So if our competitors’ cost structures are increasing, I wouldn’t expect that they would change their approach to pricing. But I think if anything, they’ve got to build it in there and try to capture for it. But fortunately, that’s something that we’re not having to contend with. Like I mentioned earlier, we’re good with our strategy, and we feel like it’s worked for us over time, and we believe that same formula and strategy can continue to work for us in the future. So that’s what we’re going to keep executing under.
Ken Hoexter: And I’m sorry, thanks for that. Great answer, but do you mind clarifying on the insurance?
Adam Satterfield: Sure. Yes. You’re right. We do an annual actuarial assessment in the fourth quarter each year of our reserves. And so we, unfortunately, had an unfavorable adjustment this year. And those go either way. The last few years, they’ve been favorable adjustments. And we’ve got an expense rate that we use through the first three quarters of the year, and that’s why you see that number that’s more consistent, if you will, but – and then we just had that third-party review done make adjustments and then just kind of move on. But just looking at that activity, that’s why I think that our expense rate will be a little bit higher in 2024 through the first three quarters versus where we were last year, but maybe only 10, 20 basis points or so, and then we’ll conduct another actuarial assessment in the fourth quarter of 2024, make whatever adjustments are necessary then and then just move on.
But I think it’s been – since 2019 was last year, we had an unfavorable one. So best case scenarios when we get to the end of the year, they conduct the study, and we don’t have an adjustment either way. But unfortunately, this year, it was an unfavorable one.
Ken Hoexter: Great. Thanks for that. Appreciate the time.
Operator: Thank you. The next question is from Amit Mehrotra with Deutsche Bank. Please go ahead.
Amit Mehrotra: Hey. Thanks. Adam, I think in your prepared remarks, you mentioned that maybe there’s a need to add headcount in anticipation of volume growth. Can you just put a little bit more color around that? How far ahead of this inflection of volume, when could we expect the headcount to go and how quickly? And then, the industry is always – another follow-up to that. The industry has obviously been disrupted over the last six months and the dust is settling, curious to get your view on like how you think the competitive dynamic has evolved from both a service quality perspective and a pricing perspective. Have you seen service disruptions? I know there’s maybe early signs of that in the third quarter, but have those fixed itself or you continue to see services structure to create market share opportunities for you?
And what are you seeing on the competitive pricing side that makes you feel better or worse or neutral about kind of where the discipline is in the industry?
Adam Satterfield: Yes. That’s a lot in one question. I’ll see if I can keep it all straight. But we have heard about some service issues and we obviously stay very engaged with our customer base, our large national accounts and 3PL customer accounts as well and meet with them often. And so we have heard about some service issues and believe that, that’s something that may continue. And it’s very typical in an up cycle, especially. And so I think some of the carriers that maybe took on some of that extra Yellow business may cause some issues for them throughout the system or their system. And so that’s usually a source of market share for us especially when the economy starts to pick up. But from a pricing standpoint, it’s continued to be a very favorable pricing environment, I would say.
We’ve seen – obviously, we’ve continued on with our consistent and cost-based increases, and that will be our strategy going forward as well. But just looking at some of the GRIs and some of the feedback that we’ve had from [indiscernible] as well, it seems like the other carriers have continued to push for increases. So that’s generally a good thing for us as well. If the competitors are increasing their rates. And again, increasing demand environments. Generally, we see competitors that are increasing rates faster than us. And if we’re at a price premium to the market and that gap closes, that too, creates market share opportunity for us. So that’s why we feel good about where we’re positioned and the opportunities that we have going forward.
It’s been a long, slow cycle that we’ve been in. ISM has been below 50 for 14 months now. And you compare that to 2008, 2009, I think, was below 50 for 12 months. It’s been a very long, slow cycle that we’re ready to get back to growing again. But, you know, going through these slow cycles requires patience. And I think we’ve managed well, managed cost efficiencies, managed our discretionary spending to go through a year where tonnage was down 9%. Our operating ratio was at 72, to me was pretty remarkable. And so I’m really proud of what our team accomplished this year and what we’ve done to position ourselves for opportunities that are ahead.
Amit Mehrotra: Yeah, agreed. Okay. Thank you very much.
Operator: Thank you. The next question is from Jon Chappell with Evercore ISI. Please go ahead.
