Jordan Alliger: Yeah. A couple of just real quick follow-ups or clarifications. One, I don’t know if I caught the order of magnitude impact of the international intermodal loss, whether it be revenue or volume? And then secondly, what does it mean price not being accretive to margin? Does that mean overall yields would it best be flat? Thanks.
Jennifer Hamann: Yes. For the second part of your question, Jordan, it really just means mathematically, when you look at how the price impacts and is added to the revenue, it does not help your overall operating ratio calculation. Even though it’s going to be higher than the inflation.
Jim Vena: So when you do the math, you know that math, right?
Kenny Rocker: So again, we’re not going to frame up the magnitude. I can tell you, we’re focused on growing the international intermodal network. We’ve been blessed with a new intermodal terminal there in Phoenix. It’s going to open up February 1. I talked about some of the other products that we have coming out of Houston. We’ve talked about Mexico. So again, we’re bullish and we want to make sure that we’re moving that product at the appropriate margin, acceptable margin.
Jordan Alliger: Thank you.
Jim Vena: Thank you very much.
Operator: The next question is from the line of Jason Seidl with TD Cowen. Please proceed with your question.
Jason Seidl: Thanks, operator. Good morning, everybody. Tacking on to Jordan’s question there. If we were to look at pricing and exclude sort of intermodal and sort of the natural gas impacts and some of the linked coal contracts, would pricing be accretive to margin in the remainder of the business? And also, as I look in that near-shoring commentary, how should we think about sort of post ’24 in near shoring? Where is that going to show up for you guys? And is there any extra CapEx that might be needed? Thank you.
Jennifer Hamann: Yes, Jason, thanks for the question. We’re just not going to get into that final level of detail, but certainly, those are substantial headwinds for us that have been impacting our yields through much of 2023, and the intermodal piece for sure is going to linger into 2024.
Kenny Rocker: Yes. So post 2024, as you look at it, I mentioned a lot of industrial base markets that are going there. Think in terms of auto, think in terms of metals and minerals, think in terms of petrochemical market.
Jason Seidl: Perfect. Appreciate the time, as always, everyone.
Jim Vena: Thank you.
Operator: The next question is from the line of Jeff Kauffman with Vertical Research Partners. Please proceed with your question.
Jeff Kauffman: Thank you very much. Thanks for squeezing me in. Just a follow-up on the near shoring for Kenny. A lot of the companies we talk to say really all that’s been done at this point is concrete has been poured in the ground and some of these facilities have been announced. And really, you’re not going to see a lot of this potential until kind of ’25, ’26, ’27? Looking at your industrial development plan and kind of what’s out there, do you think – and I’m going to ask you to guess here. Could this be 100 basis points in magnitude to volume on a basis over 3 to 5 years? Could it be larger than that? How should we think about scoping this longer-term industrial development opportunity for UNP?
Kenny Rocker: We’re certainly not going to guide on your basis point question. Here’s what I will say, though, and I’ve repeated this, and I want to make sure I hit this pretty hard. We’ve got a service product coming out of Mexico that is unmatched. It’s a daily product. It’s the fastest product to getting in and out of the heart of Mexico. We also have 6 gateways, which gives us optionality, which gives our customers optionality, which gives us an opportunity to hit different parts of Mexico. So yes, we feel very bullish about Mexico and the growth, and we’ve been working from an industrial development perspective with all the stakeholders with all the customers to help bring that on.
Jim Vena: The only thing I would add is with the ownership position we have in the FXC, I think that ties us even to be able to optimize what’s available to us as near shoring happens and as we work collaboratively and make it the view as one railroad operationally, it will help us on the efficiency of being able to move the traffic. And I think we’re able to offer the customers the best product, and we think it gives us a chance to win a bigger majority of any business that’s added to those lanes.
Jeff Kauffman: Thank you very much.
Jim Vena: Thank you.
Operator: The next question is from the line of Jairam Nathan with Daiwa. Please proceed with your question.
Jairam Nathan: Hi, thanks for taking my question. So just on the casualty and I guess on the other expenses on the last slide, you have flat to down, it looks like casualty will be – would be favorable here. So can you talk about some things that could kind of offset that?
Jennifer Hamann: Yes. On the call, I mentioned the fact that we’ve had some higher casualty expenses certainly over the last couple of years, and we’ve been playing some catch up. And so that’s really a large part of what’s driven the increase in those lines – in that line and the other line. And so we don’t expect that to continue because it’s not indicative of our safety performance. And in fact, you’ve heard us talk about being very focused on improving that overall performance. It really is some cleanup and some maybe outsized verdicts, too, just with some of what’s going on in the courts. And we think we have some of those big things behind us. So looking forward to a better footing in 2024.
Jairam Nathan: Okay. And finally, just on the CapEx question. Jimmy talked about FXE. In terms of capital additions would FXE be on the same page as you guys in terms of investing in the business?
Jim Vena: Yes, they have the same capability. They do a real good job. I’m on the Board and so is Jennifer, and they have a great plan for 2024 and they invest in their railroad, the same as we do, bottom up, build the plan up to see what you need. So I’m very comfortable that they will invest and have the capability to invest what they need to move forward.
Jairam Nathan: Okay. Thank you.
Jim Vena: Thank you.
Operator: Thank you. Our final question is from the line of David Vernon with Bernstein. Please proceed with your question.
David Vernon: Hey, guys, thanks. Good morning and thanks for taking the questions. Sorry?
Jim Vena: I said they put you last David?
David Vernon: It’s been happening since the second grade. The last name is V, you should be – you should feel familiar with that process.
Jim Vena: You and I were always called last, I hear you.
