Episode Transcript
[00:00:00] Speaker A: We're talking 2026. It's hard to believe.
[00:00:03] Speaker B: The reality is that like, everybody buys it.
[00:00:06] Speaker A: It's just replenished better than everything else.
[00:00:09] Speaker C: It's always in your face.
[00:00:11] Speaker B: We were conservative about our prediction in 2025 and I think that we nailed it.
[00:00:17] Speaker C: I do think that that might impact the rejection rates.
[00:00:19] Speaker B: Dip was disgusting. It was the bane of my existence.
[00:00:23] Speaker A: Our third leg of the Tripod. Co founder Andrew Lynch.
[00:00:27] Speaker D: Calling all CPG shippers, truckers and logistics pros, welcome to the truck.
[00:00:33] Speaker C: Yeah.
[00:00:33] Speaker D: Podcast. Your ultimate cheat code for smarter shipping, smoother logistics, and dominating the shelf where it matters most. Buckle up. It's time to learn, laugh and get your freight on.
[00:00:47] Speaker A: Ladies and gentlemen, welcome back to another edition of the Zipline Logistics podcast. My name is Jesse Jewett. Joined with me as always, Teddy Lee Knox. Hello, Teddy.
[00:00:56] Speaker C: Hello. How are you?
[00:00:58] Speaker A: Wonderful. Got our favorite recurring guests, some might call them our third leg of the Tripod. Co founder Andrew Lynch.
Welcome back.
[00:01:08] Speaker B: Thank you. I feel great as a, as a third leg of the stool. I, I spent most of my teenage years as a third wheel and yeah, so it just feels, I feel right at home.
[00:01:19] Speaker A: Yeah, well, you are at home here on the truck yet podcast we're talking 2026. It's hard to believe we're finishing 2025 with the flourish we midst of Q4, 2025 holiday season, freight market, busy season if you will, peak season of the freight market. But we're headed into 2026 and we wanted to bring you on again to talk about things. We're gonna talk about the freight market in general, specifically cpg, supply and demand volumes, rejections, rates and then retail buyers responses.
So right off the bat, Andrew, predictions for 2026, how do you see now the market going? This time last year we were talking probably the second half of 2025. Things were going to get really tight and the demand was going to soar and the supply was going to dip. I don't think we've quite hit that prediction, but what do you see for 2026?
[00:02:16] Speaker B: We were conservative about our prediction in 2025 and I think that we nailed it. 2026.
I'm kind of standing with my motif of like slow and steady improvement. So I do think that what will be about 2026 is that it'll be the first year since 2019 where supply, demand pricing really behave the way that all of our, you know, modern supply chains were designed to behave. There's going to be predictability, there's going to be consistency, you know, I think that volume will grow, you know, from, from, you know, what it, it appears is happening in the consumer marketplace and in, in manufacturing. And what seemed to be kind of the melody lines on the effect of the one big beautiful bill is that we'll see some manufacturing uptick and some industrial production uptick. So I think that we're going to see improving dynamics on the demand side, but very steady and very comfortable, nothing unpredictable, no black swans.
And then I think that we're going to continue to see due mostly to the capacity to enforce, not because of how many bad actors there are, but I think we're going to continue to see capacity kind of get whittled out of the system.
But I think those two things are going to come together in a very slow and organized manner. And so I think it'll feel for the first time a little bit more like a pre Covid environment. That's, you know, that's, that's my, my wish, hope and prediction all all in one.
[00:03:59] Speaker C: This is a lovely picture. I like this.
[00:04:02] Speaker A: Yeah.
Can you peel back the, the supply side of things? You talked about enforcement. I know we're, you know, we saw our first I don't know, bump the non domicile cdl, well, I guess legislation are we calling it, I don't know, enforcement. Like you said, that was beginning of November, end of October, beginning of November. Was that when that first kind of first wave happened?
[00:04:31] Speaker B: Yep.
[00:04:32] Speaker A: And then now we're seeing recently, early December, we saw a kind of, for lack of a better term, crackdown on schools, if I'm not mistaken, CDL, quote unquote, schools that were issuing CDLs at a rapid pace to as far as the entities are concerned, not qualified folks. So that was adding drivers into the, into the supply side. And so the government or the forces that regulate these things, the regulatory bodies are saying, hey, we're going to, going to crack down on this one. The non domiciled CDLs, those are folks who don't live in the United States or maybe don't live in the States. Is it a combo of both?
