#12 Bill Driegert (DAT) on the Technology That Actually Sticks in Freight

[00:00]

Host: Alright. Welcome everyone to another episode of the Freight Show. I'm very excited to be joined here by Bill Driegert, the Steve Jobs of Freight as I understand it. I did not look at that title. That was not my suggestion. I knew you would feel, like, deeply uncomfortable when somebody said that, so I had to tease you about it. Apologies.

Bill Driegert: It's alright. I would mercilessly tease Andrew Silver about his Freight Prodigy line, which was on Freightwaves, like, I don't know, four or five years ago when he started Molo. So he told me that, yeah, once you can't get out from under it once you got it.

Host: Yeah. Well, it's really good to have you on, Bill. I'm excited to chat. I thought we would -- yeah. Many folks in the audience, I think, will kind of loosely know your story. And so I'm actually just gonna dive straight in. And one of the things that I've always appreciated about our conversations, Bill, is that I think your skill set, experience, and just general sort of outlook puts you in a position where you've got a very unique perspective on both where the industry has sort of come from, but I think also where it's headed because I think you've had a really front row seat to a lot of the different waves of technology innovation, but also just sort of business model innovation in and across freight. And so I was curious to basically start with your view on the sort of epochs that you've been involved in freight. So you sort of joined originally with Coyote Logistics, I believe, and then went over to Uber Freight and then went over to Flexport and then the Convoy acquisition and now are obviously leading the carrier side of things at DAT. But I'd love to hear your kind of meta reflections -- what did things look like at that stage? What was the industry? And take me through these sort of big movements as you've seen them.

[02:03]

Bill Driegert: Yeah. And I think the first thing I'll just call out is change takes decades in the space, and if you go back, it's really like a decade at a time. And I actually think today we're kind of overlapping a few changes at the same time for the first time. So if you go back to deregulation, post deregulation, well, you know, computers were a thing, but it was still a pretty traditional industry. And way back in the day, right, you had Sage Robinson, American Backhaulers, a few others pop up in the eighties into the late nineties that -- you know, it was posted boards to the first internal brokerage systems and that really was like up through the nineties. The big change that happened with American Backhaulers in that era, so pre -- you know, American Backhaulers got acquired by CH, and I'm gonna get my year wrong. I think it was 96, 97. They were unique in the way they managed the floor. And it was one central operation. That central operation had one system, and all the loads are visible to all the carrier reps. And they also did a split where they had one side be carrier, one side be shipper. That was distinct from CH Robinson, which at the time had like 250 plus different offices. It was all cradle to grave. Right? And cradle to grave meaning the same team managed the shippers, they managed the procurement, they would find their local carriers. That made it very difficult. So CH at that time had a very difficult time managing large national accounts or very scaled accounts. And American Backhaulers had this big central office in Chicago and that became Chicago Central for CH. But this was a period -- the first epoch -- where technology really started to yield benefits for freight: if you had this central platform, you had all the loads in one place and one team, then you can get much more efficiency out of like -- you might have one team that's working, say, the Pacific Northwest, but they just happen to have one of their carriers in Atlanta that can do Atlanta to Dallas today. Right?

And so those sorts of opportunities when you're doing cradle to grave are harder to manage. It's harder to manage big scale national accounts like a Coca Cola or Pepsi. So that, the first epoch of brokerage -- one was deregulation and just the creation of brokers because when brokers first came to market, there was a resistance to the idea of a broker. Like, there was a lot of just educating the market about what a broker was because it was a whole new model and a whole new way of going to market, and why would I give you freight if you don't have trucks, right? I mean, you can imagine the pushback and the salesmanship that had to happen at that phase. The second phase was this split into the Chicago versus traditional models, and then the rise of the broker TMS as a result. So post American Backhaulers, I came on as fourth employee at Coyote. That was my introduction to the space. And Jeff's whole thesis at the time was very much: we're gonna build the most efficient brokerage platform. But this was brokerage platform within the four walls of broker, just executing freight, and making that Chicago model just more efficient -- taking the American Backhaulers as version one, this being version two, and more efficiently applying all those ideas. But at the time, we did not think about anything outside the four walls. So the idea of putting technology in the hands of a carrier or deeply integrating with the shipper outside of EDI, just passing loads back and forth, that really wasn't the focus. It was really all about making the broker more efficient. That was the next phase of tech.

Then you had, I think, two things happen. Right? You had apps come to market for the iPhone, and just like any new technology, people try to figure out a lot of it -- a lot of the early apps were just taking the website and putting it onto an app, and there really wasn't a new operating model. But then when Uber launched, that was this transformation -- and of course, there were a lot of competitors to Uber, but Uber was really the one, right, that transformed how people thought about

[06:09]

engaging in these transportation operating models because it's like, oh, I can just hit a button and a car shows up. That's a whole different experience. And that then, it took time to percolate in the market and really gain traction. The first company to call themselves Uber for freight was a company called Keychain Logistics that came through Y Combinator in 2012. Their product was really just a load board. It was more of the Craigslist, but putting it on the app versus actually managing execution. They did not last too long, but at that same time, at Coyote, started thinking about this. I remember having presentations of, like, we need to be with Uber for freight, cut out the dispatcher, let's build an app. We built an app called Coyote Go, and then apps started to come to the market at a pretty steady pace between 2012 and 2016. There were a lot of startups. I don't think that the true end to end execution though, like the true vision of Uber being this full experience really started to crystallize until Convoy, you know, a few others around Transfix, of course Uber Freight -- it's that whole 2015 to 2016 period is when you really started to see an acceleration of a true app driven model where the full execution happens. And that was the next wave.

