of inventory in the warehouses. You've got a lot of pent up demand from people that weren't able to get products over the last 18 months. You've got an economy that was doing pretty well. That's been challenged, you know, over the last, you know, three to six months. So it'll be really interesting if we can get kind of the China supply chain under control, maybe some of the global conflicts.
Joe: (04:17)
So help me understand, like what happens in an environment where spot prices are rolling over and diesel prices are going absolutely to the moon? It seems like an absolutely brutal combination of events.
Matt: (04:37)
You're gonna be in deflationary market until we get to what we call equilibrium and equilibrium is when the rates have come down enough that people start to exit the market. So right now they're still making enough to cover their costs, make a little bit of money, but for how long, who knows. I mean, obviously we've seen one of the, you know, historically fast decline of spot rates.
So you'll continue to see that downward pressure on spot rates, until enough people either take the capacity off the road or, you know, demand picks back up enough to offset and drive some volume back into the spot market.
Tracy: (05:07)
How unusual is this market? Because one of the things that Joe and I hear just walking around this conference is every once in a while, you'll catch someone going like, oh, “2018, 2019.” And that's the parallel that it feels like everyone reaches for, but is it actually like that? Or is it unique in some way?
Matt: (05:26)
We talk about the freight cycle constantly and you know, you obviously know that there's a three to five year period of time where it goes inflationary gets to the peak, then deflationary, gets back to equilibrium. And then typically there's some type of shock, whether it's a pandemic or a natural disaster or some type of, you know, bad weather event in a large part of the country that kind of sends it, you know, back in the other direction.
But what I will say is we’ve gotten so elevated, you know, if you look back to 2018, the highest spot rates got were 2.04 plus fuel. So today we're talking about how rates have fallen extremely fast, and they're at $2 to $2.04 in that range plus fuel.
So rates are still elevated above where they were in the peak of 2018. So, you know, what's really interesting is, you know, how is the market gonna react? Because in 2018 through 2019, you know, we saw rates come from 2.04 down to a 1.40 plus fuel. You know, a lot of people think there's gonna be a new bottom, so to speak from a rate environment. So we're definitely interested to watch because it is very different than 2018 because of how high and how elevated and how much demand we saw in 2021.
Joe: (06:26)
So why don't we back up a little bit and talk about your background at Arrive. You started it in 2014, what did you see as the opportunity that there was space for what you wanted to build?
Matt: (06:39)
Yeah, I wish I had a really crazy story how we were gonna just take over the industry. But back in 2014 I was working at another company called Command Transportation. I was super happy. I was learning a lot. My co-founder and I met in college, Eric Dunigan who's here.
We really enjoyed the transportation market and we had a group of friends that, you know, owned another health supplement business and they were looking to make investments. So they reached out and they were like, “Hey, we wanna make investments into startups.”
Like we worked with you when you're in college. And I was like, well, I know transportation, and you guys have a $5 million freight spend. So we kind of started with like this, “Hey, we're gonna manage this shipper's transportation network. And then we're gonna grow from there.” And so, you know, things have really rolled since 2014. We've had a lot of good momentum. The market's been in our favor a few different times. But yeah, we're really focusing on, you know, what the next five to seven years look like.
Tracy: (07:27)
What was the attraction of freight brokerage? Because Joe and I, we've joked on the podcast before that, like we wanna start our own owner operator company, but actually having walked around this conference, everyone's going maybe brokerage is the place to be. I mean like high profit margins, you don't actually own that many assets. Well, correct me if I'm wrong.
Matt: (07:48)
Who has high profit margins?
Tracy: (07:52)
We’ve heard 20%.
Matt: (07:54)
No.
Tracy: (07:54)
Is someone lying to us?
Matt: (07:55)
Yeah. That's, I mean, that's not accurate. I would say if you look back historically, it's maybe been elevated, but with technology, all the investments that we're making, we can talk about that for hours. Obviously technology is deflationary to margins. We're trying to eliminate as much cost of every single, you know, transaction and that gets passed on. So if you look at the big, you know, the big companies that do like North American surface transportation, middle mile trucking, I mean, you're at like 12% to 15% now revenue per load moves up. So the spread dollars are moving up. But 20% is not sustainable. I mean, it's too competitive of a market. There's too much money entering the space. People are willing to take the freight at a lower cost. I mean, there's a market clearing rate, right? All of our shipper partners work with 20 brokers or 50 brokers and 500 assets. So they're not paying us this huge premium to move the freight. We have to charge a market rate. And then it's really on us from a procurement standpoint to drive margin.
Joe: (08:47)
So before we came down here and I was like telling people, “oh, we're going to interview the CEO of a freight brokerage.” People were like, you know, who don't know anything about freight, they're like “Really? There's brokers. Like why isn't it all just done on an app?”
You know, like ride hailing or something. And obviously here at the conference there's been, you know, tons of, lots of startups and lots of demos of technology. But you know, when you go to the Arrive website, a lot about people, the sales force. Talk to us about like your view of like, what is the sort of the people element in building a successful brokerage?
Matt: (09:20)
Yeah. So I think you've got two different ways to build a successful freight brokerage. You can go out and raise a lot of money and build great technology. And then you're gonna realize when the customers come to you and say, well, you need good operations. You're gonna go start hiring a bunch of people to do the operations part of the job.
And then there's, you know, the other way to build your operations and then build technology to, you know, kind of augment that. But at the end of the day, a winner in this industry is gonna have unbelievable technology, unbelievable people, right?
It comes down to people, process and technology. So we obviously have gone out and raised money over the last couple years and all of our capital raise that we've done has been allocated to technology development. We're spending about 30 million a year right now, building, you know, proprietary technology, 250 full time engineers.
And it's never enough, right? It's an unlimited opportunity to, you know, better build better connectivity. But we are very big advocates that the people are everything in this business. And we spend so much time on not just talent acquisition, but on talent management, talent retention. I probably spend 70% to 80% of my time with the executive team talking about our people. And then obviously the rest was strategy and technology. But it is the difference. And at the end of the day we're business services, people come to us because they wanna move their freight from point A to point B and they want to do it with least amount of friction as possible. So that people are a big part of that.
