October 1, 2024 • 44 mins
Operating a privately held debt-free less-than-truckload (LTL) operator provides Estes Express Lines the flexibility to make growth investments and keep its commitments to customers and employees through the freight cycle, Webb Estes, president and chief operating officer, tells Bloomberg Intelligence. This approach has allowed the company to opportunistically acquire facilities and equipment against a challenging freight environment as well as keeping workers’ morale high, he says. In this Talking Transports podcast, Estes joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to share his insights about LTL rates and demand, which saw a pick up in growth in September. Estes also discusses sustainability, maintaining high service levels, technology investments and doing most jobs working his way up the organizations.
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Episode Transcript
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Speaker 1 (00:07):
Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast.
I'm your host, Lee Glasgow, Senior Freight, transportation and logistics
Analysts at Bloomberg Intelligence, Bloomberg's in house research arm of
almost five hundred analysts and strategists.
Speaker 2 (00:20):
Before diving in a little public service announcement, your support
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(00:41):
Bloomberg terminal, on LinkedIn or on Twitter at Logistics League. Today,
we're delighted to have Web estes SS Express Lines President
and COO. Before being named.
Speaker 3 (00:53):
To those positions in twenty twenty three, Web was Vice
president of Process Improvement, where you supervise several key departments
including human resources, culture and communications, marketing, corporate strategy, and IT,
where he led much of Estes's technology evolution. Web also
has dedicated much of his career towards identifying opportunities for
(01:16):
improvement and his focus on company culture spurred Essy recognition
as a top workplace by Forbes, Women and Trucking, the
Richmond Times Dispatch, and Best Jobs USA. Web earned a
bachelor and master's degree in accounting from the College of
William and Mary.
Speaker 2 (01:33):
So I guess go Tribes. He's also a graduate of
the ESSES Driving School. Thanks for joining us on the
Talking Transport podcast Web.
Speaker 4 (01:41):
Yeah, Thinkesley excited to be here.
Speaker 2 (01:43):
Yeah, it's great to have you. And I'm assuming your
last name is the same name as the company. That's
not by coincidence, correct, not by coincidence.
Speaker 4 (01:52):
I'm part of a family. We're still privately held, and
I'm part of the fourth generation here at Estas.
Speaker 2 (01:58):
Yeah.
Speaker 1 (01:58):
And for those that are I'm familiar with us, says,
if you can just give us a brief description of
the company and kind of the markets you serve. And
just for those listening transport topics as you as the
number eleven four Hire Trucking Company and number four LCL carrier,
so you know s this is a very very large
trucking company, private trucking company in North America.
Speaker 4 (02:22):
Sure, yeah, so Es. We've been around ninety three years.
We service all fifty states Canada, Mexico, Puerto Rico. We're
in the less than truckload space, which is I call
us the sandwich between the large truckload industry and then
the parcel guys which handle the small shipments. So we're
(02:43):
in that less than truckload space and our company will
be over right around six billion dollars this year. We
have twenty three thousand teammates, eleven thousand tractors, and over
fifty thousand trailers. So we're pretty much in every neighborhood
around the country serving our customers to meet them where
they need freight to be moved.
Speaker 2 (03:04):
And you know, roughly, what are your markets? Is it
like sixty percent industrial manufacturing, forty percent retail? What's the breakout?
Speaker 4 (03:12):
I would put us more at probably sixty percent retail
and the other way. Okay, we'll deliver over one and
a half million residential shipments this year. And our company,
we love servicing the retail space. I mean obviously huge
in both. I mean we have over twenty thousand customers,
So I like to say I've never met a customer
(03:33):
and met freight that I don't like. But we do
a lot in the retail space as well.
Speaker 2 (03:38):
And when you're delivering to people's homes. Is it white glove,
you're bringing stuff inside.
Speaker 4 (03:43):
We'll do some of that. It's kind of the whole
whole gamut from We don't really used to be called
curbside as an industry, but at this point we call
it front door, so we like to bring it to
the front door, and many times we'll take it into
customer's house as well.
Speaker 2 (03:57):
Okay, And I guess most of that kind of frame
st of furniture and exercise equipment, things like that.
Speaker 4 (04:04):
That's part of it. I mean, we deliver grills, we
deliver spot covers, spas. We actually have worked on a
new liftgate that we now have. It's eight feet long.
Our operations team love it, except they now know that
I'm a little bit more willing to take on some
bigger freight as well. But during the pandemic, it was
(04:24):
such a squeeze where everybody tried to get everything to
the customer. There was so much fear of going into
stores and all those things with COVID that we found
ourselves delivering basically anything that can get to a home.
Speaker 2 (04:38):
And you mentioned earlier that you're really all across North America,
so are your facilities in Mexico and Canada. Are they
SYS facilities? Are you outsourcing it to other providers in
those regions?
Speaker 4 (04:49):
Sure, so we have partners in Canada and Mexico. So
the two hundred and twenty facilities that we operate out
of are all in the US. We actually did in
the Yellow perchase of FACILITI who actually bought their Hawaii facility.
So we're excited to open up directly in Hawaii. People
have asked me why, and part of it is we
(05:10):
love to grow and that was a market that we
thought having our boots on the ground would be helpful.
I've also never been to Hawaii, so maybe it's an
excuse to make a trip there in the next year.
Speaker 2 (05:19):
Sounds like a good idea. Who knows, Maybe we'll base
your home office there when she get it, when she
get a taste of paradise. You mentioned the Yellow bankruptcy.
Can you just talk about you know, for those that
don't know Yellow, it was one of the largest LTL carriers.
It was Union. They've had financial problems pretty much for
(05:41):
the last twenty years. It just took them a really
long time to finally go out of business. Can you
tell us the impact that had on your business.
Speaker 4 (05:50):
Sure, yeah, I mean Yellow has obviously been was the
largest LTL carrier back in the late two thousands, and
they were ten They were a ten billion, had twenty
five percent of the market share, and over the last
fifteen years they had dwindled down to being a five
billion revenue company and maybe ten percent of the market.
(06:11):
So when they went out of business late July early
August of last year, that was an opportunity for the
LTL industry. Obviously, the economy from a trucking perspective has
been slower of late, so that pushed more business to
the surviving carriers. But when Yellow went out of business.
(06:31):
Over the last year, they've been selling equipment and real
estate and all of those types of things. But for us,
this we definitely saw a big bump in business. Day
one we call it kind of the three cycles. Like
Day one was anyone that would pick up their freight.
Customers gave it to us. He gave it about three months,
and customers started to rationalize their business and find a
(06:53):
better home for it. And now we're kind of seeing
that third phase where more RFPs and more kind of
we're customers are trying to find the long term home
for a lot of that freight.
Speaker 2 (07:03):
And for us, is how sticky has the freight been?
Are you like, do you think you'll hold on to
ten percent of what you initially got or is it somewhere.
Speaker 4 (07:13):
No, eighty eighty five percent? Probably like most of it.
I mean we were we were about the same size
as what Yellow was, both being about five billion at
the time, and so we picked up about ten percent
more business kind of day one, and we put in
a really focused effort. The first two months. Customers were
(07:36):
okay with poor service, you know, it's hey, can you
just try your best? But we knew that wasn't gonna last,
so we put a lot of emphasis on adding resources
and capacity within our network because we didn't want the
customers to leave. We wanted we wanted them to call
us home. So yeah, I would say that we held
on to most all of that ten percent for the
(07:57):
first year, and some of it changed, some of it
we've lost, and some of it we've gained, you know,
through those different cycles. But overall it's been it's been
a lot of growth for us.
Speaker 2 (08:08):
Right And were these were most of these new customers
or were they like current customers that just gave you
a larger share of their wallet.
Speaker 4 (08:16):
Sure, early on it was it was mainly the same
customers where we were Yellow was in there and Estus
was in there as well. The change that we've seen
from iteration kind of this first two months to today
is some customers have said, hey, you know, we don't
want to have but so many eggs in anyone basket.
Right after you've gone through one of those things, they
(08:36):
like to spread out the wealth. So so some of
that business has kind of spread out since then, but
lee a lot of it stayed. And then yeah, there
were new customers as well that hadn't heard of Estus.
We are the largest privately held trucking company in North America,
but we've also kind of been a quiet company for
a long time, right, I think we just liked our
(08:57):
work to speak for itself. But we've started to kind
of realize, hey, we do a lot of really great stuff.
We should start, you know, at least letting the public
know kind of what we do and that we're here
for them if they need us. Right.
Speaker 2 (09:10):
And then not only you know, did you gain some volumes,
but you know you mentioned that you you know, got
a facility, and why you also were able to acquire
a bunch of other facilities. Can you talk about the
benefits of those facilities that you're adding to your network?
Speaker 4 (09:27):
Sure, trucking terminals are We joked that we think some
people would rather have a nuclear power plant or a
waste dump next door than a trucking company. So it
gets harder and harder for us as an industry to
find land parcels where the communities are excited to have
(09:48):
us be a part of it. And so when when
Yellow went bankrupt and they owned and leased a large
number of facilities, they they were attractive to all the
tail carriers and the industry at large, and so so
there was an auction. At this point, we've actually purchased
(10:08):
thirty five of those facilities, some of them and Lee.
