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What is up, ladies and gentlemen, we are back. We are live. It is the Freight Coach podcast, the top podcast in transportation coming to you guys every single weekday. 08:30 a.m. Pacific 1030 Central to break down some industry headlines, but most importantly, provide some actual insight into what you can do with all of this information. If this is your first time tuning in, welcome. This is the real side of freight, ladies and gentlemen, and I say that before every single show. And what I mean by that is I only speak with transportation professionals because at the end of the day, you guys, I want to talk to the right individuals who have done what you're looking to do or who are currently doing what you're trying to achieve.
So you can take all of this information, apply it, utilize it, and see a meaningful difference in your business and your life. Cross border is probably the topic out there at all times, right? Like, there's. There's such a resurgence of fulfillment down in Mexico near shoring everything like that. And, you know, where do you start, though? I think that's the most important piece, especially if you want to start offering that as a service or you're a manufacturer or distributor or supplier, and you're looking at Mexico for a your next move in building out your supply chain. So we're here to talk about that today. I got a special guest for you guys. I got Mister Luke Huffs on the show. He's the director of innovation for Prosper Fulfillment. So, Luke, thank you so much for joining me.
Thanks for having me, Chris.
No, man, I'm really looking forward to this. You know, I think that the Mexico portion of freight is really gaining a lot of attention. And, you know, there's kind of a lot in the whims on what happens here in November with, you know, people's candidates proposed legislation about tariffs and everything else about what's going on. And then, especially over these last three years, you know, it getting stuff imported or out of China and stuff like that has really kind of been a challenge at times. So it seems like the natural progression has been to go down into Mexico to kind of build up a fulfillment center and stuff like that. So, like, before we get into any of that though, man, how did you get your start in freight, Luke?
All right, so I ran out of college, got my feet wet at a large brokerage. Three letters, Cql. Absolutely loved it. Was. Went through their sales LAAT program and found myself transferring into distribution sales. I did an RDP there, so learned how to sell at TQL, loved the culture, and then I rotated around a distributor doing every single job. It was RDP program, where they put you in accounting, operations, sales, marketing, and ended up moving down to Orlando where I got to sell and grow a book of business. And I realized that at that time, all this product is moving around me. I always had my freight broker hat on and when I was selling at the distributor, I grew a book there. Ran into my first problem where I get orders from my customers.
My operations guy would say, I can't get this stuff out till next week. So I put my freight broker hat on and we started signing up courier companies and transportation companies to handle that surge in new business I was bringing on. And I like to say I just got sucked in from there. So solved the problem in the distribution space. That turned into running a courier service for a little bit. All I really did at the courier service was sign them up with brokers. Then their phones are ringing off the hook. I said, man, I kind of miss being a broker. That's when I moved into the agency role and did that for a while. Always worked with forward thinking tech based brokerages. I like solving problems through technology in the fast paced environment we move.
And yeah, just recently, through some connections, saw the next wave in the supply chain and realized that it's near shoring, whatever you want to call it, near shoring, cross border fulfillment. It's, it's a power play for a lot of big companies. And what we do is we help the mid sized companies get there quicker. So that's ultimately, you know, what got me into the fulfillment side. So I've had experience, you know, with courier services, LTL, parcel. This is the last piece of the puzzle for me. So I find it, you know, very interesting. And my days are, my days are great.
So, yeah, no, I think that having an understanding of more than just one mode of transportation, I think that comes in time, in experience and everything else. I wouldn't advise anybody just like jump in and be like, all right, I'm going to do ltl fulfillment, full truckload, air fry. Like, I am so against all of that. One of my many mistakes. Yeah, dude, right? I'm all about like choosing your niche and then kind of building out from there. But I think, like, learning and getting ahead of some of these trends is pretty crucial. And, you know, I, you know, I'm an entrepreneur at heart, right? Like I'm a, I founded a couple of companies here and I always try and look out 24 months in advance. Right? Like, that's where my mind is constantly sitting for the most part.
And, you know, the whole push in Mexico and everything has been all over the news and I'm thinking here, like, how many companies out there right now are, like, I'm sick and tired of all the fees associated with importing freight through, you know, La long Beach and then wait time and everything else of ordering it from, you know, the Southeast Asia region of the world and then having it take eight weeks to get over here and then another week to get in from the port. Hypothetical example, you guys. But, you know, they're like, what would it look like to build that in Mexico? What would it look like for me to move, you know, some of my. My production down there?
