AI in transportation logistics requires careful integration with legacy systems like AS400, where successful deployment involves building middleware layers that enable AI agents to connect with older technologies while maintaining security and reliability. AI excels at high-volume, deterministic tasks such as processing load tenders, handling ETA requests, and auditing invoices, but human judgment remains essential for complex scenarios requiring nuanced decision-making like RFQ bidding and route planning. The most effective AI implementation strategy involves starting small with high-volume customer support use cases to build trust and demonstrate immediate ROI before expanding to more complex financial processes like invoicing and quoting.
FreightWaves TodayAdded:
expanded warehouse and transportation jobs by 70,000.
>> Yeah. And even in the last month that warehousing and storage was up by 6,000 even though overall for the month it was flat. So it's really exactly what we've been saying all week when we talked about warehousing yesterday how uh important that part of it is and that that is to your point a little bit of a leading indicator warehousing and all that prior to the jobs being more of a lagging indicator and and showing 6K up month over month is huge. You know, one of the interesting things and we talked about this in the uh Zach and I did on our state of freight last week is the fact that if you look at the most because in our sit reps inside of Sonar, we looked at all the 71 different public companies, the the most bullish company in America, most bullish category was warehouse operations. And if you're going to re-industrialize, if you're going to bring manufacturing production, it's going to show up in the warehouse operators first. It's exactly what the data says. And that is why I think you're seeing some expansion there. Uh let's go to headlines to see what is happening in the world of freight today.
>> Kick things off with a growing clamor over the Federal Motor Carrier Safety Administration's troubled rollout of its new modus registration system. Modus, which launched May 14th as a single entry point for a wide variety of interactions with registration systems and other FMCSA tools, has faced widespread complaints across social media as users struggle to access the platform. The agency has responded with two notably different statements. One memo acknowledged that these issues have created challenges for members of the commercial motor vehicle industry who rely on our registration systems with the agency focusing resources on addressing issues affecting insurance filings and operating authority status.
But a second note from FMCSA administrator Derek Bars described the problems as minor technical issues, praising the launch as a major agency milestone and an extraordinary feat of heavy lifting that involved transferring more than three decades of data across multiple legacy systems. Industry consultant Pan Garney of Scopitis Transportation Consulting said carriers are struggling to link their DOT numbers with some spending hours on the phone with FMCSA and he doesn't have a good sense that they're getting any closer to fixing this. Over in the freight security space, a major new tool is launching to combat the industry's escalating fraud and cargo theft crisis.
The National Motor Freight Traffic Association has launched a free online threat report portal that allows transportation companies to anonymously report freight fraud, cargo theft, and cyber security incidents. The initiative is designed to improve industrywide threat intelligence sharing as cyber enabled cargo crime and fraud schemes continue to increase across the supply chain. The portal is available to carriers, brokers, thirdparty logistics providers, and shippers, allowing organizations to share information about incidents, including ransomware attacks, fishing campaigns, network intrusions, fictitious pickups, and other suspicious activity. NMFA's chief operations and technical officer, Joe Orur, said threat actors are constantly adapting their tactics, and no single organization has visibility into every threat facing the industry. The portal aims to address the persistent challenge of limited visibility into emerging threats as many incidents go unreported due to concerns about reputational damage, customer perception, or potential legal exposure.
Finally, one of the truckload industry's most prominent founding figures is stepping away from the company he built.
Knight Swift Transportation announced that Kevin Knight has retired from his role as executive chairman effective Wednesday. Knight was a founder of Knight Transportation and served as the company's CEO from 1994 to 2014, playing a key role in the company's 2017 merger with fellow Phoenix based truckload carrier Swift Transportation. Nightwift is now one of the nation's largest diversified freight transportation providers, generating $7.5 billion in annual revenue from its truckload, less than truckload, logistics, and intermodal offerings. Knight called the merger with Swift our greatest collective achievement and will serve as a consultant to Knight Swift for a 2-year period. A separate filing with the Securities and Exchange Commission showed Knight will receive $20.3 million for his consulting services and for the forfeite of unvested equity awards.
David Vanderplug, who previously served as CFO at Schneider National, has been appointed Nightwift's chairman.
Julie, I got to ask you, Night Swift, you have personal experience. I have personal experience. You know, we by family sold US Express to Nightwift. How do you feel about uh Kevin Knight's retirement?
>> So, I had the opportunity to meet him during the process of the acquisition.
He came in and spoke to really the organization as a whole and then separately to the executive team as well. Uh and he was incredibly personal.
I think he is an amazing financial mind >> and that is due to a lot of you know the night success over the years and their their reporting and their amazing o is that he's incredibly good at that sort of thing and he stayed really involved in the business and was still in the office very regularly and was incredibly hard worker. Adam Miller also has an incredibly brilliant financial mind.
>> How old is Adam Miller?
>> My age maybe I understand he's pretty young. He's a pretty young guy in his >> early 40s, >> which is great. I mean, we we have young management. This industry needs it. I think one of the issues that you typically get in trucking companies is that these, you know, these larger companies, particularly family companies, they the the owner is sort of involved and there isn't a transition.
And I think Night Swift is certainly a case. I mean, you talked about Swift.
I'm a little hurt, Kevin, that you didn't mention your acquisition to US Express. I know Julie feels the same way. We did invite Kevin Knight to come on uh actually before we got the announcement earlier this week. Uh and uh he he has uh invited or suggested we reach out to Adam. We we're doing that.
So we'll hopefully hear from Nights soon.
an amazing story, an amazing company and and I I mean you talk about financial engineering but also one of the things that I've always understood about Knight is just how disciplined operational discipline they are even to the detriment at times uh or at least reputation where customers have wanted them to do things and they are so disciplined the answer is no. They definitely have learned the art of no whereas you know even at US you express perhaps that wasn't as drilled in as it could have been. Right.
>> Certainly not. Yes. They're they are disciplined in their network. They are disciplined in what they're willing to accept and at what rates and and that has led to a lot of financial success.
I'm sure from a financial standpoint.
David Vanderplug is also going >> He's a Schneider guy, right?
>> He was CFO at Schneider for quite a while. So, I'm sure that that gap will be filled really well, but uh yeah, wish Kevin the best in his retirement.
>> Amazing. We We got to talk about modus.
I mean, this has been something I've been, you know, a lot of folks in the industry have been waiting for this thing to get fixed. It still is having issues. We heard in the morning minute that it's still having problems. What are your thoughts there?
>> Do you think it's just underst staffing?
I think they're blaming it on people hitting the website for multiple.
>> Look, I think you remember healthcare.org years ago. It was the big roll out. I think the problem is you get these legacy systems that are probably built in cobalt trying to bring them together and it's just maintaining old code is a problem. And it's funny hearing founders and entrepreneurs of of data sort of these AI companies are talking well I can just go fix it and I'm like man you have not worked in enterprise systems big old green screen mainframe or you would know the pain that you're inviting upon yourself and look there's no better person to talk about AI speaking of AI than our next guest Shush Sant Raman he is the founder of Pallet the CEO the man that is aing this industry.
How are you doing, sir?
>> Doing great. How are you?
>> Good. Now, are you in are we in the San Francisco today?
>> No, I'm in London.
>> You're in London.
>> London is a great time. This time of year is amazing. It's a great place to to go. We got to get your location. This is for my own mental note. You know, this is the first week of the show.
Appreciate your support. Got to put your location so I know where you're at. Um what's what's new, man? what's going what's been what's what's been happening world of AI.
>> I think I think that there's a lot that's happening in the world of AI and transportation today. I think as you touched upon it, we're starting to see the reason I'm here in Europe is it's now there's now global interest in logistics on how do we deploy these systems to kind of go and achieve value.
One of the interesting things that I feel like I've noticed in the last year is that there's a shift. Previously when people think about AI especially in the logistics context the focus is always on like optimizing margins but I actually think there's an increased appreciation for something quite different which is like the role of AI I think is really for a lot of these companies is how do we deliver highquality service right and I think a lot more of the focus is on expanding revenue delivering high quality service because what folks realize is like it's not good enough today to be a transportation provider that just delivers stuff on time customers really remember those tiny touches like how fast did you respond to that ETA request? How accurate were the invoices you sent? Did you send them in a timely manner? Um how quickly do you respond to quote requests? And how well do you price? Um all these tiny details tend to matter. And what we've really seen this year is a focus on AI as an elevator for the customer experience for a lot of the transportation providers where they think of AI as a strategic tool or if you think about the worst customer experience you've had like going to the DMV. No one likes going to the DMV.
But in transportation, we've seen providers like Molo or Coyote be able to charge high prices because their reliability and their service. And we think a lot this year about how do we enable the providers that work with us to ultimately be able to give such a hightouch customer service experience that would have only been possible in the past by having a lot of headcount.
And we think of enabling this AI workforce that allows your customers to be like wow when I work with a broker or carrier that successfully deployed pallet I really want to work with them again and again and again because I just have a reliable consistent experience. Um so that's been a huge focus for us this year.
>> Well Susant we we just talked about the modus uh transition in government databases. You you mentioned the DMV experience.
A lot of large transportation enterprise companies are still running on an AS400.
How are you seeing AI interact with those legacy technologies?
So what we do is we actually work with one of the one of the largest truckload carriers in the United States and they run on AS400 and we've helped them automate their customer service. So what we think about the role of I think this is kind of an interesting question you asked because now when customers are asking us about you know how do they want to trust a provider or pick a provider the first thing they ask you about is hey can you plug into all the systems we utilize we don't really care about the flashiness of the demo we care about change management integrations and how we deal with that is we actually go and we do a lot of work on sending an engineer on site who sets up connectors and builds out connectors into these AS400s and they literally will go on site onto the operation and make that happen and they do a lot of work to build a middleware layer that allows AI to basically effectively connect with legacy systems so that way the customer does not have to go undergo significant change management and we can still deploy these agents and gather data in a way that's secure, reliable, accurate from legacy systems and we've done this with a number of different Fortune 500 transportation providers already.
