The penultimate episode of our Visibility Economy series brings in Director of Koho Max Lock to discuss how being able to book less than truckload (LTL) shipments through an online platform gives small to medium sized shippers the ability to still reach their customers during a time of capacity, equipment, and driver shortages.

Chris Parker: Hello everyone. And welcome to the Expeditors podcast, where you can hear about front-of-mind topics in the logistics, and freight forwarding industry, through the lens of a global logistics provider. I'm your host, Chris Parker. And today is the penultimate episode of our series on digital solutions. For this one, we'll be focusing on less than truckload transportation and how empowering small shippers with a digital platform will give them a fighting chance for capacity. My guest today is Max Lock, the director of Koho within digital solutions here at Expeditors. Max, welcome to the podcast.

Max Lock: Thanks so much for having me, Chris.

Chris Parker: Yeah. How have things been with you lately?

Max Lock: Yeah, it's exciting times in the industry. Everyone seems to have something to ship. And, we're just trying to keep up with the changing landscape of what's happening in logistics, it's been a crazy year.

Chris Parker: And I'm sure we'll be getting into plenty of that later in this discussion. But, for starters, I said Koho, and I haven't really told anyone what it is right now. Could you explain to us what Koho is? What does it do?

Max Lock: Yeah. So, Koho is an online platform that's particularly targeted towards small and midsize shippers to help automate all the processes around less than truckload or LTL freight. So, everything from quoting, booking, tracking, managing, accessing documents, dealing with exceptions that come up, we have a self-service online platform that empowers businesses to manage everything and anything related to less than truckload shipping.

Chris Parker: Koho has an interesting history because you are the one who built Koho. But this comes from an interesting situation that you had some years ago. Could you talk a little bit about your background and how you became part of Expeditors?

Max Lock: Yeah, so I'm still relatively new to Expeditors. It's been about 18 months now. But prior to that, I started my own company, which was really built out of the frustrations that I had as a small importer. I used to manufacture paper cups in China. And, the hard part about manufacturing paper cups was not actually the manufacturing. It's pretty hard to mess up a paper cup unless there's a hole in the bottom of it.

Chris Parker: Sure. Sure.

Max Lock: The challenging part was all of the logistics. And so, I didn't know what I was doing when it came to international supply chains. And, I hopped around from smaller mom-and-pop forwarders to larger forwarders. And, it took me a long time to get the grasp of it. And, being someone who is a bit younger, I thought, "Hey, this is crazy. I can book a small parcel shipment online. I can book an airline ticket online. I can book a hotel online. Why can't I book an ocean or air shipment online."

Chris Parker: Yeah.

Max Lock: At the time, that's what I was most concerned about. And so, I came up with this idea at the time it was called Fleet. I pitched it to some investors back in 2014. And, was off and running. And initially, we were targeting the ocean and air freight market. And over time, our customers were asking for us to get into the domestic transportation with full truckload and less than truckload. And what we realized was that our LTL platform is just what was taking off the most. And, we joined Expeditors back in May of 2020. And, as part of that acquisition process, we decided, "Hey, let's focus on what we're best at, which is LTL freight." And, we've doubled down on that area. And, currently today we just focus on less than truckload freight.

Chris Parker: What about LTL was so important to your customers at the time and to customers now?

Max Lock: Sure. So, supply chains in general are very complicated.

Chris Parker: Sure.

Max Lock: International supply chains are even more complicated than domestic only supply chains, just due to the fact that you have less moving pieces in the puzzle. So, on a trucking shipment, you likely only have to coordinate with that trucker. On an ocean shipment, you have to coordinate with the steamship line, customs broker, warehouses truckers, all of the different parties in the supply chain. And, we really wanted to execute on our promise to bring automation and better efficiency to this industry. And that is harder to do on the international side because each shipment is unique in its own way.

Chris Parker: Absolutely.

Max Lock: And it requires a lot more parties in the transaction. And so, we started on less than truckload, because one, that was a big need for our customer base. They are either receiving goods for their manufacturing process or sending out goods to their customers. And so, it was something that they did a lot more of than ocean to air freight. And secondly, it was something that we feel like we can execute really well on, in providing a much better digital experience.

Chris Parker: What would you say is really prohibitive about establishing a supply chain for small to mid-sized shippers?

Max Lock: Yeah. So, there's a lot of nuances to supply chain, and there's no training course.

Chris Parker: Sure.

Max Lock: Our customers are not experts in supply chains.

Chris Parker: Sure.

