Latest / Talk Track by Telegraph / Freight Cycles Explained: Why Markets Turn + What Shippers Should Do

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Freight Cycles Explained: Why Markets Turn + What Shippers Should Do · Talk Track by Telegraph

• 0:06
  SPEAKER_00: Welcome back to another episode of Talk Track where we talk about and respond to the events of the day in freight railroading, and we think about that from the perspective of anyone who might be interested.
• 0:17
  SPEAKER_00: That of course includes railroaders, shippers, railcar lessers, policymakers, really everyone.
• 0:24
  SPEAKER_00: And today's topic is freight cycles.
• 0:26
  SPEAKER_00: And I'm really excited to have my friend and I think nationally or internationally renowned expert on freight cycles, Dr.
• 0:34
  SPEAKER_00: Angie Arcochello with us.
• 0:35
  SPEAKER_00: I'll do a brief introduction and then she can do the real one.
• 0:38
  SPEAKER_00: But I just want to start off at the top by saying that I've been lucky enough to have known Angie for a while.
• 0:44
  SPEAKER_00: We started working together really when you were doing some of your graduate work that led to your position now, and maybe you can tell some of that career history to orientate people.
• 0:54
  SPEAKER_00: And one of the things that I think is really exciting is that Angie has written my favorite paper on freight cycles, and I think it's a lot of people's favorite research on this topic, where she really, you know, deeply investigated how do shipper carry relationships actually work in practice.
• 1:10
  SPEAKER_00: Not maybe what you know we say outwardly, but you know, what do people do and what does the data tell us about you know how those relationships unfold as the market changes.
• 1:19
  SPEAKER_00: So I'm really excited to get into that.
• 1:21
  SPEAKER_00: On top of that, she's done work across modes, trucking, ocean shipping, all sorts of freight procurement, and recently published a really interesting sort of perspective on transportation procurement.
• 1:33
  SPEAKER_00: And the last one I've got to call out, she also teaches the flagstone class at the MIT MIT Center for Transportation Logistics, SDM 260 Logistics Systems, one of the greatest classes to ever exist.
• 1:45
  SPEAKER_00: Dr.
• 1:46
  SPEAKER_00: Angie Ocatella, thank you so much for taking the time to join us.
• 1:49
  SPEAKER_01: Awesome.
• 1:49
  SPEAKER_01: Thank you so much.
• 1:50
  SPEAKER_01: That is a really great intro.
• 1:52
  SPEAKER_01: Um, I'll try to add a little bit to it, but I think we do a great job.
• 1:56
  SPEAKER_01: Um, it's it's so good to to get to chat with you because we love transportation.
• 2:03
  SPEAKER_01: Um, and so I'll maybe give a little bit of details on what I'm kind of working on now and how that's kind of evolved over the time.
• 2:10
  SPEAKER_01: So you mentioned, you know, I did my PhD at the Center for Transportation and Logistics in freight procurement, and I think what really brought me to that and what's interesting about that was there's this really technical piece to it of the analytics, the data, but there's also human dynamics to it.
• 2:25
  SPEAKER_01: And I think that was something that you and I really talked about a lot during my time, was that there's um a lot of human dynamics and kind of weird things that happen in the industry that you have to incorporate into making decisions, whether they're strategic or operational.
• 2:39
  SPEAKER_01: Um, and so that brought me to kind of post PhD and now as full-time research scientist here, is on expanding research in just decision, strategic and operational decisions in transportation.
• 2:51
  SPEAKER_01: So I do a lot of work in procurement, um, kind of helping shippers and carriers both make decisions for improving their procurement decisions from pricing, uh contract mechanisms, spot pricing.
• 3:03
  SPEAKER_01: World we'll talk all about market dynamics, um, to technologies in transportation, including but not limited to AI, but how are digital technologies being used across the board?
• 3:15
  SPEAKER_01: Um, and then finally, one thing that um I'm also expanding on, which is stuff you had done when you were here at MIT, was on the driver experience.
• 3:23
  SPEAKER_01: And you had done some really interesting work on really exploring what does it mean to um to be a driver and how do they how do they utilize their time and how can we help them do their job better and actually have better experience as drivers.
• 3:36
  SPEAKER_01: So it's expanding that into things like parking um infrastructure and things around, you know, again, utilizing the driver in a way that they're actually happy to be utilized, be able to drive and and things like that.
