How to Manage Your Brokerage’s Profits in Market Cycles | Episode 305

Speaker 1: 0:19

All right, welcome back. It's another episode of Freight 360 Podcast. We're up to episode. How do I make this sound funny? Pitbull, right, mr 305? Isn't that his nickname, mr 305?

Speaker 2: 0:32

Yeah, that's Miami's area code, right.

Speaker 1: 0:35

Episode 305. We made it to Pitbull status as podcasters. So if you're brand new, clearly tons of other content. The library on our website is the best way just to kind of search through and find what you're looking for, since there is so much. So if you're new and you're trying to find out how to prospect shippers, just type in prospect or sales or shippers and you'll find all the related content that has those keywords in there. If you're maybe a carrier sales rep and you're looking for carrier-related things, just search like carrier or sourcing or procurement, whatever, and you can pull that stuff up and consume it as it best fits where you're at in your journey.

Speaker 1: 1:15

So, yeah, check out the website and then there's the Freight Broker Basics course. While you're there, if you're looking for a full in-depth training for yourself or for your team, and share us, leave reviews comments of full in-depth training for yourself or for your team and share us. Leave uh reviews comments, all that good stuff and uh, we appreciate it. So, ben, how's uh speaking of 305, I mean? I mean I know you're not 305, you're north of that, but how's uh south florida and late july here as we head into august pretty, uh toasty, it's definitely warm um it's been like unbearably hot up here.

Speaker 1: 1:44

Man, I can't imagine. I'm not one to complain about the heat. I'll embrace it and just like be uncomfortable. But it has been a hot summer, that's for sure it might be hotter where you're at.

Speaker 2: 1:53

To be honest, Like I still catch Pittsburgh's weather usually like every morning for a little bit, and I think their high was like I'm like looking at our high right now is like 92. And I think it was like 94 in Pittsburgh was expected high today.

Speaker 1: 2:05

We are coming off of a hot streak. Pittsburgh's probably hotter than Buffalo, but we hit like low 90s over this past weekend and it's been like 80s this whole week, so it's going to be upper 80s all next week. I think I could be wrong.

Speaker 2: 2:20

No, we're going back into the 70s.

Speaker 1: 2:22

We're a little cool off.

Speaker 2: 2:24

Do you see the uv index, similar in the summer to what you see when you're down here, like because I know you and I look at that when you're down here often. I look at the home screen of my iphone.

Speaker 1: 2:33

I don't know if you could see it. The uv index is right up in the middle there. So I always uh, I got some messages there. I always have it. I'm like because I always want to know like, do I need to wear sunscreen? Do the kids need to wear sunscreen? Yes, it gets.

Speaker 2: 2:45

Um, it gets way higher in the summer here than it does in the what's yours hit today, what's yours expected when you look at the graph uh, eight, and then, like we've hit nine and ten this summer but it's usually have like between seven and ten in the summer okay so it's pretty similar, like I'm pretty red man.

Speaker 1: 3:03

I, I played in a golf tournament over the weekend and, um, it was hot and it was sunny and I put on sunscreen once in the morning and that was it. And yeah, I just got, uh, I got toasted.

Speaker 2: 3:16

So dude, I put that stuff on like religiously. Now I also got the stuff without benzene because apparently like that's super cancerous now.

Speaker 1: 3:23

Yeah, my wife buys all that stuff for our kids.

Speaker 2: 3:25

Yeah, so, dude, I won't go out of my house now without it and I'm like it's very noticeable because I'm like it's so intense and if I go out, even if I go play tennis, at like 5, 30 to 6, 30, it like the heat index or the uv drops off at six, basically when the sun starts going down, but like I still will get like sunburn on like the back of my ears, like just being out for like 20, 30 minutes.

Speaker 1: 3:47

All right. Well, sports we're approaching. Well, by the time this releases, the MLB trade deadline will have passed. So I'm curious if there's any big, big moves in baseball as we head into the later parts of the season. We're getting ready for football. I went to Buffalo Bills training camp on Monday of this week and this Friday, the day this drops, I'll actually be going to the stadium for the first scrimmage for the Bills. So it's kind of like it's during their training camp but they, instead of going to training camp, they actually do it at their home stadium, yeah, at Highmark Stadium stadium. But is this? They just play each other. But it's like kind of fun, like we're gonna take the kids and stuff and get back into it.

Speaker 2: 4:29

man, then it's, then it's preseason, we're back we used to do that a lot in pittsburgh. They have training camp at saint vincent college um, I think it's art rooney field, but like one, it's like super cheap to be able to go and it's like a really fun day because, like you're literally like next to the field walking around and we were a little like we used to get autographs all the time. I think the last time I was there, if I remember, my buddy and I I got Yancey Thigpen's glove because he, like you know, they give away their gloves that they're wearing for the receivers. Yeah, and I think I had a Cordell Stewart jersey autographed. And I think I had a Cordell Stewart jersey autographed. Like it gives you an idea of like time frame of how long ago that was. But, dude, they were good times, especially with the kids.

Speaker 1: 5:08

Yeah, so Netflix did a pretty timely dropping of the quarterback season two and, to credit to Steven, I'm enjoying watching Joe Burrow and kind of getting to see what the guys are like off the field, so playing piano and buying a Batmobile and then and then canceling the order or whatever. But yeah, good stuff, stephen, have you watched it all? I'm yourself, I want to get your take.

Speaker 3: 5:35

I haven't watched it yet. I've got it. I've been so bad. I've caught some of the trailers and stuff, but the only thing I've watched on Netflix outside of the kids shows was Happy Gilmore 2 that came out on Friday.

Speaker 1: 5:48

Yeah, we watched that the other night too. I thought so. That was the next thing I was going to say Ben, have you seen?

Speaker 2: 5:54

Happy Gilmore 2. Yet I intentionally haven't watched it yet because I wanted to actually like have the time to do it. I was like super excited I was going to put it on late. The night it dropped and I'm like no, like I actually want to like have the time to like sit and enjoy it, Cause I've been looking forward to this for like 20 some years.

Speaker 1: 6:07

But the amount of cameos that they, that they pulled off I thought was incredible. I enjoyed it. I talked to some guys yesterday they were like, yeah, it was whatever.