[08:12]

Host: Because why do you hate that term?

Bill Driegert: "Digital freight matching" just sounds like -- you don't call Google a digital phone book or something. You know, it's just equating very traditional things versus creating a new term or definition. Also because the assumption was that the match was the most important part. And that to me is the difference -- the Craigslist versus Amazon analogy, where Craigslist, you find buyers and sellers connect and everything else happens offline. And it was always, from the beginning, so much more. And when you say Uber, you understand that it's more because it's not that you just found a driver and then you gotta call the driver, had to negotiate, and then the driver showed up. Maybe they didn't show up. That wouldn't be much better than a taxi service. So it wasn't the matching, it was the full experience. And I thought Uber for freight captured that, but of course nobody wanted to use Uber as a term after Uber Freight came to market. And there wasn't a good replacement term, so I just kinda went with it. And I haven't come up with a better term, so I'll just accept that it's digital freight matching.

But so that was the next era, and I don't think we're done with that era because the Uber Freight and Convoy obviously spent significant sums scaling that model as brokers. And this is where I think the pivot is: this tech and that capability will continue to scale in the market, but not from companies that are brokers. I think the biggest brokers -- you see CH Robinson is getting leverage out of the model, your TQLs -- like they will, you know, your largest brokers will make those investments to have those capabilities, but all the other brokers will partner with Convoy platforms and other providers to build out all those automation capabilities. And I think the tech still has a lot of runway in terms of spreading across the market, but the model of being a digital broker -- I think that stalled out quite a bit. Other than the largest brokers continuing to invest and get the benefits, for new digital brokers, I would not expect in the year 2025 that anybody's gonna spend $2,000,000,000 building another digital broker.

[10:17]

Host: And what do you think -- I've got my own sort of ideas about this, but like, why is that not the case? Do you think that it really is only the very largest companies that can get the return given the investment, or do you think that there's something about freight mix that makes it just not possible to drive the levels of penetration?

Bill Driegert: I think some of the difference in how Convoy and Uber Freight went to market speaks to the challenges here. Convoy, if you were pure and you only wanted to drive automation and you wanted to be incredibly product driven, that's your model -- which is more what Convoy went to market with -- then you are going to restrict your opportunities in the market. And so from a commercial perspective, it means you're dramatically narrowing your TAM because if you think of the innovation curve, you're gonna focus just on the early adopters and those that are willing to -- you're really narrowing your TAM. As where, if I'm a traditional broker, if I'm just starting a broker today, I'm gonna use all the tools, but I also know that there's gonna be a big chunk of freight that I'm just gonna have to slog through because the shippers may not be sophisticated or have good tooling or just don't have budgets to invest in integrations or capabilities, or they have an ERP system that's 20 years old, or I'm delivering into schools and I've just gotta call the principal to negotiate when I show up at the dock. Right? There's a lot of manual processes because freight is just such a varied tapestry of SOPs that if you are trying to be pure with your product, you're just naturally gonna constrain your market share. And it takes significant investment to get full coverage across the market. In fact, one of the beautiful things about being at DAT is you have this company that over forty seven years has figured out how to solve for every part of the market within their particular

tech scope. But that means a highly differentiated experience across that whole portfolio of companies that engage. And it's just hard as a startup -- you're always trying to ruthlessly prioritize. You know, you're gonna capture those early adopters and then it's just -- this is also why change in freight takes decades. It's 10% of the economy, it's just a massive industry with millions of players with highly variant needs and SOPs and capabilities. And it's not like consumer where you can just download an app and experience the future. It's business to business. So you've got capital investments, you've got long decision cycles, and as you move up the chain -- shippers, bigger brokers, bigger carriers -- those cycles can be years or more. So I think to try to just build a broker that's purely digital -- I would say that if I were gonna start a broker today, it would be digital forward, AI forward, but it would not be purely digital or purely AI. That would be dramatically limiting my TAM or my opportunity.

Host: And it feels like it's a very hard -- if you're starting with the customer, it's a hard model to sort of say, well, let me just kind of pick and choose the freight I can run for good margins and not solve the rest of your problems. It feels like a hard sales competition. It's not a good product to the shipper. It's quite product-centric as opposed to customer-centric in some ways.

