May 13, 2020
In this episode, we sit down with Lance Theobald, CEO and Co-Founder of SecūrSpace to talk about solutions for truck parking and shipping container storage.
Santosh Sankar 0:40
Hey ladies and gents Welcome Back to the Future Supply Chain podcast. I'm your host Santosh Sankar, and joining me today is Lance Theobald, Co-founder and CEO of SecurSpace. Welcome, Lance.
Lance Theobald 0:52
Thank you so much Santosh. It's great to be here.
Santosh Sankar 0:55
Great for you to join us and getting right to business here. Some of our listeners might be familiar with what you're building at SecurSpace, but I'd love to level set knowledge and get a high level overview of what you're building.
Lance Theobald 1:09
Absolutely. So SecurSpace is a b2b marketplace that provides on demand access to yard space for the transportation and supply chain industry. So every day, thousands of companies from independent owner operators to some of the largest names in retail and shipping in the world, struggle to find adequate parking and storage capacity for trucks, trailers and containers. This problem is especially acute in major metropolitan areas like Los Angeles, Chicago, Chattanooga, Charlotte, places like that. And so the SecurSpace model is built around aggregating slack capacity at private businesses and facilities across the country. And presenting that to these customers and an on demand or "pay by the glass" fashion. In addition to our marketplace, we've built out a SaaS platform that helps the supply-side of our partners manage the complexity and the customers that come to them through our marketplace, or their existing parking and storage customers. So we really have two pillars. Primarily it's the marketplace and the subscription platform supports the marketplace.
Santosh Sankar 2:17
Got it. Got it. You know, before we jump further into SecurSpace, what led you in Cory to go build a company focused on truck parking and yard storage?
Lance Theobald 2:29
Yeah, it's a bit of a crazy niche if you think about it. But it really came from my experience in the industry prior to launching SecurSpace. I used to work for the largest chassis leasing company in the country. And part of my time with that company was spent out on the West Coast as their West Coast sales manager based in Los Angeles. And it was there that I began to really experience this problem. My job at the time was to lease out chassis on a long term basis to trucking companies, shippers and shipping lines. The bulk of our customers were small to midsize trucking companies. So in a city like Los Angeles, one of the biggest constraints to growth, particularly in a low margin business, like transportation, can be access to real estate. So it would often be the difference between getting a deal done, a chassis lease done, and not getting it done, would be access to parking for this customer. I began to really dive deep into this problem and realize there was a subset of the market, some small midsize carriers, and then many other businesses that had excess parking capacity available. So we really built our early thesis around the idea that companies out there in places like Los Angeles and certainly across the rest of the country have latent capacity sitting there. And if we could build the mechanism or the machine to handle the entire transaction to go do the business development and sell that for them, they would be willing to list and sell that space. And so we've really seen that play out over the last couple years. But it all started with me trying to lease more chassis back in 2014/15.
Santosh Sankar 4:07
Give our audience a sense of what happens today. Like if I need to find a place to park my truck as a driver or to leave trailers; how do people practically piece this need together?
Lance Theobald 4:23
Yeah, so those are two distinctly different things and our model services both of them. So I'll kind of separate them out. Truck parking is an incredibly huge issue across the supply chain. The last and latest stats by the ACRI state there are something like 400,000 truck parking stalls available across the country. This is at rest areas. This is at truck stops and elsewhere that supports truck parking. And there are over 2 million drivers on the road every day looking for a place to stop. The status quo would be ideally I'm next to a rest area or trucks that have capacity available if I'm looking for a place to park overnight, but the reality of the situation with that massive supply and demand imbalance is most truck drivers don't have a place to park. This is why you see him parked on the side of the road. You know I-75 going through Chattanooga, I'm sure if you roll down the road at past three or 4pm you're going to see trucks parked on ramps off ramps and in abandoned lots.
Santosh Sankar 5:24
Lance Theobald 5:24
That's the truck parking side. The trailer storage and container storage side of the business. By its very nature, you know this equipment is supposed to be in circulation and in use. But given the peaks and valleys in goods movement, we're gonna think about a ship coming into a port or a rail or railroad train bringing in a bunch of equipment into a rail hub. You're going to have an enormous amount of equipment hit one small area all at once. And so there's this need within the market for short term storage. Today in different areas across the country: look at Los Angeles, look at Chicago. You have businesses who built their model around servicing this, but it's never enough. It's kind of going to that concept of no one builds the church for Easter Sunday. There's usually enough capacity in a given market to service normal demand. But when peak surges hit or when you have something like COVID-19, or the tariff fiasco that we got into last year. You have surges in demand or surges in equipment hitting a very small area. A lot of times shippers, 3PLs, and carriers are kind of left in the lurch and they really happen to where to go.
