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LTL Technology Deep-dive with Lance Healy
47 Plays21 days ago
In this episode, Lance Healy, Co-Founder and CEO of Freight Facts, joins Host Brian Glick, CEO of Chain.io, to discuss:
- Lance's journey into LTL technology
- The evolution of APIs in freight
- AI and automation in freight
- FreightFacts freight scoring
- The future of LTL and industry standards
- Balancing work and life as a founder
Lance Healy is the Co-Founder and CEO of Freight Facts, the industry’s first data driven shipper scorecard relating to LTL shipping location attributes and behaviors. Prior to Freight Facts, Lance served as the VP of Innovations at Optym, that focused on developing applications for LTL Carrier line and P&D optimization. Prior to that, Lance was the Founder and President of Banyan Technology that pioneered API connections to LTL Carriers in the late 1990’s. He was awarded a US patent on LTL Carrier Dynamic Pricing in 2017.Lance serves several positions on numerous industry associations including the CSCMP, Center of Excellence chair of Technology and Awards committees, and serves as a chair of Digital LTL Council workshops defining the next evolution of efficiency through APIs.
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Transcript
Introduction and Early Career
00:00:01
Speaker
Welcome to Supply Chain Connections. I'm Brian Glick, founder and CEO at Chain.io. On this episode, we're going to speak with Lance Healy. Lance is a longtime technology expert in the LTL space. He's launching a really cool new product in the upcoming months, and I'm very excited for us all to hear about it and for you guys to get to listen to me learn about something I know very little about. So I hope you enjoy the episode.
00:00:31
Speaker
Plants, welcome to the show. Thanks, Brian. yeah Just tell us how you got into this and why you stayed. Yeah. Well, like everyone else, I lost a bet. No, I actually had another company that was arbitraging construction materials in the mid to late 90s in the dot com boom era.
00:00:52
Speaker
And we were taking advantage of massive pricing discrepancies and were double blind bill of lading, buying anonymously, set up a marketplace. And then I had to coordinate all the freight. I'm like, how hard could it be to coordinate freight to a construction site with double bind bills of lading?
00:01:09
Speaker
um and and And so it began. And so that business really gave rise to a lot of commercial industrial stuff. So heavy LTL, we actually couldn't afford the SMC license, SMC3 licenses to get the Czar tariffs. So we're like, hey, we know the internet. Let's just create these new things called APIs and build those directly to the LTL carriers. And then we can just get our rates directly.
00:01:39
Speaker
That must've been a
Building API Solutions
00:01:40
Speaker
journey. Yeah, it was. I mean, it was back where, you know, very few trucking companies could spell APIs, but we kind of the first ones to build those. And we just did it for our own use back in 99. And then a bunch of our customers said, wow, how did you do that? And we said, we just built this thing. And they're like, could we use that and put our account numbers in? We're like, yeah, I think so.
00:02:06
Speaker
And then we struggled to figure out, hey, we should charge for this. And so in 2001, we launched abandoned technology. And we just said, let's just charge $100 a month you know because we're still doing construction materials. And like four years later, somebody called us a SAS model. And I was like, would you call me? I've never heard of that before. um and And then 2001 hit, commercial construction absolutely just took a dive after 9-11. And so we just decided to pivot and said, hey, let's leverage this little new tool that we built and let's switch from construction material exchange to freight connectivity software. So that's, it's always really cool when those things happen. And I appreciate that you
00:03:00
Speaker
did not do something that a lot of people who start companies do, which is make the story sound like you did it on purpose. Oh yeah, no. Like that's a very common thing though, right? yeah Not to get geeky, but to like retcon your own story, right? Like kind of, oh yeah, and know we we always wanted to be in the LTL trucking pricing market, but yeah we started buying construction, right? Yeah. it was let's let's with It was a pivot from one desperation to another.
00:03:28
Speaker
And you know, it worked out and just fell in love with logistics and the LTL
AI and Market Adoption
00:03:34
Speaker
especially. So it's kind of where I carved out my niche and made my home. So I was having a conversation yeah a couple of days ago with someone about AI bots and or agentic AI or whatever we want to call this. I'm not going to ask you a question about AI technology, but the thing they said to me was in the freak brokerage world,
00:03:54
Speaker
this is moving very fast. And where I spend most of my day, which is in the international world, it's not quite as fast. And the same thing happened with APIs, right? So you were there for that journey, yeah right? And like an international, like like I'm literally still trying to get major freight forwarders to have published APIs in the international space. Why do you think those markets are so different in the way that they're adapting these kind of technology trends. Like what do you think is different in your world? I see the LTL space. I think it's high volume. It's how do we get more efficient at this? So there's a real desire to see more throughput. I always got the impression we work with several freight forwarders with my last company. and And a lot of those were very, it's very artisanal. That's my impression from the outsider going in.