• 3:48
  SPEAKER_01: So that's kind of across the board, we're doing all sorts of stuff here on that.
• 3:52
  SPEAKER_00: Gosh, and two things that are so exciting to me about that, you know, in one, I think oftentimes when people think about PhD researchers, which we can count ourselves, you know, proudly or abashedly in that number.
• 4:06
  SPEAKER_00: You know, they think about quantitative research, which I know that you do, but but I think it's really cool how both uh sides of the project that that you mentioned have a human factor.
• 4:16
  SPEAKER_00: So you mentioned the human factor in the shipper carry relationship, and then also you know, I'm so glad the driver initiative work is going forward because just you know, understanding that it is a human behind the wheel that makes the truck go, I feel like is not always top of mind for people.
• 4:30
  SPEAKER_00: And gosh, uh you can understand so much more about how transportation really works when you remember that and you include that in in your frame of reference.
• 4:38
  SPEAKER_00: Yeah, totally.
• 4:39
  SPEAKER_00: Gosh.
• 4:40
  SPEAKER_00: So if we could, I'd like to start on, you know, at least for me, I kind of like to think of as your breakthrough paper or your first hit single, if you will, in in trucking research.
• 4:51
  SPEAKER_00: And I think I remember, but correct me if I'm wrong, um, seeing you sort of sketch out the ideas for this on a whiteboard in a second floor office at some point, you know, six or seven years ago at MIT C TL.
• 5:03
  SPEAKER_00: And it's the paper that ended up becoming, and I want to make sure I get the title exactly right, uh Elephants or Goldfish, an empirical analysis of carrier reciprocity in dynamic freight markets.
• 5:14
  SPEAKER_00: So two questions.
• 5:16
  SPEAKER_00: One, uh, I finally caught up on the TV juggernaut that is Ted Lasso, where they make lots of references to goldfish.
• 5:23
  SPEAKER_00: So I wonder if that's part of what inspired the title.
• 5:26
  SPEAKER_00: And two, you know, for people who don't know what that paper captured, could you sum it up for them?
• 5:31
  SPEAKER_00: Because I think once people know what you investigated, everyone want to know what you found.
• 5:36
  SPEAKER_01: Yeah, totally.
• 5:37
  SPEAKER_01: First question.
• 5:38
  SPEAKER_01: Um, so I in this case would not advise being a goldfish in this particular but some some are.
• 5:45
  SPEAKER_01: Um and so and and and we'll get to this as well, but uh good news for you, I've done a remix of my hit single, so we actually have a follow-on paper to this that's we just finished up, so I can chat about that.
• 5:55
  SPEAKER_01: But essentially, what what kind of this what underpins all this in truckload transportation, first of all, is that the contracts between shippers and carriers are non-binding.
• 6:03
  SPEAKER_01: So there's a price that's set that's determined, but any the the shipper side is they're not required to offer the volume that's expected, um, and from the carrier side, there's not, they're not required to accept the freight when it's being offered or tendered.
• 6:17
  SPEAKER_01: And so that leads to these relationship kind of issues.
• 6:21
  SPEAKER_01: And so as market dynamics shift between one party kind of favoring one party versus the other one, the question was what should you do as a whether it's a shipper or a carrier, when the market favors you, so that when the market inevitably shifts to favor the other one, they then prioritize you as a as a provider or as a customer.
• 6:43
  SPEAKER_00: Um and just to pause you on that, sorry, sorry to interrupt, just to kind of make sure I follow and then the listener might follow.
• 6:48
  SPEAKER_00: So is the the wisdom there or the strategy there kind of like just because it's a good day for me, don't squeeze too much out of my partner because the tides are gonna turn.
• 7:00
  SPEAKER_00: Is that maybe the and it always does.
• 7:02
  SPEAKER_01: We can look historically, it always does.
• 7:04
  SPEAKER_01: Um exactly.
• 7:06
  SPEAKER_01: And so what we did at the time was we were going at the time we were going into a pretty tight market where we have c it's very constrained, right?
• 7:13
  SPEAKER_01: More demand than there is supply for that that demand.
• 7:16
  SPEAKER_01: Prices go up.
• 7:17
  SPEAKER_01: Um, and we wanted to see, so this is a carrier's market, right?
