Could that be a factor here? That is

number two.

Snap is a big piece of it.

So we know that, you know, a lot of the Snap dollars ended up at some point in the hands of the big beverage companies or the big consumer, you know, the highly processed, ultra processed food categories.

And therefore, the government said, hey, we're not doing that anymore.

And we're not going to to to let you use your SNAP benefits to buy beverages and unhealthy snacks.

And that feels like the right thing to do.

Is it just sort of staying in the doldrums or is it continuing to weaken further?

It's kind of a mixed bag.

Yeah, we talked to a lot of the big industrial REITs.

And what's interesting is that we started to identify a change in the freight economy earlier this year, really February, March is when things started to really turn around in terms of industrial activity.

Really started in November, but really the momentum took place in February and March.

And it's different.

Location of demand has moved to the Midwest.

That's where a lot of the sort of origin point of a lot of freight is happening and less so on the coastal cities, particularly the West Coast, while it's benefited from stronger import volumes this year.

So I thought it was interesting to think about something I had seen you had said about AI and construction of data centers and like that leading to demand and then how the intersection of real estate and freight and what that looks like as we all just prognosticate the future based on where we're at right now and the trends.

So is this a temporary pressure or structural change leaders need to plan around?

Structural.

We're pretty close with the FMCSA and DOT.

I've had a number of conversations with Secretary Bars, who's in charge of the Federal Motor Carrier Safety Administration.

And the way that they're leaning into regulatory oversight are ways that we haven't seen.

If you think about...

I bet many in this room couldn't even name an FMCSA director that wasn't named bars prior.

Are we entering a real and sustainable freight market recovery? Or are the current improvements mainly being driven by higher operating costs and capacity leaving the market? Craig?

Mm.

And, uh, everybody's celebrating 'cause it's been a miserable existence.

Ocean container lines, uh, they were out of a recession pretty quickly.

They had a, you know, about eight-month recession, but trucking has been in a r- was in a recession really since 2022, and, uh, it ended in November of this past year, of '25.

And so everyone feels relief.

I would, I would dispute your, uh, comment about it bad for the consumer 'cause ultimately when freight's moving, uh, that, uh, is good for consumers.

I mean, transportation cost is about 3% of finished goods prices that consumers pay.

What's going on with terrain grab? Who's winning?

Um, what we were seeing in the wake of an MOU, what the end of an MOU could mean for trade.

Yeah.

Look, I mean, this is, uh, obviously a developing story we've had overnight, but it, but, you know, I, I, I think there's a, a lot going on.

You've got, you know, uh, Iran doesn't seem to want to end the conflict, uh, without sort of the last word.

And, and that's really the, the problem is it's very unpredictable.

But what we've seen over the last couple of weeks is we've seen- You know, if, if you look at container freight, it hasn't been that impactful.

It's, uh, it...

So in light of that, and in light of the relative insulation that the US enjoys versus other parts of the world, despite the geopolitical landscape here, what does it mean for the read-through to the US economy, uh, when you do look at some of this freight data, data, especially we, as we do come into peak container shipping season, season a- a- and other things?

Mm

... staggering.

I think what's most exciting is the Interstate Highway System, the largest infrastructure build in history, was funded by federal tax dollars and the federal government.

Really important to have that infrastructure.

What we're seeing with AI data centers is private companies, the most wealthiest, richest companies in the history of mankind, are taking capital and putting it into our economy, and it's creating demand for construction materials, uh, creating demand for things like steel, HVAC systems, cooling systems, transmission lines, copper, you name it, and a lot of that's coming from US factories.

It's really a profound time in history.

I mean, that, that's true, yes?

Yeah, absolutely.

Yeah.

Of like, "What is keeping these trucks alive? Like, how are they staying in business?" It's very clear now that this was a labor availability, an immigration related availability, that really kept a lot of new entrants, created a lot of new entrants into the market, that oversupplied it.

And then what we've seen over the last year is the administration is coming hard and fast.

They're putting a lot of restrictions on non-domiciled CDLs.

They're, uh, starting to put more restrictions on, uh, the, um, deploy, the CDL mills, which is cutting off some of the supply.

You've got just immigration, period, in the United States.

It's actually cutting off new drivers or would-be drivers.

