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The diesel spike & the trucking market · The Intermodal Logistics Podcast

• 0:02
  SPEAKER_00: Thanks very much for joining us on this edition of the Intermodal Logistics Podcast.
• 0:07
  SPEAKER_00: I'm Kevin Baxter with my co-host today, Intech Logistics, CEO Rick Lagore.
• 0:12
  SPEAKER_00: Hey Rick?
• 0:13
  SPEAKER_00: Hey.
• 0:14
  SPEAKER_00: And uh joining us for the second episode in a row, we've uh brought back somebody who uh sort of uh an expert that we rely on on uh certain particular issues.
• 0:23
  SPEAKER_00: This one is uh trucking, and we also want to talk about diesel and the impact there and uh all sorts of other stuff, I'm sure.
• 0:31
  SPEAKER_00: The uh guest we have today is Dean Croak, the principal analyst for DATIQ.
• 0:37
  SPEAKER_00: Dean, thanks very much for joining us again.
• 0:39
  SPEAKER_01: Good to be with you guys.
• 0:39
  SPEAKER_01: Yeah.
• 0:40
  SPEAKER_01: Twice in one week, Rick.
• 0:41
  SPEAKER_01: Yes, twice in one week.
• 0:47
  SPEAKER_00: Rick or Dean, if you want to uh jump in and talk about uh where you just were.
• 0:52
  SPEAKER_00: I mean, you were both uh both together a couple of days uh earlier in this week as we record this, and uh just uh a little recap of what you were doing.
• 1:00
  SPEAKER_04: Yeah, so uh both Dean and I we were talking different uh different things, but uh both of us were on uh separate panels for JP Morgan Chase um industrial conference that they had in DC this week.
• 1:13
  SPEAKER_04: Um I was talking specifically about intermodal um and what we were seeing in the intermodal marketplace, and uh while Dean was covering what he was seeing in the trucking market spot rates, he talked a little bit about produce, if I remember right, and produce season, and that might be the telling source.
• 1:30
  SPEAKER_04: And we talked about he to he covered you covered a lot of stuff because you also covered non-domiciled CDLs and and what the impact that was having.
• 1:40
  SPEAKER_04: So I mean, I I know our notes here are talking a lot about fuel, and we covered that, but I mean we can cover yeah, he had a bunch of great stuff, and they only gave us 35 minutes to talk, and then they gave you a five-minute break in 35 minutes.
• 1:52
  SPEAKER_04: So anyway, it went super, super fast, but I thought it was a great conference.
• 1:57
  SPEAKER_04: Um, but yeah, enjoyed it.
• 1:59
  SPEAKER_01: Yeah, I went I was on with Chris Pickett, and uh I love being on with him because he has such a good macro view of the truckload market, you know, the inventor of the coyote curve and uh his time at at uh at Coyote, because he's now at Flock Freight, but I I just love his perspective because it's a level of perspective I don't see at a macro level.
• 2:18
  SPEAKER_01: I'm I'm not an economist, but I I love listening to people like Chris talk about the the macro level view of the market and how it how it behaves cyclically, you know, and I'm I'm kind of down in the weeds of what's going on the back of flatbeds and what's going in the back of trailers in Lakeland, Florida today.
• 2:36
  SPEAKER_01: You know, is it strawberries or broccoli?
• 2:39
  SPEAKER_01: Like, and how hard were they hit by the last cold weather?
• 2:42
  SPEAKER_01: So it was a very interesting compliment because um uh his view of the world is kind of um much higher level.
• 2:52
  SPEAKER_01: I'm I'm looking at more seasonal, weekly drivers of what why rates are.
• 2:58
  SPEAKER_01: And of course, diesel's one of the big things, but we touched on a lot of topics that would be very interesting to see if they come to fruition.
• 3:05
  SPEAKER_01: I don't think our rate forecasts are anywhere near what Chris was talking about.
• 3:09
  SPEAKER_01: They were talking about plus 40% year-over-year movement in spot rates.
• 3:14
  SPEAKER_01: I don't know that we'll see that, but then there's so much going on, Rick.
• 3:17
  SPEAKER_01: I don't know that any of us can predict because we thought this market was improving in January, February, into March, and then this Middle East problem happened, and next thing we're back to where we were a year ago when the trade war started.
• 3:31
  SPEAKER_01: You know, and it's like it's like deja vu.
• 3:33
  SPEAKER_01: It's like I've seen this video before where shippers just say, hold on, what's going on here?
• 3:38
  SPEAKER_01: We need to stop, uh, you know, slow down and just wait and see what happens.
• 3:42
  SPEAKER_04: So yeah, I I've been watching uh Chris's stuff for for a long time, and he's always put some solid, yeah, solid information out there on his macro view of what's going on.
• 3:51
  SPEAKER_04: And so, yeah, great conversation.
• 3:53
  SPEAKER_04: And I thought that's what was great about the conference, and and particularly the first day.
• 3:57
  SPEAKER_04: Um, I spent a little bit uh there on the second day that was uh more of an earnings call that I I felt, which is also a good good perspective from some of the well when I was listening in a class one railroads.
• 4:07
  SPEAKER_04: Um but yeah, what you see at the macro level versus what you see down down in the weeds, it it could be telling you different stories.
• 4:14
  SPEAKER_02: Yeah.
• 4:15
  SPEAKER_04: Um, and that's I mean, we had some we were talking uh quite a bit about FMCSA and and all the activity that they have, and and and and really what a lot of us feel is changing the structure anyway, yeah, of rates for truckload.
• 4:29
  SPEAKER_04: It's not improving volumes um overall in the marketplace, but it is definitely changing changing the overall.
• 4:37
  SPEAKER_01: Oh, yeah.
• 4:38
  SPEAKER_01: I mean that's why I thought uh Derek Barr's session was very interesting because it's it's had an impact on on rates, not because of demand.
• 4:48
  SPEAKER_01: Like this is one of those first times I can remember.
• 4:50
  SPEAKER_01: I'd love your perspective that we've actually seen the market turn in in terms of spot rates, anyway, on the truckload side, not because of demand, but because of supply.
• 5:01
  SPEAKER_01: Like I don't know that it's ever been a supply-side market transition, but we're actually not that, you know, I'm not saying the market's flipped, but spot rates are holding this morning, uh, 18% higher year over year in dry van, 22% higher year over year in uh reefer, and 12% higher in flatbed.
• 5:19
  SPEAKER_01: You say, well, how is that at this sort of trough in the freight market cycle here in March?
• 5:26
  SPEAKER_01: When demand, if demand is flat, um why are rates higher year over year?
• 5:32
  SPEAKER_01: Well, weather's been a big part of that, but it's actually this what I call a structural exodus of capacity that's happened in the market for a variety of reasons, not just regulatory, but it's been such a bad market for years.
• 5:44
  SPEAKER_01: There has been an exodus of capacity because of lack of viability.
• 5:48
  SPEAKER_01: But then there's also this push around, and this is what Derek Barrers talked about, the CDL schools.
• 5:53
  SPEAKER_01: I was shocked at him saying we've closed down 7,000 of the 17,000 CDL schools.
• 6:00
  SPEAKER_01: Uh, they're tightening up the requirements to get into the industry with a CDL license, uh, you know, a DOT number.
• 6:06
  SPEAKER_01: Like, so you think about all of these things they're doing, it's actually reducing A, the amount of capacity that's available and B, the rate of new entrants coming into the industry.
• 6:16
  SPEAKER_01: So you extrapolate that down the road here, you actually get to a point where this these wild swings in capacity that we've seen, I think, start to disappear, and we get back to more normal seasonal ebbs and flows of rates as opposed to massive influxes of capacity that we've seen in the last few years.
• 6:36
  SPEAKER_01: So maybe, maybe the last five years has been an outlier because of the pandemic and it's taken us this long to get to it.
