Mark Rourke : Yes. As Jim mentioned, the #1 competitor here is over-the-road alternative. And with the market that’s particularly even some of the head haul markets, which is generally pretty unusual that there’s been a closer competition with truck, and so there’s been more choice from the customer standpoint to convert back and forth. But as we look at those discussions we’ve had, particularly with the large, more sophisticated shipper and looking at their total decision tree, which as Jim mentioned, is increasingly including the emissions reduction portion of that, there’s really no better place to go to achieve that in the immediate and short term than over-the-road conversion to intermodal. And so there’s still, obviously, a healthy gap that you can have between intermodal and over the road that can bring economic value to the shipper, fuel savings and now you have the emission piece.
And so again, I think that’s why it’s raised in prominence on our customers planning for 2024, and we intend to help them achieve that.
Operator: Your next question comes from the line of Ravi Shanker with Morgan Stanley.
Ravi Shanker : So obviously, 3Q was a really difficult quarter for you and pretty much all your peers. And yet you were saying that supply remains a little bit more resilient than you thought and you aren’t quite the exit of capacity in the marketplace. A, are you starting to see that right now. Obviously, you’ve seen some high-profile bankruptcies and exits, that already seeing that in the mom-and-pop side as well. And second, why do you think they have been resilient so far? And kind of how do you think that evolves in the coming quarters?
Mark Rourke : Yes, Ravi, it’s been stubbornly resilient to your question. Part of that could be the buildup that people were able to acquire and retain during the highly unusual pandemic period. But I think any assessment that’s been done to look at that would suggest that, that has been exhausted, which is, I think, why we’re seeing the increase, at least from our portfolio, we have visibility to look into on things like owner-operator lease turn-ins just because of the overall health of that portion of the capacity mix. So those things — again, those are more leading indicators as opposed to lagging. And so that’s giving us more confidence that we are long in the tooth here. But it has taken us longer than any of us, I think, would have expected at this point in reference to maybe some of the more high-profile bankruptcies that you referenced there.
What we’ve seen as outcome of that hasn’t been moving from one brokerage to another brokerage, but moving from brokerage solution to more of an asset play as I think the customers are also sensing that, that is something that’s probably in their best interest after what we would consider an overreliance in the last year to 18 months on the brokerage industry. And so there is, I think, because of some of those signals a move back to more asset allocations within those customers, and we’ve certainly seen that in a much bigger way coming through the most recent news.
Ravi Shanker : That’s helpful. And maybe as a follow-up, kind of you said that you don’t snap back early in 2024. I’m just trying to figure out kind of is that something that you feel like given how bad the market is right now? Or is that what you’re hearing from your customers and kind of what you’re seeing in terms of early moves in early bid cycle for ’24?
Mark Rourke : Yes. We’re not very much into that piece of actual events, Ravi, just yet. We’re into more of the discussion phase of planning and fourth quarter is a big time just to get together and start planning and discussing kind of each other’s kind of goals in the year ahead. And so we haven’t got any real data for you on that yet. But I would say customers are at least they feel — and this is a general comment that the inventories and all the actions that they’ve taken, they feel pretty good about where they are there. And there’s perhaps just some trepidation of understanding where the consumer is. I think the holiday season here, I’ll give good insight into that as we move and understand what’s inflation — what’s actual amount of goods that are moving through this holiday period.
So I would just consider that the customer may be a bit more cautious. But at least I don’t think we’re going to take in this inventory overhang issue that obviously, we took into 2023.
Stephen Bruffett : And I think I’d just add on to that, Mark, that at least from where I sit, the comments I made earlier about entering 2024, we’re really on a historical basis, volume levels of January and February are typically fairly light. And then once you get to March, things begin to pick up. So there was that side of the equation I was referring to. When it comes to the customer renewal and the tone of those types of conversations, I actually feel more upbeat about those going forward than where we’ve been over the past — so if I separate those 2 things for broader context as we enter next year.
Operator: Your next question comes from the line of Scott Group with Wolfe Research.
Scott Group : So some of the industry data would suggest there’s still a pretty wide spread between spot rate and contract rate. Do you see that in your data? And I guess, I’m wondering that in the context of — you’re talking a lot about price recovery. Are we confident that we’re going to get that in ’24? And then maybe just within that, like where are you more confident you can get it? Is it in truckload? Or is it in intermodal?
Mark Rourke : So I’ll maybe just open with that and I’ll let Jim kind of weigh in. Yes, there is still — particularly between our contract and spot rates, and that’s certainly influential in our network business as we add preserve more of our capacity, looking for more opportunities here than it’s actually arrived in the fourth quarter. And so that’s impacting our overall revenue per truck in the network because of that gap. And we’re also seeing the gap, but we’ve seen it stabilize. It’s not getting any — necessarily any better or any worse, but it stabilized now for Jim, probably 8 to 10 weeks, yes. So with that, I think you have to have stabilization before you can have improvement. And I think we have arrived at that location.
And we know that we have a certain part of our book, and this is particularly a network trucks, Scott, more than the other parts of our portfolio that we have opportunity even within this market to reallocate our capacity to more compensable freight. And that’s the process we’re on presently and having either, A, price discussions to avoid that or start taking action to move and improve the book, and that’s an all-hands-on-deck effort right now.