Or, you know, maybe I'm looking at a supplier down there, and maybe I need to find something close to the border, like, say it's manufactured down in Mexico City, and I want to get a fulfillment center closer to the border itself so I can increase my customer response time and everything from there. So how does that look, Luke? Like, how do I contact you? And I got a widget that I'm getting manufactured out there that I need some long term storage potentially down there. How do I build a fulfillment network with somebody like you?
Absolutely. So, yeah, we would get started with establishing the relationship with your manufacturer, understand how you're currently doing it, and, you know, our. Our statement is, however you're currently doing it will reduce your operational costs by 20% to 30%. Now, location does have a lot to do with it. And when we. When you're bringing stuff over from. From China, all from a customer's perspective, you have to change is instead of going from port to door, getting it into the United States, the first thing you would change is getting it port to port. So you bring your products in. We won't. We'll keep the manufacturing in China right now. I'll run you forward. I'll run you through this play, and then we can talk about bringing the actual manufacturing to Mexico. What that looks like.
This is probably the easiest transition to build your footprint in Mexico. You know, step one. So you bring the products in. If you're heavy in d to c sales, you can take advantage of de minimis duty programs such as section 321. I won't get into that too much, but just know that it's. It's. We have the capabilities to, you know, process d, to see orders under dollar 800 duty free. And it's. It's a big game changer for a lot of. A lot of brands paying high duties and tariffs.
So, yeah, let's talk about that, though, man, because that's. That's something that isn't necessarily talked about a lot with, you know, tariffs and everything else that's out there. So, like, what is it? Have you, have you guys looked into this? Like, what does it actually cost most manufacturers to import in its current juncture?
Oh, yeah. It's HTS codes. You talk about just databases and siloed out. Databases, I'd say HTS codes and reporting to your freight forwarder is probably up there. And some of the most confusing, misled, misinformation out there on the Internet. There's no one database you can go to calculate your savings. It's, each country holds its own, you know, rule of taxes and duties and how they charge for that. So in general, if you're. And, you know, if you're paying over 1015, 20%, and the list just keeps getting higher and higher as, you know, more laws are imposed. So if it's a pain point for you, it stings immediately as you enter the United States. And as soon as it clears that port, right before it clears that port, you're paying. You're paying a lot of money to get that freight cleared into the United States.
So what we do is.
Yeah, I think that there's.
Go ahead. I'm sorry.
No, I was going to say I think, like, you know, because we're. We move a lot of containers, you know, importing a lot of containers, and, you know, we're kind of seeing that there's, there's a, a lot of fees that can kind of pop up unannounced. We'll call them and, you know, and it's stuff like that I think that as you're going out there and really assessing, what is your next logical move? Right? Like, you know, you're like, hey, we can't grow fast enough here in the United States, so we're looking to start buying product in, you know, Southeast Asia. We're assessing what the import status looks like. We're really looking to expand our operations.
And I think, like, having a clear understanding of what it costs to actually import a container from China into the United States, as opposed to what it would cost to manufacture in Mexico and then just ship it up here into the United States. And seeing that cost breakdown, I would love to actually see that. And, you know, like a side by side comparison. What is that average? And then I want to also account response time, too, right? Like, because obviously, unless you want to air freight something from China, you're looking at 6812 weeks, whatever that looks like, from manufacturing to release to getting here to the United States, as opposed to what would it be to have it manufactured down in Mexico? Is it two weeks? Is it three weeks? Is it half the amount of time?
Because it's like, as, from my perspective, I would look at it as it might be a little bit higher on the upfront costs, but if it improves my fulfillment and my response times to my customers, then my sales team can get out there and sell more. Right. Because there's not a twelve week gap between order to arrival to our distribution network. It might be three weeks and then we can get it across into our distribution network and then we can sell at a higher pace. That's just kind of where my mind goes with a lot of this.
