A Unique Pricing Method- tested by a major shipper

🔥 Shippers- this is your episode!🔥
Hear the journey of a major Supply Chain Executive who instead of having his team managing hundreds of brokers and carriers, he selected 5 partners with contracted pricing, self-monitoring and scalable operations.
No take-backs.😱 No spot market. 😌

Ron Kane, Supply Chain Consultant, formerly the VP of Operations at Monster, VP of Supply Chain at Stone Brewing and Chief Supply Chain Officer at Pabst.
Ryan Daube, Principal at DFK Group, former owner of AFN Logistics (purchased by GlobalTranz in 2018)

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Sponsored by
Lean Staffing Solutions:  https://leanstaffing.com/
OTR Capital: https://otrcapital.com/madgaines/
SwanLeap: https://swanleap.com/madgaines

Transcript

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[Music] happy friday everybody welcome to mad gains hold on i gotta turn this [ __ ] up it's friday it's friday the 13th naturally i bring you guys the free godfather oh yeah all right welcome to mad games live i am cassandra gaines your host we have a lot of new people okay i see you mike yes this is my dispatch headset okay you can make my but you guys can hear me really well like this you know everybody makes fun of me because my dispatch headset fine um we are gonna have some very special guests one guest you guys have never seen on the show um so he's a special treat one is the freight godfather who we all know and we're gonna introduce to you a new pricing and operations model that you haven't heard anywhere else so it's it's new for reals not like marketing spin new it's new for real uh so we have three sponsors but i'm excited about this okay first otr capital you all know i love otr capital because they don't play games so for my brokers shippers and carriers actually they don't play games with transactions with termination fees they do the back office work so they will treat you like a family so otr factoring reach out to grace and you have a bunch of people who are going to be in the comments andrew teal is in the house and already admiring ron's shirt but not my shirt okay um i'll remember that andrew lean staffing all right here's the thing about lean staffing people hear about lean staffing they know everybody uses lean staffing but i don't think some people know exactly what to use lean staffing for so i came up with a couple examples for you guys so pay attention uh a lot of back office work they can handle for you so don't worry about hiring people you can choose clean staffing instead so pod retrieval you've got data entry customer service you've got dispatch and you have uh oh debt collecting i thought that one was a good one and tech support so reach out to my folks at lean staffing they're all in the comments as well so i have a special treat for you guys today hold on [ __ ] hair is in my way all the time um special treat hold on swan leap all right they've sponsored before but uh brad hollister the ceo he has decided to give mad tropis a very special uh offer uh hold on i gotta read what he sent me he said that for madropolis members go to the link that's in the description in every feed you have brian parker's in the house um and he will give you guys six months free access to the tms six [ __ ] months six months people he's got a good tms it's not clunky it's not old it's already integrated with a lot of shippers so hop to it go to the link after the show not now and that is my opening so now i'm gonna introduce you to our guests um we will pull up how do you do like the little thank you we've got new tech so i'm not the one responsible for the tech uh welcome to the show we got we got the free godfather and then we've got ryan who's new ryan look you're in a cabin it looks like yes and that's confirmed in the cabinet smart ass look at him he's very proud of himself already and uh what's where are you in this cabin like are you in wisconsin i am i'm in wisconsin when i used to work for schneider um right around this time frame the entire floor would be dead because they're out there shooting innocent animals is that what you're doing in your cabin i'm watching the innocent animals uh poop all over the lawn right now we don't shoot them over here so andrew t wants to know where in wisconsin are you i'm in monaco wisconsin at a place called camp kawaga which my four sons go to so uh just enjoying the quiet time up here and i appreciate you having me all by myself today with ron there's a lot of sarcasm there um one time when i lived in green banks i worked for schneider uh andrew teal will appreciate this uh and so will the freight coach chris jolly cause he's from wisconsin as well um have you ever been pheasant hunting pheasant that's the bird right yeah pheasant hunting have you ever been all right so in green bay i went it was traumatizing they had it was just like the hunger games they they you like rent a spot they drop the pheasants into a quadrant they tell you where the pheasants are they drop them right when you arrive you're already drunk i didn't do this by the time you arrive and you just shoot the things and drunk oh yeah everything in wisconsin is being dumped drunk and then the dogs go get the poor birds and bring them back you literally have to do no work it's a hunger game and you did this for congregation schneider doesn't sponsor this after that type of i didn't i didn't do it i didn't go quadrant killing pheasants i just keep remembering that every time you guys talk about hunting and ron with his chainsaw um so i guess we should get to the show ron fray godfather could you please introduce yourself for those few people who do not know you um ron i've been in supply chain for about 30 years all with um large bottling companies on canning companies nestle monster energy stone brewing and pabst very nice and what beer are you drinking today i'm drinking a non-alcoholic ipa today athletic brewing it's very good i say no not the ca i don't i'm not a fan of ipa i drink pale ales the half of eisens those are good the ipas always good uh ryan for no one here that has not had been in trade in freight for as long as we have they have not seen you yet you are brand new on the screen you're a new victim so could you introduce yourself um my name is ryan and i'm a taurus i like long walks on the beach yeah exactly basically got the head we started a business called afn or advantage freight network and built it to almost a little over a quarter billion dollars and uh sold it in october 2018 and i was lucky enough to have a relationship with ron at one of his shipper businesses um and helped him manage his transportation and um where do you normally live or is that cabin thing chris jones crack me up okay sorry the cabin is that where you live permanently or i'm working on trying to get out of illinois before it's too late so we'll see my wife will disagree with me do you have a yacht uh no we have like a couple of ski boats if you're interested in learning how to slalom though i'm not a very good swimmer um we have someone here who has a yacht um because they're pretty big time i won't say any names it's not it's not ron not yet wait ron do you have a yacht no no um for those of you who are wondering why we're here today ron has a we've all ryan and i and a couple other people who were too fearful to