00:04:52
Speaker
It's like, Hey, you've got, you know, freight forwarding is like witchcraft and and and in art because it's got all of these things. And so trying to automate that, it's like, well, it's kind of taking that artisanal aspect away. So that's always been my impression from the outside, but I don't know if that's true or not. No, I think there's something to that. You know, I know a lot of freight forwarders will say kind of privately, at least like,
00:05:22
Speaker
if I don't do all of these things, why am I here? It's like I'm adding value because I know these things. I guess the LTL space is more transactional, right?
Comparing Freight Markets
00:05:35
Speaker
It's more like you're doing a thing and it's a little bit more commoditized maybe is a fair way to put it. Yeah, so yeah I think it's so much more complex than just truckload.
00:05:45
Speaker
Alright, which is AB b and some triangle points or whatnot, but LTL is a lot more complicated with accessories and things. It's a little more akin to some of the international, but but I think there's so many options in international and how you do things and which ports and so many different tools to play with.
00:06:05
Speaker
It will come.
Introducing Freight Faxes
00:06:07
Speaker
There's no doubt it will come. And I think where we're seeing it, the AIs creeping into LTL and those brokerage operations is in the rote tasks, the email responses, the check calls, a lot of that being automated through AI and AI voice bots. There's a ton of that stuff happening. So it'll come eventually. So what are you working on now? It's been a a couple of years since Banging. Yeah, yeah. It's been about to three and a half, four years ago. One of the things I got a patent on dynamic pricing while I was at Banging for LTL. And one of the challenges I ran into was I could tell where the LTL carriers needed more weight in a particular lane to get a direct point so they didn't have to do a brake bulk and a stop.
00:06:50
Speaker
But we couldn't tell if it was a customer I wanted that free from so oh yeah this guy has a sixty minute dwell time where an LTL carers expecting twelve minutes or they pay in a hundred twenty days yay um you know it's so that was a huge component that was missing is the customer qualification so if We're now able to, we're creating freight faxes, the name of the company, and we're essentially collecting data from all the major LTL carriers and then creating a scorecard on the shippers themselves and 3PLs. So it's kind of the mere piece of everyone's rating carriers, right? But no one's rating the shippers and holding them accountable. So the idea is it's almost like a credit score, but on freight attributes rather than lending practices.
00:07:39
Speaker
That's really interesting. I've heard this talked about for years, right? And it's like a very big panel topic of like being the shipper of choice, right? Right. Like it becomes almost a cliche at certain events, right? Yes. We can't mention them. It's fine. We're not a competitor. It's just for fun. You know, but like, why pick this problem? Like why There's a lot that comes through this and there's been a lot of LTL consolidation in recent months and years. And what that's created is an environment of, it's not quite an oligarchy, but there's definitely less carriers. So there's the ability to work with that. Like in full truckload, okay, I got 300,000 independent carriers, hard to
00:08:24
Speaker
corral those fruit flies, right? But when you have 20 to 30 meaningful carriers, you can come together and say, hey, let's create this accountability and let's improve the industry as a whole because now shippers have a history that follow them. They can't just jump from carrier to carrier to carrier, right? With these same bad practices, now you have a freight score of, you know, 430 on a 900 point scale.
00:08:48
Speaker
They're going to see that. And the the good news is, and the real intention is, it also tells you, here's how you can get better. Here's how you can improve. You know what? Your dwell times are horrible. Like, work on this. You know, here's some ass tutorials that you need to work on. Better classification. All those things result in just making the entire industry more efficient.
00:09:08
Speaker
And for me, that's super exciting because once you have a freight score, now you can build things on top of that. Now you can build in dynamic pricing that says, hey, because you have a freight score of X or Y, I'm more akin to give you a ah lane special because now we can make our operational networks more efficient.
00:09:27
Speaker
ah RFP processes get much more accountable and smoother rather than roll the dice or you know Hopefully this turns out. So yeah, I think there's a lot can come of it so so I remember doing ah RFPs as a customs broker and one of the things that would happen all the time is we would lose business that we had and because we would go into a customer and we would quote them in the ah RFP based on knowing them. yeah And we'd be like, this is the floor yeah that we're willing to go because, you know, this EDI and this and that and they go, yeah, and 87% of it's wrong. And we have the data, right? And we have to manually adjust, you know, the 87% of your shipments.