Yeah, yeah, absolutely. So there's kind of two ways you can look at it. You know, you can have the big picture train of thought. It's like, all right, I'm going to bring my entire supply chain and actually manufacture in Mexico, or I'm going to enhance my relationships with my suppliers in China and run cross border fulfillment and take advantage of all the duties and tariff programs that help eliminate those on a d two C level for now. So it's basically a step, the ultimate power play for all the enterprise customers. Yeah, it's a land grab in Tijuana right now, but that takes time and it's getting more expensive as well. So the ultimate way to run your d two c chain. Absolutely. It just from a financial standpoint and playing it forward, it makes sense for everybody to have a manufacturing facility in Mexico.
But years one through four, how do you take advantage of it while having that big picture train of thought? You use a fulfillment partner that knows how to do cross border fulfillment and follow the paperwork properly and enhance the customer journey.
So, so how does that look though, man? Like, so say I end up, you know, we, I manufacture widgets, whatever that looks like, and I choose you to, you know, to handle all of my distribution for me down in Mexico. What does that look like from a, an import side of things? Are you guys the freight forwarder as well? Do you guys work with the freight forwarder? What does that process look like? Why am I seeing more names besides prosper fulfillment coming across to let me know about my order status.
Right, right. So right now our focus is fulfillment. I like to say I've learned that mistake of going a mile wide and an inch deep. So we're a mile deep and an inch wide and just fulfillment. We got awesome import and export partners that we work with. If we come across a company that has a healthy relationship with their freight forwarder, all they have to do is change it from port to door to port, and then we can catch that data and bring it in. So how you move with your freight forwarder doesn't change much. How you file for the customs clearance, that changes a little, and our onboarding team takes care of that. And then once you bring the product in, we operate very similarly to a good three pl domestically in the United States.
We hit all the SLA's and you might be wondering, for d two c business, how are you getting it to New York in two to three to four days? So to make it very clear, and in short, we consolidate truckload. We run truckloads consolidated across the border. We inject into regional couriers. Yeah, we have relationships with a plethora of courier services through a pretty cool, dynamic way of dispatching our shipments. But we cross the border, it hits San Diego, the package just never stops moving. It's called zone skipping in the parcel world 1500 of the orders going to New York, it's consolidated on a truckload, and it's. It's teamed, expedited all the way.
Yeah. So how does that look, man? Are you guys like, say, I, you know, I only have a, I don't even know what to quantify it as from an order volume perspective, but, like, how do I just like, rent out a bay of pallet spaces where it's like, hey, I have, you know, ten pallets a week worth of volume that would ship through that? Is that how it's broken down? Or are you know, like from. I'm just looking from like kind of like a pricing perspective. You don't have to tell me like, what the rate is or anything like that, but I'm just wondering, like, hey, man, I only need, I'm a small company. I only need 1010 pallet spaces for a month? Or is it breaking, broken down by the sku? What does that look like?
Yeah, so let's talk about, you know, the growth of an e commerce brand and you know, what the norm is right now. So I must say, working with e commerce brands, very fun. Eccentric founding. Anyway, when they're doing up to 500 orders a day, they're more than likely doing it in house. It could have started in their garage. Then they started renting a public storage unit and the play there, if they want to grow. And the three pls domestically have done a great job at educating the e commerce brands. It's make this switch. Normally, if they're doing 500 orders, a day, and they make the switch to a three pl domestically in the states, they're paying about 5% more. And it's, you know, that's been the norm for the last five, six years. But this cross border play, when you make that switch. Yes.
Onboarding, there's a lot of paperwork and processes we have to follow to a t. We're very good at that. Instead of a 5% uptick, it's a 25% to 30% reduction in cost. So I'd say think about anything. 2300 orders a day, it'll make sense financially, but anything below get better at selling.
Yeah. No, no, I mean, that makes sense. Right. You know, again, back down to the whole, I try and be as honest as I possibly can on my show about, like, where. Where my business is and where things are, and, you know, it's all a calculated risk. You know, like, you look at sometimes where, hey, I want to get into a bigger space because I truly feel like these results are coming, and I'd rather have it and not need it than need it and not have it. But the reality is you might swing and miss in those instances.
