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- [00:00]
Michael Niederhauser
Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do@mintmobile.com.
- [00:18]
Marielle O'Connell
Switch upfront payment of $45 for 3 month plan equivalent to $15 per month Required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full terms at Mintmobile. Do foreign welcome to Running on Ice, the coolest community in freight. I'm your host Marielle O'Connell bringing you the latest updates, warehouse news and everything happening in the cold chain world. Not only is there the coolest show on freight, but there's also running a nice newsletter that could not be colder. You can subscribe to that on FreightWaves.com RunningTheNice Today we welcome Michael Niederhauser, Parcels VP of Strategic Partnerships. Welcome to the show, Michael.
- [01:04]
Michael Niederhauser
Thank you so much, Mary. I'm thrilled to be here.
- [01:06]
Marielle O'Connell
I'm excited for today. This is something that we honestly haven't, we haven't covered in a hot minute and that's kind of, you know, the, the, the goods behind the goods. You know, the stuff that makes sure that if a reefer unit fails on an entire, you know, trailer of strawberries, like it's going to be okay adjacent, like we're going to lose some strawberries but we're not going to be crippled financially. But before we get some, before we get too far into that, let's get some background on you and how you got started at Parcel.
- [01:38]
Michael Niederhauser
Sure. Thanks, Mary. Yeah. So quite a journey. Much like your strawberries you mentioned a moment ago. I actually started out as a programmer with Accenture. I was doing a supply chain systems engineering that and obviously after that I joined the Peace Corps. So I went to Sub Saharan Africa and taught mathematics for two years. A little bit of an about face, but after that came back to the states and focused my career around supply chain and then health care as well. Interestingly enough, health care in the early 2000s was adapting a lot of supply chain principles as well as manufacturing principles. So interesting things came together there. I then found my way into a startup and just kind of got a startup bug. I had one amazing experience with the startup where we were acquired by another consulting company called Huron out of Chicago. Amazing experience, right? Not life changing. I'm still here but still great. I also had another not so great experience and so, you know, you learn from all of them, right? But definitely decided that startups were for me. And so kind of after the not so good experience, crossed paths with the current CEO Ben Hubbard. Our kids, now teenagers, previously were in preschool together. So talked with him just obviously doing the catch up and he's like, hey, your background this and that. We're startup phase of some different stuff. Why don't you come in and meet the team? So did and went extremely well. And here, here I am today. So actually started out as a part of our monitoring side of the business, helping with customer retention and growth and more recently have moved over into strategic partnerships which really focuses on data partners, but also on our brokerage entities as partners. Insurance is a little, little bit different than your typical buying cycle. If you need insurance mar as a supply chain company, you're going to go to a broker and your broker is going to find you insurance. So when you realize that you don't buy insurance directly, you go through a broker. From our perspective, managing brokers and broker relationships really are the key to helping you and your company. So that's that in a nutshell. And today I kind of sit in this interesting spot, at least I find it interesting. It's between our technical team, so the team that's really acquiring, analyzing data building systems and our underwriters that are actually the ones that are sitting down evaluating the risk and putting prices on it. So very different worlds. And I'm kind of in the middle there and I really do like it.
- [04:14]
Marielle O'Connell
I kind of like that you sit in that almost like a translator role of like you sit there and you go, okay, yes, technical, keep doing your thing. But then the underwriters are like, I don't particularly like I care, but I don't care. I just need like the Reader's Digest version.
- [04:31]
Michael Niederhauser
You know, you're so right and understanding like the why. Why am I recording all of these individual routes now versus just making a rate and there are reasons behind it. And you're right, that why is often missed. And I don't think that's unique to insurance. Right. I think the why is probably the not so secret sauce to any business functioning effectively. Right.
- [04:51]
Marielle O'Connell
That's like the whole, that's why I like there's always like that one department at any company that you're like, what do they like? They do things. But then like also 90% of their job is just taking things from everyone else and being like, okay, this is why you Guys should care about it in like a very layman's term because for the most part you're right. There's always those two departments that are like, I don't give crap what they do. Like just do what I need you to do. But then also like, they all like work together. So that's, it's a, it's a fun position to be in, you know, the little.
