February 13, 2024 • 32 mins
Less-than-truckload (LTL) pricing power and share gains from the demise of Yellow last year could position carriers for earnings growth and margin expansion in 2024. In this Talking Transports podcast, Saia President and CEO Fritz Holzgrefe joins Lee Klaskow, Bloomberg Intelligence senior transportation & logistics analyst, to discuss the outlook for the LTL markets and the company’s expansion prospects. Improved service and increased reach has helped Saia offset inflationary pressures, with an 8.7% increase in contract renewals in 4Q. It plans to open 15-20 new terminals to better serve customers and provide a springboard for organic growth. Holzgrefe also talks about how the company is investing in facilities, tractors, trailers and technology to position for expansion.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
Hi everyone, and welcome to Bloomberg Intelligence Talking Transports podcast.
I'm your host, Lee Klasgau, senior freight, transportation and logistics
analysts at Bloomberg Intelligence, Bloomberg's in house research arm. We're
delighted to have Fritz Holdgref, President and CEO of SIA.
Fritz joined SIA in twenty fourteen as VP and Chief
(00:28):
Financial Officer. Since then, he held other senior leadership roles,
including COO. He assumed the role of president and CEO
in twenty twenty. He earned a Masters of Business Administration
from Washington University in Saint Louis. In addition, he earned
a Bachelors of Arts and Economics from the University of
Notre Dame. So I guess that's a go fighting Irish.
Speaker 2 (00:48):
Absolutely all right, Irish.
Speaker 1 (00:50):
Well, thanks for joining us on the podcast.
Speaker 2 (00:53):
Fritz.
Speaker 1 (00:53):
It's great to have you.
Speaker 2 (00:54):
Here, great to be here, Thanks for the opportunity.
Speaker 1 (00:57):
So you know, people might not recognize SAIA. It's not
a household name. It is for me, even though sometimes
I mispronounce it. Give the my Jersey accent. But if
you see them on the road their trucks, can you
talk a little bit about Saya's business.
Speaker 2 (01:11):
Sure Saya is a one hundred year old company founded
in Homa, Louisiana. We're in the less than truckload space,
so we're operating a network of terminals across the country
moving freight from all varieties of customers, from consumer package
goods companies to industrial manufacturers. We carry freight to thousands
(01:35):
of customers every month. Are freight typically weighs thirteen hundred
pounds and we usually drive eight nine hundred miles to
make that delivery for the customer. So it's a business
that reflects the US economy and covering all sectors of
that economy.
Speaker 1 (01:50):
Right, And I'd add Sia as a publicly traded company
as a market cap around fourteen billion and trades at
the ticker SAIA. And so it's been a real interesting time.
I'm in the lesson truckloader we're going to say now
the LTL market. Because of a bankruptcy of Yellow, which
was one of the largest LTL carriers in North America
back in last summer, Saia bought a bunch of terminals.
(02:15):
Could you talk about you know what you bought, why
you bought it, and how it's going to benefit you.
Speaker 2 (02:19):
Absolutely so SIA has been on a kind of organic
growth strategy for several years, starting in twenty seventeen. We
had operated in thirty four states up until that point,
and we were determined as we invested in the business
and looked for growth opportunities, we were looking for opportunities
to expand to become a national carrier. So we started
(02:40):
in twenty seventeen with our northeast expansion, adding four terminals
in Pennsylvania, New Jersey. Now, as we developed that strategy
over time, it became increasingly clear to us that we
could provide a lot of value to our customers growing organically,
adding terminals, incremental service and coverage to our customers. When
the yellow Back sup happened, there were naturally they're going
(03:03):
through the process of liquidating the real estate, and that
was part of our growth strategy around organically growing, so
we saw an opportunity participate in that process. We ended
up acquiring seventeen terminals. Also, we acquired eleven least terminals
as well, so we'll be operating twenty eight additional terminals
(03:23):
over the next couple of years that have come out
of that liquidation process.
Speaker 1 (03:27):
And geographically are they in a specific area. Are they
just all over the United States?
Speaker 2 (03:32):
Big chunk of them are in the center of the
country covering the Great Plains. It was an area that
we had not filled in on our map. But there
are also some strategic terminals and markets that we already serve,
but we're just moving closer to the customer with these acquisitions.
So it's a really exciting opportunity for us to provide
enhance service to our customer set.
Speaker 1 (03:50):
And will this bring you into all the states?
Speaker 2 (03:52):
Yes, we'll be in all forty eight states as lower
forty eight.
Speaker 1 (03:55):
Right, and so do you need to rely on third
parties to make picks up in deliveries anymore or you're
still going to have you still have more to fill
out in all the states that you're maybe newer in.
Speaker 2 (04:08):
You know, well, in some spots we'll continue to use partners.
But the exciting part about this expansion is this allows
us to really take that freight from pick up the
delivery in a SIA network and ASIA equipment. The customers
get a better experience from that, and we're excited about
that opportunity growth our customers. As we enhance our coverage
(04:30):
in our service territory, there may be some markets where
we continue to partner with other carriers, but this is
a really interesting opportunity for us to move closer to
the customer.
Speaker 1 (04:42):
Yeah, I would imagine for the industry it's at once
in a lifetime opportunity for a lot of companies. So
Yell is not done liquidating, it's it's real estate footprint.
I'm assuming you guys are going to take a hard
look at all the other facilities that might come up
for a bid.
Speaker 2 (05:00):
You know, we have a pipeline of facilities that we
consider not only in this situation, but there are other
terminals that we have purchased from other of some of
our larger competitors or frankly, other businesses that have exited
the market. So this is an opportunity. It's just continue
to enhance our real estate development pipeline. There could be
(05:21):
some facilities there, but there could be facilities in other areas.
I would expect that over time we shall see these
as the industry absorbs this capacity, You'll see terminals trade
as somebody maybe trades into a larger facility exits a
smaller one. There may be opportunities for us as part
of that as well.
Speaker 1 (05:39):
Right in this Yellow event really consolidated or an already
consolidated market. Before the Yellow bankruptcy, the top ten LTL
carriers had about two thirds of the market roughly, so
that's getting even more consolidated. So obviously, so you're getting
the facilities, but you're also getting some of the volume too, right.
Can you talk about the volume that you've picked up
(06:01):
since the Yellow bankruptcy and what that's meaning to your
you know, the numbers that you put out, whether it's
tonnage or shipments.
Speaker 2 (06:07):
Yeah, I mean, if you look at our our sort
of performance over the last couple of quarters, you clearly
see the impact of our growth is as we've taken
on share that was with Yellow and frankly in other
areas in the market as well. We're excited about that
opportunity and it's important upon it for us. At this stage,
we're spending a lot of time making sure that we're
(06:29):
providing the great level of service the customers expect. It
may be improved service compared to what they were getting before,
but then it's also important for us to make sure
we understand the impact of that freight in our network
because we're making a lot of investments in the network
to support this growth. So it's going to be important
that we get that new revenue, those new shipments priced
the right way and in a position that we can
(06:52):
continue to invest in our business and support that growth
for our customers.
Speaker 1 (06:56):
And it was there a big difference between the new
tonnage that you're bringing on from Yellow compared to your
legacy business, Like is it are they lighter per shipment weights?
Are they less? Are they they less on palettes?
