Financial Health In Freight

Chris Jolly [00:00:01]:
Alright, ladies and gentlemen. Welcome back to another episode of coffee with a freight coach. My name is Chris Jolly. I am your host, and I am the freight coach. Before we jump into the episode, as always, thank you guys so much for coming out and listening to this podcast. If this is your first time tuning in, welcome. This is the real side of freight, ladies and gentlemen, and I say that before every single show that I do.

Chris Jolly [00:00:25]:
And what I mean by that is I only speak to transportation professionals on this show as well as my weekday live show because I wanna talk to the individuals who have done what you’re looking to do or who are currently doing what you’re trying to achieve. So you can take that information, apply it, utilize it, and see a meaningful difference in your business and your life. I do have one small favor to ask. If you get value, and I know you will, but if you get value in what you hear today, and you’re not subscribed, subscribe to the show you guys. Share it out there dear network. Because at the end of the day, this is how we grow, but most importantly, this is how we help more and more people is because if you saw value, your network’s gonna see value as well. I got a very special guest for you guys here today, and this is gonna be on a a a video component as well. I don’t know if I’m gonna be uploading this onto my YouTube channel, but I know my friends at SPI Logistics are gonna be doing that.

Chris Jolly [00:01:12]:
And who knows? Maybe I’ll start doing that and adding a video component into this podcast. But we’re here to talk about finance. Right? Like, we’re here to talk about the financial health of organizations and and really how how are you balancing any of that stuff? Whether you’re in an up market or a down market? How are you taking those times and investing into the future? So with that being said, I got my man, James Lemon, here today. He is the VP of finance and chief financial officer of SPI Logistics. James, thank you so much for joining me.

James Lemon [00:01:40]:
Thanks a lot for having me. I mean, I’ve listened to all the podcasts you’ve you’ve done with all the people here, and now I’m excited to finally be on here and get this share some knowledge.

Chris Jolly [00:01:48]:
No, man. It you know, it’s great being you know, because I like, for those who see the video out there, you get James has a phenomenal background of the beautiful British Columbia area. And, you know, having the opportunity to come up and, you know, be in the SPI offices back in August and everything was great. And, you know, we recorded a bunch of podcasts while we were up there, and, unfortunately, there were some technical difficulties with the one that we got. But I’m glad that there was because now we get to talk again, man, because it’s like Exactly. As everything gets up and running, I mean, we got we ran into each other in, you know, in Vegas, and we got to have dinner with you and Anita and everything. And, you know, but it’s always good just to sit down with you, man, because I I always enjoy learning about every aspect of the industry. Right? Because, like, at the end of the day, I’m like, I know freight, really.

Chris Jolly [00:02:30]:
Like, when it boils I know a lot of what not to do in freight. And there’s so many different components to to the business that’s out there. And, you know, I’m on a a a mission to understand my finances at a lot greater level. And, you know, it’s like I look back on it in going to school, and I’m like, man, I wish I would have got a degree in accounting. Like, truly, because I feel like understanding your money is what is I I I would say it’s very overlooked out there. Because I actually interviewed my CPA for the podcast, James, and he was talking about that. He’s like, the the amount of people that don’t know about their financials is it’s it’s almost alarming that’s out there. So, like, how did you get your start in the finance world?

James Lemon [00:03:13]:
Well, my the funny story is so I grew up in hard times. I didn’t have my parents didn’t have a lot of money. Grew up in poverty. So, you know, when you take those aptitude tests at school, it tells you what potential things you could be good at. And so on mine, accounting came up as one of them, and it had the highest, income. So I was like, well, that’s what I wanna be because I wanna make a lot of money.

Chris Jolly [00:03:39]:
Heck yeah.

James Lemon [00:03:40]:
And so in grade 12, I my school offered an accounting course. And I was like, well, let’s give it a try and see if I’m actually good at it and like it. And turns out I ended up winning the there was a award for the best student in accounting and I won I won that award and I was like, well, I guess I’m doing this. And then got got my degree, got my CPA, and, I mean, now I’m here.

Chris Jolly [00:04:04]:
Dude, it’s you know, accounting for me was it was the one course that I actually like, math related that I actually excelled in because there there was only one way of doing it. Right? And for because, like, I was actually just talking about this on my live show. Like, I I mean, I struggled in in math. Like, I struggled in algebra. I struggled in all that stuff because I’m like, what’s the point? Like, and then FYI, to this day, I have yet to quote a shipment that I needed to find out the value of the letter a. Alright? I’m just throwing that out there. But, you know, when it came down to the accounting aspect of things, like, I I actually it was weird. I was able to actually slow it down a little bit and really understand how how to work it.

Chris Jolly [00:04:47]:
And I you know, because, like, I have 2 degrees in management, and I’m, like, looking back, I’m like, man, if I could do it all over again, I woulda got my associate’s degree in accounting, and I woulda got my bachelor’s degree in management because there’s so many there’s so much value in understanding the financial health of your organization because it’s like how many people learn the hard way, right, where they make $10,000, but they think they can spend $10,000. They don’t account for taxes. They don’t they don’t understand that there’s actual assets that you can depreciate to lower your taxable income and everything else that’s out there. And then they get in a bind, they don’t pay their taxes, and then all of a sudden, they get slapped with a massive bill that they can’t afford, and then they go out of business. They’re, like, I gotta fold up. I can’t pay that.

