DAT’s Convoy Acquisition: Transforming Freight Automation | Episode 306

Speaker 1: 0:19

Welcome back. It's another episode of the Freight360 podcast. We've got a fun one today. We've got a guest. We're going to talk about some big news that has happened recently in the industry, but first make sure to check out all the other content that we've got.

Speaker 1: 0:31

You can go to Freight360.net if you'd like to find our searchable library of all of our content from long form podcasts where we interview guests and just talk about industry best practices and help you with tips on how to reach out to those customers and build your carrier network better, leverage the latest tech that's out there. And you can even send us a message and we'll answer your questions on our Q&A show that drops every Tuesday. There's a little bit of a contact button on our website or you can just comment on our YouTube channel and we'll take your questions. That way, you've got the freight broker basics course If you're looking for an educational option for your team or for yourself to get your brokerage off the ground. And leave us that five-star review. We haven't run any reviews off in a while, but yeah, good stuff. All right, ben, anything new in South Florida today before we introduce our guest.

Speaker 2: 1:23

Yeah, just looking forward to winter. That's about it. Super hot, like it's been all summer.

Speaker 1: 1:28

All right. Well, without further ado, we've got Bill Driegert with us. Today we're going to talk about the DAT acquisition of Convoy and all the tech there. Bill, welcome to the show, really quick. For anyone who doesn't know, you, feel free and give a brief rundown on you or your background, current role, and we'll dig all into.

Speaker 3: 1:49

Convoy and DAT later on in the episode. But feel free and give a quick intro. Yeah, thanks for having me. So I've been in this industry since 2006. I was fourth employee at Coyote Logistics, spent about eight years there, spent a couple years at Amazon and then was co-founder of Uber Freight and spent about eight years building that up, before going over to Flexport and having the fortuitous opportunity to acquire the assets of Convoy as that wound down and we, of course, recently sold that to DAT, which we'll talk about today, and so now I'm EVP of Convoy Platform over here at DAT, driving Convoy Platform within the DAT ecosystem.

Speaker 1: 2:21

Awesome and I'm super excited to dig into that. Dat's had a massive 12 months. I feel like we've talked about acquisition after acquisition and just a lot of great product development. So we'll get into the convoy part of it in a little bit here. That is the big news, so we're going to skip over our news portion today For a quick sports roundup. Ben, did you see the Buffalo Bills are the Hard Knocks preseason team they selected this year.

Speaker 2: 2:48

I didn't.

Speaker 1: 2:49

So I'm a diehard Bills fan. Being here in Buffalo, I have never watched Hard Knocks on HBO. Basically they follow teams. They've evolved it over the years. It's been around for like a couple of decades, I think, following teams throughout the season. But now they've got like follow a team through training camp, which the Bills are being featured on right now, and they follow another team during the season and then another team post offseason. I guess is what they're doing.

Speaker 1: 3:13

But I went to training camp in Rochester, new York, which is like 75 miles east of Buffalo. The Bills are like one of five or six teams that actually leave their home facility for training camp. The Bills are like one of five or six teams that actually leave their home facility for training camp. And then we went to on last Friday they came back to Orchard Park in Buffalo to do like a in our stadium scrimmage, you know Bills versus Bills. And we watched the first episode of Hard Knocks last night when it dropped and they had like footage from like literally last Friday in that show and I was like this is insane.

Speaker 1: 3:48

It's really cool Cause I'm like I wonder, as we watch the show, if you know, my wife and I will make a little cameo, I don't know, but either way, if you're a sports fan and your team is featured, whether it's like. You know, we talked with Steven, our producer, about having Joe Burrow on the Netflix quarterback series this that just dropped from last year's season like it's just fun to follow your team through. You know, obviously you know how the season ends, um, in those shows. But just get you pumped up like this is, you know, training camp and heading into preseason this weekend. So I'm I'm super excited. What do you think about the steelers this year, ben?

Speaker 2: 4:17

your boys. I'm saying like cautiously optimistic. I mean like training camp reports are saying that like aaron rogers is really, I don't know, showing leadership qualities. I camp reports are saying that like Aaron Rodgers is really I don't know, showing leadership qualities. I mean like the fact that like he's spending time with like the younger guys on the team. There's lots of really good positive reports from like almost all of the local media up in Pittsburgh. So I mean it went from we don't want this guy would rather him not be here to immediately like this warm welcome and it seems like I don't know could be pretty optimistic.

Speaker 1: 4:46

We'll see, you never know, man. I know a bunch of Steelers fans that were like, if we sign Rodgers, I'm not going to follow the team anymore. And I'm like, yeah, if you're a diehard fan, you're still going to give it a week or two and Billy, you said you're not a big sports guy, but you said you're. I mean in the San Fran area, right? Is there a lot of Niners fans out there?

Speaker 3: 5:03

Oh, my son is a diehard Niners fan. I actually grew up in Dallas. My wife and her whole family are big Cowboys fans. Okay, definitely a bit of a Niners Cowboys, oh yeah.

Speaker 1: 5:12

Oh yeah, very true. Well, cool, good stuff. We'll get right into it, bill. So you came over to DAT. I mean, this just happened. What two weeks ago?

Speaker 3: 5:23

It officially closed last Wednesday.

Speaker 1: 5:25

So a week ago.

Speaker 3: 5:26

The first full week, yeah.

