Driving the Supply Chain with Yellow's Matthew Marshall | Episode 2

Matthew Marshall: 0:07

Welcome to Tire Tracks, a Banyan Technology podcast driving the logistics industry. And now your host, Patrick Escolas.

Patrick Escolas: 0:16

Hey, it's me your favorite victim for the podcast here, I get to have all the fun with doing the Banyan Tire Tracks podcast still here, downtown Cleveland Hilton for our first ever users conference the Connect 2022. I'm here with Matt Marshall with Yellow. Thanks for being here today. Thank you -- happy to be here. Hey, I'm really happy that you're here. Now, you had a great keynote address earlier today. And for all those who weren't lucky enough to be here with us? Could you kind of give just a summary of that? Sure. It was great. Yeah. Because everybody said so. Yeah, standing ovation, they're actually still clapping about it.

Matthew Marshall: 0:52

Joking aside, you know, I was asked to talk on a couple of topics, first of all, the market. And really, from a market perspective, you know, the gentleman before me, Brent gave a great, really in depth analysis of what we're seeing leading indicators, so on and so forth. I kept it simple. You know, when LTO, we focus on a couple of key metrics, one of which is inventories. Okay. So, and you're really seeing a bifurcation in the market today, when it comes to inventories, because we know retail is bloated. You know, you've seen the the releases from Target and others about they are carrying too much inventory, which is interesting considering where we're at. Exactly. And so you counter that with the industrial market, which really is still coming out of a phase where they are lean on inventory. Okay, you have the chip shortage from automotive standpoint, the chemical industry is still extremely lean on inventories. So, from a market perspective, you've got these competing forces where retail customers are ordering less, yep, the industrial market is ordering more. And you've got this confluence now we're capacity has opened up, but how those evolve over time, is going to have a big indicator on what this economy looks like next year. And then I talked about the fragility of the market. And you know, we just had a major event in Florida with the tragedy that affected so many families down there. Yeah, you know, events continue to shape this supply chain, because you know, that the unfortunate part is the tragedy, the benefit is, when we rebuild it, there is a jumpstart to the economy and that.

Patrick Escolas: 2:12

Right and it's it's interesting, because it's one of those things that as you're in the day in day out, you forget that it's not a standalone thing logistics as a whole is affected by every industry is affected by global political and all those events. And yeah, I It's one of the things that, as I see, you hear about that, and I wouldn't immediately go, Oh, how's that going to affect? You know, what we have as far as availability and capacity concerns?

Matthew Marshall: 2:35

Yeah. So I touched on the market briefly, really, the primary point of my conversation was just to really remind everyone of the industry issue that's kind of been swept under the rug in the last couple of years. You know, we've we've been so focused on our supply chain and the disruption in the supply chain, that we've gotten away from the discussion of the driver shortage and how it's exacerbating, right? So spent some time talking about the real pressures that are on that market. You know, the average age of a driver is still over 50 years.

