So it’s early. We know that what we’re going to be working with them on is the reality of sustainable pricing. We’re going to be talking to them openly and honestly about what’s happening at these pricing levels that have been out there, because the data is right there in front of them and this attrition is real. We’re going to talk to them about making sure that where we price, we can stand behind it and not be back in 60 days, 90 days, or multiple times a year. Those conversations in some cases will go very well, and with others, I’m sure it’ll be more difficult. One-Way Truckload is down, you saw in the quarter, and we’re prepared and actually planning to take it down further as we continue to lean further into dedicated.
So that provides opportunity for us to be a little more picky and a little more disciplined in our price approach to this bid season coming up.
Elliot Alper: Thank you, both.
Derek Leathers: Thank you.
Operator: The next question is from Scott Group with Wolfe Research. Please go ahead.
Scott Group: Hey, thanks. Afternoon. So maybe, Chris, your comment about trucking – truckload rates flat to down a bit sequentially from Q3 to Q4. Should we assume that we should apply that similar logic to truckload OR or trucking earnings Q3 to Q4 flat to down slightly.
Chris Wikoff: Well, Scott, there’s several puts and takes as we head from the quarter. I mean, certainly if the One-Way Trucking rate is down a bit, I mean, we’re talking flat to slightly down is sequentially where we’re headed. Nonetheless, that would be offset with some potential peak activity that would be better. We certainly didn’t have a lot of peak activity in Q3, just a little bit of tail end of the quarter. But we have had some peak activity in October and would expect that to continue with some of the peak awards we’ve got, although, estimating volumes has been challenging this year, I think, for us and our customers. And then the other thing to mention is just the continued headwind as relates to gains. We had, I think, a $9 million gain we posted in Q3.
And you can tell by our annual guidance of $42 million to $47 million for the year that implies a lower number in Q4. So definitely some puts and takes along with our cost savings program, which will continue to hopefully show some benefits there. So hard to say, we’re certainly going to work as hard as we can to show some improvement, but continues to be a challenging environment and hopefully the tailwinds will outpace the headwinds.
Derek Leathers: Yes. And Scott, I’ll just add to that and just reinforce that we would expect to continue to see some year-over-year improvement in those select expense categories that we mentioned. And really where you started that question was really focused on the one way business, dedicated. While the fleet should be flat to up and revenue per truck per week generally holding steady that will have some offset to mitigate some of that mid-single-digit decline in the one way rate.
Scott Group:
Derek Leathers: Yes, Scott, great question, and I’ll keep it fairly high level. But I’ll start with this. Dedicated has actually performed very well through the cycle, and that’s exactly how we expected it to, with a couple of exceptions around the margin. So examples of those exceptions, we’ve seen fleet shrinkage across dedicated. So within contractual terms, three trucks, five trucks per fleet kind of shrinkage. And that certainly hurt our defensibility a little bit, because those trucks have to find a home. We’ve stayed disciplined to reference back to an earlier question on the call about increased competitiveness in dedicated on bids this year. We’ve kept our discipline, and as a result, some of those trucks ended up all the way back in one way when we would have preferred that they had found a home within dedicated.
But overall, dedicated returns, margins, et cetera, have been sort of as expected in this type of economic backdrop, performing pretty well. One way has been worse than expected. That’s just the simple reality. This one way market is more difficult. It’s been lower for longer. Our spot exposure has been higher than anticipated, and therefore, it has been the predominance of the drag. You couple with that, yes, in the acquisition space, those were predominantly one way plays, but to fill regional gaps within our network. And on the market facing portion of those decisions, it’s been very solid. Our customers have embraced it. We feel like it has absolutely filled out the network in ways that are going to be strategic and important, and we stand by those decisions.
But their results have been difficult from a year-over-year perspective, because they’re operating predominantly, actually exclusively in that one way space. And then lastly, in logistics, we’ve talked a lot about, there’s times to where we believe that gaining share and gaining momentum in a space makes the most sense, and doing so and executing with a unified platform that we’ve been working so aggressively on has been paying dividends. But we have digested quite a bit of new business in logistics, and there is nothing like a dedicated implementation cost, I’m not trying to make that case. It’s much shorter in duration, but there is a bit of a digestion that you do as you get the carriers in the roster settled. So those are some of the puts and takes.
And that’s why I didn’t shy early on in my remarks, I stated, it certainly doesn’t meet our expectations internally either. But what does is like the way the portfolio is now structured. I know that we’re in the later innings of this cycle and as we come out of it, we’re even further entrenched with a stronger performing dedicated unit than before and a growing and much more relevant logistics business.
Scott Group: Thank you for the time, guys.
Derek Leathers: Thank you.
Operator: And our final question today is from Ken Hoexter with Bank of America. Please go ahead.
Ken Hoexter: Hey, great, good evening. And Derek, thank you for squeezing me in and Chris. So just – I guess, you noted you’re seeing delays in expanding existing dedicated fleets, but the dialogues are now positive. Maybe expand on your thoughts there a little bit. And then the pace that your largest customer is now in sourcing its fleet, has that accelerated given the downturn? Have they paused? Maybe just talk about that process and the impact on dedicated?
Derek Leathers: Sure. So within dedicated, as they were working through their destocking as well as kind of right stocking would be probably even a bigger component of it in my view, getting the right SKUs for the post pandemic consumer, getting the types of goods that they are more interested in buying in this inflationary environment and getting all of that right and on the shelf, that took a while. And what I’m most encouraged by is in conversations with our major customers, which I’ve had many of in recent weeks, they feel as though that work is behind them. Once that work is behind them, you get back to replenishment levels, you start to see reordering and you start to see confidence that they’ve got the SKU mix right.