Speaker 1: 5:28

So take us through and then we'll, you know, we'll dig into it a bit. For the folks out there that are listening to kind of paint the picture of you know how this all happened and what does it mean. Can you kind of set the stage on? You know, I kind of want to hear more about you too. I mean, your background's super impressive, but how did, how did the convoy platform you know, how did you feel about it and how did it work for you in the years past and how did everything lead up to this acquisition? We'll start there.

Speaker 3: 5:58

Yeah, I've known, I knew Dan pretty early in his journey with the convoy platform. I actually met him while I was still at Amazon in Seattle when they were first starting off back in 2015 and 16. And I always believed in the idea. It's an idea that really started coming to market in 2012-ish the idea of an Uber for freight or using an app for driver to manage freight. It seems pretty obvious in retrospect and a lot of people were converging on this idea around the same time, but there weren't a lot of companies that have the capital and capability to really push it hard. And Convoy I mean it came down to Convoy and Uber Freight there from 2016 to 2020, really pushing the market and going tit for tat in terms of product features and just pacing and growth. And so I was on the other side of that because I helped co-found Uber Freight in September 2016. Convoy originally launched a little bit before us in 2015. So they had a little bit of a headstart, but we of course, have the Uber brand name and the fact that Convoy was pacing their all through that. They always were leading with product, they always had incredible product, they always had an incredible team and, of course, they got significant amount of investment and like gold tier investment investors throughout the whole process. So I was very familiar with it as a competitor and I knew that they had built a very solid product. I knew that carriers loved the product. I knew the brokers the shippers at the time they worked with loved what the service that Convoy offered.

Speaker 3: 7:23

Well, then came the pandemic and lots of things changed. Uber Freight became quite a different company. We made a large acquisition of TransPlace Convoy. Ultimately, the end of that story was come 2023, they had to shut the doors. Unfortunately, we were able to engage with them very early, Almost as soon as that happened, reached out to Dan, had a conversation. It was clear they had a very short window to make a decision around what to do with the technology, because the bank was effectively taking all the other assets and we had the opportunity to buy the technology. But it was no business. We weren't buying a business, we were just buying the tech. But myself and Ryan, CEO of Flexport, were super bullish on just the value of that tech and that platform and because I was incredibly familiar with it and had built very similar capabilities at Uber, I also knew that I was pretty confident that we could take it and do something with it.

Speaker 1: 8:15

Can you talk a little bit, because there's probably people in our audience well, there's definitely people in our audience that are new and maybe don't understand what an Uber Freight does compared to a traditional brokerage model or what the convoy technology does. Can you just break that down Barney style to understand specifically convoy what? What is it? What does it do?

Speaker 3: 8:35

Yeah, both convoy and Uber Freight were very tech forward, and I'd say convoy even more so in the scope of the products they built out. It really starts with a different operating model that is app-centric on the carrier side and then, I'd say, building up from there. There was a significant amount of technology investment in all sorts of different capabilities in Convoy, but I think the pivotal piece that most people center on is this idea of instant booking, app-centric booking, and it's been highly transformative for carriers and I think, fundamentally, the carrier market has shifted as a result over the last 10 years. So if you put yourself in the shoes of an owner operator and it's 2010 and you need to find a load or let's say you just got your CDL how do you get started? Right, there aren't. It's a lot of just banging on doors. Hopefully you've got some good relationships. Hopefully you've got previous shippers you worked with who you can offer your services to, or maybe there's other carriers you can sign on with, but it's very, it's very unlikely that you can just book a load the next day and if you do that, you're probably going to um, you know DAT or a load board. You're making phone calls. There's a lot of friction involved in that process and if you're calling a broker, you're operating on broker hours, so you're calling them at 6am because you're trying to be the first one, first call they get, and that's just a very like that's how it worked up until really these models came to market.

Speaker 3: 9:51

So now today I'm an owner operator, I can download an app, I can book a load, I can just start doing business. I've heard hundreds of these stories from carriers where they said, yeah, I mean first day I got my CDL. Carriers where they said, yeah, I mean first day I got my CDL I didn't have options. Like now I've got options and it just allows me to be a lot more, allows them to be a lot more flexible and have access to more freight and just manage their business through the app. So from a carrier perspective, they can book a load there, all the tracking happens in the app and then they get paid and their the payment can be one to two days. It's very like everything. It's a consistent experience across a whole set of different freight types.

Speaker 3: 10:23

From a broker perspective. So because Uber Freight and Convoy went to market as brokers and Uber Freight still is a broker Convoy is no longer a broker. We shifted away from that. We decided this tech is great, let's give it to all brokers and go to market that way. But from a broker perspective, it's like a magic button. It's like when a load just comes off the board or gets booked at 10 pm and you don't even have to touch it or call a carrier. That's a magical experience when it happens, but it's an OPEX saver.

Speaker 3: 10:53

And to get there, though, every element of that load had to be optimized and automated. So, starting with the bidding and the pricing and allowing the carrier to book it automatically, all that had to be built out. Tracking very robust tracking. These days, the phone in your pocket has incredibly precise GPS and tracking compliance is incredibly high. Early on, when carriers first started using apps, they didn't want to use them or the tracking wasn't great. There were issues, but those are 10-year-old problems. Today, carriers using apps. They're highly compliant. And then all the payments system had to be built out Up front. All the one of the big investment areas for Convoy was in fraud right, because if you're going to automate this like, you've got to ensure that you've got very tight controls in terms of who comes on board and how we bring carriers through the compliance process. So.

