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Mike Roeth, NACFE | The Cost of the Messy Middle · Freightvine

• Chris Caplice: I'm Mike, welcome to the Freight Find Podcast. Welcome to the truckload market update for 11 June, 2026. Looking at Dry Van first. The change in active contract rates increased 0.4 % over last two weeks. Spot rates increased 4.1%. And the current level of replacement rates is positive 5.4%, which means on average, new contract rates coming in are 5.4 % on average higher than the rates they're replacing. You will have numbers greater this and lower than this if you do an RFP, obviously. Hello and welcome to the Freight Vine Podcast, your source for all things freight transportation. I'm Chris Campos, Chief Scientist at DAT Freight and Analytics, and today my guest is Mike Rother. He's the Executive Director of the North American Council for Freight Efficiency, or NACFI. Now I last had Mike on Freight Vine about 18 months ago. I invited him back to discuss NACFI's latest publication, The Cost of the Messy Middle. our conversation, we dive into what Mike calls that messy middle, that Mike Roeth: Hello Chris, glad to be here. I'm excited about doing this today. Chris Caplice: Yeah, it's been a while. It's been a while. think we first met about a year and a half, almost two years ago, at a roundtable we had up at MIT. And then I think I had you just over a year ago here to talk about sustainability and trucking. So this is great. So let me, for some people who didn't listen to the podcast a year ago, let's start with your organization, the North American Council for Freight Efficiency. Give us some background on that. Mike Roeth: Sure, sure. mean, it's a long title, but it's all important. We do our work in North America, and we're about freight efficiency. were started 17 years ago, and the of the spark was high fuel prices. mean, you know, we almost ⁓ now we've had three and $4 diesel fuel forever, but it really was ⁓ 20 years ago when we saw, you know, fuel prices ⁓ And so, ⁓ know, ⁓ simple math. Chris Caplice: complicated transition period where battery electric vehicles, hydrogen, natural gas, and biodiesel solutions will coexist for probably decades. Mike estimates up to 50 years before it converges. We dig into the hard numbers on total cost of ownership and we discuss which duty cycles, such as long haul over the road, regional line haul, drayage, urban pickup and delivery, et cetera, which of those duty cycles favor which technologies because it's not uniform. market gap between spot and contract is 24 cents a mile positive. Spot is above contract. Year-over-year in spot rates about 32-33%. ⁓ Year-over-year in contract rates about 4%. Okay, moving to temp control. We saw that the change in active contract rates dropped about 0.3%, which is kind of like treading water. Spot rates 0.9%. Not as much as I thought they would. They had a big jump last period, ⁓ but relatively this time. Mike Roeth: 100,000 miles a year, seven mile of the gallon. You know, you get into 70 or $80,000 a year to power these trucks with fuel. And so it's like, you know, it's like a huge amount of money. In two years, you'll spend as much fuel as it costs for the entire tractor. No other vehicle is that kind of situation. So that is how we got started. And we did a lot of work on the technologies that were available to fleets that they could buy. Chris Caplice: We also tackle the infrastructure challenges that shippers need to understand to support these different technologies. This is one of the most pressing challenges facing the trucking industry. How do we transition from diesel to sustainable alternatives without disrupting the essential service of moving goods? Mike and his team have just completed their fifth run on less demonstration, tracking real trucks with real drivers and real freight across multiple powertrain technologies for a period of time. And the results have been pretty eye-opening. Current level of replacement rates for temp control is about 6.6%, double what it was about two weeks ago. And the market gap's about 12 cents a mile between spot and contract for temp control. And we found change in spot rates year over year is 21 % and about 3.5 % for contract. Moving to intermodal. We saw no change in active contract rates. Usually that's pretty rare to see it just kind of stay flat, but that's what we saw. Spot rates went up about 3%. Now there's very little spot in Intermodal, but still we report it. Replacement rates are down 4.4 % here, which means that new rates coming in are actually a little lower than the rates they're replacing. And we see the market gap between spot and contract negative 5 cents a mile, where a spot is below contract for Intermodal. Year-over-year change in spot rates, 7.5 % for Intermodal and 5.8 % for contract. Finally, flatbed. Mike Roeth: And then in 2018, we kind of added two more elements. One was we started looking at emerging technologies. So for the last seven or eight years, we've been very aggressive in different alternatives, primarily, or mostly, I would say, battery electric, because we felt like there was so much. We just didn't understand it. I mean, like even myself, I mean, like even myself, said, batteries, hall freight? You got to be freaking kidding me. It takes an engine to do that. Well, I was wrong. Chris Caplice: Some fleets have been averaging over 11 miles a gallon. whether you operate a private fleet or work with carriers, this conversation offers practical insights into navigating freight's complicated future. So stick around as we separate the reality from the hype in this evolving world of sustainable trucking. ⁓ my conversation with Mike, I'll present the latest truckload market update. So let's get started. Right, right. Mike Roeth: Now we've to figure out if it's cost effective and everything else. we've now worked on guiding emerging technologies, as we call it, ⁓ autonomous, hydrogen, natural gas, and other things. And then we've now completed our fifth run on less. So this is every two year demonstration of some of the pioneering fleets that are out there doing what we think is going to be the future of trucking. But we'll get insights to them. Chris Caplice: Saw the change in active contract rates increase 0.3%. Spot rates went up 1%. Current level of replacement rates and eye watering 9.5%. So you're seeing on average almost 10 % higher contract rates coming in. And the market gap's about 14 cents a mile, spot above contract. 