Tracy: (10:35)
Can you go into detail — as much detail as possible — on why tech is important and why data is important? Because, I mean, for instance, we listened to Billy Beane yesterday on the stage from Moneyball. And I know you've mentioned Moneyball as well as an inspiration behind your approach. And I'm wondering like, exactly how do numbers and technology fit into the business model?
Matt: (10:59)
Those are, I can answer two different questions. One is how is Billy Beane and Moneyball relevant to our business model? And then how is technology? And I'll start with technology and then we can go to Moneyball if you want. So technology is everything. We look at technology in three different pillars, you've got customer interaction. So basically how are we connecting to our customers? How do we make that a more seamless transition? A large enterprise shipper has very different needs than an SMB shipper, right?
So we wanna build different technology. We want to have the ability to interact with them differently. They care about different metrics and on-time percentages and different ways of getting quotes. So it's all about how do we connect them and make that experience seamless.
And then what the second of the third pillar is around the carrier side. And you've heard a lot about the apps and even you just asked, why isn't it all automated? Well, if you could get all 500,000 plus carriers to use the same system, it would be pretty easy to automate this industry.
But I can tell you, we've got carriers that refuse to do anything, but over the phone. Then we have carriers that only wanna use our app. We have carriers that only wanna go onto a web portal. We have carriers that wanna use Gchat and Slack — different modes of communication. So our technology is how do we connect with every single one of our providers to drive the most efficient connectivity between us and them, and then the third pillar of technology and, and obviously very important to the future of our industry is internal technology is how do we operate?
How do we make our operations more efficient? I think like 5 years ago, 10 years ago, they would tell you three loads per day per head was like the gold standard in transportation. And that number's just not sustainable. You've got to get your fixed cost down. So you've got to build technology that augments what a person can do. A person's job is to build relationships, to problem solve, to proactively communicate, to build a good relationships and to expand the business. The technology's job is to do everything else, whether it's decision, support, pricing, support, um, whether it's matching the right carrier, the right load every single time. It's all about the different things that we can do internally that humans were typically doing. And we can take that part part out of the process. And that allows us to have more transactions per day, per employee, which ultimately lowers our cost per employee, which ultimately lowers the margin.
Because we can go in more competitive and drive more volume. Moneyball is a longer question, but I'll answer as quickly as I can. One of the things that we've done that's really, really unique is like I said, we started from like an operational standpoint. We were all about building the best operations that we could build. So we didn't have great technology at the beginning, but we perfected the art of hiring training and retaining. And so we have five cohorts. So we have new customer sales, new carrier sales, new customer. Then within customer, you have SMB mid-market and enterprise new carrier. Then you have carrier based on wallet size. And then you have corridor, which is OD pair like origin destination, city to city, how often we're running it. So we've basically figured out all of the math behind every single one of those cohorts.
We've never missed a monthly projection from a load per day perspective. Our investment banks actually told us we have the most predictable defensible financial projections they've ever seen because it's detailed down to the actual person's name. And then future hires are by cohorts, right? So we know how many people to hire what their productivity's gonna be, what the turnover's gonna look like. What are retained accounts are gonna be? What the growth on those retained accounts are gonna be? How many people we need to hire to fill those orders on the carrier side, how many people we need to hire on the operations side.
So it's just one big financial model that we've created. And the good thing about it is every single month, it gets better because every single person's another data point. So month 18 of Person Y is another data point for that, you know, 18 month, tenure on the customer side of the business.
So it just continually gets better and better. So that's kind of the whole Moneyball approach and the predictability. And then what we do is we overlay technology gains. So it's like, okay, on a baseline of a hundred percent magical achievement on the carrier side, that was an April of last year. We're now at 162%. So that's a 62% increase in productivity across all tenure bands. So that's kind of how we're underwriting our return on our investment because we know what our cohorts were doing before and we can constantly monitor and see how they're improving each and every quarter as we build more and more technology.
Joe: (14:54)
So how do you succeed as a broker or what do you look for in the characteristics of someone who comes to work for you and what do they have in them that makes them thrive and arrive.
Matt: (15:05)
If you had to ask me that five years ago is a very different answer. I mean, people today are very different coming out of college. I mean, we'll hire 800 people this year and 750 of them come out of college. So what I would tell you is we look at it by role. So one of the things that we talked about is higher train retain within hiring. We have profiled, we looked at every single university, everything you can look at, we know everything like where to go, to get the best talent for each every, each, and every role, whether it's customer sales, operations, or carrier sales, cuz they're completely different jobs on the customer side, it's a little bit longer of a sales cycle. It's a, it's, you know, you're selling into a transportation manager, someone that's probably got a four year degree. Someone that's, you know, has a supply chain major.
Matt: (15:45)
So you're having to sell , a different type of sales process on the carrier side, you're selling into with us, our core carriers have 12 to a thousand trucks. Um, we do some with the smaller market, but we've built all of our technology and our capability around the mid mid-market fleet. Um, so you're talking to someone that you know, is probably sitting in an office that's managing their carriers. So you're trying to build that relationship and then operations, it's all about proactive communication. It's all about customer service, right? The end of the day, the operations people, when, when we ship for a big shipper, they look at arrive based on the experience that they have with their rep. That's managing the day to day of that account. So it's super imperative to Bo you know, to hire and train people to be like unbelievably good at, at that
Tracy: (16:25)
You said it used to be different what's that you said it used to be different. What did it used to be like?
Matt: (16:30)
Yeah. So our company was a lot different. Five years ago, we did zero contractual freight. It was all spot freight. And that was how we got off the ground. It was just, you know, an aggressive sales culture. Run through a wall. Do it again. Land a customer, grow a customer.
So that was a different personality. Now we're in with 5,000 plus customers. It's all about expanding wallet share within those customers. And yes, we're gonna continue to grow. I mean, we landed 23 fortune 500 accounts last quarter alone. I only know that cause my board meeting is on Thursday. So it's one of the slides. But it's really about like maturing as a business, building out unbelievable operations, building out best in class technology. So it's just a different profile of people that are successful.