Speaker 1: 11:41

Ben, you know what this makes me think it was. We go back probably to early on, and when me and you first were getting into the brokerage side, I remember writing articles on LinkedIn and like writing comments when Uber, freight and Convoy came out because people were like they're going to replace freight brokers and I'm like, I'm like they're literally acting as a brokerage. They're just leveraging technology to do a way better job and if they can really do that, well, I think there's something there and I always saw the benefit of the technology versus just trying to replace a broker as the more important part. Ben, do you remember when this first stuff all came into discussion?

Speaker 2: 12:17

Very much so this is like the mid to later 20-teens.

Speaker 3: 12:22

Yeah, yeah, there was a lot of anytime a new entrant comes into market with so much investment, so much media and impressive attention, there was a lot of counter narratives in the market, yeah, and I think fundamentally there's a also. I think, just if I'm a small carrier or a small broker and I can't make that level of investment, what does this mean for me? And I think that's also one of the things that's changed over the last 10 years. A lot of tech now is available to most brokers and, like, with us going to DAT, even more so now they have access to this capability.

Speaker 3: 12:56

But certainly there was a lot of fear in that too, because, having been at Coyote and having been gone through a broker startup, a lot of what we were doing by the time we started Uber Freight was just going through our wish list, right, just like automating everything. That if we had had the budget, we had had the capability and had had access to this many developers like this is what everybody would have wanted to do, right. I think we also got a little bit of pushback for that, because I think in any industry, it's not always like the ideas is a brand new, it's just a better execution that the tech has evolved. You can just do it more efficiently than you could before, and if you can do it with that level of investment, you can just pace much faster than anybody else from a tech investment perspective.

Speaker 2: 14:25

I'm curious on the part that you were talking about on, just like the from the driver's perspective. Right, so this is, it's going all the way down to the driver level, or to the VIN level, or pretty much that MC level compliance insurance.

Speaker 3: 14:38

Yeah, if a carrier is working with convoy platform, the vast majority of those carriers are owner operators and that's primarily to do with the fact that they have to use the app to engage in book freight. We do allow dispatchers midsize carriers, but they still have the driver has to manage the load through the application. Loud dispatchers midsize carriers, but they still have the driver has to manage the load through the application. There's a certain size carrier by which you know they may have constraints around allowing their drivers to use the apps, but generally that's the constraint and for them too it's a strong product market fit because they just don't have, as the other options are not as seamless and easy to use. So it's a preferred option.

Speaker 3: 15:11

But if you're an owner operator or if you're on the app, we have to know the driver, we know the device, like. We know we have that information. We have a lot of rich information about the users and we know then too that like are they. You know we have all the location information so we can their IP address, all the rest, all the other information. So we have a lot of. We do have driver level detail versus strictly carrier. Now, if so, we have a lot of, we do have driver level detail versus strictly carrier. Now, if it's an owner operator it's one of the same and so, because we have such a large owner operator population, probably a huge percent of our carrier base, by capacity and by count, is a driver and a carrier and it makes a lot of sense, like we've talked about this a lot.

Speaker 2: 15:47

It's like, well, one, just how the whole carrier market is like segmented, right and like for owner ops like I don't want to use the word like disenfranchised, but like, okay, you only have so many resources right as an owner op to be able to, like you said, make phone calls, talk to brokers, negotiate different loads, right, like even if you're starting early calling and going, okay, like this load looks good, but then, okay, well, that load's booked. Now I got to talk to the next person. I got to talk to the next person, and then it's the other uphill battle of like, okay, how long is your MC history? Can they verify it? Do you have enough inspections, which I think were like old school ways to prevent fraud that are now probably not as effective.

Speaker 2: 16:24

But we've always talked about this as a sense that, like how the industry tried to solve that basically created this giant headwind for owner operators right, and for new trucking company owners to where it's just like, okay, so you don't have history. Like, how do you start? How do you gain that credibility? And the reality is is if you've got visibility all the way down to the insurance, the VIN level and that driver on the tracking side and specifically all the way through the payment side, then at the very least, like that mitigates so much of the risk for the brokers to work with those carriers.

Speaker 2: 16:55

that really wasn't solving that problem anyway, and it's certainly not solving it these days.

Speaker 3: 17:00

Yeah, and if I mean from a carrier experience, just so much easier. I often use the analogy of like previously that it was more like Craigslist and this is more like an Amazon, and it's like somebody brought this up the other day. They said, well, you know, there's other systems where you can just book a load online now. And I said, sure, but if you went to Amazon and you just you said, oh, I bought it. And then they said, great, now you have to send a check to the vendor and it'll show up. It's the whole experience, right, it's the fact that it's end-to-end and integrated too.

Speaker 3: 17:33

It just makes it that much easier, but also to your point then lowers the risk because you're controlling every step of the process and you have visibility through every step, so there can't be any disconnect through that process.

Speaker 1: 17:44

And there's so much risk to around that, the Amazon impact or effect. I think about how frictionless the experience is, which draws people back in there, and then they just get so used to how easy it is, and I kind of feel like that's the way this is going, versus, like what you said if you order something online, it's a great, you have to send a check in. Well, that's not quite as frictionless as they made it out to be originally. So I'm curious the, the, so not necessarily how Convoy's platform operated in the past, but so, moving forward, how does what's the broker's experience going to be like with Convoy now part of DAT? What does that?

Speaker 3: 18:25

like. For us, the broker experience really centers around their tms. So we have a series of tms partnerships. Uh, we have native integrations. We just launched with the port tms. We've got a great one. Uh, coming to market with the send tms, where we've got deep integrations and relationships with these tms companies. We have a broker portal. A lot of that capability I expect we will integrate within the core DAT system.

