Why Canadian Oil Won't Save US Diesel Prices

0:28This podcast features Mike and Malcolm and Matthew Muester. Ladies and gentlemen, welcome to the last day of the month. You see the man, you see the dude. I'm Malcolm Harris, joined by my brother in crime, Michael Vincent. It's another episode of What the Truck. Mike, what's up, boy? We got you in here. Right on. This is my tribute to John Kingston.

0:55Hey, man. That is beautiful. I love it. I may even get up and walk. I may even get up and walk around with my computer today. You never know. You never know. That's the best. I may do one of these things. Hey, what's happening? You never know. 146 Studios out in Dallas has never looked so much better, man. It is good. It is. It's the deal, bro. It's the real deal, man. I mean, it is everything. It is all that and a bag of chips out there where you're at in Dallas. How are you, my brother? I'm fantastic, too. I'm uh you know we're we're bunker we're hunkering down it's uh it's uh I don't know we're supposed to get some rain dude okay today some I don't know a hurricane or some shit or whatever on Pacific Broca Park came across New New Mexico so I don't know I haven't been paying attention but currently we're supposed to flood watches and shit like that for the next day or something nice nice well listen I will go come get you and Carlos and two of every single animal and put y 'all on my ark and bring you.

1:57You've been working on that, huh? Come on. Oh, bro. You are awesome, man. We got a great show in store for you guys today. Looking at On Deck, we have two great guests, two guests that have actually been on What the Truck before. But for those that don't know and did not see those episodes, let's bring it to you right now. Matthew Winster is going to be on the show. For those that do not know Matthew, he is fantastic. he's the chief economist at breakthrough all right the conversation with matthew is very simple he's joining us to talk all about the diesel market heading into the fall of course more north american crude sounds like good news for prices but he's explaining that that's not necessarily the case and what's really driving diesel and all the things are we're going to talk about keystone xl as well and canadian crude which actually fits into the picture so i'm excited to speak with Matthew.

2:46And then the bar has been set. Mr. Jefferson Barr, I see him with the red polo looking dynamic, and he is ready to hop on what the truck. I'm excited to speak with him. He's going to return to talk all about supply chain chaos. All right. There's a new report from him and his team at NetStock, and it's talking about how there's no single big disruption this year, just lead times, raw materials, freight costs, and demand all moving at once. We're going to get into why 99 % of SMBs are still growing. Despite the chaos, the dead stock problem getting worse, as well as inventory is improving, and why order early might actually be bad advice heading into peak season.

3:26All right. So between Jefferson as well as Matthew, we are going to have a fantastic 45 minutes plus five of freight. All right. I'm excited for these two men to join the show. But before we get to them, The month of September has been a fantastic month here on What the Truck. We have had a lot of different interviews, a lot of positive things happen on the show. And you have heard from both of our sponsors. Our presenting sponsor is none other than Descartes. Descartes has done such a wonderful job for us this month. And they're a wonderful organization in general. Of course, this segment and this show, again, is brought to you and presented by Descartes.

4:05They're introducing Descartes MacroPoint ELD+. All right, you guys heard this from Andrew Weimer. This is a new dual source tracking capability that combines ELD and mobile app tracking in one session. You can spot discrepancies sooner, capture proof of delivery, and gain greater confidence within every single load. You can learn more right now at Descartes.com. Descartes, thank you guys so much for all that you have done for us in the month of September. And also thank you to a special organization as well, our supporting sponsor. That is Kooner Fleet Management Solutions. If you guys don't remember on Monday's episode, Mr.

4:41Bill Cooper was here in the house and he had such a wonderful interview with us talking about fleet management and how to properly keep a fleet moving. And with this being said, again, this segment as well as the show is being supported by Kooner Fleet Management Solutions. All right. Because a truck that is not moving is not making any money. Every breakdown means lost revenue, misloads, driver downtime, and added pressure on your business. And that's why fleets across North America trust Kooner Fleet Management Solutions for mobile maintenance, preventative service, DOT inspections, and nationwide repair support.

5:18Kooner's tailored services help maximize revenue by keeping trucks moving, drivers earning, and freight on schedule. Visit KoonerFMS.com slash whatthetruck for your complimentary fleet maintenance review. Again, that is Kooner Fleet Management Solutions. Thank you guys so much to the great team at Cooner as well. And thank you to my co-host, Michael Vincent, because he's going to be here at this event in just a month's time. Actually, we're not under a month. Michael, can you tell the people what this event is, please, sir? It's F3, bro. It's the Future of Freight Festival. The Future of Freight Festival is live and officially on the way to you, coming from The Signal out here in Chattanooga, Tennessee.

6:00Yeah. This is the bee's knees. This is the WrestleMania of Freightland. This is the Super Bowl. This is going to be the biggest event of the year. Our events team is working hard to bring this to you. All right. And I know that times may be a little weird right now with the budget kind of looking at spend. I don't know, Malcolm. Well, I know you should definitely come. And I got a little something for you. It's a code. It's a promo code. Take 20. You can take 20 % off of admission into the future of Freight Festival here at The Signal. Again, that is T-A-K-E-2-0 that you see on the screen right there for your opportunity to take 20 % off.

