Paul Stoddard: Hi. This is Paul Stoddard on for Jordan. I guess with the recent agreement on the West Coast for the Long shoremen, there’s some anticipation that there could be some more freight being diverted back to the West Coast. I guess how are you thinking about that in terms of international intermodal long-term? And do you think that’s going to be offset by domestic intermodal? Thanks.
Kevin Boone: I think the long-term trend, if you just go to Charleston, you go to Savannah and you look at all the investments being made, there’s a long-term growth opportunity on the East Coast and you’ll continue to see our growth in the East Coast, which we’ll continue to serve and benefit from. Some stability on the West Coast is going to be helpful. As you know, a lot of our international business still comes across the West through Chicago and other interchange points. And unfortunately, a lot of that volume given some of the congestion on the West was either trucked, and we didn’t see that volume. So as that — we should benefit from a recovery there. So I don’t see it as necessarily taking share away from what we’re doing in the East, more as something that — obviously, if the rails in the West begin to perform better on a year-over-year basis will benefit the Eastern network and some of that traffic coming to us.
Operator: Your next question comes from the line of Allison Poliniak with Wells Fargo. Your line is now open.
Allison Poliniak: Hi, good evening. Just want to go back to Brian’s question on modal conversion. When you talk to customers that aren’t quite ready to convert yet, is it simply price that’s holding them back? Or is there something from a service perspective that they’re looking for you to provide that’s just not quite there yet? Just any thoughts on that. Thanks.
Kevin Boone: Look, I think the most important thing for a customer is reliability, right? And in some customers’ eyes, they want to see more of that reliability. They like what they see today. We’ve got to continue to perform and have those conversations. And sometimes it’s lane-by-lane. It’s carload-by-carload where we get that confidence from a customer. And so we’re in the very early innings of this, and we feel the acceleration from first quarter to second quarter, and I expect those conversations to pick up even more in the third and fourth quarters as we continue to perform. Sharing what we’re doing on the hiring side is incredibly helpful. Sharing with them what we plan to do to make our network more resilient, winning their confidence, but that’s the number one issue.
It’s not price. 99% of the time, we have a pricing advantage versus our truck competitor. So that’s the opportunity for us. We have the environmental advantages. So we have all these things, we’ve just got to get the reliability and prove that the reliability is sustainable.
Operator: [Operator Instructions] Your next question comes from the line of Walter Spracklin with RBC Capital Markets. Your line is open.
Walter Spracklin: Thanks very much, operator. I just wanted to shift focus from — the pipeline looks really good, Kevin, and presumably that’s merchandise base mainly. But looking into 2024 on some of your bulk areas and in particular, ag and coal, the EIA has just revised downward its forecast for next year by quite a bit? And then on the ag side, it looks like there’s some severe drought conditions forming that’s going to impact the current growing season. So looking into 2024, I mean that suggests that we could be bracing for some down double digit volume growth in those two categories. Is there any offsets there that you would flag for next year that would offset some of those fairly negative forecast for those two particular commodities?
Kevin Boone: Well, really hot summer certainly doesn’t hurt and that’s what we’re in the middle of. Obviously, from a coal perspective and you’re referencing mainly the domestic side, that’s obviously dependent on the weather conditions and the weather I think is a surprise from a heat perspective to the upside here over the last few weeks. And we’re seeing that with a lot of our customers running full out here and replenishing some of the inventory levels. And so we’ll see how the winter plays out. I think it’s really, really early in July to call 2024. That seems a bit premature to me. We see a very healthy export market as well. Obviously, that’s driven by global macro conditions. But we have new supply coming online that will ramp up next year.
That supply is going to land in the market. It’s very competitive in the market, and we expect to participate in it. Many of the mines that we serve are going to be in the market almost no matter what conditions. So we see the volume there sustainable. On the ag side, again, I followed these markets for a long time. I think July is a little bit premature as well. It has been hot out there. We’ll see how the market firms up here, but there’s a lot of moving parts. We’re seeing a little bit of weakness here in the third quarter, but we see some good indications into the fourth quarter. So we’ll see how that trends, and we’ll watch the crop conditions as you are to see how that moves into the back half of the year. Obviously, we don’t have as large of a franchise on that side as some of the other railroads, particularly in the West from an export perspective.
So a little less exposure.
Operator: Your next question comes from the line of Jason Seidl with TD Cowen. Your line is open.
Elliot Alper: Great. Thank you. This is Elliot Alper on for Jason. On the international intermodal side, last quarter, you talked about how some of your larger customers were expecting a pickup in the back half of the year. So I guess, what have your customers said that has changed over the past three months that has resulted in no inflection yet? Maybe there’s been any change in view into peak season? Thanks.
Kevin Boone: I don’t — I wouldn’t read any of our comments that there’s been any type of inflection down. We’re just — I don’t think there’s — we’re seeing in real-time an inflection up in the market. And I mentioned earlier, in the fourth quarter, we obviously start to lap a lot easier comps on a year-over-year basis. So I think from a overall growth perspective, fourth quarter will be a much easier comp than what we’ve seen throughout the year. And hopefully, that momentum will carry into next year. But there’s no indications that the market is necessarily picking up. I don’t — I think we bottomed from that perspective. The question is how quickly the market recovers. And that will be heavily relying on the consumer and how that pans out into the holiday season going forward.
Operator: Ladies and gentlemen, this concludes our Q&A session for today and today’s conference call. Thank you for attending. You may now disconnect.
