Jonathan Chappell: Thank you. Good morning. Adam, thanks for the commentary around the 4Q to 1Q move in the OR, given some of the noise in the fourth quarter. As we think about the rest of the year, and I know it’s difficult to predict the volume landscape, so let me frame it, if you will. It sounds like you’re in a good position, 30% capacity. Maybe you can see the whites of the eyes on adding headcount, maybe both PT lever if necessary, if things kind of accelerate quicker than expected. But should we expect a return to kind of normal seasonal trends in the OR this year? Or can we see even better in the first maybe nine months, if you get some of the volume back on a stickier basis, more of an industrial recovery and then maybe lag a little bit some of the resources that you need to handle that just given your spare capacity today.
Adam Satterfield: Yes. I mean, obviously, a lot of it is going to be volume dependent, and we’ll really get some type of economic recovery and when does that begin? It’d be great to see it start early. But I’m not sure that the general economic forecasters are predicting that things are going to start so early in the year. But we’re ready. We actually hired and increased our headcount during the fourth quarter, much of which was on the platform where we were hiring folks to backfill some of the jobs where our combo employees with the freight volumes that were higher in the second half of the year, we pulled people off the dock and put them right back into a truck, and we’re driving again. So we backfilled some of those positions in particular.
But we’re cautiously optimistic about things, and we’re not going to get ahead of it by any means. So once we start seeing line of sight into some volume recovery, and increased demand, and we’ll make sure that we’re adding to the workforce as appropriate to keep up with it to make sure that we’re efficiently handling any growth that comes without any sacrifice to the quality of our service. But I would say that from a big picture standpoint, when you look back in time and just thinking about the fiscal year overall, generally, when we’ve gone through a slow period, even going back to 2009, 2016, 2019, we’ve gone through periods that have been really slow. If we’ve lost anything from an operating ratio standpoint when the volumes and revenue come back into the system, we’ve been able to more than recover that OR loss.
And back to our cost structure and really pleased with the performance, as I said, but we generated improvement in our direct operating cost for the year this year, even despite the lack of density that we had with the volume weakness. And really, the OR loss was just limited to our overhead expenses increasing, and most of that was depreciation as we continue to expand the network as we brought in new equipment into our fleet to replace some of the older stuff that we’ve been hanging on to the last couple of years with OEM challenges. So as we incurred a lot of the expense on our own selectively, we’re positioning ourselves to capitalize on future growth opportunities. So that will be the power of leverage in the model, is once we get that topline growth going again, we’ll continue to be able to improve further those direct operating costs as a percent of revenue, but we regained lost ground on the overhead side, get right back to the operating ratio improvement and have that same formula work and where we’re growing the topline, improving the operating ratio and having the income growing faster than the revenues.
And that’s producing profitable growth has been our long-term story, and it’s led to a big increase in shareholder value over time as well.
Jonathan Chappell: Yes. Okay. Thank you, Adam.
Operator: Thank you. The next question comes from Tom Wadewitz with UBS. Please go ahead.
Thomas Wadewitz: Yes. Good morning. I wanted to ask you just on pricing and I guess if we look at the January, I think you said the January is up like 6.4% and 4Q was 7.5%, I believe, for revenue per hundredweight ex-fuel. Do you think there’s kind of further deceleration in the pace of year-over-year pricing that you would expect looking forward? And where do you think things settle out? Is it 4 or 5? And then I guess, just one other kind of related question. How do you think we ought to think about cost inflation this year compared to what it was last year? Thank you.
Adam Satterfield: Sure. Yes, from a – just a revenue per hundredweight, excluding fuel surcharge, if you apply normal seasonality quarter-by-quarter, then the yields would compress to around 6.5% growth, kind of in the first and second quarters, and then that would start to moderate to be closer to 5.5% by the fourth quarter, which – as you know, if you look long-term, our revenue per shipment has been more in the 5%, 5.5% range over time. So we’d expect, absent any mix changes for that – for us to be able to get consistent increases as we go through the year, as bids are coming new and that’s why you just see that absolute number increase quarter-by-quarter. But that rate of growth may start to compress. Now granted, I had anticipated that it would compress a little bit last year and we had the decrease in weight per shipment.
