Justin Cramer of Proship discusses the major changes and challenges experienced by the logistics industry, and how they’ll shape its future.

 
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Danny:

– Hello and welcome to today’s IndustrialSage Executive Series. I’m joined by Justin Cramer who is the cofounder of ProShip. Justin, thank you so much for joining me today on the Executive Series. How are you doing?

Justin:

– Excellent. Thank you for having me.

Danny:

– Well I’m excited to jump into today’s episode and learn a little bit more about you. For those who don’t know about ProShip or have not heard of you, what do you guys do?

Justin:

– ProShip solves small parcel shipping complexity problems. And a lot of those problems are around speed. So if you’re a high-volume shipper, somebody shipping 1,000, 10,000, 100,000, maybe even a million shipments a day, you know there’s a lot of complexity involved there. There’s a lot of data that has to move, and it has to move very quickly or you’re not going to be able to keep up with your operators, your automated equipment, or maybe your batch processes. So that’s really what we do in a nutshell is we simplify and streamline everything necessary to actually produce the appropriate carrier label to get the package to your customer in the time they expect.

Danny:

– Yeah, and we all know now that that online and ecomm and when you look at freight with even just B2B from raw goods to manufacturer, just the whole thing with the big demand in ecomm has just created this massive demand for all kinds of technology where we’re seeing the supply chain is really struggling to keep up. And then there’s all kinds of talk about the big thing is, the holiday season comes up, what kind of strain you’re going to have on there. So I’m excited to jump into some more of these topics a little bit later, but right now, this part of the episode is I really want to get to know more about you, more about Justin and hear your story a little bit more. So tell me. Take me back. How did you get into this space? Was it something—did you go to school saying, hey, I want to go into logistics? What’s that story there?

Justin:

– No, actually I started out in the US Navy as a nuclear machinist mate. I was operating nuclear power plants at sea, had created some very good friends while I was there, and one of them got out of the military before me and ended up in the Chicagoland area doing logistics software and said, hey, I’ve got a job for you on the way out. And so we started. And we realized that well, logistics software is complicated, but not nearly as complicated as nuclear power. So we found what we thought was a pretty good niche: helping to move data, helping to select the appropriate carrier services, and apply a lot of business rules. And customers, they can get to some really complicated business rules, and I think we got lucky in the fact that we were able to simplify what nuclear power was, so we were able to help our customers using some of the same techniques, simplify their business rules, or maybe not simplify but streamline and properly hierarchy their business rules such that back in the early 2000s, they’d actually get significantly more out of the lower-powered processors that were available at the time. And it just grew from there.

At first it was all about the integration. It was all about connecting to the rest of the enterprise software stack, moving that data, streamlining those business rules like I mentioned. But it was really about helping the customer to leverage the resources that they had with computing as well as labor which is a continuous issue that we’ve seen year over year, and of course now we are in the worst of it right now, we hope. Hopefully it will get better from here going forward. But it really came down to that, so we started creating carrier components to provide a higher speed. We started creating more connection components to get to more parts of the enterprise software stack. And it’s just slowly grown from there. And so we’re just a 21-year overnight success.

Danny:

– That was going to be my next question was, this was basically started, for the most part, coming out of the navy. Is that accurate?

Justin:

– Exactly, yeah, yeah.

Danny:

– That’s quite a jump. That, I would say, that’s a very interesting story because normally you hear, you’re going to some other organization, and then—that’s pretty awesome. Obviously you’ve seen a tremendous amount of change in the industry over that time period, I’m assuming.

Justin:

– Oh, yeah.

Danny:

– There’s a little thing called technology, and lots—

Justin:

– Well it’s not just that. When you look at it all the years ago, DHL used to be the fourth carrier in the US. And now they’re an international carrier the way we think of them. However, they’re one of the largest carriers in the world. Airborne is gone. That went with DHL. We’ve seen same-day continue to be the next thing, the next thing, and now we’re starting to see it again come back in the industry as people start to basically move around a little bit more. Maybe not all work from the office, but the more work from the office we’re seeing, the more demand we’re seeing from same-day.

But there’s just a ton of changes that are continuing to go on, and probably one of the largest ones and one of the ones that of course me as a multi-carrier shipping software vendor is most excited about is we finally see the duopoly of UPS and FedEx where people are finally starting to question that and determine, can these regionals who have been around for decades, been providing reliable service for decades, can they help? Should I start introducing different modes? Should I start looking at crowd-source solutions? What type of courier should I be using? All these things. So to me we’re in one of the most exciting parts of the small parcel shipping software since we started. And of course that’s because of all the changes that we’ve seen over the last two decades.

