Mike Burnett: Hello, this is Mike Burnett, partner and co-leader of the business and financial services practice here at Alexander Group. Today I’m joined by Zack, who is a leader within the practice and oversees our transportation and logistics work. Zack, thank you so much for joining. Curious to get some of your thoughts on what’s going on in the space. Transportation and logistics, probably operating in one of the most complex environments we’ve seen in recent years. Zack, let’s talk through what’s going on in the bigger picture, the macro environment as it relates to transportation and logistics.
Zack Houghton: Thanks, Mike. So there’s a lot going on in the transportation and logistics industry has not been boring at all. When I think about headwinds and tailwinds, there’s a lot going on there from a headwind standpoint. There’s, of course, we’ve been in a freight recession over the last few years. Covid brought a lot of complexity to supply chains, but now we’re also seeing a lot happening with tariffs. A lot of volatility, especially when we consider China. And then we also have to couple on to that what’s been happening from a structural capacity standpoint. So there’s been persistent driver shortages. There’s also been there’s a potential tightening of the commercial driver’s license regulation, which would further limit the number of drivers that we have out there. And then while we’re on the topic of regulatory pressures, there’s also EPA 2027 standards, as well as certain zero emission standards pushed by local states. And the impact of all those headwinds is it’s creating a lot of complexity. It’s forcing fleet investments really before we know that there’s a positive ROI. That’s from a headwind standpoint when we think about what’s happening from a tailwind standpoint. So it’s not all bad. We have what I would loosely call Onshoring or Nearshoring. A lot of the trade lanes themselves are starting to orient more around Canada, the United States and Mexico, which naturally benefits the US market. And then secondarily is there’s been a lot of M&A activity that’s been happening. There’s been really a focus on tech-enabled or asset light, very specialized transportation logistics companies. And with that, there’s this ongoing need to merge in the new technology, rethink the commercial model. So, in a nutshell, it’s, it’s some good and some bad with the transportation and logistics industry right now.
Mike Burnett: So plenty of opportunity, but a pretty volatile environment to navigate. So with that said, how are commercial teams trying to respond? What are some of the things we’re seeing folks do from a go to market standpoint?
Zack Houghton: Yeah, three things. One is they are rethinking entirely how they’re going to market. Number two is they’re rethinking how do I get my sales force to be more data fluent? How do I incorporate AI? And then the third thing that I’m seeing a lot is really doubling down on the skills within the workforce, just adding a little bit more color to each of those three. When I say re-imagining the go to market workforce, really talking about two things that I’ve seen pretty prevalently. One is from a sales pitch standpoint, we’ve had to rethink how a seller is selling. So before it might have been very lane focused, very specific. And now it needs to be more of a bundled solution-oriented cell, and that has a lot of implications for the type of talent that we need, but also then how we need to enable and empower that talent that we have. On the second bucket, where I’m talking about data fluency, there’s this little thing called AI that’s happening right now. And so companies, of course, transportation and logistics is no exception is really investing there. And so the question then becomes, where should you be investing in AI? There’s all these different opportunities, but where is there an opportunity with the highest ROI or the best use case? Just the last thing in answering your question there, Mike, around focusing on the skill sets of the organization. Yes, AI is a piece of that. You need to make sure that the reps are very digitally fluent, but even more so than, you know, the past decade, there’s really a need to put the first line sales manager in truly a leadership position. In this space in particular, there’s been a lot of hiring of the best sales reps, which, as we know, doesn’t necessarily translate into the best managers. And so I’m starting to see a lot of organizations take a second look at how exactly they’re enabling their first line managers in particular.
Mike Burnett: Yeah, that resonates a ton. And I think to your point, this data rich environment that we live in also ups the ante in terms of the insights that are expected that we’re being expected to generate and use to help the sales team be more successful. So things like revenue operations, data science backed analytics is another area that I think a lot of these organizations are trying to really wrap their arms around. They’ve done it always from a logistics and operations standpoint. Now, how can we apply that to the commercial team? You said, AI, let’s go there next. How is AI actually being used today, and what are some areas you’d recommend folks to focus on?
Zack Houghton: Yeah. One area that I’d say is a slight pivot from what’s been done in the past is when we think about automating more routine tasks, right? Like before we might have had a separate resource that’s just in charge of those routine tasks. And so that concept is not new. What’s new with AI is now that you can do more with that piece of technology. And so you can really automate those more routine things, and you can get more out of each individual resource where AI is starting to really make some differences. And where I’ve seen some companies do some pretty exciting things is they’re starting to use AI in a more customer facing way. Yes, there’s the enablement aspect of it where a rep can use that maybe to prioritize more which accounts or which prospects have the highest priority. But we’re also seeing companies actually deploying an external facing AI agent to cover the long tail. So instead of having your inside sales rep with 200 or 300 accounts, you’re seeing a large portion of those call it a half being autonomously managed by AI. And the benefit to the organization is that that inside sales rep now goes from having a book of 200 or 300 to having a book that’s more manageable, like 50 to 100. The last area that I’ll call out, Mike, where I’ve seen AI have a really big impact, especially in transportation and logistics, is when we think about the supply chain and route planning, that is now becoming a key factor in differentiating between competitors on how quickly you can navigate changes in traffic or changes in weather or changes in demand. Having an AI agent autonomously manage that react in real time with a human in the loop is becoming an increasingly differentiating factor.
Mike Burnett: All right, Zack, so now let’s talk through what are some quick wins that go to market or commercial leaders can do today in response to a lot of the things we talked about so far?
Zack Houghton: Yeah. Not every organization is ready to make a big, massive change. Right. And they want to know what can I do immediately? I would put that into four different recommendations. One is around customer segmentation getting a lot tighter using the data we have to better navigate the seller and what to prioritize. Second recommendation being around compensation, really focusing on pay for performance and focusing on the right metrics that we want to drive behaviors around. So think about things like margin. The third recommendation I would say, is conduct a talent assessment of your organization, not from a standpoint of who can we replace with AI, but more so of where do we need to invest in training? Which brings me to the fourth recommendation or quick win, which is around doing training. And I wouldn’t just say broadly training, yes, we need to make sales reps more fluent on AI and being more digitally fluent, but really focusing and doubling down on the first line sales manager because they are the tip of the spear when it comes to evolving and changing the organization.
Mike Burnett: Excellent. Zack. Thank you so much for the insights. Everyone watching, if you’re interested in scheduling time with Zack or myself or gathering more insights for yourself, please feel free to go online and visit us at Alexandergroup.com. Thanks again.
