Making Trucking Networks More Efficient Through Multi-Enterprise Collaboration (Ajesh Kapoor, Founder/CEO, SemiCab)

00:00:04: Hello and welcome to the logistics tribe I'm your host Boris felgendreher my guest on today's show is ajesh Kapoor ajesh is the founder and CEO of semicab,

00:00:14: semicab is a US based lock Tech startup that is bringing multi-enterprise collaboration to the world of truck transportation

00:00:20: semicab offers Tech enabled services and connects shippers and carriers on a collaborative Transportation platform.

00:00:26: I just took me on a deep dive tour and how the idea for semicab emerged how we started the company by semi Cape is unique in its approach what value the platform create for shippers and carriers,

00:00:37: but the company's growth plans look like in much more Super interesting conversation that I hope you'll enjoy,

00:00:42: before we get started a quick thanks to our supporters great orange great our jaw tomates Warehouse operations through a combination of AI software and autonomous mobile robots

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00:01:05: check them out at gray orange.com alright and now we're on to the show which ajesh Kapoor from semicab

00:01:11: enjoy hello I Josh welcome to the logistics tribe thanks for being on the program thank you for having me Boris

00:01:18: adjust last time we talked that any decent length was when we were still colleagues together at in for Nexus that's a few years ago fast forward a few years and now here you are,

00:01:28: successful entrepreneur with a startup called semi cab I want to hear all about it but it's been a while huh

00:01:34: it has been a while and input has been doing seems to be doing well in for Nexus crowd is still some good

00:01:42: friends over there and you know like excited about some I have what we are doing we have still a start-up so successful there are degrees of success I think we are we are doing well but,

00:01:53: forward to do.

00:01:54: Awesome yeah give us the the very short pitch the elevator pitch of what semicab is doing before we dive into some of the specific later on and then also you transition from from the corporate world so to speak to your own boss so what's the what's the short pitch what does that some I kept to the reason we found it so my cap was very specific and

00:02:13: when you look at the trucking networks across the world no matter what geography you are looking at these are extremely inefficient.

00:02:21: And in more than one way so one of those is where people measure it by the efficiency the

00:02:29: utilization of the resources that you deploy in the space so your trucks they are running empty even and advanced network with all kinds of data in the u.s. they are running one in three miles empty,

00:02:41: so that is one part of it where you obviously want to improve that

00:02:45: and it has a very direct impact on the environment so you want to bring in a solution that actually is able to cut that down and utilize that mileage in a more effective.

00:02:56: But then there is a social component to it because the way everything is structured.

00:03:02: The trucks are on the road for weeks at a time and the drivers don't really know when they are going to get home.

00:03:07: So that unpredictable nature leads to a very high driver attrition and driver safety issues

00:03:14: that that becomes a pretty big part of the problem because driver attrition leads to carriers expending a whole lot more money on that side and just

00:03:26: trying to provide reliable service to their customers that becomes a challenge every day so that's what we set out to solve and,

00:03:35: obviously with the team and the experience that we bring together in taking a multi-enterprise approach.

00:03:41: To solving this problem bringing entities from different spectrums together under one umbrella and being able to optimize that is unique about us

00:03:50: and that is the that is the mission we live by yeah and what's the what's the history of the gestation of the idea I mean you have been all obviously been in logistics supply chain,

00:04:01: and on the technology side for for a long time looking back was there a crucial moment or like a pivotal moment where you realize okay here you know that that Trucking

00:04:10: the full truckload long-distance Trucking is suboptimal I want to take a crack at that when was there a specific moment when you have that realization yeah it's a I think a couple of different

00:04:22: Milestones during this journey so I started out in this Logistics and optimization space back in the mid-90s.

00:04:30: And did my first start of back in the year 2000 so that's an interesting time to have a start-up in 2000 yeah and the exit once I exit was in 2007 which was interesting again.

00:04:43: Okay so how are you so you started something in 2000 that survived the bubble so to speak the tech explosion and it survived until 2007 okay all right that's the first success on your belt okay we had a good exit and

00:04:56: I said the key part was when you look at 2007 specifically and till that time.

00:05:03: I was in the last mile delivery space Transportation Planning from an Enterprise Centric perspective right and

00:05:10: you start looking at these guys not having visibility to where the carrier assets are and you start thinking about how do you bring the two together at the same time what happened in 2007-8 Crash

00:05:24: recession that us entered into all the carriers who are spending all the investing the capital in those trucks.

00:05:33: Running the operations doing all the hard work.

00:05:37: They are going bust and the Brokers they are basically making record profits and there was a whole lot of stuff that was going on that said,

00:05:45: you know there has to be a better way of doing these things instead of this boom and bust all the time it's so cyclical.

00:05:53: And then the next part that comment so that was I think the Genesis of the idea of what we wanted to do but in terms of the feasibility.

00:06:01: Just coming out of another startup timing is key in these things so we wanted to wait on some of the technology pieces to be available,

00:06:10: I'll make sure that we have the right approach in that we can actually implement it in a practical way.

