What Shippers Really Value in LTL Carriers | Episode 72

Hi, welcome to Banyan's Tire Tracks podcast. My name is Matt Silea. Today with me, I have Kevin Huntsman from Mastio & Company. Kevin, how are you doing?

Good. Very nice to be here. Appreciate it, Matt.

Oh, likewise. Likewise. I am selfishly very excited for this one. Your company's study is one of the most fascinating to me. I come from the carrier world, so I worked for FedEx on the parcel side for about 10 years. So kind of the outcome of what you guys do is super fascinating to me. And before we get too far in, for some of our listeners that might not be familiar with the research and the study you guys do, can you tell us a little bit about what you guys do at Mastio & Company?

Absolutely. So first off, again, thank you for the opportunity to be here today. So Mastio recently published the 22nd edition of the USLTL study. So we do telephone interviews, Matt, with major shippers across the U.S. We also do the same thing in Canada. Mastio's expertise lies in capturing insights from customers, whether it's for LTL, air and ocean freight companies. So you mentioned FedEx. So we work with FedEx on the air and ocean freight piece. We do a lot of work in the energy, and as well as the chemicals and plastics area.

But really, when you distill it down at the end of the day, we talk to companies' customers, we capture how they perceive those customers, and we bring it all together and publish an annual report for the carrier community, the investor community, as well as the shipper community.

Yeah, no, it's awesome. For anyone who's interested, like I said, it just came out. It's a fascinating report. We've had the pleasure of you guys presenting at our users event a couple of times now. And I remember one of the ones a couple of years ago. It's just really interesting because I think you – and you, as the user, as a shipper, or even as a carrier, you have some of these feelings, I think. And it's pretty common to know, okay, this carrier is difficult to work with, or I don't think their service is super great. But it's really interesting when you see the data aggregated and kind of see it all come together, like you said. For this year's study, what were some of the things that stood out most to you? What was maybe one of the more shocking results you found this year?

It's a great question. One of the most shocking things is really from a pricing perspective, Matt, and how the carriers have been able to maintain pricing discipline in the marketplace. I mean, we measure an attribute called rate stability. And the industry mean for that attribute stayed very similar.

So if you would have seen it going down a lot or either way, that means carriers were lowering prices or raising prices. The carrier community has been very disciplined in what most would consider really a two or three year plus freight recession outside of an uptick, Matt, really kind of into first quarter in through the summer months.

The other thing that what I thought was impressive, if we want to talk about one of the larger national carriers, is XPO. XPO is the only national carrier when you think about the big guys whose scores improved on every single attribute that we measure. So very impressive, very difficult to do. And that was something that we were really – surprised isn't the word. Impressed might be the right word. Because it's hard to do in the LTL freight market, as you well know.

Yeah, yeah, for sure. And what's interesting is I've been exposed to you guys' data for a little while now. I think I remember a couple of years ago, you noticed that XPO was kind of coming up a little bit in scores. I think you comment. I'm like, yeah, we want to see if this trying to continue. That's actually really interesting that you pointed out that, yeah, they've kind of stuck with that.

I remember you talking about small things like the cleanliness of their trailers and things like that. That is interesting. One of the things that kind of stood out to me, it's probably because I might not have last year's study, but seeing Daylight higher up on the list, at the very top at least for on the overall, was a little bit surprising to me. They're more regional than some of the other players. But I was like, "Oh, wow." They don't come up too much just because I'm in the Midwest. So we get a lot of the Dayton, PITT OHIO, R+L carriers. But yeah, I was pretty impressed to see Daylight come up. I don't know what their trend's been the last few years, but I saw that was –

Their trend's been outstanding. It's two years here in a row where they've actually placed number one, what we call the Mastio Weighted Performance Index. So that Mastio Quality Award. They're a unique LTL carrier, Matt, kind of that long haul coming out of the West Coast. They don't look like a lot of other carriers. They partner with other carriers that you see on our list that deliver freight for them that do exceptionally well. One would be Averitt Express, which I believe ranked number two overall.