6:37You're going to see a lot of different people. You may see a lizard. You may see Craig Fuller. You're just not going to see them at the same time. You're going to see the armchair attorney, Matthew Leffler. You're going to see myself. And you may see Dale Prax. Not sure if my buddy Dale is going to be in the building. But you will see Michael Vincent. You're going to see the Bowler Room Boys. And you're going to see a bunch of different folks, a bunch of different conversations. The Freight Tech 100. Of course, we got a broker conversation happening on day zero. I love, love, love what we have planned and in store for you guys.

7:08Not going to give away everything, but just know this is going to be the biggest one that I know that has happened in some time. All right. So tickets are on sale now. Future of Freight Festival, October 27th and the 28th. Again, this is in Chattanooga, Tennessee at The Signal. Tickets are on FreightWaves.com. All right. So with that being said, the Bills, not in Buffalo. I was going to say, what the hell happened to the Bills? What's going on? Do you see my hat? Can you tell me the name of the team on my hat? It's Kansas City, but I don't, it's not, is it the Chiefs? It's not the Chiefs. It's not the Chiefs.

7:45Not the Chiefs. Shit. Who were they? I don't know. I'm keeping my hands off of my computer, so I can't look it up real fast. It's okay. I'm going to say the Monarchs. Yeah, it's the Kansas City Monarchs. For those that don't know, it is a Negro League team. All right, so this is from their 1920 season. And I got this at a thrift store. Yeah, man. You got it at a thrift store? Yeah, I got this. It looks pristine. It looks pristine. It's a little dirty on the inside. I'm not going to show you guys the inside, but I wiped it with an alcohol swab. so we should be good all right man we should be good uh another announcement before we we get into the headlines the uh freight brokerage compliance symposium is going to be uh an awesome event as well as uh looking at this in congruent all right so you're going to have a supply chain day uh the freight brokerage compliance symposium again it's going to be um some great conversations surrounding compliance as well as brokerage uh insurance i'm sure it's going to be a heavy conversation and then the F3 awards dinner for the Freight Tech Top 100 is going to be great.

8:52And then, of course, you're going to have Tuesday as well as Wednesday. So you got day zero, which is the 28th. I mean, excuse me, day zero is the 26th. Day one is the 27th. And day two and the final day is going to be on the 28th. So this is going to be a fantastic jam packed week. Make sure you guys are here. All right. I want to see as many people as humanly possible. And this is what we work so hard for all year we have all this stuff happening let's wrap it up here in q4 which q4 starts tomorrow michael can you believe it brother that's it's ridiculous it's ridiculous it it it it it it i i don't know what to say about it i mean yesterday it was we were looking at it's going to be q1 soon it's going to be you know we're it's uh i don't know for sure i'm let's I'm, I look, tell you the truth.

9:44I'm distracted. Why are you? Why are you? I am surprised it's already Q4. It is. But dude, I just looked up like who played for the Monarchs. Okay. Are you freaking kidding me, dude? Let's hear it.

10:01Well, let's talk about, let's talk about, let's see here. Monarchs most famous player depends on how you measure famous. Jackie Robinson that's pretty famous I mean that's it's 1A I mean it's got to be the top guy right unless you know Satchel Paige you know what I'm saying here's one I never heard of before but this is listen to these guys Cool Papa Bell yeah I want a Cool Papa Bell jersey is what I want that's player Cool Papa Bell Cool Papa Bell, bro. And he played alongside Turkey Stearns. Turkey Stearns, man. I'm telling you, man. Turkey Stearns. Those are my favorite. Cool Papa Bell. I got a picture of the 1948 Cleveland Indians.

10:54It's actually a front page of the Cleveland Press from the 1948 Cleveland Indians World Series championship team. Satchel Paige right there front and center on that one, too. He played for the Cleveland Indians at that time, too. I don't want to get canceled by saying this, and I might. I kind of want the Guardians to go back to the name Indians. Is that bad? No, I don't call them the Guardians. No, I still wear my Indian stuff. I want them to go back to the Indians. If they don't go back to the Indians, they could go back to the Forest City Spiders is what they were at one time, which would be badass.

11:27It's just like I just don't get it. Same with the – I mean, and I get the Redskin thing. I get it, but it's just – I don't know. It's just the sports team. that may be me I don't know and I'm like the most PC person at Freight Waves like I have to be but I just dude I always looked at the Redskins and I was like well that's pretty rough dude that's pretty bad the Redskins that is very bad it is but the merchandise from dude you know is it the Chattanooga colored people oh wow do you know what I'm saying No, I get it. I get it. I genuinely, like, Redskin is, yeah, I see it. It's just the merch, like, for, like, a throwback jersey.

