Shelley Simpson: Nick, let me add to that just a bit, because that’s exactly what I was going to try to talk through, is that, you’ve done a great job taking out the incremental trucks that we’ve had, having to carry, because we couldn’t get new equipment. But also the CBD work that you’ve done, being offensive in our strategy there.
Nick Hobbs: Yeah, so we’ve done a lot of one to two truck reductions at existing accounts, and we’ve seen that through the history. You asked about our history as we do that through down cycles, it pays back in dividends from those trucks coming back plus some others. So we really feel good about that. If I look at the business we priced in 2022 and how it’s performing in 2023, it’s performing exactly the way we priced it and that’s with the cost in there and that’s with the proper return. So we feel very solid about our dedicated model.
Shelley Simpson: And I think my point to that is, that’s our long-term view, making sure that we flex with our customers, understanding that we’re in dedicated fleets for a long period of time in total, and I think that’s a good thing.
Operator: Your next question comes from the line of David Vernon from Bernstein. Please go ahead.
David Vernon: Hey, good afternoon, guys, and thanks for taking the question. So, team, I’d like to ask you a little bit about driver availability and hiring from a capacity perspective. And we’ve heard a lot over the last five, 10 years talking about driver shortages. Could you talk a little bit about the labor environment when you’re hiring for dedicated and intermodal? And then also from a capacity perspective, as you look at the brokerage business, are you seeing any signs of capacity rationalization in the truckload market that you can point us to in terms of trying to get supply and demand back into a better balance? Thank you.
Nick Hobbs: Yeah, I’ll take — this is Nick. I’ll take the driver’s side. Good, really solid drivers are still hard to find. We are finding them. They’re much more available than they have been. But we feel very good about the supply of drivers. We still have pockets in different areas that are tied. And the driver wages are not going anywhere. They’re staying up. There’s a lot of demand out there for other jobs, so we don’t see the driver wages really going down. But with our corporate driver personnel group, we are able to find the drivers we need right now.
John Roberts: I think from a carrier community, we are seeing the pressure kind of show itself with reductions or some losses and closures. But I also feel like that difficult backdrop of the brokerage environment and what — when I mentioned that, they’re pushing back on the lowering cost of PTE to kind of come in line with what customer rates have done. And so, to me that’s the signal that says they’re at that breaking point. And so, while it hasn’t been in high volume yet, we do anticipate that we will continue to see an increase in losses or closures as we move forward deeper into 2023, into 2024, as long as this rate environment persists. And so, we have seen that continue to gain momentum, not at macro scale yet, but I think that that’s just a matter of time. There’s only so long that the carriers can hang on with the low rates.
Operator: This concludes the Q&A portion of the call. I’d like to turn the call over to President, Shelley Simpson for some closing remarks.
Shelley Simpson: So thank you so much for joining our call. I will say that you’ve heard us talk through this last hour really as to where we see the businesses today, but also focused on our future and what our long-term prospects are across all five of our business segments. We do love the complementary nature of all five of our segments as our customers really ask us to help them through the North American supply chain. We feel like that we can answer our customers with any of those five segments. Pleased with the volume growth in Intermodal and what our customers have told us that they want to buy from us. We’re starting to see that in our results. We love the resiliency of our dedicated model and I think you’re seeing that play out here in the third quarter.
Very pleased with our progress in final mile. We didn’t talk about that much, but very pleased with us continuing to push our customers on making sure that we are paid appropriately for the value that we create. And also pleased with what’s happening inside 360 Box with volume growth overall. The freight environment has been challenging. That is nothing new to our team. It’s not a matter of if, but when, we actually come completely out of the freight recession. But we are encouraged by some of the results in some of our businesses. I would say, in total, we’re very proud of our people. And in this environment, for us to be able to flex in all of our businesses and make sure that we are delivering on what our customers are asking us for is the highlight of everything that we do.
Sometimes our people are working so hard and they don’t get to see the fruit of their labor, but I would tell you, they’re working harder today than they’ve ever worked in total. For that we’re super proud of our team. We remain committed to our team and remain committed in our three key priorities, delivering value for our customers, committed to our people, and finally committed to long-term returns for our shareholders. With that, I’d love to turn it over to John Roberts, our CEO, for final thoughts.
John Roberts: Thank you, Shelley. Very well said. I continue to land on your idea here that this recovery is not an if question at all. It’s a win question. I really appreciate and respect the callers need more on the win. We wish we could give you more. The compliance data definitely tells us that we’re all working towards a better understanding, but the data and the results in the quarter tell us that there’s a lot of headwind out there. But I think we continue to find our way back to this idea of people and experience. And the people on this leadership team have an absolute ton of experience. And that gives us confidence to not feel like we have to make short-term decisions when we know what the right long-term decisions are.
For instance, When we talk about our container ads, we use very large micro numbers, but I want to emphasize that was a very, very precise calculation made with the railroads on, real capacity, real availability, real conversion opportunity. We didn’t just make up a number there. And when we don’t see that demand, we look at and we alter the timing. But what Shelley said is so vitally important. When we were asked questions about just today, the volume in Intermodal. What drove the volume down in Intermodal was PSR, very, very simply. And we reacted to that by completely shutting down our desire to continue to bring on equipment that is extraordinarily hard to source and takes a very long time to get landed. That’s experience working right there for you.
Saying, hey, we did the calculation, we did the math. These assets have an extraordinarily long life. They sit quietly. We’re not out stockpiling Class 8 tractors. We’re buying the right assets. When I ask myself, how can we best position the company for the win, for the win we recover? We have to invest in the right assets and we have to learn from our experiences and when we apply that, it’s just preparation for the win. I totally appreciate what the folks on this call do, but when you’re here with us in this room, we’re looking at that long term. So much real good conversation on CapEx and it is elevated and that is a very serious matter, but I want to reiterate the drivers behind that were a shortage of supply. We don’t really talk about the impact that shortage of supply has on our system, but when we carry equipment over its natural life, you have to carry extra, you have to fix it more, you have to park it more.