00:10:11
Speaker
And then ah somebody who doesn't know the business would come in and they would bid 30% less than us. yeah and we'd be you know And it would be like one of these, you'd be very upset that you lost it, but at the same time, you'd be like, I feel bad for the other guy. Good luck with that. So essentially you're going to put a flashlight on that a little bit so that the other guy knows not to go underbid that business. i mean i so I'm going to avoid the C word here, but like the facts of the matter. absolutely They can still underbid the business, but they know they're underbidding the business. There's some transparency there. yeah I don't think transparency is bad for anyone. you know It's going to change some practices, but it's all for the better. How much inspiration did you take from other industries or other
00:10:57
Speaker
places where scoring like this happens? um Huge. So, you know, the ah two business partners in this venture, Pat Martin and and Mark Maskin, and they've really been kind of noodling this around for for a little while. And, you know, we looked at, okay, how would we model that? How do we do that? You know, I looked a lot at credit bureaus and how they started, it actually started with tailors in England back in the 1800s that were just wanted to get rid of the deadbeat customers that went from different tailor to tailor. And that was the first concept of a credit bureau. You know, who was a real problem for those tailors in London? Winston Churchill.
00:11:43
Speaker
I've read an excellent biography of Winston Churchill and then there's a little bit deeper book. It's just about his finances that I read one time, like just about like through the course of his life, because, you know, he was kind of born into aristocracy, but not really. And like his finances always were like all over the place, ups and downs. And there'd be all these letters home when he's off, you know, in India or wherever he was coming back and being like, okay, tell,
00:12:10
Speaker
Taylor and the haberdasher and like okay give them this much money and then this much money But leave this and tell them that I need an extension. of and It was like very much that and the turn of the century Yeah, really interesting yeah and we do have a 900 point scale on the freight score, which is not a coincidence so somebody says 780 they feel pretty good about that as a score
Inspiration and Goals of Freight Faxes
00:12:34
Speaker
and Yeah. So looking at that started with some MVP, you know, 25 most important things, but really worked with a lot of the carriers to define, Hey, what are the most important factors to you? And, you know, when you're considering how to price a customer, why not just go do something completely different after bang and why stay, why stay like, let's let's get to, let's get to the, like, what makes you personally decide,
00:13:03
Speaker
I want to stay in LTL. Yeah. I honestly, um, so I used to do like 15 shows a year. It's just, uh, there's a family that's been created in this little niche market. And honestly, I love the people and I've gotten some political capital built up over the last 20 plus years. Really? That's what it was. is I just, I didn't want to leave the industry and there's so many problems to solve. I didn't have to. Yeah.
00:13:31
Speaker
outside of what you guys are doing, like what else has you excited? Oh, actually I'm super bullish on there's a a digital LTO council that has has come together over many years and has finally found a ah really great home in the NMFTA. And they're kind of a governance standard body. A lot of folks think of them like the masons of LTO, but they just create this. Okay, this is what it's going to be.
00:13:58
Speaker
we've created these tools to normalize how you communicate with all the LTL carriers that the industry has now come together and said, okay, guys, let's all get together and create a standard API connection for pickup, pre-pickup visibility in transit. And so there was 40, 50 plus people that all came together from all different roles in the industry and said, hey, if we were going to build APIs from scratch,
00:14:28
Speaker
What would we want them to do? How would they act? And then create the standard for everybody to adopt. And the most exciting part of that, and I'm super geekin' right now in LTL, but is defining standards for accessorials, defining standard for exception codes. Because now, once the industry has those standards, instead of burning a ton of IT time on normalizing those standards, we can now build on top of those standards and put some AI bots on it.
00:14:58
Speaker
and put some agents on it and stuff and say, oh, okay, I got this code. It's not, I got this code from Pitt, Ohio, but that means something different from Estes or Oak Harbor. We can now build and as an industry become more efficient, so at a advantage on differences. Well, so I was going to go there for a second. Um, one of the things in a lot of industries and you know, LTL is certainly one of them and I would actually ocean freight is another.