- [05:22]
Michael Niederhauser
It is, it is, it is. And it's constantly challenging. Flexing me. So definitely not sure that I would have guessed I would be here today, but I sure am glad that I am.
- [05:32]
Marielle O'Connell
You know, who would have thought, who would have thought all those years ago? But before we get to let's, before we go all the way down into that insurance rabbit hole, let's take it back. Let's do that 3,000 foot view. Kind of give us some context of. Because you guys have had some pretty big announcements lately.
- [05:51]
Michael Niederhauser
We have, yeah. Yeah.
- [05:52]
Marielle O'Connell
To properly celebrate, let's get some background. What is parcel? We. I know you guys might have been on the show years ago. It was before I took over. So for all of us who have not been listening from the beginning, give us some context on parcel and kind of a quick cargo insurance. One to one. Because it's, it's more important than you think. It is.
- [06:14]
Michael Niederhauser
It is, it is. Thank you. Yeah. Super quick, high level parcel. We are a data powered cargo insurance versus complex supply chain company. So it's all about ensuring complex supply chains. Right. We acquire and use data from many, many different sources so that we can better understand price and mitigate risk. And ultimately what that means is our insureds end up saving money and we can help them actually improve coverage if they have the right scenarios in place. So building on that, Mary, let's, let's take your, your strawberry example, Mary's berries. You've got to ship your berries, you know, all around the world and you usually are on risk for your berries from farm until customer. Right. Things happen. And through that process it could be catastrophic events. Obviously we've heard a lot about wildfires recently, floods that are associated with hurricanes. When that stuff happens, you know, it's really hard to plan for that. Almost impossible. And that's really when I think insurance is, is its best, is covering those big catastrophic events that no one else could really do anything about. So we're there for that. Right. The scenario where we actually have really started to dig into is where the risk is not catastrophic. Right. It could be a human error, could have been a malfunction of A piece of equipment, lots of different scenarios like that. And so what we're really focused on is helping in those scenarios, use data so that if there is a potential problem, Mary, with your berries, then we can help you better understand that risk at a global scale, meaning across your operations, not necessarily around the world. Unless you're sending your berries around the world, we can help there too. But it's basically a mutual kind of relationship, long term relationship where we use data and we're trying to help our insureds better understand their own risk so they can mitigate that. Because guess what, that's a benefit to you because if you can sell your goods, you actually get the profit on top of it. Not to mention maintain your customer relationships. If you reduce your losses, that also helps us as your insurer. We don't want you to have losses and you don't either. Right. So that's kind of the mutual relationship that we're trying to really grow and harvest, if you will. So we're here if you need it, and if you don't, then we're still here. But yeah, so that's insurance in a nutshell. And again, the really interesting part is the brokerages in all of this because you typically will need all sorts of different types of insurance, Mary, not just for your shipments, not just for goods in stock, for all your employees, workers, all these things. So a broker helps to consolidate that and add value in that chain because there are many different types of insurance. So for parcel, it is important to note that we are cargo insurance. So one piece of a very big insurance pie. And really that involves stuff going over land, sea, air and goods in stock as well.
- [09:12]
Marielle O'Connell
I think that's kind of like a unique position to be in because you, like you said, because you take that data approach to it, it's more than just like, oh, someone forgets trying to refer on, okay. Like you can see how often it's happening with a specific carrier. And then if your customers are using this carrier a lot and you say, hey, maybe pick a different carrier or do something else or come up with something else, because we're seeing things fail at this rate that is causing you to lose more because of these certain human conditions. But then also, you know, maybe you could take a step further and say, if I'm shipping pharmaceuticals and I have manufacturing in the south and then in the north, you know, maybe I switch a little bit more manufacturing to the south in the wintertime, so that way I don't have to deal with blizzards and stuff getting Stuck in production or not being able to set a ship out or, you know, sitting there forever because it's stuck on a trailer that's under like feet of snow.
