Adam Satterfield: Well, I think that we had – for one thing, we had a pretty hefty CapEx year this year. And when you look at our operating ratio and the change that we have in the third quarter, that was a bit of a headwind, 110 basis points headwind on the depreciation side and some of the CapEx was basically related to what’s happened over the last couple of years with the OEM challenges that we’ve had, shortages of parts that have required us to carry maybe a little bit more equipment on the books than we would sort of look at from an – if we were optimizing the fleet standpoint. So I think as we go through next year, if it looks like it’s going to be another flattish year, we’re already sort of a leg up, if you will.
A lot of times, you can take September volumes for the month and kind of just use that to correlate to what the next year’s volumes will be. And so we might be looking at even if it’s underlying demand doesn’t change at all. We believe that we’ve got the opportunity to win some of the share that we continue to believe will be turning around over the next six months to a year given some of the service issues that I referenced earlier, we’re hearing about every day. But we’re already in a position where we might see a little bit of volume growth. And then get some yield on top of that, that in an environment where cost may be improving as well. Then yes, that’s the environment where in the past, we’ve been able to produce some operating ratio improvement.
Thomas Wadewitz: So I mean it sounds like you feel pretty good about where you’re at in 2024, even if you don’t see a lot of improvement in the freight market?
Adam Satterfield: I think so. I mean, we’re certainly – we saw the step-up basically in August. And then I was pleased with the performance that we had in September. And when we talked about post the mid-quarter update, where we were from a shipments per day standpoint, we had been at 47,000 shipments per day since December of last year. And basically, that average carried forward through July. We saw that step up. We’ve talked about kind of an incremental 3,000 shipments per day, and that’s where we were in August. In September, normally, it’s a 2.5% to 3% increase in shipments per day would be normal seasonality. Although the last month of the first quarter and the second quarter we saw a little bit of a pickup, but nothing close to where normal seasonality would be.
That’s kind of where we’ve been missing some of the growth over the last year, but our shipments per day were up 2.1%. So that performed a lot better than what we’ve been seeing at least in the last month of the quarter, and that really was no new impact. That’s just some share shift and then existing customers that are giving us more freight, if you will. So there’s been a lot obviously going on over the last four months within the industry, some things obviously permanent. And then like we mentioned, I believe that we’ll see some of the volume gain that we had in October that will return to a competitor. So trying to kind of figure out where the daily shipment count gets to in November and December is a little difficult. But if things kind of shake out, if we had just normalized, if you will, and we’re more along normal seasonal patterns, we would have been in an environment where – or if we get back to that from November, December, rather, to where our shipment counts are more flattish, with where we were last year in the fourth quarter and revenue is probably becoming more flattish as well versus being down 5.5% in the third quarter.
It may still be down slightly, but it’s getting – everything is kind of getting back to flattish. And I think that, that’s a good position to build on as we go into 2024. Hopefully, we’ll continue to see some more of those share gains, like I mentioned, just service related. And then if we can get a little bit of help from the economy, then that would build on even more volumes and then we’ll just continue to execute, like I said earlier, on the volume side and managing costs. And if we can have that positive delta there, then that’s a good setup even if underlying demand is not significantly changing. If it does, and we’re not going to precall it like we did last year. But if it does, then that’s the type of environment where I think our model shines the brightest when competitors are at capacity issues, and we believe that’s happening just based on customer feedback today, then that’s when we can really put on the incremental volumes that we build our network up to be prepared for.
And so that possibility is out there, but a lot depends on what we may see from an overall economic standpoint.
Thomas Wadewitz: Right. Okay. Great. Thanks for the perspective, Adam.
Operator: The next question is from Jordan Alliger with Goldman Sachs. Please go ahead.
Jordan Alliger: Yes. Hi. Spoke quite a bit about price on the call today. I’m just curious on mix and the types of shipments you’re getting, obviously, weight per shipment, maybe discussing that, which is basically trended down, sort of thoughts around that and shipment mix? Thank you.
Adam Satterfield: Yes. Our weight per shipment has trended down and really it went down, I guess, in August to about 1,485 pounds, and that was some of that incremental freight that we saw that pickup of about 3,000 shipments per day. Increased a little bit in September, which you’d expect, and we’re kind of hanging around that 1,485 pound range here in October as well. So that’s something where I believe we’re kind of at a baseline, reflecting kind of the underlying freight that’s in our book right now. And that will be a metric to watch to see are there increased orders for widgets, does that 1,485 pounds – do we see that grow to 1,500 to 1,520 pounds getting back closer to the 1,600 pound range that we’ve seen in robust economies.
So it’s – like anything, the freight that you take on as long as you understand the handling characteristics and what the pricing ought to be, that decrease in weight per shipment did have a little bit of a favorable impact on our yield metrics during the quarter. But that’s what we have built our business on is investing heavily in all the tools and technologies to understand the freight that we’re moving to make sure that we’re moving everything profitably with the right pricing in place. And I think that we’ve made those adjustments to the incremental freight that we’ve seen thus far.
Jordan Alliger: Thank you.
Operator: The next question is from Eric Morgan with Barclays. Please go ahead.
Eric Morgan: Hi. Good morning. Thanks for taking the question. I just want to come back to the near-term. I think for September, you said tonnage was about one point below average seasonality on a sequential basis. But you have confidence you’re gaining market share and underlying demand on study. So just wondering if you can clarify that and maybe if you’re seeing any attrition from the initial wave of share shifts. I guess kind of along the lines of an earlier question, just wondering how any new customers you have from this are responding to your premium service but also premium price offering?