Danny:

– Yeah, to your point there was a story that came out just a couple weeks ago of Roadie. I’m not sure if you’re familiar with them, but yeah, they’re here in Atlanta. And UPS is acquiring them, and to your point about talking about the crowd-sourcing or taking that Uber or that Lyft model, I think it is a very exciting time because you’re going to start seeing a lot of this, maybe what we call democratization of lots of change for a whole host of reasons. I think it’s super interesting. But I want to go back a little bit on your story. Going from, working on a, you said was it nuclear sub?

Justin:

– I was a sub volunteer. I ended up being on aircraft carriers.

Danny:

– Okay, aircraft carriers. I have a friend of mine who… he was on a nuclear sub. He did some of the same stuff. It was like, really? You’re in charge of this—this is crazy. Making that transition over to going into this logistics, I imagine that there was an element that, going through this, you’re kind of like, this is new. I’m not really sure. For you to be in this game that long, I would think that there’s a point where you’re like, man, I really love this. This is super cool. Did you have that moment?

Justin:

– That moment was basically my first successful install. The reality is, just like anything, when you have a good challenge and you actually complete that challenge, you get that first, in our case, production label out of the system and it goes into the appropriate carrier trailer, I was hooked at that point in time because what it meant was it meant pulling information from various components, ecommerce suites, OMSs, ERPs, WMSs, CRMs. A lot of home-grown systems are available now. All of these things, being able to navigate that complexity, being able to do that and then apply business rules such that the shipping station operators didn’t have to think of everything—we were there to support them, not the other way around. The first time that first production label came out, yeah, I was hooked. I wanted to do more, and I wanted to make it more efficient.

Danny:

– That’s awesome. That’s super cool. That’s fantastic. I love hearing stories like that. It’s almost like, hey, it worked.

Justin:

– We always thought it would work, and here it is actually live. And yes, it was a super affirming situation.

Danny:

– Yeah, absolutely. It’s only gotten a little bit more complex since then, I am sure. Going through your journey through all this, obviously you’re cofounder, and it can be very difficult. There’s a lot of challenges. It can be a little isolating, I think, at times. Is there a particular person or maybe an event in your life in this journey since the majority of it has been really with ProShip, but perhaps it’s even before that. Is there somebody that really comes to mind that you say, wow, they’ve helped me out tremendously. Again, it could be personally; it could be through business, both. Who comes to mind?

Justin:

– I’m actually a pretty voracious reader, so a lot of—somebody said that you should have multiple mentors, and they don’t actually have to be live people. For me reading Ben Franklin, reading Plato and Aristotle and all the others, reading about the various industrial leaders back during the Industrial Revolution, those things have all kind of come together in order to help give me a good background. But then, I’ve got to say, everybody that I work with brings something to the table. Even if it’s a new engineer, a new salesperson, a new marketing person, they come with information and ideas that I, in my years, haven’t had the luxury of coming across. Even talking with you before we started this broadcast started to learn a little bit, started to add a little bit to it. So there’s no one person. It’s the opportunity that everybody has provided me in order to learn from them and go forward.

Danny:

– That’s awesome. That’s fantastic. I love how you said just reading books and different things, but even outside of the industry or even business and organizations you mentioned, Ben Franklin, or even looking at—I loved reading about the Vanderbilts and the Rockefellers and looking at, what I think is super interesting is just transportation. It’s this idea of connecting people. That is still, you look at the railroads back in the 1800s or what have you. I think that Cornelius Vanderbilt, his big thing was taking a little boat and basically moving goods across this river, and he was able to help bridge—

Justin:

– Got to start somewhere, yeah.

Danny:

– Exactly. And then now you look at the internet, and it’s making these connections.

Justin:

– Making the world smaller. When you look all the way back into Socrates’s days, his world was 20, 30 miles. We move into Columbus’s day, and the world is measured in hundreds of miles. We get the transcontinental railroad, and all of a sudden for the United States the world becomes nearly 1000 miles. We go through Eisenhower; we get the interstate system. We get airplanes; we get boom. And then finally we get the internet where 8000 miles in a second is no problem. You can reach around the world to touch and communicate with somebody. So yeah, it’s all very fascinating how we got here.

Danny:

– I think it’s amazing. And fun fact, I think I read that Eisenhower, the reason for the interstates was actually a military thing so they could deploy, they could scramble planes faster. There is a certain amount of interstate that had to be—

Justin:

– Troops and everything, yeah. So literally, that was one of the things that the Germans did very well was their ability to use the Autobahn to move their light troops around the country to be able to shuffle them faster. It was a massive improvement in mobility and therefore—especially given the size of our country, putting in the interstate system ensured that if we did have to fight the last war again—let’s face it; it was built really for World War II—we could move troops from one side of the country to the other, north to south, and more importantly the logistics trains to follow them. Beans and bullets, you can’t fight a war without them, so having a way to get those to the troops was extremely important. Again, another great historical figure that has a lot to do with the reason why we function the way we do today.

