Auto-transcribed via Deepgram nova-3. Speaker labels are approximate; light cleanup applied.
[00:00]
Jesse Buckingham: I was just talking to a customer before this show. They said, well, how's it going? I said, it's going great except for the fact that all of my customers want to all surge, want us to haul more freight, want us to look at more opportunities all at the same time. But there's only so many trucks at the end of the day. Right? Now all the brokers will tell you that there's unlimited capacity. That's always been the joke. But at the same time, it's busy. Right? There's not unlimited capacity. Capacity is very scarce right now, and I think it's gonna only continue to get tighter.
Why is that? From a regulation standpoint, it's it's definitely eye opening, and the industry definitely needs to to do their part and and maybe come up with with stricter guidelines and stricter processes across the board, right, on how we manage and who we actually put on the road.
Harman Cheema: This is a really great conversation with Harman Chima who is the CEO of Chima Freight Lines, is a 500 truck carrier on the Western Side Of The US and they've got, you know, coming on a 100,000,000 brokerage as well. So really interesting combination or, like, perspectives from somebody who really understands both sides of the business and is really trying to scale both sides of the business and gives a lot of insight into, you know, what the shape of the market's gonna be especially some of the latest changes around, you know, safety and non domiciled drivers. Enjoy this conversation with Harman Chima. Alright. Welcome everyone to another episode of the Freight Show. We've got Harman Chima on with me today. Harman, it's great to great to see you.
Jesse Buckingham: Yeah. Absolutely. Thanks Jesse for having me on.
Harman Cheema: Yeah. I'm excited to chat. You've got like an interesting vantage point in the industry given that you've got got both the assets as well as the brokerage.
[02:01]
And I do wanna like start with your perspectives on the like most recent Supreme Court decision. I know that you've got assets and, you know, I'm curious, like, maybe just I'll of leave it there. Like, I'm curious to hear your thoughts. Like, were you was this a surprise to you? Does is this gonna have an impact on you? What impact do you think it's gonna have on the industry?
Jesse Buckingham: Yeah. How how are you thinking about it? Yeah. Definitely. It wasn't a surprise. We've been following it for some time and kind of I figured it was kinda gonna go this direction. Right? From an asset standpoint, it's a good thing because it tightens up what the brokers need to be doing and and hopefully get some bad actors out of the business that don't do some of those things. But at the same time, owning a brokerage as well, whether it's asset backed or traditional brokerage, it's it's scary. Right? It's a scary thought. We do power only as well, which makes things even muddier and and makes it even a little bit more scarier. Right? So because at the end of the day, we can bet all the carriers we want. We can do all the great things, which we do. And, you know, now this just tells us that maybe we need to turn it up a notch even more as an industry and and get better at that. But at the same time, like, it's very hard to the one thing that I guess you can say that kinda still spooks me a little bit, it's very hard to know who's actually driving that truck and then the spookier part is who's actually driving from a driver standpoint, driving that truck with freight that we brokered and potentially my trailer. Right? That's got Chima on it. So from a power only standpoint, it gets even even stickier. Right? So what what yeah. What makes it scarier about power on? Is it the fact that it's your trailer basically? Well, it's like all the things that could go wrong and now that you're on the hook for potentially adding to the fact that it's also got your trailer on it. Right? So so those are things I'm definitely worried about from an industry standpoint and and from a Chima standpoint. But all we can do at the end of the is just control the controllable and and just continue to make our processes
[04:02]
