Operator: Our next call comes from Scott Group with Wolfe Research.
Scott Group: So, I just want to go back to this core shipments, core tonnage up 6%, total tonnage down 18%, that’s a pretty massive spread. At this point, what percentage of the business is this transactional?
Judy McReynolds: Well, Scott, it’s certainly lower. I mean, we use transactional, to fill in the gaps that we need. And I think what’s changed from last year is an emphasis on wanting to make sure that we have. We serve, core customers well, but we also have capacity to serve them well. Last year, when you think back about where we were in a period where it was very important to us to have consistency in our network. We had brought on a lot of people. It had been a very challenging hiring environment. As we got in to later first quarter into second quarter. We were working to get our labor deal done. And so it was really important to us to keep the network working, keeping our people working and staying in a consistent place.
And as we entered the latter part of the second quarter and into the third quarter. We started to hear the noise about the Yellow situation. Customers were reaching out to us. We started to see a lot of opportunity there, but we were also in early July wrapping up our labor deal. And so we saw an opportunity to really emphasized the core business opportunities that we were seeing. We also saw an opportunity to really right size the network from a resource standpoint to put the most effective resources on them. We wanted to emphasize the use of our people rather than to third party resources. And that equation has proven to be improvement in growth opportunity of the core customers, but also profitability improvement. And that’s where we are as we enter 2024 as well.
What we want to do is be sure that we stay in that place where we’re optimizing growth, profitability and the use of our own labor and resources. And it does create some odd comparisons. I would tell you this too, the January weather also plays a role in some of those statistics. In the latter part of January, we saw much stronger you know, trends in terms of our core customers. So we really think there’s a lot at play there. But sometimes when you’re giving good update like we do in our 8-Ks that 1 month is just not as instructive as you’d like for it to be for the rest of what you’re doing. And so just hope that you can take all of that into consideration as you’re looking at it and how that affects what you’re doing and thinking in your modeling.
Scott Group: I guess ultimately what I’m trying to figure out is, are you, clearly we’ve pivoted away from this transactional stuff, it’s helping yield, it’s helping margin. Are we happy with the mix today? Do we want to go even push the transactional even lower or do you think maybe in your view, if we overshot a little too much on tonnage pressure, we want to actually increase our transactional. What are we trying to take this transactional from here?
Judy McReynolds: I feel like it’s in a pretty good place. We feel, we have access to a lot of transactional business. So we have the access to it, if that’s what we’d like to do. But we do see that it’s at a more optimal level than certainly it was last year. But we are constantly evaluating that, Scott. I mean, we do it every day. We look at the opportunity set that’s there. We look at the lanes that we’re running in, how that one more shipment could affect it. And so it’s very, very analytically driven, let’s just say. And so, but I feel like it’s probably in a more optimal place today than it was in last January for the environment that we have today. Last year, we had some different objectives that we were working toward and, I outlined those already.
Operator: Our next question comes from Ben Moore with Deutsche Bank.
Ben Moore: Following up on the service discussion, when we look at the most recent Mastio data, it’s been pretty volatile in terms of customers’ perception of ArcBest service. Not sure if that’s more to do with the adjustments you’ve made on pricing or if that highlights some deficiencies in some areas that we need to focus?
Judy McReynolds: Yes. Go ahead, Dennis.
Dennis Anderson: Hey, Ben. This is Dennis. And I think certainly, when we look at the Matthew study, we’re not in a place that we want to be and that we’re striving to be. And I think Seth highlighted some of the things from a service perspective that we’re working on and have improved really even since that study was in market. And we have more coming. So, when we look at service, it’s also about how we communicate with our customers. And so we talked about some of those tools, especially on the visibility side that we’re providing rolling out in fact tomorrow some things on the pre-pickup side. So, definitely continue to listen to customers, make changes to make their experience better with us. And I think also you mentioned from a price perspective, certainly, it helps to be more consistent. And as we’ve migrated more to a core type mix here as we’ve been discussing, that is helpful in that consistency conversation with customers.
Ben Moore: And maybe just as a follow-up, the team did a great job on costs in the quarter. Can you just talk about how you expect the asset based cost structure to trend throughout this year given a lower inflationary environment and also a step down in wage inflation?
Matt Beasley: Yes. So, maybe just a few comments on that. I mean, certainly we do have the contract increases that we saw in the third quarter of last year carrying into this year and then those obviously moderate significantly on a go forward basis on the contract, all of the work that we’ve done on the asset side that we highlighted, THAT’S continuing and in a lot of ways accelerating this year as we continue to work on service and optimization efforts. So again, all the purchase transportation and cartage and maintenance costs and just all the work that we’ve done as well as all the efficiency work that we’ve done, we expect that to continue to have impacts throughout the year in 2024.
Operator: Our next question comes from Bruce Chan with Stifel.
Bruce Chan: Judy or Steven, maybe just a big picture question here on the strategy at asset-light. A couple of years ago, you bought a young high growth company. Obviously, the market is changed pretty significantly since then, a lot of movement with some of your big competitors in the business. If you could maybe just share how you’re thinking about how asset-light fits the model in terms of cross-selling and other synergies. And then maybe what kind of long-term growth or long-term margin profile you’d ultimately like get out of this business in a more normalized environment that would be really helpful. Thank you.
Matt Beasley: Yes. So from a strategy perspective, I mean, we are customer led, so we want to have every opportunity to say yes and help our customers improve their supply chains from an efficiency and effectiveness perspective. And so in order to do that, you have to have these services. And so we want to provide those services in an integrated way. And so we feel like what we’re doing in Asset Light is a strong part of our long-term plan. And on top of that, we feel great about where we are with our people and our technology, what we’re doing to build out that business and continuously improve. You mentioned the acquisition of MoLo and one of the things that we really like about that is the focus that team has on the customers.
We continue to hear from our customers that we’re a leader for them from a service perspective. Also from an employee perspective, we’re continuously having getting recognition for being a great place to work. So that allows us to attract the right talent, which leads to a great customer experience. But overall, we see this and when you look at even our pipeline, our pipeline for opportunities, whether it be in managed or truckload, continues to grow. The number of deals throughout fourth quarter, the number of deals in our pipeline increased month-over-month, and we’ve seen that as we move into the first part of the year. Those services are resonating very well. As you mentioned, we are in a challenging market environment, but we expect that to improve.
And then from a margin perspective, we’ve talked about that 4% to 6% range that we’re targeting. So that’s how we’re thinking about it in the long-term.
Bruce Chan: And just maybe a really quick follow-up. I mean, if I look at the business today, you’re roughly, call it, 60-40 ABF to Asset Light. Is that the right kind of mix of overall business? Is that something you’re trying to manage to?