00:06:15: So the electronic logging devices mandate in the US was a big huge propeller for it and of course the minute that come about when was one was that as a milestone so 2016 or so is when this thing was.

00:06:29: Getting much more talked about.

00:06:32: And got rolled out over 2018 and 2019 so that works and that was big and then of course the experience at GT Nexus just,

00:06:40: building a multi-enterprise platform from the ground up and introducing optimization into it those four key key experiences key learnings that we wanted to.

00:06:51: Round out what we were out to build at

00:06:55: yeah but at the same time from your the initial idea when it developed and let's say 2007 until you finally pulled the trigger so to speak to launch it a whole bunch of stuff happened in the sense that a whole bunch of other platforms

00:07:07: the try to do similar things were launched right so there's very big platforms where we established platforms,

00:07:13: and if you look at their websites it sounds essentially they're trying to do the same thing explain to us what those companies have been trying to do and how,

00:07:21: that hasn't quite led to the solution of the problem and how you're solving a differently yeah it was actually one of the key motivators for us that.

00:07:31: When we looked at the ventures that were getting funded between let's say 2015 and 2018.

00:07:37: Because even between 2016 and 18 we knew the solution that we were going to bring to the market but if there were people who were going to do something meaningful something similar it would have given us a pause it would have given us a

00:07:52: an opportunity to evolve the solution from there the what was happening you're rightly pointing out this was the first time,

00:07:59: the investment Community was recognizing how large this opportunity was.

00:08:04: And they were example and I get like a convoy for example write an example of like a company that's super heavily financed by venture capital and is like triple unicorn evaluation that sort of thing you talking about yeah,

00:08:16: yeah and but that approach that these companies had taken I think there is.

00:08:22: So many problems in the trucking industry when you look at the efficiency part of it.

00:08:27: They were looking at the spot Market brokerage as the primary piece where

00:08:33: they wanted to minimize the number of phone calls they wanted to minimize some of the friction and that where people are picking up the phone finding an order and then on the other end picking up a phone finding a carrier who can cover it,

00:08:46: automating digitizing that part of the process bringing in the smaller carriers owner operators into the mix,

00:08:55: because the large shippers large Enterprises cannot do business directly with those guys

00:09:01: so they were making that process simpler and augmenting the capacity but

00:09:06: it was just super important right because back in the days it was like a pen and paper and maybe an Excel spreadsheet and phone and fax and stuff right it was super analog that's exactly like okay so so taking that process and,

00:09:17: making that process easier I think that that did solve a relevant problem in the market space at the same time.

00:09:25: When you deal with the spot Market it fluctuates so much.

00:09:29: During covert times when we look at just a full truckload Market in the u.s. it was above a hundred billion dollars.

00:09:37: Thirty percent of the overall market right now it is down below 10%.

00:09:41: And it's random in the lanes that show up where because the trucks are moving all the time so the capacity imbalances are in different places.

00:09:51: What our Focus was from day one was to build a more efficient.

00:09:56: So the way we went to Market we said we are going to become the primary providers for the contract Freight we are not going to build set it up with Dynamic pricing where we are taking a load at a time

00:10:09: we want to bring these large Enterprises in.

00:10:12: And they are entering a collaborative space they don't have to collaborate directly in a traditional way that they are basically talking to each other and trying to figure it out.

00:10:23: Because they enter this space we are able to orchestrate collaboration across them by looking at it holistically optimizing across and before you can optimize a cross you have to be able to predict.

00:10:35: What domiciles the loads are originating what locations,

00:10:41: and what Lanes the volumes are on which customers are coming in where the synergies are,

00:10:46: and so a completely different approach to even from a technology perspective.

00:10:52: There is a collaboration part to the platform that's the foundation of it making it very very simple bringing in all kinds of systems underneath but on top of that the engine that we built that we call predictive optimization,

00:11:06: that allows us to utilize,

00:11:10: all the trucks and drivers much more efficiently and then able to bring the drivers back home in a very predictable schedule.

00:11:17: Right so so that it's a it's a very different problem we are solving a it's very easy to get lost and it's tracking and everybody is trying to match

00:11:28: shippers and carriers but if the problem is as big as you describe it

00:11:32: like how come nobody has noticed it or has it been noticed but it hasn't been solved or the idea hasn't come up or has been approached in a different way or wrong way what's a what am I missing yeah the evolution is actually kind of interesting and that even when we hit the market,

00:11:46: so this will tell you a little bit about it.

00:11:49: Literally felt like it was latent demand where you had these companies literally waiting we have never had throughout our career when we a.

00:12:00: Out there selling software Solutions and some very effective and very need Advanced the sales Cycles have never been shorter for us right.

00:12:08: And the reason was the way this thing evolved.

00:12:11: Companies had Enterprises on this side they had tried to collaborate directly with each other and when you don't have a platform,

00:12:21: limited synergies and no predictive optimization technology it's very very hard to.

00:12:26: Find when winds and create when winds and those sides so that was one part one approach that people had taken new the shortcomings knew that a platform like this would help.

00:12:38: The second approach that has been tried a couple of times is where people tried to come in and created a technology platform and try to make it keep their hands clean.

