2026.09.25 | GP | Trucking | Truckload Chairman: Peak Season

Season Expectations

Associated:

RXO

CHRW

LSTR

HUBG

JBHT

SNDR

HTLD

WERN

KNX

Viewpoint:

Competitor

Moderator: Matthew Brooklier (MB)

| Sep 24, 2026 | 31 Min Read

William T Kretsinger (WTK), Chairman, CEO, and Chief Customer Officer - American Central Transport

SU MMARY

Overview

The discussion centers around the trucking industry, focusing on the challenges faced by a private truckload carrier, particularly in relation to fuel costs and driver recruitment. The expert shares insights into operational strategies, market dynamics, and competitive pressures within the trucking sector.

Key Insights

The expert highlights significant cost pressures due to rising fuel prices and the complexities of fuel surcharge mechanisms. They emphasize the need for efficient fleet management to mitigate these costs. Driver recruitment and retention are critical challenges, with the expert noting recent pay increases and the importance of factors such as miles driven, home time, equipment quality, and company culture in retaining drivers. The expert anticipates double-digit contract rate increases in the upcoming bid season, driven by supply-demand dynamics and rising operational costs.

Competitive Landscape

Company/Entity

Positive Aspects

Negative Aspects

Large Trucking Companies

Benefit from fuel discounts and economies of scale

Face challenges in recruiting and retaining drivers

Smaller Fleets

Brokers

Struggle with cash flow and lack of fuel discounts

More vulnerable to market pressures and cost increases

Opportunistic pricing strategies in tight markets

Perceived as predatory, especially when capacity tightens

The expert notes that larger fleets have advantages in negotiating fuel discounts and managing operational costs, while smaller fleets face significant challenges. Brokers are seen as opportunistic, adjusting pricing strategies based on market conditions.

Quantitative Insights

Metric

Value/Description

Driver Pay Increase

5% to 7% in recent months

Fuel Cost Benchmark

10 cents per mile net of surcharge, below industry average

Contract Rate Increase

Expected double-digit increase in upcoming bid season

The expert provides insights into recent pay increases for drivers and the impact of fuel costs on operational efficiency. They also discuss anticipated contract rate increases due to market dynamics.

Conclusion

The conversation provides a comprehensive view of the trucking industry's current challenges, particularly regarding fuel costs and driver recruitment. The expert's insights into operational strategies and market dynamics offer valuable perspectives for navigating these challenges.

MB: Hello, I'm Matt Brooklier. I work on the industrial team here at Guidepoint. I want to introduce our advisor for this afternoon, Bill Kretsinger, who's the chairman and CEO of American Central Transport, which is a private truckload carrier. If you have any questions for our advisor, please email us at ask@guidepoint.com. Again, that's ask@guidepoint.com. As always, if we do receive any questions, those questions will be asked anonymously. And before we get into our conversation, I'm going to pass it to Bill and he's going to just give us some quick background. Bill.

William Kretsinger: Yes, so I'm the chairman and CEO of American Central Transport. We've got a 300 truck dry van carrier based in Kansas City. I've got 45 years experience in all facets of the business with an emphasis on pricing and sales. And that's a quick bio.

MB: No, that's great. And thank you again for doing the call this afternoon. Very much appreciate it. So I wanted to start off with something that's a little bit more topical here. J.B. Hunt came out and they pre-reported for their third quarter. The company and management highlighted some incremental cost headwinds. Fuel was one category. They also talked about incremental costs for retaining and recruiting drivers. I just wanted to hear your general thoughts. Is ACT seeing similar cost headwinds? And if so, how are you dealing with them?

William Kretsinger: So, yeah, we're a little bit different, J.B. Hunt. I think they're primarily referring to their over-the-road fleet, which is mostly purchased transportation, not so much company trucks. So, yeah, the fuel prices are probably a headwind for a lot of carriers this last 30 days, and they're probably projecting that as well as their dedicated fleets seeing increased fuel costs that they're not able to recapture.

MB: Yeah, I mean, that's more of a timing issue, right, for most fleets that have a dynamic fuel surcharge in place, though, right?

William Kretsinger: Yeah, it does affect non-loaded miles, deadhead miles, and MB: Okay.

William Kretsinger: idle time. Those are typically not recovered through fuel surcharges, so depending on the amount of idle and deadhead, yes, it can vary.