Patrick Escolas: 3:02

Yeah, it was there. And I remember during there was a push to lower the age that you could start becoming a driver. Yeah. Well, I think that's on Capitol Hill right now. To to drive across state lines, you have to be 21 years old. Each state makes their own rules within the confines of that state boards across state lines. Correct. Okay. So what that does, and you know, it's a safety feature, and it's an important topic. But regardless of the outcome of that, until then, you've got this three year gap where people who finish high school, they want to learn a trade, it's difficult to get into this market as a driver unless you're doing it locally. So that's one factor. The age of the workforce is another, the Clearinghouse and the number of drivers that are not able to be qualified as a result of failing the testing. Okay. Largely marijuana based more than half of the infractions are marijuana based, that pulls people out of the market. Is that Is there a look to change that as it's becoming more legal? across different, you know, once or because at a federal level? It's still... Yeah, my guess is it will not change, at least not in the immediate future. It's not something I'm terribly close to right. But, you know, at the end of the day, I think everything boils down to safety and safety of the driver safety of families on the road sharing space with that driver. So I think those pressures will continue there. No, and so we've got a few of those -- it's just because there's more restrictions on top of not having a bigger pool or are there other -- what else is going on? Really what we're having to do is we're having to manufacture drivers, because the market the labor pool continues to shrink. Okay, so what we do is we just opened our 22nd driver Academy, And you said 320 hours, what does that look like? Is the okay, so we are if someone comes to work for Yellow, you know, we'll spend some time with them. They'll work on our dock, we'll get to know their work ethic. And then if they qualify, we will pay for them to get a CDL right. So it's about a 320 hour course. They earn pay the entire time. They are at some points they'll have to go to a driver school we'll cover that logic, but we generate about 1000 drivers You're right now. And whatever through that program actual time of start to finish? I think it's down to nine months. Okay, I'd have to check. Gotcha. So there's still a gap. It's a significant lag in what you're Yeah, putting a lot into it. And then even once they get through that, what's what's to keep them with Yellow after you put that? It's interesting. It's actually a federally approved apprenticeship program. Okay, so so we do work with the federal government on this as a result of that, though, you cannot require someone to sign a letter of commitment saying, hey, if I go through this program, I'll work for two years to make sure you get back from it. But what we're finding is, and this is fabulous is is the retention rate on those employees is through the roof? Well, Because you you go out of your way to give them another source of income and a future really, instead of just being on the dock,

Matthew Marshall: 5:50

Exactly. And you think of the average American, how many can come up with the money, and the time to get a CDL. Most people are out, they need to earn a wage on a daily basis. So this gives them the luxury of both and the employees are extremely appreciative.

Patrick Escolas: 6:05

Right. And I mean, it's in a market that isn't going anywhere. It's an industry that's going to be needed. Now, you've got that you've got that in place, from yellows perspective, is that going to catch up at a certain point? Or do you think you're going to be chasing that? We're going to be chasing it? Right now. We're about it, depending on what number you use the markets, probably about 85,000 drivers short every day, okay. And we're projecting, you know, with the aging workforce and these other pressures that that gap is going to widen 230,000 buyers see a lot of 2030 lot more retirements and walk aways that simple coming into it. And you know, you've got competing forces here, because while there's all these pressures that reduce the labor pool, the economy continues to grow. So there's need we're short today. And the need is still going to increase. Now, this this goes back to my old life where I was talking a little bit HR and with people in the trades and construction industry, or how do you educate people on this being a potential way that your life could go? Is there anything you're doing as far as are you educating the young population or trying to get

Matthew Marshall: 7:07

We, you know, and I'll get the timing wrong, go back five years, eight years? I'm not sure what it is. People used to line up at these jobs. Yeah. And and you really had experienced people that you could choose from trucking organizations, particularly LTL organizations, they've had to become recruiting organizations. So we have this massive talent acquisition department that solely focuses on helping our facilities to recruit drivers. It's as simple as job fairs the normal thing, but we also we partner with the federal government, on veterans, veterans coming out of the military looking for a career. Yeah, we provide alternative

Patrick Escolas: 7:41

And they've got a lot of hard skills that you'd be looking at basic military logistics. Absolutely. And then the other really underpayment penetrated portion of the market that we're trying to recruit is women. Women make up less than 8% of the driver force in America, And they're better than us. My wife says every day, and I believe her! I'm pretty sure that's not debatable. But in all sincerity, you know, women make up 50.5% of the population in the US, And what do we see right now from a within

Matthew Marshall: 8:11

It's about 8 percent? Yeah, that's just you know, Women in Trucking is a massive organization. We're very big proponents of it. Tamra Joven, our VP of talent, acquisition and safety. He's heavily involved in that. Okay. I think the conference is November in this year, we'll probably have 80 to 100 people there. Yeah. As we continue, and it's an it's not just drivers, you know, it's dockworkers. It's supervisors, everything gets its leaders throughout the company that we're promoting, how do we better capture this portion of the market?

Patrick Escolas: 8:41

So we talked about the driver shortage, what you're doing to an individual who might be watching? Well, why why why should I be a truck driver? Why should I get involved? Why should I? Why should I listen to you So it's interesting recruiting me. Give me a pitch and tell me why you want me to work for you?