Speaker 3: 6:24

And I'm like, well it's. I'm Like it's just funny. You know what I mean. So when it, when I heard it was coming out like, I went into it with the expectation that it's not going to be good. But it's. It's going to be like a bunch of callbacks and it's just going to be. It's going to be fun for the actors more than the audience. Yeah, yeah, and it blew my expectations away. Like setting a low bar was the best.

Speaker 1: 6:42

I think that's the key here Set low expectations.

Speaker 3: 6:45

But talking to the cameos, I think I think I saw this yesterday that there was it was either 72 or 75 cameos.

Speaker 1: 6:55

Oh my God, it was like watching an episode of Entourage, like it's just one famous person after the next.

Speaker 3: 6:58

It's beautiful. It was so good.

Speaker 2: 7:00

The analogy somebody used this morning. I heard they were talking about it because they were comparing it to like the new Naked Gun movie coming out and they were like, well, they were like, if I'm going to lunch at Taco Bell, like I'm not expecting, Ruth, Chris, Like you know, like it's your expectations, what it is and like a lot of why that was so funny in the first place was because nobody really did that comedy before the first one, which is why the first one was so good. And it's like you can't do groundbreaking round two 20, some years later and have it have the same novel like new impact. Because, like I've watched some of those movies where I remember like something about Mary was like probably one of the funniest movies I've ever seen in my life. When it came out, like laughed the whole time and I watched it again later and like it's still funny. But like part of why it's so funny is because, like that comedy wasn't done prior to like some of those movies. So, whatever it is, I'm with Steven in regards to my expectations. I'm going to enjoy it, no matter what.

Speaker 2: 7:53

They had a lot of the cameos they showed on full swing on Netflix when they were filming Happy Gilmore with a lot of the PGA pros that were going to be on it. I heard john daly's like living in his garage. Like I don't really want any spoilers. I'm like super excited to see it.

Speaker 1: 8:06

But yeah, no, I won't give any spoilers. And I would say to steven's point when you, when you set the bar low, you have to remember, like when you've got 70, some cameos like these are not actors, these are like athletes, right. So when you put them in a role to act and have them do things that aren't natural themselves, you're going to get kind of that goofy performance. But it is. I just thought it was hilarious, so yeah.

Speaker 2: 8:27

Bob Barker got in a fist fight in the first one right the chances or odds of that happening in any movie was just like the shock value made it hysterical, right.

Speaker 1: 8:37

Price is wrong bitch yeah.

Speaker 3: 8:39

The one thing I do want to say for the last six years, because there's like rumors that they're the one thing I do want to say for the last six years. Um, because there was. There's like rumors that they're doing water boy too. Um, and I, I don't want water boy too. What I want is I want them to do a 30 for 30 on how the mud dogs won the bourbon bowl. That's what I want. Don't don't do a number two. Do a documentary on the team and bring all the actors back. That would be pretty funny.

Speaker 2: 9:06

That'd be really funny. Actually, that's a really good idea, oh all right, shifting gears to news.

Speaker 1: 9:12

The big one, um DAT, a big, another big acquisition this year picking up a convoy. Well, it's really Soundvoice technology. Right is what it broke down to the platform. So, ben, what was your take on all that yesterday when the news came out?

Speaker 2: 9:26

I mean, honestly, I'm really going to be excited to interview them. We were talking with their team and their PR team at DAT yesterday and I just emailed them right before this episode. We're probably going to either be interviewing the CEO at DAT or the person who I think was running this at Flexport. I was talking with Kevin Hill, too, about this yesterday and he said one he's like that guy is super sharp and it's going to be a really good interview. So, no matter who we end up booking in the next week or so, I'm very curious to hear what their plans are in integrations.

Speaker 2: 9:55

I've heard some really positive things on it being used at Flexport. I mean Bill Dreger and he managed the relaunch of the convoy platform under Flexport. Like I heard really good things, at least from Ryan Peterson on interviews on them using it at Flexport and also huge shout out to Ryan Peterson because that is a huge win. I think he bought that platform for like $16 million and sold it to that, for I think it was reported around like 200 million.

Speaker 2: 10:24

Craig at Freightwaves did an article yesterday and honestly, like it was pretty comical, like his take on the whole situation and like he kind of announced in his article that's why I sent it to you guys that, like, apparently Triumph and Highway are going to launch, or Highway is launching, a load board partnered with Triumph, and to me I can't really make sense of why you would do that. I mean, so I'm way more interested in what that is going to be doing with Convoy and how they're going to start pulling this together, because they've got some really interesting acquisitions over the past year. They picked up the factoring company, they picked up trucker tools and now they have the Convoy platform, which apparently has some like really good technology.

Speaker 1: 11:07

Third big acquisition this year, then yeah. So I remember 10 years ago when Convoy launched was it 2015? Does that sound right? I remember writing an article on LinkedIn about you know everyone's like digital freight matching is going to replace brokers, and I was like no, it's not. I wrote this whole article about like it's like it's going to change the way that we operate, but it's still human beings and relationships that are going to drive everything, and like. That is held true a decade later. So yeah.

Speaker 2: 11:34

And I think it's super fascinating because, like, I interviewed and almost took a position at one of the bigger load matching firms in like 2017. And the thing that I found really fascinating was when I actually got behind the scenes, like their algorithm was really impressive and they were able to match a lot of freight really efficiently, but the type of freight they were able to match wasn't really freight that typically was spot freight or brokered freight, like it was mostly contract freight and matching up efficiencies with large carriers and large shippers, and it worked really well in that scenario. Now, when you try to push like spot freight through it like I mean you're looking at the results of like Uber freight like it just doesn't work the same way and it's for what you're saying, nate, like it moves too quick. And it's not that the tech can't move that fast, it's that the communication can't happen that fast. And, at the end of the day, to actually get that truck to pick up a load in an hour or two involves talking to a human, and part of that is, I think, because the drivers also need to be spoken to, which is the piece.

Speaker 2: 12:35

But I think, even once you have driverless trucks, whenever that does start to roll out or becomes a part of the industry. I still I've I've been thinking about this for years and, like I think I can kind of picture how some of this might work, but I still think what you're saying is going to be very true, nate, in regards to the human aspect, the relationships and how and which these things are done. I mean, tech is going to play a bigger piece in this, but it's going to be really interesting to see how this starts to take shape, I guess, yeah totally All right.

