1536. #TFCP - Systems of Execution: Scaling 3PL Operations with AI!

0:00This episode is brought to you by S.P.I. The Gistics. The premier freight agent logistics firm in North America. For over 40 years, S.P.I. has been diligently building the most successful freight agent network to provide first-class relationships for our shippers, receivers, and carrier partners. We are more than another transportation network. We are a dedicated team of professionals united by one singular purpose, and that is to expedite our agent success. All of our agents are set up for success on day one, as they are provided with a full suite of support staff that is ready to assist them with everything from after hours emergencies to financial and administrative needs on a no-fe basis.

1:01This way you can focus on continuing to grow your business. There is no financial risk to start, and you have the ability to earn up to 75% in commissions. If you are looking to take control of your financial future and build your business with a backing of one of the most successful logistics firms in North America, visit www.spi3pl.com to learn more. Do me a favor and let them know that the freight coach sends you. Hey guys, before we jump into the episode, I wanted to let you know it is brought to you by Revanofa, the official TMS provider for the freight coach. You guys have been a broker for a long time, and the tools that are at your disposal with Revanofa help you eliminate bouncing between systems, which improves your accuracy when you are managing multiple tasks throughout your workday. Plus, it's built into the Salesforce Cloud, so your CRM is fully integrated with your TMS, eliminating yet another silo. In today's day and age, you are definitely concerned about the safety of your data. With Revanofa, it's fully protected. They have cutting edge security that keeps your information safe so you can focus on what matters most,

2:05and that's growing your business. Speaking of growing your business, with right and lane IQ, you get real-time pricing and route recommendations, helping you optimize costs and improve operational efficiencies, which ultimately helps you make smarter decisions. If you are like me and have recurring shipments from non-EDI customers, they have intuitive cloning features that let you easily replicate previous shipments, saving both shipper and carrier rates with adjust a few taps. If you are ready to learn more, visit www.Revanofa.com to request a demo. Just do me a favor and let them know that the freight coach sent you. What is up, ladies and gentlemen? We are back. We are live at the freight coach podcast, the top podcast in transportation. Come and do you guys every single weekday? 8.30 a.m. Pacific, but we are going early today because I got a lot of stuff going on this week. You guys know I actually move freight. We got a busy week coming ahead. So we are going live a little bit early today to break down these industry headlines, and as I always provide some actual insight into what you can do with all of this information.

3:08I got a very special guest for you guys here today. Obviously, AI is everywhere. There is no secret behind that, but what they are building and what product they have out there. It really stuck out to me. And we are going to break that down here in a couple of minutes. But before we do that, you guys know what we got to do. We got to jump into my favorite segment. And that is this week in freight power by my friends over at DAT. Again, you guys, this is a three times a week lane analysis. I never tell you guys what to quote. I just teach you guys how to actually read markets for on the lane level. So you guys can be better prepared for seasonalities because at the end of the day, the lane, the lane, the seasonality is rarely change. It's just albeit at a higher price point. And this lane in particular is going to be those ones that I think is about to skyrocket in price. And that is for a drive in. It is Los Angeles, California to Miami, Florida. Now, this is a lot of what you see right here. Like, yes, it's miles. It's a power lane. It's going to be great overall from like a money perspective.

4:09I just see this one is about to skyrocket in price. And I brought this one up because fuel in California is at like $10 a gallon. I'm not even exaggerating at this point. And depending on what happens out there, it is going to get exponentially more expensive. I wouldn't be surprised if we pulled this lane up in the next 30 days. And it's got an additional $3 to $4,000 associated with it. Just due to fuel. And then if you look at the inbound market going into Florida, Florida has been one of the hardest hit markets in regards to capacity due to their strict ELP enforcement, their non domiciled CDL enforcement there. It is a very limited capacity pool that is willing to go into the state of Florida right now. And then if you look into again on fuel prices on top of it, I think this is going to be one of the more expensive markets here coming up. And California market going really anywhere is going to skyrocket in price here over the next 30 days as long as fuel continues to be what it is.

