BlueGrace Logistics Founder and CEO Bobby Harris offers up state of markets

Logistics Management Group News Editor Jeff Berman recently caught up withBobby Harris, founder and CEO of Tampa, Fla.-based non asset-based 3PLBlueGrace Logisticsabout various topics within the freight transportation and logistics markets, including capacity, rates, and digital freight matching, among other topics. A transcript follows below.

Logistics Management (LM):How do you view the current state of the freight economy?

Bobby Harris:When you look at the first quarter, based on data from publicly traded companies, it is no secret that the market was softer in the first quarter than a year ago. And we are seeing that same softness when looking at private companies, too. While there are some companies that are outperforming, the market is not where it was a year ago. I think it is important to note that when comparing year-over-year, 2018 was almost unprecedented, especially in the truckload sector. That being said, we still see a lot of positive momentum. For BlueGrace, we are up [year-over-year] quite a bit. We are a growth company, so we are looking for more and more market share…so we are not always a good indicator of what everybody else should be doing.

LM:Capacity does not seem to be as tight as it was a year ago. How are you viewing that situation and are you at all still dealing with the ELD mandate at all?

Harris:I don’t think there have been any significant changes since the inception of ELD. It was disruptive at the beginning. As far as what we are seeing with the rest of the market and how we are handling capacity, there is just more available now than last year.

LM:What about from a carrier perscpective?

Harris:Carriers, whether they are LTL or truckload, are still being very responsible. I think the market is leaning towards being more bullish with summer approaching and with things being tighter than they have been in the last few weeks compared to earlier in the year but still not at Q2/Q3 levels of last year, where we saw some incredibly tight conditions. Things are set up a little bit for that, it seems.

LM:Looking at pricing, there have been declines in spot market and contract rates. How do you view that?

Harris:Rates are declining, and that is part of the nature of having that much more capacity. That is how we are seeing it, and we feel our competition sees it the same way.

LM:Regarding your customers, what are some of the biggest shifts you are seeing from your customer base, in terms of how they are approaching the market and how they work with BlueGrace. Are they asking for new and different things?

Harris:The savvier customers, we find, have been looking for longer-term/more concrete type contracts. On the other side, I think tariffs have got people more spooked than they have been in a while. It is a topic more discussed by them from a business standpoint, as opposed to a shipping one, and more of a top level in terms of looking at changing carriers or where they source their goods from, too. If they move from China to Vietnam, are they going to bring it in through a different port? These are things we have not solved for yet, but I can say that it was always a topic that came up in the last six months that has definitely accelerated.

LM:With the tariff “pull forward,” are you seeing higher inventories impact shippers’ supply chain operations?

Harris:It may be a little early to say that but anecdotally it is and there are also other things that need to be put into the equation to say it is truly that. My hypothesis is yes it is.

LM:How do you view cross-border logistics as the new NAFTA i.e. USMCA remains unsigned?

Harris:As far as our modeling, we still feel very bullish about Canada and Mexico. There are no changes in direction based upon the new deal for us.

LM:What is your take on the emerging last-mile logistics market?

Harris:我们没有专门在这个市场本身。We want to handle anything one of our customers would need so we want to at least be thoughtful on that front. We have a number of retail customers with whom that can come up. The general consensus is you are seeing more of the asset-based carriers equip themselves to be prepared for more and more of it in the future. Every indicator shows that is not something that is going to change; it is a trend and an opportunity for companies to offer that service year after year.

LM:How do you view the state of digital freight matching (DFM), as there are many new players, as well as more established ones too? Can the market handle it demand-wise?

Harris:I will say this in that the time we have spoken a new player has popped up. The rule of thumb I go for is that there is always room in the market for the best. And in between you are going to see a lot of the start-ups and there will be some that make it. It is a very low concern regarding the new entrants into the market.

LM:Is the DFM segment the most competitive part of your overall business?

Harris:It is hard to say because every industry feels they are in the most competitive industry so doing what we do feels extraordinarily competitive. The thing is a lot of these new companies with the bells and whistles are not what separates companies, it is an expectation…being that if you don’t have it, you need to be working on it to be relevant in the years to come. We are not the only ones doing it; it is not just us and a couple of people. You need to find other ways to separate yourself. The technology piece that used to be considered attractive is now just expected.

LM:What is BlueGrace’s approach to intermodal? Does service remain an issue?

Harris:One of our most rapidly growing parts of our business that relates to intermodal is drayage. We service a lot of forwarders and do a lot with the drayage piece. As far as the rail side goes, service wise, I have not seen it now as big of an issue as it has been in the past but I am not supporting that with any type of data. If you look long-term, we are not laying down new track anywhere in the U.S. so you need to consider that, too.

LM:Looking at the current state of M&A in transportation and logistics, things seem somewhat quiet at the moment. How do you view it?

Harris:We have a pretty good viewpoint from where we sit, and we are not seeing lot of movement from the big guys, compared to last year, when there was a lot of activity. This year, it does not feel like there are as many deals to do. Quite frankly, I think the softening in the market has taken a little steam out, so we expect that M&A season will largely expire near the end of summer. A large deal can always happen, but the feeling we are getting is that there will not be as many large deals for the next few months or beyond.

LM:With Peak Season arriving sooner than later, what is your approach?

Harris:It is interesting with peak as we always get busier ourselves and we feel the effects from that. One of the things we do in May is bring on a lot of interns. We are a very intern-bullish company and they are phenomenal for us in the summer. They help with a lot of workload and are also our future employees. The other thing is we have a large college class coming in, and that helps with the [peak] surge that we expect in the coming months. It times up very nicely for us as it allows us to expand and meet the needs of clients

LM:What do you think of Amazon’s recent official entrance into the truckload freight brokerage space?

Harris:The thing with Amazon is I am not one to think of the entrance of a new player usually, but Amazon is for real. They have been successful in just about everything they have done and are one of the world’s largest companies and they find our space interesting now. For us to be dismissive of them would be a bit foolish. They are very good at logistics and did not do this as a ‘let’s just try it thing,’ and they will be very successful at it. The thing for us is that the market size is so massive for what we do that we will just have to watch them over the long term to see what it does to pricing and overall concepts within the market. They will bring some new things to the game, given their interest in the market….it’s all competition.