And so a lot of the efforts there have also been beneficial to helping us deliver those productivity numbers, the shipment per person per day numbers, and the 17% NAST last year, the 20% in GF. And of course, we’ve got targets of 15% in NAST and 10% in GF this year.
Arun Rajan: Yes. I’ll just add that in terms of optimizing yield, this goes back to revenue management. And I’d say, I describe it as Dave has the operating model installed. And I describe it as active management of optimizing volume in AGP. That happens every day and it’s a marriage of our science and our people. And I’d say we just manage it much more actively than we ever have, both on the cost side as well as the pricing side. That’s what yields the AGP.
Operator: Thank you. The next question is coming from Elliot Alper of TD Cowen. Please go ahead.
Elliot Alper: Great. Thanks for the question. This is Elliot Alper on for Jason Seidl. I wanted to ask about ocean capacity. And we’ve heard some other ocean — from other ocean players that shippers have already adapted to a lot of the concerns, whether it be the Red Sea or Panama Canal, though appears to have been easing a bit. I guess we’ve seen spot rates come down notably from mid-February levels. I guess, how should we think about pricing sequentially? And maybe the puts and takes on growing the Ocean business in the second quarter?
Mike Zechmeister: Yes, Elliot, this is Mike. I’ll take that question. So I think our view is consistent with what was implied in your question. And as the Red Sea disruptions happened, as the canal issues kind of came and have now haven’t completely been solved, but are more solved. That repositioning of capacity really puts a pinch on the market and what drove prices up. But once that capacity has been repositioned and it largely has, then those prices have come back down and you’re now back to the basic principles of supply and demand. And on the supply side, the capacity side, well, the observation for the remainder of the year is there’s more capacity coming into the ocean market than is coming out. And so there should be a fair amount of capacity there.
Now there may be some repositioning to accompany some of the changing dynamics in trade lanes where there’s more density there, but net-net, more capacity coming in. So then you’re back to the demand side. And we’ve seen a little bit of demand there, but no green shoots yet to suggest that we’ve got a trend moving for the remainder of the year. So you know, your prediction of where it goes really depends on your view about the world economy and the U.S. economy, and we’ll see how that plays out.
Dave Bozeman: Yes, Elliot. And just to pin a couple of things on that as well. I mean, we’ve said this in the past, we are on average, our contract business for Global Forwarding is 30% to 40% in contract. So the remaining 60%,70% of spot obviously, we have an opportunity to do business in. But also, as Mike said, on the Panama Canal and to the essence of your question, I mean, it’s improved as far as water levels, but the crossings and we track that right now 27 a day, but that’s normally 36 a day. So it’s somewhat muted, as Mike said. We haven’t seen any major green shoots there, but we watch that business with intently.
Elliot Alper: Thank you, both.
Operator: Thank you. The next question is coming from Tom Wadewitz of UBS. Please go ahead.
Tom Wadewitz: Yes. Thank you. I wanted to see if you could give some thoughts on, I know you talked about the progression. Within April, are you seeing kind of a similar dynamic to what you said in March and that improvement? And is that kind of more of a volume improvement, or is that a gross margin percent improvement if you think about NAST? And then I guess I also wanted to just think about productivity drivers. You’re doing a great job on that productivity number, the 15% in NAST. But do you think you get there more by volume growth picking up, or is it you get some more sequential headcount reduction? Or is that just kind of depends on the market? So, thank you for the time.
Mike Zechmeister: Yes, I’ll take your productivity side and then maybe pass it off to take another shot at the trends going forward in the market. But on the productivity front, the shipments per person per day front, we really have to be flexible to adapt our productivity delivery based on what kind of market we’re in. So what we’re really doing, I think now differentially from the past is thinking about installed capacity, thinking about how to handle demand with the — without the need to bring on people when the demand comes back. But if the demand does not come back, we still got to deliver that productivity number. And so we really are trying to build the flexibility into our model to handle both a demand-based year or a soft market like we’re in right now.