[00:05:20] Speaker B: Yeah. To maybe add clarity to the, to the, the opinion on. At least my, my opinion on the supply side is I think that, that the last two years the story on the supply side has been washouts due to economic conditions. Right, right. And that, and that's still the case kind of. Yeah. But I think by and large that washout is sort of complete.
[00:05:41] Speaker A: Right.
[00:05:41] Speaker B: We, you know, we've, we've got, you know, I wouldn't say equilibrium, but we've but we've got, you know, enough of a, of a washout of capacity where when, you know, some of these peaks show up in demand, you see real tightness and you see, you know, rates move, spot rates move, you see, you know, kind of rejection rates go up and that's a signal that, you know, again, while we're not in like total equilibrium, that we're a lot closer than we've been in years.
And then where I see there being, you know, sort of catalyst for, for continued tightness, you know, call it late 26, you know, maybe even end of the year, is you know, as that, that non domiciled cdl, you know, enforcement starts to, I mean look it's, I think they're enforcing it as well as they can right now. Yeah, there just isn't enough labor in the, you know, those kind of government institutions to go out and really, you know, drop a hammer on this stuff. Right. But you know, as you see, you know, the, you know, the ICE and the immigration stuff taking place and as you see the, the non domicile CDL enforcement taking place and then like you brought up those MC number mills that are like, you know, just cranking out carriers and then also the chameleon carriers thing, which is, which is really recent. I think that's maybe within the last couple weeks.
[00:07:00] Speaker A: Yeah.
[00:07:01] Speaker B: Where the FMCSA has really started to dig into that.
I think you're going to see like a, you know, a high single digit percentage of decline in supply and where that supply lives is what's key as far as like the broker performance space. Because again, you know, we don't compete against tender rejections and stuff like that. What we compete against is our, our competitors behavior. Right.
[00:07:29] Speaker A: Yeah.
[00:07:30] Speaker B: And you know, that's where Zipline wins, you know, in, in, in whatever market we're in. And, and as you see those, those non domicile CDLs, those, those chameleon carrier CDLs and MCs and the, the immigration population that generally leaves its exposure to the small and like very small carriers. Right. Like you know, one truck to under five trucks.
[00:07:54] Speaker A: Right.
[00:07:55] Speaker B: And those carriers. Right. That's that, you know, that's that massive sort of fragmentation in the, in the small carrier marketplace which obviously makes up you know, 90 plus percent of the total capacity marketplace.
What's, well, what's maybe not unique to Zipline, but what I think is, is, should be comforting to our clients and what the message that we're giving to our clients is that's really not our population. We're not, you know, we, we've always moved like kind of high value, high stuff like that really, really tiny carrier population really isn't where we play.
[00:08:25] Speaker A: Yeah.
[00:08:26] Speaker B: And so you know what I think you'll see when and when you, when you look at like the performance of really, really large 3pls and brokers where their capacity teams, you know, the kind of their whole play is like this high volume, they touch all of these little teeny tiny carriers. A lot of these little tiny carriers move almost all of their freight through the very large kind of top 103 pls that as that capacity starts to disappear, whether legitimate or not, it's going to affect how those, how those big guys perform. Yeah. And it's, you know, it will bring up, it will create a rising tide for the entire marketplace just because those things obviously work on macro levels. But when it comes to performance, which is really the only thing that we care about at Zipline, you know, I think there's danger for shippers that are really heavily exposed to like, you know, not to like name names but like, let's just say to like the, the heavy DFM guys. The really, really heavy, you know, sort of automated marketplaces.
[00:09:32] Speaker A: Yeah.
[00:09:32] Speaker B: Or heavily automated marketplaces where you know, the primary mission, whether it's, you know, whether it's a, you know, a broken, you know, spitting into a, a Celsius can while, you know, making 200 calls or whether it's a, you know, an AI. The goal of that thing is to pick this cheapest truck. Right. And, and it always has been. And so yeah, I think that, you know, as we've sort of talked about, you know, over the last couple quarters of of of these predictions, it's, it's really about the risk is not in price, the risk is in service. And it's, there's been a risk to service the last six months and I think there's going to be a heavier and heavier risk to service as the months progress.