Speaker 2 (07:12):
You know, is there any difference. It's been interesting because
I think Yellow had maybe more of an exposure to
retail than maybe we did. So what we've seen is
we've grown our share of wallet, if you will, some
of the customers that retail customers that had did the
business with Yellow and us, so we picked up additional
(07:33):
retail accounts there. It shows up on our weight for shipment,
which is down at bit year over year about four
and a half five percent. So you know, it's something
we'll manage, continue to manage. It's it's a good opportunity
for us though.
Speaker 1 (07:46):
Yeah, and LTL tends to be, you know, more weighted
towards the manufacturing industrial economy. Roughly what it's the split
of size freight and customer mix.
Speaker 2 (07:57):
You know, we would we typically say two thirds it's
one third two thirds industrial, one third retail. That you know,
we don't really spend a lot of time on that
because if you think about some of our customers, maybe
you have a home goods retailer that is shipping say
lawnmowers that comes out of a manufacturing plant. You know
(08:18):
that maybe that's an industrial freight, but it's ending up
in a retail space. So it's more important for us
to understand what that freight is, make sure we provide
the service that's needed, make sure we charge for it.
Speaker 1 (08:30):
And how do you how do you measure service when
you're looking inward, Well.
Speaker 2 (08:35):
We measure it in a lot of different ways, but
the fundamental measurement in the industry often is claims. So
we would have claims would be the amount of damage.
And we have an industry one of the industry leading
claims ratios. But if you really study a customer, customers
care about a few different things. Pick the freight up
when you say you're going to pick it up, be available,
(08:55):
deliver it when you say you're going to deliver it,
and don't break it in the middle. So we measure
it at every step way in the process.
Speaker 1 (09:01):
All right, great, So you know when you look at
freight companies, everyone looks to you guys to say, how's
the economy. So, you know, the freight cycle has been
relatively weak. The impact of Yellow is kind of really
mitigated that weakness. You know, it's early twenty twenty four.
What are your customers telling you and what's your crystal
(09:22):
ball telling you about the freight economy?
Speaker 2 (09:24):
You know, I think it's a great observation you make,
is that a lot of what we're seeing right now
is the exit of Yellow and kind of the disruption
in the industry. You know, the underlying dynamics in the
business sort of the macro situation remains kind of tepid
in terms of and I think it's pretty consistent to
what we have seen prior to that. Maybe a little
(09:46):
bit more growth now. Our customers are a little bit
more optimistic. Now, we're really optimistic about what we bring
to the market. If you go back to the first
half of last year, prior to the disruption, sia's performance
rolled for the industry was stronger. I mean, we were
leading in you know kind of performance versus the rest
(10:09):
of the industry. We saw share gains there. We think
that underlying growth story that we have going on is
going to help us drive growth through the balance of
this year. So if we get to a place where
maybe things are a little bit more optimistic in the
second half, which could be I mean, I think if
you follow the interest rates, you have to think that
at some point it's going to be a bit of
a stimulation in the economy in the second half of
(10:30):
the year, potentially we stand to benefit. But in interim
we've got a lot of opportunity as it is. So
we're managing this around focusing on the things that we
can control, so that if there is an uptick in
the economy in the second half of the year or
into twenty five, we're well positioned for it.
Speaker 1 (10:48):
Right and SIA has been considered within the freight transportation
logistics market a kind of growth story. You know, we're
looking five year out it stocks up around seven and
twenty percent versus the BI LTL index, which is up
three hundred and forty percent, and the S and P
five hundred which is up eighty five percent, So you
guys are definitely outperforming not only the broader market, but
(11:10):
your peers because of that growth story, So can you
talk about the growth for twenty twenty four, What are
your expectations. Can you give any insights into, you know,
where you see growth in twenty twenty four From Sia's perspective.
Speaker 2 (11:26):
You know, you're going to see growth because we're going
to open fifteen to twenty facilities this year. That's going
to be a important part of what our messaging is
to our company around focusing on the customer. But I
think the underlying growth in the business is pretty compelling
as well. In the last two years, we've opened up
twenty facilities, which quite frankly this stage are we think
(11:48):
there's still a lot of opportunity in those facilities. So
if you couple that with what we're opening, you know,
I think there's a growth through growth for us through
twenty twenty four. I think we have potential to be
a you know, kind of leading and sort of growth
story in our space, in the LTL space. As we
continue to sort of optimize those facilities that we open,
(12:11):
maybe that you know, we'll be able to drive operating
income improvement at the same time. So we're exciting about
this opportunity for us you know, the macro situation. If
it slows down, that'll have an impact on us. But
I think that there is an underlying momentum in our
business that you know, should carry us pretty well in
(12:31):
twenty twenty four.
Speaker 1 (12:32):
Are you hiring a lot for these new facilities or
it's kind of like there's a lag there because obviously
all the facilities are going to open up day one.
You guys are got to invest money in some of
these facilities. So how's the labor market from a freight
transportation standpoint.
Speaker 2 (12:45):
You know, we've we've got a great story to pitch
to employees. New employees talk about the success of the company.
So when we go and recruit and all these new markets,
which is what we'll have to do, we talk a
lot about what the SIA culture is, customer first, taking
care of each other. Those are things that are really
part of the fiber of the business. So we've got
(13:07):
a compelling opportunity for folks that want to have a
career in transportation. So when we open up in these
new markets and every one of the terminals that we're opening,
we'll have to do some recruiting either in the facilities
that are in a green space for us, or there
may be in a market where we're already serving but
we're moving into a nearby facility. We may have employees
that transfer to the new facility, but we'll still be
(13:30):
recruiting as we expect growth out of both both the
you know, the original the and the newer facility. So
I think for us across the board, we're recruiting. We've
been able to because of this story that we have,
and we've been able to provide employees around a great
place to work. It's been a compelling and we've been
able to an argument for us and that we've been
able to grow with that. So it's it's been a
(13:51):
good good space for us.
Speaker 1 (13:52):
And I'm assuming it's a it's a good time to
be hiring truck drivers right now, given how difficult the
truckload market is.
Speaker 2 (13:58):
Yeah, and you know you can it's a classic LTL position, right,
so you can talk about Hey, listen, this is a
great place to have work life balance, You be home
every day, you have the opportunity to get a very
competitive compensation structure, great benefits in a growing business. Those
are all positives, right.
Speaker 1 (14:17):
And so if I remember it's correctly when I was
a college kid, I worked for an LTL carrier, worked
the graveyard shift. It's a now defunct carriers. The Teamster
organization is no longer around, called APA. The line haul
usually was the better paying job, but the pick up
and delivery is probably the better quality of life, if
you will, because you're home every night. Is that still true?
Speaker 2 (14:39):
Very similar? You know, we try to organize our line
hall network, so all those that team drives at night,
you know, they're home every you know, every morning or evening. However,
the schedule works, so you know, there's a good chunk
of our guys that are on that kind of a schedule.
Now there are others that are what we call system
drivers that you know, continue on for maybe are gone
for a week, but there or a few days anyway.
(15:02):
So it's it's important for us, you know, as we
developed maturity in our network, what we can do is
create those opportunities for a line haul driver to be
home every day.
Speaker 1 (15:12):
Okay, and let's talk a little bit about pricing. So
pricing has been pretty fantastic. You know, if I remember correctly,
on your earnings call, you said contract rates were.