Bill Driegert: Yeah. Yeah. Because a broker wants to be able to go to a shipper and say, give me your hardest challenges and I will be here for you. And that's how most brokers get started -- just incredible hustle and service orientation. So you had to go in and say, well, I only want the perfect freight for my system because my system's better. Well, you're immediately starting in -- you know, you're immediately undermining your value prop to the shipper.

Host: And I think one of the things -- this is sort of a well understood phenomenon, but I think in the early days of that model, there was some belief that you might get winner take all dynamics, but there's a bunch of reasons even from a shipper procurement perspective why you wouldn't really want that.

[14:39]

Bill Driegert: I want to have, you know, a competitive bidding situation. And certainly I'm not gonna consolidate on a single provider. You know, I may whittle that down over time if you have a clearly differentiated capability, but yeah, I'm always gonna be in a competitive space.

Host: Yeah. And so as you think about the various stakeholders -- let's just call it sort of shippers, brokers, carriers -- what do you think is sort of fundamentally maybe true about what they care about that will sort of dictate the way that the industry evolves?

Bill Driegert: That's a good question. And I think you have to put yourself in each of their shoes individually because starting with the shipper -- I mean, shippers ultimately, it's cost and service, and they're gonna look at the scorecards at the end of the year. And I think the challenge from a shipper in terms of big investments in technology or big capital expenses is that most gains are very incremental, right, in terms of benefits. And there's a certain amount of noise that you just can't eliminate from the system. Plants will break down. There's always high volatility in demand. There's always some noise in the system that you just have to have buffers for and be able to control for. But I also like -- most shipping departments are grossly uninvested relative to the cost. And most shippers' transportation is not the primary expense. It's once you get into commodities like lumber or these areas, that's where it's going to be a significant percent of the cost of goods. But you know, like, get into these -- particularly in San Francisco, you get into trucking, people are like, great, let's go get Apple freight. I'm like, yeah, it's not good freight. Like, who doesn't like -- they're gonna have highly, you know -- like, there aren't that many truckloads of iPhones going down the road overall.

Right. So most shippers -- you know, most Fortune 500 companies, transportation is just not a core strategic priority or competency. And if, like -- I'll take Amazon. When I was at Amazon, when I got there, we were spending probably 2,000,000,000 a year on trucking, which sounds like a huge amount of money. But we were spending over $200,000,000,000 on fulfillment center buildout. So for the operations team, trucking was still way fifth or sixth on the priority list. And so it just didn't get as much attention. So as long as it's working, as long as the trucks are showing up, and as long as it's reasonably reliable -- and if company reliability is absolutely essential, like auto plants and manufacturers, they'll have a very highly engineered solution. And once they've got it, they've got it. And then if there's a little bit of cost drift, it's all in the noise in terms of what are you trying to achieve.

So I think the core challenge, if you're thinking of it from a shipper perspective, is just -- being a VP of transportation is a job that is more likely to get you fired than promoted. You tend to be very conservative. I'd say 95% of directors of transportation or procurement are very conservative and methodical in their approach, and the good ones are very data driven and just very process driven, but they're not going to -- it's going to take a massive effort to get them to change their core approach, meaning, to use a new provider or to reengineer how they do procurement or to reengineer their routing guide approach or to put in a new ERP or transportation management system. Those are just big efforts in general. So that's like most friction. Brokers, like, highly competitive market. They're looking for advantages. I'd say it's fun working in -- Oh, sure? Because I'd want to come back to brokers, but I do have one question before we move on from shippers.

Host: Do you see there is a fundamental difference in the needs and preferences of midsize

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small to midsize shippers versus the large enterprise?

Bill Driegert: And you see this in the difference in how certain brokers are competitive in small shippers versus large shippers. And small to midsize shippers typically -- you're going to have -- they're gonna be higher touch. They're gonna be more variant in terms of their SOPs. They tend to do better in cradle to grave models or models in which the shipper is the center of the world. And you see this -- we did a survey years ago of who shippers, SMB shippers preferred. And the company at the top -- I'll give a shout out to -- was Landstar, which was a surprise at the time, but then I talked to the CEO of Landstar, he said, well, it's all agent based. You've got offices all across the US, and if I'm a Landstar agent, the shipper down the street pays my electricity bill. Right? Making sure that every single load is taken care of. I'm gonna be highly responsive. And a lot of service -- and this is one area where I think at Uber Freight and Convoy and some of the bigger models often get wrong -- is that service really starts with responsiveness. Like, you can be -- for the big shippers, if I'm Anheuser Busch or AB InBev, yeah, at the end of the year, if you're 98% on time and the other one in my second place is 98% on time, I'm gonna give you a little more leeway, and you'll move up the rankings. For a small shipper only shipping like 10 truckloads a month, it either showed up or it didn't. Right? I'm thinking much more transactionally. And if you called me immediately to let me know that load is running late, and you were responsive, and you're offering me options, and you're working with me -- and you clearly care about whether it shows up or not, then I'm gonna respond well. It doesn't matter then if you were only 80% on time. Like, if you had two loads late that month and the other provider would have had only one load, but the other provider didn't pick up the phone and you did, I'm gonna stick with you.