MB: Okay, so arguably a less efficient fleet is potentially going to see greater relative cost pressures from an increase in terms of fuel surcharge versus one that has a higher utilization rate.

William Kretsinger: Yes.

MB: Okay. That's a good point. I spoke with an advisor earlier this week or last week, I can't keep track here, and they run mostly refrigerated fleets and his comment was they need to go back to their fuel surcharge calculation because they found during the summer with rising fuel costs that they were seeing even greater, and it was less of a timing issue. I think it was more mechanics in terms of how they calculated their fuel surcharge. They were seeing greater margin pressure and they were attributing that to their... the auxiliary power unit for the refrigerated trailer was eating more fuel than they had calculated and so they had to go back and reconfigure things. But I think as fuel costs rise, you start to uncover parts of your operation that maybe could be a little bit more efficient than not.

William Kretsinger: Yeah. And the other thing is, depending on each fuel surcharge, if you had a weak fuel surcharge, so to speak, and you factored in the difference in your base rate, say, 60 days ago. Well, now you didn't factor it in enough, so you're a little bit exposed, because as the fuel goes up, the spread between what we consider a good fuel surcharge and a poor fuel surcharge, the spread increases. So there's some exposure there as well. There's MB: Okay.

William Kretsinger: a solution there as well.

MB: So some of the costs, right, so the fuel surcharge in its essence from a, for lack of a better word, construction perspective is supposed to cover the incremental cost of fuel, right? If fuel costs are going up, trying to insulate those swings in terms of price, but I guess your comment is a portion of the cost of fuel is also baked into the base rate that you're charging your customer.

William Kretsinger: Yeah, when we price freight, we look at each customer generally has their own fuel surcharge. We look at their fuel surcharge against what we need, and if it doesn't cover, then we build that remainder into the base rate. Well, as fuel goes up, that weak fuel surcharge gets weaker and weaker, so more is needed to be built into the base rate. And, you know, if you did it 60, 90 days ago, well, you didn't do enough. So you're a little bit exposed on that.

MB: Right. Okay. That's a good point. And so, I mean, directionally fuel has been going up, you know, since March, let's call it. Have you been going back to customers? I know you've been repricing your freight because supply demand in the market overall is swinging, you know, more in favor of the carrier versus the customer. But have you gone back specifically to customers and maybe even more recently to try to recoup whatever portion you've assigned to the base rate given the fact that fuel keeps rising?

William Kretsinger: We have not. We track our net cost of fuel after surcharge, and it's been running all year about 10 cents a mile for the cost that would normally be in the base rate before the fuel, and that's below industry. Industry is probably closer to 13 to 15 cents a mile net of surcharge. So we track that weekly just to make sure our overall net fuel costs are benchmarking properly.

MB: Okay. And so the broader impact of fuel costs and diesel at record highs, have we seen more carriers exit the market? What's your sense there?

William Kretsinger: I think you definitely will. The smaller fleets, you know, they don't get the discounts we do, and then it's a cash flow problem because you've got to pay your fuel depending on what kind of program you have with the fuel cards or the fuel stops, but you generally have to pay those within a week. If you're small, you probably have to pay it at the pump, and so you're not collecting money for 30... in our case, we average about 30 days on receivables... so you're not

collecting for 30 days, so there's a cash buildup there or cash outflow.

MB: Right.

William Kretsinger: And if you're not getting, you know, we typically average around 60 to 70 cents a gallon below the DOE retail price. If you're not getting those discounts, then it exacerbates it. And then if you're factoring your receivables, then you're going to be factoring more money and paying more interest. So, yeah, it's tough on small guys that, you know, they're utilizing factoring for their receivables and not getting discounts yet.

MB: Yeah, no, it's kind of a double whammy to some extent. If I'm a small carrier, say I have like 5 trucks, 10 trucks, I would imagine there's fuel discount programs out there, or I mean, how can a smaller carrier save money on fuel?

William Kretsinger: Well, there are some deals. Some brokers offer deals, some factoring companies offer deals, but they're nowhere near what larger fleets are getting. They're somewhat token, maybe 10 cents a mile or 10 cents a gallon off instead of our 60 or 70. So yeah, they're not at the level we are.

MB: And that negotiated rate where you're getting a 60 to 70 cent gallon discount, that you've... Those deals are negotiated directly with truck stops? How does that work?

William Kretsinger: Yeah, so we fuel most exclusively with Love's Truck Stops and we have a, what they call, they start with cost and either you're at cost or below cost discount at each stop. So that's... you've got to be buying some volume to get those kind of deals.