5:15And then anything going into Florida, this isn't just a California thing anything going into the state of Florida for the foreseeable future is going to continue to be very tight capacity out there. Just due to all of the enforcement that is going on now that doesn't mean these carriers are running illegal operations or a shadier or anything like that. Some people just don't want to mess with it anymore right, but it's like and then when you have these carriers that are willing to go into these markets, they're going to come with a premium right now because there is going to be a take it or leave it who else is going to do that mentality out there. And going into Florida like it's normally a hard market to go into you guys without everything that's going on just because the outbound Florida market is generally very, very soft from a freight perspective throughout the year. But this one in particular, I think this one's about to go up because you know outbound California Q4 holiday push that's always a higher premium that you normally see out there and what's everything that we've seen so far this year we're in a normal freight cycle right now.

6:19But with diesel prices and then the state of Florida doing what it's doing it's going to go up and this isn't just an outbound California going into Florida like I had mentioned it's going to be literally everything at this point going out of California is going to be more expensive and everything going into the state of Florida is going to be more expensive I was talking to a buddy of mine the other day who moves this very similar lane to this on a reefer and he told me what he paid and trust me when I tell you guys it's a lot higher than what we're seeing right now so you need to take this. Take this information and go to your customers early alright do not be afraid to quote or to hire price point because that is what it is going to take to move this free and then as we know if you look at last year at this time it was you know a couple thousand dollars less. But throughout the year customers are paying the higher price point right so it's like you got you cannot be afraid to bring this information down to them and again sometimes it's going to come with maybe losing the volume out for a little bit as that adjustment comes in because inevitably someone's going to come in and say they can do it for less that's part of it but the freight can't sit so position yourself have these these tough conversations now if you're moving anything outbound California at all I would be having this exact conversation with you.

7:33So I'm going to be with your customers about with where diesel prices are with where capacity is going depending on the market I think you for just got a lot more interesting out there with price fuel prices continuing to spike so pay attention to that you guys but this lane there's going to be a truck for it it's just going to come at a sticker shock out there but that is this week and freight power by my friends over at DAT and again you guys if you want your lane broken down on the show I just need to email my team podcast at the freight coach calm now let's jump in I would like to welcome my very good friend. Mr. Dan Helman back on the show Dan thank you so much for taking the time to join me today. It's good to be back it's been too long. Dude it has we briefly saw each other here at capital ideas and Phoenix and you know you're you're out here. Dude you I mean even on the tech side of this for a while now man and it's dude it's wild to see where like how fast a lot of this stuff has progressed but before we get into that man like dude what's going on with envoy. Yeah so I joined on boy about five six weeks ago love it it's been a it's a great team what I love about is they're all every single person is a former operator or a former you know logistics I will it's on TM or straight brokerage.

8:50So what we're really doing is focusing primarily just on brokerage within the looks of just this is for the both sets our entire business not just a vertical that we service along with many others. And really just how to not necessarily eliminate the human because so many AI companies talk about eliminating humans and not enhancing the human and that's really where we're falling on. I okay I love that and I couldn't agree more like I you know again I understand people got to make money the shock value behind marketing you know and if you've ever done social media understand the adage if it bleeds it reads and it gets a lot of people's eyeballs on it but like I look at with where a lot of people are. There's a couple of them that I'm a very big fan of out there but like I'm almost like it seems like you're kind of counterproductive to like actually selling a product at that point right it's very I don't want to dorogatory is not the right word but it's like you can't shit talk your clientele about how we're going to replace you and expect to gain some traction and I don't know yeah that's my opinion.

