Capacity CRUNCH: Why Trucks are Disappearing from the Market

Speaker 1 [0:00] Welcome back to FreightWaves Today. We are live from the Univar annual carrier kickoff event. It’s been a great show so far. We’ve been joined by 3 great guests and we’ve got 2 more excellent ones coming up to close us out. We’re joined now by Ben Kavlinar, EVP of Operations at LRT Solutions. So Ben, tell us a little bit about what you do both personally at LRT and what LRT Solutions does. Sure.

Speaker 2 [0:26] Yeah, sure. Thanks for having me. I’m excited to be here. A really cool event. So LRT is a logistics company. We’re based in Fort Payne, Alabama, but have a lot of service offerings. We do LTL, we do full truckloads.

Speaker 1 [0:39] Do you think it really helps a shipper position themselves as a shipper of choice when you’re making decisions who you want to do business with and spend your time and resources and capacity on?

Speaker 2 [0:48] Yeah, I think they do. I think it’s very important to, you know, put a name with a face. We have certain gaps, just like any carrier or logistics company has certain gaps we’re looking to fill. So having some of those conversations prior to the bid is important and knowing where we can fit in the puzzle there.

Speaker 3 [1:04] Conceptually, it’s specifically in this city, you know, all of us now, it’s very hard to stick out. I mean, it feels like we all are cousins and we all do the same thing. How are you able to stick out at events like this and in conversations that you had to To add that, I don’t want to say competitive advantage, but it’s like a Chick-fil-A compared to a Burger King. We know that Chick-fil-A I’m probably going to go to over a Burger King.

Speaker 2 [1:27] Yeah, it is difficult to stick out. But I mean, there’s some great partners here, some great logistics companies here. And so you don’t necessarily— we’re competing in the same space. So you’ve got to stick out with service. You got to stick out with customer service. So we tend to lead on those things, those items. And obviously there’s some great carriers here. Safety is super important in our world right now. It always has been. So that’s table stakes for everybody right now. But service is something that we can, we can sort of stand on and stick out with.

Speaker 3 [1:56] Let’s stay on that for a second.

Speaker 1 [1:57] I think he can also lean on his charisma and experience.

Speaker 3 [2:00] He’s got it. He’s got it. He’s got it. I want to stay on safety, you know, for a second because, I mean, we read these headlines every day. I mean, if it’s not cargo theft, if it’s not fraud, it’s not You know, something with, you know, drivers being taken out the market. I mean, this is a whole new ballgame compared to when I first entered, when you first entered. I mean, it’s apples and oranges. What are the conversations you’re having internally right now with your group?

Speaker 2 [2:24] Yeah, it’s pretty scary. We’ve faced a lot of headwinds. All trucking companies have these last 5 or 6 years. It’s been pretty difficult and it’s just one thing after another after another. And then just recently we’re seeing all these verdicts coming across negatively towards our Towards our business, so it’s it’s scary. And no, we’re going to have to do do some things different and pay more attention on certain things where we probably shouldn’t have in the past anyway. But so we’ll we’ll adapt and continue to get better. But there’s a lot of stuff coming at us right now, so we just have to stay on top of it.

Speaker 3 [2:54] Well, for sure. Yeah.

Speaker 1 [2:55] So talking of all of those headwinds, obviously the market was incredibly tough for a four-year called the free recession, right? For four years. It has certainly made a turn as we’ve seen capacity continue to tighten, which if you have assets is great. If you’re brokering, is putting some pressure on it. So what are you guys seeing happening in the market? How are you dealing with it and what do you expect to happen?

Speaker 2 [3:21] Well, with a lot of capacity coming out of the space over the last 4 years, it’s given us an opportunity now that volumes are starting to increase a little bit. But I don’t know if it’s necessarily a volume increase as much as it is a capacity decrease. So we’ll We’ll see. We’ll continue to watch that. But it’s definitely a great time to get out and introduce yourself to new clients or new shippers and be available to them. ‘Cause while we’re not looking for everything, we’re again looking to fill some gaps. And I think we can do that with the right partner. That’s what we’re looking for.

Speaker 3 [3:47] When it comes to, you know, What the Truck, we talk about AI tech 24/7. I’m sure our audience is like, we’re tired of it. But for me and my personal, just, you know, knowledge. How are you leveraging that aspect of the business, but then also keeping what you are doing right now so well, by the way, with us in human interactions and one-on-ones and creating those relationships too?

Speaker 2 [4:11] Yeah, so we, you know, being a smaller company, it’s difficult to have that tech spend that we can kind of devote to a high AI spend or, you know, technology spend. So we focus on leveraging some pieces within our TMS that can you know, a little lower cost, but give us a lot of benefit as far as freeing up some bandwidth on our team. And we’re going to continue to do that and find out where it’s, you know, where it’s necessary to continue to spend those resources. But for us, again, it’s just really being in front of our customers and being available to them and being very responsive.

Speaker 3 [4:43] I think that’s a great answer.

Speaker 1 [4:44] All right. So I also have to ask our very own Sonar’s head of Freight Market Intelligence, Zach, gave a market update earlier in the day. Were you able to watch it?

Speaker 2 [4:54] I was. I was.

Speaker 1 [4:55] Any takeaways?

Speaker 2 [4:58] I would agree with most of what he said. And I think that we’re in that band right now where it’s, you know, we’re just— we’re popping out of it every once in a while. We’re seeing some, some days where it’s strong and very active in the, in the market and some in the last couple of weeks has been a little softer. So I think we still haven’t found where we’re at right now. But it’s— I think it’s working its way to be a pretty active marketplace. Over the next few years, so I’m excited about that.

Speaker 1 [5:22] Zach is a little less excitable than Craig and I are. You know, he’s he’s a little bit more cautious and talking about the market a little bit more. I would say that like it’s absolutely turned capacity has left the market. I don’t see capacity entering anytime soon because there’s new barriers to entry. All of this regulation, the liability and the verdicts that are coming in are terrifying. And yes, it’s been a little little bit softer the last couple of weeks. But it’s July. I think it’ll stay that way in August. But we’re still seeing tender rejections in that 15% range. So like, yes, soft compared to the craziness we saw in the beginning of this year, which was such a quick turn.

Speaker 3 [5:59] Yes.

Speaker 1 [6:00] But really very normal and still elevated compared to the last few years this time of year. So it’ll be fun to watch. Again, like Craig and I are like way more bullish and excited about it than Zach is, which is why Zach is up here like very analytical and giving the market update. But I think we’re all seeing the same thing, just to varying degrees.

Speaker 2 [6:18] I’m very bullish on it too. I mean, you’ve got a couple of things that, that are being tough for new entries into this business. I mean, one of the costs of equipment, we always talk about cost of equipment, it’s continued to skyrocket. But on the other hand, we’ve got all these negative, you know, things coming at us with these verdicts. So insurance is going to be a big, a big thing in the near future. It already is and it’s going to continue to be worse.

Speaker 1 [6:39] Yeah. Any takeaways from the event other than the market update?

Speaker 2 [6:44] Not really. I’m excited to get back out there and meet a few more people and introduce our company. But no, it’s been great. And thank you guys for having me.

Speaker 1 [6:50] Thank you for chatting with us about your experience here.