Lightning like Steve McQueen I'm in a fast lane when the light turns green Built tough, I ain't nothing but grit Because I made rugged blood sweat and spit yeah, like a horse I fly I like to play hard but I work harder and I weather the storm.
Because I'm built stronger what is up, ladies and gentlemen? We are back. We are live. It is a Freight Coach podcast, the top podcast in transportation coming to you guys every single weekday, 8:30am Pacific, 10:30 Central, to break down some industry headlines. But most importantly, you guys provide some actual insight into what you can do with all of this information. As you can see, I am not in the studio. I am at the NMWTA Cyber Security Conference, Day 2 in Cleveland, Ohio, to break it down here with my friend Cleat, you know where, you know, it was funny as we saw each other in the gym both mornings, and, man, you're. You put in the work, man. And it's like, I see a guy like you, and I'm like, all right, that's.
That's exactly what I want to be here in a few years, man. So, Cleat, thank you so much for taking the time to join us. And, Cleat, you're with Southeastern Freight Lines here. And, you know, for. For those out there, man, how'd you get your start in freight? Like, what brought you into the industry?
So I got to go way back, and I'll make it quick because it is a neat story. So my grandfather actually came from Cuba in the 50s to play major league baseball.
Oh, wow.
When he came over here, the country fell, so he couldn't go back. And he was working in the off season. He was working on a freight dock rider pie, which is an older carrier. Somebody didn't chalk the trailer. He went off the dock on a forklift, crushed his legs, could never play ball again.
Oh, dang.
Couldn't speak English.
Yeah.
So all he knew how to do is work a freight dock. So he's in the trucking industry. My father was in the trucking industry then, ironically, my wife that married her family's in trucking industry. So.
Wow.
I really don't know anything else, so this has got to work out for me.
No, I feel you there, man. I love that. And that's. That's kind of it for. For me as well. Like, I come from a family of truck drivers. My great grandparents immigrated here from Germany in, like, the 1930s. They started a trucking company in Iowa. And then my. My dad got into it. My grandfather on my mom's side they. He was a dispatcher after he came back from the war. And then uncles, godfathers, everything. And then I got into it as well. Like for the longest time I wanted to drive. Like, that was my thing. And my dad always told that was like actually the one job that he never wanted me to do. And I never really understood why, but he always told me, he's like, I want something different for you. You know, like, go do something different.
Work with your brain, not your back. And so I got into freight sales. I got in as a broker pretty much right outside of college, and I've been doing that ever since here. And you know, I found this industry to be. I mean, to me it's just like one of the most unique industries out there. Granted, it's all I've ever known, but I think it's because like, our industry, I think is the one that can say it touches literally every single piece of this country. You're at all moments. Right. So it's like I don't know of anybody else or any other industry out there that can say that.
Yeah, you're absolutely right. I agree that it touches everything. And it's amazing when I meet people, whether it's at church, ball fields in the community and I explain to them what I do in ltl, it doesn't take long. Start naming the customers that we haul freight for, then they can immediately make a connection.
What's one thing about the LTL industry as a whole that you think is the most misunderstood about that mode?
That's a great question. Of course. So my background is from the pricing side.
Yeah.
And so I'm going to give my answer. May be more geared towards that, but it is. When I try to explain to people that we determine a price to move a. A shipment in the LTL arena, it's two to three pallets. We're forecasting everything. We're forecasting how many trailers we're going to run over a certain lane, is there going to be any traffic? How many stops can that driver make, how many other shipments? There's a lot of variables go into it. So that is probably the most dynamic part of this industry that I really enjoy because it's a constant trying to forecast what's going to happen and then also set a price to make the company successful.
No. So, I mean, I. I'd love to talk about and dive into that a little bit more. Right. Because I feel like freight classifications is probably the first thing that comes to mind when you're out there quoting because ltl admittedly not my jam. All right. I'm a full truckload guy. Ultimately when it boils down to it, I've, I found the most success in that mode. How do you guys, what is a freight classification? How do you guys determine this is a class 70 or a class 90?
