The last several years have challenged what it truly means to be a modern logistics provider. Supply chain disruptions and a flood of venture capital created a boom in freight tech—with some innovation being better than others. At the same time, economic headwinds and an oversaturation of capacity created tough times for asset-only providers and challenged traditional logistics business models. Modern 3PLs have had to adapt, combining investments in innovation and assets to maximize value for shippers. In this session, ITS Logistics CCO Josh Allen and guests will discuss industry highlights, where shippers can find the most value from innovation and assets, and how a modern 3PL model can benefit shippers.
Speakers:
- Josh Allen, CCO, ITS Logistics
- Craig Pettit, Executive Director International Operations and Trade Compliance, Bridgestone Americas
- Mike Sajdak, Senior Supply Chain Manager, Amazon Freight
Transcription
Josh Allen:
All right, we're hot. Welcome, everybody. Thanks for joining us for unlocking value. And where we're going to answer the question is your 3PL making the investments to help you? I'm Josh Allen. I'm chief commercial officer at its logistics. I've got a couple friends with me here. I've got Craig Pettit here, executive director of international logistics and compliance from Bridgestone. And I've got my friend here, Mike Sajdak, senior manager of supply chain at Amazon. So the topic du jour is investments. And you know, if you think about it, it's almost nonsensical sometimes when you think about the market that we've been in as transportation logistics professionals for the last two years, very, very difficult to think about investments. However, we believe certainly at its logistics, that our investments in capacity, technology, people and culture have helped us grow 30% last year in volume and north with 20% this year. So in a tough market, we feel really, really good about it. The thing that we don't know is what do shippers think? We feel like it's a pretty good idea to invest in all these things, but I found myself preparing for today and preparing for this conference and hoping to get some perspective from some other people as to what you think about investments in those three categories. So to get us started, let's talk capacity first. For several years now at its, we've been investing in kind of a multifaceted offering of capacity. So you think about continuing to invest in our DC network, continuing to invest in our fleet, specifically our trailer fleet, that we execute a power only solution and then also in this selective opportunities, we invest in power units. But, you know, it seems that it's playing very well for us. But I don't know. That's why I'm going to have you guys answer the question. So, Craig, as you think about investments in capacity, specifically from a 3PL perspective, whether you're talking about it in your role today or maybe even previous history, where do you think 3PLs ought to be investing in capacity?
Craig Pettit:
I really think it's a balancing act, not going too heavy on one side or the other, but to serve your customers, you really have to have that agility. So I believe you do have to have key assets in certain areas, but again, really balancing where you have those, not going to overload on one or the other. I'm kind of agnostic to it just as long as you can service me. I really don't care if you have to borrow it, rent it, lease it, own it, but it would make good practice, like what its has done for us just being, having that nimble footprint, access to warehousing, access to assets, you know, if we have to move stuff quickly, that's one of the benefits of working with its that I've found over the time is just that that ability to be nimble because you have those assets in place.
Josh Allen:
Very cool. Mike, what do you think? I mean you have a unique perspective because, you know, in your history as a buyer at Amazon and then now you have a different role, but you have the opportunity to think about it through multiple lenses, both as a buyer as well as being on the 3PL side in your history. When you think about investments in capacity for 3PLs, what perspective do you have?
Mike Sajdak:
Yeah, similar to craig there. I think that balance and nimbleness through there. Obviously Amazon does expect a lot of their vendors and their carriers in our network and Amazon themselves invest in a lot of different equipment through there. But I think you find out where it makes sense most with the warehousing, with power units, with trailers, I mean ships, whatever it may be through there. But I think with our conversations, what we've had through there, I think the expectations of technology, the people, the culture and the equipment because honestly I'd hate to be the person that has to deal with our forecasting because it's all over. As you know, it takes a lot to get to your packages, to the door within the same day through there and kind of peek behind the curtain. Flexibility is huge and it's consistent change as well through there. So I think it is that delicate balance to make things work and at our level too, obviously, Amazon being so big, but also being on the other side, being a 3PL through there, I think you know and understand that and you see the value of we'll put the investment in where it makes sense.