9:56Yeah yeah no what we're really focusing on is like I mean as you know you've been the freight game like as your low count increases your labor cost increases same click you know just as you grow your labor cost increase and so it's like how do you decouple that a little bit so your labor cost more stays flat or increases slower rate than your local. How you know I think we're in an interesting time right now because I you know the amount of automation that is at our disposal now is I mean do you you broker along you know for a long time you know you and I were talking before the show about how you know how old school it used to be out there and I look at it where I'm like my very bowl go I said this on the show a bunch and I'm going to say it again right now like I'm going to build a hundred million dollar freight broker to 10 people. Because like the technologies there today like it's at your disposal today in 24 months from now it's going to be a guarantee because I look at it where it's like how do I do more with less right like how do I get as many touches as possible and I'm taking that from the perspective of like I'm bootstrapping everything right like I got to build a war chest capital to compete out there you know it's like some of these larger operations spend more on coffee in them in a month than I'm making a year right like it's that's just the

11:15the reality of it and I look at with where automation tools are today I think there is going there's the potential to be a massive rise in like the mid-size providers that are out there because you're going to be able to bring such a tailored experience to that regional shipper that they've never experienced before where it's like you know as you know you've worked for large corporations I've worked for large corporations there's a lot of selectiveness on who you service and what level you service them and you know that's a great thing. And now you can deliver such a heightened level of service and like reliability that some of these guys have never experienced before. Oh spot on. Yeah those mid-market shippers they just they have an experience like you said they're used to the old tech like I you talk about how much the industry's changed I still remember so I broke for 15 years my first came out of school at a University of Dayton started brokerage in the first like three months of my job you could still pay it extra I think it's like 50 years. I think it's like 50 cents 75 cents per DAT posting to get the truck posting the flash the truck stop.

12:23I feel like I'm young until I can remember some of those things like no I'm not as young as I feel like I am. Dude I know what you mean man it's so like from focusing in on does it come your guys this angle of taking this is it come from the fact that like your founder was an operator out there because it's like you don't really see a lot of operation focused automation you see a lot of AI voice dialers a lot of AI sales reps and everything else and there's not a lot of people who are actually focusing on the execution phase of things. That's exactly what comes from so our founder Robbie Nathan he started brokerage news I think 22 right up college at AFN carrier sales rep stayed in brokerage he found and started low delivered it's about top 40 brokerage sold connecting his 2018 the capstone logistics you'll start and just collapse. And so that's where it's like every layer of our organization are all operators and so very intentional to certain details that you need because they may seem small but if you don't have those details that's where.

13:30She hits the fan on Thursday afternoon because it was coming from an operator first mentality is is this change our product in our customers. It's not the sexiest thing man like when you think about it right like operations to execution like you know I talk about it a lot on the show as well where I'm like the hardest thing for me in business data systems development because it's like you put you have a lot of great ideas but like you don't know if it's going to work for like six months sometimes. And but I look at it where it's like I want to bring a consistent level of service to all of my customers of all walks right it does and because in my opinion every customer is just as equal like whether they do a hundred loads with me in a day of one in a month it I want everybody to receive the exact same level of service and communication because I look at it man where they're building a business is hard contrary to what you see on the internet building a business is hard. Getting a customer is hard but then once you get them in the door their experience with you and growing them that's an entirely different sales approach at that point and it's like how do you make them feel like they are the most important person in the world because they are and they should feel that way where it's like for me from an operations perspective.

14:50That is the real separator out there right because as you know just as well as anybody you can get in the door on price with some people you can under bid under quote but like if you can't back that up with service it doesn't matter how cheap your rates are more often than not if you can't back it up with service and execution you're going to be out the door just as fast as they let you in. Spot on every customer you get because a price you're going to lose because price yeah simple that there's always somebody cheaper out there and yeah what would you land on you get the service a little hell out of them and give them that that white glove experience it's whether you one load a week or 2000 I mean it's your livelihood they have to get those warm up as you. Do you think we're going to get to a point because like I also look at it where every shippers different right like every shipper tenders things differently I mean there's even RFP shippers out there that still operate up spreadsheets right and how they how they you know how they want to communicate. You know because again it's it's tailoring to the customer like I want to meet my customer with where they are and how they want to communicate and I think like that's kind of one thing that like the tech evolution is almost tried to force their hand in is no we're going to get everybody to communicate the way that we want them to communicate and again like we we have to be so adaptable out there when it comes down to how customers tender over freight how they want to be updated you know same thing with your carriers and they want to communicate with you.