Danny:

– Yeah, I think we’re going to have to make a new episode that we talk about America’s history of the industrial age. That would be super interesting. Let’s move on to today. There’s obviously a lot of challenges and a lot of things going on. What are you seeing right now are some of the biggest challenges?

Justin:

– I do not think there is a part of the logistics industry that is not suffering from a labor, materials, and backlog challenge. It’s meant great growth for us, but it’s still to the point where I don’t think there’s anybody in the logistics industry that can say we can do everything at the same speed we did three years ago. So whether it’s the backlog of ships out of the various ports that we see actually allowing us to get goods into stores and warehouses or whether it’s the labor shortage that might be in those stores and warehouses to actually execute all the way down to providing enough engineers that are well-trained in the logistics industry to apply the ever-increasing changes that customers are now realizing that they want. There’s just so much challenge with shortages right now, and it doesn’t just mean the physical labor or the trucks or, in this case now, the goods as well. But it does mean all of the people. It’s IT within our customers. It’s us onboarding engineers. It’s us having enough time to actually get things in place. It’s a huge challenge right now, and it requires some very open communication in order to ensure that frustrations don’t come to a boil.

Danny:

– Yeah, absolutely. No truer words have been spoken, that’s for sure. It’s been super interesting with all the changes that have happened in the evolution of that. How has the pandemic altered your future over at ProShip?

Justin:

– During it, like I said, it was a challenge of onboarding and communication. I think we’ve defined it as that which has made this bearable for us. I’m not going to say it’s easy. And it’s not exactly extra difficult. It’s just a lot more. That’s really what it is. On the other hand, I think going forward it has lowered the bar for logistics managers, for CTOs, for anybody in business where shipping is part of what you do to think about the fact that you truly need a comprehensive, multi-carrier solution to provide the appropriate services across the board. That really does come down to, who do you need where? You need to line-haul from one coast to another because that provides the appropriate time in transit at the appropriate cost level. Another thing that we’re seeing is there’s a ton of volatility in the market right now. We’re seeing new players coming onboard all the time. You’re talking about Roadie. Roadie, to me, isn’t new. They were in the business pre-pandemic. How many others of those have started up since 2020?

Danny:

– Oh, yeah.

Justin:

– How many of them are no longer in business? There is this new dimension, new challenge that’s going to come out as we go post-the shortage problem that we have right now once we get to the other side of that and we no longer have major capacity constraints from the nationals. Even the regionals and new start-ups have provided extra capacity, and so now we’re going to be able to get choices. With those choices there are going to be some new logistics companies that make it through and some that don’t. And I think that’s going to be the new challenge on the other side of this is actually right-sizing your logistics portfolio, making sure you’re using the right ones in the right area, and at the same time just to add another challenge to that, the consumers’ expectation of same-day, especially for high-value or perishable goods, is going to continue to increase. I’ve already got several very large retailers that, they’re looking ahead to that. They’re seeing it, and so it’s continuing to reinforce my thought process at the end of 2019 that same-day was going to be the next big thing. Little did I think any of us know what was going to happen over the last two years which, again, has accelerated different parts.

Danny:

– Yeah, it certainly has. It was definitely going that way, for sure, and then the gasoline just got dumped on there.

Justin:

– Yeah, exactly.

Danny:

– A lot of interesting challenges, for sure, ahead. You mentioned something. You said that with this, it allowed the ability to lower the bar a little bit. I’m curious; are you thinking of it from a sense of maybe a reduction of fear to be able to try those new things and to be able to say hey, we know we’ve been needing to do this, but we’re concerned about status quo? Now the band-aid got ripped off, and now it’s like—elaborate.

Justin:

– I think going from the two national carriers and the post office—the post office has never really been out of it, but let’s face it, they’re not competitive, and they’ve always been the low-cost winner. If you’re looking to rate shop, post office is always going to win. I think, to go back to your question, it is the fact that a decades-old thought process that I want to put all my eggs in one basket because that basket will provide me with the lowest cost and provide me with good enough service. I think that that has been shattered in the C-suite. I think that’s something that’s—it’s slowly been coming.

At a certain size, companies diversify anyway. But I think the reality is where that might have been 100 million in logistics spend where they start to diversify, now that number will drop, and it might be as low as 20 million in logistics spend that companies start to look to diversify. I think that movement down is really one of the things that is going to be the major thing that we see. When we reflect back five years from now, we’ll see that as probably the primary change. But then there’s going to be some—like any pendulum, it’s going to swing back and forth. Right now it’s swinging to the direction of, I’ve got 20, 30 carriers. It’s going to swing back. Do I think it’s going to get back to where customers have less than five carriers? No, I don’t think so, especially with the fact that we’re not seeing a ton of same-day services come from the national carriers.