• 6:42
  SPEAKER_01: But the fact that you've got a lot of carriers out there, and he talked about ELDs, right?
• 6:46
  SPEAKER_01: I was shocked at his numbers around how many self-certified ELD providers were asking for um to become certified as an ELD provider.
• 6:55
  SPEAKER_01: And he was saying, well, hold on, we've now got new standards, and um and part of the extra capacity in the market has been, and again, this is allegedly, I haven't I I've seen it, I've seen trucks with the firmware where you can reset your hours of service every day and have a new 70 every morning.
• 7:12
  SPEAKER_01: Um, I've seen trucks run 4,000 miles a week and record three and a half, like so so all of these, so all of this that there's been a black market around allowing extra capacity either through the number of trucks or the miles they drive.
• 7:28
  SPEAKER_01: Right.
• 7:28
  SPEAKER_01: And if you think back to how flat rates have been in the last few years, you'd say, where's this capacity coming from?
• 7:35
  SPEAKER_01: And when you start to listen to the FMCSA, you kind of get a sense that maybe this is a bigger problem than we thought.
• 7:42
  SPEAKER_01: Right.
• 7:42
  SPEAKER_01: And so, you know, I still have a class A truck, I still drive, I'm about to head to Louisville for Matt's.
• 7:47
  SPEAKER_01: I will get out there on the road in my truck tomorrow morning and I will see stuff that I will, if I didn't have my dash cam running, you wouldn't believe.
• 7:55
  SPEAKER_01: And it's not just car drivers, it's other truck drivers.
• 8:00
  SPEAKER_01: And when you watch it, you think, what the heck's going on?
• 8:03
  SPEAKER_01: Because this has been going on for three or four years that we've all noticed that change in driver behavior.
• 8:09
  SPEAKER_01: I thought it was like the pandemic or or you know, the legalization of marijuana in a number of states, like something changed on the road, like in terms of how drivers drive.
• 8:20
  SPEAKER_01: But it was, and I kind of put car drivers in that one bucket, they're not aware of what it's like to be around a truck.
• 8:28
  SPEAKER_01: So I don't expect them to not cut me off or break check me or do crazy things.
• 8:33
  SPEAKER_01: That's normal.
• 8:34
  SPEAKER_01: What I don't expect are other truck drivers behaving in a manner that's dangerous to themselves and everybody around them.
• 8:41
  SPEAKER_01: And it's kind of this, you know, I remember saying to myself, it's almost like these guys got their CDL license on the back of a cornflakes packet.
• 8:50
  SPEAKER_01: Like a material.
• 8:52
  SPEAKER_04: Based off of how many CDLs uh or schools have been shut down quite that's the answer is yes.
• 8:59
  SPEAKER_01: So it was like I remember watching these guys go past me and thinking, what the heck's going on here?
• 9:04
  SPEAKER_01: This is insane.
• 9:05
  SPEAKER_01: Like, do you not know how risky it is to drive an 80,000-pound truck through, you know, these sort of construction zones?
• 9:12
  SPEAKER_01: And anyway, it turns out that a lot of them did get their license on the back of a serial packet, literally, and they drive accordingly.
• 9:19
  SPEAKER_01: So I, you know, as someone that holds a CDL and it's hard to keep it through the DOT physical process, because you've got to be healthy and you've got to meet a lot more requirements.
• 9:29
  SPEAKER_01: If we end up in a position where it's actually we get rid of a lot of this shady uh chameleon capacity, you know, these sham operators they talk about, that'll be a good thing for all road users.
• 9:41
  SPEAKER_01: But what's underpinning it, of course, is tighter capacity in the truckload market, absent higher demand.
• 9:47
  SPEAKER_01: And that's where we see this new flaw that's being held.
• 9:50
  SPEAKER_01: Now, I think I think we're going to really see a lot of volatility in the truckload market.
• 9:55
  SPEAKER_01: I'd love to see how this translates over to your intermodal side, but we see extreme volatility coming around any seasonal demand.
• 10:04
  SPEAKER_01: Um, think Mother's Day, uh, Road Check Week.
• 10:07
  SPEAKER_01: I think Road Check Week will be crazy this year because it's focused on ELDs.
• 10:11
  SPEAKER_01: Right.
• 10:12
  SPEAKER_01: And and of course they're going after it.
• 10:14
  SPEAKER_01: You think about if you're an ELD provider that's been taken off the market, well, that truck company, that driver, has to go to paper logs in the interim, right?
• 10:24
  SPEAKER_01: Until they get a new.
• 10:25
  SPEAKER_01: Um imagine not wanting to be out there during road check week and having to explain your paper logs.
• 10:31
  SPEAKER_01: Oh, right.
• 10:33
  SPEAKER_01: I think no.
• 10:34
  SPEAKER_01: So I think what you'll see is incredible rate surge around Road Check Week.
• 10:39
  SPEAKER_01: A lot of drivers take time off, and of course, it leads into Mother's Day out of Miami, which is where 90% of our flowers come from, from Ecuador and Colombia.
• 10:47
  SPEAKER_01: So you're going to see refrigerated volatility, I think, like you've never seen this year around key events.
• 10:54
  SPEAKER_01: And it's not just key events, it's also like a at a regional and a lane level, day of week effect becomes very pronounced because at the start of this year, people said, What's your headline?
• 11:04
  SPEAKER_01: And I said, um, stabilizing demand meets constrained supply.
• 11:09
  SPEAKER_01: That was my headline.
• 11:10
  SPEAKER_01: And and I think that's how it's going to play out on the on the demand side.
• 11:14
  SPEAKER_01: On the supply side, it's very constrained.
• 11:17
  SPEAKER_01: Um Shelly at JB Hunt said it very well in her last earnings call.
• 11:21
  SPEAKER_01: She said the market has lost its elasticity.
• 11:24
  SPEAKER_01: And I thought it was a very good way to describe how capacity's exited and it's unable to absorb shocks in the market around demand.
• 11:33
  SPEAKER_01: And so that's why I think whenever you see something that happens, whether it's weather, which we saw with Fern and Gianna, I think when you see Road Check Week come around this year, we will see a fairly big exodus of carriers, particularly in the refrigerated sector, because they tend to take time off at about double the rate of dry van and flatbedders during road check week.
• 11:54
  SPEAKER_01: So I think reefer market could be a very tight market this year.
• 11:57
  SPEAKER_01: Um, a lot of volatility, but that's how it's playing out right now.
• 12:01
  SPEAKER_01: And of course, the the other wild card is diesel prices are up a dollar a gallon in two weeks, and that's really hurt a lot of the spot market carriers that could, if it lasts, um, send some of them out of the business, which again tightens capacity and then forces that spot rate curve up even higher.
• 12:19
  SPEAKER_01: And then and I'm anxiously waiting for it to see where it leads to your theory, which has actually been proven out over the last few market cycles where innovator spot rates start to rise after drive-and rate drive-and rates move and capacity is tight on the truckload side.
• 12:34
  SPEAKER_01: But we're not seeing that yet, right?
• 12:35
  SPEAKER_01: We're seeing No, we're not seeing it.
• 12:37
  SPEAKER_04: It's still, as a matter of fact, we took a look at it yesterday because we we run it every Tuesday.
• 12:41
  SPEAKER_02: Yeah.
• 12:42
  SPEAKER_04: And um well, it kind of talked a little bit about uh as fuel went up, um, we actually saw the line house portion of uh the spot rate drop a little bit further.
• 12:51
  SPEAKER_04: So it still hasn't taken it still hasn't taken hold there.
• 12:54
  SPEAKER_04: So as we see these rates increase on the truckload side, we are starting to have more conversations with shippers that are uh seriously considering making um conversions over to intermodal, which they haven't done previously.
• 13:07
  SPEAKER_02: Yeah.
