Tire Tracks: Driving the Logistics Industry

The Difference Between Regional Parcel Carriers and the Big 3 | Episode 8

May 16, 2023 Banyan Technology Episode 8
Tire Tracks: Driving the Logistics Industry
The Difference Between Regional Parcel Carriers and the Big 3 | Episode 8
Show Notes Transcript

ProShip President Bill Schroeder discusses the state of parcel shipping, including how changes in the supply chain have affected regional parcel carriers versus the Big 3 (FedEx, UPS and USPS) in episode 8 of Banyan Technology’s Tire Tracks™ podcast. ProShip is the industry-leader in automated multi-carrier parcel shipping software for mid- to enterprise-size shippers.

Announcer  00:07
Welcome to Tire Tracks, a Banyan Technology podcast driving the logistics industry. And now your host, Patrick Escolas.

Patrick Escolas  00:15
Hey, everybody. This is Patrick Escolas with another episode of Banyan's Tire Tracks podcast. Today, I have a special guest with me, Bill Schroeder of ProShip. Bill, thanks for coming. How you doing?

Bill Schroeder  00:27
Glad to be here. Glad to be here. How you doing?

Patrick Escolas  00:30
I'm doing really well. I just got a new haircut. So it's... took a little off the top. But, I think it looks out pretty well.

 Bill Schroeder  00:36
Yeah. Hope you didn't have to pay too much for that.

Patrick Escolas  00:39
No, no. But I did save way more than I should have. But anyways, I wanted to talk to you. But Bill, for anyone who doesn't know you, who are you? What do you do? Who you with? I mean, I know I mentioned ProShip, but take it from there!

Bill Schroeder  00:53
Sure. Sure. With ProShip, I'm the president of ProShip and a couple other transportation execution systems within a company called Constellation. Constellation Software buys and will hold software companies forever. So, unlike a venture capital or private equity investment, where they might have a company for three-to-five years, and then be looking towards the exit, Constellation buys companies, holds them forever, and tries to create long-lasting strategic value, both for Constellation, obviously, but also for the customers of that company.

Patrick Escolas  01:36
And that, when you say the forever, it was fun to you drop that like for, but no, I think that it really drills home that you're not in there for, you know, a quick flip. You're really to make something lasting out of it. Yeah.

Bill Schroeder  01:48
And that, that really changes the way you think about customers, because you want to have your customers forever. It changes the way you think about organic growth. You're not looking, you're not looking for double-digit growth for three years. 

Patrick Escolas  02:02
It's got to be sustainable. 

Bill Schroeder  02:03
Exactly. It has to be sustainable. So, you're not doing crazy stuff where you're growing like crazy for three years, and then you have a hangover afterwards, while you clean up the mess you made. It's, it's a very long-term strategy. It changes the way you think about business and the relationship with your customers, because you're going to be with those customers, you yourself are going to be with those customers. For as long as you're with the company, right?

Patrick Escolas  02:26
And better backup what you say... 

Bill Schroeder  02:29
Exactly, exactly. You got to live up to your promises and your commitments. It, prior to ProShip, I spent 21 years in the personal business at FedEx, so I was always involved with IT and software, particularly customer-facing software. So, the ProShip transition was a natural one and feels like home.

Patrick Escolas  02:52
Awesome. And then with Constellation, are they since we're talking logistics here are all those softwares logistics-based or it kind of runs the gamut?

Bill Schroeder  03:00
No, it's every kind of software, you can imagine there's more than 800 other software verticals in the Constellation universe. It's a Canadian company and it was actually founded by a gentleman named Mark Leonard, who was a private equity investor. And, when he was a young man, he had this brilliant idea -- "if we buy these companies, and we work hard to make them good, solid companies, why don't we just keep them?" 

Patrick Escolas  03:28
Yeah, why shouldn't we just continue to go down that road? No, makes a lot of sense.

Bill Schroeder  03:32
Exactly what he did, and now he's got a lot of copycats.

Patrick Escolas  03:35
No. No, that makes sense. And this is just from my understanding, and I'm curious, within that constellation world, do you ever marry the softwares together? Where it makes sense? Or does that not generally happen? Like, if one ends up being an accessory or a building block for another?