So it's, you know, I'm starting to kind of reassess my opinion on a lot of that, where I'd almost rather be busting at the seams before I would expand out and change my operations, as opposed to now, let's just get into it right now and move everything down there. But again, everybody processes risk differently, and I've just kind of been down. Been down this route now for, you know, four years, and I'm just learning on how to make the best chess move. Long time in my business. And, like, how do we allocate our capital? How do we, you know, like, what is the best ROI for our efforts? And, you know, sales is everything, right? Like, you brought up a good point there, Luke. You gotta sell more. I. My.
My big concern for a lot of people inside of transportation is their entire revenue is tied up with one or two major accounts, and they're not selling, they're not expanding. They don't know where to look in the event that they have a customer or a prospect that comes to them. And you guys, this is why I bring a guy like Luke on this show, because if you're a broker or trucking company or an LTL provider and you don't know where to turn if your customer comes to you and says, hey, we're thinking about shifting our operations down to Mexico.
Do you know of anybody, this is why you, we need to have conversations like this, because it's not about, I understand the need for a lot of people that they need revenue, but you need to know who to talk to in the event that your customer comes to you, because that could be the deciding factor if you're going to remain their provider or if the person who comes to them with that solution is going to take everything over. Because what I like to say when I get in the door with the customer, I get in on my core competency. But if my customers come to me with another request, you better bet your ass I'm going to find that solution for them because I'm looking to move up their totem pole of importance.
I'm looking to eventually sink my claws in and become their number one provider for everything. It's just a matter of time. I want to talk to guys like Luke. I want to know who I could talk to in Mexico from a fulfillment standpoint, who actually owns the building that they're, that they would be going in, where if any of my customers or somebody else might know you need, you know, networking is everything in these situations.
Yeah, absolutely. And one of the favorite, one of my favorite parts of doing this is when we have a prospect on the phone and, you know, their ICP meets the criteria, and we deliver the pitch and then they go, why isn't everybody doing this? That's, it's my favorite thing. Because at the end of the day, it just makes sense to do for the right customer. And it's a disruptor in this industry. Right. So, you know, that takes time and it takes the right forward thinking group.
So we're not working with hundred year old companies that have, you know, I like to say, you know, the buildings with the fluorescent lights, you know, in the, you know, we work with companies that are doing anywhere from ten to 200 million with a high revenue per employee number that maybe they're fulfilling in house, maybe they're utilizing a three pl domestically, but they see the shift in the supply chain and they want to take advantage of it. We're here for that. We're here to grow because fulfillment is growing in multiple ways. Yeah, there's this giant growth in e commerce, but over the last two, three, four years, the marketplaces have started catching up. You know, everybody. Amazon's been the biggest logistics company forever. Yeah. Then Walmart grabbed ahold of that. Now tick tock shop is blowing up.
Yeah. Yeah, that's true, man. That's wild. Sunny brings up a good question here. This is actually where I was going to. Sonny watches the show so much, he knew where my question was about to transition to because I wasn't, you know, he asked to know, do you guys do temp control product? Because that was going to be my next question is, are you guys food grade certified? Are you guys just, you know, consumer goods? Like, what does that look like right now?
It's, it's consumer goods, mostly apparel, footwear. And that's what we're going in a mile deep on. We, we love to have the conversations to, you know, talk through time control and how that would work. There's a lot of, it's just a lot of extra paperwork. You end up having to know what to do to clear things with the FDA from an import export standpoint.
Yeah, I will say this. My wife is from Sonora, originally born and raised. My in laws live in Sonora. And you can't beat the sonoran beef, man. I'm telling you, dude, that's next level good down there. Yeah, so I will say that, and I know because my man Sonny specializes in protein, out there for his temp, controlled proteins and stuff like that.
But, yeah, Sonny, we'd love to talk. We'd love to talk and figure out how we can help. So please reach out.
Yeah, it's, you know, dude, I think that, you know, but I like what you guys are doing, though, in that niche style thing where, you know, you brought up, you know, apparel, shoes, footwear, stuff like that. It's, it's kind of staying inside of that specialty because, you know, again, I. And then, and I think that aligns perfectly with your guys' core customer base. And who you guys are really going after is you guys. You know, again, correct me if I'm wrong, it seems that you guys are going after that up and coming brand. You're looking for that brand that's out there.