even better and Yep. Even more. Right? And continue to educate our brokers that are on the frontline, our carrier reps, and show them the importance of vetting and making sure if they if they feel something is wrong, it probably is and trust their gut a little bit. Right? Versus some of those eleventh hour calls we have to make in this industry, especially in this market. The stakes are changing fast. I was just talking to a customer before this show. They said, well, how's it going? I said, it's going great except for the fact that all of my customers want to all surge, want us to haul more freight, want us to look at more opportunities all at the same time. And there's only so many trucks at the end of the day. Right? Mhmm. Now, all the brokers will tell you that there's unlimited capacity. That's always been the joke. But at the same time, it's busy. Right? There's not unlimited capacity. Capacity is very scarce right now and I think it's gonna only continue to get tighter. So Why is that? From a regulation standpoint, it's it's definitely eye opening and the industry definitely needs to to do their part and and maybe come up with with stricter guidelines and stricter processes across the board, right, on how we manage and and who we actually put on the road. You guys obviously had the fleet and so you were saying as a carrier, this is actually a good thing. Can you say more about that? Like, why Yeah. So tell me more. From a carrier standpoint, from our fleet, I mean, we own Chima owns 500 trucks, 2,000 trailers all over the Western half of the country. And from a carrier standpoint, that just means more opportunities coming to asset based players because there's gonna be a lot of customers that are simply gonna change their strategy now and maybe they had a sixty forty split where 60% asset coverage on the route guide and 40% brokerage or whatever the split was. And a lot of them are going back and reading this and their legal teams are going back and it's easy for legal to quickly say, hey, carriers or, hey, traffic managers. You need to just use all assets, but we know that's not realistic. Right? And so Mhmm. The traffic managers are gonna be forced to find more asset solutions in general, So that just means more opportunities coming our way from an asset standpoint. Interesting. So can you explain to me why will it drive
[06:09]
transportation managers to use more asset solutions, do you think? Or like why why do you think their their legal teams will be asking them to do that? Well, naturally, an asset based solution is a little bit more secure. Maybe maybe that's not the right word, but we know who the driver is. We know it's our truck. We know the insurance. Odds are, you know, we know a lot more about who's actually hauling the freight. From a brokerage standpoint, you hope you know. Right? You you you trust your partners. You trust your carriers that have worked with you and but at the end of the day, we have no idea who they're really what drivers are really putting in the truck. Right? Yeah.
So you so basically, the exposure to a shipper because this is maybe an area I haven't explored as much, which is like, what what does this mean for like shipper shipper liability and because I guess they they would have the same Right. They would be open to a suit for like negligent hiring with a carrier. But I I think the point that you're making is yeah. But if you're going with a like a reputable carrier that you kinda know that can give you guarantees about who they're hiring and, you know, that the assets are legit and what their safety standards look like, that you just have you practically even if you could be exposed like going with somebody where you can diligence all of those things is gonna be easier versus like through an intermediary, you just have less clarity. And so how do you as a shipper either? Because they could be like pass through liability. Like, did you negligently hire a brokerage that negligently
[08:16]
hired a is that is that the idea basically? Yeah. I mean, we're we're all on the hook now. Right? We're all in it together. So from a if I'm a shipper, naturally, it makes more sense for me to to have more assets on my route guide because I'm trusting the big names, the big brands because they have a lot more skin in the game to make sure things are safer, right, than a broker who doesn't have any skin in the game for the most part because they don't own any assets. And so, yeah, it's it's different. But from a brokerage standpoint, it's it's tougher. Right? It's it's definitely eye opening and and for some of the some of the big brokerages who are bringing in, you know, hundreds of reps quarter and teaching these people like now you have to teach them what, you know, more of what liability and some of these things are, right, because now we're all on the hook together.
I was at a dinner last year at one point with and there was a very like robust conversation happening between some folks from some big carriers and then some folks from some brokerage. And some of the folks on the carrier side, these were large fleets that did a lot to invest in the quality of the equipment and they're like driver safety programs. And they felt like there was an unfair playing field because there were folks that were getting hired by the brokers at lower costs that were willing and able to run. I I don't know exactly why, but like at much lower cost points and maybe the argument is that like part of that is like not being super tight and by the book on safety. Yeah. And it does. Is that like something you've seen as well? Yeah. Absolutely.