18.1 % year-over-year change in spot rates and change in contract rates year-over-year, about 5%. So this is kind of a mirror of our last update two weeks ago. We're on drive-in and flatbed are up this time. Temp control dropped and Intermodal stayed flat. It was just the opposite last time, which shows you the volatility of these markets. rates are up across the board. reinforcing what we see anecdotally. We're seeing spot rates go up everywhere. Comparing year over year, all modes except Intermodal, has little spot, ⁓ the spot rates are up 18 to percent and 3 to 6 percent for contracts. So it's pretty consistent for those three markets. Mike Roeth: and start to understand coming in the future with our run on less. It's real freight, real trucks, real truck drivers. So we're not making it up or it's not an engineering exercise. It's a real world freight movement ⁓ demonstration. Chris Caplice: Right. One of the things that I really liked when you were here at MIT talking about, you raised the point, and some of the other practitioners raised this as well. We had shippers, carriers, third parties as well, is that it's not going to be a single switch to one technology. And a report you had in 2023 talked about this, called it the messy middle. I thought it was actually the muddy middle. But I went back and checked one out. No, it was a messy middle. And it's that transition. drive and temp control and flatbed. Intermodal's a little different. rates from the positive five to 10 % and similarly the gap between spot and contract is positive 12 to 24 % per mile. And so we're seeing the market continuing to tighten. We'll see how this evolves throughout the spring and into the summer. We'll see if if demand drops little bit and so we see a little loosening here but we, right now we're seeing a continuing tightening of the market. And that's it for. Mike Roeth: Yeah, but muddy's not too bad either Chris. Chris Caplice: Yeah, it's a transition from internal combustion engines to eventually there will be a future probably dominant technology in certain niches but it's that middle that transition path that that's really critical and recognizing that and that you're not going to have just a sudden switch. 11 June, 2026. Mike Roeth: That's right, and we think this middle is going to be a long time. benefited one fuel, ⁓ or 50 years. ⁓ And of course, there's like a tipping point. when will we mostly there or there that, you know. But one thing about movement and commercial trucking in general is it's Chris Caplice: What is a long time for this can you define your messy middle? Wow! Mike Roeth: very diverse from, know, within moving freight. You've got vans all the way up to heavy trucks. You've got different kinds of trucks in different states because of weight laws and other things. So ⁓ it's all really complex. So it's not a, ⁓ it's to say, and I think the Obama administration or maybe even before that talked about a polyfuel future, that this is going to be, ⁓ you more than just diesel and gasoline as we move forward for lots of reasons, including sustainability, Chris Caplice: Right, right. Mike Roeth: Energy ⁓ efficiency and independence, et cetera. But that's easy to say and hard to do. I the analogy of a restaurant all the time, you know. Let's say you're successful making burgers and fries, but there's people that want soup and there's people that want pasta and there's people that want, you know, smoked meats. And so before you know it, you've got this ⁓ plethora, menu that's six or eight pages long and you're no good at anything. You know, you don't make a good hamburger anymore, let alone anything else. So. ⁓ Chris Caplice: Great. Mike Roeth: We do have a challenge here in this messy middle of too many technologies that we can't handle. And so we're in that right now. mean, we're seeing, we've had natural gas trucks for 15 years. We're starting to see that. There's a couple of reasons for that. One is just diversity of fuels because right now, I paid $6 diesel in Indiana. It's not just the California thing. You know with higher fuel prices and so forth you can mitigate that somewhat with natural gas plus it has some environmental emissions benefits and some other things that Are starting to emerge so it is a middle. It's gonna be a long middle Some people are even questioning our calling it a middle because a 50-year doesn't seem like a middle for Christ sake Yeah, yeah, so but but we definitely think we're here and we're gonna certainly get into it But ⁓ battery trucks are hard to ignore Chris Caplice: Doesn't seem like a middle. Mike Roeth: I mean they are very simple easy to drive Maintenance is going to be much better these diesel trucks have got more and more complex with all the after treatment We're about to go through a 2027 Knox change again, and so they just become very difficult and That's where the battery truck just might really shine Chris Caplice: eventually the long term, most things will probably be battery, 50, 60, 70, whatever. I mean, that seems to be a dominant technology. Maybe something will change. But what I find is, and I'm curious what your thoughts are, I've yet to meet the driver who has the option to go from internal combustion engine to a battery or electric somehow that doesn't like it. Mike Roeth: When we started our journey with battery electric trucks, 2017, 18, 19, and I think it was November of 2017 when Edon Mess talked about building a semi, we sort of knew given the passenger car experience that drivers would like them. And so I kind of almost said, all right, we know that. Let's go figure out everything else. But it is so important and so big that we can't ignore it. I mean, you know, it is difficult to find drivers, even though driver pay, you know, driver pay is not a horrible profession. mean, it, you know, you can make money driving