[00:00]
Jesse Buckingham: I'm excited for everyone to hear this next conversation with Chris Brumett, who is the chief product officer at Terminal Industries. This was a different take. Chris is building product to focus on the yard and the efficiency of the yard. And this was a really interesting opportunity to learn more about -- for our customers who are primarily freight brokerages and trucking companies delivering at facilities -- to get a little peek at what's actually sort of driving the interactions that they have with facilities, and what are those facilities trying to optimize for? Because this is this sort of interface between the yard and the LSP and the facility, a common friction point that's probably one of the more under-addressed areas. And this was a really good lifting up the curtain to understand more about the incentives and motivations and how facilities think about the decisions that they make. I hope you enjoyed this conversation.
Chris, thanks so much for coming on the Freight Show.
Chris Brumett: I appreciate it. Looking forward to the conversation.
Jesse Buckingham: This is a little bit of a different one for me. I'm always curious to learn about different parts of supply chain and the transportation ecosystem that I don't spend as much time really thinking about. And we're gonna learn a lot more about your story and what you're currently building at Terminal. Chris, maybe you could kick it off with your sort of career journey and how you came to what you're doing now.
[02:01]
Chris Brumett: Well, how much time do you have?
Jesse Buckingham: We've got about an hour.
Chris Brumett: No. So I've been in what I classify as the supply execution space for about thirty years. Always from, call it, the software solution side of things and looking for ways to solve problems leveraging technology. In my early career, I spent a lot of time inside the warehouse. So when you think about supply chain execution systems, it's typically transportation management, warehouse management, manufacturing resource planning type systems. Those systems that are helping operations execute their process, and yard management. And so I started out more on the yard management side of things because I ran kinda IT and logistics for a 3PL. A 3PL is really a cool place to earn your stripes in the logistics industry because they've got lots of different customers, and coming from an IT perspective, you've got your internal customer, which is the operator, and you've got your external customers who are actually the ones paying the bills. And so it creates this ecosystem of multiple different wants and requirements. I learned the inside of how the warehouse works, which ultimately helps drive the way the external side of things work. As my career transitioned, I founded or cofounded a handful of different companies, but really spent the last fifteen years in and around what is called yard management or the yard space. And traditionally speaking, it's kind of that forgotten stepchild, if you will.
[04:05]
I've said it's kinda like the Rodney Dangerfield of supply chain execution systems. It never gets any respect. But I kind of gravitated to it because I understood the inside, I understood the value of having a robust application that can manage the yard, ensure that the right trailer's at the right door at the right time. And so over the last fifteen years, I've spent a lot of time in the yard leveraging technology to help make that process more efficient, which ultimately makes the adjacencies more efficient.
Jesse Buckingham: You've also spent a bunch of time on warehousing and learning about those operations. What is it like operating a warehouse? What are they optimizing for? And how does that translate into what the requirements are for the yard and for the transportation providers?
Chris Brumett: Yeah. No. It is a great question. It's great baseline education because ultimately the yard is there to serve. Understanding how the facility works and operates and what motivates that facility is key. But traditionally thinking, if you think about a distribution center where you've got product coming in, it's being received from a trailer through a dock door, and then it is typically put away into what they refer to as storage locations.
[06:10]
Then that product, based on velocity -- how quickly it moves or turns -- they've got different locations that they'll place the product. And it could also be based on the type of product. If it's a grocery warehouse, it might have multiple different types. Could have frozen, could have temperature controlled, could have ambient type storage locations. And so the product coming in will dictate where it gets unloaded at.
Jesse Buckingham: So a dock door closer to the freezers would be different than some other part of the warehouse, for example.
Chris Brumett: Exactly. So the warehouse is always trying to optimize or reduce travel time inside the warehouse. And the way to do that is to unload the trailer or load the trailer closest to the area where that product is stored. So if we think about the flow where we've got product coming off of a trailer, being unloaded, it's then put away into locations or reserve locations. And from the reserve locations, then it might go to pick locations or case pick locations or each pick locations. There's different types of product. Some is palletized, some is not palletized. So all of those things -- if you think about what a warehouse management system does, it's optimized around managing the labor and the inventory and optimizing to reduce deadheading or optimize the picking process. Because in a large facility, you might have 75, a 100 people per shift that are picking or replenishing or doing put away or staging or checking. So there's a lot of labor and moving pieces within the warehouse that ultimately a warehouse management system manages.
