He Invented the Return Label in the Box: Phil Siegel on Newgistics, Private Equity, and 3PL Market Consolidation | Supply Chain Saga Ep. 016

Mark Taylor : And just like that, we're up. Today we are joined by Phil Siegel. I would say professor and time to time mentor. How are you doing today?

Phil Siegel : I'm doing well. How are you doing, Mark? Mark Taylor : I'm doing very well. Thank you for being here with me.

Why don't you just start off by introducing yourself and giving us a little bit of background? Phil Siegel : Yeah. : So I'll go all the way back. I grew up in a small town in Indiana, went to the University of Chicago, undergraduate, math and chemistry, always been interested in math.

When I came out, went into the advertising business, which was under incredible turmoil at that time, but it was exciting to be around. Went back to business school, got a degree again at the University of Chicago. Came out and started working for a consulting firm, Boston Consulting Group, where I had my first introduction to supply chain and logistics, working for a number of different companies in that area and others. While I was at Boston Consulting Group, my wife came up with a business idea that turned out to be a real winner in the supply chain and logistics group.

And that's how I got into entrepreneurship and then eventually into private equity where I am today. Mark Taylor : What was the genesis? How did your wife see the niche? Where did that come from?

Phil Siegel : Yeah. So I mean, I remember it very vividly. She grew up in San Diego and we went to Lego land in San Diego. And we went to buy a bunch of Legos, but she said, "I don't know how we're going to do this because we don't have enough room to take these home."

But it turned out Legoland. And this was really actually something quite unique back then. Now everybody does this. But at that time they said, "Well, we'll ship your product for you to your house.

You tell us when you're going to return and we'll make sure that the product is there within a day or two of your return." And she just thought that was the greatest thing ever. And she said, "All kinds of things like shipping should work like that. " And I said, "Well, like what?

" And she said, "Returns. : Returns should be so much more convenient." Back in those days, and a lot of your listeners aren't old enough to know how it used to be in returns. You used to have to take the old box or a box that you had, put the item in it, fill out a form, usually throw it in there, and then hand write the address on the outside of the box and then go stand in line at a post office or a shipping center to send back to the company that sold you the item, whether it was a Lands End and Eddie Bauer and so forth.

And that was just a pain because lines at the post office back then were actually quite long. It was very inconvenient. And then even the worst thing from that, then you had to usually wait somewhere between six and eight weeks to get your credit and you would find yourself calling up the company and asking them probably five, six times over the course of your shipment or your product, where was your credit? : And then we didn't really have as much capability for online looking at your credit card bills.

So then you had to sometimes wait for your credit card bill to come to see if it was on there. So it was just a mess of a process. And so we took the brainstorm of my wife and created a business to make returns that much easier. So I like to tell people, I know that they've used the product that my wife and I invented.

They just don't know that they've used it. It doesn't have its own name to the consumer, it does to the shippers. But we essentially invented the barcode label in the box for you to return items and put on the outside of the box and drop on your stoop. Mark Taylor : And you did this, and was this Newgistics?

Phil Siegel : Yeah. Mark Taylor : Okay. And what year was this? Phil Siegel : So Nugistics started as a company called I Return It in 1999.

There was actually another company that started at the same time, return.com. And it was partially owned by mailboxes, et cetera, which is now the UPS store. UPS bought mailboxes, et cetera, and calls it the UPS store now.

And so 1999 was the start. It was still pretty expensive to write code to do anything. So we spent unfortunately more money than I would've liked to have spent to build this product, but it was a success not out of the gate, took a little while negotiations with the post office to get the product, to get a favorable rate on returns. It's called zone skipping.

And you could get favorable rates on forward zone skipping, but they didn't have a rate yet for return zone skipping. We actually worked with them to develop that and that's what launched the business. Mark Taylor : Was this all self-funded or was this, did you raise money for it? Phil Siegel : We raised money, both from the venture firm that I was working with called Austin Ventures, and then from industry partners.

So at the time, R.R. Donnelly had a very large logistics business, and then a company called US Freightways, and I've forgotten who eventually bought US Freightways, but they were another investor in the business. So they were the initial investors in the business.

Mark Taylor : Wow. That's quite a story. And then now the problem has only gotten worse by magnitudes, but fortunately there are products like this that actually help to address it. How long did you guys stick with it, grow it, and then what was the, I believe it was sold to Pitney Bowes eventually?

