Moving DoD Freight | Episode 299

Speaker 1: 0:19

Welcome back. Episode 299 of the Freight360 podcast, ben. We're almost at 300. We'll do that one next week, yeah, but if you're brand new, you got 298 other episodes plus all the Q&A sessions. And, as a caveat, I'm pretty sure the first like 20 or 30 episodes are not publicly available, just because I recorded them under a slightly different brand and company. So, but anyway, for all intents and purposes, episode two, ninety nine, share us with your friends. Check out the website Freight 360 dot net and check out the Freight Broker Basics course if you're looking for some educational options.

Speaker 1: 0:54

So do you ever have anybody ask you about that? Ben, that we're like where's the first 30 episodes is when I worked at LDI and like it. Like their name was like part of the branding of it very early on. It was like produced by them. So I remember, yeah, I just kind of like got rid of those and I'll be honest, like all the content that was in them is definitely regurgitated and improved upon in our other content. So you're not missing anything. Well, let's go. What's what's going on in Florida, man?

Speaker 1: 1:21

Nice to have you back, brother in Florida, man, nice to have you back, brother.

Speaker 2: 1:26

Yeah, a couple of weeks of army stuff, but we're back.

Speaker 2: 1:27

It is now very hot, I mean, and it's it's funny I was talking to my cousin about this like just like working out, exercise, sports and stuff, and it's like I measure a lot of this stuff, like either with a Fitbit or whatever, just like you know, all different types of things.

Speaker 2: 1:45

And I've been playing tennis now since, like I don't know, like October, and up until like May I was able to get my cardio up to right Like I could play for like two hours like pretty solid without being like super winded. When I first started, did 15 minutes in, I felt like I was going through like hell week in high school, like sports, like wanted to throw up, couldn't breathe, and it's so crazy because, like as soon as it started to get hot and also like the humidity, which also makes it way harder to breathe, I am so tired after an hour that I just stopped. I just moved my lesson from Saturday morning to like one of the nights during the week, cause I'm like my whole day shot, like I am so tired after playing out in that heat for an hour, hour and a half that like I can't, I don't even want to eat for four hours. I can't get anything done around the house and I'm just like I'm either getting really old or it is really hot, or maybe a little bit Both.

Speaker 1: 2:45

I used to love playing. I was on a nighttime volleyball league on Thursdays and I used to love like the nighttime. Like summer yeah, like it cools off a little bit Big heat wave coming across most of the US in the coming week, so it's going to be hot. It was actually interesting. So like I'm talking about, like fitness, like I, so I have a a slight. Did I give you an update on my leg.

Speaker 1: 3:09

Yeah, I know, I tore my meniscus like almost a month ago, but it's a minor tear, so like, I went to the orthopedics office and they're like, they did an x-ray which they knew nothing was going to show up, but it's all you know.

Speaker 1: 3:21

You got to do everything in order and they basically said, like, based on mobility tests and things like that, like it's probably a slight tear, self-pt is going to be the answer for no need for an mri or any like surgery or anything like that. So I actually just this week yesterday or monday got on the uh treadmill, which is where I, which is where I tore it was on the treadmill. So I got back on the treadmill for the first time in almost a month to do like just some like walk and jog intervals and, um, I was out. You know it's my, I'm like man, I was like it. It's crazy what a month of not regularly running will do to your your like cardio levels or your fitness levels. And I was like, is it just my injury or not working out, or am I just getting old and I was like, or is it all of the above?

Speaker 2: 4:05

so, dude, I'll have to send you this later, remind me, because, like, I pulled a tendon in my elbow. It was similar to like a tennis elbow injury, but this was like working out like two years ago. This thing took like 11 months to heal and I got I have tendonitis in my shoulder and I went through the MRI and stuff just to make sure I wasn't going to damage something. And same scenario, self-pt. I went to a physical therapist once. They gave me a list of exercise. I do them every morning.

Speaker 2: 4:34

But I found this guy who was on a Tim Ferriss episode where they interview him and this is like a Stanford I can't remember physiologist. He's a PhD right and studies whatever like biomechanics, but he only studies how to heal tendons and things like that, like meniscuses, injuries and like the whole interview is awesome because he explains like, especially as you get older, most people do big muscle groups but don't really strengthen like very small muscles that are all necessary to do anything. Those go first and like one fixing it. Like I was able to improve both my elbow and my shoulder in like three weeks doing like what he said, and it was basically like you just hold tension on it for 30 to 45 seconds. You do that like a couple of times every morning and there's like at that amount of time your body basically sends everything it needs to it to help repair it, but it doesn't stress it to the point where it injures the injured part, like it strengthens the rest of it.

Speaker 2: 5:35

And then there's a peptide I ordered that, I take with it. You take that and vitamin C. You put it in like a drink. It almost tastes like nothing, but it's specifically the thing that your body needs to repair tendons, which is different than protein for your muscles. And taking that every morning, doing those for like five, ten minutes, helped so much and like I went to physical therapist for like nine months and it didn't help you.

Speaker 1: 5:57

You remember in uh, when we were in florida, I was showing you I'm pouring my hydro water right now.

Speaker 2: 6:02

My little, I got the tabs I didn't get the bottle yet but I bought the thing about.