Bill Schroeder  03:54
Yeah, that, that's an interesting question. And the answer is yes, sometimes we do either one of those. For the most part, the companies stand on their own, and continue to operate very independently. So, the overall philosophy is I I know best how to do shipping and transportation software, right? So I don't have a central bureaucracy that shows up and says, "here's how you should do it". 

Patrick Escolas  04:19

Bill Schroeder  04:20
Which is kind of part of the magic behind the whole thing. We know our customers, we know our software, we know our solution. We're the best equipped to deliver value in that space. So, that along with having the parent's backing of a very large publicly traded company, kind of creates the best of both worlds as optimal as you could imagine it being a very large company, but still having the independence to operate the way you need to to take care of your customers. You get both of those things.

Patrick Escolas  04:52
I like the sound of that and that makes sense to and I you know, seems like specialization at a certain level is going to be much more agile than trying to go big. 

Bill Schroeder  05:01

Patrick Escolas  05:02
So yeah, exactly. So where are you right now, Bill?

Bill Schroeder  05:06
So, right now we're at Converge, which is our user conference. We're in Nashville. Several...

Patrick Escolas  05:12
You got your cow, you got your cowboy boots on?

Bill Schroeder  05:15
Don't have any cowboy boots. Good question, though. I really should have a pair of Wranglers and a pair of cowboy boots, right? 

Patrick Escolas  05:22
No, last time I was there, I was blown away by every shop had buy one pair get three free. So, it made me wonder how much cowboy boots actually were, and how many pairs you generally need if you're getting into that lifestyle. So...

Bill Schroeder  05:37
I think those cowboy boots are $580 apiece, and you get three more free so that's a bargain!

Patrick Escolas  05:44
It's kind of like tires, right? You know, it two tires is only $800. And we'll put them on and throw the other two in. Yeah, yeah,

Bill Schroeder  05:52
Exactly. Exactly.

Patrick Escolas  05:53
So, what are you what are you doing at Convergence and what's ProShip doing there?

Bill Schroeder  05:58
So Converge, Banyan's here at Converge with us. They're one of our partners. So, it's a conference of both our users, our customers and our vendors, as well as several of the other companies that are in the, in our particular case, the supply chain portfolio. So there's ERP systems here that are part of, of Constellation. There are WMS systems that are part of Constellation, and the shipping and transportation companies, which I'm responsible for, along with our partners who serve those same customers. So Banyan's, here is one of our guests, as well as a few others. And our users are here to learn, to interact and network with each other. And it's how we stay in touch with our customer base, make sure that we're continuing to deliver the value that they want, we maintain the relationship and that the software and the companies headed in the direction that ensures we have again, that long term forever relationship.

Patrick Escolas  06:54
Was gonna say keep forever, forever, not...

Bill Schroeder  06:58
We don't just say it, we live it.

Patrick Escolas  07:00
I like, I like that. I can imagine somewhere in the building. It's just for forever, kind of a threat, a promise and a way of life.

Bill Schroeder  07:09
Exactly, exactly.

Patrick Escolas  07:10
I like that. So we talked a little bit about ProShip, just as far as the name and where it fits. But what does ProShip do within this logistics and shipping.

Bill Schroeder  07:20
So, and that'll actually be a great segue into what the partnership looks like strategically between Banyan and and ProShip. So, ProShip is specifically in the the parcel execution piece. And what that means is we support carriers, you would think immediately of UPS and FedEx and and USPS... 

Patrick Escolas  07:43
The Big Three, yeah. 

Bill Schroeder  07:45
And then there's actually hundreds more. And we do this globally. So, what we do is create the interface between the customer and their technology stack, whatever it may be, and the carriers. And, there's, it's a very fluid and very dynamic space because of both regulatory reasons, market forces, and everything else that comes into play. Banyan in the LTL space is a area of expansion for us. We used to do, we do a very small amount of LTL application, like focus 

Patrick Escolas  08:24
True LTL or just like, ground freight? Okay, 

Bill Schroeder  08:27
True LTL. 

Patrick Escolas  08:28

Bill Schroeder  08:29
With with, you know, a handful of carriers and we have some roll your own capabilities for customers. But if somebody's 90% truckload or over-the-road, in their transportation needs, they're not a good fit for us. So they might do 10% parcel and 90% truckload and an over-the-road kind of freight. If somebody's 90% parcel and 10%, other modes of transportation, that's a good fit for us, right? So we that's why we built a little bit of native LTL capabilities, or truckload capabilities. That's not a good space for us, we're not experts in it. We don't want to be experts in it. We want to be very, very good at what we do.