Tracy: (17:11)
How do you manage that culture change? Because in some respects it kind of reminds me of what happened on Wall Street, right? Because in the 1980s, I mean, even up until the 2008 financial crisis, there was a certain type of trader who was typically quite aggressive, quite competitive, very sales focused, that sort of thing. And then in recent years, technology has come in and changed the market. It feels like the requirements for what it takes to succeed have changed quite a lot. So how do you manage that transition from a people perspective?
Matt: (17:41)
Yeah. I mean, culture and engagement is huge. We never even talked about talent management eight, seven years ago when we started the company, we didn't even know what that was. We didn't have a single person in HR until we had 150 employees. And now it's a huge part of our differentiation strategy. So what I would say is, you know, we've really focused on talent management.
We've really, really focused on how do we build people. The people that we're getting today care about their career, they care about upward mobility they care about. So seeing the progression in job titles and base salaries and earning opportunities and roles and responsibilities. So we as an organization have had to kind of take that aggressive sales culture and marry it with what people are looking for today. And honestly there's been turnover, right?
And that's just part of scaling a business and, you know, some people are able to adapt and be a part of the new forward looking momentum. And then other people want it to be what it used to be, a 100 percent spot aggressive and those people don't ultimately make it. So, um, but from a culture standpoint, we try to, you know, appeal to every single type of person. We still have really good hungry sales people, but we now have a lot of technology, people and technology, people look for a lot of different things than a salesperson does. So like how we're involved in the community, how we're doing, um, career, uh, development, how we're going and bringing speakers in how we're doing, you know, extra, you know, happy hours for the sales people. Cause they love that, you know, extracurriculars or sports. So we're trying to do everything to appeal to a bunch of different subsets of the employee base, whereas before it was one kind of person.
Joe: (19:06)
Can we go back to the question of like the limits to technology and the limits to apps? And so like what are the things right now in your business that simply just, you just can't do it from an app and what is. What can't be done with technology yet?
Matt: (19:31)
Well, we move 4,500 truckloads a day. And we don’t do anything on an app, so I guess a lot.
Joe: (19:39)
Ok, website or web portal.
Matt: (19:40)
Yeah here's obviously a lot at the end of the day. You’re getting in front of customers. Getting in front of carriers, understanding what they're looking for. Every carrier has a hundred brokers calling 'em right? So how do you differentiate? how do you build that relationship? How do you offer them the right load every single time?
Because so many people can call a carrier and be like, “Hey, I know you want Dallas to St. Louis,” but not knowing they don't want a night delivery. Or not knowing they don't want a certain commodity. Not knowing that they don't want a certain weight. Not knowing they want the 15 different characteristics of every single load that's different. And there's actually more than 15. It's like 40, but, you know, it's really, really focusing on how do you bring the right opportunity to every single one of your customers and carriers.
And that's really hard to do on an app. Now we're doing as much as we humanly can, but that obviously means that the customers need to be integrated into the app and that the carriers need to be integrated into the app. And there's a lot of pushback on that side as well. So we're automating as much as we humanly can as fast as we can, because we're obviously focusing on driving levels of productivity.
And automation is the best way to do that. So, you know, what you've seen though is over the last, you know, couple years, the adoption of the technology has increased significantly across the entire industry.
And it's an amazing trend, especially for the big companies here in the audience or in the industry, cuz we're the ones that have the technology that's, you know, out there that's able to connect all the parties to make it more efficient, to drive more volume and then obviously increase, you know, profitability on our end and for the shippers and carriers.
Tracy: (21:16)
As technology advances, how do you maintain a balance between price and quality? Because it feels like, you know, if I'm a potential customer and I go on an app or a portal or whatever, like it feels like there might be a tendency just to look at price and be like, ‘who's gonna do this the cheapest?’ How do they actually understand who is reliable as a service provider?
Matt: (21:42)
What I'll say is, and this can be an unpopular answer is if the load is already available on a load board, we haven't done our job as a business service company. We want them to call us with all of their problems with all of their needs, ask us to help them out. And then we want to convert that to contractual freight. So repeat that question, sorry. I'm joking.
Tracy: (22:02)
I guess the question is like, how do you balance price versus quality and reliability?
Matt: (22:06)
I mean, at the end of the day, there's a market clearing price. Like I said earlier there's not this magic ability to charge an unlimited amount of money. Um, so really it comes down to, “Hey, who is the person that we know can get it done?” A lot of these shippers, they actually look at pricing on an RFP with like a landed cost adjustment, which is like, how often did the carrier give back the load?
You know, what did the late deliveries cost us? So really making sure that you're focusing on best in class service will allow you to have a little bit more pricing power. But at the end of the day, you know, it's a competitive marketplace. I mean there's 20,000 brokers, there's 500,000 assets. Everyone wants the business, everyone wants to grow. So it really comes down to how do we build that relationship and how do we get in front of them and offer the best solution?
Joe: (22:48)
Going back to the macro environment, and one of the conversations has been this gap between spot and contract rates. And so what do you see? Like how does that close and in what direction and how does that affect a business right now? How does that close?
Matt: (23:05)
What you're gonna see is every shipper right now is discussing internally what to do about their contractual. You've got a lot of shippers that move to quarterly bids. So during Covid, a lot of shippers started to do shorter bid time. So all of those bids are gonna come due. The prices are gonna come down. So you're gonna see margin pressure on contractual freight. So that will pull it down. Then you'll have the yearly bids that come due. Then you've got, you know, 25% of shippers probably out there that are willing to rebid their network for lower cost, cuz they know the spot's lower than contractual market is. So what you're gonna see is month over month, over month, over month contractual pressure. So that's gonna bring it down over time. But the question is, is how do you get spot back above contract?