Dave Bozeman: Yes. And I think — hey, Tom, this is Dave. The adding on to that where the team is doing a really nice job is, at the end of the day, you have to look at work differently. And take it away the manual work that in a sense is capacity, right? I mean, when you at our scale, when we have our people doing nominal task that eats up capacity of a person. And I think Arun and team have done a really nice job and this is where you do use technology and large language models and a number of other things to now remove a lot of those kind of menial tasks and allowing our people to just kind of focus on the things they need to focus on, in a sense, gaining capacity, right, in doing that. So that’s really important on achieving this productivity part of shipments per person per day.
It’s getting smarter about the work in implementing that work. So I just want to — I want to add on to that. And I think on trends, and Mike, you can jump in there too. It’s — we feel good about where we’re at and we’re concentrated on what we can control. I mean, this is a soft market and everyone’s dealing with that. This is why we are staying disciplined, driving our model to execute, and what we’re saying is no matter what the marketplace is going into Q2, we want to execute within that market. I mean, dealing with the lows of the markets and excelling at the highs of the market is something that we’re laser-focused on and we are going to do that with our operating model, with our science and pricing, and a number of the things we talked about today.
Tom Wadewitz: Great. Thank you. Does anybody else want to add any comments on kind of April? And what it looks like? And what might be driving it kind of volume or gross margin?
Mike Zechmeister: Yes, I think we’ve covered that.
Tom Wadewitz: April or — sorry, I might have just missed that earlier.
Mike Zechmeister: Yes. We made comment earlier about Q1 and the progression that we made Q1 and our confidence in some of the progress we’ve made and the various elements inside the operating model. And as we move into Q2, just the way that a typical Q2 unfolds is that we get the produce business, we get the beverage business and that strength is usually in the back half of Q2 for our business model.
Tom Wadewitz: Okay. All right. So the — okay. So the year-over-year is still looking good. Okay. Thanks for the time.
Operator: Thank you. The next question is coming from Jonathan Chappell of Evercore ISI. Please go ahead.
Jonathan Chappell: Thank you, and good afternoon. Just a quick one on the competitive landscape. You’re winning share, you’ve done better than the market for three straight quarters, but at the same time, you’re being disciplined on price. So is this a function of maybe smaller players exiting the market? There’s been an interesting chart that’s been circulating on the, I guess, exit of brokers. Do you feel like the capacity in the broker industry is closer to balance than maybe it is in the asset-heavy side of the equation? And is that helping you win share? Or is it more kind of company-specific and the things that you’ve been talking about for the last half an hour or so that’s driving those share gains?
Arun Rajan: Yes. I would — thanks for the questions. I think it’s both. There’s disciplined execution on our side. We’ve talked about that a lot. But clearly, there’s pressure in the brokerage industry. And I think you’ve seen some of the exits. You saw Convoy last year and I think we continue to get reports of smaller brokers who are unable to sustain this market. So I think it’s both. I will say that while there might be some benefit from the market and smaller brokers or other brokers not doing well. I would over-index to the success being as a result of our operating model and the inputs and the discipline in that context.
Jonathan Chappell: That makes sense. Do you get a sense just as a quick follow-up that the broker business at large is closer to balance, maybe closer to, let’s call it, 2019 levels than the truckload market from an asset-heavy perspective is?
Dave Bozeman: No. Jonathan, this is Dave. I would say it’s not at the levels of 2019. We don’t see that just as we see the influx on capacity and carrying capacity, we — while that’s coming down, we don’t — that’s not at levels that we think it should be at this period in the cycle. But as far as broker specifically, no, I would say that we’re not at those levels of 2019.
Jonathan Chappell: Okay. Thanks, Dave.
Dave Bozeman: You’re welcome.
Operator: Thank you. At this time, I’d like to turn the floor back over to Mr. Ives for closing comments.
Chuck Ives: Thanks, everyone, for joining us today. That concludes today’s earnings call and we look forward to talking to you again. Have a great evening.
Operator: Ladies and gentlemen, thank you for your participation. This concludes today’s event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.