Patrick Escolas  09:13
You want to keep, keep, keep in your lane, you know, you're good at it. Let's do it. Yeah, no, it makes sense.

Bill Schroeder  09:18
And that's when we reach out to park. So, that's when we look to find a good strategic partner where an alliance makes sense, where they're delivering capabilities, and then do they fit integrated into our platform. So Banyan has a great set of API's that we can use to leverage the integration to them and take care of an expanded offering of over-the-road capabilities. So when when Brian and Alan were, you know, when we were first chatting, it was like, this makes a ton of sense.

Patrick Escolas  09:49
Now, it was a chat you guys didn't meet doing karaoke and we're blown away by Brian or Alan's voice or something like this?

Bill Schroeder  09:56
Yeah. No, it was it was close to that was very close to that, I believe. The first interaction occurred eating barbecue in Memphis, over a beer. So it just grew from there. That's where the partnership formulated, we realized we had a lot of common customers. But, what we weren't offering those common customers is a unified solution that was seamless. As...

Patrick Escolas  10:21
You had a Reese's moment. You had the peanut butter, we had the chocolate. 

Bill Schroeder  10:24

Patrick Escolas  10:25

Bill Schroeder  10:26
Exactly. That's funny, because I use an analogy all the time. This is Reese's Peanut Butter Cups, man. This, that is exactly what this is.

Patrick Escolas  10:32
I would just say that might be, I might be like, the last generation that'll get that, because my dad had to explain it when I was a kid as far as the actual old-school commercial where they had the two the two parts of it. But no, that's that's exactly what came to mind is you got one half if this we put them together, we got a whole package. 

Bill Schroeder  10:50

Patrick Escolas  10:51
And then, and then as far as where do you really see an a, you know, we talked about it kind of hitting a need. But why is this a strategic partnership? Why is this an advantage to your customers? I mean, obviously, I talked about banding LTL for a living. But, where do you where do you see it? In your words, why is this a great move, a great partnership? 

Bill Schroeder  11:11
Yeah. So there's, there's kind of a long answer to that. I'll make it very short. I was...

Patrick Escolas  11:16
I was gonna say, yeah, do whatever you want editing is possible...

Bill Schroeder  11:21
There you go. So, ProShip specializes in very large retailers, and and people who ship very high volume. So, if you have 10,000 to a million parcels a day, we don't think twice about it. If you come to us, and you say, Well, I want to ship 1000 pallets, well, you know, we're gonna stop for a second go, "I don't know if I want to do that," right? So, putting those two things together, makes sense. Now, what we would have done in the past is we would have said, we're probably not a good fit. Here's a few other TMS systems that you should go look at. Not wanting to build in our own native capabilities for the over-the-road type transportation scenarios. We got asked more and more about that. And, one of the things that started to emerge during the pandemic is customers who are actually mode, mode shopping. 

Patrick Escolas  12:14

Bill Schroeder  12:14
So what we support is, is carrier shopping, or multi-carrier system...

Patrick Escolas  12:20

Bill Schroeder  12:20
That allows customers to find the cheapest parcel carrier that will get their package where it needs to be on the day it needs to be there. Now, if I have to ship 20 boxes somewhere, the question that should come to mind is, is it cheaper to send 20 individual boxes? 

Patrick Escolas  12:37

Bill Schroeder  12:38
Or is it better to take them on a pallet and put that pallet with a couple more pallets and send it over the road and in a shipment? So, during the pandemic, everyone got real creative about how to move their goods, where the goods be. And, they started seeking out capacity, because capacity was really in short supply. Then they also started to do it for cost savings, right? Is this a good way to replenish my my stores versus some of the traditional ways I would look at doing it? Doing the the mixed commodity pallets and stuff started to make a lot of sense. But, how do I price that apples-to-apples with a parcel option?

Patrick Escolas  13:19

Bill Schroeder  13:20
A lot of complicated logic behind that and they figured out hey, this actually does make sense there is savings to be found here. And there are you know, customer satisfaction opportunities with that as well.