So for small shippers, it becomes much more that's why, you know, this is a relationship driven business. I'm gonna care about the contact and engagement, which also then makes it harder to automate as a result because that soft touch is just harder to replicate. And this is also where you will find there are probably thousands of very small brokers that have legacy relationships they've had for twenty years with the same person. You're never gonna shake them free. And it's because they just have a good relationship and they built it over years. They don't care if you coming in can get them 3% cheaper and 2% better in service. Like, they've got their guy or gal that they work with. And I think that's the other challenge or the other question of, like, why can you not just consolidate the market? You have that long tail, and most shippers don't care. You can build -- in the end, this market, you're talking about percentage differences. You're on time percent as an average -- you may go from 90% to 94% on average. Great. That's just not enough of a difference to consolidate the market. There aren't 10x better solutions. There are incrementally better solutions that take time to percolate to the market.

Host: Yeah. Okay. Awesome. Shippers and --

Bill Driegert: Brokers, highly competitive. So I think from a broker perspective -- I mean, it is a squeeze right now. We're in a bear market. So particularly right now, brokers want to know, like, how do I get my OpEx down? I've had a lot of these conversations with CEOs where it's like, how do I rethink my business and adapt -- adopting AI, adopting our automation capabilities? What does that look like? I think it's different from a shipper because it's existential. Right? Shipper, you're buried at the bottom of the organization. Broker, this is your whole world. So you've got to be thoughtful and innovative. I also would say that

there are brokers even in this bear market that I talk to that are making great margins, growing year over year over year. And I'd say a lot of it still comes back to fundamentals of service, but by and large, I find that a lot of the most successful tend to be the most curious, the ones that are trying new things. And the other thing I love about working with brokers too is if it works, it works, and they will continue to. And if it doesn't, it doesn't. Like, brokers are incredibly pragmatic because it is a highly competitive business, and you've gotta be on top of the numbers every day and every week. I made this investment -- am I getting the return? If I'm not, then I'm not gonna invest more in it.

But I think brokers are gonna adopt AI if it drives OpEx savings, and they're gonna adopt AI if it drives buy side savings. They're gonna adopt Convoy platform and all the DAT automation as we build out -- if it drives savings, if it adds value, and we can prove that out. And these things do work, which is why it's also a great proof point because you'll get scale as it works and as it proves its value. Because our brokers also, like, they talk to each other. Right? It's a small world. You meet the same people, you go to the same conferences, and stuff cascades out, and people, you know, tug at the bar or whatnot. It's like, oh, did you try Vooma? Did you try Convoy platform? What'd you think? Oh, this is good. This is bad. Right?

Host: And what do you think is likely -- because there's sort of a conversation that I often think about, which is does the level of fragmentation in the brokerage market increase or decrease

[25:08]

with time? I think when I look back thirty years, the big thing is that brokerage has just crushed as a share of total freight, which is really cool with some amount of sort of concentration. I'm curious where you see that starting to head.

Bill Driegert: Yeah. It's a good question because it also -- like, who is going to play which role is part of the embedded question there as well. Because if you think about Uber as an example, did it create more fragmentation or less fragmentation? Well, it really created more fragmentation in the sense that now you have individuals that can enter or exit the role of being a ride provider easily and flexibly. And similarly, what we saw during the pandemic on the carrier side is that more fragmentation occurred. The market has become more fragmented on the carrier side because the friction to engage in the market went down. And so thereby, it was easier to enter and exit as a result. At least that's my thesis, and I'm sticking to it. But on the broker side, what is the benefit of consolidation? Like, what are the reasons that a broker would scale? And certainly technology investment is one of those historically. So if technology is more democratized, you have more access to pieces, then small brokers tend to be more competitive and you'll have more competition, more differentiation based on their adoption of technology.

The mid level is where historically, yeah, you hit a certain threshold below which you just can't build your own systems. You're relying on third party systems. I think a lot of these TMS -- the TMS used to be the differentiation. That was the whole thesis. Duco was like -- operating platform. It's more efficient. And that's an advantage to Coyote. Thereby we're just able to optimize more effectively across the whole network because we're very thoughtfully feeding information to the person that needs it when they need it. But those capabilities, I think, become more standardized, and then it becomes this -- okay, well, do you adopt the external capabilities, the Convoy platforms, or the internal tooling like the Voomas and other

AI providers. And I would expect more fragmentation or more strength in the mid market. But you also see CH has been investing significantly in tech and they appear to be yielding the benefits and getting positive results. And so does that just gain more momentum? It's like there's puts and takes. It's not easy. Can't be definitive. Because usually, you will see consolidation if the capital costs get higher or the cost to compete scales up. Right?