- [10:08]
Michael Niederhauser
You're exactly right.
- [10:09]
Marielle O'Connell
The, the upper, the northern half of the country does love a lot of snow. They love a lot of snow in the winter.
- [10:16]
Michael Niederhauser
It's happening.
- [10:17]
Marielle O'Connell
And then also, you know, same with that southern option. If you have something, you know, around the coast near Florida, Alabama, something like that, then you say, maybe during hurricane season we shift that up to the north. So that way our facility can obviously still run. But when we have some of those things that are huge disruptors and can devastate an area, you kind of have that flexibility to still keep your product moving, but also, like you said, mitigate those losses. So that way you're not left there going, well, I don't know what's going to happen. We're just going to hope for the best. Whereas you guys have that data that says, well, statistically, this is what's going to happen.
- [10:53]
Michael Niederhauser
That's exactly right. Got it.
- [10:55]
Marielle O'Connell
So onto the big exciting news that you have. You guys recently got that in the terms of the youths, I think.
- [11:05]
Michael Niederhauser
Yes, yes.
- [11:06]
Marielle O'Connell
You got that bag. You know, you guys secured a huge raise in your CDC funding.
- [11:12]
Michael Niederhauser
That's right.
- [11:13]
Marielle O'Connell
So what's the goal? What's the plan for it? What are you guys planning to do other than just take over the world and make everyone a parcel customer?
- [11:20]
Michael Niederhauser
That's right. No, I think really there's, there's three main areas that we're focusing on. First and foremost is people. While we are really, really scaling in a different way than traditional insurance organizations, we absolutely have to have people in the right places, talented underwriters that truly understand the risk and be able to, to write that and to serve our customers. So that's, that's the very first thing is an investment in people here in, in North America as well as in London as well, which our main office in London and here in the States too. So people number one, number two is technology and data. This is both a combination of building some in house tools as well as purchasing some in house tools. I think one of the key areas that we're really going to focus on actually touches on the people piece, which is making sure that our underwriters are maximizing their time. A statistic I saw recently was Most underwriters over 85%, 86% spend two hours a day on manual data entry. Right. Just setting up a risk. Right. Think about that. And we've Got incredibly smart underwriters that understand risk in ways that you and I just don't even think about it. And here they are doing data entry. So that is a very clear area where we're investing. We already made some significant gains, but there's a lot more to go here as well as obtaining really non conventional insurance data. So buying information from logistics companies, partnering with other monitoring agencies to get us more information, because the more information we have, the better view that we have of risk. Right. The third area is really investing in our mission. And so our mission is pretty, pretty interesting. We really do believe that insurance can actually change the world. I know it's a little bit of a lot, but thinking about this, there used to be a time when warehouses throughout the states were practically on insurable, right? You had all these consolidated risks, fire happens, all these goods are lost. Well, the insurance industry basically said, we'll insure you, but you need to install sprinklers. Right. And so across the board now you have this adoption of sprinklers not just for, for commercial, but for residential, etc. That has really improved the lives of many and reduced harm and reduced loss. So there is this kind of interesting impact, if you will, that that insurance could have. So we're really looking to invest in those sorts of areas that can change the world for the better. And honestly, that could be beyond perishables, which is our core area, into other vertically integrated supply chains as well. So hopefully those three areas gives you some idea of what we're investing in. But honestly, it's an investment and we're looking to return value to the good old stakeholders. Right? I mean, everyone loves that statement.
- [14:18]
Marielle O'Connell
I absolutely love it. Because honestly, there I saw a statistic, I'm gonna completely butcher it. I should have, I should have looked it up recently, but it was something like in your entire, like, if I'm a shipper and I'm shipping berries, I can expect to lose 30% of my product. And again, I might have that statistic wrong, so do not quote me, but it's like you are like, you can just automatically expect to lose 30% of your shipment just due to like improper supply chain or generic loss. And I remember being so angry when I saw that because I was like, why? Why are you in? Why knowing that this is going to happen. Is this something that you're like, yeah, that's fine. We can take a 30% loss on just, just off the top. And then there's, you know, the losses that happen through whatever else happens, whether you have to move a shipment, nothing happens to the berries. But if you have to move it, you know, at a thing, at like a price point that's lower or too low, you know, it's not great. And so I, I love that because you can come in and say, hey, by doing these tiny little things, doing these changes, we can kind of mitigate some of this loss and drop that 30% down. Also, I'm pretty sure that the fire departments all across the world are thinking insurance companies for sprinklers.