Josh Allen:
That makes a lot of sense. So just a follow up specifically because both of you have depth in international and in drainage procurement. I'm curious, what's your take on 3PLs and their investments in chassis and perhaps even in chassis pool? How valuable is that to you? Craig, maybe you first can be very.
Craig Pettit:
Valuable at points when things start to stack up and go sideways. You want to have that again, that flexibility to be nimble to, you know, we have chassis so we can get the boxes on chassis, we can move them around. We're not waiting for a certain carrier to have the assets ready for that. So to me that's really important in our business. I mean, we import, I think we handle 40,000 TEU imports a year. So I mean, we have to be nimble just to get rid of the detention, be able to move stuff in and out. I mean, we've got a pretty good relationship with our carriers, but still, they're going to charge you if you're renting space on their cans.
Mike Sajdak:
Mike, what do you think in our approach, I guess with, you know, coming from the ocean and the drainage side through there, I mean, we opted to have our own pool of chassis that are utilized by our carriers investment, obviously, you know, through when Covid hit, a lot of things changed through there. But just due to the ridiculous volumes that we'd have and the fluctuations, it made more sense for us to invest in that and allowing our carriers to then access that pool of chassis through there. So we never had too many issues with shortages there. It was just one of those that Amazon felt it was best for us from a cost perspective and working with our carriers directly. And I think it, there's other intricacies that go into it, but it just makes the most sense for, for our setup to have our own pool.
Josh Allen:
That makes sense. It kind of helps being an importer of I don't know how many boxes you had at Amazon, but significant to say the least, right? Yes. Well, very good. So let's move on. I love the conversation about capacity. I think that it's an interesting topic because certainly as somebody that has lived in 3PLs where we've had assets, we've not had assets. Threading the needle on having the agility, having the flexibility in your brokerage and then also being able to weave some of those assets later on for complex opportunities has been extremely valuable. But as I said, let's move on. Let's talk about technology for a minute, and we can go several different directions here. But for me, I love this topic. And frankly, it wasn't that long ago that we were all talking about how digital freight brokerages, digital forwarders, digital warehousing, virtual warehousing companies were going to destroy the traditional businesses that have been in the marketplace for decades. And, you know, aside from some murmurs, aside from a few conversations, for me, I don't really hear those conversations and I don't see those articles nearly as much as I used to. So, you know, I guess the question becomes, I guess, what's cool and what technology should we be investing in for the future? And, you know, I'll give you my take at its we have taken the stance of investing in our technology that empowers our people. It makes them better. It makes them more productive. Subsequently, they're able to further their careers even more. But really, the tech focused on becoming a toolkit for our professionals to be able to service our customers and then service providers as well. So if you think about our development of container AI, simply, we were trying to build a better product on the floor for ourselves. We needed to solve for better data, better visibility. And so as a result, we have this thing that we built and there was an opportunity to share it with the world, or at least some version of the world. And it works. It works both externally. It works internally. But I guess, craig, from your perspective, when you think about technology investments, from a 3PL perspective, or anybody that is going to be a service provider for you, what do you feel like they should be building?
Craig Pettit
Good question. I mean, it's very applicable to what you have stated. Something that you can use internally and externally. Being really on the import side, on the drayage side, it's a key portion of visibility. It's pretty easy to track a ship. There's enough platforms out there that do that. But really, that time when it gets off the boat, gets out, gated at the port, and getting to the DC is some of the more critical time. Where's my stuff? And working with you, you know, you guys have built that platform and that feeds our, you know, enterprise platform is what we use it for. So I think really the visibility of where's my stuff at and how you can measure that to see carrier performance where they are also, stuff gets lost, you know, contrary to popular belief. I mean, stuff gets misplaced and stuff. And if you're tracking something critical, I think, you know, that's important to have that in place. So I think you guys are on the right path. I'm a big fan of visibility, how it can cut down workload on your employees rather than going to carrier websites, calling people, texting people. Like, if you got it right at your fingertips, it's just a lot easier to work with, especially with the younger generation. I think they really appreciate that.
