Alan Shaw: Jordan, you asked about where headcount’s going. Let me just put a fine point on that. I do think that our conductor training pipeline really starts to taper down here in the fourth quarter, and I’d expect that we’d probably end the year just under 600. We have enough qualified T&E here probably in the fourth quarter to start capturing meaningful growth that might be on the horizon. And it’s really about balancing where those T&E are amongst our hiring locations and we want to make sure that we’re not just adequately staffed, but we’re at resilient levels in those critical locations. But probably, I would say the other area of headcount, we’re going to need some more supervisors now as you add a lot more T&E. So that’s probably the remaining pickup you’ll see in some of the resilience investments that we’re making in the fourth quarter is really around the area of field supervision.
But in terms of overall T&E, I think we’re cresting here. And now we’ll be able to handle more volume and start driving productivity to also take another step up in volume absorption. So that’s kind of the roadmap on T&E.
Operator: Our next question is from the line of Jason Seidl with TD Cowen. Please proceed with your question.
Jason Seidl: Thank you, operator. Alan and team, good morning. Wanted to follow up a little bit on the automotive side. You guys mentioned that there’s a backlog of finished vehicles that you could move. Can you give us a sense of how many weeks you think that backlog is for you guys just in case the UAW strike drags on longer than most people would want? And then you made a comment about near shoring and how that is looking really good for you potentially down the road. Do you have any numbers from your industrial development projects? If you can compare in the prior years, that’d be great. Thank you.
Ed Elkins: Sure. And thanks for the question. This is Ed. On the automotive side, yes, there have been high shipable ground counts at a lot of places that we originate from. The strike duration is probably longer than I want it to be right now, to be honest with you. And those shipable ground counts are going to dwindle over time and we’ll see where it goes. I really can’t be more granular than that because of the nature of the strike, which has moved from place to place. On the industrial development side, there’s over 600 projects in the pipeline right now. We’ve seen tremendous investment, mostly in the southeast and the Midwest, which is very beneficial for our network and for our customers. I highlighted a few of those during the prepared remarks and just to be more anecdotal about it, in September we had three new lumber shippers that either originated or started receiving traffic just that month and that’s really highlighting, number one, the strength of that, what I would call non-res or manufacturing construction economy, which is, I think, higher now than it was during the entire 2000s for the U.S. Most of that is focused east of the Mississippi River, and most of that is focused again in the Midwest and the Southeast.
So we think we’re really well teed up, really well positioned for what I think Alan has referred to as a manufacturing super cycle in the coming decade.
Jason Seidl: Well, I certainly hope so. You mentioned 600 projects. How does that compare to, say, pre-pandemic?
Ed Elkins: Still elevated from a pre-pandemic level. The EV supply chain is really a new frontier that’s out there and I think in one of our previous calls I mentioned that there’s been over $70 billion invested into that, and about 30% of that is on our lines. Whether it’s the Infrastructure Act, the Inflation Reduction Act, the CHIPS Act, there are a lot of compelling reasons, along with geopolitical instability and affordable and reliable energy, to make the U.S. a very compelling place to be.
Operator: Our next question is from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question.
Ravi Shanker: Thanks, everybody. Just to follow up, the comments on the customer preference for short-haul moves and the empty moves is pretty interesting. Do you have a sense that this is cyclical, or could this be structural given evolutions of supply chains and when the up cycle comes, are you confident that shippers will not choose to prefer faster, shorter-haul truck moves over rail moves?
Alan Shaw: Thanks for the question. On the international side, we saw those lanes suffer the most during the pandemic, where steamship lines were basically moving port to port and then allowing customers to pick it up there. That naturally is the part that has reverted back the most and I would say it’s naturally reverted back the most strongly because of the capability that we have in some of those markets, like from Savannah into the Southeast, like from Charleston into the Southeast, like from Norfolk into the Midwest, and even from the Port of New York into the hinterland markets. We have a really good portfolio of intermodal services and I’ll remind you that over 100 million Americans wake up every morning within 50 miles of one of our intermodal terminals. That is a compelling strength that we think is going to allow us to succeed both on the international end and the domestic side.
Ed Elkins: Yeah, look, this is a positive for us, right? This shows that we can add value into the market and even short-haul lanes where rail traditionally has not been competitive and we can do that because of our focus on productivity. We can do that because of our focus on the value of our service product. In the East, that’s why we’re very confident, right, that we’ve got a franchise that faces the fastest-growing segments of the U.S. economy.
Operator: Next question is from the line of Bascome Majors with Susquehanna. Please proceed with your question.
Bascome Majors: Mark, thanks for all the detail you gave us on the Eastern Ohio spending in the plan forward. Can you talk about, without necessarily quantifying, but the timeline of any major charges or outflows that you have a little bit of visibility into that are still ahead of you and is there a point where your ongoing spending tapers off, but the insurance and legal recoveries are still coming in, and your response to this incident shifts from a cash flow burden to a cash flow tailwind? Thank you.
Alan Shaw: Okay, Bascome. Thank you very much for that, for the question. We’re certainly pleased that we’re winding down the site remediation work, which obviously has been costly, as you’ve seen from my chart and the impact there, but I do think we’ve got issues that we’re going to be working through for several quarters to come and it’s really impossible right now, Bascome, to predict the amounts or the timing and, there could be a lot more developments that lead to additional costs, and in particular with regard to litigation matters, fines, penalties, legal fees and these could end up being material, but at the same time, we do have insurance recoveries that have started. We actually got our first cash recovery, that $25 million I cited, that we recorded in the quarter.
We actually got the cash last week for that, so that’s good. But I don’t think that you should expect to see significant, meaningful cash recoveries from insurance in the near term. I think these things are really going to become protracted, but so it’s hard to even match the timeline of those inflows with what potential future outflows might be. I think with regard to insurance in general, I think, just bear in mind, it would be reasonable to expect significant premium increases going forward as a result of an incident of this size. So hopefully that’s helpful, Bascome. Thank you.
Operator: The next question is in the line of Ben Nolan with Stifel. Please proceed with your question.
Ben Nolan: Yeah, hi. I appreciate it. I wanted to go back to some of the development that you’re seeing from some of your customers, and specifically, it’s sort of a little bit of a mixed signal. It sounds like there’s a lot of people moving forward, but then the lights are not all green. I guess I was curious, have you seen any, as a function of higher interest rates or ambiguity in the market or whatever, any of those projects that make up that $600 on your book here, have any of those shifted to the right, or is there any reason to think that maybe those aren’t all full steam ahead?
