Q3 2024 J B Hunt Transport Services Inc Earnings Call

Hello, and welcome to JB Hunt's third quarter, 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad.

Unknown Executive: All lines have been placed on mute to prevent any background noise.

Unknown Executive: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star one on your telephone keypad.

Brad Delco: I would now like to turn the conference over to Mr. Brad Delco, Senior Vice President of Finance. You may begin.

Speaker Change: I would now like to turn the conference over to Mr. Brad Delco, Senior Vice President of Finance. You may begin.

Brad Delco: Good afternoon. Before I introduce the speakers, I would like to provide some disclosures regarding forward-looking statements. This call may contain forward-looking statements. Within the meaning of the Private Securities Litigation Reform Act of 1995, words such as expects, anticipates, intends, estimates, or similar expressions are attended to identify these forward-looking statements. These statements are based on J.B. Hunt's current plans and expectations involve risk and uncertainties that could cause future activities and results to be materially different from those set forth in the forward-looking statements. For more information regarding risk factors, please refer to J.B. Hunt's Annual Report on Form 10-K and other reports and filings with the Securities Exchange Commission.

Brad Delco: Good afternoon. Before I introduce the speakers, I would like to provide some disclosures regarding forward-looking statements.

Brad Delco: This call may contain forward-looking statements within the meaning of the private security litigation reform act of 1995. Words such as expects, anticipates, intends, estimates, or similar expressions, are tended to identify these forward-looking statements.

Brad Delco: These statements are based on Jamie Hunt's current plans and expectations of involved risk and uncertainties that could cause future activities and results to be materially different from those set forth in the four-looking statements.

Brad Delco: For more information regarding risk factors, please refer to J.B. Hunt's Annual Report on Form 10K and other reports and violins with the Securities of Exchange Commission.

Brad Delco: Now, I would like to introduce the speakers on today's call. This afternoon, I am joined by our President and CEO, Shelley Simpson, our CFO, John Pulu, Spencer Frazier, Executive Vice President of Sales and Marketing, our COO and President of Contract Services, Nick Hobbs, Darren Field, President of Intermodal, and Brad Hicks, President of Highway Services and Executive Vice President of People.

Speaker Change: Now, we'd like to introduce speakers on today's call. This afternoon, I'm joined by our President and CEO, Shelley Simpson, our CFO John Kuhlow.

Speaker Change: and Spencer Frazier, Executive Vice President of Sales and Marketing.

Speaker Change: Our CEO and President of Contract Services, Nick Hobbs.

Speaker Change: Darren Field, President of Intermodel, and Brad Hicks, President of Highway Services, an executive vice president of people.

Shelley Simpson: I'd now like to turn the call over to our CEO, Michelle Simpson, for some opening comments. Shelley?

Speaker Change: I now I've turned the call over to our CEO, Miss Shelley Simpson, for some opening comments. Shelley?

Shelley Simpson: Thank you, Brad, and good afternoon to everyone on the call. First, our thoughts are with those impacted by the recent hurricanes in the Southeast and Florida. Many of our employees were impacted, and I'm proud of how our company has responded to support them. And the recovery relief efforts in these communities. The rebuilding will take time, and J.B. Hunt will continue to support these efforts.

Shelley Simpson: Thank you, Brad, and good afternoon to everyone on the call. First, are thought to with those impacted by the recent hurricanes in the South East and Florida. Many of our employees were impacted, and I'm proud of how our companies responded to support them, and the recovery and relief efforts in these communities.

Shelley Simpson: Turning to the quarter, we continue to navigate a challenging freight environment while remaining focused on what we can control around our costs, providing exceptional service to our customers, preparing for their future transportation needs, and maintaining our focus on safety. As discussed last quarter, we have seen a return to more normal seasonal demand patterns, as evidence across our businesses in the third quarter, which the team will highlight in their remarks. I remain confident in our strategy as we execute on our priorities, which is a reminder R1 to deliver exceptional value to our customers through operational excellence.

Shelley Simpson: The rebuilding will take time and J.V. help will continue to support these efforts.

Shelley Simpson: Turning to the quarter, we continue to navigate a challenging freight environment while remaining focus on what we can control around our costs, providing exceptional service to our customers, preparing for their future transportation needs, and maintaining our focus on safety.

Shelley Simpson: As this guest last quarter, we have seen a return to more normal seasonal demand pattern, as evidence across our businesses in the third quarter, which became a highlight in their remarks.

Shelley Simpson: Our main confident in our strategy is we execute on our priorities, which is a reminder of one to deliver exceptional value to our customers through operational excellence.

Shelley Simpson: To scale our long-term investments in our company foundations, which are people, technology, and capacity. And three, drive long-term value and returns for our shareholders. Our focus remains on how we can deliver value for our customers with excellent service while looking for ways to drive waste out of their supply chain. We do have some more positive sides in the business to support our work in this area, particularly around our volume trends, customer awards, and third-party surveys that highlight J.B. Hunt's performance. I see more evidence today that we can scale our investments in our people, technology, and capacity to capture additional market share at better returns as the phrase cycle and selection occurs.

Shelley Simpson: to scale our long-term investments in our company foundations, which are people, technology, and capacity.

Shelley Simpson: and Dree drive long-term value in return for our shareholders.

Shelley Simpson: Our focus remains on how it can deliver value for our customers with excellent service while looking for ways to drive waste out of their supply chain.

Shelley Simpson: We do have some more positive sides in the business to support our work in this area, particularly around our volume trends, customer awards, and third-party surveys that highlight JBHM's performance.

Shelley Simpson: and C. More evidence today that we can scale our investments in our people, technology and capacity.

Shelley Simpson: to capture additional market share at better return as the freight cycle in flexion occurs. Our remaining confident in our strategy and maintain our focus on generating appropriate returns on capital to deliver values for our shareholders.

Shelley Simpson: I remain confident in our strategy and maintain our focus on generating appropriate returns on capital to deliver value for our shareholders.

Shelley Simpson: as we prepare for an eventual turn in the freight market, we have focused our organization on being operationally Iceland and delivering unmatched value for our customers. By controlling what we can right now, we position ourselves to grow with our customers, knowing that these key service components are ingrained in our people. At the same time, we know we need to repair our margins to generate acceptable returns to reinvest in the business, and our customers are and should be aware of that as well. We take great pride in providing high quality service in all that we do, which is a testament to the dedication that our people have to serve customers well.

Shelley Simpson: As we prepare for an eventual turn into freight market, we have focused our organization on being operationally excellent and delivering unmatched values for our customers.

Shelley Simpson: By controlling what we can right now, we position ourselves to grow with our customers, knowing that these key service components are ingrained in our people.

Shelley Simpson: At the same time, we know we need to repair our margins to generate acceptable returns to reinvest in the business and our customers are and should be aware of that as well.

Shelley Simpson: We take great pride in providing high quality service in all that we do, which is a testament to the dedication that our people have to serve customers well.

Shelley Simpson: Creating value for our customers is core to what we do and helps build long-term strategic relationships. Customer value delivery for CBD is a process that we have used for a while in our dedicated business, and we continue to roll this out across our entire organization.

Shelley Simpson: Creating value for our customers is core to what we do and helps build long-term strategic relationships.

Shelley Simpson: Cross-morty delivery for CVD is a process that we have used for a while in our dedicated business, and we continue to roll this out across our entire organization.

Shelley Simpson: Part of the value we create is through our safety culture and performance, which is a strength of our business, and we have continued to improve upon last year's record performance, as we will discuss. The team will provide more details on each of our businesses, but in summary, I continue to have strong conviction around our strategy and the growth potential of our company. We have and we will continue to improve our ability to deliver out performance for our people, our customers, and our shareholders. Our confidence comes from our people, our experience, our complimentary suite of services, our scale, our strategic investments, and our financial strengths.

Shelley Simpson: Part of the value we create is through our safety culture and performance, which is a strength of our business. We have continued to improve upon last year's record performance, as Nate will discuss.

Shelley Simpson: The team will provide more details on each of our businesses, but in summary, I continue to have strong conditions around our strategy and the growth potential of our company. We have, and we will continue to prove our ability to deliver out performance for our people, our customers, and our shareholders.

Shelley Simpson: Our confidence comes from our people, our experience, our complimentary suite of services, our scale, our strategic investments, and our financial strength.

Shelley Simpson: All of these uniquely position us for the future as we pursue our vision to create the most efficient transportation network in North America.

Shelley Simpson: All of these unique position, that's for this future, as we pursue our vision to create the most efficient transportation network in North America. With that, I'd like to turn the call over to our CFO, John Kuhlow, John.

John Kula: With that, I'd like to turn the call over to our CFO, John Kula. John.

John Kula: Thank you, Shelley, and good afternoon, everyone. Similar to recent quarters, my comments will cover a high-level review of the quarter and an update on our cost control efforts and an update on our capital allocation plan for the remainder of 2024. As a general overview, while we have seen some slight moderation and inflationary cost pressures, the inflationary rate environment continues to pressure our overall margin performance across segments.

John Kuhlow: Thank you, Shelley, and good afternoon everyone, similar to recent quarters, my comments will cover a high-level review of the quarter and update on our cost control efforts and an update on our capital allocation plan for the remainder of 2024.

John Kuhlow: As a general overview, when we have seen some slight moderation in inflationary cost pressures, the inflationary rate environment continues to pressure our overall margin performance across the segments.

John Kula: Let me start with a quick review of the third quarter. On a consolidated GAAP basis compared to the prior year period, revenue declined 3%, offering income declined 7%, and diluted earnings per share decreased 17%. We saw our volumes on a sequential basis of performance normal seasonality, particularly in JVI, but also in our highway services business, which includes both ICS and JVT. That said, overall yield pressure in these areas continues to put pressure on margins and our overall profitability. We continue to focus on productivity, efficiency, and discretionary cost areas to enhance our performance across all of our businesses.

John Kuhlow: Let me start with a quad review of the third quarter.

John Kuhlow: On a consolidated gap basis compared to the prior year period, revenue decline 3%, operating income decline 7%, and deluded earnings per share decrease 17%.

John Kuhlow: We saw our volumes on this quenchable basis of performing normal seasonality, particularly in JBI, but also in our highway services business.

John Kuhlow: which includes both ICS and JVT.

John Kuhlow: That said, overall yield pressure in these areas continues to put pressure on margins and our overall profitability.

John Kuhlow: We continue to focus on productivity, efficiency, and discretionary cost areas to enhance our performance across all of our businesses.

John Kula: We believe this is evidence and supported by what we believe to be industry-leading margin and return performances in our two largest segments, both intermodal and dedicated. Going forward for the full year, we expect our tax rate to be approximately 24.5%, which should imply a decent step down in our fourth quarter tax rate compared to the prior three quarters.

John Kuhlow: We believe this is evidence and supported by what we believe to be industry leading margin and return performances in our two largest segments of the intermodal and dedicated.

Speaker Change: Going forward for the full year, we expect our tax rate to be approximately 24.5%. We should imply a decent step down in our fourth quarter tax rate compared to the prior three quarters.

John Kula: to update on our cost control efforts. We have made significant improvements across the business to right size or cost structure, mostly evidenced in our highway services businesses as both JBT and ICS improved their operating margins compared to prior year period. We remain thoughtful in our approach to managing our costs, focusing on controlling what we can in the near term without jeopardizing our ability to support future growth and our aggregate burning's power potential. Our focus on cost has grown broad-based and covers the entire span of our company.