Speaker 3: 18:49

What Convoy, really, you know up front, it is similar to a lot of the other DFM providers in that you're managing load state bidding and all that. But you have to integrate every step of the transaction. So we have to have deep integrations with the TMS, because for the TMS, the intention is that it should just operate like a visible set of hands, like another carrier rep, and that really depends on us being integrated for booking, for bidding, for load state management, to tracking, to key milestone updates, to payments and even payment approvals, and all of that integrated in one system just makes it that much easier. So it's very TMS. We have great partnerships with TMSs. So from a broker perspective, it's a complimentary service. Now it's a. You know it's part of the DAT package going forward as we think about this as an ecosystem. So I sign up with Convoy platform. If I have a TMS, that has pretty much worked with all the TMSs at this point, but then we integrate through the TMS. Capabilities are slightly variant between TMSs so that should all converge over time.

Speaker 3: 19:57

But yeah, it's as simple as it can be. As simple as you just post all your loads, filter out the ones that maybe don't work or that you want your floor to work, get real-time feedback on expected cost to cover probability of coverage, see when those loads are booked immediately in your system off convoy. You see the carrier. You can automate the carrier approval or the carrier approval. If you have additional steps that you want to take, you can manually override that or manage that process. Tracking is all automated. Breadcrumb data is all automated. Anytime you can call the carrier because you have all the visibility. They'll call you because that's what's showing in the app and then payments are managed automatically. How?

Speaker 1: 20:33

about that pricing, though? Is it like you can put a range in, or? Yeah, brokers set the ranges.

Speaker 3: 20:39

So brokers determine what range they want the price to be in. They can set an absolute max pay that we will never pay above because it's all programmatic. It manages bidding activity. So this is where there was significant investment and we've got real-time ML models that manage this behind the scenes that determine. You know, are we going to have regret if we don't take this bid? Is this bid within range? There's a reserve price. It's operating within for any given time.

Speaker 1: 21:04

This reminds me of eBay early on and how, how great that evolved everything Right. Yeah, it's just way more advanced.

Speaker 3: 21:10

Yeah, yeah, if I think back to early eBay, you could do things like auto accept certain counter bids and it has similar functionality, but it's all automated on the backend when, yeah, like, if you think of it on, yeah what? Ebay is actually a good and interesting case study because something like 85% of all eBay is actually buy it now versus bidding, and we have that option. They can buy it now or they can put a bid and most carriers choose to bid because they know that there's some bid range above that.

Speaker 1: 21:41

It's kind of just the operating model you just think about, like Ben, think about how much time is spent at a brokerage when someone's like you know carrier puts an offer in and like they go on their TMS and like log a carrier offer and then it might go to somebody else who then maybe the manager has to approve it and it just takes so many people and so much time like that.

Speaker 3: 22:08

That automation of that process just seems like such a time saver to me. Yeah, and you have to respond, uh, immediately, because I was um, I was more inclined to want, like a buy it now, early on as we were taking these capabilities to market. But it's really, carriers prefer to bid, but only if you give them a response like right away you can't have a bid, and then it goes like off into the ether and you come back 15 minutes later because you just get such dramatic fall off. Yeah, it's got to be while they're in the app, while they're looking, because otherwise they're going to go do other things, find other options, start calling people.

Speaker 2: 22:33

I am curious about that that you bring that up, like what does that look like from like a fall off percentage? And again, like I'm curious what that looks like even internally, like across the network, right? So from the carrier's perspective, right, like I'm bidding on a few loads, I get accepted from Nate's load, but then do I see yours, if you give me back the higher rate after I've accepted him and because, like in a practical scenario, like you know, think back to Coyote, like how we do this, it's like okay, there's the ethics of once you have given that load and agreed, you are giving them that freight, even if you get to carry the calls and you know two minutes later and gives you a better rate, right.

Speaker 2: 23:14

Like how does the system? I guess kind of address that from a practical standpoint.

Speaker 3: 23:19

Yeah, that's why it's very important to respond to the bid immediately and then it's a yes, you know, yes, no, so the carrier doesn't have to even go out of the session to get a response. It's very critical for the system because you have the fall off is dramatic and if you I mean I don't, I don't know the exact numbers, but I would guess that your success rate after an hour to just recalling my time at coyote, because I did look at this data in detail back then it's got to be 10 to 20 percent, um for the bit, actually even being alive, particularly in your peak hours, because in a 6 to 10 am like, if you try to go to back to a bit at 1 pm, it's just it's not gonna be there, right, yep, it's like 6 am and 8 am, maybe because you're in that window where people are like parsing through options, and I'm sure it's evolved even since I back the days that I was looking at that data. But certainly I and again I don't recall the exact numbers, but I do know, like you know, convoy studied this quite intently in terms of bid response and the fall off if you don't respond immediately Now those bids do go and are visible to brokers. So if this is where there's a little bit of learning, when a broker comes onto the platform, just how does it react, how the bids come in? Because you know, the concept of max pay or the maximum willing to pay, varies very much by broker and also it adjusts with time. And so how do you get ahead of that and say, okay, if you're willing to pay a thousand dollars one hour out, like, we will ramp the rate up for you. We're not going to pay a thousand two days out, we'll pay, you know, 800 or whatever. And how do we make that transparent If a what we often see is they can see the bids, so they set the max pay at 800, even though they really will pay up to 1,000 if they have to.