Speaker 1: 6:06

I was like ah, I got my hydro water here. It helps with inflammation anyway. Yeah, so with it, with a knee injury, and I was gone the last like two and a half three weeks for army national guard. We're up at fort drum and the timing couldn't have been worse because, like, we're out in the field and it's uneven terrain, like austere environment for the most part, and my paperwork hadn't gone through yet to like officially limit what I could and couldn't do in an army setting. So I'm like wearing combat boots, walking in the mid, like in the woods, and dude the limping, like it was bad. I I literally took what was just a, an injury to my right side of my right knee and next thing you know from the limping and like the, you know the counter act, like how I would basically um, how I would basically like uh, adjust my movement and limp, like then the left side of my knee started hurting, then my left knee started hurting, then my lower back started hurting and I was like finally like getting getting home and sleeping on a normal bed, like uh definitely has has helped out with, you know, just feeling better. But they're all connected. To tie this all in, we're going to have a good discussion today about military freight because I had a pretty interesting thing that I was dealing with as well while I was gone, which we'll kind of tie that in in today's episode.

Speaker 1: 7:18

Other stuff Florida dude, the Florida Panthers just won the Stanley Cup this week. So South Florida, I'm sure, is happy. I'm sure there's a lot of NHL fans that aren't happy. They're sick of Florida dominating, but it is what it is. I think NBA is coming up on the, did you?

Speaker 2: 7:36

watch the end of the Open. Did you get to watch any of it?

Speaker 1: 7:40

So it was on Father's Day, right, so my brothers had it on inside my house. I was hosting so I was pretty busy, but I I checked out a little bit of it. I had it on. I was just shocked at like the scores dude, like these guys I think the winner was like one under one guy under par finished yeah, and it was in. Was it in pittsburgh right?

Speaker 2: 7:58

yeah, it was oakmont. That was like one of the coolest things was like I got to play that course and like I have friends of play it. My cousin gets to play it pretty often as good friends with I think his name's Devin G. He's the pro up there, darren, who I was. Oh, you were out. My cousin won the tri-state open too as an amateur. Like two weeks ago he was going to walk with I think it was Terrell Hatley. One of the pros wanted somebody local to walk the course during the practice round and my cousin didn't end up being able to go because he had to work. But it was pretty cool watching a huge tournament and being familiar with the course and like having been able to walk it, play it, and it was really pretty interesting. A big comment was like what would a 18 handicapped or 10 handicapped player shoot under those conditions, right? Or 10 handicap players shoot under those conditions, right? And Bryson said he's like I wouldn't be surprised if an 18 handicap shot a 200 there, right, and that level of rough.

Speaker 1: 8:52

I'm like a 20 handicap Like a bogey golf is good for me. And that's when I was like, yeah, I'd probably my brother was joking. He's like, yeah, the one guy missed the cut and was at like shot like some wild score like high, and I was like, yeah, that's the kind of guy I could golf with. He's like no, he's like literally like you'd probably be like three times that.

Speaker 2: 9:10

So yeah, I mean somebody asked me. They were like well, what did you shoot when you played there? And first off, like I wasn't US open conditions when I played there, like the rough wasn't that high. Second of all, like there is a saying or a piece of advice my cousin gave me when I first played there and I think I was an eight handicap when I played there. That was when I was playing like every day and I think I I think I broke a hundred, I think I showed a 99 or a hundred of the card around here. But like there's a big asterisk next to that because the saying was and he told me this before I went because I was like nervous to play this course he's like the saying is like play fast and if you're playing poorly, play faster. Right, because there's a caddy and you're playing with other people.

Speaker 2: 9:53

And I was playing with, like I think they matched me it was the senior legal counsel for Callaway Golf. This guy played with Vijay Singh, like the day before and like this other CEO of a company that were like really good. So like I shot a 99 or a hundred, but I definitely didn't play every ball all the way to the hole because like you hit a shot and sometimes you're at an eight or a nine and like you're just going to pick your ball to go to the next hole to not hold the group up, so like I definitely probably would have shot playing like true golf rules, probably like 115, 120 as like a seven handicapper.

Speaker 1: 10:27

I did one of the Pinehurst courses a few years ago. I shot like a 98 at.

Speaker 2: 10:31

We're actually, I'm going next week.

Speaker 1: 10:33

I'm going to Kiowa next week for a buddy of mine's getting married and he wants to do a golf trip. So we're we're going down to Charleston, and what is it Like the ocean course there that the PGA has a event at every few years? So that'll be a good one, but yeah anyway.

Speaker 2: 10:47

But really cool to see JJ spawn win. I mean like he's definitely like an everyday golfer and there was a post I saw that like and he had, I think, his two daughters and he's like, yeah, he was at CVS at three o'clock in the morning on Sunday Cause his daughter was throwing up, and then came back and then like won the open. They're like Absolutely great Father's Day.

Speaker 1: 11:08

So news here. There's two things. I wanted to highlight one of them and this came out in our newsletter on Tuesday. So if you guys aren't subscribed, make sure you go to the website Freight360.net. There's a box to put your email address in. You'll get our news update every Tuesday and then our news and market update every Thursday.

Speaker 1: 11:25

Just some quick highlights from various sources around the freight community, but the one that I found interesting was there was an article from who did this. This was G Captain, which they do a lot with maritime trends and whatnot, but this they looked at the amount of empty containers and where they're moving and what that could indicate for freight. So I'll try and read a little snippet here. Basically, let's see.

Speaker 1: 11:53

So after optimism spiked following the US-China talks in Geneva, many in the industry anticipated a surge in peak season imports. But the data tells a different story. One of the most telling signs is a steep decline in empty container exports out of major US ports like LA and Long Beach. When there's demand, empty containers are hustled back to Asia for refilling. That rush simply isn't happening. So that's kind of the long and short of it. But basically what they're saying is you know, you know, we think because there's this pause in tariffs and we don't know what's going to happen, that you know. We hey stuff's going to boom, but the reality is like the containers aren't moving there because the demand is not there, just truly isn't there.