Speaker Change: To update on our cost control efforts, we have made significant improvements across the business to right-size our cost structure. Mostly evidence in our highway services businesses, both JBT and ICS, improved their operating margins, compared to prior year period.

Speaker Change: We remain thoughtful in our approach to managing our costs, focusing on controlling what we can in the near term, without jeopardizing our ability to support future growth and our aggregate burnings power potential.

Speaker Change: Our focus on cost has been broad-based and covers the entire span of our company.

John Kula: Rapping up with an update to our 2024 capital plan, we now expect our net capital expenditures for the year to be approximately 625 million, which is below our previously revised expectation of 650 to 700 million. Our update from the prior quarter largely reflects the sale of all the chassis that we acquired from Walmart, which will not fit the containers we purchased following our retrofitting of those assets. The sale reduces at that purchase price of those assets and gives us even greater confidence in the strategic value of that transaction for our customers and, importantly, our shareholders.

Speaker Change: Grabbing up with an update to our 2024 Capitol Plan.

Speaker Change: We now expect our net capital expenditures for the year to be approximately 625 million, which is below our previously revised expectation of 650 to 700 million.

Speaker Change: Our update from the prior quarter largely reflects the sale of all the chasties that we acquire from Walmart, which will not fit the containers we purchase following our rents you're fitting of those assets.

Speaker Change: The sale reduces the debt purchase price of those assets and gives us even greater confidence in the strategic value of that transaction for our customers and importantly our shareholders.

John Kula: Our balance sheet remains strong, and during the quarter we repurchase approximately 200 million of with limited near term capital needs with regards to equipment, our current leverage position, market dynamics, and our view on where we are in the cycle. We continue to believe a disciplined approach to cheery purchases is a prudent use of capital at this time.

Speaker Change: Our balance sheet remains strong and during the quarter we repurchase approximately 200 million of stock.

Speaker Change: with limited-neared term capital needs with regards to equipment. Our current leverage position, market dynamics, and our view on where we are in the cycle. We continue to believe a disciplined approach to share repurchases as a proven use of capital at this time.

Spencer Frazier: This concludes my remarks, and I'll turn it over to Spencer. Thank you, John, and good afternoon.

Speaker Change: This concludes my remarks, and I'll turn it over to Spencer.

Spencer Frazier: I'll provide an update on the market, our commercial strategy, and some feedback we are hearing from our customers. In the third quarter, we saw a continuation of more normal seasonal demand patterns, particularly across our intermodal and highway segments. In JBT and ICS, we experienced modestly improving volume trends and some pockets of tightness across the country, which would or should be expected around the end and quarter end. While in general capacity remains readily available in the market on the highway side of the business, some customers are beginning to use more mini-bids to fill some out-of-cycle capacity needs.

Spencer Frazier: Thank you John and good afternoon. I'll provide an update on the market, our commercial strategy and some feedback we are hearing from our customers.

Spencer Frazier: In the third quarter, we saw a continuation of more normal seasonal demand patterns, particularly across our intermodal and highway segments.

Spencer Frazier: In JBT and ICS, we experienced modestly improving volume trends and some pockets of tightness across the country, which would or should be expected around the month and the quarter end.

Speaker Change: Well, in general, capacity remains readily available in the market on the highway side of the business.

Speaker Change: Some customers are beginning to be more many bits to fill some out of cycle capacity needs.

Spencer Frazier: Additionally, there is interest in having more collaborative, long-term planning discussions around business strategies. Historically, both of these engagements have been indicative that supply and demand are becoming more balanced. When we have conversations with customers around their transportation needs, we highlight the value or school of service and present and focus on excellence to ensure all of our customer needs are being met. Our goal is to achieve the top ranking on each of our customers' service provider scorecards. With some customers, we've achieved our goal; while with others, we have some opportunities to improve. Through our mode of neutral sales strategy, we work with our customers to develop the optimal solution for their needs, with our people leveraging our full suite of services and technology to create value.

Speaker Change: Additionally, there is interest in having more collaborative, long-term planning discussions around business strategies.

Speaker Change: Historically, both of these engagements have been indicative that supply and demand are becoming more in balance.

Speaker Change: When we have conversations with customers around their transportation needs, we highlight the value or school of service can present and focus on excellence to ensure all of our customer needs are being met.

Speaker Change: Our goal is to achieve the top ranking on each of our customers' service provider scorecards.

Speaker Change: With some customers we achieve our goal, well with others we have some opportunities to improve.

Speaker Change: Through our vote in true state of strategy, we work with our customers to develop an optimal solution for their needs.

Speaker Change: with our people, leveraging our full suite of services and technology to create value.

Spencer Frazier: We believe this is a clear differentiator for JBT. Our focus is on providing the best customer experience with every interaction we have while living up to our say-do culture. We know that excellent service the first time leads to opportunities for future growth across our customer supply chain, and we are committed to achieving both.

Speaker Change: We believe this is a clear differentiator for J.V.H. in the market.

Speaker Change: Our focus is on providing the best customer experience with every interaction we have while living up to our say-do culture.

Speaker Change: We know that excellent service first time leads to opportunities for future growth across our customer supply chain and we are committed to achieving both.

Spencer Frazier: All closest and feedback we are hearing from customers. First, we are beginning to execute the peak season plans we developed with our customers. While some volumes are pulled forward into Q3, we also incurred more peak season startup costs to pre-position resources to serve our customers' peak demand in Q4. Secondly, each customer, regardless of size and industry, is unique. Within our diverse portfolio, our customers are somewhat mixed on the outlook for demand for their products and what their transportation needs will look like in the near the medium. While that is their view on the market, we believe we are in a strong position to take share based on the value we can create for our customers with our people, technology, and, most importantly, our consistent service levels.

Speaker Change: All close with some feedback we're hearing from customers.

Speaker Change: First, we are beginning to execute the peak season plans we developed with our customers.

Speaker Change: While some volumes are pulled forward into Q3, we also incurred more peak season start-up costs to pre-position resources to serve our customers' peak demand in Q4.

Speaker Change: Secondly, each customer, regardless of size and industry as you need.

Speaker Change: Within our diverse portfolio, our customers are somewhat mixed on the outlooks for demand for their products and what their transportation needs will look like in the near-the-medium term.

Speaker Change: Well, that is our view on the market. We believe we are in a strong position to take share based on the value we can create for our customers with our people, technology and most importantly, our consistent service levels.

Spencer Frazier: Lastly, as we sit here today, capacity is not a top concern for customers, but they are aware that the current market dynamics will shift, though the timing and rate of change remains uncertain. Customers are also aware that there has been significant cost inflation across our industry, and margins are under pressure. With these knowns, we will continue to work with them to help drive efficiencies across their supply chain while balancing our need to repair our margins. We remain committed to investing in our business and growing with our customers over the long term by delivering consistent value at the high service levels they've come to expect from JB Hunt.

Speaker Change: Lastly, as we sit here today, capacity is not a top concern for customers, but they are aware that current market dynamics will shift, though the time and rate of change remains uncertain.

Speaker Change: Customers are also aware that there has been significant cost inflation across our industry and margins are under pressure.

Speaker Change: With these loans, we will continue to work with them to help drive efficiencies across their supply chain while balancing our need to repair our margins.

Speaker Change: We were meant to admit that investing in our business and growing with our customers over the long-term by delivering consistent value at the high service levels they've come to expect from JB Hunt.

Nick Hobbs: That concludes my remarks, so I'd now like to turn the call over to Nick. Thanks, Spencer, and good afternoon.

Speaker Change: That concludes my remarks, so I'd now like to turn the call over to Nick.

Nick Hobbs: I'll provide an update on our dedicated and final mile businesses and give an update on our areas of focus across our operations. I'll start with dedicated. Our dedicated business model has focused on providing professional outsourced private police solutions to our customers. Performed well during the quarter. We believe the resiliency and performance in this segment stands out in the market and supports our differentiated model and go to market strategy. While we have discussed some pressure on the police side due to customer downsizing, bankruptcies, and as a result of remaining discipline on our underwriting return hurdles, we believe the market remains stable with ample opportunities for future growth.

Nick Hobbs: Thanks, Spencer and good afternoon. I'll provide an update on our dedicated and final model businesses and given that update on our areas of focus across our operations.

Nick Hobbs: I'll start with dedicated business model. Let's focus on providing professional outsourced, private police solutions to our customers performed well during the quarter. We believe the resiliency and performance in this segment stands out in the market and supports our differentiated model and go to market strategy.

Nick Hobbs: Well, we have discussed some pressure on the police sides due to customer downsizing bankruptcies. And as a result of remaining discipline on our underwriting return hurdles, we believe the market remains stable with ample opportunities for future growth.

Nick Hobbs: During the third quarter, we saw 258 trucks of new deals, with some we expected to sign in Q3 spilling over into Q4 due to timing. Our sales pipeline remains strong, and our team has worked hard to backfill most of those truck losses we have experienced this year. We have started up a significant number of customer locations and trucks over the past two quarters, which has had an impact on a margin that's mature business has been replaced by newer, less mature business. That said, we remain disciplined on new customer wins in our confidence that this business would generate both appropriate margins and, more importantly, returns on capital once they've ran to maturity.

Speaker Change: During the third quarter we sold 258 trucks of new deals with some we expected a sign in Q3, spilling over into Q4 due to timing.

Speaker Change: Our sales pipeline remains strong and our team is worked hard to backfill most of those truck losses we have experienced this year.

Speaker Change: We have started up a significant number of customer locations and trucks over the past two quarters, which has had an impact on our margins as mature business had been replaced by newer, less mature business.

Speaker Change: That said, we remain disciplined on a new customer lens in our confidence that this business was going to write both appropriate margins and more importantly, returns on capital once they've ramped to maturity.

Nick Hobbs: Going forward, we expect new account growth sales to range stable within our long-term, stated range of 1,000 to 1,200 trucks on an annualized basis, but keeping in mind growth and operating income typically lacks fleet growth by a few quarters.

Speaker Change: Going forward, we expect new account gross sales from range stable within our long term stated range of 1,000 to 1,200 trucks on an annualized basis. But keeping in mind, growth and operating income typically lags bleak growth by a few quarters.

Nick Hobbs: Shifting the final mile, we have made significant progress to improve the overall health of our business, focusing on high quality service and revenue quality while remaining cost discipline through the process. We have seen the market for big and bulky delivery involved with customers looking for high quality service providers with national scale and strong safety standards. Overall, demand for big and bulky products remains somewhat challenged, with continued self-demand for furniture and modestly soft trends in exercise equipment and appliances. While we remain encouraged by our sales pipeline and continue to engage in discussions with new brands, we have seen some customer churn, which in fact is top line and bottom line performance in the quarter.

Speaker Change: Chifting the final mile. We have made significant progress to improve the overall health of our business, focusing on high quality service and revenue quality while remaining cost discipline through the process.

Speaker Change: We have seen the market for big and bulky delivery involved with customers looking for high quality service providers with national scale and strong safety standards.

Speaker Change: Overall, demands for big and bulky products remain somewhat challenged with continued self-demand for furniture and modestly self-trans and exercise equipment and appliances.

