Shannon Breen-Logistics Super Star

Welcome to Chain Reaction: Tales from the Supply Chain. In this episode, Jeff Davis interviews Shannon Breen, co-founder of Freight Waves. They discuss the evolution of technology in transportation, the challenges of the current market, and the potential for innovative companies to thrive. They also explore Freight Waves' unique position in the industry, including their trailer pool service, advisory services, and technology solutions. Join us for insights into the logistics market and its future prospects.

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Transcript

1:28

Hello everyone, and welcome to another episode of Chain Reaction Tales from the Supply Chain. With us today, I have Mr. Shannon Breen. He is the co-founder of Freight Waves based in Arizona. Oh, Edit Start over. Jeff, you're too. In all fairness, you had an article of freight waves on your LinkedIn, so I did. Hey, fresh, my was stuck on your brain. I'm like, Hey, we're only 10 seconds in. We could definitely start over. Yeah. Yeah. So I'm, I'm gonna, I'm gonna discount some of my mis misnomer there. It didn't just come out the, oh, and it's VNA too, cuz people, some people say, Vanna don't do that. I figured Va like, cuz there's Carvana cuz there's car. There's Tiana too. So let's, let's give credit to Tiana who was much earlier than all of us. Okay, well, fair enough. So let, let's not talk about that either. There's some sensitivities, so So welcome everybody to Chain Reaction Tales from the supply chain front lines. I am Jeff Davis and with us today we have Mr. Shannon Breen, the co-founder of Freight. Based in Arizona. Definitely looking to hear what he has to say about various aspects of the logistics market. Shannon, tell us a little bit about yourself, how you got here. Well Grew up without any background or experience in transportation. Had entrepreneurial spirits when I was younger. Jeff always was that kid. In, in high school, I, I pictured myself having franchises in 30 or 40 and x number of franchises by a certain age that didn't pan out. Backgrounds in finance. So spent a lot of time on that in school. Ended up doing, working for private equity company and some sister companies doing some. Then 2012 came and really was my first foray into transportation. So I've lived here in the Phoenix Valley for 30 plus years. It's been home college here. Joined the ranks of, of night Swift, swift transportation. Really night at that time out of Phoenix, right pre-merger. and worked my way up through the ranks and really enjoyed the business and the chaos and the people. And I just fell in love with it. So it, it really spoke to me. I love, love solving the problems, love working with some of the tech stacks and packages, and have been doing transportation logistics ever since 2012. So over a decade in the industry and excited to see what we, and honestly, the industry does next cuz there's so much out there and. Big ocean, as we all talk about, but a lot of opportunities for, for, for folks hopefully like ourselves. Yeah. Absolutely. And, and so there's a few things there I wanna hit on, right. So you were, are, you were an entrepreneur at heart from, from early on? Yeah, I would say so. Yeah. Yeah. And you started out in what you said, private. I was working for a private equity company doing some more finance side. Right. Doing financial planning and analysis. Yeah. I think from a career standpoint, Jeff, there's, you may have experienced this yourself, but there's sometimes when you can do something and then there's sometimes when you love doing the things that you're doing, and I think that there's a, there's a chasm there. And so while I could do financial planning and analysis that that was not my true calling, and it, it, it left. Wanting more in different areas of my life. And so when I found myself to transportation, I felt like it was a perfect fit. Yeah. Do any of those skills kind of translate in from, from your finance days into what you're doing now? Absolutely. I think from a business perspective, right, understanding the bottom line, understanding the costing tax implications understanding how the balance sheets and PNLs work and being able to manage a business from the backside had really, really suited me well, to your point in my career working for a publicly traded transportation company and honestly even out on, on our own today, it, it suits me well. So those, those skills do translate quite. I'm gonna change gears. So you came in in 2012. What was, and I don't know if you remember, but what was like the big technology kind of advancement going forward then? Yeah. A a lot of talk about TMSs then, Jeff, right? Oh yeah. So you had, you had big industry players that had for, for really had kind of cornered the market I'd say on two front. So I love the question. Two fronts that I, I'd say they had the market cornered for, the