[08:12]
Jesse Buckingham: What system is deciding when a shipment comes in, where it's gonna go? Or is that an automated process largely today in most warehouses?
Chris Brumett: It's a mixed bag, which creates opportunities for companies like Terminal to come in and help with automation. But in an ideal state, you would receive electronic -- in the industry, it's typically referred to as EDI. Although EDI is kind of an older tech. It's more batch oriented. Now more people are moving to API. But believe it or not, there's still companies using EDI transactions to communicate the content of the load, or transactions set around the carrier and the carrier picking it up and the status of it, all designed to drive at a system to system level -- hey. I'm delivering this product, and this is the expected time where I would be delivering it. And these are the products that are on it, and there's varying levels of detail.
[10:13]
Jesse Buckingham: Is that an ASN?
Chris Brumett: Like an advance ship notice. That is correct. An ASN, which is traditionally thought of as a EDI transaction 856. But that's the intent -- is that at the origin location, that trailer is loaded. And at that point in time, that origin location generates an ASN transaction to the delivering facility. And so then the delivering facility receives that. They tie that to that trailer coming in or paperwork coming in. And in an ideal state, they can have scanners that have pallet labels that are tied to the ASN so that when they scan that pallet ID, it automatically knows that this was confirmed, and so it automatically updates the inventory. Because without that ASN, the old school way of doing it is, okay, let's offload the trailer, let's manually count, figure out what's on it. The bill of lading says 80 cases. Why do I only count 79? Well, it's because one of the cases fell off. So it's helping to eliminate some of those manual interactions and checks.
Jesse Buckingham: And so you've got a shipper delivering, and that might often be like a vendor selling product into a distribution facility. Right? The vendor's often responsible for transportation into the facility. And so if the vendor works with a broker or a carrier, does the delivering facility -- they get the ASN from the origin facility when it gets picked up. Are they getting visibility into that truck arriving? Because the providers are giving it to whoever their customer is, but is that also going to the receiving facility?
[12:15]
Chris Brumett: Sometimes they do and sometimes they don't. And that you've kinda opened up what is a big challenge in the industry now. Because of the load boards and all of the multi-brokered loads, and you can even have -- I mean, the great thing about an ASN is it's a representation of what it looked like when it was loaded on the trailer. But what you don't necessarily know as part of that transaction is typically you will know the load and the contents of the load and the trailer that it was loaded onto, but you won't necessarily know the driver or the operating carrier that's moving that freight. So you might have a carrier that that supplier uses for that lane, but for this one particular lane to this one destination, it's not a core lane for this carrier. And therefore, that carrier will then broker that load out to an owner operator in that lane. And so it's the same trailer, the same load, but the operating carrier that's delivering the trailer is a different carrier than the tendered carrier. So you could have a core carrier, where you're using their asset to move it, but they're leveraging a different operating carrier. So it's important at that destination location to be able -- the more information you can get, the easier it is to validate and get them checked into the facility.
[14:18]
But it's also important for that receiving facility to be able to segregate between the tendering carrier and the operating carrier because it becomes an auditing point and a validation point.
Jesse Buckingham: You know, it's my understanding that some of these receiving facilities have really onerous requirements around, like, if you're late for your appointment, you get fines. What's beneath that?
Chris Brumett: Yeah. So ultimately, it kinda goes back to what drives the inside of the facility. The way to help control the labor and the bottlenecks is to require carriers to create an appointment. So traditionally speaking, when a load gets tendered, you'll have a planned date. And the carrier that's responsible for it knows that they need to get this product delivered within this planned window. It could be a twelve hour period, it could be a twenty four hour period, it could be a three day window. There are facilities that say you cannot deliver unless you have an appointment. And I typically refer to that as carrier appointments. So that's the agreement between the carrier and the receiving facility that I'm gonna show up at this time and I'm gonna either deliver or pick up the load.