And of course, if there's efficiencies of scale fundamentally -- but I think the efficiencies of scale at a broker historically are capped out by the technology, and as technology gets better the efficiencies of scale improve, which is -- all of this is just via traditional methodologies, which is like, I call a carrier, they've got 10 trucks, nine of them are in Texas, but one of them happens to be in Maine and needs to get back to Texas. Well, that one truck, because I put it in the system, shows up on the team that's working that Maine load and then they call it. Like, it's just -- those were the traditional benefits of scaling a broker. Centralization is that you got these network effects that would just be more efficiently played out if you're centralized. But tech as tech gets better, a lot of that should be available to smaller brokers because think of DAT. Right? As we provide more visibility or more real time responsiveness and you can post and immediately book -- building AI tools behind that, it's all just driving velocity acceleration. That means the mid sized brokers have a more competitive position.

Host: Yeah. I've thought about this -- it's an interesting question. Because the other big wildcard in this is autonomous vehicles and how that scales up in the market and when.

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Bill Driegert: Yeah. It's almost -- you sort of almost have to put that to the side a little bit in a way. But I think one way to think about it: where do you start to get diminishing returns on cost per load improvement from technology, which is maybe one way to frame it. Because if it just keeps going down, like, either your cost per load advantage keeps going down or you're just able to buy better, then there will just be returns to economies of scale, and then you would expect more consolidation. But to your point, maybe there's some minimum efficient scale that you need to clear and then sort of lends towards more -- there's a bunch of -- maybe it's regional markets or even national markets where you like, there's a bunch of big players, but it's not gonna trend towards one. And then I guess the other piece to this is if the SMB shipper market doesn't change, the technology and efficiency and automation generally is a cost advantage in some ways. Like, there's sort of service advantages as well, but I could imagine that it just becomes less impactful there. And as a result, there's just more of a space for brokers that are in the community that have the long standing relationships to kind of win for that segment of the market more -- it just hardens that advantage in some ways.

Bill Driegert: Because if you think about the legacy models of cradle to grave versus the Chicago model -- well, cradle to grave probably benefits more from AI because the procurement is the area that gets more and more automated, and then I can spend more time on the shipper side. Again, hardening those relationships or working with shippers that may not be as sophisticated and as advanced. So yeah, I think that's -- there's truth in that, and you're solving the problem that is where the biggest brokers get the most leverage.

Host: Yeah. Very interesting. Yeah. I've sort of thought about this -- that the Chicago model ended up being a more efficient way to cover a bunch of freight, but it's probably not the best design

from a service perspective because you have lower levels of accountability and lower levels of -- I mean, you don't have visibility to the entire process. Right? And ultimately I do think service wins in this space. And it particularly wins outside of the -- on the long tails. And it's service in the sense of responsiveness and engagement and being there and the personal -- like, wins with most shippers by number. And there are plenty of exceptions, which is why brokers can start from zero and just be 2 pennies cheaper to still get freight. Like, you know, you get into very commoditized spaces where it's more price driven, but I'd say by and large, by count, most shippers are gonna prioritize the relationship and the engagement.

Bill Driegert: And it's interesting because I do think service gets better with AI as well. Like, I've been -- I call my local car dealer. I had to schedule a service appointment. They've got now -- it's all AI driven, but it is so much more consistent versus when I called before, and I'd be put on hold, and sometimes they get the information wrong, and now it's just -- I know it's gonna be correct. Right? And I'll get a response, and I'll be able to get an appointment. So even with -- I think AI will automate most of the rote task, and that's why those that are more service and relationship oriented that can bring incremental value and differentiation through personal engagement are gonna have more of an advantage.

Host: Yeah. It's interesting because we're in a transition period. I mean, I just see this in my own life with services that I use -- we are in this mode where there's fear of putting AI in to do certain parts of the aspect because it'll intervene with the relationship. But I think there's gonna be a lot of situations where it's gonna be untenable not to have AI doing it because the speed and consistency and availability is just much higher. Like, for example, I have all of these software tools that I use where I would never reach out to support,

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but now they have very good AI that is available. And my consumption of support has gone massively up because I know it's sort of always gonna be available and it's gonna respond quickly, and it doesn't obviate the need for the relationship and the account manager, but there are certain aspects. And so I -- we're starting to see that as well where even shippers, for certain types of interactions, there are requirements now that AI be available for certain things. Not broadly saying that will broadly be the case, but I think give it a few years and you'll start to see a little bit more of that.

Bill Driegert: Yeah. I mean, I remember a very large shipper getting very mad at us one time back at Coyote because we had failed to send them this report that they wanted in a very specific format, week over week. And it was just this one region of this large shipper, this one load planner, and somehow that escalated all the way up to the VP and put the account at risk, and it was like this very minor thing that could have probably been solved with AI in just minutes. Right? I think there's a lot of those cases where people just kinda want their one thing or their one answer -- they just need specific information.

Host: Yep. Yeah. Bill, shifting gears a little bit because you've spent a lot of your career building ecosystems around the mobile app. And obviously, with AI now, there is this opportunity to communicate across phone and email using software. And so I'm curious about what you think is the role to play of these different channels, and where do you think it sorts to over time?