12:12Yeah. I don't know. That one's a little rough. That one's rough, yeah. Indians is, yeah, that's one thing. We'll see. Because there's still Seminole and stuff like that. Well, I think the issue with the Indians, though, was the goofy-looking Chief Wahoo, which they got rid of years ago. You know what I'm saying? Yeah, yeah. That I could see was a little bit offensive. You know what I mean? I could go for that. I could go for that. We got three articles. We're going to keep it pretty light today because we've been very heavy on the news, not only here, but on Freight Waves today. The first is obviously going to get into a layoff story.

12:49There has been quite a few layoffs that we need to go through in terms of Noy Mahoney's layoff breakdown report. It's approximately 1 ,850. So we're looking at almost 1 ,900 jobs that are on the chopping block. I'm going to take you guys through this list very, very quickly. It's kind of jumping around a little bit of everywhere. Texas, from what I see, actually is taking the lead with, I'd say, approximately a fifth of this list is out of Texas. But the biggest one is 4XH Logistics out of San Antonio. So this is going to be 230 jobs that are being cut and layoffs are going to start in about a week, excuse me, in about a month's time, November 6th.

13:37All right. This is due to closure. And then also just rounding out the top five real quick. And I want you guys to look at the full breakdown on FreightWaves.com, which you have Arter Delivery Services out of Centerville, Ohio. This is a closure happening on November 26th. Out of my home state in Georgia, Augusta to be specific, is going to be FPL Food LLC. Again, FPL Food LLC. This is permanent layoffs happening on Halloween. It's going to be$179 as well. That was with Ardorf Delivery Service as well. It was$179. And then out of California, you're going to have Ruiz Foods. All right, that's layoffs.

14:17and then you're going to have some additional cuts. And then rounding out the top five, respectively, is going to be out of Brownsburg, Indiana. This is Postal Center International. It's just a closure, 150 jobs being lost. And then an indefinite production curtailment on October 2nd in a few days is going to be out of Jasper, Texas. That's Louisiana Pacific Corporation. All right, so you can get a full breakdown of this freight distress report according to NOI at freightwaves.com but Michael whenever you see this it's never good news but we got to bring it to you what are your thoughts about this when going through this reporting brother layoffs suck they do yeah they they do and and and um it uh yeah you got to feel for the people I mean I've been in I've been caught up in it so you know a few times my in my life and it it sucks layoffs suck for a ton of reasons.

15:16The company's failing, whatever it happens to be. I wish I could say, and it's true, in his numbers are things that aren't real. I mean, they're just, you know, an Amazon delivery service lost their contract, but somebody else got it and picked up all those jobs. Some of those numbers that he's had in there are packaging people at Pepsi plants that aren't really transportation people. So there's a bit of that. And I wish I could say that he's inflating the numbers, but the reality of it is that the normal churn, and this is what's disturbing, dude, the normal churn, because my immediate thing is, okay, is this like a bogus number?

16:02And if it's not a bogus number, what is it in reality? Is it better this month than last month? Is this a positive trend or what's going on here? What is the context behind this 1800 or 1 ,850 jobs. And here's the contact, dude. It's about 1.4 % of the actual layoffs and churn in the transportation warehouse and utilities sector every month. The average is 111 ,000 every month. Insanity. I mean, it's a drop in the bucket. It's less than half a day of the actual number of people in the industry that are laid off or discharged is what he's reporting. And we look at it and go, wow, 1 ,900 jobs were caught.

16:51That's half a day, actually. It's like zero. It's 1.4 % of what's really happening out there that happens normally and every month. from normal firings, layoffs, et cetera, that type of stuff. It's crazy how the turnover in this business is. And I guess if you start counting the fact that you've got driver turnover that's like 120 % at some places and stuff like that, 100 ,000 people a month doesn't really register. You know what I mean? It doesn't at all. It doesn't at all, brother. More on this, of course, from Noi. You can read this, again, full breakdown on fretwaves.com. You know, Michael Vincent is an Ohio State Buckeye.

17:32He does not shy away from his hatred of that school up north. Let's talk about the school up north. Was that beautiful? They're trying to figure out a way to take two seconds off the clock this weekend instead of Adam. You live by the gun, you die by the gun. Where was the secret clock that no one's ever heard of? Yeah, we are all Western Michigan. Let's talk about Michigan for a second, but we're not talking football. We're going to talk about some drugs and crime and everything in between. All right. So for this one, guys. Why are you laughing about drugs and crime? Because it's just the transition.

18:12I was like, that probably sounds terrible. I'm not happy about drugs and crime. I just want to let you know. I'm just a happy guy in general. Anyway, Michigan State Police motor carrier officers stopped a semi-truck Thursday on I-69 near Marshall, Michigan. All right. The commercial vehicle stopped happening around 2 p.m. on September 24th. So this is a little bit less than a week ago. Trooper soon discovered. Look at those guns, bro. Look at all those guns. Look at this. They reportedly found 92 bundles containing approximately 167 kilos of suspected heroin. That equals 368 pounds of narcotics.