[16:23]
That allows me from a warehousing perspective to know that I need to -- let's just say it's a pickup. I'm a carrier and I'm gonna set an appointment for 2pm to pick up this load. Well, now I know that I can forecast my labor to know that I've got this many appointments at this time. I know how long it's gonna take me to pick those orders, get them ready. And if it's a live load, then I can have them staged so that I can turn that driver around quicker. And so it actually creates more efficiencies through the entire pipeline. It's more efficient for the driver because now the facility is better prepared for them to show up, they can turn them around quicker. So the driver spends less time idle sitting out of sight and more time over the road generating revenue for themselves or their company. It's better for the facility too because now I can forecast my labor a little bit more consistently and plan ahead.
And so that's where you'll see varying levels of the shipper or receiver facilities applying that requirement, where you've got some that are very strict, meaning you've got fifteen minutes on either side of what that appointment time is. And if you're not within that timeframe, I'm rejecting you. You're gonna have to set up a new appointment. And sometimes I've even seen companies that'll actually bill a carrier, saying, hey, I allocated labor to do this work for you. You didn't show up, so it cost me money.
[18:25]
Jesse Buckingham: So in those cases where they're really onerous, is it mainly that they're protecting the labor time because they wanna run the facility as efficiently as possible? Because I know when I speak to carriers and brokers, they're sort of theoretically for efficiency because the driver can kinda get in and out faster. But the more pain usually comes from the fact that I can't get a good appointment. And so the driver's actually sitting super idle. They're not idle at the facility, they're somewhere else waiting around.
Chris Brumett: Yeah. No. I think it is, and it's a great point because you have to look at all of the different perspectives and really start thinking about how do we make this overall process more efficient. And some of it comes from a little bit of PTSD where there hasn't been really good compliance. And at the end of the day, when you're a transportation provider, stuff happens. There's traffic, there's weather, there's things outside the carrier's control or the driver's control, maybe even better said, that could cause delays. And so what ends up happening is, if the warehouse, let's say it's a live operation -- meaning the carrier comes with a trailer, either loaded or empty, and goes straight to the dock and gets either loaded or unloaded -- if I'm a warehouse operator and I know that I have a live load to be loaded at 2pm, and I wanna get ahead of the game because it's a combination of pallet and case picks, and it takes time, I'm gonna try and stage the load. And staging is picking and having it ready in some loading bay or behind the dock door. And some facilities have plenty of staging space. Some facilities, the racks are tied right up to the dock door and you have very little staging space.
But in an ideal world where you've got some staging space, if you're gonna pre-stage an order based on a 2pm appointment, what you've done is you've created congestion on your dock, and your dock is your most valuable real estate within the warehouse. Because that's where the transaction happens. So let's say you stage a load for Door 27, you're actually probably creating congestion from 25 to 30 because of the way. If you think about 24 pallets worth of stuff that goes on the back of a 53 footer, that's a lot of staging space that is gonna create congestion
[22:40]
for the adjacent doors. And so if I stage that, and let's say I shoot to have it staged, ready, call it thirty minutes ahead of time, I started that staging space maybe an hour and a half or two hours before that. We staged the orders, got them picked, got them consolidated, got them checked, whatever your process is, even palletized. And so we're starting to create congestion on the dock for hours before, which affects those adjacent doors.
Jesse Buckingham: And then if the carrier's late, that's a big problem. But it's usually not days. So is that the right time frame that if you provide notice that you're gonna be late within an hour and somebody's pre-staged, big problem. If you're doing it the day before or maybe even like six hours before, unlikely that they've started work on that, so less of an issue for a facility.
Chris Brumett: Yeah. Yeah. Yeah. One question I have is around how facilities prioritize appointments. Because one of the common frustrations that brokers and carriers have, and one of the things that we also help them with is getting prime appointment times, especially for brokers who are trying to cover loads on the spot market. It really matters if you've got a bad appointment or a good appointment for how much you're gonna pay to cover that freight.