Speaker 2 (15:23):
Up eight point seven.
Speaker 1 (15:25):
Eight print seven percent. XPO just came out with a
number of this morning at nine percent. You know, people
might be taking a step back and being like, Wow,
that's that's extremely good pricing. Why why is pricing so
good right now? And especially why is it good for
for Siah. How are you able to increase the rates
that you're charging your customers in this environment?
Speaker 2 (15:47):
Well, you know, it all starts with the service you're
providing the customer. So if you are not providing high
levels of service, you know I discussed earlier, I talked
about picking up freight, delivering what we customer expects, no damage,
easy to do business with. You accomplish those things, you
have the opportunity to charge for that. In the environment
that we're in right now. You know, I think that
(16:10):
by and large, the best companies are focused on service
or providing that sort of incremental coverage to a customer
that allows you to charge for the service. Now, it's
fundamental underneath this business. It's highly inflationary. You know, you've
got to invest in technology, you got invest equipment, you
got to recruit and retain people that are you know,
(16:32):
the best in the business to be able to differentiate.
All those things are inflationary. So you have to keep
the pricing there in order to generate the appropriate return
for that kind of a business. But fundamentally, you can
do all those things in the inflationary business, but if
you're not providing great service, you're not going to get
the price. So in this environment, I think it's a
(16:54):
bit more focused there. But I think there's also the
realization that fundamentally, this is a business that reques requires
a lot of investment, and in order for that to happen,
people have to get the appropriate return.
Speaker 1 (17:05):
Yeah, and also we mentioned earlier it's a pretty consolidated
market and all the players are very disciplined and rational
when it comes to pricing because they all have their
ROI benchmarks that they have to overcome to make that reinvestment.
So very different than the truckload market currently. So your
o R, if I got this right, it was eighty
(17:25):
four percent last year. Is there anything structural preventing you
guys from getting to a sub eighty into the seventies
because some of your competitors, you know, have lower ors
operating ratios.
Speaker 2 (17:39):
Absolutely, we recognize and see their performance and we say
that we've got to get there. Side needs to be
There are services on a par with those other competitors,
are you know, high performing companies. We don't see a
way or see a reason why we would have a
limitation to drive the o R in this business into
(17:59):
the seventies. I mean some of our best operating regions
of the country right now already operate in the SEVENTIESK
And so for us, you know, as we continue to
develop the maturity of our network, you know, we'll drive
the whole company performance to that kind of level it
needs to be because your customers are getting that level
of service from us, and it just that's the appropriate
(18:20):
return for this kind of a business.
Speaker 1 (18:22):
Is there any like low hanging fruit that you know,
you know you're doing and in that region where you
are in the seventies, where you're you're maybe doing it
in the high eighties, Is there is there a low
hanging fruit that you guys can see, whether it's purchase, transportation,
I don't know.
Speaker 2 (18:37):
You know, the big the biggest thing in the markets
that we have the longest history. So you take the
sort of Texas region, Gulf States, Uh, those are the
areas that we have the best density. Those are the
areas where we have the best brand recognition. We've got
the team that has been in place the longest, you've
(18:57):
got the consistency that comes with that, and you've got
a very very high level of service. Those are our
best performing network or business parts of our business. They
lead in all the service metrics, not surprisingly, so as
we continue to repeat that model in other regions of
the country, that will drive the pricing to where it
needs to be and that will get us to the
(19:19):
finding that freight in that mix of business that we
can generate those kinds of returns. So it's I would
tell you that I think it's really more about sort
of network maturity over time as we build densities and
markets that we haven't been in as long as we'd
like to have been. We're developing that now, but we
see a lot of runway for those business. Customers are
really excited to do business with sayah, and we see
(19:43):
it in our sort of continuous tracking of their feedback
on how we're doing. So as we can replicate that
in more markets, as we add all these terminals, I
think the opportunity for us to perform at that level
company wide, it's definitely right there for us.
Speaker 1 (19:58):
Okay, And while you're mostly an lt Carrie, you do
have other businesses brokerage, Expedited. Can you talk about the
other businesses, how they're doing, what percentage they make up
of your total revenue and maybe your total ebit.
Speaker 2 (20:11):
Yeah, so that in total, those group of businesses are
a little bit sort of three to five percent of
our totalk and what's really important about those businesses for us,
it's all about our customer focus. So these are opportunities
for us to provide an incremental service to our customers,
be it logistics or truckload brokerage or some of our
(20:33):
specialty services around Expedited or whatever the customer might need.
Part of that is just developing that relationship with the
customers that they understand that if they have a supply
chain issue or they have an opportunity that they need resolve,
we're there to help them facilitate their success. So we
view that as not so much of a segment so
(20:54):
to speak, is more of a compliment to what we're
already offering the customer. So we view it that way.
So that'll be as we continue to mature as a company,
that'll become a bigger part. But fundamentally, we're an LTL business,
and we're providing additional solutions for customers.
Speaker 1 (21:11):
Right and does and I'm assuming the LTL business feeds
the other businesses, and the other businesses feeds the LTL business.
Speaker 2 (21:18):
Absolutely, it's hand in hand. And it works best when
a customers when they realize that, hey, this LTL business
works really well with the logistics problem they need help solving,
we can combine those services and that's a win for
the customer and that works for us to have.
Speaker 1 (21:36):
You guys ever really used M and A in terms
of growth, whether it's into a segment or the LTL network.
Speaker 2 (21:43):
So if you go back in the history of Siah
and you really look at what we did in the
sort of two thousands, we cobble together are the first
parts of our national network through acquisitions. The financial crisis
happened that kind of put all that on the brakes
on it, so to speak, and we had to kind
(22:03):
of survive that process because we acquired all those businesses
right as the economy slowed down into the crisis. So
the company kind of spent the period of you know,
twenty eight, nine and ten surviving and eleven twelve thirteen
was a period of stabilizing, starting to return the investment
in the business, bringing down the fleet age. We considered
(22:26):
M and A through the sort of mid twenty tens.
We've acquired some of our logistics and brokerage businesses at
that point in time. But then we figured out in
sixteen and seventeen that our opportunity to grow was really
about developing an organic pipeline in an organic structure that
we followed the strategy. If followed, we can control what
(22:49):
we're providing the customer in terms of making sure we
provide that consistent service. Most importantly, also replicating the culture
that Saya, you know, that sort of focus on the customer,
and you organically grow, you hire, you train, you position
the team to be successful and provide that uh replicate
that service for the customer, rather than trying to integrate
(23:12):
an acquisition that perhaps, you know, maybe creates a disruption
for the customers. You don't want to do that. So
when we've done that in our sort of organic strategy,
we've found that we've we've gotten pretty good at that.
So when this yellow opportunity came together, this was really
exciting for us because this kind of accelerates our sort
of growth trajectory.
Speaker 1 (23:32):
And you know, you mentioned earlier reinvesting in the business.
You mentioned technology. Can you talk a little bit about
technology and how it relates a side. Do you guys
use off the shelf program or you guys are you
guys building your own proprietary technology and what does that
technology do for you that you're that you're using or building.