But Dayton, it's a great carrier. Very, very focused on what it is that they do well. And a close second would be Averitt. And then number three, I think overall was – not think. I know. It's my study. I should. Right, Matt? It's Old Dominion. So another carrier that does an exemplary job with shippers.

Yeah. They're a crowd favorite, I would say, in terms of clients we work with. That's a super common one that they pop up a lot. The rates, I would say, and your study kind of shows it, they're more of a premium offering. But for the right shipper profile, it's really worth it.

Again, you see these things through day-to-day interaction. For me, it's kind of validating from an industry perspective to see like, "Oh yeah, that thought of mine is actually true. They're a premium offering. They're a little bit more expensive. But man, they do a good job."

What are some of the most important factors that you think are influencing the LTL carrier selection today?

That's a great question. I mean, there's the basics because we look at customer needs two distinct ways. We look at what we call stated importance, which is what people tell us directly. We use a scale from one to 10 with 10 being critically important. And I'll just list the top five, Matt. No surprises to anyone. Number one, shipments delivered with no damages. Number two, shipments delivered with no shortages. Three, picked up when promised. Four, accurate billing. And five, carrier is trustworthy. So what I always consider the basic nuts and bolts of that relationship that the carrier has with the shipper.

Now, most shippers won't even interact with a carrier if they don't think they do those things sufficiently. What those factors really become are what we call baseline requirements. So think about the basic blocking and tackling map that a company has, or as I'll say sometimes, the nuts and bolts. But for those carriers like a Daylight, an Averitt, an Old Dominion, Southeastern Freight Lines, you mentioned PITT OHIO, Dayton Freight, great carriers. Those carriers are really separating themselves with the relationship.

Some of the other factors that when you look at the customer needs, through what we call a two by two decision matrix, those major factors that are the differentiators in a relationship is are you easy to do business with? Are you trustworthy? You resolve my problems. Customer service personnel respond. You pick up and you deliver when you say you're going to. Really, outside of those nuts and bolts, it's that relationship. If I were the shipper and you were the carrier, that we would have that helps that relationship blossom.

Now, if the nuts and bolts factors or the baseline requirements start to drop, then there's the concerns. It doesn't matter how good you are over here. But for the carriers that excel, they're very, very good at the baseline and what we call the industry parity factors. But the differentiators – and another one of the differentiators that I wanted to hit on is proactive communications, Matt.

Yeah, that's a great one.

It's one that is so important in this industry. And I've heard stories of listening to interviews that my team does. It's been a couple of years ago, Matt, but we had a gentleman that we were speaking to and kind of doing a little digging on proactive communications. And he's like, "Listen, if you know at 3:00 that you're not going to be there today and I'm standing on the dock waiting for you and I'm going to miss my son's soccer game, you need to let me know." That's proactive communication. So when the carrier knows, letting the shipper know.

And I think there's a lot of technology that's coming into play now, Matt, that didn't exist before that I think will help assist and aid in that transformation from a communication perspective. I mean, I can order a pizza on Domino's and I know when it goes in the oven. I know when it goes in the delivery car, Matt. I know when it's on the way. I can see where it's at. That's transcending our B2C relationships over to the B2B and the expectations that many shippers now have.

For sure. I talk about this a lot just with track and trace and invisibility when we're talking to prospects and clients. I'm a consumer at heart. I use Amazon. I obviously lived through COVID and just I remember ordering everything online. And really what's kind of shifted is – I like to use this analogy. As soon as I order something, my nose is against the glass. I want to know where it is, when it's coming to me. And really, the e-commerce surge kind of put, I think, pressure on the industry to really give you more insights of where your freight is. It's really interesting. Not to pick on LTL, but parcel. I have my induction scans and all these different things. And full truckload, you have your ELD tracking. LTL has kind of been the one that's like, yeah, I know when it left the terminal and when it might not have. And that's about it.