• 13:07
  SPEAKER_04: Um because the rates have been so so cheap on the truck side, uh capacity has been so plentiful.
• 13:13
  SPEAKER_03: Yep.
• 13:13
  SPEAKER_04: So why make a change to something that is is different than what they're used to?
• 13:18
  SPEAKER_03: Yeah.
• 13:18
  SPEAKER_04: It just didn't make sense for them.
• 13:19
  SPEAKER_04: But at this point in time, it we're we're starting to have conversations and and I think it's gonna work out well.
• 13:24
  SPEAKER_04: But like you said, there's really not additional demand that's out there in the marketplace.
• 13:28
  SPEAKER_04: It's really um we're just shuffling the demand, we'll be shuffling demand between modes to try to get um help shippers get their product to where they need to go.
• 13:38
  SPEAKER_02: Yeah.
• 13:38
  SPEAKER_04: Um it was funny that uh you you brought up the Miami and the Mother's Day flowers and stuff like that.
• 13:45
  SPEAKER_04: It was suggested that if you're gonna get something from your mom, you should get a candle this time because it might be difficult to find flowers that are fresh and and at a good price.
• 13:56
  SPEAKER_01: Yeah, well, we've seen a 16 cents per mile swing in two weeks between all-in and line haul.
• 14:01
  SPEAKER_01: So we've seen the same thing on the road where all in rates have gone up eight cents, line haul's gone down eight cents.
• 14:07
  SPEAKER_01: So it means there's margin expansion in the middle where truckload carriers at the pump are really struggling to get the rates up to the same degree that diesel's going up, uh, because your all-in rate doesn't have a fuel surcharge carved out of it.
• 14:20
  SPEAKER_01: So that's uh that's a kind of interesting phenomenon we saw back in 2022 where it takes time for line haul rates to catch back up.
• 14:28
  SPEAKER_01: Um but it was interesting.
• 14:29
  SPEAKER_01: Ken made a good point yesterday, Ken Adamo, my boss, he said um with the fuel surcharge being added on to the line haul rate and those rates going up, you could see a shift away from the spot market to back to contract markets.
• 14:42
  SPEAKER_01: His theory was a very interesting one.
• 14:44
  SPEAKER_01: I think it'll play out.
• 14:45
  SPEAKER_01: If you're a truckload carrier that's been playing in the spot market because the rates have been so good, you would you would maybe switch back to the contract market, have a uh a higher level of tender acceptance, not reject as many loads, because in the contract market you can add the fuel surcharge on, which, as you know, if you've got higher MPG trucks than 6.5, you can actually make money off the fuel surcharge.
• 15:09
  SPEAKER_01: So it was an interesting theory that he thought that we will see volume move away from the spot market back to the contract market, and which potentially takes a bit of the steam out of the spot market, certainly takes the steam out of tender rejections if that happens, and people start to accept more of the EDI tenders or API tenders from their shippers.
• 15:27
  SPEAKER_01: So again, we're back to a wild freight market where a lot of the things that you and I have looked at over decades as being leading indicators are kind of like not quite there at the moment because of all these other things that are going on in the market.
• 15:42
  SPEAKER_01: Diesel prices being one of them.
• 15:45
  SPEAKER_01: Yes.
• 15:46
  SPEAKER_01: We've seen we've seen small carriers' profitability get wiped out in two weeks.
• 15:50
  SPEAKER_01: I mean, that's the that's the bottom line.
• 15:52
  SPEAKER_01: If you said what's been the impact, diesel up a gallon, a dollar per gallon has wiped out all of the gross profit margins of spot market carriers in a two-week period.
• 16:00
  SPEAKER_01: All that money they were making December, January, February, they were making, you know, about$20,000 a year extra because of the way rates were.
• 16:08
  SPEAKER_01: They're now back down to zero.
• 16:10
  SPEAKER_01: So Yeah.
• 16:11
  SPEAKER_04: Because some people don't under fully understand, as you just explained the terms how the fuel surcharge actually works.
• 16:16
  SPEAKER_02: Yeah.
• 16:16
  SPEAKER_04: And uh because a lot of people just say, well, the carriers can just go ahead and you know, DOE puts their numbers out on Tuesday and we can we can just up the rates.
• 16:26
  SPEAKER_04: And that's just not the way it plays out.
• 16:28
  SPEAKER_01: No.
• 16:29
  SPEAKER_01: No.
• 16:29
  SPEAKER_01: Your um your percentage of fuel, if I could I could play with it here now, if it's at 527, um, diesel is uh 81 cents a gallon for a dry-van truck.
• 16:41
  SPEAKER_01: Um if I if I go back to where it was before the war, it was 66 cents a mile.
• 16:47
  SPEAKER_01: So 66 cents a mile was my cost of diesel.
• 16:51
  SPEAKER_01: Um now it's up to well over 80 cents a mile.
• 16:54
  SPEAKER_01: Now the fuel surcharge this week is at about 64 cents.
• 16:58
  SPEAKER_01: So, you know, I'm not getting full cost recovery of the cost of additional cost of fuel anyway from the fuel surcharge, but for a spot market carrier, I don't get the option to carve out the fuel surcharge and add it on.
• 17:09
  SPEAKER_01: It's in my all-in rate.
• 17:10
  unknown: Right.
• 17:11
  SPEAKER_01: And that's that's the problem.
• 17:12
  SPEAKER_01: It's like the spot market becomes a bit of a problem for carriers that don't know their operating costs.
• 17:17
  SPEAKER_01: But that's the nature of that crazy market where you've got a lot of volatility and fluidity where you need that excess capacity.
• 17:24
  SPEAKER_01: Um and Rick, we'd been seeing more carriers join the market in December, January, and February because rates are so high.
• 17:32
  SPEAKER_04: Like Yeah, you had mentioned that, which is kind of surprising that we've got so many, so many carriers exiting, but you were saying, well, we actually see some coming in.
• 17:39
  SPEAKER_01: Yeah, it's uh we're seeing a higher rate of new carriers joining.
• 17:42
  SPEAKER_01: Now I think that'll stop because you know, like carriers have short memories, I think, when it comes to this stuff, because if you don't know your costs, spot rates up year over year could give you a false sense of security that maybe this market has turned them or off to the races.
• 17:56
  SPEAKER_01: Well, no, that's not the case.
• 17:58
  SPEAKER_01: So I think we're about to see a another exodus of cat carriers and a slowdown in the number of carriers joining.
• 18:04
  SPEAKER_01: So it's it's a lot of this because diesel is such a big part of your costs, it's like 34% of your operating costs in a small carrier.
• 18:12
  SPEAKER_01: And um and because rates are a little bit higher, it gives them, I think, a false sense of security right at the moment.
• 18:18
  SPEAKER_01: And that's why it's we're it's being a supply-driven uh change in the market.
• 18:23
  SPEAKER_01: You uh I think a lot of people have falsely said the market has flipped and turned, and it hasn't because demand is still flat.
• 18:29
  SPEAKER_01: It's just we've got fewer trucks in the spot market, I think is where we're at.
• 18:33
  SPEAKER_01: And the large contract carriers are still slow, um, not I won't say they're adding trucks, but they're slowly increasing their new order intake and decreasing the age of their fleet.
• 18:44
  SPEAKER_01: But they're not, they're not, you know.
• 18:46
  SPEAKER_01: If you look at the Journal of Commerce, um, that index that Bill Cassidy has, which is a the truckload capacity index, um, they've decreased their truck counts for the last 15 quarters, but just in the last quarter of last year, a very small one to two percent increase in the number of trucks.
• 19:04
  SPEAKER_01: So we're kind of getting to the bottom of the market where you get to equilibrium.
• 19:09
  SPEAKER_01: When you get to equilibrium, any shock to the market creates volatility on the spot rate side.
• 19:14
  SPEAKER_01: But but I I loved your piece that you had out last year that said that, you know, when you start to see intermodal spot rates and dry band go up at the same time, albeit on a lag, we know the market's turned.
