Expanding What's Possible in Modular Construction Logistics w/ Stream Modular [podcast transcript]

John McMullen

Can you talk about maybe some specific challenges that you've encountered with modular construction projects in the past? Are they maybe unique to projects? Do you see them throughout projects? Maybe some specifics on some of those more difficult challenges that you faced?

Carson Holmquist

Yeah, the reason why we gravitated towards the world of modular, which we think about as a term of art. It includes panelized, construction pods modules, it's a perfect example and environment of high stakes freight, where we have to be on time because there's a set crew waiting. So, if there's idle labor there, it's very expensive. It throws the whole production and construction schedule off. We really love that about the modular industry.

So, the challenges we run into a lot is speed. How can we do this efficiently and quickly to capture the primary benefit of offsite construction, which is speed occupancy. There's a lot of benefits, but that's the primary one. The second thing that we always have to think about is overcoming constraints. Whether that's space constraints, storing modules at a factory, the constraints of a staging yard of ingress and egress to a project site.

There's always some element of constraints and sometimes they look different from project to project. There are overlapping themes where we have to be creative on how do we overcome these constraints to make sure we're super reliable on getting the modules or the components to the jobsite on time. Also, we're very efficient doing it so we're keeping budget in mind. So that's what really drew us to the modular industry. It’s a perfect example of what we call high stakes freight.

John McMullen

So, you've been in the modular industry for a while. You found success, you've been doing a good job, and you are introducing Stream Modular. Tell me about that decision and why and what, where, and when.

Carson Holmquist

Over the last, it's been about three and a half years since we really encountered this industry and started to fall in love with it. These projects really demanded the best within ourselves. So, challenge our team to continue to get better. We also saw that this industry is craving better solutions. It really requires better transport solutions to get the most out of the concept of offsite construction. We've been investing a lot of time and attention thinking about this industry. At Stream Logistics, we also serve other industries. So, we were getting these great experiences in the modular industry, but that experience was fragmented amongst a lot of team members.

The decision to launch Stream Modular is all about specialization. We're taking some incredible team members from Stream Logistics, putting them over at Stream Modular, and they are only working on transport for mods, pods and panels. So, their entire day is steeped in this world. We're learning much faster, there's faster iteration cycles for the development of our solutions. At the end of the day, the whole concept we think about is density of repetition. Our team members are just getting repetition after repetition of designing project solutions, implementing them, managing projects, and we're learning very quickly. That was the decision where it's like, specialization is going to get us to a place where we can help the industry even faster and even more effectively.

John McMullen

So, tell me about the scope of Stream Modular. Are you guys serving all the same areas as Stream Logistics did? Is it different or smaller, you're growing?

Carson Holmquist

Yeah. So, we're definitely going to be growing in the sense of our investment in the industry. Our footprint is still going to be primarily the US, but we are transporting in and out of Canada and starting to ship out of Mexico as well. There are several factories popping up in Mexico, so transport across that border is important as well. We're not bound geographically. It's more about where are the factories, how do they need help and then we'll create solutions around them in their market. Building that network of drivers that allow us to serve both the peaks of demand. When projects are booming and making sure that we have the flexibility to scale down as they have their roles, to make sure that everything's going to be cost effective.

John McMullen

Very good. You guys, I believe, are exhibiting at the upcoming World of Modular. What can attendees expect to hear from you and see at your booth? What can they look forward to in general from Stream?

Carson Holmquist

Yes, you're correct. We are exhibiting and we're very excited about that opportunity. We were there last year as well. It's a great opportunity for us to connect with pretty much all the major players in the industry, which is really exciting for us. One thing that we've got a lot of positive feedback on is we just launched what we're calling factory carrier pool. It's a pool of hydraulic carriers, these very specialized trailers for the modular industry, and we're in the process of building the largest fleet in the industry of these specialized trailers. We've already gotten a ton of interest, have had a lot of project scoping calls around the utility and use of these trailers, and I think that's going to be a really big topic amongst the people in the room at World of Modular.

Hopefully, then come to our booth, talk to us about that among other things, but that's a big commitment we're making. We've seen a high demand for these trailer capabilities, where essentially, the trailer can load and unload a module on and off of cribbing. It's very fast, it's effective. It doesn't put a lot of torsional forces on the module so it's a gentle process. There's far more demand for these trailers than there are supplied today. So essentially, if we wanted to help out and source some of these trailers for factory, we'd have to pull them from Factory B, or C and that's not really helping the industry as a whole. So, we know to solve that problem, we're going to have to make a massive investment in building a fleet of these trailers, and pairing that with skilled drivers who can actually haul them safely and effectively. That's one of the biggest commitments we're making this year and that's a topic where we've got a lot of interest. I imagine at World of Modular, that's going to be our main theme that we're talking about.

