Kevin Beth: Yes, I agree with Phil. I think one thing to point out, Bruce, is we definitely have some high comparables. We’re looking at this year sort of as an exact slip of last year, where we started off with really high revenue amounts in ITS. And this year, we’re going to build back up to those as opposed to starting with it. And as the bids come about later in the year, we’ll start to see that price increase year-over-year as those bids that went in the second half were priced at a lower amount to begin with.
Bruce Chan: Okay. That’s really helpful. And maybe just as a quick follow-up here, any comments around what you’re seeing in terms of competitiveness in the marketplace? And I know you’ve got some boxes to unstack. Some of your peers have some boxes to unstack. So maybe just what assumptions are built in from a pricing competitive standpoint into your assumptions, for pricing this year?
Phil Yeager: Sure. I’d say it’s a competitive market, but we’re very focused on our network needs and really driving that velocity and productivity and converting business from over the road. That’s actually what we’re probably seeing in the majority of our wins within the shorter length of haul, which might be a negative mixed impact to our revenue per load, as the year progresses. But I think at the same time, it’s a positive for velocity and balance. So, while it’s competitive, we’re not going to unstack containers unless we’re getting a return on that. And we still have a long way to go to get our fleet to running optimally and at the utilization levels that they should be. So there’s capacity available even on the street today, but we also want to make sure we have ample capacity to support new onboarding, make sure that those are seamless and that we’re serving our customers appropriately as well.
Bruce Chan: That’s great. Thanks for the time.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Brian Ossenbeck of JPMorgan. Please go ahead, Brian.
Brian Ossenbeck: All right. Thanks. Good evening, guys. Appreciate you taking the question. Just wanted to go back and make sure I understood the cadence again. Like, were you seeing contract renewals now to your point? You were holding the line a little bit too hard on price. Or is pricing down at this point? It sounds like maybe you’re hoping for that to recover and turn positive on market recovery, and maybe comps at the same time. So maybe you can just start there and kind of walk me through that again?
Phil Yeager: Sure. And focusing on our incumbency, we are seeing slightly down renewals, I would say. And then what we’re really trying to do is ensure that we’re getting growth that is consistent with our network needs that help drive that balance, help reduce costs, and really spread our fixed costs a little bit more effectively.
Kevin Beth: And when you look at the latter part of the year, you know, Brian, that’s where we mentioned that we held price a little too long. And it’s those contracts that are going to come due here in the second half and we’ll be able to price better, and have winning more volume at that time.
Brian Ossenbeck: So then I guess I’m just having a hard time with you’ve got price that’s held too long in the back half of last year coming up this year. Wouldn’t it flip the other way and you’d lose – some more on price and get more in volume? Obviously, a lot can happen between now and then, but just wanted to make sure I understood what you were assuming, in the outlook focused on the midpoint?
Phil Yeager: Yes, maybe I can try to take it again. It’s slightly down price in the current bid process, which is at 41% and 18% that are here in the first half, right? So that’s what we assumed on those renewals. And then we assumed slightly up on the Q3, Q4. And as we bring that on, we would hope we would be hopeful that we are growing volumes during all of those bids. And that is what we are seeing currently right now. If you talk about the 41% that is currently in bid, we are seeing we’re locking in our incumbency at that slightly down level, but then we’re adding incremental volume, which as has a significant flow through for us. And that’s been the approach thus far. Obviously, we want the market to assist us. We want to see us, there is some stabilization in the spot market.
We haven’t seen that necessarily translate into contract rates yet. But we’re certainly hopeful we see the market really solidify, start to move upwards. And as you know, price is a large flow through for us and will certainly be as the market enables us, to be going after rate as well.
Kevin Beth: Yes, I think one thing we didn’t mention, this is Kevin, is on the upside of the guidance, is the potential for some surcharges and assessorial coming back. That was really muted. In fact, there was no surcharge revenue that we experienced in 2023. So if we can get back to a standard environment, we think we’d be able to get some surcharge revenue in the second half of the year as well.
Phil Yeager: And I would just highlight, I think we based that on discussions with a lot of our customers who are having some concerns around the East Coast labor challenges that may be existing as we enter what is typically retail peak shipping season. And so, I do think you’ll see a little bit more diversification back to West Coast ports.
Brian Ossenbeck: Okay. I appreciate all that. And just to maybe follow-up on the current market conditions, it sounds like things are actually pretty strong, relatively speaking, from December into January. I think Brian mentioned there’s some signs of spot market, some spot market strength and clearly not, as strong as you’d like, as you just mentioned, Phil. But what do you see now that sort of gives you confidence in looking out for that back half recovery? Is it too early, to say we’ve turned the corner? And then maybe specifically, since you talk about truckload conversion, just on rail service, are shippers really willing to commit meaningful volume to that? Or is it just kind of wait and see?
Brian Alexander: Yes, sure. Sure, Brian. I’ll start with the quality of the bids that we’re getting. And Phil mentioned some of the dialogues we’re having with our shippers. They have a much better view with the normalized inventories of what their demands are going to be in each of the lanes and some of that seasonality that comes with it. That helps us align with what to execute to, what the price to, how to balance our network. And so the quality of the bids are coming out really well. And so, we mentioned some of the early wins in the bid season that have already started to materialize here. We’ve seen early signs of that in January. I mentioned some of the sequential growth that we’ve seen, not just in intermodal, but also when we look at our brokerage.