Bill Driegert: Yeah. It's a good question because DAT -- we've got a few partnerships with AI dispatchers, and that's a space I see growing quite

[35:38]

aggressively right now in terms of companies entering the space because it seems like a pretty obvious use case. But my challenge to that is I think there was a demo at TA Technovations where they did 10 to 20 simultaneous phone calls. Right? So I'm a small carrier. I sign up for an AI dispatching service. I have it scrub DAT or find freight and start calling brokers. Well, if I'm making 10 to 20 simultaneous calls, well, that makes it easier for me as a carrier, but clearly I'm creating more work in the system unless all those calls on the other side are also being managed via AI, or else you've got all of a sudden 20 times as much work being done. Like, brokers are taking those calls, managing it, talking to AI, and the -- I think that's gonna reach a head very quickly.

So which is why, like, if you're calling service and it's inbound, it makes all the sense. Once you start -- outbound you also hit robocall restrictions and all this. So I think there's gonna be certain channels where they're just gonna break down very quickly in terms of whether they're viable channels for AI to engage with. Which is why I still think the app -- I use my phone, most of the time I'm on an app. Right? I'm not making calls or even sending texts. I'm using an app or something. Even if it's email or whatever, but I'm not picking up the phone and calling. And so the surface area to which AI can engage, right -- there's certain obvious channels. Email to me is a very obvious channel too where it will persist because it's often more directed and structured. Calls, I think, will hit a bit of a challenge. Inbound, fine, but outbound -- you're just gonna have good banks. Which is why, like, if I think about from a carrier perspective, putting myself in each of the shoes -- if I'm an owner operator on the road, I'm most of the time driving, I can't work. And I'd love to maybe have a voice assistant, which is why the AI dispatchers are taking off. But also, if I'm sitting down to schedule my day, I just wanna go to an app and definitively plan and book freight and just ease.

[37:46]

And also because my hours are a little odd. I like -- I'd love to be able to work at 2AM, and you can't make calls at 2AM. So you need a board where you can just book freight. I think that's why the apps will still have a significant surface area. I'm a mid sized carrier or a large carrier, or if I got a dispatcher that's making those decisions for me, I would still love to have those loads just ported in my TMS and be able to pick at them or have an agent or some process that's automatically booking those without me having to make calls or take inbound calls to book those. And similarly on the broker side, rather than -- if I can avoid taking inbound calls and automatically negotiate and execute those, great. And if it's just ported to my TMS -- the whole beauty of Convoy platform is, right, if I'm a broker, I can port that freight directly to the platform. It automatically gets booked and magically comes off the board. I don't have to make a call. They don't have to make a call. Right? It's all just click a button. And so that process is then dramatically compressed. As soon as you're adding calls, you're adding work. Right?

And this is like a fundamental principle of customer service -- the more you're swapping between mediums or interfaces, right, each one of those is like a defect to the process. Right? The more you can just complete it with one click or within one session, right, then that's a better process. And I think apps just enable that. Web portals, or working within your native TMS -- if I'm sitting in my TMS and can just do it all there, it's all natively integrated. Beautiful. Right? As soon as I've got to go to another portal, like, that's one defect. As soon as I've got to pick up the phone, send an email, send a text, it's another defect in the process. So if I'm engineering the process simply: one place.

Host: And is your sense that the reason that this is not happening today in higher volumes is just the availability

of freight in those channels right now and the integration?

Bill Driegert: And it's back to the earlier point about fragmentation across the industry. Right? So you have to be able to surface or engage across all the different channels because people all work in different ways, and no matter what your place is on the chain, you're gonna have fragmentation on the other side of it to some degree. And it's shippers that have most leverage and constraining that. But carriers and brokers -- they're always dealing with a massive amount of fragmentation.

Host: Yep. Yeah. Yeah. There's this -- I always think with freight you have to think in submarkets or sub use cases because it is just so diverse. The people that are playing in this sport. I mean, even your point around maybe I'm talking to an AI dispatcher if I'm driving, but when it's 2AM maybe I need a load for the morning. So I'm gonna go and take that on and book it. And so it probably doesn't end up being, at least today, this sort of one model meets it all. But let's maybe put the Nostradamus hat on and think -- I'm curious to hear your take. Like, twenty years out, what do you sort of imagine transportation to look and feel like?

Bill Driegert: Well, I do. I mean, AV will come to the market. Right? Anybody that's sat in a Waymo or taken a robo taxi -- it works. It will. It is coming. Let's maybe -- as a segue to that -- I'm curious to hear your reflections on what you think the impact on the carrier market will be and on the brokerage market from AV.