join the show uh we were involved in a unique idea that you guys are gonna love to hear about today uh that ron created ron could you tell us like tell us what got you to this idea and the lead up so people can have the background story uh yeah i guess the short version uh too many hours on airplanes um and for those of you that have been watching cassandra's show for a while we did the the supply chain appear and talked about cans what a lot of folks probably don't know is that can manufacturers because they're capacity constrained that at certain times of the year they'll actually cover each other so if you're a customer of wrexome or what's wrexham is now arda or ba um or even um mcc uh or quark crown core conceal when they run out they'll actually make each other's cans um so you might have at certain times what was then a wrexham can with a wrexham logo that was actually made by ball and the reason they did that is they can maintain the capacity within the entire supply chain the industry and you can cover your capital costs by tapping into other people's capacity they do it at costs that are consistent so they don't touch each other's finances they don't get into non-competitive or violate any ndas it's kind of something that's just known in the industry i'm speaking of wisconsin dairy co-ops work the same way to where you have individual companies that will join in a dairy co-op to take advantage of consistent manufacturing consistent distribution um and a lot of time on planes and one of the challenges i was having at the shipper was the fact that we had about 164 carriers um they were all fine they did a good job the problem was i spent just way too much time managing every single issue 164 carriers um our on-time delivery rate was in the low 90s which wasn't bad given the amount of deliveries we had but frankly i was up to 30 of my time just dealing with[ __ ] um so ended up on a plane actually sketching out an idea of could i create an aluminum can model with transportation companies so pick the core carriers that i wanted under very specific criteria but instead of creating a core carrier program or a managed freight program create a transportation co-op so ryan's company was one of the companies that was part of it and there were four other carriers that became part of it um so that was the short idea then i spent about two months putting together all of the very specific criteria ideas how the heck i was going to do it and the biggest challenge was going to be how do you go from carriers on day x to five carriers on day y and that's where a lot of the work really went into and ryan and his team were a very very big part of it what was your freight spend actually from the bigger from a broader perspective like for uh how much you know what i'm getting at part of my p l was about 12 at the time i mean but that's going back a couple of years um it was about 12 of my spend it was about at that time 30 to 40 of my time um where at the end of the day it wasn't putting product on the shelves and that's where it was just really the disconnect and i couldn't get it to increase um just just because the network was just too disparate uh question from one of my favorite people matt fink he says uh when did you do this i think you said a couple years ago does it still apply today um or were you an early mover in the space with this idea uh with this specific idea for freight and i guess it's better asked to the five carriers that were working with me on it we were the first ones to put together something like this because the specifics weren't just a core carrier program it was more the carriers actually needed to work together it was self-managed and self-owned so they managed all aspects of it we still did rfps but i think the biggest thing i know cassandra put it in the teaser for the show the expectation was 100 tender except with one exception is that if you could not carry that load it didn't come back to me it went to the automatic backup and the carriers created that entire network on their own so i did a lot of things to try to make sure that the carriers could be successful in setting up many networks so they had regional bases that they carried um around the country they had for lack of a better term guaranteed lanes or at least that was the intent and there was a lot of moving around we determined what percentages of the network they could have as the network grew but there was a lot of at least i tried to build in some safety valves that if you know if the business grew inordinately in the northeast that didn't necessarily meant that the carrier that had the northeast was going to recruit was going to get that the intent was the whole network would have the opportunity to grow at the same rate um because my my intent was the carriers could remain their profit base but they had to go find the regional carriers that they were going to use and the only way they could do that was by having guaranteed revenue and volume coming in so ryan when ron came to you about this idea or when you first heard this idea what were some of your thoughts i i thought it was innovative and smart you know and i was you know obviously happy to be part of it i think that there's no reason to have a full infrastructure for what we are paid to do you know we we understand how to arbitrage the transportation of these businesses we have a larger grip on what the entire market is doing as opposed to just what his shipper was doing and he knew that he could he would trust us to self-police you know that as long as there are score cards on time you know on time acceptance on time delivery on time pickups so he's managing his infrastructure he doesn't have hr you know he doesn't have all the different orientations to manage he found his best partners and they committed to servicing the business and every single one of us wanted another dollars worth of business so it wasn't as if we all were smiling but we all knew at the same time that like hey you know if you can't handle that maybe we can handle that so and it was laugh ha ha but we meant it and run yeah it wasn't that much we all wanted four it was really an intelligent way to keep us together yeah so did you try to convince ron like hey fun idea ron how about you just give us all your freight instead and then you don't have to manage five you could just manage one ron and it's trans remember that's not whatever it's not right i i think that when he went from as he said 164 carriers to five uh you know there's what i'm gonna say about pigs and hogs we we figured it was a great opportunity and it frankly it was really fun to be able to see our competitors and how they work and function too you know we got to see who the innovative smart people were on those other organizations and how they operate so we got to just self-improve just in seeing how other people were managing their business differently than we were ron did you think about doing just a managed trans deal with just one no i had done some managed trans deals at uh nestle um nestle had this goes back to cheese at this point i'm old so about 30 years um as they were growing so rapidly they put in some managed trans and i'm i'm if it's in the right place with the right carrier i think it could be really successful you can do some really good things with it um the challenge is that i would