>> Yeah, I think that it sounds highly customized, which is absolutely necessary in this industry. Can you give us some examples of what works really well and what still needs to be done by humans, but what you've, you know, very successfully been able to transform into an AI operation. You talked a little bit about customer service. What about other operational roles and dispatch?
>> Yeah. So what we think we think that there are a lot what we think is a good task to be automated by AI is these high volume workflows where there's actually not a lot of significant human creativity or judgment where good examples of this are like processing load tenders dealing with ETA requests or like the dealing with customer service requests that are high volume like ETA request appointment schedules POD retrievalss um or dealing with auditing invoices like these tasks which are high volume and there's a fairly deterministic set of logic you follow to get to the right answer. Where you need really human judgment and creativity is for scenarios where the answer is pretty nuanced and where there's some sort of complex decision-m required. So a good example of this is when you're dealing with like a complex RFQ bid. Like let's say that a shipper sends you an RFQ. AI can help you process that RFQ, but the final gut call on what lanes to bid on, what lanes to not bid on, that's an example of where you need human judgment. Um, another example is when it comes to planning out a route, AI can maybe help you make a first pass on kind of determining how to structure a route, but you understand your drivers the best. You understand your various customers that you're kind of delivering to the best. And that's an example of where you still want a human touch because it's not immediately obvious just by looking at raw data what the right answer is. So we think of it as AI is good for these tasks where the answer is fairly deterministic and where you want human plus AI to play a role is in areas which require judgment where there's no right or wrong answers but there's always a bit of nuances like RFQS route planning and what we think about is that successful AI deployment across the enterprise should actually allow humans to focus on the things that they do best and take them out of the routine mundane tasks that they're left which should in result translate to better customer experiences, better employee retention because they're spending their time on less mundane tasks and just freeing up your employees to have that much more output.
>> I love that. It sounds like it's taking a lot of the noise out of the inbox of the of the employees. I know what mine looked like when I was working in operations and the number of to your point ETI ETA requests and things that can be automatically answered. getting that noise off of their plate. And then even it sounds like in the things that you mentioned require, you know, gut instinct and and human domain expertise, you still are getting that started to create more efficiency. So along those lines, what do you think the future looks like? What do you think are short-term trends versus what's going to stick around long term where AI will play this role in logistics?
So what I think is definitely going to change is the fact that humans have to go from being managers of like you the evolution of a lot of these roles where you're you're dispatcher your CSM and so on they have to be able to manage agents like almost be a manager of agents effectively and in that future like in order for that person to be able to do that they have to partially accept that some parts of their role like the customer communication getting on getting on calls calls with customers they're still going to handle but rather than doing everything themselves they need to be a supervisor of agents. So what we think of is almost every single person in the enterprise actually should be a manager where they have AI workers kind of going and doing tasks. So that's going to be a fundamental change in the operations mindset of these companies where historically if you think about it we were only used to like there being human managers and they manage a team of CSRs.
The CSRs handle all the ETA requests.
But what's going to change is the CSR of tomorrow is going to be an agent manager and they're going to have agents handle the ETA requests, some of the appointment schedules, and then they're going to go look at the exceptions or look at scenarios that require human judgment and be able to handle that much more volume. So, we should see a huge amplification in productivity. What probably is not going to change though is that customers are going to expect a consistently high quality service. Um, and I think that what's going to what you're you can expect the basics there to be similar, right? Customers expect shipment to be delivered on time. They expect you to flag when things are late.
They expect sharpness of responses. They want things to be highly accurate. They want to be get on a call with their account manager and not just an AI agent at the right time. So that ship the shipper carrier or the shipper broker relationship and having a human touch there is still going to be important and that's something that what no matter how good AI is going to get people are still going to want a human touch there but I do think the role and how work is done is going to fundamentally change. What is the when you go in to implement a client, where do you tend to see the fastest adoption and where do you tend to see the most friction?
>> We tend to see the fastest adoption today on customer high volume customer support use cases. Um what we found is that basically common requests like where is my shipment like ETA request basic things like appointment schedules or really easy use cases or like manual load tenders are easy use cases to get started because of a couple of reasons.
One done right they can help improve your customer experience. Two they're not highly complex. So people have a trust factor where they've already interacted with AI agents to kind of handle customer support from their favorite brands. And three, the ROI case is immediately obvious. So we've just seen a ton of momentum and value from those use cases immediately is good starting points. Where there's some hesitation at the beginning is people trusting these AI agents for complex use cases in the billing, the invoicing side or the quoting side in areas that touch money and revenue directly. There's often a bit of a hesitation to go to full-scale automation. And what we found is that once they have that first deployment approved, they start to kind of trust it for more and more complex tasks where eventually folks have started to realize that even for invoicing or billing, it actually they can actually recoup more revenue by having an agent go and audit their invoices and they can actually reduce their day outstanding. But there is a bit of hesitation at the beginning to immediately trust you with a use case that touches your finances. And we find that that the high volume customer care ends up being a really good starting point. And we're seeing a lot of rapid adoption there.
>> One of the biggest things that I've observed even in my own organization is just resistance. You know, management teams want it because of the efficiencies. There's always a a resistance it feels like among uh established legacy employee bases where they're just afraid of afraid of the technology. How do you help companies work through and navigate that challenge?
So what we try to do is we try to start small and don't go big. So rather than going and being like hey let's go and roll this out across your entire customer base day one it's like let's pick a a portion of the volume coming in and let's earn trust of a handful of account managers. So like let's say we're working with a large carrier.
We'll be like let's pick two of your shippers and then let's show that this thing works at that small scale. And what happens immediately is that people start to see nuggets of it working. It's not a high, it's not like you're forcing everyone to change. You're forcing a small set of early adopters to find value. And then there's this aha moment that they achieve. They're like, "Wow, like my days freed up from having to respond to these ETA requests and these basic scheduling requests to actually do high value tasks for my customers and I have like a lot more time back in their day." And then that starts to like for them to realize it's actually not something I'm afraid of about taking my job. It's actually making me way more productive, way more focused on the things that I'm actually uniquely equipped to do. And I just have a much more uh and my clients are also happier.
And then there's this aha moment that happens. So we think of it as like totally understand the fear and start small, show a little bit of proof to get to value. And I think where this goes wrong is when you focus on pitching this really big vision day one and you have to get a lot of people bought in without any proof. That's the wrong way to do a deployment.
So, I agree wholeheartedly and and have even noticed that sometimes when we get some things automated and our employees realize they don't have to do some of those repetitive daily tasks, then they takes a minute for them to adjust and then they realize they have the opportunity to just look around and see what else needs to be done and where we can be improving instead of stuck in sort of the doldrums of the same things over and over again. You spoke a little bit earlier about invoicing and paperwork. I think I've read that 10% of logistics spend goes to processing paperwork and invoicing and we certainly had a number when I was doing that of understanding just what it cost us to even cut a bill. Um can you give us an example of you mentioned a little bit of distrust there. What's the easy place to start there? Where's where do you start in that part of the business to get someone moving in that direction?
So and that side there are the typical areas we start off in are um one is like if on the carrier side there's a very common use case around bill of lighting ingestion where you get a B alongside a load tender and what we help them do is we help them process that load tenor and that the reason it's a really interesting use case is it's not as simple as extraction it's extraction applying the right sort of accessorials and the right deals that are missing and then getting into the right data format and the way we get earn the trust is we have them give us a data dump during the sales process with us and we show them the output back and then there's this aha moment where they realize that it's actually more accurate than the humans handling it through this test that they do with us. The second area we've seen a lot of success in is AR or AP. So where you're a broker what hap when when you're a broker you get these carrier invoices and you have to reconcile them against your RFQ or your contracted rate and we help them flag discrepancies and accessorials the base charge or so on and that act that that audit process the AP audit process is another area where there's immediate trust because you can actualize cost savings day one and then the other area we've seen is the AR side where you're about to send out an invoice and what you find is that some percentage of the time people forget to apply accessorials, they forget to apply a fuel search charge the right way and there's a lot of revenue leakage happening or the invoice might be formatted poorly and they're just not getting paid back on time. So those three starting points, manual load tenders with bs, AP and AR tend to be like the areas where we've seen the highest impact on the document side. Um, and particularly why AP and AR are interesting is not only are we reducing the time that the team spends there, but we're also helping them just capture revenue that they otherwise would have leaked. And that is like something where AI is going to be actually more accurate than a human because it's going to like when you're processing the hundth invoice for the day and when you're looking at the 100th invoice, you're tired. you might make a mistake and like when you're comparing it against what was rated, you might just have like a rough day. And AI is not going to do that. It's always going to do a complete set of checks. It's never going to drop the ball. It's around the clock. So that's why that use case in particular has been a huge success for us.
>> So Champ, a lot of conversation about token maxing for those that are on X.
The idea that the tokens, these companies are are getting hit with substantial bills that they didn't expect. There's even conversations that in certain circles where companies reduced expense under the promise of AI but actually are spending more now on tokenization. How are you helping companies really deal with the cost of these technologies in addition to these successful implementations?
>> So what we do is we try to make it easy for customers to digest. We don't talk in terms of tokens, we talk in terms of outcomes. So think of PAL like what we want to do is we want to make sure that we have you deploy AI that generates ROI. I actually think token maxing on its own is a really bad way to deploy AI because like there's some there's a recent study where like 95% of big enterprises have deployed AI they feel productive but they don't feel the ROI.