00:15:26
Speaker
the complexity of billing and as a surreal codes in particular is a not wonderful, but factually accurate way to make money. yeah Right? So, you know, the, Oh, my customer can't really audit my bill. And even if I'm not doing something unethical, I'm less likely to kind of have the little bit of extra money that's sloshing around in maybe some accidental, you know, and again, I'm giving the best possible few of this, but like, but like, you you know what I mean? Like, like there's, look, when you get your, when you get your cable bill or your cell phone bill and there's like the, you know, this, this recovery charge, and you're like, I don't even know what that is, you know, like,
00:16:18
Speaker
but it's You don't have the energy to fight it, right? Right. So take me behind the curtain. Like, are there people who are upset about this or? No, no, not really. ah Because there are so many people that I think the only people that may be upset about it or the freight bill and audit folks.
00:16:34
Speaker
I would imagine. Some that are adding questionable value, they find the same error every month. And instead of fixing it, they just bill for correcting it. So the hopes are that you can now correct the issue instead of just continuing to pay to fix it every month. But a lot of them are behind it as well. It's going to make their jobs more efficient and automated.
00:16:56
Speaker
So explain something to me that I have absolutely no idea about. So I don't even know if this is a valid thing, but I'm going to get and try to make a transfer from the world that I spend in. Like one of the challenges that tends to exist when I look at ocean freight audit is the structure of the quote and the contract is not very good. And therefore what you are subject to paying at the end is sometimes interpretive or carrier A and carrier B.
00:17:26
Speaker
your quote is foundationally different, especially on, you know, any kind of longer term basis versus a, you know, a one-off quote. yeah Is that same thing exist in truck? Is there like, yeah would like an are and that like an actual legitimate, I can say that and say, no, I think I should have paid this. And you say, no, I think you should have paid that.
00:17:46
Speaker
So, yeah, in LTO, we have a little thing called incorporated by reference. So, on the bill of lading, and when you engage with the carrier, each carrier has about a 300-page document that is called the rules tariff. And nobody reads it, but it's there. Now, with AI, you can set up bots and agents that would actually consume that rules tariff to be able to digest it and say, aha,
00:18:15
Speaker
you know, page 122, sub-paragraph 9, sentence 4 says, you know, you have to do this. So, that that very much exists in the LTL world and every carrier has their own rules tariff and people negotiate discounts off of a published tariff.
00:18:35
Speaker
And then can waive rules and also do a FAQ, which is freight all kinds, which for everyone who's listening, do not do that. It's just lazy padding. So you're going to pay more for everything because you don't want to actually class something. So there's your giveaway. Stop doing everything. By the way, exact same thing on ocean freight. I mean, like that's what you sit down with your carrier and I'm not going to be subject to your GRI increase this year. I want this percentage of my fuel, but I have to give you this volume on this lane and this volume on this lane, but I'm not actually going to fulfill
Complexity and Optimization in LTL
00:19:17
Speaker
those. And then how are we going to fight this and that? Yeah, exactly. Different vessel, right? Yeah. So you guys, I suspect Ocean will be coming along. We're getting there, we're getting there. What you were talking about was definitely LTL 20 years ago, where it was just, it was all kind of in the mix and a little bit of wizardry and don't worry about the invoice, we'll just argue about it at the end of the year. If you weren't doing this, what would you be doing?
00:19:50
Speaker
I'd be a full-time dad rock band. I knew you guys. Yeah. No, that just doesn't pay well. tell everyone about your harmonica? Oh, well, yeah. So, I'm, yeah, no, playing harp. Actually, I'm a drummer in a band for about 15 years, just starting our 16th year, actually. Just getting a little kid from Cleveland, Ohio. But yeah, we just play out of bars and cover our bar bill, usually. And we have a great time. But that's why we're doing our racing sailboats. But i'm I'm not good enough to do that professionally. So, that's just, that's fun.
00:20:26
Speaker
What problem would you like someone to fix in the industry besides the one that you're fixing? So I'd love to see asset neutral optimization. And I think we're what does that mean? Yeah, that's a fair question. So that is, you know, LTO carriers build a hub and spoke asset heavy hub and spoke networks with the proliferation explosion of local delivery companies. The only thing they're missing is line haul to connect the dots. So if companies that have, you know, they're in all the NFL cities, 79 different cities, they've got great PMD coverage. And all you need now is how to connect those and and with a line hall network and boom, you've got now some pressure creeping in on the LTL companies.
00:21:14
Speaker
I think it's ripe for the taking. It'll be interesting to see who kind of steps up and claims that, but the technology is there, the infrastructure is there. So take take me back through that again, but explain it to me like I'm five. Yeah, no, local carriers, there's local carrier companies that are in multiple cities, right? 20 different cities, but they're not connected. They only serve in those markets.