Max Lock: Most of them don't even have a logistics manager or a full-time supply chain staff. They don't maybe know about compliance requirements or they don't know about what's going on in the industry from capacity constraints, or potential accessorial charges that they might get hit with in the future. And that's a very costly lesson for small to mid-sized shippers to learn.

Chris Parker: Mm-hmm.

Max Lock: Because there's really no way but getting thrown into the deep end, where they start running some shipments, and then they'll learn, "Oh, I ran into this issue with long wait times. So, I got billed extra for that. Let's see if I can change that for the next shipment." And, there are so many different things to learn. It's not like you just move one shipment, and then you know it all. I imported many, many, many containers in my time, but I was still learning new things every time.

Chris Parker: And I imagine that there's an aspect of infrequent shippers. They don't have enough of the demand of high volumes that a large shipper would have, but also they're stepping into this really big world because, for me, I think e-commerce plays a huge role in those smaller shippers expanding and having a big reach, but not enough capability, or ability, or the partnerships to reach their audience. Could you talk a little bit about that? How is e-commerce and just this infrequent shipping a challenge to smaller shippers?

Max Lock: Well, we're also seeing a shift for these e-commerce type players, because they're so used to being able to do everything online. They're e-commerce companies, after all. They sell online, and they can build a website, they can have fulfillment done online, they can do their digital ads online. But when it comes to shipping, especially if you're an e-commerce player that ships larger, bulkier items, that process still is way more manual than we would like it to be. And so, that's what we're starting to see with e-commerce shippers, and why I got into Koho and built this platform in the first place is this idea that businesses are going more digital. They're going to be online. And they expect that shipping is a natural part of that ecosystem.

Chris Parker: You mentioned something really interesting earlier was that, there's no handbook, there's no course, there's no lessons to be taken in order to gain this logistics knowledge. Would you say that it's hard to access advanced logistics knowledge for smaller shippers?

Max Lock: I think, there's so many nuances to that individual company's supply chains. And, there's not the same predictability that a small shipper has that a larger shipper has, because of just the sheer volume of how much they're shipping, and that allows them to have a much more established process. Smaller shippers don't have that to their advantage. So, they might have one customer in New York, and the next customer might be in LA, and the next customer might be in Vietnam.

Chris Parker: Mm-hmm.

Max Lock: And, each one of those deliveries is going to have its own nuances, and its own processes, and learning curve to them. But if you're a larger shipper and you've every day got 50 shipments going to Texas, and New York, and LA, and overseas. You've built up way more knowledge and your businesses larger, that you can afford to have a logistics department that specializes in monitoring and checking on these shipments.

Chris Parker: All right. Well, let's switch over to looking at LTL a lot more closely here since that is today's topic. What would you say is going on right now in the world of domestic trucking and LTL?

Max Lock: It's a bit of a crazy time for LTL shippers today.

Chris Parker: Mm-hmm.

Max Lock: So, capacity is definitely at a premium now.

Chris Parker: Yeah.

Max Lock: Although, capacity has stayed relatively the same from... The same LTL carriers are still in the market today that were in the market pre-COVID, the challenge is there's just a lot more demand. You see freight that's coming in from overseas, ocean freight, air freight, that previously may have worked its way through other networks, whether that be full truckload or a small parcel, that those things are going on LTL carriers. You're also seeing these LTL carriers get a lot more picky in trying to optimize their own efficiencies because they have a lot more demand than they had before.

Chris Parker: Absolutely.

Max Lock: So, freight that might not be palletized, or a freight that is more challenging to move, or more susceptible to damage, they're less interested in moving that freight because they have so much of the just standardized cargo that they can move today.

Chris Parker: Mm-hmm.

Max Lock: Then, looking out a little bit further, you have equipment shortages. And so, yes, you need the equipment to physically move the freight. And if you don't have the equipment, it's not like you can just go on Amazon and purchase a new truck.

Chris Parker: Sure.

Max Lock: You have to order a truck, and it has to be built, and you need the trailers.

Chris Parker: Mm-hmm.

Max Lock: And so, there's not an easy flip of the switch to get that into the market. And lastly, you have the driver shortages. Driver shortages are something that we as an industry have talked about for... Gosh. However long I've been in the industry. I feel like we've always been hearing about driver shortages.

Chris Parker: Mm-hmm.

Max Lock: This is also not an overnight switch, even if you had the equipment, it's not like we have a ton of drivers that are just idling around waiting for that equipment to show up.

Chris Parker: Right.