Speaker 1: 13:57

Well, that's the the big news. Oh, on that whole note, like, if you think back like 10 years to today, like think about the things that didn't exist and we talk, like when we, when we coach TIA and we talk about technology, we're always like, hey, it's an ever evolving landscape, like 10 years ago. We talk about technology. We're always like hey, it's an ever-evolving landscape. Like 10 years ago, um highway didn't exist. Uh, gen logs didn't exist. Dat in its current state didn't exist. Uh, half of your sas load or tms platforms didn't exist.

Speaker 1: 14:27

Like this stuff is crazy speaking of gen logs you see ryan joyce's email to us a little shout out, we got on, uh, yeah, the uh reddit frame broker reddit page. Uh, it's funny, like you know, people always ask like, hey, what's good training? Brian Joyce's email to us a little shout out, we got on the Reddit Freight Broker Reddit page. It's funny, like you know, people always ask like, hey, what's good training for brokerage? And people are like don't pay for crap, like it's all garbage, and so I was glad to see that people were given for. Both are, you know, are free and paid content, like people giving good feedback. So glad to hear that. And thanks for the shout out folks paid content, like people giving good feedback. So glad to hear that. And thanks for the shout out folks. And um gen logs you see they released the the dray or the intermodal is it the dray edge? The ports overlay now and you can. You can see where all the containers are moving and stuff and it's actually reading like container numbers. It's really interesting.

Speaker 2: 15:09

Yeah, I'm still in a lot of the weekly meetings on how this is all starting to take shape, and I've been really excited for that since it started because to me, like that was one of my favorite things to do in this industry was doing container moves. Like and specifically in 2017, when the ELDs happened there was so much stress and strain on that whole industry that it was like probably one of the most fun periods I've had as a broker in this industry. Just working your way through it, understanding and learning how those pieces really come together, how they interact with everything from warehousing to the trucking side, the ports, and how all of these things really work together. To me is like I just find like one of the most interesting aspects of our whole industry, and I've been really excited working on this with some of them there because I think this is going to be a super powerful tool that's going to bring a lot of use cases in the industry.

Speaker 1: 15:59

Absolutely Well, cool man. Let's get into our content. Today we're going to talk about profitability, more so on the brokerage side, but I want to also let this bleed into the carrier side too, with running a profitable company and how to adjust the way that you're operating as the market around you operates. So to kind of set the stage for you and I've had discussions similar to this with Pierce, where I work as the market has shifted and, as you know, we've kind of seen it over the last handful of years when you're a margin-based business as a freight broker. You know, I remember during the surge after COVID, right, and that people would be like you know how's that impacting you guys? And I'm like, honestly, it's good, like when rates unfortunately right.

Speaker 2: 16:54

We're problem solversvers.

Speaker 1: 16:55

When there's more problems, we have more work to do, exactly which is good for business on top of that, when rates go up, when we're a margin-based business, the profit, the dollar amount, naturally just goes up before margin-based right. So like if, if a lane was running just give you an example right if we're making 15 margin on average? Right, if a lane was running for just give you an example right, if we're making 15% margin on average? Right, if a lane was running for $1,000 and our margin is 15%? Right, that's $150 profit. Okay. If those rates go up 50%, right, and you keep a 15% margin, well, that $150 just became $225, right For literally the same lane, right.

Speaker 2: 17:37

But more work.

Speaker 1: 17:39

It usually results in more work trying to source the capacity to get that lane moved. But then when you look at the opposite market right, like the market we're in now, where rates have contracted and kind of held at a steady lower end for a few years now, you're going to have the exact same thing just in reverse, right. So what used to be paying you $225 in profit is now paying you $150. So when I track profit per load on average for our company and I've tracked it for years and I remember being close to $400 a load, you know, right before rates started to go down, and I've seen it in the high twos some months and I think I have a guy like spraying my plants behind me.

Speaker 1: 18:24

I don't know if you can see that I can. Yeah, it's like a pest control, it's like their quarterly service. Anyway, don't, don't look out my windows, but that's kind of like setting the stage. So when in the profit dollars, that's really what our revenue to pay our expenses is right, because we pay the carrier and that's what we have to operate off of, right. So I'm going to add one thing to that.

Speaker 2: 18:47

The other piece and this is a thing that my, I guess, mentor manager used to teach and talk about a lot about the markets when I was coming into the industry was I started in a very loose market, meaning like it was very easy to find a truck pretty similar to now but it was really hard to find shippers that had enough problems to be willing to add a broker Right. And especially when you have no book of business, you feel like that's the worst situation because, like you don't have customers yet and everybody's like well, everything's kind of fine and we just don't really need any help solving anything right now. But we'll keep you in mind and I'm like I like vividly remember saying this to Jason and going man, I just wish the market would tighten up so that, like some of these doors would open that I've just been like knocking on for like weeks and months in some of them. He's like care for what you wish for. He's like because on the other side of this you'll get customers, they start sending you loads, but you'll see, like you know, metaphorically speaking, like knife fights over carrier relationships, because now you're going to start really working super hard to get those trucks in those lanes, they're going to fall off more often. You're going to have more issues on running the loads.

Speaker 2: 19:53

There's never really like the perfect scenario, because we're in the middle, right, like if it's loose on the carrier side, it's hard to get shippers. When it gets really tight and hard to get carriers, the shippers start opening their doors and onboarding you, but then it gets two or three times as hard to find the trucks. So like there's not, I feel, like a perfect way. But I would say that you pointed out like there is a benefit. If I've got to work hard, no matter what. At least if you're working hard and your margins are better because just overall lane rates are higher, that's probably a better solution. And most brokerages grow in those markets. Like if you look at the very big companies, they are not grabbing market share in a loose market. They tend to only grow and ratchet up. As the market tightens up and it gets really hard to find carriers, they acquire more customers and they grow Right. So yes.