MB: Right. Okay. How about let's shift gears just slightly here in terms of cost headwinds and talk about the driver market, if you will. Hunt highlighted that that was also a cost headwind in the quarter. They're paying more to retain, they're paying more to recruit, they're paying more everywhere, right, for drivers. How much more competitive has the market gotten over the last, maybe let's say, a couple months? And what is ACT doing specifically? I know you pay your drivers a little bit more and you have probably lower turnover than the average, but what can you do as a carrier to try to retain or recruit or even just keep your seated count level?

William Kretsinger: Yeah, it's a combination of facts. We've had 2 pay increases this year, 1 in April, 1 in August 1st, and so that has gained some traction in our seating count. But really, it's more than that. There are 4 major components, and we just did a survey with our drivers on this, what's most important to you: miles, home time, equipment, or company culture, which is how they're treated, and it was in that order. It was miles first, home time, equipment, and culture, but you need all 4 of them, so that's what we're focusing on is making sure that drivers are productive and getting home and they've got good equipment.

MB: Don't you arguably need a greater aggregate headcount to provide your drivers with more home time, or is that if you're efficiently managing the network, you don't need more drivers to accomplish, I guess, the number 2 on the list that you just went through?

William Kretsinger: Well, ideally, you know, we hire drivers, we've got a fairly tight network that we operate in, and so we try to hire drivers along those routes so they naturally get home through the house with a load, especially on the weekends. So they're still loaded. They're just taking a break at home generally on the weekends. So that's been, you know, next to the best

is we've got some dedicated business for the drivers. They stay on loops and that's certainly the most popular lowest turnover part of our business, but we're consistently trying to refine our over-the-road routes so the drivers naturally get home or we can plan them home most anywhere in our network.

MB: Okay. Can I go back? You indicated that you did a pay increase in April and then 1 in August. Are you able to talk to the magnitude of those pay increases?

William Kretsinger: Yeah, the 1 in April was kind of a token 1 cent a mile, just to show that we're doing something, and we communicated to them that the market's turning and we're able to increase our rates; therefore, we'll be able to increase driver wages in the future. And then in August, we came back with a more significant pay increase. Some of it targeted for guys who live in the right areas, whether they run over the road or dedicated or what we call our hometown fleet. Over-the-road drivers get a bigger pay raise due to their being away from their home more, and they're more productive. The drivers that stay out and work are more productive than your hometown guys, so there was a little bit of that. And then there was a little bit of raises on non-driving activities such as detention, stop-off, and layover pay. So that was an effort to try to compensate them better for non-driving. Time, it's of no control of theirs. So far, it seems to have worked until everybody else catches up, I guess. But yeah, we've seen turnover, we've seen recruiting classes bigger, and we've seen turnover reductions so far in the last 60 days.

MB: That's good to hear. I guess how big was the August wage increase? It sounds like there was some non-driving stuff, so I'm not sure if you're able to measure that on a per mile basis or not, but I'm just trying to scale that versus the 1 cent you did in April.

William Kretsinger: Yeah, it was probably good. It probably averages out to 3 or 4 cents a mile with MB: Okay.

William Kretsinger: everything wrapped up in it.

MB: And on a percentage basis, roughly.

William Kretsinger: Yeah, the OTR driver is getting, you know, about 2 cents more than the dedicated or hometown drivers and MB: Okay. And the driver pay, if I have like a base, if I'm trying to get a percentage of how much that increased?

William Kretsinger: That would be 5% to 7%.

MB: Okay, so 5% to 7% increases of 3 to 4 cents.

William Kretsinger: Yeah.

MB: Versus a lower single-digit number in April. I'm just trying to get a sense more, you know, when we think about third-quarter earnings reports for the Knights and the Warners and the Heartlands of the world. Do we think maybe this increase in terms of driver pay, and I know rates are going up, clearly rates, contract rates are going up at a faster rate, but I'm just trying to get a sense for if it, you know, potentially dampened some of the upside, right, that you would report. If we didn't have these headwinds, but I mean, this is cyclical stuff. This is, we deal with this every cycle.

William Kretsinger: Yeah. So far at this point in the game, the increases are kind of just barely staying ahead of cost. You know, one of the things is overhead contribution. With the driver shortage, everybody's got empty trucks, but they got the same fixed overhead.

MB: Mm-hmm.