have to go to one of the massive transportation companies to do it um but the biggest thing for me and and ryan sort of and you know talked about it a bit the way i structured it it was going to be self-policing whereas managed trans or a cost plus model it's hard to police it unless i want to do all the work tracking down whether it's that or it's cass or something else to try to figure it out and the intent was i don't want to do that i want to make sure that i can get insight into the industry as a whole to make sure that i understand what i'm paying versus the industry but i don't want to have to manage these guys and they manage themselves so we did a lot of different things that i think they were surprised about when i put it together because the first meeting i put them all in the conference room and there were owners and ceos of the companies that came and then told them that they were all going to work together um and work together for me um and like literally we had quarterly co-op meetings where they all stuck together and had to work on different problems that were coming up they would give me industry insight as to things that were going on and then figure out how to solve them so it was the self-policing worked in the one thing 100 worked i personally experienced it it was very cool i think that to having the backup carrier and ryan said it no won a dollar so it was real quick if somebody was going to be a little bit off on what the hell was going on in a specific lane or a couple of lanes uh their competition would let them know it real quick and we could figure it out because we had blind bids or they weren't bids they were just this is what your rates are so it's not an rfp but if yeah afn's the back up on 30 different lanes and they come in at 8 lower than the primary it'd be like uh okay what changed but we didn't treat that as you know afn's trying to steal lanes it was always a what is afn seeing on these lanes that's different in the marketplace that either we're not seeing or the primaries not seeing um primary would then have an option to go ahead and match those rates or they could lose them so it was it was pretty organic in the way that it moved and it took me i mean just the the top side kpis i went from 30 percent of my time to about five percent of my time so i didn't have to deal with it anymore my on-time delivery rate went above 97 percent within six months um claims next to disappeared because folks were keeping it honest i mean it just everything i wanted it to accomplish it accomplished and the biggest thing i wanted to accomplish was to get out of and i realized this is an exceptional time as far as freight uh rate volatility but i got out of a lot of volatile freight rates because i didn't i think these guys remember i i basically abolished seasons there was no such thing as christmas tree season no more such thing as produce season and you're wearing a lot of talk about uh carrier shortages or driver shortages so it it worked um and it worked for several years the we have a lot of questions rolling in and i'll get to them you guys in just a second i can see them with my new little tool uh that my buddy zeke who's helping me out i have all your questions right here hi may um but i want to illuminate a couple things um first of all i personally was involved with this and i've been involved in my career with a lot of managed trans arrangements and and it was interesting ron to see the the co-op arrangement because the self-policing really did work and it was it was we were all friends but at the same time we would totally freaking rat each other out for stuff and then ron would literally you're laughing right but it's so true you know and then ron would literally you know he looked he took it as a team approach i think we were all looking at it as like yeah that that guy's nice and all but i'll take his lanes any day this week um so i'm just making kind of that up that's what i was thinking in my head as a vicious lawyer um but it was interesting because ron would tell us like hey you over there cassandra you're weak in this so go sit with ryan for a week and figure out why he's good at this and if you don't agree yo out and it wasn't like i'm paraphrasing but it was that kind of policing that i loved and the friction that kept us all performing um and uh and you know ryan i don't know if you've ever heard of cargo net when they announce stolen loads yeah i'm familiar i was just saying i used to watch that for afn how'd that look all right go ahead let me know my cargo net statistics i'd be curious you could put that on here yeah you guys were really good actually um so uh so we gotta back up though because we have a lot of questions coming in um first of all ryan um someone had a question for you was oh robert right my buddy robert uh is this a truckload co-op and do you think this could work with ltl ryan uh it was a truckload co-op it was largely non-asset based i think that it could work in ltl i think that ltl is very disruptible right now uh it is while fragmented not as fragmented and not as focused on and uh you know again ron's freight has always been a way out before it cubes out so there hasn't been opportunities for a lot of uh you know added efficiency amongst shippers but i think it's very opportunistic in ltl as well but you got to have decent uh order size density i think anything you know average order size should be six seven ten pallets in order to find real density one two pallets are those are tough shippers to partner with around yours it was a hundred percent truckload you had no ltl no any of that tiny tiny ltl tiny lto and tiny um air and ocean freight just just we had one person that managed the whole thing it just wasn't that big a part of it so how did you two decide on a contracted rate because ron would come to you and say hey when in summer when everybody's like getting drunk um we were run rfps but we ran two two cycles for when the freight rates would be set um basically one was the summer rate one was a winner rate knowing that we had some seasonality um and i didn't go to anybody i mean my team would push out the spreadsheet because everybody's got a stupid spreadsheet um would go to the folks that were pricing it but it was i mean i think about the rfps i ran before this to what i was able to pull together after i mean it would be a two-week exercise because you're not trying to drastically change things you're just looking at some of the market changes within very specific lanes but that bid exercise was not the first time we talked about it because we had the quarterly co-op meetings and then i had also scheduled top to tops with each of the five companies that would happen you know depending on various times so there was a lot of communication more around what was going on in the industry then you know i'm bitching because you can't get out of springfield for 13 loads and all the other crazy stuff it just changed the conversation dramatically so when the the bids came in there would usually be something that somebody was off on that just looked funny but it was always in comparison to their backup so then it but the nice thing was i could literally get on the phone with afn and whoever the backup was together and go okay my assumption was always i don't distrust what you're telling me so just tell me