Santosh Sankar 6:36
Where does this kind of meet or mesh with what you've built? Because what you've ultimately built is this network of capacity that you can access digitally, and not necessarily go on a boondoggle, if you would, for something so simple? Or in theory, so simple.
Lance Theobald 6:58
Right. Well, yeah, in theory it's simple. And we've really tried to make that go from theory to actuality. So where we fit in is we go and we go into a market, Los Angeles is a great example. That's where we got our start in early 2018. We went into that market, and we added about 2,000 slots of private capacity for truck parking and trailer stores or trailer parking in Los Angeles and Orange County. So there's an enormous amount of additional capacity that's never previously been available. And then we present that up to the folks that need it. And again, it's pay by the glass. If you need a place to park a truck tonight, you can come to us and book that much like you would a hotel room or something on Expedia, or Kayak. If you need 200 trailer stalls for the next six months to support peak season volumes or something of that nature; you can also coordinate that through us. You know, there's this misfit in the commercial real estate world. For the last 10-12 years it's been a seller's market. If you needed capacity, you were likely not forced to go out there and find some sort of multi year type of agreement to meet that capacity unless you knew someone who had slack capacity. Well, SecurSpace changes all that by aggregating slack capacity, you're a couple clicks away from getting exactly what you need in, you know, 43 states across the country right now.
Santosh Sankar 8:26
Touching on that topic, your partners who have the capacity: who are they? Presumably, this is, you know, Mom and Pop who might have some extra space adjacent to a warehouse they own? Who are these folks that have been able to monetize and make an additional income stream as a result of their partnership with you?
Lance Theobald 8:51
There's actually a really wide diversity on both sides of the equation. There's a wide diversity in who our customers are and who the partners are. With partners specifically, it is a lot of mom and pop type of operations. Smaller trucking companies, warehouse operators, distribution center operators, we work with a growing number of industrial real estate investors and the shippers themselves. We just recently formed a relationship with a large shipper base out of the Midwest. They have a couple of DCs across the country. Their DCs were built back in the day when they didn't try to fill the entire acreage with a million square foot or a 1.2 million square foot distribution center facility. And they have excess parking capacity. There's a wide array of partners that we have and it's a lot of fun to see people, some very recognizable names from a retail perspective and shipping perspective, come in and join our marketplace. And what we see is a lot of our partners end up being customers of ours, just in different geographies. You might be a buyer in your hometown of Chicago, or excuse me, a seller in your hometown of Chicago, but maybe you're a buyer in Los Angeles when you need capacity in that market.
Santosh Sankar 10:05
I've probably like many others driving at night you're going through travel stops, such as a pilot or a Love's. Where does that ecosystem fall into the broader truck park offering? You certainly can't leave a trailer there but how about truck parking? Using those facilities?
Lance Theobald 10:27
Yeah, so I mean we complement what they do. You know, those are purpose built travel centers and truck parking facilities. They have showers, they have restaurants, they have kind of the whole nine yards and fuel. I was looking at something last week and over the course of the calendar year 2019 Pilot Flying-J, the largest truck stop chain in the country, added 11 new locations with 920 total stalls. So going back to what I mentioned earlier, 400,000 stalls on the market today, there's a need for something closer to 2 million. These companies are pouring an enormous amount of capital into building new facilities and truck parking is only one component of what they do. And you know, they're never going to catch up to the demand. So I think we complement them. Our model leverages private facilities during that same time-frame of 2019, adds hundreds of new facilities and exposes thousands of new parking stalls across the country. For a fraction of the cost I might add. So I think we complement each other. We're not looking to compete directly with them. Their model is much different. It's far more capital intensive, but you get a whole different product when you show up to a Pilot Flying J versus a SecurSpace, truck parking location.
Santosh Sankar 11:49
If I'm a dispatcher or driver can I just make the SecurSpace park part of my route? So either in the middle of the day, when I know I need to take a break? Or at the end, when I've gone through my hours of service? How does that engagement practically work?