Speaker 2: 12:35

So yeah, two things on the back that Ryan Peterson, ceo of Flexport, has done a lot of really good content on what's happening. Flexport has done a lot of really good content on what's happening and he said this, probably like a month ago, is exactly that, like most of what ships from the US to China are is air is the joke, because they're empty containers that get refilled to come back in. That was already not happening and he said they were. The shipping lines were already sailing blank, meaning empty ships because the demand wasn't there. They were rerouting ships to other countries.

Speaker 2: 13:09

So he had said back then that even if there is a pause, there's going to be a giant time lag for the shipping lines to either get empty containers where they're needed and to get the ships there, which takes time, he's like. So that's already going to be a whiplash. Even if the demand comes back, you're going to see something like that. And he said the other thing was not only that, but like trade was already being rerouted and now, even when you saw some of the increases, like the rates went way up. They jumped like 50% as soon as there was a pause because it costs more money to get the empties over there. So even though there's the pause in tariffs, there's also an increase in the cost to now ship a container, which people are going to pay in inflation, right, yep.

Speaker 2: 13:53

And then there was something in Freight Caviar this morning that said Gene Sirocco, I think is like the head of the unions over at the ports over on the West Coast and he's like imports and exports are down like nine and five or six percent. You're starting to see carriers really starting to feel the pain because there's just not as much cargo to be moving out of there right now and everybody is seeing the impact in our industry one way or another. Yep, anything.

Speaker 1: 14:20

So yeah, interesting Not super positive. Yeah, the other one, which is somewhat timely, because we just recently had an episode with DAT where we talked about the outgo yes acquisition. I wish we had Ken like readily available to like bring him on here and get his, get his take, but like it was settled yesterday it was yeah, this morning there was in Freight Caviar.

Speaker 2: 14:44

There was an emergency hearing yesterday.

Speaker 1: 14:47

I know it was yesterday yeah, but I didn't even know. This was like a thing and I thought about it too At first. I was like, didn't they used to have like an OTR relationship or like a referral thing? But OTR was basically trying to file suit, saying that, like you're violating a non-compete, like a non-competition that we had from our RevShare program in the past. So what was the outcome then?

Speaker 2: 15:04

An emergency hearing in the OTR DAT lawsuit took place yesterday, June 17th, following a court order temporarily halting DAT's ALCO platform over a non-compete dispute. According to legal commentator Matt Leffler, the case has now been settled. Dat confirmed that ALCO remains live with loads marked by a black dollar sign indicating broker eligibility. Dat says it remains focused on minimizing disruptions and scaling its carrier payment.

Speaker 1: 16:23

It was like a blue checkmark is what they were saying? Yes, because that was like the OTR thing was the blue checkmark.

Speaker 2: 16:29

And isn't that what Alco originally?

Speaker 1: 16:30

had was a blue checkmark, so they changed it to a black dollar sign.

Speaker 2: 16:33

Yeah, so they changed it to a black dollar sign, yeah, like it was that. Basically, I think when Alco, if you were as a carrier looking at a broker or I think, a broker looking at a carrier, I can't remember which one it showed you the credit worthiness with the same indication that was under the OTR relationship. So they were arguing that that was part of it. And then they argued something about the non-compete.

Speaker 1: 17:02

And I didn't get into the like the legal details of it, but it's interesting. Well, I'm glad that's taken care of. So let's, let's get into it today. So we're going to talk some general, uh, information about government freight, dod, sddc. What does it all mean? What does it all stand for? We'll dig into that. And what's what's interesting is I have never personally moved DoD freight on the freight brokerage side my company, we have brokers that do it, so I'm familiar with the process. But I have worked on the military side of it once historically for a deployment and I'm working on it again right now, which we can kind of dig into. And you have worked on the DoD side with Crowley business, I believe, and some other things, so you're well-versed in that Crowley, XPO through TQL.

Speaker 2: 17:41

Like I ran it and managed Bruce, who was on our show years ago. He ran the Mississippi to. I think he had the East Coast, yeah, and I had the West Coast. We split the country in half so my team ran anything military on the West side and at first XPO had the contract, Then Crowley took the contract. So I manage it directly with the SDDC and also through both Crowley and XPO when they manage all of it, like the entire contract.

Speaker 1: 18:06

Yep. So let's I want to start off just kind of basic, like define what some of these things are right. So when we say DOD, we're talking Department of Defense. All right, now the SDDC, which people will often hear, that's the Surface Distribution and Deployment Command. When you look at the United States military, you have United States Transportation Command which is like the overarching transportation organization that handles all stuff moving air, ocean and on the ground. Okay, the air force has air mobility command, that's what flies things around. The navy has a military sea lift command which moves things on boats and whereas where we come in domestically as freight brokers and have opportunities is with the ground side of things, the SDDC, the Service Distribution Deployment Command. It's the Army's leg of that.

Speaker 2: 19:01

And go ahead. It's not just the Army At the very least, I don't think, because we used to work a lot.

Speaker 1: 19:07

It's not it's not just the Army, but it's primarily the Army, but it's all the ground things so yeah, so we did a lot with marine bases.