[00:10:17] Speaker C: I think you bring up the point of like pre2019 market and when before that. I always think of the struggles of being a brokerage and the I guess reputation that came with it, which Zipline is not. And I think when everything happened with the tariffs, this is a very reactive industry as it is, but people were kind of scarred by what happened with the tariffs and not being able to get materials or imports and exports being more difficult. And I think when people learned about the non domiciled they kind of overcompensated and a lot of people went to asset based Only and I think where that is going to go is it's going to actually impact the volumes and rejection rates because you, most people don't put all of their eggs in one basket. And I think that it's important to note that you have to have a diversified supply chain and only using asset players can be difficult. We've heard a lot of partners say too that you need to have both. You need to be able to have network capacity that can handle anything and be. And adjust quickly with the market. So I do think that with all of this, with, you know, impacts happening to the supply side carriers leaving the marketplace, I do think that that might impact the rejection rates and overall volumes.
And then just based on reestablishing what zipline is, what three PLs actually are, not just the ones spitting into Celsius cans. Is that the new group that we're identifying?
[00:11:48] Speaker B: Well, nobody's dipping anymore, right? I'm, you know, so I was making a, I was making a pre Covid reference. Right now it's all about the.
[00:11:56] Speaker A: It could come back.
[00:11:56] Speaker C: It could come back with pre Covid.
[00:11:59] Speaker B: I hope not.
[00:11:59] Speaker C: I hope not.
[00:12:00] Speaker B: Dip was disgusting. It was the bane of my existence before we had cleaning staff at Zipline. But yeah, I mean think, I think you're right, Teddy, about that and I think it's a, it's a good point. I think it also might be one right, wrong or indifferent.
I also, I think a lot of carriers or a lot, I'm sorry, a lot of shippers, especially on the larger end of things really shifted their focus heavily towards assets because they, they knew that they could capture highly competitive rates, you know, like tracked against history.
Whether they were highly competitive, like this specific, specific marketplace is in question. But against history, they could say, hey, you know, we're going to spend less in 2025 than we spent in 2022 by shifting all this freight over to these asset guys and they're going to drop trailers and it's going to be efficient and like, yeah, those guys look like geniuses. It's like, you know, it'd be like being a stock broker for the last two years. Like, yeah, dude, yeah, you look like a genius, right? No matter what you did, the number went up, right? No matter what those guys did, the service stayed high. You know, they could continue to drive rates down. They could jam, you know, accessorials down people's throats and tell them to swallow it. But you know, those, those folks, you know, hopefully they got promoted before, you know, this, this market fully shifts because you Know what looks like a genius move, especially with how, how prolonged this environment has been is, is probably not going to, going to age that well as things start to turn. Because you know, again, like we still, you know, we can talk about all these shifts that are happening and they're, and they're, you know, they're marginal. It's, it's, you know, a couple, you know, 3% here, 4% here. Maybe it's you know, 5 to 5 to 7% on the non domiciled and, and chameleon carriers. But like when you zoom out, driving a truck is still an incredibly taxing job and not an attractive one to a younger demographic. Owning a trucking company still requires incredible cost and price demand discipline and are exceedingly difficult to own and manage.
Insurance costs continue to rise, labor and parts costs continue to rise. Like it is still really hard to, to, to be in trucking.
[00:14:33] Speaker A: Yeah.
[00:14:34] Speaker B: And the capacity is less elastic.
I think on the expansion side of things, as we have seen it be on the contraction side of things like capacity is, is exiting the market faster and faster and I think we'll continue to exit faster over the next, you know, couple quarters and replacement capacity is not going to be quick to show up.
Right.
You know, and so, and so that's going to continue. I think that, that, you know, hopefully that that makes for a, a healthy operating environment, you know, for, for a longer term than, you know, just kind of these usual bull markets as Freight Waves likes to call them.
[00:15:16] Speaker C: I feel like we should have done like a little like remix of like, you know, podcasts that have happened this year because what you just said just reminded me of the podcast with Larry Darlington when we talk about CPG and bulk transit. And he said the biggest mistake you can make is owning your own trucks.
It's not a good business decision. Now he says it a little bit differently than that, so you should listen to it different. But it's just one of those, someone who owns a company not what he would advise.
[00:15:43] Speaker B: Well, yeah, and Ted put that through the lens of how much of the conversation in the past 12 months at least, like there's been a healthy portion, a healthier portion than at any time in this industry's history that I can remember of people talking about the impact of private fleets and how much private fleets had grown during COVID and how they were pulling so much demand out of the marketplace and really also adding supply.
Private fleets are a double whammy for an intermediary marketplace. Right. Because they add supply and remove demand and owning trucks is the worst.