So what we do is we're like look your cost of auditing an invoice in house is $3. With pallet we will charge you 40 cents per outcome. So we charge on successful outcomes. So it's very easy for a CFO or a VP of finance to go like if Pallet handles this task whe it's AI workforce I'm spending a fourth a fifth of the cost of doing this and the methods we're using today. So they always know as long as we're able to scale they're going to guar have a guarantee on ROI. So what we do is we abstract away the concept of tokens and we focus more on outcomes as our pricing model and that always guarantees as long as our solution works the clients 100% have at least a 3 to 5x ROI on any project they do with us. Well, Suzanne, we first of all, I I go through the Chattanooga airport and I see your ads in the Chattanooga airport and it always makes me feel like I'm a part of this great AI experience seeing it right there in front of my eyes. I really appreciate you supporting the airport because uh the city needs it. We we need more direct flights to Chattanooga, but really appreciate your support. You guys have built an amazing brand uh inside of the industry helping companies address AI. We hope that you come back um and really appreciate all that you're doing to move this process forward and and help companies address their number one problems which AI is uniquely positioned to do so.
>> Yeah, we're really excited about this year. We think this is the year where AI is none going to help customers improve. It's going to help all these carriers and brokers improve their customer experience, identify revenue opportunities, and the story is going to be really be one of productivity enhancement, better customer outcomes and revenue growth versus one solely of cost cutting. And I you're going to see that narrative really bake in this year.
And we're really excited to help enable the industry to achieve those outcomes.
>> Well, thank you so much for coming on.
We hope to have you back to get some updates on what's happening in the world of AI. Up next, we have a man that is really the most impactful transaction attorney connected to transportation.
It's a really important segment. It's our gift to you, non-billable hours with the smartest attorney in freight, Mark Scutter.
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Next up, we have Mark Scutter, the CEO of Scutter, Horning, and Shear. Mark is a transaction attorney that is involved in the biggest and most important transaction in transportation. Mark, how are you today?
>> Hey, doing great, Craig. How are you?
>> Doing great. I got to tell you, big news today. Uh Kevin Knight feels like the end of a end of a decade or end of an era. Uh retired. How do you What are your thoughts on that?
Well, I've just been very fortunate to know Kevin for almost 30 years and uh you know, he he uh had a huge impact on the industry. He's a great person, great trucker, and uh but uh you know, whatever he does next, I'm sure he'll make a huge impact. He I was lucky enough to go on the board of Knight in 1999 and continue to work with Kevin and the rest of the Night Swift team, you know, through today. So, >> yeah, it's it's interesting. Uh, of course he's leaving at the top of the market. Uh, Night Swift stock is on a tear as we this recovery is taking place. You've been on a number of trucking boards, particularly public boards. I I'm curious, what are your thoughts in the what is the experience like in the boardroom over the last couple years where this freight recession has been murdering us all?
What is that like when you're having to just have these hard conversations about the state of business?
>> Yeah, it has. It's been tough. the the combination of um lack of uh ability to to make a move in pricing in the market, uh inflation and risk has made the uh the what I would say the general trucking uh industry over the road uh very difficult to invest in. And so boards have had to be very conscious of controlling risk of uh allocating capital uh prudently and just trying to hunker down and make it through. And I think you've seen you know public markets indicate that capital's flowing back into those companies now and uh I think there at least the equity investors are predicting uh quite a turnaround. You look at the the multiples the companies are trading at and uh yeah they're implying a you know a doubling of earnings over the next few years.
>> Yeah the multiples are absolutely just ripping. But I think as you as we all know, as you know, anyone who's followed these trucking stocks is they tend to they tend to get really strong growth in the uh stock price on the early end of the cycle. And unfortunately, as we go to the as the cycle looks like it's starting to peak, that's when it it creates more pressure. There's no signs of that happening anytime soon. In fact, when we look at the data that we've got as well as this this whole week, we've heard about how strong this market is and frankly how surprising a lot of the executives, we had Webb Estus on earlier this week and Webb has the benefit of not being public so he can say exactly what he's seeing and what's on his mind and he talked about how surprised they were on the state of the consumer, how strong the consumer is relative to the expectations.
>> Yeah, I think the consumer's held up pretty well. uh the recent data indicates uh some uh reduction in savings rate and so how long that can continue uh I guess we'll see I think uh wages are rising slightly slower than inflation now but um you know depends what part of trucking you're in too I think the uh there's the more more consumer or e-commerce and uh industrial orientation of the LTLS u certain of the truckloads are have more exposure to industrial and uh others more to retail.
So uh you know to some extent investors whether they're private or public are looking at where do the companies uh have their business positioned.
>> Mark how do we think about you know one of the risks always in the trucking business it tends to get ahead of itself over supply capacity in the in at least the conversations that you're having with again you're working with the largest of the biggest of the biggest.
What is the general sense in terms of of expansion right now? Are they are they being conservative? Are they approaching this market with caution to ensure that we don't overcorrect as a business or how are they generally positioning themselves?
>> Yeah, I think that um for the most part the companies are trying to shore up uh earnings first. Uh they're looking ahead to what's going to happen in the driver market. You've probably seen a few of the announcements and others are happening behind the scenes about raising driver pay, whether that's a straight pay raise or whether it's linked to uh utilization and safety and you know other uh performance targets.
And so I think uh companies are making sure one they don't lose capacity uh of their existing drivers. Two that they're ramping up recruiting and um and uh trying to make sure they can source enough new to grow with their customers.
uh but really first get back the utilization and get back the profitability that was lost over the last three or four years because uh there's still among the large carriers the ability to get more you know more miles per truck per week uh without adding another truck and so I think um I think they'll the big uh companies will probably add trucks um judiciously.
>> Yeah, they've been incredibly disciplined. I mean they really haven't whether they've liked it or not they've had to be disciplined in this past part of the cycle some have performed much better than others but even when you see companies like Hartland which has historically been one of the most profitable that struggled to make a profit it just tells you how difficult this market has been one of the big contributors of of really this change in the market direction is compliance what what is it you know from a a legal standpoint a compliance standpoint I know you're not really involved in the safety compliance conversations and more on the transactional side, but you have to have perspectives on on sort of this entire movement among the regulators to get really a handle on a lot of the issues in our industry.
>> Sure. That's been a big board topic and it's also an M&A topic. So, um, you start to look at, um, in the M&A market, what are buyers looking at? And they go directly to, you know, claims, safety, driver profile, and it's almost an onoff switch. if the um you know, if the company that's potentially a target doesn't have um a good safety record doesn't have uh the right kind of driver files, uh the drivers won't qualify for the buyer's uh fleet. uh if they've got claims that are uh either underreserved or uh may go over insurance limits uh or they've had problems getting renewed, I think that the buyers are just not interested in taking on that risk. So, um yeah, that I would say it's a very significant u component of both board discussion and and internal growth strategy, but also for M&A. Is it just simple a yes no if they don't have the if they're from a compliance standpoint the filter is so simple regardless of the financial profile and the valuation.
>> Um that's been my experience so far.
I've not dealt with any buyers that are willing to take on you know material risk on the driver. Um right now I and and if if you think about it what are you what are you really getting if you're doing an M&A deal? uh you're getting, you know, trucks that are rolling with drivers in them and customer relationships for the most part. And uh now if you have a bunch of uh excess capacity in your own company and your the profile of your acquisition is buy the target, sell off the the iron, um don't employ most of the drivers and take on the customer freight and spread it over your existing fleet.
I I think six to 12 months ago that might have been a a pretty good strategy. I think uh now that's less attractive because the market's so strong. You don't necessarily want to take on uh the legacy freight without the drivers to to handle it.
>> Yeah, you really don't have to work that hard to find freight these days. You just got to put a sign said, "Welcome shippers. Please call us up." Uh everyone's got more opportunities they can handle. Mark, I've got to ask Scottus. Probably the biggest day in transportation uh compliance change since deregulation.
I was actually headed to lunch with David Parker that day and I don't think I've seen a happier David Parker and David Parker has a lot of energy as you know. Uh uh so he was uh he was very ecstatic about the state of the change and the decision there. I would imagine in boardrooms across the asset side of of the universe that you cover, you're hearing consistency. What are your thoughts on Scotas?
>> Yeah, I think it's good to have clarity.
Uh, you know, I'm I'm not as excitable as David Parker and probably not as you either, Craig, but it's um, yeah, I think it was a significant decision because prior to that, you had half the country where u, you know, the rule was that the brokers aren't liable and half the country had the rule that the broker could be liable under certain circumstances. So now at least uh the playing field is is even across the country and I think it'll have a ripple effect throughout the industry and that's what people are spending time on right now is uh what are the insurance ramifications? What are the contractual ramifications? What are the process ramifications for both for brokers and for carriers?
And then uh uh that you know there's been a recent Texas case for application of the same standard to shippers that came out in favor of the shipper. But I think there's still a question of whether shippers will also start to impose u at least some more rigor around vetting who their brokers and carriers are.
>> Yeah. It's funny you mentioned Derek Bars was in our studio a couple weeks ago. He actually visited Covenant and he he remarked about if you vent my dad and Mark I know you've worked my father he's he's he's much more muted than David.
David's more excitable. I I am certainly of course David and I have the same haircut. Great haircut by the way Mark.
Um >> good haircut and your grandfather was excitable too.
>> The smartest best looking folks in freight are bald. That's what I say. Uh Mark, I've got to ask uh transaction flow night. We're talking about Kevin Knight who's been inquisitive over the last decade. Uh you know David Parker has been quite inquisitive. Really the story of growth in trucking for the largest asset carriers has been M&A not really organic growth. What what are your thoughts on the M&A market over the next uh year or so?