Speaker 2: 19:19

I remember like 29 palms and things. So we did like the troop movements and things for mostly the marines and the army when they would either move for deployments or re or move to like rearrange things from one base to another, like so not totally nerd out all this is a military logistic logistician, not to totally nerd out.

Speaker 1: 19:35

But sdc is an army component, all right, the same way that Air Mobility Command is an Air Force component. But they don't move only their own services stuff, they're just the one responsible for it. So like Air Mobility Command, for the Air Force will move army assets will move Navy assets, et cetera, military Sealift Command has the ships. They will move, you know, a Marine Corps unit or an army overseas ships.

Speaker 2: 19:58

They will move a Marine Corps unit or an.

Speaker 1: 19:59

Army unit overseas, they'll move their equipment, the same way that SDDC for the Army will move Army equipment on the ground. They'll move Navy equipment on the ground, they'll move Marine equipment on the ground. It's just that the Department of Defense assigns each of those three to a specific organization to take command and control of it. So when we say SDDC and we say it's an Army component, it does not mean it's just moving Army equipment.

Speaker 2: 20:22

It just means it sits under that branch.

Speaker 1: 20:25

Yep. It's considered an Army service component command, so Army owns and manages it. But the customer is all the Department of Defense assets. So when you hear SDDC, that is oftentimes who the actual customer is Like. If you look at who you're invoicing and who you're billing, it's SDDC because that's who's actually I think what's that?

Speaker 2: 20:47

SDDC is the organization you're working with and, if I remember, the billing goes through CAS. At least it used to Sincada.

Speaker 1: 20:54

Oh Sincada.

Speaker 2: 20:56

Oh, sincada, yeah, that's right.

Speaker 1: 20:59

So yeah, like we won't get into the super fine-tuned details, but like you have to have a US bank account. Sincada is like how payments are processed and whatnot, but basically we'll talk about the big picture of how this stuff all works, okay.

Speaker 2: 21:15

I do want to put one little point out there, right, because we've gotten plenty of questions over the years. Like I want to get set up, how does this look? Where do I go through? Right, like you really do want to understand how these things work, because there's a lot of admin work for each of these loads and there's not often as much profit, but there's a ton of volume, right, so there's different things you want to kind of understand if you're going to start moving this type of freight.

Speaker 2: 21:41

Honestly, like I would spend the time to at least do some high level research to understand how and what organizations you need to do, what hoops you need to jump through to get onboarded.

Speaker 2: 21:51

Like I remember when we did this, we literally whiteboarded it out to see exactly what we're explaining.

Speaker 2: 21:56

Like, ok, this organization is for this part of the military, they move things for these. This one does this. So we could literally visualize it and kind of see it, so you could understand who you're working with, what you're moving where and the invoicing parts of it and each step you need to take to get involved in actually participating in these bids and things. So, through it, though, like you kind of don't have to keep doing it. It's really like a one and done thing, but really understanding that, like the admin requirement was not small, like for the volume of freight we moved, we had way more staff doing invoicing and billing than probably almost any other account, probably a TQL, because the steps to make sure you get paid if they're not done right, you just don't get paid. It's not like you just call somebody and they're like oh yeah, let me process this for you. Like it's got to go through every one of the bureaucratic steps to make sure you get paid for the work.

Speaker 1: 22:49

Do you ever work with GFM? That's like the TMS, global global freight management, so like that's another piece of it too, when you start to hear this stuff, if you go through the process of setting your company up whether it's an asset-based company or a 3PL to bid on and move military freight, you're gonna see these terms brought up. So GFM is the system where the bidding and everything happens. Sincada, which I believe the parent organization is US Bank Corp, that's, that's the payment processing system.

Speaker 2: 23:20

And then SCDC is the actual organization in which these awards are given and there's three, right, if you want to outline it, because I remember like we had two people staff just doing Sincada and billing. We had one person that just sat in that TMS all day as bids came up to put in numbers, to submit them, to get awarded freight. And then there was another bid system that was sent out at least it was by like Excel sheets that was through the SDDC. They would send out like one or two a day, sometimes sometimes seven, anywhere from like five to 20 bids would go out every day or during a week, and then it had what was the movement, what was the truck codes that they were requesting, and then what the volume was, what the timeframe was, and then you would put in your number for each one of them, submit it, and then usually the top five to seven brokers and carriers would get chosen and like they were anywhere from like hey, we've got a 20 truck movement or a five truck movement, up to 150 or 200 truck movements, 250.

Speaker 2: 24:23

But also, like I remember one of the longest bids that was the smallest number was like I worked on moving a rocket engine from like the base in like Utah that had to go to California then over to Cape Canaveral and this thing was like. I remember it was like 80 or 90,000 pounds. It had to go on like a 13 axle trailer. It was the most expensive move I've ever looked at Like. I think the bid on that was something like $75,000.

Speaker 1: 26:09

Oh yeah, you think, between, like insurance and specialized equipment. So let's, let's start with like, yeah, what are, what are some of the reasons that you know? What are the use cases? If we consider the, the military, as the customer here, why are they moving things? What are these scenarios? So you just, you know, you gave an example of one which is, hey, we need to move something unique from one place to another for some specific reason. Right, that's, that's one, and those are kind of one offs. Then you have, if a unit is mobilizing or deploying and they didn't move all their stuff from their base maybe to a port where it's going to go on a ship, ok, so you got to do all that ground transport to get it from whatever fort or camp it's at to wherever it's going to load out of, and that's going to be a big project a lot of times with a lot of different equipment involved there. Another example it's one that I'm dealing with right now is what's that?

