Tom Wadewitz: Great. Thank you.
Jim Vena: Thank you.
Operator: Our next question is from the line of Jon Chappell with Evercore ISI. Please proceed with your question.
Jon Chappell: Thank you. Good morning. I was going to ask this anyway. I guess it’s a perfect follow-up and maybe it’s just reading between the lines. So when Eric mentioned some of the challenges remaining from the work agreements that required additional employees, I mean, it was noticeable to me that you stressed near term. So is this just – is there a time where this anniversaries, where you could be a lot more flexible based on the volume environment? Or was the stress on near term kind of related to what you were just mentioning, Jim, you’re putting programs in place, you’re trying to address it and that you hope at some point, you can kind of reverse that trend?
Jim Vena: Yes. In the – in 2024, we have dates of implementation for the agreements that we have not implemented completely. And those are pressures on the number of people that we would need to operate. So that will be through 2024, and that’s why I’ve always talked about this is a – I see this as a 2-year adjustment to the railroad to be able to get there. But we do have programs in place as we implement, we run into things if we operate as efficiently as I think we can, we’ll mitigate that. You mitigate it by running less trains, having more cars on the same trains. We grow. We put more cars on the same trains instead of starting more. We use the people and the facilities that we have more efficiently. So – but it’s a 2024 headwind for us that we are going to overcome just like we did in the fourth quarter.
Jennifer Hamann: Well, just a reminder, Jon, we only have the work rest [ph] agreement in place with the BLET. We’re still negotiating with SMART-TD.
Jim Vena: Correct.
Jon Chappell: Okay. Thank you, Jennifer. Thanks, Jim.
Jim Vena: You’re welcome.
Operator: Our next question is from the line of Amit Mehrotra with Deutsche Bank. Please proceed with your question.
Jim Vena: Good morning.
Amit Mehrotra: Thanks. Hey, guys. Hey, morning. Congrats on the good results. Jennifer, I want to come back to the 5% inflation. So you’ve got a $15 billion cost structure that basically translates to like $750 million of higher costs in ’24. I assume that’s a gross number because you’ve done – you guys have done a phenomenal job actually lowering the cost structures as we move from 3Q to 4Q. So is there any help you can give us in terms of how you think about that gross 5% translates to kind of like a net cost number in the context of the revenue outlook?
Jennifer Hamann: Yes. No. I mean, you’ve got that exactly right, Amit. The 5% is the gross number. So that’s our challenge, right, and opportunity is to offset that with productivity. And so that’s where you heard Jim talk, you heard Eric mention, we have those opportunities in virtually every cost category, I’ll put depreciation aside, that’s kind of fixed for the year. But we absolutely have opportunities to offset that in terms of how we run the railroad. And I think just think about wage inflation and think about fourth quarter. So we had wage inflation first half of this year. Our wages are going to be up 4%. For our Union Personnel [ph] it’s going to go to 4.5% in the second half, but our cost per employee was only up 1% in the fourth quarter. So that’s productivity that’s enabling us to offset some of that. And so that’s the task of this management team, and that’s those controllables that we talked about, and that’s where we’re very much focused.
Amit Mehrotra: But is there any help? Like, I mean, can you offset half of it? Can you offset 40% of it? Like because that’s obviously critical to understanding the EBIT and the margin outlook, which I know is highly uncertain, but at least give us some sense of how much you can offset that gross number by in your opinion?
Jennifer Hamann: You also know, Amit, that the volumes play a role in that in terms of how we’re able to leverage and build longer trains and have more work to put up against some of those inflationary costs. So that’s our challenge, but I’m really not going to be able to give you any more than that.
Amit Mehrotra: Okay. I thought I’d try anyways. Thank you, guys. Appreciate it.
Jennifer Hamann: Thank you.
Jim Vena: Good question. Nice try. Thank you.
Operator: Our next question is from the line of Allison Poliniak with Wells Fargo. Please proceed with your question.
Allison Poliniak: Hi, good morning. So obviously, service is improving here. Just in terms of customer engagement, any color on sort of the pipeline of opportunities? Is it starting to accelerate? Are there unique opportunities? And I guess along with that, are you seeing any improvement in some of the conversion of some opportunities out there? Just any thoughts. Thanks.
Jim Vena: Allison, let me start and then Kenny, please jump in. So if we look at this railroad that we are blessed with that we operate, and I think you’ve seen some of the steps we’ve taken is you have to provide a level of service that we sold to our customers, and that’s our goal, and we work real hard every day to do that. We operate the railroad very efficiently. Where’s the opportunity? We have a mix of traffic that’s available to us that originates on our railroad, so when I go around the entire railroad, I’m very comfortable that we offset and we have the capability to offset and we are tackling, whether it’s that industrial complex all the way from New Orleans to Brownsville, Texas, whether it’s the grain, whether it’s the soda ash, whether it’s the intermodal at the West Coast and our speed.