Speaker 3: 24:53

And it's now six hours later and the best bid is 850, but they set it at 800. Like, why didn't we take the 850? Well, it's because the system is absolute right. You got to control it. As we're on the floor as we're on the floor, you're often having a conversation. So your real max pay and it's. It's funny because a lot of tms's have like max pay and then they have like over max pay, yeah, absolute max pay, yeah, like emergency pay, yeah, yeah, yeah exactly, and communicating that concept programmatically, like the computer's gonna, the algorithm's gonna just do what it does.

Speaker 3: 25:24

So, yeah, so let me ask you how to use it on the back to like the broker's use case.

Speaker 1: 25:29

You mentioned TMS integrations. Is that like an all or none or is there? Can they operate? Can a broker operate in the convoy or DAT platform without a TMS integration?

Speaker 3: 25:42

No, it requires a TMS integration because it's core to the experience.

Speaker 1: 25:46

I figured it would. I just was curious if there was any way around that.

Speaker 3: 25:48

Yeah, it's like the Amazon versus the other modes, because we have to manage load state. So to be able to manage that simultaneously. What you don't want to is the idea is that brokers may be working these loads Parallel happens all the time. If they're posting 100% of their freight, they've got a floor, the floor is working in parallel. They got a floor, a floor working in parallel. So if something, if they book that, we want to take it off the app and vice versa. So, like you need those integrations. And then for tracking, everybody has basic tracking integrations these days in their TMS. You just want to upload that data.

Speaker 1: 26:17

Got it, but the tracking is actually happening through the convoy side of it.

Speaker 3: 26:22

Is that correct? Through the app? Through the app, exactly Okay, got it.

Speaker 2: 26:26

How is this like? And it sounds like, I guess like a very simple question, but like once, so right now it's still technically two separate products. They're not integrated yet. Correct Between being able to use it through the TMS, through DAT. Is it still the standalone yet, or have you guys merged them together?

Speaker 3: 26:44

They're two separate products. They are very complementary. They're definitely features that will be integrated over time and we'll bring together certainly a lot of the investments in fraud and other capabilities. There's application across different parts of the DAT ecosystem. But really think of it for Convoy. It's loads that can be automated, because not all loads can be automated. It's a today. It's a smaller carrier pool because it goes through a different compliance process Over time.

Speaker 3: 27:12

You know we'll integrate different capabilities across both, but DAT is still the largest load board, lets you do anything. It's got full features. It's fully scoped. Right, it's 47 years of development and build up. But clearly we expect these things. You know we're going to benefit on both sides and the convoy network will scale up. But there's slightly different use cases. You can think of it too, just in the way brokers use them. Brokers tend to post loads as soon as they get them onto the convoy platform, let it work in the background. Brokers are often using DAT to source new capacity when they need it or as they need it, and so a lot, most of pretty much well every customer we have today that I'm aware of also had a DAT when we went through this process. So and they use them in complimentary ways, and sometimes it's they've got similar people managing the postings or thinking about how to use them day to day, but it's, they're very complimentary.

Speaker 2: 28:05

So from the TMS point of view, from, like, the user right Once that integration's there. Now what it would look like is I'm basically deciding whether or not I'm posting my loads to convoy or to DAT, which will eventually be one posting, or maybe an option into one Cause. We'll eventually be like centralized under, obviously, the one umbrella, correct?

Speaker 3: 28:26

Correct and, as of today, there's more optionality to post-loads on DAT. It just covers a broader set of services and capabilities and it's more flexible. Load has to be well-formed to land on Convoy platform because we're going to execute it. We had to have all the information. There can be some differences there, but yeah, practically, if I was starting a broker today and I was trying to build a tech forward and highly sophisticated, I would probably use those in the way that I would have most of my freight posting on Convoy, also posting on DAT.

Speaker 3: 30:15

There's a lot of companies that have stepped into the market too to manage inbound calls in a more automated way off of DAT. I think the market's going to look. You know it's fine to be on the inside because I do think this is one of the pivotal changes that's going to push through the market in the next five to 10 years. Carrier procurement in general is just going to become a lot more tech driven in terms of how brokers manage it and DAT just has a legacy of depth and coverage and scale and capabilities and flexibility in terms of how the product works and on the convoy side it's all about automation efficiency.

Speaker 1: 30:47

So you mentioned there's some differences between what's required to post to a basic posting on DAT versus convoy. Can you talk? Because I'm thinking like if I want to post any old load on DAT I'm looking at like origin, destination, equipment, type, equipment right.

Speaker 3: 31:04

Yeah, and the date, maybe not even wait. You can imagine just the use cases at which you're doing that. There's a broader set of use cases in which you might post a load to get it inbound.

Speaker 1: 31:13

What does that narrower scope look like for convo With?

Speaker 3: 31:15

convo. It's the actual load, right, we're pulling it out of your TMS scheduled. Right, it's ready to go. We've got the pickup location, delivery location, the schedule, like all the.

Speaker 1: 31:25

Down to the address. You got the price range in there. Is there limitations on equipment types?

Speaker 3: 31:29

You can imagine. I mean, there are definitely a lot of operating models in terms of how brokers manage loads or get freight from their carriers that support a DAT-like approach, where you just need a little more flexibility and the load has to be automatable. It has to be a little more rigorous, uh coming through the convoy platform. Okay, any limitations on equipment like is it specialized? Drive, flatbed and reefer, and don't do like we don't have the full scope of specialized in terms of uh flatbed as we're on, you know dat it's pretty much whatever. Like we, it's a, it's a fully broad set of services got it cool.

Speaker 1: 32:04

so what do you go ahead, Ben? I'll ask some questions in later.