Patrick Escolas  13:32
And then, I don't know, it's funny going back to we have both have kind of the same half of a different mode because so much of what you're talking about is what Banyan does, you know? We had the the rate shopping between carriers and then adding the the malls of multifunction in the mode. So, I'll ask you this. Bayan's had parcel or add-ons for a bit. Why is ProShip different than those other options? What is, what is ProShip do... You know, because everybody is in a space because they do something really well. Some companies are lucky enough to do multiple things really well. Why is ProShip as good as they are at what they do? What, what sets you aside? Is it just that volume, or how is how is that better done through the ProShip side?

Bill Schroeder  14:16
Yeah, there's a few things. We have a few competitors in our space. They're good. They're good at what they do. We're better, I believe.

Patrick Escolas  14:26
I mean, obviously we believe so, too or else we wouldn't have a strategic partnership. 

Bill Schroeder  14:31
Absolutely. Absolutely. And I can I can really back that up. But the one thing that makes us truly significantly different is the people that we have and the tenure that they have in the personal industry. So, it's a very complicated, everyone... You know, you put a piece of paper on a box that has a barcode on it, how complicated can that be? It's a lot more complicated than you think. And then it's to understand the dynamics and all of the different charges and the different factors that go into shipping a parcel, then do that at scale, and then solve problems when they come up or react to carrier changes or regulatory changes. And then, when someone calls in for customer support, they have a very specific question, do you have anyone on staff that can answer that? Do you have anyone? So, all of that, if you look up, you know, ProShip on LinkedIn, you're gonna find that our average tenure is around eight years, which is significantly longer than anyone else in this industry,

Patrick Escolas  15:36
I'd say. I'd say in most industries. Yes, that's a pretty crazy stat.

Bill Schroeder  15:41
So, we're a Midwest company. We're family oriented. We're very, I like to say that they have a work ethic that, that drives a lot of people to find a job and that's a company that treats them well, they're going to stay there for a very long time. And that's what we have. Now. It's that continuity, it's that rudder that keeps ProShip on course, and delivering the value that we need to. Now the next thing we do is we do what we do faster and more reliably than anyone else. We have a rock-solid enterprise technology stack that is designed to do what it does at scale. And then it has a number of very robust features built in so that it can remain elastically reliable, even if you're running it on a single server, or across multiple servers in the cloud. It's just bulletproof. And I can tell you, during peak, our biggest customer went through all of peak this year, at the top of the shipping days to 3 million packages a day, and did not have a single hiccup. That's... 

Patrick Escolas  16:52
Wow. That's crazy. 

Bill Schroeder  16:55
So that's what makes us special. like to think we're really good at what we do.

Patrick Escolas  16:59
I would just say that the fast and the speed and the volume gets you in the door, but that you don't just know parcel your people have lived it is probably what makes it easy to stay there and that "forever" that we've been talking about. Yeah.

Bill Schroeder  17:14
We can, we can grow with our customers. So, you know? We hope someday they all ship 3 million a day.

Patrick Escolas  17:19
That's, that's right. You'll help them you'll be there for it. Yeah, keep it up, guys. Ya know, that's awesome. So we talked, you mentioned getting creative during COVID, especially with the mode, shopping, not just looking at the cheapest carrier as well as looking at consolidation. One of the things I've asked a lot of people is since COVID, and like, I talked a lot from the LTL side, you know, capacity was limited. Now it's opening up, things are changing. What does that look like from a parcel side? Or is it mirror it? Or is is there different takes, different trends going on within that world?

Bill Schroeder  17:56
Yeah, we live in the same thing you did. So the parcel carriers, if you just look at it at the macro level, they tried to not be impacted. They were essential workers, they kept moving, they didn't lock down, they had to keep keep the keep the whole world going, right? 

Patrick Escolas  18:14

Bill Schroeder  18:14
But everybody else was locked at home shopping online. It's an old story, everybody knows it. And within a matter of a month, all of the projections for ecommerce volume jumped ahead 10 years. And no one was ready for it. So supply and demand. Immediately were out of balance. And the capacity was constrained because of the demand was just much too high. It was, so we all saw that right? That's, that's over, right? We've gone and everyone adjusted, you know, they started building capacity faster. Yeah, customer demands kind of tempering, right? It's still not back to what it was pre- COVID levels, we're still at higher volumes, net, and ecommerce shipping and shopping is still very, very much a real part of... 