Max Lock: So, it is a challenge. I think, COVID has definitely rearranged the workforce a little bit, and people that probably brought in some new people that hadn't considered trucking in the past, that probably also took people out of the market that were in the trucking space pre-COVID. So, it's definitely interesting times. I think the capacity is definitely probably the biggest challenge. And, it also is still pretty market-dependent on certain areas. If you look at Los Angeles, for example, you have a lot of imports coming in. We've seen a lot of freight that may have moved on full truckload carriers before, are now being broken up because the full truckload market is also crazy, that they're trying to get a little bit more predictability with less than truckload. That's also challenging for all the shippers who are already in the less than truckload space because now, more freight is entering in. But then there's also other markets that are not port or major Metro markets, that still have capacity because the trucks are going in there and they need something to put on those trucks to send out.

Chris Parker: Now, I know that we're past states locking down. I guess, how did shutdowns and such impact LTL trucking?

Max Lock: Yeah. So, shutdowns had a varying degree of impact for truckers.

Chris Parker: Mm-hmm.

Max Lock: Generally, a lot of the warehouses that are either picking up or receiving the goods from were considered some sort of essential business. And so, they were still operating. Chances are they might have operated at a reduced capacity. And so, that meant longer times to load, that meant longer times to unload as well, just more congestion. And all of that has a ripple effect through the network because they're less efficient. If they're sitting more time at a receiver, if they're going to pick up locations and the freight isn't ready yet, that can really hurt the efficiency of how many stops a driver can make per day. And then, that's capacity that they can't go back in time and make that truck more efficient.

Chris Parker: Mm-hmm.

Max Lock: So, the lockdowns really have that impact. There were no states that just shut down and said, "We're not letting any trucks in."

Chris Parker: Right.

Max Lock: Fortunately, people still need goods to live. And, on top of that, people were at home and buying even more things. And so, that led to an even higher demand for truckers. But we definitely saw just general, whether it be labor shortages on the driver's side or on the warehouse side had led to a lot lower efficiency levels across the board.

Chris Parker: Now you said, there's a driver shortage even before the pandemic, what are the headaches or tough situations were there in trucking before the pandemic?

Max Lock: This is always greener on the other side.

Chris Parker: Sure.

Max Lock: So, looking back at it, you say, "Wow, those are really nice times where-"

Chris Parker: Those weren't so bad after all.

Max Lock: ... Yeah. You book a shipment online with pretty good reliability. The truck will show up to pick it up. Pretty good reliability that it will be delivered in the estimated transit time.

Chris Parker: Mm-hmm.

Max Lock: Sure, there were different nuances to it. And people were trying to negotiate rates, but capacity was not really a part of that equation on the less than truckload side.

Chris Parker: Mm-hmm.

Max Lock: And so, there were a lot of things to like in that market. The market is a lot more dynamic now because capacity constraints that we haven't seen in a very, very long time.

Chris Parker: We've talked about the state of LTL. Let's talk about Koho, or at least what a digital platform is supposed to do for these small to mid-sized shippers here. How does Koho or services that Koho provides do for them? How does it empower the little guy, essentially?

Max Lock: We do two things. One, there's the value of using Koho as a platform? So, we give choice, many more carriers than what a small shipper might have access to on their own, or just be very cumbersome to go to each carrier directly to try and establish a relationship. So, we provide choice. We provide competitive rates because we're able to aggravate the volume across our whole entire network of shippers. And then, also transparency, we show all of the fees for accessorials, for the rates, so that customers know what they could potentially be charged if in the event that something happens in exception how was the shipment, but also just if the shipment goes smooth and according to plan. That's on the value proposition side for the platform. But then there's also the more soft things that we do that really empower the small shipper.

Max Lock: So, we give them the attention that they need. So, if they have questions, each one of our shipments has a messaging room built into the shipment, So, that they can share documents, ask questions, and it goes directly to our operation staff. So, it really cuts out the middleman of, traditionally, they might go to a salesperson and the salesperson is just going to funnel that question to an operations person, who's then going to go ask a carrier that question. And so, we've tried to cut out some of those steps, so that the questions go directly to the source, and that we can get the customers, the information a lot faster. The other thing we do is really try to empower them by giving them all the information they need online.

Chris Parker: Mm-hmm.

Max Lock: So, shipping documents. Through our connections with the carriers, as soon as the driver scans in at proof of pickup, proof of delivery, those documents are going into Koho's system.

Max Lock: If you need to know where your freight is at any point in time if you have any questions at any point in time, we empower the shipper to do that, instead of spending a lot of time on hold, sending countless emails, it's really to put that information in the most easily accessible place for the small to medium-sized shipper. And so, ultimately our end goal is that they just don't have to worry about it. They have plenty of other things they need to worry about running their business.