It's so Chris, right now it's based on the density of the product, the liability of the product, the stowability of the product and over time. So if you went back years, the shipping industry would want to make it simple. They would want one class for an item. So water bottles would be one class.
Yep.
As technology has emerged over time and a lot of carriers now have dimensioners, we're getting the exact density of every piece of freight. What we sell at Southeastern in any carrier is nothing more than space on a truck.
Okay.
So if all we sell is space on a truck, we need to be able to price by space on truck. So the classification through the NMF is starting to really. Next year in 2025 is going to be a big year where we're changing, where it's not going to be single classes for the majority of the items we're now going to have. The classes will be determined by density. So the classification is moving more towards a. If we sell space on a truck, we want to give a class based on the size of truck.
So when you say density, so if It's a standard 48 by 48 pallet and it weighs 100 pounds, is it going to be priced differently than that? Exact same dimensions, 48 by 48. But it weighs 500 pounds?
Yes and no. The way we, our industry prices freight, we charge what's called 100 weight. So we basically come up with a charge per £100. Okay, so the idea between the class system is when that the pallet that you described, 64 cubic feet, at the end of the day, no matter the weight, we want that pallet space to pay the exact same dollar amount whether it's 100 pounds, 500 pounds, 1,000 pounds. And that's how the class system works. It changes 100 weight charges. So we get paid. If we need $80 for that pallet space, it doesn't matter how much weight we're going to get paid $80.
Okay, so then I mean with that is, you know, I'm also what adds more to your guys rates is it, you know, the more the driver has to do, you know, liftgate, residential driver assist, pallet jack, all of that and is that Based on, like, the time aspect of it, where it's like, hey, this driver to grab this one piece or this one order is going to take 45 minutes as opposed to 10 minutes. And then do you guys factor in a lot of that stuff to confirm for some of the accessorials that come along with it?
We do. So every stop is we. We do. We. You know, the neat thing in our industry now, and I. And I almost feel this is every industry.
Yeah.
We're getting an overwhelming amount of data.
Yeah.
And so that data can tell us for these consonants, these shippers, here's how much time we're spending at their docks. And we build that into the price.
Okay.
And then like you said, the assessorials are those charges are put in when extra services are required.
How have, how has pricing evolved over your career? Like, do you think it's gotten more complex with the amount of data that is out there now, or has it gotten more streamlined and it's a lot easier for the customers to kind of predict or have a general idea of, hey, if my pallet or my order is similar, the rate should stay the same throughout the year.
Give you answer and say both.
Yeah.
So it's lto pricing over the last few years has gotten a lot more granular. And what I mean by that is it's, you know, I liking it like this. My, my wife does not like these at all. My sons and I, we love them. But if you go to a buffet, you're going to pay one price to eat.
Yeah.
And I love it as a father because I know exactly what I'm going to pay and walk out. But if, you know, that would be the ltl industry years ago, meaning went to a customer, we gave them one price for every state, every lane. It was a. Almost a catch on. What were looking at is, at the end of the year, do we make money on your account or not? Now what's happened? It's. My wife loves going to this yogurt places up the. Up the road from our house, and I don't like it, but she likes it because they charge you per ounce.
Okay.
So whatever you get on there, they're going to charge you. So her price is a lot different than mine. And my sons go in there and they overwhelm us, and it's like, I.
Can'T believe what we're paying for $100 frozen yogurt. Yeah.
That's what's happening. Ltl industry now, it's gotten so granular in price, we're pricing. We have some customers set up where we're pricing. A specific move from a specific shipper to a specific constant. And so it's. And that's all because of technology we're able to do that.