18:53Officers also recovered 174 handguns from the vehicle. Authorities reported that the firearms had obliterated serial numbers. This seems crazy. This is a little bit north of Grand Rapids. I mean, I wonder, do we think they were going into Canada? I mean, what's your thought here? And then also, I'm nobody to tell somebody how to do their business, specifically in the drug business. you would think you would you would uh scatter some of this i mean this seems very uh what's the word i'm looking for mike i need you to help me out here stupid no it is stupid make no mistake it is stupid but it seems very much so like you would want to put this in multiple truckloads yeah yeah here here's what i'm thinking because i did some i did some research on this as Like I always do all these things.

19:51What's the other story? So one of the things that I found, and it's not it's not a big mistake, but if you think about it in context of the other research that I did or found was this is actually much closer to Kalamazoo. The article misspeaks, and a couple of them do, but it was actually much closer to Kalamazoo. And it's like saying if you caught something outside of like Cleveland, Tennessee, that it was just south of Nashville or just south of Knoxville, which is true. But you would really say it's just north of Chattanooga. You know what I'm saying? To give it a little bit more context in this vein, this was in southwest Michigan, which Kalamazoo kind of puts it that way.

20:34more right and the reason i say that is because according to this southwest michigan state police southwest michigan loses more people to drug overdose than car crashes and homicides combined holy smokes what a stat that is insane i had no idea yeah and that's kind of that's the sobering thing behind this too right um sure so i i go with heroin's making a comeback over fentanyl sweet to to 172 guns what the hell are you doing with that that's a lot and then for the each serial number to be scratched out like bro well yeah i mean they're definitely definitely yo yeah it is there's supply in a drug gang for sure that's there's there's no doubt about that but that i mean you know and those are kind of the lighthearted things that you you you that i certainly used to not go well just how depressing and sad that is that all that shit's gonna hit it and then you look at this stat and go and where it was caught i mean you're not going across the border into canada from western michigan no way okay you're not no you're not coming in from mexico it's like a destination place it's like flying into chad nougan they say uh i hope you uh reach your connecting flights.

21:56I mean, there is no connecting flights. It's an end-of-the-line deal for this drugs, and that's sad, man. It absolutely is. You can check this one out from Phil Brick right now on FreightWaves.com. We're going to transition to another state, but we're also going to talk about an 18-wheeler and more drugs as we continue. This is crazy, fellas. I mean, ladies, gentlemen, this is crazy. Arkansas. Alright, this is where we're headed right now some cocaine they don't do drugs in arkansas no way no way they just have walmarts and uh and pigs out there in arkansas nah arkansas highway police uh about a week ago as well this is the same day they uncovered 254 kilos of coke during again another stop on i-40 all right canine mac all right alerted troopers to the rig during the arkansas inspection officers then searched the equipment located two kilos of meth and then they estimated that the street value of the cocaine was 5.1 million dollars as you guys can tell by this picture uh but then also uh this discovery what is what it looks like what was that picture of uh it looks like it's packaged for shelf sale it does it looks very very very organized and crispy it does like a cp like they busted a cpg trailer what is that there's a second stop as well in arkansas mike that a true person searched this vehicle and got 11 pounds of marijuana one uh gram of meth and then 4.2 ounces of shrooms and then they additionally located the stolen ut that's just that's just a decent that's just a decent party they just ruined someone's barbecue with that one it's ah man so it's getting pretty active in arkansas and in michigan uh the reason that we provide these stories because i know a lot of our listeners are like all right what does this have to do with supply chain and logistics well it's happening on interest state technically so you guys know for that purpose that it is something that we have to cover because it's on the highways that your stuff is getting picked up and delivered to and from and you can read more about it right now on freightwaves.com mike any thoughts before we get to matt any thoughts before we get to matt it's some cheap ass coke bro okay you can't say that you can't do i can't you know you can you can but you know it's yeah you're just you're something else man let's let's bring it some let's 5.1 million for 254 dude it's it's and they said that was street value yeah that no that ain't street value dude it's like it's dude 100 kilograms of cocaine is like 13.3 million dollars on the street yeah no that uh that somebody's math is somebody's math off or the michael vincent school of uh of math is really right i i don't know i don't know i don't know i'm claude knows his coke dude that's all i gotta say claude knows it's coke claude knows this guy that we're about to talk about right now all right he's the chief economist at breakthrough he is again a repeat guest that we have had on what the truck he has the best haircut in freight i want to welcome at this time mr matthew winster matthew matt my man welcome to what the truck so good to see you brother thank you gentlemen really great to see you too how's uh how's everything been since we've seen you last what have you been up to uh it's it's been a blur it's been a ride and like you were just talking about earlier it's hard to believe that q4 is beginning tomorrow unreal but last time that we yeah Yeah.

25:48Yeah. It is nuts. It is nuts. I mean, I got to put out my Halloween decorations now. You know what I'm saying? Our neighbors have had them out since Labor Day. Yeah. Yeah, I would do it too, but I got a new HOA and they don't like that type of stuff. But it's, you know what it is though? It is, it is, it is football season. It is. Okay. And it is professional football season. And I believe, Matthew, you went to St. Norbert College, did you not? I did, yes. He did. He did go to St. Norbert. So, look, St. Norbert College has got a strong affiliation with the Green Bay Packers. I don't know if anybody knows that.

