M&A: State of Play in Logistics

Details #

In this episode, host Karl Siebrecht speaks with Ben Gordon, Founder & Managing Partner, Cambridge Capital, about the current state of logistics and supply chain consolidation. Ben shares his perspective on the post-freight recession rebound, the increasing appetite for M&A, and the capital market factors influencing deal activity. He also highlights emerging trends in AI-driven logistics, the importance of post-merger integration, and predictions for the industry's future, including supply chain software consolidation and domestic manufacturing growth.

Key topics discussed:

• How the logistics industry is rebounding from the worst freight recession in history, and the signals pointing to a surge in M&A activity.

• With capital markets increasingly focused on supply chain investments, what’s driving shifts in valuations, and how strategic consolidations are shaping the future of logistics.

• Which areas of logistics and supply chain technology—such as global trade management software and AI-driven solutions—are becoming prime targets for M&A, and why investors are paying close attention.

• The critical factors that make or break a successful M&A deal, and what lessons can be learned from industry leaders about integrating teams, maintaining culture, and driving long-term value.

Logistics Leadership Podcast legal disclaimer

Episode Transcript #

Narrator 0:00

Welcome to the Logistics Leadership Podcast brought to you by Flexe. Flexe provides Flexible Warehousing Infrastructure, helping enterprises optimize their supply chains with flexible solutions through North America's largest network of warehouse operators. Enjoy the show. It's the Logistics Leadership Podcast with Karl Siebrecht and Ben Dean.

Karl Siebrecht 0:31

Welcome back everyone to the Logistics Leadership Podcast. Once again, I'm your host, Karl Siebrecht, and as always, I am joined by my colleague, Ben Dean. How's it going, Ben?

Ben Dean 0:41

It’s going great, Karl. It's good to see you. And what are we talking about today?

Karl Siebrecht 0:46

So today we're going to talk about mergers and acquisitions, M&A, and kind of the state of play in logistics. So if we zoom out a little bit, more broadly, in the industry, across manufacturing, industrial, CPG and technology, there's sort of a general sense that the pace of M&A is going to pick up this year and into next year, just given where we are in the business cycle. So we believe that is likely to also be the case in logistics. There have been a lot of reports that have offered that prognostication. And so we wanted to get into some detail.

Ben Dean 1:23

That sounds great. I mean, it's an exciting area in general, and especially if we're looking at an increase in frequency and size of deals happening. So who'd you bring to the conversation today?

Karl Siebrecht 1:34

Yeah, so today, we've got probably the perfect guest. Ben Gordon has been a financial advisor, M&A advisor, in logistics for close to 25 years, and he's also been on the investing side, so he's got tons of depth in this field. So let's go talk to Ben. Welcome, Ben, it's great to have you on the podcast.

Ben Gordon 1:56

Karl, thanks. Great to see you again.

Karl Siebrecht 1:58

Thank you for being here. And I thought just for the listeners, if you could just start by giving us a sense of yourself, your background and what you do.

Ben Gordon 2:07

Sure. So I'm a supply chain guy. I've really spent my life, career and beyond in the supply chain world. I say beyond because I grew up in a supply chain family. My grandfather started a truck leasing company. His grandfather started a horse and buggy business called Morgan Stern Express. So, you know, maybe I'm just missing a chromosome, but I've been a supply chain guy all my life. And so where I started was, in ‘99 I started one of the first eCommerce logistics companies. It was a SaaS TMS called 3PLex. And so we were, nobody used those words or acronyms back then, by the way, but we were pioneers in using the internet to help logistics companies automate their business. TMS, of course, as your listeners probably know, is really like an operating system for logistics companies. And so we were helping mid-sized 3PLs compete against the giants by democratizing access to great technology. And did that, raised 28 million, ultimately sold the business to Maersk, you know, to Maersk, then sold it to IBM. And then that really set me on my journey of building a string of companies in the supply chain world. And then an investment bank, BG Strategic Advisors, doing M&A for great companies in the supply chain world, like UPS, FedEx, DHL, Genco, NFI, New Breed, a variety of others. And then started investing my own money and that of partners with Cambridge Capital into terrific platforms. We were an original investor in XPO and a host of others since then. And so today, still own BGSA, still provide M&A advisory work for companies. Spend the majority of my time at Cambridge Capital focused on investing in terrific companies and then helping give them the resources to accelerate their growth.

