John Steele: And when we’re talking about bid season, Tom, we’re talking about the 39% of our revenues in TTS that’s One-Way Truckload. The biggest share of it is in Dedicated, and we think that’s going to be positive, up 0% to 3% in revenue per truck per .
Tom Wadewitz: Yes. I mean that makes sense, and I understand that. I guess maybe one follow-up on this topic, I think generally, people are kind of thinking high single-digit decline in contract rates, irregular route truckload. Are you more optimistic than that? You think it’s better? And then I guess in terms of the kind of quicker tightening, do you think maybe this really tightens meaningfully in second half or it’s more just like kind of a gradual improvement?
Derek Leathers : Well, I don’t know that I’m more optimistic because that sounds an awful lot like hoping. We put guidance out based on analyzing it. And we talked for several quarters about our One-Way network being more engineered than ever before, we’ve talked about LTAs being part of our One-Way network at a larger percentage than ever before. And so I’m not trying to review what others may be saying about what may or may not happen in their networks. I just feel strongly that in our network, based on both bids completed, LTAs in place and ongoing engineering within that One-Way network that our ability to perform where we’ve guided to is at this point what we feel will take place.
Tom Wadewitz: Okay. Great. Yes. I mean, I think it’s quite clear that you’ve positioned the portfolio to be resilient, which is great. So, thank you for the time.
Operator: The next question is from Todd Fowler with KeyBanc Capital Markets. Please go ahead.
Todd Fowler: Hey, great. Thanks and good afternoon. Hey, Derek, hey, John, hi, Chris. There’s been a couple of comments on the cost side, and it sounds like that there’s some opportunity and some things that can help and also some headwinds. I’m just curious, Derek, if you’ve got a comment on driver pay being one of your biggest cost buckets I know that that’s moved up substantially in the last couple of years. Is that something that moderates into ’23? And then how do we think about maybe, I think, John, you shared that total operating expense in the fourth quarter was maybe up 6% or so. Does that — what sort of run rate are you expecting in ’23 on the total side for all the buckets? Thanks.
Derek Leathers : Yes. So I’ll have John take the second part of that. But on the driver pay question, yes, we think there’s going to be moderation. That market is still going to be tough. We’re still going to hold our expectations high, and only hire the best of the best. That does come at a premium cost. But nonetheless, in that market, the pressure has moderated some. We also remind you, especially on the One-Way side, pay is reflection of both pay rate and miles. And so as we’ve endured the last couple of years and some of the disruptions that were going on and you saw miles degrading, you had to make that up at times with the pay rate. As we start to stabilize miles and start to see some of that congestion or disruption, if you will, evaporate, it provides us an opportunity for our drivers to still be paid very well, still make a very good living and actually have less disruption in their life as well.
And so all those things factored in, yes, that’s a line that we envision moderating this year compared to what you’ve seen over the past couple of years as we continue to focus on other items. Look holistically, there’s still a lot of pressure. Trucks, trailers, tires, fuel, most likely and a moderating driver wage, but still not going down, clearly, are all going to put pressures on the P&L. So our job is to go find every other line item in there that we think we can extract savings from and then execute on it. At the same time, it’s going to be having those tough conversations with our customers about what we need to have sustainable pricing to be able to support their future growth and their needs. Those customers aren’t — that aren’t growing or are struggling.
Obviously, that conversation has a different tone. That’s why we try to align ourselves with folks that at what they do.
John Steele: And Todd, the year-over-year increase in driver pay has tracked from quarter-to-quarter throughout ’22. First quarter was up 15%, second quarter up 15%. Third quarter up 9%. Fourth quarter, up 4%. So, the year-over-year increase is moderating and the cost, while it’s not flat, it’s moving to lower single digits. We expect it will stay in the low single digits as we move forward in 2023.
Todd Fowler: Okay. Good. That helps. And maybe just for a quick follow-up. On the logistics side, with kind of the change in the portfolio and the acquisitions, the margins in the last two years on a full year basis have kind of been in the mid-single-digit range. Is that kind of the right longer-term range, not looking for 2023 guidance but just kind of a general range to think about the logistics margins at this point? Or is there something that makes the margin stronger or weaker for any reason? Thanks.
Derek Leathers: Sure. I mean, first off, I’ll point out logistics is now greater than 30% of revenues, and we have eyes to growing that at an outsized pace over the more incumbent book of business and Dedicated in One-Way. So, I think you see that becoming a larger portion over time. We’re super excited about how the integration is going ReedTMS and the opportunities that stand in front of us. That integration in particular, especially as it relates to the real productivity gains and system enhancements when you bring people together on one platform is a back half of ’23 initiative. It takes a while to get there. We operate predominantly in different verticals today with different customer makeup. They do very well, but we are actively working toward that integration date.
So, at this point, I’m not looking to change any kind of guidance on mid-single-digit logistics expectations. But we will certainly be updating as we get further along in that integration as to what we think that potential could look like when you get all the freight into one network with one central kind of visibility platform.
Todd Fowler: Sounds good, Derek. Thanks for the time .
Operator: The next question is from Jon Chappell with Evercore ISI. Please go ahead.