John McMullen

Very exciting. So, what's the process for making these trailers? You said there isn't enough supply, everyone wants to use them. Why are they more difficult to make? Are they more expensive? Are they more complicated? What's the issue?

Carson Holmquist

Yes, all the above. More difficult to build, just more complicated. It's not rocket science, but there's more that goes into it. They're far more expensive. I think that's it. The primary hurdle is let's say a factory wants to partner with trucking companies and they want these trailers. Well, it's a massive commitment for a trucking company to go buy a fleet big enough to service any large-scale factory. A lot of them just haven't been willing to make that investment. So, we've heard a lot of factories are having to buy their own hydraulic carriers, then hire a trucking company to do power only just basically pulling around their trailers. These factories are forced to use their credit or their cash to go buy assets to help their business achieve the goals that they want to achieve. They have a lot better uses for that cash or that credit. Like they're in growth mode, a lot of these factories.

So we wanted to take the pressure off of them and make that long term. These financial investments we're making are going to help accelerate the industry, help factories reach their highest potential and in turn, obviously, that's going to be good for our business. It's a bet we're comfortable making because of all these conversations we've had and we know the demand is out there. The early conversations we've had since we started building out this carrier pool is really proving the concept we know is in high demand.

John McMullen

Excellent. And you'll have to forgive me, I know very little about trailers. I've seen pictures of modules, they're on a flatbed, they're going down the highway or wherever, what makes these so much better than a flatbed that you would just put a module on and crane it off?

Carson Holmquist

The first thing is they're built specifically to haul modules. All the little nuances and details have modules in mind. For example, they have outriggers, which are bars that essentially telescope out to add the trip for trailer width. So if you have a 16 foot wide module sitting on an eight and a half foot trailer, it's not nearly as stable as if you put these outriggers on to extend to 16 feet. They also have the ability to extend the length to accommodate longer modules. The first wave of the trailers that we're building, extend out to 70 feet, for example. The primary functionality that makes it particularly useful for modular is this self-loading and unloading capability.

So imagine the deck of the trailer has ability to rise and lower, allowing a driver to essentially back underneath a module that's sitting up on cribbing, lift the trailer up which gently essentially loads the module onto the trailer, then we can move the cribbing out of the way, drop the trailer back down to writing height, strap the module on and it's ready to go. There's no crane, no loading equipment, it doesn't even require any support or labor from the factory workers. The driver can do all this himself. Then that module can be transported to a staging yard and the reverse can happen where we might be staging dozens or potentially hundreds of modules in an empty lot. A lot of those lots don't have any type of lifting equipment so the ability for the driver to do the reverse, which is basically back into position, set up some cribbing, drop the module onto the cribbing and then pull out, essentially self-unloading, is a huge efficiency. It benefits and reduces costs, because the factories don't have to set up lifting equipment cranes or some other type of way to load and unload the modules.

So, it's an efficiency play. It's a cost savings play and the factories that have committed to this set of operations, absolutely fall in love with it. They don't want to do anything else. There's a lot of work around. So, if they built their operations around having access to these trailers and then they don't have them, it's a huge bottleneck that really cuts into the benefits of modular construction, which is one of the biggest ones is speed occupancy. So, if they're late on their deliveries, you're carving into that benefit that they sold the developer on. That's why this is really important for the industry, but it's one of many investments we're making. I think it's going to be one of the most impactful things we do here in 2023.

John McMullen

Very exciting and thank you for the details, I feel educated. So, I brought up World of Modular before, I was wondering if you could maybe help me out as a previous attendee. What can you tell us about your previous experience at World of Modular that might help a prospective attendee who's never been before? Make the jump and register for the show?

Carson Holmquist

Yeah, I think once you go to World of Modular the more appropriate question is why wouldn't you go? To more directly answer your question, it's a place where the industry gathers. It’s some of the brightest minds, the people most committed to solving these challenges are best utilizing the concept of offsite construction. It's a roomful of innovators and very exciting to be around. It's just a unique place where everyone gathers in one spot. So, if you are committed to the industry or interested in the industry, there's no other opportunity like this.