Speaker 2 (23:52):
You know, I tell people that are outside of the industry,
they say, tell me, tell me about trucking. I'll tell them, Well,
there's there's a lot of technologlogy in this business. There's
a lot of data optimization, and you could argue that
this is actually a big data play as much as
it is a asset play. You know, if you think
about you know, SIA will deal with in a given month,
(24:15):
maybe forty thousand different ship to locations. We're going to
handle thirty five ish thousand bills a day. We're going
to run that through a network of one hundred and
ninety four terminals. Soon to be, you know, we're going
to add another fifteen to twenty to that mix. You're
going to say we're going to travel nine hundred miles
and carry shipments the weigh fourteen hundred pounds. I mean,
(24:37):
there's a lot of data and how do you optimize
all that? So we have invested quite a bit of
technology around data optimization tools that allow us to better
schedule our pickup and delivery networks, that allow us to
better schedule our line haul networks. At the same time
taking all that data scheduling data, you're also taking the
time to collect the data around what's going on with
(24:59):
the freight, your pick, what are the dimensions of the freight,
where is it going, what are the delivery locations? And
from that you're modeling not only the operations in terms
of what type of equipment you have to use, but
you're also focused on pricing and how do I make
sure that I charge for all the services that we're providing.
Is the does the delivery go to a limited access
(25:21):
location that requires a liftgate? Well, those are all special
services and those require specialized assets that all deserve a
return for those assets. So that takes you that operating
data turns into pricing data, and then as you put
all that together, that's all about driving profitability. So it's
a it is a massive data optimization problem problem. It
(25:45):
is artificial intelligence on a daily basis. Dealing with all that,
and so I think it's uh, it's a different differentiating
thing for us.
Speaker 1 (25:54):
And roughly, what what's your CAPEX spend in this did
you give out a guidance?
Speaker 2 (25:59):
Yes, So for the for twenty twenty four, we're going
to approach a billion dollars and spend. This is an
interesting year for us. We just spent over two hundred
and fifty million dollars to acquire facilities. We're going to
have to upgrade those facilities to get them ready to
operate like SIA facilities. With the big step up and
volume that we had last year, we're gonna have to
make the biggest investment in our fleet that we've ever
(26:22):
had around everything from power to trailers, most significantly trailers.
All about providing service and flexibility for our customers, and
we'll continue to invest in it and all the data
analytic tools that we use every day.
Speaker 1 (26:35):
Is it hard to get equipment because you know, a
couple of years ago, during the pandemic, it was impossible.
It seems like it's gotten better, is it? Are you
getting what you want or are you still await?
Speaker 2 (26:44):
So far, we're getting what we want and it's you know,
we're focused on making sure that that trailer pool is
one that is all about availability to the customer. Customers
care about that.
Speaker 1 (26:56):
And can you talk about a life of the life
of a truck within Saya's network as it starts in
one business and kind.
Speaker 2 (27:04):
Of absolutely, So, you know, the first couple of years
of the tractor's life, we're going to run it in
our line hall network. And the idea with that is
that's the peak performance of the vehicle. It's uh, you know,
the best fuel economy, latest safety technologies on board, highest
level of reliability for that equipment. And then as it ages,
(27:26):
it moves out of the line hall sort of role
and it moves into sort of line hall city role
until ultimately it graduates to our city operation. And in
the city operation, you know, the equipment's not on the
road as long you can manage the reliability a little
bit easier in that environment fuel economy. You're unfortunately operating
(27:47):
the city, so you're not going to get high levels
of fuel economy anyway there, but you're going to get
decent fuel economy, So you kind of manage the tractor's
life in that way. So you know, our fleet tractor
age right now is right around four. We like that,
but when we're done with a piece of equipment, it's
it's fully utilized.
Speaker 1 (28:04):
Yeah, that's good. Are you guys testing at all EVS?
Speaker 2 (28:09):
We are we you know, we we don't know that
we're an earlier adopter per se, but we would say
we're a really fast follower. We're have tested, uh, a
fair amount of both E E V and now more
recently some hydrogen equipment. You know, I think that the
you know, there's some there's some promise there, but I
(28:30):
think that, you know, the the economic viability of that
equipment yet is still to be determined. And I think
at the same time, you know, we have to understand
really fully what the performance characteristics are of it. How
will operate in extreme environments is a really critical uh focus?
Speaker 1 (28:49):
Right, And I'm assuming EV's maybe work for pick up
and delivery, but not so much in the line haul. Yes, okay,
So you know, obviously you're you're reinvesting a lot into
the network. What other capital priorities do you have?
Speaker 2 (29:06):
Do you do buybacks?
Speaker 1 (29:07):
Dividends?
Speaker 2 (29:08):
Right now, we have a I think a pretty compelling
growth pipeline, both in real estate and sort of technology
and fleet that that our investors would say, or it's
an optimal return for them is to focus on those
sort of capital deployment. But listen, we also understand very
clearly that we are stewards of the shareholder's capital. They'll
(29:31):
come a day where we're going to have to figure
out ways to balance that. Today, there's some really interesting
opportunities for SIA, So our deployment of capital today is
very focused on growth.
Speaker 1 (29:43):
All right, And so some just switching gears a little bit.
So you know, you've been with Taia for a while,
you came on as a CFO. Were you in transportation
before that or was SAI your first fora into transports.
Speaker 2 (29:55):
This is the first time I've been in a transportation
focus business. But every business I've ever been in, a
great part of the value that provided the customer has
been about that supply chain partner and the transportation networks
that we utilized. So I probably somebody that understands and
appreciates the use of a good transportation partner, maybe more
(30:18):
than others. Right.
Speaker 1 (30:19):
And what do you do for fun when you're when
you're not running an LTL company?
Speaker 2 (30:24):
Well, I try to play golf. But that just tells
me I need to go back to work. That's your
handicap too high. It's about this today, it's about fifteen.
I think it's not very good twenty so, but you know,
I'll enjoy time with family, you know. It's uh, kids
(30:46):
in college are graduating college. That's a lot of fun.
Speaker 1 (30:48):
Too, Okay, So you have a light at the end
of the tunnel. I do, kids, That's that's good. I'm
early on in that life cycle. So, you know, have
you read any books about insportation that you know you
kind of like, you know, wow, it was really eye opening,
whether it's fiction or nonfiction, you know, over the years.
Speaker 2 (31:09):
You know, I don't know that I have a specific
book about transportation that I would point out as one
that said, hey, this is what you got to read.
But what I would say this is that if you
read any book about either and I'm into sort of
historical economics industrial development, and if you look at it
(31:29):
over time and you look at all the great industries
that have been developed in the United States for around the
world for that matter, there has always been a significant
element of the supply chain that has facilitated that growth
or that enablement. So I have always gravitated to those books,
and I think if you if you spend time in
(31:49):
that space, studying those markets and those economies, you quickly
see the importance of transportation and the value potentially provides
the part of the market.
Speaker 1 (31:59):
Yeah. I mean, that's one of the reasons why I
love covering. I love covering for so long. It's just
it makes me pretty knowledgeable about every other vertical that
my colleagues cover, so and it's a great kind of
vantage point to see where the economy is heading. So
it's a transports are great. Well, Fritz, I really want
to thank you for your time today. I thought the
(32:20):
conversation was fantastic, So thank you Lee.
Speaker 2 (32:23):
Thanks for the time, and I enjoyed the opportunity to
tell you about what's going on in Saia.