Chris Parker: Mm-hmm.

Max Lock: We don't want them to have to worry about shipping. And, we want them to know that the Koho team and the Koho platform is monitoring and really helping to automate those processes.

Chris Parker: Yeah. I'm thinking about growth a lot these days. And, I want to know if a small ship is trying to go medium or a medium trying to go large. What role does Koho play in that? Or what role does LTL trucking play in that growth?

Max Lock: Sure. So, I always tell my team that, just because we have the best platform, or we have the best rates or the best capacity. It doesn't mean that our customers are going to necessarily have something to ship. They need to have the demand, and the sales, and that comes first. So, if someone buys their product, then they're going to have something to ship.

Chris Parker: Yeah. Good point.

Max Lock: So, LTL alone is not going to drive someone's business, but we have seen it open up. For example, we have customers that are in the e-commerce space that previously they really struggled because the freight is larger than something that could go through a small parcel network, but they just weren't familiar with, "How do I get this into my customer's hands?"

Chris Parker: Mm-hmm.

Max Lock: They might not have a forklift at the receiving location. They might not have a loading dock. "How do I handle these shipments? And before maybe I split up a bunch of packages and sent it through a small parcel network, but that isn't a very efficient option." And so, we've allowed businesses like that be able to scale. And really, it just cut out a lot of those headaches where they can ship one pallet with all the stuff on it, instead of having to try and take their freight and fit it into a network, like small parcel that just wasn't built for that.

Chris Parker: I'm still hung up on this. Yeah, you're right. There is no handbook. So then, if there's no handbook out there for people who are trying to get into LTL. I guess, this could be lessons that you've learned too, what would you say are like the absolute crucial things, or some really important things to understand in order to be a successful shipper?

Max Lock: Sure. So, nobody likes surprises.

Chris Parker: No.

Max Lock: I would say, the first lesson-

Chris Parker: Only on my birthday.

Max Lock: ... In the Koho handbook for LTL is to know what it takes to get an accurate quote for a shipment because you don't want to get hit with a re-bill down the line after the shipment has already delivered. It's just an awkward situation for everyone because you've already charged your customer. You can't really go back for more. And so, you want that predictability. So, I would say it's very important first to learn the origin and destination locations. What kind of locations are they? Do they have a loading dock? Do they not have a loading dock? Do they have a forklift? Is it going to be a very long time to load them? Because, in the past, there were shippers that could get by with maybe not booking a lift gate at a pickup or receiver location. But the carriers have gotten a lot more automated and they catch these things.

Chris Parker: Mm-hmm.

Max Lock: And then, it's going to be more expensive to get hit with that charge down the road. I would say, the other very common thing that we see shippers have to learn is around freight classes. So, the LTL industry is a little bit unique, that we have a freight class system that's primarily based off of density, but also has a whole book of exceptions by the National Motor and Freight Transportation Association that publishes the freight class guide. And so, I would get very familiar with what your products are. Koho has some great educational material online, on our website, that if you look up the item, or even if you ask Koho for help in classifying those items, that can cut down on a lot of re-bills. Because, it's based off of the density of the goods, but there's also a book of thousands of exceptions to that, based off of the commodity.

Max Lock: And so, if you can get those things right, you're already a good chunk of the way there in that first initial steep learning curve there isn't a handbook for.

Chris Parker: Sure.

Max Lock: And, you're already going to avoid a majority of the re-bills that could potentially get thrown at you. I think the big conversation when it comes to LTL is, well, two things. One is, over the road versus intermodal. So, there's a lot of carriers now because of the driver shortages that they're running more of the freight on the rail, so on the intermodal carriers. And they're just taking the trailers, putting it on the rail carriers, and then getting to the destination.

Chris Parker: Mm-hmm.

Max Lock: The downside to this is it takes a lot longer and has a lot less predictability, and you have a lot of ocean freight that's also moving on the rail. So, we're now competing with capacity for that freight. At the origin and destination container yards, they also have to be picked up and moved. So, that adds some complexity. And I think that's something that carriers have just done out of necessity because they don't have the drivers or the equipment to move it elsewhere. And so, expect delays when that happens. The other thing is interline versus non-interline.

Chris Parker: Mm-hmm.

Max Lock: So, a lot of the national carriers might have a very large presence all across the country, but smaller carriers may rely on partners in certain geographies. And, that can be challenging because normally those partners are smaller, local trucking companies, that don't have the technical systems or visibility that you might get with a larger end-to-end provider. So, it really just depends on the city. If you're shipping out to rural Oregon, chances are any carrier you work with is going to have an interline partner that handles that area, just because they don't have enough volume there.