26:35I don't know if Matthew even knows that. He might know that. But they do have a very, very strong affiliation. There's a guy. Yeah, yeah. I mean, check this out. I got pictures of Vince Lombardi, I think, with Matt. There it is. There we go. Right? Celebrating. And the reason that that happened isn't really because Matthew did anything, but there was another guy that went to St. Norbert College. And in 1961, he was an art student at St. Norbert, and he was also working for the Green Bay Packers as an assistant to the equipment manager. And there he is on the left. His name is Jeff Gordon. Okay?

27:11This is the dude that drew the G. That's the dude that drew the G for the for the Green Bay Packers, their logo right there. And the strange thing about this is I'm going through this and why this became your thing and not like a cloud picture. Today is the anniversary of his death in 2023. Actually, today. So we honor Jeff Gordon, St. Norbert's, Matthew and the Green Bay Packers and Vince Lombardi, who said it doesn't matter who wins or loses. why do they keep score? That is a great quote. That is a great quote. And I will say, you know, on the anniversary of his, the death of the guy that did the G, man, the royalties that he should be getting.

27:54I mean, there are so many different sports teams in college and in high school that have that G on the side of their helmets. I mean, crazy. Absolutely. Yeah. Yeah, he was an art student. They asked him to draw it. And that was, it was actually accredited to the equipment manager, this pressure dude for years and years and years and then they finally came clean and said this dude did it jeff gordon so anyways there you go not the race car driver matt speaking of a race car in order to have a race car you got to have gas let's talk about diesel let's just throw it out deep nascar is not diesel bro it's not at all but i tried to make a segue so bad i tried in the worst way it did not work out i think formula one is though aren't they diesel for it.

28:36No, maybe not. Matt, what's happening other than this just time? I mean, this is unprecedented what we're seeing right now when it comes to diesel and futures. For our listeners and viewers, can you just kind of paint a picture of where we're currently at right now, if you don't mind? Sure, happy to. You're absolutely right in connecting the fact that this is an unprecedented moment. What's happening for diesel is very unique, that we have a product that's kind of so far out of a fundamental supply-demand balance that its premium has skyrocketed. And so when we usually think about the cost of a gallon of diesel, especially earlier this year in the months of January and February, we could typically attribute a large portion of the total cost as well as the volatility that its price experiences to the underlying cost of crude oil, which today sits at about$90 per barrel.

29:31But what's happened over the course last seven months or so, of course, is with the onset of greater geopolitical conflicts, not just in the Middle East, but the continuation of Russia, Ukraine, we've gotten way out of balance in terms of international diesel fundamentals. And now the diesel refining premium or the diesel crack is trading today at about$108 per barrel. And so all in, we're really looking at about a$200 barrel of diesel. Michael Vincent, take it away, brother, because I know you got some questions. I saw you in the preview camera over here. I always have because I'm always trying to understand it more and more and more.

30:11And I still don't think it should be traded as a future because it's actually fuel to me and energy is a utility and it shouldn't be traded. It just shouldn't. It's such a necessity. But what I'm really interested in is why the future price hits the cost today. You know what I mean? If futures go up to$120, God forbid, like today, right, because we drop a bomb or something, because it's not really supply and demand. It just isn't here. Why does gas and diesel go up tomorrow? I mean, shouldn't it be priced on what the raw good was when they bought it? When the oil oil was refined? I mean, you know what I'm saying?

31:01I mean, they're not selling me. You know what I'm saying? Because then when it goes down, it takes forever to go on it. So they're double-dipped. And you're talking about oil companies and refinery companies are making record profits right now. And it's the big guys that are. The littler guys. There's also big guys and little fish in that pond, too. And the little fish are getting squeezed out and the big guys are. So there's some nefarious stuff going on there. You can't convince me there isn't. Yeah. Yeah, you're likely right. Can't confirm or deny it. When it comes to what's driving price, many things do.

31:37So some firms strictly in the business of trading. Other firms are in the business of trading and can actually hold inventory. Others are producers. They all matter ultimately to the price equation. When it comes to the futures price and how it influences the prices that we experience as consumers, as fleets, as shippers, as we reimburse our transportation service providers, the front month will influence our wholesale prices as early as the next day. And so today's trading really makes its way into the energy supply chain in terms of price impacts very quickly. And unfortunately, today, crude oil, diesel cracks were up earlier today.

32:18You know, we're waiting and seeing an inventory report any time now that may have a hand in it. But ultimately, these trades do matter to our immediate experiences as both consumers or as businesses that are moving freight across North America and the world. Hey, can I follow up for a minute? Certainly. All right. Cool. So there's two items that I really want to hear from you on. And so I'm sure many else do because they're a bit confusing, right? because refineries why would refineries be going offline now and didn't the administration just approve uh building some new refineries and how long would that take to hit it um and then you also have this idea of hey why don't we quit exporting our diesel so it doesn't cost so much that's a lot to take in but there's a lot why are refineries yeah that's fine i'll try to work my way right through those.