So the need for that proactive communication is huge. So it's interesting to hear you guys kind of talk about that. Based off of this year's research, do you feel like the LTL carriers are adopting that more proactive communication, or do you think there's still some work ahead of us?

It's a combination of both, Matt. I mean, I know I spent some time at CSCMP and had a chance to visit with some of the PITT OHIO folks, and some of what they've got coming down the pipeline from proactive communications is ground-breaking, really. So you'll know where the driver's at. Was it close to your terminal?

A lot of the carriers are investing in that, some more so than others. Some more so, if you're a big national carrier, there's an extreme cost for that. I think another carrier that's done exceptionally well on the proactive notification is Estes. Estes has invested heavily from a tech perspective, and we're starting to see comments like that in the data.

As a matter of fact, Matt, we have a question that we ask more of a top of mind question. What's the most valuable tool that an LTL carrier can provide on their website and which carrier's website is the most valuable to you? Estes has been number one, two years running on that. So that investment is translating into the perception of the shippers where they're saying and using those tools.

And one of my key things, I talk about this a lot, Matt, to your point is, especially as we have younger people coming in that don't look like I do with all this gray hair is you're at the younger people's expectations is immediate gratification from an information perspective. And that's where it's going. And the other thing is I can throw an apple tag on my suitcase. And if it gets lost, I know where it's at.

There's all these little things that sounds so simple, Matt, but are massively difficult to leverage across a very broad network. But I would say all in all, I think the carriers are doing a very nice job of bringing new solutions to the table and providing those types of tools for shippers that are especially interested in them.

No, yeah, that's super interesting. And you talked about Estes. One of the things – I get the pleasure of working with our API documentation and our product team heavily here. Some of the regional carriers – and you hit on this and it kind of stuck with me, but the regional carriers seem to be quicker to adopt this. And like you said, their footprint is much smaller. So implementing a new technology is a lot easier than an XPO or a FedEx or something like that.

One of the other things you mentioned actually had me kind of think of something else. Just from our own experience, how much do you think brand recognition of knowing the national carriers also impacts carrier selection? I ask this selfishly. We work with a few shippers where they keep picking – I'm going to pick on FedEx a little bit. It's nothing personal. But they'll pick FedEx even though we'll do analysis with them and show them there's cheaper carriers, there's better service carriers. But they keep picking the same carrier over and over again regardless of what data shows. Do you see that kind of brand recognition factor into your survey results at all?

Yeah. I do think it does come into play to your example that you just mentioned, Matt, that at the end of the day, I think many of us are creatures of habit and we know, okay, I work with – and I'll use Old Dominion as an example because they are costly. They don't hide it, but they're a premium carrier. I've had shippers tell me that, Kevin, I know they're expensive. But when I go to bed at night, I know it's going to get there. So you've got brand recognition around OD bringing a premium carrier.

The FedEx halo brand over the LTL. And I think some of that could be, and you could speak to this better than me, as far as the halo of the FedEx package piece, which obviously now is split away and spun out, but there's still that brand component to it. And I think LTL carriers today, Matt, especially some of the nationals, Saia, XPO, have done a really, really good job of promoting their brand.

Listen, they've got traveling billboards going down every road across every state in the US. So I know, I believe XPO has got a new tagline on their trailers. I saw that. I know some of the carriers had some 250th anniversary trailers for the US running around. So they seem to be more cognizant of brand recognition. And I think that does, at times, impact shippers with the brand. And again, just being creatures of habit.

Now, that's it. And when I was at FedEx, something that they talked about heavily is the brand awareness of it. And they put a lot of focus on it. I'm actually really curious to actually see your guys' results over the coming years with their LTL division kind of splitting out again. That'll be interesting.