Do you think that makes it more challenging to retain business in the long run with that as data and technology gets out there? Because I feel like, you know, again, on the full truckload side is, you know, a lot of it. When you're first getting started with a customer, it is about price, right? Like ultimately that's what a lot of people will. Will always look at. Not everybody. But ultimately I think overall it's very price driven out there. How do you guys handle that when you have to go in there with a price increase? Right. Because you know, the data is out there. I'm not saying you're your company in particular, but you know, I've seen articles out there where, you know, LTL, you know, minimum 8% price increase year over year and stuff. So how do you guys handle that conversation?
It's really two part. The first thing we look at is anything with the customer change. Meaning that if we, if the cook, we'll pick on a customer in Atlanta. Maybe from Atlanta to Louisville, Kentucky is a very good lane for us. We need freight going in that lane. So we price it one way. Maybe going to Miami, Florida, we still want the freight, but it's got to pay a little higher price because there's nothing coming out of Florida. So what happens is if the customer during that year, they may not ship anything to Miami and ship everything to Louisville or vice versa. If they do the inverse and they ship everything to Miami, we're gonna go back to that customer, say your lanes have changed, your mix has changed. So we need now to change our price.
Cause you're really buying a different service from us. Okay. When you get granular in price, if you have a price for Miami and a price for Kentucky, that'll take care of it. So what it does is the more granular you can get in price, it really hedges some of those conversations. So we're not going back at the end of the year and say now we need a 12% increase because the products change or on the shipper side to go back to the end of the year and we actually charge a shipper too much. We don't need an increase. So now what we're trying to take all that variability out of it through pricing. And when we go talk a customer at the end of the year, it's more about our increased costs because our drivers are being paid more.
Insurance, technology, all the things we're doing to invest back in the company.
Do you. I mean, do you guys lay all that out there from a. Like, as an overall, like, you know, not necessarily showing them your P and L or anything like that, but, you know, cost of living goes up, inflation goes up, your guys costs, fuel, maintenance, everything. Because that's. I think that's one of the biggest things, at least on the independent contractor side, the owner operator side, on the full truckload is. Is they're seeing all of their costs go up as well, but their prices are compressed more than anything. So, you know, how are you guys going in there and really handling? Like, how would you advise somebody, as somebody who's been in this industry for a long time, you've seen every market swing imaginable, you've been through it all.
How would you prep somebody to go out there and talk to their customer about a price increase?
Of course, coming from the pricing side, I'm going to say that's easy.
Yeah, just go do it.
Yeah, just go do it. Let me know when to make it effective. Now, one thing we try to do at Southeastern, and I'm sure most we have some very good competition and what we're seeing in the industry, when we put our sales team, and we've got some great members on that team, when they go in front of a customer, we try to give them all the data they need to go to a customer. It's, you know, same thing like you. If I just. We had streaming service that we watch TV through. All of a sudden all I did was get an email last week, said, your price is going up $10.
Yeah, I think we use the same streaming service.
Well, I used to use them. So no explanation, nobody you can talk to. It was almost a take it or leave it. And I said, well, I'm gonna choose to leave it. Yeah, we never want to do that to customer. It's south that we don't want to go to customer and say, unless you take this 10% increase, we're not gonna haul your freight anymore. What we try to do is work with the customers, give our sales team reasons on why we need that increase, and you hit some of the specifics. We try to break it down. And here's how much it went for, just general wage increase. Here's how much our equipment's going up fuel. And so we meet with the customers, more of a partnership so we can.
Show them what we're doing so you're essentially. I, I think that's like, you know, bringing data back into it. I think that actually being able to show somebody like, hey, this is how we price it out. This is a, you know, our overall overhead to haul this one pallet. Right. Like you got to factor in maintenance, driver pay, insurance, time. All, all of that stuff gets factored in for you to bring that out there. I feel like that would be, I don't ever want to call anything an easy sale but like that would help you explain it a lot more on why you have to charge what you have to charge. Because otherwise I feel like most people feel like we did when we got that price increase, an arbitrary price increase. Okay. Why?