trucks. Now, some people will disagree with that, with me on that, but ⁓ yeah, yeah, But it's a difficult job for different reasons no matter what it is, you know. And so, but, and so these trucks, I am convinced, and I've said this many times, might have even said it when I was with you all. In my 50 year. Chris Caplice: Depends on the segment. Depends on where you are. Yes, yes. Mike Roeth: trucking career, I'm about 42 or 43 years into it, I believe that battery electric trucks are going to be the biggest driver, attractor, and attraction and retention thing that we'll ever see, we have seen. It's that big. And so when something's that big, you shouldn't ignore it. mean, so how do we not only use it, but amplify it in our businesses, whether you're a fleet or a... So it's a big deal. And it'll be very helpful. Chris Caplice: Yeah. What's interesting, Mike, is a lot of technologies have to be forced down the driver's throat. I remember in-cab cameras, or out-cab, you know, that kind of thing. And this one, if they wanted, the adoption rate, like smartphone adoption, was pretty fast. ⁓ And a lot of cabs, yeah. Mike Roeth: Yeah, I mean, I've literally had fleets tell me, Mike, stop talking about battery electric trucks. My drivers love them, but I can't afford to give them to them. And they don't want to be in that situation. And maybe we won't be in that forever. Chris Caplice: Yeah, but the other point I want to make is that both the left and the right have really interesting the far, know, there's a lot of consensus in the middle maybe, but like the far left, I guess I should do this, right? The far left is ⁓ saying, well, if it's not battery, then no, 100%. You just got to get there right away. Ignore this middle thing and just jump over it. And then the right kind of says, we like combustion engine, internal combustion engines. Mike Roeth: Yeah, I think we're finding in our work is that people, a lot of folks think that you can only do one thing at a time. ⁓ And so they're worried that if we take advantage of, sometimes they're called near zero or mostly zero or something that's better than today, that'll get in the way of the long term. mean, we have baseball season, right? So we're ⁓ swinging the fence and then a home run versus get a couple of singles and all of sudden you got a rally going. ⁓ Chris Caplice: Right. Mm-hmm. Yep. Mike Roeth: I think in the trucking industry, think we can shoot government walk at the same time. I think we can maximize renewable diesel, biodiesel. We can be much more efficient with diesel. in the run that we just completed when the national average is 6.7 or 8 mile per gallon, we had some trucks do 11, 12 mile per gallon. So it's like, boom, we still can do a lot classically in energy efficiency that we're trying hard to do, but there's just reasons why that doesn't get going. To finish my thought, you've got natural gas with its, you know, elegant renewable natural gas, is, you know, grabbing methane that otherwise is bad in our atmosphere, grabbing it in power trucks. mean, that's a circularity double benefit fuel. And then, you know, who knows where hydrogen's going. But my point in all that is there's a bunch, you know, the innovation cycle of America is kicking in and they're bringing solutions. Some of which probably won't make it, some of which will make it in niches and in parts of the industry and we can figure it out. Chris Caplice: Yeah, but that's what happens with innovation. Whenever you have a, we had a dominant design for a hundred years of an internal combustion engine for trucks. And it takes a lot to push away from that. And sustainability was one push, but I think now the, you know, I always joked that everyone gets green when the price of diesel or gas goes up, right? Everyone's suddenly into sustainability. Mike Roeth: Yeah Yeah, I try to caution everybody on that. I've been through too many of these, Chris, where it comes up and goes down. When it goes down, everybody says, well, we don't have to worry about that anymore. Or we can ignore it. It gives us ⁓ a license to ignore it when there's lots of reasons other than sustainability why we should. Chris Caplice: Yeah, exactly. Absolutely. So this gets me to the report you just released that's called the messy middle cost report where the S is a very clever dollar sign. So your marketing team is is on there very very clever. So tell me about what prompted that report and tell me Mike Roeth: Well, yeah, so first of all, I mentioned run on less little earlier where we go out and find fleets that are making something happen that we think is part of trucking's future. So we just completed run on less messy mills. So ⁓ that's a two run. Our runs are a two year effort. So we did a boot camp education series in the ⁓ spring of twenty twenty five. And then we found 13 fleets operating 14 trucks from all the technologies we've just been talking about in class eight heavy duty. Chris Caplice: Mm-hmm. Mike Roeth: ⁓ operations, so diesel, renewable diesel, on and on. And so a few, it's a mix. In this run, it was a mix because we were really focusing on the powertrain and the technology, and we were looking at long return to base or long haul irregular routes, so truck load, private, LTL. And so we went and found those ⁓ fleets were operating these different solutions. Chris Caplice: Private fleet, four higher carriers, Mike Roeth: And we went and visited them. We took a video crew. We took ⁓ some engineers, the NACV team, we talked to drivers and the maintenance people. How did they the infrastructure in place? Just give you a flavor, we had ⁓ two fleets running Hyundai hydrogen fuel cell trucks in real freight movement. Yeah, they're out there. It's not like a Bigfoot where you see them, but you don't they're real. And then we had, let's see, we had two Tesla semis, we had a Windrose, the new Belgium-based, the Chinese component heavy tractor, and then Freightliner Volvo, you know, on and on. So as we and visited those sites, we learned a ton, and we got ready for, ⁓ you know, highlight of any run-on lesson. That's three weeks in September where we followed the trucks, we showed their routes. Where did they