Jesse Buckingham: There's a big difference in the urgency of different types of freight that are coming in. Some things are, if we get it today or get it in three weeks, we need it but it's not urgent. Versus something that, at worst, maybe an item's out of stock or it's a part in a manufacturing facility. Is there discernment around priority when it comes to POs or what's actually on the truck? And are there any shippers that have started to think about the problem differently?
[24:48]
Chris Brumett: Yeah. No. I think there is, and it's really case by case based on the level of sophistication that shipper or receiver has. Typically, the most common thing -- from a distribution center standpoint, they've got outbound orders. That's their demand, right? And they know ahead of time that they're gonna be short because they preallocate the inventory to those outbound orders based on whatever priority matrix they've got. Customer A might have a higher priority or might get fined more. You've heard the term full and complete, by some of the big shippers that are fining their vendors millions of dollars if it's not complete and on time. And so that outbound planning process really comes into play and that's what a lot of times will dictate the priority of the inbound product. So for example, a C-velocity item that maybe turns once a year, well, they're just restocking based on forecasted demand. But if it's an A-mover and it's moving multiple times a month, or if it's on outbound orders that are gonna be short, then they're gonna try and prioritize any appointment that has that product on it. And so that kinda goes back to our ASN discussion. So having visibility to the detail levels of what product is on those trailers and then being able to have the sophisticated systems -- like one of the components that Terminal offers is a carrier appointments module. Being able to allow the receiving or shipping facility to set up their capacity based on what are their labor constraints, and then also help tie that to a shipment or an order. So now based on the schedule that I create, it could be very fine-grained on turning items. And that may change, right, day by day or week by week, because what's short today might be not short next week. Or the one that I've seen especially in retail, is the go-to-market team will put on an ad. So any product that's in that ad, they can't be short on retail shelf. So any trailer coming in with that product on it needs to be prioritized over the other stuff.
Jesse Buckingham: So they yeah. There's a lot of focus on solving for the outbound because in general, for a facility that represents their customer demand. And so it's actually getting determined by what is most important for their business in getting product out the door. And so is that when you have scenarios where a carrier might have an inbound appointment, but they'll actually just get bumped?
[28:55]
Chris Brumett: I don't know that it would get bumped. I mean, I'm not saying that it wouldn't. But what I've most typically seen is that when that carrier checks in for their appointment, the facility person checking them in communicates at that time, hey. We're a bit behind. I know your appointment was at 02:00. We're marking you down as being here on time. But unfortunately, we're not gonna get to you for an hour or two. In actuality, what might be happening is that, to your point, they pulled forward other appointments or maybe it's a drop and hook facility to where they've got product that's in a drop trailer that now they're pulling forward, using some of the labor capacity to unload that versus the live load.
Jesse Buckingham: When facilities are thinking about their appointment scheduling, how are they optimizing their own operations and their costs? Which largely is a function of the labor and equipment utilization. When you compare that in a tight capacity market where shippers wanna be shipper of choice so that they can get access to lower-cost freight, how important is that relative to the labor cost? Is part of the challenge that priority one, two, and three is gonna be maintaining the efficiency of the warehouse, but the gains from making it a little easier for carriers just isn't as compelling from an ROI perspective?
Chris Brumett: Yeah. I mean, obviously transportation represents a huge piece of the overall
[30:58]
cost in the supply chain. So I think it's always at the top, but if you ask the facility, are you gonna optimize to be shipper of choice or are you gonna optimize to be more productive and reduce costs on the inside? I think they would tend to go that direction. The shipper of choice conversation really started to happen during COVID and right after COVID where they just couldn't get enough drivers. And then I think what also happened is that organizations, enterprises, realized that the driver is a fragile and very critical piece to the overall supply chain, and we need to start looking at ways to treat them better. And I think appointments used in the right way can do that.
Jesse Buckingham: And do you tend to see trends in where a facility uses drop trailers and prefers them?
Chris Brumett: Well, yeah. Most of the time, it's the enterprise that decides, based on the type of product or the process that they deal with the product. It's more efficient to have drop trailers or a drop and hook program, which is very common to hear. And also, it's kinda dependent on the type of facility, like manufacturing. Just in time is great. Well, the last thing that you wanna ever do is run out of product to shut down the line. And so having dropped trailers with those products in them so that really what you're worried about is making sure that it hits the dock at the right time. You've got control over the whole thing.