The Delta is so big right now. It's gonna be really interesting. It's gonna take a lot of, you know, capacity leaving the market. I don't see it happening because of an increase in demand because you've had such a run on durable goods that I don't see that it being this massive demand shock that moves it back in the other direction. So it's gonna have to be a, you know, supply leaving the market over time, bringing those lines together, contract moves back up once it finds the bottom and then some type of disruption will happen and it'll move it back in the other direction up. So it could be a while. I mean, but once again, we can't accurately forecast, you know, wind spots are gonna come back up cause it's typically driven by something we can't predict.
Tracy: (24:23)
So speaking of capacity, leaving the market, I have a really basic question that probably a lot of people in the free industry will already know the answer to. But if you could please humor me, you talk about market fragmentation, right? And everyone's like, oh, thousands of brokers in the space. Why is that? Why hasn't someone just come in and started? I know there have been a few who've started consolidating, but like why don't we see that kind of consolidation in the market?
Matt: (24:47)
Well, there's very low barriers to entry, right? To start a brokerage. And it's getting a little bit higher, you know, harder these days, but not that much harder. So, and then everyone that has assets, they're like looking at their friends that have assets that have a brokerage. So you've got a lot of people that are starting brokerages.
So I just don't see that trend stopping because there's an opportunity to make incremental money off of their relationships.
Now you're starting to see shippers start brokerages. You're starting to see all sorts of different people, try to find a way to, you know, have more predictable capacity, manage their costs more efficiently drive, incremental growth. It's a great question. Now what you will see though, is that the top 10 to top 20 brokers are taking significantly more of the market share. Yeah. And that's a function of, like I said, it all comes down to lower cost per load, better technology and better service. And the, the people that have large scale, it allows them to take that market off, you know, that, that market growth a lot easier.
Tracy: (25:40)
Does technology factor into that as well? I imagine, you know, if technology becomes a more important part of the business, you have to spend more and more to develop it. It feels like those with access to lots of capital will have a competitive advantage in a way tha didn't necessarily happen before.
Matt: (25:59)
Yeah. You're already seeing that. You're seeing the bigger getting bigger. And you're seeing the smaller, able to kind of they're going after probably a much different subset of business, right?
So there's, there's a lot of freight out there. There's a hundred thousand shippers. So there's a lot of SMB guys out there. There's a lot of small brokers that can make a really great livelihood working on them. You know, we're all fighting for the Fortune 1000, the ones that can really drive a lot of scale that can really allow cuz technology's useless without scale, which is why all these companies are raising money to get to scale because that's a lot, it gives you more data, every transaction, it allows you to offer more freight to your carriers, which gets your carriers to be more sticky within your network, which drives better service and better purchasing. So just this huge flywheel.
So do I see consolidation continuing to happen? Yeah absolutely. The large players are gonna continue to take an outsized portion of the market. But there's definitely a place out there for the smaller guys, um, to continue to exist and be successful.
Joe: (26:52)
And is that largely a function of the fact that setting aside brokerages, just the shipper, there's just so many different types of shippers and carriers that there's just always gonna be a need for lots of different kinds of players to connect them.
Matt: (27:06)
Fast forward 20 or 30 years. Maybe there's more of a connected ecosystem. You know, I think that you're starting to see that already with the marketplaces. You know what we're trying to build from an automation of like, we can give a price on any load on any lane at any lead time in the country, and we're gonna guarantee that we're gonna cover that now the price might not be great.
But that's really what we're trying to build is how do we build a marketplace where all of our capacity is available for all of our shippers. And yes, I think what you'll see over time is the small SMB shippers starting to use more of the marketplace is going on getting their own quotes. And that will lead to like obviously the smaller, you know, the less competitive like their friend and you know, that lives next door. Probably not being the best option for them in the future.
Tracy: (28:02)
I have a slightly weird question, but again, if you could just humor me, there is an executive on this stage yesterday who was talking about supply chain congestion and just general chaos that we've seen over the past couple of years or so, and talking about the need for cooperation in the market. And when I think freight brokerage, I don't necessarily think like “kumbaya, everyone's gonna cooperate.” I think like cut throat competition, everyone going after each other winner takes all kind of thing. Is there opportunity or space for working together to try to make things more efficient?
Matt: (28:36)
Yeah. I mean the supply chain's a lot better than what I, what we play in it arrive is middle mile trucking, right? Full truckload, middle mile, the supply chain's so much bigger. You've got the international component. You have the air component, you have the drayage, you have the warehousing, you have the trans loading facilities. You've got final mile, middle mile, LTL. So I definitely think that, you know, you're gonna see a lot more collaboration.
What you're seeing also is that the big companies are buying those capabilities. I mean, we've all seen the big steamship lines in some of their, you know, acquisitions they've made recently. Um, you know, so I think you're gonna continue to see where they're trying to make it a seamless, uh, you know, seamless transaction for the shipper where they're getting one bill of lading. Um, so they're gonna partner with different parts of the supply chain to be able to do that. So I definitely think you're gonna continue to see it, but I also think you're gonna see more acquisitions and, and kind of like creations of companies that can do way more of the supply chain instead of just being one, you know, one part of it. And by bringing all that together, the thesis would be better connectivity, cost, savings, productivity, etc.
Joe: (29:33)
Will you be an acquirer?
Matt: (29:35)
We just did our first ever acquisition. It was a small one about, you know, $30 million of revenue. And what I would say is we're gonna be opportunistic. We are really, really good at middle mile trucking. Like we love the middle mile. It's a huge space to play in. And so we bought a cross border asset. And cross border is an awesome opportunity for us. Um, we've integrated the company over the last 90 days. We just had the nine day update on Monday. Things are going amazing.
So that's been a good experience for our executive team to learn how to do M and a and to do a tuck in. Um, and we've, you know, already put 'em into our, our, all of our silos within the organization. So that's been great. So we're gonna continue to look at some opportunities. And then when we look out five, seven years, um, there's a lot of things that we're looking at, you know, large trailer pools, things of that nature, um, you know, shippers want assets. They want the ability to have drop trailers on their yards. I mean, we do, you know, 15 to 20% of our freight is drop trailer, but it's not our trailers. It's our partner carriers. Right? So having the ability to have trailer pools is a huge differentiator.
