Working through challenging situations teaches teams a lot of lessons. The pandemic taught supply chain teams about the value of options, the importance of getting to market quickly, and the dangers of having an overly complex, elongated supply chain. At the same time, it demonstrated the difference that can be made by having strong relationships and actionable transparency.

Frank Dreischarf is the Senior Vice President of Supply Chain Solutions and LTL Operations at R2 Logistics. He has over 20 years of experience in supply chain distribution and has managed more than $200 Million in transportation spend. Frank has always believed in the power and importance of relationships, from his first post-college role to today.

In this episode, Frank joins host Scott Luton to speak about several topics where he has a lot of professional passion:

• How he and his team apply their expertise and high service levels to help small to medium-sized companies optimize their LTL spend

• The current status of global supply chain operations, with a special focus on doing business in or with China

• Why operating a 3PL is like being in the ‘headache elimination’ business, and why he appreciates being able to fulfill that important role for his customers

Scott Luton (00:00):

Hey. Hey, good morning, good afternoon, good evening, wherever you are. Scott Luton with you here on Supply Chain. Now, welcome to today’s show. Now we have a great discussion teed up here Today. We’re gonna be diving into a variety of topics, including some of the most pressing topics in the current challenging supply chain landscape. And we’re also gonna touch on the power. It’s one of my favorites here, the power of integrity and trust in building relationships these days. So, hey, what’s old is new again. Right? But with that said, I want to, uh, introduce our featured guests here today. Please join me in welcoming Frank Dref, senior Vice President of Supply Chain Solutions and L t L operations with R two Logistics. Frank, how you doing?

Frank Dreischarf (00:41):

I’m doing great, Scott. Thank you for having me. You

Scott Luton (00:44):

Bet. Have, I’ve enjoyed our, our pre-show discussion. We talked a little bit of golf, a little bit of football, uh, gotta know you a little better. I, I, I can already tell Frank, your sense of humor fits in perfectly here at Supply Chain now. So welcome to the show,

Frank Dreischarf (00:57):

<laugh>, is that gallow’s humor that, that, that dark humor that says everything in the world’s gonna end real quick. And, and we might as well just enjoy the show.

Scott Luton (01:05):

Uh, you know what, uh, on that note, uh, uh, we talk a lot about how incredibly important, uh, maintaining a healthy sense of humor has been, uh, and, and how important it is to get through these, these challenging times we all faced. So, uh, great to have you here, and I kinda let the cat outta the bag a little bit, right? Because before we get into the, the, the really good stuff, I wanna talk about this golf habit of yours. <laugh>, you’re a big golfer. I think you’ve got four kids. A lot of them play golf. Yeah. Right? So, so what has been one of your favorite courses to play and why?

Frank Dreischarf (01:39):

Well, my absolute favorite round of golf. Uh, uh, 12 years ago, my father and brother and I had the opportunity to go over to Scotland. Uh, we played seven and a half rounds of golf in five days. And there is nothing in this world that beats walking up the 18th fairway of the old course at St. Andrews. Um, and with your, with your, with your father and your brother, with your best pals, uh, it was an absolute treat. I, I get chills just thinking about it now. It was my favorite day on the golf course. We played the, uh, the oldest 27 holes of golf you can possibly play. We played 18 at the old course, and then we drove down to Edinboro and played a nine hold track called Old Muscle Bro. And it was an absolutely beautiful day, and I’m telling you that there’s nothing that beats walking up 18, getting your picture taken on the Swen Bridge, uh, with your best friends, man.

Scott Luton (02:39):

Frank, you giving me chills? Uh, you paint a gorgeous picture there and, uh, I, I, no wonder, I bet that’s the day you’ll cherish for the rest of your life and a trip, uh, on top of that. Um, alright, so let’s switch, switch gears. I’m, I’m, I’m curious now that you’ve got my, my, um, my blood going, my juice is going, talking golf. So you’re a big football fan, uh, big, uh, the Ohio State, um, uh, football fan. So the Horseshoe, of course, most of our listeners be familiar with is one of the best places to take in a college football game anywhere. What is one of your favorite experiences at o uh, at a Ohio State, uh, football home game?

Frank Dreischarf (03:20):

Well, uh, two of my least favorite experiences were getting maced for storm in the field. Um, they kind of take that serious. Uh, but my absolute favorite experience, uh, in the shoe was when Ohio State played Michigan. We were number one, number two, it, it was essentially the national championship game before the national championship game. And it was absolutely rocking. There was a, probably 110,000 fans inside of the stadium, and probably another 200,000 outside of the stadium that just showed up to tailgate and, and, and, you know, watch the game on their TVs and whatnot. But it was the single greatest football experience I’ve ever had. I’ve, I’ve never seen you felt anything like it really,

Scott Luton (04:04):

It it was,

Frank Dreischarf (04:05):

That entire stadium was shaking. I mean, just shaking <laugh>. I thought we were gonna bring it down on top of us. It was <laugh>.