[42:09]

Bill Driegert: Yeah. I think it's just like predicting if we'll have consolidation in the broker space -- it's similarly challenging because I would expect that higher capital requirements would result in some consolidation. I think we will have totally new types of operators because a carrier is primarily a hiring and training company, right, in terms of what their most critical functions are. So large carriers -- it's continually bringing new drivers in, driver recruitment. That's a huge part of their function. Also from the OEMs and the actual manufacturers -- most of their research investment is in human factor design versus the actual equipment. So there's a space for new types of operators and new types of manufacturers, and it's unclear. There are people putting these theses out -- well, okay, I could just buy an AV and put it on the network and make money. Or Elon's been pushing the idea on the robo taxis: buy my Tesla and I put it in taxi mode and it goes off and makes me money. I mean, that's an interesting thesis, but I think the counter to that would be that -- like, what are the fundamental -- if I'm a new manufacturer, a new company in the space, and I can manufacture these things incredibly cheaply, and it's just a pure AI, no driver, no human factor -- like, a pure AV vehicle -- how does the operator engage? Because it's primarily gonna be maintenance. Right? It's gonna be providing the capital, the maintenance, and then on the back side, you need the tech to actually execute it. This is where I think one thing that will fundamentally change is there's -- the way freight is booked is very stochastic. I think it'll be more deterministic, meaning that if I'm dispatching an AV truck, I'm not gonna call anybody and negotiate the rates. Right? I want to know exactly which units are nearby, how long they will transit, what price would it be per unit, and I wanna dispatch that specific unit, do all that very precisely. And so how do you get to that end state? Right? That's like there's a long journey to get there.

But also it's going to be a transition like anything. I mean, again, freight takes time to transition. Right. Do you think once the price point though is below a certain threshold, these things will accelerate? But you're gonna have people in the middle of that for a long time in the transition. So how do you position yourself for that? I think this is where it's like -- now at this point in the process because we're still so early, it's all speculative. So it's probably that doesn't benefit anybody to get too worked up or worried about it. But certainly, staying on top of it, being aware of it, and being thoughtful about how it could evolve and how you could position yourself for that -- I think those are important steps to take at this point. But yeah, I would expect -- I don't remember the stats, but post deregulation, it's like only, you know, of the top 25 carriers -- I'm gonna get this wrong. It was like one or two of them survived. Right? All the others --

Host: Were lost. There were a few, and a lot of them yeah. Exactly. The folks like JB Hunt and stuff that performed really, really well, I think. And there's a big structure -- and actually, JB Hunt's a great example because they've reinvented themselves multiple times. I mean, they're more an intermodal company now than they are a truckload company.

Bill Driegert: They've read the tea leaves and been able to stay ahead of it, and that's a company I admire as an example. But I would expect too that they're probably having boardroom conversations right now about how do we stay ahead of AV. Like, what's our position in this? How do we think we're gonna play in ten years? And you know, some of these companies will survive as AV operators, or become scaled AV operators, and they're those are the ones that'll be two steps ahead. But yeah, there's gonna be -- just like with AI in the brokerage space -- yeah, validation, deconsolidation. There's gonna be a shakeup. Right? And not every company's gonna survive, some are gonna get acquired, like, there's always churn and turnover. And the type of broker that's successful ten years from now is just gonna be a very different broker than what was successful ten years prior.

Host: Yeah. I know that's like -- it's pretty hand wavy, which is -- it's hard to be precise. No. I mean, I've sort of thought through it. I mean, I think the -- I mean, I think the capital requirements and the

economies of scale -- I do think that you start to get -- because there's gonna be a lot of network optimization. There'll be sort of maintenance components that I think will become -- that it will sort of trend towards benefiting larger and larger businesses, which could start to, on the lanes where AV can operate, start to consolidate the carrier pool. And then, you know, if traditionally, at least, the brokerage role has been to sort of connect with the long tail, maybe during that transition, the role of the broker starts to look like figuring out where you insert AV effectively into fleets and what are the facilities that are well set up to support it, or where are the situations where you might actually need to do an unload or something and have a last final mile --

Bill Driegert: Person. Well, and also -- the role of brokers is often like an outsourced transportation department and transportation experts. Right? So particularly if you think about all the midsize shippers, they're looking to brokers to be their transportation department. They're the experts. They know the rates, the markets, what's going on. I don't think that role definitely shifts with AV, but it doesn't go away. Like, you still need something that you can rely on. But you can imagine maybe a broker becomes a network consultant or transportation consultant, or some role where they're doing that across multiple midsize shippers. I think the skill set will evolve. I don't think the role goes away, but it will definitely change.

Host: Yeah. Do you have any opinions on managed transportation as an offer? Because I think this idea of a network consultant -- or maybe even that is a natural place to expand where you're sort of actually figuring out how do you plug AV in versus other modes and that actually becomes a more important function over time. And I'm curious if you see any trends

[48:16]

there in that offering.

Bill Driegert: Well, I think even today, there's a lot of opportunity to rethink four PL now because a lot of what four PL does traditionally, you could engineer AI solutions or more automation around and kind of rethink that role. You know, obviously I've got extreme fondness for Uber Freight, and I'm hoping that's what they're thinking about as they look across their Transplace acquisition and the four PL capabilities. But I think that role will also change. And it gets back to the era -- most shippers' transportation is not the key capability, so it makes sense to have a partner outside that can manage that more effectively and just manage it end to end. And the four PL answers the question of how do I get full capture of a shipper's freight. Right? So brokers aren't gonna get it as a provider, but a four PL as a manager of the freight in a different role, different position, effectively has full visibility across the network and has captured that full freight spend, but often in different commercial terms. But I think if you take the role of a four PL and start to automate load planning -- because shipper departments don't look, you know, functionally at similar roles to what a broker does. A broker's doing it in aggregate and they're doing it in much more efficiency and at a much higher scale than what a department would do. A four PL. So once you're a four PL managing that across multiple shippers, like, effectively, capabilities versus broker capabilities start to look pretty similar.