You know, and then, and especially if you don't have anything to back it up or if you're not even willing to talk to somebody about that.
Yeah.
You know, and I also feel like a lot of individuals out there kind of like the decision you made. If you're going to increase your rates at all, you have to be prepared for somebody to say I'm going to go explore other options and see what else is out there at that time.
Yes.
So do you, how do you've probably been in that situation before. How do you prep yourself up if somebody says, hey Cleat, I understand where you're coming from but I got a business to run too here. I got to go see what else is out there.
I don't say there's a bunch of different answers. Each situation is different. I'll take probably the two far extremes. You know, I don't, I'm always we. I reference my grandfather.
Yeah.
I don't know why this comes to mind, but I always remember him telling me, you'll never see a trucking company go out of business because of a lack of freight. It's normally because they have too much freight, not priced right. And when you think about it, the last few carriers have gone out. Normally their docks are full. They, they need people to come rescue freight when they shut down and it's because they're not pricing it right. So that there it we do. You're right. We do have a business to run and we know what our costs are and if we know we need this, why would we handle it for less? That's one extreme. The other extreme, we are very big at Southeastern and building partnerships so we want a long term partner. We really, we do not like churning. We don't want to.
We're not big on bidding for or participating in bids, where every year the customer's pulling the business to cheaper carrier. So if we're partnering with a customer and we do this currently, we may need a 7% increase if that customer for some reason can only afford to pay a 3, that there's a path either through efficiency, reduced costs, if there's some path to get us to our profit margin, we will work over years with that customer. So it's kind of on both sides.
Do you think pricing is. People don't put enough emphasis on the data that's available to them when they are pricing freight. Because I think your grandfather brings up probably the best point about it. And it's not just in trucking, that's just in business in general.
Right, right.
Because finding work isn't necessarily the challenge. Because I think if you're naturally hungry and you're driven, you can find customers, you can find freight, you can find business. It might not be easy, it might not be instantaneous, but you're going to find it. Do you think now with as much data is out there, it's harder to price in the long term knowing that your guys's competitors are in their ear? Because, I mean, let's be honest, every single shipper in North America right now has a laundry list of prospects that are, you know, that people are prospecting. Right. A friend of mine, Kara Brown, she says it best. She says all of your customers is somebody else's prospects. And you need to treat it that way with that much urgency. That's good behind it. Right. So it's like, how are you out there?
How are you know, do you think it's harder to price in the long term? And like, how do you balance that? Hey, we've been working with each other for a long time. This is our prices. And we've kind of, we feel like.
We'Ve backed that up in each situation is different. It's, you know, while you're talking, something came to mind for, you know, for a good ltl care. There's really three things. It's. And they work together, but also they can work apart. But one thing I believe in three things is very good price discipline.
Yeah.
Because if, you know, everybody wants to wake up in the morning, see their shipment count from the night for. And see it raised and, you know, we get excited about that.
Yep.
It's easy to go out and buy shipments, meaning we can lower our price. If you're given a price, I can Come in. So I'll do it for a dollar less and without any regard to call. So pricing discipline then, in that you got to have a good costing system to know your cost. And we do realize that there's some moves we can do for a certain price and there's some moves a competitor can do for a lower price. They have a different cost structure, so to know their cost. And the third inside the LTL arena, which you put those two together, is density. So density drives efficiency, meaning we. I can, I can ask for a $200 charge all day long for a customer, but if I don't get any freight, I've got to have some freight to move. Our.
We've built a certain size network and we need density to put through it. So those three items together, pricing, costing system and density have to work together to give you a good outcome.
How would you recommend somebody goes out and, you know, or maybe, you know, you might have some insight on this about building their book of business up. Do you. Do you think that it's imperative that they choose kind of like a niche region to really focus in on, say, like ltl? You know, there's somebody who's listening to this show right now, they're like, hey, I want to go sell ltl. Do you recommend that they choose a region to stay in? Is there a certain freight classification? Do you think it's more of like a keep it as simple as possible, or is it kind of like a. More of an overarching service where it has to kind of encompass all ltl?