William Kretsinger: So without revenue gain or load count gain, you know, your cost-effect overhead per load or per driver is higher, so that's probably a drag on a lot of fleets. They're not fully seated; if they get a significant amount of trucks unseated, then the fixed cost is not coming down. It's still there. So that's a little bit of a drag on the cost side also. I think that's going to be probably with us for a while. I just read an article this morning that trucks are not adding, or fleets are not adding trucks. They're just upgrading to get out of the more expensive maintenance. And so, you know, I think that's a testament that they just are not confident they can get the drivers in the seats.

MB: Yeah, no, it did.

William Kretsinger: Sorry, go ahead. It's not just a driver, it's a safe driver. So that's probably where most people are. They still need more money to get back into the, you know, low 90s, high 80s ORs.

MB: Okay. Did your seated truck count change from, let's say, second to third quarter?

William Kretsinger: Yes.

MB: It got a little bit worse or?

William Kretsinger: No, I'm sorry, that second rate increase or driver pay increase was in October 1st or September 1st.

MB: End of September, yeah.

William Kretsinger: Well, let me think. We're not in October yet. It was August, that's August 1st. So 2 months after the increase, yes, our SRC account is up about 15 drivers.

MB: Okay. So that clearly had a positive impact on your...

William Kretsinger: Yeah, turnover went way down and recruiting classes got better.

MB: Okay. Okay. So you picked up some utilization in terms of having more trucks seated. You got some return on that 5% to 7% increase.

William Kretsinger: Yeah.

MB: I would imagine anyone trying to grow their fleet, that's going to be more expensive now. Like the pressure, the driver pressure to find, recruit and retain, that's more on the OT. I would imagine it's more on the over the road,

longer haul moves than dedicated, that, you know, do I have that right? Okay.

William Kretsinger: Yeah.

MB: Do I have that right? Okay.

William Kretsinger: Yeah. Most calls coming into recruiting want dedicated or local driving jobs.

MB: So the public companies with bigger long-haul or medium-haul, over-the-road type truck driver jobs are seeing the most pressure relative, like a Knight's probably seeing more pressure than a Werner.

William Kretsinger: Werner is 80% dedicated. But they still have a big appetite for drivers. You know, some of their dedicated is like Dollar General where you've got small stores and the driver has to assist on some things. And so it's not an easy, dedicated job, so to speak. They still lose drivers.

MB: Did you hear during the third quarter that Knight or Werner or any of the publics were being more aggressive in terms of trying to hire drivers? When the J.B. Hunt announcement came out and they talked to, you know, drivers being a pretty meaningful cost headwind in the third quarter, had you heard that Hunt was paying up or trying to recruit more drivers? I'm just trying to get a sense for what the conversation was. What were people talking about in the third quarter, if anyone stood out from a driver recruiting or throwing money around, if you will.

William Kretsinger: I think most fleets are trying to fill their empty trucks. Certainly the Hunts of the world, they're a big dedicated fleet, and the Werners, they continue to try to grow that business, and so they've got some opportunities in the pipeline that they need drivers for in addition to backfilling turnover. I know those fleets probably do a lot of hiring, a lot of students as well, so they're bringing in newly trained drivers.

MB: Okay, so did Werner specifically stand out as one of the carriers that was spending a little bit more money on drivers during the quarter?

William Kretsinger: I haven't heard anything specifically about what those carriers are doing on the pay front, but I assume they are.

MB: Got it. That's good color.

William Kretsinger: Yeah, one note from Warner I read where they're seeing on the dedicated freight, your increases are generally smaller because it's more attractive, consistent business. So they're saying 3% to 5% rate increases where we're up 16 cents a mile or we're up a lot more, 16% year over year. So it kind of goes with the territory.

MB: Yeah, no, I mean, they're right. They're mixed. You're going to see less volatility in terms of the increases and the decreases, right, with the market where it is.

William Kretsinger: Yeah.

MB: Decelerate. What do we think about contract rates? I know bid season is starting up towards the end of this year

and pricing being effective for a portion of your contracts at the beginning of 27. What kind of contract rate increases do you think? What's a fair range of contract rate increases for 2027?

William Kretsinger: I think we're looking at double digits depending on the customer and what we accomplish this year, but yeah, they've got to go up double digits.

MB: Okay, double digits is 10, is it 15, if you had to pick a range?

