So, we’re very focused on making sure that we are compensated for the service, but in order to be compensated for the service, you got to be doing a great job. So that’s kind of altogether, but we’re continuing to work through and understanding the value that we’re providing to the customer and in understanding what the impact is to the customer’s freight on our network.
Amit Mehrotra: Thanks very much guys. I appreciate it.
Operator: Your next question comes from the line of Chris Wetherbee with Citigroup. Please go ahead.
Chris Wetherbee: Hey, thanks. Good morning, guys. Maybe want to get your perspective as sort of — just piggybacking on what you just noted there around price, relative to some of the volume that you brought on. So I guess I’m curious how you’re thinking about if you need to make any trade-offs between the opportunity for volume growth as you continue to expand the network and then the ability to get priced on somewhat of a catch-up basis. So I guess I’m just kind of curious how you’re balancing those two priorities as we’re entering 2024.
Fritz Holzgrefe: We always balance that, but I think that what’s incumbent upon us is that this is a very high service level that we’re providing. So, our team is very focused on making sure that we’re fairly compensated for those service levels. So, we’re going to get volume growth simply by some of the network coverage we’re going to grow at this year. That’s going to be beneficial. At the same time, while we’re doing that, we get that priced in the right way. We’ll continue to develop the OR profile over time. So I think it’s an important part of our business case and I think if you look back at the last four or five years, this is what we do, so provide a high level of service and focus, and making sure that we are compensated for it.
Chris Wetherbee: Okay, that’s helpful. And then we’ve heard some mixed things about 2024 in terms of pricing being more of a sort of return to normal type year after a bunch of years of pretty elevated levels. We obviously had a significant capacity event in what was a relatively sort of soft market from a freight perspective, broadly in ’23. So, I guess just conceptually, as you think about pricing ’24 versus ’23 years, there’s still sort of more acceleration opportunity, and maybe that’s unique to Saia, but bigger picture or is it maybe more of a normalizing environment? Just kind of get a sense of what you think the sort of direction broadly for the industry is?
Fritz Holzgrefe: Well, I think broadly for the industry, I mean, the underlying costs for the industry are inflationary, right? And I think that’s an important note. And I think that those that choose to invest in service levels, that’s probably doubly inflationary, right? So, you have to really remain focused on balancing that equation. I think that the industry dynamics broadly — those trends aren’t going to change in the coming year in terms of what the underlying inflationary costs are. So I think that you’ll consider — continue to see positive pricing in the business. When I think about Saia, I think about what our relative position is, and I look at our relative service and I look at our relative sort of pricing opportunity is, I think that’s pretty positive for us.
Doug Col: I’d say, too, Chris, there’s a case to be made that you could see another leg up in industry pricing, right? I mean the industry event happened and there was capacity there to handle it, but that’s because tonnage in our industry has been negative for basically a year when it happened. But if you give — the players I see operating in our industry today, if you give us a little bit better macro backdrop in terms of industrial freight, nobody’s given away the service. They’ve all made investments to provide good service and improving service levels. If the backdrop gets a little better, I’d say there’s a case we made that we’re handling all those extra volume now that you could see another leg up in industry pricing. So, we’ll have to see what the macro deals, especially in the second half.
Chris Wetherbee: Okay. That’s helpful color. I appreciate it, guys. Thank you.
Operator: The next question comes from the line of Scott Group with Wolfe Research. Please go ahead.
Scott Group: Hey, thanks. Good morning. So Fritz, I think you just said you repriced 50% more of your business in Q4 than Q4 a year ago. I guess I’m wondering how do you do that? And then can you just put some perspective like what percent of the actual business was repriced in Q4? And then maybe just, Doug, maybe you can help a little bit. We got so many moving parts with yields were up 12%, but rev per shipment was up 2% or 3%. Like how should we think about just overall yield growth going forward?
Fritz Holzgrefe: Scott, thank you for bringing up that. Let me just clarify my comments around the contractual renewals. So those would be the number of contracts year-over-year increased by 50%. So, it wasn’t 50% of the book of business or something like that. It was just the absolute number of contracts. The key thing with that is, as you know, those contracts are effectively pricing agreements. They don’t have a volume commitment to it. So what we end up doing, we’re very pleased with how that process went. Now it’s a matter of making sure that we hang on to the business going forward. But I think it’s a directional indication that’s pretty positive kind of a trend for us. So we think about it in that context, but it was the number of contracts that we physically renewed this year versus last.
Doug Col: And then, Scott, just in terms of the rate environment, I mean, you saw our GRI that we put into December — early in December, we pulled it forward. So if you’re looking at December shipments, that early GRI might have taken a little bit of the top off of shipments, but we’re okay with that again because it was the right thing to do. But I’d say, I mean, our revenue per shipment for the full year 2023 was still up in that low single-digit range, 4%-ish. So the cost inflation last year ex fuel was a little bit less than that. So I mean, I think pricing — revenue per shipment in the mid-single, 3% to 4% range probably still makes sense for us. And again, a little bit better backdrop, maybe you get more than that. But you’re right, it’s confusing with the weight per shipment coming down so much the yields, not really telling the pricing story.
But underlying pricing and revenue per shipment growth is still going to be positive, I think, in that low single-digit range.
Scott Group: Okay. And then I just want to follow up on the CapEx piece. How should we think about D&A and interest expenses here to fund it? And then should we think about this as — it’s $1 billion this year, but then it sort of normalizes back down in the out years, and this was a bit of a pull forward? Or is this a new run rate in your mind?
Doug Col: Yeah. I mean in terms of depreciation, I mean, it’s been increasing as we’ve expanded the footprint over the years. I mean, I’d expect another step up if we get all this equipment delivered and the timing of some of these construction investments and things. I’d expect depreciation will be up another 15% to 20%, I would guess in 2024. You’re right. I mean we ended the year with a lot of cash and we’ve made our Yellow investment. We’re not regularly into the line or anything, but we’ll be using our line and putting a little bit of debt on throughout the year. So I mean, you’re going to have — you’re going to flip from interest expense — interest income to interest expense and some were probably — I’d expect probably $5 million or $10 million probably in interest expense in 2024, depending on timing.
Scott Group: And then, is this a one-year CapEx or a multiyear at this level?
Fritz Holzgrefe: I think you obviously have the one-off related to the real estate here in the Yellow auction. I think what you’re going to see over time as we grow the company, you’re going to see elevated levels of CapEx investment that — reflective of that growth. So, I think you’d expect to see it step down and then I think you’d see it expect to, over time, normalize. We still won’t have all the levels of — or all the real estate or all the locations that we think we ultimately want to have and in underlying all this, I think it’s important to understand that real estate line is that we’ve got some pretty nice investments in the legacy network in order to support a growing business. So I think you’ll see us continue to invest in real estate over time. The fleet will have to match that. You’ll see the OR improve over time. We’ll be able to fund a lot of this from operating cash flow.