We'd go back a long way, but back in two
thousand and eight, when Yellow was struggling, we actually bought
forty of their facilities then to help them when they
were really on the ropes. And of those forty, many
of them twenty six of them had already been turned
back into estes and we were using them. But Yellow
(10:31):
was still operating in fourteen of those facilities and so
some of that thirty five has been us actually buying
our leases back to ultimately move into them. And so
but of the thirty five, we're already in close to
half of them. And and I know a terminal, it
(10:52):
sounds like, well, what's a terminal? So for us, terminals
are basically these concrete pads that have a lot of doors,
and it allows us to load trailers and load other
trailers quickly and efficiently. One of the big things that
I see missed when people talk about the Yellow facilities,
it wasn't just the doors. They had a lot of
great parcels where there was a lot of parking and
(11:14):
lee we talked about us being large into retail. Retailers
love having carriers that have a lot of trailers because
there are times when they'll buy and by the time
it gets to them, they're maybe not ready for that
that business, or they need us to hold it a
little bit longer. And so a big opportunity for us
is having enough land that when the freight comes in
(11:35):
if a customer is not ready for it, being able
to park it and store it and be ready to
go with when they're ready for it. So so it
wasn't just the doors, it was the land and it's
a game changer for US. Lots of markets that I
could brag about, but ultimately the capabilities. We've added twenty
five percent more doors over the last three years, and
(11:56):
fifteen percent of that has been yellow and it allows
us to say yes to customers where before we might
have had to have a different conversation.
Speaker 2 (12:04):
And so I guess a lot of the acquisitions that
you did when it comes to terminals, was that additive
to your network? Are you are you operating like maybe
a smaller terminal in one city and you can get
this bigger one, so maybe you're selling or leasing the
other terminal, or are you operating both terminals in the
same area.
Speaker 4 (12:23):
Yeah, both are happening. A good example, we bought a
Buffalo terminal that's one hundred and seventy doors and we
have a forty three door terminal right now, we're not
going to need both of them, so we'll move into
the new Buffalo and sell or lease our old legacy Buffalo.
But there were other markets where we were serving multiple cities.
(12:44):
A good example Temple Texas for US serviced Waco and Austin,
and so we purchased an Austin, Texas terminal from Yellow
and now we'll operate out of both of them, which
will give us just more capacity and being closer to
the customer.
Speaker 2 (13:00):
Right and Elsin's a growing market, so that's that sounds
like a win win for Estes for sure. So could
you just talk about the LTL market right now? You
know what we've seen a lot of your public peers.
They're good enough to provide August updates, and you know
demand has been down call it mid single digits, while
pricing has been up mid single digits excluding fuel search charged.
(13:24):
Is that something similar you're seeing at Estes or are
you seeing something different?
Speaker 4 (13:29):
Yeah, at Estes we're actually up about five percent tonnage,
so we're actually a little different in that regard. I
think maybe lee quickly I stepped back might be helpful here.
We're normally a good bell weather for how the economy
is doing. But when Yellow went out of business, there's
been so much movement of freight. It's made us a
(13:52):
little different. You know, over the last year, a lot
of the carriers were up or at least you know, flat,
and a big reason for that was Yellow being out
kind of helped augment the business levels. It all changed
when we got to endo July early August, because now
we have comps that are much harder, and so we
went from being up ten to eleven percent tonnage down
(14:15):
to more close to flat, one to two percent up.
But then very quickly I realized I didn't like seeing
any red numbers in my metrics, and so we went
to work and we've been able to bring on business
typically when we want to bring it on, and so
the last few weeks we've actually seen it ramp back
(14:37):
up where we're actually up, like I said, five six percent,
seven percent tonnage for the last three to four weeks.
I don't know. There are definitely a lot of moving
pieces right now. You've got the ports that may be
going on strike, and so I don't know how much
of this is kind of an early push to get
the Christmas freight through the ports before shout down happens.
(15:01):
So we may see October fall back down. But for US,
September has been been a really strong month, and in
August we were still up, not negative.
Speaker 2 (15:11):
All right, And so everyone on Wall Street, we want
to know, because you know, one of the great things
about the LTL market is that you guys have pricing discipline.
It's an extremely consolidated market relative to the truckload market.
You know, I think the top ten of seventy five
percent share of something like that. And so that's been
a real belt, like a real pillar for earnings and
(15:32):
revenue for the company. So when you're when you're going
after business, how are you going after it? Are you
going after it with price?
Speaker 3 (15:40):
No?
Speaker 4 (15:40):
And the whole industry has been has been talking more
and more about quality and service. And I realized it
makes sense that every carrier is going to talk about it.
There's a difference between talking about it and actually performing
great service. But I think as an industry, you know,
rates are higher, right and customers ask questions, Hey, when
(16:02):
I'm paying more, what am I getting for it? And
so we've seen the whole industry really focus on the
service component of it and providing good service you know,
does come with some extra costs. So at ESTs we
pride ourselves on not trying to win business based on price.
One main reason for that is if you're the cheapest today,
(16:23):
you may not be the cheapest tomorrow. And we really
like to work with customers that catch the vision of
what we're accomplishing, and so we want to build a
longer term relationship. So yeah, sure we're competitive. And if
you if you look at the mass Fio Gale survey,
which is a big industry wide survey that looks at
(16:43):
all the LTL cares each year, we consistently kind of
are by ourselves on the dot where it's four quarters.
I don't know if you know the four quadrants, but
it's like price and quality of service, and we have
really pride ourselves on being in that bottom right quadrant
and we're kind of all alone where our service is
(17:04):
far above the mean, but the value or price is
actually below the mean pretty significantly. So it doesn't mean
that we're not getting good prices or fair prices, but
we try to come along our partners for the long term.
Speaker 2 (17:19):
Right, And how do you measure service? SS express?
Speaker 4 (17:23):
Yeah, so, I mean their service gets talked about in
lots of ways. The on time service is the one
that you know, we deliver next day service from here
to here. Did it get there next day? Then you
also have the claims and the exception ratios of when
you delivered it. Were they're missing packages or was it damaged.
Those are the main service components. I'll tell you one
(17:45):
that gets missed quite often is the pickup service. So
you know, as carriers were like, well, we didn't pick
it up, so we couldn't offer next day, and the
customer's like, well that's still a failure to me, right, Like,
I'm not just interested in one you pick it up,
how you do? I'm interested in can you pick it
up today? And so we've put a huge emphasis on
(18:05):
our pickup capabilities. Actually, we rolled out a new technology
two years ago leave where our customers can go on
our website and they can put in their pickup tracking
number and we show them do we assign it to
a driver, what's the driver's name, how many stops away
in ETA on when we think we're going to be there.
(18:25):
And what we found one of the biggest surprises was
our customers love us, maybe even more than I want
to say this, because of our drivers that they know Jimmy,
they know Bob, they know Susan, like they know the
driver that's coming. And so putting that information on our
website just kind of raised the bar for our customers
so they could rely on us, not just for the trains,
(18:48):
the time, but also knowing that we're going to show
up to get their freight same day.
Speaker 2 (18:53):
Yeah. The people, the relationships are really local. The people
at the docks, the customers really know the individuals that
are coming to pick up they're freight. As a kid,
I worked at a warehouse and I used to remember
that the guy used to come every like Tuesday and Thursday,
the LTL carrier.
Speaker 4 (19:11):
Yeah, I've heard that there are customers that even give
our driver the combo if they need to get in
for something, And I'm like, don't even tell me that, right,
But there is a trust that's there. In fact, Leeb,
we were talking about why zestus up every year and
a little different. One thing I take very seriously is
our people. It's a benefit of being private. I don't
(19:33):
even have a quart. I don't know when my quarters end,
so I'm not trying to hit a quarterly number, don't.
I don't focus on that very for me. The people
that we have are very important and so kind of
two bullets I can give you there. When COVID happened
in April of twenty twenty, we didn't lay anybody off.
We hung on to everybody because I feel like when
(19:54):
we hire somebody, I've made a commitment that they're gonna
that they're part of our team. It's my job to
give them something to do, and they commit to working hard.
And so the second quarter of twenty twenty we were
up year every year as a company, and I think
we may have been the only one in the country
up with COVID bearing down our necks, and to start
(20:15):
last year we were down twelve percent, and yet we
laid we hung on to everybody. So for me, it's
one of those scenarios where when I'm looking at business
and volume, it's not just margin, it's also Okay, what
teammates do I have that we're slow? Where do we
need to kind of make sure we're taking care of
them because they take care of me every day with our.
Speaker 2 (20:36):
Customers, right, And you know you mentioned your people and
obviously some of the most important people in a trucking
company or the drivers. You know, in your bio it
says that you have a CDL from an ESTs driving school,
So can you talk about that. Hey, that's awesome. I
tried driving a truck once and I killed a lot
of cones and I don't think I'm allowed back in
(20:58):
a truck. Ever, again it was a closed lot. Can
you talk about, you know, the driving schools that you
have and kind of the benefit to your company and
kind of the reason why you operate those.
