Mike Zechmeister: Thanks for the question, John. Let me take a cut at that. So you’re right, it is a very stressed market and one of the things that we believe may be an advantage to us in this stressed market is that we’re still investing. We’re still putting our money down on the pipeline of projects that we intended to do. In fact, as we try to increase clock speed, we’re doing some of those projects concurrently. And so while others may be looking to cut to kind of hang in there, weather the storm, we’re continuing to make ourselves better with the idea that when we emerge the inevitable turn here, we’ll be stronger as we come out. Wouldn’t comment on anybody specifically in there in the pinched front, but boy, we certainly hear about it. We see it. The implications out there are clear given where we’ve been and how long we’ve been there.
Jon Chapelle: Okay. Thank you.
Operator: Thank you. The next question is coming from Chris Wetherbee of Citi. Please go ahead.
Chris Wetherbee: Hey, thanks. Good afternoon, guys. It looks like from a cost perspective, as you think about 2024, that you’re guiding OpEx to be roughly flattish year-over -year. I think you guys have also said that you’re not necessarily expecting a freight rebound coming in 2024, at least as far as you can see in the relative near term. So I guess I was just trying to square that up. Obviously, you guys have added a lot of costs for COVID, Dave, as you noted. So as you think about sort of the opportunity here, is flat enough for 2024, and maybe you can help us give some perspective of what the longer term might look like on a cost basis.
Mike Zechmeister: Yeah, Chris, let me take a cut at that. So appreciate the question. There are some offsetting things going on here. One is that we’ve got restoration of our incentives in 2024, and we’ve got normal inflation that’s hitting, and so we’re offsetting that. And to break it down and just be a little more specific about your question, on the personnel side, the midpoint of our guidance is up 0.2% versus where we landed in 2023 ex-restructuring. And on the SG&A side, we’re down 0.8% at the midpoint versus where we landed ex-restructuring in 2023. But we absolutely have to improve our cost structure. We continue on that path. The productivity numbers that we generated, the 17% in NAST and 20% in GF, as you heard, continue into 2024, 15% on NAST and another 10% on GF.
So we’re talking about over 30% on a compound basis in both businesses here over the two-year period. So the efforts continue. We do expect some rebound in the market, so that we’ll have some volume pickup there as well. But we got to continue to head down the path that we’ve been on.
Dave Bozeman: Yeah, Chris, just to add on to what Mike said, we’re also looking at this to, as we’ve said before, is really position ourselves to be in a strong pole position for the market rebound, and we feel good about where we’re headed there. Best data we have is back half of this year. If we start seeing that inflection, we’re driving our cost structure to have really that operating leverage put us in a great position as well as continue to go after structural cost while creating that balance. So I feel really good about that and the things that we’re putting in place to drive that. So thanks for the question.
Chris Wetherbee: Okay. Thanks.
Operator: Thank you. The next question is coming from Stephanie Moore of Jefferies. Please go ahead.
Stephanie Moore: Hi. Good afternoon. Thank you. I was hoping that you could maybe touch a little bit on what you’re seeing kind of bid environment, where it stands today and how it’s been trending and those conversations have been going. And on the other side, would love to get your thoughts on what you’re seeing in terms of capacity exits. I think we all are pretty aware of what’s going on on the demand side, but capacity exits have been much slower for the last year. So would love to hear your thoughts on kind of where that stands today. Thanks.
Arun Rajan: Yeah. Thanks for the question, Stephanie. In terms of bids, there’s a variety. Customers come in their own forms and there are different customers with different approaches. A lot of customers want resilient pricing in their contracts. So, meaning, like, they know the market is going to turn at some point and they want to price some of that prediction in such that the contract doesn’t have to be repriced, whereas others want to be more aggressive and want us to quote, based on what the market looks like today, understanding that none of us have a crystal ball. So there’s a variety of contracts and variety of customers in terms of the bid environment. Having said that, the way we approach pricing any of these contracts is obviously a combination of our revenue management objectives, the attributes of the customer, things like their customer lifetime value and so on.
And finally, the value proposition that we deliver. So on balance, we have to consider all those things in terms of how we respond based on what the customer is asking for, such that we can sustain through the contract in a way that meets our objectives. And in terms of capacity coming out of the market, Mike, do you want to take that?
Mike Zechmeister: Yeah, sure, Stephanie, I’ll cover that. So, one of the interesting differences in this cycle has been the delay in the capacity on the truckload coming out. But the good news is we are starting to see that kind of normal behavior, the capacity coming out. There’s a little bit of momentum in that space. It hasn’t significantly impacted pricing yet, but we’d expect that to come. Just by way of example, one of the things that we track is new carrier sign-ups. Last year we were about 9,100 in Q4, and we’re about half that, a little less than half that here in this past Q4. So would expect that to continue. When you think about — on the Ocean side, I think it’s a little bit different story where there’ll probably be a net capacity increase in ’24 on the Ocean side.
Stephanie Moore: Helpful. Thanks so much.
Operator: Thank you. The next question is coming from Jeff Kauffman of Vertical Research Partners. Please go ahead.
Jeff Kauffman: Thank you very much. And thank you for laying everything out so clearly today. I want to revisit David’s assessment and in particular the focus on the core four. Is there an implication here that we’re applying the 80/20 rule and those are the four businesses that we really want to drive, or is the implication here that we’re going to simplify the structure at Robinson? And if you’re not part of the core four, then eventually that might not be a business we’re in in the long run.
Dave Bozeman: Hey, Jeff, thanks for the question. Yeah, let me double-click on that a little bit more here. The implication as we’re looking forward is about what you said the first time. It’s about focus for where we want to go. Our focus for this company is truckload, LTL, Ocean, and Air. And that doesn’t mean — I mean, we have a lot of other feeder type of businesses that will help to drive the growth of those key businesses that I spoke of. And that’s really what our focus is going to be about. Now you’re going to always look at things and evaluate them and say what’s the best for the company from an operational perspective and long term. But focus is about really truckload and it’s about LTL, Ocean, Air and maximizing the feed of those particular businesses. So that’s really where I’m doing, and I’m constantly evaluating the entire company on that.
Jeff Kauffman: Okay, that’s my one. Thank you for the clarification.
Dave Bozeman: You got it. Thank you.
Operator: Thank you. The last question today is coming from Bruce Chan of Stifel. Please go ahead.
Bruce Chan: Thank you, operator, and good afternoon, everyone. Dave, you talked about one of your big findings, I think it was number four, as being the opportunity to drive some better synergies across the portfolio. Maybe if you could just talk about how many of your customers today are using multiple service lines and where that number could go, or if you’re thinking about that in a different way, like what the revenue synergy opportunity could be, I’d love to get some color on that too.