Speaker 2: 32:07

What do you kind of see, like what this is going to look like? And I would say like probably in the interim, because I think you alluded to a minute ago I'm like I don't think most people think the industry is going to function the way it does today Five years from now, for sure, and it's probably going to look different in three years than it does in five or six, whatever that ends up being Right. There's like this interim step and there's probably what it's going to look like and then ultimately, probably 10 years, probably looks even different than it does in five. No-transcript. That kind of overlaps with some of the things you guys are doing. There's the Alco piece with a factoring, which kind of overlaps a bit with what Convoy's been able to leverage for trust verification, fraud prevention. What are some of your thoughts and I guess like even the near term, and how maybe these things will be able to leverage each other to be able to create more value across the platform.

Speaker 3: 33:08

Yeah, it is week two and there's a lot of work to do, but it's. There's definitely a vision by which all this comes together and you can start to think about them as different, the different capabilities in each, each segment. There's a little bit of overlap around the edges but you're starting with Outgo factoring financial services and capabilities around that. We had payments built in but it really didn't overlap at all with what Outgo was building and already I see huge benefits just in engaging with that team. They have such deep expertise on factoring, on credit, on underwriting capabilities that just shore up DAT top to bottom in those those realms and as we think about how we manage payments, the payment options and how to expand that service set, because certainly across the broker portfolio everybody's got slightly different. Um, you know ways of managing their working capital or thinking about going to market and this will give us a lot of optionality plus expertise, I know on my side and then across tat. So it's been uh fun engaging with that team. Um, trucker tools, more mature products already got a broader install base. It's got more white label capabilities in terms of tracking and it's got more like I'd say, services or additional like points of interest and things like that and capabilities for truckers that would be interesting, complementary capabilities within the convoy app. And then Convoy is really focused on that end-to-end execution and streamlining every part of the load lifecycle, because again, we came out of a broker. It was a broker, it was dog-fooded with a billion dollars of investment, so it's a very refined execution. I always I like to use the word like the label execution layer. It's like an execution layer capability. I mean it's in the hands of the carriers managing every step of their process and then automating that on behalf of the broker to make it easier for them. So they're all. They're complimentary in that sense. Yeah, they overlap around the edges and you know we are, you know, actively working through automating what the end state looks like and how the pieces come together. But yeah, it's like the convo is kind of the last piece of the puzzle.

Speaker 3: 35:06

And the earlier question, like how does this evolve over time? I think I've had the fortune of working with some very forward-thinking brokers that engage in these products very early, that wanted to learn about them, wanted to try them, some of whom I would say are more farther down that path of evolving into what a next state of I would say are more farther or farther down that path of evolving into what a like next state of broker looks like. I'd say the golden use case would be Uber, freight and Convoy as they existed or as they progressed as digital brokers, which you know. It's 80 to 98% plus of load as loads are automated from booking to execution. You have a small carrier team that's really managing around the edges to execution. You have a small carrier team that's really managing around the edges, and those in the OPEX can be a third or less of what a traditional broker operates at. So that, to me, is probably the end state.

Speaker 3: 35:54

I think there's always going to be a mix because oftentimes the limiting factor is how the shippers engage or what they need, and then how that maps to the capabilities of the broker, and that's why you see a huge variance in operating models of how brokers go to market. But I do think that procurement will become more and more automated and more focused back on the relationships, meaning that a lot of brokers have very good relationship with mid-to-large carriers. That tends to be the sweet spot, particularly those mid-sized carriers where they have a particular capability. They understand their geographic footprint. They under like the carrier rep is building a deep relationship with that carrier, knows immediately when loads hit the board. Is it going to be a good fit for that carrier? They're problem solving um some. That's what I think becomes more valuable from uh carrier engagement.

Speaker 3: 36:38

But a lot of the pure transactional stuff just continues to get automated away because it's not just us, it's also ai and other capabilities coming to market on the shipper side. I just it's a slower um uh push in terms of how brokers engage with shippers. Shippers are always just a little more conservative in how they go to market um, and I think ultimately that like it's still so relationship driven, because a lot of the variance again in opex internally is all just driven by how shippers want to engage in their expectations and their service expectations or how they want to manage things on their end. So I don't think that side is going to change as quickly. I think the carrier side is where we're going to see the change happen more quickly. So it already has.

Speaker 1: 37:17

Yeah question on the evolution because you know you, you guys can create the greatest product out there, but there's a reliance on integration with TMS. There's a reliance on acceptance of the process and the product from brokers and carriers. I'm curious, as you've I mean, you've been in this industry long enough to see the evolution happen at light speed. Do you feel that? Is there any part of that equation where someone's a little bit behind the ball versus someone else, or someone's a little bit too far ahead? You know what I'm saying is like, if you've got this great product, are there TMS companies that are not ready for the integration yet? Or is adoption from the user not ahead, or is it just kind of?

Speaker 3: 38:00

homogenous alignment. The digital freight model is model has been popularized enough in the marketplace that all the TMSs at this point have some solution for that, but it's not the same as being ready for what we're offering, because it usually focuses on the booking and the matching piece of it, but not the full load execution. But the rest of the process has been built out and solved along the way as well. There's so many different tracking solutions, so all those APIs and capabilities are built out. I'd say that all TMSs that we've talked to are ready for like phase one. Phase one is basic load management, end to end. To me, the next phase, though, is really about workflow automation for the brokers and thinking about how to streamline how they manage their day to day, how they allocate loads to carry reps.