16:18So I think that's the most effective way to minimize your risk for fraud and double brokering and theft and all of the hot button issues right now is by using a repeat carrier network that has been working with you time and time again. I mean we all know the one and done carriers that's where those get stolen that's where you get gallons or access services terrible. I'm a firm believer that brokerage is a human game is a relationship game but there's a lot of tasks that you don't you don't need to got check you don't need 15 years experience to do. But it is a relationship game so it's freeing up that time so you actually build those relationships. Why do you think that hasn't changed right because like I look at it man where a lot of what we're doing today is what I did when it was how I was trained to do the job and that gut feeling keeps you know it's brought up a lot right it's that tribal knowledge and everything else.

17:19Why do you think so many people hold that so close to the you know and don't want to put it out there like because I look at it man like nothing that I'm doing is like proprietary right like I have been my carrier selection. My carrier selection strategy isn't proprietary the way that I communicate with my customers what I pay my carriers none of its proprietary it's just not always convenient to my bottom line to do the right thing but we repeatedly do the right thing out there into the market so it's like what why is that such a sticking point. I think one good brokers or control freaks you know you have to control me that's just you don't need spot on the control freaks there's nothing wrong that I was that too and that's why I was good at broker I just I had to control everything within the life cycle. And there's some level that really good brokers they just they have a different personnel they just got this certain grit that you don't find everywhere else and whether it's the attention to detail it's the insane work ethic all of those things but that's what makes it good.

18:26How do you guys to like when you're looking at the execution side of things here because again like I'm in love with it because like to me this is this is the biggest bottleneck inside of my organization because it's like we grow we bring on we want to take on more volume and we know and for the headcount that we have with me and my business partner in the amount of freight that we move every single month we're very efficient in what we do but we look at it where it's like to we can 10 x this stuff right we we should be able to do way more with that so it's like how do you guys define the execution there. You know it's the communication channels between you and the carriers because there's so much back and forth that you know cut past emails cut past emails you don't need a human to do that you know it's it's stream line is communication channels to free up to do more but it's not just spring up to do more it's free you up to see can work smarter you know that the biggest thing that's missed a lot of times with with AI is just like the data you can uncover in the data you can uncover and that's what I'm going to do is I'm going to do it.

19:31You can uncover in service every carrier you've ever interacted with you know from previous lows or just communication channels or those truck list like an email over and that no one does anything with it actually start surfacing those insights to be more directed so it's not well used AI is not sending out 200 300 400 500 emails phone calls it's hey here are 10 awesome matches for this will get going out with surface those and reach out to those carriers. Do you how do you think carrier sourcing is going to evolve here like I because it it seemingly it and it's I still see it out there right like I'm I'm I'm a fan of load boards load boards are still the most effective way to develop the right capacity out there but depending on internal compensation structures at brokerages that carrier that does a great job for 1500 dollars that one time might not be the best one because you want it you got a boss. I got to get it for 1300 bucks right they completely low all of that up but they missed the fact that there are legitimate carriers who do these lanes 24 7365 and you know we I use my book of business and my operation as an example like we move obscure markets right like we're 100 to 200 miles out of major metropolitan areas we you know we're a west coast flatbed broker right we we have no problem going into New Mexico Colorado Wyoming my

20:59Montana Utah Idaho all of those states that the traditional brokers out there like oh we got a quote exponentially more expensive because nobody wants to go there that's the most false statement I've ever heard because there is truly a carrier out there for every lane in America and it's like identifying those individuals and those operations and then keeping them working for you I think that is the sweet sauce that most people the boy. Yeah I think the carrier sales process and positions change drastically over the next few years and it's going to have to come down to the jobs going to change you know as we see carrier sales now it's not going to the same free as well what now what's great about it is it's essentially up leveling the position you know having these carrier sales reps we we I always say boss machines but they are managing digital workers to do this that that group work reaching out and while focusing on the high value tasks those exceptions that happen the escalations building relationships and with that the compensation