Lance Theobald 12:07
Yeah, so if you're if your dispatcher you know, the use case, you're gonna be sitting in front of a terminal, a computer screen somewhere, and a lot of our activity comes on, you know, from a dispatcher or someone sitting in an office booking on behalf of a driver or on behalf of a bunch of drivers. And so the entire system is built around this concept of a reservation. So it's waiting for you when you show up. So the dispatcher can do that themselves. The driver does that themselves. We've actually just announced an integration with trucker tools. We have several more integrations in play right now where the mobile application that millions of drivers already have and use everyday and every week, are soon going to show the SecurSpace locations for truck parking all across the country. So what we've focused our energy and efforts on is building out a very robust network of facilities. And we want to remove any points of friction in the process of accessing that piece. Drivers, especially if they're on the road, don't have time to pull up their phones, search around and find something. We want to make it as easy as possible. And so that's why we've chosen to partner with several of these large technology players within the space.
Santosh Sankar 13:21
Shifting gears a little bit. The one thing that we have not discussed yet is kind of the interesting opportunity you have to reshape the practical flow of freight in the last mile. And I think most people could relate to you know, places like LA and Atlanta, you get stuck in traffic. You know, put yourselves in the shoes of a truck driver. You're stuck in traffic, you're not going to get somewhere on time. Once you get there, there's probably detention being racked up because you're not coming at the proper hour. It's really hard to collect your detention payment as a driver. You're able to do a lot of interesting things with the network you have because you could consolidate things, stage freight. Talk to us about that because I feel like that's really the overlooked part of this truck park yard management you've created.
Lance Theobald 14:21
Yeah, that's a big part of what we do today and we are focusing on important rail hubs, specifically. You have, you know, demurrage and per diem charges that will rack up if your equipment is sitting at a facility. After 24 hours or after 48 hours, whatever your free time might be, you start to incur these enormous charges and so our facilities spread all across the country present shippers and 3PLs the opportunity to deploy equipment in stages at much lower cost and secure facilities right next to that, that distribution center or that the marine terminal. On the driver side of things, you're absolutely right. If you can reserve a spot and you know you're going to be right next to the Walmart DC or the Amazon DC, and you're not going to have to deal with kind of playing that game of trying to time it exactly right. Hey, my window is at 4pm. I don't know what construction is going to be like, I don't know what the traffic patterns are going to be like. We present an opportunity for a driver to have a home when they show up. Either prior to the delivery or ahead of that delivery, or excuse me, after the delivery, when their hours of service are out.
Santosh Sankar 15:29
With that, what does the future of truck parks and yards look like? You know, we have things like autonomy, showing up are starting to maybe show some promise, even if it's a decade away. Depending on who you ask. We've been spending a lot of time thinking about electrification of fleets. What is this gonna do to some of the partner assets that you have on your marketplace?
Lance Theobald 16:00
The biggest demand that we see across our network is in visiting that final mile type of situation in dense metropolitan areas. So I'm not an expert on ABs. But when I look at that it seems like the immediate application or the nearest term application over the course of the next decade will be the platooning or the caravanning across Kansas, across Colorado, Missouri. These areas where there's not nearly the density across your station. That's not really where the truck parking and trailer storage problem exists. It is in cities like Los Angeles, Chicago, essentially the entire eastern seaboard. So again, coming back to ABs you know, if that's the case, AB technology will be applied in maybe more of these open less populated areas. The truck parking demand is going to probably be the same if not increase as time goes on. Because you're going to need a place to stage equipment ahead of time. Stage trucks prior to a platoon of five trailers showing up. So I can't look into a crystal ball and tell you exactly the impact it will have. But the bulk of our business is conducted in and around cities today, and I don't anticipate ABs disrupting that to any great extent in the near future. And it might actually accelerate, you know, additions to our network.
Santosh Sankar 17:27
On the electrification side, then in, in last mile environments, especially, it could be that a lot of these parking facilities, the real estate assets themselves might have another revenue generating opportunity. As you see more fleets adopt electrified vehicles or alternative energy vehicles, what would your thoughts be?