Chris Parker: Mm-hmm.

Max Lock: But there are other regional players that in some major cities might require an interline partner. And, the reliability typically isn't the same when relying on another third party to hand it off to the carrier that you booked it with. So, that's just something to be aware of.

Chris Parker: Ultimately, what I'm hearing a lot too, is just details, details, details, right? Definitely, you want to be measuring three times and cut once before you send that box off.

Max Lock: Yeah. These are all hard lessons that I had to learn. I never thought to ask, "Is this moving on an interline carrier?" Or, "Is this going to move on the rail?" All of these questions you have to get burned once to learn your lesson to be like, "Okay, now I know for the next time I'm going to check for this."

Chris Parker: Yeah. If younger Max could be listening to this right now, and what would you want to make sure that he knew or anyone else knew about the experiences and just another hard lesson that you've had to learn?

Max Lock: It's challenging. Because on one hand, yeah, it's painful to go through those lessons. But on the other hand, I also wouldn't have had the idea for Koho had I not gone through those lessons?

Chris Parker: Oh, good answer.

Max Lock: So, I don't know. There's no shortcut to learning these things.

Chris Parker: Sure. Right. Right.

Max Lock: The best thing, I probably would have asked more questions. I probably would have asked more people who were in my shoes, that had businesses that were shipping regularly. But the challenge is, you can't really go to your competitors and say, "How do you ship your goods?"

Chris Parker: Right.

Max Lock: So, there's not really a community of shippers that are sharing the know-how.

Chris Parker: There's no convention. Right.

Max Lock: So, I would really ask questions and find a provider that cares about your business.

Chris Parker: Mm-hmm. Absolutely. Yeah. Going forward, what would you say that the... I mean, LTL has gone through some changes this year because of the pandemic. It's a very unique service that is needed by a very unique customer. What would you say are the lasting impacts that the pandemic will have on LTL going into the future?

Max Lock: I think a lot more people are realizing the importance of LTL freight.

Chris Parker: Mm-hmm.

Max Lock: I think supply chain on a whole, across the nation, has really been elevated about how important it was, where before it was just a behind-the-scenes thing. I think LTL is going to be more important for a couple of reasons. One, I don't think E-commerce is going to slow down anytime soon. So, people are going to continue to buy things online. To me, that seems like a fairly safe bet.

Chris Parker: Yeah.

Max Lock: With that, you're going to have larger items that are shipped. People order a sofa, people order a piece of machinery online, that stuff has to get shipped somehow. And that's more freight that is going to be in the LTL network. I also think that there's certain capacity strains. Like I mentioned, there's no easy flip of the switch for these things to go away. And so, I think we'll see a lot of carriers rethink their networks, and see, "What freight do I want to handle? How do I price that freight? How do people interact with my business? Do I get more bookings online? Do I become much more dynamic in my capacity? Do I provide greater visibility?"

Chris Parker: Mm-hmm.

Max Lock: I don't know what all those things look like right now, but I think that's something that the pandemic has really accelerated, is these carriers having to rethink their digital footprint of how they do it. Because a lot of the carriers, yes, in LTL we're fortunate, you can get quotes online, you can book online, you can do many of these things through APIs. There's still a lot of the parts of the puzzle that are not available digitally. If you want to change an address. If you want to get a copy of the invoice. If you want to pay. Those things aren't quite automated yet. And I think the pandemic has shown that we will see an acceleration of these items.

Chris Parker: And I think another thing too, was the wisdom of someone on the other side of the screen, helping you along as you are trying to figure this stuff out. If I were to go and try to book a shipment, I'm sure I would have a ton of questions. So, it is very comforting to know that there would be someone on the other side who was able to guide me through it. Well, thank you so much for your time today, Max, talking me through this. If anyone wanted to get into touch with you, or have more questions, learn more about Koho, or your thoughts on things, or your thoughts on LTL, where would you direct them?

Max Lock: Yes. So, we've designed a platform to be as self-service as possible. So, best place to start is gokoho.com. There's a signup button in the upper right-hand corner. We're also here if you want to talk to us. You can find the phone number on our site. You can also shoot us an email, fill out the form on our site. We will get back to you super quickly because we know response times matter.

Chris Parker: Oh, yeah.

Max Lock: But, we also want to make it as easy that, you can sign up, get a quote, book a shipment within minutes, and never have to talk to someone if you don't want to.

Chris Parker: I appreciate it, Max. Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.