>> Yeah. So that um the market's gone through a number of phases. Uh you probably remember the land rush uh era in the 80s and 90s as uh deregulation took hold there there was a lot of acquisition in the van and refrigerated space and uh really at the expense of the LTL companies at the time. Um and then kind of a period of consolidation and more steady growth. And then really in the uh the next the 2010s you saw the rise of brokers and uh the rebirth of LTL and um you know some continued consolidation in the in the otr space and then a lot of interest in asset light developed in part because private equity was looking to deploy into the industry and they really couldn't make the investment work with an assetbased carrier and uh in part because of technology and uh and continued shipper pressure on pricing. So those things you know then resulted in uh you know a couple of years of supply chain disruption following the pandemic and here we are uh you know entering a new cycle for the first time you've seen some in four or five years um you've seen some interest in the uh irregular route uh truckload industries uh with uh dart getting acquired and then u you know the management team from USA truck um doing the carve out from DSV. So there's some capital flowing back into the irregular route industry where it had been pretty quiet for a while really since uh Nightwift uh and US Express merged and and Hartland did the CFI and uh Smith deals back to back. So u I think that will probably continue um as companies get through getting their their u their own fleets utilization up. probably start to acquire. Uh LTL had been quite uh active for a while and particularly again with Nightswift doing AAA Cooper and MME and DHE those were all um kind of in rapid succession and then the yellow terminals getting uh parcelled out uh throughout the industry. Uh I think that's probably slowed down a little bit as those all get digested.
And then uh in the uh what I call the specialized bulk tank uh flatbed and um and other kind of defensible niche industries, there's been a lot of activity u some uh some corporate but also a lot of private equity and infrastructure fund investment along with the leasing industry and I think those are those will continue to be uh pretty hot. Uh although I think in the tank industry you're seeing some distress right now. So those uh some of those rollups uh may need to you know be acquired themselves.
>> You know Mark I I'd love to have George Henry's luck in terms of timing. He is the best timed executive selling USA truck at the top of the market. I remember when I saw that it was summer of 22. I don't think that DSV realized or shanker realized that the freight market was uh had topped or the truckload market had topped. And talk about buying it at the bottom, man. Sell at the top, buy at the bottom. You couldn't have timed that one better.
Good on USA Truck and good on George and and the management team over there at USA Truck. What are we going to see in terms of logistics companies? Because I imagine private equity doesn't even know how to really price these companies today because of the Scotas decision.
You've been around trucking. you know how uh latigious and plaintist attorneys are looking for a reason. What are what are you hearing in terms of how PE and just general transactions in the in the logistics space are?
>> Yeah, I I would say it's been pretty quiet over the last month or so. Uh there were we've we've got a couple of deals that um were ramping up early in the year and uh you know, we'll have to see how those turn out.
uh they were not in the into the marketing phase. So, uh I don't have a a specific read on the last month, but I think it's going to take a minute for uh the brokerage companies to go out and u evaluate their procedures, evaluate their contracts, and uh probably repric their insurance tower. And uh I think it'll be difficult for uh anyone to invest until those boxes can get checked. But private equity uh very capable of making financial decisions.
They've got access to all the uh you know insurance companies. Uh they understand risk. So I don't think it'll shut down interest, but I think it'll um maybe pause for a moment until those things get reset. Mark, I'd love for you to give some practical advice to our audience if they're thinking about selling their business, if they're thinking about buying this business, you know, at all stages. What do you tell uh those parties in terms of preparing for a process and really in terms of of positioning themselves?
>> Yeah, I I would say um and and we've done we've done this u you know, presentation a few times for different groups. Uh it's very good to start early and and bring in somebody that understands what the buyers are going to going to evaluate and sort of have the questions answered before they get asked. Um and I'll give an example. Uh in the last year or so we were involved with a really a pretty nice company. uh it was in a specialized uh brokerage uh sector and um they operated well. They had growth, they had good margins, they had a better gross margin than average uh and they had pretty high revenue per uh brokerage employee, but they didn't have any contracts with those employees. And so it was very difficult for any buyer to value the income stream.
Uh and so thinking of ahead about how am I going to talk to my uh to my key people in my team about how they're going to uh how we can assure you know somebody in a transition that they're going to get the people that are creating the profits. Um do I have planning that I need to do to get assets in or out of the the company that I'm planning to sell? uh what are my financials going to look like after I you know rejigger those things uh do I have adequate insurance what do my reserves look like uh do I have contracts with key customers dailed down um you know there there are a number of different questions uh whether that's customer concentration risk drivers equipment that um companies can go through and and sort of do some housekeeping before they in front of uh buyers and um and then having everything very organized is another thing. If you've got if you can answer questions quickly, if you can provide data quickly if it if the data makes sense, um if you can slice it two or three different ways to explain uh maybe something that didn't go as well as you wanted or an opportunity that's coming up on the horizon and quantify it. Those are the types of things that give buyers confidence and um and either help you get a better valuation or prevent you from getting um kind of nicked down and and uh the price coming down during the process because you know problems are discovered and there are no answers for those problems >> or even walk away. I mean, so many deals die because >> the the buyer loses confidence in just even if the numbers are are still looks like a good deal, they just don't know if they can trust the numbers because there's too many questions. So, I think to your point, Mark, being ready is important. And I'm sure that you're happy to take the call and you're happy to help them along that journey as they prepare. Uh whether they're doing a transaction, whether they're selling, they're buying. Uh Mark is the guy. He is if you go look at the transactions particularly on the asset side, Scutter has been an institution across this industry. Uh and he him the the business is is is just absolutely the right party if you've got a deal to be done.
>> Well, well, thanks Craig. We we've just been so fortunate to be involved with a lot of the great, you know, families and companies in the industry for decades and uh people have helped us out a lot over that time and I'm happy to take a call from from anybody and just uh you know chat with them for a few minutes if they want.
>> Now, now Mark, my screen says Denver, but I know you as a Lincoln, Nebraska guy. Is that is that just today?
>> That's just today. The qu I got I answered the question, where are you right now?
We've had some We've had Denver. I didn't know if you moved, >> but Lincoln, Nebraska's home uh when I'm not in Chandooga.
>> I didn't know if you like the was going to the mountains or not. Mark, thank you so much. Appreciate it. That is our gift to our audience for free hours. And speaking of free hours, we have another attorney. This is a day of attorneys coming up as the one and only Matt Leler and I will have freight expectations right after the break.
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Welcome back. I am joined for the closeup of today's first hour by the one and only Malcolm Harris. Again, >> we're going to sort of wrap the week and wrap the show and then take a quick break and get back to >> Great Expectations with the one and only Matt Leler and Craig Fuller. But thanks for joining me for the wrap. Uh, I wanted to talk a little bit about how the week has gone and about social media and remind everyone to continue to give us feedback #FW Today. What we've seen on LinkedIn and Twitter so far this week has been great. It's been really encouraging to me because it has been quite a week. It >> has been quite a week and I just want to say kudos to you stepping into this thing, doing an amazing job. I think the entire team is extremely proud of you and Craig. It's it's been awesome. It's really been awesome.
>> Well, like I said, I am by no means a news anchor. I am learning as we go here on the fly. Really enjoying the content, enjoying talking about our industry, and we have had so many amazing guests this week. And that is the part that has made it really easy is that we've gotten to talk about so much cool stuff.
>> Yeah, for sure.
>> We got a great lineup next week, too.
>> I was going to say just looking at this week in recap, what was your favorite guest? I mean, we've had so many different conversations, but what was just like one that you just like, man, this was really awesome?
>> I don't know that I've had one favorite guest. I've had quite a few that I really enjoyed. I really liked the conversation with Aaron Graph because I think it made a lot of what we've talked about all week a little bit more accessible. It was really easy to sort of follow and understand the money part of it and how that interplays with it with invoicing and all of that with our industry. And I think that's usually a topic that's kind of intimidating for some, especially like true operators.
So, I loved that part of it. Um, everyone loved the Shelley Simpson interview. I know that's what you're going to say.
>> She was fantastic. She was fantastic.
Shel was awesome. and just kind of hearing her story and just uh you know everything that she has done in her body of work at JB Hunt. But then also uh he's my 1A uh Jeff Anderson with STG. Um he is fantastic and he was on with the truck, but just seeing him in this aspect and environment uh it really is a testament to what they're doing at STG and uh the the next iteration of what it's going to look like as well.
>> Yeah, there were a couple others that I want to mention too. So I also loved >> I love Webbestas. I love his story. I thought that was great. I love that, you know, I earlier in my career kind of met Shelley and watched her career progress and it was amazing to see a woman and with the amount of success that she's had. So, that has been was really cool to me to have her on here and get to share that moment. And then I loved the instudio guests yesterday. I love having people here in person. I loved that we got to talk about warehousing as we've talked about so much data and how important that is in our current in market environment. And I loved that we had a shipper on yesterday to talk about, you know, a little bit of a different angle than we have prior the rest of the week earlier in the week.
>> Definitely. And and social's been buzzing. I mean, this stuff is everywhere right now. So, if you uh missed out on an interview or uh you know, want to check a recap out, you can go to uh the website. You see videos directly on the homepage. I saw that new update on our website. Oh, really? Yes.
So, you can get it right at freightwaves.com directly and it'll take you to uh the Freight Waves Today page as well.
>> Yeah. Again, reminder, >> check us out on Freight Waves TV. Is it tv.frightwaves.com?
>> TV.rightwaves.com. Yeah, >> you can see us on the homepage, the LinkedIn page, >> the X feed, and we want your feedback specifically on X. Also on LinkedIn, #FWTOday.
Please keep sending it in. We love it.
We want your suggestions and ideas, anything that you'd like to hear from us over the coming weeks. We have an amazing lineup for next week. I don't want to tease too much and take the uh excitement out of it, but I think it's going to rival this week in terms of guests and be great as well.
>> It's going to be awesome. It's been a great week here. I know it's been fast and furious, but looking at the the views and impressions, I mean, it's it's been a good week for Freight Laves TV.
It's been really, really awesome >> and it's been fun to talk about in, you know, with a larger audience talk about the things that we talk about and love as well. All right. So, with that, we are going to get to a couple of words from our sponsors and then we will be back with freight expectations.