big establishments were their t m s customized t m s solutions that they had built. Mm-hmm. and the data analytics that they housed within it. And so an interesting, as two 12 2012 moved on, you saw a lot more participants building out of the box technologies that you could buy off the shelf. You saw the advancement of third party integrators and data sources that could provide better intelligence to the industry. even if you didn't have the volumes of the biggest and baddest players in the industry. And so at that time it was, it was, it worked really well because I was working for an institution that also needed advancements in the platforms we were using and what we were gonna do with the data and how did we capture it. So that was an interesting time in transportation. I got a really good chance to work through some projects that allowed me to be right at the crux of some of that. But I think at that point in time, that was a huge conversation in where a lot of the industry was wondering like, Hey, do we buy versus build five versus build conversation still happens today. There are so many participants on the data and t m s side of the business than 10 years ago. It's, it's wild to see how different it is. Yeah. Data is more valuable than gold, right. More valuable than oil. Right. It's the most valuable commodity. And yeah, so I remember t m s coming out and that was the big solution set. Who were they? Who was the two big T m s? I don't remember who they, well, I mean, look, you got big outfits, right? I think you've got like a c h Robinson clearly, right? Been doing this for 120 years. Yeah. So they dominated on both data and their. They were, yeah, obviously a, a, a leader and, and still are today. You've had other, other big institutions like an Echo Global logistics and some others. So they really had some distinct advantages of size and still do, but I would say, kind of like a race. I feel like the rest of the market kind of caught up to'em in certain areas. Mm-hmm. Maybe not being able to replicate clearly size and breadth and, and all the experience they had. But in regards to data analytics and functionality of the t m s, many people started to close the gaps and continue to do so. Even some would argue surpass that functionality that some of those industry leaders had the advantage 10 years ago. So, fast forward. 2023. What's happening in technology in our industry now? Well, I think it's a really interesting time. In order to understand where we're at or where I maybe perceive us at today, you gotta go back a few years, right? Everybody's selling the best wizbang technology that's gonna democratize freight, remove all humans and be the next thing that the entire fragmented industry of, of trucking transportation goes to. Yeah. That would've been kind of the, the headline story from 16 to 17. definitely into 18, 19, and 20. But I think 23 is an interesting story because we're seeing some of those stories start to erode. We're seeing the plausibility of some of those marketing packets start to kind of fall apart underneath the weight of the market underneath the weight of. Fundamental financial fundamentals. And so this to understand 23 thinking, how did we get here? Well, a lot of money pouring into the space. A lot of popularity on transportation, especially following covid and some of the disruption. Okay, well, what solutions really work? What platforms really built to be sustainable? What platform actually can produce profits? and maintain their employee base and have scale. And so very interesting time as we go through these challenging transportation and economic times to see kinda, hey Will, what, what, who are the strong ones that will, will survive? So that's kind of the theme and status, or at least as I see it in, in the market that we're in here today. Yeah. That's a interesting that you, so, so what you're saying is, you know, there was all this marketing, this, this push to drive out manual processes. Mm-hmm. optimize, automate, and I guess in the last year, last 12 months and 18 months, if I'm hearing you right, some of that actually happened because the labor force. Reduced. So it's a matter of are we going to, or what lasted, what actually worked. So some of these got put to the test. Mm-hmm. Absolutely. Yeah. And I think our old, our continue to be tested, which is, which is evolution, right? I think. Yeah. Yeah. These ideas come about and people try'em and they market'em. They get money behind them. And then what really sticks, what really works? Yeah. What is that intersection of old school, new school? What will. And what business models can sustain that, right? Especially as the capital markets dry up. It's a real test, right? Because if you can't pick up the phone and raise X dollars and someone's like, Hey, you've gotta right size this business to either make money, stop bleeding money, that's a wholly different. Problem