00:12:51: Building Technology Only Solution right and you bring these guys in and now you are trying to create these multi multi party

00:12:59: contracts for each set of stuff that you have to do on a daily basis and the problem becomes almost impossible to manage,

00:13:09: and of course when the distribution of gains happens because there are significant gains to be had in these situations the thing falls apart so that has happened a couple of times and those were some of the learnings as we evolve the business model at semicab right so

00:13:23: there was a reason we didn't go with a technology only platform Only Solution we basically decided.

00:13:29: The technical services model was the right way to do it because you can.

00:13:34: Provide the reliability that the Enterprise shippers need at the same time treat the carrier's the way you want them to be.

00:13:42: Yeah and then how long did it take from when you first pull the trigger and you

00:13:47: started doing anything until you had a prototype that you were comfortable going out to the market with like how long did you spend in the lab so to speak developing this before you had something a prototype a minimal viable product that you were able to show up there

00:14:00: oh that's it that's a good question because that the standards are different on those two sides just in terms of math when we talk about predictive optimization

00:14:10: nothing even close to this scale had ever been modeled for forget when we talk about solving this problem and

00:14:18: then solving this problem to something that reaches close to optimality

00:14:23: so we were aware of it we had the model but we wanted to test it out at a scale where we want the data you need tried on yeah so we were able to Source the data after building the initial engine,

00:14:36: we were able to Source the data where we were bringing in close to half a million loads a week.

00:14:41: And we had the location data for different trucking dami soils thousands and thousands of them right and so that's what we tested.

00:14:49: The solution on for a good close to 12 months bonus before we were comfortable that we would

00:14:56: at the market okay so you had to form Partnerships with these two shippers to even get to the data right or how would you be able to get the data yeah some of the some of the shipper data some of the open source data that we sourced and so that part

00:15:10: obviously and then you want to architect it where it's not just a u.s. problem right so the architecture of the solution was.

00:15:19: Critical for us as we move into other geographies if we move into Canada we move into Mexico we move into Europe we went to India so that that part was critical for us as well so we went through that process so we.

00:15:33: It was a good I would say 18 18 months before we hit the market after testing everything out.

00:15:41: I mean I would imagine that your problem that you have with any kind of thing that approaches

00:15:47: Marketplace you need two sides right you get the shippers any of the carriers and eat enough of them more cameras you have the more shippers you know it's a network effect that you someone you need to get their flywheel flying so to speak how how did you convince the first

00:16:00: parties to join and what was the what was the incentive where they so desperate I mean or did you pick out some companies on the shipper side for example there are particular

00:16:10: prone to try new technologies or how did you decide how to partner with yeah no it's a

00:16:15: it's one of those crazy Marketplace questions and it's not even a typical marketplace where you put putting two parties together so it goes even further than that so the first first decision we had to take was.

00:16:29: Do you start with demand or do you start with Supply.

00:16:31: And we were in a crazy crazy Market where the supply was extremely short right extremely Limited

00:16:39: the carrier's be that's a good that's important to me and it's important to mention you started the idea in 2018 and 18 months so you're talking middle of almost 2,000

00:16:49: yeah we're golden and so,

00:16:52: yeah yeah not a not a typical time okay that's real that was in hindsight was it a good thing was it a good thing to start under those conditions or was it in hindsight would have preferred another time or maybe it played into your cards I don't know so this is the thing about our business model that actually doesn't

00:17:06: the timing is less critical for us in that we have a situation where you have either constraints apply,

00:17:15: that drives a part of the ecosystem and then you have a constrained demand that.

00:17:20: Drives the other part of the ecosystem right so so both are crazy in our case where we ended up even with the constraints apply.

00:17:28: We ended up starting with the demand side of it first and when we approached the first set of Enterprise shippers.

00:17:38: The response was awesome the response was where our approach was not that we are trying to provide you cause benefits and things like that not directly.

00:17:47: That will bring your transportation costs by down by 10% or something like that it was more,

00:17:54: this is what we are trying to do and this is what does it does for you in the long term and this is how it makes capacity more reliable.

00:18:02: That message resonated with the first set of customers and then the second set of customers and.

00:18:08: It's resonated so much that some of these customers actually started Within.

00:18:13: Six months of joining and working with us they were already bringing other customers into the.

00:18:20: So so turned out to be a good approach on that side and then we were able to bring in we have a small Ops Team,

00:18:27: try to keep it small because this is the other on the supply side this is the other crazy thing you'll see especially Brokers advertising we have million.

00:18:39: Carriers in our ecosystem and you say okay on an average it carrier will have at least 5 to 10 trucks.

00:18:46: And you look at the numbers and you say do you use a truck from a carrier every couple of years because that's basically what the revenue is telling you so.

00:18:55: It's again people will talk about the fragmentation of the industry and everything like that.

00:19:01: You're not utilizing the relationships that you have you're not really doing anything for the ecosystem members and that's.

00:19:09: Our approach we have a couple of thousand carriers on our Network right now right I'd say.