Josh Allen
Very cool. And just quickly, as a follow up to that, you know, I feel like the conversations that I have internally or externally, many occasions, it turns into, should we be building customer facing tools? Should we be building external facing tools where, you know, the early versions, you know, several years ago were, you know, the trucks moving across the screen. Okay, great. And then containers moving across the screen, boats moving across the water versus sending you data or building the capability to transmit data in a very elegant and effective way. I don't know, as you think about it, and certainly for other folks in here, what do you think about that from a 3PL investment? Should we be building a external facing products or should we be investing more so in data?
Craig Pettit
Yes. Really depends on the shipper. I mean, like somebody our size, that's, you know, I mean, we've got 150,000 employees, plants all over the world. For us, it's, you know, you know, we can't just have one, you know, rely solely on your visibility. It only handles certain countries. My team span all the americas, so we have to work off different systems. So really, as a shipper my size, the point I'm getting to is somebody like a four kites or project 44, that's very applicable to us. We have to feed data into that and you're a piece of the data. But for a smaller shipper, some of the other companies I work for, your external facing tool might be just fine, what they need. So I think it's really gauged on the customer, on what their needs are. But yes, I think both are important. And knowing that you have the data to feed your own customer facing tool, you should be able to easily do both.
Josh Allen
That makes sense. That makes sense. So, Mike, same question, but take it back a step and start from the beginning. So when you think about and perhaps when you thought about in your role as procuring transportation and interacting with service providers from a technology standpoint, what do you wish they would have been building or what are you perhaps happy that they were building along the way to become a better service provider for you?
Mike Sajdak
Yeah, I think with us, and like Craig mentioned, due to the size, we want them to be able to build things that are integrated to our systems. I mean, you have versus having so many to go to, I mean, it is key to funnel everything into one system within Amazon so everyone can physically see that North America, Europe, whatever it may be through there. So I think that's absolute critical to have that. Now, if I'm looking at some of the other, you know, I wasn't involved with some of the build outs, thankfully, with some of the carriers through there, but I mean, there's still some way to go. But I can't think of one thing like to say, oh, this carrier, you know, did this. Well, I think it's just the standard integrations and the EDI functionality between there that would feed our system. So you're getting the, the key metrics, the key data, the in out data, you know, because when you're dealing with drainage and ocean, just with the detention to merge everything. It's just so critical. So I think having the gate out activity and everything, everything in place and updated correctly is what it was an absolute requirement for a carrier to work with us. So if they're going to be on boarded and work with us that you had to have 100% done.
Josh Allen
Interesting. And then as you think about, you know, your adventure that you're on now and you know, you're thinking about it through the lens of, you know, 3PL investments through Amazon freight, what do you think are maybe some of the most important things? Make sure you check the boxes.
Mike Sajdak
In my current role now, taking my shipper hat off through there. Yeah, yeah. I think investing in your operating systems and your technology, but your people, I think we'll get a little more into culture. I know, through there. But I think how critical, it doesn't matter how much you've done a certain role through there if you don't have the right tools and the tech to do that, I mean, it's easy to fail. I think with the, as now we kind of mentioned with making your job easier, taking minutes out of your day, empowering your employees to do that. So I think in my current role that is the biggest thing that I'm working on is really getting that tech to line up with what we're doing to be long term and be a world class organization.
Josh Allen
Fair enough. So one topic that is consistently brought up in our organization and with some of my peers, we talk about this frequently and there's been this growing opportunity and capability of API rating and getting into tmss and pushing rates into customers native tms to be able to execute. And we've taken a stance on what we think about that. And certainly those aren't easy to build. Those require significant investment dollars in order to build. But I guess from your perspective, either one of you really, do you have an opinion on consuming API rates and is it something that 3PLs should be investing in?