James Lemon [00:05:33]:
Absolutely. And I mean, we’re gonna see in in our industry, you’re gonna see this coming to a head as things get tighter. You’re gonna the the companies who have a good knowledge of what their accounting is are gonna thrive and they’re gonna stay in business. And those those ones that you’re talking about that have no idea, like, what they can expense or what their expenses even are in a month.

Chris Jolly [00:05:55]:
Yeah.

James Lemon [00:05:56]:
And all of a sudden when your customer says, oh, sorry. I can’t afford to pay you this month and you look at your bank account and it’s negative and you’re like, well, how did that happen? I’m making all this money. But, I mean, if you don’t have money coming in, it’s not it’s not it’s not really your money until you actually have the money. Yeah. And if your customers, they end up in hard times, that can put you in hard times. And if you’re not prepared for it, it can sink you real quick.

Chris Jolly [00:06:22]:
I think that’s one of the biggest value adds about having my agency with SPI and working with SPI is the financial health of the organization. But the steps that you guys put in place for vetting customers to see, are they financially secure? Because, you know, there’s you go out there and you’re trying to develop business. Right? You’re you’re cold calling or you’re cold emailing. You you’re knocking on doors, whatever it is, to get a customer. And then you get that customer, and then you wanna think that everybody’s good. Right? Like, you wanna think, like, all these guys are gonna be great. All this freight’s gonna be moving, and you don’t have anybody to check that in some instances. Right? And then you get yourself in a pinch quick where it’s like they were it’s like you think it’s great because they’re giving you a ton of freight.

Chris Jolly [00:07:12]:
Right? Like, you’re getting a ton of stuff coming your way, and then they don’t pay. And then it’s I was like, oh, hey. We’re good. You know, just just keep we’ll keep giving you freight. And then it you know, 30 days turns into 60, turns into 90, and all of a sudden, you’re in a really bad spot. And, you know, one thing I love is, like, the the steps that you guys have in place where it’s just like, you know, even having receivables insurance, because I know that that’s not cheap to have receivables insurance that are out there, but that has to be, from your perspective, probably one of the best investments that you guys have made out there. Because how many times have you seen that in your career, James, where it’s like, hey. These customers come out hot and heavy, and then 30 turns into 6090 and everything else.

James Lemon [00:07:52]:
Well, absolutely. I mean, we it was about 5, 6 years ago now that we finally decided to take the plunge and invest in the credit insurance because we were just getting to a size where I mean, knock on wood, we haven’t had any major customers go out of business on us yet. But we’re we’re starting we were starting to delve into those customers where they’re they’re becoming a significant portion of your AR. And if something were to happen, it would have sunk us. Yeah. So we we made the decision that we regardless of the cost, we needed to make sure not just for ourselves but for all of our agents that if something bad were to happen, yeah, it would be a little bit of a speed bump, but we’re gonna we’re gonna come out stronger on the other side because we’re gonna have that protection of insurance. And, I mean, that’s what insurance is there for.

Chris Jolly [00:08:43]:
Yeah.

James Lemon [00:08:43]:
You you hope you never have to use it, but it’s there if you need it.

Chris Jolly [00:08:46]:
No. And and I think that that I mean, man, it’s like you know, because, like, I I’ve talked about this and for you know, fortunately, it it was a lot of money at the time, you know, because, like, I got stiffed out of it was, like, just about $5,000, you know, a couple years ago. And I was, like, fortunately, I had put money aside. Fortunately, I was saving for a rainy day in the event that that happened. But, like, add a couple more zeros to that and that bankrupts people. And then you you know, because, again, it’s just like I feel like, you you described it best with insurance, and and I truly live by this in business. I would rather have it and not need it than need it and not have it because, you know and and it’s even, like, with cargo insurance and everything else, everybody thinks, like, oh, it’ll never happen until they’re on the hook for a $100,000 bill. And then I would, you know, argue most people don’t have a $100,000 laying around to pay for that as an added expense to their already large p and l that’s out there.

Chris Jolly [00:09:46]:
And, you know, having insurance and having that security behind it yeah. I mean, I don’t know of anybody who loves shelling out money for insurance every single month. Yeah. But it’s gonna be great to have in the event that somebody does unfortunately stiffy because not everybody out there is good. Not everybody out there has your best interest in mind.

James Lemon [00:10:07]:
And, I mean, sometimes it’s not even their fault. Yeah. Just hey, that’s business. There there’s gonna be there’s gonna be great companies. Like, you look back 20 years ago, the some of the Fortune 500 companies that everybody thought were great, but things happened. I’d change, and all of a sudden, a lot of those companies don’t exist anymore. Nobody thought they were gonna go out of business, but they did, and you don’t wanna be left holding the bag.

Chris Jolly [00:10:32]:
Yeah, man. There’s there’s so much of that too. And because, like, I like, this is the stuff that keeps me up at night. Like, honestly, is I’m just like you know, obviously, nothing’s perfect and you’re gonna make mistakes and, you know, things are gonna happen. But it’s just like, what are those things that you can do to protect yourself? Right? Like, because there there there there is you know, you look at some of those large companies that are no longer around. Why are they no longer around? Is it their failure to adapt to a change? Like, I think Blockbuster is you know, because we’re pretty much the same age. Blockbuster is like the most glaring one for most of us who grew up going to a video store. And for those of you who are younger, that’s actually how you used to watch movies back in the day.

Chris Jolly [00:11:12]:
But Blockbuster is one of those things. And then because you hear about it too. Right? Because I think that they had an opportunity to do a streaming service of some sort or it was something with a Netflix style.