Speaker 4 (21:12):
So we do have driving schools and LEEA, it was
one of the hardest things I ever had to do
was learning to drive a truck. I was working for
my accounting sitting for the accounting tests, and I'll tell
you driving the truck was harder. So really proud of
our team. One of the reasons I love that program
(21:34):
is yeah, I mean, we have over ten thousand drivers,
but we have twenty three thousand teammates, so we have
a lot of dock workers and mechanics and clerks, and
so one of the things that it does is it
allows your people upward mobility, where you give them an
opportunity to see that, hey, this can be a career
for me. Right, I can start on the dock, I
can move through these other things. And that's important to
(21:56):
me from a culture perspective. But secondly, and this shocks me,
but those that go through our driving school have a
better safety record than those that we hire from the outside.
So we love sending our employees through our own driving school.
It costs US about fourteen thousand dollars per person to
go through our school. The other thing is a lot
(22:17):
of our drivers will end up working the dock some
and driving. And so if you can have a dock
worker that's already working the dock well and then they drive,
now you've got someone that can do anything you need
on any given day and gives you a lot of
flexibility and gives them flexibility in what they do. So
love the program, could not be more proud of it.
Speaker 2 (22:37):
Are the schools that's open for s this employees? Correct, Okay, gotcha.
So it's more like an internal development program for your people.
Speaker 4 (22:47):
That's right. We have two schools, one on the east,
one on the west, and we basically people kind of
sign up and say, hey, i'd like to do this,
and they have to get approved by their manager. So
I tell them, hey, you don't have to up to
your manager, but you know, make sure you're doing all
the things you're supposed to do. And yeah, and so
we'll run three to four hundred drivers or dock workers
(23:08):
and clerks through that driving program each year. But they're
all US employees. And yeah, it's an amazing program.
Speaker 2 (23:15):
That's pretty that's pretty cool. So are you able to
safely and effectively back up a tup tupup trailers?
Speaker 4 (23:24):
When I was doing it, I could get lucky for
about ten feet, but I would always lose that backpup.
It is It's an unbelievable thing what our drivers do
each day.
Speaker 2 (23:35):
Yeah, my mind could never wrap around, move this way
and the trailer goes the just it was just it was.
It wasn't pretty. So you know, you mentioned that this
is a family business. Are there any other ss that
are involved in the company right now?
Speaker 4 (23:53):
Well, so, we're a family of girls, and I should
tell you I'm the last one who can pass on
the name. Estis I have three beautiful I have three
beautiful daughters, and so it's going to end here because
I want to stay married and three is our max.
But have lots of family members with very different names,
but lots of family members involved. My great granddad had
(24:15):
lots of kids, and so there's a lot of cousins.
We call ourselves the four g's. My dad's third generation
group has maybe five or maybe five cousins that are
working in the business. And I think in the fourth
generation we already have five or six, maybe seven even
cousins that are in the business. Obviously, I get the
question often is family a good thing or a bad thing?
(24:37):
So far, it's been an amazing thing. We hold our
family members to a higher standard than anybody else, and
you know, the things that we have to work through
is make sure that the rest of our teammates don't
feel like they can't get the opportunities to get promotions
because it's just family members type scenario. But yeah, I
have a lot. My sister runs our VP of of
(25:01):
Customer Engagement and she is just killing it. She runs
circles around me all the time, and it's fun to
get to come to work and see her and support
her vision for how we can take care of the
customer even better.
Speaker 2 (25:15):
Are there any of the previous generations still involved?
Speaker 4 (25:19):
Yeah, my dad is still involved. He's our CEO and
has been at Estes for forty eight years. And he's
got several cousins, Billy and Steve Hupp, our CFO and
executive vice president, and Bobby Spate who runs our ess
Logistics division, and so yeah, there are definitely one interesting
(25:42):
part to a family business as you have these generational separations,
and so sometimes there are these gaps and kind of like,
how do you slowly but surely give more responsibility that
next generation, but not too little, not too fast. And
I can't say enough good things about my dad and
Billy and Steve and Bobby. I'm here standing on the
(26:07):
shoulders of giants. They have gifted me a debt free,
privately held company that goes across the whole country, with
a culture where employees love being here. So I feel
very fortunate to get the opportunity that I get.
Speaker 2 (26:23):
And so on Thanksgiving, are you talking about trucking or
are you talking about football and turkeys?
Speaker 4 (26:28):
My mom has told us it has to be about
turkey and sweet potatoes. Okay, but but I would be
lying if I didn't say that my dad and I
and my sister maybe find some some moments where we
where we talk a few things or get a few
things accomplished.
Speaker 2 (26:46):
Right. So, so, turning back to the freight market, so
what is your expectations for the rest of the year
in terms of demand? And and I know it's it
might be a little too early to talk about, but
what are you thinking about twenty twenty five when it
comes to LTL Fright.
Speaker 4 (27:01):
Yeah, So I'm not sure if I have the most
popular view in this space. Obviously, we've been in a
freight recession the last two years. Things have been slower,
and there's a variety of reasons for that, but the
assumption is often made, well, if you're in a recession,
then when are you going to get out of it?
And when is it going to rise? My concern with
(27:24):
that line of thought is twenty one and twenty two
we're not just a normal boom. I mean, the government
gave us a ton of money to spend, and you
couldn't go anywhere. You couldn't go to Taylor Swift concerts
and Disney trips and a whole lot of services that
don't really require transportation. And so the question that I'm
(27:45):
asking is, I think the economy in twenty one twenty
two is a twelve and we're maybe at an eight
right now from what I can see, So can it
go up? Yes? Is there room for you know, more
economic boom? Yeah, I think it's there. But we're also
not in as terrible time as I think we maybe
(28:05):
sometimes want to say it is. As carriers, there's just
extra capacity in the market and so when I look
out this next year, I mean I think it's going
to be about the same for the next six months.
The electional play role. I thought it was a really
good sign that the FED lowered interest right to half
a percent. I think that tells me that they're listening
and that they're feeling like they needed to make a
(28:30):
reduction there, and that obviously play can play a significant
role in housing, which is a big driver for transportation.
So I think the next six months are pretty flat,
and hopefully from there we have some really good positive
news and can keep moving forward.
Speaker 2 (28:46):
You mentioned there might be a little too much capacity
in the market. Do you see capacity coming out of
the market or you just see demand filling the capacity
that's out there.
Speaker 4 (28:58):
When I talk about extra capacity, you know, there hasn't
been a new LTL company in decades created, so there
is more LTL capacity with people buying yellow equipment and
yellow trailer or facilities. But I think what you'll see
is the truckload industry. I think you'll continue to see
(29:20):
more and more of the truckload carriers kind of struggling
and maybe pulling out some capacity. One quick thing that
I think of us as a Sandwich. And so in
good economic times, truckload gets away from the multi stops
and parcel gets away from the larger parcel shipments, and
so LTL really expands when the economy is slammed, Yeah,
(29:42):
because the two buns of the Sandwich don't really need
our freight. But in these slower times, you see truckload
really dipping into our space multi stops, all those types
of things, and the parcel guys saying, hey, you know what,
maybe that big screen TV, we can find a way
to move it through our network. And so what I'm
hopeful for with that if the truckload market can find
(30:04):
more equilibrium, and there may be truckload guys are less
interested in those multi stops, that more of that business
could fall back into LTL at some point, But you're
not going to see. I don't think LTL cares leave
the market. I mean, there's so much factored into it
and there's no one losing money right now. So I
don't think the LTL capacity leaves as much as truckload
(30:27):
maybe finds equilibrium. It's probably the best thing for LTL.
Speaker 2 (30:30):
Right And when you when you talk about you know,
excess capacity, and you mentioned Yellow, and you know you
mentioned earlier that you guys, what thirty five thirty six
facilities do? You have to reinvest a lot of money
in those facilities and bring them up to sts standards
because you know, Yellow is famous for its trailers with
holes in it and any really old truck. So what
(30:51):
were their facilities like?
Speaker 4 (30:53):
So the facilities they all depended. You know, some in
the south didn't have some of the snow, you know,
asphalt cracks that some of the northern ones had. I mean,
each one was its own animal. But we have put
a lot of money into them. You know. The one
thing for Estes is we're always thinking long term. Being
(31:13):
debt free makes it really easy for us to say,
let's put ten million into this facility because we're going
to be here for forty years, right, So we have
we have put a lot of money into them. One
of the reasons you do that is the best time
to do that is before you move in. Once you've
moved in, it's really hard to invest and do it
(31:33):
without disrupting the operation. So they weren't perfect, but the
bones were good, the concrete slab for the dock was good,
and there was a lot of positive obviously because we
spent I don't know, close to three hundred million dollars
doing this, so we definitely bought something that had value,
but it did require some work. But Lee, you mentioned
the trailers, We've actually bought over seven thousand of their trailers,
(31:57):
not the ones with the holes in them, but you know,
they had bought their banks had a lot of least
equipment from like twenty seventeen to twenty twenty, and then
when Yellow got that loan from the government, they bought
a lot of equipment, so they had a lot of
newer equipment. And because we've continued to grow, we saw
(32:18):
a really strategic opportunity to dip into that and are
very excited about our trailer fleet from that perspective.
Speaker 2 (32:25):
What is the average age of your tractor and trailers?
Speaker 4 (32:29):
Yeah, I mean our tractor's age, it's about maybe four
and a half five years of age. We will keep them.
