At the end of the day, we need to make decisions quicker. We need to react quicker. We need to quit having so many layers that slow down the decision-making, and with that, we end up winning, Fadi. Hopefully, I answered your question. I know it was a long answer. And maybe there won’t be any other questions after this.
Fadi Chamoun: Appreciate it. Thanks.
Jim Vena: Okay.
Operator: Our next question is from the line of Jason Seidl with TD Cowen. Please proceed with your question.
Jason Seidl: Thank you, Operator. Good morning, Jim, welcome back, Jennifer, Kenny and Eric. Wanted to focus a little bit on sort of the inflation and pricing dynamic that we have going on here currently. Is this just a case for waiting until we can get to repricing some more of the contracts as we move through and seeing sort of better fluidity in the railroad? And are we just sort of in for a few tough quarters here in terms of comps?
Jim Vena: Kenny, go ahead.
Kenny Rocker: Yes. Thanks for that question. No, we’re not waiting. We’re repricing these contracts right now in real time. We’re having some very clear and direct conversations with customers. The commercial team is doing an excellent job of really articulating what took place from a labor standpoint and these costs and specifically how what we’re doing and what Eric is doing on his side, how we’ll benefit our customers. Now I’ll tell you that our customers are seeing some of the same pressures and it’s playing out in their markets that way too. The other thing, and Jennifer talked about this a little bit we’re investing a lot of money here. We’re investing $3.7 billion. We don’t lose an opportunity to share that with customers and talk about the value that they get from those investments.
And so you look at that, you look at the improved service product that Eric is delivering us. We have no problem looking at our customers in eye talking to them about pricing the value that’s there.
Jennifer Hamann: And Kenny just to remind Jason and others. So we can’t access all of our contracts immediately from a price standpoint. So we do have, call it, half of our book of business is in multiyear contracts. So to your question, Jason, it does take us a bit to work through and reprice those contracts. But Kenny and team are very focused at every opportunity they get, they’re having that conversation and they’re winning in the marketplace with higher prices.
Jason Seidl: And Jennifer could you remind us how they renew through the course of ’24 what percent?
Jennifer Hamann: So we’ve not talked about 2024, but in general, call it, half of our book is multiyear contracts, 25% is tariff and the other 25% or so are contracts that are a year or less in duration.
Jason Seidl: Okay. Fair enough. I appreciate the time.
Jim Vena: Thank you.
Operator: Our next question is from Amit Mehrotra with Deutsche Bank. Please proceed with your question.
Amit Mehrotra: Thanks very much. Hi, Jim. Hi, Jennifer. Hi, everyone. Jennifer, can you talk about, I guess, OR expectations as we move from 3Q to 4Q, obviously, the fuel headwind I think that gets even better sequentially. You talked about year-over-year, but I think it actually gets a little bit better sequentially. You’re moving 8,000 more carloads per week. It’s only two weeks into the quarter, so I don’t want to get ahead of myself, but we’re seeing some decent sequential volume growth. So could you talk about that? And then, Jim, just related to Jim and Eric, actually, you talked about getting car velocity up to 220 miles per day. You’ve already had great improvement on that in recent months and that has corresponded nicely to kind of this improvement in volume.
Should we think that, that increase to 220 allows you to essentially move more volume that’s waiting to be moved and we can see kind of a corresponding increase in kind of the seven-day carloadings? And how do you get comfortable? How do you get us comfortable that the added volume doesn’t drive service challenges, which historically has been the case for all railroads. So if you can just talk about that as well. Thank you.
Jennifer Hamann: I’ll maybe start off and address your question, at least the question about sequential OR improvement. As I’ve said in my prepared remarks, we’re looking to build off the momentum that we have here as we ended out the third quarter and take that into the fourth quarter. And so without making any guide relative to what fourth quarter volumes are going to do, to your point, we’re off to a good start, very pleased by that. But we’re going to operate as efficiently as we can. And we do think we have an opportunity to have sequential gains going from third quarter to fourth quarter on the OR basis. It’s going to take hard work by the team. It’s going to take continued gains in terms of how we’re operating the railroad and driving efficiency, but that’s absolutely the goal that we’re looking at. Jim, do you want to maybe hit the rest of this question about freight car velocity.
Jim Vena: So what — the reason I use car velocity is it truly is that end-to-end number that gives you a great indication. And it’s not the only indicator, but it gives you an indicator. So I like the question. You said, can you handle an increase in business and are you leaving business behind? I wish we were leaving business behind. I really do and we are not. And we will look for everything we can to get more business. The railroad and railroads get themselves in trouble when they lose sight of what the fundamentals are for an increase in business. Increasing business can come in a lot of different ways. One is it can be bulk, which adds people adds locomotives as puts more pressure on the capacity. And we built this railroad that has the capacity, which you always have to concentrate on and usually is the limiting factor when you increase especially on the carload business is how well your terminals and what the capacity is on the terminals.
And when I was here last time, we worked on in the Houston area and invested a lot of money to make sure that, that terminal has the capacity to grow with the products that we handle in the industrial landscape. And it’s important for us and we are going through a process to make sure that every car has the least amount of touch points, fluidity is king. And that we can handle the most cars per employee within all those terminals and we have the gap that allows us to be able to react when the business comes up. If you add an extra intermodal train or you add an extra 1,000 feet on one of our locomotive trains. That’s an easier fix again, as long as the terminals, whether it’s G4 in Chicago or it’s the Dallas terminals have the capability to handle it in an expeditious manner the same way.
I think we have it with all the business that Kenny’s promised me, okay? Is as we have the capacity, but we will invest and make sure we try to stay ahead of the curve on the fluidity on our terminals. And if we drive the terminals properly because that’s usually your limiting factor more so than what the physical plant is out in the railroad and we keep that buffer of people so that we have the people to react. I’m not real worried about if we go up another 10,000 carloads. In fact, what a challenge to have. So Kenny, your job to bring it on. So thank you very much for the question.
Operator: Thank you. Our next question is from the line of Jordan Alliger with Goldman Sachs. Please proceed with your question.
Jordan Alliger: Hi. Thanks. I think Intermodal is often viewed as critical or key long-term growth engine for the industry. Are you now in a position do you think to start taking more share from trucks with trip plan compliance moving higher? And if not, what still needs to happen to get intermodal to grow, obviously, other than the macro, is it more service from you? Do truck rates have to move up? Can you give some thoughts around that? Thank you.