These retailers, Walmart may not. Right. I mean, Amazon may not. These folks that have incredibly high predictable volumes kind of no matter what, they may not make changes to that.
But I'd be willing to bet that Target, who's, you know, profitability is, is, is suffering immensely and has to make big changes. And a lot of other major retailers that, you know, are really starting to see positivity on their, on their, you know, kind of top line numbers that they're going to take another look at that private fleet, you know, decision that they made during COVID and, and start to really reevaluate like, oh wait, you know, these drivers are now super expensive.
You know, there's the, our insurance costs are, you know, up 30, 40%. But yeah, to where they were before we made this call.
There's probably, you know, an additional risk factor to balance. I would imagine those things take longer to peter out than, you know, your average MC number just shutting down and moving back to.
[00:17:26] Speaker A: Right.
There's always a, a breaking point.
[00:17:30] Speaker B: Right.
[00:17:30] Speaker A: And I think we saw that. You know, not to get too topical, but this week I forget the name of the carrier, but they were the number one carrier for the U.S. postal Service like the last 25 years or something like that.
[00:17:45] Speaker B: Oh yeah, 10 roads.
[00:17:46] Speaker A: Yeah, there you go. And you know, it was a thousand or ten thousand trucks or something like that and they owned 60% of the U.S. okay. So at some point, yeah, you would think in 1970 or whatever, when they got in with the U.S. postal Service, it was a gravy train with biscuit wheels, baby.
And now here we are and it's like, oh, ever heard of this thing called email that's impacted things and oh, you know, people don't want junk mail anymore. So that's changed significantly. All of a sudden the, the gravy train starts drying up and you've got a thousand trucks that are operating all these routes and you got to figure it out so it can happen quickly or that maybe that didn't happen that quickly. But you know, there is a tipping point at where it makes sense. I mean, I think we probably saw that with like the E Commerce boom. You know, that's still happening right now and these retailers have decided to build, you know, warehousing and store spaces. But again, we're getting off topic a little bit. But again, there's a tipping point for all this stuff and like you said, it can't just, the cost can't just rise forever and expect something not to change. So watch this space. We'll we'll talk about it in for our 2027 predictions, but let's dive into Andrew, to the CPG specifically. Like do you have any ideas around private label brands or more, more competition within that space or sustainability? What are you seeing in the CPG market specifically?
[00:19:16] Speaker B: Yeah, I mean, so these, you know, these things over the years, I, I think if there's something that, that like has kept me up at night the most over the years outside of like just the general ongoing panic attack of, of owning a freight company is like every time there's a, there's a downturn, private label numbers start, you know, kind of skyrocketing and like the whole world is like, wow, private label is really taking over and like, you know, it's, it's really dominating the, you know, the, the, they're the only growing, you know, sort of segment inside of these, these retail outlets. And, and so I've tried as I've aged to, to react a little bit less like viscerally to these environments. But you know, it is sort of a steady erosion where private label does, you know, if you, if you zoom out again over kind of 20 or 30 years, like private label does continue to take, you know, kind of more and more wallet share and it seems like it happens like the catalyst is every time there's a big, you know, kind of inflation spike or every time there's a, you know, a recession or a, you know, a contraction in the, in the economy that, you know, people pivot into these brands and as a result of that these retailers have gotten really good at it. Right. And and so I, you know, I think that those, those private label brands will continue to hold their market share by and large that they've gained over the last few years. But at the same time the American consumer is just unstoppable and it's an unstoppable force at the low end of the consumer market seems to be where all the tightness is right now. I think that explains why there's a little bit of an overweight effect from private label right across like kind of all categories.
I think as the economy, you know, at least hopefully at that, at that lower end of the income spectrum starts to loosen up for folks. Whether that's because, you know, payrolls improve or because, I mean, costs don't go down. But you know, if spending power improves, meaning payrolls go up faster than costs, that you'll see that start to level out a little bit.
At the same time, you know, again like the American consumer is kind of always looking for better. You know, I think that the tastes and preferences are, they shift, you know, really consistently here. You know, I don't know what it's like in older cultures than ours, but I could imagine that there's a little bit less like dynamism on food innovation. Right? Like if your culture is thousands of years old and you have cultural foods that, that you've eaten for thousands of years, right. You probably don't need, you know, a new flavor of potato chips to come out every, you know, seven seconds. But you know, when you're a 250 year old culture and you don't have those kinds of, you know, ingrained traditions, like, you know, we look for innovation constantly. And, and so, you know, for that reason, like, I'll always be optimistic for the CPG marketplace. It's a, it's a place where great innovators, great ideas and, and great entrepreneurs really, you know, always have a chance to come in and, and, and you know, shoulder themselves out some space.
