Q2 2023 Forward Air Corporation Earnings Call
[noise]. Thank you for joining forward Air Corporation second quarter of 2023 earnings release Conference call before we begin I'd like to point out that both the press release and webcast presentation for this call or accessed.
Investor Relations section to forward errors website.
Www Dot forward Air Corp, Dot com with us this morning, or C. F O Thomas Schmidt and see I'm, sorry C E O Thomas Schmidt and C. F O. Rebecca Garber by now you should have received the press release announcing our second quarter of 2023 results, which was furnished to the SEC On forum eight dash K N O.
The wire yesterday after the market close please.
Please be aware that certain statements and the company's earnings press release announcement and on this conference call are forward looking statements within the meaning of the private Securities legislation Reform Act of 1995.
Occluding statements, which are based all expectations intentions and projections regarding the company's future performance anticipated events or trends and other matters that are not historical facts, including regarding our expected third quarter 20 twenty-three in fiscal year 2023.
[noise] statements are not a guarantee of future performance and are subject to known and unknown risks uncertainties and other factors that could cause actual results of differ materially from those expressed or implied by such forward looking statements for additional information concerning these risks and factors. Please refer to our filings with the Securities and Exchange Commission.
And the press release, the webcast presentation related to this earnings call.
The company undertakes no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
During the call. There may also be a discussion of financial metrics that do not conform to U S. Generally accepted accounting principles or G. A P.
Definitions and reconciliation of these non-GAAP measures to their most directly comparable GAAP measures are included in the press release issued which is available in the investors tab of our web site and now I'll turn the call over to Tom Schmidt C. E O four were there.
Thank you John and good morning to all of you on the call.
Let me lead off with five points before opening it up for questions and comments.
The first point beaches, we just finished the third disappointing quarter in a row.
It's been a very tricky for a recession for our team and our customers and it became in faces we have seen the worst thing now main show the L. T L business in the fourth quarter of last year and it also in the first quarter of this year.
<unk> brokerage as often and afraid possession has had a prolonged demand in pricing low and.
And as he started coming out off the low for the L. T L business in the second quarter hour intermodal drayage business. So it's bought them for.
For both his call revenue, but also for its accessorial services, especially the storage fees.
The second point I wanted to make up Friday's grow forward is working that's our initiative, that's focusing on high value freight.
Mm priced appropriately in a very very clean best in the industry operating environment and made accessible increasingly to a larger customer base as I said.
During the last call, it's working and we won't see the full results in 2023 yet.
Our industry, leading best surveys from best on time performance 99 per cent two lowest damages claim ratio of 0.1%.
It matters when you deal the shipments of consequences.
Still as we saw in afraid recession costumers do trade down.
We saw that with all the time that you could go back all the way to the last quarter of last year and the very beginning of this year or tonnage per day was down 15% for the full first quarter. It was down by 12% second quarter, We just finished 7% down.
Most recently, we've seen a lot of kind of close to flat and very very positive trend. This week. So far we are seeing plus 7% year over year tonnage.
The third point I Wanna make upfront the yellow impact will exaggerate the momentum.
And at this point I do have to start with just a personal note as I know quite a few people who actually worked at this iconic company yellow I do feel for the thousands who gave their all for so many years 99 years I think in total at this iconic company and I truly hope and wish that many of those great professional.
They'll find another great professional home soon.
On a pure business friend capacity, leaving the market will further cement pricing disciplined in our industry.
And be clearly will be part of a very disciplined pricing group.
You should see some volume benefits into more dense lanes and four shipments that benefit from our industry bleeding precision execution. This week's plus 7% year over year tonnage is it good observation of that.
Fourth point that Wanna make upfront and this is more to myself I do need to get better and forecasting in dynamic challenging times like we were in.
And we need to get back to a more could you be more conservative and then beat expectations and.
In that spirit, we are still cautious when the guide to rewards Q sweep into me.
Land truckloads, they'll still have ways to go to get back into full swing. There is L. T. L. A momentum of its building, but we still want to be cautious about the size of that momentum import volumes for many of our best basically as partners and customers are still very subdued.