That is, you know, maybe they just moved out of their first apartment and they're getting into their first building, and then they're starting to assess what is our next thing if we're going to get manufacturing, you know, because manufacturing costs, all of that stuff is that's a very real thing. I think a lot of companies want to have that made in America label on it, but as you're building your business up, you might not be able to afford to do it that way. And, you know, you got to look outside of there, don't get me wrong.
We service enterprise level customers and you know, we have that part of our business. But from the, from the interesting and exciting aspect of being able to work with brands that have figured out their brand, their ICP and have created a market and loyal customers that need a little help that will help on the fulfillment side to help them do what they do best. There's nothing better than that. It's exciting, it's very cool and that's.
Like, I've been very fortunate to work with a couple of customers that got really big after we got in the door with them. And I'm not going to say it had anything to do with us brokering their freight, but, you know, seeing where they went from two facilities to 15 facilities nationwide and they went from like, were doing like 200 shipments a month to like 1500 shipments a month with them, like, that's so exciting to see these brands kind of grow out over time and then knowing like, you know, you were kind of a big part of it in bringing their brand out there to, you know, nationwide.
And you know, when I even still to this day, like I pointed out to my wife almost every single time that we see their product on the shelves and there's another new flavor of their stuff, I'm like, damn, we, and then they have like cans now and it used to just be in bottles and I'm like, and then they got energy drinks and all this stuff. I'm like, babe, we used to move it when there was just one sparkling flavor and now here they are and they got, I don't know, I just, I'm a just a freight junkie at heart, man. I just love this shit. So I love seeing that stuff, man. I really do.
Yeah, it's fun. I, I dubbed the term supply chain surfer because it's just, it's fun. And yeah, I will say growing with brands, how we tend to add value is forecasting and being at the forefront of pushing the right data their way and truly forecasting because you can forecast for truckload freight and everybody has their systems out there for fulfillment. It's not only, you know, seasonal, it's the amount of employees, the amount of storage and bins. It gets very complex, very quick. So that, I mean, we push the technology and clean data through our system to put our customers in the best position possible to make the best decisions.
And I think like that, you know, I'm a firm believer that success leaves clues out there. And for you guys, to have those enter that enterprise level. And I'm not saying you guys are sharing data, but that experience of working with an enterprise level customer and forecasting with that style information, to be able to bring that down to a brand that might be looking to expand out there, and it's like, hey, this is what these a customer of ours that does. This is how they operate. This is how they forecast. And then having that experience, I mean, dude, that's crucial, right? Like, I'm fortunate to be involved in some entrepreneur, in an entrepreneur group wherever.
I, I kind of can cheat a little bit in business because I'm learning from guys who have built massive companies and they're helping me expedite my success because of that. Like, it's probably saving me 510 years of growing pains that I'm getting it condensed down because they're like, no, do this, this, and this. We, when I hit this level of revenue, this is what we changed and pivoted to when I hit that level. This is what we did. This is how we expanded hiring. This is how we expanded all of that stuff. Stuff. So to me, that information is valuable. And then working with somebody who's kind of seen that play out from multiple angles, I mean, dude, that's huge, man.
Yeah. And living in 2024, when you not only can play it out, you can visualize it. It's, it's incredible. It's very powerful. And, yeah, it's, it's been a fun ride so far. We're, we're just getting started and we're filling up a 280,000 square foot, our 2nd. 208,000 square foot facility quickly. So, yeah.
Are you guys Justin in Tijuana then, or do you guys have another facility out there as well?
So just in Tijuana right now?
Okay.
Mile, mile deep and an inch wide in Tijuana?
No, absolutely. Absolutely, man. No, that's great. And I think that. No, that's perfect. Luke. Well, Luke, I appreciate you joining me, man. How does anybody reach out to you to find out more?
Hit me up on LinkedIn, you know? Luke huffs or email me. Luke Rosper fulfillment.com and yeah, that should do it.
Perfect. Sounds great, man. And for some reason, if you guys can't find Luke out there, just hit me up. I will gladly put you guys in contact with Luke to learn more about what they got going on out there, but that is going to be it for today, ladies and gentlemen. We will be back tomorrow. We got another guest, as always, if you guys got value in what you heard, I subscribe to the show. You guys share it out there to your network. Because if you see value, your network is going to see value as well. I appreciate you guys. I love you guys and we'll be talking to you soon.