00:19:15: That approach has always been just because we create these long-term relationships on the carrier also the number of trucks we need the number of carriers we need in the platform is significantly lower so we

00:19:28: we don't believe in the metric that okay somehow.

00:19:32: Two thousand or 10,000 or 20,000 carriers signifies anything meaningful in our in our commitment what is more important to us is.

00:19:42: On an average our long-term carrier Partners how much business are they doing as part of are they doing.

00:19:49: 10% of their miles with us and a year 50% of the miles or all of it right so that's that's a better measurement for what our model looks like and that.

00:19:59: Has a very direct impact on the unit economics so you can bring the cost down so many different ways but keeping the process smooth.

00:20:08: Making the capacity more reliable it requires that we have these.

00:20:13: Relationships that cannot get cannot be created between an Enterprise and carrier directly for the Long Haul side of it.

00:20:20: But creating it for the ecosystem that reliable capacity that becomes much more achievable that's much more feasible and that's how we go about it

00:20:30: okay let's just walk us through a typical example from the vantage point of a shipper how they use the platform and what kind of benefits they get out of it yeah so the

00:20:39: basic process that we go through before we bring a shipper on board is.

00:20:45: We say Let us look at let's say the last 12 months of your shipment data we have this whole the predictive optimization engine that,

00:20:54: is already running the ecosystem on a continuous basis and we say what we are going to do is we are going to take your data we are going to synthesize with our Network as it is right now,

00:21:04: let's see where the opportunities are for a meaningful.

00:21:08: And mileage meaningful Improvement in efficiency where the synergies are so so that's the

00:21:15: that's the process we go through even before we bring a customer on and then we get into a collaborative cycle with them deciding okay this is where we want to start you want to get comfortable

00:21:27: in terms of us this technology team being able to meet your operational needs right so that was the first hurdle we had to cross,

00:21:35: with the first set of customers here let me ask you first of all like how willing are these shippers who share the data with you and then how easy is it for you to just take the data,

00:21:44: as it is because I can Envision their formatting issues data quality issues like what you get from them and what format and how this transfer takes place will

00:21:53: the outcome of this trial of this sort of simulation right so talk to me about the willingness and the difficulty of getting started with this data in the engine,

00:22:01: yes oh so interestingly again this was a reservation we had this was concerned we had right we have not had,

00:22:10: once we explain what we are trying to do the customers are buying into that idea and we don't we don't face any resistance and.

00:22:19: Them sharing that data with us at that point so so you have lots of tens of billions of worth of freight data and release.

00:22:28: That we can that we are running through this engine right so it's a.

00:22:33: That has been actually a very very good experience in these companies willingness their understanding of what we are trying to do and then their willingness to share the data,

00:22:44: become part of this ecosystem the second part of it when we talk about the collaboration platform so this was.

00:22:51: Learning that we had not just with GT Nexus but through the career we getting the data for an assessment like this but then.

00:23:00: Getting the data on the operational side flowing in without putting a whole lot of manual effort into it.

00:23:07: That was the entire design part of the structure that we built.

00:23:13: For the platform itself so being able to take data from in different formats and different sources and the advantage that we have is,

00:23:23: the transportation data the load data is fairly standard the Ed is standards have been established for a long time these guys are communicating it to the carriers and you basically need that basic data that you're bringing in so it's not,

00:23:36: assessment side is not completely seamless but it's not a day's worth of work to massage the data and to clean up the data and.

00:23:46: I'm going to put it in and the data typically comes out of their Erp systems or TMS systems or variation of or that's exactly right I was working yeah so it's so there are customers who use the TMS to store that data there are customers who.

00:24:02: We'll take it from the TMS and take it into their Erp and tender it tender the loads out from there so those are the two basic sources where they extract the data from.

00:24:12: But then on the operational side we create an integration on that side so just keep.

00:24:17: Yeah so I would describe this as an exploratory phase where you take the data you run it through the engine to identify if there's opportunities have you seen cases where you said well thanks for the data we looked at it,

00:24:28: it doesn't quite work you're not a good fit and just like let's pause let's pause here for a second and you come back later when the when the platform was differently or have you basically run into situations where every sort of data set you imported from a potential customer actually worked out

00:24:42: no so so this this is the this is the key piece the way

00:24:47: the way the structure revolves is when we take the data there have been situations where a good 70% of the ball

00:24:55: was synergistic with our Network and they have been cases where.

00:25:00: Ten to fifteen percent of the volume that the customer was running in 70% is quite significant because when you're saying you have couple of thousand carriers I mean it's not like you have 80% of the potential carrier Network covered you have a small sliver right,

00:25:14: yeah and still you run into situations where 70% is already covered those are two separate things right well as So when you say seventy percent of the volume the first thing we are trying to assess through this process has.

00:25:28: How much of it because capacity is available it's again we will onboard capacity as we generate more and more demand and where we.

00:25:36: That capacity from your very targeted in that as well so we don't do the random acquisition of carriers we basically saying.

00:25:44: We need them in Dallas we need them in kind of Chicago we need them in Atlanta those kind of places we need them in Southern California.

00:25:51: But the basic idea is when we take the data and a customer on day one is not going to give us seventy percent of their body.