Speaker 3: 38:43

It's like the tactical questions. I know that X percent. If I know that, I should probably expect that 10% of my loads are going to be booked off of inbounds, off DAT, 20% are going to be booked via convoy, and then I need to focus on the remaining 70%. How do I focus that 70%? What information do I need? What tools do I need? How do I need to think about the load board management on a day-to-day basis. Also, as I'm going to market if I'm going to bid on freight or bid on a contract, how should I think about these other capabilities and capacity channels available to me and how that balances against current internal capabilities?

Speaker 3: 39:16

So I think that's where you'll probably see the bigger differentiation of TMSs over the next five years. I think the base level capabilities the booking, the load management, bidding all that is kind of table stakes and we're far enough along in this digitization freight journey that every TMS knows they got to play that game. Yeah, what I think they are, what they'll have to come to the table with over the next five years, is that next level. Like if I for my broker customers, how am I helping them operate in a more digitally forward model that allows them to optimize their team and make sure that their team is being utilized in the best way?

Speaker 1: 39:52

Yeah, what's interesting about what you just said there is, I think, back to. I just went through a TMS evaluation for my brokerage this year for an upgrade, and I did the same thing about five years ago year for an upgrade and I did the same thing about five years ago and I work. So what I saw was available five years ago versus what is available now, it is night and day. A lot of the names are still the same, but what they're actually focusing on is very, very different. Like five years ago, a lot of the focus was, you know, some automation, but a lot of it was we're trying to get away from the legacy system and get more to the online, web-based. It's accessible anywhere, it's easy to use, it looks nice.

Speaker 1: 40:29

And now, five years later, it's like well, that's the industry normal now, like it should be easy to, you know, easy to access. You could get it on your phone or on online, whatever, from anywhere. And now it's like there's all these other cool tools out there. We want to be able to integrate with them and leverage what they're doing. So it's, you know, our folks can operate in one system but leverage all the stuff that's out there. So it's really, really cool. That's why I was curious. If there's any TMS, you know you don't have to name any, but if there's, like you know, mostly all of them are leaning into this and they're bought in. Or is there, is there a decent percentage? That's like we're just not there yet or we don't really want to do that.

Speaker 3: 41:06

I can call out a few that we've got good relationships with. I touched on a few before For long tail brokers. Ascend is one that I'm very excited about. The launch it's natively built in. We've worked quite hand in hand.

Speaker 1: 41:18

Tim's done a great job with keeping that always ahead of what's coming in the market.

Speaker 3: 41:22

Yeah, like always ahead of what's coming in the market. Yeah, tim's a great guy, you know we, the cloud, is the biggest one. We've got a great relationship with them. I was recently at one of their conferences where you know they're already ahead of the game on AI integrations and other capabilities, and so, you know, we're currently in the process of pushing our first fully certified release with them. So, more to come, more press to come on that one. But then, moving down the list, like you know, we just launched Port Pro native integration.

Speaker 3: 41:53

We've got pretty much, I'd say, the top 10, some commercial agreement or relationship with all of them, by which and they're all at slightly different phases, which dictated both by their internal roadmaps and you know, as we've brought stuff to market, and our customer mix and what they're asking for. But yeah, I wouldn't say there's any. There may be, you know, without calling anybody out, there may be some of the more old school, old school ones that haven't just haven't invested at the same pace, that are kind of slowly weeding out of the market, but I'd say by and large, by pure load count, broker count, all the TMSs, because it's a very competitive market as well. So they don't want to be caught out and I think, certainly with us now coming on to DAT, and it's going to be a default expectation from a broker to have these capabilities. So yeah, to your point, like the I almost feel like they're going to.

Speaker 1: 42:38

Yeah, they're going to be forced to adopt, Like if their customer wants something. If they're smart and they run a good business, they're going to listen to their customer Right no-transcript.

Speaker 2: 43:17

It was something Tim and I were actually talking about two weeks ago was more to like the larger, like, think like load matching companies, right, the automations ones like in the back, and like the two, then the teens, the. Where they really found a fit, it seemed like, was with contract freight, where time was an advantage, meaning like if you can predict where the carrier is going to be and you know the load's going to be available. They worked very well. But in the spot market they tend to be very unprofitable because it's very hard to determine how many trucks are going to be there if you've got a shorter amount of time.

Speaker 2: 43:42

Right, and Tim was. I think he actually put something on LinkedIn recently about like just Uber specifically, was it like they'd been running at a loss consistently? Right, and I'm curious, like your thoughts between, like, revenue growth and profitability where, like lots of other brokers have looked at some of the very big models and said they're basically just using funded money to drive rates down right and at the end of the day, can they ever actually turn a profit? And is that an economic situation? Is that the timing of the freight and the niche they're in, or is it related to just the freight market we've been in for three and a half years of it being recessionary, where like that may turn around just because of the current economic situation.

Speaker 3: 44:24

Like that may turn around just because of the current economic situation. Yeah, with both Uber Freight and Convoy, I think it's important to understand that they both had or have. I have not, like I don't. I'm not at Uber Freight anymore, so I don't know the details, but I certainly understood it as we were as, as I was there, there's a highly profitable broker buried in a kind of larger enterprise and a larger technology company, and it was true for Convoy as well that there was a. You could have taken a very profitable chunk of business out of that if you did not have, like, there were a lot of other pieces around that which kind of resulted in it being unprofitable. And this gets to. I think one of the core challenges in our space is to be able to invest in technology at that scale. It can only be supported.

Speaker 1: 45:12

Oh, I'm not the only one who has a dog that goes nuts on the podcast. All three of us have them. Yes, welcome to the crew, bill Amazon delivery driver.