Speaker 1 (32:27):
All right, great, well, thanks for tuning in, and if
you like 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 suit executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
have an idea for a future episode, please hit me
up on the terminal or on Twitter at Logistics Lee.
(32:49):
Thanks everyone, and be safe out there
Hi everyone, and welcome to Bloomberg Intelligence Talking Transports podcast.
I'm your host, Lee Klasgau, senior freight, transportation and logistics
analysts at Bloomberg Intelligence, Bloomberg's in house research arm. We're
delighted to have Fritz Holdgref, President and CEO of SIA.
Fritz joined SIA in twenty fourteen as VP and Chief
(00:28):
Financial Officer. Since then, he held other senior leadership roles,
including COO. He assumed the role of president and CEO
in twenty twenty. He earned a Masters of Business Administration
from Washington University in Saint Louis. In addition, he earned
a Bachelors of Arts and Economics from the University of
Notre Dame. So I guess that's a go fighting Irish.
Speaker 2 (00:48):
Absolutely all right, Irish.
Speaker 1 (00:50):
Well, thanks for joining us on the podcast.
Speaker 2 (00:53):
Fritz.
Speaker 1 (00:53):
It's great to have you.
Speaker 2 (00:54):
Here, great to be here, Thanks for the opportunity.
Speaker 1 (00:57):
So you know, people might not recognize SAIA. It's not
a household name. It is for me, even though sometimes
I mispronounce it. Give the my Jersey accent. But if
you see them on the road their trucks, can you
talk a little bit about Saya's business.
Speaker 2 (01:11):
Sure Saya is a one hundred year old company founded
in Homa, Louisiana. We're in the less than truckload space,
so we're operating a network of terminals across the country
moving freight from all varieties of customers, from consumer package
goods companies to industrial manufacturers. We carry freight to thousands
(01:35):
of customers every month. Are freight typically weighs thirteen hundred
pounds and we usually drive eight nine hundred miles to
make that delivery for the customer. So it's a business
that reflects the US economy and covering all sectors of
that economy.
Speaker 1 (01:50):
Right, And I'd add Sia as a publicly traded company
as a market cap around fourteen billion and trades at
the ticker SAIA. And so it's been a real interesting time.
I'm in the lesson truckloader we're going to say now
the LTL market. Because of a bankruptcy of Yellow, which
was one of the largest LTL carriers in North America
back in last summer, Saia bought a bunch of terminals.
(02:15):
Could you talk about you know what you bought, why
you bought it, and how it's going to benefit you.
Speaker 2 (02:19):
Absolutely so SIA has been on a kind of organic
growth strategy for several years, starting in twenty seventeen. We
had operated in thirty four states up until that point,
and we were determined as we invested in the business
and looked for growth opportunities, we were looking for opportunities
to expand to become a national carrier. So we started
(02:40):
in twenty seventeen with our northeast expansion, adding four terminals
in Pennsylvania, New Jersey. Now, as we developed that strategy
over time, it became increasingly clear to us that we
could provide a lot of value to our customers growing organically,
adding terminals, incremental service and coverage to our customers. When
the yellow Back sup happened, there were naturally they're going
(03:03):
through the process of liquidating the real estate, and that
was part of our growth strategy around organically growing, so
we saw an opportunity participate in that process. We ended
up acquiring seventeen terminals. Also, we acquired eleven least terminals
as well, so we'll be operating twenty eight additional terminals
(03:23):
over the next couple of years that have come out
of that liquidation process.
Speaker 1 (03:27):
And geographically are they in a specific area. Are they
just all over the United States?
Speaker 2 (03:32):
Big chunk of them are in the center of the
country covering the Great Plains. It was an area that
we had not filled in on our map. But there
are also some strategic terminals and markets that we already serve,
but we're just moving closer to the customer with these acquisitions.
So it's a really exciting opportunity for us to provide
enhance service to our customer set.
Speaker 1 (03:50):
And will this bring you into all the states?
Speaker 2 (03:52):
Yes, we'll be in all forty eight states as lower
forty eight.
Speaker 1 (03:55):
Right, and so do you need to rely on third
parties to make picks up in deliveries anymore or you're
still going to have you still have more to fill
out in all the states that you're maybe newer in.
Speaker 2 (04:08):
You know, well, in some spots we'll continue to use partners.
But the exciting part about this expansion is this allows
us to really take that freight from pick up the
delivery in a SIA network and ASIA equipment. The customers
get a better experience from that, and we're excited about
that opportunity growth our customers. As we enhance our coverage
(04:30):
in our service territory, there may be some markets where
we continue to partner with other carriers, but this is
a really interesting opportunity for us to move closer to
the customer.
Speaker 1 (04:42):
Yeah, I would imagine for the industry it's at once
in a lifetime opportunity for a lot of companies. So
Yell is not done liquidating, it's it's real estate footprint.
I'm assuming you guys are going to take a hard
look at all the other facilities that might come up
for a bid.
Speaker 2 (05:00):
You know, we have a pipeline of facilities that we
consider not only in this situation, but there are other
terminals that we have purchased from other of some of
our larger competitors or frankly, other businesses that have exited
the market. So this is an opportunity. It's just continue
to enhance our real estate development pipeline. There could be
(05:21):
some facilities there, but there could be facilities in other areas.
I would expect that over time we shall see these
as the industry absorbs this capacity, You'll see terminals trade
as somebody maybe trades into a larger facility exits a
smaller one. There may be opportunities for us as part
of that as well.
Speaker 1 (05:39):
Right in this Yellow event really consolidated or an already
consolidated market. Before the Yellow bankruptcy, the top ten LTL
carriers had about two thirds of the market roughly, so
that's getting even more consolidated. So obviously, so you're getting
the facilities, but you're also getting some of the volume too, right.
Can you talk about the volume that you've picked up
(06:01):
since the Yellow bankruptcy and what that's meaning to your
you know, the numbers that you put out, whether it's
tonnage or shipments.
Speaker 2 (06:07):
Yeah, I mean, if you look at our our sort
of performance over the last couple of quarters, you clearly
see the impact of our growth is as we've taken
on share that was with Yellow and frankly in other
areas in the market as well. We're excited about that
opportunity and it's important upon it for us. At this stage,
we're spending a lot of time making sure that we're
(06:29):
providing the great level of service the customers expect. It
may be improved service compared to what they were getting before,
but then it's also important for us to make sure
we understand the impact of that freight in our network
because we're making a lot of investments in the network
to support this growth. So it's going to be important
that we get that new revenue, those new shipments priced
the right way and in a position that we can
(06:52):
continue to invest in our business and support that growth
for our customers.
Speaker 1 (06:56):
And it was there a big difference between the new
tonnage that you're bringing on from Yellow compared to your
legacy business, Like is it are they lighter per shipment weights?
Are they less? Are they they less on palettes?
Speaker 2 (07:12):
You know, is there any difference. It's been interesting because
I think Yellow had maybe more of an exposure to
retail than maybe we did. So what we've seen is
we've grown our share of wallet, if you will, some
of the customers that retail customers that had did the
business with Yellow and us, so we picked up additional
(07:33):
retail accounts there. It shows up on our weight for shipment,
which is down at bit year over year about four
and a half five percent. So you know, it's something
we'll manage, continue to manage. It's it's a good opportunity
for us though.