fuel? Where did they stop? How many miles they went on a charge or on a fueling event? All the stuff that everybody's interested in. It just blew our minds, Chris, around how all of these technologies are getting better operationally over time. So the range goes up. The charge speeds are faster. The availability of things like biodiesel is improved. a lot of the things, because part of what We weren't hoping for it, but we were wondering, you know, will some of these technologies just not prove their worth and fall out of the mix, you know, and make it less messy just because they weren't good. And that's not really the case. They've found their way and they're getting better. ⁓ So. Chris Caplice: Yeah, but there are two things. One is the technology itself, but then there's the supporting infrastructure. So did you find improvements in both across this or was it a mix? Mike Roeth: Yeah, I mean, I think we're seeing generally improvements in both. Some are faster than others. Some because there's ⁓ companies that are finding the innovation and moving quicker. There's other situations where the ⁓ technology and its adoption is proving out. And so the fleets are becoming more successful on how they operate them. Let give you a point. I mean, if you can find opportunity charging ⁓ the driver's hours of service and at 350, or even the 1 megawatt, 750, which some folks have been doing, or the 1.2 megawatt that Tesla's come out with, if you can even find 30 minutes of charge time, particularly in some of the sweet spot of the state of charge, mean, you could add 100 miles, 200 miles to two of these trucks in a half an hour. So it's not like the driver needs to sit there and wait five, six hours to charge a truck. we don't do that much with diesel fueling or gasoline for our cars. We don't go spit. $5 of fuel in it, go fill it up, right? So our is you got to fill it up. Well, we're finding some fleets get creative and not do that. ⁓ Only it to what they need, yeah. Yeah, and so ⁓ a of learning's there. So what chose to do, once we completed the run, 18 days, 14 trucks, and ⁓ collecting data Geotab devices at 10 second intervals, we ended up with 2.2 million lines of data in only three weeks. Chris Caplice: Interesting. Mike Roeth: so we took that data, put it out. We did a potluck workshop with the data where people did analyses and came to the event. And the reason it was a potluck was kind of corny, but it stuck. You like the backyard picnic where you got to bring a dish to come, you had to bring an analysis to come to this. So this wasn't a spectator. This was a bunch of people. And it was really cool. Yeah, well, we. Chris Caplice: wish we had known about that, Mike. I have some MIT students that would love to work on Mike Roeth: Yeah, well actually, trying to think, had some, now it could be, who knows if it was ⁓ MIT or one of those other schools or somebody else. uh So we had all this data. So we chose here in 2026, first half, to issue multiple reports. We've got actually five reports. key big three is ⁓ one that focused on the operations. So how did the trucks operate? Chris Caplice: schools. Come on. Mike Roeth: How much did topography matter for the different technologies? How did they handle going up hills, coming down hills, on and on and on. Then we looked at cost, and then finally we looked at emissions. So three different reports, three different efforts focused on key elements to what fleets think about when they're looking at this. Can the truck do the job, operations? What's it cost me, cost, and what is the emissions effects? And so you're talking about, and you're asking me about the cost project. This was incredibly challenging. As a matter of fact, Chris, was multiple times throughout the out the work, I'm like, what are we doing? Why are we even bothering looking at it? Well, you got to look at cost. mean, it's what drives the world, right? So we have to. it's almost, there's moments where I thought it's almost an insult to trucking to study costs because it's really, we use the word bespoke multiple times in the report. Every fleet's different, every truck, every route is really different. And so to think you can kind of put a recipe out there for a cost of operation or total cost of ownership with the folks that upfront capital cost, operating cost is kind of silly, you know, and it's a must, but it's really hard to do. And to try to do it at any kind of average or aggregate or duty cycle level is, like I said, you know, almost an insult to the users, which makes us. But we did it anyway because it was really important. what we. Chris Caplice: Yeah, it's a benchmark. And so it might be something that no one's rates, no one is exactly on that, but they can see where they're above and below. think it's very Mike Roeth: Yeah, it is. is. Exactly. Yeah, every forecast wrong just you learn from some, you know, kind of kind of thing. So so here's how we did it. We looked at we defined five duty cycles. So this gets into what I mentioned earlier, you know, long haul irregular routes. characterize that as over the road. Some talk about it as one way. So, you know, you all you got a multiple group. And then we had long distance return to base LTL and some privates operate that way. And we're seeing actually the fleets maximize the length of haul in those niches of the marketplace. then we looked at things like, know, dredge and urban and, you know, kind of a medium distance return to base and so forth. ⁓ so we looked at five duty cycles and then we looked at the multitude of power trains, diesel, natural gas, battery and hydrogen fuel cell. And then ⁓ the is we at it with respect to timing. what is the situation now? Soon and later. So we used 25 because we did the data collection in 25, 28, and 2035. again, you start talking about 10 years out, the diesel may have a little more confidence in, but some of these new nascent technologies, what's going to happen with? Everybody jumps to battery price and residual value, but there's a whole lot of other even components on the trucks that are very nascent, electric, air conditioning compressors and the like. that we just don't know yet. And then