William Kretsinger: Probably somewhere in that range, depending on the customers, depending on their fuel surcharges, you know, depending on the operational efficiency of the customer, just different variables.

MB: If... let me ask you a question, if fuel was where it was at the beginning of this year, right, it wasn't, you know, the Iran conflict, if you will, hadn't started and fuel is at a more normalized level, do you think 10% to 15% would be the range or do you think it would be a lower number?

William Kretsinger: I think it would be close, maybe MB: Okay.

William Kretsinger: a little lower, but yeah, MB: Okay.

William Kretsinger: I mean, there is that cost of high fuel, so yeah, that's got to be recovered.

MB: Okay, so that the 10% to 15%, maybe there's a pinch of fuel, but the 10% to 15% mostly reflects the supply- demand dynamics or anticipated supply-demand dynamics for next year.

William Kretsinger: Yeah MB: I guess... And so I think you said your... did you say your yield year to date is up 16% or is that the amount of contract, average contract rate increase you were able to achieve? This year, William Kretsinger: that's year over year from the trough of the last year to now.

MB: So sorry, your yields are up 16%. Okay. And so you were kind of, you know, three-fourths of the way through the year. I would assume if you're up 16%, you were the increases you're looking for in the contract, right? Because you're mostly contractor. You don't do a lot of spot, right?

William Kretsinger: Correct, yes.

MB: Okay, so that the range of increases... that's kind of the midpoint of the contract rates you were asking for customers and William Kretsinger: Correct.

MB: That came in what? That came in kind of 2 parts, right? I think going back and renegotiating some contracts, like mid-ish year, is that a fair statement?

William Kretsinger: Yeah, we renegotiated several large customers in the summer and they were fourth quarter renewals last year and so fourth quarter was still getting minimal rate increases. So we went back to them this summer and now they're about to reset again next month, first 2 weeks of next month, and so we'll see a pretty good jump in our rate per mile from those resets. So yeah, they ended up for the year, mostly around between the original increase and the repricing, they probably ended up 12% total, and then they'll probably have around that again in October.

MB: Okay, so when we go through, right, so we're going into bid season and you're going to have these conversations and pricing for a good part of your business is going to be effective for the first quarter of 27. That 10% to 15% increase, you're not asking for 10% to 15% in this round, or you are. I'm trying to figure out if 10% to 15% is the initial ask and you walk away with 7% and then if the Announcer: Thank you for joining us. We'll be right back.

William Kretsinger: Well, it was more MB: market's still tight, you're going to ask for another 7% mid-year.

William Kretsinger: like 3% in the fourth quarter last year, 7% this summer. And then, for the next year, another 10% plus.

MB: Okay. Right. But do you ask for all of the rate up front or is it going to come in pieces like it did this year?

William Kretsinger: No, these are all up front.

MB: Okay, so you think you go in, you know, this bid season looking for 10% to 15% off the bat and then you kind of reassess if the market were to get even tighter, kind of mid-yearish. Okay, that's what I was getting at. Got it. No, it's helpful. How did September, I don't want to say turn out because we still have a couple more days here. It does feel like October, I do agree with you, but how did September feel? I know seasonality picks up from August to September, but maybe talk to us about September from a supply-demand perspective and then maybe benchmark it relative to normal seasonality, if it was tighter or looser, in your opinion.

William Kretsinger: Yeah, for the most part, it continued to strengthen. Our tender rejections are trending up after the summer lull. And so there seems to be more requests for capacity from new customers as well as existing customers. So, yes, it's definitely strengthened off of August and July. So, yeah, it looks like we're moving more traditionally, looking like a peak season, early peak season, and it'll accelerate in the next 3 months.

MB: Have you seen continued sequential increases in terms of your tender rejections each week in September? And that's typical of a normal September?

William Kretsinger: They've been elevated all year, but yes, they've... kind of settled down in July and August and now they're moving up again.

MB: Was August slower than you expected it to be?

William Kretsinger: No, August, it was... we've been busy. It's just the amount of freight you're turning down, amount of new opportunities coming in the door have accelerated in September.

MB: Okay. Yeah, I just heard from some advisors who thought, and I think it clearly depends on what region and what lanes you're running, right? But who thought maybe August was a touch softer than they anticipated? But at the same time, we had such a big May and June were, from my understanding, such a crazy time for the market that anything relative to that would look kind of like a slowdown. But I mean, some brokerage provider advisors that I've spoken with said sequentially their margins got a little bit better and they attributed that to their purchase transportation cost, right? Sequentially had ticked down a little bit. I think the spot market moderated a little bit too.

