Operator: Our next question is from the line of Jason Seidl with TD Cowen.
Jason Seidl : First off, Lance, good luck in the future, and congrats to both Jim and Beth, if they’re listening in. Some quick things. I wanted to look a little bit about regulation. We’ve seen the FRA now is looking for a public comment period on train weights and lengths. Wanted to know if you guys think this is sort of a precursor for more regulation from them. And two, maybe if you could talk a little bit about anything anticipated on reciprocal switching. And lastly, squeezing in here, Jennifer, when was the last time you guys didn’t repurchase shares in the quarter?
Lance Fritz : Jennifer, you want to go first, then I’ll take the others?
Jennifer Hamann : Yes. So I would go back to second and third quarter of 2020 when the pandemic hit and there was such a drop in volumes. We paused our share repurchases then for at least a couple — I’m pretty sure for the full second quarter, part of the third quarter, I think, is when we restarted that. So we manage the share repurchase piece with our excess cash. And that’s always been the flexible part of our shareholder return, and that’s how we’re managing it today.
Lance Fritz : Yes. And Jennifer, we’ve been crystal clear that we turbocharged our excess cash by using the capacity of our balance sheet. And that capacity now has been largely used, and it’s all about growing cash from operations and operating income at this point.
Jennifer Hamann : Exactly, Lance. And obviously, with some of the earnings pressures we’re facing this year, that’s not giving us that incremental capacity we’ve seen.
Lance Fritz : So Jason, talking about what’s going on in Congress and at the STB in Congress, the Rail Safety Act, we’ve been crystal clear about things in there that we think are appropriate. Like there should be additional regulation and laws regarding the preparedness of emergency responders, the information that’s at their disposal. We believe the same is true on tank car standards. There’s an opportunity to pull forward tank car standard improvements. And we also think there’s room for regulation to step into wayside detection. We’ve done a ton of things in wayside detection voluntarily. It is not regulated. And if it were to be regulated appropriately, that makes some sense. There’s some things in the Rail Safety Act that don’t make sense like coupling train size with safety.
On our railroad, mainline and siding derailments are down 25% plus, while train size is up 20% over the last, call it, four years. There’s just no correlation in our experience between safety and train size. And likewise, there’s no correlation anywhere in the world between train crew size and safety. That should be left to collective bargaining and what technology enables. So as we look at Congress, that’s what we’re thinking about. As we look at the STB, as we’ve said before, we help them understand how the railroad industry works, how our reinvestment works. And when it comes to reciprocal switch or forced open access, we help them understand that, that would have a real negative impact on investment. It would not improve service product, and they should be very, very careful as they think about whether or not that should be implemented and how to implement it.
Operator: Our next question is from the line of Tom Wadewitz with UBS.
Tom Wadewitz : Lance, wanted to wish you well in the next thing you do, retirement, whatever it is. Let’s see. I guess one just clarification. I think, Kenny, you commented earlier on intermodal yields are — 3Q, are we expecting more sequential pressure on revenue per car in intermodal in 3Q? So that — just a clarification. And then the broader question really — when we look at the industry, I think historically, there was opportunity from productivity and price to improve margins. Certainly, UP did that in a massive way over, I don’t know, 15 years, right? But it just seems like there’s this inflation in the cost base and pricing’s good, but not enough. So do you think it’s fair to look forward and say, look, margin improvement is really about volume and without volume, you’re — maybe you have a tough time to improve the margin?