• 7:20
  SPEAKER_01: They can kind of choose what shipments that they're gonna accept.
• 7:23
  SPEAKER_01: They can accept higher prices, things like that.
• 7:26
  SPEAKER_01: And so we were at yeah.
• 7:28
  SPEAKER_00: So sorry to dig in.
• 7:29
  SPEAKER_00: I I I'm just thinking about sort of the the uninitiated, and I want to make sure they get all the value out of understanding the paper here.
• 7:36
  SPEAKER_00: So, what happens if I'm a shipper and I'm in that market that is not in my favor?
• 7:40
  SPEAKER_00: What does it look like if um you know the carrier rejects a load?
• 7:45
  SPEAKER_00: What are the practical sort of truck and freight implications of that so people can frame up in their mind?
• 7:51
  SPEAKER_01: Absolutely.
• 7:51
  SPEAKER_01: Yeah, so essentially a shipper wants to make sure their carriers are accepting their shippings.
• 7:55
  SPEAKER_01: Because if they don't, then a shipper is gonna be relying on backup carriers who are gonna be typically higher priced, and maybe they don't know that shipper's business that well.
• 8:05
  SPEAKER_01: So they may be likely having lower performance across other metrics as well, maybe on time, maybe um, you know, the um damage, things like that.
• 8:17
  SPEAKER_00: So so I'm a shipper, I want to move my freight, um, my coconuts.
• 8:22
  SPEAKER_00: Um, I have someone I prefer to work with.
• 8:25
  SPEAKER_00: When it's a carrier's market, they might say, Actually, we're not picking you up today, Dave.
• 8:30
  SPEAKER_00: Then I have to go to someone else who might charge me more and is less trustworthy.
• 8:36
  SPEAKER_01: Yes, exactly.
• 8:37
  SPEAKER_00: Got ya.
• 8:37
  SPEAKER_01: Yes.
• 8:38
  SPEAKER_01: Um, and so what can I do, right?
• 8:41
  SPEAKER_01: What can I do when it when my carriers can have their pick?
• 8:45
  SPEAKER_01: Is there something I can do to demonstrate that I they should prioritize me?
• 8:49
  SPEAKER_01: Um so we looked at that particular type market when what are carriers accepting?
• 8:56
  SPEAKER_01: Who are they prioritizing?
• 8:58
  SPEAKER_01: And what did those shippers that they are prioritizing, what did they do in the past when they've typically had um in a softer market when they've had more of the the favor in the market when the shippers have.
• 9:10
  SPEAKER_01: Um, or are carriers really just being myopic and saying, I'm only responding to what I'm seeing today?
• 9:15
  SPEAKER_01: So that's where elephants or goldfish come in.
• 9:17
  SPEAKER_01: Am I a goldfish where I'm really just thinking about today, short-term memory, just thinking about what's happening today in today's market, and I'm only prioritizing my shippers that are are that I prefer today?
• 9:28
  SPEAKER_01: Or are they more like elephants and thinking about the long-term relationship and considering what the shipper's done in the past in order to determine if they're prioritizing them or not?
• 9:39
  SPEAKER_00: So so in this case, it is the opposite of the Ted Lasso implication where I think it was good to be a goldfish and not carry grudges.
• 9:47
  SPEAKER_00: And in this case, if you're a goldfish, it's almost like you're not paying attention to the history of that relationship.
• 9:54
  SPEAKER_00: Yeah.
• 9:54
  SPEAKER_00: Do I got there?
• 9:55
  SPEAKER_01: Yes.
• 9:55
  SPEAKER_01: Yes.
• 9:56
  SPEAKER_01: And kind of a secondary thing we did in this paper was looking at, well, what defines a relationship, right?
• 10:02
  SPEAKER_01: What is a good relationship, what is it not?
• 10:05
  SPEAKER_01: And back to your your comment earlier about really looking into the data and defining what does a relationship look like?
• 10:10
  SPEAKER_01: Because we could talk about that all the time, but what does that look like?
• 10:13
  SPEAKER_01: Um to a carrier, what does a carrier want?
• 10:17
  SPEAKER_01: They want good pricing, right?
• 10:20
  SPEAKER_01: Pricing that's competitive with the current market.
• 10:22
  SPEAKER_01: They want um consistent volume, they don't necessarily want high, high volume because they have network effects they have to they have to balance.
