Lance Fritz : Jennifer, do you want to start that?
Jennifer Hamann : Yes, I can start it. So you raised a good point, Ravi. I mean we do think looking backwards certainly that industrial production has been a better gauge. But you’re right, we have great franchise diversity, which we’ve talked to and Kenny mentioned too. And with the growing intermodal portfolio, there are certainly components of that. But it’s really driven by consumer spending, and a lot of that consumer spend on industrial production. So it’s hard to really separate from that. But in terms of what’s changed from where we started the year, certainly, coal is something that with natural gas prices falling as it did late January, early February, that certainly took a big chunk of that demand away from us. Now you’ve heard us talk about the heat and you’re seeing that, you’re seeing maybe a little bit of inflection in natural gas prices.
So we’re watching that. The other piece, though, is on that consumer side. Onboarding a new intermodal customer coming into the year, we expected that to be a big tailwind to our volumes. And just the way that, that consumer spending and consumer goods purchases has dropped, that’s just had a really outsized impact.
Kenny Rocker: All I’ll say is that we’re looking at consumer spending by the week. And I feel very encouraged that we have onboarded over the last couple of years a couple of transformative customers on to our domestic intermodal network. And so as we see that movement move up, we’re in a great position. And so that’s encouraging for us as a company.
Operator: Our next question is from the line of Brian Ossenbeck with JPMorgan.
Brian Ossenbeck : First, just wanted to follow up on price to the labor inflation. Do you think getting rate is enough to offset those costs? Do you need to get some productivity benefits from the work rest, the brake men and then possibly, even the utility rule? And then just for Kenny, can you just comment more about price/mix? You mentioned specifically the coal and intermodal pricing were resetting lower in the quarter. Does that continue throughout the rest of the year? You can give some parameters in terms of how to think about that plus mix in the back half.
Lance Fritz : Kenny, why don’t I start with the — what about the agreements and getting price and productivity out of them. The short answer, Brian, is we are confident that we can continue to price above inflation. We’ve just seen a few agreements like paid sick leave add to the inflation in our comp and benefits. And Kenny’s team is tasked now to get out there and make sure that we recoup that. In terms of productivity, the brake person agreement is just a clear path on productivity. We can reduce 3 people to 2 people on crews where we don’t need 3 people, and we can either redeploy them or lower our hiring demands. So that clearly, just in that one example — there are other examples like in work rest, Brian, we’ll be able to get productivity out of that.
Today, there’s a percentage of our workforce when they’re called to take a train, they are not available to us. And we don’t know that before we call them. And that creates failure cost and disruption in the network. I’m going to presume, and I think the experience where work rest schedules are in place, that unpredictability dropped dramatically. When that happens, we get better the utilization of our assets and we lower failure costs from the network. So the only question for us is order of magnitude and when as we implement.