• 19:24
  SPEAKER_01: And and Rick, it's my last slide in every market update.
• 19:27
  SPEAKER_01: I say, so so let me put this in context.
• 19:30
  SPEAKER_01: Until you see this intermodal spot rate move, because it's moved historically up and down going back over the last decade, you can't say the market has turned.
• 19:38
  SPEAKER_01: And this is a crazy market where spot rates are actually elevated and and going up year over year, but your intermodal spot rates are still flat because demand is still flat overall.
• 19:49
  SPEAKER_04: Yeah, we're still not seeing demand.
• 19:51
  SPEAKER_04: I mean, there's a lot of things going on in the economy that just say demand isn't gonna come back.
• 19:55
  SPEAKER_04: Yeah.
• 19:55
  SPEAKER_04: Um, and and I I talk about this all the time in terms of comparing 2026 back to 2019.
• 20:02
  SPEAKER_03: Yeah.
• 20:03
  SPEAKER_04: That it we had so many headwinds in 2019, even as the Fed went ahead and reduced rates, which based off of the PPI that came out today, probably they're not gonna go ahead and reduce rates anytime soon until a Fed chair changes and maybe a philosophy changes in that office.
• 20:19
  SPEAKER_04: But um, yeah, there were so many headwinds in 2019, and those headwinds are were a lot less than what they are as we run into 2026.
• 20:27
  SPEAKER_02: Yeah.
• 20:28
  SPEAKER_04: Um I see some some people going, yay, we saw uh ISM manufacturing increase.
• 20:33
  SPEAKER_04: Right.
• 20:34
  SPEAKER_04: Yeah, but if you strip out the AI side of it, yeah, the underlying stuff that that really drives freight for for us in in the past, the housing market and and actual manufacturing going on outside of the construction of of AI items, um, they're they're down.
• 20:50
  SPEAKER_04: They're down.
• 20:51
  SPEAKER_04: So where is that where is that demand going to come from?
• 20:54
  SPEAKER_04: So it it's a good thing.
• 20:55
  SPEAKER_04: That's the bulk of the table.
• 20:57
  SPEAKER_01: Unless the bulk of the tonnage, right?
• 20:59
  SPEAKER_01: Because a lot of that heavy industrial tonnage underpins a lot of our origin destination pairings on the truckload side anyway.
• 21:06
  SPEAKER_01: And uh and again, after two months of positive ISM PMI numbers, like a new orders numbers, that doesn't make a trend, right?
• 21:14
  SPEAKER_01: My saying, I I said in February, so let's see what that March looks like.
• 21:18
  SPEAKER_01: Well, of course, now we've got a Middle East crisis, and maybe maybe ISM PMI coming out in a couple of weeks will start to fall off and notice that.
• 21:26
  SPEAKER_01: But the one point you mentioned AI, and I think we covered this at the JPM uh JP Morgan conference, and that is that we we're seeing a lot of decoupling in the market.
• 21:34
  SPEAKER_01: And I think what we're about to see is a decoupling of contract and spot rates, because spot rates lead contract typically on a four to six month period, where spot rates go, eventually contract rates go.
• 21:47
  SPEAKER_01: I don't see I think contract rates are more tied to broad broader general economic, you know, economic indicators and demand overall, which is flat.
• 21:56
  SPEAKER_01: Whereas the spot market's got a lot of volatility and less capacity.
• 22:00
  SPEAKER_01: Capacity in it, and I think that will see a lot of volatility and maybe rates going up, but I think we might not see contract follow on its typical trajectory.
• 22:09
  SPEAKER_01: And I'll give you one more example.
• 22:11
  SPEAKER_01: We talked about it in Washington.
• 22:13
  SPEAKER_01: Even flatbed is bifurcated.
• 22:15
  SPEAKER_01: Because normally you'd say, oh, if spot rates are up in flatbed, well, then maybe the whole economy is improving because it, you know, they haul the industrial economy on the back of the trailers.
• 22:23
  SPEAKER_01: Well, no, because all of our uh rate gains in flatbed in the last 18 months have been data center driven.
• 22:31
  unknown: Right.
• 22:31
  SPEAKER_01: AI data center driven.
• 22:33
  SPEAKER_01: If you look at new rates coming into routing guides for contract flatbed carriers that haul roofing shingles and dimension framing lumber and steel, they're down about 4% year over year.
• 22:44
  SPEAKER_01: So contract carriers on the flatbed large side are decreasing rates.
• 22:48
  SPEAKER_01: Spot rates on the flatbed open deck are going up because AI data centers are in the middle of nowhere where there's a crane and permits and specialized trailers and a long deadhead component out.
• 22:59
  SPEAKER_01: It's perfect spot market freight.
• 23:01
  SPEAKER_01: So we're seeing a decoupling of the market even in flatbed, driven by this AI phenomenon that we've got that requires enormous data centers, a big footprint, and a lot of power to generate, to run them, and a lot of machinery to course build the building.
• 23:17
  SPEAKER_01: So even that has changed the way we look at the market because it's it's it's great for flatbed carriers, but it's not an indicator that the economy is improving.
• 23:27
  SPEAKER_01: It's just one sliver of it that's been improving.
• 23:30
  SPEAKER_01: Because I could show you AEM Association of Equipment Manufacture data that shows that you know broadacre farm tractors are down 12% year over year.
• 23:39
  SPEAKER_01: Well, it's planting season.
• 23:41
  SPEAKER_01: Shouldn't that be up?
• 23:42
  SPEAKER_04: It should be up, yeah.
• 23:44
  SPEAKER_01: But it's not.
• 23:44
  SPEAKER_01: So again, you've got all of these different commodities that aren't that don't you know, it's like the rising tide lifts all ships or boats.
• 23:52
  SPEAKER_01: Well, that's not the case here where rising spot rates aren't lifting the entire market.
• 23:57
  SPEAKER_01: It's very segmented commodity specific.
• 24:03
  SPEAKER_00: So when you went into the year, um you've talked about sharks, obviously nobody was predicting diesel to be what it is.
• 24:11
  SPEAKER_00: Um how do you how does that really change your your outlook going forward?
• 24:15
  SPEAKER_00: I know you mentioned um the just in the the the early stages of things, there were actually there's a a bit of a lag in even incorporating any kind of diesel uh hike because of how quick it happened.
• 24:28
  SPEAKER_00: Yeah.
• 24:29
  SPEAKER_00: But um but how do you see that kind of playing out over the course of the year, say that diesel is this significantly elevated?
• 24:38
  SPEAKER_01: Yeah, I think I think we'll we'll see um an at an exodus of marginal capacity out of the industry at a at an accelerating rate.
• 24:46
  SPEAKER_01: I think that's generally what happens.
• 24:48
  SPEAKER_01: Um we'll see a slowdown in new carriers entering because of the barriers to entry.
• 24:53
  SPEAKER_01: Like, so you think about, well, insurance has been very high.
• 24:55
  SPEAKER_01: That's always been a it's a growing barrier to entry.
• 24:58
  SPEAKER_01: It's harder to get into the industry because of the new uh the biometrics the FMCSA's got in place.
• 25:04
  SPEAKER_01: And then you add in the cost of fuel, like so the perceived cost of running a truck is higher.
• 25:11
  SPEAKER_01: So I think what you'll see is a slowdown capacity joining.
• 25:14
  SPEAKER_01: But those that are in the business that have been struggling to get by, I think you start to see an exodus of those going out.
• 25:19
  SPEAKER_01: So once so one side of the argument could be that higher diesel prices accelerate the exodus of capacity and the market flipping.
• 25:30
  SPEAKER_01: Because if we get to even less capacity than we've got now in the spot market, you could argue that rates go up even higher in that particular market.
• 25:40
  SPEAKER_01: So that's one thing that I think will happen.