that some people are now being forced to solve here in the last six to nine months. And I think we'll continue to have to solve for the next nine to 12 months in our space, surely. So. Yeah, and, and I foresee the nine to 12 month challenge as well. So yeah, I mean, man, I had like a LinkedIn conversation. With somebody kind of in the tech space about this very thing of, you know, we, we live, we work in a manual industry where you guys on, in the warehouse, they're unloading trucks and loading trucks and palletizing and, and de consolidating. And a lot of the stuff we actually enter in manually, but some of that has, Optimize. So to what extent will AI and machine learning help and his input was, there's already been tremendous progress and you know, if, if a, if a bill of lading can be cut by e d i, then you just removed that whole, you just removed this and you don't need it anymore. Yeah, yeah. There's so much more to be had and I think. You know, as you cut continue, the industry continues to cut through the noise. Participants continue to make bets with their wallets on what tech works and what doesn't. It's gonna be a really cool time to continue that evolution. Right? Yeah. And it's happening at a fast rate. This'll be a tough time, but I think there'll be a lot of winners coming outta the backside of it. Yeah. So, you know, what, what, what is the industry kind of customer segment that you work? Yeah. So full truckload for star. A lot of people ask us about L T L and you know, there's some stuff on our roadmap, but full truckload transportation and logistics. Dry and refrigerated primarily. We don't, we don't do a lot of bulk. We do a minimal amount of flatbed, but, but an area that we can cover off on. So I say dry and reefer. What makes us very interesting, Jeff, is we've got our own unique trailer. which helps us to really tap into that long tailed small carriers in the industry. Yeah, we've got amazing partnerships which have helped us scale that to a level of pretty sizable and meaningful and we cater to all of the shippers that need trailer pools to operate their business. You're talking about c PPG companies, retailers, manufacturers. So we use a trailer pool kind of service there. And then, and then we do standard three PL and brokerage work for, for customers throughout the country as well. So that's kind of our, our niche. That's what we do. Yeah. We're pretty unique in that. And I'd say the only other caveats of of Freight Honda that make us really unique we've got an advisory services group that helps small to medium sized carriers and companies. They're looking to make acquisitions or sell their company. Whoa. We, we, we are, we help them. Make that a possibility. We help bring that to life for them. So we, we basically represent them, help them package themselves up, or we're, we're offering them different companies that are wanting to sell. We bring those opportunities to our buyers and, and, and, and try to make deals that way as well. So that, that is an advisory services part of Freight vna, which is super unique. and gives us a lot of great connections in, in the marketplace. And then lastly, we have a technology solutions group, which people hire us and we, we do bespoke projects for shippers, carriers, manufacturers. We become like an extension of their IT team. And based on our wealth of experience and working within the walls of multi-billion dollar companies, we're able to really help out a lot of technology teams that need the additional assistance. So, wow. And. being on the full truckload side, what are you seeing in terms of this, you know, we, we hear all about the, the driver shortage or we hear capacity crunch. Different markets may have different things. What, what's really going on and what is the reefer situation? I, I want you to touch on that later cuz I'm sure produce Susan whenever that happens, that that affects it. Yeah. I think on the carrier side, right? Let's hit that first. I think this is the downside of the cycle, right? When you see rating, that's at five year historic lows. You know, someone argue that it, that it helps, it does help certain segments, right? But the, the, the transportation markets are roller coasters as you well know right now, after you've done it right, a certain amount of years, you've seen the entire rollercoaster show doesn't take a lot. You could look at all the data analytics, it what goes up and comes down, and it's coming quicker and faster and more voracious than it ever has. So in this current cycle, the rates being five year historic lows probably suits the budgets of shipp. they got their butts kicked on budgets and consistency over through the covid and years. And so this is kind of that down part of the cycle where they have some advantages on getting transportation at a very low cost. The, the backside of that low cost. The unfortunate or fortunate part of a, a