Derek Leathers: Yes, hey Jack, thanks for the question. First off, it’s difficult. I want to be clear about that. We’ve done a lot of work, and we talked about it even in the prepared remarks, the 30 to 40 basis points of OR impact year-to-date on – related to this tech journey. What makes it difficult is I don’t want to imply that all of that is nonrecurring because there will be other types of costs that may replace it in some cases, so licenses and services, systems as a service fees and other things. But perhaps the biggest cost of all, and it’s the one that’s the most difficult to really quantify is the amount of man-hours and time and effort that is put into making sure we get this right. So just significant amounts of meetings and productivity that gets impacted as we lay this journey out and folks that are working through this journey that as part of it, there’s a period in time, and most of that period of time has been the last couple of quarters.
And to be frank, for the next couple as well, where folks are actually working harder and working longer as they work out of old systems and into the new platform. And we know that, that journey continues for a while as we look forward. As far as what we see on the out quarters and why is the juice worth the squeeze, I think having a Cloud First, Cloud Now strategy, having our tech architecture modernize the ability to make changes and adapt to a changing marketplace more nimbly is it’s very difficult to even put a value on. It will make us more nimble, more able to serve. But more importantly, probably than all of the above is the ability for the first time in our history as we’ve grown this portfolio out and expanded dedicated logistics and even within one-way, increase the level of engineering that we do having all that freight in one system with one visibility will be leaps and bounds ahead of where we’re operating today.
We’re very encouraged by that. You couple that with Werner Bridge and the digital platform within brokerage, which we’re not holding out there as the core, if you will, of what we do because in truckload logistics, we have a tremendous amount of contract work and work that involves other value-added services along the way that are coupled with our standard brokerage product. But within Werner Bridge, that capability as it builds out and gets implemented we’re seeing receptivity both from the customer and carrier community and a fairly quick ramp to the capabilities that that’s bringing us. So yes, it’s going to be, call it, a year still out in front of us to even perhaps as long as 18 months as we go down this journey, but the output of it is something that’s very attractive.
And I’ll point to a specific case, now over the last year, the most implemented, most integrated portion of this journey is our Truckload Logistics group. And if you look at the performance within that group, from a revenue or market share perspective, taking share growing at a time when very few if any others are doing so, yes, with some additional costs associated with it, because of this tech investment. But over the long-term, we like the positioning of that part of the portfolio, a great deal, given its larger scale and relevance in the marketplace. So it’s going to be tough work. We’re signed up for it, and the team here is committed to seeing it through.
Jack Atkins: Okay. No, that makes sense, Derek. And I guess, just as a follow-up. Within – when we think about the dedicated market, some of your competitors have been speaking to an increasingly competitive dedicated market here over the last quarter or two. Can you talk to if you’re maybe seeing increased pricing pressures show up in bids over the last few months? I mean, I know it’s a challenging market broadly, but it does feel like we’re seeing some competitors may be looking to deploy additional assets into your sandbox. And just would be curious if you could talk to that for a moment and how you’re addressing that?
Derek Leathers: Yes. So first off, I’ll say, there’s clearly increased level of interest in Dedicated, both from the shipper and carrier community. I think that’s not surprising given the absolute draconian pricing that exists within the spot market today. Most of what we do in Dedicated can’t really be replaced by spot capacity, it really doesn’t play a role. But it does cause carriers to gain interest in opportunities or to pursue Dedicated, whether or not they may have the capabilities to actually perform. So it’s really incumbent upon us to make sure our performance is at the highest possible level. The business that we do is true Dedicated. The stickiness and defensiveness of that business is inherently built in because of the complexity of the type of work we do.
And I can tell you that despite being disappointed in our overall results for the quarter, I’m extremely proud of the work that we’re doing in Dedicated and the underlying financial results of it as well. So it stood up as well as we would have expected in a market that was under this much to us. And I think the prospects for it to looking forward are certainly strong. But we’re going to maintain pricing discipline. And you’re going to see that, and you have seen that in the fact that although it’s a larger percentage of the fleet, it’s not growing at the pace it once was because we’re going to stick to making sure it’s the right type of Dedicated that’s defensive in nature, that’s hard to serve and it’s priced appropriately.
With all that said, the pipeline looks pretty good right now. We still like the out quarters as we look forward and our ability to continue to lean into Dedicated.
Jack Atkins: Okay, thanks again for the time, Derek.
Derek Leathers: Thank you.
Operator: The next question is from Eric Morgan with Barclays. Please go ahead.
Eric Morgan: Hey, good afternoon. Thanks for taking my question. I wanted to ask on supply. Derek, you’ve offered some helpful perspective over the last few quarters on just industry capacity. I know recently, you’ve been talking about elevated cash balances, smaller carriers kind of extending the cycle. And I think in Q&A, you said you’re seeing a more rapid pace of attrition, but maybe you could just talk a bit more about what you’re seeing right now? And if there are any other factors you’ve kind of identified that are having an outsized impact that might have you rethinking how long this down cycle could persist?
Derek Leathers: Sure. So let’s start with – we’ve talked a lot about the activations, and that’s not the end all be all, but it’s certainly a relevant gauge on the dashboard. And we’ve seen 57 weeks now and over 150,000 trucks. But during the early portion of those weeks, you were seeing quite a bit of movement in the BLS data where owner operators and others may have been showing up at a decent percentage as employee drivers at some other fleet. Only in recent months or really, call it, 1.5 quarters when you start to see BLS also negative. At the same time, you’re seeing that the activations go negative and then you couple that with now named brand bankruptcies, not the obvious yellow that everybody’s talked about, but 200 truck, 400 trucks, 500 truck carriers kind of on a weekly basis starting to hit the radar of not being able to survive this pricing environment.