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>> Race car drivers like NASCAR champion Jesse Love are a lot like commercial drivers, pros. But even the best in the world still watch the tape to see what they missed and get better next time.
So, we created the Samsara Driving Coach.
>> Great race, Jesse, but you were following too closely and you were speeding. Okay, you got me on that one.
>> Samsara uses insights from millions of professional drivers to coach drivers in real time >> because even champions need a coach.
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Welcome back. And I got to say, welcome to Freight Expectations. This is a special thing we're changing up. Freight Expectations. Normally Matt and I pre-record it, but we are so electric live and we thought we'd roll it into Freight Ws today. Matt, how are you?
>> I'm doing great now that I had the clip of premier trailer leasing. You know, I love trailers. You know, I love maintenance, Craig. So, I'm excited, man. Live and in person or kind of in person. We're getting closer. How are you?
>> Yeah. I mean, you are the trailer whisperer. So, you and Chris Hines are the only two people that I know that don't work at Waw Bash or a trailer company that love trailers. Matt, >> everyone loves trailers. Everyone loves trailers.
>> Well, you got to have them. You know, it is important. I mean, you think about the trailers, they're they're more important than the truck in some ways, right?
>> Absolutely.
>> You can repower an asset. The trailer is what all the freight is in. Like, you want to know where is my box and that's the beautiful thing about connected trailers, my friend. So Matt, what is in the world of all of the stuff that's happening legal? We we were a couple of weeks past the Supreme Court decision, the Montgomery decision. What's sort of the fallout of the world right now?
>> I mean, it's still a lot of uncertainty, Craig. So, everyone is asking the question, what is a safe motor carrier?
They're asking, what is a reasonable vetting process? And the reality is nobody knows. You're not going to know until you have litigation in case law.
And so this is going to continue to percolate for the next few years. We'll likely see more cases go before the Supreme Court, but as it stands right now, there's a lot of uncertainty and uncertainty uh in the midst of a freight economy that is booming. I think people are still getting excited about everything.
>> Yeah. Our prior guest Mark Scutter, who's also an attorney, talked about the he he's more on the security side of the world where transactions are being done, M&A transactions. You said a lot of the logistics deals uh h are certainly u there's been I wouldn't call it loss of momentum is maybe not the right term but certainly a lot more question uh in terms of sellers and buyers of of really what this all means. I guess the buyers are the ones that are impacted.
How are you what are you seeing?
>> Yeah, there was so much pent-up demand coming into 2026. A lot of deals that were going to happen in 25 those got sidelined and now we're looking at 2026.
We say, well, what deals are going to happen? Well, for a lot of freight brokers, 3PL's and man's transportation companies, uh, the game is now changed.
The fundamentals of when you might be held accountable for a driver who is unsafe and has an accident. This is what we're going to have to understand. So, a lot of people that were really looking to get deals done. Now, there's a little bit of a slow play. What do we think the future holds? And we're again, we're not going to know for many, many weeks.
Ultimately, uh, I think the deals will still continue to happen. people either want to take some chips off the table or they want to recapitalize the business and there's a big appetite because even though here in Chicago it's pouring rain. Uh freight never stops it no matter what happens. So we're going to continue to see people need the stuff inside those beautiful trailers.
>> Matt, it's beautiful weather down here.
I was in New York yesterday. It was beautiful up there. I'm sorry that it's being rained in Chicago. But the uh you know it is it's this is the busiest time of the year. Speaking of weather, June just drives so much freight demand.
We're seeing incredible tightness in capacity. I think the question that is is still on a lot of folks minds is how much have we seen SCOTA Scottish decision really impact the freight market? Earlier this I believe it was last weekend. Uh there was a report at Siege Robinson is starting to call its carrier base. It's starting to be far more selective of which carriers it's going to do business with. Uh how how pervasive do you think that is?
I mean, this is the big question, like what do you have to do to have a reasonable vetting process? And for someone like CH, one of the biggest brokers that's ever existed, you're going to have to really look closely at what you allow in your network. So, conditionalbased motor cares, the safety rings that are again conditional, probably gone. I mean, they're not going to have the risk to take that type of liability on. And one of the things I think is going to be really interesting, Craig, that we're going to find out, a lot of large 3PLs and even shippers that work directly with motor carriers, they looked at their carrier vetting process as confidential, proprietary information that they were going to keep very close to the their chest. But now that's going to be litigated every single time an accident occurs. So, we're going to learn very quickly what every single major broker and major shipper does when it comes to how they onboard capacity, how they monitor capacity. And you're going to, I suspect, see a lot more culling as we wait for the federal government to kind of get modus fully implemented, find out ways to get rid of bad motor carriers. But as of right now, it's keep things careful and you're going to see rates likely go up as a result of that.
>> Yeah. I mean, there is a question. I mean, I've said it. I don't believe that Scotas is the driving is the driving factor here in the rate market. There are folks on X that have disagreed with that and maybe maybe it is. I mean when you have a company of the scale of Sage Robinson cutting back on the capacity or cutting back on whom its providers are uh that certainly it tells you a lot about you know the fact that it probably is having an impact maybe not uh not the only reason for sure. I mean freight demand is higher. We saw the employment report today was was much stronger. Uh the economy appears to be like I don't know if you've paid attention to the show this week, but I think consistently across the board we've you know we had the largest LT second largest LTL player with Estus on there, largest private transportation company in the United States. Uh we had their CEO on and he talked about just frankly how surprised they were on consumer activity. Uh we then had Shelley Simpson with JB Hunt, COJB Hunt, uh the largest surface freight transportation company in the United States. Uh we had STG, a very large intermoal player uh in the United States. Uh we had Ship Station CEO, $200 billion of transactions and consistently, again, all of those parties consistently talked about the fact that freight is strong. Aaron Grath mentioned uh as well. So it just strikes me that the the economy is holding up and better. We're seeing the employment data. We saw it ISM. We saw it in LMI.
The railroad data has been really robust and and quite strong. And I I think it's interesting because that demand side is certainly having an impact. We know that particularly in in sort of flatbed and certain modes of traffic. The supply side is also getting whacked at the same time through this compliance crackdown.
And now you have SCOTUS. And I still don't think Scotas is the primary driver, primary catalyst, but you know, if we continue to see more and more brokers start to call their carrier base, it's got to have a huge impact.
>> 100%. I mean, what we are seeing is this renaissance or a great freight awakening of people saying, "Okay, what is actually happening in the supply chain?"
And we see the CBS reports that come out. We see about Super Ego and other uh brokers and motor cares that are putting people on the road that aren't necessarily the safest. We saw the FMCSA, you and I interviewed Derek Bars together and phenomenal work he's done with the FMCSA. But what they've really focused on is driver qualification. So English language proficiency, non-domicile CDL, entry- level driver training registry, all of these initial kind of places. But we still realize even with after international road check, there's a lot of work to be done.
And now that there's a new kind of game in town, meaning anytime there's an accident with a truck that's involved and there's a broker involved, the plaintiff will sue the broker. They have no choice. They have to sue the broker.
Now, maybe the the the vetting process that they use is going to be consistent with a reasonable standard of care.
Again, we don't know that, but we're going to see a lot more of this moving in that direction. The thing that troubles me, and we've talked about this on the show before, what about the American consumer? What are we looking at with credit card debt or auto loan delinquencies or or mortgage uh mispayments? Like these are really important things that'll drive the ultimate like this the consumer demand for buying the stuff that we have. And that should concern people, I think, as we see gas prices likely continue to climb in the months ahead. Hopefully, we have a resolution to the excursion at some point. But what we know for sure is that motor cares and brokers know the federal government is trying to make the road safer and they're putting more things in place to try to drive that.
You and I both agree and I think we can assume the FMCSA is probably on the same page. They need vastly more resources that there is no doubt in my mind that if we want to have safer roads, you want to get home in the same condition that you left, which we all want, you need the regulator with a lot more teeth and a lot more resources. And that is still TBD in the days and weeks to come.
>> Now, Matt, is the requirement if you're an attorney, and again, you I I've never gone to law school, and I I think I got like a D in in law school because I hardly ever showed up. In fact, in college, I had a problem of like forgetting that I had to go to class or not go to class. I remember I got a D in in legal cuz I didn't and the problem is you know this because you're an attorney is you can't really fake it in in legal classes like a lot of things in English you can write these great things history kind of repeats itself but man if you try to fake it in your legal classes you're going to flunk out that was the story of me is I really didn't do any of the homework uh but I got to ask the the idea that there you have a fiduciary obligation to your client or you have an obligation I imagine it's a fiduciary obligation Yeah, it is absolutely >> to sue the the broker is is all that actually is something that I think a lot of frankly brokers who believe are going to be somehow exempt from this just don't understand.
>> Yeah. And that's a really good point. So when you're a lawyer, you absolutely are a fiduciary for your client. And with the law, you have to bring any claim you have during the kind of the nexus of events. So if you find out, okay, there was a motor carrier that was in an accident, whether the motor carrier was at fault or not isn't really relevant at this stage, but we're going to make the assumption that there's there's some culpability, you're going to say, well, who else was involved? And again, we've talked about the insurance numbers for motor cares, the the federal minimum being $750,000.
So, if you're looking at a potential claim, you're going to look at who is involved and if a broker is involved, maybe even the shipper is involved, if there's a leasing company in play, if there's a manufacturer that might have some culpability, you're going to bring those claims right away. Now, if you don't have good facts around those things, you may just issue discovery and and find out all of these things and then amend your complaint to bring these claims in. And so, a lot of brokers know this. Obviously, you have a requirement legally to have a $75,000 shity bond.
Now, that has nothing to do with liability in catastrophic accidents.