Scott Luton (04:12):

So, and, and you’ve been, uh, and you’ve taken in a bunch of games, is my understanding. So for you to say that that one was the most special, and you haven’t ex I mean, that’s, that’s a, that’s how I praise Frank.

Frank Dreischarf (04:25):

Well, it was number one versus number two. And of course, we did beat the team up north, so that’s always nice. <laugh>.

Scott Luton (04:31):

All right, well, hey, we’re gonna have to have you back. Uh, it’s been a little while since we do our, uh, supply chain nerds talk sports, right? <laugh>, we need to do that show more often, but we’re gonna have to have you back and we’ll dive more into golf and football a lot more. But hey, we got, we got work to get to, so I wanna switch gears here. Uh, and before we get into, um, talking about our two logistics and what’s going on out in the industry, I wanna talk more about your professional experience. You’ve got, uh, you know, we’ve got a two decade rule here at supply chain. Now, we try not to break, uh, you know, we don’t wanna date ourselves, but you’ve got more than 20 years of experience in, uh, the supply chain industry, right? Yeah. So, tell, talk to us, um, prior to your current role at R two Logistics, what is one other leadership role that you’ve held in the ministry that really shaped your worldview?

Frank Dreischarf (05:18):

Well, I gotta tell you the, the, the role that really shaped my leadership style and, uh, and how I view, uh, managing people and, and leading people was right outta college. I, I, I came out of the Ohio State University after spending the better part of the nineties there, um, <laugh> and, uh, six, better part of six years. Um, but, uh, I went to work for a company called Overnight Transportation. They were the largest non-union L t L carrier operating in the United States. And I was put in a role as a doc supervisor where I was, I was managing people who had literally been doing their job for longer than I had been alive.

Scott Luton (06:07):

Wow.

Frank Dreischarf (06:08):

And I was one of only two college graduates, uh, in that operation. And it was one of the most humbling experiences right out of the gate. Uh, and what I learned very, very early on, like pretty much within my first couple of days, is how much I really didn’t know Hmm. And how much I could learn from the people around me, including the people that, you know, I was, I was supposed to be managing. Uh, it taught me a lot about building relationships. And I had, uh, a terrific mentor there who gave me some of the best advice I had ever I’ve ever gotten to this day. And that is, you don’t measure the success of your career by how well you do. You measure the success of your career by how well your people do. And that is something that, um, I’ve held very near and dear to my heart since then.

Scott Luton (07:04):

Uh, Frank, I love that story, and I can, I can picture you, uh, I think a lot of our listeners, I know I can relate to, uh, some of those first couple jobs, uh, outta school and some of the situations you’re thrust in. Hey, that mentor you mentioned, uh, do you still remember his or her name?

Frank Dreischarf (07:21):

His name’s Tim Carlisle. Tim Carlisle. And he’s still a, he’s, I still consider him a very dear friend. Uh, he did me the greatest favor that anybody could have ever done.

Scott Luton (07:32):

Wow. So, Tim Carlisle, if you’re ever listening, that is, uh, that’s also how I praise and appreciate your leadership style and the impact you’re having on great people like Frank, and I bet many others. Frank, don’t you think?

Frank Dreischarf (07:44):

Oh, absolutely. He’s, he’s a, he’s a terrific leader of, of, of people. Mm-hmm.

Scott Luton (07:49):

<affirmative>. All right. Well, this keeps just getting better and better. Frank, I’m, I’m looking forward to this next section. I, I wanna, so I think it’d be helpful for our listeners if they understood better about our two logistics. We’ve mentioned them, you know, that’s your organization. So in a nutshell, tell us what the company does.

Frank Dreischarf (08:05):

So, R two Logistics we’re a top 53 PL operating in the United States. Uh, primarily truckload, L t l, air expedite, uh, those sorts of services. We got her start around 15 years ago, uh, primarily servicing tier one automotive suppliers, uh, as an expedite carrier. Uh, we essentially were the folks that you called when you couldn’t find a truck. Hmm. And that, that beginning, that, that start is still very foundational in our D N A. And to this day, uh, 25% of our daily volume is same day emergency and expedite shipments. Uh, I like to tease our head of marketing that, you know, you know, we <laugh>, you know, we, we compete with, with some folks like, you know, maybe Panther or, uh, FedEx custom critical or folks like that. Uh, they just have better marketing than we do

Scott Luton (08:58):

<laugh>. Oh, man. Frank, can we publish that? Uh, I don’t wanna get anybody in trouble. <laugh>. Uh, well, hey, uh, I love that, uh, uh, uh, 15 years of, um, and making things happen and keeping production lines going, I bet in the automotive industry, avoiding those stoppage fees. Um, so let’s, let’s, let’s talk about your role. So senior Vice President of Supply Chain Solutions and L T L operations. Tell us more about, uh, what you do in that role.