James Lemon [00:11:23]:
They they actually were they were in talks of buying Netflix.

Chris Jolly [00:11:26]:
Okay. That’s what it was. But Blockbuster was gonna buy Netflix.

James Lemon [00:11:29]:
Yes.

Chris Jolly [00:11:30]:
Okay.

James Lemon [00:11:31]:
Yeah. In the in the early stages, but that was back before they had figured out the pivot to streaming because, I mean, Netflix started as a DVD sharing service.

Chris Jolly [00:11:39]:
Yeah. No. Yeah. I remember that. And it’s, but it is, you know, it’s one of those things where, you know, failure to adapt, or is there an outside force that’s gonna eventually put you under? You know? And it’s just like, I just look at that because it’s like so many people out there. I mean, whether you’re an agent or you’re running a business or or you know, because if you are an agent, you are running a business. Right? Like, I gotta pay taxes on the money that I make. Right? Like, I got expenditures.

Chris Jolly [00:12:03]:
And what can I do to align myself to kinda minimize a lot of that risk and that exposure that’s out there? Because, you know, and that and that’s one of the things, like, I love working with you guys about a lot, is is is is like, yeah, when things are great, I think everybody’s happy. But most importantly, it’s when things go wrong. You know? Like, when there’s damages to loads or when there’s things out there, you guys are on top of your stuff. And it’s not a, hey. Your guys gotta pay for this or anything like that when it comes down to insurance and everything else. And that’s what I love because it’s like it gives me an opportunity to just operate and execute. And that partnerships that’s there, I like, I think that that’s the biggest that’s the biggest value add out there to anybody who’s looking to go out on their own and become an agent is is you got we have the best of the best insurance. You guys are are you guys are constantly investing and looking for new innovative ways to give agents the best tools to succeed in any freight market.

Chris Jolly [00:12:58]:
And it is very, very evident by like, if whatever I need as an agent, I’m literally one phone call away from, you know, whether it be you, Mike, anybody who is like, hey. This is what’s going on. And you guys are I was like, we’ll look into it. We’ll look into it. I mean, especially from a tech perspective. Right? Because you guys were at manifest. You guys are out there scouting all the time. What is coming up? How can we position our agents for the most success?

James Lemon [00:13:23]:
Absolutely. I mean, our biggest our biggest invest we we had 2 our biggest push came from 2 major sources. 1 was actually advertising. I mean, it’s it’s funny how a little bit of advertising can go a long way and that partnering with people like you have been a boom to our business. But the biggest one has been technology. We’ve we’ve probably quadrupled our investment in in technology over the last 5 years. And I mean, yeah, it costs a lot of money, but it’s 100% worth it because you can streamline things. You can automate things.

James Lemon [00:13:57]:
We never wanna automate people out of our business. Yeah. We wanna automate the mundane things so that our people can do things that are actually interesting. Yeah. We don’t want we don’t wanna eliminate people because we don’t that we’ve seen how bad that is. You go on some of these app that only have computer chatbots to talk to, and it it takes you half an hour talking to a chatbot to get to a person. We don’t wanna be that. We want you to call.

James Lemon [00:14:24]:
We want you to When you call in, you call to you get an actual person on the phone right away who can solve your problem. And our people are empowered to solve those problems because they’re not sitting on a keyboard all day doing the mundane task.

Chris Jolly [00:14:40]:
Yeah. It’s you know, I I remember an example here. I I mean, spent a couple of months ago by now, but, like, we had a customer of ours who, you know, the the the the receiver didn’t have a way to offload the truck. Right? And, obviously, we do a lot of flatbeds. So we had to find a third party facility to offload it with a crane, set it on the ground so the customer could come in and take it. And, you know, it was literally one phone call to client care. Hey. This is what we’re doing.

Chris Jolly [00:15:05]:
All they said is is this is the information that we need from the company. Let us know. We’ll wire the money right away, Like, without hesitation, and it’s like, they’re the it’s those instances to me, James, because it’s like on the flip side of working in a start up environment. You don’t have the resources sometimes. Right? Like, how many people are out there moving freight right now that couldn’t cover $1500 to like, even though the customer was paying us for it, front the $1500 in that instance to get that job done. Because these cranes don’t work on net 30. It’s net pay me right now or you’re not you’re not they’re not gonna offload you. And it’s situations like that from a capital perspective.

Chris Jolly [00:15:46]:
Right? Like, the financial risk is almost gone as an agent, right, at the end of the day. We we don’t take any financial risk that’s out there. You guys front you guys pay the carriers. You guys you know, from a receivables perspective, you guys are out there getting money from the customers and everything else. But then it’s it’s the ancillary expenses that pop up, like a, you know, 3rd party facility that you would need to offload a truck or restack pallets and everything else. You guys are there to take care of that stuff. That another you know, another thing too, man, is is, like, from a financial perspective, right, like, that that doesn’t, you know, on paper affect Chris Jolley’s balance sheet. That affects yours, but that’s what comes along with being an agent with SPI.

James Lemon [00:16:28]:
Absolutely. I mean, that’s for a lot there there are a lot of small brokers out there who are trying to do it all themselves. They’re probably getting into some tough times because I mean, money is getting tighter and that’s our that’s our biggest selling point for being an agent with our business is we offload all that back all that back end stuff comes off of your plate. You’re not you’re not worried about calling in customers saying, hey. I really need this payment. You’re calling new customers trying to get new business.