And then finally before we open it up point number five.
I wanted to give you a little bit of a perspective, sometimes it's.
Important and rights to be self critical at the same time. It's also important to have some perspective.
2021, just two years ago was the first of two unprecedented trade boom years and.
And at the time when you finished 2021.
We actually finished with by far our best earnings per share in the history of our company at the time that it was just two years ago.
Absolute freight bustier, 2020th we we still easily expect to beat that 2021 boom your EPS number.
That means to be a nightmare b O b, yet, but it just means a bit of perspective, sometimes helps to them.
I read that back over to you John and we're going to open it up for thoughts comments and questions.
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And we will go first to Jack Adkins go ahead. Please.
Good morning.
My question boring.
Morning, Jack.
So I guess.
I'd like to maybe start with what you've been seeing over the last few weeks. It sounds like it's it's obviously a pretty dynamic.
Right now.
The.
The.
Could you maybe give us a little bit more granularity on the last few weeks.
Sort of going on there in terms of.
And you know where where is that.
If you could maybe provide some context around that yeah, Jack absolutely so and I'll go into July and I didn't meet God cause he got me going through the first few days of August .
First of all that the numbers and then a little bit of color behind the numbers put the first week of July aside for a second that was a goofy week in July 4th is it Tuesday by all practical means you actually losing two business days that week now when you go into the second week of July but <unk>.
Is in the second quarter of always minus seven per.
Percent year over year, the the remainder after the first week of July I think averaged out roughly at minus free cell that Ah trend already was going upward.
And they're not getting the last several days was a whole another step up which you hadn't fully built into our forecast. This is the past 7% year over year tonnage, which is unusual all the week over a week over a week B C sequentially Kinda last fall plus five per cent of the last few weeks. So there's a lot of kind of old men.
Building. The second question is like where is it coming from some of it is truly our sales team doing a phenomenal job with our core business partners, helping them and helping us all again, giving him just great ammunition and that will kids some of our longest standing business partisan customers have been growing with us even pre.
Dating some of the yellow impact, but very clearly over the last several days going into the last week of July we do see some of our core business partners and customers, who also were yellow costumers for long lanes for some of the more sensitive rate switching that big.
This over to us so, yes, yellow yep, leaving the market real I think further accentuate pricing discipline. It probably will help some of the class right companies that are first class and in volume directly more than it helps us that'd be have seen sweepy else do your point, Jack and we also have seen.
And some of their domestic forwarders that I'm all focused on the type afraid that yellow actually was a good carrier for B C. Some of them growing with us in the most recent days and that clearly is them heading over business that day, so far gave to yellow to us. So we are a.
Direct beneficiary volumize lesser than to some of the class fake companies, but the hour direct beneficiary and showed me on the pricing front, we expect as I said that the pricing disciplined to accentuate at July 2nd half kind of mine sweep August so far plus 70 year over year tonnage.
And then maybe just following up on July briefly.
For July in total.
[noise] tonnage in July in total.
<unk>.
I think like the down minus five and I think the problem again was the first week, which was very goofy dressed getting better. Okay July was.
And then it's obviously gotten better over the last few weeks.
Excluding fuel there there's been some downward pressure on that over the last couple of quarters.
You know how do you think that is impacted by what we're seeing.
The the broader dislocation of the L. T O market you feel like you've got some pricing leverage back here would you expect to see some sequential improvement in revenue excluding fuel.
I do believe that the the the last quarter and the last two quarters that you're looking at for probably the most challenged from a pricing environment and you should see improvement there in Q3.
Do you think there's the opportunity for.
This year.
Well.
So.
Let me say it in two weeks the answers that we do G. R. I's once a year, we do it the first week of February .
And I think our customers and business partners should rely on that they don't like it when he comes but there should be predictability that they can build into their boxes and forecasts for the following year. Now here is what we did do as we talked about it many times got really really tough over the last six nine months, we've worked with many of our customers and when they.