Speaker Change: While we remain encouraged by our sales pipeline and continues to engage in discussions with new brands, we have seen some customer churn which impact its top line and bottom line performance in the quarter.

Nick Hobbs: Our focus remains on providing the highest service level as we deliver products into the homes of our customers, customer with a priority on being safe and secure. We will remain disciplined with potential new business to ensure appropriate returns for our service while we work to grow the business and improve profitability. Going forward, while we are encouraged by the improvement in our final mile business this year, we remain focused on growing the business profit bleak with the right customers that recognize the value we provide.

Speaker Change: Our focus remains on providing the high service level as we deliver products into the homes of our customers' customer with a priority on being safe and secure.

Speaker Change: We will remain disciplined with potential new business to ensure appropriate returns for our service. While we work to grow the business and improve profitability.

Speaker Change: Going forward, we're encouraged by the improvement in our final mile business this year. We remain focused on growing the business properly with the rock customers that are recognized the value we provide.

Nick Hobbs: Similar to last quarter, I'll close with some comments on safety. Our company is rooted in a foundation of safety. We're not only our people, but also the motoring public, and we continue to invest in training and equipment to enhance our already strong safety culture. In 2023, we had a record performance in terms of DOT preventable accidents per million miles, and so far here today, I am pleased to say we have improved further. I'm also pleased to announce that we hit our previously stated goal of being 100% rolled out with inward-facing cameras in our trucks by the end of the third quarter.

Speaker Change: and more to last quarter I'll close with some comments on safety.

Speaker Change: Our company is rooted in a foundation of safety, we're not only our people, but also the motoring public, and we continue to invest in training and equipment to enhance our ready strong safety culture.

Speaker Change: In 2023, we had a record performance in terms of the O.T. preventable accidents per million miles. And so for a year to date, I am pleased to say we have improved further.

Speaker Change: I'm also pleased to announce that we hit our previously stated goal of being 100% rolled out within replacing cameras in our trucks by the end of the third quarter.

Nick Hobbs: These cameras are just one of many innovative safety initiatives we have rolled out that continues to contribute to our safety culture and performance. As you are aware, the cost of claims have elevated, so we continue to manage and mitigate risk by remaining focused on our safety performance.

Speaker Change: These cameras are just one of many innovative safety initiatives we have rolled out that continues to contribute to our safety culture and performance. As you're aware, the cost of claims have elevated, so we continue to manage and mitigate risk by remaining focused on our safety performance.

Darren Field: This concludes my remarks, so I would like to turn the call over to Darren. Thank you, Nick, and thank you to everyone for joining us this afternoon on the call.

Speaker Change: This concludes my remarks, so I would like to turn the call over to Darren.

Darren Field: Let me start with the review of Intermodal's performance during the quarter. Overall, we saw the momentum from the second quarter accelerate into the third quarter as our overall volume was up 5% year over year, which modestly outperformed normal seasonality. The volume growth during the third quarter was driven by 7% growth in Transcon, with Southern California outbound volumes of double digits once again in this quarter, and 3% growth in the east. By month, our consolidated volumes were up 7% in July, of 4% in August, and up 4% in September. In the east, we continue to compete more directly with one-way truck load, but as evidenced by our overall volume improvement this quarter, we are beginning to wind back small amounts of freight from customers due to our strong service levels and ability to meet their capacity needs.

Darren Field: Thank you, Nick, and thank you to everyone for joining us this afternoon on the call.

Darren Field: Let me start with the review of intermodels performance during the quarter. Overall, we saw the momentum from the second quarter accelerated in the third quarter as our overall volume was up 5% year over year, which modestly outperforms normal seasonality.

Darren Field: The volume growth during the third quarter was driven by 7% growth in Transcon with Southern California outbound volumes up double digits once again this quarter and 3% growth in the east.

Darren Field: By month, our consolidated volumes were up 7% in July of 4% in August and up 4% in September.

Darren Field: In the East, we continue to compete more directly with one way truckload, but as evidenced by our overall volume improvement this quarter, we are beginning to win back small amounts of freight from customers due to our strong service levels and ability to meet their capacity needs.

Darren Field: As we look to our bit warehouse, we continue to see a large amount of freight that we believe should be converted from over the road to intermodal as it is more economical and environmentally friendly. We stand ready and have the capacity and people in place to meet and exceed our customer service needs both now and in the years ahead. During the quarter, we did see margin pressure year over year, and despite a modest improvement in margins, we did incur additional expenses in the third quarter. You've heard me say that right now volume means more to us than it has ever before, and that remains true.

Darren Field: As we look to our fifth warehouse we continue to see a large amount of freight that we believe should be converted from over the road to intermodal as it is more economical and environmentally friendly.

Darren Field: We've been ready and have the capacity and people in place to meet and it's seen our customer service needs both now and in the years ahead.

Speaker Change: During the quarter, we did see margin pressure year over year and despite a modest improvement in margin sequentially, we did incur additional expenses in the third quarter.

Speaker Change: You heard me say that right now, volume means more to us than it has ever before and that remains true.

Darren Field: However, pricing has been and is still the biggest lever to improve margins. While we did see sequential volume growth, we absorbed additional expense during the quarter to keep our network fluid in life of the imbalances caused by the strength in our networks specifically out of Southern California. We are encouraged by the improvement we are seeing in customers' bid compliance, which will provide us better opportunities in the future to fill in lane imbalances and drive greater efficiencies in the network. Going forward and as a reminder, we implemented the remaining pricing from our 2024 bid season during the third quarter.

Speaker Change: However, pricing has been and is still the biggest lever to improve margins. While we did see sequential volume growth, we absorbed additional expense during the quarter to keep our network fluid and light of the imbalances caught by the strength in our networks, specifically out of Southern California.

Speaker Change: We are encouraged by the improvement we are seeing in customer's bid compliance, which will provide us better opportunities in the future to fill in lane and balances and drive greater efficiencies in the network.

Speaker Change: Going forward, and as a reminder, we implemented a remaining pricing from our 2024 bid season during the third quarter. And given the nature of our pricing cycle, we will be living with a large portion of current pricing through the first half of 2025.

Darren Field: And given the nature of our pricing cycle, we will be living with a large portion of current pricing through the first half of 2025. We just kicked off our 2025 bid season, and we do like our position given our service levels and ability to handle customer search demand that we have been experiencing. We continue to see truckload pricing that we believe is unsustainable over the long term, particularly in the Eastern network. We have recently seen some shippers live to convert small amounts of freight from truck to rail in the East, which we are encouraged by and highlights our service and value proposition that we in our rail providers are able to provide.

Speaker Change: We just picked off our 2020 five bid fees and then we do like our position given our service levels and ability to handle customer service demand that we have been experiencing.

Speaker Change: We continue to see truckload pricing that we believe is unsustainable over the long term, particularly in the Eastern Network.

Speaker Change: We have recently seen South Shippers live to convert small amounts of freight from truck to rail in the east, which we are encouraged by and highlights our service and value proposition that we and our rail providers are able to provide.

Darren Field: With regard to our rail service providers, we have been pleased with the service levels from each of them, their commitment to the intermoe offering a growing overall market. That said, we in our railroad providers know the true test of our collective service will come once freight volumes increase with higher overall demand on our networks. We have been in constant dialogue with them that this could serve as one of many proven moments to show customers that we collectively can handle significant growth while maintaining proper service. Maintaining service during periods of stronger demand, like we are experiencing today, supports the case for intermodal growth and additional conversion from over-the-road freight.

Speaker Change: With regard to our rail service providers, we have been pleased with the service levels from each of them. They're commitment to the intermodal offering and growing the overall market.

Speaker Change: That said, we in our railroad providers know the true test of our collective service will come once freight volumes increase with higher overall demand on our networks.

Speaker Change: We have been in constant dialogue with them that this being could serve as one of many proof-it moments to show customers that we collectively can handle significant growth while maintaining proper service.

Speaker Change: Maintaining service during periods of stronger demand, like we are experiencing today, supports the case for intermodal growth and additional conversion from over the road freight.

Darren Field: Our conviction and the strength of our intermodal franchise hasn't wavered. Our customers trust us; our service levels are exceptional, and our optimism on the future growth of our intermodal business hasn't changed.

Speaker Change: Our conviction and the strength of our intermodal franchise hasn't wavered. Our customers' trust us, our service levels are exceptional, and our optimism on the future growth of our intermodal business hasn't changed. That concludes my prepared remarks and I'll turn it over to Brad Hicks.

Brian Hitch: That concludes my prepared remarks, and I'll turn it over to Brian Hitch. Thank you, Darren, and good afternoon, everyone.

Brian Hitch: I'll review the performance of our integrated capacity solutions and truckload segments. I will also provide an update on some of our work in JB Hunt 360. Starting with ICS, the overall brokerage environment remains competitive, with pressure on both volume and rate. That said, I am encouraged by some of the progress we have made to stabilize trends in the business. Technic growth revenue declined 7% year-over-year in the third quarter, driven by a 10% decline in volume, partially offset by a 3% increase in revenue per load. To quenchally, ICS volume increased 2% as our efforts to diversify and strengthen our customer base are starting to yield results.

Brad Hicks: Thank you, Darren and good afternoon everyone. I'll review the performance of our integrated capacity solutions and truck load segments.

Brad Hicks: I will also provide an update on some of our work in J.B. Hunt 360.

Brad Hicks: Starting with ICS, the overall brokerage environment remains competitive with pressure on both volume and rate.

Brad Hicks: That says I'm encouraged by some of the progress we have made to stabilize trends in the business.

Brad Hicks: Technic Rose revenue decline 7% year over year is the third quarter, driven by a 10% decline in volume, partially offset by 3% increase in revenue per load.

Brad Hicks: So, coincidentally, ICS volume increased 2% as our efforts to diversify and strengthen our customer base are starting to yield results.

Brian Hitch: While we continue to focus on quality revenue and growing with the right customers, we have also made strides to right sides of the cost structure of our business, especially in our legacy ICS business. Technic growth margins were high at 17.9% per the quarter, highlighting our discipline bid strategy, effective sourcing, and was also made by some project related work. We continue to make progress on our costs and better aligning our resources with our current business levels.

Brad Hicks: While we continue to focus on quality revenue and growing with the right customers.

Brad Hicks: We have also made strides to right-size the cost structure of our business, especially in our legacy ideas business

Brad Hicks: Technic Gross Marges were high at 17.9% for the quarter, highlighting our discipline bit strategy, effective sourcing, and was also aided by some project-related work.

Brad Hicks: We continue to make progress on our costs and better aligning our resources with our current business levels.

Brian Hitch: In the quarter, we did encourage some additional expense related to the integration of the brokerage assets of BNSF Logistics, which had an approximately $2 million negative impact on our operating expenses in the quarter as compared to the second quarter. Going forward, we will remain focused on further diversifying our customer base. Continuing to right size our cost structure and leveraging our technology to scale growth. We will need to scale the business with more volume on the platform to return the business to acceptable levels of profitability. Moving over to JVT or Treckload, segment growth revenue was down 12% year over year, driven by a 6% decrease in volume and a 6% decrease in revenue per load.

