Adam Satterfield: Yes. Winter weather comes every year, and it’s something that we contend with, and is generally in our averages. So we don’t view that as a one-time event. But a couple of weeks ago, us and everyone else had to deal with weather issues and made up for a little bit of lost ground with that last week. And then we’ve got a short week to finish out the month, the year. So we’ll see where the final numbers land. But as of right now, our shipments per day are trending pretty much in line with where we thought they would be. I gave the 10-year average earlier with respect to the sequential changes from a shipments per day standpoint. Our December was 5.9% below November, that’s better than the 10-year average. But over the last five years, we’ve kind of changed – we’ve given one extra day of paid time off around the holidays.
And so our five-year average in December is actually a decrease of 6.5%. So we were a little bit better than that revised average that changes the month a little bit, not so much the quarter. But looking at January, the five-year average sequential change is a plus 0.3% increase, and so we’ll see where we end up. But I feel like that certainly that number has been impacted a little bit, looks like it’s going to come in below that overall sequential number that we would go up a bit. But how much will we get back in February, where we see kind of a traditional bump and then March will continue to be the important month. That’s a month where we’re typically up about 5% sequentially over February. And if you remember, we anticipated in 2023 that we would see a recovery in the spring.
And unfortunately, it didn’t materialize like we thought it would, but that will kind of be the key point for this quarter is will we start seeing that reacceleration in our business levels, and that obviously dictate a lot in terms of the operating ratio and general performance for the first quarter.
Christian Wetherbee: And just one point of clarification. So for 4Q, do you think that with those two big moving parts, that’s sort of the number that we have is the right jump-off number as we think about that normal sequential progression of OR?
Adam Satterfield: Well, the normal change in OR from the fourth to the first quarter is about a 100 basis point increase, maybe 110 basis points. And those two particular items that we called out in the press release, we’d expect some normalization, if you will. To start with, the insurance and claims, that was 1.9% of revenue in the fourth quarter. That number had averaged 1.2%, 1.3% each quarter in the first three quarters of the year. And so we’d expect that to somewhat normalize and our expense to be more consistent in the first, second and third quarters of 2024. Now it maybe a little bit higher – we’ve had four or five straight years of double-digit premium increases and continue to contend with higher cost in that line item, but I still expect that, that would be maybe 1.3%, 1.4% of revenue in the first quarter.
So get maybe 50 basis points of benefit, if you will, as we transition into the first quarter on that line item. And then the miscellaneous expenses, we wouldn’t expect for those gains to be that significant. That was pretty unusual. Typically, that miscellaneous – the expense line item is 40 basis points or 50 basis points. And so we’d expect that to somewhat go back to normal as well. So that could be kind of 100 basis point, 110 basis point headwind. So I think just net-net, thinking about the 71.8 that we did in the fourth quarter, as we transition into the first, maybe 170 basis points to 220 basis points deterioration, 170 would be kind of normalizing for those items that I just mentioned. And then just maybe being on the high side of that was just the uncertainty of where we really get the economic recovery and volume performance through the quarter, that acceleration that we normally would.
If we get that acceleration, we’re certainly managing all of our costs, and it could be on the low end of the scale or better. But as of right now, probably better to just handicap it on the higher side of that normalized average.
Christian Wetherbee: Okay. That’s very helpful. Thanks for the time. I appreciate it.
Operator: Thank you. The next question is from Ken Hoexter with Bank of America. Please go ahead.
Ken Hoexter: Great. Adam, just to clarify that insurance and claims that was an annual adjustment, right? So when you talk about normalizing, I just want to understand that actuarial change. But my question would be on – you didn’t bid for the – or I guess, maybe win the centers, maybe your thoughts on in the industry, if you think there was – I presume you think then there was overpayment, right, given you were trying to be the stalking horse bid. So what does that mean for the environment? Do you think those peers need to get a return quickly on that investment, and you see increased pricing competition? I just want to understand your thoughts or view on what the impact of overpaying from your peers’ competitive perspective means?
Adam Satterfield: Well, I won’t say anybody overpaid. We looked at the whole thing, obviously, with that initial bid and felt like if we could get everything and get it at somewhat of a discounted pricing than we were willing to take that risk, and obviously, it would have come with increased cost if we had absorbed all that property. But I think each carrier is different, they look at those opportunities. And I guess that fit in with their long-term strategic plan. I think if anything, it’s increased in the cost basis. And like we’ve said for many years, as we’ve invested in real estate, you’ve got to build that into your overall cost structure and appropriately capture that with rates. And that’s been our strategy over time and it’s certainly played to our advantage.