market that moves the way transportation does is that, you know, what we're seeing already in the world the market is seeing is you're seeing, starting to see a ramp up of how many small to medium size carriers are going out of. Right. That's just starting to happen over the last three or four months. We'll continue to raise. And then the staff that a lot of people don't see Jeff, that we see here and many other third party providers do, it's the calling down of the size of the freight. That's very hard for a lot of folks to quantify, right? If someone goes out of business and that mc is no longer active, that's a, that's we, we can mark to that, right? And I can tell you how many trucks they had and what they did, and now they're. but what's a really hard stat that really drives the market even faster as far as capacity coming out? Let's say Jeff, you had a trucking company, you had 18 trucks. Let's say you had 10 leases. Let's say you gave six of those leases back, so now you're at 18 trucks. Now you're at 12 trucks. You just cut your fleet by 33%. That stat's really hard to see, but how much did capacity enter or leave the. Well, it left. Well. It left. Yeah, it left. But I don't have something really tangible to ping on. So while people are really honing in on the revocations, right, the, the MCs going out of business. It's very critical and I'm, and I'm working with a couple partners now to really try to see into this kind of, through that wormhole and say, what does it look like for just the culling down of the freight, right? That, that, that Jeff, Jeff Transportation that went from 18 to 12 and every subsequent move down like that. that'll be a very interesting trend line to see because that also builds up to the capacity leaving the marketplace. And then what goes down, what must come up. And hence we won't be running at the five year, you know, historic lows for a long time because if that comes out, you're going to see a normalization and, and the rates come back to more normal, sustainable levels cuz at these levels for tracking companies, I'll be honest, most trucking companies can't sustain at the levels and pricing that exist in the marketplace today. I think that's factual, especially as you get into the smaller fleets. So at the rate levels of today, they're too low to su to have a su a meaningful, sustainable business. I would, I would say so. I think the market would say so. There's plenty of reasons, you know, if we, we had more time to unpack it, but I mean, everything that people talk about, fuel prices are still. Insurance and, and claims are still at a very high, high level driver pay and wages have not come down so that you know, these owners and these people that are managing these carriers, they just don't have a lot of ability to cut any of those costs out, and equipment is still not cheap. So you add those four amongst many others, you just get to a breaking point where the economics don't work. And hence you're running a deficit every single month on cashflow and profitability. and the unfortunate part about businesses, just like humans, when times are good, a lot of people don't do a good job of saving. So then when you get to these times, did you save all your money from the good times so that you can withstand it? But if you've spent that money or you got too far out over your skis, which a lot of people do, then this time's going to cause a lot of pain and, and some tough decisions have to get made on shrinking a company or in the worst scenario going outta business altogether. Whew. All right. Gimme some good news. Shannon The good news is, the good news is that it is a market that always changes. The good news is that there are really good companies with cool technologies or cool platforms or unique propositions that they're looking to bring to market. And as the market swings back, Like, like many you've heard this and read this, like, great companies are built and born out of some of these challenging times. And obviously I'm here with you today and you know, we've started freight VNA and we're trying to be one of those companies. Yeah. But we're very humble and hungry in our approach, and so we are doing everything we can to position ourselves for the long haul. Right? Yeah. Not to be cheeky, but like those companies that are able to build sustainable growth models on the backs of good culture. That the industry participants identify and believe in, those will be your winners. And, and we're definitely working our, our butts off, Jeff to, to try to be one of those folks. Absolutely. And, and I, and I like that. You know, and I too started, you know, a, a company in this time and it's, you know, I tell my wife, if we can get through 2023, it's going to be very, Right, like cuz q3, Q4 is when I kind of see some, some trend upwards. And then really next year we should, we should see some normalization there. But hopefully