[33:03]
Jesse Buckingham: So the thing that drives it could be that it's really critical that the facility has control over exactly when product lands inside. Is there also a sense around the cost of land? If land's cheap, probably having a big yard makes a lot of sense. If land's at a premium, then having a bunch of trailers in the yard that are effectively storage space could be quite expensive.
Chris Brumett: Well, and it's also availability or accessibility to a facility. Sometimes you just don't have a big yard. And so you've gotta be able to adapt to that. A lot of times that footprint will help dictate how you manage it.
Jesse Buckingham: What are the challenges in operating a yard well, and why are those problems important?
Chris Brumett: Yeah. So when you think about why the yard has been that entity without getting enough respect, it's because traditionally speaking, when you talk about a solution provider coming in and saying, hey. I've got this solution and it's gonna solve these problems for you, when you pin out the ROI the same way you would look at when you buy a warehouse management system -- when you buy a WMS, you're dealing with hundreds of employees on the inside to where if you shave off a second or two
[41:21]
per pick task, that can turn into real money real quick. If you use that same logic for the yard, you just don't have that labor pool. If you think about a large yard where you've got 500 drop trailers, you may be receiving in and out maybe 100 ins and 100 outs a day, combination of live and drop. Well, you might have five spotters. And a spotter is that dedicated unit responsible for moving a trailer from a drop spot to a dock door and from a dock door back out to a drop spot. So a lot of times you're optimizing to make their life easier. Well, if you use that same logic, you've only got five resources as compared to 100. So traditionally that's been a challenge.
The challenge to that is, well, do you realize how inefficient you're making the inside of your facility because you're inefficient on the outside? Because if every time you send a move task to the spotter driver and say, hey, Johnny. I need Trailer 1-23 at Door 17. And he spends the next forty five minutes to an hour doing an Easter egg hunt looking for that trailer because they don't know where it is. And you've already pre-staged that that trailer would be loaded. Now you've got dock labor waiting around for a trailer that creates inefficiencies on the inside. And so the exciting thing is that over the past three to five years, companies are realizing that there's a lot more points of value within the yard. Obviously optimization around spotter movements is key, especially in a large yard. But how about detention and demurrage? How much visibility do you have to the trailers and how long they've been there?
[43:25]
Or the chassis, especially when you think about facilities close to the ports. You're needing to manage the chassis and containers separately and get them back to the ports. And then you start tying into how can I make the overall visit more efficient? So a big thing that we at Terminal are leveraging is computer vision to try and make that check-in or check-out process more efficient, but we're also looking at the entire visit. We're not just a computer vision company. We're a transformation company that's transforming the yard. And what we're seeing is that there are all kinds of point solutions out there. There's a gate system that does this. There's a yard management system that does this. There's an electronic bill of lading system that does this. There's a load verification system that does this. And we're seeing this fatigue by companies that are sick and tired of these point solutions. Our approach is we're gonna start chipping away at all these point solutions, and that's why we refer to ourselves as a yard operating system. From everything from planning -- meaning the minute we understand about that shipment, we will enable you to create a carrier appointment. From that carrier appointment, we will process you more efficiently at the gate, through the entire process. And along the way, help make the warehouse more efficient so that ultimately it makes the driver more efficient and gets them through the facility quicker.
[45:30]
Jesse Buckingham: So to play it back, the system is essentially bringing all of the yard operations and more deeply immersing it in this combination of the warehousing operations with the transportation because that piece of it, if done poorly, can kind of be a logjam for everything else. And so the ROI isn't measured just on the five heads that are moving things around the trailer, but what's the impact of operating that ineffectively? Who are the different types of customers that you guys sell to?
Chris Brumett: So generally speaking, another challenge that's been in the yard space from a solution standpoint is that you've got an enterprise with a network of sites. And just like any network, there's larger facilities and smaller facilities, and there's different purposes of those facilities. One might be an expo delivery, one might be a fulfillment, one might be a regional distribution center. Our perspective -- and a big challenge in the industry is that with these big enterprises, when they look at the solutions that are available today, well, I'll use YMS A for my large facilities because they do a great job for high complex things. I'll use yard management system B for my smaller facilities because it's more cost justified.
