But — so it’s a double-digit year-over-year decline in the LTL tonnage that makes up the base assumption. And then we also had a couple of margin points that we kind of took down and what the thinking there was in a very, very soft environment, we may have to work with our customers in some specific cases about competing and winning business that may be a bit more in the soft kind of profitability area. We are still going to be extremely pricing disciplined. We had a GRI. We put this in place for every single customer. So the pricing discipline is going to be there. But it’s a combination of double-digit starting with 15%, 16% and then alleviating — getting a little bit smaller throughout the year tonnage per day reduction coupled with a couple of percent margin points that we took off.
Once you run this through our model, it ends up being the number that I quoted, which was $0.93 EPS impact.
Todd Fowler: Got it. I’d say other than relying on our reports or some of my peers, maybe those are all prudent assumptions, Tom. So I don’t…
Thomas Schmitt: That’s what I’m assuming.
Todd Fowler: You got to be careful there. I don’t know how granular you want to get on this question, but when I look at the extra freight OR in the fourth quarter, despite the falloff in tonnage, it was only 30 basis points or so higher in the fourth quarter of ’21, at least what I’ve got in my model. What’s your realistic assumption for ’23 in this environment? I mean, can you hold the OR flattish on a full year basis? Do you see it move back by 100 basis points. You’ve got a lot of levers on the cost side. Just maybe any thoughts on the expedited OR as we move through ’23.
Thomas Schmitt: Yes. So it’s probably flattish. And — but let me just explain this one more time, too, because I think we had this conversation, and I think the logic holds, but you guys challenge us on that. So if you remember, we said we expect inside expedited trade, the 800-pound gorilla is our main show, the LTL business. The other businesses are in their own right, obviously, profitable and they need to be above certain ROIC and margin thresholds, but they also need to make the main show better with backhauls, with co-locating, co-routing and so on. But we did say going into 2022, we expect 150 to 200 basis point margin expansion in 2022 and in 2023. If you look at 2022, you’ve got probably about twice that. We were more like 390 or so basis points that we added margin on the LTL side.
And some of that is temporarily inflated by fuel. So say, for argument’s sake, we get 3.5, 4 percentage points LTL margin expansion in 2022, we, as a team, do not take credit for the 150 or so that come from fuel being temporarily at very high levels. Same is true the other way around. Now fuel is walking down. So if the margin remains flat, it still means the quality of the freight, the quality of the business, the way we operate our terminals, the way we dim and reweigh, all the initiatives that are part of Forward 23 still get us 150 to 200 basis points margin expansion in 2023. However, if you look on a piece of paper, it might show flat because fuel is going to be the headwind in this case. We want to get pound for pound as a company better, and we don’t take extra credit for fuel, but we also don’t want to take fuel as the determinant when we look flat, but de facto make the business better.
So it’s almost like put fuel assigned, sometimes it’s a bit of a tailwind, sometimes it’s a bit of headwind. The test is, is this business getting better by 150, 200 basis points in its own right and it did in 2022, and we expect the same based on these initiatives in 2023.