Brad Hicks: In the quarter, we did incurred some additional expense related to the integration of the brokerage assets of BNF logistics, which had an approximately $2 million negative impact on our operating expenses in the quarter as compared to the second quarter.

Brad Hicks: Going forward, we will remain focused on further diversifying our customer base.

Brad Hicks: Continuing to right sides our cost structure and leveraging our technology to scale growth.

Brad Hicks: We will need to scale the business with more volume on the platform to return the business to acceptable levels of profitability.

Speaker Change: Moving over to JVT or TREPLOG.

Speaker Change: Thank you, Gross Revenue, with down 12% year over year, driven by a 6% decrease in volume and a 6% decrease in revenue per load.

Brian Hitch: Our focus remains on attracting the right freight that best fits our network while ensuring that our capacity is positioned in the right markets to meet customer needs. We've seen customer bid compliance improve throughout the year, which allows us to better plan our capacity, which provides efficiency across our network and has contributed to the improved profitability in our JVT business. Our service levels have been very strong and at the highest level since the shift to our power-only model, JVT-360 Box, in 2019. Our high service levels combine with the flexibility of the drop-trailer network position as well for future growth with new and existing customers.

Speaker Change: Our focus remains on attracting the right freight that best fits our network while ensuring that our capacity is positioned in the right markets to meet customer needs.

Speaker Change: We've seen customer-bid compliance improve throughout the year, which allows us to better plan our capacity, which provides efficiency across our network and has contributed to the improved profitability in our JVT business.

Speaker Change: Our service level has been very strong, and at the highest level since the shift to our power-only model, J.D. Hunt 360 Box in 2019.

Speaker Change: Our high service levels combined with the flexibility of the drop trailer network position as well for future growth with new and existing customers.

Brian Hitch: Going forward, we continue to expect to see some pressure on volumes. That said, I am confident in the network discipline that we have and the growth opportunities in front of us as we head into the 2025 bid season.

Speaker Change: Going forward, we continue to expect to see some pressure on volumes.

Speaker Change: That said, I am confident in the network discipline that we have and the growth opportunities in front of us as we head into the 2025 businesses.

Brian Hitch: I'll close with some comments on 360. Technology is foundational to our company and is the piece that can and empowers our people to the available capacity we have to serve our customers. A lot of the significant investments into the foundations of our platform have been... Complete. That said, we continue to leverage this foundation into new market opportunities. For example, rolling out the platform to the agents we acquired from the brokerage assets of the NSF Logistics and also to the SMV and LPL markets while also improving cargo security in our business. We continue to believe our technology investments will drive greater productivity and efficiency gains across the scroll and better position us for long-term growth with our customers.

Speaker Change: I'll close with some comments on 360.

Speaker Change: Technology is foundational to our company and is the piece that connects and empowers our people to the available capacity we have to serve our customers.

Speaker Change: A lot of the significant investments into the foundations of our platform have been complete.

Speaker Change: That says we continue to leverage this foundation into new market opportunities.

Speaker Change: For example, rolling out the platform to the agents we acquired from the broker Jazz Sets of the NSF logistics.

Speaker Change: and also to the SMB and LPL markets, while also improving current security in our business.

Speaker Change: We continue to believe our technology investments will drive greater productivity and efficiency games across the scroll and better position us for long-term growth with our test

Unknown Executive: This concludes my comment, so I'll turn the call back to the operator to provide instructions for the Q&A portion of the call. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again.

Speaker Change: This concludes my comment, so I'll turn the call back to the operator to provide instructions for the Q&A portion of the call.

Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. We ask that you please limit yourself to one question and then re-cute if needed.

Unknown Executive: We ask that you please limit yourself to one question and then req if needed.

Ken Hoexter: Your first question comes from the line of Ken Hoaster with Bank of America. Your line is open.

Speaker Change: Your first question comes from the line of Ken Hoatster with Bank of America. Your line is open.

Ken Hoexter: Wow, I'd appreciate it.

Ken Hoexter: You know, front, and I guess Shelley, you would cut me off if I asked on November 16th how many points Texas will win by? So I will not ask that.

Ken Hoatster: Wow, great appreciate you know front and I guess Shelley would cut me off if I asked on November 16th how many points taxes will win by so I will not ask that

Ken Hoexter: You noted at normal intermodal patterns, but I guess looking at how much was pulled forward. Can you estimate how much, you know, was the results were aided by the pull forward and Darren, you noted business is strong now. I guess given the post hurricanes catch up from strike, or is this just the peak season improvement? I'm wondering if we see the slowdown faster because of those earlier shipments. I know a lot in there, but I'm trying to understand the impact of the pre shipping.

Speaker Change: You noted normal intermodal patterns, but I guess looking at how much was pull forward. Can you estimate how much was the results were aided by the pull forward?

Speaker Change: But Darren, you noted business is strong now, I guess given the post hurricanes catch up from strike or is this just the peak season improvement? I'm wondering if we see the slow down faster because of those earlier shipments. I know a lot in there, but I'm trying to understand the impact of the pre-shipping.

Shelley Simpson: Sure, so Ken, appreciate the question.

Spencer Frazier: I'm sure Spencer might have some thoughts as well. Let's look, you know, as we went into Texas and planning, we communicated with all of our customers and looked for as much of their advice as we could get and prepared our clients. We certainly know that there were customers that were shifting business back to the West Coast from the East because it fit their network well. We had customers shifting freight from the east back to the west because of fears of a potential labor strike on the East Coast. We had customers talking about a pull forward just from a preparedness and an overall capacity standpoint, and we had many, many customers that said normal peak.

Speaker Change: Thank you for watching.

Speaker Change: Sure, so can appreciate the question of, sure, Spencer might have some thoughts as well. Let's look, you know, as we went in to take these in planning. We communicated with all of our customers and looked for as much of their advice as we could get and prepared our plans.

Speaker Change: Certainly know that there were customers that were shifting business back to the West Coast from the East because it fit their network well. We had customers.

Speaker Change: Shifting freight from the east back to the west because of fears of a potential labor strike on the east coast. We had customers talking about a pull forward just from a preparedness and an overall capacity standpoint. And we had many, many customers that said, normal peak. So I think that the results are really in terms of a mix bag in terms of how much was pulled forward. We don't really know.

Spencer Frazier: So I think that the results are really in terms of a mixed bag in terms of how much was pulled forward. We don't really know. I don't want to tell you that none of it was. Some of it was certainly pulled forward. We do have a lot of customers that continue to expect a normal peak as we go through the fourth quarter. So we do anticipate continued demand for our services, and we'll all kind of have to wait and see if it's a faster pull down. But at this point, I think we're expecting things to behave what we consider normal.

Speaker Change: I don't want to tell you that none of it was some of it was certainly pulled forward.

Speaker Change: We do have a lot of customers that continue to expect a normal peak as we go through the fourth order so we do anticipate continued demand for our services and we'll kind of have to wait and see.

Speaker Change: If it's a faster pull down, but at this point I think we're expecting things to behave.

Spencer Frazier: Spencer, I want to know if you have some thoughts you'd like to share there.

Spencer Frazier: Yeah, Darren, thanks for that, and I can appreciate your question. A couple of thanks just regarding the port strike in the East. As Darren mentioned, our customers really deployed a handful of different strategies. Some of that was a little bit of a shift to the west. Some of it maybe pulled some inventory in ahead of that strike, and others had a wait-and-see approach. And when we sit here right now, I'd say we've got a couple of weeks for those East Coast ports to really normalize their flows.

Speaker Change: What we consider normal.

Spencer Frazier: Spencer, I will know if you have some thoughts you'd like to share there. Yeah, Darren, thanks for that and can I appreciate your question.

Spencer Frazier: A couple of things just regarding the port strike in the east. As Darren mentioned, our customers really deployed a handful of different strategies.

Spencer Frazier: Some of that was a little bit of a shift to the west, some of it, maybe Cole Summary and a head of that strike, and others had a wait and see approach.

Spencer Frazier: And when we say here right now, I'd say we've got a couple weeks for those East Coast ports to really normalize their flows.

Spencer Frazier: But something to consider is this deadline just got extended to January 15th. And so the place that they ran leading up to this event are now probably going to be rerun as we look forward into January.

Spencer Frazier: by something to consider.

Spencer Frazier: This deadline just got extended to January 16th

Spencer Frazier: and so the place that they ran leading up to this event are now probably going to be rerun as we look forward into January. And then also I'd say a couple other things just around peak and peak demand. I want to give our customers a lot of credit for the work that they've done as their demand is normalized as well as their inventory is normalized.

Spencer Frazier: And then also, I'd say a couple of other things just around peak and peak demand. I want to give our customers a lot of credit for the work that they've done as their demand has normalized, as well as their inventory has normalized, with their forecast the capacity needs from J.V. Hunt. They've done a better job of that. I think Brad and Darren both mentioned that our big compliance numbers have improved. We're happy to see that. And then also, as we think about peak going forward, we're still in active conversations to make sure we continue to position our people to successfully execute peak along with our capacity over the next several weeks so our customers can have a great finish to the year.

Spencer Frazier: with their forecast, the capacity needs from JB Hunt. They've done a better job of that. I think Brad and Darren both mentioned that our big compliance numbers have improved. We're happy to see that. And that also as we think about peak going forward, we're still in active conversations to make sure we continue to position our people to successfully execute peak along with our capacity over the next several weeks. Our customers can have a great finish to the year. Thank you.

Brian Ossenbeck: Your next question comes from the line of Brian Ossenbeck with JP Morgan. Your line is open.

Speaker Change: Your next question comes from the line of Brian Austin back with JP Morgan, your line is open.

Brian Ossenbeck: Hey, good afternoon. Thanks for taking a question. Um, so maybe a little bit more on the peak season. You mentioned a little bit of project for coming back. I think that was a brat on the ICS side, so. Probably on rail service. How is it performing out of the West?

Brian Austin: Hey, good afternoon. Thanks for taking the question. So, maybe a little bit more on the peak season. And you mentioned a little bit of project for coming back, I think that was Brad on the ICS side.

Brian Austin: ofthat

Brian Ossenbeck: It seems like you have a pretty good ability to move the commands around the volume, but how is that performed in with the new COO, I guess, consulting for them at Harris, the NSF, they expect any changes here in the short term or the medium term, um, if he looks to take a closer look at those operations. Thank you.

Brian Austin: and Robby Ralester, Rathouse, and Performing Out of the West, it seems like you have a pretty good ability to move the tremendous amount of volume, but I was that performed in with the new CLO, I guess, consulting for them at Harris on the NSF, Dave Specten, he changes here in the short term or the medium term, as he looks to take a closer look at those operations. Thank you.

Darren Field: Okay, Brian, your phone kind of broke up there, but I think I know that just have it just for our Western provider where we continue to be engaged at all levels of our organization in terms of how can we be more efficient and stronger together when we solve problems together.

Speaker Change: Okay, Brian, your phone kind of broke up there, but I think I know that just for our western provider, we continue to be engaged at all levels of our organization in terms of how can we be more efficient and stronger together when we solve problems together.

Darren Field: I'm aware that at Harris being aside as a consultant to be an SS has created a handful of questions. It's our understanding that he's really focused on the merchandise network. You know, I would say this: BNSS, the largest intermodal provider, moves the densest intermodal business serving the fewest nodes in the intermodal industry. That density is very much in line with all things PS are now. I'm not saying they're a PS are railroad. It's just they didn't have to do that. There's a lot of attention to intermodal that BNSF in terms of their growth channel, and we're convinced that there is no changes coming to our business in the coming months or years.