Joe: (30:37)
What's a trailer pool. This is outside of my knowledge.
Matt: (30:40)
So, so trailer pool is just the trailer not the truck. Right. So having extra trailers where you can drop those at a big shiper where they can load 'em where with product to go wherever you want, and you can move that power only. So you assign a truck driver to come in and pick up your trailer and move it.
Joe: (30:55)
What's the appeal of the cross-border business? When you say that's a big opportunity…
Matt: (30:59)
For yeah. Cross border. I mean, I think you're seeing a lot of, you know, fragmentation over in Asia, you're seeing a lot of different issues. So, um, you know, whether or not I'm right. I don't know. I would assume that Mexico's gonna be a big winner, uh, over the next 10 years with that they're already one of our biggest trade partners. Um, so just the amount of truckload freight that goes, you know, north, south, south, north, um, is absolutely huge. And there's not that many companies that are great at it. Right? So like really trying to build a core competency where we're one of the leading cross border companies is a huge niche market for us. And the good thing is, is we already have the customers and we already work with the carriers. We move more than, I think it's like 250 loads a day, inbound Laredo, which all of that freight's ending up, you know, most likely south of the border. So it's like we already have the customers. We're already doing a lot of that transactions. Like how do we just complete that and make it a more seamless experience for our customers?
Tracy: (31:47)
So two questions based on that, but we hear a lot of people talking about making their supply chains more resilient, maybe moving some production and manufacturing from places like China, closer to home to avoid the problems that we've seen for the past couple years. So one, do you think that's actually gonna happen? And then two as a freight broker, how do you actually position for that? And do you start building up that business now?
Matt: (32:11)
Did we see the peak of globalization? I think is the question right? And, and I don't know the answer to that. I don't think I have a crystal ball. But I don't see that people don't get a little bit more resilient and with some areas of the world that might not have as much faith in long term. I don't see how people don't diversify their supply chain a little bit over the coming years.
But there's a huge cost to that. And we understand, you know, there's, there's a lot of infrastructure already set up in Asia and it's a huge investment. I mean, obviously you've seen Intel making that 100 billion commitment between a few different cities in America. So I think you'll continue to see that. And as a freight broker, it's great. We love when more manufacturing is in America, north America, Canada, or Mexico, you know, in the north America. But, um, you know, I think that the way you prepare for that is you buy those capabilities. You build those capabilities, you have the capacity. Um, and so all that freight that's moving in Asia will hopefully come back to this part of the world and that's just gonna increase the demand in our marketplace. You know, some of that will go rail. Some of that will go, you know, us.
Joe: (33:13)
So obviously like the last two years have been totally unprecedented for basically everyone in the industry. And one of the questions of course, is will it change the, um, you know, the global geography of supply chains? Are there any other things that you see that happened in the last two years, changing ways of doing business in response to all the ups and downs that will persist post-pandemic?
Matt: (33:40)
I mean, you can make assumptions, right? I think you saw a lot of companies that ran really lean inventories. Now you're gonna say, are they gonna continue to run with inflated inventories? For deployment of inventory, you know, how are they gonna continue to expand warehouse footprint? I mean, those are all real expenses. And as we know that, you know, we're all about driving, you know, as a public company, not us, but as a lot of public companies, it's all about the bottom line. Yeah. And you know, a lot of those investments are expensive, so it'll be interesting to see how it plays out. I'm not gonna, you know, take a guess out of my crystal ball, how many of those things don't get reversed. But it's gonna be interesting over the next couple years.
Tracy: (34:16)
So speaking of the past couple of years, I mean, one of the things that's happened is that attention has been focused on supply chains possibly like never before. And I know Craig Fuller from Freightwaves was making those point yesterday, but he was basically saying that it's almost like what you saw with FinTech post- the 2008 financial crisis people saw what was broken in the system, started talking about solutions to fixing it. And there was lots of interest from the market. So from venture capital, private equity, just lots of money flowing into that space. Is that something that you see potentially happening now?
Matt: (34:55)
I think it already has happened. In fact, in fact, you can find some pretty good information. I think on Freightwaves about how much capital's been deployed into the supply chain industry over the last couple years. Do I see it slowing down? No. I mean, if you even just look at the financial markets, I mean, there's so much dry powder and private equity, whether it's going to logistics or FinTech or whatever, there's just so much liquidity out there in the market that needs deployed into quality companies. And, you know, in transportation, there's a huge opportunity. There's a lot of fragmentation, investors love big TAMs, and this is probably one of the biggest TAMs. There's a lot of fragmentation there. Hasn't been a lot of technology until, you know, the last five to 10 years. Um, so I do think you're gonna continue to see a lot of companies that have a thesis around, you know, consolidation or supply chain or, uh, software that supports the industry.
Joe: (35:40)
I think one of the most surprising things for me still, and even hearing you talk about like, oh, there are so players that just wanna do by phone and we've heard the word fax machine multiple times. Mm-hmm over the last couple. I don't know if that's still a thing, but what is, why is there still so much reluctance on the part of some players to move on? And why does, why is there so much that's still done by what feels like, you know, pretty ancient tech at this point?
Matt: (36:04)
Yeah. I mean, it's a good question to ask to, to the entire, you know, marketplace, but what I'll say is I grew up in West Virginia, so I grew up in a tiny town in West Virginia. Our only claim to fame was that DuPont poisoned our water. If you've seen the movie Dark Waters that's our claim to fame. But you know, it's, it's very blue collar, right? So I grew up very blue collar and this industry's still very blue collar at the end of the day. I mean, transportation, trucking, warehousing supply chain, it's a blue collar industry. So I think you, you definitely have some hesitancy from technology. A lot of people, you know, don't wanna adopt it quite as much as they probably could, but you are seeing the change you are. You're definitely seeing the change. We have so many of our carriers that used to be adamant about, “oh, just call me.”
