Alain Bedard: Well, Jason, you know what, first of all, it’s got to be US. Because in Canada, there’s not much in terms of size, right? So, it’s got to be US. What we like in specialty is, we’re big fan of tanks, we’re a big fan of flatbed and dump operation, right? So, that is really our focus. We’re not big fan of reefer, okay? So, this is really our focus. And if you look at Daseke, I mean, that’s a perfect fit for us, right? And in terms of, do we have to do P&C, yes, no. I mean, P&C in my mind is maybe something may happen down the road, but right now our focus is really, like I just explained, is let’s deliver our US LTL, let’s do the Daseke deal, and if an opportunity comes along, okay, in late 2024 into LTL or logistics in the US, we’re ready to look at it.
Why is that? Because Daseke is not the same difficulty for us as UPS Freight was. UPS was a lot of work, it’s a carve-out, it’s complex, it’s big, et cetera, et cetera. Daseke, to me, it’s small, it’s $1.5 billion revenue, $1.6 billion, $1.5 billion in the US, $100 million in Canada, and the operation is very well run. There’s a few things that will work with the boys over there. But to me, I mean, it’s day and night versus the UPS Freight deal, in terms of complexity, in terms of difficulty to bring the OR under 90.
Jason Seidl: Makes sense Alain.
Alain Bedard: Pleasure Jason.
Operator: Our next question is from Tom Wadewitz with UBS. Please proceed with your question.
Tom Wadewitz: Yes, great. Good morning Alain.
Alain Bedard: Morning Tom.
Tom Wadewitz: Wanted to — I know you’ve gotten a bunch on US LTL, but wanted to ask another 1 on that. You had, I mean, obviously the yellow situation provided a lift. I think the way that kind of flowed through to you was initially good, but then maybe a little bit disappointing on the tonnage and keeping the shipment. And then, you’re showing improvement in service with the cargo claims ratio down a lot. So, I guess, I just want to get your sense of how much visibility you have to the improvement and to things being on track. The 88 OR is that 90% cost driven and you have a lot of conviction? Or is it 50-50 with revenue and you still could have some kind of volatility around the shipments and the pricing performance. So, just, I guess, some more thoughts on the trajectory on US LTL?
Alain Bedard: You know what, Tom, my experience with revenue — growing revenue at TForce Freight has not been too good, right? So if you look at our track record for two and a half years, I mean, we were never able to grow revenue over there. Why? Because our churn is too high, because our service was not up to par to our peers, et cetera, et cetera. So, this is — well, when we talk about it, the 88 OR, it’s going to be like 80% today based on how good can we shrink cost today, right, to get to the 300 basis point versus what we are today at Q4. Now, we’ve made some changes, okay? We’ve improved our claims, okay? Like we said, we are improving our linehaul, okay, just in time because we do more on the road than on the rail versus, let’s say, two years ago or a year ago.
But still, okay, we have to improve the customer experience dealing with us on billing, okay, where there’s too many mistakes, like I said earlier on the call. So, this is an ongoing process in 2024. Our sales team also has to be more focused on the freight we need, not the freight that’s there, okay, that we don’t need. So, it’s again a cultural change that — guys, okay, retail freight is good, industrial freight is better because it’s heavier. We get more money. Close customers to our terminal is better, right, than customers that are 100 miles away from our terminal. All this kind of education of our sales team and focusing on the right thing, and also reducing the churn, okay, with our customers. Our churn is too high. So, these are all things that, during the course of 2024, we have to make some major improvements.
Like we said on the script, on our press release, we were successful on claim, okay, because that was a major issue of dealing with TForce Freight claim is a disaster. So, that’s been fixed, okay, and we’re doing well on that. Now, we have to improve — continuously improve our service, and this has got to be the goal. But if you ask me today, okay, to get to 88 OR, okay, how are you going to get to there? I would say, 80% of that will be saving money, being more efficient, doing more with less. And hopefully our sales team and our sales leadership start to deliver some growth year-over-year in terms of the shipment count.
Tom Wadewitz: Right. Okay. Maybe just a couple more quick ones on that. So, if you look at — so you’re saying volume up, I think, for shipments in second half is — would you — in US LTL, would you also expect revenue per 100 weight to be up in second half? So, the pricing lever too? And then, just wondered if you could give a little more kind of detail on how much of linehaul is outsourced to rail, like where you were before and maybe where you are today. Thank you.