what you see that they might not see and i always treat it as look if you can't do it afn and make a profit that's cool they're gonna take it like it's not it's it's a business decision in that i always looked at my partners in the fact that they were companies that needed to make a profit um so we just need to figure out what that was you know my thought was i don't want you to get independently wealthy off of me but i want you to be able to receive a profit that makes sense um and can keep your company growing because we intend to keep growing you don't want anybody to you know go out and buy a cabin and retire and stop something and just live life yeah um so ryan how did you price truckload or how did you how did you decide and trust ron and price this truckload flat rate because lately i've been reading some of the um android teal keeps me up to date on all this stuff i'm not cool but he sends me all the articles on different companies quarterly reports for in financials and a lot of the companies that have to honor the shippers rates right now are taking a bath um with contracted rates so how did you know that wouldn't be you or when spot markets low ron wouldn't just take back the freight and toss it back into the spot market i think that we are probably priced on the higher side if you know if ron's being honest we're always you know fairly conservative on the markets we were servicing with the idea of that it is 12 months and you know again different care if you talk to the carrier and you explain that the shipper is a fair one because most of these carriers know most of the shippers anyway but if the car if the carrier understands that the shipper is literally going to give you the freight year round they will be stable with that rate and if i pay the carrier faster than the shipper does they're even more happy you know if i'm managing their claims they're even more happy so i'm a i'm a great partner to my carrier first and if i have the ability to be a great partner to my carrier and i have the ability to say hey this company ron is is willing to guarantee me that he's going to keep this volume stable you know weekly not monthly not like hey we're going to give you the business at the end of the month not the beginning you know a lot of these shippers you know let's just talk about it those shippers sleep around they're all looking for the cheapest price and then they're going to say that you have 20 of it uh when you probably only have 10 but you're they're sitting there and they're playing the game and they're holding you and committing you to a rate and then now to your point rates are through the roof and every shipper is expecting these carriers to hold their ground and by the way uber and companies like them that aren't trying to make money are keeping these rates artificially lower so it's shame on them for putting these areas in a position where they have to be so volatile with their rates and truck and not you know treating the people with integrity that are sleeping around ron held his uh his word he was true to it i knew he'd be true to it and so we were willing to make that investment into him and his business and make sure that he shined and you know i obviously rooting for his company to be successful because if his team is successful and they can regulate what their pricing is they know that the rates aren't going to vacillate the way some of these are now where their business becomes bad because the shippers can't uh move the freight that the same price like that is incredibly opportunistic to a smart selling team so ron just made the job that much more simple stabilized it and everybody won with him it was fantastic i had i saw a really good question um it was a super good question why i look at it i have one more question asked ron ron what kept you from being a freight[ __ ][Laughter] well actually i think it goes back i was going to add to it i think that what did and what ties to ryan because it's interesting he said it was a little bit on the higher side it was on the higher side if you compare the you know if i could pay a thousand bucks for elaine and i might be able to get it on the spot market for nine and a quarter nine hundred the difference was though i didn't have to grow my transportation department by building this so i saved on labor dollars i eliminated a significant chunk of claims that i didn't have to manage my accessorials came in correct every time so i didn't have to spend finance dollars in tracking stuff down i could ensure i paid my carrier partners immediately based on the bill of weightings that came in so i didn't have to track that down i mean so when you start to add up all of the different things yeah if i pay a thousand dollars for that load that's just what i'm paying the carrier like day one except then i've got all this back office and all this other weirdness that happens that people tend not to pay any attention to that i eliminated it all so my freight rates in total which i tracked to the p l actually went down so if you're a carrier you're great because i've got a pretty consistent rate and i've got you know we were talking about it yesterday you know for me the easiest example is that we had we as a shipper ended up actually helping a carrier in denver grow you know they were a small mom-and-pop carrier they were you know a couple of tractors and four or five trailers we kept them busy all year long and what was nice is when rates would skyrocket because it was summer and they were going after bottled water or something nope we kept paying our 1400 bucks because they knew that when rates you know 100 bucks they were still going to get their 1400 bucks and they were able to grow their business responsibility and you know we tried to be good partners that way to make sure that i wanted an entire fleet of these small regional carriers that to ryan's point they could trust us because they knew that we would take care of them and so being a freight [ __ ] might make you happy the minute you do it but you're still going to go home sad the next day with your underwear in your purse it's oh that was good that was so good and i'll tell you that one reason i've heard because we do have a lot of supply chain folks watching today uh probably the majority of supply chain folks actually because i nagged the [ __ ] out of them to show up here um and one thing that i was super curious about because i hear a lot of supply chain folks say and shippers say i don't want to be a freight [ __ ] but the people up top make me be afraid [ __ ] so matt fink had a great question he said what was wrong and i'm curious about this too what was ron's boss's response to hey i got an idea curious if his leader was involved um and what the reaction was to this and the internal cell if necessary which i know is a big question for everybody else watching this too yeah i think that it's probably a little bit unfair because it's a little bit easier because i ran um the entire supply chain for north america at the time so it wasn't like i was a you know a freight manager going up to a director who had to talk to a vice president i mean i was high enough in the organization that i didn't have a whole lot of folks to go above me um i've had a reputation of innovation previously so it's not like this is the first time i came up with something a little