Ravi Shanker: Thanks, everyone. So, I think you guys are flagging competitive risk in multiple segments, dedicated, ICS, I think maybe also IM. Is this a surprise? And kind of where’s this pressure coming from? Is it coming from other public companies? Is it coming from small and mid-sized carriers? And just to follow up on the IM side, a related question. You said that you feel like you’re taking share and that’s driven some of this volume acceleration. Again, is that share exclusively from truck or are you also taking share from other IMCs?
John Roberts: Where do you want to start, Brad?
Brad Delco: Yeah, I’ll have Darren start on the intermodal side and then I’ll let Nick talk about the competitive dynamics that he’s seeing to the extent he is seeing it in DCS and then Brad Hicks can wrap up with comments on brokerage and what he’s seeing on Power Only.
Darren Field: I think we’re taking share both from the highway and from other intermodal channels. I’ve been really proud of the team’s focus and efforts on the highway conversion front, but inevitably there have been pricing actions by our customers earlier in the year, and maybe we didn’t win something, and three months later, they come back, and through a mini bid, we win it a second time because maybe a provider struggled to service that opportunity. And that’s not new. That happens every year, but that has certainly been something at play here this summer.
Nick Hobbs: For the dedicated, I’d just say that the fleets that we lost were a couple of other publicly traded companies and we just couldn’t match that from a return standpoint. So we walked away. But I would say that if you look at our pipeline, we have a healthy pipeline and the deals that we’ve won and priced meet our return requirements, so we’re very happy with that. So we’re always fighting competition out there. So I feel good about the future and where we’re going.
Brad Hicks: And I’ll round it out from maybe what we’re seeing in brokerage. I think that in brokerage, as you all well know, it’s been an incredibly difficult environment. Radical swings in rate from just 12 months to 18 months ago versus what we see today, so it is probably more competitive in the brokerage segment than what you heard from Nick and Darren. It’s a fight out there. As I mentioned in my prepared remarks, we hold some freight that was not favorable for us, but we’ve also lost some freight due to the competitive bid process that our customers took advantage of or utilized during this bid season. But I’ll tie it back to our acquisition and really the value of J.B. Hunt 360 and what we see is letting our platform execute and creating that value for our customers.
And so with that acquisition and where we’re at, I largely feel like we’re at the bottom and just kind of bouncing along. But there is extreme pressure on PTE. And so we do see carriers pushing back on the floor of what PTE is today and really just kind of navigating those choppy waters as we work through the beginning of the fourth quarter.
Shelley Simpson: Ravi, I would also say, it I feel like organizationally we want to be physically responsible and take a long-term view on the business that we have and also business that we onboard. If you heard anything from kind of what these three presidents have talked about, Nick’s comments around not making a proper return, we aren’t talking about a couple of points here. These are dramatic changes that maybe our competitors decided to be strategic with that account for whatever reason. And we believe the best decision for J.B. Hunt and the health of our business and our customers long term is to walk away from that business. Same thing from Brad’s perspective, really challenging what’s happening in the market. I think Brad is leading in that space and really talking to our customers about the long term benefit, long term value.
Has that business been able to be as sticky as we would like? No, I do think Brad’s comments around it being, we’re in a fight there. I think, the fight doesn’t last for that long. You can’t lose money for a long period of time in this business. And so, I think for us we take a long-term view. I think in intermodal, we’re largely where we thought we’d be, maybe at the lower end of our pricing expectations, but pleased with what our customers have talked to us about and where we are moving forward.
Operator: Your next question comes from the line of Brandon Oglenski from Barclays. Please go ahead.
Brandon Oglenski: Good afternoon. Thanks for taking my question. Shelley, maybe to follow-up from that and the idea about being disciplined around capital, because you guys have been reinvesting the business here for the last two years at pretty elevated rates. And I know we had the pandemic in the last five years, but intermodal volumes have really been kind of stagnant looking back that far. I guess, what do you guys see in the next five years that transitions out of this stagnant volume outcomes? I know there’s been a lot of changes with the rails of the pandemic, but I guess the fear here, and I think historically you guys were always valued higher because of the focus on ROIC, but maybe are we just over investing this cycle now?
Shelley Simpson: Well, let me say this Brandon, I think our customers — Darren mentioned this earlier, our customers are struggling still with what their forecast will look like. And I know we gave an update on this earlier but I just — we completed bid season. I would expect our customers to have made material improvements in what freight they are giving us, so bid compliance. And we have not seen a major change in our bid compliance. So I think we’re up into the mid-60s now in intermodal. Just for comparisons, if you went back to 2017, that would be in the 90s. So customers are struggling to know what’s going to happen from a forecasting perspective. If you’re to look at the one-way parts of our business, intermodal, JBT, and inside ICS, those businesses are ranging with bids fully implemented between mid-50s and mid-60s.
That’s difficult for us to think about our networks and what that will look like, but we also know that customers aren’t satisfied with that either. This is the reason you’re seeing mini-bids trying to find that equilibrium on or the right balance between price, service, and cost overall. And then I should say where we are investing, remember in 2022, a big part of our investment that carried over into 2023 was our lack of ability to get equipment, particularly on the tractor side. So if you see our fleet replenishment and making sure that we’re in good shape there. But also in intermodal, what Darren talked about, our ability to move very quickly with our customer was a key to our success in September and even moving into October. You heard Darren say we’re continuing to unstack.
Those aren’t 100 at a time. You’re talking about big numbers that we’re swinging dramatically. And so for us, we know what it looks like to shut down our supply chain. We did it in 2020 in intermodal. It was very difficult to onboard equipment and to get things moving again. I do think that we’re doing a nice job evaluating what our customers are saying with our own experience to that and trying to plan out how much equipment that should look like. We still believe in our long-term future. Our customers believe in it as well. And I might just echo one more thing. I think our customers had a lot of questions in the first half of the year. They were struggling on inventory. They were trying to determine. Our conversations have shifted slightly into now they have confidence at intermodal, at least our intermodal products can deliver.