Host: Pretty similar. Yeah.

Bill Driegert: That's also -- from an AI perspective, what a load planner does, load selection, carrier selection, carrier procurement -- all those capabilities, as they become more automated, the four PL also becomes -- I think that's the four PL function because it's already scaled and abstracted somewhat. And if shippers can really have more leverage in how carriers engage, it should be more automatable. Because again, brokers have to deal with the whole

world of possibilities, as where shippers can constrain it and force carriers to kind of meet them where they are. So they have more leverage to automate. So a four PL should be able to drive a higher degree of automation. Brokers just naturally have to deal with more variability.

Host: Very interesting. Bill, I would love to hear -- tell me about what you're excited about in the current moment with the DAT acquisition of Convoy and what you have ahead of you there.

Bill Driegert: Yeah. It's incredibly exciting because DAT does have this incredibly valuable network for which the opportunity is to then apply all the new technology that comes with Convoy and Outgo and Trucker Tools across the network, adding value to our carriers and our brokers. The Convoy platform has really been focused on small carriers and end to end automation from posting all the way through execution. And but to the earlier point, DAT has to solve and be all things to all people. So DAT effectively has most all carriers and brokers on the platform. But the way they engage with DAT historically was post a load, wait, everything happens off platform. All of a sudden now we have this whole tool set to bring automation and engagement at every layer from posting, matching, booking, to tracking with Trucker Tools as well as Convoy, to payments -- Convoy has payments, but Outgo has much more robust capabilities. So we've got, next year, a pretty exciting road map in terms of pulling all these pieces together. On the broker side, it's really about simplifying it from a DAT perspective and how we engage with brokers to drive automation. On the carrier side, all right, we've got a couple different apps and points of engagement in terms of how they interact with the system that will standardize and simplify over time. It's like, this is a very transitional moment for DAT. There's been a big organizational change

[52:25]

with all the new acquisitions and all these new capabilities -- where the pace of product is just rapidly accelerated. And there's no better place than DAT to realize this vision of freight automation. So yeah, it's pretty exciting.

Host: Well, I'm excited to follow along and see what you guys do with it. Bill, one final question for you. What is, like, one topic or issue space in freight that isn't getting the attention that it deserves right now?

Bill Driegert: The one area that I've continually tried to push some change on is scheduling. Right? Where -- and I know there's players in the space now that are trying to drive more automation, but it's the area where all this fragmentation really comes to a head in terms of process, and where you could have significant improvements in operating models for all providers if you can automate and standardize it. We pushed the scheduling consortium at Uber Freight right before I left, and I tried to push some efforts to standardize the approach here, but it's a huge hairball of a problem. I also think there's a place for somebody to be more of the Yelp for facilities and really -- the points of engagement. It's been a very difficult space to monetize, which is also why there's been a lack of traction. But I think that's the final frontier -- if we can solve and automate scheduling, and this is where I look for Vooma and others to drive value through AI. So I'm excited about how that might evolve. Because I think once you've solved that, then it just opens the door for much more automation because it's an outsized percent of the time that

[54:26]

most brokers and shippers spend just managing freight.

Host: I was on a panel recently at the JLC talking about why it has been so difficult to drive this because it's partly technology and AI, but it is a very tricky coordination problem because it's very clear why it matters a lot to brokers and carriers. And indirectly matters to shippers because they're ultimately paying for the cost plus markup of whatever it takes to actually move freight. But some of these facilities -- they care more about other things. Right? Like, maybe your biggest challenge is you're in an area where it's really, really hard to hire warehouse labor. And so the most important thing for you to do is kind of figure out and optimize that source of spend. And so whether or not the trucks are just kinda sitting outside waiting or whatever else -- that's okay for you because it's not the most important thing necessarily. But yeah, there's probably a dimension there of, like, how do you actually -- what's the business commercial model to bring it all together. So it's not simple, but I agree. It seems like the final place -- because it starts to hook you in as well into what's actually going on in the shipper's business upstream that you can then connect transportation and logistics to.

Bill Driegert: But it's a good point. It's like for the people who can actually enact change and drive change for scheduling, it's the lower priority in terms of their operations, meaning the actual facilities. But yeah. We'll get there.

Host: Bill, I've really enjoyed this conversation. As always I love hearing your perspectives on the history of the industry and where it's headed, and congrats on all of the latest developments in the Convoy acquisition and your new role at DAT, and excited to see what the next couple years hold.

Bill Driegert: Thanks, Jesse. Always good to catch up.

Host: Thanks, Bill. Appreciate it.