Frank Dreischarf (09:25):

Sure. So, uh, starting with L T L I re, I lead our L T L division. Uh, we’ve grown dramatically over the last four to five years. Uh, we now, uh, are are roughly in the, you know, 60 to 75 million range in, in terms of total spend. And our L T L uh, business was really came about as a start because we had a lot of small to mid-size customers, uh, that really didn’t understand the L T L space. This happens a lot. Mm-hmm. <affirmative>, um, you know, typically for smaller shippers, maybe they have a million dollars of L T L spend, uh, call it 5 million of L T L spend. They can’t really afford a professionally managed transportation department. Uh, they don’t have the headcount or the resources necessary for that. And one of the big issues inside of L T L is that, uh, L T L carriers, by and large, have an economic disincentive to educating their customers. Hmm. Uh, they absolutely love it when you make mistakes. Uh, they can make an awful lot of money in terms of unplanned accessorials, uh, rewa fees, reclassification corrected bill of ladings, things of that nature. And what we bring to the table is operational expertise, along with, you know, a high degree of service that allows us to provide to our customers that professional level of management in order to reduce their overall spend. Mm.

Scott Luton (10:54):

Frank, you’re absolutely right. I, I’ve been in that role as a shipper early in my career, and, you know, making decisions with, uh, poor decisions with, uh, spreadsheets and little bit of input from our sales reps. Uh, but, but you’re so right. And I love, uh, it seems like you have, um, you’re very passionate about, uh, countering that and doing business a far different way and, and informing and, uh, the customer as a trusted advisor to help them, uh, avoid a lot of those, those, uh, uh, bad outcomes that you mentioned. Is that right, Frank?

Frank Dreischarf (11:29):

Yeah, you’re absolutely right, Scott. The, the whole way that we add value to our customers is by helping them reduce any waste that’s inside of their supply chain. Mm-hmm. <affirmative>, and unfortunately, TRA transportation tends to be a relatively hidden cost. Now you see the cost on your p and l, right? And you say, all right, well, we’re spending 7 million on transportation, but are you spending that $7 million efficiently or not? And that’s, that, that’s literally the million dollar question. I had a, I had a customer not too long ago, uh, you know, we’re talk, we’re talking with the C F O and the COO o and I said, well, you know, how much is your transportation spend? It was around 10 million. I said, well, how much of that is inbound versus outbound versus interplant? And the CFO f said, well, I don’t know. Mm-hmm.

Scott Luton (12:20):

<affirmative>,

Frank Dreischarf (12:21):

I said, well, you’re spending 10 million, does it, does it bother you that you, you don’t know where that money’s going? He said, well, now that you bring it up, it does

Scott Luton (12:30):

<laugh>.

Frank Dreischarf (12:31):

And, and essentially our role in this, you know, in this whole endeavor is to provide transparency. It’s tr to provide, uh, actionable data that allows companies to make good decisions faster. Yeah. While at the same time eliminating waste from their supply chains. Mm-hmm.

Scott Luton (12:47):

Love that. Well, let, let’s keep going down that path. I, I appreciate you sharing that conversation you had with that executive team and, and the eureka moment. Sounds like, uh, y’all had there, or the C f o had, uh, what other, when you think about all the problems over the last 15 years that you and the R two logistics team has had to solve, uh, for your customers, what’s one of your favorite go-to stories that comes to your mind?

Frank Dreischarf (13:09):

Well, one of my, one of my favorite ones is, uh, we have a customer, uh, they’re owned by private equity. Uh, they, they work in the manufacturing space and they have been adding businesses to that, to that company’s profile under their umbrella for about the last three years. We run all of their transportation. And one of their critical issues was whenever they brought on a new company on, you know, they’d buy a company bringing ’em under their umbrella, their integration process was incredibly slow. Okay. It took, you know, six to nine, maybe even 12 months before they were even able to start the integration process. We’ve now gone through this process with them more than a dozen times. And to get them to get their acquired business fully integrated, and on our logistics platform, we now have it down to less than two days. Mm-hmm. So, e almost immediately, once they’ve completed the purchase, they’re able to start seeing some synergy savings related to their transportation spend.

Scott Luton (14:13):

Frank, that is a powerful story. If I, and just so I’m a, I’m a little bit slow sometimes, uh, I have those numbers, right. So 6, 8, 9 months initially is what the integration was taken. You’ve gotten that down, you and the team to Two days.

Frank Dreischarf (14:28):

Two days,

Scott Luton (14:29):

Man. Okay. Um, alright. So I wanna shift gears here. Now that we, uh, we’ve got a little better feel for, uh, who you are, Frank and who your organization is, I wanna switch over to what’s going on out in, uh, industry right now. Right. Challenging, challenging time. Uh, but you know what, it always is, that’s how global supply chain works, right? Um, disruption just keeps on coming. Um, that’s one thing you can count on. So let’s talk, I think we’re gonna tackle three items, get your take on three topics out there of what’s going on in the current landscape. And I think for starters, Frank, we’re gonna talk China and global trade, your thoughts.