Mike Sajdak
So to kind of through that we're consuming the carrier rates electronically, spot rates electronically. I think from the contract rate I can tell on our side, you know, I wish we had more of that because of the intricacies when you're talking with payables, to have that rate matching and doing less manual auditing, I think that should be something, especially when you do it, the volumes that we do it at, I think the time spent internally on and working with your vendor on getting the rates right. I mean it's, if it's manual, it's tough. I mean, you waste, yeah, you do. You waste a lot of time going through there. So I'm a big fan of that, especially the automation. Anything you could do to automate with your payables and lining up with your contracted rates and various things. I mean, I think back to our days, if you have the barcode and things just boom, boom, boom works. You know, it's, I think the automation on that, I'm all for it.
Josh Allen
Yeah, fair enough. Well, I think it's a, it's always a big topic. We, it's strong debate. You know, I'm sure there's probably ten people in the room could stand up here and argue either side of it of, you know, what speed might do for you in a spot environment. You can also talk about the fact that you're inviting commoditization into your life and so that can be tricky. But I guess the bottom line is if you're standing behind the service, then, you know, perhaps it's applicable. But I guess, you know, it's a debate for another day. Anybody wants to join in on that debate later, hit me up. I think we can have some fun with it. All right, people and culture. So, you know, I think the saying goes, culture eats strategy for breakfast. I don't know what to think about that, especially because I had strategy in my title once in my career. You know, I think it hurts my feelings a little bit if I'm being honest. But I think generally organizations throw around these words very easily and kind of slap them around as corporate initiatives and that sort of thing. But do you really buy into it? Do your organizations really, really buy into it? And are you investing in people and in their careers? And do you say the words that you are taking responsibility for people's livelihoods and their futures and their future careers and perhaps even their kids? We believe at its absolutely non negotiable. We absolutely have to drive team first. We have to invest in our people. We have to make sure that we are advocates for their careers and the betterment of their families. And so, you know, once you grab hold of it and once you get on board, it's actually pretty fun. Those are pretty exciting words to say. And, you know, we get very passionate about it inside the office. Craig, I know culture is extremely important at Bridgestone, so maybe talk about how culture, this is kind of interesting, but how culture, both internally at Bridgestone, kind of makes life better. And then also how can you discern or how can you consume culture? Maybe from some of your vendors. How do you pick that up? Does it show up in their service? What do you think?
Craig Pettit
Yeah, I think for us it's very important. I mean, face it, all of us, if you have teams, I mean your number one asset is your people over anything. So really seeing them bond I always look at, because I'm a shipper, I'm not a logistics company. We've got very skilled people that know logistics very well, but we aren't the ones moving the stuff all the time. We don't own boats, we don't own, well, we used to own trucks, but now we don't. But really, I always say a service provider such as its or a flexporter and expeditors or anybody is really just an extension of my supply chain team. So there has to be that linkage, working with them closely. They should fit what we need, but also the people dimension has to fit. And I also think that the technology has to work with both sides too, especially with the younger generations. I mean, we've got a heavy intern program from UT because we're based here in Nashville. So I would say half of our workforce, permanent workforce is UT graduates. So we really pick people, work with the universities to create that culture, what they're doing and also work with our suppliers, so to speak, whether it be a carrier, a freight forwarder, any of that. There must be that connection with the teams together.
Josh Allen
Very cool. What do you think, Mike?
Mike Sajdak
It's probably the biggest thing in business. I think I pride myself on it personally and professionally. I think one thing, pleasure working at Amazon. I think you mentioned, Josh, the balance and just investing in someone's livelihood just so much outside of their just individual role. And I think that's huge. I think with sustainability, other things, think of big picture climate pledges, Amazon looks a partner with like minded vendors. But, you know, I take it that step further. I mean, it's, I never assume just because we're Amazon, you got to do everything and expectations to do whatever. I mean, they have to trust the person and the company just as much through there. So I think, yeah, culture, this is so huge. I think in working with other like minded companies that no one understand your business and they're going to put the effort in and vice versa and us as well. I think it's critical for, for you to kind of, you know, walk it as well.