bit weird the difference was for this one i didn't go to him with just the framework of i want to do this knowing i had to answer every question that he could conceivably come up with before i walked in that door so i had i mean for me the biggest one how the hell are you going to get rid of 159 carriers that we've been relying on for decades um and not forget the relationship part not that that's not important because we all had good relationships with them it's more how are you going to do it from a business standpoint um so that was a lot of what ryan and the team we spent a lot of a lot of meetings talking about how the hell are we going to do this so when i went in i said look i've already met with them i know what this is what i want to do this is how i lay it out um and it was and i've said this before it was look i i trust you i think you can do it are you willing to put your job on the line because if this fails this fails a whole lot of people in a really bad way if you think that you can make it successful that that's great equally if this really screws up this really does sit on your plate and i had the conversation with a co-op that if you don't think that i'm invested in this you're wrong because if it fails i get fired so yeah there's great dollars involved in profit dollars but you screw me i will literally be gone and this whole thing blows up and you're back to carrying 20 loads a week uh ryan have you seen anybody else implement this idea in the industry no i haven't either no um why why do you think that is i think that ron had a bigger job than most people that are focused on the you know the day-to-day truckload volume i think that he had the ability to manage all of it and uh the ability to reconcile what his what the cost was in that situation not have to be worried about his job being in jeopardy um you know these transportation managers all play the game a lot of pretty much the same way um and if they're if they have the you know if they're concerned about whether they're gonna have a job next year and playing it year to year month to month then they're gonna beat every carrier down no one's playing the game with the same level of confidence ron was and and is and i just think that if if someone had the courage to be different to ron's point you could understand how this is very scalable with the right third party logistics partners makes sense so where were the problems here well the problems initially frankly was probably the first 30 days was just the without putting too fine a point on it just the abject fear of how the hell is this going to work i mean this was a big enough deal that i got legal involved we wrote 159 letters from the legal team that i signed that we sent certified mail to the carriers and you know some of the carriers were small some of them were very very big and the tough part is you spend a whole lot of time about why you know why why am i not involved and you know and the answers were varied but they were meaningful um and you put a lot of people that had a lot of business with us unfortunately in a position where that business was going away um but it was i asked every single carrier to keep true to the loads that they were tendered um and for the most part they actually did um with respect to the industry they did exactly what they said they were going to do um but i planned for because i remember it was march 1st i planned for march 1st that oh [ __ ] we're screwed can you guys pick it up and you know i know that the the carriers and the co-op spent a lot of time doing a okay i've got 30 loads on the books now i might have 300 loads on monday how in the hell am i going to pull this off um that was tough i mean the other parts is really it's keeping it together it was a lot of fun met a lot of good folks a lot of really smart folks um but it's it's a lot like herding cats when you got five different companies that all run very different ways very different thoughts very different focuses some you know afn that eventually were going to be bought by somebody else some of them were public companies some of them were just had you know asset basically wanted to grow their trucks so very different views on what they wanted to do from a business and then you've got to do it to where there's in sync on what i want to do and i think one of the biggest challenges and you mentioned it i was pretty steadfast in that if you did something better so if you as legal i mean you became the legal benchmark for everybody and uh not everybody liked that but it was also somebody did something better it was like okay i just want this way because this makes my life easier you guys are [ __ ] i don't want to do it this way yeah and uh uh one question popped up from uh the freight coach chris jolly he says and i was curious about this too ron um what are the differentiating factors eliminating the last five providers like what separates the top ten from the top from your five that you selected yeah five this is really terrible five was i didn't go into it with the thought of i want five or three or ten um what really when i started to sketch it out and what i wanted i wanted a criteria and the criteria led me to five versus i get to five so i wanted companies with which i already had an incredibly good customer service level so they were already on time they were already very good at managing things like claims like accessories so those must-haves were there they had the ability to scale to the need i needed them to scale i wanted the ability to have access to the top leaders or the top decision makers so i didn't necessarily have to sit down with the owner of the ceo but if it was the ceo or the head of carrier sales or whoever it was it was making the decision i wanted to be able to tap into them if needed i wanted to make sure that they're from a technology standpoint that they were leading edge versus a follower um so i mean those were the things and it ended up being five and i will admit i was biased towards i wanted non-asset based because i didn't want to deal with the issues of asset based around someone trying to you know move their freight to a different part of the country or something else i wanted them to build small regional networks within their own portfolio of the business makes sense um ryan would you i just i wanna i don't wanna miss this opportunity ron when you when you took it in a regional approach what did that do in terms of keeping your rates from getting inflated as a large temper by not having five or six carriers stepping over each other in the same market as opposed to having one calling that's the same no and that's i remember that conversation coming up so it's funny ryan's remember because of the way we did it before and the way the nature is if you have enough brokers in your network you have two or three brokers calling the exact same company to move the exact same loads because they're either on the board or their tenant or you're chasing them around and we would have quite often like i'm sure a lot of shippers do you have transportation company xyz colin young like i got three brokers calling me on this damn load and it's up by a thousand bucks and that was the one thing that by regionalizing it but also there was an expectation that you didn't call each other's transportation companies within that network that it