Hub Group, Inc. (NASDAQ:HUBG) Q4 2022 Earnings Call Transcript

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And you’re able to de-risk your supply chain and all that is coming together I think very well to see a strong bid season for us. And just – in general for over the road conversion to intermodal.

Brian Alexander: Yes, I’ll also add to that to Jon. I mentioned in some of the prepared remarks too, but we’re putting in those cost disciplines and really bending that cost curve down in every possible way. And I mentioned a few of them, but that insource dray is a big piece for us we hit 65% in Q4, which was a substantial improvement. But have I set on 70% as we go into 2023, as well as our third-party dray taking that cost out. And then as that service improves, the fluidity of our overall network gets much better from a cost perspective as well.

Jon Chappell: All right, that’s super helpful. Thanks, Brian. Thanks, Phil.

Phillip Yeager: Thank you.

Operator: Thank you. Our next question comes from the line of Jason Seidl of Cowen and Company. Your question please, Jason.

Jason Seidl: Thank you, operator. Hey, gentlemen, how are you? Two quick things one, I was talking to another large IMC and they mentioned that they think now and going forward, there’s going to be a lot of market share taken from the smaller and mid-sized items seize. I mean one, would you agree with that statement and two, why would you think it would occur going forward now? And I have a follow-up about sort of East Coast, West Coast. So long chance of the first one and I’ll get to the second one.

Phillip Yeager: Yes, this is Phil. I feel very strongly. We feel strongly that asset based players are going to continue to take share from the non-asset based IMC both around an overall access to capacity, but also drayage economics. And our rail partners are building their network and their service product around an asset based carrier with better integration on technology and overall just a better service product we think perhaps based players. So I think that’s going to continue. I think the last couple of years have shown a lot of the weakness in the non-asset based IMC model particularly around driver availability and capacity availability. So yes, I would agree with that assumption.

Jason Seidl: Makes a lot of sense. And thinking about sort of, the shift that went on last year as the West Coast ports had a problem saw a lot of container traffic flow to the East. There’s going to be a, certain percentage of that, probably large percentage flow back to the West. Are you guys agnostic to that or would you rather have it on the East Coast or on the West Coast?

Phillip Yeager: Yes, this is Phil. We typically see higher margin per load day off the West Coast because it is typically a Transcon move. We also see higher transload volumes off the West Coast and so typically for us, West Coast business is going to be better and higher profitability. I agree with you. I think we typically see our shippers switch their ordering patterns from coast-to-coast on kind of annual basis. And so, we believe that with some of the labor issues getting put to rest that we’re seeing a strong year off the West Coast, and that will create a strong peak season, we hope, and we’ll see volumes continue to get back to growth on the West Coast. So that’s very beneficial to us.

Jason Seidl: We’ll have our fingers crossed too. Appreciate the time, as always, guys.

Phillip Yeager: Thank you.

Operator: Thank you. Our next question comes from the line of Brian Ossenbeck of JPMorgan. Please go ahead, Brian.

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