Frank Dreischarf (15:07):

Yeah. So if 2020 taught us anything, uh, it taught us that the entire world can change on a dime. And there are plenty of, you know, plenty, plenty of supply chain professionals, uh, who got, for lack of a better term, got hit right in the mouth, uh, when Covid happened, uh, they weren’t able to get supply, they weren’t able to, heck, you weren’t able to get boxes outta Shanghai for love or money. At one point, uh, the cost to import goods went from roughly $3,500 a container to, at one point it went up to almost $30,000 a container. Um, and what the, the fallout from that is that we are seeing a significant number of businesses try to shorten their overall supply chains. So we have seen manufacturing operations moving out of China. Uh, some have moved to Indonesia, Vietnam, uh, quite a few have moved, uh, to Mexico, where now the relative cost of labor in Mexico is even less than it is in China, uh, in some markets.

Frank Dreischarf (16:15):

And we’re seeing a significant amount of reshoring of businesses coming back to the United States. So the long story short is we’ve got about another 10 years at least, of some very significant global shakeups that are happening to the overall supply chain. Uh, the, the types of ships that are being built now are smaller in size than the, you know, super carriers that we’re bringing, you know, 35,000 EU or more over, uh, because the demand outta many of the ports just isn’t what it is. Say it’s coming from Shanghai to Long Beach. So the sad part is, is if you’re a supply chain professional options matter more now than they ever have in the past. Uh, you, you cannot put all of your eggs in one basket anymore if you’re a, a purchasing or procurement professional. Uh, uh, speed to market flexibility are becoming as important as price, because if you can get the lowest price on an item, but you can’t get the item, the lowest price no longer matters. And a lot of times lowest price does not equal lowest landed cost. And so all of those factors are reverberating throughout the supply chain. And it’s, it’s creating a lot of strain. It’s creating a lot of challenges, but that also creates a ton of opportunity.

Scott Luton (17:40):

Right? That’s right. Um, and, and you know, one of our favorite quotes here at Supply Chain now, uh, was made, uh, pretty much at the height of the Pan pandemic by a guest, and he basically said, um, you don’t have to be opportunistic to find opportunity. Right. Because a lot of folks, when you, when they, when they hear the word to opportunistic, it kind of creates a, a, a negative connotation. But to your point, there’s tons of opportunity right now. Right. A quick follow up question. And so, so Frank, my hunch is that you’re, um, a part of these, uh, due diligence conversations with a lot of your customers as they’re looking for options, looking for, um, you know, uh, procurement, sourcing, transportation, uh, tweaks and adjustments. You’re right there in the thick of things. Is that right, Frank?

Frank Dreischarf (18:31):

Absolutely. And typically those conversations start with the cost question, right? Uh, hey, we’re looking at our p and l, our, our supply chain costs, our transportation costs, our costs of goods sold seem to be skyrocketing out of control. We need to get a cheaper price. Mm-hmm. Right? And again, lowest cost doesn’t equal or lowest price doesn’t equal lowest landed cost. Right? And that’s, that’s the, that’s the sort of the big aha moment as you start going down this path. So, you know, what we view our, our role in the, in these discussions is, is helping our customers find a more efficient and more flexible way of doing business.

Scott Luton (19:15):

Yeah. Well said, Frank, and, and to our listeners, Hey, uh, you gotta look at the, the entire enchilada, the whole equation holistically. Don’t just jump at that, that, uh, that first price point you get. Right, Frank?

Frank Dreischarf (19:28):

Well, yeah, Scott, and, and I really want to, I really want to dive into that for a second. Yeah. Because it, it’s often the case that we’ll have customers that, uh, will make decisions that will suboptimize their overall supply chain in an effort to try to win in one or two categories. For instance, warehousing costs are very, very easy to understand, and they’re very, very easy to see what’s driving those costs. It’s the cost of rent, it’s the cost of people and so forth. So in an effort may be to reduce warehousing costs, a customer will say, you know what? We need to cut three heads on the dock. Mm-hmm. The problem with that is, is now all of a sudden it takes you longer to load trucks. It takes you longer to unload trucks. Now you’re getting detention and dem merge charges like crazy.

Frank Dreischarf (20:17):

Now, carriers no longer want to come to your dock because it takes ’em six hours to get loaded or unloaded as opposed to an hour and a half. And the issue really becomes, is most of your cost drivers in transportation are hidden while your cost drivers in warehousing are seen by everybody. Mm-hmm. So folks that don’t understand that you have to maximize the entirety of the supply chain means give and take in certain areas. Now, you’re an old guy. I’m an old guy. I’m probably an older guy than you are <laugh>, you remember, you remember the old stereos with the equalizers? Oh

Scott Luton (20:54):

Yeah. I had ’em one. Yeah. Well,

Frank Dreischarf (20:56):

If you’re trying to maximize the base, well now you can’t hear any of the trouble. Right. And our job is to help customers to understand that you need to make tweaks along the way without blowing up your costs in one area or another.