Speaker 1 (07:46):
Yeah, and LTL tends to be, you know, more weighted
towards the manufacturing industrial economy. Roughly what it's the split
of size freight and customer mix.
Speaker 2 (07:57):
You know, we would we typically say two thirds it's
one third two thirds industrial, one third retail. That you know,
we don't really spend a lot of time on that
because if you think about some of our customers, maybe
you have a home goods retailer that is shipping say
lawnmowers that comes out of a manufacturing plant. You know
(08:18):
that maybe that's an industrial freight, but it's ending up
in a retail space. So it's more important for us
to understand what that freight is, make sure we provide
the service that's needed, make sure we charge for it.
Speaker 1 (08:30):
And how do you how do you measure service when
you're looking inward, Well.
Speaker 2 (08:35):
We measure it in a lot of different ways, but
the fundamental measurement in the industry often is claims. So
we would have claims would be the amount of damage.
And we have an industry one of the industry leading
claims ratios. But if you really study a customer, customers
care about a few different things. Pick the freight up
when you say you're going to pick it up, be available,
(08:55):
deliver it when you say you're going to deliver it,
and don't break it in the middle. So we measure
it at every step way in the process.
Speaker 1 (09:01):
All right, great, So you know when you look at
freight companies, everyone looks to you guys to say, how's
the economy. So, you know, the freight cycle has been
relatively weak. The impact of Yellow is kind of really
mitigated that weakness. You know, it's early twenty twenty four.
What are your customers telling you and what's your crystal
(09:22):
ball telling you about the freight economy?
Speaker 2 (09:24):
You know, I think it's a great observation you make,
is that a lot of what we're seeing right now
is the exit of Yellow and kind of the disruption
in the industry. You know, the underlying dynamics in the
business sort of the macro situation remains kind of tepid
in terms of and I think it's pretty consistent to
what we have seen prior to that. Maybe a little
(09:46):
bit more growth now. Our customers are a little bit
more optimistic. Now, we're really optimistic about what we bring
to the market. If you go back to the first
half of last year, prior to the disruption, sia's performance
rolled for the industry was stronger. I mean, we were
leading in you know kind of performance versus the rest
(10:09):
of the industry. We saw share gains there. We think
that underlying growth story that we have going on is
going to help us drive growth through the balance of
this year. So if we get to a place where
maybe things are a little bit more optimistic in the
second half, which could be I mean, I think if
you follow the interest rates, you have to think that
at some point it's going to be a bit of
a stimulation in the economy in the second half of
(10:30):
the year, potentially we stand to benefit. But in interim
we've got a lot of opportunity as it is. So
we're managing this around focusing on the things that we
can control, so that if there is an uptick in
the economy in the second half of the year or
into twenty five, we're well positioned for it.
Speaker 1 (10:48):
Right and SIA has been considered within the freight transportation
logistics market a kind of growth story. You know, we're
looking five year out it stocks up around seven and
twenty percent versus the BI LTL index, which is up
three hundred and forty percent, and the S and P
five hundred which is up eighty five percent, So you
guys are definitely outperforming not only the broader market, but
(11:10):
your peers because of that growth story, So can you
talk about the growth for twenty twenty four, What are
your expectations. Can you give any insights into, you know,
where you see growth in twenty twenty four From Sia's perspective.
Speaker 2 (11:26):
You know, you're going to see growth because we're going
to open fifteen to twenty facilities this year. That's going
to be a important part of what our messaging is
to our company around focusing on the customer. But I
think the underlying growth in the business is pretty compelling
as well. In the last two years, we've opened up
twenty facilities, which quite frankly this stage are we think
(11:48):
there's still a lot of opportunity in those facilities. So
if you couple that with what we're opening, you know,
I think there's a growth through growth for us through
twenty twenty four. I think we have potential to be
a you know, kind of leading and sort of growth
story in our space, in the LTL space. As we
continue to sort of optimize those facilities that we open,
(12:11):
maybe that you know, we'll be able to drive operating
income improvement at the same time. So we're exciting about
this opportunity for us you know, the macro situation. If
it slows down, that'll have an impact on us. But
I think that there is an underlying momentum in our
business that you know, should carry us pretty well in
(12:31):
twenty twenty four.
Speaker 1 (12:32):
Are you hiring a lot for these new facilities or
it's kind of like there's a lag there because obviously
all the facilities are going to open up day one.
You guys are got to invest money in some of
these facilities. So how's the labor market from a freight
transportation standpoint.
Speaker 2 (12:45):
You know, we've we've got a great story to pitch
to employees. New employees talk about the success of the company.
So when we go and recruit and all these new markets,
which is what we'll have to do, we talk a
lot about what the SIA culture is, customer first, taking
care of each other. Those are things that are really
part of the fiber of the business. So we've got
(13:07):
a compelling opportunity for folks that want to have a
career in transportation. So when we open up in these
new markets and every one of the terminals that we're opening,
we'll have to do some recruiting either in the facilities
that are in a green space for us, or there
may be in a market where we're already serving but
we're moving into a nearby facility. We may have employees
that transfer to the new facility, but we'll still be
(13:30):
recruiting as we expect growth out of both both the
you know, the original the and the newer facility. So
I think for us across the board, we're recruiting. We've
been able to because of this story that we have,
and we've been able to provide employees around a great
place to work. It's been a compelling and we've been
able to an argument for us and that we've been
able to grow with that. So it's it's been a
(13:51):
good good space for us.
Speaker 1 (13:52):
And I'm assuming it's a it's a good time to
be hiring truck drivers right now, given how difficult the
truckload market is.
Speaker 2 (13:58):
Yeah, and you know you can it's a classic LTL position, right,
so you can talk about Hey, listen, this is a
great place to have work life balance, You be home
every day, you have the opportunity to get a very
competitive compensation structure, great benefits in a growing business. Those
are all positives, right.
Speaker 1 (14:17):
And so if I remember it's correctly when I was
a college kid, I worked for an LTL carrier, worked
the graveyard shift. It's a now defunct carriers. The Teamster
organization is no longer around, called APA. The line haul
usually was the better paying job, but the pick up
and delivery is probably the better quality of life, if
you will, because you're home every night. Is that still true?
Speaker 2 (14:39):
Very similar? You know, we try to organize our line
hall network, so all those that team drives at night,
you know, they're home every you know, every morning or evening. However,
the schedule works, so you know, there's a good chunk
of our guys that are on that kind of a schedule.
Now there are others that are what we call system
drivers that you know, continue on for maybe are gone
for a week, but there or a few days anyway.
(15:02):
So it's it's important for us, you know, as we
developed maturity in our network, what we can do is
create those opportunities for a line haul driver to be
home every day.
Speaker 1 (15:12):
Okay, and let's talk a little bit about pricing. So
pricing has been pretty fantastic. You know, if I remember correctly,
on your earnings call, you said contract rates were.
Speaker 2 (15:23):
Up eight point seven.
Speaker 1 (15:25):
Eight print seven percent. XPO just came out with a
number of this morning at nine percent. You know, people
might be taking a step back and being like, Wow,
that's that's extremely good pricing. Why why is pricing so
good right now? And especially why is it good for
for Siah. How are you able to increase the rates
that you're charging your customers in this environment?