Chris Jolly [00:16:57]:
Yeah.

James Lemon [00:16:57]:
You don’t wanna spend your time dealing with AR and AP and paying carriers and receiving money. You wanna be spending your time out there prospecting, getting new customers, getting new new opportunities to grow your business.

Chris Jolly [00:17:10]:
I you know, it’s funny. I was talking to a a friend of mine, you know, and he started a brokerage. He sold it. And then through some things, he started another brokerage. And I’ve heard this from multiple friends of mine who started brokerages. They’re like, you know, early on, they’re like, when you have to invest in accounting to build out your back office before you can hire more sales reps, they’re like, that’s the most uncertain time in the business because, you know, you gotta bring in 2 to 3 people to process all your invoices at some point. And, you know, because not all factoring companies are gonna do all of that and do it, you know, entirely automate your entire back office. Some of them, you know, have those offerings now, but, like, if you’re not factorable for whatever reason or you choose to not take that route, you gotta invest in, I’ll call them a nonrevenue seat.

Chris Jolly [00:18:02]:
Because at the end of the day, in in trucking, in freight brokerage, there are sales reps who generate revenue, and then there’s operations who don’t technically generate revenue. Yes. They are part of the revenue process, but at the end of the day, you don’t put them in a seat, and then they’re out there cold calling and developing business. And all of my friends who have started Broker to Zeus, they’ve all said the exact same thing. They’re like, if I would have gone back now, taking the agent route would have been so much more beneficial in the early days to not have to pay 100 of 1,000 of dollars a year in salaries for an accounting perspective.

James Lemon [00:18:37]:
Absolutely. And I mean, it it is a it’s a hard it can be a hard sell sometimes because, I mean, when you’re doing it yourself, it’s yours. It feels like you’re in control of everything. Yeah. But in the end, when you come and you partner with a brokerage, it’s still all yours. It’s just you don’t have all the headaches that we have to we take off your plate.

Chris Jolly [00:18:57]:
You don’t have the headaches that James has.

James Lemon [00:19:00]:
Exactly.

Chris Jolly [00:19:01]:
But, you know, from a business development standpoint, I can literally count on one hand the amount of accounts that were already in use. And I’ve sent over I’m pretty sure, AR knows me by first, middle, and last name by the amount that I’ve reached out to them to see on on a business development perspective. But you know, that’s the thing is is that’s another question that I get all the time is is, oh, I’m sure all the accounts are taken. I’m like, far from it. Like, not even close in my

James Lemon [00:19:30]:
I mean yeah. We’re we’re we’re a big brokerage, but, I mean, there’s millions of customers out there. And, like, you think your customer is big and but, really, it’s just another fish in a gigantic ocean of customers. And it’s very rare that we have an instance where a agent has an opportunity and they come to us and say, hey. I have this opportunity. Are they taken? And that they actually are taken.

Chris Jolly [00:19:54]:
Yeah.

James Lemon [00:19:54]:
And I mean, in a in a lot of cases, there’s ways we can work out with whoever’s doing the business. Or if it’s decentralized and they’re each their own their own entity, then you get that business anyways.

Chris Jolly [00:20:05]:
Yeah. No. For sure. And, you know, and and then, you know, on top of that. Right? Because we you know, we had a customer that needed EDI capabilities, you know, as they jumped on it right away. It was done. It was up there. And, you know, an EDI can be a you know? And if you’ve never done it before and you’re listening to this, it’s a process.

Chris Jolly [00:20:24]:
Right? Like, there’s a ton of testing that’s involved in that. And, you know, again, it’s like having that backing from an infrastructure perspective to where it’s like you get to the finish line. Because, again, this is the stuff that’s not talked about out there in developing business. You get to a finish line and then you’re like, you need a half a $1,000,000 in cargo insurance to haul your freight. You don’t find that out in the first couple of conversations, FYI. It’s usually after you’ve sent over a customer agreement. Oh, FYI, you need this. IT perspective, you need EDI capabilities.

Chris Jolly [00:20:55]:
You need a fully functional we need to run testing for 2 weeks. We gotta make sure all the transmissions go through properly. That’s another reality that kinda comes along with it that you don’t know about right away. And, I mean, I think about, you know, again, for it’s it’s hard enough to develop business out there, and then you get to the finish line just to find out I don’t have the money to do that because that’s another reality. Right? Half a $1,000,000 in cargo insurance is not cheap. Right? Like, I I I again, I was talking to another buddy of mine who does this, and he’s like, I literally spend almost $1,000,000 a year on insurance as a broker. Because he has high level stuff, but a $1,000,000 a year in insurance alone. So it’s like, these are the things.

Chris Jolly [00:21:36]:
It’s like as you’re growing and building, you don’t want, like yeah. It yeah. It’s a thought that’s that’s in your mind, but it’s like, you just wanna get out there and develop freight. Right? Like, you just wanna get customers, and then this is the the the side of this business that nobody I don’t know of anybody else out there who’s talking about this at at scale about investing in the infrastructure of your company and having these things because you will inevitably get to a point where there is you’re you’re not gonna be able to move their their freight because you don’t have the money to do this unless you are an agent, and you have somebody who has already invested this over the last 40 years and built it up.