We've been known to keep them fifteen years. But when
you look at our new trucks basically go into our
line haul, our city to city operation that get most
of the miles, and then as they age down, they
(32:51):
move into our city fleet where they get less miles
and can be maintained, you know, kind of close in
one facility all the time. So both tractors and trailers
got really expensive during the pandemic. I mean, trailer prices
went up sixty seven percent, and normally when they go
up that high, you would at least hope that you
(33:12):
could buy as many as you wanted, but they were saying, nope,
this is the price, and you only get three hundred trailers.
So it made it very hard on all the carriers
to create capacity. So we ended up refirming a lot
of equipment and doing whatever it took to keep the
fleet moving. But with this Yellow purchase, it's it's changing
(33:33):
that paradigm where we're going to be able to get
rid of our older trailers and move that age up
quite well. We did not buy a lot of their tractors.
Trailers are a little bit more interchangeable, whereas a tractor
you want the right engine, spack, you want the right
all the things that you do each day, and a
tractor is pretty critical. So instead we've been buying a
(33:55):
lot of new tractors because both tractor and trailer capacity
has really opened up this year and you can basically
buy as much as you want, and so that's freed
us up to buy the right things that we needed
to buy new while still being strategic with us where
it made sense.
Speaker 2 (34:12):
When you're looking at equipment, you know, there's a lot
of talk about, you know, trying to lower emissions, and
there's a new EPA mandate in twenty twenty seven. What's
as this approach to that. What are you guys doing?
What's important to ask to us?
Speaker 4 (34:25):
Man? I love this topically, and I love it because
I think there's a paradigm shift that everybody in the
discussion needs to take. When I share. When I say
the word sustainability in one of my meetings, I can
see half of the room get really excited, and I
can see half of the room completely shut down on me.
(34:47):
And there's kind of this belief that, like sustainability is
either like the most important thing that our world is facing,
or it's something that's not even true. And this is
a place where generations play a role, uh Lee. There
there is kind of generationally different beliefs around sustainable goals
(35:09):
and what is needed. And so I've been able to
step in the last couple of years and say, hey,
we're debt free, we want to do good in our world,
so let's lean in. But there are so many win
win wins out there. Like my commitment to our employees
is that they'll never hear me say I was going
to give you a raise, but instead I decided to
(35:31):
do something for the world right or to be greener
as a company. We are going to take care of
our employees. That is the that is that is my
responsibility as an employer. But within that so many win
win wins. So we're we're adding solar panels at a
lot of facilities. We've gone pretty big with electric forklifts.
(35:52):
We're now starting to do electric yard trucks. We actually
was were transport topics first and aull Giral winner of
their Pathfinder Award for sustainability, and it's exciting for me.
The only caution that would I would make around it.
The thing that maybe I struggle with with California, and
I'm sure a lot of your listeners know about the
(36:13):
California electric tractor requirements over the next ten to fifteen years.
The thing I don't like about it is when you
make a goal fifteen years from now. I strongly believe
in humankind being really smart, like we have brilliant, amazing
people that live and breathe in our world today. And
(36:36):
so to say that electricity is going to be the
solution for fifteen years from now, I think misses an
opportunity for us to dream and an opportunity to do
something that might be even better. What I've read is
that electricity today for trucks doesn't pull out nearly as
much CO two as you would like to think. I've
(36:57):
heard numbers around forty percent that because of how we
create electricity today, an electric truck only pulls out forty
percent of the CO two. And clearly, if we want
to make a significant difference in our world, we've got
to think about other options. So there are things like
we're more carbon that's actually putting a device on the
back of the tractor that pulls out sixty to eighty
(37:19):
percent of the CO two, but it allows a diesel
engine to still work, so you can do all the
things that you need to do, and that CO two
can then be sold to soda companies because that's what's
in carbonation of our water, you know, with Coca cola
and stuff, and you can put it in concrete and
actually make money on the carbon that you're burning, which
is fascinating, right, So that would be my one caution
(37:43):
is we thought five years ago natural gas was a solution,
and now we've kind of come to California gives us
zero credit for the one hundred and fifty two hundred
natural gas trucks that we have. So for me, the
focus is how do we do great things but continue
to drive for innovation and and do it in a
(38:04):
way that's going to be affordable but also great for
our world.
Speaker 2 (38:07):
So what are you trying to do to change that?
Are you like involved in you know, like the ATA
or other lobbying groups to to kind of shape what
legislation is.
Speaker 4 (38:19):
Going to look like. Yeah, so I mentioned were more
of carbon. That's that's a partner of ours. We're listed
as the number A four or fifth provider that's going
to get to test out their tractors. So part of
it is leaning in with great stories like that to say, hey,
(38:40):
let's let's kind of continue to drive that. I know
writers kind of a big driver of that as well,
and so I think that's that feels like my job
is to continue to find new ways to push us forward.
I want to give California credit though. I mean, if
you remember the trailer skirts that came along, and every
van needs a trailer skirt, and it carried the whole
(39:01):
trucking industry kicking and screaming, and then we went and
tested them and they were brilliant. I mean, they saved
us a ton of money putting them on, and now
all of our trailers basically have skirts, right, And so
so I feel like one of the main things I
get to do is test a lot of things and
then things that work share it with the world. I mean,
(39:21):
I could maybe see it as a competitive advantage for myself, like, hey,
don't tell anybody how great this is, but I feel
like we all win when we do things that are
more sustainable in that regard.
Speaker 2 (39:31):
And so, you know, we're wrapping up here. You've been
working at the company, probably since you were a kid.
I'm assuming what was the most difficult job for you
to do at your time? And asked us. I know
when I when I was in college, one summer I
worked the graveyard shift at an LTL carrier and I
(39:52):
had a load and unloaded trucks and it was like
one hundred degrees in there. And after that job, I
became a honor student.
Speaker 4 (40:00):
Yeah, exactly.
Speaker 2 (40:01):
It is very hard work and I am not made
for this. So what was the hardest thing you had
to do?
Speaker 4 (40:06):
I mean, first, I would say that every job that
I've done has come with its challenges. The two hardest.
Driving a truck was hard, especially night driving. You know,
being able to stay awake and stay focused. It was
a hard job. And you know, how do you eat healthy?
How do you exercise? I mean, all those things were
hard about driving, But the one that's probably my hardest
(40:29):
job was being a terminal manager. And the reason I
say that is in that role, every day you have
customers complaining about something, or you know, there's a fire
and having to be the firefighter to save the day.
But also think bigger than that and figure out how
do I build processes that my people are going to
(40:51):
kind of lean into and follow, and then how do
I take care of my people. If you're doing it
the right way, every day you're solving. You're solving problems
to make your people love you more and make your
customers fall in love with you. And I found many
days I'd work twelve hours and skip lunch and breakfast
(41:12):
and come home and just have dinner. I lost forty
pounds while I was a manager, so that it was hard,
and kudos go out to them because you know, in
corporate there are hard parts to my job for sure,
but mineor big picture and our manager's day in day
out getting the real work done as it was my
(41:36):
hardest job for sure.
Speaker 2 (41:38):
Is there anything that keeps you up at night as
a senior manager at US Express.
Speaker 4 (41:43):
Well, we didn't talk about our cyber attack, but we
did have a cyber attack that happened October first of
last year. So we're coming up on a year which
I joke all the public carriers are going to have
a much harder comp in October because they handled a
lot of our business. We lost half of our business
overnight the moment the cyber attack happened. And so this
(42:04):
whole year I've spent a lot of time with the
team just improving processes. And you know, cybersecurity is one
of those things that you can do everything in your
power and you still have to, you know, recognize that
in any moment, something could happen, and so that one
keeps me up at night. I'll tell you the flip
side of it, though, is that month I have never
(42:28):
felt such support from our employees. We actually were doing
an employee survey during the cyber attack, like right before
the cyber attack, and we took survey results before and after,
and our employees gave us four points of a higher
score post the cyber attack. And our customers have come
to me so many times saying like we actually believe
(42:48):
in trusting you more watching you go through that. So
it keeps me up at night. But I also have
learned that, like anything, you can kind of survive and
work through. But that's one that Lee I would prefer
to never have to do again.
Speaker 2 (43:02):
All right, Well, let's fingers cross and last question would
I like to ask most of my guests, do you
have a favorite book on either like leadership or transportation
that you know really hit your core?
Speaker 4 (43:15):
Transportation, I mean, I mean a lot to me that's valuable.
There are like some of the news articles, but a
book that I love start with why is I know
a famous one, but this next generation of leaders aren't
looking just for a paycheck. They're looking for something that's
going to transform our world for the better. And so
(43:37):
for me, when I read the book, start with why
it changed my trajectory of how I'm going to lead
the next thirty years. That one of my biggest jobs
is to paint the picture of how our people are
changing our world and being essential, and how can I
help them get all the barriers out of the way
(43:58):
so that they can do amazing things. So I love
that book and it transforms how we do business.
Speaker 2 (44:04):
All right, great, this is a great conversation Web. I
really appreciate your time.
Speaker 4 (44:09):
Yeah, thanks Lee, this was a privilege all on my side,
and love your show and appreciate all the time.