So we touched on a few of the things. You talked about what the baseline is, proactive communication. Some of the highest performing LTL carriers, what are the things they're consistently getting right? So outside of just what you consider the baseline, to kind of be in that top five, is there any correlation between other things outside the baseline that kind of links across your top high performing LTL carriers?

Absolutely. Great question. There's a few attributes that come to mind. One is ease of doing business with the carrier. I always say, how can I make it easy for the shipper to give me their money if I'm a carrier? So that ease of doing business. And the other one, carrier is trustworthy, is another one. And trustworthy, you could ask five people and get six definitions of what that means, Matt.

But we've seen that attribute increase, say, versus 15, 18 years ago in importance. And that continues to be in that top five. But one that I think is there's two that are really critical that probably don't get as much discussion as they should. The first one would be drivers are courteous and professional. Because drivers – let's use R+L, for example. Great carrier. They see that driver every day. That driver is R+L. Is that driver in a good mood? Does that driver look good in the company clothes? In many instances, that perception of that carrier is when that driver comes to your dock every single day. And that's critical.

And the other piece that it does get talked about is the knowledgeable and helpful sales reps. Because that rep that advocate for you when you're shipping. Does that rep come out and walk your dock to see what kind of freight you have? How can that sales rep help you encounter fewer of billing inaccuracies. When you think about quote to cash and accessorials with the new NMFC classifications. Just taking that time as a sales rep to walk that shipper's dock, it can pay off in so many various ways. Not only in saving them money and some of the other things I just mentioned, but creating a relationship. And that matters.

Because listen, all these trucks go up and down the road. So how do you differentiate yourself? Because most of them do 80% of the things exactly the same. So what are those 20% of things that really differentiate you? And it's the relationship pieces, Matt. And those carriers that are at the top consistently, year after year after year, always do that other stuff right, but excel on the relationship pieces.

That makes sense. And you talked about how the rates kind of stayed relatively stable this year. But with some of the fluctuations in the market in general, I would imagine that that trustworthy piece is heavily influenced. Because in an uncertain market, I want to work with the guy that I'm comfortable calling. And I know he's going to answer. He knows my freight profile. Sure, it might cost me a few extra dollars this quarter, next quarter, whatever. But I want to work with the person that I know is going to deliver on time. He knows me. So that definitely makes sense.

And we even see a little bit on the TMS side of going out and just understanding the freight profile. The same kind of thing is like everyone can give you a platform to make a BOL, but going the extra distance of just understanding the freight, the challenges, NMFC changes that. Oh my gosh, is that such an interesting thing for the folks on the dock to kind of understand that. So no, that definitely makes a lot of sense.

In this next question, I think you kind of answered it and we kind of just chatted about it, but kind of the confirmation, does the research suggest that customers are willing to pay more for a consistent, better service? And is there any additional analysis to go with that? But I think based off what we said, the answer is yes. What's your perspective?

The answer is yes. I mean, that's the beauty of the LTL industry. There's a carrier type for every type of shipper. So if you want lower costs, don't necessarily care if it gets there quickly, there's a carrier for you. If you want somebody that's kind of in the middle-of-the-road cost, middle-of-the-road service, there's a carrier for you. If you want premium, we talk about Old Dominion and that space. And there's a tremendous number of carriers that are in our study, the Averitts, the PITT OHIOs, Warp, A. Duie Pyle, ones we've mentioned today, Peninsula, that are what the shippers consider to be a superior value. That for the level of service that they're providing and the dollar that I spend, I think they do an outstanding job.

And I think the other part of this, too, is we actually ask a question. Have you moved or are you moving volume from one carrier to another over the next 12 months or have you over the last 12 months? And it's about 75% to 80% no. I used the term creatures of habit earlier. You had a great analogy with the FedEx example, Matt. And that's that stickiness quotient of the relationship that will keep you with somebody, maybe even if it's a little bit more expensive, but you've got certainty. And especially, if you're in a just-in-time inventory position with your suppliers.