Alain Bedard: Yes. So, right now, what I could say, Tom, is that we’re doing our own linehaul for about 56% or 57% of all miles. So, rail is doing probably like 35% and third-parties are doing the rest. In terms of trying to be where are we going to be in 2024, really the goal on the revenue per 100 weight is to improve that. I mean, our revenue per 100 weight is down a bit. We think that the market condition will support some growth in there. If I look at my peers, those guys are up. Us, we’re down a bit because our weight was also up at the same time. Our revenue per shipping is up year-over-year. We believe that market condition in 2024 for the industry in general in the US will be positive. So, we’ll be in a position, again, to improve the quality of our revenue.
But again, I mean, if the service is there, okay — like my peers, their service is up to par, right? It’s easy to get more money. It’s easier, not easy, but it’s easier to get price increase from customers. It’s not the situation at TForce Freight, right? So, we are working on improving service. And once you improve service, then you’re way better positioned to start moving rates up, okay, versus market. I’m convinced that TForce Freight today versus my peers, same shipment, same destination, et cetera, et cetera, same way — we have to give a discount to our customer, because our service is not comparable, but we’re going to get closer in 2024 with everything that we’re doing.
Tom Wadewitz: Right. Makes a lot of sense. Thank you for the timeline.
Alain Bedard: Pleasure Tom.
Operator: Our next question is from Brian Ossenbeck with JPMorgan. Please proceed with your question.
Brian Ossenbeck: Hey Alain, good morning. Thanks for taking my questions.
Alain Bedard: Good morning Brian.
Brian Ossenbeck: So, just want to follow-up on that service point you gave the context of the year-over-year improvements. Can you talk about how that trended through last year and how recent those improvements were? Because it sounds like it might have been more recent events, because that probably has some implications in terms of how fast you can improve the pricing, how much customers trust the level of service. So, maybe you could give a little bit more context around that.
Alain Bedard: Yes. No, what happened, Brian, is that this is — these are improvements that happened during the course of 2023. If you look at the claim, I mean, it’s something that we just woke up one morning and say, hey, I mean, our claim ratio has improved so much. This is something that we should talk about, and this is why for the first time we’re talking about it in our press release, right? But this is something that we started improving about a year and a half ago when we saw that there was really a need — a major need for improving. In terms of the linehaul, what we’re talking about, okay, this is something that we started about three, four months ago, okay, when we talked to our union contract and all that. We said, guys, you know what, in order to improve service, we want to drive more miles on the road.
For sure, that will create some kind of jobs, et cetera, et cetera. So, that is something that we really started, let’s say, in the fall of 2023, and we’ll keep doing that to improve service. In terms of the major rock that I’ve got in my shoe over there, which is billing, et cetera, et cetera, this is something, we’ve just hired a new folks in our pricing billing department, I would say like six months ago. This guy took it over, and that’s going to be part of our improvement for 2024. There, we have seen some improvement, okay, because of all the measures that we’ve put in place, manual measures, okay, to improve the way we bill customer to try to eliminate as much as possible mistakes and all that, and credits and rebuilding and all that.
But I mean, in terms of the system, this is 2024, where we’re going to have to move into a much better tool for our people to be able to build customer in a efficient way so that there’s no more mistakes. I mean, you know what, this is something I’ve never seen in my life, how bad of a system that we have, how many mistakes we make. I mean, I think that for, let’s say, 22,000 shipments, we will probably issue like 35,000 invoices because we bill, we credit, we rebill, I mean, it’s just a nightmare. And this is not something new, this has been going on for years and years and years, but it’s never been addressed.
Brian Ossenbeck: Got it. So, on the other side of US LTL, one of the big themes going to this year, I think, was just getting the terminal level information down to the service center managers [indiscernible] thoughts and whatnot. So, I don’t think you’ve talked about that as much. So, maybe you can give us a sense in terms of how that’s progressing, and if you’re starting to see that, that’s going to take a little while to get moving as well?
Alain Bedard: Very good question. I mean, yes, we have financial information now at the terminal level, okay, in 2024. This is something new, okay. So, I’m meeting the guys next week and I’ll know more. I was in one of our terminal in Alabama two weeks ago, talked to the manager there. Yes, we’re doing better now. And then, for sure, Brian, that’s something I forgot to talk about. But you’re absolutely right. I mean, this is also going to help us because now we’re providing them the financial information so that they could start making a difference in terms of managing costs better, okay, managing labor costs better, et cetera, et cetera. That’s something new though. I mean, this is — we’re just doing that now, okay? It will take some time.
Some managers will make it, maybe some managers will say, you know what, this is not for me, and then we’ll have to replace some of the managers. But a manager at a TForce terminal in 2024 now has got to manage costs, manage employees, manage the fleet, manage the service, et cetera, et cetera. He has got to be a real manager.