Phil Siegel : Yeah, eventually to Pitney Bowes. So we grew it, boy, I want to say until 2013. Then we sold it to another private ... It was a very, very profitable business at that point and pretty large, a few hundred million in revenue and tens of millions of profit.

So we sold it to a private equity firm who then grew it even further and then they sold it eventually to Pitney Bowes and now it's one of the larger divisions of Pitney Bowes. Mark Taylor : So what was the opportunity analysis? Because I mean, your wife was spot on and when it came time to build the case for it, how did you look at it? I mean, it was almost hard to predict at that point just how ubiquitous e-commerce and fulfillment and then how many returns were just going to explode.

Phil Siegel : So Mark Taylor : How did you think about it at the time? Phil Siegel : Yeah. So we were a little bit lucky on that respect because the market already existed through ... And again, some of your users may not even know that this exists, but at the time it was through catalogs.

So before e-commerce, there were catalog companies. You'd get a catalog in the mail, and still some do this, where you get a catalog in the mail and you can go through that in order. So the catalog business was actually quite large at that time, and that alone would have sustained a reasonable size business for us. E-commerce was just starting to emerge, and Amazon became a very large customer early on for this.

And there's a whole story behind Amazon, which was funny, but eventually they went to Federal Express, and I think now they have had a falling out as well. And so I don't know, Amazon may be doing this themselves for products where they take returns. : But at any rate, we knew eCommerce was going to grow. We didn't know how much it was going to take from catalog.

The catalogers were all telling us we're going to have both kinds of business, so we're going to need this. And so we didn't feel stressed about the opportunity size because as I said, there was already a business there. And then the question is, how big would the e-commerce side of this become? And it's obviously become the dominant piece of the business.

: The real key question was, are they really going to want this? And this is where really digging in and talking to potential customers gets you the information that you just say, "Wow, aha, this is really great." So they all thought it was really good, I would say, on a scale of one to 10, a seven on the whole logistics and make this easier, lower cost, faster, and so forth. The two areas which we hadn't really predicted is they all had really good data about how consumers would leave if they had a bad return experience.

And so some of the big early proponents of what we were doing were actually, it was actually the marketing departments who said, "I need something to keep my customers from leaving me because of this. " And then the one that came out of nowhere, we had no idea was what I mentioned earlier. : Consumers were calling these companies four or five, six times about a return. : Over time, we've been able to help these companies reduce the amount of staff just answering questions about returns by 70, 80, 90%.

Now they still have the staffs that have to do kind of the take orders, whatever it is, or help the customer through an order. But for returns, they used to get an enormous amount of calls. And this product, because we gave the credit at the time of receipt, as soon as it was scanned in, the consumer would get an email saying, "You are going to get a credit on Tuesday." And let's say it was Monday.

And that satisfied the consumer and they stopped calling as often about their returns. And that turned out to be one of the biggest selling points of this whole thing. The logistics were good, the consumer satisfaction was very good. And then this was the home run, more than the cherry on top in a way, was the ability to reduce all those incoming calls about returns.

Mark Taylor : Wow. So returns, I mean, today is one of the most talked about feared thing within a warehouse, the physical operation. And I mean, just for instance, if we have a customer in our 3PL that wants to do a return, we issue them the label and we don't typically issue the refund until we receive the actual product Phil Siegel : Back Mark Taylor : Because what's started to happen is a lot of fraud. Phil Siegel : Yes.

Mark Taylor : And that's you buy the product and then you return a ghost product or whatever. And so people gaming the system. Did any of those exist, like any of those problems? Phil Siegel : No.

And this is, in a way, our fault, right? It's an undetended consequence of making a difficult process really easy because what we've done is make it really easy to take returns and really easy for consumers to game them. There's been companies that have shown up ... After this all came out and we became a big business in this area, FedEx actually built a pretty big business in this area.

I don't think UPS ever made it a big focus, but Logistics and Federal Express both had very big businesses in this and now Pitney Bowes and Federal Express. But once you make it really easy, what do consumers start to do? Well, then they start to order four things and return three, knowing they're going to return three of them. And so some of the companies that made returns free early on, because it was kind of cool, said, "We can't afford to do this anymore."

So they were starting to make consumers pay or at least setting guidelines around it. : Then consumers started to complain about how hard it was to return things at stores once this became super easy to do. And so you started to see fraud at the stores and there were companies that showed up. Really only purpose was to fight fraud on returns at the stores.