It's it's about cargo and and paying cares and all this, but when you look at what insurance does for you is it helps defend you. It it pays for the cost of a lawyer. And when you're in litigation, you might have $20,000 a month in legal expenses completely absent of any finding of liability. So, even though our federal government does not require brokers to carry, you know, third-party or contingent auto kind of liability insurance, you better believe they're going to start having this. Now, the big brokers already have it. They're going to see the renewals be a little bit more frustrating, a little bit more expensive. But for brokers who have not thought about contingent liability insurance, they're going to have to have that conversation and they're going to have to have it very soon. Otherwise, you'll have a bunch of Chameleon carriers and a bunch of Chameleon brokers who get knocked out by litigation, pop up a few months later, and get right back to it. Yeah, Chameleon brokers are definitely where this is headed. But I got to ask from, you know, bankruptcy court because that's where these would end up somehow in in bankruptcy. That is hard to sort of I mean, it's quite easy as I understand it, particularly small businesses, to pierce the corporate veil. idea that I can prove that you have intermingled accounts or I can prove that you've intermingled your personal life. I know a lot of brokers.
These guys are really smart about slinging freight. Some of them are incredibly great business people. Some of them are by the book, but some of them are not. And those are the people that I think are going to get screwed when it comes to piercing the corporate veil because they're probably not thinking about this. They're probably not thinking about the fact that I need to have a very separate set of books. I need to have perhaps a formal board meeting. I need to have board minutes. I need to have bank accounts that are separate, legal agreements. I can't just intermingle my personal life and personal funds with your business. What is the advice that you would give somebody that is a broker to ensure they have some protection?
>> Yeah. The best first thing I would say is don't take legal advice from a television show. If you think you need a lawyer, you probably do. It's not.
>> But it's free, Matt. And that's the point. This is a give.
>> We're not giving legal advice here. You can't. I love your about it.
>> The advice I would give >> people love non-billable hours.
>> That's right. That's right. We're all on a contingent side. Anyway, what I'll tell you is just like your sponsor loves talking about preventative maintenance for your truck and trailer. Yeah. You need to change the oil on that truck at a certain duration of time or certain duration of miles or engine hours. Like you have a cadence for when you get your equipment inspected and maintained. If you're in the business of moving freight or any business, this applies to anybody in any type of industry. Um, you need preventative maintenance on your company, what is happening with the law, what has happened regulations. You want to talk with your insurance company as often, maybe once a quarter, maybe once every six months to say, am I doing enough? Am I doing it right at this moment? And then you want to work with your outside counsel, say, hey, here are the contracts I use. Here's how this stuff operates. Because to your point about piercing the corporate veil, it is difficult in to pierce the corporate veil, but it is easy to do if you to your point co-mingle funds or underinsure a business. Like that's a big one. If you underinsure your company and you're found liable, they'll go after you personally because they would argue you should have known better. So, if you're open to preventatively maintaining your equipment, and everybody should be, then you should also be open to preventatively maintaining your business, having your contracts reviewed, having your policies reviewed, and making sure that you're doing everything as reasonable as you can, because when you don't do what's expected of you, that's when you have the liability. So, if you have a really good process document, but no one follows the process, understand that my brethren, my sisters and brothersin-law are going to come knock on your door and they're going to start reaching into your pocket.
>> And just like we Mark Scutter was on, again, he's a transaction attorney and he I asked him advice that he would give a founder, an entrepreneur wanting to sell their business. And he said, "Look, get ready. Start today. Start early in the process. Make sure that you're ready. Well, before you start talking to bankers, well before you start talking to attorneys, is get your business ready. Because if you find something out in diligence that maybe the business isn't as clean or isn't as as performing to the degree that the the buyer would expect or want it to be, it's going to get it's going to ding you in price.
It's also probably you have the risk of deals falling apart. I've walked away from deals myself and have been on the other side where we've had deals, you know, years ago. So, I I ran a payments business and we had a big buyer came in uh private equity firm came in and I was young and I didn't understand and appreciate what that process looked like but they came in did diligence they walked away the next day they said ah like we're we're just not comfortable with these things and they were not to me as a CEO as a someone in the business I didn't think they were that consequential but there was just enough of them had piled up to where they had doubt and I think you would probably agree that it's the same thing with plaintiff attorneys. They don't have to find one thing, but a series of things.
It's just like in a murder trial. My wife and I watch a lot of, you know, these murder shows. Women love those things, by the way.
>> Like the Lifetime shows like give me give me this at a Hallmark. You know, Hallmark is like everyone's lovey and it's the typical, you know, dude from the city. the girls like the country girl comes in and you know if they fall in love hallmark always happy ending Lifetime is always bad endings women women love the extremes um >> true crime man it's it's a phenomenon >> you know these dine shows that we watch is always like it's just the culmination of facts that make it easy you don't have the body you don't have the weapon but you have enough facts to give a doubt and I imagine that works really well for plaintiffs is just enough facts to show that you're sloppy enough if you're if you're suing that person.
>> Yeah. I mean, this is why you get advice from people who say, "Don't say safety is your number one priority." Because if you say safety is your number one priority, all we're going to do is find all the instances where you weren't safe and then say, "Okay, here's why you ought to be liable." So, it's to your point, it's about following a process that you have that's documented, not deviating from that process when you're trying to find capacity. That is when the lawyers can get their claws into you. Because if you have a process and you say you have a process and you don't follow the process, now we're not saying, "Oh, it's a bad day for this truck driver." Now we're saying it's a pattern. It's a practice of your company to to kind of circumvent your own internal documentation. And once you can show that you're not careful on those issues, we can continue to go forward unlike the true crime world. So true crime, murder, all this pro the the you know criminal stuff that is all around uh proof beyond a reasonable doubt. Not proof beyond any doubt but proof beyond a reasonable doubt. Think uh 99% think that's what happened. That's a kind of good analogy. In civil litigation it's nothing near that. Civil litigation is a prepoundonderance of the evidence. Think flip of a coin plus one. And so the burden of proof in these cases far lower than most Americans understand when it comes to, you know, criminal stuff that you see on television. And there's not a lot of great shows about civil litigation, but I'm sure there's something out there somewhere. But that's what really gets people surprised. It doesn't mean that you are for sure guilty of this. It means that you might more likely than not are, and that's enough to get you on the hook for joint and several responsibility for something that happens. Matt, there are some good shows. You had Suits. I never watched Suits, but I'm well aware of one of the actresses who's now sort of like the the UK's enemy number one. Uh, and then you had Boston Legal, one of the greatest shows on television.
>> Unfortunately, Rush in Peace Boston Legal. I love that show. That was a fantastic show. You do have some legal.
There are some ones, but they're typically very soapy drama series that don't go into they're not hard-hitting like Dine, right? Well, the problem like I watch the legal >> grievously a criminal thing, right?
>> It is. It is. So, when you're like as a lawyer, like you see the stuff on television or on Netflix or whatever, it's different than being a lawyer.
Like, when you're actually a lawyer, you're just sitting in a cubicle or an office looking at documents and highlighting things and maybe sending emails all day long for 12 or 15 hours a day. It's nowhere near as exciting as you see like trial attorneys going and arguing before judges. Uh, most litigators, if they're really experienced litigators, might litigate one case a year just because most cases settle. So, maybe I need to start watching more of the legal stuff. I don't watch a lot of it, Craig. I just don't. I watch a lot of medical and true crime, though.
>> That's interesting. Do you ever see Land Man?
>> No. You've said great things about >> You got to watch Land Man, but the worst I think the worst scene in television's history is this scene because it just so fake. anyone who's ever been in a legal thing of of the young hot shot lawyer uh in there and she's like shaking them down the the opposing council. It's just so like anyone who's ever been in the legal system, it just doesn't work that way. Um and I just >> there's no surprises in litigation. Like you know all the evidence well before you get >> Yeah. And you're not going to I mean the whole shakedown thing and they're like oh like you just it's so fake and and it's unfortunate. Also there's a weird airplane. By the way, I love Land Man.
It's a great show. There's this weird airplane scene. As a someone who knows a lot about airplanes or and knows enough about airplanes as a pilot, it just like uh someone asks goes, "Is that actually how it works?" Like, "No, that that isn't how it works." But that's fine.
Coming right back, man. We got a lot to talk about. We need to unpack this Home Depot show or this Home Depot lawsuit.
You have dug into it. It is. It's an interesting one in the light of Montgomery where Home Depot was a part of a lawsuit was sued in the event of an accident and it rings a lot of questions about negligent hiring and whether that can be enforced against a shipper. We're going to find out what the Texas Supreme Court said about it right after these messages.
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>> Matt, I love our intro music, by the way. It just has this awful feeling of like doom and gloom. It's sort of almost like Succession. You ever seen Succession?
>> I love Succession. That is a phenomenal program and it does inspire a very nice kind of discordant chaos that we find ourselves in with supply chain. So, absolutely, man.
>> Especially when the attorneys get involved. Speaking of attorneys, I got to talk about this Home Depot lawsuit.
You wrote an article about it. Just for our audience that may not be familiar with it, this is a lawsuit that involved a an accident that happened. Home Depot was brought in court, the state of Texas, and the Texas Supreme Court said something about it. Matt, what exactly is the background on this? Yeah, like so many of these catastrophic accidents, it starts off with a motor carrier that has a collision with someone else. And in this case, it was a motorcyclist. And the terrible accident takes place. They sue the motor carrier. You always sue the motor carrier. You sue the driver.