• 10:31
  SPEAKER_01: They want the volume they're expecting, um, and they don't want to be detained at facilities for too long.
• 10:37
  SPEAKER_01: And so we looked at a host of these different things that carriers want and asked, what is are shippers that have good performance across those metrics are they being prioritized by carriers in that tight market?
• 10:50
  SPEAKER_01: Um to kind of cut to the the chase here, essentially we found that carriers are actually more like goldfish, they are more myopic.
• 10:58
  SPEAKER_01: So, what carriers are really looking for is in that tight market, in that current market, are carriers are shippers having consistent volume, and are they more importantly having prices that are consistent with the current market?
• 11:13
  SPEAKER_01: So if I'm a shipper and I'm trying to lock in low prices before I see the writing on the wall, I see a market starting to tighten, and I want to lock in low prices, that's not gonna be a good strategy.
• 11:23
  SPEAKER_01: You really have to be aware of what your prices are are looking like today and what the market looks like tomorrow.
• 11:29
  SPEAKER_01: And are you can are you able to um make sure that you're you're paying what's a fair price to carriers?
• 11:38
  SPEAKER_00: I know you work with you know some of the biggest brokers in the business, some of the biggest shippers.
• 11:44
  SPEAKER_00: What did they take from that result?
• 11:46
  SPEAKER_00: What is the strategy that you know they took as their playbook from what you learned?
• 11:52
  SPEAKER_01: Yeah.
• 11:52
  SPEAKER_01: So the biggest thing is don't just run your annual procurement process, set contracts across your whole network, and then just forget about it and walk away.
• 12:01
  SPEAKER_01: You really need to be consistently looking at what's what the market looks like, looking at your prices, looking at what carrier performance in terms of acceptance is, and seeing where is there maybe a problem.
• 12:12
  SPEAKER_01: If you're seeing lower acceptance from a carrier, you probably can can make a pretty good guess that either the prices are are maybe not at the right price, maybe need to update them, maybe there's something operationally in terms of the consistency of the volume.
• 12:26
  SPEAKER_01: Um, but but looking at what's happening in your network as markets change throughout the year and seeing if you need to update things.
• 12:34
  SPEAKER_01: Not everything, but seeing more more specifically within your network what do you need to update.
• 12:40
  SPEAKER_00: What about the less rosy implication?
• 12:42
  SPEAKER_00: Am I right to think that the the other implication could be when it's a a shipper's market?
• 12:50
  SPEAKER_00: Am I right to think that there is some evidence to suggest if I'm a shipper, there's not really a return to me on trying to build a strong relationship with those carriers because it doesn't look like they remember it when the tide turns.
• 13:04
  SPEAKER_00: Is that fair?
• 13:05
  SPEAKER_01: So yeah, so it's not so much that it doesn't matter, it's that what happens during the soft market is important, but even more important is what you do as you transition into that tight market.
• 13:17
  SPEAKER_01: So for a carrier, what a good relationship from a shipper is, maybe it's not what happens in the soft market.
• 13:23
  SPEAKER_01: It's really as we go into that tight market.
• 13:25
  SPEAKER_01: So do relationships matter?
• 13:27
  SPEAKER_01: Yes, but what that relationship is defined by is how a shipper behaves in that tight market.
• 13:33
  SPEAKER_00: That's so interesting.
• 13:34
  SPEAKER_00: And there's an analog to fishing I hadn't thought of um when I first read the paper, just in that, like the fishing's not very good at low tide or at high tide.
• 13:43
  SPEAKER_00: The fishing is good like an hour before either, as the waters transition.
• 13:47
  SPEAKER_00: There's something there that's interesting.
• 13:48
  SPEAKER_00: Yeah, yeah.
• 13:50
  SPEAKER_00: Gosh, and you said you had a remix, so like what's in chapter two?
• 13:57
  SPEAKER_01: It was only fair to ask, well, our shippers' elephants are goldfish, right?
• 14:01
  SPEAKER_01: So so carriers are are goldfish.
• 14:04
  SPEAKER_01: Um, and so we looked at the opposite.
• 14:05
  SPEAKER_01: Once we kind of were through that market cycle and went through an entire new market cycle, so about a year ago, then we did the the reciprocal of our shippers' elephants or goldfish.
• 14:15
  SPEAKER_01: So during a soft market, when this is now when the shipper has more of the favor, right?