[47:38]
We kinda threw all that out the window and said, no. Part of the problem is now you don't have a common data model across your entire enterprise, so you really don't have a better purview on your overall network. And so the way we've built the solution is modular, so smaller, less complicated systems just use fewer capabilities. For your larger sites, you might have more modules, but more modules can help you drive more value. But we're really looking at it from an ROI cost perspective. When we talk to our prospects, that's like the first question we ask: what are the problems that you specifically are challenged with? And here's an ROI calculator that I can help you pin this out on.
Jesse Buckingham: What are you generally competing with? Like, other yard systems, the status quo of no system?
Chris Brumett: It's a combination. One of the big reasons why Terminal was founded two and a half years ago was because there is no dominant system or player in the industry that is focused on this space. And so it's pretty well published that somewhere between 20 and 25% of the total TAM that makes sense to have a YMS have an actual YMS.
[49:40]
And of that, I would say probably no more than 5% is any one player. So it's really ripe for transformation -- with better tech, newer tech, and a different approach to solving the problem, like what we're doing. So a majority of those, call it the other 75 to 80%, are using some combination of paper, or they could be using a module of a WMS. The problem with that is it's really looked at as an extension of the warehouse, which is kind of the wrong way to look at it because now all you're doing is looking at a slot as a slot in a warehouse, not optimizing for the driving room. But you would be surprised at the types of facilities that we walk into and you see Google Sheets or you see Excel or you see a Microsoft Access database where somebody's gotten creative in trying to solve the problem, but they're really not solving it. They're just capturing the data after the fact. It's not real time. Nobody else in the organization has visibility to it.
Jesse Buckingham: When you think about some of the customer results that you guys are most proud of, what sort of concrete results are you able to deliver when you guys do a really good job?
Chris Brumett: What we strive for is a four to five x return from an ROI perspective, and it comes from a couple of different points. But some very gratifying things are -- a lot of times you go to these high volume facilities
[51:46]
and you'll see trucks backed up at the entrance/exit point. And being able to implement the solution and being able to cut time down by 70% to get that process -- you come back two months after the implementation and now there's two trucks in line versus ten trucks in line. As a person that's been in the industry for a long time looking to solve these types of problems, and being able to leverage the technology that's now available to us in an efficient manner, is super gratifying. But generally speaking, what we strive for is four to five x.
Jesse Buckingham: And how are they measuring that? What are the levers?
Chris Brumett: It's typically labor reduction or displacement -- making the process more efficient but you still need that human in the loop, but you've created time so that same human could do other tasks. There is carrier accessorial reduction: detention charges, per diem charge reduction, demurrage charges, providing visibility to that and helping to reduce and hopefully eliminate it. The other thing that a lot of people don't think through is the scaling factor where if we're making you more efficient but not displacing that labor, could you bring in more product with the same amount of labor? So not only a cost reduction, but it's a potential revenue generator.
[53:48]
Jesse Buckingham: As we come to an end here, what gets you excited looking ahead both personally and for what you guys are doing at Terminal?
Chris Brumett: I think it's really seeing the fruition of technology, new technology advancements such as AI -- and AI gets overused generally speaking -- but really taking that and putting it to operational use and seeing it solve some of these problems within the warehouse that could be identified as mundane, but are really critical to the process. That's a perfect play for that kind of technology. So that's why we not only look at ourselves as a computer vision company, but an AI enabler that is driving more efficient operations through the use of it, driving workflows and automation around those workflows. And so those are the exciting things that we will continue to develop the rest of this year, and it's super exciting for me to see our customers start being able to leverage that and bring reality to it.
Jesse Buckingham: Very cool. Chris, thank you so much for the time. Really enjoyed the conversation and learnt a ton about the world of warehousing and what's actually going on the other side for our customers when they're delivering freight.
Chris Brumett: No. Thanks for the opportunity for the conversation, and I enjoyed it as well, Jesse.