was to keep them whole but you could bid it and that's where the secondary bid came in place because it was a new carrier or a different carrier different carrier expansions that somebody frankly wasn't doing their homework on and missed um or you had somebody based in denver and now they're going to do you know they're going to build a satellite business in charlotte north carolina and i know because i'm already dealing with them you can take advantage of those rates which would change the the secondary um the rate process for those of you who are just joining us we are talking about a unique uh pricing model and operations model that ron had for truckload market um and it's something that ryan and i haven't seen in the industry since then um and i want to let you know that i said this earlier but you can see who the sponsors are swan leap giving us six months free to their tms i just i love that they love us so uh we have a question popping in from of course the famous andrew eel who is on his way to kill innocent deer in his cabin um i'm not passing judgment i'm just saying uh ron outside the box and looking back at this how scalable do you think this idea is how large before it dies in its own weight i think looking back at it the size that it dies under its own weights really dependent on the shipper's commitment to it i was fiercely committed to it and watched it grow pretty significantly over a couple of years and then it kept on going on its own um but then it's like anything if the shipper isn't committed or think that it continues to to pay dividends you know to your point they want to chase rates or do something else it'll collapse under the weight of the shipper's lack of interest versus the size of the network um because it was a really big network that we were working on it was a lot of trucks gone um every single month ryan what did how did you when you okay first of all how'd the conversation go when you all first had your co-op meeting like your first meeting it didn't have to be a co-op meeting but you are in the same room like what was that like it's just a matter a lot a lot of people a lot of alphas trying to figure out who the you know who was going to sort of take charge and how to keep ron happy because it was a big substantial opportunity for all of us to have a commitment from a shipper who was sort of looking back and let 159 carriers go like we knew that we had to make him look good we knew we had to be successful we knew that he trusted in us and we were going to trust him back so it you know again like not having his freight on the dat you know what what were my claims percent was my theft what was the all these percentages happened better because he knew that we were going to take care of his freight and give it to the appropriate carriers we weren't going to have someone who was shopping it and would have a few cents cheaper on a dat so that we could uh you know make a few more dollars in the short term you know we were resourceful he knew it he was restorable we knew it so it was it's a match made in heaven oh my god okay the bro bromance has to stop because i need i need now ryan to pick on ron and ron to pick on ryan and then it'll make my show more fun for me um ryan so what is that about the debt like you you when you guys weren't posting the shipments on the data anymore yeah no no shipping utilization on our customer freight that we cared we cared about that weren't sleeping around as i said earlier but you had these shipments that ron gave to you so you didn't use load boards at all no was that a rule ron no it was my vision was to create regional carrier customers um for them how they did it they did it i think but for me it was really easy to track if they were doing it um because we'd rather each other i had enough people that i was picking up with or delivering to and before and i said i would spend up to 30 because i would get phone calls from any one of the delivery places on don't and every week i had somebody calling me say you're not allowed to use carrier x anymore because they screwed this up or they screwed that up or i'm tired of it tired of that to where overnight it became it got quiet um because they were delivering on time but equally i would as i traveled around the country and talked to various deliveries you know a common thing go talk to the guys in the warehouse because you want to find out are you getting treated well are we doing the right things we loaded them well is the product coming in on the right and it'd always be like yeah terry always shows up on tuesday's great like i'll tell you like yeah now we always get terry coming in because the guys were always calling the same companies to carry the freight and it started to get a lot more consistent and for me the customer service aspect just went dead quiet i mean we were 98 on time so it was you know that that's not a cheap on time level um but it certainly keeps things quiet from a customer standpoint oh my god justin has the best question i was thinking the same thing from like a oh [ __ ] hold on i'm gonna click on the wrong button and mess things up okay wouldn't i thought this too ryan wouldn't it be easier for you guys all to get together and decide amongst each other to raise the rates without raw knowing i would love to let justin call in and hear his philosophy on how that would work and ron[Laughter] it's but justin i see where he's coming from because it's to be like if the market was going in the wrong direction meaning that there was tighter capacity i think that you know we had the opportunity to review our rates i want to say every trimester like we could go in and re-review and make sure that it was suitable and we gave it to everybody else to have the opportunity so you know i just you can't really trust five other carriers to collude and try to raise about raise rates and that's not going to be that doesn't really have a long-term view it's not how you build a business and build a supporting team it's not you you'd be gambling for just a few percentage points for a very short period of time so i would not play that game justin wherever you're doing business buddy no but it's like your natural inclination is to think that like hmm here i go with my beard i don't have one like ron but i think one of the differences too and i think it's a fair question from from justin because right somebody always snitches but i made a point extremely early we had a meeting um where actually i put these guys together to because you guys came up with the rules i i didn't come up with the rules to how to operate and i remember it was how do we build this how do we do billing how do we do everything else and i was in my office and came in late in the afternoon and i remember it was just everybody getting really wrapped up on you know how do i build accessorials and how do i deal this and how are we going to make sure this and it's just basically look i've not [ __ ] anybody in this room i'm not going to start we just have to trust each other and we've got to make it work and it was kind of like okay and we got past that yeah that was the hardest part to and plus i mean it's not if you want to start screwing around with rates across the board it's not like i don't have access to industry-wide data anyway and i could see like what the hell is going on um i just didn't