Speaker 1: 45:21

Yeah, let me follow that screwdriver. One of the things I'm curious on is um, so with when, whenever a broker, um, whenever there's an integration into into someone's TMS? Um, there's a certain group of people who the first thing they think is, like my data is not protected, someone's going to have access to all my customers information and loads and they're going to steal it from me. Um, can you speak to the, the guess, the protection or how that works, so that people would feel at ease having their customer's business and that data running through the convoy platform?

Speaker 1: 45:55

Yeah, the same as for DAT. If you're posting a load like DAT, you can see who's posting what load. Do you know what I mean?

Speaker 3: 46:00

Yeah, it's the same. That's always my counter argument. Yeah, in terms of, like, partitioning the data and how we control that data, there are a lot of protections within in the contract, just legally, in terms of how we manage that data. Uh, and beyond that, like we are not a um uh, we're not engaging with the shippers. Like we're not a broker, we don't have any like, there's no uh financial incentive or motivation to use that in any sort of like ant, like anti-competitive way. Internally. Certainly it's a big part of what we're trying to do is position like be neutral, position ourselves as neutral. Uh, we want, we're here for the broker, we're building tech for the broker. So I would say it just, you know, generally it's part of doing business that at some level you've got to be able to share the data by which you want the transactions to execute. Beyond that, like we have, no, we don't see, as an example, revenue. We don't see shipper rates. We only see the rates that they give us for the buy side and what they would want to set that at.

Speaker 1: 46:58

So we limit the data that we pull, to that that's relevant for the transaction and to that note, and this is it's slightly unrelated, but I think people that get afraid, because I've heard people be like I don't want them to even know, like the number of customers that I have or the number of loads that I'm moving, and at the end of the day, the way I always see it is like there's a level of data you need to share to be able to have optimization.

Speaker 1: 47:19

And on top of that if you have a good relationship with a customer who cares how many loads you're moving with them you know what I mean that. That's the way I've always looked with it. If you do good business and you have good partnerships, part of you know, part of that business relationship is sharing some sort of information with one another in a safe way.

Speaker 2: 47:36

So yeah, I wanted to loop back to the one thing right before your dog barked to. Let you finish the thought, though, because I think you were going down the line of thought of, like, if you've got to raise enough capital to build something that big and that impactful, you need to have a large enough portion of the market to be able to repay it over a certain period of time. Right, but what are your kind of thoughts on like? Does that at some point economically kind of fall back out, or does it like there's just always going to be a section of the market where, like, those are going to work better, where the spot market loads in the speed in which they need to be negotiated and change hands are going to be more fit for like a part I mean literally what you guys have partnering with DAT well, not partnering, but like bringing those two things together to me feels like you guys are now starting to approach that spot market with the same value proposition, without the economic disadvantage of locking in the rate and then hoping you can pay it later.

Speaker 2: 48:27

Yeah, exponentially larger, because now you're servicing every one of the large brokerages. Back to that same customer, you add up all their 10 percent of that customer's freight. If you get five or 10 of them or all those brokers now, you're being able to service a much larger piece of that whole pie and I think there was a lot of lessons learned in that. I mean, there were a lot of companies that I think tried to do that in the 2020s, that you know, two, three year range, where you know, I think, they just weren't as constrained on their cap table and, like you said, there's just only so much of that market you're going to be able to grab within a certain amount of time and you just can't repay it. You just basically end up drowning and chasing a goal that is unreachable with one brokerage. But when you spread it out now, all of a sudden, you can actually leverage that value across a lot more of the market.

Speaker 1: 49:16

Cool. I mean anything else as we get towards the tail end here, anything like near future that folks can look forward to or what's like, you know the short term 50 meter targets for for this. You know the acquisition here versus you know what should we expect three to five years from now? You got your work cut out for you, man. It's exciting, though. Awesome, ben, you got any other questions for Bill?

Speaker 2: 49:36

I'm super looking forward to just really kind of all these pieces that have come together.

Speaker 2: 49:40

I mean, from talking with Jeff earlier this year and like all the acquisitions and just you can kind of see how the pieces are going to come together.

Speaker 2: 49:57

And even going back to, I mean, when we were talking with them like two years ago on plans, on just what they were doing, starting to see the roadmap come together and to see the pieces come into place, I think it's going to be really exciting seeing how all of these things fit together, because I think there's a ton of value in how the things can some in some ways, oh it's, you know, it's like economies of scale, the fact that like you can add the one and one and get three, or the three to get five when you start pulling them together, where one is able to help in the one way that another one necessarily wasn't necessarily designed to solve that problem, like you were saying, like alco and factoring and how that's a part of Convoy, but like that is their focus, and being able to leverage that value along with yours and along with the value of, like some of the other pieces.

Speaker 2: 50:33

I think it's going to be really cool to see how it all comes together. I did want to ask one more thing. I mean, coming from Flexport, you excited to be back and mostly in the domestic truckload space again, seeing it to come to fruition.

Speaker 1: 50:45

Full circle.

Speaker 2: 50:45

That's awesome man.

Speaker 1: 50:46

Well cool, bill. Thanks for joining us on the show. I'm super excited to see how all this rolls out. Any last things you'd want to add in before we wrap up here? Yeah, we'll throw your page in the show notes here too. So if anyone wants to connect with Bill, definitely check out show notes or the description and you'll be able to connect with them. So thanks again for being on with us, bill Ben. Any final thoughts?

Speaker 2: 51:08

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

Speaker 1: 51:12

And until next time my hard knocks boys, go Bills.