We sat down with Forager CEO and cross-border freight veteran Matt Silver to talk pizza delivery, capacity, and closures.
So, what were the biggest changes we saw in cross-border shipping in 2019?
Closures. A lot of closures. US Xpress closed their Mexico branch, Covenant is no longer servicing Mexico, and Celadon shut down entirely. It was like a bunch of big, devastating dominoes. A lot of supply chains had to do some serious reshuffling to compensate. With such a significant amount of supply leaving the market, costs increased for some shippers.
Did you expect those closures?
Not at that scale, and not so fast. Cross-border is one of those niches that’s difficult to service well, especially down into Mexico. There just isn’t the incentive for these big companies to build out expansive networks, or develop new capacity, or hire the experienced, bilingual people they need to run it well. Not when the domestic market is so huge and way less complicated.
In the case of Celadon it was obviously more of an issue with the organization. But with US Xpress and Covenant it was a purposeful, strategic decision. There’s a reason Forager focuses exclusively on cross-border. If you don’t have that laser focus you’re going to struggle to see returns, and you’re going to struggle to maintain the same level of transparency and service. If you want your cross-border service to be at the level of your domestic freight, it can’t be an afterthought. It’s got to be the first thing on your mind.
Speaking of Celadon, as someone who’s worked in the cross-border space for so many years, what was the shutdown like as a competing provider?
It’s hard to talk about. Thousands of people lost their jobs overnight, and while I’m grateful for the additional business, it’s bittersweet. I’m honestly still shocked, as a “competitor” but also as someone whose been booking freight since I was a teenager.
What are some other changes we saw in cross-border?
Well, I mean, politically there have been some big trade shifts. Tariffs and policy and, yeah I won’t get into the details. It’s boring-
And we’d edit them out.
-and you’d edit them out, but long story short; Chinese tariffs and now the USCMA have encouraged a lot of companies to move into Mexico. Industry in Mexico is booming, the UN even released a report specifically mentioning Mexican trade growth following Chinese tariffs. And when industry booms, so do exports.
Is US/Mexico capacity keeping up?
Yes and no, but the answer depends on who you ask. If you ask an American company who only deals with English-speaking carriers based in the US that only occasionally run south, capacity for them is in a crunch. Especially with Celadon and US Xpress and Covenant out of the picture. A lot of shippers relied on these massive outfits for their cross-border and don’t really know how to find capacity that isn’t attached to a huge carrier.
But if you ask us or other focused logistics providers, our capacity is great. We have a lot of personal relationships with Mexican carriers. We have a team full of Spanish speakers. We don’t have to stay restricted to this small pool of English-centric cross-border capacity. It’s part of the reason we can service the difficult freight, and why we can keep costs down. We’re not fighting for the same resources because of our ties to Mexico.
Do you see cross-border capacity growing or shrinking in 2020?
It’s always hard to say because freight exists in a bubble that leans on the economy at large but very much exists outside it. Given how much industry is moving into central Mexico – like the Michelin group just opened a tire factory in Leon – there will be a lot of flux. The demand will rise first, there will be a squeeze as everyone snatches up capacity, but then other drivers and big carriers will see the piranhas in the water and say “oh, there’s something there” and rush in to get a piece. At the end of the day it’ll equal out and reach a new balance.
We’re lucky to avoid the scrambling because we’re already there. We tout “don’t feel the crunch” because we mean it. We’re not in the water getting crushed in the feeding frenzy, we’re watching from the shore with a fishing rod.
That’s a pretty dark metaphor.
Yeah it got away from me there. Either way, I see capacity trending steadily upward while prices fluctuate accordingly.
What recommendations do you have for shippers to compensate for those price and capacity fluctuations in 2020?
I’m pretty partial to using Forager, but aside from that, I’d recommend they plan ahead. If you know you need something delivered at a certain time in a certain place, don’t wait to plan the load and find a provider. Give yourself a cushion. Living and dying by estimated delivery times is impossible when you’re at the mercy of the border.
I’d also say do your research. It can be difficult because it’s not like there’s a Yelp for carriers and 3PLs, but you can always ask around. Logistics is a small world. Chances are good you know someone who knows someone who’s used the company you’re considering. Nothing’s better than a referral if you want the truth about a service. It’s true for everything from haircuts to trucking companies.
Visibility Across the Border
So you’ve mentioned Forager a lot.
Well, I am the CEO. And this is an article for our website.
Fair. Can you tell me a little about where you see Forager going in 2020?
I see us growing, obviously. We’ve already grown from three founders working in a home office to 30+ fulltime employees in about a year, so I see that trend continuing. We’re hiring by the way.
But more than that I see our platform expanding. We’re constantly adding new features and updates to SCOUT by Forager to give customers the best experience possible. We’ll continue investing in our tech to improve user experience and automate processes that will drive cost down and improve service, especially visibility.
Why “especially” visibility?
Okay, I have a lot to say about that so buckle up. In the US we have ELDs. We use GPS for everything, and there’s this expectation that everything can and should exist online. If I order a pizza, I can watch the driver get closer and closer to my house and know within a few minutes when it will arrive. It’s that granular.
And if we expect minute by minute visibility for a ten-dollar pizza, we demand it for a $50,000 for a shipment of $50,000 worth of automotive parts or $250,000 worth of TVs.
And you see that kind of minute by minute visibility it in the US. There are a lot of companies who can provide that kind of pizza delivery experience for domestic shipments. There are even some companies who can do it for Canada.
But Mexico is a different ballgame. I hate the myth of Mexico as some third world country, because that’s not the issue. It’s just different. They don’t have the same laws, for better or worse, so you don’t get the ELD tracking like you do in the US. So many brokers and shippers just throw up their hands and accept that they can’t know with any level of certainty where their freight is once it crosses the border.
Customers don’t know where their shipment is?
They have no idea. Typically you get one “your load has cleared the border!” update and then radio silence until delivery. You can try to keep calling and calling for updates, but even then there’s a language barrier issue that can throw a wrench in even the most diligent shipper’s plans.
But I don’t accept that. I want that real-time tracking. I want the pizza delivery experience. So we’re changing the expectation with SCOUT by Forager.
We give real-time updates, and we’re providing that insight through the portal. You just log in and there it is. It’s one of the things we really push for and care about perfecting because we want it to be just as easy to ship a truckload from Oaxaca to Detroit as it is to ship from Dallas to Atlanta.
I think visibility is one of those obvious final frontiers for cross-border. The other being instant pricing.
So how does Forager provide instant pricing?
That’s a secret.
(The secret is experience, pricing algorithms, and our incredible development team.)