Now they don't even call us. They just go to our portal and they book all their loads. So like, I do think you're seeing a changing landscape as people see that it's more efficient as, as you know, they see that their earnings can be increased. It makes them, you know, have less employees to be able to manage more of their fleets. So, you know, technology is a great thing for the entire, I mean, Donald bro, who's a, a big, he talks a lot in this industry and he always says, technology is deflationary by nature, right? Technology, whether it's in supply chain or in any part of our, our lives is deflationary. It makes us more effect efficient as it gets better and better, it gets cheaper and cheaper. So, um, you're gonna continue to see that.
Tracy: (37:19)
So how do freight brokers actually make that up then? Because when I think technology, I think price deflation transparency, which like in general might not be good for someone taking a sort of like middle man position in the market. So what happens to brokers and their margins in that scenario? Do you try to make it up in scale?
Matt: (37:37)
It's all about scale. It's all about productivity. If you move specialized freight, there's, there's a hundred different niche, you know, parts of the transportation market. But, for people like us, with what we're trying to accomplish and, you know, getting to, you know, being one of the leading middle mile transportation providers in North America, it's all scale and scale drives productivity.
It's every single time we pick up the phone and call a car that has a hundred trucks, we have a hundred things to offer 'em right. And you can't do that. If you're moving a thousand loads a day, you just can't. So really focusing on, you know, productivity, automation getting that cost.
I mean generally speaking, a cost per load in the industry might have been $150 to $225 at depending on the size of the brokerage. I mean, we're working to getting it to $100 and below, right? So how do you make that cost per load as low as possible so that you can drive more transactions, cuz then you're gonna go and pass that savings along and you're gonna get more and more business and it's just gonna continue to grow.
Joe: (38:30)
So what's a day like at the offices?
Matt: (38:33)
For me or for our employees?
Joe: (38:34)
Well if I were so were walking around and actually I wanna do that sometime I wanna visit you…
Matt: (38:39)
We wanted him and he didn't come…
Joe: (38:40)
I know we never made it happen. I got Covid, that’s my excuse. I didn't wanna give everyone Covid. But what's the day to day like at the brokerage?
Matt: (38:56)
I mean, we have so many different people that come. And one of the things is we talked about a lot today, is this the culture and the engagement and the like all the employees. It is a lot of fun. It’s loud. It's an outgoing atmosphere. You know, a lot of people think the office is dead and, you know. We're allowing for a lot more flexibility than we ever thought.
People have a couple days a week that they can work remotely. And then as they get more and more experience, they have even more flexibility. But all of our top performers still come to the office every single day. It's such an environment that makes people wanna be successful, drives them forward. And if you think about what we're doing is, it's a team sport, you've got customer sales, operations and carrier sales, right. And they're all working together to effectively, you know, deliver the load on time. So it, it, it's so much more effective. It's so much more fun when you're working with your peers. Um, so when you walk into our office, every single person says the buzz is, is awesome.
Tracy: (39:51)
So is it still, is it like open outcry? Like, are people calling out, you know, loads on offer and prices?
Matt: (39:58)
It depends. Yeah. I mean, but our office, I mean, we've got like 160,000 square feet in Austin, so it's really hard to s scream across the office, but what we do is we do it in pods. So it's like sales team and ops team procurement team. We're constantly moving around, letting 'em get to know other people because you really only are interacting with the people in that area of the office that you're at cause is just so big. Um, but yeah, we do a pretty good job of trying to move people around. And so you're dealing with a lot of like interaction on slack, but then you're talking to people, you know, throughout, whereas at home, your interaction's very limited. And, and the problem is, is our industry. You need real time, you know, decisions like, do you wanna do this or not? And then if you have to send someone a slack and they don't get back to you for seven minutes, it's too late. So, um, productivity we've seen in the office is, is significantly better.
Joe: (40:44)
What are the other areas that you're excited about? We talked a little bit about the cross border opportunity. Like what other areas of the market do you see yourself going into?
Matt: (40:55)
Yeah. So I think that if you there's four or five different ones, we're looking at first and foremost, uh, drainage it's, it's the next kind of obvious step for us. We already have the carriers, we already have the customers. It's just, you know, different understanding of how to move it. Um, so we're looking at that. LTLs been something that we've been focusing on over the last 12 months, not, you know, we haven't grown that as quickly as we'd like, but something that we're gonna continue to be, you know, watching, um, cross border Mexico as one. Now we're going cross border Canada, um, you know, freight, management's something that we, we constantly hear about. Um, but we kind of, you know, if we get in that, that would be more around building a software for SMB shippers, for mid-market shippers to give them, you know, a procurement system, a TMS for them to be more efficient, to try to, you know, capitalize and take wallet, share, um, that way. So those are some of the different areas of, of the supply chain that we're looking at getting into.
Tracy: (41:44)
This reminds me of something I wanted to ask you, which is how much does customer segmentation matter in this market? Because my understanding is that you tend to target mid-sized firms versus like individual drivers or owner operators.
Matt: (41:59)
For carriers or customers?
Tracy: (42:01)
Either.
Matt: (42:02)
So from like a customer standpoint, like I said, we were very SMB, small medium business. And now 65% of our revenue in 2021 and like 67% and 2022 is gonna be enterprise. So a billion or above and by 2027, that will probably be 80%. So those are the companies where you can really get scale. They have consistency, we're able to come in and offer them a service.
We're able to connect to them with our technology. Um, and so that that's really where our growth will continue to be on the shipper side. We'll continue to build technology and products for the SMB market. But it's a much higher attrition of the customer. I mean our board meetings on Thursday or also, I wouldn't know this stat, but we had 0% turnover and a customer that gave us 10 or more loads last year.
So if a customer gave us 10 loads a day, we lost zero of those customers year over year. And we doubled the number of customers that gave us 10 or more loads year over year. And about 80% of our growth came from those customers that gave us 10 or more loads. So we don't lose customers. Once we get in the door with them, we service them, we build teams around and we build around the clock support for them. Um, and then on the SMB side, it's just a lot more of a churn. You know, they're, they're a little more, you know, price sensitive. They're gonna go to a few different portals, so we're gonna build the technology for them, but that's not gonna be the growth engine of our company. Um, and then on the carrier side, you know, we, we love the 12 to thousand truck carrier.