To get in the room with others who are trying to do the same thing. It's invaluable to us. So, we love this time of year. Right now we're already setting up meetings, we're looking at the attendees, we know who we want to talk to and we're making a lot of investments and sending the team out there to make sure that we can connect with everyone who wants to connect with us and vice versa. So, we love the World of Modular and most of the industry does as well.

John McMullen

That was a fantastic answer. Thank you very much. What is next for you and Stream Modular? I know you're making this big investment and 2023 is going to be very exciting for you. Is there a timeline in place for when you're going to start expanding your fleet of these trailers? Are you going to have some by the end of the year? Is it 2024? Is there a general timeline you can give us?

Carson Holmquist

Yeah, yeah. So, with regard to the trailers, we'll have our first order and delivery, which will be six hydraulic trailers sometime in mid to late April. The goal is to have 24 by the end of the year, so they're just going to continually be built in waves of six because that's the capacity in which we could build them. Beyond that, I would imagine a similar pace to continue going into 2024 based off the demand we're seeing. We're also making commitments to make investments in other areas. We're working on API, integration with Moducore, the factory operating system software. The goal there is to make sure that anyone using that software to run their factory operations can also get all the important transport data that they need into their core system.

We can do API tracking details, shipment confirmations, and even documentation such as signed proof of deliveries, and even pictures so that we can close that loop cycle within Moducore. We're going to take that same concept to the other factory operating system software's and try to do that. That's another investment we're making. We'll be announcing over the next few weeks some other things we're working on to make sure that factories can operate at the highest potential. That's our goal. Our mission is to help accelerate the adoption of modular construction. We know we have a lot of work to do to help the factories remove obstacles to doing what they want to do. So, there's more to come there. In terms of the trailers, we will definitely have meaningful capacity being built by the end of the year.

John McMullen

Awesome. It sounds like you guys are really taking a look at everything on a holistic level, where you can fill gaps and provide service and I think that's awesome. If you could identify one thing that you'd like other modular project stakeholders to know about the importance of logistics, what would it be?

Carson Holmquist

I think the factories that are doing it really well take the process really seriously, meaning they see value to be extracted out of the logistics process. So, they're thinking about it earlier in the project cycle. They're asking their partners to be creative and co-create solutions to be more efficient, more cost effective. I think that pays dividends when the project actually starts. They see projects run smoother, they’re more efficient, allows set crews to set more modules a day because everything’s more organized.

So, I think if you're a factory looking to gain some efficiencies, a good place to look is logistics. A good place to start there is to start having conversations earlier and try to work with companies that are dedicated to this industry. If you're working with a trucking company that does all sorts of freight their attention is going to be fragmented. They're not going to be looking for solutions as vigorously as other companies. So, I think those are good places to start.

John McMullen

Very good. I've got one last question for you and I've asked this of manufacturers and designers, but I think you might be able to provide a different perspective, which I'm looking forward to. What do you think the next three to five years will be like for modular construction, I guess in particular for logistics, but for the industry at large? Are we on the brink of something new and exciting? Are we seeing step by step improvements and things? Are we on the verge of something big?

Carson Holmquist

I think we're on the verge of something big if we can pull off something specifically. So, there's a few groups of people and some really impressive individuals who are actively trying to work on getting some sort of nationalized building code for modular. These factories can start doing closed wall manufacturing, they can start building the same product with higher replication and capture the efficiencies that, frankly, a lot of other countries already have. I think if that happens, the industry has potential to explode, where we can really capture the efficiencies on the industrialized construction front. So, making factories run like manufacturing factories. I think right now, the factories are a little handicapped by the fact that they can't build the same thing over and over because of code in a lot of instances.

So, I think that's big. The individuals who I've spoken to who are working on it are very optimistic of that happening sometime in the near future. I don't know all the details of what it's going to take to pull that off, but I can understand the resulting effect it could have on the industry. Our goal is to be prepared for something like that. So it's starting to build the infrastructure so that these factories, when they do take off or when new factories come online, we have systems to support as many of them as we can.

John McMullen

Very good. Well, I know that is going to be a huge discussion within the industry. I know MBI is going to be playing a big part in that. We'll have to see how that turns out, but there's definitely potential there. We'll have to see where that goes.

Thank you, Carson, very much for your time. It's great to talk to you as always and I'm looking forward to seeing you in Las Vegas in about a month.

Carson Holmquist 

Yes, same. We really appreciate the time and allowing us to talk about Stream Modular. I'm excited to see you and excited to see everyone else at World of Modular. It’s going to be fun.

John McMullen

My name is John McMullen, and this has been another episode of Inside Modular: the Podcast of Commercial Modular Construction. Until next time.