Always shop.

Presumably, maintenance will come along too, but that might be a little further off.

Well, I think it is interesting because the word deregulation has an idea that the government deregulated every element of trucking.

That was never the intention.

The intention was to deregulate pricing.

and deregulate the ability to do commerce for two counterparties, two parties could do business together without the government having a say or interfering or slowing that process down.

And we've talked about this before.

The regulated days were quite insane.

But it's about this- Keep your

Craig, what is causing all this?

You know, it's a good question, the cause.

Uh, we know there's a lot of catalysts, which I think is easier to sort of, to look at.

What is the catalyst for this? And I, I think it's the industrial sector that's coming back, and I think data centers are probably the primary contributor to the industrial, uh, surge that we're seeing.

And a lot of that is because of some of the tax, uh, benefits that, uh, companies get this year for investing in buying American manufactured goods.

So if you're building a data center under the big beautiful bill that, uh, was introduced last year and really went into effect, uh, this year, uh, we get the full benefit of it for the whole year.

Uh, I think a lot of that is, is that data center developers are looking at the United States to source the material.

Yep

So is that how we should be reading what we're seeing in the freight data here in the U.S., even despite this war in real time?

Absolutely.

So we saw really the last week of November, we saw a massive surge in freight volume.

And the freight market had been in a recession for three years.

And so it was pretty difficult.

But what we saw really since post-November has been in a massive surge.

And what's interesting, in the last couple of weeks, we've seen a substantial increase.

What about fuel prices, which I know when you're talking about freight specifically tends to not get absorbed by the companies, but pushed out to the shippers themselves, which are companies and customers?

What exactly would it look like, hypothetically, if the U.S. were to, quote unquote, take control of that 21 mile wide Strait of Hormuz?

Yeah, I think what Donald Trump is referring to is actually escorting the ships that are passing the straits.

So really providing, you know, naval escorts and security is really what insurance companies want to see, because ultimately...

Iran doesn't have the physical ability, especially without any type of naval assets, to shut the straight down.

But you do have the threat of rocket attacks, drone attacks that create issues.

And if the U.S. Navy can defend those ships, then it mitigates a lot of that risk that the insurance companies are worried about.

Is there a scenario in your mind where the U.S. would need to put troops, boots on the ground, so to speak, around the Iranian side of the strait in order to help guarantee some of that security? Or is it mostly about what's happening on the water?

Yeah, I believe it.

It didn't have representation on that side.

And look, I think a lot of carriers historically have had this question about what we are all about, right? Because we talk about the market.

And sometimes we're talking about the market being healthy.

Sometimes we're talking about the market not being healthy.

And there's always a question of like, what is our goal and our mission? Our mission is to be transparent.

A couple of years ago with the freight recession, first started, we were very early in that.

And that's the risk of having, you may have all this data we call high frequency data.

Do you think it's going to be a little bit more dramatic of a swing now? Absolutely.

So you may have a good seller, somebody thinks they want it, but it's not being used effectively.

The vast majority of data is that way.

I think this is the reason a lot of software companies are really bad at being data businesses is because they are used to selling a piece of software.

They have a professional services group that goes in and implements it.

Do you think data companies should have more professional services? Yes, I think so.

And I think that's a mistake.

We're a venture-backed company.

If I want to get into the media business, what advice would you give me? Or would your advice be like, stay away? I

Some of the most English proficient truck drivers are Mexican cross-border carriers because they know that that's what throughout history, the, the, the trade zone DOT officers have been looking for the most.

But I think the assumption that a lot of people make when they hear the word immigrant is Latinos.

If I post something on X about immigrants, it's immediately people assume I'm talking about Latinos.

I'm talking about a brown person is what they assume.

What they're often missing is these groups of people are Eastern European, where there's a huge Serbian population that is driving trucks.

There are people from the Punjabis that come over from India and Pakistan.

We have these large populations of groups, and I would disagree with Ken on this.

I

You think just because those areas of those businesses are slowing down because of the macroeconomic pressure?

Yeah, it's macroeconomic pressure.

It's high interest rates.

It's companies afraid to make long-term investments.

It's really, if you think about where we've seen inflation related to tariffs, a lot of the tariff cost has been in wholesale prices and wholesale goods.