[10:23]
Like, for example, you know, talk West Coast, Washington, Seattle market down to LA is always been a backhaul market. Right? And naturally, an asset based carriers pricing themselves, you know, a buck 25 to a buck 40 depending on the on the freight, on dry freight, plus fuel surcharge. And that doesn't cover the cost, but that covers that's that's a decent backhaul rate for us to reposition our units to a head on market. But the same lane during this last three years, my brokerage was able to price the same thing for 50 to 60 cents plus fuel and still make money on it and still pay the carrier. And at that point, like, we're looking at this going, this is absolutely ridiculous. But if our brokerage doesn't do it, then one of the other big box brokerages will still do it and still would use the same truck, right, at the end of the day. So at that point, we gotta separate ourselves from being an asset and a broker together and say, okay. Well, in this market, my my two companies have to be a little bit separated and they have to do what's right for their business. But it's ridiculous to see that brokerages can cover some lanes for nearly half the cost or close to that, you know, what an asset based carrier can cover for. And being a good reputable asset based carrier, I can tell you that those are the rates we needed, but we weren't getting. Right? So that competition, whether it's our own brokerage or other big box brokerages or any brokerages really, that just adds to the competition. And why would the why would the shipper pay double or or close to that to anybody. Right? And so that that we've been that's the uphill battle we've been fighting. Now, if you take it a step further, the last few years, we've been fighting the the capacity. Right? The capacity that was in the market with, whether it's non domiciles or unsafe drivers or whatever. Right? All of those things that we're all aware of now. We've been fighting that capacity because there's so much so many of those guys and they were ultimately able to haul it cheaper. At the same time, there was a whole other bank fiasco where some of them weren't making payments, but the banks weren't possessing the equipment. So now these guys are not only hauling it cheaper, but they're also not making equipment payments, so their cost is naturally lower. Right? And so and so some of those folks that were able to survive this last six months with the regulations and everything that are have made it, now we're in from a trucking standpoint and asset standpoint, we're all locked into some kind of a contract, whether it's a handshake or something on our contracted freight. And these guys are the first ones to now immediately take advantage of the high spot market rates. So they got us when it was low. Now they're getting the freight when it's high. So and meanwhile, us guys in the middle are struck making deals with our customers and trying to get the rates up. Right? And and and telling them why the rates that we have contracted and they're published weren't sustainable. Some of the conversations I've had were, well, why did you bid this back in January? Why did you bid this back in December? Well, if I didn't bid this, I would have gotten nothing.
[12:29]
And we all know that. We can look each other in the face and say that because you would have it with somebody cheaper or a broker that's cheaper, and I would have been stuck here no freight and that's potentially a worse position for my drivers and my equipment to be in. But we also realized that it was never sustainable. Right? And so those are the fights and and the battles that we're facing as asset based carriers today. K. Like, as this as the market sort of turning now, you've got contract rates that are just way below where? Yeah. And and we're getting them up. It's just a battle. Right? Nobody's gonna offer to say, here's 50 a mile. Go ahead and get it. Right? But if you're a broker all of a sudden, you say, can't get any trucks and it's like, well, what's it gonna take? So Yeah. Yeah. But those are some of the conversations we deal with every day. How was it that you could get a truck for 50 cents, 60 cents a mile on those backholes? Like, why what did how is that does that pencil? Is it because these are super small carriers and therefore, like, you're not really the drivers aren't really getting paid like a living wage and and they're not really it sounds like maybe like not the the banks don't wanna are they like, why would the banks not repossessing the truck? Because there's no there's no market to sell them into and so what are you gonna do with There was a market to sell them into. So now if they repossess the truck, it's gonna be sitting in the yard where they're paying storage somewhere. Yeah. And these were bad deals in the first place where they Right. Did bad loans on equipment and overpaid where the their customers overpaid on equipment. These guys these guys financed it, right, ultimately, and and they know when the trucks coming back, there's no buyer. It's already upside down. So I'll just let this guy keep running it. Hopefully, he pays me a little bit more. Right? A little bit more. It's like better than yeah. You definitely you get a is it like a you'll lose everything kind of thing. Right. It's not even break even at that point. You're like, you're you're paying money to get rid the equipment, right, at that point from a bank standpoint.