Consumers who would buy address for one thing and then bring it back. Now, the stores let that happen, but what consumers didn't realize is they'd end up on a list and the list would be shared across retailers. And then if you started to abuse this, you started to be blacklisted at many stores if you were a consumer and they didn't expect that. So there's all kinds of unintended consequences that arose, not just from us, but from others making the return process easier.

But at the end of the day, it's still better to have a better process and then plug the holes as they emerge along the way. : But to your point, we didn't expect that. It didn't happen early on. Consumers were just delighted to have a better process, but then once they figured it out, the gaming began.

Mark Taylor : And I mean, it's exponentially risen during and after COVID. Absolutely. Yeah. So looking at how involved or how much are you zeroed in on returns these days?

Phil Siegel : Not at all. Mark Taylor : Okay. Phil Siegel : Yeah. One of the great things about being in private equity, and I don't know about it ...

I've been an entrepreneur a few times. I have an ability once the business has been sold and I'm no longer involved to just say, "Okay, I'm done." It's in somebody else's hands. I don't have any say or impact, so I'm not even curious about how the business ...

I mean, I've heard how big it is at Pitney Bowes, but I'm not curious about what's going on, who's doing it, all that kind of stuff. Mark Taylor : So because I mean, having that early perspective, you would think that if you had ... I mean, I guess it would really help you if somebody brought a deal that said, "Hey, we think this is the next thing." And you might be able- We see that every now and then.

Yeah. Right. So I mean, I'm sure that would help, but in terms of just monitoring the market and going and looking for a deal, that's not what you're doing. Phil Siegel : No.

Well, I mean, somebody at our private equity firm is responsible for the supply chain vertical and they are doing it. I'm not delved in at that level of detail. When they bring deals, I help evaluate them, but there is somebody at our firm that does do that, but I'm not that person. Mark Taylor : So switching gears, but still kind of the same, I think at last count I heard, I believe that there are around 24,000 3PLs out there.

And it seems like the trend that eventually that happens is Europe kind of establishes a very consolidated market and practices, and then those practices slowly make their way to usually California and then bridge to the East Coast and then they start to come into the center. : So following that thought process, because you do see the most stringent, as we were kind of talking before this, regulations popping up in California and then New York and New Jersey are typically pretty close after.

That's kind of the way it is with the independent sourcing rules and many other things. How do you think about the market and the broader supply chain market, especially the warehousing service providers? If that's going to kind of be the way of the ... If your startup like mom and pop can save up a little bit of money and start a lifestyle business that's totally fine, they put in a little bit of management, you know, they make enough to get by, that seems like it's going to go to the way of the Dodo soon.

And how do you think the market consolidation is going to play out or how do you view it playing out, I guess? Phil Siegel : Yeah, I don't think it's going to go away. I think that most of the middle of the country states do like these independent ... And frankly, most of the drivers like being independent because they can decide when to take loads, when to not take loads and so forth.

I think it will go away at facilities because the basic idea of it, it doesn't have as much kind of logic to it. Why should you have independent contractors at your facility versus the drivers it does because the driver has to come with a truck, the driver wants to decide their own schedule. They don't want to work only based on when the company wants. It's much more efficient to have a driver to be able to go across a number of different brokers and shippers, and it's very efficient for a number of brokers and shippers to have a number of different ...

Because you never know when a shipment for whom is going to need to come. : Your facility is a little bit different. It is a much more predictable process. So I think in that sense, anything at the facilities might go the way, as you said, of the Dodo.

I don't think the driver's side will, except in California where it kind of is already, but I don't think the other states necessarily are bought into that. All of that being said, Europe is a perfect example of why it's not necessarily a good idea to do it that way, because Europe is a much more concentrated set of providers. Prices are higher because of that, and the supply chains are less efficient. They just are.

They're lucky that the countries are smaller, but then again, even crossing countries ... So there's all kinds of things that affect and impact this, but this kind of entrepreneurial spirit and supply chain and the ability to start up an agency if you want or just a brokerage or be an independent salesperson has allowed people to set their own schedule, to do a lot of different things with their life, and allows us to have more, more capacity, better capacity, and lower prices.

: And so it'll be very interesting to see where we end up, but I hope we don't end up as concentrated as we're seeing in Europe. Mark Taylor : Yeah. So it's interesting. The genesis of how I got into this was I began as a third party seller on Amazon and very quickly figured out we're not big enough to go and talk to an XPO or NFI or somebody like that.