have to do it all the time um carla brought up a great point which is like what you like voting off the island um did you no ron says no he's not allowed to be voted off now um and then um okay i thought this too steve lowe which is ryan how'd you stay a hundred percent off the dat for sourcing and let me let me remind you guys that back in the day because this was a while ago it's old enough now where we're not all bound by non-competes and the information's stale so we can talk about it um but um staying off the load boards at that time was like this whoa like right now you get the bottom feeders and the little boards you don't have carrier relationships you're a new broker on the load boards you're a new shipper now like that is different back then we lived and breathed off the load boards right ryan or am i saying something wrong because i remember when we were like no more load boards and people were like whoa we we incentivized our carrier our carrier reps to build great relationships with their carriers i we did not not we used load boards for customers that uh weren't necessarily as good paying customers as others you know but when we had the business to support our ability to make sure that we would service the business with the carriers we trusted you know i would pay attention monthly of the number of carriers that we would use the debt to book and then if they were one-time carriers how expensive it is to set them up and if you know are we doing business with them again you know what's the point and then i'm paying attention to the carrier sales reps that are calling them and why you know but there is obviously a place in a time for load board carriers for the right shippers ron was not the right shipper for that you know again you got everybody who's paying attention understands that this is a game of twenty five dollars fifty dollars seventy five dollars a load it's not you're not living a great glamorous life making five hundred dollar thousand dollar spreads very often so it's a grinding business and you have to be thoughtful about how you're going to service it and the key is having great carrier relationships to service your customers if you're going to treat your carriers like you don't care they don't care either plain and simple yeah makes complete sense um okay uh of course matt you are on fire today um would you do this again um thinking a broker grows away from this and if you did what aspect would you change either from ryan or from ron because ron's been moving and shaking since then this is kind of old news to him this is like an old idea for him but frost were like yeah this is the cool thing ron i think that no doubt you're obviously going to say yes and i would say the same thing i think that knowing the carriers better knowing our 3pl partners better uh was a once in a lifetime unfortunately experience you know can we do it again certainly but um you know there's a lot of competitors out there ready to eat they're young right now i mean the market is really really tough and there's not a lot of carriers out there that are making money or brokers for that matter so i'm not sure how that looks with some of the competitors that are in the landscape today but i would certainly give my best effort to help a customer out that way and try to work through a philosophy that gives them a better long-term view and if i can explain that you know if gdp is 10 you know every if ten cents of every dollar is transportation and i can do it for five then you shouldn't look back unless you're managing a super regional landscape so you know i think that those are good ways to sell it you know and again he ron got the ability to tell his sales reps that are out selling to retailers hey i've got this at this price per can you know this price per bottle and it as soon as you if you sell above that price i've got you covered it makes money like a sales team really appreciates understanding where the opportunity to be profitable sits and i'm sure all of ron's shareholders would agree to a few of you who are still launching questions about the load board i want to tell you guys that some people ratted each other out when they saw ron's freight on a load board some people it wasn't me i didn't um because i'm a lawyer i'm not on a load board how would i know um so the next question ron we have to back up a little bit ron again why do you think this idea has not been anywhere else ryan and i haven't seen it anybody else who's watching this event said like i did this you guys just rebrand i just nobody's saying[Music] i think the difference for when i put this together this wasn't a carrier-based initiative that they were coming to sell an idea and usually i mean it's selling whether it's managed freight or it's different things and those are all good you know this was really reliant on me as the shipper because i wrote the rules i brought in the carriers and i said do you want to work within this framework um and it was mutually beneficial so it worked um but you have to find a shipper that's willing to look at things in a different way and willing to challenge themselves as much as they're willing to challenge their partners because this was not a you know and actually we were traditionally a just beat the [ __ ] out of people if you don't hit our service numbers and that's just the way we operated because that's the way a lot of people operate yeah and it's kind of turned that on its head in that yeah there was expectations for metrics and everything else but it was a far more partner-based conversation um and i think that that's challenging for any shipper to get into those types of relationships and somebody mentioned it earlier but i mean you've always got a boss you got to go to who's pissed off because something got[ __ ] up and how how do you respond with yeah it's okay but i'm gonna deal with this partner and that's where i think it's challenging um somebody said something about you know would i do this again ryan's point yeah i think the one thing that i would try harder to do was probably expand it to bigger to more carriers but only because i would get more freight for the entire supply chain um you know the one thing that we didn't take enough advantage we tried in small parts but weren't as successful as i wished we could have been um that if you can start to tie in and get rid of empty miles and i've been the i put this in place in a subsequent place um the subsequent shipper and we tied a lot of inbound freight and then outbound freight um so that kept the empty miles down um which really really managed my prices a lot better but it also broadened the amount of carriers that my broker partners could find um because they knew they were going to keep moving and we became a shipper of choice um because we would have outbound freight for them we treated them well as far as getting them loaded making sure that they could keep their detention down so that's probably the one thing i would do is actually spend more time trying to broaden the approach to make it more beneficial for my partners i think i just got lost it could be because i'm out of wine um okay so uh for the dumb lawyer of the group because ryan's like oh i get right wait do you understand all that ryan i try okay i try you want me to try this i can't i don't okay let's break it down right he says that