Patrick Escolas  19:04
Right. I can't see people going away from being at home in the sweatpants, you know, ordering stuff. So I know I'm guilty of Uber Eats a lot more than I should. Postmates or DoorDash depending on what region is popular. But um, but with that, is there. Is there any overcorrection that's really hurt? Is there, did the parcel, did they go out and hire more people that now they don't have the action for or what's, what's the hangover as you described it before, from all of this? 

Bill Schroeder  19:36
Yeah, well, what happened is the big the big companies can't add capacity as fast as the smaller companies, right? So a large number of regional players and this kind of, you know, it's a great topic to get into, you know, the Big Three and then you know, there's a whole basket of regional carriers... 

Patrick Escolas  19:58

Bill Schroeder  19:58
Some regional carriers play nationally, but they, they are looking for very specific parcels. They don't want to move everything, they just want kind of the stuff that the Big Three don't necessarily want. So, we saw a real big increase in investment and in the creation of new startups in the parcel, regional space. Now, that has to be normalized, a lot of them are going back after some of the, the, the Big Three are going back after that business and those parcels. And that's kind of kind of where we're sitting. Now there's some regionals it was our expectation that those regionals would probably hit critical mass, and several of them have OnTrac and LaserShip are outstanding. You know, they're there, they've got good business plans, great execution, they manage their costs, they, they know how to do what they're doing. Some of the other startups we're just learning how to do that, and then then the volume tempered...

Patrick Escolas  21:04
The rug got pulled out from under them, yeah... 

Bill Schroeder  21:06
UPS and FedEx went "we want those parcels back" and, and they went, went and got after it.

Patrick Escolas  21:13
Now, are the, do the Big Three in that case, and you may not you were at FedEx, and you might see, do they go after kind of like a venture capitalist and buy out any of these regionals? Or do they just go direct to the client and say, "look, we got the capacity, we got the name, you know, come push it through us"?

Bill Schroeder  21:31
Yeah. What happened during the pandemic is the big shippers, they saw their ability to negotiate contracts kind of drove, right?

Patrick Escolas  21:42
I gotcha. 

Bill Schroeder  21:42
It's like, it's like either one of us trying to go buy a car today, and thinking we're gonna get something less than sticker price, right?

Patrick Escolas  21:50
I had to get it last year, I had to get a used car. Mine died a week before my wedding. And, I had a lot of people track me down a good deal before it, hit the dealer refresh, and I remember saying, hey, I'd be happy if we did this price, which was, I thought was fair. And the guy just laughed at me, and he goes, if I don't get this amount, my manager will put it online for seven grand more than that, and it will sell. And so, it's funny, you use that analogy. I was in there, and I'm thinking, I'm a salesperson, I'll talk to this guy, get it straight. And it's like, no, I thought up to me, this thing's gone. You want to now, but we're willing to give it to you or you're out of luck, man.

Bill Schroeder  22:28
Yeah, it all goes back to basic economics supply and demand, right? So if the supply is constrained, you get to pay whatever they want. And that's exactly where the big shippers were if their contract came up for negotiation, and UPS and FedEx could be picky about the packages they wanted. And then of course, when that goes away, you know, the, I'm sorry, to back up to second they the small regionals rushed into that space...

Patrick Escolas  22:54

Bill Schroeder  22:54
And they said, "I'll take those packages, and I'm willing to do it for a percent less", right? 

Patrick Escolas  22:59

Bill Schroeder  23:01
So, that, that whole scenario is kind of like worked, itself out. Supply and demand are equalizing a little bit more. Now, there's some change and shift in the growth of consumer behavior in ecommerce. And that is starting to cause some stability back into the whole pricing scenario. That of course, is, is squeezing those regional players out if they didn't, if they didn't control their costs and build a good efficient network. If they, if they were counting on that, you know, that 3% premium that they could get, that's, that's getting pulled out from under him right now. So, I think we'll continue to see that trend evolve, and we'll you know, we'll still see, regionals pop up here, there and everywhere. And we'll see a few that are operating and executing well continue to survive. They serve specific metro markets, and they do it better than the Big Three can do in that particular metro market.