Karl Siebrecht 4:02

Fantastic. Sounds like quite a journey. And you and I have known each other for quite a while, but I hadn't yet heard the part of your background, of your, what would it be? Your great grandfather with a horse and buggy transportation company. That's fantastic.

Ben Gordon 4:15

I thought I just got to save something new for you for next time.

Karl Siebrecht 4:19

Now I can't wait till the next time for us. Okay, so if I do the math roughly right, you started BG Strategic Advisors roughly 22, 23 years ago, and over that time period, both on the advisory side and the investing side, you've seen a handful of business cycles in the broader economy and, of course, in the supply chain, logistics sector. So with that rich perspective, give us a sense of where we are right now in the business cycle in logistics and supply chain.

Ben Gordon 4:57

So we are in what I would call the rebound phase. And if you think about it, the last three years were the worst, deepest and longest domestic freight recession we've ever seen. And it didn't just hit freight. It hit everything, but it hit freight the hardest. And you see that in the 50% plunge in truckload rates. You see that in the spike in bankruptcies trucking companies, of course, like Yellow, among many others, and brokerage companies like Convoy. So it's been a rough three years for the industry. Things are starting to come back. We believe freight rates will come up close to 50% this year, and we see M&A activity that reflects that surge in enthusiasm. I think number one factor is the rebound from the deep freight recession. But there are other factors too. Second factor is the surge in optimism you saw at our conference, the BGSA Supply Chain Conference, that we hosted in January. One of the things that we get to do is learn from all the other great CEOs and leaders like you who are there. And of course, the survey data, which is for me, one of the most interesting things, shows that more than 70% of attendees are expecting double digit growth for their companies this year, and more than 70% of them are expecting to participate in some sort of M&A or other transaction this year. So it just tells you, from the bottom up, you know, as opposed to just top down prognostication, the enthusiasm for 2025 is very high. And the last thing that I'll add is we already start to see that and the data based on some of the deal activity that we're seeing now.

Karl Siebrecht 6:44

That’s fantastic. I know we had originally hoped to record this session a month or so ago. I think it's actually better that we're doing it now, just on the heels of your conference. I was going to reference that same data and just the perspective, and for those of listeners who don't know, Ben has run this conference for over 20 years, I believe, and really attracts almost all of the top leaders from the largest logistics and supply chain companies out there. And so when you get these folks in a room and you ask them their opinions on the outlook of the industry, sort of it's a crowd sourcing exercise, but the crowd is particularly relevant because the perspective and the scope of perspective across the combined companies is really, really impressive. So thanks for referring to that, and that survey data, you know, real time in the room really reflected that. You also called out specifically the sort of appetite for M&A. Can you give a sense about like, what is driving that? Again, you mentioned in general already, hey, the freight recession is largely over, and there's optimism, sort of general business optimism. There are also kind of macro capital markets factors, as well. You know, the interest rates and the state of venture capital availability and what the LPs of VCs are thinking right now. Could you get into this, the capital market side of this a little bit more?