Scott Luton (21:10):

Oh, I love that. Uh, and when I hear, hear the word treble, it always takes my brain to an episode of the office where, uh, Andy had an acapella group called, here Comes Treble <laugh>. So, so anyway, alright. That, that is so much goodness in that last, uh, couple of minutes, Frank, and, and going all the way back to, uh, options matter more now than perhaps ever before. It’s so, so true. And another thing I wanna call out is, uh, that, that ripple effect that you mentioned, you know, you pull one lever it that balance, I think that e equalizer is such a great, um, a great example. I always get my metaphors and my assemblies mixed up, so whatev, whichever one that is. But that, you know, one decision, you gotta, you gotta take into account the big picture and, and where those, what that ripple effect will be. Um, let’s switch gears for the second time. So the first one we, we spoke about China, really global trade. What’s going on there? Let’s move into really, uh, the state of truckload and, and less than truckload markets. Frank, what’s going on?

Frank Dreischarf (22:13):

Well, right now in the truckload markets, the truckload markets specifically are, are very, very loose. Meaning there’s, there’s way more trucks out there than there is available freight. So overall truckload pricing has dropped pretty dramatically. Now we’re entering into produce season. Typically, there’s a little bit of bump in cost during, during produce season as farmers are trying to get, you know, all of their food to market their peaches and watermelons and everything else that, that my kids enjoy eating during the summer, right? Um, so right now we’re seeing, uh, uh, some, some real looseness in the truckload markets. But the thing to remember about the truckload markets is they’re cyclical. So right about the time that everybody thinks it’ll, it’ll never tighten up again and start making decisions in that direction, is also right about the time when a lot of smaller carriers start going out of business.

Frank Dreischarf (23:11):

A lot of larger carriers decide not to bring on additional trucks or additional drivers. They try to equalize for the volume that’s at hand, and then all of a sudden the economy pops or something changes, and now there’s way more freight than there are drivers. And that pendulum swings back the other way. And that circle just continues to go round and round. Hmm. So the truckload markets are very, very cyclical. We see it, uh, happen. Those, and what we’re, what we’re really seeing happen happening the most in that is that those swings are becoming more violent and they’re becoming more frequent. And the reason is, is because of additional technology. So there’s more transparency in the truckload markets than there ever has been before. Uh, shippers have a better understanding of what a lane, a particular lane should cost. Uh, carriers are having a better understanding of what those, what they should be able to charge in those lanes and what’s, and what the relative demand is in those lanes.

Frank Dreischarf (24:18):

And when you have everybody seeing the same amount of data, then you end up with mass amount of peoples making the same rational decision at the same time, which actually increases the frequency of variability because all of a sudden everybody’s saying, Hey, there’s this thing happening, like Covid or whatever, let’s all run out and get toilet paper at the same time. Right? Now, all of a sudden there’s no toilet paper for anybody. And the same happens in the truckload markets. Hey, the price in these markets are dropping, so let’s take capacity offline. And then all of a sudden there’s not enough capacity to meet the demand. So understanding the cyclicality of truckload markets is critical. And it’s really critical for folks in the C-suite, and I’m talking specifically to the CFOs, the COOs, and the CEOs over the out there, because in a tight market, they’ll see their truckload costs going up, which typically they’ll just see the transportation line on their p and l going up and they won’t understand why.

Frank Dreischarf (25:22):

And then they’ll fire a guy doing a roll like I was doing right? 10, 10, 15 years ago because, hey, your truckload costs are going way up. Well, that’s about a 700 billion universe, right? I don’t care how big of a shipper you are, you don’t control that market. But what you can control is your relationships. And if you have good, strong relationships with your transportation providers, you are honest with them, you expect honesty from them, and they provide a high level of service to you, then you need to be able to communicate what’s going on to the, to the C-suite. And in addition, you know, there are strategic customers and there are tactical customers, right? If you’ve been a tactical customer forever, you’ve been willing to cut a carrier’s throat for $5. Well, when that market swings back around, carriers have a very long memory. But if you took care of your carriers in the, in, in, when, when the market was in your favor, they still have a very long memory. Mm. So a a 10 or a 15% increase is a heck of a lot better than a 35 to 40% increase.

Scott Luton (26:34):

Frank, I really appreciate your perspective there. I wanna call out one thing in particular. Cause you know, it’s easy to partner in the good days, and that goes almost universally no matter what partnership you’re talking about. But it’s those bad days of what you do with your partners, unfortunately, to your partners that you’re talking about that, um, really speak to how strong of a relationship and what your leadership or your organization’s approach to relationships, um, really looks like. So I really appreciate that perspective. Let’s talk about the L T L markets a bit, Frank.

Frank Dreischarf (27:07):

Sure. So, you know, l t l in on the truckload side of the fence, there are tens of thousands of truckload carriers numbers almost beyond count on the L T L side of the fence, there’s maybe 50 L T L carriers really operating in the United States. And out of that, there’s really only 30 that, you know, kind of move the needle. So on the truckload side, you know, some relationships can be transactional, some can be strategic. On the L T L side of the fence, all of your relationships are strategic relationships because there are so few LTL carriers that are out there. And the weird thing about LTL is, uh, when the truck markets get very, very loose, uh, the LT and the economy gets poor. The L t L markets tend to get pretty robust. And part of the reason is, is, uh, if the economy is poor, if we’re in the middle of a recession or about to be in a recession and the supply chains are tightening up inventory, uh, spins are tightening up a little bit, folks don’t wanna order truckload quantities.