00:25:58: Okay so so we want to be real on that side but there is that creates a potential even at that point where you say.

00:26:08: Can I take 70% of this company's loads and let's say they are worth over all 500 million.

00:26:14: So you can take 350 million dollars what the loads and you can actually run them at.

00:26:21: Let's an empty percentage of 10% or below the amount of capacity expansion that represents is significant it basically is,

00:26:30: saying that the trucks that you would use to meet that demand you would have augmented their capacity by close to 30% of what they are doing.

00:26:39: And that's because you have your optimization engine instance of on top of it but does a better job of eliminating empty miles and better usage of the existing Fleet it's the combination of

00:26:51: because the engine still has to work on these Enterprises coming together so the first step always is

00:26:57: that these Enterprises are willing to collaborate now so that's the first part of it but the second part of it is more interesting for us and how we grow that,

00:27:06: so a new customer joins and they provide their data and they start working with us it basically means that.

00:27:13: That data has opened up opportunities for our existing customers more and more of their volume as we scale up that becomes synergistic as well right so,

00:27:25: let's say without this retailer XYZ.

00:27:30: There were certain efficiencies in the set of customers we had in the network but when xv's XYZ joints there are new.

00:27:38: Lanes and new geographies that become synergistic right okay then I'm sense that keeps growing that way

00:27:44: okay so then let's step one step further you the customer realizes okay you've you've run that trial period or that sort of finding phase and they join

00:27:55: and then they are the paying party right so the business model is that they pay for for the service what about the carrier's repay the carrier

00:28:02: you pay the carrier's be basically as you said you know the technology provider but you're charging for the technology is it like a software-as-a-service or no it's

00:28:10: it's built a cannibal Services we do not charge for I use agile platform all the technology that we have built in all the way from not just predict about consideration all the any visibility we would provide to the shipments any of the

00:28:23: automation that we provide so there is a whole lot of AI in the platform they had you have to build that in to achieve the scale these days we do not charge for the platform membership today

00:28:36: it is purely we believe that we can create enough efficiencies between what the shippers are doing.

00:28:43: And when they are collaborating there are enough efficiencies that we can generate to make it meaningful for everyone yeah and just a little bit more on the type of shippers that this is particularly attractive to you mentioned,

00:28:56: fast moving consumer goods you mentioned retailers who else is your prime target so it is it a certain size describe to me the perfect customer our segmentation,

00:29:07: we do it by vertical and then we do it by size you write on so on the vertical side when we were,

00:29:16: starting out we wanted to create a core because you want to scale up little more quickly before you start opening it up to smaller shippers right midsize shippers and smaller.

00:29:28: So the first part of it obviously cpg companies make sense just because they use a whole lot of truckload.

00:29:34: Shipment retail the same thing especially because they need the truck load side but they also have a whole lot of people feeding truckload shipments into.

00:29:45: And so there is a strong pain point on that side even for the largest retailers that you can think of where,

00:29:53: the on time in full and on time delivery into their warehouses that's always a problem I was like people cannot still exceed,

00:30:01: 70 to 80% on time,

00:30:04: or deaf right so you have a bunch of people in the warehouses waiting for trucks arrived and vice versa yeah it's super inefficient so that part of it comes in but then on the size part of it.

00:30:14: Where we always go as we say we started with the large customers large Shepherds we are already bringing in midsize shivers,

00:30:23: and then on the lower side is where as we scale up we will start opening it up to smaller shippers that.

00:30:31: Our shipping let's say anywhere from 10 million to.

00:30:34: Twenty-five to fifty million annually in Freight truckload Freight the advantage to them is just.

00:30:41: So much higher because they don't get access to the service and the pricing that the larger ship.

00:30:47: And in our case it is identical to them right at basically this is what we are providing we are not charging.

00:30:53: It brokerage fee on top of whatever we whatever these guys pay us so so that part of it becomes super attractive to them at the same time just to make sure that we are doing it in a.

00:31:04: Sustainable manner that's the sequence we follow so we are still bringing in large shippers into the mix but then we are starting to introduce the mid-size guys in there

00:31:13: yeah and you just mentioned that the keyword brokerage you know the traditional way there was always there was a shipper and there was a broker between the the carrier

00:31:21: is that still part of the equation are broker still playing a role in this particular model or are you cutting them out of the picture.

00:31:30: I think that's a that's an interesting question because the way we think about the market there is always going to be a part of the market that is what you would call the spot Market.

00:31:40: What Brokers have tried to do so couple of them have tried to dabble in where they try to do,

00:31:48: because they don't have really a way to create efficiencies there very soon go to cutting their losses on the contract Side by bringing in spot and then they become spot hair.

00:31:57: There are maybe maybe one exception to it maybe two out there that still does a decent amount of contract work but they still Source their capacity from this part,

00:32:08: when we come in it's basically saying you know there are geographies where there is still going to be spot loads there is still enough variability.

00:32:19: Where the Brokers can still play but there is no scenario that we can think of where the spot Market would be thirty percent of the overall Market.

