John F. Orr: Yes. As I’ve said in my prepared remarks, they’re not mutually exclusive. In fact, they’re complementary to each other. And, my approach is, as I evaluate the network and restructuring our yard and local plans, what are basically on ramps to our corridor that touch our service, touch our customers and creating efficiencies, new standards and accelerating through our current dwell times, making improvements year-over-year, but also making improvements on the individual cars and the handoffs on those cars, it drives performance. And, then the overall speed of the network picks up as there’s more reliability. So, that’s why I talked to not only our craft employees and our frontline supervisors in my first few days, but also union leadership and the regulators to make sure they understood.
We’re going to go at a quick pace, give them a forecast of what we’re doing. And, was very clear even with our union leadership that I’m going to ask our people to do more, give them the resources, give them the training, give them the skills to do it. But, they’re going to be stretched in ways that they’ll be proud of in the coming years and we’re going to do it sustainably. We’re going to grow a team of capable PSR driven leadership and do it in a way that produces amazing results.
Operator: Our next question is coming from the line of Jon Chappell with Evercore ISI. Please proceed with your question.
Jon Chappell: Thank you. Good morning, gentlemen, I want to follow-up on a couple of things that have been touched on already as it relates to the things that you’ve done in the last 30 days. The volumes so far this quarter have been relatively strong for Norfolk Southern on a year-over-year basis, granted there’s easy comps. But, as you go through the next six months and you deal with things like laying 300 more locomotives or reducing merchandise families by 10%, is there a situation where you don’t maybe chase volume recovery as quickly as you would otherwise? Or it’s more about getting the network where it needs to be and worrying about volume, and I guess the topline beyond that next six month period?
Alan H. Shaw: John, why don’t you talk about that? And then, Ed, why don’t you talk about the market?
John F. Orr: Yes. I think that the most imperative thing we can do is to close the gap on performance, reliability and drive the value of the network. As far as the capacity, we’re unlocking capacity in the existing terminals by being more efficient, more effective and driving those on-ramps to the network more effectively. What’s there in that pipeline, we have ample capacity to grow more trains or grow the longer trains and to get yield out of that even a single-line capacity. So, I don’t see it as being one or the other, it’s both. And, whether or not the volume is there, depending on what the economy gives, we’re going to drive performance, we’re going to close the gap faster than anyone else. So Ed, I’ll turn it to you.
Ed Elkins: Sure. And, you’re absolutely right, John. We’ve seen fairly strong volume so far this month. We’re encouraged by that. Our customers are encouraged by the level of service that we’re delivering. And, to be clear, in intermodal, the level of service we’re delivering is the best in a generation, and it’s sustainable and it’s going to continue to be that way, and we’re earning trust from our customers to do that. We’re seeing very good response on the bid front for new volume converting from the highway, which we’re very encouraged by in intermodal. On the merchandise side, look, we spent the last six months building a sales conversion pipeline, which includes technology augmentation as well as institutional rigor, and we are going to deliver growth from the highway converting freight in the merchandise space that should be moving on Norfolk Southern.
The capacity that John has unlocked and we’re going to use to go out and get back the freight that should be ours.
Operator: Thank you. Our next question is from the line of Justin Long with Stephens. Please proceed with your question.
Justin Long: Thanks, and good morning. I guess to follow-up on some of the commentary about intermodal, you’ve talked about rationalizing some lanes. I wanted to get an update on where you are in that process. Is that now complete or is there more to come? And then, similarly or along those lines, thinking about these multi-year OR targets, how do you envision the mix of the business changing? Do we need to see a shift to more general merchandise freight? Or is that not necessary to hit these OR objectives? Thanks.
Ed Elkins: I’ll talk about the intermodal piece first. I think that was your first question. Look, we took a very, very disciplined view of our intermodal network and did a couple of things. Looked at lanes that were very low density, looked at lanes that were not strategic in terms of their capability for our customers. And then thirdly, looked at lanes where we did not believe that there was going to be long-term growth potential that we had line-of-sight on. Once we pass all those filters, we talk to our partners that were engaged in those lanes, that includes our port partners and some others, and we made some tough decisions. It’s about 15% of the intermodal lane portfolio, but only about 1% of the intermodal revenue portfolio, which should tell you something about the density there.
Are we done? We’re always looking at our network to make sure that we are applying our resources where the greatest growth potential is. And, one thing that this exercise taught us is, we can redeploy some of that capacity that we’re freeing up toward our powerhouse lanes, where we’re delivering exceptional value for our customers. And I would say, with regard to kind of the mix question, intermodal is going to grow because that’s where the growth is. We serve the consumers, but at the same time, merchandise has probably suffered more in the past couple of years from the service challenges we have. So, just unlocking the network and doing everything that John’s doing should enable merchandise to really return to better growth rates as we start to recover share.