Matthew Marshall: 8:56

Well, so there's a couple of things and Brent said it well, this morning. If I'm a young person, and I'm looking to get into an industry, I want to get into an industry that's growing right and this industry is going to continue to grow. The reality is you know at Banyan you're you're one of the leaders when it comes to technology. Exactly. But you still need a human being to pop up talk against a doc to move, you know, if I want to go buy a television and Best Buy tonight. Yeah, how many human beings had to touch that television before? It's in the store?

Patrick Escolas: 9:24

Yeah, we're trying to make it less but there's never not going to be a great, a few, a few different hands in there

Matthew Marshall: 9:29

So there is definitely a future in it. The second thing is it's a very lucrative career. I mean, not just from a salary standpoint, but at Yellow, you know, we partner with the Teamsters, we're a union organization and our our teamsters don't pay a penny for benefits. And in a world today where health costs continue to skyrocket, you know that that is a significant value to a family.

Patrick Escolas: 9:49

No, I mean, that makes a lot of sense. And, and with that, and this is one since you're talking to a younger age and not even Millennials anymore, whatever. We're labeling the next thing. How do you how do you appeal with kind of their priorities and what you're looking for out of a job with not only just the benefit side, but kind of getting more out of it, because you know, everybody wants to work towards something that they do for that paycheck.

Matthew Marshall: 10:10

I agree. And it's interesting that among driver classifications, it used to be I would take a job, and I might be happy in that job for 20 30 years, there's, there's opportunities to advance your career. And you could start off as a box truck driver, which isn't a full CDL, right, a lot easier entry to the summer, exactly, then you can move up and earn your CDL through us, and then maybe you move out of the city operation and you move over the road. The other thing about truck drivers is they're very proud. They're very competitive. Yeah. So we love, you know, our representation of the national truck driving championships every year. So it's an opportunity for those that take tremendous pride in their craft to celebrate it. So we promote that as often as we

Patrick Escolas: 10:48

Are you telling me that there's truck drive can racing? Like

Matthew Marshall: 10:52

It's not really racing.

Patrick Escolas: 10:53

Okay. Because I got I got really,

Matthew Marshall: 10:55

There is I believe it's on Saturday before the NASCAR races on Sunday, but it's really the LTL industry. Yeah, no, no, no, I understand. We tend to practice things more like, you know, save turns and backing into a dock and those skills, not just pure speed,

Patrick Escolas: 11:10

No, and that's understandable. It's probably better for everybody involved. But I had a moment and a glimpse into the thought right there. And I'm like, wow, I'd watch those left turns. That'd be good. Something else we're doing though, is from a driver recruiting standpoint, is we're undergoing a major transformation. Right? Okay. We're we're bringing our four asset base brands together as a single company, right consolidation, a little consolidation. And there's, there's tremendous benefits for the consumer. There's tremendous benefits for us as a company with efficiencies and cost savings. But from a driver standpoint, there's benefits as well. You know, we're in our line home networks, we're retooling our line home networks. So that freight moves over shorter distances. More drivers home every night. Yeah. And that quality of life is so important to the young driver, you know, that best in class in the industry probably have 90% of their drivers home every night. Okay? Which you know, that that will appeal more to that younger market? I wouldn't, I wouldn't think that that was a reasonable or logistical possibility. It is an LTL Oh, not necessarily full truckload understood, but an LTL, we can offer that quality of life. That's awesome. That's awesome. So now, we talked a little bit about what you're doing and where, where did carriers fit in? Was it just driver shortage with a lot of the supply supply chain disruptions in the past? Or was there? I mean, obviously, what did that look like? Everybody, it was craziness to everybody in a certain way. But what did that look like from a carrier perspective?

Matthew Marshall: 12:31

I think I think the first thing if we go back to the beginning, and I give a lot of credit to our drivers, our terminal personnel, because you remember the early days of the pandemic, you and I were nervous about going to the grocery stores. Yeah. And yet, we had people showing up in a public place, driver stopping at 20 30 customers a day. And this country needed that service,

Patrick Escolas: 12:51

Right, like we slowed down to a halt, but it's still kept going down on the backs of those that were still going out day in and day out.