[00:22:49] Speaker A: If you were suggesting a c. How a CPG brand could best stand out in 2026, what would you tell said brand?
[00:22:59] Speaker B: I would tell said brand the same thing I would have told said brand in 2016, which is beyond the shelf. You know, companies run, you know, promos for product that moves. Product that's on the shelf is product that moves.
It's just, it's, it's the easiest way to ingrain yourself in a positive way with your retailer and with your end consumer is to consistently be where to, to consistently meet your, your end consumer where they are, which is at, you know, whatever grocery or retail outlet has the product market fit that matches your, your specific product. You know, I wouldn't, I wouldn't want to comment on, on consumer trends, you know, beyond that mostly because my opinions are not usually those of the broader marketplace.
[00:23:45] Speaker C: I want to add to that TikTok.
Every brand that's been on TikTok Shark Tank gets noticed, goes into somewhere and following private label brands because to me, private label brands are effective delegation. They're outsourcing the right things. They have the right colors, they have the right placement on the shelves. They make sure that things are there on time. You rarely see a private label product for that retailer unavailable.
So I think those, those are all basically what you just said, Andrew. Now that I'm realizing, resaying it. So I apologize.
[00:24:20] Speaker B: But no, that's a good call out though that like if you, yeah, like if you want an example of, of why you should be on the shelf, take A look at how utterly rare it is for a private label to not be on the shelf. Yeah, they're not. Not on the shelf because no one bought it. Yeah. You know what I mean? Like the shelf is never empty or it's never full because no one's buying that stuff.
[00:24:44] Speaker A: That nature's basket pasta is always there.
[00:24:47] Speaker C: Always there.
[00:24:49] Speaker B: Yeah. Like, like I, you know, it's funny because I'm, I, I would imagine that, that, that might be the mindset, it probably was my mindset at some point of like, man, like no one ever buys this stuff. It must suck. And the reality is that like everybody buys it.
[00:25:06] Speaker A: It's just replenish better than everything else.
[00:25:09] Speaker B: It's always in your face and everything is run, everything is run so efficiently.
[00:25:14] Speaker A: Yeah.
[00:25:14] Speaker B: That like, look, if, if something isn't getting bought, it's, it's definitely not on the store shelf next week. It'.
And so, you know, if you're seeing it and it's on the shelf, it's because that brand knows, you know, what the hell they're doing from a customer supply chain perspective. And it's because the, you know, the retailer as, as everyone should expect, is running their business well. And that goes back, you know, Teddy, to what. And really, I guess both of you, when we, when we've been customer facing, like whenever we've talked to sort of larger markets, whenever we speak at a, at a show, it's always about like, you should expect that on the, on the D, like from the DC to the store shelf, that your retailer operates perfectly. And that may not be, that may not always be the truth, but at the end of the day, the only way you can plan your business and only way that you can actualize those projected sales based on the, you know, the deals that you signed with retailers to start the year is for you to assume that and operate that way. And, and, and 99.9% of the time you're going to be rewarded for that. Like, assume that if I get it, that if my product is due in the store on, or if I'm going to have empty shelves on Monday based on, on, you know, throughput and the DC wants my product on the Thursday before that, that that retailer has it nailed and that if that stuff is not there on Thursday, you will have empty shelves on Monday, but if it is, you won't.
And operating to that level of perfection on your side to mirror what that retailer's doing, I mean, that really is the game for these guys, in my opinion.
[00:27:04] Speaker A: Boom.
You heard it here. First, last and everywhere in between.
Well I think that's gonna wrap it up. So just to review real quick, we think there's gonna be a slight decrease in the supply. The demand is going to stabilize if you will and we're starting to see kind of pre co back to pre Covid numbers. Certainly the CPG brands are figuring out the way but as always get the product onto the shelf.
It's always about delivering to your customers and owning that process and finding a partner like Zipline to help you out. We touched on tariffs a little bit. There is going to be a reference to a tariff tracker in the show notes so take a look at that reminder to everybody. These are just predictions. Anything can happen in 2026. As always thank you for listening. Leave us a five star review on Apple or Spotify. Andrew, thank you for joining us once again. We'll see everybody next year in 2026.