[14:31]
thought about that sort of equipment angle because I'd already sort sort of thought that like there's there's some advantages in being a very small carrier. Right? Like, you're willing to kind of like live on the road and you can Well, I used to say we were we were a ski boat for a long time where we can turn on a dime, we can be quick, we can go fast, we can slow down quickly. I'd like to still say we all still run that fast and we all still make decisions that fast. Yeah. But this sucker is not a ski blower anymore. It's a freaking Titanic and turning this around or getting it faster takes a lot longer. Right? Yeah. You mean that your scale now as a carrier? Right. Yeah. The company. Totally. And those all those folks are they're little boats that just pivot and and, you know, turn as they need to. So that's definitely the advantage they have on.
[16:39]
And and we're getting calls we're getting calls from shippers that we've been calling on for years. But all of a sudden, like, hey. How's it going? Do you think you have capacity for this? Because their carriers are falling off. And, unfortunately, we we don't have capacity for all of it anymore. Right? And so what we're doing ultimately is we're working with the partners that stuck with us and Yeah. You know, getting our rates up where they need to be so we can make some money again, but ultimately giving them first right of refusal on our equipment before we start giving our way to to new new folks.
Yeah. And I guess that's the, like, the hard you know, you've got these assets and they're contracted at these rates, but now you've got people knocking on your door asking for them. And so you really do wanna like to preserve that relationship, go back and give them the opportunity. They need to kinda come come up. This is the sort of importance of the, like, relationships in in this stuff. Right? And kind of working together through through the site. And a lot of our customers, you know, I've had our customers for a long time and we're able to have these conversations. I could pick up the phone and say, Jesse, this is what's going on. I haven't made money in the last few years. It's been tough. I'm getting opportunities potentially almost double the amount of what you're paying me or close or whatnot. I have to go make some money. Can we work some out or should I allocate some assets that way, you know? And we can have that conversation you know, man to man and and usually the other side they understand it sucks but they they do and and then we usually work some out. So those are those are the the exercises we're kind of going through right now and all the asset bases or carriers are going through right now.
[18:43]
there's a significantly less amount of trucks. So Yeah. Getting trucks is very hard. I can quote on load today that picks up tomorrow or on Friday, and the market might change big time by then. And that's what's happening. Every day, there's, like, no I'm just praying for some kind of normal coming soon, hopefully, so we can do some, you know, predictive rating and whatnot, but there's no there's none of that right now. So it's changing almost day by day, sometimes hour by hour. I've seen loads out of Southern California, for example, going to the Northwest, go from $4,500 all the way to $7,000 depending on the day in the same week. So how are you supposed to how are you supposed to predict that. Right?
That's wild. So what does that mean for how you like, your strategy on the spot market when there is so much volatility and difficulty in predicting where rates are gonna be? Just be open. Open and say, look, I think we can get some trucks for this. And most of the customers are like, okay. Let's get it done and hope you're right. And if the market changes in the next couple days and you got a few days before the load picks up and it changes significantly, then we'll have that conversation and say, the market changed significantly. Look, it's right here and we need some more money to cover it or, you know, and if it's just a small change, then sometimes we'll we'll take it on the chin and just get it done right for the customer, but that's that's it's almost day by day right now. And so you therefore like you kind of have to quote it differently. It's not like, hey, it's like, hey, I'm gonna try to get this covered for you assuming, you know, within this kind of range. Yeah. Right. Right. Right. Or like I tell my guys is if you're quoting something and you think it's it's a high enough rate to to get a truck, quote it higher because it it it could change pretty quickly.
[20:44]
it's been a challenging year, but I think it's gonna be a fruitful year, at least for our company overall, by the end of the year once we're done with it. But it's been definitely new challenges, and and this is a lot different than the COVID challenge, I would say. COVID was In what ways is it different? I mean, same thing, like, less capacity, but I feel like there are still hopes of capacity coming in, and there's no hopes of capacity coming in now because there's no drivers. We're cutting the drivers off, which is good for the industry long term. Right? The correction won't happen as quick, and it'll force players to work on retention, to work on some of those things that from an asset based standpoint that we should be working on. We shouldn't have, you know, we shouldn't have a 100% driver turnover problem in the asset based business that we all do.