Speaker Change: I'm aware that Ed Harris...

Speaker Change: Being a side as a consultant to be an SS has created a handful of questions. It's our understanding that he's really focused on the merchant ice network.

Speaker Change: You know, I would say this, BNSF's the largest intermodal provider and moves the densest intermodal business serving the fewest nodes in the intermodal industry, that density is very much in line with all things PSR. Now I'm not saying they're a PSR railroad, it's just they didn't have to do that. There's a lot of attention to intermodal that BNSF in terms of their growth channel, and we're convinced that there is no changes coming to our business.

Darren Field: There's no deviation from their strategy to grow intermodal. We're very encouraged by their commentary. If anything, improvement in their merchandise network could positively influence intermodal service. We will wait and see. That's not an area of their business that we stay focused on, but we're assured by the BNSS that PS are not a strategy at BNSF.

Speaker Change: In the coming months or years, there's no deviation from their strategy to grow intermodal. We're very encouraged by their commentary. If anything, improvement in their merchandise network could positively influence intermodal service will wait and see. That's not an area of their business that we stay focused on, but we're assured by the BNSF that PSR is not a strategy at BNSF. I don't know if Shelley wanted to make a comment on that.

Shelley Simpson: I don't know if Shelley wanted to make a comment on that.

Shelley Simpson: No, I think Darren said it well. I would just say, you know, for us, we're very focused on expanding the intermodal market together. So both JB Hunt and VN are thinking about how do we launch for customers around intermodal and expanding the merged markets like things you've done at Quantum and what we're doing with Mexico. We're continuing those conversations.

Shelley Simpson: No, I think Darren said it well. I would just say, you know, for us, we're very focused on expanding the intermole market together. So both JB Hunt and VN are thinking about how do we launch for customers around intermodal and expanding emerging markets like things like Dillon Quantum and what we're doing in Mexico. We're continuing those conversations. I would say anything that happens from a merchandising perspective would roll over into JB Hunt and should benefit us as well. Thank you very much.

Shelley Simpson: I would say anything that happens from a merchandising perspective would roll over into JB Hunt and should benefit us as well.

Brad Delco: Brian, I may have been put on mute.

Brad Hicks: This is Brad, but you asked a question about project-related business.

Speaker Change: Brian, I've made this put on you. This is Brad, but you asked a question about project related business. I'll let Brad Hicks respond to that. Yeah, Brian. We had some of that start.

Brad Hicks: I'll let Brad Hicks respond to that. Yeah, Brian, we have some of that start. In order, we'll certainly have a project of business that'll carry in the Q4 work. Some of that is seasonal work that we do on behalf of our customers. Otherwise, there are small pockets where our customers have needs, where we want to make sure that we're the right partner and service them at a level that we can continue to be that first call when they have those extra needs.

Brad Hicks: and we'll certainly have projects of business that will carry in the Q-4. Some of that in the season will work that we do on behalf of our customers.

Brad Hicks: Otherwise there's small pockets where our customers have needs.

Brad Hicks: where we want to make sure that we're the right partner and service them at a level that we can continue to be that first call when they have those extra needs. I really think that the key element there is just how proud we are of the improvement that we've seen in ICS in particular. The gross margins in the quarter were very healthy and I think that that's representative of the foundational work that we've been focused on all year around quality revenue and the right type of business. And certainly our teams have done a great job executing throughout the quarter.

Brad Hicks: I really think that the key element there is just how proud we are of the improvement that we've seen in ICS in particular. The gross margins in the quarter were very healthy, and I think that that's representative of the foundational work that we've been focused on all year around quality revenue and the right type of business. And certainly, our teams have done a great job executing throughout the quarter.

John Chappell: Your next question comes from the line of John Chappell with Evercore ISI. Your line is open.

Speaker Change: Your next question comes from the line of John Chappelle with Evercore ISI, your line is open.

John Chappell: Thank you.

John Chappell: Good afternoon. Darren, I'm hoping you can help understand the quantulant increase in revenue promote. I know it wasn't gigantic, but it did go up your east wind up 3% and 3Q versus down 7%, so conceptually there should have been a mix headwind there. You've been telling us all along to kind of bake in that 30% bid season from 1Q to 2Q and 3Q. So just felt like, with everything that you just posted from a mixed perspective, that revenue promote would have been down sequentially. So how did you manage that up?

John Chappelle: Thank you, good afternoon. Darren, I hope you can help understand the sequential increase in revenue payload. I know it wasn't gigantic, but it did go up your east wind up 3% on 3q versus down 7% of the conceptualization that it should have been in midwind there. You've been telling us all along.

John Chappelle: to kind of bake in that 30% bid season from 1Q to 2Q and 3Q. So just felt like with everything that you just posted from a mixed perspective, that revenue pooled would have been down sequentially. So how did you manage that up? And then I guess how do we think about your comments about being fully baked into the middle of 25? Is that that mean kind of flat from here or is there any improvement potential? No.

Darren Field: And then I guess how do we think about your comments about being fully baked into the middle of 25? Is there any improvement potential? Okay, well, on the revenue for load, I mean, the mix results in the quarter were; our length of haul was actually longer in the third quarter than it was in the second quarter. And there was sequential pricing pressure; certainly that played a role in those results. You know, I lost a little piece of your question there.

Speaker Change: Okay, well, on the revenue per load, I mean, the mix results in the quarter where our link to Paul was actually longer in the third quarter than it was in the second quarter and there was sequential pricing pressure, certainly that played a role in those results, you know.

Darren Field: I just know that as we've gone through the year and implemented new pricing, none of us are satisfied with where we're at in terms of the returns on our business. We still believe that the pathway to help for us is to execute on behalf of our customers, make sure that we're doing what we say we're going to do, and deliver value to our customers so that when the world changes, we're prepared and in a good position to talk about the quality of our service, the challenges we have from a cost standpoint, and recover some of our margins through pricing efforts.

Speaker Change: I lost a little piece of your question there. I just know that as we've gone through the year and implemented new pricing, none of us are satisfied with where we're at in terms of the returns on our business. We still believe that the pathway to help for us is to execute on behalf of our customers.

Speaker Change: Make sure that we're doing what we say we're going to do and deliver value to our customers so that when the world changes.

Speaker Change: We're prepared and in a good position to talk about the quality of our service, the challenges we have from a cost standpoint and recover some of our margins through pricing efforts. That will continue to be our focus and we'll wait and see how that plays out as we move in the next year.

Darren Field: That will continue to be our focus, and we'll wait and see how that plays out as we move in the next year.

Jordan Alliger: Your next question comes from the line of Jordan Alliger with Goldman Sachs. Your line is open.

Speaker Change: Your next question comes from the line of Jordan Aletcher with Goldman Sachs. Your line is open. Yeah, hi. Question on dedicated. It came in to give an update on the overall general competitive environment for new business. And also, you've been hearing some thoughts that private fleets.

Jordan Alliger: Yeah, hi. Question on dedicated. Can you maybe give an update a bit on the overall general competitive environment for a new business? And also, you know, we've been hearing some thoughts that private fleets, you know, shippers themselves have been adding their own trucks over the last year or two, and you know, maybe that's impacting some of the over-the-road guys.

Jordan Aletcher: You know, Schippers themselves have been adding their own trucks over the last year or two and maybe that's impacting some of the over the road guys. I'm just curious if you've heard that and if so, does that make a tougher maybe to sign in and close some of the deals on the dedicated front? Thanks.

Jordan Alliger: I'm just curious if you've heard that, and if so, does that make it tougher maybe to sign in and close some of the deals on the dedicated front? Thanks.

Nick Hobbs: Thanks, Jordan. I'll talk about that a little bit. I have been reading a lot about competition in the dedicated market as well, but what we're seeing in the marketplace and where we're focused on really private fleet replacement. We're not seeing any unusual competition out there, I would say, in what we're really targeting. We love our pipeline. We love the success we've had. We're remaining disciplined in our pricing margins. And so we feel very good about that. We're I see a lot of the competition and hear about a lot of it is more in the retail drive and kind of more monetized.

Speaker Change: Thanks Jordan, I'll talk about that a little bit. I have been reading a lot about competition in the dedicated market.

Speaker Change: as well, but overseeing in the marketplace and more and more focused.

Speaker Change: A really private fleet replacement. We're not seeing any unusual competition out there, I would say, in what we're really targeting. We love our pipeline, we love the success we've had. We're remaining disciplined in our pricing margins, and so we feel very good about that. I see a lot of the competition, and here about a lot of it, is more in the retail drive-and. Thank you.

Nick Hobbs: And we have a little bit in there, but not a lot. Just looking at the names that we've been awarded in the last week, you probably wouldn't recognize for the names in there at the private fleets that we're taking over. So we feel good about that now from private fleets. I would say yes; some of the large private fleets are growing. And that's fine, but if I look at the market, 60 to 80 to 90 billion that we have qualified, we still feel very good about what we're doing and our sales target. So I read a lot about the competition, and we see some.

Speaker Change: Kind of drop in hook, more commoditized, and we have a little bit in there, but not a lot.

Speaker Change: I'm just looking at the names that we've been awarded in the last week. You probably wouldn't recognize three or four of the names in there at the private fleets that we're taking over, so we feel good about that now from private fleets. I would say yes, some of the large private fleets are growing and that's fine, but if I look at the market, 60 to 80 to 90 billion that we have qualified.

Speaker Change: We still feel very good about what we're going and our sales targets. So I read a lot about the competition and we see some, we've lost some business with our trucks but overall I feel very good that with our discipline, pricing and approach, we can still be very, very successful. [inaudible]

Brad Delco: We've lost some business with our trucks, but overall, I feel very good that with our plot discipline pricing approach, we can still be very, very successful.

Brad Delco: During this is Brad Delco, I do want to add, I mean mix in his prepared comments. You talked about the performance of that business.

Speaker Change: Jordan, this is Brad Delco, I do want to have a beat.

Speaker Change: Nick's in his prepared comments.

Brad Delco: And I think when you look at the performance of the business, both in terms of how well revenue and trucks has been, certainly operating income and margins has held up relative to a lot of the peers said.

Speaker Change: You talked about the performance of that business and I think when you look at the performance of the business, both in terms of how well revenue and trucks has been certainly operating, come in margins has held up relative to a lot of the tier stand. I mean, I do think it's a different to his model that's supported by that performance and hopefully that's recognized by those on the call.

Brad Delco: I mean, I do think it's the differentiated model that's supported by the performance. And hopefully that's recognized by those on the call.

Daniel Imbro: Your next question comes from the line of Daniel Imbro with Stephen Tink. Your line is open.

Speaker Change: Your next question comes from the line of Daniel Embro, with Steven Tink, your line is open.

Daniel Imbro: Yeah, pay good evening, everybody. Thanks for your questions. Darren, on the animal margin side, those hold in, I think nicely and better than expected given the pricing pressure this year.

Daniel Embro: Yeah, pay good evening everybody. Thanks for your questions.