• 14:20
  SPEAKER_01: Because now they can choose whatever carriers they want to use.
• 14:24
  SPEAKER_01: Um, are they provide are they choosing to offer volume to carriers that in that previous tight market had accepted their freight and had been good providers, right?
• 14:35
  SPEAKER_01: Um, and there we actually found that shippers are more like elephants.
• 14:38
  SPEAKER_01: So they are actually considering what happened in the past, specifically by the carrier's acceptance.
• 14:44
  SPEAKER_01: That was the main factor that that shippers were most important most interested in.
• 14:48
  SPEAKER_01: Was in the in a tight market, if a carrier is accepting more freight from that shipper, the following soft market, they're going to be getting more volume from them.
• 14:58
  SPEAKER_01: So when they're kind of desperate for filling their trucks, they're gonna get more volume if they had previously been accepting and showing up for that shipper.
• 15:07
  SPEAKER_00: And and who are the people, you know, as these results have come out, who are the parties that you found especially interested in these results?
• 15:15
  SPEAKER_00: And have you been surprised by, you know, some of the people who inquired about what what you uncovered?
• 15:20
  SPEAKER_01: Yeah.
• 15:21
  SPEAKER_01: I think so.
• 15:22
  SPEAKER_01: For the most part, I mean, shippers and carriers alike are interested.
• 15:24
  SPEAKER_01: It's fun to present this work and ask the room, you know, do you think shippers are elephants and goldfish and carriers?
• 15:31
  SPEAKER_01: You get totally different answers if it's a full room full of carriers or shippers.
• 15:35
  SPEAKER_01: Um and I think there's some element of validation sometimes when from both sides of like, yeah, but you know, yes, we behave this way if we're carriers, we behave this way, but under uncovering why and what's really important to us, I think there is a lot of validation.
• 15:50
  SPEAKER_01: Um, because when I entered this research 10 years ago now, was there was so much talk about relationships matter or do they really do they matter?
• 15:59
  SPEAKER_01: And so this kind of shone some light on what specifically is important about that relationship.
• 16:04
  SPEAKER_01: So I, you know, for the most part, both shippers and carriers are are understanding the other one a little bit better and then being able to utilize this to improve their performance from both sides.
• 16:16
  SPEAKER_00: You know, I'm sure this title would not have been published, but it's almost like you uncovered the love language of shippers for carriers and vice versa.
• 16:24
  SPEAKER_01: That's uh you know, I haven't published the second one yet, so we can have titles.
• 16:30
  SPEAKER_00: You know, I don't know that that one will help your chance.
• 16:32
  SPEAKER_00: Not that it needs any help, but uh so so you know, a c a couple next stops on this conversation, but you know, one intermediate stop that I'm really interested in.
• 16:42
  SPEAKER_00: So, like you've really studied how shippers and carriers behave in freight cycles.
• 16:49
  SPEAKER_00: And you've seen, you know, shippers' markets and carriers markets.
• 16:53
  SPEAKER_00: Did all of that time spent in that research give you some sense of what do you think cause causes um freight cycles to ebb and flow?
• 17:02
  SPEAKER_01: Yeah.
• 17:03
  SPEAKER_01: So we have been spending a couple years trying to figure that out.
• 17:07
  SPEAKER_01: So there's kind of like what do I think based on not specifically studying that question and then also studying that question and what can what can I say about that?
• 17:15
  SPEAKER_01: Um, so we've spent a couple years now trying to essentially predict what are the indicators that predict what leads to a change in the market, whether it's soft or tight, right?
• 17:25
  SPEAKER_01: So what direction you're going.
• 17:27
  SPEAKER_01: Um the short answer is it's hard, right?
• 17:29
  SPEAKER_01: There's there's so many things that there's no one particular or even combination of things that really strongly predict the market, with the caveat of diesel prices is a pretty strong indicator.
• 17:39
  SPEAKER_01: Um we've found that tight markets typically are event-driven.
• 17:44
  SPEAKER_01: So the 2017-2018 was really the ELD mandate that came in.
• 17:49
  SPEAKER_01: Um, we had we had a more constrained market because that put a lot more constraints on drivers, on carriers.
• 17:56
  SPEAKER_01: And so the supply side was kind of the issue there.