Frank Dreischarf (28:18):

They want to order L t L quantities rather than ordering a full truckload, we’ll just order the three or four pallets we need. So we tend to see L T L volumes go up a little bit. The other big piece with L T L is there hasn’t really been a new L T L carrier started in this country in probably 30 plus years. And the reason why is it is in incredibly capital intensive to start an L T L carrier these days. You know, you, the real estate out there really isn’t, there isn’t much available to purchase as far as existing terminals and whatnot. And so if you were to build one from the ground up, you gotta greenfield the whole thing. Nobody in their right mind is gonna outlay that capital for the kind of returns that they’re gonna get in ltl. So the legacy carriers are in a very, very good position if they can operate efficiently, if they can operate without damaging their customer’s product.

Frank Dreischarf (29:15):

Uh, and if they can provide great on-time service, part of our role as, as, uh, three PL is to, number one, establish very good relationships with our L T L carriers. And we have some great partners that are out there. Uh, and number two is to help them de-risk their business in terms of dealing with our customers. So we provide an awful lot of data, we provide an awful lot of guidance to our L T L partners. Our goal is really to help our L t L providers operate as efficiently as they possibly can when they’re going in to pick up for our customers. And it’s a real symbiotic relationship between, uh, our L T L carriers and our customers and getting both of those parties to understand that if we can all operate efficiently, if we can all, uh, work together to drive out, uh, waste from the supply chain, we can all make money and it’s beneficial to all of us. And at the end of the day, that’s, that’s really where we add value in the market space, and that’s how we view our role, uh, when we’re working with our, our carrier partners.

Scott Luton (30:24):

Yeah. Building a healthy ecosystem is what I’m hearing there. Um, and I bet my hunch is, um, that it creates some opportunities well may, where may maybe some of your customers, uh, can work together in, in creative and innovative ways, is my hunch as you’re building that ecosystem. Um, let’s talk, let’s touch on something. So at the beginning, uh, of your, uh, some of your truckload market observations, you’re talking about technology and transparency. Um, and that, that’s the third topic I wanna talk with you about because, uh, while there’s, there’s more of it now than there has been, and we’re seeing some shifts still, to your point that you’re talking about in the pre show, there’s still a big gap, uh, to bridge. So, so talk, talk about technology and transparency out, out in the transportation world.

Frank Dreischarf (31:11):

Sure. So, you know, from a technology perspective, roughly 90% of the businesses operating in the US do not have a transportation management system, do not have a T m S system, especially smaller shippers. So we’re talking about folks with, you know, maybe a million spend up to a 10 million spend who are still operating their business off of Excel spreadsheets or bless their hearts, or, or trying to fax things to folks like, um, if you’re still using a fax machine in 2023, um, you need help. You need a lot of help. Um, and we see <laugh>, and believe it or not, we see that a lot. Uh, we see oftentimes that transportation decisions are being made by Sally in the office who basically works in accounts payable and well, you know, she, she pays the bills to let her talk to those truckers or Tim on the dock who, you know, doesn’t really understand anything about transportation, but he drives a mean forklift.

Frank Dreischarf (32:16):

And well, he, he talks to those truck drivers, let him take care of it. Hmm. And at the end of the day, we see companies all the time that are spending 10 million or more that have absolutely no tools in place to tell them where that money is being spent, how it’s being spent, whether or not it’s being spent efficiently, and even better yet, whether or not there are some opportunities to drive some of that cost out of their supply chain. And so at R two, what we did is we built a, a transportation management system. It’s specifically designed for small to medium sized shippers, and it gives them the same tools that a large or even a mega shipper might have in order to manage their, their transportation expenses. Because at the end of the day, again, you know, I, I say it a lot because it’s, it’s foundationally true. Your, your transportation cost drivers tend to be hidden in most companies. Hmm. And what we try to do is we try to shine a giant light on those costs so you can see exactly what’s going on inside of your business and drive out the waste.

Scott Luton (33:26):

You can’t manage what you can’t see, right?

Frank Dreischarf (33:30):

If you’re, if you’re not measuring it, you’re not managing it. Yeah.

Scott Luton (33:33):

That’s even better, better quote. Uh, and I love Frank, I didn’t think, uh, you said, bless their hearts. I thought that was, uh, I didn’t know that was an Ohio thing too. So I <laugh> some of our favorite phrases around here. So I love that. Um, and, and finally that little factoid, or maybe big factoid, 90% of businesses still, uh, generally speaking are not using and leveraging t m s transportation management systems, 90% huge opportunity, Frank,

Frank Dreischarf (34:05):

Absolutely massive. Uh, we’ve seen, uh, a ton of growth on, on our technology platform because of that. Uh, our PA platform for, for lack of better terms, is kind of like the Expedia of ltl, okay?

Scott Luton (34:19):

Right.