Daniel Embro: Darren, on the intermodal margin side, those held in, I think, nicely and better than expected given the pricing pressure this year. Can you maybe just talk to the puts and takes of the sequential step up in margin and then from a pricing standpoint, maybe sensor can add color to, but you're going into this upcoming bid season with more excess capacity than history working. So, maybe in a year that didn't go as well this year strategically, how are you thinking about driving volume growth versus holding the line on price and just the strategy going into that bid season given the excess capacity we're in now.

Daniel Imbro: Can you maybe just talk to the puts and takes of the sequential step up in margin and then from a pricing standpoint, maybe sensor can add color to, but you're going into this upcoming bid season with more excess capacity than history work away. So maybe in a year that didn't go as well this year strategically, how are you thinking about driving volume growth versus holding the line on price and just the strategy going into that bid season given the excess capacity we're in now. Okay, well on the sequential margin, you know, at the end of the day, volume, we've said before, volume has meant more to us today than ever before.

Speaker Change: Okay, well, on the sequential margin, you know, at the end of the day volume we've said before volume has meant more to us today than ever before.

Darren Field: If still isn't more valuable than the role that pricing would play when pricing can turn, you can see that impact margin quicker, certainly. You know, velocity on our system can play a role when we pick up volume. There's efficiencies we gain inside of our drainage operation, or there's certainly a lot of opportunity to grow. You know, a load out of Southern California is not the same as a load going back to Southern California. So the mix of the traffic that operates in the third quarter versus second quarter is very different, and the result of the margin is what it is.

Speaker Change: He's still a bit more valuable than the role that pricing would play when pricing can turn. You can see that impact margin quicker certainly.

Speaker Change: You know, velocity on our system can play a role when we pick up volume, there's efficiencies we gain inside of our drainage operation, or there's certainly a lot of opportunity to grow, you know, a load out of Southern California is not the same as a load going back to Southern California. So the mix of the traffic that operates in the third quarter versus second quarter is very different. And the result of the margin is what it is, as we go into the next year, you know.

Darren Field: As we go into the next year, you know, like I said earlier in the call, I mean, we're not satisfied with our returns. We believe that carriers are operating at rates below their cost. We think they're unsustainable. We're surprised by the longevity and how long it has lasted. We also have been wrong in the past when we believed that the pricing market was about to turn and we could get rates up. And I would even say, at this point last year, I probably, I'm not sure I said it, but I probably didn't believe that a year ago today, and I would have been wrong.

Speaker Change: I'm like I said in the earlier in the call, I mean we're not satisfied with our returns.

Speaker Change: We believe that carriers are operating at rates below their cost, we think they're unsustainable. We're surprised by the longevity and how long it has lasted.

Speaker Change: We also have...

Speaker Change: Been wrong in the past when we believed that the pricing market was about to turn and we could get rates up and I would even say at this point last year I probably don't sure I said it but I probably did believe that a year ago today and I would have been wrong.

Darren Field: And so, as we go into the bid season, we're focused on delivering value to our customers, talking about the capacity answers that we have, also talking about the cost challenges we face, talking about how we're prepared to serve their needs. In a host of ways, and that's at the enterprise level.

Speaker Change: and so as we go into the biz season, we're focused on delivering value to our customers.

Speaker Change: Talking about the capacity answers that we have, also talking about the cost challenges we face.

Speaker Change: Talking about how we're prepared to serve their needs in a host of ways and that's at the enterprise level. And so, as we go into this bin cycle, we're going to continue that process because the experience in this room has taught us that that's the best approach.

Darren Field: And so, as we go into this bid cycle, we're going to continue that process because the experience in this room has taught us that that's the best approach.

Shelley Simpson: Yeah, and there, and I'll add Daniel, you kind of wanted to know a little bit about where we're at with customers and our conversations. And I would say this, you know, they're in their bid and budgeting process right now. And in that, they're challenged to operate their supply chain and find ways to do that in the most efficient way possible. And, you know, they also know, as Darren just said, you know, the cost in our industry has been rising dramatically, and the margins are not sufficient. But when we have those conversations with our customers, we're really very transparent in the cost to serve them, while working with them to design optimal solutions across their network.

Speaker Change: Yeah, and Darren, I'll add, Daniel, you kind of wanted to know a little bit about where we're at with customers and our conversations, and I would say this, you know, they're in their bid and budgeting process right now. And in that, their challenge to operate their supply chain and find ways to do that in the most efficient way possible. And, you know, they also know, Darren just said, you know, the cost in our industry has been rising dramatically and the margins are not sufficient.

Speaker Change: But when we have those conversations with our customers, we're really very transparent in the cost to serve them while working with them to design optimal solutions across their network. And ultimately, we're leaning on the consistently high service levels that drive value and find a match for that value for both companies. And ultimately, that's the moment to set them up, set our teams up for success. And hopefully improve our return in the process.

Shelley Simpson: And ultimately, we're leaning on the consistently high service levels that drive value and find a match for that value for both companies. And ultimately, that's the moment to set them up, set our teams up for success, and hopefully improve our returns in the process.

Scott Group: Your next question comes from the line of Scott Group with Wolf Research. Your line is open.

Speaker Change: Your next question comes from the line of Scott Group with Wolf Research. Your line is open.

Scott Group: Hey, thanks. Afternoon, guys. So pretty dramatic improvement in the broker, ICS, gross margin in the quarter. Any thoughts? Is that the market? Is that in your mind more specific to you, and how sustainable is that?

Scott Group: Hey, thanks afternoon guys. So, pretty dramatic improvement in the brokerage, ICS, Gross Margin in the quarter. Any thoughts? Is that the market? Is that in your mind more specific to you? And how sustainable is that? And then just separately, you know, I think the last couple of years in Q4, we've had some pretty big insurance accruals just catch up. Any color on how to think about that? And in Q4 this year. [inaudible]

John Kula: And then just separately, I think the last couple of years in Q4, we've had some pretty big insurance or cruels just catch up. Any color on how to think about that in Q4 this year?

Scott Group: Scott, I'll start with the first question, and then I'll maybe throw it to John Kula for the second part there. You know, the gross margin percent that we see in Q3, I think, is unique to JD and the focus and the work that we've been trying to accomplish. Now, you know, we'll see when some others release, but certainly against what we were seeing in earlier quarters of the year, that feels like it's unique to us. And I really do think it's a testament to the type of phrase that we're going after, the customers and the value that we're providing to our customers, as well as the execution of our business in terms of our purchasing and leveraging our technology through JD on 360.

Speaker Change: Hello. Hello. Hello.

Speaker Change: The gross margin per cent that we see at Q3, I think is unique to J.D. Hunt and the focus in the work that we've been trying to accomplish. Now, we will see with some others release, but certainly against what we were seeing in earlier quarters of the year, that field like it's a unique task.

Speaker Change: and I really do think it's the testament to the type of phrase that we're going after, the customers and the value that we're providing to our customers.

Speaker Change: as well as the execution of our business in terms of our purchasing and leveraging our technology through Jamie 360, and I think that those all come together for us.

Scott Group: And I think that those all come together for us in a unique way in Q3. Now, you know, we have seen more recently disruption with the back-to-back hurricanes and the Southeast and Florida, as Shelley mentioned at the opening comments. And so we see little things happening there that can have the potential to put pressure on us, but we also saw that a little bit leading into Fourth of July and then a solution back up for us in terms of the book of break that we have. So I do feel like we're capitalizing and trying to maximize what that could be for us, and I'm really proud of the great work that the team has done.

Speaker Change: in a unique way in Q3. Now, you know, we have seen more recently disruption with the back-to-back hurricanes in the Southeast and Florida, as Shelley mentioned, at the opening count-nets. And so we see little things happening there that can have the potential to put pressure on us, but we also saw that a little bit leading in to Fourth of July , and then a solution back up for us in terms of the book afraid that we have. So, I do feel like we're capitalizing and trying to maximize what that could be for us.

Shelley Simpson: Hey, Scott, it's Shelley. I might just add, we don't model and aren't modeling for a 17 plus percent margin that's historically very high for the market. So it's a, you know, anything in the average of 14 to 15 would be more norm. And so, you know, there have been some things that ICS has done and some key customers that they're working closely with. And I think that's yielded some improvement in third quarter. And we'll see what happens here moving forward.

Shelley Simpson: And I'm really proud of the great work that the team has done. Hey Scott, it's Shelley, I might just add, we don't model and aren't modeling for a 17 plus percent margin that's historically very high for the market. So it's a, you know, anything in the average of 14 to 15 would be more norm. And so, you know, there have been some things that ICS has done and some key customers that they're working closely with. And I think that's yielded some improvement hand third quarter. And we'll see what happens here moving. Moving forward. We'll see you in the next video.

John Kula: Hey, Scott, this is John Kulo, and actually I thought maybe Shelley was going to take the insurance question point. Yeah, so to your point, we did, over the last couple of years, we had some, some more significant charges and various borders for insurance. That was a little bit more of circumstances around the dramatic increases in where some of these settlements were going. And as it was layered against our insurance structure at the time. And so do feel like we've made a lot of good progress and going through our claims, working with our actuaries and our attorneys.

Shelley Simpson: and Scott, this is John Kuhlow, and actually I thought maybe Shelley was going to take the insurance question point. Yeah, so to your point, we did over the last couple of years, we had some more significant charges and various orders for our insurance. That was a little bit more of...

Shelley Simpson: Certain stances around the dramatic increases in where some of these settlements were going. And as it was layered against our insurance structure at the time. And so do feel like we've made a lot of good progress in going through our claims, working with our actuaries and our attorneys. And feel like we're in a good spot with respect to our insurance accruals.

John Kula: And feel like we're in a good spot with respect to our insurance accruals.

Ravi Shanker: Your next question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open.

Speaker Change: Your next question comes from the line of Ravi Shankar with Morgan Stanley, your line is open.

Ravi Shanker: Thank you very much, everyone. I just want to follow up on the BNSS commentary.

Ravi Shanker: I think you said that you don't expect anything to materially change, but so are you saying that you don't think they're going to do TSR at all and if they did, does that change your go-to-market strategy with them anyway? Thanks.

Speaker Change: Thanks for reading everyone. I just want to follow up on the BNSS commentary. I think you said that you don't expect anything to materialy change, but are you saying that you don't think they're going to do PSR at all and if they did, does that change your go to market strategy with them anyway?

Darren Field: Well, first of all, Ravi, yes, you heard us loud and clear. I don't believe BNSS is implementing TSR. They have certainly engaged with us for decades now in how can we be more efficient and more effective together. Now that we are largely the only channel at BNSS, I would say that that dialogue has ramped up to another gear, and together we work together on how can we drive efficiency for each other? But most importantly, BNSS listens to us, talk about what our BCOs need and want from the market. And we feel like that is very different than what we have experienced from railroads implementing TSR.

Speaker Change: Well, first of all, Robbie, yes, you heard us loud and clear, I don't believe BNSF is implementing PSR. They have certainly...

Speaker Change: Engage with us for decades now in how can we be more efficient and more effective together? Now that we are largely the only channel at BNSF, I would say that that dialogue has ramped up to another year. And together we work together on how can we drive efficiency for each other, but most importantly.

Speaker Change: Being a set of lessons to us, talk about what our BCOs need and want from the market.