• 18:00
  SPEAKER_01: Um, softer markets is usually a recovery from that tight market.
• 18:05
  SPEAKER_01: So we had a soft market following that, then COVID hit, right?
• 18:08
  SPEAKER_01: And so 2020-2021 was a tight market from COVID.
• 18:11
  SPEAKER_01: Um, then since 2022, we've had a very soft market for much longer than we've ever really had in the past.
• 18:19
  SPEAKER_01: Um and so since late spring, we are now starting to, or we are now in a in a tight market.
• 18:26
  SPEAKER_01: And so, what leads to these things and the length of being in each particular cycle, one is hard to tell because we only have so much data and everything's kind of irregular.
• 18:37
  SPEAKER_01: Um, but it's it's a matter of is there strong economy, right?
• 18:43
  SPEAKER_01: So is the demand side the push for it?
• 18:45
  SPEAKER_01: So is there a strong economy, or is the supply side struggling?
• 18:49
  SPEAKER_01: Um, and so what we've seen in the last four years since 2022 has been more on the the supply side, um, and then the kind of uncertainty in demand in terms of you know, we have tariffs happening, we've had um kind of an inflation, inflationary economy.
• 19:07
  SPEAKER_01: So that's kept demand low.
• 19:09
  SPEAKER_01: As we've shifted in the last last few months into a tight market, it's been a little bit more um, we've seen over the last year or two the um English language requirements, so that's kind of constraining capacity a little bit more, um, cracking down on CDL um uh licensing facilities.
• 19:29
  SPEAKER_01: Um we just had the the Montgomery liability risk kind of issue come up, which is adding more constraints and um to carriers.
• 19:38
  SPEAKER_01: So we're seeing a couple of stacked instances of supply actually going down and being more supply-driven tight market this time.
• 19:47
  SPEAKER_01: So it's kind of all to say there's so many things that can lead to a soft versus the tight market, and it's every one that we've looked at, at least since 2015 and and before that, has been a slightly different thing that's led to a tight market.
• 20:00
  SPEAKER_00: So, you know, one thing I want to call out for for our listeners here is that this um heavily credentialed, highly published, and well celebrated researcher says it's hard to predict when the freight market's gonna turn.
• 20:12
  SPEAKER_00: So you know, when you see easy predictions, please you know recall that that some of the brightest among us suggest it's hard.
• 20:20
  SPEAKER_00: Um but but I want to also for for this particular audience take this to railroading.
• 20:27
  SPEAKER_00: And obviously they're different, and I'm asking you to step a little bit outside of your recent expertise, but I know you cover all kinds of freight transportation.
• 20:34
  SPEAKER_00: And and you know, I I guess I'm wondering to someone who might be listening and is thinking, well that you know, that applies to trucking because there's many more trucking providers, because the cost profile is different between rail and trucking, maybe this market cycle stuff doesn't apply.
• 20:49
  SPEAKER_00: So I wonder how you would address that concern.
• 20:52
  SPEAKER_00: And I particularly wonder how you might do it in that I know you know you are not a a one-mode pony, if you will.
• 20:59
  SPEAKER_00: I know that you've also looked at maritime, you know, which has may maybe some structural similarities um to rail.
• 21:05
  SPEAKER_00: So so as we think about freight cycles, you know, maybe some commentary that you've already started to build on around where we're at in it now.
• 21:14
  SPEAKER_00: Can you think of how the rail listener might um what the rail listener might take from your work on freight cycles and shipper carrier partnerships?
• 21:22
  SPEAKER_01: Yeah, that's and it's a fair, fair comment.
• 21:25
  SPEAKER_01: What I would say is that the two industries, so so trucking and rail are very closely coupled.
• 21:32
  SPEAKER_01: Rail really acts as a relief valve for trucking, and so when there's very high volume, very high demand, and high prices in in trucking, you're gonna see more volume, more shippers going towards intermodal rail.
• 21:45
  SPEAKER_01: Um, because rail can be much lower cost, it's gonna be there's kind of the cost versus service level or time trade off.
• 21:51
  SPEAKER_01: Rail's gonna be lower cost almost always, um, and so shippers will be much more willing to go towards rail as we go into these types.
• 22:00
  SPEAKER_01: Markets.
• 22:00
  SPEAKER_01: So looking at the truckload market specifically and knowing that we are going into a tight market where prices are increasing is going to be a huge indicator for volumes in rail in the next few months.