Matthew Marshall: 12:58

So that's the first thing was just how the the LTL community and particularly yellow reacted to support the country. I think the other thing that's really happened from carrier perspective is education. You know, our CEO, Darren, you know, he's on our committee that meets on national health. Now he had representation with President Trump. He's now part of a group that meets with President Biden. So being involved in that process, as the government starts to understand the impact of the supply chain to the crisis in the porch was the hot topic for the longest time,

Patrick Escolas: 13:28

People waiting around and never getting anywhere and what are they losing out on money? You know,

Matthew Marshall: 13:32

I think there's an audience that's available to companies like Yellow is the second largest LTL carrier in the market, where we can further education. And let's, let's face it, Capitol Hill is going to influence all of us. In and out of the industry, there will be impacts that affect transportation. So

Patrick Escolas: 13:48

They get the final say, Absolutely. Whether we like it or not, yeah, hundrer percent no.

Matthew Marshall: 13:52

And then the third thing, I think, really was just managing the uncertainty of it. You know, things got incredibly slow. And then they got extremely tight, extremely quick. And carriers that were nimble that had plans where, you know, we were fortunate that we had, we still have four brands in market. You know, we had we had one facility closure that I'm aware of due to COVID. We were able to transition all that work to a neighboring facility. Okay, and redundancies? Correct. So that's the other thing when you go through and time of extreme pressure in the supply chain, it's how do you have contingencies? How do you have redundancies built in to continue to support the customer?

Patrick Escolas: 14:30

And with that, and just kind of we're getting to this as a organic kind of thing. What's one main point you'd say kind of a walk away statement, or it's either the viewers or logistics industry or just here's a chance what do you got?

Matthew Marshall: 14:44

Well, I would say, I've been at Yellow for 24 years, and it's provided a tremendous life for my family. I've probably had 10 different roles in that time. So I've been able to learn a lot but I've never been more excited to be a part of this company. Okay because of the consolidation we just talked about Yeah, what we're about to do. And we've already started our first phase of three phases, where we're building our new super regional network, we are going to reduce cost. We're going to make better use of our driver assets, particularly in the city. We're going to be moving on more of a regional clock, which based on the Amazon effect, merchandise has moved closer to the consumer. Yeah. So that next day and today market is where the demand is today. That's where you gotta live. And we are building this company. We have very strong regional capabilities today through three best in class regional brands. Okay. As we complete this transformation, though, the entire company will become a super regional that can offer that service throughout much bigger scale. And some of the classic examples are we're in Cleveland, Ohio right now. Today. Yes, go and Guaridnas playoff bound. That's right. Tomorrow. Today, we don't offer a regional service to Philadelphia or to New York or to Boston because they crossed two different asset based carriers lines. Okay. If you look at the southern port of of Hollins footprint down in Atlanta, we don't offer regional carob capabilities into Florida, into Texas, when we complete this transformation, and it'll be into next year before it's done. All of those markets open up. So we are not only creating efficiencies and reducing cost, which benefits the consumer, but we're about to be playing in markets that we've never played them before.

Patrick Escolas: 16:20

You're opening up more opportunities not only for yourself, so moving customers so incredibly exciting. Hey, Matt, it has been great having you with me. He pretended like he liked me the whole time. So we're really happy for him. He brought up his wife. She is a she will be watching this. No but thank you very much. I love getting the information especially from the carrier side. That's one that even as I'm talking to my clients, you know three PL shippers. All I hear is are we connected to him? Can we can we do that? And I like hearing your perspective, especially. I'm not from the logistics space background. So this is all really good. And like you said, you know, we need drivers can and we desperately people in the logistics space across the board. And we need women women in there too. So again, they're they're smarter than us and they're better truck drivers. So get at it. Thank you very much. Thanks again Matt.

Matthew Marshall: 17:06

Thank you. I appreciate being here.

Patrick Escolas: 17:07

And thank you for another episode of Tire Tracks.

Matthew Marshall: 17:14

Thank you for listening to Tire Tracks. Watch for new episodes dropping monthly and subscribe on Apple Podcasts, Spotify and other podcast apps. For more information about Banyan Technology visit banyantechnology.com