Lance Theobald 17:54
Yeah, that's actually something that we get really excited about here. I think back to the mid 90s into the early 2000s, when American Tower was building 10s of thousands of cell towers across the country. I think they have 20,000-21,000 towers spread across the country and I think they probably had at the time, close to that many individual agreements with landlords, land owners and operators to go in there and build these facilities or these towers. But I think the same concept is going to apply. There's an enormous need for charging work as EVs start to ramp up. And if you're Tesla or if you're whomever that's coming in and trying to build out this network, the cap x is too great to imagine going out there and purchasing enough real estate capacity. In addition to the install and everything else that goes along with it. You'll have the travel centers, the truck stops, the big carriers and shippers probably install their own networks, but that's going to be a drop in the bucket. 97% of the total fleets and I think might be 90% of the total truck capacity is six or fewer truck drivers. These are not fleets with enormous amounts of capital where they can install their own charging stations across the country to meet their fleet's needs. I think SecurSpace presents a unique entry point for whoever is going to jump into that space and start installing these vehicle charging stations to essentially, through us, access thousands of facilities. Businesses that are already involved in the truck parking world, already involved in the equipment storage and staging world. And it's just one more menu item, one more thing that they can offer. And so I think we present a pretty cool opportunity for whoever builds that to get into an enormous number of facilities all at once. It's a really great thing to think about and we've got some strategies in play around that.
Santosh Sankar 19:51
Yeah. Super interesting. So you've had this front row seat if you would, given your ability to observe the activity on and off the real estate that's on your network. You have a software solution that helps facilitate all this. What are you seeing in the trucking industry today? Because you're at the ground level. What is volume like? Where is there activity? Where is there not as much activity? I'd be curious.
Lance Theobald 20:28
Yeah. So we saw in February and through the first half of March, we saw a pretty precipitous fall off, particularly on the west coast. Again, you know, we got our start in port cities, and that's where a lot of our activity happens today. But we saw a sharp decrease in demand. And I attribute this you know, Asian manufacturing shut down. They were dealing with the impact of the pandemic, weeks and months before the US started to deal with it. So there were blank sailings from the major carriers. And as a result, the demand on our network, particularly on the West Coast fell off in February in the first half of March. But going into the latter half of March, certainly through April and it kind of held steady and continued to grow through today. We see quite a bit of activity from retailers of non-essential items. Think furniture and household goods, things of that nature. They need a place to store merchandise that was maybe already on the water or was being sent this way, securely, while they're waiting for the American economy to begin starting up again and stores opening back up. So we see loaded container loaded trailer storage kind of happening across the United States. And unfortunately, to an extent we've seen quite a few trucks that, you know, 6, 8, 12 weeks ago, were in circulation productive, out there making moves. Now there's not enough there's not enough freight volumes to keep them employed. Some of those are finding a way into our network. So we've kind of cut both sides of it there.
Santosh Sankar 22:07
Yeah. And do you see pressure among certain constituents in the market? So now our large fleets you know, able to navigate this better? Are you seeing more activity from them versus the long tail of owner operators?
Lance Theobald 22:28
We are so the larger fleets, shippers themselves, some of the 3PLs, they have the financial wherewithal to to plan ahead and not wait until they just absolutely need the capacity. So we've had anybody from steamship lines to some recognizable brands in the retail world, come to us and purchase capacity preemptively. To basically accommodate this one off situation, hopefully, where you have all these non essential goods just sitting. Waiting for stores reopening and consumers to begin spending again. So it's definitely weighted towards the fleet and larger players as opposed to smaller owner operators and smaller carriers.
Santosh Sankar 23:13
Are there any signs or green shoots of things coming back?
Lance Theobald 23:18
At the moment? We have a couple of hot spots across the country where we're starting to see a little bit more movement. I can't really tell from our vantage point, if it's a green shoot, or if it's just more of the same where you have more equipment and more merchandise hit the shores and needs a place to be bored securely. Because a DC warehouse is full of stores closed down.
Santosh Sankar 23:43
Well, that's really interesting that where we're getting to a point where here in some markets, your warehouse is at capacity so the trailer essentially turns into a mobile warehouse.
Lance Theobald 23:57
I call that warehouse on wheels. Wow.
Santosh Sankar 24:02
Cutting edge of distribution. With that, Lance, appreciate you joining us and taking time to walk us through the industry that underpins a lot of truck movement. Parking and yard storage, and equally also sharing what you're seeing live on the ground. And with that, hopefully have you join us again in the future. Cheers.
Lance Theobald 24:27
Transcribed by Otter