• 25:42
  SPEAKER_01: But I do honestly think that we'll see uh if fuel stays high like this, we'll see a lot more carriers want to stick with contract freight where they can add that fuel surcharge in and get that full cost recovery.
• 25:54
  SPEAKER_01: But I think that then accelerates the conversions to in tech logistics because that makes sense to me if I'm a shipper and demand is still soft and I don't need that freight to be anywhere in a hurry.
• 26:07
  SPEAKER_01: I'm I'm putting it on to steel wheels.
• 26:10
  SPEAKER_01: Like I'm why would you why would you pay more when you can save what 20 to 25 percent on spot on a 53-foot move?
• 26:19
  SPEAKER_04: Absolutely.
• 26:20
  SPEAKER_04: That's what we believe, and that's what we've been seeing um in some of the customers that we have, just current customers.
• 26:26
  SPEAKER_04: Again, they're not saying their demand is increasing overall.
• 26:30
  SPEAKER_04: They're just flipping as their finance team is trying to get their uh freight rates pounded down, and they find that they can't do that in the truckload market anymore.
• 26:38
  SPEAKER_01: Well, I think the diesel that display is played.
• 26:41
  SPEAKER_01: Well, the Field Search Hard is going to add to the cost of transportation.
• 26:44
  SPEAKER_01: So what it does is it brings procurement costs back into focus again.
• 26:47
  SPEAKER_01: I was with a large shipper on Thursday, and uh they were looking at two things, more mini-bids to try and lock in a price before things got crazy, but they were looking at more dedicated, looking at less one-way and more dedicated, but they're also looking at uh more intermodal as another option for their slower moving, lower turn type commodities.
• 27:07
  SPEAKER_01: But Rick, what they had at their disposal was you know our benchmark IQ product, where they could look at their spend versus the market on every spot market lane they ran and load.
• 27:18
  unknown: Right.
• 27:19
  SPEAKER_01: And they could look at the carriers that were costing them more or less.
• 27:22
  SPEAKER_01: So they could actually sit there and make a really informed decision about road versus rail in a way that I'd never seen before from a shipper perspective.
• 27:32
  SPEAKER_01: Like shippers have got so much transparency now where they can actually make that transactional decision and say, you know what, we need to put this on the rail because it makes more sense because our capacity is very tight on this on this truck lane.
• 27:48
  SPEAKER_00: Yeah, the uh I mean the other thing you you talked about the the cost.
• 27:51
  SPEAKER_00: You you mentioned already that uh people were making money and now all of a sudden uh on the spot market it's pretty much a wash.
• 27:59
  SPEAKER_00: Yeah.
• 27:59
  SPEAKER_00: Um so one thing that that I'd seen some other places was there was a suggestion of of fleet drivers maybe going back out on their own, but now now maybe not so much, right?
• 28:10
  SPEAKER_01: Well, so the it's interesting, the math works out that it's still better to be independent contractor versus leased on.
• 28:18
  SPEAKER_01: So if you if you cast your mind back to the start of the pandemic, there was a massive influx of new capacity into the independent contractor status because the money was falling from the sky.
• 28:27
  SPEAKER_01: You didn't have to be an acute businessman to make money during the pandemic with one truck or a few trucks.
• 28:34
  SPEAKER_01: Um but what happened when Russia invaded the Ukraine and diesel hit 581 in the summer of 2022, you saw a transition of carriers going back from being out on their own to seeking the shelter of being leased on to a larger truckload carrier with power only.
• 28:50
  SPEAKER_01: And that's that's been the that's been like that for four years.
• 28:53
  SPEAKER_01: Because the math, you know, the math worked out that these spot rates didn't cover the additional cost of a truck and trailer and authority.
• 29:01
  SPEAKER_01: So you need about 50 cents a mile to run your own authority on the road.
• 29:05
  SPEAKER_01: That's the trailer, insurance, lumper fees, load board, uh, the actual authority itself, and your lease costs on the trailer or finance cost.
• 29:13
  SPEAKER_01: So you need 50 cents a mile, right?
• 29:16
  SPEAKER_01: So if you say, well, average leased on owner operator costs are a buck 75, add 50, all-in rates need to be 225 before I need to be at the decision point where I could actually go out my own and make money.
• 29:29
  SPEAKER_01: Well, all in rates are at 241 today.
• 29:33
  SPEAKER_01: So you could make the case right now where I could go from being leased on to an independent contractor and actually be better off.
• 29:40
  SPEAKER_01: The problem is, though, with the outlook and where diesel is, you'd be sitting there thinking, heck, I need my fuel discount with my large truckload carrier that I'm leased on to.
• 29:49
  SPEAKER_01: So what you asked me about what diesel prices do.
• 29:51
  SPEAKER_01: Diesel prices going up slow down that transition back to independent contractor status.
• 29:58
  unknown: Right.
• 29:58
  SPEAKER_01: So I think that because up until the war started, there was a there was a definite transition to independent contractor.
• 30:05
  SPEAKER_01: We were seeing it in our load board subscriptions, but I think it slows right down now because fuel now becomes that big headwind that a lot of those independent contractors are are worried about.
• 30:15
  SPEAKER_01: So we see a slowdown in that coming.
• 30:17
  SPEAKER_01: But the math for the first time in four years in January worked out that it was actually better to become an independent contractor, which is bizarre when you think about how bad demand is.
• 30:27
  SPEAKER_01: Right.
• 30:27
  SPEAKER_01: But that's how the math works out.
• 30:29
  unknown: Yeah.
• 30:30
  SPEAKER_00: So how quick does it shift for the folks who did go out um in the last few months?
• 30:36
  SPEAKER_00: How quickly do they go back, maybe, if if the the fear of this diesel issue is is too much?
• 30:43
  SPEAKER_01: Well, it's not that easy because the the large truckload carriers aren't adding capacity at a at a big clip, right?
• 30:50
  SPEAKER_01: So they've you know they're probably very reluctant to add more owner-operator capacity back into their business because they're not ordering incredible numbers of new trucks because they're not seeing more loads, like the volume of loads being moved.
• 31:07
  SPEAKER_01: So they're still seeing fairly flat demand.
• 31:09
  SPEAKER_01: I think it's very hard to transition back.
• 31:11
  SPEAKER_01: I think you're kind of stuck if you've made that jump.
• 31:15
  SPEAKER_01: Uh guy, guys I've talked to have made that jump, and they say it's hard to go back and find workers at least on operator because they there's just not the demand there for for independent or for owner operators as a percentage of total company drivers.
• 31:28
  SPEAKER_01: Because even if you look at company drivers, those numbers are still decreasing.
• 31:32
  SPEAKER_01: When you listen to uh the BLS or you watch the BLS employment numbers, they're down about 3.5%.
• 31:38
  SPEAKER_01: So that's the employees on payrolls in large transportation companies.
• 31:41
  SPEAKER_01: They're still decreasing.
• 31:43
  SPEAKER_01: So they're not adding employees at this bottom of the curve either.
• 31:47
  SPEAKER_01: So I think the transit, you're kind of stuck.
• 31:48
  SPEAKER_01: If you've gone out on your own, you are stuck with what you've got, unless you're an open deck.
• 31:53
  SPEAKER_01: If you're a flatbed carrier, yeah, you can you're still making pretty good money.
• 31:57
  SPEAKER_01: I think if you're a reefer carrier, this could be a very good year for you.
• 32:01
  SPEAKER_01: But dry van, that's pretty problematic because that's a kind of a commodity.
• 32:05
  SPEAKER_01: It's very hard to differentiate yourself from anyone else in the market.
• 32:08
  SPEAKER_01: But a spot market reefer carrier, this would be a really good year for them.
• 32:13
  SPEAKER_03: Well, we'll find out pretty shortly as the proto season kicks in.