00:32:29: That should not happen and those are the situations where the Enterprise shippers actually they blow their budgets they don't have any control over the quality of the supply that they are getting.

00:32:39: That situation should never come up right there yes the network is imbalanced but the imbalances are not at that level

00:32:47: and if you are if your promises right in the the sort of long-term contracts are it's running smoothly than there's less demand for for spot work right so they can lower their spot percentage so to speak right yeah the geography acidic on that is so that brings us to the customer experience side of it this is why.

00:33:03: So that is the first step where these customers decide to join us based on what we are trying to do but then the expansion always happens based on.

00:33:14: The customer experience they have with us right

00:33:16: and we focus very very strongly on if they are giving us a geography they should be able to set semicab as the provider and forget about it right because basically

00:33:28: anything they give to us we would execute it and we would execute it best of our ability at the highest quality and so.

00:33:37: Industry metric on that side is where primary provider on an average I'm not suggesting of course timing changes.

00:33:45: Maybe fifty sixty seventy percent of the time they would be able to accept a load.

00:33:50: And then the shipper has to go to the second contracted carrier the third contracted carrier down the routing guide,

00:33:57: and that they end up in the spot Market we try to do 99%,

00:34:02: plus okay it's about difference what kind of yeah that's yeah yeah and these contracts are typically annual contract or how long is the time Horizon for for the shippers with you yeah so that's a that's an interesting question because the.

00:34:16: The way that's what it was all about the about interesting questions though there is so there is that there's two components in there and we conflate it a whole lot of times so,

00:34:27: the Enterprise shippers actually,

00:34:29: do a very good job of signaling a long-term relationship and a long-term is not a one-year relationship so the master agreements anytime we sign with any of these customers.

00:34:41: They really don't have an end date or they Auto renew year after year after year when we talk about the rate part of it there is the annual cycle.

00:34:51: So I'm going to say there's a bit cycle but then there is a contract duration.

00:34:57: The contract duration and most cases it's 12 months but then there is some seasonal volume that we are able to incorporate in there as well which may be shorter,

00:35:05: yeah okay interesting let's let's switch gears a little bit and talk about the the carrier part of it we've talked a long time around the shipper side stripper perspective let's talk about the carrier's maybe first described this sort of landscape in the US which is different than some of the

00:35:18: Trucking landscape in Europe for example there's tons and tons of small operator carrier sort of

00:35:23: small set up Mom and Pop trucking companies and us it described to us that little bit because we have an international audience just to make sure that people understand the sort of particularities and the the special situation in the trucking Market in u.s.

00:35:35: Yeah this is a question that comes up a lot of times and some people think that the US market is so much more fragmented than their geography.

00:35:44: And then something that US market is much more organized and.

00:35:48: Their geographies are much more fragmented we were having this discussion with a big group of companies in India that and they basically were on the other side and the surprising part is when you go from geography to geography.

00:36:03: When it comes to trucking specially the mid to Long Haul Trucking the structure is very different yes the ground realities may change how you.

00:36:10: Work with the carriers may be slightly different but.

00:36:15: When you look at the US market let's say and they talked about the fragmentation and there are two components there as well one is.

00:36:22: There's a large number or percentage of owner-operators so let's say there are two million trucks doing this work one-way Transportation made too long.

00:36:31: You're basically say oh 86% also are.

00:36:35: Want to track owner operators and then you say 6 Plus trucks you are already in the 90s then 20-plus trucks,

00:36:43: you have reached the 94 95 percent of the population this thing hides the fact that even the larger carriers how much of their capacity so they their number of assets looks very very large.

00:36:56: But the number of trucks that they put in the market for the OT our side of it for the one-way Transportation on the Long Haul.

00:37:03: That's actually very very small so when you say you are looking at the top five carriers let's say in the US.

00:37:11: Out of the two million trucks they provide less than 20,000 trucks in this particular structure.

00:37:17: So you're talking about it's at that point it's not meaningful right it's one percent of the capacity so no matter what you are going to do.

00:37:26: You are dealing with a extremely fragmented market now it's the.

00:37:32: I don't know if it is exactly the same but it's very similar in Europe it's not like there are large carriers dominate that market either the big huge step the big huge mindset change that we have to make is we have,

00:37:45: traditionally treated fragmentation as a problem K now that basically saying oh the small businesses.

00:37:53: Are less efficient or create a problem then if you basically created monopolies and we are all cable customers right there is no basically is not either or and so.

00:38:06: Creating a structure creating a platform that actually takes advantage of and makes it meaningful bringing these guys in and doing the operation taking advantage of this structure.

00:38:18: Making it meaningful for the owner operators for the small carriers I think that's a better approach to doing.

00:38:24: So I think the market characteristics are what they are there are advantages that the larger carriers have over smaller carriers but smaller carriers are nimble.

00:38:34: And the way they approach the market kind of service they are able to provide it actually a big part of the large carrier population.

00:38:44: Is using these guys so there is the whole I see part of the thing that you see in their balance sheets.