And I would say the carriers have multiple customers. They have the shipper as a customer, but also the shipper's customer is their customer many times. So many layers. And if you're a shipper and you find that, hey, I don't have issues with this carrier and my customers don't have issue with this carrier, then I probably don't want to switch. And even if it goes up a little bit more – now there's always a tipping point, Matt, with that. But if it's within a band that I can manage and I can sell to my team, my front office, my executive office, and my customers, then I want to stick with them. And that's when the shipper becomes the advocate for the carrier. Versus the carrier becoming the advocate, the sales rep being an advocate for the shipper.

And I think that's a really interesting piece as well, because great perk for a TMS company is when the shipper, when the end customer is impacted by the carrier performance, makes great tools for us. But for the carrier, unfortunately, we see a lot of times people ask like, "Hey, I've got one specific customer or one lane where they don't want to see the Saia driver," or whatever the case is. Yeah, like you said, they're kind of going two layers down for that kind of buy-in with the carrier.

One of the other things I wanted to ask was, based on this U.S. finding, where do you think the greatest opportunity for the LTL carriers are there? And my perception from what we've said so far, one of the biggest ones is probably the proactive communication piece. But what's your opinion on that?

And I would concur with you on that. And proactive communication can mean many things, too. I've had carriers tell me, we're really good at telling somebody when something went right, but we're not always good at telling them when something went wrong. And that falls into that umbrella of proactive communications, Matt.

And I think that's kind of the next frontier of some of this around the proactive communications is when something goes wrong, because it will, it is an LTL network, crap happens.

All the time. All the time.

But how can you resolve that and get ahead of it? And I think the other thing that I've been kind of beating the drum on his billing accuracy as well. So the carriers that perform exceptionally well in billing accuracy, you see them also kind of coming up to the top as well. Because as a shipper, I work with a carrier that has billing issues that has a trickle-down effect because they start doing that incorrectly. I'm constantly fighting that battle. Then I start to think, well, now they're not picking up on time. Now they're breaking my stuff. When in reality they may not. But your perception has changed because of the friction created with billing issues. So you hear that term quote to cash all the time. And you guys are familiar with all that with the TMS side.

Yeah, yeah. You brought up a really great point. Oh, my earbud fell out. You brought up a really great point. So when you start getting those billing inaccuracies, you start to then end up impacting other departments as well. So not only is like the AP team or the accounting team impacted, now they're having to go to the operations department more to look up the shipment details and figure out, "Okay. Well, what were we quoted? Did so and so enter the information correctly?" And you start going down that and you start to maybe notice things you didn't notice before. Like you said, like, "Oh, they're breaking my stuff all the time." And it could just be a small window into it. But those billing inaccuracies really kind of open the door to probably unwanted visibility is probably a good way to put it. No, that totally makes sense. Is there one takeaway from this year's study that you would want the industry to kind of remember? And what should that be?

It's a great question. I've been thinking about it after Megan sent me the email. I think if I had to pick a word that – and we've been talking about it, we've used it, is it's communication. And we ask a number of open-ended comments, voice of the shipper questions too, Matt. So when I start to marry up those carriers that perform exceptionally well and bring in, using some AI tools, those open-ended comments, the ones that excel and continuously excel, it so revolves around communication. And that's not just communication from the shipper or to the carrier to the shipper, but that communication within the carrier, because that translates to a better relationship with the shipper themselves, but working collaboratively within the carrier.

Because ultimately the carrier, our carrier partners are who we do this for, our goal is that every one of them is perfect. It's not going to happen. But that's why I never like to talk bad about the people at the bottom because they're trying. And just because you're at the top doesn't mean you're going to stay there. But that constant – it's like continuing education in a job. You got to keep doing it. You got to keep practicing to get better. And communication is that piece, whether it's the driver.