Frank Dreischarf (34:20):

You’ve got an origin, you’ve got a destination, you know what you’re shipping. We bring you back the, you know, 10 or 20 low, you know, 10 or 20 quotes to move your, to move your goods ranked from highest cost to lowest cost. And we tell you roughly how many days it’s gonna take to get there, whether it’s a three or four day transit lane. And then also what, you know, what are the linear foot rules associated with your shipments? Because you, as a former shipper, I’m sure, have run into linear foot rules where, you know, maybe you shipped seven pallets, you thought it was gonna cost you, you know, $1,200, and all of a sudden you get a bill for $7,000. Yep. I mean, understand why, and we see that happen, uh, uh, in conversations I have with customers every day. It’s one of the first things we look to eliminate, uh, from, from their issues, right? It’s one of the lowest, it, it’s not even low hanging fruit that fruit’s sitting on the ground, you just gotta pick it up and put it in the bucket. <laugh>.

Scott Luton (35:17):

Well, you know, there are no easy buttons in global supply chain, but man, that sounds really close, Frank, uh, the ex ex, uh, Expedia, uh, version. I love that. Um, alright. Simplicity’s a good thing, you know, and, and, and none, none of this is simple. But man, if we can, if we can bake as much simplicity, especially the simplicity that makes outcomes more successful and makes, uh, allows consumers and customers to be more informed and make better and faster decisions, man, that’s a big, big part of the game. Um, all right. So as we start to come down to home stretch here, um, I want to talk more about, you know, big theme, uh, from what you’ve been sharing is the value of relationships, right? The value of relationships. And I, and as our team was doing a little, little homework on your, um, your mo and kind of your mindset and, and some of your mantras. You believe Frank Logistics is a big time relationship based business. And if folks can’t already tell, I’ll call it out. You’re real passionate about how integrity and trust are critical factors in building those relationships. I want you to, uh, Frank, if you would expound on that and share a tip or two with our listeners in terms of how to build relationships that can truly move mountains.

Frank Dreischarf (36:36):

You know, it it, thank you for this question because it is something that I am absolutely passionate about. I was passionate about it when I was a shipper. Uh, I’m, I’m just as passionate about it now that I’m on the other side of the table, uh, working as a, as a three PL provider. And the reality is, is inside of the transportation space, there are tens of thousands of providers and a shipper’s job. A transportation manager or director of transportation, or a VP of supply chain or whoever their job is to be able to separate the wheat from the chaff. They have to be able to understand, okay, there are tens of thousands of providers out there, but when I have a problem, who’s gonna pick up the phone and solve my problem? Because at the end of the day, as a three pl, we’re in the headache elimination business.

Frank Dreischarf (37:28):

Hmm. Right? Our customers know that when they fire something over to us, when they fire a problem over to us, they can forget about it afterwards. It’s a fire and forget relationship. Right? And if you’re not exe as a, as a carrier, if you’re not executing at a very, very high level, if you’re communication isn’t, uh, absolutely spot on. And if you’re not operating with a high degree of integrity, then your customers are never gonna believe in you. And as a shipper, if your, if your providers can’t trust what you’re telling them, if you signal to your providers that you’re gonna, you know, you’re gonna cut business away from ’em because you found somebody that’ll, that’ll do it for $5 cheaper without factoring in service and the other components, well, that’s not the basis for a good relationship. The foundation of any good relationship. And I don’t care if it’s your marriage, your relationship with your kids, your relationships with your customers, or your carriers, every founda, the, the, the basis of, uh, of every relationship is founded upon trust. And that trust comes out of integrity. You have to know that when I tell you something, it’s the truth as I absolutely know it. Now, I can be wrong, but I will not lie to you. Mm, I may be wrong, but I won’t lie to you. And that goes for shippers and that goes for carriers. If one of the two are, are lying anywhere in that equation, the trust is gone and the relationships is gone. And it, you know, it takes years to build a foundation of trust and it takes seconds to destroy it.

Scott Luton (39:14):

It is so true, Frank, and I’m so glad we talked about that. Cause you and I are kindred spirits and, uh, all that you just shared in that last segment. Um, so <laugh>, I wanna go back to something you shared too. You eliminate headaches. I can’t remember the phrase you used, but you know, what came to my mind, especially as you used that Expedia comparison in the earlier segment, is, do you remember when Richie, uh, Richard Petty of NASCAR fame used to do the, the goodies powder commercials? Our two logistics is like the goodies powder, uh, when it comes to global supply chain. Is that right? Frank?

Frank Dreischarf (39:47):

Uh, <laugh>. I, I would, I would definitely love to think of us that way. We are, we are certainly in the headache elimination business and fun factoid. I had the opportunity to re to meet Richard Petty years and years ago when I worked at Ashland Chemical. We owned Vaseline, uh, motor oils and had the opportunity to meet, uh, Mr. Petty at the Daytona 500. Wow. Couldn’t have been a nicer guy. And my absolute favorite, uh, Richard Petty commercial of all time, I, it might have been an ESPN commercial, I can’t remember, but he’s teaching a driving class <laugh>. And, and here’s where you turned left, and here’s where you turned left, here’s where you turned left. One of the students in the class goes, well, when would, when do we turn right? And he goes, why would you

Scott Luton (40:31):

<laugh>? I love that. And I bet he had that trademark hat on. Oh, absolutely. Had a loy feather coming out. I, I’ll tell you.