Speaker 2 (44:15):
All right, great, and also want to thank you for
tuning in. If you liked the episode, please subscribe and
leave a review. We've lined up a number of great
guests for the podcast. Check back to hear conversations with
C suite executives, shippers, regulators, and decision makers within the
freight markets. Thanks everyone, and take care.
Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast.
I'm your host, Lee Glasgow, Senior Freight, transportation and logistics
Analysts at Bloomberg Intelligence, Bloomberg's in house research arm of
almost five hundred analysts and strategists.
Speaker 2 (00:20):
Before diving in a little public service announcement, your support
is instrumental to keep bringing great guests onto the podcast
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want to talk transports, please hit me up on the
(00:41):
Bloomberg terminal, on LinkedIn or on Twitter at Logistics League. Today,
we're delighted to have Web estes SS Express Lines President
and COO. Before being named.
Speaker 3 (00:53):
To those positions in twenty twenty three, Web was Vice
president of Process Improvement, where you supervise several key departments
including human resources, culture and communications, marketing, corporate strategy, and IT,
where he led much of Estes's technology evolution. Web also
has dedicated much of his career towards identifying opportunities for
(01:16):
improvement and his focus on company culture spurred Essy recognition
as a top workplace by Forbes, Women and Trucking, the
Richmond Times Dispatch, and Best Jobs USA. Web earned a
bachelor and master's degree in accounting from the College of
William and Mary.
Speaker 2 (01:33):
So I guess go Tribes. He's also a graduate of
the ESSES Driving School. Thanks for joining us on the
Talking Transport podcast Web.
Speaker 4 (01:41):
Yeah, Thinkesley excited to be here.
Speaker 2 (01:43):
Yeah, it's great to have you. And I'm assuming your
last name is the same name as the company. That's
not by coincidence, correct, not by coincidence.
Speaker 4 (01:52):
I'm part of a family. We're still privately held, and
I'm part of the fourth generation here at Estas.
Speaker 2 (01:58):
Yeah.
Speaker 1 (01:58):
And for those that are I'm familiar with us, says,
if you can just give us a brief description of
the company and kind of the markets you serve. And
just for those listening transport topics as you as the
number eleven four Hire Trucking Company and number four LCL carrier,
so you know s this is a very very large
trucking company, private trucking company in North America.
Speaker 4 (02:22):
Sure, yeah, so Es. We've been around ninety three years.
We service all fifty states Canada, Mexico, Puerto Rico. We're
in the less than truckload space, which is I call
us the sandwich between the large truckload industry and then
the parcel guys which handle the small shipments. So we're
(02:43):
in that less than truckload space and our company will
be over right around six billion dollars this year. We
have twenty three thousand teammates, eleven thousand tractors, and over
fifty thousand trailers. So we're pretty much in every neighborhood
around the country serving our customers to meet them where
they need freight to be moved.
Speaker 2 (03:04):
And you know, roughly, what are your markets? Is it
like sixty percent industrial manufacturing, forty percent retail? What's the breakout?
Speaker 4 (03:12):
I would put us more at probably sixty percent retail
and the other way. Okay, we'll deliver over one and
a half million residential shipments this year. And our company,
we love servicing the retail space. I mean obviously huge
in both. I mean we have over twenty thousand customers,
So I like to say I've never met a customer
(03:33):
and met freight that I don't like. But we do
a lot in the retail space as well.
Speaker 2 (03:38):
And when you're delivering to people's homes. Is it white glove,
you're bringing stuff inside.
Speaker 4 (03:43):
We'll do some of that. It's kind of the whole
whole gamut from We don't really used to be called
curbside as an industry, but at this point we call
it front door, so we like to bring it to
the front door, and many times we'll take it into
customer's house as well.
Speaker 2 (03:57):
Okay, And I guess most of that kind of frame
st of furniture and exercise equipment, things like that.
Speaker 4 (04:04):
That's part of it. I mean, we deliver grills, we
deliver spot covers, spas. We actually have worked on a
new liftgate that we now have. It's eight feet long.
Our operations team love it, except they now know that
I'm a little bit more willing to take on some
bigger freight as well. But during the pandemic, it was
(04:24):
such a squeeze where everybody tried to get everything to
the customer. There was so much fear of going into
stores and all those things with COVID that we found
ourselves delivering basically anything that can get to a home.
Speaker 2 (04:38):
And you mentioned earlier that you're really all across North America,
so are your facilities in Mexico and Canada. Are they
SYS facilities? Are you outsourcing it to other providers in
those regions?
Speaker 4 (04:49):
Sure, so we have partners in Canada and Mexico. So
the two hundred and twenty facilities that we operate out
of are all in the US. We actually did in
the Yellow perchase of FACILITI who actually bought their Hawaii facility.
So we're excited to open up directly in Hawaii. People
have asked me why, and part of it is we
(05:10):
love to grow and that was a market that we
thought having our boots on the ground would be helpful.
I've also never been to Hawaii, so maybe it's an
excuse to make a trip there in the next year.
Speaker 2 (05:19):
Sounds like a good idea. Who knows, Maybe we'll base
your home office there when she get it, when she
get a taste of paradise. You mentioned the Yellow bankruptcy.
Can you just talk about you know, for those that
don't know Yellow, it was one of the largest LTL carriers.
It was Union. They've had financial problems pretty much for
(05:41):
the last twenty years. It just took them a really
long time to finally go out of business. Can you
tell us the impact that had on your business.
Speaker 4 (05:50):
Sure, yeah, I mean Yellow has obviously been was the
largest LTL carrier back in the late two thousands, and
they were ten They were a ten billion, had twenty
five percent of the market share, and over the last
fifteen years they had dwindled down to being a five
billion revenue company and maybe ten percent of the market.
(06:11):
So when they went out of business late July early
August of last year, that was an opportunity for the
LTL industry. Obviously, the economy from a trucking perspective has
been slower of late, so that pushed more business to
the surviving carriers. But when Yellow went out of business.
(06:31):
Over the last year, they've been selling equipment and real
estate and all of those types of things. But for us,
this we definitely saw a big bump in business. Day
one we call it kind of the three cycles. Like
Day one was anyone that would pick up their freight.
Customers gave it to us. He gave it about three months,
and customers started to rationalize their business and find a
(06:53):
better home for it. And now we're kind of seeing
that third phase where more RFPs and more kind of
we're customers are trying to find the long term home
for a lot of that freight.
Speaker 2 (07:03):
And for us, is how sticky has the freight been?
Are you like, do you think you'll hold on to
ten percent of what you initially got or is it somewhere.
Speaker 4 (07:13):
No, eighty eighty five percent? Probably like most of it.
I mean we were we were about the same size
as what Yellow was, both being about five billion at
the time, and so we picked up about ten percent
more business kind of day one, and we put in
a really focused effort. The first two months. Customers were
(07:36):
okay with poor service, you know, it's hey, can you
just try your best? But we knew that wasn't gonna last,
so we put a lot of emphasis on adding resources
and capacity within our network because we didn't want the
customers to leave. We wanted we wanted them to call
us home. So yeah, I would say that we held
on to most all of that ten percent for the
(07:57):
first year, and some of it changed, some of it
we've lost, and some of it we've gained, you know,
through those different cycles. But overall it's been it's been
a lot of growth for us.
Speaker 2 (08:08):
Right And were these were most of these new customers
or were they like current customers that just gave you
a larger share of their wallet.
Speaker 4 (08:16):
Sure, early on it was it was mainly the same
customers where we were Yellow was in there and Estus
was in there as well. The change that we've seen
from iteration kind of this first two months to today
is some customers have said, hey, you know, we don't
want to have but so many eggs in anyone basket.
Right after you've gone through one of those things, they
(08:36):
like to spread out the wealth. So so some of
that business has kind of spread out since then, but
lee a lot of it stayed. And then yeah, there
were new customers as well that hadn't heard of Estus.
We are the largest privately held trucking company in North America,
but we've also kind of been a quiet company for
a long time, right, I think we just liked our
(08:57):
work to speak for itself. But we've started to kind
of realize, hey, we do a lot of really great stuff.
We should start, you know, at least letting the public
know kind of what we do and that we're here
for them if they need us. Right.
Speaker 2 (09:10):
And then not only you know, did you gain some volumes,
but you know you mentioned that you you know, got
a facility, and why you also were able to acquire
a bunch of other facilities. Can you talk about the
benefits of those facilities that you're adding to your network?
Speaker 4 (09:27):
Sure, trucking terminals are We joked that we think some
people would rather have a nuclear power plant or a
waste dump next door than a trucking company. So it
gets harder and harder for us as an industry to
find land parcels where the communities are excited to have
(09:48):
us be a part of it. And so when when
Yellow went bankrupt and they owned and leased a large
number of facilities, they they were attractive to all the
tail carriers and the industry at large, and so so
there was an auction. At this point, we've actually purchased
(10:08):
thirty five of those facilities, some of them and Lee.