We hear or we see and receive open-ended comments that, man, I love carrier X because I have my driver's cell phone number. He's the best. And that's another layer of communication within the relationship from the account rep to operations, to the driver, to dispatch. But to me, really, the thing I would like to leave people with is don't take focus off the importance of communication within your own organization, as well as the carrier to the shipper as well.

And sometimes this is a shipper thing, too, Matt, is you will hear shippers talking about carrier of choice. Well, as a shipper, be a great shipper because the carrier is going to be more favorable to you.

100%.

Put the information in correctly when it's an address. If it needs a drop gate, put it in there. If there's accessorials you know are coming – nobody likes surprises and neither does the carrier. They don't want to take the time to go invoice you again for an accessorial. Be a shipper of choice too. And that's where I talked earlier about walking the dock. The sales rep walking the dock with the shipper, that's an opportunity for the shipper to learn best practices as well. So that they're a most favored nation's carrier or shipper with that carrier.

Yeah. And I remember seeing that in a past life all the time. You said it really well. No one likes surprises. You show up to the dock and you've got five extra pallets and now you have a capacity issue. And depending on where that shipper is in relation to the terminal, I might not have another driver that can come through and help pick up the rest. So that proactive communication from the shipper to the carrier is super critical. It's something that I think is sometimes overlooked or even taken for granted. And it goes a long way, like little details like that, like liftgate, calling in early for pickups when you know that you're having an influx or a busy day, those things go a long way. From a routing perspective, I have a lot of pieces on the table as a carrier where I can help make something happen if I know about it. But if I don't know about it, it's really reactive.

And then you said something earlier that I think is really important when it comes to communication is everyone wants to tell you about the good things that happen. It's really easy to do that. But when something goes wrong – I always use this example. There's always a weather delay when something goes wrong on the delivery side. I don't know what it is, but you can find a weather delay in Texas in the middle of August somehow. But having the insight, like you said, internally from the carrier to say, "Hey, we had a delay here. It caused this, it caused this." That now allows the entire company to be able to communicate to the shipper and say, "Hey," back to your earlier example, "we're not going to make it by that dock close time." That allows the shipper to go to some baseball game or whatever.

But yeah, I would echo from what I've seen as well on our side of the fence, that's the direction I would say the industry needs to focus on. And I know for us, not to plug us, but we're doing the same things in TMS in terms of how do you find these indicators earlier and earlier in the shipment's lifecycle to throw up a red flag? Because, like I said, that red flag is typically enough to at least make something happen, get a rescue, another pickup, something else, or rescheduling a delivery. No, that's great.

We're coming up on time. Is there anything else, any closing sentiment you'd like to add for the for the viewers at home or anything else about Mastio you'd like to include?

Just one thing, and I think it's always very important, Mastio exists because the shippers are kind enough to give us their time. And we can't thank the shippers enough for that, Matt. And we try to create an environment where it's easy for the shippers to give us feedback. And I just want them all to know that the carriers do invest in the data in Mastio and their time and resources to improve their services over time. But the shipper community is an amazing community. Carrier's amazing community, and Mastio & Company feels very blessed to be able to be a part of that.

Oh, that's awesome. Yeah, I echo Kevin with that. This data, if you haven't been exposed to it, it's very rich. It's very great data. I love it. I think it's a really great resource to review and just kind of get understanding of the market. So to kind of echo what you said, anyone that participates, please keep doing so. It's awesome. It's a really cool report and research study that you guys do.

Yeah, coming to the end, again, Kevin, thank you so much. Really appreciate the time and the conversation. This is a lot of fun for me. Selfishly, when our marketing team asked me to do this, I selfishly was like, "Yeah, I definitely want to do this. I really like this data." Thank you so much.

Thank you.

Yeah. For those of you at home, check out Kevin Huntsman, Mastio & Company. I'm Matt Silea with Banyan Technology. You can find us on LinkedIn and all the regular socials that everyone's used to looking at. But thank you. Tune in next time. Thanks, guys.

Thank you.

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