there's all kinds of other challenging things to understand around, as you brought up infrastructure, what's going to be the percent of sort of public or corridor charging versus behind the fence depot. There's just so many things. ⁓ ⁓ a nutshell, what we found was that diesel and natural gas, anything that has an engine, is going to struggle to take cost out. of the upfront cost of the truck. And we're seeing that with supply chain issues. We're seeing it with the technology's mature. We also have, like I mentioned earlier, some emissions in, which will cause those trucks to go up in price. So we see those trucks actually increasing in price over the next 10 years, while we do think there's a lot of opportunity for a decrease on the battery truck side. Now, Chris Caplice: So let me make sure, is this what you call the diesel escalator? Is that what you're getting at? Mike Roeth: Yeah, used a bunch of what we thought were pretty descriptive terms. So yeah, when we talk about diesel escalator, we're saying that because ⁓ wisdom says as you continue to make more and learn more and get better, you're able to take cost out in certain areas. But there's a point where you just can't get the blood out of the turnip anymore. And so ⁓ sort of think that's where diesel is. And there continues to be very specific diesel cost challenges, emissions being one. there are others that are out there. Maintenance another one. These trucks are, it's amazing. look back over my career, it is absolutely amazing that we can build diesel trucks with this kind of Knox and PM and have uptime like we have and improved so many things. that's kind of coming to ⁓ a head or close, let's say. So that's what we mean by the escalator. Now, does this mean that Diesel's dead by no stretch of the imagination. It's just going to continue to be difficult. And as some of these other solutions come in, they're going to also take away some diesel volume. So the percent of the total market, and we're not talking about a huge market here. We've got a number of truck builders. So you start to say, OK, what's the market to spread these different kinds of trucks over? The non-recurring engineering costs of bringing them to market and the sales and support costs of something different. Back to my whole restaurant analogy of, how do you make, do you have a cook back there that knows really how to make pasta and smoked meats and then, you know, every day also. all that kind of came to head in our ⁓ report. And it was fun to work on. Again, it was challenging. And I think it more is about a thought process of how fleets and others should be thinking about costs than it is you can take home and. and think that we hit the numbers exactly. Chris Caplice: So one of the things you said in the report is you identified two of the duty cycle types as being the sweet spot for battery. And that was a regional return to base, which I guess is regional, is that like less than 200 miles, like same day kind of stuff? Mike Roeth: Yeah, yeah, it's returning home and it's not using the full amount. Yeah. So, you know, the fact of the matter for battery electric and hydrogen as well, these trucks cost more. There's a lot of debate as to how much more they should cost or really will do cost or will cost in the future, but they cost more. So if you're going to have the same TCO, then the operating costs need to be less. And we see that. Chris Caplice: and then Drayage. Mike Roeth: in a number of areas. ⁓ Oftentimes, the electricity expense to power the trucks versus diesel is a lower cost. And we show that and calculate that in the report, as well as maintenance costs and so forth. So the mileage matters. The utilization matters. So the more miles you can run these new trucks. So I stopped about talking about it this way. Everybody wants to electrify a school bus so there's no emissions around our school children. But you and I drive our cars more than school bus gets driven in a year. And so there's really a very difficult cost situation because the buses cost more, the operating costs are the same or higher. You don't get that benefit of a lot of miles being utilized. So that's the point we're trying to make there. And as you look at the five different duty cycles, some have lower miles and some have higher miles. And so now, you can do some things to mitigate that. You can have smaller battery packs, lower the cost of the truck. Maybe do slower charging if you're not needing the fast charging to get the miles. But what we're basically saying there is for battery electric trucks in particular, to get the real payback ⁓ of investment in the higher cost of trucks driving a lot of miles and figure out how to do that. Chris Caplice: So let me ask a question. Is one of the duty cycles I thought that would be dominant for battery electric vehicles is the urban pickup and delivery. That's where I'm seeing adoption for a lot of local fleets. I know like the Pepsi, Fritos, so they're going in for that local pickup and delivery because the thing that seems to fit the life cycle, the daily ⁓ cycle fits. Really? Mike Roeth: Yeah. Right. Well, yeah, yes and no. So ⁓ what we focused here in this report is Class 8 heavy duty. didn't look at it. didn't look at it. Now, but you look at a ⁓ couple of good examples, US Foods, Cisco, these are heavy tractors that are, I always called those city tractors. They're trucks that move around. They will deliver food to a restaurant or a hotel or a conference center the particular case of US Foods and Cisco. Chris Caplice: ⁓ okay. Mike Roeth: So they're around the city, great use of electric, know, got regen, the drivers like them, they're easy to drive around in the urban. Now, they're usually, well, they can be, but oftentimes they're a very small ⁓ tractor that's hauling, ⁓ sometimes even a 28 foot trailer if it's getting into some urban places. they, a good like practical ⁓ place for an electric truck. But again, you know, if you've got a battery pack that'll do Chris Caplice: And they're like, are they like 20 foot straight trucks? Or they're not like, I'm afraid. ⁓ OK. OK. Mike Roeth: 300 miles and you're only doing 100 miles a day you're