Patrick Escolas  24:00
You're great. You jumped to that, that. My next question is Where where are the regionals are going to play versus the Big Three going forward? So I'll go to one that that came up while you're talking. Do the shippers now, now that things have kind of I keep using the word normalize these different things, but it's all it's all relative. But are, are the shippers able to kind of come back? And do they have the negotiating leverage again? Or it's yeah, what's that? 

Bill Schroeder  24:24
Yeah, yeah, they do. And I would point anyone towards LinkedIn and Nate Shriver has, has a great deal of analysis on this. He's an incredible wealth of knowledge. He has a very recent one on UPS' earnings for this quarter where it was not what was expected. 

Patrick Escolas  24:45

Bill Schroeder  24:45
And even more so, the shipper volume was off of what they were forecasting. So, that, that contraction and it's not really a contraction. It's just slower growth, right? 

Patrick Escolas  24:58

Bill Schroeder  24:59
I mean, it's still growing, they're just not growing at what they thought they would grow at. So it feels like it's constricting. 

Patrick Escolas  25:05
How dare they not grow it another 200%? 

Bill Schroeder  25:08
Right, exactly. 

Patrick Escolas  25:09
Yeah, no, no, someone's someone's mad upstairs. No. -- and you mentioned UPS. Now, I don't know if it's accurate enough, but I'd heard a few things through different clients, the upcoming or the possible UPS strike? Is that something that comes into your mind or that your clients are worried about, or looking how they're going to move things through? 

Bill Schroeder  25:29
Yeah... We're talking parcell, it seems relevant. It's probably the number two question I get, right? And I'm not going to pretend that I know the answer. 

Patrick Escolas  25:38

Bill Schroeder  25:39
At what I do not, I'll get, I'll get to my non-answer on that in just a second. But, I actually started in 1997 in, in the transportation industry, right? 

Patrick Escolas  25:53

Bill Schroeder  25:53
First day at FedEx, UPS was on strike. 

Patrick Escolas  25:56
I was gonna say, I just looked up about a week ago, when as I was kind of doing so,me research for these questions, it was like, when was the last one? Then '97 -- exactly.

Bill Schroeder  26:06
Yup. I literally had started, and I was gonna work in IT, right? I was, man, I'm gonna use a keyboard, right? And the first thing they do is point at the truck. Go get on that truck, you're going to be running around with this courier. I was like, really? Yeah, I can do this. It was a blast. We had so much fun. You pull up to a FedEx drop box, and literally, you couldn't even see the drop box. Customers would go to the drop box, and if it was full...

Patrick Escolas  26:34
It was close enough. 

Bill Schroeder  26:35
They'd put boxes on-top around, on the side. They'd be over, they'd be in the road. And we fill up the truck and we take it back and empty it. And then we go back. 

Patrick Escolas  26:46
Go back -- yeah! 

Bill Schroeder  26:46
That's it, yeah.

Patrick Escolas  26:47
Do a lot more back and forth... 

Bill Schroeder  26:48
It was insane. It was absolutely insane. Now, do I think they're going to do that again? I have no clue. What I do know, is that the softening volume and UPS not having necessarily the results they expected, who knows right? Now, here's what I do tell people. This is wise and this has worked for the last several years. If you had, if you had gotten on-board with ProShip five years ago, our mantra was, you want to use us because Amazon has free shipping. Now, we all know free shipping is not free. 

Patrick Escolas  27:30
It's built in, it's built in somewhere. But if you see that it says free shipping, you like it better. 

Bill Schroeder  27:34
Yeah. And you're gonna buy it, right? But if you as a shipper, you have to pay for those parcels, right? So, if you can find 1% savings, you take it right? That's, that's 1%, that's going right to your bottom line, because you got to pay for the shipping, no matter what. And the best way to do that is to have options to have multiple carriers. It's not always intuitive, you know, zone seven package with one carrier or another carrier, even if you've negotiated exactly the same discount. After you add in all the SS Oriole charges and fluctuations and fuel surcharges and everything else, you can find one 2% without even trying, right, just shop between the multiple carriers. The next point when it came up, and there was another great use cases, diversify your risk. If one carriers got all the volume and they're not going to take any more, you got to have someplace else to put it, you might as well build them. The strike scenarios exactly the same thing. Diversify your risk, single carrier strategies made sense back in the 1990s, when you could bundle all of your shipping together with one carrier and negotiate a better deal than you could with two carriers. It hasn't been that way for at least 15 years. You can negotiate good deals with both of them. You're gonna get marginally incremental, better deals if you bundle all your volume, but you're also taking on a whole bunch of risk.