33:21So why are refineries going offline? Well, if they're going offline structurally, you know, I think right now they're not because they're exceptionally profitable. In past years, some have become under pressure. In some instances, it's the policy environment that's putting pressure under refiners and ultimately increasing their operating costs to the point at which they can't be financially sustainable. We've seen that in the U.S. In other instances, the infrastructure is old to the point in which it's deemed no longer valuable to make the reinvestment in the equipment and keep the plant operable.

34:02When it comes to policy support for refineries, it's great. We're going to need it for some time yet. we're well aware of that as as diesel consumers where market share presently sits in terms of what heavy duty vehicles in particular are consuming especially here in north america it does take plenty of time to roll them out i mean these are complex chemistry sets not only do you need to build the actual refining infrastructure at the site you need to build the infrastructure to support the flow of of upstream products to the refinery whether that's more than likely it's your input. It's crude oil into the refinery itself, but there are other resources that have to be accounted for.

34:47So that timeline is really into years. And then scratching my head at three items, usually I need a list when I go to the supermarket or go out for any purchase. So third question, if you remind me. It was just the talk about the administration talking about banning exports of diesel. Oh, yes, the diesel band. Well, here, I think a couple points, food for thought. We export a lot of diesel out of the Gulf because it's very efficient to do it. Most of our refining, well, a healthy chunk of refining infrastructure, more than 40 % or so, exists along the Gulf Coast, especially Texas, Louisiana. up makes it very convenient to put that onto the water.

35:36And we also can think of the U.S. in terms of really being many different diesel markets. And separated to some degree, we talk about pad districts, petroleum area districts. We think about the Northeast, the West Coast, the mountain region, the Midwest, the Gulf Coast is having very different diesel price points. And that's true. It's not just driven by change in taxes from one geography to the other, but the underlying commodity prices and movements have a lot to do with that also. So what might a diesel export ban look like and how might it affect the market? Well, it affects international markets in a major way, especially places like Europe and South America that the U.S.

36:17has been exporting considerably more diesel to. That's something that's driven our diesel exports up, you know, averaging 1.7, 1.8 million barrels per day for recent history, going back to certainly the onset of the Middle East conflict. What it also could do in the near term is perhaps build domestic inventories. That's an argument. It would necessitate a Jones Act waiver continuing in order to move inventories to the northeast. But some of the limitations are these different diesel regions of the U.S. may not necessarily be built to accommodate that level of diesel imports. That either they've, over the longer term, have really relied upon regional refining infrastructure or pipelines from the Gulf Coast to pull diesel into the region.

37:04So whether they can accommodate more exports that would have to be driven by vessels, I think, is another point of consideration. So in total, I think you could see some near-term benefit. Longer term, there is a risk of greater imbalance across the refined product portfolio because ultimately at some point, golf producers aren't so focused upon putting more diesel into the market. That's what's really driving their profitability. And ultimately, they'll start to cut other products within their production slate, like gasoline, as they choose to put less crude oil through the refinery. Matt for uh for Tom's sake I want to ask two questions uh the number one question this Keystone XL deal with Canada when it's incorporated into the U.S.

37:49or if and when how is this going to make the future look and then also if you could give our listeners some insight as to what you think is going to happen in terms of um you know obviously you're an economist so futures but just really in general when it comes to diesel if you could just shake that crystal ball and give us an inside look what do you think that's going to look like all right excellent and so starting with keystone and xl first yeah uh you know this this pipeline has been in and out of our minds for well over a decade um when we think about total impact on the us it does add more crude oil to uh north america and keeps it uh the region well supplied with crude oil.

38:32Today, Canada is responsible for about 60 % of our crude oil imports at about 4 million barrels per day. The expectation for the Keystone XL initially would that it be supplied more oil to the Gulf Coast, where then the Gulf Coast could supply products into the international market. It's not the only pipeline worth considering. The Bridger pipeline is extension, likely replacement of some of the initial volume that was intended for the Keystone XL. That's slated for like 2028, 2029, so not immediate improvement, but something, again, that can offer domestic refining infrastructure, more supply and stability.

39:12They'll be heading into Wyoming, that mountain region, I believe is the expectation. And then Canada is also committed toward putting more barrels of oil in the international market, which can also help with overall supply and demand fundamentals and make us less dependent on places in the world that have been more volatile. In terms of immediate impact, there isn't one. These projects are still a ways up in years in the making, but it could have an impact toward the end of the decade. I will say then, so shaking the crystal ball, how do things shake out here? When looking at forecasts, we really focus upon decomposing the market and then reestablishing a price buildup for any energy commodity.

39:55So with the diesel price, we're considering the underlying price of crude oil. It sits today at$90. I expect that the crude oil market can moderate much more quickly than the diesel market on itself can because of those refining premiums. So we're looking at 2027 averages. Had to think about the year there for a moment, but we're looking at those averages. We're pegging it at about$70,$75 per barrel, understanding we're going to be higher in the beginning part of the year, lower toward the end of the year, hopefully as some of these logistical bottlenecks get worked through. When it comes to diesel refining premium, we're sitting$110 today.