Stepped forward with real initiatives to grow together with US we gave them temporary G. R. I, a relief where they didn't have to pay the full amount, we always talked about Jack about capture rates capture rates were never 100 per cent. This year it was lower than in the previous coupla years.
So what I do we expect us to do is have conversations some of those customers about yes. We worked together over the last six to nine months, giving you a temporary relief when the G. R. I that needs to kind of come back to a more fulltime level. So it is more of the enforcement of the existing G. R. I at full level versus getting.
[noise] out of sequence or out of cycle all customers. They do deserve some reliability and planning predictability and we don't do two or three G. R is a year.
No that that that makes sense.
So I guess.
Other opportunities you'll be asked the soils and then you know the degree to which.
You know negotiations with customers on normal course of business in the back.
Half a half of the year. So I mean do you feel like that when you put all that together that could have a positive impact on pricing sequentially in the third quarter.
Absolutely and again I think the point that that a mate in my opening remarks about guidance folk usually.
Some of the but we just saw in the last few days he's not fully built in so I'm off that pricing disciplined positive outcome may not be fully baked baked and I do want to get us back on track to a point, where we are and you've been fairly vocal about is rightfully. So wherever you are more consistent in terms of.
Maybe last last question and I'll I'll hand, it over.
You know could you maybe talk about peak season, what are your customers telling you about their plans for the back half of the year. Maybe are you beginning to see if you can.
Strip away the the impact from yellow or it may be hard.
Beginning to see some signs that there's a little bit of improvement in underlying demand or is it just.
To make that call.
It's probably too early to make that call. There there's quite a few of our customers, who said like yesterday I've seen their order books Ah getting fuller, but there's also some customers to be very blind about it. They say, we don't see a pic this year, there's no indication of that coming in my mind, we need to focus on what many people will call.
Self-help like let's control it'd be control, which is working with our costumers to earn more of their business I oftentimes talked about a slice of pie game and the size of the pie is not growing if there is more of an uplifting and in the third and fourth quarter of that will be additional benefit on top of what you're looking for and what the guiding tour.
It's.
Okay. Thank you Tom I appreciate that.
Thanks Jack.
I don't know if she'll go to Scott Group with Wolf Research. Please go ahead.
Hey, Thanks, good morning, guys boring.
Boring Scott.
Can you share what what what is the tonnage you're assuming in the third quarter guidance. You said, a few times, you're not assuming everything you've gotten in the last week. So what what is the actual China jurors swimming and the guy.
Yeah. It's got so we we are assuming that.
Would be positive in the third quarter. So we're expecting that to be you know your every year in north of you know the more north than five per cent for Q3.
Okay. So it was time it so it sounds like you are assuming that you keep it the rest of the way cause trying to drift downsizing.
In July .
Yeah, we liked August and September it to be a bit better [noise] you know look at it you know from a sequential kind of July August September standpoint, So that's right.
Okay, and then maybe just you know there's been a lot of mixed changes can you just as as the tonnage as spike maybe just talk about what's going on with Labour shipment, what's going on with length of Hobbes you guys had an impact on on some of the revenue numbers. So any any color on what's.
Happening as as the tonnage levels are spiking.
Yeah, So Scott wait for shipment has been going up again.
We always like it when when the number starts with an eight so 800 pounds is what we have seen most recently it typically tends to be what are what has been the traditional kind of true al Fayed that goes from one airport to another airport tends to be lower waged in door to door shipments and do you have had quite a bit of success over the last several.
Without three P. L. She a person does tend to be door to door shipments. So dog did all shipments growing up tends to actually help the weight per shipment and that's what we've been seeing the second thing. That's also important as as we are getting getting more and more high value freight less of the lower weight ecommerce. We also tend to get.
Oh, how 'bout lenthall.
Length of Hall.
B B, we are getting longer again, and that's what the ultimately based on a operating model with teen drivers often times going onto long distances.
Right and ultimately what I think I'm trying to get at is what's what's.
What's the margin differential between like that but the legacy airport to airport and maybe somebody that's a more traditional L. T L type free.