Josh Allen
Do you find, do you find any ways to specifically detect culture or investment in people with, you know, vendors that you might have had in a previous life or, you know, perhaps even how you might interact with vendors today.
Mike Sajdak
Yeah, I mean, you can take, you can. I mean, obviously, this standard things, you're looking at credit, you're looking at checks. I mean, there are a lot of things in red flags. You can see by how it's handled top down and just individually and how you're working on the ground level. I mean, I grew up in the expedited industry, so service, I mean, I still kind of have that mentality of shutdown material, and it's just the expectations are high. So as you come in there, you set those expectations, make them very clear. And I think it's, at least for me, after you've been doing it for so long, you get a feel for the things you look for. I guess those red flags are things that are like, all right, something up here. But it, you know, it goes well beyond credit ratings and various other things, but it all contributes to the bigger picture.
Josh Allen
That makes sense. Craig, anything from your end, any way that you perhaps detect it, like Mike.
Craig Pettit
Said, I mean, it's very, just the feel of it, you know, meeting with them, having face to face understanding through the bidding process who they are, like what time, what type of outfit they are. Are they going to go the extra mile for you? You know, I look at stuff sometimes I need something hot, and I have a particular ocean carrier that I will go to that will bump other people to get my stuff on because he prides his takes me over that top, and that's the kind of guy I want working for me. Somebody that values the business relationship and the company does and the teams do.
Josh Allen
Makes sense. So from my standpoint, I'm only ten months on the job at its, and it's been a great experience so far and having a whole heck of a lot of fun. One thing that I've been taken aback by is people externally, whether it's just colleagues, whether it is customers, whether it's providers, don't really matter. Folks comment all the time about our activity and how our culture appears on LinkedIn, and then externally, other messages. And I thought, that's kind of cool. I never had had that feedback before in my previous career opportunities. And so something new, but certainly valuable for me, and I give a tip of the hat to our marketing department as they're pulling that off extremely well. Any chance you guys get feedback about your own presence online and folks saying one thing or another about culture?
Mike Sajdak
I don't know. I mean, you probably see a lot of things through Amazon. I mean, obviously bad and good through there, but you control the controllables. And what I can do to affect my team and my, and how that's seen in the community internally and whatever it may be. I mean, I can do a lot to affect that. But I think you'll see a little bit of both for Amazon in the news.
Josh Allen
That makes sense. Okay, so listen, this has been a pretty quick conversation and we don't have significant depth beyond those three big rocks we talked about. But really, I'd like both of you guys to provide your number one recommendation. If you were to pick one thing that logistics or supply chain companies should be investing in, what would it be? So, Craig, why don't we start with you.
Craig Pettit
One thing.
Josh Allen
You can have five if you want to. We got plenty of time.
Craig Pettit
I think you have to invest in capabilities, technology, people and even assets to a point. I mean, I think you have to have a balancing act. It's got to all come down to being agile in this world that we live in now. I mean, we're dealing with, you know, I wasn't going to get into this, but I guess, I mean, we're dealing with, you know, something that I would consider for at least my company is pretty much catastrophic at this point. The strike goes on tonight and how long it goes, I mean, so just having that experience, having the people that understand it, how we can shift and be nimble and those partners to help us do it, is key, especially in the environment we live in now. Supply chain world.
Josh Allen
That makes sense. The trifecta, then you've got to have.
Craig Pettit
All of, it's got to be a balancing act of all. You can have all the people, but if you don't have technology, it's not going to really help that much.
Josh Allen
So a scale of one to five, how are you feeling about this? You'd be feeling like it is catastrophic, like it is, as my 13 year old daughter would say, mid or low.
Craig Pettit
I mean, you really don't know. I mean, from what I've seen, it could be, could get pretty nasty from the signals we're seeing, so. But based on what I've stated, I feel like my company, that my team has mitigated 70% of our risk at this point because we've been prepared, we understand it. We are using our tools, technologies, partners.