• 22:13
  SPEAKER_00: Gosh, excellent.
• 22:14
  SPEAKER_00: And then thinking, you know, one of the things that I'm working on now is our quantitative forecast for rail volumes really through the end of the year.
• 22:22
  SPEAKER_00: And I hope you'll tell your your 260 students that I'm using some AREMA models as part of that.
• 22:27
  SPEAKER_01: So there's I will I will start the class saying there's a payoff.
• 22:38
  SPEAKER_00: But I guess kind of building off what you said, you know, I'm thinking a lot about you know this changing tide, changing cycle that we've been talking about, thinking about freight volumes through the summer and then through the end of the year.
• 22:52
  SPEAKER_00: If you had to characterize, you know, what either your analysis or maybe just sort of your gut tells you about these volumes through through 2026, what kind of summer is it gonna be?
• 23:02
  SPEAKER_00: What kind of winter is it gonna be?
• 23:03
  SPEAKER_00: Are we are we in growth mode, or should we be should we be really bullish here, or do you think there's still some some data points yet to come in to help us understand what's around the corner?
• 23:15
  SPEAKER_01: Yeah, I think a couple things.
• 23:17
  SPEAKER_01: I I mentioned a little earlier that fuel prices, diesel fuel prices are gonna are kind of the biggest indicator that we could find over the last two years of trying to predict when we're gonna go into this next tight market in trekking.
• 23:28
  SPEAKER_01: Um and so if you if you're looking at that, we're expecting to see at least over the summer, still elevated, but um and not really coming down diesel prices.
• 23:38
  SPEAKER_01: So to that extent, and especially the the um implications from the supply side I was just mentioning, I think we're still gonna be going into a particularly high volume summer.
• 23:49
  SPEAKER_01: Um I now this is personal opinion, not based on actual data analysis at this point, but we did see the entry into this tight market a little bit slower than typical, right?
• 24:01
  SPEAKER_01: Typically, we see, as I said, there's an event and prices start to go up.
• 24:05
  SPEAKER_01: It was about six months of speculation of, I think, or even almost a year of speculation of going into a tight market, oh, maybe not, we're not seeing the indicators.
• 24:14
  SPEAKER_01: So the last year or so has been kind of everyone's saying, Oh, yeah, it's gonna be next month, it's gonna be next month.
• 24:18
  SPEAKER_01: Um, so we've seen a little bit of a slower increase into this tight market.
• 24:22
  SPEAKER_01: I think we are, unless there is an event that really increases or demand starts to spike as a result of something, I think we're gonna have a little bit of a slower burn into this tight market.
• 24:34
  SPEAKER_00: And and how long does the uptick in prices have to last to be a market change?
• 24:42
  SPEAKER_01: Yeah.
• 24:42
  SPEAKER_01: We're typically, I mean, we're looking at um week over week increases, so continuing week over week increases.
• 24:49
  SPEAKER_01: The the work we did with students here this the past two years was looking at three months in increments and saying, you know, are we for at least a quarter are we um seeing increases in pricing, specifically spot pricing, because that's what's a little more volatile.
• 25:03
  SPEAKER_01: Um, so so that to us was okay, we're we're squarely consistently increasing for three months.
• 25:09
  SPEAKER_01: Now that's a little bit conservative, but we wanted to make sure that we were, you know, doing it and not just jumping the gun when we did when we did say there was a tight market.
• 25:18
  SPEAKER_00: No, well, and and very true to your empirical approach on sort of defining what a relationship is and measuring it, I feel like that kind of measured approach to understanding this is what we're going to call a market turn by these metrics is tremendously helpful.
• 25:34
  unknown: Dr.
• 25:34
  SPEAKER_00: Angela Coachella, thank you so much for doing gosh, this might be our third podcast we've ever done together.
• 25:41
  SPEAKER_00: To many more.
• 25:42
  SPEAKER_00: Thank you so much.
• 25:43
  SPEAKER_01: Thank you so much for having me.
• 25:44
  SPEAKER_01: It's been great.
• 25:45
  SPEAKER_00: Thank you very much for joining us for another episode of Talk Track.
• 25:48
  SPEAKER_00: You can listen to this episode on more on YouTube or anywhere you get your podcasts, and please learn more about us at telegraph.io.