We'd go back a long way, but back in two
thousand and eight, when Yellow was struggling, we actually bought
forty of their facilities then to help them when they
were really on the ropes. And of those forty, many
of them twenty six of them had already been turned
back into estes and we were using them. But Yellow
(10:31):
was still operating in fourteen of those facilities and so
some of that thirty five has been us actually buying
our leases back to ultimately move into them. And so
but of the thirty five, we're already in close to
half of them. And and I know a terminal, it
(10:52):
sounds like, well, what's a terminal? So for us, terminals
are basically these concrete pads that have a lot of doors,
and it allows us to load trailers and load other
trailers quickly and efficiently. One of the big things that
I see missed when people talk about the Yellow facilities,
it wasn't just the doors. They had a lot of
great parcels where there was a lot of parking and
(11:14):
lee we talked about us being large into retail. Retailers
love having carriers that have a lot of trailers because
there are times when they'll buy and by the time
it gets to them, they're maybe not ready for that
that business, or they need us to hold it a
little bit longer. And so a big opportunity for us
is having enough land that when the freight comes in
(11:35):
if a customer is not ready for it, being able
to park it and store it and be ready to
go with when they're ready for it. So so it
wasn't just the doors, it was the land and it's
a game changer for US. Lots of markets that I
could brag about, but ultimately the capabilities. We've added twenty
five percent more doors over the last three years, and
(11:56):
fifteen percent of that has been yellow and it allows
us to say yes to customers where before we might
have had to have a different conversation.
Speaker 2 (12:04):
And so I guess a lot of the acquisitions that
you did when it comes to terminals, was that additive
to your network? Are you are you operating like maybe
a smaller terminal in one city and you can get
this bigger one, so maybe you're selling or leasing the
other terminal, or are you operating both terminals in the
same area.
Speaker 4 (12:23):
Yeah, both are happening. A good example, we bought a
Buffalo terminal that's one hundred and seventy doors and we
have a forty three door terminal right now, we're not
going to need both of them, so we'll move into
the new Buffalo and sell or lease our old legacy Buffalo.
But there were other markets where we were serving multiple cities.
(12:44):
A good example Temple Texas for US serviced Waco and Austin,
and so we purchased an Austin, Texas terminal from Yellow
and now we'll operate out of both of them, which
will give us just more capacity and being closer to
the customer.
Speaker 2 (13:00):
Right and Elsin's a growing market, so that's that sounds
like a win win for Estes for sure. So could
you just talk about the LTL market right now? You
know what we've seen a lot of your public peers.
They're good enough to provide August updates, and you know
demand has been down call it mid single digits, while
pricing has been up mid single digits excluding fuel search charged.
(13:24):
Is that something similar you're seeing at Estes or are
you seeing something different?
Speaker 4 (13:29):
Yeah, at Estes we're actually up about five percent tonnage,
so we're actually a little different in that regard. I
think maybe lee quickly I stepped back might be helpful here.
We're normally a good bell weather for how the economy
is doing. But when Yellow went out of business, there's
been so much movement of freight. It's made us a
(13:52):
little different. You know, over the last year, a lot
of the carriers were up or at least you know, flat,
and a big reason for that was Yellow being out
kind of helped augment the business levels. It all changed
when we got to endo July early August, because now
we have comps that are much harder, and so we
went from being up ten to eleven percent tonnage down
(14:15):
to more close to flat, one to two percent up.
But then very quickly I realized I didn't like seeing
any red numbers in my metrics, and so we went
to work and we've been able to bring on business
typically when we want to bring it on, and so
the last few weeks we've actually seen it ramp back
(14:37):
up where we're actually up, like I said, five six percent,
seven percent tonnage for the last three to four weeks.
I don't know. There are definitely a lot of moving
pieces right now. You've got the ports that may be
going on strike, and so I don't know how much
of this is kind of an early push to get
the Christmas freight through the ports before shout down happens.
(15:01):
So we may see October fall back down. But for US,
September has been been a really strong month, and in
August we were still up, not negative.
Speaker 2 (15:11):
All right, And so everyone on Wall Street, we want
to know, because you know, one of the great things
about the LTL market is that you guys have pricing discipline.
It's an extremely consolidated market relative to the truckload market.
You know, I think the top ten of seventy five
percent share of something like that. And so that's been
a real belt, like a real pillar for earnings and
(15:32):
revenue for the company. So when you're when you're going
after business, how are you going after it? Are you
going after it with price?
Speaker 3 (15:40):
No?
Speaker 4 (15:40):
And the whole industry has been has been talking more
and more about quality and service. And I realized it
makes sense that every carrier is going to talk about it.
There's a difference between talking about it and actually performing
great service. But I think as an industry, you know,
rates are higher, right and customers ask questions, Hey, when
(16:02):
I'm paying more, what am I getting for it? And
so we've seen the whole industry really focus on the
service component of it and providing good service you know,
does come with some extra costs. So at ESTs we
pride ourselves on not trying to win business based on price.
One main reason for that is if you're the cheapest today,
(16:23):
you may not be the cheapest tomorrow. And we really
like to work with customers that catch the vision of
what we're accomplishing, and so we want to build a
longer term relationship. So yeah, sure we're competitive. And if
you if you look at the mass Fio Gale survey,
which is a big industry wide survey that looks at
(16:43):
all the LTL cares each year, we consistently kind of
are by ourselves on the dot where it's four quarters.
I don't know if you know the four quadrants, but
it's like price and quality of service, and we have
really pride ourselves on being in that bottom right quadrant
and we're kind of all alone where our service is
(17:04):
far above the mean, but the value or price is
actually below the mean pretty significantly. So it doesn't mean
that we're not getting good prices or fair prices, but
we try to come along our partners for the long term.
Speaker 2 (17:19):
Right, And how do you measure service? SS express?
Speaker 4 (17:23):
Yeah, so, I mean their service gets talked about in
lots of ways. The on time service is the one
that you know, we deliver next day service from here
to here. Did it get there next day? Then you
also have the claims and the exception ratios of when
you delivered it. Were they're missing packages or was it damaged.
Those are the main service components. I'll tell you one
(17:45):
that gets missed quite often is the pickup service. So
you know, as carriers were like, well, we didn't pick
it up, so we couldn't offer next day, and the
customer's like, well that's still a failure to me, right, Like,
I'm not just interested in one you pick it up,
how you do? I'm interested in can you pick it
up today? And so we've put a huge emphasis on
(18:05):
our pickup capabilities. Actually, we rolled out a new technology
two years ago leave where our customers can go on
our website and they can put in their pickup tracking
number and we show them do we assign it to
a driver, what's the driver's name, how many stops away
in ETA on when we think we're going to be there.
(18:25):
And what we found one of the biggest surprises was
our customers love us, maybe even more than I want
to say this, because of our drivers that they know Jimmy,
they know Bob, they know Susan, like they know the
driver that's coming. And so putting that information on our
website just kind of raised the bar for our customers
so they could rely on us, not just for the trains,
(18:48):
the time, but also knowing that we're going to show
up to get their freight same day.
Speaker 2 (18:53):
Yeah. The people, the relationships are really local. The people
at the docks, the customers really know the individuals that
are coming to pick up they're freight. As a kid,
I worked at a warehouse and I used to remember
that the guy used to come every like Tuesday and Thursday,
the LTL carrier.
Speaker 4 (19:11):
Yeah, I've heard that there are customers that even give
our driver the combo if they need to get in
for something, And I'm like, don't even tell me that, right,
But there is a trust that's there. In fact, Leeb,
we were talking about why zestus up every year and
a little different. One thing I take very seriously is
our people. It's a benefit of being private. I don't
(19:33):
even have a quart. I don't know when my quarters end,
so I'm not trying to hit a quarterly number, don't.
I don't focus on that very for me. The people
that we have are very important and so kind of
two bullets I can give you there. When COVID happened
in April of twenty twenty, we didn't lay anybody off.
We hung on to everybody because I feel like when
(19:54):
we hire somebody, I've made a commitment that they're gonna
that they're part of our team. It's my job to
give them something to do, and they commit to working hard.
And so the second quarter of twenty twenty we were
up year every year as a company, and I think
we may have been the only one in the country
up with COVID bearing down our necks, and to start
(20:15):
last year we were down twelve percent, and yet we
laid we hung on to everybody. So for me, it's
one of those scenarios where when I'm looking at business
and volume, it's not just margin, it's also Okay, what
teammates do I have that we're slow? Where do we
need to kind of make sure we're taking care of
them because they take care of me every day with our.
Speaker 2 (20:36):
Customers, right, And you know you mentioned your people and
obviously some of the most important people in a trucking
company or the drivers. You know, in your bio it
says that you have a CDL from an ESTs driving school,
So can you talk about that. Hey, that's awesome. I
tried driving a truck once and I killed a lot
of cones and I don't think I'm allowed back in
(20:58):
a truck. Ever, again it was a closed lot. Can
you talk about, you know, the driving schools that you
have and kind of the benefit to your company and
kind of the reason why you operate those.
Speaker 4 (21:12):
So we do have driving schools and LEEA, it was
one of the hardest things I ever had to do
was learning to drive a truck. I was working for
my accounting sitting for the accounting tests, and I'll tell
you driving the truck was harder. So really proud of
our team. One of the reasons I love that program
(21:34):
is yeah, I mean, we have over ten thousand drivers,
but we have twenty three thousand teammates, so we have
a lot of dock workers and mechanics and clerks, and
so one of the things that it does is it
allows your people upward mobility, where you give them an
opportunity to see that, hey, this can be a career
for me. Right, I can start on the dock, I
can move through these other things. And that's important to
(21:56):
me from a culture perspective. But secondly, and this shocks me,
but those that go through our driving school have a
better safety record than those that we hire from the outside.