It's it's it's actually mostly differentiated Ah Scott by customer group, so the but you're right airport. The airport on average is still more profitable and door to door.
We do have some customer groups, though where we like you mentioned in a great example from a events divisions off some of our customers Airlines are a great example, west so I won't be would actually goes to an ultimate destination.
And we actually have a benefit from that too but airport. The airport still is that you will in terms of profitability, but we all walking up the door to door business also.
Okay. So do you do you think that cause I assume what you're winning right now is sort of the door to door L. T. L type phrase is that so there there there could be some degree of the margin mix headwind as we can.
Take some of the song is that is that right.
That's what makes perspective, that's fair, but again, we always said with go forward in a high volume afraid focused I bet.
Rising that's appropriate that'd be that we expect when you put fuel aside possibly beyond negatively that'd be seat margin expansion in R. L. T. L business, you're correct from a mixed perspective doctored all makes it harder and still we expect to see margin expansion. Once you put fuel aside so yes did that number should be going on.
Okay. Thank you for the time guys. Appreciate it okay. Thanks Scott.
Oh, we'll go next to so many majors wish with US Squander. Please go ahead.
Tom you're certainly not alone in having this year, a turnout and transportation different than maybe you expected in January or February , but I do think it's easier for us to.
Understand some of those drivers and some of the businesses that have a lot more public cops and be able to compare you know your businesses, you know unique and and the mix in the airport. The airport focus in your largest business I'm. Just curious if you could back up to to kind of how you felt about the year in January and February and how.
Do you feel about it now the the one or two most meaningful <unk>.
Drivers of that change in outlook, and and and maybe just let us know how how confident you are but that those levers are kind of close to a bottom or even getting a little better and if there are any pieces of that that may actually have some risk of getting worse or just more uncertain as we look for two or three or four quarters.
You.
Yeah Bascom good morning, and let me just kind of walk you through over time, what we saw in college some of that remain consistent how some of you changed the first thing I would say as we were planning 420, 20th we we clearly were after school that I think a lot of people were on some.
If there are skeptics, though which said.
Somehow inventory there'll be depleted Ah Ah by the end of the second quarter two levels were normal shipment sizes and shipment volumes should start happening again in the second half of 2020th we that was kind of a predominant school of thought going into 20 screens. We if you ask me kind of.
As we went into the second quarter and now certain whoever sitting today I think that was all that was too optimistic I think those are voices.
Voices that said early on I think basketball I think you've ever one of them that that this are afraid to recession could be link or lingering on longer I think turned out to be more right. So that's one I think expectation and to some extent hope that'd be shared that that second half, which kind of starts.
This uptick in that disappointed we are looking at too many screens V as a year.
Again, we have to win a slice of pie game with our customers because we are not banking on the size of the pie growing in the second half. The second thing is is that we probably were expecting what we saw on the L. T outside with the fourth quarter last year being difficult the first floor, they should've being difficult and a second <unk>.
Waldorf starting kind of see some uptick with our direct small medium sized business customer selling in addition to working with our core business partners, what fever somewhat unpleasantly surprised by it I also mentioned any opening comments the animal drayage business, which really really has to be rock solid dealt with it.
Margin performer, she is similar but slightly time delayed absolute bottom in the second quarter, specifically in the months, you'll find me in April and May.
We didn't expect it to come down dead Heart Diaz Sorial fees, we talked about the new storage visa at some point with a supply chains being unclothed would be normalizing, but the basic Paul revenue came down harder than would be expected. So that was another lesson learned for us we knew truckload in brokerage we'd be challenged isn't afraid recession.
The new mall Drayage business, we probably saw more consistent in our forecasts and it ended up being specifically in the second quarter. So now looking forward I do believe the bottom is behind us.
I do believe when the L T outside not only because of the yellow impact, but certainly also bolstered by the yellow impact on the L. T outside there's momentum building, a quantity and quality of the freight.
That will forward program is working on the in the mall Drage side I do believe we also with a slight time delays are working all the way out of that bottom truckload and broke which I think is gonna be still sluggish over the next several months. So that's why I'm, saying this year, probably will go into the books.