• 32:16
  SPEAKER_03: We need to go out and buy more fruit and veggies, please.
• 32:19
  SPEAKER_03: Like the prediction to come true.
• 32:23
  SPEAKER_04: Yes.
• 32:24
  SPEAKER_04: California's always a uh a tough market anyway.
• 32:27
  SPEAKER_04: Um, and we've seen a lot of the because of the non-domicile CDL stuff, yeah.
• 32:31
  SPEAKER_04: Uh, we have seen a lot of exits out of that that area.
• 32:34
  SPEAKER_02: Yep.
• 32:34
  SPEAKER_04: Um one of the other topics that that you covered that I thought was really interesting is really this um the the amount of freight moving on the southern border um between Mexico and and uh Texas.
• 32:46
  SPEAKER_04: There were some there were some key insights that you brought up that uh I could you share some of those as well?
• 32:51
  SPEAKER_01: Yeah, well, so we're into the um the Mexico produce season kind of starts early in the new year and peaks in May, right?
• 32:57
  SPEAKER_01: And about 60% of all that volume of Mexico imports uh comes through um the McCallan market.
• 33:06
  SPEAKER_01: So it's southern Texas, Rio Gran Valley, the far border crossing is the uh crossing where all that volume, majority of it comes through, a little bit through Laredo, some of it in the Gallas, through in the Tucson market.
• 33:17
  SPEAKER_01: So you've got three entry points.
• 33:19
  SPEAKER_01: The bulk of it, though, is in McCallan, where um where of course ICE and DHS have set up a lot of their operations.
• 33:27
  SPEAKER_01: And when you go, and I just quickly pulled up while we were talking, I just pulled up the rates.
• 33:31
  SPEAKER_01: If you go back to September uh on McCallan to Los Angeles, now I think Rick, what you're getting at and what we talked about in Washington, is that capacity that supplies so so if you're in McCallan, where do you find trucks that are going to run back to Los Angeles?
• 33:48
  SPEAKER_01: Well, they come out of Los Angeles in the first place, because that's where most of the produce comes from, to Dallas.
• 33:53
  unknown: Right?
• 33:53
  SPEAKER_01: So you look at that Dallas lane running lettuce and strawberries, right?
• 33:57
  SPEAKER_01: Well, you just go and look at the news.
• 33:58
  SPEAKER_01: CBS ran a story from the the head of the big trucking association there, where uh Mr.
• 34:04
  SPEAKER_01: Dillon said, My guys, who who runs the largest trucking association in the country, said, My guys are scared to go anywhere near the southern border.
• 34:11
  SPEAKER_01: We're not leaving California with their trucks.
• 34:13
  SPEAKER_01: So when I saw that story, I thought, okay, so that means that those backhaul lanes back to Los Angeles that rely on California capacity that's been targeted disproportionately by the immigration activities, because most of your minority truckers in California are in the long-haul produce sector.
• 34:31
  SPEAKER_01: Like they dominate long haul team produce off the West Coast.
• 34:35
  SPEAKER_01: So I thought, okay, if that holds true, then spot rates on those lanes back to Los Angeles should be holding higher year over year.
• 34:41
  SPEAKER_01: Well, they set up camp on the border.
• 34:43
  SPEAKER_01: This is when we started hearing about drivers being literally dragged out of the trucks, like even American citizen drivers, not people that weren't, you know, legal, but everybody was being harassed.
• 34:54
  SPEAKER_01: You were getting$2,500 a truckload.
• 34:58
  SPEAKER_01: Now, if I have I got default fuel included.
• 35:01
  SPEAKER_01: So it's including fuel.
• 35:02
  SPEAKER_01: So$2,500 to run McAllanda, Los Angeles.
• 35:05
  SPEAKER_01: Um, I think it's about 1,500 miles thereabouts.
• 35:09
  SPEAKER_01: Anyway, so since September, Rick, it's gone up, it's now doubled.
• 35:14
  SPEAKER_01: Wow.
• 35:15
  SPEAKER_01: So$2,500 is now 5,104 in the last seven days to run that same lane.
• 35:21
  SPEAKER_01: Now, admittedly, volumes are increasing on the on the Mexico border.
• 35:26
  SPEAKER_01: Let me just quickly pull up what the produce is looking like.
• 35:29
  SPEAKER_01: Uh, Mexico produce volumes are still increasing, but they're behind 9% year to date.
• 35:36
  unknown: Okay.
• 35:36
  SPEAKER_01: So we're not seeing more produce, we're seeing less produce than we would normally see.
• 35:40
  SPEAKER_01: But you're making$2,500 more to run McAllen to Los Angeles.
• 35:46
  SPEAKER_01: But it's it's observable.
• 35:48
  SPEAKER_01: It's been an upward trend since they set up operation on the southern border.
• 35:52
  SPEAKER_01: Now, I can look at any lane, whether it's Nogales to Chicago, Nogales to San Francisco, any of those lanes that rely on capacity that runs back to the West Coast, those rates are through the roof and holding at that level.
• 36:06
  SPEAKER_01: So what you're seeing is regional capacity tightness that's impacted by that outbound capacity piece, which kind of is a, again, a supply side story that we've not seen before.
• 36:18
  SPEAKER_01: It's the same to Miami, Florida, or Lakeland, Florida, out of California.
• 36:22
  SPEAKER_01: It's the same reluctance to leave, and you're seeing rates northbound out of Miami and Lakeland right now in sort of strawberry season, holding at about 20% higher year over year.
• 36:32
  SPEAKER_01: And there's there's the geo geography of Florida where there's only a few roads in and out.
• 36:37
  SPEAKER_01: Right.
• 36:37
  SPEAKER_01: So if you're not squeaky clean, there's a good chance you're going to get grabbed somewhere along the way.
• 36:42
  SPEAKER_01: So again, that's when I said that we get to Mother's Day, which is coinciding with Road Check Week, I think it'd be very hard to find refrigerated trucks northbound out of Florida.
• 36:52
  SPEAKER_01: So again, that gets back to where we started with extreme volatility in the spot market, but but not higher demand anywhere else overall that sort of moves that national rate needle.
• 37:03
  SPEAKER_01: But at a regional lane level, I think there'll be incredible volatility this produce season because of the structural removal of capacity, or people just saying, hey, I'm just not going to leave California.
• 37:14
  SPEAKER_01: I'm going to go and drive a dray truck, or I'm going to do something else.
• 37:17
  SPEAKER_01: I'm just not going to go anywhere near where I might be exposed.
• 37:21
  SPEAKER_01: And you could say the same in Chicago.
• 37:24
  SPEAKER_01: There's another minority group there that's been affected because like Eastern Bloc drivers in particular that have been affected by this.
• 37:32
  SPEAKER_01: So there's different pockets where this has affected different people.
• 37:36
  SPEAKER_01: But there's no question that the enforcement activity of the government is having an effect, in particular in the spot market, which most of us would agree is not before time because of the craziness that we've seen on the road and the sort of illegal carriers that have been out there operating.
• 37:52
  SPEAKER_04: Yeah, and as you said, it's it's really regional based where we're seeing a lot of that um that tightness.
• 37:59
  SPEAKER_04: Um it's not nationally, we're not just seeing it across the board.
• 38:02
  SPEAKER_04: It's definitely regional point-to-point moves.
• 38:05
  SPEAKER_01: Yeah, I think that's going to be the story.
• 38:07
  SPEAKER_01: I don't I said the other day at a conference that you know regional regional work is going to do all the heavy lifting this year.
• 38:14
  SPEAKER_01: Nationally, you won't see volumes up.
• 38:17
  SPEAKER_01: Um I I was talking to a broker this morning in Canada.
• 38:20
  SPEAKER_01: Um rates outbound uh at Toronto, sort of into that Ohio River Valley Great Lakes area, are up about 60% year over year.
• 38:30
  SPEAKER_01: Yet loads moved a flat cross-border from Canada to the US.