So we love sending our employees through our own driving school.
It costs US about fourteen thousand dollars per person to
go through our school. The other thing is a lot
(22:17):
of our drivers will end up working the dock some
and driving. And so if you can have a dock
worker that's already working the dock well and then they drive,
now you've got someone that can do anything you need
on any given day and gives you a lot of
flexibility and gives them flexibility in what they do. So
love the program, could not be more proud of it.
Speaker 2 (22:37):
Are the schools that's open for s this employees? Correct, Okay, gotcha.
So it's more like an internal development program for your people.
Speaker 4 (22:47):
That's right. We have two schools, one on the east,
one on the west, and we basically people kind of
sign up and say, hey, i'd like to do this,
and they have to get approved by their manager. So
I tell them, hey, you don't have to up to
your manager, but you know, make sure you're doing all
the things you're supposed to do. And yeah, and so
we'll run three to four hundred drivers or dock workers
(23:08):
and clerks through that driving program each year. But they're
all US employees. And yeah, it's an amazing program.
Speaker 2 (23:15):
That's pretty that's pretty cool. So are you able to
safely and effectively back up a tup tupup trailers?
Speaker 4 (23:24):
When I was doing it, I could get lucky for
about ten feet, but I would always lose that backpup.
It is It's an unbelievable thing what our drivers do
each day.
Speaker 2 (23:35):
Yeah, my mind could never wrap around, move this way
and the trailer goes the just it was just it was.
It wasn't pretty. So you know, you mentioned that this
is a family business. Are there any other ss that
are involved in the company right now?
Speaker 4 (23:53):
Well, so, we're a family of girls, and I should
tell you I'm the last one who can pass on
the name. Estis I have three beautiful I have three
beautiful daughters, and so it's going to end here because
I want to stay married and three is our max.
But have lots of family members with very different names,
but lots of family members involved. My great granddad had
(24:15):
lots of kids, and so there's a lot of cousins.
We call ourselves the four g's. My dad's third generation
group has maybe five or maybe five cousins that are
working in the business. And I think in the fourth
generation we already have five or six, maybe seven even
cousins that are in the business. Obviously, I get the
question often is family a good thing or a bad thing?
(24:37):
So far, it's been an amazing thing. We hold our
family members to a higher standard than anybody else, and
you know, the things that we have to work through
is make sure that the rest of our teammates don't
feel like they can't get the opportunities to get promotions
because it's just family members type scenario. But yeah, I
have a lot. My sister runs our VP of of
(25:01):
Customer Engagement and she is just killing it. She runs
circles around me all the time, and it's fun to
get to come to work and see her and support
her vision for how we can take care of the
customer even better.
Speaker 2 (25:15):
Are there any of the previous generations still involved?
Speaker 4 (25:19):
Yeah, my dad is still involved. He's our CEO and
has been at Estes for forty eight years. And he's
got several cousins, Billy and Steve Hupp, our CFO and
executive vice president, and Bobby Spate who runs our ess
Logistics division, and so yeah, there are definitely one interesting
(25:42):
part to a family business as you have these generational separations,
and so sometimes there are these gaps and kind of like,
how do you slowly but surely give more responsibility that
next generation, but not too little, not too fast. And
I can't say enough good things about my dad and
Billy and Steve and Bobby. I'm here standing on the
(26:07):
shoulders of giants. They have gifted me a debt free,
privately held company that goes across the whole country, with
a culture where employees love being here. So I feel
very fortunate to get the opportunity that I get.
Speaker 2 (26:23):
And so on Thanksgiving, are you talking about trucking or
are you talking about football and turkeys?
Speaker 4 (26:28):
My mom has told us it has to be about
turkey and sweet potatoes. Okay, but but I would be
lying if I didn't say that my dad and I
and my sister maybe find some some moments where we
where we talk a few things or get a few
things accomplished.
Speaker 2 (26:46):
Right. So, so, turning back to the freight market, so
what is your expectations for the rest of the year
in terms of demand? And and I know it's it
might be a little too early to talk about, but
what are you thinking about twenty twenty five when it
comes to LTL Fright.
Speaker 4 (27:01):
Yeah, So I'm not sure if I have the most
popular view in this space. Obviously, we've been in a
freight recession the last two years. Things have been slower,
and there's a variety of reasons for that, but the
assumption is often made, well, if you're in a recession,
then when are you going to get out of it?
And when is it going to rise? My concern with
(27:24):
that line of thought is twenty one and twenty two
we're not just a normal boom. I mean, the government
gave us a ton of money to spend, and you
couldn't go anywhere. You couldn't go to Taylor Swift concerts
and Disney trips and a whole lot of services that
don't really require transportation. And so the question that I'm
(27:45):
asking is, I think the economy in twenty one twenty
two is a twelve and we're maybe at an eight
right now from what I can see, So can it
go up? Yes? Is there room for you know, more
economic boom? Yeah, I think it's there. But we're also
not in as terrible time as I think we maybe
(28:05):
sometimes want to say it is. As carriers, there's just
extra capacity in the market and so when I look
out this next year, I mean I think it's going
to be about the same for the next six months.
The electional play role. I thought it was a really
good sign that the FED lowered interest right to half
a percent. I think that tells me that they're listening
and that they're feeling like they needed to make a
(28:30):
reduction there, and that obviously play can play a significant
role in housing, which is a big driver for transportation.
So I think the next six months are pretty flat,
and hopefully from there we have some really good positive
news and can keep moving forward.
Speaker 2 (28:46):
You mentioned there might be a little too much capacity
in the market. Do you see capacity coming out of
the market or you just see demand filling the capacity
that's out there.
Speaker 4 (28:58):
When I talk about extra capacity, you know, there hasn't
been a new LTL company in decades created, so there
is more LTL capacity with people buying yellow equipment and
yellow trailer or facilities. But I think what you'll see
is the truckload industry. I think you'll continue to see
(29:20):
more and more of the truckload carriers kind of struggling
and maybe pulling out some capacity. One quick thing that
I think of us as a Sandwich. And so in
good economic times, truckload gets away from the multi stops
and parcel gets away from the larger parcel shipments, and
so LTL really expands when the economy is slammed, Yeah,
(29:42):
because the two buns of the Sandwich don't really need
our freight. But in these slower times, you see truckload
really dipping into our space multi stops, all those types
of things, and the parcel guys saying, hey, you know what,
maybe that big screen TV, we can find a way
to move it through our network. And so what I'm
hopeful for with that if the truckload market can find
(30:04):
more equilibrium, and there may be truckload guys are less
interested in those multi stops, that more of that business
could fall back into LTL at some point, But you're
not going to see. I don't think LTL cares leave
the market. I mean, there's so much factored into it
and there's no one losing money right now. So I
don't think the LTL capacity leaves as much as truckload
(30:27):
maybe finds equilibrium. It's probably the best thing for LTL.
Speaker 2 (30:30):
Right And when you when you talk about you know,
excess capacity, and you mentioned Yellow, and you know you
mentioned earlier that you guys, what thirty five thirty six
facilities do? You have to reinvest a lot of money
in those facilities and bring them up to sts standards
because you know, Yellow is famous for its trailers with
holes in it and any really old truck. So what
(30:51):
were their facilities like?
Speaker 4 (30:53):
So the facilities they all depended. You know, some in
the south didn't have some of the snow, you know,
asphalt cracks that some of the northern ones had. I mean,
each one was its own animal. But we have put
a lot of money into them. You know. The one
thing for Estes is we're always thinking long term. Being
(31:13):
debt free makes it really easy for us to say,
let's put ten million into this facility because we're going
to be here for forty years, right, So we have
we have put a lot of money into them. One
of the reasons you do that is the best time
to do that is before you move in. Once you've
moved in, it's really hard to invest and do it
(31:33):
without disrupting the operation. So they weren't perfect, but the
bones were good, the concrete slab for the dock was good,
and there was a lot of positive obviously because we
spent I don't know, close to three hundred million dollars
doing this, so we definitely bought something that had value,
but it did require some work. But Lee, you mentioned
the trailers, We've actually bought over seven thousand of their trailers,
(31:57):
not the ones with the holes in them, but you know,
they had bought their banks had a lot of least
equipment from like twenty seventeen to twenty twenty, and then
when Yellow got that loan from the government, they bought
a lot of equipment, so they had a lot of
newer equipment. And because we've continued to grow, we saw
(32:18):
a really strategic opportunity to dip into that and are
very excited about our trailer fleet from that perspective.
Speaker 2 (32:25):
What is the average age of your tractor and trailers?
Speaker 4 (32:29):
Yeah, I mean our tractor's age, it's about maybe four
and a half five years of age. We will keep them.
We've been known to keep them fifteen years. But when
you look at our new trucks basically go into our
line haul, our city to city operation that get most
of the miles, and then as they age down, they
(32:51):
move into our city fleet where they get less miles
and can be maintained, you know, kind of close in
one facility all the time. So both tractors and trailers
got really expensive during the pandemic. I mean, trailer prices
went up sixty seven percent, and normally when they go
up that high, you would at least hope that you
(33:12):
could buy as many as you wanted, but they were saying, nope,
this is the price, and you only get three hundred trailers.