Ben Gordon 8:08

Sure. So if you think about what happened over the last decade, or actually even go back further. One of the reasons why I started our businesses, you know, first BGSA and then Cambridge Capital, was because I didn't perceive there were many people in the capital markets that really understood supply chain. There were people that understood parts of it. I mean, I remember when, when we were building 3PLex, my SaaS TMS company, and Morgan Stanley pitched us and said, you should take us as an investor, because we know this space well because we took UPS public, and it was like, hey, that's great, but we're not UPS. It's very different, you know, between you know, what they do and what we do. And then similarly, there were plenty of other smart people, but the actual knowledge of supply chain and technology and innovation was a gap, okay? And so my view was that there was an opportunity to build, first an advisory firm and then an investment firm that had that expertise. Fast forward 25 years later, to today. I mean, look, the level of interest in supply chain and knowledge about supply chain is higher than it's ever been. We differentiate, I believe, by knowing more, having more access, more CEO relationships, and more insight about what they care about, and being able to translate that into results. But listen, I think it's a good thing that there are more people in capital markets that know and care, and that's part of why there was such a run up in interest investment and valuation over the last several years. So I'll give you a data point. On the M&A side for supply chain services, if you took a ten million EBIT supply chain services company, just as an illustrative data point, the baseline company in you know, brokerage, warehousing, freight forwarding, 15 years ago, that company might have been worth six times EBITDA, okay. 2015 might have been seven, you know, might have inched up, you know, a little bit more, eight, okay. During the freight recession, well, actually, prior to the freight recession, during COVID in ‘21 everything shot up. And it shot up because there was scarcity. It shot up because people recognized that they needed expertise and access to capacity that they couldn't have. I mean, remember, the world ran out of everything from semiconductors to chicken to toilet paper to numerous other things. And so guess what? The multiples went up and the EBITDA went up too. So that ten million EBITDA company might have actually been a $20 million EBITDA company in ‘21 and instead of getting seven times, might have got 14 times. Okay, so now, but you do the math on that, 10 times seven is 70 million of baseline value, okay. 20 times 14, okay, I'm trying to do that quickly. That's, that's like 300 what is it, 80 million or so? I mean, it's a massive spike in value, and it wasn't right, and it wasn't sustainable, but there was this moment in time where there was this huge surge in demand. Meanwhile, on the software side, as you know, in your leadership of Flexe, that same things happen in the capital markets for software. So if you look at and actually, the public data on this is the easiest way to do it. If you look at public comps for SaaS companies, 2010, well, first of all, they didn't really, there were hardly any that existed back then. There were public markets, but there were a few, but by and large, you know that category traded at, you know, two, three, you know, four times revenue. Grew to around five times ish, again, on average for the public companies, you know, around five times by, you know, 2019. Shot up again, 2021, that was over 20 times. So again, a 4x increase in valuation. Now look, there was regression of the mean after that. So the services multiples and the software multiples all kind of came back down to the way they were in 2017, 18, 19, and so you could argue that it's not that they're undervalued now, it's that they just regress to the way they used to be. But value is a, you know, beauty is in the eye of the beholder. If you're a buyer or seller, you might have a different point of view on that. So look, I think broad brush strokes, Karl, I would say number one, surge in knowledge, you know, interest, awareness and willingness to invest in supply chain over the last 15 years, massive spike during COVID, regression of the means since then, and I think now we're about to move into the next chapter.

Karl Siebrecht 12:47

Really, really helpful, that perspective. Another question for you, in the broader sort of supply chain and logistics category, are you seeing any particular sub-segments that you think are more ripe for activity? I'll sort of, I'll highlight a couple of the publicly announced activities that are out there. You know, DSV has been looking to buy Schneider. GXO has announced that they are exploring a potential sale. RXO and Coyote Logistics. So you've got some in contract logistics here, a lot in transportation, freight forwarding. Are there any sub-sectors like particular elements of the tech stack, or particular service businesses that you're seeing more activity around, or that you think could have more activity because of some sort of underlying dynamics?