Speaker 1: 20:39

So here's. Here's where I want to kind of lean in, though, is when, when the market shifts to a looser market meaning, you know, customers are having less trouble having less problems to solve because the capacity is there for the, you know, and we're less trouble having less problems to solve because the capacity is there. And we're talking about like nationwide Right. We're not talking about a microeconomic, certain region or market, we're talking like nationwide overall capacity is is not tight right now, it's loose, generally speaking, so it's not terribly hard to find a truck in general, right. It's loose, generally speaking, so it's not terribly hard to find a truck in general, right. As the market shifts that way and rates contract, if they do, you are now going to have less. If your business maintains its current level without growing, your business is going to have a reduced amount of funds to operate off of Less dollars in the door. So if you've seen the headlines the last three years, you've seen trucking company goes out of business, brokerage goes out of business, brokerage files, bankruptcy, trucking company files. You keep hearing all this and people you ask the question like what happened? What's going on? And I'll tell you what I think a lot of it is at least on the brokerage side, where we're margin based and we're an intermediary, we don't have to worry about truck payments and maintenance and stuff like that. That's a different conversation for for asset based companies, but for a brokerage you literally have to scale back what your expenses are. Right, and a lot of times that just means you know, ideally just a hiring freeze would be like best case scenario and you just have your natural attrition if people quit or find a new job and it reduces your, your, your workforce, but it could ultimately mean laying off people that don't have the work to do anymore. So if you know, if you have, you know, let's say, two hundred K a month in payroll and now your operating revenue went down by 50%. I'm just making this up you've got to find a way to either pay the people and have less company profits or you've got to reduce your costs by maybe laying somebody off. Either way, something has to give for your company to be able to do that. Now what I've seen and we've done this at Pierce is we've chosen the long game of we'll operate at a reduced workload for our folks and you know when the time comes and things pick up or whatever. Whatever they're there, right, but we've also continued to grow so we haven't really seen that kind of that issue with it.

Speaker 1: 23:13

But you've seen companies just go out of business like a lot of times they they hired when the money was there and it was good. They hired when they didn't need the people. And now it's just exposed Like, yeah, you didn't really need them. Then you brought them on because you could afford them and it was nice to have that extra, like that layer of redundancy for, like, maybe, billing people or for you know, whatever the case might be. And then when, like, you really look at it, you're like how much work is this person doing every day and why are there two of them when really one could do the job and when that one is off, this third person could cover for them if we just cross-train them, right.

Speaker 1: 23:48

So you have to look at those things and I think a lot of brokerages probably overspent on technology, didn't wisely reinvest money into their company or keep retained earnings. I think that's kind of like the big picture of what happens when the market cycles. And again, this is like the weirdest market cycle that I've ever seen. It's the longest, most drawn out that I've ever experienced in my entire career in logistics. What is your initial thought on that concept?

Speaker 2: 24:18

I agree. And the other analogy that I think and there's a couple of companies you consult with, we've gone through exactly that, looking at like, okay, well, you have like four accounting people, but like your load volumes are 75% of what they were when you needed for, like, how many loads are each of them processing? And it's like, oh, they're all kind of working 40% of the day now. Well, okay, like, and again, these are tough, difficult conversations to have, but like you've got to be able to also shrink the company and sometimes, when the load volumes aren't, there is one and like the other thing I think about cause this is like think personal development world or like coaching, however you want to like define that.

Speaker 2: 24:57

But like there's this analogy right Of like you will get more done almost all the time under more pressure, right, and I think that's true with just like all human beings meaning like if you're getting chased by a dog, you will run faster than you've ever run, for longer than you ever thought you could, without even thinking about whether or not you're going to stop, because that thing is that bad. If it catches you right Now, if you just want to go, start to run, you're probably going to quit half that potential, like there's always more in there, like David Goggins talks about that. Like everybody's got 30% more in the tank even when they want to quit. And I think that holds true too in work. Right, like the amount of work that I've been able to do as a broker and I look at like the most stressful periods of like I don't know early 2017 ELDs. Like I have like four people when we're moving like 250 loads and we're check, calling all of them, negotiating all of them. Yeah, we're working more hours, but like we are capable of so much more.

Speaker 2: 27:09

And I think, as work sometimes shrinks in a company, everybody just keeps moving the bar back and then you get to a point where you're like, well, wait a minute, everybody's just kind of working at 40% and there's less dollars coming in and nobody's trying, nobody's reaching their potential either, and I don't think that's good for the worker, I don't think it's good for the company and I don't think it's good for the economy, which is why I always like. To me, that's one of the biggest benefits of a lean market and capitalism. It has to cycle, it's got to grow and expand and then it's got to contract. When it contracts, that's where you see what a company's made out of and what a performer's made out of. When it gets, when it grows, everybody can work a little bit less because it gets a little easier, right? You kind of need that leaning out and growing to keep cycling.

Speaker 1: 27:53

Yeah, it's like burning a tree. You know what I mean. Yeah.

Speaker 2: 28:02

And we have not. We have been in this lean market now for the longest period in its modern day existence. The way the industry functions, where, like, it's never been this low for this long, and I think companies need to start looking at these things and really identifying them. And the other thing that really comes to mind is like how and what people do changes in a market like this than in a market during COVID, where it's like a ton of freight to move and not enough resources to do it. In a market like this, like sales becomes way more important, like in an industry in our industry, peak COVID you got a lot of account managers that could be earning 150 to 170 grand a year just booking trucks, negotiating and track and trace and managing operations Right.

Speaker 2: 28:39

But when you're in a market where, like it's harder to get freight, a different skillset is required, where, like some of the people that are a great fit in that market can't provide the same value to an organization and a market that is like this, because, like now, you need an account manager that can also pick up the phone and develop more relationships, full blown sales, but like you can't have, I think in a lot of companies, call it in the 15, 10 million to $50 million range.

Speaker 2: 29:06

Like you need more of the Swiss army knife, of people in your company. You need somebody that can do all of these things and it's like the cradle to the grave model prepares somebody to be able to do all of it. Like you can book your truck, you can track and trace, you can vet a carrier, you know what to say, you know how to manage those operations, but you can pick up the phone and you can go and develop rapport with the other point of contact you haven't met yet at that company. You can find the other companies that are like that company and then you can bring in more business and the folks that were trained to just do half of it. I think we're going to have a harder time in a market where it's like the pod model I think suffers, I think faster because you have segmentation and I think in a very tight market you get a benefit of efficiency where you need it right.