Speaker 2: 27:07

So I remember it was like equipment stuff and then you also had like rolling stock like a bunch of RGNs, because you're loading trucks onto that like military trucks onto it, to get on a boat or off of it.

Speaker 1: 27:18

So that's the example I want to talk through today. Base-to-base move is another one. Right where we're moving equipment from one base to another base and this could happen for a variety of reasons is going to a big culminating training exercise, and it's at a place like the National Training Center out in 29,. Is it 29 Palms or somewhere?

Speaker 2: 27:40

No, it's in California, Most of them for some reason. Yeah, the trainings, if I remember, are like, I remember doing a lot with the base in South Carolina, going to 29 Palms and those were like big moves 29 Palms is a Marine Corps base, but the National Training Center at Camp I think it's Camp Irvine or Irwing, or I should know this in the Army.

Speaker 1: 27:58

Let's see Where's NTC. Camp Irwin, california, and then you've got Fort Polk in Louisiana, is another big training area for the Army. You've got a bunch of them right. But this is again. You're going to move a whole unit out from one base to another and then on the back end you're going to Other bucket, another one that we used to do a lot of support with, was the base that's up by San Francisco.

Speaker 2: 28:24

They support the wildfires and the firemen that go out and, like you know, huge forest fires. When there were fires a ton that year I remember like all the equipment that went out there came from that military base. So we would get like spot loads where we'd actually like talk to them. They would call us and be like, hey, we got to get eight trucks up there in the next hour and a half. Like we did a lot of that supporting the wildfires during that year when they were really prevalent off that base.

Speaker 1: 28:53

Yep. So the one that I'm dealing with right now is it's a base to base move. So we've got in New York State and the National Guard, we've got a logistics unit that's in western New York, south of Buffalo, and they're getting restationed. So it's not temporary, it's a permanent move. So all their stuff, everything from trucks to generators and you name it is all going to New York City permanently. It's going to be their new home, their new station, going to be their new home, their new station. So what we have to do is we have to figure out how are we going to move all this stuff from one side of the state literally all the way across the other side of the state, and so we'll kind of unpack that a little bit here.

Speaker 1: 29:37

But you go back about a dozen years ago. The last time I dealt with one of these was for a mobilization or deployment. So actually that same unit that's repositioning now I used to be a part of, and when we deployed the last time we had to get all of our stuff down to Texas where we trained up for two months before going overseas. So I was the unit movement guy, so we I was the unit movement guy, so I actually legitimately was there when flatbed drivers rolled up and we're loading our containers and our equipment up on flatbeds and I'm driving it down there. But it's interesting the way it works.

Speaker 1: 30:16

National Guard and active duty military are a little bit different, but there's a, there's a head officer, it's a TO that you're probably familiar with, the transportation officer for the base and the active duty. And in the National Guard it's a. It's a state transportation officer for the base, in the active duty and in the National Guard it's a state transportation officer, so they handle not just a base but all the units within the state. So that's the actual person who you're likely going to have a relationship with, who will tender, or they might be requesting information or quotes from you or tendering things out to you or getting you approved on their end. There's all kinds of ways this can happen.

Speaker 2: 30:41

Here's something really important about this, right. People think and this is applicable in any freight you move and this is why I probably say this more than any other piece of advice in our industry is, you need to speak with the people you're doing business with and you need to have a relationship. It changes one the amount of business. You'll get the likelihood, you'll get the business knowing what's going on, beyond just the details that get emailed to you, because, like in the instance of TOs, right, quickly is okay. So we get an Excel sheet with bids. They're very similar to any bid you're going to do for any company, except they're going to happen all together over one period of time, and here's why that matters.

Speaker 2: 31:24

If you are moving, say, 10 or 15 flatbeds a day for 10 days, right, there's only so many flatbeds within 50 or 150 miles of a base. So when you've got to move 15 to 20 a day you almost always suck up all of the available spot capacity before you hit the number that's needed. So then you've got to go to surrounding areas and pay to deadhead trucks to come in and load, to then move, because there's usually just not that many available for that period of time, right? So what happens in a practical standpoint when you're moving, this is okay. Say, the average rate on that lane is just like I don't know 3,500 bucks. Your first one or two trucks, you might pay 34 to 36 because a guy needs to go there, he'll take it a little less. Somebody kind of doesn't want to. You pay a little more. When you get to like your fourth or fifth truck, you book that day like you are always paying way above the average because they're usually not as close and you got to pay to deadhead them. That's the first thing you got to understand when you're bidding these. The second thing you got to understand is there are multiple brokers always working on these movements. So if you got, say, there's 15 loads a day and you get allocated five, I get allocated five and two other brokers each get allocated five. I get allocated five and two other brokers each get allocated five. If I bid, say, $3,700 on that lane because I feel like I'm going to pay $35,000, but you bid $4,000 and you expect to pay $38,000, you're fourth on that list, so I get the first five because I am the cheapest guy. If you are number four on that list, you bid more money, so you have more money to pay carriers.

Speaker 2: 33:03

So what happens is is when everybody posts their loads on DAT example, for that day I need to cover mine for the average, call it 3,500. You want to get your trucks booked up before they're all gone, so you start offering every truck 38 because you got $4,000 into it. So what happens is is you buy all the capacity for the higher rate and I don't get any covered. And this is an instance where, like you really end up competing with each other to get the same trucks to go run the same freight, which pushes all the rates up. This is important because you need to understand the relationship of how you're bidding these.