40:33That's way off of where we were at the beginning of the year, where we sat between$30 and$40 per barrel. This will take more time to work through. So expect diesel prices to remain very high here in Q4. Our forecast is higher prices in October than what we had in September. expect them to be very volatile. And ultimately, once we work through the holidays, it might be our first chance of some downward price pressure and reprieve from some of these high diesel cracks. But do budget for elevated prices in 2027. And the guidance that we're sharing right now is in the neighborhood of 10 to 20 % lower than the 2026 average, but that's still keeping prices is exceptionally high.

41:16Matt Munster again, chief economist at Breakthrough. You guys will hear from Matt. Try to have him on quarterly to give you guys all the latest and greatest. Matt, thank you so much. And keep hope alive, man. We look good under these lights, okay? Don't let anybody fool you, okay? Yeah, there's a lot of shine up here this morning. Oh, other side, backwards, up here this morning. But hey, I love it. Next time, I'll need to get a cool-looking lit. Props on the Monarch's lit. Thanks, brother. I appreciate it. Thanks for having me, guys. Of course, man. Of course. Appreciate it, Matt. And that was an awesome interview.

41:50Again, we'll have more when it comes to diesel pricing and futures and everything in between from Matt on future shows. But I would like to end the show. We have a few minutes left. And for time's sake, I want to bring him in now. He's the chief marketing officer at NetStock. He has been on the show as well. An awesome guy. He's looking good. He has a lot more hair than me, too. And he's pretty smart. I'm pretty sure he's smarter than me. Mr. Jefferson Barr. Jefferson, welcome to What the Truck, man. It is so good to see you. How's it going? What's up, Malcolm? Good to see you, my friend. Good to see you, too, brother.

42:24It's been a while. It's been too long. I got something for you. What's up? I got something. I got a lid. You got a lid, too. I might need one. I might need one of those ships to... I got hair, but I still got a lid. I figured I wanted to fit in. When in Rome, do it to Romans. The last time I was on, my colleague was wearing a bow tie, so I couldn't put the hat on. But here we are. Here we are. I love it. I love it. Mike, I need you to give the Claude sauce, man. I just want to say, I'm a little scared. Mike's on the call. He's got Claude. He's going to throw some questions at me that I may not be able to feel.

43:03So I'm a little. No, no, no. No, they're always answerable questions. They're usually stupid. I'm that guy that they always say, look, There's no stupid questions, just stupid people that ask them. Exactly. I don't know the street price of meth or cocaine, but I just want to report that I'm no longer, I've divorced from professional sports. I no longer follow it. I would already care. So there's that. I understand that, but you did, you were a graphic designer, an artist, art major. Is that right? Yeah, I'm an artist. You were? My true soul is an artist. So that's all I got in the course. It was a graphic design and marketing.

43:42Yeah, thank you. I think my man Cody got us a picture together. There it is. Let me tell you, I can send you a picture. That is not far from what I look like in 1982. I'm just saying. That is pretty darn accurate. And Blue's Clues is in there because I think he's also an alum of, what is it, DeSalle University, right? Well, a partial school of design was the art school. But anyways, so. yeah well you're an artist but you also are you're both i did i went back and got my business degree i wanted to be smart there you go so there you go so there's your there's your cloud picture there right there i love it you gotta send me that picture no we'll get that we'll make that happen i'll get it from cody um talk to us about this report man because this is it's crazy there's a lot of data to break down i feel like we're gonna run out of time in order to break it down properly so high level give us the latest and greatest when it comes to this net stock report bro yeah i mean i think the main point is that this year is a different landscape last year terrorists were played the main villain uh in the report uh that was a single not a singular threat but they knew where to anchor their defenses our customers um it's pretty clear the majority of them were front-loaded inventory to avoid higher prices for terrorists uh they essentially build a lot buffer stock to combat higher prices, which is called strategic overstocking.

45:06Fast forward to this year, there's multiple disruptions, more bad guys in the cast all coming at you at once. So it's difficult to determine where do you go first? Who do you battle first? You know, do you diversify your inventory, find similar items, change suppliers, or simply stock up to weather the storm? So it's a different landscape. It's more challenging for sure. It is, but how do you figure out which fire to go after? What's the strategy in this? Well, we always say data and visibility, right? So if you have the visibility, most times people will fall back to their gut instincts. What did they do before?

45:51You know, before they had a platform, they would just order more. Or now what we're saying is that by using the visibility brought to you by a platform like NetStock, use that visibility and use the data to make smart decisions, to make strategic decisions. Don't be reactive. Be active, not reactive, if that makes sense. Yeah, it does make a lot of sense. Now, talk to me a little bit because I see a couple of data points that I'm looking at. 99 % of businesses still launch new products, expanded product lines, or did both. How are SMBs simultaneously telling you conditions are this difficult, but also they're still pushing the gas when it comes to growing their business?