- [15:39]
Michael Niederhauser
You're welcome. You're welcome.
- [15:41]
Marielle O'Connell
Like, they're like, oh, no, you have a sprinkler. Oh, the worst. So when it comes to kind of the, the future of the cargo space, if you will, because that's something that I think at its core is something that you guys are really setting yourself up for with these, with these investments within your company, you know, you guys are really saying we're gonna more or less future proof ourselves. You know, really just make sure that we're setting everyone up to grow and be successful. What are some of those trends that you see happening? Or what do you really kind of see the cargo space turning into or the cargo insurance space turning into here in a couple years or maybe in like the Jetsons future?
- [16:22]
Michael Niederhauser
Yeah. So, I mean, cargo insurance is, is definitely evolving and going fast. Right. Supply chains we've seen are just ever, ever after becoming more complex and interdependent. And so what that really means is cargo offerings also has to be able to adapt to these interconnected supply chains and be able to honestly be customizable based on very, very unique stages of companies and where they are in that important supp. So, you know, we're investing heavily in AI and data driven policies. Right. Artificial intelligence can and should be used in many ways. We can talk about that perhaps in a different question, but really here we're using data to create custom policies. So you know, the Barry's example that we've been talking about, we actually do a lot of work with countries in Latin America and it used to be essentially that a berry was a berry. Right. We could draw a line. Even citrus is tossed in there. Avocado. We have enough data now that actually prices cherries very different than oranges. Right. So again, you had this common line. Certain commodities are much higher risk, others are much lower risk. And so to understand that helps us, but it also helps our insured. They may have been overpaying or etc. So using data to customize policies. We also talk. You talked a little bit about Hurricane season. Well, in insurance there's a concept of your max value at a given location and traditionally you'll get that max value. And it is assumed that you're always going to have that max value in that warehouse just outside of Miami. Right. Including hurricane season. Well, guess what? If we have an idea of what your seasonality is, we can actually help to understand. Well, no, you have very, very low stock in Miami during hurricane season. We're not going to ding you for that. Right. We're not going to charge you the max value. So it's using the information we have with a little bit more steps than maybe has traditionally been done to better, better price risk. So I think using data for those elements is really important. Having a variety of products to offer to insured. So, you know, not just having goods in stock or goods in transit, but actually offering stock throughput policies that cover everything end to end, warehouse liability, logistics liability. Really having a variety of offerings in the cargo space is super important and super helpful as you're going out to look for these sorts of insurance. Because if they're related and information can be shared between, that means that you're going to get better service in the event of a claim. Right.
- [19:02]
Marielle O'Connell
I think that's something that is happening just kind of in the insurance industry in general. Not necessarily like limited to just cargo insurance, but also for like your carrier insurance and other stuff like that. I'm starting to see a lot more of the. Well, if you give us more information, we can give you a better policy, which is completely fair because I used to be a pricing analyst and I had the exact same problem when I would say, hey, can you move this freight for me? And people would say, we need a picture. We need to know what it looks like. We need to know what we're moving. We need to know how it's, how it's wrapped on a pallet. We know what we're working with. And then if the shipper didn't give it or the sales guy was like, we don't need to ask the shipper for that. I'm like, well then you're going to get bad pricing. And, and so it really does help because the more, you know, and the more you're kind of. Because ultimately insurance is kind of mitigating the unknown. And so there's. If your list of unknowns is a mile long, well, your price is going to be a lot higher. But if you can just give, if you can just knock like four things off the list of the unknown, well, maybe for Everything you knock down, you know, And I think that insurers are now becoming, whether it's a broker, like you said, or the actual people who underwrite the policy, I think that they are kind of also on board with the. Well, more data is power. Like, we know kind of how to manage this now instead of just like, here's my entire supply chain. How much is it going to be?