spending a lot of money on something You're really not using plus those those trucks are also nice for electrification because they because of their deliveries and because of their Like their consumer facing they don't operate during the night You know, we don't want a garbage truck coming down our street garbage being one of those kind of trucks or even this truck Chris Caplice: interesting. It's rare. Mike Roeth: coming up beside our hotel, dogs barking, people trying to sleep and all that. they tend not to be operating on a second shift, which is the opportunity to slow charge and charge those trucks less expensively. there is a... ⁓ Chris Caplice: You know what's interesting on that point though, Mike, let me just raise a point because there's been a lot of studies in New York City have looked at this because the worst time to deliver things is during the day, right? And so looking at nighttime deliveries for like restocking the stores, the bodegas and things like that, having a battery vehicle, that helps a lot because the noise... Mike Roeth: Yeah. It does, does, the noise helps a good bit. So, run on the last, I think it was 23, I rode with a truck that was delivering to grocery stores and right behind the, right where the dock was was a fence, but there was a bunch of homes right there. And the driver told me that a few months earlier, because of the electric truck, he actually had a person come over and thank him for having an electric truck, because he could sleep in the morning, because the diesel truck wasn't idling. you know, it's a bit of a conundrum. you know how how some of these technologies can help or hurt in certain situations and so you know Exactly. mean if you have a ⁓ a Rivian electric van ⁓ is more in communities no exhaust no very little noise It is more friendly and possibly when those packages are being delivered at Christmas at eight o'clock at night You know, they're not disturbing as much maybe the bodega store deliveries is another example of exactly what Chris Caplice: Yeah. Interesting. Mike Roeth: you're bringing up. Chris Caplice: I don't know about you, but we get Amazon deliveries at like three in the morning sometimes. I don't know what it is. And sometimes it's someone's Datsun they're driving. You never know. You never know. Mike Roeth: Yeah, yeah. Yeah, but you know, and you're exactly right that Datsun, what's frustrating is it might wake up a dog and that wakes up me and now I'm mad and honored. But I think I'm glad we're having this conversation though, Chris, because this is some of the things that I think ⁓ important to the conversation. And that is there are benefits to these vehicles other than sustainability. ⁓ it's not intuitive. mean, there's some people that Chris Caplice: ⁓ yeah, yeah. Absolutely. Mike Roeth: We can't afford green, it's bad. But some of these ⁓ solutions have benefits that, and many of which when you get into trucking can be commercialized. know, that noise piece, ⁓ are other things ⁓ might actually be, because a commercial vehicle is unlike a car where it's a tool to make money. And if a consequence is there, there's a cost, you if there's ⁓ a of a certain thing in commercial trucking, there's a cost that's real to the fleets. I submit also that if there's a benefit to that truck, there can often be a cost improvement that could be included in these financial calculations that oftentimes we don't, either we don't understand or don't admit or don't want to put in the financials because, you know, we're just, we're not supposed to have things go better. We're supposed to protect ourselves. Chris Caplice: You know, one of the interesting kind of counterintuitive things that, you know, let's say you're a carrier and you get, I want to talk more about your latest run on less, some lessons you've learned, but you give an example of a carrier getting 10, 11 miles per gallon. That's the last thing they want to let their shipper customers know. Because then they're going to want to claw some of that back. Mike Roeth: they're still right. That's right. I mean, that's the we at NACV have. mean, we're a ⁓ nonprofit helping educate and improve the situation. So we're only as good as what the early adopters of the people tell us. So as long as they're sharing information with us, whether the fleets, the builders, the infrastructure people, they're sharing some information, and to your point, they're reluctant oftentimes to share any information because it's, ⁓ too much information is a challenge when you buy and sell stuff. On the other hand, think we're learning that there isn't a whole lot of data and information that can be kept private anymore. And so over time, know, so think people realize that and so somewhat of it's like, you know, what's the worst thing that can happen if I share information? Maybe I'll make the industry better and that'll help me also. Chris Caplice: to cost plus business. Also, what you're saying is if you're able to get that great mileage, then if you're a first mover, you have a great advantage because the fuel surcharge will assume a much lower level and you're recouping that difference. There's really an advantage to be on the head, front end of that, especially with the price of fuel now. Yeah. Mike Roeth: Exactly. Yep, exactly. I agree with you. And any of these big cost elements like that, I mean, if you're better at retaining your drivers and you don't have that cost, you know, mess, drain, that's good too. So yeah. Chris Caplice: Great. Yeah, so ⁓ you also talked and we talked a little bit about utilization. That's the real thing that the denominator, right? Make that bigger. Do you have any examples or any any insights from creative way for improving that? Mike Roeth: Yeah, yeah, yeah. Sure, so I kind touched on it earlier and on the battery electric side, it's finding a place out in the wild to charge, not only at home. There's not enough of that yet where battery electric trucks are doing that solely. Almost all of them are being charged at home, finding a place the road. Other situations around some of these other fuels that are sometimes difficult to find, whether it's renewable diesel or biodiesel, ⁓ is plan your routes and be different about how you move the goods to take advantage of the infrastructure that's out there. Another one is this efficiency. We talked about 10, 11 mile per gallon diesel trucks. But things like good aerodynamics, speed management, road speed management, idle reduction stuff, that helps all of these. on a battery and probably is more important. So a range limited alternative fuel truck Energy efficiency is even more important because a diesel truck where you can put two, three days of fuel on a truck, it's a cost play. Now it's a can the truck do the job play? Meaning, do you have enough energy on board to complete the task that you want to do? But I'm glad you brought this up because in this area, know, we are, our industry is built for this challenge. And let me explain that a little bit. 20 years ago when we did not have telematics, we did not have route. data. We did not have how one driver drives a truck differently than another one. That kind of data now we do have. And we can utilize that. Some of the tools that fleets have are utilizing that. So 20 years ago, if you said, OK, I got a truck that can only do 400 miles, and there's days I got to do 600 miles, we would have said, no way. I mean, that's just impossible. It's gravity. You can't do that. ⁓ But now, you know, maybe we can route that truck home. A driver jumps, Schneider does this in intermodal. They route that truck back to the base. The driver still has three or four hours of hours of service. Instead of that driver going home, he jumps in another truck that is 100 % charged or has enough alternative fuel in it to his day. So we're seeing the fleets take advantage of, ⁓ or not take advantage. They are making, you know, it's like making a Small Hammer do a Big Hammer's job, they're figuring out how to do it. ⁓ some of those are hard do and requires operational change at the fleets. But if reason, and they want to do it, and they see a cost benefit or a driver acceptance benefit or other kinds of things, ⁓ they're kind figuring out how to make them work, Chris. Chris Caplice: That makes sense. One of the other things you said in your report is that you have found or your organization has found that shippers tend to be willing to pay for zero emission miles. Can you expand on that because that's counterintuitive? Mike Roeth: ⁓ Yeah, well, you know, that's a huge debate in the marketplace, right? So, you you've got some definitely you've got major shippers, major ⁓ freight movement companies that have committed to serious ⁓ significant sustainability goals. And of them are continuing with those. IKEA comes to mind, ⁓ but I to call out certain ones because I'll miss some others and all. ⁓ But ⁓ they're out there. And now. point has been by the carriers, okay, they want to do this, but they're not willing to pay us anymore, knowing full well that the cost to operate today with these more, you know, green technologies, and, you know, particularly, let's just say battery electric truck, truck costs more electric, and we're not there yet from a TCO standpoint. But what we are seeing is some places where, you know, they are interested in working ⁓ this messy middle by. helping the carriers and the industry move these technologies along. So we put that in the report, not so much that it's a, and I think we explain it pretty well, not so much that it's something everybody can rely on, you're going get paid more at all, but that you should be asking, you should be working with shippers on it, and ⁓ willing to talk, you know, but we're not either. This is moving goods and, you know, you can't raise prices just for ⁓ the. for the good of saving the planet or however you want to justify it. Chris Caplice: But you made a point, a distinction between total cost of ownership, TCO and TOE, total ownership environment. Can you explain the difference between those? Mike Roeth: Yeah, I don't know. So yeah, were making a point there. ⁓ other, not semantics, but there's different ways of looking at this idea of total cost. So ⁓ I've total cost of operation, total cost of ownership. Sometimes they will remove certain elements of the cost that others don't believe in and so forth. So I don't that we should get too caught up in that. think to me, It's anything that you believe in is a plus or a minus in going to that decision. Ask yourself, is this going to make a difference in my bottom line? with the point around, on drivers that you brought up a little while ago, if I can move my driver retention, if I can improve it from maybe 80 % turnover to 60 % turnover, every year I got to hire 20 % less drivers. That's a big number and you can say, well, some of it's the truck they drive, some of it they just don't like us as a company or they don't like the work hours. So, okay, say, okay, well, the 20%, calculate all those differences and say that the truck matters for 10 % of it. Now, that number is smaller but use that number because it's, you know, think you miss an opportunity if you have a benefit. You also have to watch the cost side too but we seem to be, or the risk side, but we seem to be quick to put in. to our financials, ⁓ my god, this might happen or that might happen. I encourage us to look at the other side. Chris Caplice: cost yeah yeah no that makes sense it see what because you see the cost right away the the benefits materialize over time that's always the challenge that's always a challenge yeah one last question then I'll let you go and enjoy your weekend Mike Roeth: Yeah. Yeah. Right. I agree. Chris Caplice: Most of the audience here are shippers. They are manufacturers, retailers, distributors, people, executives who are buying mainly for hire or they might have a private fleet of their own. ⁓ are some of the takeaways that shippers should take from this report? Mike Roeth: Yeah, first of all, It is not easy. it's not the industry, I don't like double negatives, so I need to be careful. The industry wants to do what shippers and wants to do what's right, wants to do what's good, wants to do what we can all afford, because moving goods is a tenant of any successful economy. So I think there's far too much, well, they