So it made it very hard on all the carriers
to create capacity. So we ended up refirming a lot
of equipment and doing whatever it took to keep the
fleet moving. But with this Yellow purchase, it's it's changing
(33:33):
that paradigm where we're going to be able to get
rid of our older trailers and move that age up
quite well. We did not buy a lot of their tractors.
Trailers are a little bit more interchangeable, whereas a tractor
you want the right engine, spack, you want the right
all the things that you do each day, and a
tractor is pretty critical. So instead we've been buying a
(33:55):
lot of new tractors because both tractor and trailer capacity
has really opened up this year and you can basically
buy as much as you want, and so that's freed
us up to buy the right things that we needed
to buy new while still being strategic with us where
it made sense.
Speaker 2 (34:12):
When you're looking at equipment, you know, there's a lot
of talk about, you know, trying to lower emissions, and
there's a new EPA mandate in twenty twenty seven. What's
as this approach to that. What are you guys doing?
What's important to ask to us?
Speaker 4 (34:25):
Man? I love this topically, and I love it because
I think there's a paradigm shift that everybody in the
discussion needs to take. When I share. When I say
the word sustainability in one of my meetings, I can
see half of the room get really excited, and I
can see half of the room completely shut down on me.
(34:47):
And there's kind of this belief that, like sustainability is
either like the most important thing that our world is facing,
or it's something that's not even true. And this is
a place where generations play a role, uh Lee. There
there is kind of generationally different beliefs around sustainable goals
(35:09):
and what is needed. And so I've been able to
step in the last couple of years and say, hey,
we're debt free, we want to do good in our world,
so let's lean in. But there are so many win
win wins out there. Like my commitment to our employees
is that they'll never hear me say I was going
to give you a raise, but instead I decided to
(35:31):
do something for the world right or to be greener
as a company. We are going to take care of
our employees. That is the that is that is my
responsibility as an employer. But within that so many win
win wins. So we're we're adding solar panels at a
lot of facilities. We've gone pretty big with electric forklifts.
(35:52):
We're now starting to do electric yard trucks. We actually
was were transport topics first and aull Giral winner of
their Pathfinder Award for sustainability, and it's exciting for me.
The only caution that would I would make around it.
The thing that maybe I struggle with with California, and
I'm sure a lot of your listeners know about the
(36:13):
California electric tractor requirements over the next ten to fifteen years.
The thing I don't like about it is when you
make a goal fifteen years from now. I strongly believe
in humankind being really smart, like we have brilliant, amazing
people that live and breathe in our world today. And
(36:36):
so to say that electricity is going to be the
solution for fifteen years from now, I think misses an
opportunity for us to dream and an opportunity to do
something that might be even better. What I've read is
that electricity today for trucks doesn't pull out nearly as
much CO two as you would like to think. I've
(36:57):
heard numbers around forty percent that because of how we
create electricity today, an electric truck only pulls out forty
percent of the CO two. And clearly, if we want
to make a significant difference in our world, we've got
to think about other options. So there are things like
we're more carbon that's actually putting a device on the
back of the tractor that pulls out sixty to eighty
(37:19):
percent of the CO two, but it allows a diesel
engine to still work, so you can do all the
things that you need to do, and that CO two
can then be sold to soda companies because that's what's
in carbonation of our water, you know, with Coca cola
and stuff, and you can put it in concrete and
actually make money on the carbon that you're burning, which
is fascinating, right, So that would be my one caution
(37:43):
is we thought five years ago natural gas was a solution,
and now we've kind of come to California gives us
zero credit for the one hundred and fifty two hundred
natural gas trucks that we have. So for me, the
focus is how do we do great things but continue
to drive for innovation and and do it in a
(38:04):
way that's going to be affordable but also great for
our world.
Speaker 2 (38:07):
So what are you trying to do to change that?
Are you like involved in you know, like the ATA
or other lobbying groups to to kind of shape what
legislation is.
Speaker 4 (38:19):
Going to look like. Yeah, so I mentioned were more
of carbon. That's that's a partner of ours. We're listed
as the number A four or fifth provider that's going
to get to test out their tractors. So part of
it is leaning in with great stories like that to say, hey,
(38:40):
let's let's kind of continue to drive that. I know
writers kind of a big driver of that as well,
and so I think that's that feels like my job
is to continue to find new ways to push us forward.
I want to give California credit though. I mean, if
you remember the trailer skirts that came along, and every
van needs a trailer skirt, and it carried the whole
(39:01):
trucking industry kicking and screaming, and then we went and
tested them and they were brilliant. I mean, they saved
us a ton of money putting them on, and now
all of our trailers basically have skirts, right, And so
so I feel like one of the main things I
get to do is test a lot of things and
then things that work share it with the world. I mean,
(39:21):
I could maybe see it as a competitive advantage for myself, like, hey,
don't tell anybody how great this is, but I feel
like we all win when we do things that are
more sustainable in that regard.
Speaker 2 (39:31):
And so, you know, we're wrapping up here. You've been
working at the company, probably since you were a kid.
I'm assuming what was the most difficult job for you
to do at your time? And asked us. I know
when I when I was in college, one summer I
worked the graveyard shift at an LTL carrier and I
(39:52):
had a load and unloaded trucks and it was like
one hundred degrees in there. And after that job, I
became a honor student.
Speaker 4 (40:00):
Yeah, exactly.
Speaker 2 (40:01):
It is very hard work and I am not made
for this. So what was the hardest thing you had
to do?
Speaker 4 (40:06):
I mean, first, I would say that every job that
I've done has come with its challenges. The two hardest.
Driving a truck was hard, especially night driving. You know,
being able to stay awake and stay focused. It was
a hard job. And you know, how do you eat healthy?
How do you exercise? I mean, all those things were
hard about driving, But the one that's probably my hardest
(40:29):
job was being a terminal manager. And the reason I
say that is in that role, every day you have
customers complaining about something, or you know, there's a fire
and having to be the firefighter to save the day.
But also think bigger than that and figure out how
do I build processes that my people are going to
(40:51):
kind of lean into and follow, and then how do
I take care of my people. If you're doing it
the right way, every day you're solving. You're solving problems
to make your people love you more and make your
customers fall in love with you. And I found many
days I'd work twelve hours and skip lunch and breakfast
(41:12):
and come home and just have dinner. I lost forty
pounds while I was a manager, so that it was hard,
and kudos go out to them because you know, in
corporate there are hard parts to my job for sure,
but mineor big picture and our manager's day in day
out getting the real work done as it was my
(41:36):
hardest job for sure.
Speaker 2 (41:38):
Is there anything that keeps you up at night as
a senior manager at US Express.
Speaker 4 (41:43):
Well, we didn't talk about our cyber attack, but we
did have a cyber attack that happened October first of
last year. So we're coming up on a year which
I joke all the public carriers are going to have
a much harder comp in October because they handled a
lot of our business. We lost half of our business
overnight the moment the cyber attack happened. And so this
(42:04):
whole year I've spent a lot of time with the
team just improving processes. And you know, cybersecurity is one
of those things that you can do everything in your
power and you still have to, you know, recognize that
in any moment, something could happen, and so that one
keeps me up at night. I'll tell you the flip
side of it, though, is that month I have never
(42:28):
felt such support from our employees. We actually were doing
an employee survey during the cyber attack, like right before
the cyber attack, and we took survey results before and after,
and our employees gave us four points of a higher
score post the cyber attack. And our customers have come
to me so many times saying like we actually believe
(42:48):
in trusting you more watching you go through that. So
it keeps me up at night. But I also have
learned that, like anything, you can kind of survive and
work through. But that's one that Lee I would prefer
to never have to do again.
Speaker 2 (43:02):
All right, Well, let's fingers cross and last question would
I like to ask most of my guests, do you
have a favorite book on either like leadership or transportation
that you know really hit your core?
Speaker 4 (43:15):
Transportation, I mean, I mean a lot to me that's valuable.
There are like some of the news articles, but a
book that I love start with why is I know
a famous one, but this next generation of leaders aren't
looking just for a paycheck. They're looking for something that's
going to transform our world for the better. And so
(43:37):
for me, when I read the book, start with why
it changed my trajectory of how I'm going to lead
the next thirty years. That one of my biggest jobs
is to paint the picture of how our people are
changing our world and being essential, and how can I
help them get all the barriers out of the way
(43:58):
so that they can do amazing things. So I love
that book and it transforms how we do business.
Speaker 2 (44:04):
All right, great, this is a great conversation Web. I
really appreciate your time.
Speaker 4 (44:09):
Yeah, thanks Lee, this was a privilege all on my side,
and love your show and appreciate all the time.
Speaker 2 (44:15):
All right, great, and also want to thank you for
tuning in. If you liked the episode, please subscribe and
leave a review. We've lined up a number of great
guests for the podcast. Check back to hear conversations with
C suite executives, shippers, regulators, and decision makers within the
freight markets. Thanks everyone, and take care.
Host
Lee Klaskow
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