I mean a lot of people always say “well 90% of carriers are under six trucks” pr something like that as the stat, but it's only like 22% of the trucks on the highway. So we are really focusing on the 60% of the trucks that fall between the 12 and the thousand because our shippers don't need us to have a relationship with the, the mega fleets. They already have a relationship with the mega fleets. You know, they're really looking at us as a way to aggregate that capacity. On the 12 of the thousand truck, they can do drop trailer, they have more capacity. We can really build corridors. So our entire business is how do we build lane level corridors. And that's really, really challenging to do with a smaller fleet. Smaller fleet is still gonna be called 10% of our business. Um, but over time we're continuing to really focus on building that consistency so that when we go to a carrier, they know that we're gonna give them what they need each and every time.
Joe: (44:03)
This might be sort of a naive question, but you mentioned SMBs, perhaps looking at multiple portals, how wide can the spreads be? or, you know, a quote for Dallas to LA or Dallas to Joliet or something. How wide can the potential price difference be?
Matt: (44:17)
So Freightwaves has a pricing tool, but I'm gonna reference one of their competitors — DAT's got a pricing tool. And on there you can see shipper to broker or sorry, shipper to carrier rates. And then you can see broker to carrier rates, and there's a 25% band, a 50 band and a 75 man. And that delta can be really significant. I mean, depending on the lane and how volatile it is, let's just make up a lane LA to the Midwest and Q4 during peak retail season, you might, the best broker might be paying. I'm just making it up $2 a mile, but there's the top core tiles paying three 50 a mile. So across that many miles, there's huge deltas, right? And it all comes down to your personal network as a transportation provider.
Like that's why we talked about our corridors. We have to know where our capacity is, what our capacity costs, so that we can offer that capacity to our, our shippers in real time. That's where the technology comes in. So not, you know, there's a lot of really good brokers out there that are really great at specific parts of the country, but they're not great at other parts of the country. They don't have the density and the consistency to build that carrier base. So that's why having multiple providers is, is the prudent thing to do because not everyone can be the best at everything.
Tracy: (45:28)
This is actually something I wanted to ask about pricing data as well. So Joe and I were playing around with the Freightwaves product yesterday, and I was trying to see how much we could earn driving a truck from Rogers back to New York. And I think it said something like almost $5,000, but like obviously…
Matt: (45:44)
For a reefer?
Tracy: (45:45)
I have no idea.
Matt: (45:46)
It's an expensive drive, right?
Tracy: (45:47)
Well, you know, we're worth it, obviously with all our experience. But the thing I wanted to ask is like A) how realistic is that pricing data? Like when someone calls you up with a quote, are you actually gonna get that rate? Or can it vary like when you actually undertake the trip or not
Matt: (46:07)
So on the shipper side or the carrier side?
Tracy: (46:09)
Again either.
Matt: (46:10)
Okay. sorry. I'm trying not to be detailed.
Tracy: (46:13)
No, be as detailed as you want.
Matt: (46:14)
So let's just talk about from the carrier side, the carrier side, depending on the fleet. So if you're dealing with a, a carrier, that's probably what I would consider driver dispatch. They're using all of the tools they're using truck off and D a T and freights to get all of the market information. So every time they put an offer in it's gonna be at market or above rate for the most part, right. Unless they really need to get to somewhere. Got it. When you think about what we're trying to build us, and I know everyone says the back haul is dead, but when you've got a thousand trucks or a hundred trucks or 500 trucks, you still have empty miles, really trying to find the right load for that carrier every single time. You know, they're not gonna try to get the market rate.
If it fits exactly what they're looking for, they might give you a 7% discount to the market, or they might give you a 10% or a 4%. So really finding that perfect load is an integral part of driving margins from the procurement standpoint. And then from the customer standpoint, you know, to, to the question earlier. It just depends on the customer. Like let's just use Arrive as an example. Dallas to Laredo — one of the highest volume lanes that we have, we used to pay 700 on that lane. And so we would've quoted off of that cost. But now that we run that so much, our cost is now at 600. So we're quoting off of a completely different number. Whereas a company that doesn't run Dallas Laredo 50 times a day, they're not gonna quote as aggressively as us cause they don't have the consistent carrier capacity to offer that price.
Joe: (47:29)
So this is what you talk about when you're like, you really wanna own a lane because then you can, if you can sort of like build up consistent capacity that you can always access between two key locations, then you can have a more economical offering.
Matt: (47:42)
So there's three types of lanes. There's low volume lanes, which are under one load a day throughout a 365 day period of time. There's a mature lane, which is one load a day or more. And then there's a power lane, which is two and a half loads a day or more. And we're constantly focusing on how much of our freight is on one of those mature power lanes. Right? If you look back five years ago, maybe 20% are on what we would consider mature power today. It's like 75%. So that's how you drive a lot of margin expansion. You drive consistency, you drive procurement capabilities. You can then pass that savings on to your customers. And everyone wins cuz the carriers are getting what they're needing and the customers are getting their freight at a competitive rate.
Tracy: (48:20)
Big picture question for you. So one of the reasons Joe and I are here is because obviously the mainstream media are suddenly all over supply chains and I know you all have been doing it for many, many years, even decades in some cases, but given what we've seen over the past couple of years since the onset of the pandemic, and I know there's been a lot of talk, especially in the government about how to improve things from your perspective, from a freight brokerage perspective, if you could do anything to supply chains, transport logistics, to make things better or easier for supply chains as a whole, you know, whether it's building out the ports, improving the roads, I don't know what would it be.
Matt: (49:02)
So you said the thing that there's always a lot of chatter on the throughput through the ports. But we are very focused on the middle miles. I'm gonna talk about that part of the supply chain. Cause I have a lot more intel under that. You know, I think it's a lot about what we talked about as tech adoptions.
How do we get every shipper to be able to connect via APIs, to be able to get all of our updates via APIs, to be able to interact and not have to have a lot of the manual back and forth processes, which you're starting to see. And then on the carrier side is adoption of technology, right? It's getting the people that live in West Virginia that I, you know, where I grew up to, you know, want to use the app to want to use the portal, to want to put in the preferences, to want, to be able to accept and reject via email rather than having to take a phone call and negotiate every single thing.