he would have broadened things to have more asset carriers because why why okay when you're using brokers why are you paying for the empty miles no i want to get rid of because i you pay for everything eventually i mean there's a profit margin so if you're a company and your profit margin whether it's 2 or 30 i don't care that's the way your business works but if empty miles are happening those are non-value added miles which means nobody's earning on them so if i can get rid of them you earn on them which means if you've got less trucks moving less drivers moving i can control my costs and that's what i did at a subsequent read loads from the pack northwest that would load with stuff for me drop off for me and then get outbounds going east my rates went down because i was handling more parts of the truck so the carrier was able to control their rates better because they got guaranteed business and then the broker controlled my rates better because they got better rates from the carrier makes sense um that makes a lot more sense sorry i'm not as experienced as you guys in this stuff to me this was a once-in-a-lifetime idea that i was involved with and i thought it was so cool and i haven't seen something yet um like this uh ryan what other areas like if you were still in freight and you were to pitch this idea to other shippers what would be the ideal freight that they would have obviously be truckload um what other like features would you look for i'm trying to help these consolidation of ltl even better you know and you start to hear someone who's a 10 million dollar ltl spend you start to do the math of what regional rates look like that sounds like an opportunity to find consolidation amongst shippers but you know shippers again oh i don't want my freight to ride with the my competitors freight that happens to be also delivering to the same retailer it's like well whatever i just want to get there and make as much money as i can typically but uh i think that someone someone has to be in ron's type of a role with a more global view a transportation manager is going to be looking behind looking behind him the whole way through and feel like he'll find his way out the door because he's not gonna be able to add continuous value ron reconciled the initiative and understood that he was creating more value to his time and therefore to his uh his organization you know and i i just think that that's very resourceful and anybody who's running a good team understands how to pull resources from other places that that's mutually beneficial and that's what he did he basically pulled on us to think of thoughtful be a thoughtful resource alongside of him as a thoughtful resource where two and two clearly equal five or six and i i just don't it seems simple to me but i think that most shippers don't really have as close of an eye on logistics as they probably should until it's like uh oh now i've got a real financial issue i've got competition i need you to come in and drop rates when the smart boss might come in and say hey i actually want you to pay more and then when we pay more we'll have better service we'll have less charge back we'll have less claims we'll have less problems we'll need less people so it's you know it's just sort of how you do the math and ron's just thinking a little bit with with a better macro view than most shippers that are out there um our friend andrew teal ask ron about eliminating ltl as a mode oh do tell ron it's a good andrew and i argument that's from that's another show or another day getting blinded here i know and i love it are you even going to give us like a little bit for those of us who are like oh okay okay we'll do another show then and then you had a good show a good question for you which is oh this is juicy um ron i love you mae you're like stirring the pot uh ron it sounds a whole lot like what convoy is trying to pitch with their new program uh what is your feedback on that well i think anybody that's watched your show for a bit knows my feedback um i i think what they're trying to do is they're at least trying to be clever and i think the one thing i told dan this when i talk to him what makes him unique as a ceo for a carrier is that he's actually listening to the shippers and trying to come up with answers to shippers problems and that's where i absolutely agree with that approach because when i did the co-op the entire carrier business those five carriers worked to try to solve my problems and in a lot of cases they told me what my problems were because and i was able to validate yeah this really is a problem let's go solve it and that's where you know with the guaranteed primary it makes sense in that there's enough shippers that have said that the rfp process is a problem i eliminated it through the co-op i didn't have to do rfps anymore because they were not value-added they took too much time it was just we can have a conversation about rates not a blind rfp it's very different it's like ryan said if something happened in the network you know like this year that would be a conversation like holy [ __ ] we can't survive if we keep doing this way your customers are going to suffer it's like that's a practical conversation that's not a hey i'm getting screwed by this broker because i'm not i can see what the rates are doing um but equally if and i can tell you there's one carrier that was supposed to be on here today um that when rates dropped pretty precipitously outbound california they came in and they literally did a give back on like look i'm just going to be honest with you you would take care of us and have taken care of us we're just going to show you here and actually they credited us um a pretty significant amount and it i didn't push them it wasn't anything it was like look you know if you treat people right and fair and actually as business partners not just you know in words you know if you treat them fair then usually i think karma will come and you'll be taken care of and you know when i was there all five of those carriers were still there and it's not that we it wasn't all you know roses and not fights and everything else we still had arguments and things still went sideways but i think the difference was is that we could at least have arguments and disagreements on the business as opposed to that underlying i'm going to screw you on rates or this that and the other just those things really went away it was just more of they were business issues as opposed to cost issues which for me is probably the biggest thing yeah makes sense um next week we actually run next week thanks to you we have a surprise show um we are going to talk about um how brokers and carriers vet shippers um the best way to go about that that was ron's idea thank you ron um and uh and if you have if anybody hasn't noticed ron basically runs this show um he got ryan out of retirement so thank you for joining us ryan um hold on let me live my closing he came out of retirement ryan i hope you come back i think this could be a very popular show i'm really happy that we talked about this and i hope that somebody comes back and says we did ron's idea and people you can hire ron to help you do this stuff i know ron i'm making you feel uncomfortable happy friday um don't kill too many animals this weekend all right take care let's end let's end the broadcast