James Lemon [00:22:14]:
Yeah. Absolutely. I mean, you look at like you said, we went to manifest. There were a lot of shippers there seeing all these fun technologies that we have, and we’ve seen more and more customers coming to us saying, hey. I need x, y, and z in order for you to move my freight. I need you need to track every shipment. It needs to be sent to us every 15 minutes, and it needs to be done automatic. And if you are just getting started and you’re just slowly developing your your business and you yeah.

James Lemon [00:22:44]:
Maybe you have one of the best, EMS’s out there, but all those things cost money. Yeah. Those are free. It’s not free to get it set up. Most of the times, they have their own portals that you need to pay into in order to get those connections. And if you don’t have that on your road map for cost, that can sync you really quick.

Chris Jolly [00:23:06]:
Yeah. It’s, you know, API you know, because it is one of those things now with with the digital world that we’re operating in inside of transportation. Having API connectivity out there in all these transmissions, like, on paper, you’re always like, oh, this this is just the way it is. Yeah. But but it’s not free. Right? Like, it costs lots of money out there to to be able to do this. And, you know, that’s the thing. Like, obviously, shippers, depending on the size of them, because not all of them, some of them are very resistant to change in technology that are out there, but there are a lot of forward thinking shippers that are very streamlined there, and they are always about that.

Chris Jolly [00:23:46]:
What do you have? Do you have this? Are you know, because it’s like I know, like, 4 4 kites and project 44 are two names that have came up pretty frequently inside of my business development phone calls that are out there. Do you have these capabilities? If not, are you willing to have them? And it’s like that. It’s literally on their setup documentation that’s out there. And, you know, again, how much of that how much money do you have to pay for that if you if you don’t? Right? And, you know, for me, it’s like, this is just where the industry is heading. I I truly think automation is becoming more and more I don’t wanna call it a threat because I I don’t think you can, automate the entire experience. I still think that there’s going to be a massive void of opportunity for people who actually know what they’re doing, who can leverage technology though to go in there and grow and scale their business with a customer.

James Lemon [00:24:38]:
Absolutely. I mean, like, yeah. A shipment picks up, delivers, no problems. Yeah. You can automate that all day long. But what happens when that’s the truck’s gonna be late or that truck gets in an accident? The algorithm doesn’t know how to solve for that. It can’t it can’t be on the phone with your customers saying, hey. I got it.

James Lemon [00:24:59]:
I’m working on it. I’m getting this taken care of. I we’re getting the tow truck to come in, pick up your freight, and get it to the next place. You can’t you can’t automate that. And that’s why you want AI and all this new fancy stuff. It’s never gonna replace Yeah. The broker, but the broker who knows how to leverage AI is gonna replace the broker who doesn’t know how to do anything with AI.

Chris Jolly [00:25:23]:
And I think that that because, like, inevitably, it’s gonna get to the point, James, where it’s like, hey. We like you, but you don’t have any of this other stuff. And these other brokers, we love them too, and they have all of these, you know, fancy toys that we all wanna talk about. And because at the end of the day, it’s, like, it it’s going to be a business decision. Right? Because it’s like I think that, you know, there’s a failure or an arrogance of a lot of people out there in the brokerage world who don’t understand that shippers, regardless if they love you or not, are going to make the decision that’s best for their business. And, you know, I’ve lost customers for a lot of reasons out there. Oh, some of them were my fault that I was doing that, but there’s also been decisions that were made where they come in. They they bring in a new team of people.

Chris Jolly [00:26:12]:
They wipe out their entire network, and then you you’re out. You don’t have any freight. And then you’re looking there, and then now, like, that’s eventually what it’s gonna get to, though, where it’s gonna be like, hey. I love working with you, but unless you invest in this, I can’t work with you anymore because my leadership at, you know, the shipper organization is saying that the the broker has to have x, y, and z. And if they don’t, they will not have access to my freight anymore. It doesn’t matter how much they love you. It’s that it it eventually is going to come down to a dollar and cents perspective where they’re gonna look at the cost of transaction of every time they have to send you a shipment as a broker. Because that’s what I don’t think a lot of brokers think about is is that it costs the shipper money to send you freight.

Chris Jolly [00:26:53]:
Right? And it and it usually comes in the time of that it takes to actually tender you a shipment.

James Lemon [00:26:58]:
Yep. And I mean yeah. There’s all those hidden costs that I mean, you don’t think about once it’s set up, you don’t think about the fact that EDI, the van has a cost. You don’t think about any of those things, but the shipper’s thinking about those things. And if you’re maybe you haven’t made the move over to API connections yet, and you’re still on EDI. EDI is expensive.

Chris Jolly [00:27:21]:
Yes.

James Lemon [00:27:22]:
And so if you’ve invested in an API and so you have broker x who is only on EDI and you broker y who’s on API, which costs the shipper, It might not be a lot, but it’s gonna be a little bit cheaper and that maybe that factors into their decision where your rates are the same, but your rates aren’t actually the same because that transaction with broker x is gonna cost more than that transaction with broker y.

Chris Jolly [00:27:46]:
Yeah. Yeah. Dude, there’s there’s so many different variables out there. And and, again, like, you you people only know what they know. But, like, to me, this is this is one of those things where, you know, I I truly think that, you know, everybody wants to talk about the market shift. Right? Like, when’s the market gonna shift? When’s the market gonna shift? I don’t think a lot of people actually understand that the market is not going to be easy. It like, the the way that this is going to head, inevitably, transportation costs are going to increase. Carriers are gonna love it because they’re gonna start making more money, but their overhead isn’t gonna necessarily go down for for their stuff.