Speaker 2 (15:47):
Well, you know, it all starts with the service you're
providing the customer. So if you are not providing high
levels of service, you know I discussed earlier, I talked
about picking up freight, delivering what we customer expects, no damage,
easy to do business with. You accomplish those things, you
have the opportunity to charge for that. In the environment
that we're in right now. You know, I think that
(16:10):
by and large, the best companies are focused on service
or providing that sort of incremental coverage to a customer
that allows you to charge for the service. Now, it's
fundamental underneath this business. It's highly inflationary. You know, you've
got to invest in technology, you got invest equipment, you
got to recruit and retain people that are you know,
(16:32):
the best in the business to be able to differentiate.
All those things are inflationary. So you have to keep
the pricing there in order to generate the appropriate return
for that kind of a business. But fundamentally, you can
do all those things in the inflationary business, but if
you're not providing great service, you're not going to get
the price. So in this environment, I think it's a
(16:54):
bit more focused there. But I think there's also the
realization that fundamentally, this is a business that reques requires
a lot of investment, and in order for that to happen,
people have to get the appropriate return.
Speaker 1 (17:05):
Yeah, and also we mentioned earlier it's a pretty consolidated
market and all the players are very disciplined and rational
when it comes to pricing because they all have their
ROI benchmarks that they have to overcome to make that reinvestment.
So very different than the truckload market currently. So your
o R, if I got this right, it was eighty
(17:25):
four percent last year. Is there anything structural preventing you
guys from getting to a sub eighty into the seventies
because some of your competitors, you know, have lower ors
operating ratios.
Speaker 2 (17:39):
Absolutely, we recognize and see their performance and we say
that we've got to get there. Side needs to be
There are services on a par with those other competitors,
are you know, high performing companies. We don't see a
way or see a reason why we would have a
limitation to drive the o R in this business into
(17:59):
the seventies. I mean some of our best operating regions
of the country right now already operate in the SEVENTIESK
And so for us, you know, as we continue to
develop the maturity of our network, you know, we'll drive
the whole company performance to that kind of level it
needs to be because your customers are getting that level
of service from us, and it just that's the appropriate
(18:20):
return for this kind of a business.
Speaker 1 (18:22):
Is there any like low hanging fruit that you know,
you know you're doing and in that region where you
are in the seventies, where you're you're maybe doing it
in the high eighties, Is there is there a low
hanging fruit that you guys can see, whether it's purchase, transportation,
I don't know.
Speaker 2 (18:37):
You know, the big the biggest thing in the markets
that we have the longest history. So you take the
sort of Texas region, Gulf States, Uh, those are the
areas that we have the best density. Those are the
areas where we have the best brand recognition. We've got
the team that has been in place the longest, you've
(18:57):
got the consistency that comes with that, and you've got
a very very high level of service. Those are our
best performing network or business parts of our business. They
lead in all the service metrics, not surprisingly, so as
we continue to repeat that model in other regions of
the country, that will drive the pricing to where it
needs to be and that will get us to the
(19:19):
finding that freight in that mix of business that we
can generate those kinds of returns. So it's I would
tell you that I think it's really more about sort
of network maturity over time as we build densities and
markets that we haven't been in as long as we'd
like to have been. We're developing that now, but we
see a lot of runway for those business. Customers are
really excited to do business with sayah, and we see
(19:43):
it in our sort of continuous tracking of their feedback
on how we're doing. So as we can replicate that
in more markets, as we add all these terminals, I
think the opportunity for us to perform at that level
company wide, it's definitely right there for us.
Speaker 1 (19:58):
Okay, And while you're mostly an lt Carrie, you do
have other businesses brokerage, Expedited. Can you talk about the
other businesses, how they're doing, what percentage they make up
of your total revenue and maybe your total ebit.
Speaker 2 (20:11):
Yeah, so that in total, those group of businesses are
a little bit sort of three to five percent of
our totalk and what's really important about those businesses for us,
it's all about our customer focus. So these are opportunities
for us to provide an incremental service to our customers,
be it logistics or truckload brokerage or some of our
(20:33):
specialty services around Expedited or whatever the customer might need.
Part of that is just developing that relationship with the
customers that they understand that if they have a supply
chain issue or they have an opportunity that they need resolve,
we're there to help them facilitate their success. So we
view that as not so much of a segment so
(20:54):
to speak, is more of a compliment to what we're
already offering the customer. So we view it that way.
So that'll be as we continue to mature as a company,
that'll become a bigger part. But fundamentally, we're an LTL business,
and we're providing additional solutions for customers.
Speaker 1 (21:11):
Right and does and I'm assuming the LTL business feeds
the other businesses, and the other businesses feeds the LTL business.
Speaker 2 (21:18):
Absolutely, it's hand in hand. And it works best when
a customers when they realize that, hey, this LTL business
works really well with the logistics problem they need help solving,
we can combine those services and that's a win for
the customer and that works for us to have.
Speaker 1 (21:36):
You guys ever really used M and A in terms
of growth, whether it's into a segment or the LTL network.
Speaker 2 (21:43):
So if you go back in the history of Siah
and you really look at what we did in the
sort of two thousands, we cobble together are the first
parts of our national network through acquisitions. The financial crisis
happened that kind of put all that on the brakes
on it, so to speak, and we had to kind
(22:03):
of survive that process because we acquired all those businesses
right as the economy slowed down into the crisis. So
the company kind of spent the period of you know,
twenty eight, nine and ten surviving and eleven twelve thirteen
was a period of stabilizing, starting to return the investment
in the business, bringing down the fleet age. We considered
(22:26):
M and A through the sort of mid twenty tens.
We've acquired some of our logistics and brokerage businesses at
that point in time. But then we figured out in
sixteen and seventeen that our opportunity to grow was really
about developing an organic pipeline in an organic structure that
we followed the strategy. If followed, we can control what
(22:49):
we're providing the customer in terms of making sure we
provide that consistent service. Most importantly, also replicating the culture
that Saya, you know, that sort of focus on the customer,
and you organically grow, you hire, you train, you position
the team to be successful and provide that uh replicate
that service for the customer, rather than trying to integrate
(23:12):
an acquisition that perhaps, you know, maybe creates a disruption
for the customers. You don't want to do that. So
when we've done that in our sort of organic strategy,
we've found that we've we've gotten pretty good at that.
So when this yellow opportunity came together, this was really
exciting for us because this kind of accelerates our sort
of growth trajectory.
Speaker 1 (23:32):
And you know, you mentioned earlier reinvesting in the business.
You mentioned technology. Can you talk a little bit about
technology and how it relates a side. Do you guys
use off the shelf program or you guys are you
guys building your own proprietary technology and what does that
technology do for you that you're that you're using or building.
Speaker 2 (23:52):
You know, I tell people that are outside of the industry,
they say, tell me, tell me about trucking. I'll tell them, Well,
there's there's a lot of technologlogy in this business. There's
a lot of data optimization, and you could argue that
this is actually a big data play as much as
it is a asset play. You know, if you think
about you know, SIA will deal with in a given month,
(24:15):
maybe forty thousand different ship to locations. We're going to
handle thirty five ish thousand bills a day. We're going
to run that through a network of one hundred and
ninety four terminals. Soon to be, you know, we're going
to add another fifteen to twenty to that mix. You're
going to say we're going to travel nine hundred miles
and carry shipments the weigh fourteen hundred pounds. I mean,
(24:37):
there's a lot of data and how do you optimize
all that? So we have invested quite a bit of
technology around data optimization tools that allow us to better
schedule our pickup and delivery networks, that allow us to
better schedule our line haul networks. At the same time
taking all that data scheduling data, you're also taking the
time to collect the data around what's going on with
(24:59):
the freight, your pick, what are the dimensions of the freight,
where is it going, what are the delivery locations? And
from that you're modeling not only the operations in terms
of what type of equipment you have to use, but
you're also focused on pricing and how do I make
sure that I charge for all the services that we're providing.