Speaker 1: 29:52

Yeah because they're the expert.

Speaker 2: 29:55

They're very good at what I think is so to your point.

Speaker 1: 30:00

You just you named or you brought to mind two people inside of, uh, my company that like, literally, are that swiss I'm gonna have. So, like one of the guys we have, he was in billing um, that's where he started off, like just billing customers, you know, receivables, and now, like he does claims, he does uh customer credit checks, he does um carrier overrides and approvals and things like that. Um, so he, he wears a lot of hats and guess what, if we need someone to go back to billing, he knows how to do our billing. We've got another guy that on our trucking side used to be a dispatcher and then he started to kind of cross train over, started doing a little brokerage. Now he also does some back office with like credit and carry related matters when needed. So we've got a couple of Swiss Army knives in our back pocket that, like we can move around where needed and then you know you've got.

Speaker 1: 30:55

I even think about like my like, because we're agent based and we hired the guy that helps me out. He was the first guy I hired to help myself out with like managing the pool of agents, his originally like all he did was, like you know, train him on how to use our software and like, answer basic, like you know, faq type stuff. And now, like he's learned over time, like here's how something works with ltl, here's how, um, something happens with the damage or a claim or a tone, or like you start to develop them in these different roles and I think if you only keep someone segmented into one area, that becomes a vulnerability for you, um, when the market changes. Right.

Speaker 2: 31:36

It's job security.

Speaker 1: 31:42

It's a disservice to them because you might be faced to either a lay them off when the market goes down or be you know you've got to bite the bullet and you're paying someone who doesn't have work to do Like.

Speaker 1: 31:50

Think about, like people that are just billing reps Right as freight volumes decreased and there was less issues that happened with, like re or, you know, accessorial chart, like you think, during like the peak of covid, like there was so much going on with like detention and layovers, and like customers get all confused and actually another pain of tone. Like you have all these different invoicing activities that are increased, not to mention the increased amount of loads that you're doing, you know most likely. And then that contracts, they might be your billing team, like you said, might be sitting there doing having 40 of their day full of work and 60, literally more than half of their day of just like twiddling their thumbs, playing sudoku or whatever. Um, yeah, it's, uh, it's a business choice. So, like you, this is the time, I think, when you know you got to find a way to like not just weather the storm but like fight through it. So you got something before, because I'm about to pivot here, but what do you got?

Speaker 2: 32:49

Because the thing that always comes back to me is the human nature of looking outward to blame your situation on external circumstances. I can't get customers because the market's this. I can't get this because this is happening.

Speaker 2: 33:06

If this happened, this would all be easier, right, but if you really flip that on your head and we've talked about this a lot it's like your brain is always going to try to protect you and make you feel safe and comfortable, and if you just pick the harder thing every time you have a choice of two, like a lot of these problems will go away, which to me, is always. It's like the recipe for actually living long-term, fulfilled life is to kind of just always doing the hard thing, and it's like there's a cliche. It's like do the hard thing today, tomorrow gets easier. Do the easy thing today, tomorrow gets harder. Right, and you just extrapolate that on, Because to me, like the advice I would give anybody, because there was also a report that college graduates are now getting jobs at the same level as non-college graduates, meaning like that is literally that bar has literally gone away. Like recent college graduates are getting the same amount of jobs as people without a college degree, right? So like if you know-.

Speaker 1: 34:03

On that note, when you started in brokerage did they require a four-year degree.

Speaker 2: 34:07

They did, or at least in associates, I think.

Speaker 1: 34:10

Okay, Side question yeah.

Speaker 2: 34:12

Yeah, and it's like thing I think is true. Is it like, yes, the company has a responsibility to oversee these things? Because, like what you use like I always kind of used a ship as an analogy like, hey, we're all going to get on this boat because we're all in this together and we got to get to there wherever there is Right. We got this amount of supplies. We can stop this amount of times along the way to get what we need, but we've got to make it there. We can stop this amount of times along the way to get what we need, but we've got to make it there. It's the captain or the CEO or the owners or the manager's job to make sure you can feed all the people on the boat. Because guess what, if you have too many people on the boat and everybody's going to die because you're going to starve and you don't have enough resources. So you got to make sure you're properly staffed to get where you need not have too many people, but also not have too few that you can't row the boat or, you know, fix the sails to sail where you need to. Right, and like, I feel like a company that is the ownership or management's responsibility to know when to add people and when to get rid of them, and to try to predict the weather changing as much as possible. You won't predict it a hundred percent, but a person has a responsibility working on the boat. Take the same analogy If I start just rowing, it is my responsibility to go to you. If you're the captain and going hey, when I get done rowing, can you show me how to work the sails? Hey, when I get done rowing, can you show me how to work in the kitchen? I need to be creating value, the galley. But like, where I'm getting at is like. Everybody has a responsibility, not just ownership for these things, but individual contributors of your.

Speaker 2: 35:39

If you're not asking to be cross trained, if you're not constantly being curious and wanting to learn how to do the next thing, to keep adding value, you're the first guy that when that boat stops at the next port they're going to go hey, look, man, we don't got enough room on you to take you to where we need to do. You're going to have to find something here because, like, we literally can't feed all the people. These guys now are rowing, fixing the sails, working in the galley, they're swabbing the deck and they've learned all these jobs so that, like, we're able to actually move the boat with like 15 people instead of the 20 we needed and we can't feed all 20 anymore, so we've got to run it at 15. And if anybody out there is a contributor and worrying about whether it's AI or the market that's going to affect whether or not they have job security, like, you've got to take that initiative.

Speaker 2: 36:19

And second of all, if you end up leaving this company, you become more employable. If you learn three or four more skill sets, you're beefing up your resume. So when the next ship comes into port, you can be like hey, look, man, can I get a ride there? And they go. Well, what can you do? The guy who can just row, or the guy who can row, cook, fix the sails and do whatever other jobs? Who do you think the next boat captain is going to pick to add to his crew when he needs more people to sail where he's going to? Yeah, and like to me, that's a personal choice that everybody either makes or doesn't make on a daily basis that ultimately they're responsible for, and most people that won't make that choice are going to blame the market, they're going to blame the captain, they're going to blame the weather and they're never going to look inwards and go. Well, what did I do to make myself more valuable for the next boat, whether I'm with this company or the next one that pulls in?