Patrick Escolas  29:03
Right? That makes sense. It's very similar to kind of just standard financial and investing.

Bill Schroeder  29:09
Exactly. Diversification. 

Patrick Escolas  29:11
Yeah, exactly. No. 

Bill Schroeder  29:14
So UPS goes on strike, I can tell you for a fact most of our customers will not care one bit. Now. It's there are a couple...

Patrick Escolas  29:21
They've already got the other big two there and probably a handful of regionals...

Bill Schroeder  29:25
Yup -- they've got a bunch of options. Exactly. 

Patrick Escolas  29:28
Yeah. No, that's a that's a good non-answer. I like that. I like that. So with that, and we're talking a little bit about future here, and I know that one of the biggest asks even from when I was a BDR just calling people setting up appointments, to now talking to my current clients within Banyan is kind of that you know, AI is everywhere and then there's multi-mode load consolidation. You know, having something pick how to run, you know, this handful of things you need to ship, you know, two of them parcel, five of them LTL, and then give you full truckload, because that's the cheapest or fastest, what do you think? Is that what the future holds for parcel? Or what is you know, what's two to five years down the road for parcel look like? Or is it kind of the same as it is now? What's, what technology is coming in that may change it? Or what what interests you about the future of parcel or even logistics as a whole?

Bill Schroeder  30:25
Yeah, right now, and this is very early on, and it's emerging there, there is some machine learning and AI being applied to it. So the current AI, y'all can fact check me on this. Zones that we have, that the big carriers use, follow the postal zones... 

Patrick Escolas  30:46

Bill Schroeder  30:47
Same concept. If you start out on one coast or the other, the other coast is eight zones away, right? It's like, big stripes across the country. I mean, think about it -- that probably worked great for the Pony Express, right? If you're in DC and you had to deliver a letter someplace to the middle of the country, that's like, 1,2,3, that's four horses away. 

Patrick Escolas  31:12

Bill Schroeder  31:13
You're gonna use for horses to get there and that's how much it costs. 

Patrick Escolas  31:16

Bill Schroeder  31:17
And literally, that's where a lot of that the foundation for what we think of as zones goes back to, right? how far can one person ride one horse in one day. Let's call those zones. And here we are. So, that is not a good way to price parcels, right? Inside of a zone, you're gonna have metro areas where drivers making many stops, it's very dense, it's very efficient. And you're going to have rural areas where somebody's driveway is a mile and a half long. The cost to serve those customers do something has to be done with pricing. What they've, what the carriers have done is they've introduced a whole bunch of accessorial charges, rule surcharges, ultra...

Patrick Escolas  32:00
They sure have, have... 

 Bill Schroeder  32:02
All kinds of crazy stuff. What they're trying to do, in a, in a not very granular level, charge what it actually cost to do some of these things...

Patrick Escolas  32:12
Without being completely surprised on the back end, yeah. 

Bill Schroeder  32:16
Yeah. And it's just, that doesn't make any sense. We have the technology now to actually know exactly how much it costs to deliver something to Patrick's house. 

Patrick Escolas  32:24

Bill Schroeder  32:24
We can do that, right? If Google can map from here to there, and tell me exactly, well, surely we can figure out how much it costs to deliver it right there, instead of saying, well, he's a zone three, so and then let's stack a charge on it and another charge and another charge because he has a long driveway.

 Patrick Escolas  32:44
Now, is there, is there a, either an investment of money to get that to happen? Or is there money hidden that somebody's gaining from not letting that happen? To why that hasn't been gotten closer to that? Yeah..

Bill Schroeder  32:58
I think it goes both ways. One has just been inertia and tradition. I mean, these the zones are well understood by 1000s and 1000s of people. It's a mechanism. 

Patrick Escolas  33:11
If it ain't broke, don't fix it. Yeah... 

Bill Schroeder  33:13
Exactly, exactly. Now, on the flip side of that, now that we have the technology to really do that down to a very granular level, the carriers are starting to look at it that way, and they see an opportunity, if you are delivering 90% of your packages to zone three, but it so happens that inside zone three, they're all going to Metro Atlanta, and they're all going to customers, perhaps in Buckhead because you sell high end handbags, guess what? You should get an incentive. 