Speaker Change: and we feel like that is very different than what we have experienced from railroad implementing PSR. Certainly, the way that they listen to what BCOs want and need has us very encouraged and we're certain at all levels at B&SF. We have their commitment that PSR is not part of their strategy.

Darren Field: Certainly, the way that they listen to what BCOs want and need has us very encouraged, and we're certain at all levels at BNSS, we have their commitment that TSR is not part of their strategy; growing their intermodal business is part of their strategy. All that being said, their margin isn't what they want it to be; our margin isn't what we want it to be. So together, we have to deliver excellence in our service execution, and we have to go repair each other's margins together in the market, and we stand ready to do that with our customers just as soon as that is possible.

Speaker Change: Growing their intermodal business is part of their strategy, all that being said.

Speaker Change: Their margin isn't what they want it to be, our margin isn't what we want it to be. So together we have to deliver excellence in our service execution and we have to go repair each other's margins together in the market.

Speaker Change: and we stand ready to do that with our customers just as soon as that is possible.

Tom Wadewitz: Your next question comes from the line of Tom Wadewitz with UBS; your line is open.

Speaker Change: Your next question comes from the line of Tom Waitowitz with UBS. Your line is open.

Tom Wadewitz: Yeah, a good afternoon. I'm going to ask a question on intermodal; hope that's okay with you, Brad. You've had a pretty good mix of questions on other spots. But let's see if I can go back to the comment during on normal peak season. When you say normal, is that normal seasonal, you know, kind of 4K versus 3K? Was it normal year over year? I don't, I guess, you know, it still seems like they're probably looking at the container imports. Would have been some strength that wouldn't continue. So I don't know if there's a way to put a little more on that. Maybe another way to look at it would be, you know, if you go back over time and say, hey, sometimes there are reasons why customers ship more in terms of imports in, you know, June, July, August versus a bit later, October, November.

Tom Waitowitz: Yeah, a good afternoon. I'm going to ask a question on intermodal hope that's okay with you Brad. You've had a pretty good mix of questions on others, but let's see.

Tom Waitowitz: If I can go back to the comment, Darren, on normal peak season, when you say normal is that normal season, you know, kind of fork you versus three key, is it normal year over year? I don't, I guess that.

Tom Waitowitz: You know, it still seems like they're probably looking at the container imports, would have been some strength that wouldn't continue.

Tom Waitowitz: I don't know if there's a way to put a little more on that.

Speaker Change: Maybe another way to look at it would be...

Speaker Change: You know, if you go back over time and say, hey, sometimes there are reasons why customers ship more in terms of imports and, you know, June's a lie August versus a bit later October November. So I just wonder if you could kind of look back on historical and maybe offer a little more on how you think about normal in terms of interval volumes.

Darren Field: So I just wonder if you could kind of look back on historical and maybe offer a little more on how you think about normal in terms of interval volumes.

Darren Field: Well, when I said normal, I would say that the sequential changes that we go from Q2 to Q3 to Q4 and the way our dialogue has gone with our customers in terms of what their expectations are, what their forecasts are, and that accuracy in which they forecast their needs. All of those have returned to what we would call normal pre-pandemic levels. We have we don't have customers telling us, hey, we're going to have a much weaker demand during the fourth quarter than what we told you just a month ago. None of that is going on today.

Speaker Change: Well, when I said normal, I would say that this sequential change is that we go from Q2 to Q3 to Q4, and the way our dialogue has gone with our customers in terms of what their expectations are, what their forecasts are, and that accuracy in which they forecast their needs. All of those have returned to what we would call normal pre-pandemic levels.

Speaker Change: Um, we have...

Speaker Change: We don't have customers telling us, hey, we're going to have a much weaker demand during the fourth quarter than what we told you just a month ago. None of that is going on today. Again, I'm not going to break down for you how many customers told us they did move, pull some forward, some did.

Darren Field: Again, I'm not going to break down for you how many customers told us they did move, pull some forward; some did, but I don't think it's this overwhelming market story for us. It certainly has been a factor. I don't want to ignore it, but at the same time, we expect our volumes in the fourth quarter to continue to be strong. Demand from Southern California, the import volumes in the way that imports floating to the west coast ports throughout the summer, that didn't translate to intermodal market.

Speaker Change: But I don't think it's this overwhelming market story for us, it's certainly...

Speaker Change: Has been a factor, I don't want to ignore it, but at the same time we expect our volumes in the fourth quarter to continue to be strong demand from Southern California, the import volumes and the way that imports flowed into the West Coast ports throughout the summer that didn't translate to Intermodal Market. There are warehouses with inventory in the built for PC's and shipping on the West Coast.

Darren Field: There are warehouses with inventory in the built for PCs and shipping on the west coast, and so we do feel like this is what I would consider normal. I don't know that I've defined it the way you want me to, but that's the way I'm going to define it today.

Speaker Change: We do feel like this is what I would consider normal. I don't know that I've defined it the way you want me to, but that's the way I'm going to define it today.

Chris Wetherbee: Your next question comes from the line of Chris Weather, be with Wells Fargo; your line is open. Yeah, thanks.

Speaker Change: Your next question comes from the line of Chris Weatherby with Wells Fargo, your line is open.

Chris Wetherbee: Good afternoon. So I guess, Gary, you had noted a couple of things that I thought were interesting. The first was the comment about some Eastern loads, potentially moving over from truck competitions. So I guess I want to get a sense that maybe what you were seeing there and what you think or the driving factors given the pricing environment that's been persistent for a while there. You know, I guess in the, in the second piece of it, yes, when you think about cough as well, I think there's some re-positioning or some position in cough related to the strong growth off of the west coast. Is that something that we think sticks around for an extended period or maybe until the boxes on the sidelines start to get drawn down, you know, more? I just make sure you say you think of the durability of that type of cough.

Speaker Change: Yeah, he thinks did that for him, um, six, so I guess.

Chris Weatherby: Darren you had noted a couple things that I thought were interesting. The first was the comment about some Eastern loads, potentially moving over from short competitions. So I guess I want to get a sense of...

Chris Weatherby: Maybe what you were seeing there, what you think were the driving factors given the pricing environment that's been persistent for a while there.

Chris Weatherby: You know, I guess in the...

Chris Weatherby: And the second piece of it, I guess, when you think about Kauff as well, I think there's some repositioning or some position in Kauff related to the strong growth of the West Coast. Is that something that we think sticks around for an extended period, or maybe until the boxes on the sidelines start to get drawn down? You know, more, I just am curious, how you think of the durability of that type of Kauff? [inaudible]

Darren Field: Okay, all good. Good questions, Chris.

Darren Field: So certainly let me touch on the, the empty's first. So I don't know how to call it durable, whether it's going to stick or not. The balance of Southern California is inbound and outbound. There certainly is an uptick in demand for the eastbound volume coming off the West Coast, whereas there's not necessarily an uptick in demand for westbound flows. If the need to support capacity in Southern California sustains at the kind of new ratio today that we're experiencing now, then certainly that has to find its way into the economics with the customers. I don't think that will completely surprise our customers, but it certainly is a factor as we move forward.

Speaker Change: Okay, all good questions, Chris, so certainly let me touch on the empties first, so.

Speaker Change: I don't know how to call it durable whether it's going to stick or not, the balance of Southern California's inbound and outbound.

Speaker Change: There certainly is an uptick in demand for the eastbound volume coming off the west coast, where there's not necessarily an uptick in demand for westbound flows.

Speaker Change: If the need to support capacity in Southern California sustains that the kind of new ratio today.

Speaker Change: that we're experiencing now, then certainly that has to find its way into the economics with the customers. And I don't think that will completely surprise our customers, but it certainly is a factor as we move forward. I think that in 2024, it's a little more visible because the growth opportunity that we saw off the West Coast was stronger than it was in the East, so it's sort of getting a little bit extra spotlight on the demand for supplying capacity out West in order to source that capacity. Now in the East.

Darren Field: I think that in 2024 to a little more visible because the growth opportunity that we saw off the west coast was stronger than it was in the east. So it's sort of getting a little bit extra spotlight on the demand for supplying capacity out west in order to source that capacity. Now, in the east, I did say that we had some shippers moving small business to us. What we're encouraged by is every single week we've had new startups in the east and and there. These are lots of customers, relatively small business segments. So this can be a hundred loads a year; it can be a thousand loads a year.

Speaker Change: I did say that we had some shippers moving small business to us, what we're encouraged by is every single week we've had new start-ups in the East and there.

Speaker Change: These are lots of customers, relatively small business.

Darren Field: These aren't big, big chunks. But customers are coming to us talking about their relationship more back to intermodal whether it be a sustainability effort on their part, maybe it's an effort because they want to get out in front of what they believe will be a tightening and the truck was market. It's also an acknowledgement of the better service performance that we have sustained for well over a year now in the east. And I think that we're very encouraged by the acknowledgement from the customers that the service quality has earned intermodal a new right at the table at many of those shippers, and that's beginning to play out.

Speaker Change: The segment, so this can be a hundred loads a year, it can be a thousand loads a year, these aren't big, big chunks.

Speaker Change: But Customers are coming to us talking about

Speaker Change: and the relationship to shift more back to intermodal whether it be a sustainability effort on their part, maybe it's an effort because they want to get out in front of what they believe will be a tightening and the truck was market. It's also an acknowledgement of the better service performance that we have sustained for well over a year now in the East and I think that we're very encouraged by acknowledgment from the customers that the service quality has earned intermodal a new ride at the table at many of those shippers and that's beginning to play out.

Darren Field: And we certainly thought it was worthwhile to call out because it is. We sustained this opportunity with many, many customers for, you know, throughout the third quarter and look to gain momentum on that as we move forward.

Speaker Change: and we certainly thought it was worthwhile to call out, because it is, we've sustained this opportunity with many, many customers throughout the third quarter and looked to gain momentum on that as we move forward. I don't know Spencer if you want to comment on that part of it.

Spencer Frazier: I don't know, Spencer, if you want to comment on that part of it. Well, I think you're a hundred percent right there in thinking about how service connects to growth. And that also with the comment on, you know, where are customers thinking about for 2025. We get a couple questions consistently from our customers, and that they are number one. When is this market going to change? None of us have a crystal ball; they don't either. The other question is what do the best transportation and supply chain customers do with their kind of mix and strategies.

Spencer Frazier: Well, I think...

Spencer Frazier: Here are 100% right, Darren, in thinking about how service connects to growth. And that also with the comment on, you know, where are customers thinking about for 20, 25. We get a couple questions consistently from our customers and that they are number one. Wait at this market going to change.

Spencer Frazier: None of us have a crystal ball, they don't either. The other question is what do the best transportation and supply chain customers do with their kind of mix and strategies?

Spencer Frazier: And I would say whenever things start to change historically, customers have linked in to highway intermodal conversion. They've linked in to adding dedicated capacity or exploring the dedicated options for their private fleet. They've also linked in to really doing more with the best service providers in their live and drop networks that create efficiency and value for them. And so those are the conversations that we're starting to have; some of the things that we're starting to see. And it's really why we focus in on operational excellence across our entire business. It's so we can be in a position to serve our customers well as things changed.

Spencer Frazier: and I would say whenever things start to change historically, customers have linked in to high-weight intermole conversion.

Spencer Frazier: They've leaned in to adding dedicated capacity or exploring the dedicated options for their private fleet. They've also leaned in to really doing more with the best service providers in their live and drop networks.