00:38:52: And um income statements there is a big part that actually the capacity is coming from the smaller guys even for the larger carriers

00:38:59: yeah and if you would summarize it what's the what's the main selling point for a carrier to join the network so the two pieces that come up so

00:39:06: one at a very basic level what you are looking at is think about the software licensing model that we used to have right so very lumpy very unpredictable.

00:39:17: Where we are trying to take the carriers as we are saying.

00:39:20: This is how much money in this is what margin that you make for a year on an average by utilizing the efficiency at the capacity that you guys have.

00:39:28: We are able to generate higher Revenue Without You incurring Higher costs so your margin is always going to be not just higher.

00:39:38: But it's going to be very predictable so that is the that is the financial predictability that comes.

00:39:45: The second part that becomes important for them is.

00:39:48: Their drivers are running coming home or predictably so when you deal with 100% plus attrition rates in this industry you are able to bring the attrition down that's a very meaningful thing for the carrier's right.

00:40:03: And it automatically impacts the safety side of it because the drivers are going in the geographies regularly.

00:40:11: Now the last part of it that one of our dedicated carrier Partners pointed out was.

00:40:17: When you create a revenue stream like that today that carrier has 10 trucks and they are basically able to dedicate that capacity to a semi cap platform.

00:40:26: We are running them as efficiently as we can but there is a revenue stream which is very predictable they can actually take it to the bank and get financing for 10 more trucks.

00:40:36: So the growth part of it is growth part of it is very very big especially for the smaller carriers,

00:40:42: interesting do they typically your typical carry do they dedicate all of their capacity to semi cap or they just just a part of it or how do they do it too badly not initially so,

00:40:53: I think the the maximum we have today is somewhere around 50 to 60 percent of the capacity that is 6% words because they come with existing customer.

00:41:03: Of course yeah but how do you how do you get these guys I mean you obviously service quality is in the other dimension we haven't quite talked about it kind of played into some of the things you said but you obviously once you bring a carry on your network you want to make sure that they

00:41:15: bye-bye certain service level safety you have it like talk to me about the vetting process that goes into deciding who comes on and doesn't yeah so there is.

00:41:24: Two parts to it one is when they join the network there is a certain level of vetting before we would ever give them a load to execute.

00:41:33: So the safety record the insurance part of it what Authority and compliance and all those kind of things authorizations they have licenses they have.

00:41:45: Read it sounds like a very manual thing you have a team I don't know just doing that it's completely automated it completely all right yes and awesome and for every carrier in the network.

00:41:55: We would run it every morning.

00:41:58: And then as soon as we decide to avoid a load to a carrier we would run it again so it's almost completely real time.

00:42:07: So what okay so tell me about the how does it work what I can what are you running where you sorting the data from is it publicly available but safety records or something are you yapping into our yeah it's so so that's the that's an advantage of operating in the u.s. fems.

00:42:21: Actually maintains this database where the carriers have to provide that information and update that information.

00:42:28: And then there are partners that we have like safer safer watch that.

00:42:34: Are keeping that data current right so so that is one part of it where.

00:42:40: Even before we would try to do business with these guys but then the bigger part of the wedding for us because that doesn't tell you what kind of customer experience these guys are going to provide in the end when they are picking up the load when they're delivering the load.

00:42:54: So so we start these guys out by giving them loads on a one-way basis.

00:43:00: And we measure that performance over an extended period of time and some cases depending on the.

00:43:06: The volume on those Lanes we might do it for a good eight to 12 weeks.

00:43:12: Where we have accumulated enough data we know what the customer feedback has been we know what the performance has been and that's when we start converting them into.

00:43:21: Capacity that would be more dedicated to the.

00:43:24: Sort of going through it a trial period so to speak yeah absolutely trying to have tonight it's you it's not it's not something you can actually skip.

00:43:34: Go Skip and get cash you basically reneging on yeah the commitment that you have made to your

00:43:41: yeah talk a little bit about your team I mean I want to know what how big are you right now and what are you girls plants looking looking ahead or you talked a bit about about foreign markets already but

00:43:49: first of all of course first priority is you sou building everything for the us but with a future outlook of having a platform that's applicable and scalable into other markets right but it's you ask first correct it is u.s. first and,

00:44:01: although I have a big development to share with you.

00:44:04: The US market is where we started the team this is where we run we just brought in.

00:44:14: Couple of people that we have in common.

00:44:17: To augment the isil Centigrade hires by the way there was listening of those folks great hires thank you so we brought in people on the sales side the marketing side.

00:44:27: We have people who just have a strong strong industry back.

00:44:33: Steeped in logistics and supply chain couple of them have actually written books about.

00:44:39: How do you structure a supply chain how you operate a supply chain efficiently right with lots and lots of experience the team is small.

00:44:47: It's by Design we don't want to become we are trying to change the Paradigm in here and the paradigms are around.

00:44:55: How much Freight can you handle power employee and we're already past that part of it right so keeping the team small.

00:45:02: And then we have a strong base for engineering q a support operations.

00:45:09: Ni in India and Bangalore and that team has been performing like crazy that the amount of snow so reproduce so.

00:45:18: So that is the that is the structure now that structure in Bangalore basically is designed where it will support any operations where we.