Patrick Escolas  33:43

Bill Schroeder  33:44
You should not be paying the same price everyone else pays for zone three, over the Atlanta area, right? So can I give you an incentive to ship there? Can I give you an incentive because you ship there, that your packages cost me less to deliver? And yeah, the answer is yes, that we have the data now we can manage it down to that level. And I see that coming as the big change, I see much more dynamic pricing occurring, because there's volume fluctuation, seasonally, there's volume fluctuations day by day. If we can do something to give you an incentive to ship that package on Tuesday instead of on Monday. 

Patrick Escolas  34:27

Bill Schroeder  34:28
Why not, right? 

Patrick Escolas  34:29
Right -- same way the restaurants got cheap burgers on Mondays when people aren't coming in right something to get you to move it when it makes sense to them. No, that's it. That's a great point. That's a I liked that. I liked that. Is that something I would have never considered. And that's why I ask questions, not answer them. But... 

Bill Schroeder  34:48
I'm sure there's something I could ask you questions about.

Patrick Escolas  34:51
Yeah, nothing you want an answer on and definitely not anything we want recorded. No, but I'm kidding. No, but no, I really appreciate that. Um, but And then, not but, but I don't want to take up too much of your time here as we're kind of winding down and some great points. And I know I'm really excited about the the strategic relationship between ProShip and Banyan. Here's kind of a I like to give everybody that I talked with, you know, they hear me talk, but here's your soapbox, your moment: What's your message to either any of your clients or anybody in the parcel or logistics industry that might be listening to this as a whole? Here's your, here's your chance. What does Bill have to say? 

Bill Schroeder  35:27
Yeah, you should probably get a job in a different industry.

Patrick Escolas  35:32
Damn -- heard it here first! Bill says sharpen the resume!

Bill Schroeder  35:35
Alright, so total sarcasm, there you go. Now, we were prior to the pandemic, one of probably the least thought of industries, you know, the stuff just shows up on my porch. I don't know how that happens, right?

Patrick Escolas  35:49
And you hit the news every day for two years in a row.

Bill Schroeder  35:53
Yeah. And then suddenly major university start offering degrees in supply chain, right? 

Patrick Escolas  35:58

Bill Schroeder  35:59
Like suddenly, this is the new sexy job and career to have. I think that's awesome. Yeah, it is. It is. It's definitely an interesting industry. It continuously changes. And then parts of it continuously stay the same. And software, goods and services, right, that stuff is physically going to have to move, no matter what happens. Everything else goes digital. Nobody buys DVDs or CDs anymore.

Patrick Escolas  36:26
Drug Mart are still trying to get me to buy them out of the basket. But, I don't know who's making them still. I hope that they're 10-years old, and they're just still trying to move them around. 

Bill Schroeder  36:35
And clear out some inventory, right? 

Patrick Escolas  36:37

Bill Schroeder  36:38
Yeah, that's not the problem you're gonna have in supply chain. I think online shopping and commerce until it's some people think 3-D printing is going to replace it forever, right?

Patrick Escolas  36:47
Or we get some teleportation there. But then we got a whole, we got a whole slew of other problems, right? Yeah, 

Bill Schroeder  36:53
Yeah, exactly. 

Patrick Escolas  36:54
We'll find somewhere to be relevant. No, no, Bill, thank you very much for the time today. Really excited about the partnership between Banyan and ProShip. And I hope you have an exciting rest of your, your time at Converge and, you know, really appreciate you talking to me. I learned a lot, I generally do. I don't know if that says more about who I'm talking to, or how little I know. But, thank you very much. And, I'll just say to all the listeners out there, thanks for listening to another episode of Banyan's Tire Tracks. We'll have this up with any more of our behind the scenes footage, maybe even the full unedited with Bill here. There's nothing really dirty or funny behind the scenes, it's all right here. But yeah. Bill, that's that's it for me. I'm gonna leave the meeting. David, do you need anything for me before I cut this out? But yeah, now thank you very much, Bill. I appreciate it.

Bill Schroeder  37:47
Appreciate it. Thank you.

Announcer  37:53
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.