James McGarragle: Hey, this is James McGarragle. I’m on for Walter today. Thanks for having me on. I wanted to ask a question on U.S. port share ship toward the U.S. East Coast and away from the U.S. West Coast over the past number of years. Given the agreements with the unions on the West Coast, do you expect this share ship to trend to — toward the East Coast to continue? And any early indication you can share from your conversations with the shipping lines and your strategy to capitalize on these trends longer term? Thanks.
Sean Pelkey: I think you’ve heard it over and over again the West Coast are challenged in terms of being able to add capacity. And so there’s been tremendous investments that continue to be made on the East Coast and we’re the beneficiary of that. So, we’ll continue to work with our East Coast ports and expect that trend to continue going forward. You also see a migration out of China and other markets. And that’s also helpful for what we’re seeing in terms of imports coming off from new locations that can go, that are more likely to go to the East Coast than maybe the West Coast previously. So, a lot of good momentum, a lot of significant investments being made. We’re making investments alongside of them to make sure we’re prepared for the growth, but it’s been a great story that I don’t see any reason that that won’t continue going forward.
Operator: Your next question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead.
Ravi Shanker: Thanks. Good evening, everyone. Just a couple of questions here, one follow-up. Sorry if I missed this, but I was a little surprised to see the headwind on the accessorials get a little bit worse because it felt like you guys had a pretty good handle on that. Can you just kind of unpack that for us and kind of if that’s now a final number? And also maybe for Joe, bigger picture, I know the rails are all trying to pivot very heavily towards growth, which has historically been challenging to come by. What do you think about inorganic growth potential opportunities maybe short-lanes, maybe trucking, like it — is that something you guys looking at as well?
Sean Pelkey: Ravi, this is Sean. I’ll start with the question around the accessorial. So, it’s been trending down all year long. I would say we took our kind of last sequential step down from Q2 to Q3. It’s a little bit more than we expected, but it wasn’t just intermodal storage. There were some other components of other revenue that were down slightly. There’s a lot of different things in there from subsidiary revenue to switching charges to lots of different factors. So, this is probably a good run rate to use going forward. It is also impacted by volume to a degree. So, it’ll trend to a little bit higher when the intermodal volumes recover likely. But the level that we’re at right now, we do think is kind of the bottom. And that’s why we just didn’t want to — we wanted to make sure everybody understood where we were headed for the fourth quarter on that line.
Joe Hinrichs: Thanks, Sean. And Ravi, just a couple of other comments from your second part of your question. I mean, at the highest level, I wouldn’t think that trucking is where we would see growth. We’re proud of the acquisition of Quality Carriers and how that’s progressed with us at CSX. But that was very specialized to serve our chemical customers where very strong franchise and very important business to us. We’ll always be opportunistic, but I wouldn’t say that trucking is where the growth comes from. But just a couple of areas to highlight that we haven’t been highlighted so far tonight. And first and foremost, I’ll start with the fact that, I think you get the sense from this team that we firmly believe that the best way to provide opportunity for growth is to continue to provide class — best industry-leading service to our customers.
And when we do that, it gives us more and more opportunities to win business with customers. So that is the foundation of where we see growth. But you have to remember, we’ve been investing in the New England region, which is the old Pan Am network that we purchased. And that’s going to be an opportunity for growth. We’re excited about that. We’re going to start a new interchange point with CPKC in Myrtlewood, Alabama. We’re very excited about that opportunity. And Kevin referenced it, but I want to highlight it, in order for this industry to see significant growth, we have to work better together to be motivated to serve customers in new and better ways. And we’re starting to have some of those good conversations with other Class I railroads to be able to talk and think differently about how do we serve the customer and how do we get excited about that opportunity?
So, there are a number of incremental steps we can take to grow the business beyond just getting better and all the work that we’re doing and the cynical nature of our business, which will be some things that should help us going into ’24, as both Kevin and Sean mentioned. But those are some incremental areas that we have opportunities. And then, as our intermodal product continues to get better and we continue to be in the 95%-plus trip plan compliance reliably, repeatedly, and get to the high 90%, as the truck market starts to rebound and as costs continue to increase there, we can be even more competitive versus truck and get some more business off the road there. So, a lot of opportunity for us. We have to continue down the path we’re on of continuing to provide that reliable service.
But there’s some exciting developments going on in addition to all the projects that are going on industrial development side, as Kevin referenced earlier, we’ll provide more guidance — maybe some more information on that, not guidance, but information on the context of that. But there are hundreds and hundreds of projects in the works in that space. So, a lot to be excited about, and really excited about the capability of our network to take advantage of that.
Operator: This concludes today’s conference call. Thank you for your participation, and you may now disconnect.