Ben Gordon 13:47

Yes. So a couple of the examples that you mentioned were, you know, big deals with big companies covering a lot of territory. I mean, for example, the, you know, DB Schenker sale, for instance, to DSV. I mean, $15 billion deal, that's a bellwether deal, you know, biggest in the sector in recent history, and certainly illustrates the activity of DSV, which is really a consolidator that's moved from number three to number two in global freight forwarding and global logistics. So wouldn't call that a niche. Would call that a broad, you know, broad range of solutions. On the other side, you know, where there are more niche, M&A activities, ideas and opportunities, and I think they fall into a few areas. One, global trade management software. One of the things that we talked about at the BGSA Conference was, if you had invested in a basket of publicly traded stocks like the S&P 500 nine years ago, okay, you would have made a little over 250% on your money, which is great, you know, you rather have 250% than no growth. But if you had invested in WiseTech Global, you would have made 3100% over that time frame. Okay, staggering, right? And the top performer in all of supply chain. By the way, a company that surprisingly few people in aggregate have heard of. I mean, even at our, you know, conference, you were there when I asked, how many people here have heard of WiseTech? Not that many hands went up, which was amazing. But guess what? I mean, this company grew from nothing to, you know what, approaching a $40 billion value business by virtue of focusing on automating global trade management, the software for customs clearance, cross border trade and a host of other global trade elements. Now, they did a lot of that organically, but also a lot of that through acquisitions, I think about 70 acquisitions or so along the way. And so that's a pretty interesting niche area. It's an area that we like, an area that we're involved with. And certainly, you know, find that to be an area where I think there's more. So I think global trade management is one. I think a second one is, look, it's the use of AI, data and analytics in order to generate more insight. I mean, AI is one of those things that everybody talks about. Of course, the level of hype is very high, but there is some reality behind it. And you saw at our conference, the winner of the BGSA Supply Chain Shark Tank was an AI company. It was HappyRobot, and they were using chat bots to be able to automate the process of communicating with a carrier, or you think you're talking to a carrier for dispatch or tracking or check calls or otherwise. But it's not really a person, it's an AI powered agent. And the demo that I think wowed a lot of people was when, you know, when Pablo held up his phone and did a demo and talked to the chat bot and said, you know, my name is Pablo, this is what I want to do, by the way, what's your name? And the chat bot said, oh, my name is Pablo, too. And, you know, I know we all like to hear people say our names, and so I think there's a little bit of, you know, psychology in that. But the reality is, using AI to automate things that are mundane, labor intensive, transaction intensive tasks, makes a hell of a lot of sense. And so look, I think there's a lot of interest in that arena, and that certainly is illustrated by the fact that HappyRobot won the BGSA Shark Tank, but also recently attracted a lot of capital from Andreessen Horowitz and others, fine. On the M&A side we see and are involved in a lot of M&A with companies that have analytics, intelligence and other AI powered capabilities, which makes them a very attractive target for other buyers. And I think you will see multiple interesting acquisitions in that arena in the coming year that reflect that. So I think that's a second niche. And then look, lastly, there are a lot of outstanding supply chain software companies that have been built over the last decade. And I think you're going to start to see some exits from companies in that realm. I mean, there were a handful that sold, but frankly, very few. I mean, Deliver sold at the top, and, you know, good for them. But most companies in this arena, most companies that, you know, were funded over the last decade, and, you know, ramped up, by and large, have been focused on heads down growth. And I think this will be a year when you start to see some of the more mature, you can't really call them a startup anymore if they've been around for, you know, eight to 10 years. But I think, I think you'll see some of those, as well. So to me, those are three themes for niches.

Karl Siebrecht 18:41

Very helpful. Very helpful. Let's turn now to another characteristic of M&A, which is what happens after the deal closes. So there's tons of literature and studies out there that basically sort of land in a similar place, which says that there's a failure rate of between, there was an article in HBR as an example, between 70 and 90% of acquisitions fail due to challenges with integration, challenges with culture, what have you. Having been in this space, and you've participated as an investor in some of these exits and as a buyer as well, what have you seen in the industry that are critical kind of drivers of success in the post deal phase of M&A?

Ben Gordon 19:37

Well, I think the number one factor is just being intentional about it and deliberate about it. And as a student and practitioner of M&A, one of the things that I've tried to do is focus on the question of who's done it really well, and what do they do right? And I was an original investor with Brad Jacobs and XPO, which grew from nothing to become a 20 billion dollar company over 10 years, and Brad has bought over 160 companies in his career. And so I think Brad probably is the best there is when it comes to this topic. And so I'll tell you what I have observed from watching Brad closely, among others, but Brad in particular. Okay, I think number one, well, number one prior to the post merger part, is be deliberate about what you want to buy. In Brad's case, he very much wanted to focus on companies that were the best in different areas. So you could be a buyer that says, Okay, I want to buy something in logistics, and maybe the company has some truck brokerage, some warehousing, some freight forwarding, a little bit of everything. Not a deal Brad would do. Brad's view was pick a category you care about and find the guy that's number one or number two, and then figure out a way to make it happen. So for example, you know, in contract logistics, arguably the top two pure plays were New Breed, which is really contract logistics for tech, telecom and medical, and Menlo. And so he bought them both. And, you know, he paid what it took to buy the business. You know, I wouldn't say that he, neither cheap nor, you know, crazy high prices. But his view was, look, pay the right price to own the best business, as opposed to a great price for mediocre business. And so I think being deliberate about what you want to buy, number one, then number two is make sure that the key people are aligned. Brad would spend a lot of time with the people going so far as to do psychographic testing. You know, Brad had, for example, like a senior former FBI agent on staff, and would do, you know, kinds of psychometrics. And you know, most companies, most people wouldn't do that. But guess what, making informed decisions about the people, however you get there, that's pretty important. So I think that's critical. I think third, make sure that the winners in an organization get an opportunity to step up as a part of the deal. So you know, you're buying a company, and let's say that there are, you know, three or four great rising stars, and they're not CEO, and they might not even be C-level, but wherever they are in the organization, make sure those people get opportunities to step up. Maybe it means that they get a promotion. Maybe it means that they get, you know, salary increase. Maybe it means they get more public recognition. You know, whatever it is, what that does is it sends a message, first of all, to the company you're buying that this isn't like Big Brother, you know, squashing the entrepreneurial spirit of the smaller company. But rather, it's about creating something better, where everybody has an opportunity to succeed. Secondly, it also sends a message to your own employees, if you're the buyer, which is to say, look, we're going to go for the best wherever that is, because, you know, as they say, talent is evenly distributed, but opportunity isn't. And so if there's somebody who's better that happens to be in the other company, great. And that's a great message of meritocracy, and I think is motivating when done properly. So I think those are some of the lessons learned in terms of acquisition success that I've seen.