Speaker 2: 33:37

Your rates versus volume on a given day change. It's not the same thing as booking one or two trucks. You end up paying different money because there's more need, right, higher demand pushes prices up. Well, the same thing happens with shippers. This is why shippers don't want to give a whole bunch of the same loads to four or five brokers, because if everybody starts posting the same load, sometimes all it does is inflate the cost. The shipper pays and the trucks win. This is one of these scenarios where carriers always complain that brokers drive rates down, but in a lot of cases a lot of brokers competing for the same truck actually benefits carriers and it pushes their rates up because the carriers are able to play the brokers against each other for a better rate.

Speaker 1: 34:19

So that's a really, really good point, and this is applicable not just to military freight. So, and that goes right to the example that I'm talking through here. So the scenario that we've got is this is a logistics unit, so they have a lot of big trucks, big equipment and they have some smaller things as well. But this unit is actually designed by its structure to be able to move, to self self-move the unit wherever it has to go. So it has the trucks and it has the flatbeds and it has the van, the van trailers, to be able to move stuff. So the question is, you know, do does this unit self-move all of its stuff?

Speaker 1: 34:55

And the reality is you're taking young, somewhat inexperienced drivers and ask them to drive a very, very large military truck into New York City. Not a good idea, right? So that's where we look at okay, why don't we have the experts that do this every single day and not some 20-year-old National Guard soldier who's, you know, driven it for three hours? Right? Why don't we hire the professionals to move the more intricate stuff? But now we're looking at what you just said. If we've got, let's say, 30 trucks that got to move, right, and we've got to load them on specialized low boys or RGNs, or in some cases it's Humvees going on flatbeds. You're going to suck that capacity up quick, which will drive your prices up. So the consideration we had is well, what is important here? Is it about getting it done realistically, with a cost estimate that makes sense, or does it have to get there by a certain time and which we always talk about right In freight? In general, it's like it's not black or white either.

Speaker 2: 35:53

It's not binary, meaning like we're all price or we're all service. The reality is is most shippers have to weigh both of these and come up with some gray area in the middle where service is important to a point and then it's like okay, we're going to give up a little bit of service to save a little bit of money, because most companies, even the military, doesn't have an unlimited budget to just go, and in certain scenarios that budget goes out the window and service matters.

Speaker 2: 36:21

Everybody thinks that, but it's like there are very few scenarios where budget goes completely out the window and it's all service. That's usually when things can't move COVID and things right, very extreme, but almost every shipper is weighing the same thing you're talking about, like we need to get all these moved by this deadline, so like we have a hard stop to get them there. But how do we do this without going unlimited budget and giving up all of our service by trying to be too cheap, like how do you really gauge that line? This is how you work back with your shippers, by the way, as a broker, to get them to understand it's not black or white. And if somebody is just like I'm all cheap and I want all service, like they're, I always laugh because it's like they're digging their own grave.

Speaker 1: 37:00

You're just going to give up service if you're leaning that far.

Speaker 1: 37:03

In that way, these are the conversations that happen on the military side. So, to give you context on it, we were talking about it about a week or so ago and they know that I work in freight brokerage. So they're asking me what does this look like from your side of it, on the commercial trucking side? And I explained the same thing hey, I can give you ballpark what a going rate is for a flatbed? I said but there are other things that impact that. So as you try to suck up this capacity and do it all at once, that rate is going to get driven up. I said. Furthermore, you're sending, you're trying to get into New York City. I said there are plenty of drivers who will refuse to ever deliver within the five boroughs because they don't want to deal with.

Speaker 2: 37:43

The same reason we don't want to send drivers. Exactly the same reason we don't want to send them is the same point of view some folks are going to have.

Speaker 1: 37:51

So they said well, what are some things that we can do to kind of like outline this? So you know, we have these little think tanks and whatnot, and then the output of all this is all right, here's the deal. We wanna move 50% of the equipment by this date, 75 by this date and 100% by this date. The rest is flexible, right. So we have kind of like benchmarks. Like you said, there's that gray area there. That's exactly what we're dealing with here is okay, we wanna have the cost realistic and we understand it's gonna be within this general window. But we, you know, we're also going to have requirements on when we have certain percentages. Then you have to find the balancing act and once this you know, we have to put together ideas of like okay, we have equipment.

Speaker 1: 38:33

It's not all in western new york. Some of it's up in fort drum and then in the adirondacks area, some of it's in western new york near buffalo, some of it's in the middle of the state at a maintenance facility. So the question is, do we try to consolidate it all into one area, make it easy and try to get it awarded as some sort of a project for a motor carrier? We put it out for bid through everybody. You know all the brokers and carriers that are in there bidding on it. So we're looking at ways to, you know, try and make it interesting and make it as cost effective as possible and make it as cost effective as possible For us to be able to get the green light to go ahead and hire commercial and run this through STDC.

Speaker 1: 39:07

We have to show that the cost, the estimated cost to do this, is worth it compared to. You know, the limitations and the safety risks of doing it as a self-move, with inexperienced young soldiers that haven't driven the equipment a whole lot. So it'll be interesting to see how it all pans out and plays out. But those are the kinds of things that happen on the other side of these conversations. It's not always just hey, this unit has to get there for training in two weeks, get it moved. Sometimes you have more of these like okay, well, there's more considerations here, it's not just about the timeline, it's also about service et cetera.