Chris Jolly [00:28:22]:
So they might get a little bit of, you know, breathe a sigh of relief, but there’s a lot of brokers out here who I think are celebrating in a market shift that I don’t under I don’t think that they’ve actually worked in an alternative market. Right? Because, like, realistically, man, the last 3 years have been easy for freight brokers. It has been very easy. 2023 was challenging from a business development standpoint because it’s been easy. Right? Like, everyone was good with their current network. I think that that’s, like, the number one response that, I’ve heard is, hey. We’re good with our current network because good enough is the biggest enemy out there to a freight market. And if you haven’t been prospecting over these last 15 to 18 months, you’re not just gonna magically turn it on.

Chris Jolly [00:29:04]:
Like, the individuals who have been heavily prospecting, there’s gonna be a lot of opportunities this year from a new business development standpoint. And you gotta ask yourself in those moments, though, because this is when all of those customer requirements are gonna start coming to light. Because you know what? They may not have been responding to your outreaches right now, but they’re gonna respond because they’re gonna be in a tough situation. And where are you gonna be? And I want people to think about this, honestly. Where how are you gonna handle it if a customer comes to you that you’ve been prospecting for the last 15 months? You’re not developing a ton of business, and they need a half a $1,000,000 in cargo to move their freight. How are you gonna handle that? Right? Like, that’s a very real conversation that is going to happen out there. Fortunately, I’m covered in that situation because, you know, with SPI, we’re we’re we’re good there. But that that’s something that I fear for a lot of people out there, James.

Chris Jolly [00:29:55]:
I I truly do because those opportunities are gonna come, but they’re gonna come with a price.

James Lemon [00:30:00]:
Absolutely. They’re gonna come with a price, and they’re gonna come with some things that you might have to do that you aren’t thinking about right now. I mean, the technology the the technological revolution has automate or hit a lot of industries, but it’s just starting to hit transportation. I mean, you’ve seen if you’ve been going to any of the transportation conferences over the last 3 to 4 years, it’s shifted from industry stuff to technology. They’re almost all becoming mini technology conferences because there is so much new stuff coming out every year. All these new things coming up and it’s are you going to accept them and and implement them in your own business? Or are you gonna let somebody else do it and you get left behind?

Chris Jolly [00:30:51]:
Yeah. No. And and it’s true. Right? And and I think that there’s there’s so much of that that is going on, and, you know, it it’s I think, you know, I I will say this. I don’t wanna ever, like, sound like I’m fearmongering. Rest assured, the fundamentals of this industry are are probably never gonna change. At least I think that they’re never gonna change. You never know, though.

Chris Jolly [00:31:10]:
But I I I truly think that if, you know, the you need to be constantly looking ahead. And that is something that I don’t I think a lot of people are more reactive than proactive in in their approach because, you know, it’s like, you you go back to, you know, look at the Blockbuster example. They never thought that their model was gonna go away until it did. And then how many meetings did they have about this prior and there was indecisiveness in there that said this will never happen, this will never happen. Same thing with so many different things, but the it’s it’s already here in freight. Right? And I think that if you’re not investing in technology, if you’re not looking at this from a business perspective right now, I don’t wanna hope that you go out of anybody goes out of business, but people are gonna have a very challenging time here. A very challenging time. How are you guys assessing technology, though? Because I’m assuming you guys get no less than 8 1,000 solicitations a day about

James Lemon [00:32:08]:
That that’s half my half my inbox is just junk mail, people trying to sell me stuff.

Chris Jolly [00:32:13]:
How do you assess, though? Like, what is that why you guys invest in going to as many conferences as you guys do? Is is you want that note you guys wanna see it for yourself and and see Absolutely.

James Lemon [00:32:23]:
Absolutely. You we we go because, I mean, a, we wanna keep up on everything that’s happening in the industry. But, yeah, we wanna like, having somebody we get cold calls about technology all the time. And you don’t know which ones to say yes to, which ones to say no to, and you there’s literally not enough time in the day to say yes to all of them. Yeah. So when you go to these conferences, it gives you the chance to actually see the products in real life and do a quick 5 minute assessment as you’re walking by the a booth. You can look at their thing and be like, is this something that could work for us? Is this something that won’t work for us? Is this something I need to learn a little bit more about? And we can make that assessment in a very quick manner rather than having to go through the whole sales pitch and listening to 15 minutes of back and forth before you actually get into anything about the actual product.

Chris Jolly [00:33:14]:
How important is it from a decision standpoint that when you’re looking at technology, the people who have created that product have worked in transportation before?

James Lemon [00:33:26]:
Alright. I’d say it factors in in the sense that you wanna make sure that it fits how the systems actually work. Mhmm. Because a lot of the times, you’ll have people who build something who have never been in transportation, and they think it should work this way, but that’s not how transportation works. Transportation works in a different cycle, and getting those two things to meet in the middle can sometimes be hard. So it definitely factors in, but I wouldn’t say it would ever exclude Yeah. Anything from our decision making because, hey, there there’s new fresh eyes coming into this industry every day.

Chris Jolly [00:34:08]:
Yeah.

James Lemon [00:34:09]:
And, I mean, the way things were 15, 20 years ago are not the way things are. And also getting that fresh look at the industry can be a very beneficial thing.