46:35Yeah, I mean, that's one thing we've learned. This is our third year of doing the benchmark report. What we've learned is our small to mid-sized businesses, they're scrappy. You know, I mean, a couple of quick data points. I'm sure you guys know this, but I'm always shocked that 46 percent of the U.S. workforce is employed by small business and it produces 44 percent of the U.S. GDP. So there's a lot of them out there, a lot of competition. So by nature, they're more agile than their larger competitors. And again, back to the tools, if they have the right tools, they can make proper decisions where to place their best.

47:10So in other words, maybe they need to source from new suppliers to avoid the tariff costs. Maybe they need to nearsource to avoid higher shipping or freight costs. Or sometimes, as I said before, find a similar product line to replace that overly troublesome product or supplier. So, I mean, the statistic that we just talked about that Malcolm just exposed or just discovered for us is, Is that telling you that these small businesses, these SMBs are becoming more resilient or have they just go, you know what, this is just a new normal, let's move on? Yeah, I think both. I think essentially they've been more resilient.

47:51They have to be scrappy to survive. We've seen them take different tactics through the past three years of this reporting. But it's also the new normal. I mean, so I was looking at some of the questions last night. No way, Jose, are they expecting things to get back to normal. They're expecting to consistently see the next threat and react to it or action on it. And structured volatility is what's being called, a lot of analysts are calling it structured volatility. So it's not going to go away. So the sooner that they can learn to see the see the problems ahead of time and act on them and not go back to their bad habits, the better off they are.

48:35Jefferson, I wish we had 30 minutes because I feel like I have 17 questions to ask you. But my final question I want to ask you is a supply chain leader in the space, whether it's an S &B, whether it's a large enterprise type deal. what's the one metric that if you're in the driver's seat, which obviously you are at NetStock, but like, what's the one metric that you're just saying, hey, like you have got to look at, or what's the one item or metric that you're like, hey, this has got to be something, it's a non-negotiable for 2027? Well, I would say not necessarily metric, but the one thing in 2027 they have to do is be agile.

49:12We've talked about it before. They have to be more agile and strategic. And essentially, one of the things that we say is businesses, their best position for future disruptions are the ones that take the data and then transform it into clear and immediate decisions. And rather than relying on what they did a year ago, they have to navigate today's reality. That's easier said than done. And one other data point that the end of the report we see is that our stars are by far the biggest users of our platform. Our data scientist, our data engineer came back to me and said, you're missing a point. The number one leading indicator of our stars are the people that use it the most, the companies, and they do it by a factor of two, 2x more than the next cohort.

50:01And it's independent of industry or company size. So basically, use a platform. I don't care. You know, I'm not saying it's not a selfish plug for NetSock, but use the tools you have. Don't make gut reactions, knee jerk reactions and trust the data. I lied to you. I got one more question that you just I got to talk about it now. All right. So there's stars versus stragglers. Define the two for me in the report and get into that as well, because I saw that and I was like, OK, this is very, very fascinating. Well, we defined it across over-ordering, under-stocking. So we have different quadrants.

50:39And basically, you can see in the report, typically, like stock turns for our stars is like 8x. For the stragglers, it's like 2x. And you want to be at least 4 or above. So it's just a really cool way to look at the data. So basically, we took the anonymized aggregated data of our 2 ,500-plus global customers, and we looked at it and split it up by who's winning and who's losing. And for a customer prospect, they can come into the report and see by industry, by region, how their counterparts are doing. And, you know, actually, one more plug, sorry. We got an inbound the other day said, hey, I read your report and I actually want to up for more professional services because we're not using the platform properly.

51:24So it's like it's there. You just got to use it, man. You know, I'll just help you, you know. You can lead a horse to water, but you can't make him drink. I think you can do that, man. You can make him drink. You can give them a solution. Or you can give them a painting because you are the official Bob Ross of what the truck. Mr. Jefferson Barr from NETStock. Mike, thank you so much. Jefferson, thank you so much, brother. Let's definitely have you on before the end of 2026. And I'll send you to it. Sorry. You better. You better. FreightWaves office, man. I will get that picture from Cody. over to you as well and uh just appreciate you for being here all right thanks a lot guys yes thanks jefferson mr vincent are you still with me sir sir i'm here all right um did you enjoy the show today i did what was your your favorite part can you tell me that my favorite part of this show yeah i don't know i i don't know man i love the whole thing bro yeah me too but when you when you first when you first come on is my favorite it's like you know waking up to ray of sunshine look at that look at that smile okay okay that's it all right there see you see you see you see my brother right there is it that's that's my thanks you know i'm saying thank you thank you thank you Thank you.

52:47Well, listen, we have no show on Friday because I'm going to the real UT, even though we lost to Texas. Got to go to the journalism college, and we will be back on Monday ready to go, and we will have a road ahead for you guys. But it's been a great show. Thank you so much to Jefferson. Thank you so much to Matt. Thank you so much to the people. Like, subscribe, follow. I hear the music. That means we got to go. Michael Vincent, Malcolm Harris, peace, love. See you when we see you. bye peace and love

53:45We'll be right back.