William Kretsinger: Yeah, the brokers are really clued in on the market and the capacity on a daily basis. So, spot rates did soften a little bit. What little we do, but they're strengthening again.

MB: Yeah. So do you do seasonal peak season freight? And if you do, what have been the conversations with customers? I spoke with 1 advisor who indicated and they do a lot of line haul for e-commerce, specifically Amazon, and they do some UPS and some FedEx. His indication was the larger e-commerce and parcel providers are pretty nervous about locking up capacity, and it seemed like his company was going to be able to not name their price but get a lot more this year than last without stating the obvious, but it just seemed like bigger shippers are worried about this year, given how tight things got in June? Maybe you could talk to that.

William Kretsinger: Yeah, we don't do a lot of seasonal surge. We do some. We've had a couple customers come to us already and said, on specific lanes, can you give us any extra capacity? And we'll start seeing the UPSs of the world come out with their Christmas surge schedules. But, yeah, I think it's got the potential to be very messy, very tight, and I bet they should be worried, yeah.

MB: Right. When do the parcel providers come out with their peak schedules and that for the end of March?

William Kretsinger: They'll probably come out in October because the heaviest part is middle of November through middle of December or the third week in December. So they'll probably come out in October. I don't know that a lot of carriers have visibility to what they can do that far ahead. That's right. But again, the price they'll have to pay up to get the surge capacity.

MB: Right. Okay. I think it's going to be an interesting peak specifically for the parcel providers. I think it could be interesting for FedEx given they've separated their LTL division. And I know that FedEx Freight did a lot of line haul for FedEx parcel. I don't know if that relationship changes at all with the company separating, but if it does, it could, I guess, get interesting from a service level perspective and also what FedEx has to pay in the open market if you're not getting, assuming they're getting good pricing on that line haul when they had the freight at the FedEx Freight segment. Now that, being an independent company, has to kind of make its own way and charge market price. But we'll see. Anyhow, that's just, I'm thinking out loud here. What are there...

William Kretsinger: Well, it's just plainly speaking, if capacity is tight now and more freight comes into the market, it's going to be bad. Tough.

MB: Right. And Amazon's bigger than it was a year ago. It gets bigger every year, but they're going to have more

parcel line haul to move about. Part of that volume has shifted from UPS back over to Amazon, but from a net perspective, I think they're growing as well. So there's a lot of parcel that needs to get moved. Again, ACT, you don't do a lot of that or that's kind of limited again. You're more contractual.

William Kretsinger: Yeah, we'll look at it, see if there's an opportunity cost to make a lot of money in the short term, but as a rule, we don't deviate from our long-term customers.

MB: Right. It's a good business model not to deviate from your customers. Okay. Are you going to be able to grow the fleet this year, just getting back to the fleet and drivers?

William Kretsinger: You know, we're just trying to fill our empty trucks that we have.

MB: So you have no growth planned.

William Kretsinger: Growth would be seat more trucks.

MB: Right. I guess how many more trucks could you seat at this point?

William Kretsinger: Probably 15 more trucks right now.

MB: Okay.

William Kretsinger: Yeah, I've heard a fairly large fleet owned by Knight. There were about 1,100 trucks, and they had 150 empties. Trucks, so...

MB: That was more recently?

William Kretsinger: Yeah. They had 150, so they saw some driver migration. Well, they've had turnover and they're having a hard time hiring. So their seat count is... and that's not unusual. I think a lot of fleets have some empty trucks to fill.

MB: Okay. But that's something new that maybe happened in third quarter specifically for Knight?

William Kretsinger: Well, it's not Knight. It's one of their carriers that was owned by US Express that they acquired. But yeah, just that one business unit had 150 updates.

MB: Okay.

William Kretsinger: This is very unusual for them.

MB: Why? So, I guess, did that segment maybe pay a lower base wage to their drivers? Like, why would they see more turnover at Express versus the legacy Knight business?

William Kretsinger:

You know, I don't know what the particulars are, but it's just an indication. I think they're not an unusual case. I think they're fairly typical of what's out there.

MB: Okay, it's just market pressures and specifically it may have been the Express segment.

William Kretsinger: In July, I drove by a 400-truck fleet in Iowa, and they had about 100 empty trucks on their yard, so I guess most people have a lot of empty equipment.