That's kind of a tough frayed recession year, but I do believe in every single one of our business lines, we have seen the bottom and the momentum on the L. T. L side is perhaps the most pronounced of all of them. We don't talk as much about the final mile business, but it's worthwhile, noting the deliberate installation of high value apply.
I insist that team actually has held up extremely well by winning additional markets with our customers and also by winning additional logos, meaning serving costumers that'd be didn't used to serve a year or two ago. So each business line I think we have seen the bottom the momentum and the L. T opens is probably the strongest final mile.
It's pretty solid I got coming.
Coming along truckload brokerage may be the one that's most challenged and I think and I'm old rage, the third quarter will be better than the second quarter.
I really appreciate that comprehensive response time. Thank you.
For additional questions or comments press one zero. Please if there's anyone else in these question or comment.
Okay, and we have Ah now Stephanie more from Jeffrey So go ahead. Please.
Hi, good morning, Thank you.
Stephanie.
And maybe get that.
<unk>. Prior question just thought I had everything clear so just for you yesterday to guidance and I. Appreciate all the other color and authenticate. So does your guidance and just to be clear normal seasonality, but it does not I've been kind of a pet you have <unk> and then the yellow diversion volume.
Yeah, it's Tiffany it doesn't seem yesterday seasonality mm.
Not necessarily you know the benefit if the yellow, but it didn't seem as Tom mentioned, you know within our control intended to pipelines that we have you know that.
We've won and where it seems that we're doing things you know and and you know what that are in control and so that's what we're we're baking.
You know at the time that we prepared to forecast yellow really hadn't been settled at that point in time. So so it's really seasonality plus the generic controlling what we see in our pipeline.
That'd be a little weak.
Yeah. So a lot of the consumer good important businesses, so think of international forwarders.
She's still significantly down I mean made me are down with them like go back to the first quarter in some cases.
For us to be down in your over your tenants in January and February by 15%. Some of the important driven business at the time was down by 20, 25%. When you talk to those same international forward as today, they still see very very sluggish imports and also very depressed right levels are coming specifically from Asia.
College shipments of consequence, and we do have high end consumer goods as part of it and that's still depressed when you talk about more of the industrial good space automotive.
Events medical we see very strong demand, we see our customers being kind of focused on initiatives in those spaces. That's that's working so I would say high end consumer goods more sluggish Ah more.
Kind of robust resilience industrial goods, we see a very very good Ah demand a pattern and frankly also demand increase.
Okay now that that's helpful and then any more and and Ah housekeeping question and and I apologize if I missed any set up but I think the the last part of your kind of get some color on you know revenue per ton per mile <unk> Airport. The airport and then and then door to door did you give those numbers for this quarter.
So we actually we did not give those numbers, but revenue per ton-mile.
It's a metric we followed closely we actually we did not publish it would be most likely Stephanie will be doing is because we're only four weeks away from being two months into this border India mid quarter update will give you. The same metrics that'd be gave last time, we were very focused on them. Yeah. It's definitely I don't have it.
In front of me you didn't buy a month, but I can say you know read any part 10 per line on my like feel for the corner is that when 1.5 per cent.
And that got it done big fans of that metric because that's what you get paid for moving Ah Asia and the same amount of distance fuel is not part of that and if that if that number goes up that tells us that either the phrase makes or our ability to prices.
Appropriately or both is moving in the right direction.
Right right, Yeah that that makes sense and then maybe lastly for me just talk a little bit about your appetite for M&A you know maybe in this environment there might be an opportunity to you know maybe the opportunistic with some deals that what are your thoughts regarding yeah ongoing M&A. Thank you.
Yeah, Almond as always part of our capital allocation and part of our strategy. We always talk about if you want to grow in double digits, it's a combination of organic and M&A.
Good example is I'm old rage business, where we all always build out of geographically and kind of thing and industry wise all footprint. We haven't had a intermodal dredge acquisition. This year the year's not over yet and we always focus on finding out finding space is very it gets drawn.