You always sue the driver. The driver is responsible just as much as the motor carrier is. And the motor carrier, it's an agent of the of the motor carrier. So that's, you know, held them jointly and severally liable. But then there's a shipper and the shipper had selected this motor carrier. And the question became before the court, okay, well, shipper, you made a selection of a of a motor carrier just like a broker might have done. You maybe picked the wrong motor carrier. Maybe you should have some culpability. And the Texas Supreme Court uh ended up saying in this case, the passive shipper does not have the responsibility that the motor carrier does. We're not going to hold the shipper like you might hold a broker liable for negligent selection. Now, it's important to note here, Craig, that the motor carrier that was selected by Home Depot for this move was Wernern Enterprises. And so, if you can't select Wernner Enterprises and avoid a negligent selection claim, we have bigger problems. And so, what this case comes out at maybe a couple of days or day after the Montgomery case is it shows the same tension that we have in this industry. The plaintiffs argued, "Well, Wernner has a lot of inspections, a lot of out of service things, a lot of accidents, a lot of things that make them appear like they might be unsafe, and so you should have had some responsibility." And the Texas Supreme Court very clearly says a passive shipper who is not in control of the asset, not in control of the driver, not maintaining the equipment, is not going to be held liable. Now, this is how Texas finds this case. This is going to be something we're going to see across all 50 states in the years to come because each one of these are going to be litigated to say what is the standard of care that someone should use when they select a motor carrier. Now again, Home Depot selecting Warner Enterprises, I don't think you're going to find any broker or shipper who's going to be held responsible for selecting a mega carrier to move full truckloads. That would be absurd. But it goes this this this tension between how much you control your service provider and how much vetting you need to do on the front end.
And that's what this case kind of boils down to. Again, the Texas Supreme Court comes out and says, "No, we're not going to hold Home Depot liable for selecting Wernern when Wernern is a big motor carrier that has got good standing with the FMCSA."
>> Well, Warner I mean Warner is is is one company, but you have others that are big. I mean, Western Express has one of the highest accident ratios of of all motor carriers that are out there. Could they have argued that if it was a Western Express or a Super Ego, Super Ego claims? They do not identify as a carrier until they do.
>> That's right.
>> So, I mean, it's show >> they're a leasing company. They're a leasing company.
>> What which bathroom do they use? We don't know. It depends on what whatever advantage they get. But the reality is like if if if if the plaintiff's attorneys were able to demonstrate that Warner was not a safe car, someone else, would that have outcome been different?
>> Possibly. Now again, they were not making the argument necessarily about the selection being negligent. They they argued that initially, but they also tried to argue a theory of respondiat superior. So essentially, you're an agent of the shipper. So you, the motor car, are actually working as if you were this. And and Texas law is very clear.
When you hire an independent contractor to perform a service, your job is not to make sure that they're doing everything properly. Your job is to pay the subcontractor to do the work that they're qualified to do. But your point is really well taken. What we're going to have to wrestle with is nationally the out of service rate for commercial vehicles is 22%. Um, I don't like to use crash data as an example of like when someone's safe or unsafe. It's it's interesting, but crash data on the FMCSA has nothing to do with the finding of liability. So, you could have a crash and you could be in the crash and reported in a crash, but someone else hit you. It it still looks the same in the government database. The things that you can control are out of service things for your drivers and out of service things for your equipment. And so if we see a bunch of motor carriers that are above the national of service rate, which again is abysmally high already, maybe that becomes a winning argument. And I think for many plaintiff attorneys, as they start to understand how this industry works and how we look at safety as a as an ongoing concern, they're going to realize, oh, 94% of motor cares have no safety rating and the out of service rate is already awful. So if you're even a little bit above that, maybe you ought to be someone who's, you know, broke taken as being hiring someone unsafe. Now the FMCSA has their work cut out for them.
Like to tell you what motor cares are safe and unsafe is their per that's their prerogative. That's their mandate.
They just don't have the resources to do that at the scale that we need. And so there's this ambiguity. And the ambiguity is not going to go anywhere.
It's going to stay here and it's only going to be deci decided through litigation or perhaps an act of Congress. And I don't see Congress getting involved anytime soon with broker selection process. That's why my hope is FMCSA gets a lot more resources to go after carriers that aren't safe and do more audits because that's the only way we can fully understand if someone's a safe motor carrier or an unsafe motor carrier.
>> Yeah. I mean, look, the FMCSA on their own website says that this is not to rely upon I mean, even the scores is not to make a safety decision. They they have that disclosure there on their website. Matt, the So, let's take this a little bit further. So we have the Supreme Court decision. It didn't change. It didn't say that brokers are liable or or could be held liable. It said that there is no federal preeemption to prevent them from being liable. They can't use the F4A in the idea of negligent hiring. That is still something that they're liable to. In fact, in the decision itself, Justin Kavanaaugh actually said, "Look, if a broker is hiring someone safe, they have the incentives to do, then they shouldn't be sued or shouldn't be uh have to pay out in in terms of plaintiffs." But it's going to take a lot of litigation. We're going to see at least 50 different lawsuits, if not hundreds, if not thousands of more, as every single jurisdiction we start to see these lawsuits pop up. But let's talk about Texas specifically. So, we have this lawsuit. Are we gonna do you think that this settles the case on whether shippers are going to be held or could be held liable in the state of Texas?
>> I think what's going to happen is you're going to have every shipper that selects a motor still get sued and those shippers will then use motions to dismiss to try to get rid of these claims. And most of the time, they're probably going to be successful. where we're going to start seeing ambiguity, I think, is when we start taking into account more of the data that can be captured. So, the way that Scotas kind of phrase, especially Kavanaaugh, looked at at his concurring opinion, and a concurring opinion, just for everyone who's who's listening and watching, a concurring opinion is not the opinion.
It really is something that's illustrative for other cases, but realistically, it is the justice saying, "I agree with the outcome. I agree with the majority, but I have a couple of things I'd like to quibble with or clarify or whatever. So, it is not binding law. The concurrence is not binding law on anybody. It's just more of a again illustrative or or secondary kind of relative to the the broader majority opinion. And to say that we don't expect a lot of brokers to be held liable that or don't expect to see a lot of litigation, that's wishful thinking.
It's very similar to opening a floodgate and looking at the water and saying, "Okay, I'm going to let you out, but don't go too fast. Go go go slow. I want to make sure this is controlled." The water doesn't care what you want. If the gate is open, it is flowing. And so, the litigation is absolutely going to continue to happen. For Texas, it is really encouraging. So, the Texas Supreme Court had the Wernern Enterprises decision that overturned their case. It was awfully decided initially at the trial court and at the appellet court finding Wernner not liable when someone else crossed the center line and collided with them.
That's a big win from the Texas Supreme Court. This is another big win for the Texas Supreme Court and for trucking companies more generally and and brokers. We don't really want our customers to be held liable for our own mistakes. And that is the important piece that I think the court recognizes in this Home Depot case. But to think that this settles the issue probably not true. These are going to be fact intensive questions of what level of vetting did you use? What did you know? When did you know it? And that's what's going to be discoverable over time. So you're going to build a defensible position, but that defensible position may change as technology or data becomes available, which is why back to our Lo's analogy, you want to get preventative maintenance of your contracts and of your processes at a reasonable cadence because things change quickly. So this is a big win for Home Depot. big win for brokers generally and shippers generally, but it is just a taste of things to come. And who knows how much money Home Depot had to spend to litigate this case all the way up to the Texas Supreme Court.
Likely millions of dollars.
>> I bet Home Depot was excited that it was Warner because at least the Supreme Court had some familiarity with the the the Warner as a company in that really famous lawsuit. an unfortunate lawsuit for Warner because, you know, this was a situation where the truck was on the side of the highway and what was the number? I mean, it was a big big uh uh claim. What was the actual jury war? Is it hundreds of millions of dollars if I'm not mistaken?
>> For the the first Werner case, you mean?
>> Yeah. Yeah.
>> Yeah. So, yeah. So, that case was was fascinating. So, the original case, let's kind of go through the highlights real quickly. Wernern is operating its truck uh below the posted speed limit.
They they never lost control. The truck and trailer were wellmaintained and it was snowing. So, the driver again was going underneath the posted speed limit.
It's like a winter advisory in Texas.
The driver in the opposite lane was going too fast for conditions. And and we know this because they lost control, spun out, and crossed a 42 foot grassy median and collided with the truck operated by Wernern. The driver for Werner probably had two to three seconds to react once that other vehicle lost control. It went to trial and at trial it was found the the liability for the truck driver the driver for Wernern was 14%. And the driver for the pickup truck that lost control and crashed across the median and smashed the Wernner truck they were liable 16%. So that's 30% of the liability with those two parties.
They found Werner was responsible for 70% of the liability. And the argument that was made by the jury and others was well Wernner should have told the driver to go slower. they had better ability to say, "Hey, here's some training on driving in the winter and you didn't give them the training." And that verdict was initially about $90 million.
And Wernner appealed that. And after they went on the appeal and they lost the first appeal, that number ballooned to $130 million because of what we call postjudgment interest. So if you get a judgment, you're still going to collect interest on that judgment until it's paid. So Wernern took a again a big gamble and they appealed to the Texas Supreme Court and that case was decided where eventually Wernern had no liability and it was and it went back to the lower court for instructions to to to that effect. But that case had the entire transportation industry on pins and needles because how in the world can anybody anticipate the actions of another driver who crosses the other side of an interstate? That's impossible. It's like you driving home from work and someone crashes into you across the median. You're at fault.
That's absurd. So, the Texas Supreme Court correctly reversed that earlier decision. But these cases are not slowing down. The verdicts continue to rise and the litigation itself continues to increase.
>> And we had the state of Missouri in in the state of Missouri, there was a case with Wobbash on the side of the road. Trailer was built 20 years ago. Was a trailer whisperer that you are. uh you know the fact that this you know truck the car is apparently the driver's intoxicated hits that truck at 55 miles hour and the argument is that there's no guard but that was in Missouri it's a different state entirely again we're talking about these substantial payouts but I got to ask Matt the idea that the shipper was not negligently hiring or couldn't be held liable for war some of Warner you know The fact that they chose Warner and somehow made a mistake there um certainly protects shippers going forward or at least provides an argument to protect them.
It does this help brokers as well. Can they make the same arguments under that particular decision in the state of Texas?