Speaker 1: 37:04

Yeah, 100%. So I think one of the mindsets that I've always taken, that has been helpful and I'm going to try to pull up some. I want to give some rough statistical numbers that I've tracked. Um. So here you go. Um, in the right before, oh, this is perfect. Right before uh rates started to contract in 2022, average revenue per load we were just shy of three thousand dollars a load. Today we're. It's about half that that's revenue per load, right, and when you're margin-based, you're- 10% of 3,000 is 300 bucks.

Speaker 1: 37:45

We were able to increase our margin percentage over those last three years, so we didn't cut our profit per load in half, but it did shrink, like it went from roughly 350 to about 270 per load. Right. So to combat that, what I have always done and this has always served me well is, when things are good, when things are neutral, when things are not so good, always a mentality of growth. And how do we get to the next level? Right, and by tracking things like load count, revenue per load, profit per load, margin percentage. Those are the things that you put them all together and you can start to see where, like, all right, we're starting to see a contraction for our company alone in this certain area. What do we have to do to focus on the next thing? So, with a constant growth mentality, what you don't wanna do is, when times are good, don't take your foot off the gas, right, because you see people, who they do that. And then you know the tide goes out and they're like what? Like you weren't growing, you were just living off all that fat there. And now that fat's gone and you're used to this lifestyle of making this good money, and now that that that income just got cut in half potentially. So you've got to be growing the whole time and people right now are like, well, it's so hard to get customers and it's like you know what? This is a massive industry. You just have to be like the 50th percentile or better and you will grow Like that's all it is. You have to find a way to be better than everybody, or just half, just be better than half of the industry and put in the activity, make the calls and you will grow.

Speaker 1: 39:21

And what we've done at our level with an agent based company is like we've. We have in the last 18 months in a down market, have hired, agent, recruit, have grown by adding agent recruiters. So it's not just myself running an agent program. We've got actual people that are out there, you know, seeking out the best candidates out there and outside of that, we're taking our back office staff and turning them into Swiss army knives so they can kind of, you know, work in different positions and we're out there making sure we've got the best software and automation available so our back office is efficient, so our the brokers that we can attract are have the best available, you know, technology and services and support available to them.

Speaker 1: 40:06

So I mean, it's all of that Right, and that's in the good times. And when things contract, you have to always try to be growing, because if you don't, that's when you're going to be one of those next brokerages. That's either in the headlines for filing bankruptcy or hey, so-and-so, just acquired so-and-so. It's not because you know it was necessarily the best fit. It was because, hey, man, they were in trouble and the price was cheap. So I'm going to strike while the iron's hot and acquire this customer while I can, for a cheap price. So, or this brokerage for a cheap price, so yeah.

Speaker 2: 40:37

There was a line and the movie came out right when I got in the industry or close to it, the movie War Dogs, and there's a scene in there where they're sitting at the hot dog stand, I think, eating like a piece of pizza. And he's like like how are we going to make money at this, like you know, basically dealing with the US government and like the entire arms industry, which is like enormous Right. He, and like the entire arms industry, which is like enormous right. He's like how are we going to compete? We're like two people with this janitor closet in Miami and we're competing with like Halliburton and like the largest companies in the world, right. And he goes dude, do you know how big that pie is? He goes we don't need the whole pie. He's like we don't need half the pie. He's like we don't even need a slice of the pie. He's like we need a crumb. He's like a couple crumbs is tens of millions of dollars. He's like that's all we need. We have to find the little pieces and we can make more than we would ever make doing anything else. And like for some, like that immediately.

Speaker 2: 41:33

That analogy to me held so true with like transportation. It is an eight, arguably between $800 billion and a trillion dollar a year industry. Like if you are a 50 million or arguably even a $500 million company or arguably even a billion dollar company. Like that is such a small portion of a trillion dollars. That, like to your point, nate, like all you've got to do is be better than half of the people and I love Leffler's line on our episode where he goes think of the average person's intelligence that you know and realize that half the people you're competing with aren't as smart as that guy. So, like all you've got to do is have like a little bit of advantage, whether it's some intellect. You definitely need effort, but if you outwork your competitors every day consistently, you don't need to burn yourself out. But like you just need to do a little bit better than everyone else every day and eventually, like you'll keep growing. And there are plenty of companies are growing. We've added more companies in the past six months than we did like all of last year and I think now something like 60% of our revenue, like today, is business we brought in year to date, like in 2025. So, like for sure there are companies you can bring in, for sure there are ways to grow and like you can use all of those negative things we talked about in the market to your advantage. Because, guess what, some of the other companies you're competing with aren't cutting, aren't making sure their employees are working that hard, they're not making the phone calls. So if you are working even at the same level you were last year, like you're probably already better than 50% Like you can outwork your competition at a pretty low bar when everybody's used to living on the fat to your point, right, everybody was able to eat, nobody had to work and everybody's getting fatter and nobody's really learning to hunt anymore, but you just keep hunting a little bit every day.

Speaker 2: 43:28

Guess what, when they all run out of meat, you at least know where to find it. And you've been looking for it and you know exactly where that hunting spot is, because you weren't just sitting back waiting for the next whatever elk to come moseying through your, your village. Otherwise you have nothing to eat. Right, like you've got to stay sharp and you've got to keep doing those things if you want to survive in a good market or a bad market.

Speaker 1: 43:49

Yeah. So I want to, I want to get your thoughts on. So the trucking side. I'll kind of give you what we have done with our trucks. We have done with our trucks, um, and I'm not very involved at all in that side of it outside of like understanding you know, you know what our capabilities are, um, but we in the peak had somewhere in the neighborhood of like 35, uh trucks that were all running and over time the last few years have slowly sliced that down to a level that makes sense and is manageable for a variety of reasons. One, the lanes that aren't profitable anymore we're not going to service those right. The amount of headaches that come along with throwing a fleet of that size like, we can get rid of a lot of those headaches, right.