• 38:34
  SPEAKER_01: So, well, how is that possible?
• 38:36
  SPEAKER_01: Well, there's an imbalance being created back in the other direction because of the trade war.
• 38:43
  SPEAKER_01: So what you're looking, you what you're looking at is fewer trucks, fewer available drivers.
• 38:47
  SPEAKER_01: Anecdotally, a lot of trucks parked no drivers, right, in that Toronto market area, which has a disproportionate number of immigrant drivers there that have been targeted by this.
• 38:56
  SPEAKER_01: A reluctance to run across the border, period.
• 38:59
  SPEAKER_01: Right.
• 39:00
  SPEAKER_01: Right.
• 39:00
  SPEAKER_01: And and but then there's an imbalance, like, how do I get back?
• 39:03
  SPEAKER_01: Because it because of the cabotage rules, I've got to load back across the border.
• 39:07
  SPEAKER_01: So I've got to load my headhaul rate to compensate for lower volume out of Chicago or Columbus.
• 39:13
  SPEAKER_01: So you're seeing regional volatility, like we've not seen.
• 39:17
  SPEAKER_01: So the rates outbound at about 260 outbound Toronto.
• 39:22
  SPEAKER_01: The last time we saw that higher rate was on the tail end of the pandemic in 2022.
• 39:28
  SPEAKER_01: Like, but demand is like volumes are flat.
• 39:31
  SPEAKER_01: Like it's so it's the structural removal of capacity in regional areas that I think will do so much, uh, will have so much impact on volatility, yet not have a demand driver that could you could articulate that says that's the cause of it.
• 39:45
  SPEAKER_01: It's really a supply-side-driven phenomenon that I think will play out the rest of this year.
• 39:52
  SPEAKER_00: So the the one demand piece that I noted uh you know on your your weekly update, which is a great resource, uh comes out every, is it Tuesday or um actually right every Saturday morning, but it's uh Okay.
• 40:06
  SPEAKER_00: Well, all right.
• 40:07
  SPEAKER_01: Well, I finish it Saturday morning.
• 40:09
  SPEAKER_00: Okay, yeah.
• 40:10
  SPEAKER_00: Well, uh great resource uh that uh that is out there on YouTube and uh through through the website and everything.
• 40:16
  SPEAKER_00: Uh one thing you noted that was sort of a positive potentially demand indicator is uh the port of Los Angeles was super busy at the beginning of the year.
• 40:26
  SPEAKER_00: So what how does that sort of play into the the market?
• 40:30
  SPEAKER_00: Because obviously you mentioned the the DRE uh activity in California.
• 40:34
  SPEAKER_00: Certainly that seems to be pretty supported by that then.
• 40:37
  SPEAKER_00: But uh how does that play into the the overall picture?
• 40:41
  SPEAKER_01: Well, I think you're gonna see a stabilization of demand uh on the import side because the trade war is largely you run its course, and China's uh China in particular has been a big impact.
• 40:54
  SPEAKER_01: If I go and quickly look at overall port volumes are down nine percent uh six percent year over year.
• 41:01
  SPEAKER_01: In Los Angeles, they're down, Los Angeles Long Beach, they're down about five percent.
• 41:06
  SPEAKER_01: So that in fact, Los Angeles and Long Beach have had their best year since 2018 in the month of February in terms of import volume.
• 41:14
  SPEAKER_01: Now, a lot of that was because, as Rick wrote about, I think in one of your pieces, the the pre-lunar new year push, where you saw a lot more volume come in, uh, that started to hit uh early February in that market.
• 41:25
  SPEAKER_01: How that impacts us, you know, it's a very interesting thing.
• 41:29
  SPEAKER_01: I used to think of as as California went, so did the rest of the truckload market, right?
• 41:35
  SPEAKER_01: And but that's not the case anymore because there's been so much disconnection.
• 41:41
  SPEAKER_01: You know, for example, we saw volumes up in Houston, up 39% in January in Houston, and we know a lot of that truckload volume ends up in markets in Fort Worth and Dallas, in those big warehouse distribution markets.
• 41:54
  SPEAKER_01: Um, and of course there's a lot of intermodal volume moves on those lanes, this month it's dropped 19%.
• 42:00
  SPEAKER_01: So I think what to answer your question, what we're seeing though, is a lot more volatility in port markets that we haven't seen before because of either commodities or ocean congestion or rerouting or whatever's going on on the ocean side.
• 42:18
  SPEAKER_01: So I think my takeaway is that I used to look at Los Angeles as being a real bellwether for the truckload market.
• 42:25
  SPEAKER_01: That's not the case anymore because of the trade war.
• 42:28
  SPEAKER_01: And then the resulting shift, you know, so we if you go back a few years, we had a shift because of the port congestion in Los Angeles.
• 42:35
  SPEAKER_01: We had a lot more volume to the East Coast and Houston and Mobile, like ports like Mobile popped up on our radar that we'd never really seen before, because vessels were trying to dump as much TE volume and brake bulk volume into those ports, which created incredible spot market demand because they weren't serviced by contract carriers initially when that TE volume hit.
• 42:55
  SPEAKER_01: So we still see that going on across the all of our port markets, where there's a there's now a very tight correlation between import demand going up at all of these ports and spot market volatility going up.
• 43:10
  SPEAKER_01: Spot market volatility and rates going up every time you see a surge in volume at those ports that you didn't normally see.
• 43:17
  SPEAKER_01: You know, it was Los Angeles with predictable, New York was predictable, Savannah.
• 43:21
  SPEAKER_01: Here you've got a lot of uh volume hitting other ports for different reasons.
• 43:25
  SPEAKER_01: And I think because infrastructure's been built around that post-pandemic surge in volume, it's stuck.
• 43:34
  SPEAKER_01: And that's caused a shift in how truckload volumes move.
• 43:37
  SPEAKER_01: So, you know, we don't see the same volume coming out of the Los Angeles market that we're used to that's port related.
• 43:44
  SPEAKER_01: And I think that's that's kind of interesting to me because they're the sorts of things we would normally look at as bellwethers of the freight market.
• 43:51
  SPEAKER_01: Now you've got to look a little bit deeper and say, well, if volumes are down nine percent year over year, where did it go?
• 43:57
  SPEAKER_01: Like, did it was there a net drop?
• 43:59
  SPEAKER_01: Well.
• 44:00
  SPEAKER_01: When you look at where it went, some other port markets did incredibly well in the month of um January.
• 44:06
  SPEAKER_04: It gets back to the very beginning.
• 44:09
  SPEAKER_04: Yeah, and it gets back to the very beginning of our conversation.
• 44:11
  SPEAKER_04: There's so many different things going on in so many different markets and so many different modes that it's really hard to put your finger on, okay, what's going to happen next, how to prep for it.
• 44:21
  SPEAKER_02: Yeah.
• 44:21
  SPEAKER_04: What contingencies do I need to put in place if I'm a shipper?
• 44:24
  SPEAKER_04: There's just there's just so many moving pieces.
• 44:26
  SPEAKER_04: And off of those moving pieces, some people are saying, hey, the market's turned around.
• 44:31
  SPEAKER_04: Others are saying, wait a minute, not so much.
• 44:33
  SPEAKER_04: Um it's it's just kind of crazy.
• 44:36
  SPEAKER_01: Well, I think I think the key is going to be for like in tech and and DAT and any of our brokers and that have got private networks is you know, relationships.
• 44:46
  SPEAKER_01: Like this is the time where you've got to go really deep on those relationships because I think it's inevitable the market will turn at some point.
• 44:53
  SPEAKER_01: And when that does, there'll be fewer trucks.
• 44:55
  SPEAKER_01: There'll be fewer trucks because we haven't purchased as many trucks as we should have, or it's just harder to get into the industry and it's harder to stay in the industry.