Chris Jolly [00:34:19]:
Oh, James, I’m right there with you, man. I think some of these people like, obviously, industry experience and and having that frontline, you know, fundamental knowledge is great. But at the end of the day, man, I I’m a firm believer in this change. Sometimes a fresh perspective is the best perspective. And, you know, because everybody gets into their routines. Right? Like, I think the biggest enemy out there in businesses is this is the way we’ve always done things. And you should be looking at innovating. You should be looking at how do we invest in into new ways of doing things that are gonna bring optimal results and more growth opportunities to to the agent network and into the people that are out there.

Chris Jolly [00:34:55]:
Right? Because it’s like, I’ve never met one person who’s like, hey. I’m I’m really planning on making less money. You know? And I I think that if you’re gonna go out there and look into, you know, any of these you know, the agent world at all is is you need to look at their what is their tech stack look like? How how open are they in showing you what their systems look like, what their capabilities are, and everything else? Because it’s like, if you’re gonna go out there and do this because, like, the agent model isn’t new. Right? Like but but there are some just like with everything, there are some very, very good agent models, and then there’s some very, very smoke and mirror agent models that are out there. And, you know, I just talk to a lot of people. I’ve heard the good and the bad and the ugly of everything that’s out there. But, you know, again, I I can say this for certain. You guys do not hold back on investing and giving your agents the best tools to succeed without hesitation.

James Lemon [00:35:52]:
Yeah. Absolutely. And I mean, change change can be scary. Change can be it can be risky because you don’t know, like, you can invest. I mean, we’ve had it on our ourselves. We’ve invested in technologies that have failed.

Chris Jolly [00:36:05]:
Mhmm.

James Lemon [00:36:05]:
And it’s cost us a lot of money. But if you’re not willing to take that risk, you’re just not gonna grow because you need to be willing to, like you said, innovate, to get better, to do things differently, to do things better because that’ll help to differentiate you with your customers.

Chris Jolly [00:36:25]:
Yeah. It’s, you know, chain I mean, it is. Right? Change is scary. I mean, I remember when we, back at a brokerage I used to work for when I first started, like, we had switched TMSs because they built a proprietary TMS, and you literally would have thought that they dropped a nuclear bomb in the vicinity and that everyone was gonna die within 3 hours because, man, there was so much. But then it’s like, I think, like, keeping an open mind with a lot of the technology and the changes that are out there are are pretty crucial. Because once you get into it and then you realize, like, oh, it I was spending so much more time doing data entry. Right? Or, you know, posting a load. I have to go to this program and then that program and everything else, and then, oh, bam.

Chris Jolly [00:37:07]:
Now we have a TMS where you can post it directly from the TMS and everything else. Like, it’s just more of, like, the uncomfortable portion of you not knowing. But I think once most people kinda get into their routine, they’re I’m assuming the positive the feedback is unwaveringly positive at at that point when everybody’s like, hey. It it it’s literally saving me 30 minutes a day on my daily tasks.

James Lemon [00:37:29]:
I mean, you’re always gonna have those holdouts who they change just for the fact that they wanna hate something. Yeah. But but in the end, yeah. Like, you don’t realize how much time you’re spending doing things that there are things that are out there that you can invest in. And a lot of the times, it doesn’t cost a lot of money. Yeah. But it’s just like turning on this widget or turning on this option in your TMS that can save you maybe it’s only 5 minutes a day, but 5 minutes a day every day adds up really quickly.

Chris Jolly [00:38:00]:
No. It it does. Right? I think lost productivity is the biggest line item on most people’s balance sheets that it’s really hard to equate. Right? Like, how I mean, I know that there’s some people out there who think that they can, you know, put an accurate guesstimate that’s out there, but it’s just like, just think about that in in in perspective. Is it’s like, if you’re 10 minutes a day, that’s, like, 2 phone calls that you could make. Right? And that’s now that’s one other person or 2 other people that you’re not speaking to, and then that opportunity goes to somebody else. Like, I think, like, you need to be in an environment where you are I’m always like, I wanna be 95% automated because 95% of my day as a broker is automated. Right? It should be automated.

Chris Jolly [00:38:39]:
But when it comes down to the customer experience and the carrier experience and talking to an actual human being and dealing with those issues that you’re talking about, that to me should never be automated because they need to feel how much I care. Really, when it boils down to it, they need to feel how much I care. And, you know, and again, and when you’re going out there and and really assessing who do you wanna work with and everything else, was what what what does that look like? We know from an infrastructure of your business because that’s what an agency is. You are a business. You have an actual company. Your brand is out there. Whether you’re a, you know, you’re you own your own freight brokerage or you’re an agent for SPI Logistics, your brand is transferable. People will always remember how you were to work with whether, you know, wherever you were working for at the time.

James Lemon [00:39:24]:
No. I mean, we’re we’re talking a lot about technology, but in the end, freight brokerage is always going to be a relationship business.

Chris Jolly [00:39:32]:
Yes.

James Lemon [00:39:32]:
And if you can have all the tech in the world, but if you don’t have the people behind behind it who can actually have a good relationship with the customer, you’re not gonna have a broker.

Chris Jolly [00:39:43]:
Yeah. And and another thing too is this freight brokerage is you it is very capital intensive. Right? Business is very capital intensive, and it’s one of those things that, you know, you think that, oh, all I need is a computer and a phone. And, you know, fundamentally, that that is all you need, but you need to be able to front 100 of 1,000, if not 1,000,000 of dollars every single month that’s out there. And, you know, if it it’s it’s one of those things, like, you’re you’re always one bad transaction away from from potentially losing everything in business. And I know that there’s some steps that you take in place, but, you know, you need to look at that too. Are you with somebody who is able to front a $100,000 a month to one customer in in in freight. Right? In freight spend.