Frank Dreischarf (40:38):

Oh, he had the, he had the hat, the glasses, and, uh, and, and just the nicest guy you ever met.

Scott Luton (40:43):

Oh man. I love that. Um, all right. So what, uh, outstanding conversation, Frank. Um, I bet you’re, do you ever get the um, uh, folks that say that they just love working with you? Cuz you always, you never know what story’s gonna come out of a frank dry, uh, dry sharps, uh, mouth. Is that, you ever hear that?

Frank Dreischarf (41:03):

Oh, I, I imagine most of my people are probably sick of hearing ’em at this point. I know my wife is, we’ve been together for 20 plus years, and pretty much she just wakes up in the morning and looks at me and tells me to shut up. So <laugh>,

Scott Luton (41:15):

Hey, Frank, you keep it real and you keep it fun and you know, the other things you keep your customers informed and you, and you, you keep the, uh, that trust and integrity, which is so paramount to any relationship and especially in global supply chain. And frankly, Frank, frankly Frank man, uh, we need a whole, we need a whole lot more of that in global business. And, you know, unfortunately, that was one of the painful lessons we learned, you know, uh, as we went through the pandemic. And, uh, we can’t forget those painful lessons. We gotta, we gotta, uh, uh, address ’em, you know, and really act on these painful lessons we learned. So industry can be truly not lip service resilient, but really resilient and we can build those successful ecosystems that you were speaking to earlier in your, um, in your, in our discussion. Is that right?

Frank Dreischarf (42:07):

Absolutely. You know, the, the pandemic taught us a lot. Uh, it taught us about the value of options. It taught us about, uh, the value of speed to market. Uh, it really exposed the dangers of having an overly complex and elongated supply chain. Um, and if, if you really look at, uh, some of the supply chains that are out there to, to bring you the goods that we use every day, you’ll have raw materials and pieces and parts that crisscrossed the globe dozens and dozens of times before they ever reach your door. Hmm. So the overall complexity of the supply chain is greater now than it ever has been in the past. And I’ve always liken the, you know, most people think about the supply chain the same way that they think about their plumbing <laugh>, which is to say they don’t think about it <laugh> until all of a sudden it doesn’t work, and then everything’s covered in crap.

Frank Dreischarf (43:08):

Right? So, and that’s kind of how the supply chain works when the supply chain breaks down, you know, that’s when, that’s when it really hits the fan. And, you know, we see that happen a lot. We, we’ve saw it happen in the pandemic, and then as we’ve clawed our way out of the pandemic, uh, we saw supply chain shortages on everything from toilet paper to food to baby formula, you name it. Mm-hmm. And the reality is, is that’s not over with yet. We’ve been, we’ve been able to stave off quite a few of, of the most recent shocks, but for sure that will happen again. And as a, if you’re a manufacturer, if you’re a supply chain professional, if you’re in the C-suite for any company Hmm. You’re not prepared in thinking about what the next round of shocks are going to do to your business. You’re not doing your job. Hmm.

Scott Luton (44:01):

Frank, excellent point to wrap our conversation around today. And, uh, I, I bet we’re gonna have some listeners, uh, that wanna connect and compare notes with you. Uh, who wouldn’t, uh, I love, man, I, I, I bet you should write a book, Frank. I bet you’ve got so many more stories. Who knows? Uh, so how can folks do just that, uh, Frank, how can folks connect with you and the team at R two Logistics?

Frank Dreischarf (44:24):

Well, I’d love for ’em to reach out for me on LinkedIn, uh, and then they can always go to r two logistics.com and, uh, find myself and any of our other executives, uh, on there as well.

Scott Luton (44:36):

Wonderful. It’s just that easy. So folks that is r the numeral two logistics.com and connect with Frank on LinkedIn. Well, hey, Frank Drek, senior Vice President of Supply Chain Solutions and L T L operations with R two Logistics. Frank, it’s been a delight really to chat with you here today.

Frank Dreischarf (44:55):

Scott, thank you very much for having me. I’ve really enjoyed it. Love to do it again.

Scott Luton (44:59):

We will, we’ll make that happen. So Frank, appreciate it. And to our listeners, hey folks, hopefully you enjoyed this episode as much as I have. I’ll tell you, Frank brings it, he keeps it real. Uh, he, he, um, he, you can tell he is been there and done it, and he is got the stories to prove it. So y’all connect with him and the team over at R two Logistics and hey, whatever you do, uh, you gotta take something there. There’s, you know, I’ve got my 17 pages of notes and talking with Frank here, lots of actionable insights that he shared, but the choice is yours to do something with it. It’s all deeds, not words, right? So, so take action with something that Frank shared here today. But whatever you do, on behalf of our entire team here at Pacha now, Scott Luton challenging you to do good, to give forward and to be the change. And we’ll see you next time, right back here at pacha now. Thanks everybody.