Or so I would expect us to have a good chance of seeing some something there on D. L. T. L side with Landau expressed we already had a great addition to our team earlier this year, but M&A is a big part of who we are and what we do and we continue pursuing that.
Stephanie.
I will go back to Jack Atkins was Stephen skiing go ahead. Please.
Just from the.
But you know when we go back to the comment Tom that you made on the.
Kind of maybe put some framework around that you know what portion of it.
This year and you know what's a reasonable expectation you know just kind of look forward over the next maybe quarter. So.
Yeah. So.
Typically our expectation would be that G. R I capture rates would.
Right. That's what we have done historically, we've done less of that in 21, and 22 and we've done much more of that this year. So if you take 75% guys kind of a good middle ground and did that idea of a 25% being mitigated for growth purposes. This year, we definitely were way below that 75% in a 2021.
Oh 22, 82 boom scenario, we were at higher than that now over the next several weeks and months. We do expect 90 wanting our chief commercial officer, Melissa Fieser R. C. M. P O salesman their teams to work with our customers on looking back up at the mitigation that we gave them over the last six months and to some extent.
Playing catch up so I'd like to get closer that's not for the average of the year, but closes at typical expectation that 75% is captured and the rest is mitigated for the right reasons.
Okay got it got it and then I guess, maybe just going back to the to the tonnage comment because I think that.
You know, it's it's a little bit confusing for folks you know in terms of if you. If you think about the expectation for the.
Third quarter.
July was down five but you had the the challenging.
Just put the calendar you know if you if you.
Think about the back half of the corner of back to back too much of the corner.
I I guess help us square the the revenue.
Guidance, which is I have to go back and look down pretty significantly with with the the idea of it.
Tonnage in your largest business is going to be up 5% I mean, how to.
It would it would seem like you have tons.
[noise] wouldn't be down as much as as what your guiding too yeah.
Yeah, Let me start and then Rebecca can correct me, but the one thing that that we have not talked much about and I frankly prefer looking I think apple like apples to apples and not letting fuel drive to discussion you know and fuel we always go with industry forecasts.
These always tend to take the kind of the one or two most respected energy Institute kind of forecasts in it and that's why we built in the forecast for the third quarter is tremendously low. So it's actually I think around 350, or it's always a bad roads built that's level of fuel right. Now is right now is he.
Higher than that if you looked at the gas pump over the last few days personally that number has been.
Pulling up again, so part of what you see on the revenue front for Q3 is is building in what he or she Institute said, which is at a very low fuel number.
Okay got it.
And then I I I guess, maybe thinking about the margin impact from the incremental tonnage that you're seeing you know I get the make shift between you know.
[noise] business versus you know a door to door business and as.
You're thinking about layering on.
Incremental tonnage that's heavier weight for shipment.
You know on an existing cost structure, the incremental margins to your point it should be higher than the existing airport the existing expedited L. T. I'll Mark that you saw the second quarter right. So I mean in theory is your caffeine and circumvent all time that that should drive margin expansion sequentially if it.
Continues is that fair.
Absolutely correct capacity utilization is a big deal and that number going up definitely should help us with margin expansion. Okay. Okay. That's all I needed. Thanks again for the time.
Thanks Jack.
No she'll go to Andrew Cox with Stifel Go ahead. Please.
Hey, good morning, Tom Rebecca Andrew on for Bruce.
Morning, Andrew.
Warning, Hey, I, just wanted to kind of check in on industry service levels. We've been hearing reports that Mr pick ups, they're starting to accelerate across the industry given the kind of flood of tonnage that has has hit the market and just kind of wanted to know if you guys are seeing that and if so what are the things that you guys are focused on to to balance the opportunity.
And and maintaining networks. So at at the at the same time and making sure that you keep the progress you've made of the last few years.
Yeah, and gradually got it right.
[noise] very topical question and and one that we in every single Cuba to be our quarterly business, where you with with our customers are focused on the first thing I should say this is a big Testament to.
Lindsey team Osborne, Chris ruble, our operations leadership and that their entire teams. We do have by any standard the best service in D. L. T L. The industry in North America.