00:45:28: And one of the first expansions that we are looking at is is in India.

00:45:33: Where the India market is similar and the technology part of it the multi-enterprise platform it doesn't exist they're either right because as Gardner would tell you.

00:45:45: We are the only platform of its kind even now in North America so nothing in India,

00:45:51: well yeah it also depends on how do you find the platform into the niche the the small you define the niche the more unique you are but the in general I get it after the long conversation we had today you have something unique so

00:46:02: I buy that from you that would say it's again

00:46:06: we say it all the time and one of the big validations Morris has been in terms of our tooting our horn so I think that that is that does.

00:46:15: Every confidence that we have attended every customer that we speak with who has a certain understanding of the logistics world.

00:46:24: Transportation works we have not had a 15-minute conversation at the end of which.

00:46:30: The other party would say oh yeah you are doing something different yes then you're not doing it like other people are doing it so so that is Meaningful to us right because it validates our approach that it still is producing value.

00:46:44: And it is it is different it's solving a different.

00:46:48: So that's the big huge part of it where we are trying to I think the US side we will expand the team over the next 6 months,

00:46:58: they we are going to set up an entire operations team in India to handle the India market completely autonomous from each other

00:47:07: fantastic and how are you finance right now I saw you first was a bootstrapped and then maybe some debt financing but later on VC what why where are you right now in terms of financing how we've so we have raised money as we needed it,

00:47:19: and we've been fortunate we have a very large basically professionals from supply chain Logistics technology side of it.

00:47:29: That have helpful that they bought into the model early on,

00:47:35: and they have more realistic expectations in some of the Silicon Valley folks maybe yeah that's already good decision yeah a lot of those professionals actually come out of the Silicon Valley so,

00:47:45: nothing against them.

00:47:47: And then we have a large Angel group called gain Jewels beliefs and diversity that is a core value for semicab as well.

00:47:57: So that's where we have been-- I think we will do a series a later this year is what we are going to go into

00:48:06: yeah that sounds exciting I mean especially because you have a lot of folks that we share in common I know they're super talented people and you wouldn't have been able to convince him to join you if you hadn't something there and it's also super encouraging to see some of the customer names we haven't talked about but I've seen some where the customers are on the platform that's pretty,

00:48:23: pretty impressive not everybody who spilled something within first two three four years has customers like them on the platform so that's,

00:48:30: so if exciting stuff I'm so excited for you good stuff man thank you boys yeah so and when are you coming to Europe what's the what's the growth plan for Europe,

00:48:38: is it a totally different animal just in a nutshell or is that are you confident that you can

00:48:43: apply that model the way it works in the US and may work in India to Europe so what we have seen I think we've been doing trial runs for that expansion right so we we were.

00:48:54: The first part that we did after the u.s. we wanted to model Mexico Market in there and we were able to seamlessly do that and.

00:49:03: The latest one is we have a large number of companies that have already provided us data for the India market that that we are running through and.

00:49:14: Yes there are minor localization piece especially on the financial settlement Side of Things Different instruments different underlying platforms.

00:49:24: The model travels beautifully right it's the there's the technology part of it but the business model is traveling seamlessly as well which is which is very.

00:49:34: Really really good.

00:49:38: On the Europe side I think the big huge p is the reason we don't do multiple geographies at the same time bonuses,

00:49:47: it requires a certain level of attention to set up the operations because the shredder technology I'm not suggesting that you should I think that's it the smart approach to do one after another but at the same time if your theory is correct that this is something super unique that

00:50:00: the minute you talk to customers dared immediately get it they merely jump onboard other companies will try to do the same thing and there's big players with Deep Pockets and good expertise

00:50:08: you're going to get some competition it may be other platforms trying to replicate what you've done so you may have to move fast man our competition is good competition does yeah that's ink.

00:50:17: We don't we don't sit on what we have built we are always obviously trying to.

00:50:24: Make it better and better and better at the end of the day I think the model has to go,

00:50:29: to where every truck out there is running close to 5 to 8% empty mileage is not sitting idle everywhere,

00:50:38: the drivers are actually coming home every night or every other night that's a big huge ways to go yeah I mean if you if you put it that way I mean just a situation that's been going on for so long as it's absolute disaster it's a disaster for the for the environment is disaster for the economy for the truck drivers for,

00:50:53: for the companies are stripped it's super super suboptimal is the way to put it so if you can solve that problem.

00:51:00: I'm all for you yep so that's where the competition part of it is where yeah bring it on you saying okay get to this level we are already.

00:51:10: Awesome I like your attitude,

00:51:11: awesome adjust thanks very much for that conversation I'm going to keep an eye on you guys let's let's schedule something in the Box for in a year or two let's see where you are with your expansion across the u.s. and expansion into India Maybe

00:51:24: you already knocking on the door in Europe than I'll be all their awesome hello thank you for having me Boris that's always great.

00:51:30: All right that was the logistics tribe podcast episode with ajesh Kapoor from semicab I hope you enjoy today's show if so please subscribe to the podcast so you don't miss any of the future episodes I'm boss felgendreher until next time.