Speaker 2: 39:45

So so there's that reminds me of this really funny story and I'll never forget this just because of just how it played out. I was having a conversation with a TO I think it was in South Carolina, and they went with like and again, when you get to know some of them, you can understand the ones that are in situations that are like yours and some that are kind of just like you got to get this done and you got to get it done for this number and that's it Right. And I remember this one move like we bid everything out. It was going like as planned, but then, like the number of trucks they needed increased unexpectedly, Like they needed like an extra 20 percent of the trucks for. Like the number of trucks they needed increased unexpectedly, Like they needed like an extra 20% of the trucks for like the last couple of days. So if they needed 10 a day, all of a sudden it was 15 a day.

Speaker 2: 40:30

And I was talking to the TO, cause that's who you're working with all day on this, making sure everything's getting loaded, getting there on time, and you're working back and forth. He's like well, hey, like we need an extra five trucks a day. And I remember telling him I was like, well, hey, like we need an extra five trucks a day. And I remember telling him I was like, listen, I was like I'm just being honest with you, Like, and when you do these a lot, you get to know the other brokers you're working with and oftentimes we would talk with each other because we're all working for the same goal to get the move. Get a move effectively. Not every broker is just trying to undercut, to just make money Like. These are long-term relationships, you care about doing them well. Also, if you have a failure, you get blocked from all SDD freight sometimes for, like I think, 45 days Can.

Speaker 1: 41:09

it depends on the TO. I'll tell you from the inside it's not actually that black and white.

Speaker 2: 41:14

So this is the fear from like our point of view. We have teams staffed. I think at the time we had like 15 or 20 people with the teams we ran. So like if you don't have freight for 45 days, you are paying salaries for a month and a half with no loads. Like that is a very, very big risk you're trying to avoid. Again, how practical that was didn't happen that often, but we'd heard it happened and he goes definitely can yeah.

Speaker 2: 41:37

And he goes, yeah, and he's like we need, you know, five more trucks a day. And I remember telling him I said, listen, like can you get me an extra? And it wasn't a big number, like I need like an extra 350 per truck, because I think they were coast to coast, which wasn't a huge number. But I'm like, and I told him, I'm like we've been doing this for six days. We are sucking up all the capacity at whatever. It was 15 trucks a day If you're going, 30% more trucks. Like we've got to bring them from an area farther away to get them there on time. Like we've got to pay these guys deadhead. It's not like we're keeping this money, we're literally going to give it to the carriers to get you what you need. They're farther away. And he was like, well, I can't do that, we're not, I'm not able to go above this budget. Like you got to move it for what you bid it for. And I said, listen, like I will be happy to hold the number, but you're telling me they all got to be moved by Tuesday. There aren't enough trucks this close to your base to get it done by Tuesday. At your rate, it will be done Thursday.

Speaker 2: 42:31

He goes well, it can't. They all got to be out by Tuesday. And I go well, you've got two choices to make. Like you, either get a move by Tuesday at a higher number or you're just going to have to wait, because nobody's just going to lose, and work all afternoon to get this moved because you changed the parameters.

Speaker 2: 42:49

And I'll never forget how he said this to me. He said it's super serious, like almost in a movie. He goes well, son, failure isn't an option. And I remember I paused for a minute and I was like and all do respect, sir, I was like failure is your most likely outcome. If you don't pick which one of these because these aren't my opinions, these are just the economics of the situation you're in. So, like you can either look really bad to who you report to by missing your deadline or you can find a way to get and it wasn't just us, it was like any of the brokers you work with. I'm like I don't even care if you give me the loads, give them to the other broker I think I was moving to. Like Landstar mostly. I'm like give them to Mario over there. I was like. But at the end of the day, like nobody's got the ability to get a driver to drive 250 miles empty for free, so somebody has got to find a way to pay these guys.

Speaker 1: 43:36

Yep. So I'll tell you, like the um and very similar to like um, you know private companies and and customers that are not government or military. The to um is just like any other customer. So, like you mentioned, you could get blacklisted for 45 days. So, like our guy in new york state, um I had this conversation with him a couple years ago and he's like. He's like yeah, that's, that's not how it works. He goes, he goes. We have leeway, he goes. I can pick and choose who I want to work with based on if I like them or not he goes. I have some wiggle room on rates If I need to. I can tell someone that I can't work with them for X amount of time because they screwed up, or I can give them a pass. So it's the same way that like customers are, like they have that. They have that ability.

Speaker 2: 44:19

I'm so glad you brought that up. That's what I wanted to circle back to right, which was what we learned. After you do this for like a few months or years, like you realize, like it's not just the lowest number, it's the lowest reasonable number compared to your track record. Right, If you get them, every truck they've ever asked for for, every time you've bid that like you get priority. Why? Because there's less risk for the guy doing business with you, right? Yep, Just like you said, when you get to know them and you get a relationship like, they'll tell you this. They're like look, man, I've done the last three movements with you guys. You have not missed a beat. Every truck's been on time. So when you go, hey, look, I need a little bit more to help you get this thing done, they're way more inclined to help you.

Speaker 2: 45:03

This is also why, when you start working with a new customer, your first couple loads there's no leeway on rate and to go back and ask for more money makes you look worse. Why? Because you haven't established a track record of trust, of service, of you doing what you say you're going to do. Once you have that, then you get a little more flexibility because they know what they're paying for. It's not. Oh, this is a bait and switch. This guy told me he can move the load for 1500 bucks. Took the load, called me an hour later, told me he needs 2200 bucks. Like nobody wants to do business with that person. If that's the way you're starting your relationship.