Spencer Frazier: that create efficiency and value for them.

Spencer Frazier: and so those are the conversations that we're starting to have, some of the things that we're starting to see and it's really why we focus in on operational excellence across our entire business so we can be in a position to serve our customers well as things changed.

Shelley Simpson: I'm going to add one, one other thing: I think it is important through the pandemic, both on the up and the down, through this break recession. Our customers were challenged with telling us what shipments we would actually haul. So their ability forecast has been super difficult over the last four years. We're on our second quarter where the big compliance is in a reasonable level in the mid 80s. Now in intermodal and JBT, those are two networks that really need more stability to build out and create more efficiency in a network. So, as we come into this mid season, our network is out of balance because of our customers are coming back to balance.

Speaker Change: I'm going to add one another thing, I think it is important through the pandemic, both on the up and the down through this freight recession, our customers were challenged with telling us.

Speaker Change: What shipments we would actually haul, so their ability to forecast has been super difficult over the last four years. We're on our second quarter where the big compliance is in a reasonable level. In the mid-80s, now in Intermodal and JBT, there's two networks that really need more stability to build out and create more efficiency in a network. So as we come into this big season, our network is out of balance because of our customers now coming back to balance. [inaudible]

Shelley Simpson: So we're coming into this mid season knowing and being able to predict better as our customers and us, whether it's network balance needs are inside intermodal, inside JBT. So you're going to see a start to fill in those gaps to the empties and all the things we're having to do to service our customers that are currently short-term cost. We will be able to solve for those over this next mid season, not necessarily solving in one mid season, but you'll see that start to be solved for over the next couple of mid seasons. That's a positive sign for our business moving into 25.

Speaker Change: So we're coming in to this bit season, knowing and being able to predict better by their customers and us, whether it's network balance these are inside intermodal, inside JBT's, you're going to see a start to fill in those gaps to the empties and all the things we're having to do to service our customers that are currently short-term cost, we will be able to solve for those over this next bit season, not necessarily solving in one bit season, but you'll see that start to be solved for over the next couple of bit season. That's a positive sign for our business in the end of 25.

David Zazula: Your next question comes from the line of David Zazula with Barclays. Your line is open.

Speaker Change: Your next question comes from the line of David Zazulat with Barclays. Your line is open.

David Zazula: Hey, thanks for squeezing me in. For Brad or Shelley, you guys have talked about doing some things to repair intermodal margins.

David Zazulat: Hey, thanks for squeezing me in. For Brad or Shelley, you guys have talked about doing something to repair intermodal margins.

David Zazula: I wonder if you could talk. I need you to talk about your relationship with the NSF. Well, we're going to talk about the strategic nature of that relationship. Maybe if it's a little bit more dynamic and some things you could do with that relationship to try to encourage better returns for you that can hopefully get you back towards those margin targets. Okay, David, therein, and I'll try to comment on that. I think from a strategic standpoint with BNSF, the areas that were focused on together to drive efficiency for each other come from growing growth in our intermodal business today is a contributor to improving our margins certainly now.

David Zazulat: I'm wondering if you could talk about your relationship with the NSF? Well, what if you could talk about the strategic nature of that relationship? Maybe if it's a little bit more dynamic and some things you could do with that relationship to try to encourage better returns for you that can hopefully get your back towards those margin targets.

Speaker Change: Okay, David, that's Darren and I'll try to comment on that. I think from a strategic standpoint with B&SF, the areas that were focused on together to drive efficiency for each other come from growing.

Speaker Change: Growth in our intermodal business today is a contributor to improving our margins certainly now. Is there something we're going to do that?

Darren Field: Is there something we're going to do that creates some new model or new method of execution? No, I don't think we're going to change the way we function in terms of we've got a Draven that goes in or a truck that goes up and picks a load up. We've got a lot of assets that we own in order to accommodate this growth, and we'll be very focused on growing together. And then how can we get utilization out of the assets for both the NSF and JV on, so from a margin repair standpoint. The focus that we have today is to grow our business, look for efficiency in our network, how can we fill up more empties, which would certainly drive some benefits to our margin, and then, and then again there needs to be some core pricing work done in order to get to our goals certainly.

Speaker Change: Create some new model or new method of execution.

Speaker Change: Now, I don't think we're going to change the way we function in terms of, we've got a drainment that goes in, or our truck that goes up and takes a load up, we've got a lot of assets that we own in order to accommodate this growth and we'll be very focused on growing together and then how can we get utilization out of the assets for both BNSF and JV? So, from a margin repair standpoint.

Speaker Change: The focus that we have today is to grow our business, look for efficiency in our network. How can we fill up more MDs which would certainly drive?

Speaker Change: some benefits to our margin and then...

Speaker Change: and then again, there needs to be some poor pricing work done in order to get to our goals certainly. So that's how we'll focus. I don't think that any one project with B&SF is going to unlock margin with J.B. Hicks necessarily. Hey Sarah, we have time for one more question.

Darren Field: So that's how we'll focus.

Darren Field: I don't think that any one project with BNSF is going to unlock margin with with JV hot necessarily.

Bascome Majors: Hey Sarah, we had time for one more question. Question comes from the line of best goal majors with Susquehanna.

Speaker Change: Question comes from the line of best-go-magers with Susquahana, your line is open.

Bascome Majors: Your line is open. There's understandably been a lot of focus on the opportunity to restore margin and returns the pricing over the next couple of years.

Speaker Change: There's understandably been a lot of focus on the opportunity to restore margin and returns the uprising over the next couple of years. But if we look at, you know, three, five years beyond, where do you guys see the biggest opportunities to grow operating income more secularly in the business and at attractive risk adjusted returns? And, you know, from where you sit today, does that look any different than what we'd say you did over the last five to ten? Thank you.

Shelley Simpson: But if we look at three, five years beyond, where do you guys see the biggest opportunities to grow operating income more secularly in the business and at attractive risk-adjusted returns. And from where you sit today, does that look any different than what we say you did over the last five to 10? Thank you. Yeah, thank you. I'll take that, and I would say if you look at all five of our business units, the market size and market opportunity, we think, is well positioned for each one of those five. I don't see our profile changing significantly if you exclude the last two years.

Speaker Change: Yep, thank you back so I'll take that. And I would say if you look at all five of our business units, the market size and market opportunity, we think it's well positioned for each one of those five, I don't see our profile changing significantly, could you exclude the last two years.

Shelley Simpson: Our major profile of the last two years is that outside of our ranges for the majority of our segments. So if you look over the last five to 10 years, I would see those margin profiles in what we've given guidance on from margin targets really being in line. Our two largest segments, both intermole and dedicated, although they are very large, the market size opportunity is even larger. So our ability to take both of those segments into high growth categories will just continue our operating income performance inside those. And as highway bus JVT and ICS and final mile continue to move forward, it's going to be difficult for them to catch the size of both intermole and dedicated.

Speaker Change: I've moved your profile for the last two years with the outside of our ranges for the majority of our segments.

Speaker Change: So if you look over the last five to ten years, I would see those marks in profile and what we've given guidance on for margin targets.

Speaker Change: really being in line. Our two largest segments, both intermobile and dedicated, although they are very large, the market size opportunity is even larger. So our ability to take both of those segments into high growth categories will just continue our operating income performance inside those. And as highway bus JVT and ICS and Final Mile continue to move forward, it's going to be difficult for them to catch the size of both intermobile and dedicated. I think you'll see them continue profit improvement. And also revenue growth overall, but adults here makes changing significantly. Thank you.

Shelley Simpson: So I think you'll see them continue profit improvement and also revenue growth overall, but I don't see our mix changing significantly.

Unknown Executive: This concludes the question and answer session.

Shelley Simpson: I'll turn the call to CEO Shelley Simpson for closing remarks. Thank you, and I'd like to thank everybody for spending time with us here on the call. And you've heard a lot of discussion from us. It's a delight time on intermodal. We've been working really hard on controlling our costs and things that we can control. You've heard us talk about providing excellent service to our customers. Very important for us right now that we make sure our customers know we want to be number one in their minds when they think of a good two of who they want to use.

Speaker Change: This concludes the question and answer session I'll turn the call to CEO Shelley Simpson for closing remarks

Shelley Simpson: Thank you, and I'd like to thank everybody for spending time with us here on the call, and you've heard a lot of this question from us, just to do a lot of time on intermodal, you know, we've been working really hard.

Shelley Simpson: on controlling our costs and things that we can control. You've heard us talk about providing excellent service to our customers, very important for us right now, that we make sure our customers know we want to be number one in their minds when they think of a go to who they want to use, who want them to think of J behind a cross or three to services. We are focused on controlling our costs where we can, but we are preparing for future transportation needs. So think about the investments that we made and our people technology capacity being ready for our customers and then we will continue maintaining our folks on safety.

Shelley Simpson: We want them to think of J behind a cross or three to services. We are focused on controlling our costs where we can, but we are preparing for future transportation needs. So we think about the investments that we've made and our people, technology capacity being ready for our customers. And then we will continue maintaining our folks on safety. So we've been working hard. I am proud several things that have happened this quarter like our safety performance continuing to improve our growth in Intermodal volume. Really proving out that we can take share off the highway into intermodal over the long term or six quarters of dedicated selling 250 trucks or more or final mile business.

Shelley Simpson: So we've been working hard. I am proud of several things that have happened this quarter like our safety performance continued to improve our growth and intermodal volume, really proving out that we can take share off the highway into intermodal over the long term or six quarters of dedicated, selling 250 trucks or more or final mile business, continuing to repair margins. ICS has good improvement but not very yet, but improvement on cost and quality revenue and furthering diversifying their customer based JVT's 5-year high on service in total. And so I'm very proud of all the work of our 33,000 people. I'm confident and I remain confident about our opportunities but

Shelley Simpson: Continuing to repair margin, ICS has good improvement, but not very yet, but improvement on cost and quality revenue and furthering diversifying their customer base. JVT is five year high on service in total. And so I'm very proud of all the work of our 33 thousand people. I'm confident, and I remain confident about our opportunities, but although we've done a lot of great work. There's still so much that we have to do. We are still battling our way through this part of the phrase cycle. And I think that's really important. So we're going to maintain our focus on excellence for our customers, driving value, and we're going to battle through the last part of this federal session.

Shelley Simpson: Although we've done a lot of great work, there's still so much that we have to do. We are still battling our way through this part of the phrase cycle. And I think that's really important. So we're going to maintain our focus on excellence for our customers, driving value, and we're going to battle through the last part of this prayer recession. There's still too much capacity in the market. We need that market to really move into more equilibrium, really good forward to seeing how that plays out into 2025. But our focus will remain on those four pieces that's spoken about. Thank you, Jim, for your time. We look forward to talking with you next. Thanks for that.

Shelley Simpson: There's still too much capacity in the market. We need that market to really move into more equilibrium. We're looking forward to seeing how that plays out in 2025. But our focus will remain on those four pieces that's spoken about.

Shelley Simpson: Thank you for your time.

Unknown Executive: We look forward to talking with you next quarter.

Unknown Executive: This concludes today's conference call. Thank you for joining. You may now disconnect.

Speaker Change: Thank you for watching.

John Roberts: and John Roberts.