- [20:21]
Michael Niederhauser
Yeah, well, and it is interesting as well when you take outside influences into consideration as well, like climate change, flood and winds. You know, geopolitical tension is certainly a thing around the world. Like we could I'm sure, talk for years on that regulation, like inflation, more advanced theft. Like there are. We recently heard of this scenario in Brazil where a makeshift warehouse was set up, goods were delivered. Turns out it was a heist. Right. And a claim there. It's just increasing complexity. We actually did a little bit of a piece towards the end of last year. So if you're interested in reading into some of these a little bit more, you can search for parcel predictions for 2025. We go into a couple of these things and talk through some of these specifics. So little shameless plug there. Check that out.
- [21:09]
Marielle O'Connell
But it's so true though, because there's. We've talked to somebody else in insurance and they said, yeah, like there's a lot of times where a driver won't know that they are taking stolen goods and they will drop it off at a warehouse that looks like it's any other warehouse and it's a very sophisticated operation. And to that I would like to make yet another appeal to the criminals who are definitely not listening to this, but maybe they are. Maybe like catch it on a, on like a little drive by. Yeah, just go legit. Please go legit. Because if you were running such sophisticated operations like on illegal goods or like stolen goods, just go legit and save us all the of the time. Because you're going to make a killing.
- [21:49]
Michael Niederhauser
Yeah, yeah. It seems like a waste of resource for sure.
- [21:54]
Marielle O'Connell
You know, you could have been a supply chain giant, but instead you're just going to be an underworld theft guy where you could go legit and it would be great. Yeah, but yeah, so such a sad day.
- [22:06]
Michael Niederhauser
Or go to insurance. No, wait, don't. Don't do that. Not if you're a thief.
- [22:09]
Marielle O'Connell
Sorry, wait, so in theory, if you were like a criminal stealing, like if I stole the load of berries, I couldn't like, do I have insurance if I'm a criminal running. Oh my God.
- [22:23]
Michael Niederhauser
We don't offer that like, that's like, we, we're definitely shying away, away from that.
- [22:28]
Marielle O'Connell
But like I was sitting there and I'm like, would a criminal go get insurance for stolen goods? I feel like no.
- [22:34]
Michael Niederhauser
I, I mean it's a, it's an interesting question and I'm sure there's someone somewhere has, has tried to do that. But yeah, definitely not advised from, from my seat right now.
- [22:46]
Marielle O'Connell
Anyway. And that's about criminals trying to. All right, so we have a very little bit amount of time. So I have two questions and one is going to be the most important. But before that, what do you guys. What's kind of like. I know you said you're making all these investments in people and technology and different things to grow. What's kind of on the horizon for you guys in the next, in the next year or do we get another a year prediction of parcels, parcels Trends of maybe 20, 26?
- [23:14]
Michael Niederhauser
Yeah, yeah, I know, I think definitely we'll, we'll come out with some more information there. I think the biggest thing is growth, right? We'll look back at this year and be able to say this was the year 2025 when we actually started turning a profit. And in a startup world, that's a pretty, pretty huge deal. So major milestone, massive opportunity for us to grow in North America, believe it or not, it's much more complicated. I shouldn't say that it's a much more distributed insurance market than the traditional Lloyd's of London insurance market, where that really has everyone coming to one place, London to purchase insurance. Here in the States, obviously we're a lot more spread out, lots more specialty. So that's going to be a really important thing and does feedback into the whole the people piece. I think that you'll also see parcel really making an impact in more emerging markets where there are probably barriers today to comfortably ensuring, but with a little bit more information, a little bit more rigor will be far more insurable. So Brazil is an area that's a very complex insurance market to get into. Obviously an incredible amount of opportunity. You've also got to balance that with I think some very real problems around the ethically sourced goods. I mean any, any wood or anything that comes from Brazil, you have to be concerned about deforestation and the EU has regulations in place around enforcing that which ultimately if your goods are stopped going into the EU could be from Brazil, you might then have delays and might in fact need some coverage for that. So understanding some of the regulations I think is really important. But emerging markets are huge Additional phases of technology, investment, new products, and then the growth of our data partner program, which I currently lead. Probably the biggest things that you'll see from us internally over the next 12, 24 plus months.