We had and I think we put this in a release we had in the 99 per cent on time with level and we have a very very few kind of exceptions and exemptions. So these are real numbers, we are not perfect and we strive to get closer to perfection every single day, and you'll never get there, but we have operating principles that'd be billed over.
For decades, and be honed and sharpened that are really are built around handling very very sensitive freight and basically having airline type schedules in mind. So we barely.
Pick ups and be again, we have a claim ratio a 0.0, sorry off 0.1%, so, but we do here and do a lot of what you're talking about and frankly. This is a great conversation for us to have with our customers when they rely on other carriers and days to see some of the symptoms that you were mentioning we.
Actually love, helping our customers when they need for those types of shipments absolute certainty or closest to absolute certainty. They have the best place to go to that so it is something that's more and more of a topic April probably intensify and frankly, we are on the right side of that topic by being.
Great choice.
Cause I'm hearing correctly overtime, you expect kind of some freak will eventually find a home some will end up finding the best service telling me that that is sent to you.
That's it that's all aspiration and that's what we were competing for every single day.
Great that makes sense, if I can if I can follow up I didn't want to have I know, we kind of briefly touched on final mile earlier, but I just wanted to talk about pricing and the final mile business <unk> one of the larger peers can I have successfully taken some pricing actions over the last six to nine months I just wanted to see your.
Your opinion of the the trains and pricing at that final mile.
[noise], yeah always going to be competitive lots of rebates going on B F to reorder markets with our existing customers and prices always a key topic, having said that we tend to do and this is what unites us across all of our forward business units, we tend to focus on service excellent we tend to focus on.
Actually I can't as we said shipments of consequence, that's true for final mile. Two this is delivering installation in most cases of high value appliances. So we do try to be extremely cost competitive, but we tend to lean on service and the reason why I'll file a mile margins Ah.
<unk> isn't in the high single digits and not in the low single digits is exactly that value creation and that ability to capture a good part and earn part of that value.
By being the best in service as a reminder, again in 2021, one of the most challenging and in a good way tough business partners to home depot.
Does their appliance carrier of the year and this was definitely earned by the exceptional service that I'll find them all team is providing.
Okay, Great John Rebecca Thanks, so much of the time.
Thanks, Andrew.
And then she'll go to Christopher Coon with the Benchmark Company go ahead. Please.
Hi, Chris.
Buy them guidance.
Yeah. So it it doesn't you know it it is what it includes right. It is you know just to kind of go back right to think about where we are at the beginning of this year. You know we acquired land air. So we got you know five new terminals, we opened up our Chicago terminal and key one of this year and go.
You know we've been winning you know new business three days terminals, and so kind of getting into new markets and so I think that you know an important point that I Wanna you know when it may cause we're thinking through our pipeline and some of the customer wins and reiterate you know tons of time. They said about you know kind of winning that bigger slice of the pie.
How we think about the forecast for Q3.
Okay, Great and then just saw the intermodal time I mean, I think you mentioned that you feel like that's the bottom and two Q and just the reasons why that might be are you expecting import activity to pick up or at the soil charges to be less of a drag.
Yeah. So again, if you look at the first half.
Rage business still in the first half was a double digit margin business and I'll finish this will be a tall order for this year for the full year to be a double digit margin is based on the.
We do again and back to Rebecca is point about pipeline, we do see an increasing pipeline in the in the mortgage business. So imports I'll still sluggish, but ER that team is winning more against slice of pie, perhaps more than the size of pie.
Where have you been.
A share of wallet, but what I see in the activity to pipeline and using typical close rates makes me more excited about it and I'm old wage business in Q3 compared to Q too. So it is commercial activity by our team Mike burned out on his colleagues specific.
Lee are driving more revenue upside in Q3 Dummies argue too I do believe he has to be you have seen the bottom and the bottoms behind us.
Okay. Okay.
Okay perfect. Thanks, guys. Thanks.
Thanks, Chris.
Yeah, we have no additional questions and Q at this time.
Okay, well, thank you John and thank you to all of you styling and for the call.
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