Stephen Bruffett : Yes. We’re looking at the same data that you are, Scott that — and our internal information would say that it’s actually very similar to the spreads being about 30%. And historically, we have not seen a cycle where the recovery is that contract rates come all the way down to whatever the bottoms of the spot market is, rather, you see things like the recent bankruptcy and causing the flurry of activity for our shippers. And when they go through that, what they often find is the rates that you could have gotten locked in at a contract rate just weeks or months before are no longer out there and available. So the longer you get into this cycle, shippers start to look for that opportunity of how can I lock into a contract rate that’s durable rather than taking risky opportunities with capacity that might not be available for you or available at that price. So I believe that’s what starts to change, and that’s where the targeted opportunities reside.
Scott Group : Okay. And then just separately, it strikes me — the earnings guidance has been coming down throughout the year and you’re telling us CapEx is at the high end of what you thought. And I don’t think you’re alone in that dynamic of earnings down and CapEx up a lot and you’ve got [packers] talking about slots for next year filling up quickly. And so it’s just — it’s a weird dynamic going on. Just any perspective on why this is happening? How you think about CapEx for next year? And it just — it’s sort of a puzzling environment. Just curious how you think this plays out into ’24?
Stephen Bruffett : I was just going to say I think what we’re dealing with here is, again, the back side of the market environment for the OEMs over the past couple of years were carriers like us were not able to get all of the equipment that we would have otherwise gotten in, say, 2021 and 2022. So there is a bit of catch-up CapEx in 2023. And as we are working toward our targeted age of fleet profile. So that is part of the dynamic. It’s not that we are tone-deaf to cash flows and how we’re deploying our capital.
Mark Rourke : Yes. And we have the other — probably secondary contributors, Scott, is our dedicated growth and a couple of the acquisitions that we’ve picked up that we’re getting into a place that we think is best and most appropriate. And so we have a cost — specific Schneider event there as well. So — but the predominance is just a catch-up from — and some inflationary impacts on those trucks. The ones that we’re buying today certainly have more cost than the ones that we’re getting out of the fleet.
Scott Group : Any early thoughts on CapEx for ’24?
Stephen Bruffett : We’re working on nailing those numbers and will provide that guidance on the next call. I would expect the net number to be lower than the level of 2023.
Operator: Your next question comes from the line of Ken Hoexter with Bank of America.
Kenneth Hoexter : Steve, good luck in 2.0 has got to know, you had multiple stops through your career, and Darrell congrats on the new position. I guess I just want to dig in to Scott’s thoughts there on the well below contract. So spot is still well below contract, I just want to understand, given that record gap. And I know you don’t have contract come all the way down the spot, but would your outlook now still be negative contract pricing if those contracts continue to at least close that record gap? Or do you think something changes and you see that adjust?
Stephen Bruffett : Yes. I think we’re really at the floor for contract pricing that there will be targeted opportunities from here on out to be able to raise that as well as our mix of spot that we have in our business. Right now, it’s higher than what we would like. And so I’d see opportunities to reduce our exposure to spot while it remains lower than contract.
Mark Rourke : And we said earlier, basically through our book of business of renewals. And so the bites have been taken at the apple and there’s no apple left.
Kenneth Hoexter : Yes. No, I appreciate that add-on, Steve. The reason I asked is just because you also mentioned that you expected the weakness — this level of weakness to continue. And it sounded like — if that then goes into bid season, that would meet contracts could continue to close that gap down to spot versus spot coming up. But I get your answer that you’re through it. Follow-up would be just on Intermodal, right? So your thoughts on your long-term box adds here. Obviously, you took CapEx up a bit. You just talked about dedicated focus. It looks like your turns actually improved, but margins were worse that you’ve posted since before you were public, I guess, back to the first quarter of ’16. Any thoughts on what’s going on the incremental margin on intermodal and the cost side of the equation that we don’t see the details too?
Stephen Bruffett : Yes. So on the — obviously, there’s still leverage to play out there. Mark also talked about the network dynamics of how we’re operating that we’re currently experiencing higher repositioning costs that we need to have better balance within our network. There’s opportunities as our [PT] adjust through this market cycle. And obviously, the #1 is to be able to start to turn the tide as it relates to new price.
Mark Rourke : So also, Ken, just suggest we could have at least 30% of opportunity to drive volume without adding any incremental container and chassis cost and it’s just pent-up capability. And so as we, again, think through next year, we also wouldn’t anticipate, at least at this early juncture that we’ll be adding capacity or excuse me, capital into containers and chassis. You might see us do a little bit on the tractor side as volumes return. And so there’s a lot of self-help in there that we don’t have to invest to achieve and looking to get to that leverage, as Jim mentioned.
Operator: Your next question comes from the line of Jason Seidl with TD Cowen.
Jason Seidl : And Steve, best of luck in retirement. I wanted to drill down a little bit on the CPKC business that you talked about. You said it grew 20%. So a couple of questions. One, sort of how big is this and how big, more importantly is the opportunity going forward? And how do these early margins compare to the margins in the existing core business?