22:07structure going to change you know it's going to be probably less transactional less commission based and more managed your. Hmm. Ha. You know I I looking with a lot of stuff that's coming out here as well and it's you know I think that if we look at from a regulatory perspective here I think people got to stop looking to the feds to come in and really fix a lot of this stuff like all of this is going to be fixed by us and like as an entrepreneur that's why I love the free market that's why I love capitalism. Right like there is an opportunity for somebody to see what is going on out there and develop a solution to this for the industry and you know it's like I see like the carrier vetting that is out there and I'm there's a difference between carrier vetting software and actually vetting the carrier based on performance right and because it's like somebody can be out there and have a clean. Well you know safer score they could look great on paper but if they don't fit into like a certain criteria on how we operate and that's something that we do like we have an internal grading system where it's like hey if they pick up on time and deliver on time with their communication sucks.

23:16All right will we use them in the future yes they're just not our top priority we're looking for those individuals where they pick up on time deliver on time they communicate flawlessly they send photos. All of that stuff and then we grade them internally do you think that that is where you guys are going to be able to help kind of identify more of those carriers because again it's like when you're building a book of business you're doing 75 different things at a time to where it's like sometimes you forget that hey this carrier performed at a very high level why are we not reaching out to them more. 100% because especially let's say you have 15 20 carrier sales reps you don't know everybody ranks carriers differently you know because emotions get time to may they're ticked off whatever and so there's no like real it's hard as you scale to get a standardized ranking system that has no emotion in it. And so now when you're tied into the carrier sales process the track and trace process you can accurately judge what is their communication how fast is it are their ETAs they give actually true and on point and then all that is stored I mean humans we can remember so much before we start I can't remember what I had to eat yesterday like it's just too much information coming in that you just you lose it and so now you can actually

24:38eat. Rank carriers see their communication. Do they follow through with what they say they're going to do and then also then tear them out create your own tiering system with tier one carriers tier two tier three to your four and apply them to the great that they've lost. Do you think that that's where going to be like the true ROI measure comes in is going to actually come from saving humans from their own emotions you know because it's like dude it's so easy to sit in a perfect controlled environment and say like oh we're perfect we never do anything wrong I mean just look at any hot button lawsuit that it's dropped in freight and everybody commenting about oh I can't believe they would do we would never do anything like that which is all far right it's all it's all a lie. Do you think that that's where the real ROI comes with AI is this removing it's like kind of saving human emotions from themselves. Same human emotions and in the database I mean it's kind of all tied together with the you know you help enhancing how humans are wired we can't remember everything emotions play on us like I still.

25:42This is back in oh seven I still remember this one fallout I had on day of Thanksgiving I still remember the dispatcher remember yelling at her how they kind of. I don't know how to hold it out from underneath me but it's like we're just hardwired to remember those things in the next our judgment. No dude I agree with it right like I I think that's one of the harder things to train individuals on is is checking their egos and this is coming from somebody who is very very guilty of that right but I've also looked at it where I you know working for a large organization early on in my career that was one of the best things that I experienced. Is there was a certain point where the person who was financially involved in the transaction was removed from that and somebody else made the decision whether it was hey can we book this carrier. Hey this is what's going on out there you need to remove that and have somebody come in with a calm head because otherwise man you're going to do and say something especially now in today's environment where what a broker says is going to be under an absolute.

26:51And absolute microscope moving forward here I think having somebody like to help assist in those matters to where it's like again minimizing the human emotional connection to it where it's like that doesn't mean that you can't care about your customers and I want to be abundantly clear but I think we're all we've all been in that situation where it's like should I do this it could benefit me but you all know deep down we should go in the opposite direction. Oh spot I mean and we've all been if you've brokered you've been that position before you know that you made a decision that you know benefits you financially but wasn't the right decision I know I did it's like my second year in the job my first got to college I had two trucks came in one is making a good margin one is making an amazing margin I went the amazing margin even though not the best carrier two days later I get a call from the DEA there's drugs in the truck I lost my customer. I got called from the DEA the truck got pulled over in New Mexico had two refrigerators full of pot but to get the two refrigerators full of pot on there they'd have removed two pallets of products so now it's my customers products just missing the trucks encountered all because I was a 23 year old kid that want to make a little extra money and so that that's where some of these some of these decisions shouldn't be made at that at that level because it's been spent financially but it puts a company risk.

