Jon Chappell : Thank you. Good evening. Derek, you mentioned Mexico earlier, and it sounds like the nearshoring somatic is starting to gain some momentum again. Can you just give a little bit more insight as to the trends you’re seeing there from a volume perspective? And then also from pricing, how does that compare relative to some of the trends you’re seeing in the U.S. and from a competitive landscape as well?
Derek Leathers : Yes, sure, Jon. I mean, first off, yes, it’s early innings, but we are seeing sort of the refutable proof that nearshoring is taking place. Obviously, it starts with expansion of existing plants and facilities because that’s easier to do than to build new plants and facilities, although those are also starting to come out of the ground. I think it plays out over many years, not just a couple of quarters. So, this is not a short-term thing, but we are reaping benefits as we speak from the increased activity to and from Mexico. Our franchise is one of the strongest, if not the strongest that exists on the southern border. Our sales team is very tenured and high quality, and we are seeing volumes picking up there.
That’s higher priced freight with longer length of haul that has lots of positives for our drivers. So, we love it kind of all the way across the board. As it relates to longer term, what– how the magnitude of that, I think it’s too early to tell, but we’re certainly encouraged by what we see at this point.
Jon Chappell : Okay. Great. Thanks. And then just a clarification, trying to match up the $30 million to $50 million of expected gains this year with the 1% to 4% total TTS truck growth from the beginning of the year to end of the year. Should we think about those ranges as kind of overlapping? So, if you have only $30 million of gains, you’re going to grow the fleet 4% and if it’s $50 million, 1%. And I guess really the reason I’m asking is if the used truck market really does continue to roll over, is there a chance that you either would have to not grow the fleet or contract the fleet on a net basis to get to that range or that, range of gains comes in lower than the $30 million to $50 million?
Derek Leathers : Yes. So that’s a tougher one to predict. I think there’s — if someone was to ask what’s the most speculative or what’s the most difficult to pin down aspect of the assumptions that we put forth, it would be gains. But I think a way to think about it is we think 1% to 4% based on pipeline alone is pretty realistic and that’s likely to happen sort of regardless. What will happen relative to the game line — what the game line will dictate is how much work we get done on refreshing the fleet. If we can continue to move equipment and move it at a high velocity, then we will get on with the business of lowering our fleet age more quickly. If that used market were to roll over and we felt like that rollover was short term enough that we might let that refreshing of the fleet take a little longer, then we’d go that route.
But I think sort of regardless of what happens in the used market, we’ve got too strong of a pipeline to not see some back half growth, specifically in Dedicated at this point. And the gains and gain per unit — I should be more specific, the game per unit will dictate how aggressively we can refresh the fleet this year. We do want to bring the fleet age down. That is something that is important, but we’re not going to do it at all cost.
Jon Chappell : Got it. Thanks Derek.
Operator: The next question is from Bert Subin with Stifel. Please go ahead.
Bert Subin: Good afternoon. Derek, you’ve made a lot of comments on the contract market, which I imagine you anticipated coming into this call. We’ve heard from some of your peers that the focus on trailer capacity is maybe changing the shape of the cycle with rates generally not falling as much for large carriers, at least those with large bases of trailers. How do you assess that with regards to your One-Way segment? Could the focus on trailer capacity help those asset-based discussions such that rates maybe don’t fall as much as they otherwise would have?
Derek Leathers : Yes. I certainly think that trailer pools and the efficiencies that are incumbent with those that have large trailer pools and a robust power-only offering like we do are better positioned through downturns to be able to have more rational conversations because there’s less folks that can replace you. You can’t replace the efficiencies we bring with a blended solution of our assets in power only, with a large trailer pool presence, with a non-asset broker. You can’t really do it with somebody that’s asset only that doesn’t have the ability to assign lanes based on differentiated strengths, meaning we’ll take the stuff that works on our assets, the broker carrier that may be better at particular lanes takes those lanes.
And so, trailer pools and the inherent efficiencies that come with them are a competitive advantage. Even within our power-only solution as an example, they predominantly play within the contract market. Very little of that is even done in the spot market. And so, it gives those partner carriers better opportunities to build the future around stable rate levels and stable experiences. So, I think both for the carriers that do business with us, the customers that participate in this product offering and for our shareholders, it truly is a win. That is also relatively speaking, in the early innings. So, all early returns are positive. We’re excited about it. We’re growing it very rapidly. But I think there’s a lot of runway ahead of us.
John Steele : Yes, Bert. Excuse me, Bert. We’ve had five straight quarters of sequential growth in our power-only business, and that’s during a period of time when the freight market is moderating. So, there’s some real staying power with power only.
Bert Subin : Yes. No, that’s great. Maybe just a follow-up then on the logistics side. How does growth in that platform play out from here? In ’22, as you noted, John, you’re expanding the presence of power only, and that’s been a success. And then you acquired ReedTMS and that significantly grew your top line footprint. As we progress maybe a longer-term question, we progress through the decade, what’s the vision for that platform? Is it to be trailer centric? Is it to be a digital automated broker? Is it all of the above?
Derek Leathers : Yes. So, as we go — first off, giving guidance out a decade is tough to do. But clearly, power only is something that’s gaining traction at a pace that’s unique compared to traditional brokerage. And so, we do anticipate that, will grow at a faster pace. The majority of what we do in brokerage is still traditional brokerage and yet power only is quickly making that gap up. I think over time, the simple reality from a product offering standpoint is that power only is tough to compete with. It’s very difficult to recreate that in a traditional brokerage format. I think as we brought Reed into the Werner family, even they were very excited about having that opportunity to complement the exceptional sales force and the customer relationships that they have, coupled with, obviously, our ability to add trailing capacity at rates that would have been difficult to do for them as a stand-alone.
So, I’m encouraged by it. I’m not going to try to predict a 10-year out percentage or ratio at this point, but I think it’s going to be a larger and larger player.
Bert Subin : Just to clarify, Derek, I meant more like what is your strategic vision for the logistics, I wasn’t looking for long-term guidance or anything like that. But I think you answered that. Thanks Derek, thanks John.
Operator: The next question is from Brian Ossenbeck with JPMorgan. Please go ahead.