And so it's not showing up necessarily in consumer prices, but it is showing up in those wholesale prices.

And so those imports that companies are getting in raw materials is really taking a pretty big hit to those big manufacturers.

I mean, since that has gone away, have you seen any change in the movement of freight?

yeah

you're screwed man i'm sorry you got to play the game The casino was open and the police showed up.

Unfortunately, casino's closed, man.

Somebody's going to jail.

And that's what's happening.

They were having a lot of...

It was a lot of fun, man.

Like,

Absolutely.

And it's an economic backwater.

And here's the problem is that when you add the kinds of capacity that we've added over the last couple of years, we've added 310,000 active trucks since 2019.

That is insane.

have come into the industry.

And when you add that much capacity, then you can't, that clearly demonstrates that there isn't a truck driver shortage.

Now, here's the crazy thing, is this concept of a non-dimensile CDL, which is basically, it was passed in 2017, was updated in 2019, which is basically the FMCSA came out and said, you can issue CDLs, the states can issue CDLs, have the right to do it, to non-U.S. residents.

Right.

When we're talking about the potential for U.S. involvement there, what does that do to not only prices, to perhaps surcharges that some of these companies might charge, and overall just the cost when it comes to companies that want to ship goods?

Yeah, I mean, the big impact here specifically is on oil shipping, is on energy shipping.

So that's really where I think the pressure will be.

But really, it impacts China far more than it does the United States.

China receives the vast majority of its largest level of imports are from that area of the world, where the United States only receives about 5%.

So it's far more drastic to China than it is the U.S. And so the question is, does the U.S. actually benefit as a net beneficiary of actually closing the straits.

Some people could argue that because U.S. has such a large level of oil exposure that it very could be that the United States doesn't get impacted drastically and may even benefit as a country from the closure.

What's happened? Why are we looking at that risk just as seriously now?

And so there shouldn't be any disruption or any empty store shelves or anything like that.

That's correct.

I mean, Kelly, last time I was here, I talked about the potential of disruptions of inventory stockouts.

The fact is that we had a month of basically volumes were stalled.

We saw a 65 percent drop of volumes out of China.

But what we're seeing now is a resumption of volume.

So a no longer appears to be a risk.

Are there surcharges for companies now scrambling to say, OK, we got to get this product on the shelves?

How bad is it right now?

Well, it's about to get much, much worse.

So certainly it's true that companies have canceled orders.

A lot of these orders they had in place up to a year.

And so they were expecting, certainly expecting some level of tariffs, but not what we've seen right now.

So most people expected we would see up to about 20% tariffs on China.

Now we're looking at something that's completely different.

But then, of course, the ripple effect is into the stores, into the businesses where there will be layoffs as well.

But when you hear the individual stats where it says, you know, Port of L.A. traffic down 40 percent or whatnot, can you give us some context around where we're seeing the biggest declines, but where things might still be pretty steady?

Yeah, so this data is a lagging indicator.

It's a 14-day lagging indicator.

So when you're showing that data, you're actually not getting sort of the real time on the ground.

What we are seeing, if you put this in perspective, during the height of COVID, sort of May of 2020, when China had shut down its economy and the US was on lockdown, we saw the international container lines cancel 50 voyages to the United States.

And what we've already seen is over 90 voyages have been canceled just to the lack of cargo.

And so this is a situation where we are seeing COVID-like conditions at the extreme, but really caused by tariff uncertainty and tariff stress.

What are you picking up on just in terms of kind of typical freight activity around the country right now?

As we look at the possibility of this happening again just about two weeks from today, how do you see shippers responding? Is it simply just good enough to go to the West Coast ports? Are you concerned that there's going to be a lot of congestion, log jams there when you're talking to your customers?

Well, the longshoremen on the West Coast have said that they're actually going to they will not break the strike.

So if there's a strike on the East Coast ports, they will also not unload those containers that were due for the East Coast.

So what we've seen is shippers have been preparing for this for months.

This is not an unexpected event.

And so there has been a lot of pre stocking, ordering inventory well in advance of this.

And remember, this is the.

As we're looking at that time period about mid-January, how big of a deal could this be? Could this be a supply chain disruption on the level of the pandemic? Where would you put it?