just don't want to change. You know the trucking industry they love their diesel they love their diesel trucks and their engines and their fuel And they just don't want to change I'm in the middle of this every minute of every day Chris and that's not the case We I mean there's bits and pieces of it, but but this this industry will change We've been through a lot of change in our industry. We will adapt and change So I think first of all if you're a shipper, know thinking about this go into it with the attitude. Let's work together and figure it out because they there is a wanna here We just got to find our way through, and that's why it's messy. ⁓ Also, be open-minded on what that solution is. There's so much talk about electric ⁓ everywhere. ranges to cars to motorcycles, everything's electric, data centers. ⁓ But don't get caught up in just that one solution. These biofuels, these renewable natural gases, just the fact that that methane is already coming out of of waste from our economy. my point is that look at other options other than just battery electric and think through. And you can claim some benefits of decarbonization with some of those that I think we're doing that we're not thinking about. mean, ask your carriers, what's the average mile per gallon? I you mentioned they don't want to share, but some of that's becoming ⁓ part of business. So if they are improving there, and we're seeing all trucks really at improve year over year, model year over model year. And so if that's happening, that's a good thing. And take advantage of it, be proud of it, and just keep moving the ball ahead. So just don't get sort of myopic would be my big piece. Chris Caplice: Yeah, of the you raised the point though for the the electrical grid that's and so I've talked to some shippers that were like doing conversion of their fleets and for like the local pickup and delivery not class eight but the local like vans and things like that for drugstore delivery and things the cost differential for cost of ownership is it for acquisition capital is not that different anymore. Mike Roeth: Right, right, yeah. Chris Caplice: It's pretty similar. They said the biggest hurdle, I've heard this from a number of shippers, is working with the utility to actually put enough power into their And that can take months to years. Mike Roeth: Yeah. So, right, right. It can. It can take multiple years. The thing I would, thing I've learned and, you know, I to engineering school a long time ago and hardly passed my one or two electrical engineering classes I took. So, but in last of years, I've learned more about electricity than I thought I would ever care to or want to. But ⁓ what I am, I think we're talking about here though is like not an engineering not an innovation problem. It's a supply chain and cost problem. It's. You know, to put up a 5 megawatt or a 2 megawatt or a 10 megawatt charging location isn't a whole lot different than when we built a stadium 50 years ago for a sports complex or some huge mall. It's, you know, it's gear and transformers and lines and, you know, and it is a big challenge. Don't get me wrong. But it's not a risky innovation engineering challenge. It's something that we already know how to do. We just got to figure out how to do it faster. figure out supply chain, figure out cost, if it's needed. If the industry says we want to go this way, that's why I see the or the edge of the grid challenge of getting power to these sites as a big deal, but not something we can't solve. Chris Caplice: You know, I'd like your opinion on something. I have a hypothesis that at the end of the day, the data centers and AI is going to drive more generation of electricity that the rest of the industries will benefit from. And the cost of electricity will go down. Mike Roeth: I think you're right on. I think you're right on. think you're right on. think there's a, we have, you know, it's been 50 years, as I understand it, since we needed to really increase capacity of the grid. You know, it was back when air conditioning was a, you know, a really big driver for buildings. And so this capacity need and demand and. data centers, actually can buy into exactly your thought is going to help all the other electrification because it's a forcing mechanism that the others will learn from. And they got pockets, so it's exactly right. It's also a different demand. It's a more ⁓ demand. so can, I don't know, there's just lots of reasons why I think you might be, your hypothesis might be more true than not, Chris. Chris Caplice: and they've got pockets. Deep money. There's a parallel to this that happened in, you remember global crossing with all the fiber optic cables that were being put and people thought they're gonna make a ton of money. They went under, but that cable got absorbed. Cost of it, mean, may be, just, there might not be as many winners as we think, but I think they will leave behind because I mean, Three Mile Island is gonna come back online. I mean, come on. Jackson Brown is still alive. So, know, what are you gonna do? Mike Roeth: Yep. Yeah. Yeah. Yeah, Well, yeah, mean, things change, technologies change. mean, the whole nuclear thing is fascinating to me. I I think that could be a very big solution for part of the demands we're talking about here. yeah, yeah. Thank you, Chris. This was fun. Chris Caplice: And we'll see you. All right, well, Mike, I always enjoy talking with you. I don't do too much in sustainable stuff, but I'd love to talk about it because you bring a real, realistic solutions. It's not pie in the sky and it's not like thou shalt do this. know, if you don't do this and you're with us or you're against us. So I really appreciate the nuanced analysis that your organization does. All right. Okay, everyone. Okay. And next time you do a hackathon or whatever you're calling it, Mike Roeth: Yeah. Well, thank you. Very good, thank you Chris, appreciate it. I'll tell the team, I'll tell the team you said. All right. ⁓ Chris Caplice: Talk to me. I have some really smart students who could do some analysis for you. All right. Everyone stay tuned for the truckload market update. Mike Roeth: on it on it