You talked about Roadie and UPS. Well they’re going to keep that pretty separate. I think the biggest thing about that is going to be the next challenge that a lot of C-suites have to look at is, do I leverage a crowd-sourced solution? How are the crowd-sourced solutions going to differentiate themselves? Do I want somebody on their way home from work in jeans and a t-shirt delivering that package? I think each of the crowd-sourced solutions are going to come up with their own. Roadie has a lot more requirements to join, whereas a Postmates or a DoorDash may not. These are ones we’re actively seeing being used right now. Shipt is a whole other one. Are companies going to want to give their packages to a carrier that’s owned by Target? Do they want to give their packages to Amazon and actually have Amazon do the last-mile delivery? There is a tremendous amount of choice that didn’t exist even five years ago, so that means there is a tremendous amount of opportunity for what have been traditional logistics-execution methodologies to be changed for the better, I guess is what I’m trying to get at overall.

Danny:

– Yeah, absolutely. It makes a lot of sense what you’re talking about. What was the old adage? You’re only as good as your last load. Obviously with the whole resiliency piece, it’s just like we need to get stuff. Any which way, however we can, we need to get our stuff or send our stuff. I agree with you; I do see that pendulum shifting back, but it’s not going to drop, I think, too low just because everyone feels like, yeah, we’ve been burned. We’re not going to go back to that.

Justin:

– Let’s face it, the national carriers have the opportunity now to set their prices, to ensure that they hit the profit margins that they want. I’m sure that’s going to allow them to be able to accelerate growth, but there are thoughts out there that some of them are going to try to maintain really high quality and therefore really a less than value price.

Danny:

– That’s interesting. There’s been a lot of conversation about that not just in the logistics and freight space, but also even in let’s say commodities like steel. I’ve heard in a lot of other raw goods some very, very similar things. So I think it’s very interesting right now where we’re at. Cattle was another one with meat processing and particularly with beef. They’ve got some very interesting things with supply and demand. Supply is there, but the demand has been restricted for various reasons. Everyone’s talking about inflation and where things are going. I think it’s going to be very, very interesting to see what’s going to happen over the next several months, next year or two. Where are prices going to go relative to this? I don’t know. I hope that things are going to settle back down a little bit, but you’ve got to wonder. If the demand is there and things are—what’s that going to look like? I guess we will see. And kind of wrapping, Justin, this has been a really interesting conversation. I’ve really enjoyed. We’ve covered a lot of ground. My last question I want to ask is, you mentioned how you’re an avid reader. Right now, what are you reading?

Justin:

– Oh geesh. I am training a team, so I’m reading To Sell Is Human. Also, I always read a fiction book because it helps you sleep. I’m rereading Stephen King’s The Dead Zone. I am reading the 1950s manual on officer leadership from the US Army. Oh, there’s one more in there that I am forgetting. Oh, Getting To Yes, which is a negotiation book. Those are the books I’m reading right now in some various shape, way, or form.

Danny:

– That is fantastic. That is great. As we wrap up, thank you for your time. I’ll give you the last word. Do you have anything else you want to leave with our audience before we wrap?

Justin:

– I just want to have them all think about the fact that we are in an area of great change for the logistics world. I think that they should not only look at what’s necessary to get their packages out the door today, but make sure that they are starting to think about the plan after some of these capacity constraints go away. How are they going to simplify? Or are they going to stay very complicated? Just make sure that you look at that five-year plan, and it’s not the one you created in 2019 because if you created it in 2019, it’s not going to serve you very well. Take some time. Think about it. Be prepared for some of the changes that are going to happen as capacity catches up.

Danny:

– Awesome, this is great. I love it. Justin, thank you so much for spending some time with us today on the Executive Series. I really, really enjoyed our conversation.

Justin:

– Thank you.

Danny:

– All right, well that wraps up today’s IndustrialSage Executive Series with Justin Cramer from ProShip. If you’d like to learn more about their solutions—it sounds like they’ve got a lot of great ones that you might want to be looking at, especially with all the changes that have been happening and things that are going to come—go to proshipinc.com, and you can learn more about them.

Hey listen, if you are not subscribed to IndustrialSage, you’re missing out on a lot of great content like this episode that we just had here with Justin Cramer from ProShip. Go ahead and get on that list, and go to IndustrialSage.com, and you can subscribe. There’s a lot of places to do that. You may be watching this from LinkedIn or maybe listening on the podcast. But go do that because there’s a lot of great content. You can learn from other leaders, learn from other organizations, what they’re doing so you can really implement some of these things or just have an idea of what’s going on in the rest of the industry. That’s all I’ve got for you today. Thank you for watching or listening. I’ll be back next week with another episode on IndustrialSage.

 

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