- [25:08]
Marielle O'Connell
I can't wait. So I was not entirely wrong when I said parcel's just going to come take over the world.
- [25:12]
Michael Niederhauser
I mean, you know, one supply chain at a time.
- [25:15]
Marielle O'Connell
Yeah. One step at a time. One country at a time. So, that being said, Michael, there's a question that everybody that comes on the show does have to answer. Yes, it's gonna. It could be the hardest question that.
- [25:26]
Michael Niederhauser
Yes, yes. There we go.
- [25:29]
Marielle O'Connell
Is cereal considered a soup?
- [25:31]
Michael Niederhauser
You know, Wow, I did not expect that. So here you go. The obvious first answer is no. However, I challenge you. My favorite soup happens to be gazpacho cold tomato soup. Right now, tomatoes, actually botanically a fruit, if I'm not mistaken.
- [25:51]
Marielle O'Connell
Correct.
- [25:52]
Michael Niederhauser
Correct. Cold fruit soup, therefore, I mean, cereal cold oftentimes has fruit in it.
- [26:00]
Marielle O'Connell
I love a fruity pebble.
- [26:01]
Michael Niederhauser
You know, the. I mean, right. So good, so healthy. So, you know, this actually might be an interesting one to ask. Chat G2Jeff. Excuse me, ChatGPT. Or your favorite other AI bot. And I bet with some prompting, you could actually train it to get to that answer. And that's one of kind of the unique things about artificial intelligence that a lot of people don't even understand is that it's. It's learning. So there you go. I mean, I think the short answer is no or yes. It is yes. It must be because of gazpacho.
- [26:34]
Marielle O'Connell
I guess I am team no, because they're in two separate aisles in the grocery store. But I'm also a monster that doesn't eat milk with my cereal.
- [26:43]
Michael Niederhauser
Okay. So, I mean, well, that's clearly not a soup without any liquid. I think we could agree that soups do require some sort of liquid.
- [26:50]
Marielle O'Connell
Correct. I also. Because I don't like how soggy cereal gets when you put milk in it. It's just not. It's a texture thing, you know?
- [26:56]
Michael Niederhauser
Yeah. Well, if you're. Are you just leaving it out there for like an hour or something or.
- [26:59]
Marielle O'Connell
No, it's just like. I'm just. I like a crunch. I'm a. I'm a crunch person. I like the crunchier the better. Like, that is my chief complaint with most pizza is that it's not crispy enough on the.
- [27:09]
Michael Niederhauser
Okay. All right. I mean, a lot learn a lot through these discussions.
- [27:13]
Marielle O'Connell
Just forever learning. That being said, if someone wants to continue the learning or if they have a really good gazpacho recipe or questions about how the heck do I get insurance on this weird thing I don't know how to do or just help please. Where can they find you outside the show?
- [27:28]
Michael Niederhauser
Yeah, so the best way would be to go to our website, parcel.com lots of resources there. Contact us. You can also just search up Michael Niederhauser I before E and and reach out to me on, on LinkedIn, et cetera. Happy to help, however, connect you with the right person that really can help.
- [27:43]
Marielle O'Connell
So thank you so much for joining us today.
- [27:46]
Michael Niederhauser
Yeah, it's been a pleasure, Mary. Thank you.
- [27:48]
Marielle O'Connell
You can catch other episodes of Running on Ice here on freeways, TV, YouTube or anywhere you get your podcasts like Apple Podcasts and Spotify. Need more Running on Ice news? No sweat. Subscribe to the newsletter on FreightWaves.com running on ice. See you on the Internet.