[22:49]
at different shippers because when we're dropping out a receiver and they're supposed to offload within twenty four to thirty six hours, they're now taking seventy two hours or they're taking four days or whatever, and so they're holding trailers up. So we're constantly playing chess with marbles all day long and and putting this puzzle together, which at the end of the day, who's ultimately affected. Right? We got our planners, our driver managers, and the folks in the office working on this all day long with our shippers and our receivers and our customers. But at the end of the day, it's the driver who's out there who's ultimately affected. So you can have a perfect week. We can have it lined up, and you're like, I gotta get home for Saturday because my kids got a baseball game, whatever and something hard on Thursday or Wednesday and it just screwed up your whole week. So eventually, you're gonna get pissed off and screw this. This is, you know, and and driver and then they're naturally wanting to do different jobs or I'm gonna go try this company instead or whatnot. Right? And so but a lot of companies, they just get so big, it's hard for them to still keep that personal touch because at the end of the day, it's still still a human being on the other side keep that personal touch to where we can we could treat them that way and and they feel like we can listen. Right? And so and that's when they start turning over. But I feel like this go around, companies are gonna have to figure that out. Like, we have to figure our retention as an industry because we can't continue to have a 100% turnover and stop the pipeline of new drivers coming in. Right? We can't just burn drivers out and just keep going new guys coming in.
[24:55]
the things that could change are the feedback loops. Don't be so rigid and stuck in our ways. There's lot of old school trucking companies out there. Don't be stuck in those ways and listen to the drivers because they ultimately like I said, they're the ones out there. Listen to their feedback. See what we can do better. Work with our shippers and receivers to show them the feedback, and they need to ultimately get better too. Right? Like, we're only as good as our shippers and receivers. So if we pick up a preloaded trailer to go sit at a grocery distribution center, one of the worst ones we get out here, the actual one of customer, I'll just say it, C and S Grocers, those guys need to realize their warehouses holding my driver up for eight to ten hours just to get offloaded is ridiculous. Like, there's no reason that should happen. There's no reason you can go to a Costco super efficient and you're in and out within hour and a half to two hours and then the same commodity takes eight to nine hours at a different distribution center. Like, there's no reason for that. So what I don't care how good the load was. You've just given a driver eight to ten hours at a dock to basically go crazy in their truck. That's that's us. Right? I would hate to do that. It'd be stuck in your, you know, 70 inch condo or whatever you got for for that long. It's ridiculous.
[26:58]
oftentimes, the incumbent carrier Yeah. Has the shortest shortest stick. Right? Because they don't they know all the nuances that go into play and so they price it here and then somebody new saying, oh, this looks like great land on paper and they price it Yeah. And bam, it's the worst land. So you lose the business and then you get a callback two months later when that carrier is like, screw this. We didn't sign up for this.
[29:07]
Yeah. It's it's definitely the crystal ball's very very smoky right now. It's hard to predict. On the trucking side, we can at least commit to to rates and lanes and know that, hey. We've committed to them. These are our trucks, and we're gonna make them happen. Right? As long as we're in a good spot there. Could still get more opportunities at a much higher rate coming at us. But, hey. If we made the deal, we're gonna we're gonna honor, you know, for the for the time we did that. Right? Especially if we just renegotiated stuff. And so on the brokerage side, we have to shift from being I feel like brokerages over the last few years turned into more of just carriers, right, for for route guides and for big companies, for for shippers. Because it's it's kind of a joke and and truckers you know, being a trucker first, when we see a carrier of the year award go to a broker, we all usually chuckle and kinda get a little offended. Like, wait. You're giving a carrier of the year to a broker. Like, that doesn't make any sense. Now now I get it from my broker side too. They're working hard, and they're getting freight cover. But at the end of the day, they're not a carrier. And so I think it needs to shift back from being kind of a carrier option that shippers got used to over the last few years and just say, we could just plug these brokers in on these route guides, and they'll just execute it at these lower rates. Now they need to shift back to saying the brokerages are our partners, and they're extension of our transportation teams. And we need them to tell us what the market's doing. We need them and their help to to ultimately get trucks where our asset based truck, you know, carriers cannot or they don't have capacity for. Right? So I think we need to go back to shifting to that now.