So we need to either figure it out ourselves or find a very small provider. And at the time, I mean, I'm sure there were those people existed, but we didn't find anybody who knew FBA in and out. : And so we kind of started doing it for ourselves in a friend of a friend's small little warehouse where they were parking a Cadillac. They said, "Yeah, we'd love to make a little bit of money off the space instead of have it be a parking spot."

We started saving money for ourselves by handling it, opened it up to other people and then said, "We think there's something here." We started and at the time, I mean, we were able to raise not a lot of money and get going. And I remember the industrial gross rate, I think was per square foot per month was around 55 cents. And then only a few months later it was up to 72 and then it went up to 85 and now we're sitting around a dollar : And we're in a great spot in Southern California at a dollar and we're looking at renegotiating.

We might have to go as high as $1.30 or $1.40, whereas to the top of the market, or I think you had people at like 175, 180, all that to say, your costs and then what the landowners are requiring for balance sheets, the strength of a balance sheet. And if you don't have a really strong balance sheet, then you better be able to post six months of rent.

Now that starts to add up for the smaller operators a lot quicker. So I think that's a part of where I say that is becoming harder and harder for your mom and pop shops to kind of Phil Siegel : Do. Yep. And we're seeing that because that's what we invest in really at our firm as smaller companies to try to turn them into bigger companies.

We're seeing that in a lot of different verticals. We're seeing that we own a payroll provider, for example, which luckily is a decent size, but now with the regulations around money transfer licenses being applied to payroll companies in a lot of states, being a small entrepreneurial payroll company, that is going to go away because you're going to have to pay these licenses fees and it's just too much if you want to be a small provider. Mark Taylor : Certainly. And then the other thing with that is your smaller providers.

When I look at them, the overhead associated with running a general warehouse laborer in state of California is only about a percentage difference if I do it on my own payroll versus using a temp agency. And that's not a big enough delta to really justify bringing more people onto the Phil Siegel : Payroll. Right. Well, and they don't see it that way, the state.

That's the thing is they don't put themselves in the shoes of the entrepreneur all the time. Correct. Think about what's going to happen to employment, what's going to happen to efficiency. It's more they get a philosophy in their head and can't really get it out.

Mark Taylor : Yeah. So how are you ... So taking kind of the same market dynamics with the smaller payroll companies and applying them to your smaller warehouse operators, how are you advising the smaller companies that you're trying to scale up? What are the ways you're going about it?

Phil Siegel : Yeah. So we avoid businesses where we think there's going to be a huge fixed cost of actually just doing business, which is unfortunate because there needs to be some people that invest in that. And there will be, but I think most of those will be doing kind of what are termed as roll-ups where they put a bunch of the small companies together, which kind of in a way defeats the purpose of what you're asking. But we think areas like agencies and we have a business that has a bunch of agents, that's how they operate, so we don't really have to worry about that because what you have is small agents working with small carriers and we're just, excuse me, we just provide the services for the agencies and we're a brokerage business and so on and so forth.

And so that's a very good business to be in. : We're in a business that is helping with the whole change in nearshoring that's going on as the US works much more with Mexico, substituting out a lot of the work that we've been doing with China over the last few years. And that's a great thesis and not really as prone to these problems that you're talking about. But we run into some businesses we like.

There are two or three law firms that are incredibly good at analyzing the situation and telling you what your risks are. Anytime we're in diligence on one of these types of businesses, we use one of those law firms. They give us a big report. They tell us, "Here's what you're at risk at.

Here's what they may have been doing in the past that might get fined if you buy this business." And so for us, we know what the cost is and the risk is going in and we'll negotiate that with the seller if we choose to go forward on buying the business. Mark Taylor : So that's an interesting point that I'm going to kind of restate, especially because there are a lot of people I think out there who have built up their businesses to a place and they recognize it's either one, going to take a lot of capital investment or just a lot of hard grinding at about the same level for like very incremental steps, like small incremental steps.

And so if you do have dreams of selling out to somebody larger, then you really have to look in the mirror and figure out what are the things that you're probably under the radar and totally fine at this level, but what could be a potential risk to like your future acquirers? Phil Siegel : Yeah. And then you overlay with that. When you're small, nobody cares about you.

I'll tell you this funny story. Please. When we were hiring for a CEO back at Newgistics, it could kind of bring in a permanent professional CEO, he kept saying, "I'm worried about Federal Express and UPS and what they choose to do. " And we said, "Well, they haven't bugged us so far."

And he said, "You're a $30 million company. They don't care about you today. The minute you become a $300 million company, which is what I'm thinking about, then they're going to care." And that's really the point.