Speaker 1: 45:38

Absolutely. So those are kind of the basics. We got anything else on the dod side here. That was really my.

Speaker 1: 45:46

My whole thing is like I guess the big takeaway here and then I'll throw it back to you it's like whether it's dod or anything else, you'll see similarities, you know, across the board with all these different situations. So there's the relationship piece of it. You have unique situations. You have repeat business versus one-offs, the ability to lose a customer because you screwed up or whatnot, and how to have that hard conversation with a customer when you can't give them everything that they're asking for. And we actually have a good Q&A for our Final Mile segment that'll come out on Tuesday where someone asked like how do I deal with the situation where the rate's not going to work and all that stuff? So that's the big takeaway here is you treat these situations just like any others. I would say the added layer here is that understand that when it comes to military freight, the setup process and the requirements, like we mentioned early on in the show, they are a little bit more robust and, you know, stringent than just setting up with some old produce broker out in Idaho.

Speaker 2: 46:52

Here's what I would say and this is from some takeaways that I really learned that you can't learn unless you do it. Ways that I really learned that you can't learn unless you do it Like I mean you can learn it by listening to us, but like you're still going to probably have to do this to experience it, to really understand how to do it better. And it's the first biggest learning curve was what I kept saying is like when you move multiple trucks on the same lane every day for a certain period of time, the pricing is very different because there's not an infinite number of trucks there all day. Most people only move one or two loads on a lane a day, maybe an off day where it's three, but they're also not doing that consecutive days with a deadline. It is very different when you're like all this stuff's got to be moved in 10 calendar days with no failure. This is how many trucks you need every day. You lose the ability to really negotiate price and a lot of it. The carriers are going to be able to get whatever they ask for, and you know, rightfully so. Some of them are farther away. They need to get paid deadhead money. So, like your, averages do not hold up. So if you're used to pricing things based on what the debt average is, plus or minus whatever you think, like that kind of goes out the window the more trucks you need per day.

Speaker 2: 48:11

For sure there's a correlation we always talk about between service and price. But when you've got a project with a start and a deadline, that has a very bad outcome if it's not met, it really amplifies the relationship between service and price. Because normally you move one load a day or two in advance, like that's not that big of a deal. But if you bid a whole project, say you're the only broker and you're working even just with any shipper and it's five loads a day, everything's got to be moved in five days. Right, you take everything that you think you pay on one truck, you post up a couple of trucks, write a number down, multiply that by five times five days and you go here's what your project costs. You're going to be way off, like you're just nowhere near going to be able to cover that volume in that timeframe. And then you have two options it either gets longer or you need more money. So like that's the biggest learning.

Speaker 2: 49:02

The second biggest learning we learned from doing military freight and I had the opportunity to move it under different organizations, so different perspectives, because they had different pricing when we moved those bids that were emailed through the SDDC. There's so many carriers and brokers bidding on it that the time it took to bid enough of them to get loads did not make sense financially. Like we're spending hours a day bidding and quoting freight to get a few loads a couple of weeks from then. So really pretty quickly we started to realize we're paying extra people to invoice it, extra people to sit in this TMS system, extra people to run quotes all day. When you pay all those people, all of a sudden you realize like you need to move a lot of loads to cover those salaries and honestly like it wasn't that profitable for that area of the DOD.

Speaker 2: 49:52

Now, other areas, like you say, where it's extreme, like hurricanes, fema, right, that stuff goes open checkbook. Why? Because if it doesn't get there, people die, yeah, so all of a sudden you can get the resources you need to do the work and I'm not suggesting price gouging or anything like that, but like when you've got to charge what it takes to perform that work, that can be worthwhile because the repercussions of it not getting done are catastrophic. Those scenarios can be profitable and are worth the energy and it's not a small amount of work Like when we would support hurricanes you've got. We would have sometimes five to 10 people in certain areas, like you would work.

Speaker 1: 50:30

12 hours a day. It's supply and demand when it comes down to like you really can't even gouge, because if you try to gouge, someone's going to undercut you and still have a good margin on it.

Speaker 2: 50:38

So it's just it's it's going to undercut you and still have a good margin on it. So it's just it's economics overall. It's just what it comes down to. And these accounts were much more profitable when XPO had the contracts because they were cost plus, which meant like you could perform the work and you put a reasonable margin on it. They had very good service but a much bigger budget that was profitable to run when they switched and then Crowley started managing it and more of it went through the SCDC. In some ways, like it became less profitable. Crowley was able to manage it very well. But how Crowley was able to achieve that is. Crowley built out an entire brokerage division to support the whole military contract, was able to do that in-house and prioritize smaller carriers to keep their costs down. Like they did a very effective job at keeping the service up and the cost down when they kept it all in-house.

Speaker 2: 51:24

To your point of when you give it to lots of brokers, it is going to inflate rates in some ways. So like there's lots of things to consider when you think about the business side of this. Is what you're doing worth the effort that goes into it? And sometimes it is yes and sometimes it isn't. And I mean there's lots of things to kind of understand as you're doing this, to determine like hey, like this is great, that's to lots of volume, but how much of this are we getting for the work we put in to get awarded it Right? Those are always things you want to consider as you're moving with anybody 100 percent.

Speaker 1: 51:58

Well, good discussion, good takeaways on all this stuff. Let us know what you guys think and if you're working on any military stuff or have any questions about it, share it in the comments or send us a message. Any final thoughts, ben?

Speaker 2: 52:12

Do you believe you can or believe you can't? You're right.

Speaker 1: 52:16

And until next time go Bills.