>> Yeah, I think it's instructive as you're a broker trying to defend yourself in these sorts of claims. So, if you look at the Home Depot case, it has to do with again an accident by a trucking company trying to bring in who brought the trucking company into that space, which was the shipper or sometimes it could be the broker. The same argument is going to be advanced. I couldn't control them. I don't have access to their all their stuff. I don't maintain it. I don't own it. That's not my prerogative. They're not an agent of mine. When you go back to the negligent selection piece, it's what did you know?
When did you know it? And how does that compare to what your process outlines?
So, if you're a broker and you're hiring only mega cares that are publicly traded, I don't think you're ever going to be hit with negligent selection and lose. You might still get sued. You might still fight those cases, but you're probably not going to be found to be negligent when you select a mega carrier. Now, you don't do that because the mega carrier is going to be more expensive probably than working directly with a small owner operator. So, this is the challenge that brokers run into. Can you go tender freight to the big motor carriers if they want it? maybe. But if you're trying to run your business, you are aggregating small capacity. And what you know about small capacity is finite.
You only know what's reported by the FMCSA. And they don't get to touch a motor carrier. Probably in the first 12 to 18 months of that company forming.
And every single month, 6,000 new motor carriers kind of enter the industry while another 6,000 or so leave the industry. So you're in this really difficult position where you're expected to know more about your partner you're working with than the federal government that regulates them. And that's an untenable position. That is why with the Montgomery case, the US Chamber of Commerce, the FMCSA, the Department of Transportation, all of them did not want the broker to have liability for negligent selection. That was unanimously found to be wrong. I mean that is unanimous. There is absolute ability to go after a broker for selecting a motor carrier. But it goes back to the same question. What is a safe motor carrier? And you don't know that until after an accident takes place and what is a reasonable vetting process? Nobody knows that. No one can tell you what that answer is. The only way we're going to know for sure is as litigation continues to build up across this country. And that takes time. So for brokers out there who are like, "Am I doomed?" you're not doomed, but you better have liability insurance because you have no idea what this what Ohio will say about your vetting process versus what California will say about your vetting process. And the whole purpose of the federal interstate system that we have is consistency across all markets. That is the one thing we absolutely do not have when it comes to negligent selection of motor carriers.
So, we're in this really difficult position of trying to give advice and give uh some options for brokers to use when the reality is none of us know and we're not going to know until well in advance as we have a lot more litigation making it through the courts. The Home Depot case though, Craig, is very encouraging. It shows us that if you work with a motor carrier, you're not controlling them. You're they're not your agent. They're just out there doing a thing for you and they're a subcontractor for your business. You have a very strong defense. and most states have a strong defense. Federal preeemption was a way to say, "I'm not even going to get into my selection process. Now, we're going to litigate the selection process." And there's a lot of great tools out there to help people do that.
>> Now, to be clear, this is only applies to the state of Texas. So, um I imagine courts, at least attorneys that are arguing in front of courts, will refer to this case, even if it doesn't apply in their state, but at least look at it as a guide. Is that right?
>> Yeah, that's right. So we we call that kind of authority p persuasive authority. So yeah, in Illinois we have our own case law. We have a whole bunch of case law. But if there's a case that's right on point, similar facts, similar kind of evidence ultimately, maybe even similar law, we can say, well, this is persuasive. This is what one court did. Maybe you should look at it the same way. And the court will will note that. They may find it persuasive.
They may not. They don't have to. So it's not like it's authority that binds them. But I do think that as we see more of these cases make it to the various Supreme Courts across this country, we'll get a pretty good understanding of what is reasonable uh vetting processes.
So even though that case of Texas is not binding on all shippers across the entire United States, it is persuasive and it'll absolutely be cited when people say, "Hey, in this case with similar facts, they weren't found to be liable, so so why should I be liable?"
So I think that'll be encouraging as time goes on. But again, yeah, you're right. It's not binding on any court outside of the state of Texas.
>> Well, coming up, stay tuned. We've got some conversation around Modus.
Caution for those folks that are trying to access modus because it has not been fun last couple of weeks. And I want to talk about this hours of service change that was made specifically for fertilizer truckers. And we'll talk get back to that right after these messages.
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Modus is the biggest technology change in FMCSA's recent history. trying to bring in a bunch of databases. The process has not gone as smooth as one would like. It does bring us back to the memories of healthcare.org that came out right after Obamacare where the system crashed. This is certainly how the industry is thinking about it. The FMCSA has been really um has put out a couple statements, but certainly they have their work cut out for them. Matt, what are your thoughts on Motus right now? Well, this is a natural progression of how we had to move things forward. As you mentioned, there's a bunch of different databases that were all siloed. And one of the big goals of the FMCSA is to have one place of truth where everything can go. And part of Modus is going to ultimately purge a lot of carriers that are that are not doing things correctly.
Two-factor authentication, a whole bunch of other changes with the new system, but it's change management and nothing ever gets as easy as we hope it is.
Deployment is always a challenge and so I think uh give it a couple of months.
Uh that's probably my best advice is it's going to take some time. There are ways you can contact the FMCSA to say, "Hey, I'm having some trouble here." But this is what we needed. We needed to have this done and there's a lot of technical debt we have to overcome. And if you want to have the road safer and you want to have everyone getting stuff that they need on time and undamaged, this is what we have to have. So, I'm glad the FMCSA has got this thing going, but there's a lot of work ahead. I'm sure uh administrator bars and deputy administrator Jesse Elisa Senhar having a wonderful time as they navigate this technology.
>> Yeah, it's like doing a big upgrade of that is so so much harder taking a big mainframe system particularly government databases which are probably you know 30 40 50 years old in some cases built in cobalt built in like machine language and trying to have them talk to modern systems. It's interesting because you always hear, you know, these these VIP code founders, these software kids that are doing amazing work have the benefit of not having technical debt to deal with. And I remember when I started my business, I kept thinking, man, these big companies are just so slow and they suck at shipping new things. I could do this so easily. And then a couple years after having real customers and real technical debt and real issues, you realize, man, it's easy to ship something when nobody's on it. It's really hard when you have to deal with the existing application layer and a new one. It's totally different. So, good luck to the FMCSA. I think the best advice I've heard is stay off it if you don't need to hit it because it's not really the best place to do. There's another story this week. Wonder if you caught this, Matt. is the hours of service modification. One of the things that we're seeing from this administration is making modifications to really help out farmers. Early this year, we saw that the SBA created small loans for in people, businesses involved in supply chain uh that were had very favorable terms. Uh we're seeing the modifications to the hours of service rules for the truckers that are hauling fertilizer. It also basically changed the way ELDs are treated in this. Any comments on this change?
>> Yeah, I mean this is interesting. So fertilizers become an interesting topic.
I don't know if it's directly tied to what's going on in the excursion in Hormuz because there's a lot of fertilizer comes out of there. But this waiver of the hours of service now drivers who are moving nonhazardous let me me repeat that non-hazardous fertilizer now have the ability to do 16 hours of driving per day and up to they have to have a six-h hour rest period.
It applies to 35 states. So if you're moving fertilizer again nonhazardous non-hazmat fertilizer you have 16 hours to drive a day and you have the six hour rest period. this goes I just want to confirm on my notes August 26 of 2026.
So until basically end of summer uh there is this waiver for the hours of service and that is a you know that just shows that we need the fertilizer delivered and if freight doesn't stop we have to make sure the drivers aren't stopping as much either and so that is what this waiver looks to be doing.
Again it does not apply to hazmat. So do not use hazmat. you need if you have questions about hazmat, talk with your uh your your insurer or talk with your lawyer. But for just general non-hazardous fertilizer, you got 16 hours a day until August 26th.
>> Well, holly manure has never been more attractive than what we're going to see with this uh extension or this exception. So, I'm sure drivers love that. I got to ask your thoughts, Matt.
We've seen the market tighten up. I've talked about this on numerous occasions that the Scottish decision is not really a major factor. Maybe it's with with Sage Robinson. In fact, we opened the show with this. Your read on the market conditions, how how impactful the Scotas Montgomery decision really is at this point.
>> I mean, Scotas does not take cases that are immaterial. They they take cases that are incredibly important. And when we first covered this thing, we did it live the day it broke. I'm afraid of expectations. It made a lot of people surprised because obviously we saw all the business groups that usually have a great track record before the Supreme Court. We saw all of them lose and now we're kind of wrestling with the aftermath. And I think what we're likely to see is many companies revisiting their carrier selection processes. So if you're in the business, you're going to try to callull more and more of your service providers. That will drive rates up ultimately, but we're still probably too early to tell. With Supreme Court cases, though, the implications are decades in the making. They take a long time to fully get into how we do business. And I think practically the goal for many brokers is to navigate this time, make sure you're following your processes and your procedures, and then as you look to increase your own protection is to have insurance that again isn't legally required of you, but it's almost required now in post Montgomery days. So I think to your to your question, will the impact be meaningful this year? Probably. I mean, we see CH and others start to callull some of their capacity, but it does not address the fundamental question, which is, are the motor carriers that are authorized to haul freight in the United States safe? And the only agency that has the power to really tell us that does not have the resources to do that.
And changing liability from a motor carrier to a broker does not make the motor carrier safer. It does not do that. But it will presumably make it where brokers are more reluctant to work with people that are edge cases and that's probably a good thing.
>> Yeah. I mean, look, so much to talk about. Uh friend of mine on X, he's a he runs a small fleet. His name is Ted. He talked about the fact that he's getting some of the freight. He got caught off by brokers. They're going to him directly, some of the shippers. I imagine that's going to be a part of the story. Matt, thank you so much. Great.
Start over. Uh great freight expectations as always. You could watch Freight Waste the Day every single day at noon to 2. We bring in the best guest every single day. You can also hear at Road Dog at 5 to 7 and daily 6:00 a.m.
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