We run into that with a lot of entrepreneurs where they say, "I haven't had much competition. Nobody's coming after my customers yet." And it's like, yeah, because they don't really care about you yet, but you start making inroads a little further and so forth, you need more help, you need to be more professionalized and that's ... Some people get that and some people don't.

Mark Taylor : Yeah. So as I've heard it, and I mean, I love your perspective on it, if you look at the real estate piece of things and then you look at the operation itself, typically those are held at, I mean, completely separate because they're two different businesses, and it's going to be two different investors or potential acquirers that would buy those sorts of things. Even so from the entrepreneur's perspective, I feel like the opportunity in this business to really help with that long-term wealth strategy or long-term value for yourself and your investors is probably to figure out how to simultaneously take advantage of that because on one side ...

Go ahead. No, no, no, go Phil Siegel : Ahead. Finish. Mark Taylor : Because I was going to say on one side, limiting how much you're actually ...

Locking in what you can charge the operation is one thing, building the equity at the same time because you're going to be having to pay these very large sums to whoever the real estate owner is. If you can figure out how to kind of double dip, it doesn't seem like as much of a stretch to operate those two businesses side by side. Phil Siegel : Yeah. Well, so yes and no.

It depends what kind of business that you're in. So let me kind of talk about the difference between a fully contracted business with a customer versus one that's more spot. You're doing kind of day-to-day stuff and people are ordering and so forth. Mark Taylor : Great distinction.

Phil Siegel : Yeah. Yeah. When you're in a contracted business, if you don't build into the contracts something that kind of says real estate fuel, all these kind of raw materials, because what you're providing is a service, right? All the other stuff around that is a different game.

You're not betting on fuel unless you're a carrier that runs your own vehicles. Same thing in a warehouse. I don't think if you were in a contracted business with a series of customers, you should be betting on real estate because if you are, you're in the real estate business, right? So you put in escalators, you put in all kinds of stuff where if real estate prices go up, the customer pays you more.

If real estate prices go down, the customer pays you less and you're really focused on making a margin on the service you're providing. When you're in the spot business, and what I mean by spot is customers come to you to do something for them for periods of time, you don't have that luxury, whether it's public warehousing or whatever it is that you're doing. : And then you are in the warehouse business. And then the question is, can you make it a short term and cheap as you can, but it's a different world and that's a tougher business.

And we don't like those businesses as well because it's very hard to control your ability. You could be the best operator there is in a spot business, but if you don't have fuel kind of movement in your contracts or whatever, you're betting on the price of fuel and your great operations might get washed away by a spike in fuel prices that you haven't accounted for. And so it's tougher. Some of these businesses are tough because if you're betting on real estate prices or you're betting on fuel prices, it's different.

Now, everybody has to bet on real estate to some extent, right? You have a four year contract, buck 22, 4% escalators, fine, but then what's it going to be the day that runs out? : And that's where having somebody, for example, being larger is advantaged because you can make sure you're staging your lease, not every lease is up on the same day. You have one, a quarter of them this year, a quarter of them next year, a quarter and so forth so that you're not making a bet on general real estate direction.

So it's a long way of saying supply chain, as much as you can make it a bet on your operating capabilities and your ability to provide great customer service, the better. If you can get away with not having exposure to some of these commodities that you don't control, that's really good, but sometimes you have to have some exposure. Mark Taylor : Absolutely. When you were describing, when you're going through your thought process on that, what's the investment timeline in your head?

Are you looking at this on two year, five year, 10 year eternity? Phil Siegel : Yeah, four to six years is our investment horizon and we don't time markets per se, but we're also not stupid, right? I mean, this would be a terrible time to sell our best company. Let's let everything kind of get back to normal in a year, maybe two years.

And then I'm not saying we'll sell then. I'm just saying we've had, maybe it's not unprecedented, but a fairly unprecedented run up in terms of just how great the environment was for some supply chain companies and then just an absolute cratering from that. I mean, we've seen companies that delivered $80 million of EBITDA in 2021 that ended up with 10 million in 2023, but they're really $10 million EBITDA companies, or maybe they're $20 million EBITDA companies that got depressed last year from 20 to 10, but then the 80 was just crazy, right?

That wasn't real. : That was a moment in time when people were desperate, they couldn't get capacity, they needed to pay somebody something to get things somewhere, otherwise things weren't going to get shipped. And so ocean container costs went from thousands to barely hundreds and we see the same thing across all the ... And eventually we'll kind of get back to more of a normal cycle where things go up and down by maybe half over the course of a cycle, not 15X.