MB: Got it. No, that makes sense. Has there been any change? With respect, we talked to brokers, right? Brokers being very attuned to the spot market because that's a big portion of... or can be a big portion of what, you know, where brokers are operating. Have you seen any changes in terms of brokerage behavior? Have there been more concentration of brokerage volume going to certain carriers? I'm just trying to measure the fallout from the Montgomery case for Robinson and if it's having a more meaningful impact now than maybe a couple months ago. If there's been any change in brokerage-related volume, I'd be curious to hear about it.

William Kretsinger: Well, they're at what I call the end of the line now, so instead of pricing to be the first call, they're pricing when the customers go through their routing guides and can't find a contract carrier. So they're kind of at the end of the line with the open checkbook, so to speak. Yeah, we had 2 sources tell us that... one was a customer and one was another source... that the brokers were coming in with 40 to 60% increases on 1 source. Oh, they repriced. Actually, there's another call I did that I always ask what the other guys are, what you're hearing from the others. And MB: Sure.

William Kretsinger: they said a $6 billion broker repriced 72 accounts with 40 to 60% rate increases. And then a customer told us their brokers were pricing increases 50 to 70%. So what that tells me is they're waiting for the freight to go through the routing guide and end up with them. Last choice is how I read that because they've got to have the money to buy capacity when they get it.

MB: Just so I understand it, so big broker, right? 72 accounts priced up 40 to 60%. Is that because the broker is not using the cheapest capacity in the market anymore because they're worried about liability if there's a crash?

William Kretsinger: Well, so what we hear from our customers is they only are using brokers when they don't have carriers. So they don't have a broker on the routing guide, so to speak. So in that case, why is a broker going to try to compete on rate? He's going to wait until, and they know there aren't enough trucks to haul freight, so they're going to end up with freight anyway. So they're pricing up so they can have the margin to go out and secure capacity.

MB: Okay.

William Kretsinger: That's my interpretation.

MB: That's your take on it?

William Kretsinger: Yeah, because our customers all want assets. And then when they can't get an asset, they go to the brokers.

MB: Right. But do you think customers in general are looking to go more direct with asset-based carriers versus

brokers?

William Kretsinger: Definitely.

MB: And that's because they're worried about where their freight may end up and your shipper is potentially dragged into a nuclear case if something bad were to happen?

William Kretsinger: Well, it's... we generally see this happen when trucks tighten up. They want to be able to call an asset carrier and get capacity. Also, you know, I've always said brokers are predatory. When freight's slow, they're predatory towards carriers, and when freight's busy, they're predatory towards shippers. So it's not unusual in history to go to the end of the line and open checkbook when freight's busy, but I think, yeah, this is a little more extreme environment.

MB: Mm-hmm. Oh, I got it.

William Kretsinger: Yeah, I think this is a little more extreme environment.

MB: So you think this is just a reflection of the broker, so that the shipper is trying to lock in contract capacity because spot rates continue to move up? And then when they're forced, maybe, to go to the broker, the broker is taking advantage of the shipper, saying, "Well, you know what? Now it's going to cost you." And they're maybe upcharging more. I mean, the price for the broker is going up, too, but...

William Kretsinger: Well, and I think they expect it. They know they're going to have to pay up because they've run out of options, and that's kind of the name of the game. But I think it's a little more exacerbated in this environment, where they're setting their prices. You know, if a customer wants a rate on file, they're setting them high so they can... so they've got money to buy capacity.

MB: Opportunistic pricing? Maybe not...

William Kretsinger: Yeah.

MB: ...predatory pricing? It's one in the same.

William Kretsinger: I'm not a big broker fan, but yeah.

MB: Hey, listen, if I were you, I would feel the same way. Yeah, no, I'm just trying to sort if... So the thought process is because there's liability post Montgomery has now shifted a portion of it to the broker.

William Kretsinger: Yeah.

MB: I'm a broker. I got to be more careful and I got to pick higher quality capacity and higher quality capacity costs more money.

William Kretsinger:

I think Montgomery has some impact on that, yes.

MB: All right, Bill, as always, a pleasure. I get a little bit smarter every time I talk to you, so I very much appreciate your time.

William Kretsinger: Okay. Okay. Sounds good.

MB: All right, well, looking forward to our next conversation, and have a great day.

William Kretsinger: Okay. Thank you, Matt. All right. Bye-bye.

MB: All right, bye-bye.

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