Is the does the delivery go to a limited access
(25:21):
location that requires a liftgate? Well, those are all special
services and those require specialized assets that all deserve a
return for those assets. So that takes you that operating
data turns into pricing data, and then as you put
all that together, that's all about driving profitability. So it's
a it is a massive data optimization problem problem. It
(25:45):
is artificial intelligence on a daily basis. Dealing with all that,
and so I think it's uh, it's a different differentiating
thing for us.
Speaker 1 (25:54):
And roughly, what what's your CAPEX spend in this did
you give out a guidance?
Speaker 2 (25:59):
Yes, So for the for twenty twenty four, we're going
to approach a billion dollars and spend. This is an
interesting year for us. We just spent over two hundred
and fifty million dollars to acquire facilities. We're going to
have to upgrade those facilities to get them ready to
operate like SIA facilities. With the big step up and
volume that we had last year, we're gonna have to
make the biggest investment in our fleet that we've ever
(26:22):
had around everything from power to trailers, most significantly trailers.
All about providing service and flexibility for our customers, and
we'll continue to invest in it and all the data
analytic tools that we use every day.
Speaker 1 (26:35):
Is it hard to get equipment because you know, a
couple of years ago, during the pandemic, it was impossible.
It seems like it's gotten better, is it? Are you
getting what you want or are you still await?
Speaker 2 (26:44):
So far, we're getting what we want and it's you know,
we're focused on making sure that that trailer pool is
one that is all about availability to the customer. Customers
care about that.
Speaker 1 (26:56):
And can you talk about a life of the life
of a truck within Saya's network as it starts in
one business and kind.
Speaker 2 (27:04):
Of absolutely, So, you know, the first couple of years
of the tractor's life, we're going to run it in
our line hall network. And the idea with that is
that's the peak performance of the vehicle. It's uh, you know,
the best fuel economy, latest safety technologies on board, highest
level of reliability for that equipment. And then as it ages,
(27:26):
it moves out of the line hall sort of role
and it moves into sort of line hall city role
until ultimately it graduates to our city operation. And in
the city operation, you know, the equipment's not on the
road as long you can manage the reliability a little
bit easier in that environment fuel economy. You're unfortunately operating
(27:47):
the city, so you're not going to get high levels
of fuel economy anyway there, but you're going to get
decent fuel economy, So you kind of manage the tractor's
life in that way. So you know, our fleet tractor
age right now is right around four. We like that,
but when we're done with a piece of equipment, it's
it's fully utilized.
Speaker 1 (28:04):
Yeah, that's good. Are you guys testing at all EVS?
Speaker 2 (28:09):
We are we you know, we we don't know that
we're an earlier adopter per se, but we would say
we're a really fast follower. We're have tested, uh, a
fair amount of both E E V and now more
recently some hydrogen equipment. You know, I think that the
you know, there's some there's some promise there, but I
(28:30):
think that, you know, the the economic viability of that
equipment yet is still to be determined. And I think
at the same time, you know, we have to understand
really fully what the performance characteristics are of it. How
will operate in extreme environments is a really critical uh focus?
Speaker 1 (28:49):
Right, And I'm assuming EV's maybe work for pick up
and delivery, but not so much in the line haul. Yes, okay,
So you know, obviously you're you're reinvesting a lot into
the network. What other capital priorities do you have?
Speaker 2 (29:06):
Do you do buybacks?
Speaker 1 (29:07):
Dividends?
Speaker 2 (29:08):
Right now, we have a I think a pretty compelling
growth pipeline, both in real estate and sort of technology
and fleet that that our investors would say, or it's
an optimal return for them is to focus on those
sort of capital deployment. But listen, we also understand very
clearly that we are stewards of the shareholder's capital. They'll
(29:31):
come a day where we're going to have to figure
out ways to balance that. Today, there's some really interesting
opportunities for SIA, So our deployment of capital today is
very focused on growth.
Speaker 1 (29:43):
All right, And so some just switching gears a little bit.
So you know, you've been with Taia for a while,
you came on as a CFO. Were you in transportation
before that or was SAI your first fora into transports.
Speaker 2 (29:55):
This is the first time I've been in a transportation
focus business. But every business I've ever been in, a
great part of the value that provided the customer has
been about that supply chain partner and the transportation networks
that we utilized. So I probably somebody that understands and
appreciates the use of a good transportation partner, maybe more
(30:18):
than others. Right.
Speaker 1 (30:19):
And what do you do for fun when you're when
you're not running an LTL company?
Speaker 2 (30:24):
Well, I try to play golf. But that just tells
me I need to go back to work. That's your
handicap too high. It's about this today, it's about fifteen.
I think it's not very good twenty so, but you know,
I'll enjoy time with family, you know. It's uh, kids
(30:46):
in college are graduating college. That's a lot of fun.
Speaker 1 (30:48):
Too, Okay, So you have a light at the end
of the tunnel. I do, kids, That's that's good. I'm
early on in that life cycle. So, you know, have
you read any books about insportation that you know you
kind of like, you know, wow, it was really eye opening,
whether it's fiction or nonfiction, you know, over the years.
Speaker 2 (31:09):
You know, I don't know that I have a specific
book about transportation that I would point out as one
that said, hey, this is what you got to read.
But what I would say this is that if you
read any book about either and I'm into sort of
historical economics industrial development, and if you look at it
(31:29):
over time and you look at all the great industries
that have been developed in the United States for around the
world for that matter, there has always been a significant
element of the supply chain that has facilitated that growth
or that enablement. So I have always gravitated to those books,
and I think if you if you spend time in
(31:49):
that space, studying those markets and those economies, you quickly
see the importance of transportation and the value potentially provides
the part of the market.
Speaker 1 (31:59):
Yeah. I mean, that's one of the reasons why I
love covering. I love covering for so long. It's just
it makes me pretty knowledgeable about every other vertical that
my colleagues cover, so and it's a great kind of
vantage point to see where the economy is heading. So
it's a transports are great. Well, Fritz, I really want
to thank you for your time today. I thought the
(32:20):
conversation was fantastic, So thank you Lee.
Speaker 2 (32:23):
Thanks for the time, and I enjoyed the opportunity to
tell you about what's going on in Saia.
Speaker 1 (32:27):
All right, great, well, thanks for tuning in, and if
you like 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 suit executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
have an idea for a future episode, please hit me
up on the terminal or on Twitter at Logistics Lee.
(32:49):
Thanks everyone, and be safe out there
Host
Lee Klaskow
Popular Podcasts
40s and Free Agents: NFL Draft Season
Daniel Jeremiah of Move the Sticks and Gregg Rosenthal of NFL Daily join forces to break down every team's needs this offseason.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Bobby Bones Show
Listen to 'The Bobby Bones Show' by downloading the daily full replay.