Chris Jolly [00:40:28]:
Because that you know, like, what there there’s those different level customers out there where you’re gonna get to a point where they will only work with you if you can extend them x amount of credit. That that does exist out there. And, you know, to me, it’s like there’s there’s never been a hesitation. Anytime I’ve had to come to client care about anything with that, they’re always like, yep. We got you. Yep. We got you. Yep.

Chris Jolly [00:40:50]:
We’re gonna do that. It checks out. And to because to me, it’s like, do you wanna be pigeonholed as well too?

James Lemon [00:40:57]:
Right? Mhmm. Well, I mean, it that’s interesting that you say that because, like, when you start dealing with the bigger and bigger shippers, a lot of them, they’re not paying in that 30 days.

Chris Jolly [00:41:07]:
Yeah.

James Lemon [00:41:08]:
They run they’re they’re big, and they get to dictate what their terms are. They’re net 60, net 90. But guess what? We still pay our carriers net 30. We don’t it doesn’t matter what what freight they’re hauling. What our guarantee to our carriers is we’ll pay you net 30. So like you said, we’re now fronting. If it’s a net 60 day, we’re now fronting a whole month’s worth of business. Net 90 days, we’re fronting 2 months worth of business.

James Lemon [00:41:34]:
We’re not passing that extra cost on to our agents. That’s just that’s just a part of doing business, and that’s one of the services that we offer.

Chris Jolly [00:41:42]:
That right there, alone in itself, James, is is one of those things, man, where it’s like that you guys take on the financial burden. Because that’s, I mean, that’s really what it is, man. When you’re talking about net 90 and you’re paying your carriers within 30 days and the agents getting paid on top of that as well. Right? Like, that that that’s a big financial risk that goes on out there, and you guys take it with ease. Right? Like, I love Friday mornings. Why is that? Rec deposits hitting every Friday

James Lemon [00:42:11]:
Absolutely.

Chris Jolly [00:42:12]:
No matter what without hesitation.

James Lemon [00:42:15]:
Absolutely. We yep. We’re we’re paying our commissions the next week. You get yourself in by this Friday. You’re getting paid next Friday. Doesn’t matter what the terms are on your customer. Doesn’t matter any of that. It’s just we’re paying you.

James Lemon [00:42:28]:
We’re paying your carriers. We’re making sure that we have that a rating on Truckstop. We’re making sure our net days to pay is 30 so that carriers don’t say no to you. Carriers are gonna say yes because they know they haul an SPI load. They’re gonna get paid.

Chris Jolly [00:42:41]:
I would love to know the stats, James, because, yes, if we get everything closed out, we get paid the next Friday no matter what without hesitation. I wonder how many w two employees out there are not paid commission until the customer pays. I would love blue. I would love to see

James Lemon [00:43:00]:
it. It’s it’s and there’s lots of I mean, there’s other agency models where they that that is a stipulation where they don’t pay commissions until they get paid by the customer. And I mean, that’s not how we do business. That’s not how we wanna do business because in the end, this is a partnership. We’re taking risks. You’re taking a risk by being a part of our network. And so we wanna share in that risk together, and we wanna be the best brokerage out.

Chris Jolly [00:43:29]:
I you will always argue that we are the best brokerage out there, frankly, at the end of the day. And

James Lemon [00:43:34]:
And that’s what we’re striving for.

Chris Jolly [00:43:36]:
You know? And there’s no doubt in my mind that you guys are very agent first. Very agent first, giving us the best tools to succeed. And I know that that is a major part of why we’ve been able to get up kinda and running at the level that we did, and the supports there. Right. And I really, really, really want to push that support there when you need it because developing a business is hard. When you have no customers and you’re coming in from a completely cold perspective, it takes time. And knowing that the infrastructure of a very large corporation is behind you, you can go out there and operate, and you have complete autonomy to run your business the way that you see fit. Still, you have the partnerships behind you, and you’re literally one phone call away. Do you have any questions? And again, I cannot stress this enough. If you have any questions at all and you reach out to client care, it doesn’t matter when it is, weekends, whatever, people are gonna respond, and they’re gonna have answers for you so you can deliver that high-quality service to your customers.

Chris Jolly [00:44:39]:
Because inevitably, that’s all that matters in your customer’s eyes. Are you fixing things? Are you making stuff happen for them? And are you easy to work with? And if you can check all of those three things off, you’re gonna be very, very successful out there. So with that being said, James, I wanna appreciate your time, man. Like, dude, we’re we kinda blew through this here really quick. And, you know, I I just I can’t appreciate I can’t say thank you enough for the belief in what I’m doing from a media perspective, but also been building up the, you know, my agency and everything, man. So thank you so much for that. And how does anybody reach out to you, man, if they wanna find out more?

James Lemon [00:45:13]:
Anybody wants to have any questions or have a conversation, they can reach me by email. My email is jlemon@SPI3pl.com.

Chris Jolly [00:45:21]:
Perfect. I know you made it this far in the episode, but if you did and you’re not subscribed, do your boy a solid. Subscribe and share this out there because at the end of the day, this is how we reach more people. But most importantly, it’s how we help more people. It’s because if you saw value, your network’s gonna see value as well. I appreciate you guys. I love you guys, and we’ll be talking to you soon.