So it’s all about adoption of technology for the middle mile. It's such a fragmented market. You're still gonna have the ebbs and flows and, you know, equilibrium versus inflationary versus deflationary. That's not gonna go away. Um, it's such a, it's such a large market and it moves in so many different directions that even a small move in one direction causes crazy, you know, ripple effects. But I think technology and integration and connectivity between customers and brokers and carriers is gonna drive to a much better experience for everyone.
Joe: (50:14)
And is there just a matter of time, are there policies that could accelerate that process of getting in technological alignment or is it just like sort of slugging it out? And one platform tries to win?
Matt: (50:25)
I mean, rolling out ELDs in 2018 was like crazy, crazy talk to a lot of assets. So I definitely think the industry is, is a lags a little bit. Um, but once again, like I've said a lot, you know, it, it's definitely catching up and it's happening.
Tracy: (50:40)
So one more question for me about the future and again, based on something that Joe and I have learned just being at this conference, but the industry itself sounds very, very cyclical, right? Like boom bust cycles, low barriers to entry, lots of fragmentation as we've been discussing. Is it always going to be that way?
Matt: (51:03)
Yeah. I mean, you would think that eventually with, you know, autonomous technology and more trailer pools and more equilibrium… we always hear about the driver shortage, but really we just have a misuse of capacity and a lot of inefficiencies. You know, four hours on every single load. Is that a shipper in constantly that's without a delay. So really focusing on those different things that can drive efficiency you know, I think that will take some of the cyclicality out of it and that will make it more of a consistent volume play. But as, as long as there's continuing to be, you know, capacity challenges, it's gonna be cyclical.
Joe: (51:42)
So obviously Tracy and I are thinking of starting a freight brokerage after this. And you mentioned that whoever said there's 20% margins in this business are lying, but what can you get?
Matt: (51:54)
Yeah, I mean, it depends on the type of freight, right? So when I always, one of the most, one of the things I always focus on with our investors and with our board is really spread per load. What is our cost per load? What is our spread per load and what is our EBITDA per load? Um, so from a percentage, if revenue per load's 3000, because it's a, you know, a longer length of haul, you're not gonna make 15% on that. You're not gonna make 450 forever. It's it's too competitive.
So really like trying to triangulate and understand from a spread per load dollar where the market, where the industry's gonna be over time, that's really what we focus on. So like to answer your question, you know, we have long length of haul that can be as low as five or 6% margin. And we've got short haul that can be 20% margin, but the revenue's only two 50 and then we lose on 10% of our trucks or our, you know, our, our lows. So that's negative margins, right? So like from a blooded out average, you know, kind of what I think the market take rate that people constantly talk about is, you know, getting to a world of like 10 to 12% margins and driving enough automation to be able to still drop 5% to the bottom.
Joe: (52:54)
All right. So another question for the brokerage, we're gonna start, I mean, our podcast is called Odd Lots. And so, you know, we're obviously not gonna be competing on like the really major lanes we'll like, leave that too, but like, are there big opportunities in the sort of in the really small lanes that do not have very much back and forth traffic and maybe have supply imbalances.
Matt: (53:19)
Sound like a board member.
Joe: (53:20)
Yeah. It feels like there must be opportunities in those in those markets.
Matt: (53:22)
You wanna come to the meeting?
Joe: (53:23)
Absolutely. I'd love to!
Matt: (53:24)
So one of the things that we do, and it's a great question is we are not gonna always be great at the high volume regional because the, the large assets are super good at that, right? That is their wheelhouse, right? As a broker, our average length of haul is almost 700 miles. So we're going after the tweener lanes, you know, that 500 to a thousand, the long length of haul over the road driving is not what it once wasSo we have to be good at those one off lanes. We have to be good at those lanes that a lot of the, the assets don't wanna build their network around, that's where our value comes in. Um, so one of the things that we really constantly do is we basically look for arbitrage on what are lanes that, you know, are hard for shippers to cover, but are easy for us to cover, right?
So I used Dallas - Laredo earlier, right? So Dallas — Laredo, if you look at the shipper to carrier rate, there's about a $200, uh, I'll just make it up $150 delta between shipper to carrier from broker to carrier. So there's an there's margin opportunity there. But Laredo to Dallas, if you look overlay those two rates, they're almost equal. So that's a rate that there's not gonna be a whole lot of opportunity to drive significant volume on. So looking at the market of where we can drive incremental margin because we have the right capacity at the right cost is a big part of what we do.
Tracy: (54:39)
So Joe we need to develop an app or a web-based portal. You could do that. We need to identify some quiet lanes, preferably short haul to maybe get 20% margins. And then we need to go head to head with Matt.
Matt: (54:53)
The problem with short haul is you're making like 50 to a hundred dollars and your cost for a load is gonna be tough. So I wouldn't build a business on that.
Joe: (55:01)
So we just have a couple minutes left, but any sort of, you know, I want to just go back to the macro situation. Like, what's your feel like, what are you watching for over the next few months?
Matt: (55:10)
I mean, you know, obviously we're coming into produce season, we're coming into a hundred days this summer. It's gonna be really interesting to see what happens. You know, our service is gonna continue to, you know, gain market share over durable goods. Is there a pent up inventory of, you know, people weren't buying autos because that industry's been really hit with the Silicon issues? Um, you know, so we're just looking at all the things that we talked about earlier. Um, it's too early to make a call on like what the future looks like in 12 months. Um, but you know, every single day, every single week we feel like we're building more and more confidence in what our, you know, 12 month, 24 month outlook looks like. Um, but I don't wanna go on record and, and make any crazy predictions, but it's, it's definitely, there's a lot of variables. There's a lot of things moving around. And as, as of this minute, it indicates that we're gonna continue to feel a lot of downward pressure on both spot and contract rates over the next nine to 12 months.
Joe: (56:02)
All right. Well, Matt Pyatt, thank you very much. This was really fun.