• 45:04
  SPEAKER_01: I think that's my takeaway is if all of the rhetoric in Washington turns into something good this year, and we have this revolving door slowed down and you know, net available capacity decrease where we get down to all of the legal good carriers that are kind of left standing, then that means that when this market turns, shippers will see fewer available trucks to move that higher volume.
• 45:29
  SPEAKER_01: And I think that's what people are and that's what they're looking at now and thinking at some point this has to turn.
• 45:35
  SPEAKER_01: Maybe it's next year.
• 45:36
  SPEAKER_01: Right.
• 45:37
  SPEAKER_01: But we need to have good relationships in place for when that happens.
• 45:40
  SPEAKER_01: I think now's the time to go really deep on all those relationships, even though there is uncertainty.
• 45:46
  SPEAKER_01: Locking in capacity on all those high volume lanes is absolutely critical at the moment.
• 45:50
  SPEAKER_00: Oh, absolutely.
• 45:51
  SPEAKER_01: Absolutely.
• 45:52
  SPEAKER_00: And as you said, also looking at all the data and doing all the comparisons as uh I mean through DAT and other sources as well.
• 46:00
  SPEAKER_00: So uh so tell people where they can find that if uh that that piqued their interest as a shipper or uh or just someone who's interested in following things.
• 46:08
  SPEAKER_01: Yeah, we have um we have a signal report that comes out every month for the shipper side of our consortium, so that'll be out shortly.
• 46:15
  SPEAKER_01: Uh Chris Kaplas on the Freight Vine podcast does a great job talking about the freight market from a shipper perspective.
• 46:21
  SPEAKER_01: So that's always a good listen to that.
• 46:23
  SPEAKER_01: He's got a uh we have I'm not sure who's on this week.
• 46:29
  SPEAKER_01: It'll be out probably tomorrow, but um uh that's a good listen.
• 46:32
  SPEAKER_01: My DATIQ show comes out every Monday at 11 a.m.
• 46:35
  SPEAKER_01: That's what you were referencing a little bit earlier.
• 46:37
  SPEAKER_01: Um so again, I do a quick market update, but there's a long-form version of my market update that has all the details and graphs and charts and forecasts that comes out on a Saturday morning.
• 46:47
  SPEAKER_01: Um, if anybody wants a copy of that newsletter, it's nothing fancy, but it's got all the data and charts in it.
• 46:52
  SPEAKER_01: Just send me a message on LinkedIn and I'll add you to the list.
• 46:56
  SPEAKER_00: Great Dean.
• 46:57
  SPEAKER_00: We appreciate you taking the time.
• 46:58
  SPEAKER_00: Thanks very much.
• 46:59
  SPEAKER_01: Great to be with you guys again.
• 47:00
  SPEAKER_01: Thanks for having me.
• 47:03
  SPEAKER_00: Getting that truckload perspective and kind of smushing it all together with diesel, as uh as we started to talk about in our last episode with uh the Strait of Hormuz causing the prices to go up, with the Iran conflict, ocean, uh, but but then closer to home now, we're seeing where we've been at with with trucking, which has been a little elevated on the rate side, the the diesel bit throws uh throws a little wrench into that.
• 47:34
  SPEAKER_04: Yeah, certainly does.
• 47:35
  SPEAKER_04: Um it changes the math.
• 47:37
  SPEAKER_00: Yeah.
• 47:37
  SPEAKER_04: Um and that math is is causing shippers to to find other ways to try to reduce costs out of the supply chain.
• 47:44
  SPEAKER_04: Um also the the math, the reason why the math is changing is also causing shippers to find other ways to find capacity as well, because capacity is leaving the market.
• 47:54
  SPEAKER_04: So um we like the math change because it makes intermodal a better play, or at least the math side of it.
• 48:01
  SPEAKER_04: Um and we like it on the capacity side because we can bring a lot of capacity on these these high volume lanes for for shippers that are really looking for ways to you know um have smoother um smoother shipments into their customers and and just an overall smoother, um better run supply chain.
• 48:19
  SPEAKER_04: So um it's uh it's as Dean said, it's a it's a way different market than what we've seen before.
• 48:25
  SPEAKER_04: We haven't ever seen um such a flip in rates based off of the supply side of the equation.
• 48:32
  SPEAKER_04: It that's always been a demand side, and and because of that, it's it's causing shippers to well, some of them are still thinking in the old way, um, and some of the carriers are still thinking in the old way that it's it's all uh it's demand that's driving the pricing, and it it's not.
• 48:46
  SPEAKER_04: And and and because of that, if you're not in tune with the market and paying attention to the the information that you know dat brings out and what Dean was talking about, um you're you're missing the mark.
• 48:58
  SPEAKER_04: Um and if you miss the mark, uh it that it's it's kind of a costly error at this point.
• 49:02
  SPEAKER_00: Well, that's one of your your classic uh pieces of advice that uh you know running through blogs that you've written many, many years back, even uh is to to keep your eye on the market and finger on the pulse of it and not just look at oh, this is this is what we did last year, this is what we did the year before.
• 49:22
  SPEAKER_00: You want to see that that whole picture.
• 49:24
  SPEAKER_00: And it seems like now, more than ever, it's very important to know everything that's going on uh when you're setting your rates and setting your freight strategy.
• 49:34
  SPEAKER_04: Absolutely.
• 49:35
  SPEAKER_04: And what's better about doing it now is there's so much data out there than what there was when, as you said, I've been saying this for a long time, lots of other people have as well.
• 49:44
  SPEAKER_04: Um, to pay attention to what's in the market.
• 49:46
  SPEAKER_04: Back then, when we were starting about that, talking about this, it was really difficult to find the data.
• 49:51
  SPEAKER_04: I mean, today, pretty easy.
• 49:54
  SPEAKER_04: Yeah, um, there's all different sources, lots of it's for free.
• 49:58
  SPEAKER_04: Um, bring in AI and and and try to pull it all together.
• 50:01
  SPEAKER_04: You can bring some pretty some amazing analysis together pretty quickly.
• 50:06
  SPEAKER_04: Um I was just sharing with somebody uh in our office um last week that I said, you know, back 30 years ago when I used to do some of this analysis on things, I said it would take me a week and a half to pull all this information together and into the to the level of details that you can make actionable um calls off of it.
• 50:25
  SPEAKER_04: I mean, I basically threw it up in in in one of the bots and uh it actually ran for about a half an hour um and while I was doing other stuff and what it what what it came up with is pretty amazing.
• 50:39
  SPEAKER_00: Yeah.
• 50:40
  SPEAKER_00: I mean, good good to remember.
• 50:42
  SPEAKER_00: And uh, you know, that that conversation, we we we went a lot of different directions.
• 50:47
  SPEAKER_00: It was interesting to hear uh a little bit more detail on some of the capacity issues and and why they're occurring and and all of that as well, uh and all the different seasonality pieces that are are coming up.
• 50:59
  SPEAKER_00: Um plenty to talk about, plenty that you just watched and or listened to.
• 51:04
  SPEAKER_00: And uh we appreciate Dean again for joining us on the podcast.
• 51:09
  SPEAKER_00: You can find more from him.
• 51:10
  SPEAKER_00: Links in the description on that.
• 51:12
  SPEAKER_00: You can find us on any major podcast platform.
• 51:16
  SPEAKER_00: We do appreciate everyone who follows us, uh, likes, subscribes, comments, drops a review, all of that is great for us.
• 51:24
  SPEAKER_00: If you have uh something that you'd like to send us privately, feel free to email us at podcast at intechlogistics.com.
• 51:31
  SPEAKER_00: And you can find more about in tech logistics at www.intechlogistics.com as well.
• 51:39
  SPEAKER_00: For Rick Lagore, I'm Kevin Baxter.
• 51:41
  SPEAKER_00: Thanks again, and we'll be back soon with another episode.