It's. So you talk. Are you asking if somebody want to go out and start an LTL carrier?
No, just like a sales rep in general. Right. Where it's like, you know, you've been doing this for a long time, obviously, and, you know, if there's a newer person who's in the industry right now and they're listening to this and they're like, hey, ltl. Seems like that's an avenue I want to go after. Do you think from like a pricing strategy and a business development strategy, it's easier or more effective to kind of focus on, hey, I'm just going to do the Southeast ltl. And those are the lanes that I'm going to try and capture it.
Sometimes I think it's easier to walk in and lay a brochure in front of a customer and say, we do everything from warehousing, truckload, brokerage, packaging, ltl. We offer everything under the sun.
Interesting.
And you pick. I think that's really an easier sale because you just, you're handing a brochure and saying, we do everything.
Yeah.
I do think what we're seeing in the marketplace because of technology, because of service requirements, a more focused sale where they're going and saying, this is what we're good at. Remember I said a few minutes ago, we know there's some lanes that a competitor may do better than us or may do at a different price. So we want to, at least in our company, we want to go in and meet a need for a customer and solve that need to develop a partnership with them instead of, you know, we don't want to go in and say, let us do everything for you in a stump, our toe or overshoot, so to speak.
Yeah, no, I gotcha. I think that, you know, because I talk about choosing a niche a lot cle, especially when you get started out on, it's more about building up that repeatable scalable process for you to follow. Because otherwise, I think with the, I mean, you mentioned seven different possibilities right there in your thing, and for you to be a subject matter expert in any of that, I think in today's day and age is extremely challenging where it's like, you know, maybe you go in there with your core offering. And this is what I personally do. I go in there with my core offering, but if one of my customers comes to me and says, hey man, we really need help with our ltl, I'm going to explore that. Right.
They're an existing customer, but I'm not going to go out there and like actively sell ltl because that's just not something that I feel like is a core competency of mine that I can really execute at a high level with all of my other work. And then, you know, most importantly, knowing how fragile it is to build a relationship with somebody, I don't want to go in there and over promise on something that I can't really do and then lose the business. And then you look at all the time that it took to develop that prospect into a customer and everything else where, you know, I'm never going to say don't take risks. But, you know, I like the thing that I like about LTL from that perspective is it's like you guys got your core offering right? Like, this is what we do.
And I feel like that's. And it's also, it's. I think it's one of. I mean, how much of the overall freight market is. Is LTL.
The 20, 25%?
I think, yeah.
The reason I hesitate is were in a meeting last Thursday and it's. You can go to three different websites, three different publications, and you can't find the exact number. Number.
I think 20 is a general rule. Yeah, we'll just stick with 20.
And Chris, I'll throw you another curveball that makes pricing even harder at Southeastern. And all I can do is speak at Southeastern. That's where I get the pleasure of working for 74 years. And it's just a practice. We've never laid out anybody off.
Dang.
And so even through the Great Recession, never. Lady, my office. So that's easy. On a. A podcast, say, hey, we never laid anybody off. And all of a sudden the driver is now getting three hours a week. They're not getting enough hours. So the hard part is making sure everybody gets enough hours. So inside the pricing, we try to also be careful. We don't want to go do a low bid for a customer that every year's re bids their freight. You know, we pick up at a service center and also becomes a lot of that service center's workload. In a year, they yank the business from us because somebody came in and beat us by a dollar. And now we need work for those drivers.
So from a pricing side, we're also looking forecasting, how do we serve our people the best we can by bringing on accounts that we can partner with so we're not putting our people in a bad position or the company in a tough position financially. So it's at least Southeastern to me, it's a blast. I love the challenge we give the practice with no layoff. But it does make the way we operate a little bit harder from a pricing side.