Karl Siebrecht 23:21

Really compelling, and particularly given one of the primary sources and how much experience he has, that's great. So let's take this topic from the customer's point of view, so the shippers. We think that it's likely going to be the case that M&A will start to rebound here in the coming years. We know that there are some challenges in integrations and the success rate broadly of M&A again in general. What's your view? Do you think that M&A is, on net, a positive thing for shippers, whether that's due to, you know, the logistics company getting more scale and being able to serve customers better, or the buying company getting more or better technology infused into their platforms, maybe earlier than they could, and that creates benefit for shippers, not to lead the witness. But what's your take? Is M&A, on net, a positive thing for the end customer, the shipper?

Ben Gordon 24:31

I think done properly, absolutely it is. And I think the sources of benefit for the customer, for the shipper, are as follows. I think number one is, you get a more comprehensive solution if it's done properly. This is a fragmented industry. You know, top 50 companies in logistics, for example, control only like 50% market share. And so what that means is you have lots of companies who are providing point solutions. And if a customer can benefit from a partner that's providing him or her with more in an integrated way, that's terrific. A classic example that would be, customer of XPO in 2011 was really using the Express-1 Expedited Service. Two years later, they might also be using Intermodal, which the Pacer acquisition gave them; contract logistics, which New Breed gave them a couple years after that, could include the Menlo contract capability, the Conway LTL capability, and a whole host of others. Now, has to be done right, I mean, there's a right and wrong way to do it, but done properly, customers benefit for more scope. A second source of value for customers is better pricing. I mean, let's face it, if you look at the pricing, for example, of RXO, which has, you know, spun out of XPO about three years ago, versus where, say, the Express-1 business was, you know, in the beginning, pricing has gotten better, it's gotten more competitive because XPO and then RXO is able to take cost out, thanks to the synergies. And so if you take cost out and you keep some for yourself in the form of a higher margin, and you share some with a customer in the form of a lower price, great, you know, that's a win as well. And then the third is, frankly, better people, better talent. Just to come back to the prior part of the conversation, Brad was very deliberate about recruiting outstanding people from wherever they were, including outside the industry. Guess what? It's a lot easier to hire those outstanding people if you can pay them more. It's a lot easier to pay them more if your business is bigger and if it's public and you've got availability of stock and other tools at your disposal. And so I'm not saying that employees at big companies are automatically better than at small companies. Often it's the opposite. Often it's the people that are working for great, high growth, motivated, scrappy, entrepreneurial companies that care more and work harder and do better, but done properly, an acquirer that is very deliberate about continuing to upgrade talent, you know, is going to be able to give customers a better experience. So I think those are three critical ways, broader solutions, better price, better people, that good acquisitions can benefit customers.

Karl Siebrecht 27:20

Super. Okay. Now I’ve got a couple of kind of forward looking questions for you, Ben. So one is, if you could pull out your crystal ball, give us a sense for a prediction or two, for what you think supply chains and logistics will look like three years from now. What will be the big changes?