Josh Allen
Fair enough.
Craig Pettit
So we've done as much as we can do.
Josh Allen
Just as a quick follow up to that, when you talk about being prepared for what potentially is going to happen, which we were talking earlier, it's still blowing. My mind that this is going down. So super interesting night tonight and tomorrow morning there'll be lots of chatter. I'm surprised that it's not top of mind for everybody, but not everybody is affected in drage and international, that's for sure. But when you think about your preparedness, you think about diverting or changing supply chains. Can you talk just a little bit more about how you are preparing for this potential impact?
Craig Pettit
Well, I mean, specifically on the export side, pumping as much out as we could ahead of time, like pushing as much as we could. We also went and signed several contracts with niche carriers where there's terminals that are operated on the east and Gulf coast that are not under Ila labor. So we're using those heavily. We had those. Again, going back to your partnerships, the relationships where you can pull strings, really using that, you know, pivoting, telling your origins, like, all right, we're going to shift to West coast. We're going to shift to Halifax, those type of things way up front as we saw this coming, I mean, you can't do a knee jerk because we didn't know this was actually going to happen. But you can at least take partial hot items, stuff like that, and put it to a place that safer. It's going to cost a little bit more, but you might avert disasters. We're a manufacturing company, too. You know, if I don't have natural rubber and stuff to, there's to build tires, you know, a plant goes down, it's very costly and that could have ripple effects. General Motors, Ford and Toyota could go down because I don't have tires to get for them. So you have to, there's a lot of calculations happening up front. So good thing is we've been through this rodeo before now every year some sort, so we, you know, we have a flavor on how to do it.
Josh Allen
Very cool. Thanks for sharing that. Okay, Mike, so what's your suggestion for 3PLs out there making investments in their future? What should they be doing?
Mike Sajdak
I think it's keying on your customer base, too, and I think basing it on that, I mean, that's going to be critical because I realize that an Amazon or a Birdstone, I mean, that may not be, you know, the ideal setup for your, you know, for a 3PL, their size or scope or where they want to go. So I think that that above all, is key. You know, find out who, you know, who your key customers are, who you're going to work with and tailor to that, you know, so if I look at someone that you know, when it was ocean or drain space, I mean, it, you know, invest on that. But it's, it's the technology and with the flexibility to be able to turn on a dime, you know, when situations like this happen, I think it's having those partnerships being able to accommodate an Amazon or Birdstone when these things happen. Hey, if this does happen, we need you to do this and what can you do for us there? So I think you need, you need the tech, you need the people with that flexibility through there. And I think the culture is huge too. I think probably kind of going in those orders through there, obviously with tech, maybe tech equipment people, maybe equipment people kind of swap those a little bit there. But I think that'd be the biggest thing. Figure out your strategy up front because that's going to dictate what you're going to do.
Josh Allen
Fair enough. So I don't know that I have suggestions for 3PL investments. I can tell you a little bit about what's worked for us and I think that's great. I more so have an ask of the community from an investment standpoint and that is continue to invest in information sharing and technologies and band together to thwart theft. It's a huge thing. It is. I don't know that it's been crippling for some customers and shippers. Some shippers don't have freight that necessarily works on the black market. Good for them. But for many it is a huge, huge topic. Us together as a community, I think it works. I think us coming together as a fabric to protect shippers, manufacturers, distributors out there from having their products stolen I think is a very, very good thing. Secondly, investing in data and the ability to share data, use data in order to enhance your business I think is just a no brainer. And if you think about the data and you think about making investments in your business, well, it should tell you where you should invest and perhaps where you shouldn't. Because for me, in order to create trailer pools, in order to invest in DC's, in order to listen to your customers and then go invest in assets, well, you got to know the numbers and you have to know how to invest, how to create returns and then how to win and it should feed itself. But you have to know what you're getting into first. So that's my suggestion. And with that, that is a wrap. Thank you very much, Mike. Thank you very much, Craig. See you guys on the floor.
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