28:16I look at that's one of my that's one of my many regrets my earlier career dude I mine was FBI I had the FBI call me we don't have time to get into my work but we just do it we just share all the stupid things we did just have a show that we literally shed man because I could I could probably do an entire podcast series just based on all of that shit out there but like you know I you know that that to me is the best part of where the right technology is the best part of the right technology. The right technology is at is is helping out in that moment and then again reminding you like hey you got the the steady carrier available for you why aren't you going out to them and then really because it is man it's like I look at it where fundamentally I think broker just is if I stripped everything away it's as simple as this I need to insulate my customers from any capacity swings and minimize rate swings as much as I possibly can and I've just found that that will always come from using repeat carriers and I rely on these

29:16and that because like operation sound operations I think is what is going to be the biggest like gold rush inside of transportation that's where it's going to come from and that's why I think there's going to be a rise of brokers where it's like our mega carrier corporations going to always exist yes I just don't know if there's going to be a big push for them anymore because there's going to be so many regional players that are out there and I could list 15 of them off the top of my head right now. With that are regional brokers or regional carriers where it's like they're going to have strongholds on some of these markets and then now with the right automation and tools a team of 10 is going to be able to operate like a team of 200 within the next 24 months 100% 100% especially when you plan it out with how you're growing in the future I mean the historically the amount of labor needed to process a load is ridiculous and margins are getting thin for brokers like you have to be more efficient or you're just not going to be a business here.

30:17I think that and I saw Andrew let us said this on a podcast the other week and and I really really agree with this I think that brokers margins as a whole are going to be sub 10% coming up here like I I I hate saying that as a broker and I'm not saying that there aren't going to be opportunities out there to make margin on loads and make big money I just look at it where you know it's going to become more and more commoditized in the sense of like efficiencies are going to be out there to where it's like there's not going to be a need and information and and I think that this is where a lot of sales reps fail is they think that they're they have some proprietary way of operating where any ship is there is going to be a lot of work is going to be a lot of work to do. And where any ship or out there has access to DAT like everybody knows what is going on but I just look at it now with where things are going to be there's going to be so much opportunity where guys are going to get carriers that are only run Phoenix to Albuquerque and they're going to have a locked in rate 12 months out of the year and it's going to be so competitive that it's out there I don't know I just I see that being more of a reality than a lot of people want to admit.

31:28I'm not surprised to hear about the you know more skin sub 10 like when we first are in the industry a while ago it's like yeah it's 80% margin consistent then drop to 15 I around 11 to 12 like it's it's getting squeezed on the flip side concern can we agree. There's more liability insurance more expensive you're on the hook for more frog and claims and everything else it's. You have to really plan out that future just because you're getting squeezed. No I and efficiencies away to see only way to go man it truly is efficiencies and you know that's the thing where it's like. With automation for example you got to really focus in on your processes and systems because you if you have shitty processes and then you automate them now you just have automated shitty processes right where it's like. Operation efficiency I think is going is the way moving forward and you know again if you're out there and you're doing the right thing right now and I think we all know the difference between right and wrong you're going to be able to hone that in where you're just going to be able to provide a better product out there.

32:36Spot on and what you said is spot on about if you automate crappy processors are going to have faster crap like it's you have to have clean processes. I love it Dan thank you so much for your time and how does anybody reach out to you guys to find out more about what you got going on. Reach out to me and LinkedIn. I prefer to email Dan at try on boy dot AI but LinkedIn's right quickest way and I'll reach out right back out. Perfect Dan thank you so much if you guys can't find Dan or on boy out there hit me up I will gladly put you guys in direct contact with them that is going to be it for today ladies and gentlemen as I was if you got value in what you heard and you're not subscribed subscribe to the show you guys and if you're feeling ambitious rank it on iTunes and Spotify because if you see value your networks going to see it as well. I appreciate you guys I love you guys and we'll be talking to you soon.