No, I like that. And we just got a couple minutes left here. I knew this was going to fly by, but yeah, I want to talk a little bit more here and kind of pivot into, you know, your. With your time with the NMFA here.
Yes, sir.
You know, so what is your role here at the NMFTA and what are you really focusing on?
So my currently in mfta, I'm chairman of the board. I've been on the NFTA for right at 20 years. So became chairman back in October. And this year is really exciting year for us because we at nmfta, we operate really on three things. One is cybersecurity. So you're witnessing that at the conference you and I are at now. You know, I told somebody last night, unless you hear seen it, the level of engagement, you know, sitting this meeting. You don't see phones out, you don't see laptop. Everybody's engaged. And so cybersecurity. The other thing we do is our standards for the digital ltl. So we are setting the standards for all API connections, digital connection for the LTL industry. And the third thing we're doing, which next year's a big deal we talked a little bit about, is classification.
So next year we have a process classification, reimagination that's assigning more of the items to density base is something our industry's asked for, the carriers have asked for. So we're going full fledged that next year.
No, I love that. And, you know, it's. I, I think that, you know, I've mentioned this, I mean, at least 30 times now. The. What I love the most about this conference in particular is I finally feel like I'm a novice, you know, because it's like, I mean, I'm a freight guy ultimately. Like, I know how to bid for. I know full truckload. I know, I know that stuff. But when it comes to the IT and the tech side of things, it's like it's just a whole new world out there and to be able to assess what you need, what you don't need inside of your business.
But then again, like, I think the collaboration inside of this conference is probably the one thing that stands out to me the most, is there are people from some of the biggest logos in the industry on down and they're all talking with. No, we're all on the same team here. Right. Especially when it comes to cyber security. We're all on the same team. Let's all put best practices out there, let's all educate each other, because if it happened, they all know that if it could happen to the big logos, it can happen to the small or vice versa.
Absolutely. And I, you know, the last. Before you and I got to talk, the CIO of Warner was talking.
Yeah.
He made a comment which sums up. He said this is a great conference because we're collaborating. He made a statement. He said, it's really us against them. It's us against them, the cyber. Cyber criminals who are trying to break in our. He said we got to do everything we can to work together as an industry because, you know, if transportation is what makes a supply chain move.
Yeah.
So if we get attacked, any facet of it hurts all of us.
No, exactly. And that, you know, that's the thing, is it is critical infrastructure. It's a critical industry. Without it, nothing else operates, nothing else can operate. So, you know, it is awesome to hear that. And I mean, that's also though, man, that's why I love this industry so much. Like, you know, yeah, there's competitors and all that stuff out there. Let's put all of that aside. But I think that there's, you know, at least recently, I can tell that the tides kind of shifted in more of a collaboration standpoint overall of like, hey, how do we improve this industry? How do we, how do we elevate these standards up? Because, you know, I'm a firm believer, man, if you've made it past six months in this industry, you're in it for life. Like, whether you want to admit it or not, you're here.
So you might as well make what's best of it and you might as well elevate everybody else around you. But you know, Cleat, I appreciate you joining me, man. We're already at time here and how does anybody reach out to you to find out more about, you know, what you got going on at Southeastern or maybe contact with you about the nmfta?
Either one my emails, Cleat. C L E T E Cordero C O R D E R O at also in reach through the nmfta. So either way is fine.
Perfect. Cleat, I appreciate it. Thank you so much.
And thank you.
That is going to be it for today, ladies and gentlemen. We will be back tomorrow at home though. I'm flying back home tonight. We're gonna be back in the studio. This is officially the end of the Freight Coach Roadshow. These last three weeks have been amazing in Florida, Kansas and now here in Cleveland. But as always, you guys, if you guys got value in what you heard, 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. Now we end the stream and I don't have anything fan.