Mark Taylor : One of the things I think that is interesting is the industry is going to go the way of automation. I don't think that's going to ... I think somebody said it very well, they said that we don't need automation to replace labor. We need automation because it's got to augment what we have to keep up with what the market needs.

And for your kind of more spot providers, the people who are three to five year leases, five to seven year leases, whatever it may be, investing in an automation play that doesn't actually return on investment or it doesn't break even until like year four maybe. : And then after that, they might have to move it and incur 30% of the cost of the system all over again to then get it to the next location. It makes it very, very challenging. And so I think we're either going to see much longer term leases come into play and so people are going to, rather than the bootstrap mentality of, okay, we're going to go 50 for three years and then 72 or 90 and so on and so forth, you're going to either see larger pools of cash come into play to get the larger facilities or you're going to see these contract terms ...

Well, sorry, you'll have to go ... I think instead of doing that on the shorter terms, I think you're going to see a longer term come into play. And then if you start seeing seven year terms or eight year terms, that's when it's going to become a lot more advantageous for your independent provider to make the investment in an automation system. : But that's just a perspective.

Phil Siegel : Yeah. Go ahead. Well, I kind of think of it as two different types of things. One is the systems you're talking about.

Well, really three. So let me give you kind of three different ones. So the kinds you were talking about were to drive efficiency and effectiveness and cycle times, and those you evaluate on an IRR basis and how long do you think you're going to be in the location and so forth. And that's ...

I agree with that 100%, but there's two other kinds of things that you don't have a choice. One is visibility systems for your customers that is now table stakes. I would say five years ago, it was kind of, boy, you get a big advantage if you have it. 10 years ago, it was like, wow, some of these people are using cool TMSs that are better than other people.

: Today, it's kind of like there's no tolerance. We need visibility on where our stuff is and if you can't provide that, you're out. Mark Taylor : That's the flexboard story. Phil Siegel : Yeah.

Then the third is things that are required by regulation and the ELDs and trucks and so forth. Somehow people are getting a little bit of a wide berth in the smaller companies that's going to change. It is. Yeah.

And again, that makes the cost of being small, large, but that's also going to be an area where you're just not going to have a choice. You're going to have to invest if you want to stay around. And that means you can't be providing ... Because a lot of smaller players wait, wait, wait, and then they can provide in their services lower costs for a while.

And everybody says, "Well, how is that person so much lower cost than me because they haven't put the technologies in, but that's not going to last." Mark Taylor : Right. A lot to think about. A lot to think about.

Yeah. Well, anything you'd like to add or ... No, Phil Siegel : I think ... Well, I'll add one thing, which is this is a sector both for investing and entrepreneurship that I think is still super vibrant.

And I think back to when we first started doing this, which was ... So obviously Nugistics for me was really my first direct foray in supply chain where I was concentrating all of my time in it. And back then, people didn't really understand the value of the low capital or for at least the providers that were not capital intensive, brokerage, warehouse companies that were just leasing and leasing equipment and all that kind of stuff. Just the great return on investment that companies like this made.

And way back then, you had Expediters International and C.H. Robinson, which were ... There was those two, and then there was FedEx and UPS.

And FedEx and UPS are super duper high capital concentration and costs, right? : I mean, just an enormous amount of CapEx every year because they own their stuff, but you had these other companies that didn't, and people didn't understand how to value them and they were valuing them the same way they were valuing UPS and Federal Express. And that was one of the cool things for us. When we analyzed this market, we noticed that we actually personally invested in expediters and C.

H. Robinson, which was great. And now when you look at it, people do understand the sector has become much better understood the difference between capital intensive providers, some of which have gone out of business, some of which can't keep up, and the ones who are low capital intensity, providing a very good service and so forth. And because you can get into this market without a lot of capital intensity as an entrepreneur, I think it will continue to thrive for a while.

: And by the way, the amount of outsourcing that companies do is still ridiculously low relative to still how much is inside. And it's been growing in the low teens consistently for the last two decades, and it probably will continue to grow the outsourcing at low teens for another two decades as people continue to move a little bit more and more and more out of their operations and into 3PLs and four PLs. And that's why I really like this sector. Mark Taylor : Oh, I cannot thank you enough for giving me the time and really appreciate all the insights.

Phil Siegel : Great. Well, it's great to see you again too. Mark Taylor : Yeah, likewise. Phil Siegel : All right.

Mark Taylor : All right. Thank you.