Speaker 2: 44:43

And the beautiful thing about Just stop right there. If a trucking company is going, we can't service this lane anymore because the customer doesn't pay enough, right? And theoretically your company gives back 10 loads a week just for a round number, right, those loads are now available in the spot market to another broker that was actually making the spot market, to another broker that was actually making the phone calls to the company that you are ultimately going to give the loads back to, right? So when people want to know, where's the freight going to come from if there's not, if it's not growing, there are trucking companies that are going. We can't service this for that anymore, right?

Speaker 1: 45:14

And then now those loads need picked up or they go out of business because they're just they aren't making any money Correct. They're losing money, right, that's like the worst game changer for them.

Speaker 2: 45:21

So now these loads hit the spot market, they're going to go to a broker, at least for some period of time, to make sure they still get picked up next week, and that shipper might actually have to pay market rate, like that doesn't mean that shipper the shippers always, and this is why everybody says in and the market rate is $2,400. Yeah, wants to pay, but guess what, if nobody can move it for $2,000, he's eventually going to pay $2,400. Or his customer never gets the light bulbs they bought, or whatever it is they're shipping.

Speaker 1: 45:47

Yep. So I mean, that's really the way that we've done it, because one of the beautiful things about a trucking side and it's not as fast, obviously, as a brokerage to scale it but you can scale it back up, right, if, if the market dictates hey, you know there's more money in the trucking side, well, hey, you can go either put some of your trucks back on the road that you have parked or, if you had sold them, you can go lease or purchase trucks again, so you have the ability to flex that up and down trucks again. So you have the ability to flex that up and down.

Speaker 1: 46:22

And I think what a lot of trucking companies probably did wrong in the last few years is they didn't look long term. They didn't, they didn't aim high in their steering. If you want to give it an analogy, they were only looking what's right ahead of them right now Right. But if they can see, hey, I can't operate this same way for an extended period of time if I don't change something. Right, if they don't do that, eventually at times in the coming you're going to have a month where you didn't turn a profit and now you've got to answer to, you know, either shareholders or creditors, whoever that might be right.

Speaker 2: 46:53

Smaller company can't make payroll, so exactly right.

Speaker 1: 46:56

So you're going to end up having, you know, I got, like I said, worst case scenario you shut the doors, which we've seen a lot of that in the last handful of years but then it's like abruptly having to like slice things instead of just planning ahead of time. Right, if you've got folks that are leased on in your, in your asset based carrier like you can let them know like hey, we're going to, we're going to have an end date for this lease effective whatever date, um. So now you know like you can have that attrition planned out. Or you know, what I think a lot of people did too, is they didn't keep retained earnings in their, you know in their bank um, or they went out and bought you know a bunch of crap. They didn't need um because they thought the money was just gonna always be coming in and rates were always going to be four bucks a mile or whatever, and it's like no, here's what I think.

Speaker 2: 47:44

I was just going to segue to exactly what you were saying, but give some people some practical ways to do this Right, and this works for literally any business, whether it's a trucking company or brokerage or, honestly, a pizza shop is. And this is fundamentally like what a bank does when they're going to lend somebody money. Right, and you do like sensitivity analysis, but that's just a fancy word for saying like, okay, this business brings in 50 grand a week. Okay, we spend, and all of our expenses, all of our payroll and to pay everybody else 40 grand and the owner takes 10 grand. Maybe that's retained earnings or, in a small business, like, that's literally what the owner takes out of the company to live on, right, as a paycheck. Okay, so now you go okay, well, the business is bringing in 50, the owner needs 10. That's what he's living on, and the whole company takes the other 40 every week.

Speaker 2: 48:34

Then what you do is go, okay, you pick a number above it, which is your goal, and go okay, well, how long do you think it would take to start bringing in 60 grand a week? Okay, and what would we need to do? The other way you look at that is okay, well, we're bringing in 50. What happens if we start bringing in 40? And then you go if I'm at 40, right, and everybody needs 45, how much money like fancy word retained earnings? Simple way to look at it is how much savings do we have before four weeks at 40, grand burns through all of our savings and we can't pay our staff. How long can you do that at 40? Then you go well, what if it's worse? What if it's 35? Now how long can we go? What if it's 30? And then you go 60. And then you basically go up and down and you figure out, in the worst case scenario, how much savings can you live on before you have to start literally letting people go or canceling company subscriptions or whatever it is, getting rid of your office, whatever that is, and how fast you need to run to keep up with this right. That will at least give your brain a conception of like how much time risk is there in the worst case? And then how fast do you got to run and work to hit the best case right? And then the thing you outlined better even before is like there's really just two ways that you make money in a business you bring more in or you spend less. Right, like AI is good at spending less by being able to do things more efficient, but it's not really that great at bringing in more yet. And now there are some ways we go down. But, like the reality is like you need people. You need people talking in sales, talking to new customers, getting more business from existing customers. That effectively helps bring more in.

Speaker 2: 50:13

But then you also got to look at, like, okay, of the 45 grand we spend for all of the things in our company, which of them are absolutely necessary? What are nice to haves? What are needed? Right, and of the nice to haves, which ones would we cut? First, if we start hitting 40 a week instead of the 50, right, then you have a plan. Okay, well, now, if we keep hitting 40, which of the people can we now overlap and go? Well, this person, like you said in your instance, can do billing and claims, all right. Well, we have a claims person now, but we haven't had a lot of claims and we got a billing person. What if one person learns both jobs? Okay, now, at least we have a plan to train both of them to see what makes sense in the worst case scenario. And then you start looking at these things and at least then, if you even just have it in your head, even better in writing. Every week you start evaluating this Okay, next week we hit 50.

Speaker 2: 51:01

What did we do to bring in sales? Did it work or didn't it work? What do we do to look at cross-training our employees in a worst case scenario, the guy in the boat we're teaching everybody that rows to also work the sales. Right, and now we're teaching everybody that used to work the sales to also row. Then you just keep cross-training. That is what helps you plan better and make your business more likely to still be around a year from now Instead of just like cause.

Speaker 2: 51:24

Steven brought up a scenario where we were talking with, like some other companies, like the owners just kept taking all the money out and it's just like okay, well, if the guy at the captain just keeps taking all the resources out of the boat but everybody else is starving, eventually everybody stops rowing and then eventually everybody just can't survive. And yeah, the captain lives a little longer, but now he's on a boat by himself, can't row it himself and he's eventually not going to live either. Right, like you kind of need all of it to work, otherwise the boat is just in the middle of the ocean, with no food, nobody to row.