00:21:38
Speaker
So all of a sudden you connect those cities and I said, okay, I'm going Cleveland to Dallas. Great. I've got P and D coverage. I just don't have a line haul. Well, I can find on any load board line haul coverage and be able to do that. Similar to road runners kind of direct points network. So essentially the ability to create an LTL ah carrier out of a network of local delivery,
00:22:05
Speaker
yeah assets and then some truckload to move things between. And you don't necessarily have to own the assets and that's the asset neutral optimization piece. Gotcha. That makes a lot of sense though. Sounds a lot like freight forwarding. Yeah, right? It does. it' Just OTR in it. So, yeah, no i a lot of it. Cool. Yeah, it'll be fun to see.
Pre-launch Activities and Industry Impact
00:22:28
Speaker
Well, uh, we're running right up on the half hour here. So tell me a little bit about how people can learn more about freight facts. I'm very excited to see the feedback that you get over time from the market oh because I think it's a really interesting challenging problem. Yeah, it's gonna run the gamut of sheer terror and appreciation. But websites, freightfax.io, we are pre launch at the moment, but we're onboarding LTO carriers now and pre registering some good sized 3PLs and shippers directly. So awesome. Well, one last thing. So we are recording this on Christmas Eve. We are.
00:23:09
Speaker
I'm sure that I'm, my team will not be publishing it on Christmas day, hopefully, but that's actually right. So as someone who built, you know, substantial team and, and has, but has a,
00:23:23
Speaker
the mentality of, of someone who starts companies, like it didn't seem unnatural to either of us to be sitting here. It's not, it's not the evening of Christmas Eve. It's nine 30 in the morning, but you know, till I say, Oh, like w like, I think, I think I reached out to you on Friday and it's Tuesday now and we're already recording and we're like, there was no question either of our head that like, yeah, of course we're working and you'll probably work tomorrow in between family things and so on. As you build your team at BAMM, how do you balance that?
00:23:52
Speaker
mentality that that's very natural to you with having employees who you wouldn't expect that from. Like, how did you think about the balance of being a founder versus building a team? I don't have a question, just drop in the end there. No, no, that's okay. I think both for me and my best partner who's always, you know,
00:24:13
Speaker
We signed up for this, employees signed up for being an employee. You have an agreement of, hey, um I'm looking for your time or this much time a week, depending on what your flex schedules are. But just set your expectations reasonably and know that if you've got great employees, you want to keep them. So don't be an ass um yeah and be respectful that this is just work for them.
00:24:40
Speaker
where for you and I, this is like life and identity and everything else. Whether that's healthy or not is a completely separate podcast. Decidedly not. um but Just trying to keep that in check and just, you know, if somebody was on vacation, I do not want to hear from you. I do not want you scheduling meetings.
00:24:59
Speaker
When I had meetings, I did 12 Webexes when I was on my spring break with my kids and it was horrible. Daddy's up at the condo, not at the beach. I just did not want that you know because that's not why they're here. Yeah, absolutely. No. and I appreciate appreciate that insight. and Again, we'll get the link to Fright Facts in the show notes and excited to see the launch and I'm even more excited again to see the to see the the reception. I think it's a really important and valuable thing that people
00:25:33
Speaker
There are things that once they exist, people quickly forget that there was a world before them. Yes. Right. And they go like, of course, how did, like, how did my predecessors operate without this? Like someone who joins the industry next year will go like, yeah, like how could you possibly price something without knowing the quality of the ship? Right. And I have a feeling you're building one of those things. Right. yeah so yeah Yeah. Thanks so much for being on the show. My pleasure, man. Absolutely. Thanks, Brian.
00:26:03
Speaker
um Thanks again to Lance for an enlightening conversation and he and I always have so much fun chatting when we get to see each other at events and you know that's really the reason I do this podcast so that we can all participate in those conversations and get educated on such interesting corners of this giant global supply chain that we're all a part of.
00:26:25
Speaker
Hope you enjoyed the episode. We'll have links to Lance's new company down in the show notes, as well as some upcoming really exciting announcements here at Chain. There's going to be a new product launch coming up that you should make sure you're keeping an eye on on our LinkedIn feed.
00:26:41
Speaker
to make sure that you hear about that, especially if you've ever had any challenges of getting too much data in too many different formats from all of your different freight providers. So that's your little teaser and hope you enjoyed the episode and I will talk to you next time on Supply Chain Connections.