Ben Gordon 27:40

Well, a couple things. One, I think people are looking for bigger bundles. And so that consolidation that we talked about, that's going to continue. And so, you know the expression that people use, you know that with their suppliers, when they say, one throat to choke, which I always thought was a terrible expression, like, you know, you shouldn't be choking your suppliers anyhow, but in any event, you will see more consolidation and bigger bundles of capabilities, and M&A will be a protagonist in that. And I think that's true on the services side. I also think it's true on the software side. And that brings me to a second point, which is we have yet to really see an XPO of supply chain software. We've seen people like Wise Tech focusing on one thing and doing a great job of it. But you haven't seen somebody that's tried to roll up an entire industry the way XPO did. I think you're going to see some major supply chain software companies pursue that in their own, different ways. So I think that's a second theme and a second area to look for. And then third, look, the big wild card and the thing that everybody loves to talk about is the political side, and that is the Trump factor. And what does that mean? Does it mean that we're going to have tariffs that go up, that reduce global trade, that mean more growth in the domestic supply chain, or is that more of a negotiating tool so that, you know, we as Americans get more of what we want. You know, for example, you know, with Mexico or the tariff threats being used to control the border control, you know, reduce illegal crossings, fentanyl and other issues and it's more about the negotiation than it is about reshaping, you know, global trade. None of us really knows that. So, we'll see. My hypothesis, and it's born out by what I think some of the conversations at the BGSA conference reflected, among others, is that we are seeing more domestic supply chain growth. We are seeing companies make more domestic manufacturing investments. We, of course, saw a lot of it in the semiconductor industry. The chips hack had something to do with it, and so you know, whether it's Intel or a whole host of others building semiconductor factories, particularly in Arizona and the Southwest, but we're also now seeing more manufacturing investment activity and discussion in the south, particularly given lower labor costs, right to work state, less risk of unionization and other labor challenges that historically caused us and other manufacturers to look abroad. So I think growth in domestic supply chains, starting with manufacturing, but then cascading to warehousing, transportation and other areas. I know that's certainly relevant for Flexe. I'm sure you have a point of view on that, too.

Karl Siebrecht 30:34

We do. Okay, super helpful. And then one other forward looking thing, so you touched on AI earlier. Clearly, it's an important thing in our world here in logistics and supply chain, as it is elsewhere, you mentioned the Shark Tank winner, as well. I know you've got some specific experience in this. I was looking at my notes. You've invested in Greenscreens, which is a, I think, a leader for predictive pricing and truck brokerage. So you're in it. Where do you see the most impact of AI in supply chains, kind of in the near term? And then, if you were to sort of again, crystal ball this thing out maybe three years, where do you see AI having the most impact?

Ben Gordon 31:15

So AI is a fantastic tool for industries that are data intensive, transaction intensive and labor intensive, and naturally sounds like we're describing logistics, so it's no surprise. There's a lot of AI opportunity in this arena. Greenscreens was a great place to start, both from my standpoint as an investor at Cambridge Capital, and from the industry standpoint, because they were laser focused on doing one thing really well, which was predictive pricing. The problem that they were solving was, you know, let's say that you're a truck broker. Could be a shipper or a carrier or anybody, but if you're a truck broker, and your job is to match freight with capacity, you need to be able to on a real time basis, know, what should it cost? What's a truckload of freight from Seattle to West Palm Beach supposed to cost? So Greenscreens came up with the following idea, which was, what if we could aggregate massive amounts of data and then hire brilliant AI and ML engineers and then be able to figure out on a predictive basis, just, you know, looking at all the different data patterns, what it should be, you know, right now, you know, right this very second. Essentially, Greenscreens was using AI to let truck brokers make more decisions, more quickly, more accurately, more profitably. And I think that's a great illustration of the power of AI. I think there are other opportunities, as well. You asked about what else, you know, coming down the pike? Look, I think, you know, agent based AI, you know, like the BGSA Shark Tank, example, where you can automate functions in other areas, whether it's the check calls or discussions with dispatch or other, I think that's a second area. A third, automating inboxes and, you know, email responses because there's so much repetition. I mean, there's repetition in everything in your email box, probably, but particularly if you were, you know, in a truck brokerage office, and you know, you basically have emails coming in, they're asking patterns of similar questions. And you know, they want to know what's available in certain lanes or prices or otherwise. And so if you can use an email agent to automate that, great, all the better. So like, that's the low hanging fruit. We're going to see a lot of that over the next couple of years. The next question is, how much more can you do? Can you put together bigger bundles of solutions? I'm not one of those people that believes that technology is going to eliminate the truck broker. There are a lot of people outside the industry that say, Oh, we're just going to eliminate the middleman. Well, the middleman is a lot more than just a middleman in this industry, but it will change how truck brokers and logistics companies do their jobs and will automate more and so I believe, you know, there's the question about it, is it man versus machine? And we believe it's not man versus machine. It's not like the labor based truck broker versus the pure digital logistics company. It's more the man plus machine. It's tech enabled supply chain companies and AI will be a great way to help tech enabled supply chain companies succeed.