Speaker 1: 52:06

And you're hoping some tide pushes you back to safety. Yeah, the last thing I'll say on this, this whole topic is, like the importance of knowing the health of your business, the like, the financial health of it. Who's doing what? People's workloads? There are two.

Speaker 1: 52:10

I'll try to make this as general as possible without, you know, making myself sound like an idiot, but there's really two types of um employees in your company revenue producers and people that are expense on your, you know, on your income statement. So you, when, when times are great, right, it's often, uh, people, they don't necessarily do it on purpose, but it's, it's easy to add more expense employees, right, I don't want me to call them out like in a negative way, but those that cost money to bring on because you can afford it, it's easier to do that and not really see it. But then, when you know business isn't as profitable, you need more revenue producers and you need less, you know, expense type employees. So, just, you know, I always say keep an eye on that. And when times get, you know, when the times are great, you keep adding more revenue producers because you want to take advantage of the time when you can stack up that business so that you can, you know, so that you can actually ride those waves as things shift the other way. So that's my big take on it is, you know, lean into your revenue producers and keep a close eye on. You know how many employees you have that are costing you money and how, what's their workload and how efficient are they? Are they doing their job? Do you need them? Can you cross train people? Again? I never want to see anybody get laid off.

Speaker 1: 53:36

It's an inevitable reality in some instances and we saw that with the initial COVID shutdowns. But you can also remember there's natural attrition in any company, right, people will decide they don't like our industry and go find a different career. They could get picked off by a competitor of yours and go work over there. They might have a life change and they're moving across the country with their spouse and family because spouse got a job somewhere else. Like these things. They might retire. These things happen and that natural attrition is also a way for you to, you know, trim the fat without having to fire or lay somebody off.

Speaker 1: 54:13

So there's a lot of ways to do this. There's a finesse to it. Being a strong, talented business owner and leader is a totally different skill set than being a good salesman, and I think that it's very important as you grow your brokerage and maybe you're killing it at sales but you want to make sure that you're putting the right people in the right seats so that you don't have those blind spots. Right, like, if you grow to you know, 20 or 30 million, well, you probably want someone strong in leadership that can help keep an eye on the books, changes in numbers, personnel management right, because you can't be the owner and also be great at everything else that's going on inside your company.

Speaker 1: 54:54

When you get to a level of that size Like think about the brokers that you work for now Like there's a reason that you're there. You know what I mean Like you need to have extra sets of eyes that can see throughout the company and and and you know see where things are going and and all that good stuff. So that's my take on it. Any other, uh, any other things you want to hit on?

Speaker 2: 55:13

And I thought about that a lot. You know, what I was thinking of yesterday is like they're very different mentalities and mindsets, and I think this is also true is that, like, even when you get good at both and I've made it, I've made a concerted effort to get better at being a leader and a manager of the past, whatever decade Right In my twenties I was really good at sales, and why I think I was really good is because, like I had that I don't give a shit mentality If you told me no, like I just don't care. But like having that type of mentality of being able to just get emotionally punched in the face and not and just shake it off also makes you less sensitive to just other human beings and I think inherently, like they are kind of like mutually exclusive. Like that's why I was a bad manager, because, like, in order for me to deal with being rejected 150 times a day, I wasn't really good at connecting with people I was managing and when I was first a sales, a producer and a manager, like I then switched to just trying to learn how to be that and I was just not good at sales anymore because, like I felt so sensitive to being rejected, that I didn't want to do it, but I got really good at connecting with people and I think you can learn both. But I do think there's a very good case to make that. Like, you kind of do need to focus on some things as you're growing or changing. Because, like you were just pointing out, like why I'm at this company now and the guy who I work with, who owns the company, has been up here for the past three or four days. We talk a lot.

Speaker 2: 56:33

I'm like dude, like if I'm building automations in these tech things, I'm like I can't focus on something that takes three hours for me to just start to understand how we're doing it, let alone get it to work, and then jump off, negotiate with a carrier and then jump on a sales call, then jump back into this deep focus. Like it's a different brain state and I'm like I literally can't do it and I'm like, so you've got to deal with the people internally for the time being. I will go focus on this because, like it's just a different level of focus, like it's not that I can't do both or that he can't do both, but I'm like it makes no sense for us both to be doing both, because I'm like we're both just jumping back and the cost to transition is exhausting. I'm like I am twice as tired at the end of the day If I switch every two hours between these tasks.

Speaker 2: 57:18

If I just pick one day and do that thing the whole day, like I feel like at the end of the day I'm like almost energized because, like you get things done and you can stay in that focus. It's the switching and I think that's also why Cradle of the Grave burns you out so quick is because, like you're literally doing everything and you're constantly context switching throughout the day and there's a huge, there's a calorie burn, there's a mental cost. Getting your brain to be able to focus back on those things requires a ton of energy, and I think there's a lot to be said about what you're saying is like looking at folks that are really good managers and leaders, right, and making sure they're also not being saddled with a responsibility that is like almost counterintuitive to the other tasks you're expecting them to do.

Speaker 1: 57:58

Yeah, absolutely Well. Hopefully this gave some good context and takeaways for folks out there. And if you're not at that point yet, where you're, you're leading the brokerage or you're at that growth stage maybe you'll listen to it in two years, who knows. But hopefully you got some good, some good little nuggets here from us. So, ben, final thoughts.

Speaker 2: 58:19

I'll add one last thing too Like, even if you aren't at that stage and you are a producer right. Like you are your business, what you create and value is what you get to take out of it. Right and like maybe that's not looking at how all of the business and who needs to do what where, but like that also includes like are you eating well? Are you sleeping well? Are you taking care of the tool that you use to make money? Right, are you exercising? Like if you're not sleeping, you're eating like crap and you're wondering why you're stressed out and you can't make phone calls every day. Like you also have some responsibility to look at, just yourself and your ability to be able to perform at what you expect of yourself, and I think everybody has the ability to do those things.

Speaker 1: 59:00

Yep Agreed, all right, good episode. What do you got?

Speaker 2: 59:02

Whether you believe you can or believe you can't, you're right.

Speaker 1: 59:06

And until next time go Bills.