[31:12]
with the with the tightening of rates that it's just gonna be hot like, it's gonna be harder to actually execute that strategy as a broker and so will be a little bit more of like, okay, where is the sort of spot stuff? Where is the less consistent stuff? Where is the more difficult stuff? Would So do you see that that trend kind of starting to shift? Yeah. I think it's gonna start going back to that for sure, like more of a, hey, this is our price for the next season, this is our price, what we feel we can get trucks for for the next thirty days or sixty days or ninety days or Yeah. Or whatnot. So I think it's gonna start going back to that. Right? It's gonna go back to more asset based carriers on higher percentages of route guides and the brokerage is ultimately solving like what it used to be. Solving the solve for the freight that's now left over. Right? That's interesting. And that is mainly because you think these really cheap sources of capacity will be They're gone. They're gone. And so Yep. Yeah.
[33:29]
Right. Exactly. Yeah. Mean, of the day, it's all about safety. Like, if we're on the road, we got our families on the road with us, wanna make sure the truck we're passing or the truck that's going on the right of us is a safe driver that's trained, that's educated and that's, you know, able to to be safe out there and and not cause an accident. So
[35:33]
Yeah. There there's there's no perfect way to do it. Yeah. We've got folk we got a sales team that's combined that's selling enterprise for both sides. We're open with our customers saying, hey. We're gonna put this on brokerage or we're gonna put this on our trucks or we're gonna put this on a combination of both or or whatnot or and then there's sellers that are just selling for pure brokerage and and and they're, you know, and they're just selling for brokerage and there's sellers that are selling for just trucks. Right? But most of our truck sellers are also selling for brokerage. There's definitely that. We get a little bit more I guess, shippers will listen to asset based brokerages a little bit more than just a traditional brokerage because we do have assets, do have skin in the game, we do have a bigger investment ultimately. Right? And now I'm not saying we're better. A lot of times we can be better, but a lot of times the pure play broker can be better than us in some lanes. Right? Now when you're I always tell my brokerage team, when you're a pure play broker, all you have is service. When you're an asset based carrier, sometimes you get a little complacent because you got trucks. Right? And so usually the shippers I mean, for the most part, like, we know where they're at and and and communication and all that's fine. But for the most part, like, we've got trucks, we've got assets, we've got drop trailers, we got all those things. Now some brokerages have those too, and now we offer those to you on a brokerage,
[37:35]
but at the same time, really all you have is service. So we have to be that much better. Right? And every broker out there, the 20,000 or 30 or 50,000, whatever the brokerage number is out there, they're all fighting for ultimately the same freight mix. Right? And and what really separates all of us is is how quickly we can answer the phone and ask the question and and provide that solution. And so Yeah. And some days we win and some days we fall on our face, then we come back again the next day and you keep winning, then you just shoot to win. Right? So Yeah. So we started our trucking company in 2006. It's a twenty year old company now. And we started our brokerage in 2009 just because Pretty yeah. Just two years later. Right? So Yeah. Pretty much been there since the beginning. But it was basically because we were getting we're doing loads for customers, and and they're like, hey. We need 10 loads on Friday, and we're like, well, we only have seven trucks. And they're like, well, can you find home for the other three loads? And so that's kind of how I started, right, because they trusted us to just get it done and then it morphed into kind of its own business and now it's, you know, we're we're getting up to close to a 100,000,000 hours in revenue on the brokerage side. We're pumping up, you know, we're we're getting more freight covered on that side. We're getting more opportunities, but ultimately, we're able to strengthen our our enterprise offering across the board And it's it's healthier too. So it's not just all assets, which is heavy heavy, you know, investment heavy. You know, trucks cost a $180,000, actually more now. Trailers are $4,050,000 dollars on the dry van side. Reefers are over 100,000. And so it's a big investment. And so
[39:39]
Amazing. I really enjoyed this chat. Thanks so much for coming on, Harman.