not everybody blew their wa last year because it was insanity. You know, if you were running a trucking company you really had to pick of your litter, of what load you wanted to take and, and at what price. Right. That's my point. Right. You could choose what you wanted to take, and it was the time to be a driver. You know, if, if I was a driver, if I was an owner operator, I, I would, I would've chosen last year to do, be my last year in business and and then, and then hang it up. But so certainly I agree with all of that. Right? And and, and if they can ride out 2023, it's probably gonna be a very good afterwards and, and more stable. Because I look at the large companies. The large institutions. To your point, I understand JB Hunt is procuring a lot of commercial real estate throughout the country and for the near future because they see a large rebound in q3, q4. Yeah. And they wanna be ready. They don't want to be caught flat. Yeah. And they have the benefit of that size and they have the dry powder and they've got the free cash flow. Exactly. Right. You know, they, they're, they're not worried about necess, I mean, they are worried, right? Cause it's publicly traded and you, you do play the quarter over quarter game like everybody has to, but, you know, they've been a company that can see beyond the the 90 day roadshow, let's call it. And they're believing in a different future. And you're gonna see a lot of companies that have the, have the capital go out and make some big acquisitions in this space. And it's, you probably don't need to look too far from some of the companies that even during the high market times, Jeff still weren't wildly success. Which would then tell you, Hey, if, to your point, if you're not wildly successful in the, in the, in the high market cycles, you've got almost no chance to make it through on the downside. And so you're gonna see some of those companies either get folded in, acquired. You're gonna see a lot of that in the industry. And, and some of those big players, like the one you mentioned, will, will probably be there for the acquisitions of both land of businesses. Mm-hmm. And all because they wanna come out and they have a, a, a responsibility to their shareholders to figure out a way to grow. And pure organic growth is really hard in this industry. And so you're gonna see a lot of more folks lean into the acquisition side that, that have the wherewithal and capital to do so. In which case your advisory business would be highly successful. Look at you, plug in the brand. Have you, I mean, you helping you out, man side marketing and sales. You, you've got Well, I can appreciate how it's kind of an additional business unit and it has some value, especially right now when there's gonna be some potential m and a activity. The one other thick caveat that I'd ask, add to what you just mentioned, right? Those big, they have very smart economists. right? So they likely are reading the charts that we just see, and it's kind of neat to look at, but they're studying all the charts and, and I just look at it as they have a fully staffed finance team and economics team. Something that. You and I don't have the benefit of having yet. Yeah, yeah. I mean, I, I've, I've seen within seen that, seen, seen the inside of that onion, and they do have more resources. I wouldn't, you know, I think there's incredibly talented people that see the world. I love, I love their follows. I love what they bring to the industry. They just, they don't have the, I would say wherewithal. They don't have the capital to really act upon some of it. And so these folks have the, the be the benefit of having a little bit of. Yeah, so awesome. Shannon, if anybody wants to get in touch with you for using Freight, Vanna, talk to you about your advisory services. Where can they get in touch with you? What's the best way? Yeah, I mean, I'm on LinkedIn, right? That's funny. Yeah, we connected Jeff months ago. So you know Shannon Breen, b r e e n. We have a website that we're, we're doing some work on, but we have a website up now. Hello? At freight va.io. All the links if you wanna send us an email to that address I just gave, go to freight vna dot Oh, we got jobs, we've got a little bit about our company. We can all be reached either LinkedIn or the email. Or the website, Jeff. So we, we'd love to hear from anybody. We, we are definitely students of the game. I mentioned, you know, being humble and hungry in our approach, and we just love the connections and the new opportunities that lie ahead, honestly. Like that's what, that's what gets me outta the bed in the morning and this team, and it's a pretty special journey that we're on. Yeah. Awesome. Well, Shannon, thanks so much and let's stay in touch, man. Let's be on LinkedIn and we will I'm. Be in touch in the business. All right, Jeff, appreciate you reaching out, man. This was a lot of fun. Awesome.