Karl Siebrecht 34:23

Yeah, yeah, that's great. Somebody I don't know, a week or two ago, I heard a quote of something like, Hey, AI is not going to come for your job. Somebody who knows how to use AI is going to come for your job. Well, Ben, this has been fantastic. I want to thank you again for joining us here, bringing your expertise, bringing your very deep and broad perspective, and then also your humor. It's been great. Thank you so much for joining us.

Ben Gordon 34:55

Well, listen, my pleasure. Thank you, Karl, and always a pleasure to talk with you.

Ben Dean 35:01

There's always something interesting to talk about in this space. So great conversation, as always. I was really interested from the moment you started talking about this, about is M&A on the rebound? Are we going to see a lot of action this year? And if so, why is that the case? And it sounds like Ben articulated why that's not just a guess, but likely to occur in 2025 with, on the one hand, you've got optimism, whether that's shippers, consumers, etc. There's a lot of folks out there. He cited this conference where they said M&A is going to happen this year. And number two, I think we've got a different cost picture in the freight space. He mentioned how domestic freight rates are going up double digits this year. But we've also got an import situation, not just impacted by tariffs, but new ILA agreements that are increasing costs, so customers are looking for solutions to bring costs down, and M&A is one way to get there.

Karl Siebrecht 35:55

Yeah, that's right. I think he did a really nice job bringing some clarity to those drivers, as you said, of some optimism. What else jumped out at you from the conversation, Ben?

Ben Dean 36:04

For me, I'm trying to think through the logisticians' eyes of where this brings value to me. How am I, as a shipper, getting a package from point A to point B, improving things as a result of M&A activity, and going into it, I heard Ben sprinkle in where they're bringing value through all these different deals and examples. But maybe, Karl, you have a better way of putting a bow on just exactly what customers are getting through all this activity.

Karl Siebrecht 36:30

Yeah, that's great. I'm glad you highlighted that part of the conversation. I would sort of summarize it in two buckets. I think shipper value comes from the scale dynamics. So a buyer, an existing logistics service provider, as an example, can add product B, product C, product D, to their portfolio, and it brings scale for the shipper. A shipper can get more of a complete solution from fewer service providers. So I think that's one driver of value for shippers, he mentioned XPO as an example there. I think the other bucket or category of value for shippers is accelerating technical innovation. So can an incumbent service provider or a larger company further accelerate their invention, their innovation through M&A. Can they build it? Can they buy it faster than they could build it by buying technology companies out there that are on strategy for them and can develop better, faster, oftentimes cheaper solutions for their shipper customers via M&A.

Ben Dean 37:37

Yeah, I'm really excited about the tech piece of that, because I think most folks in 3PLs and supply chain provider positions, they're seeing a higher barrier entry to technology at the same time that table stakes are having that technology for your customers. So how do you deliver that? Do you buy it? Do you build it?

Karl Siebrecht 37:57

Yeah. Well said. Well Ben, hey, this has been great, as always. I appreciate your partnership on this, your commentary, and I also want to thank once again, our guest, Ben Gordon, for spending some time with me.

Ben Dean 38:09

And thank you, Karl, and thank you to all of our listeners. We're hoping that this continues to be informative, interesting, thought provoking discussions with our guests. Let's keep the conversation going

Narrator 44:39

You've been listening to the Logistics Leadership Podcast presented by Flexe. The opinions of the guests aren't necessarily the views of their company. If you'd like to learn more about the podcast or join the Logistics Leadership community, check out this episode's show notes and visit flexe.com/logisticsleadershippodcast. Keep the conversation going. Email us at leadershippodcast@flexe.com. The Logistics Leadership Podcast features original music by Dyaphonic. The show is produced by Robert Haskitt with Jeff Sullivan, Ben Dean, and Karl Siebrecht. Thanks for joining us.