Brian Ossenbeck

Brian Ossenbeck inquired about the operational recovery after the recent severe winter storm, whether lost volume is expected to return, and ArcBest's outlook on its network footprint (door count, market positions) for the current and next couple of years, considering reduced capital expenditures.

Answer

Seth Runser, President and CEO of ArcBest, discussed navigating weather events using invested tools, noting that the recent storm led to one of the worst Januaries for service center closures. He confirmed the OR impact is factored into guidance and emphasized the company's ability to dynamically adjust its network. Matt Beasley, Chief Financial Officer, echoed thanks to employees for their dedication during disruptions and highlighted the addition of nearly 800 doors to the real estate network. He expressed confidence in the current capacity, mentioning strategic investments like the Denver project, and stated that future capital expenditures would be strategic and opportunistic.

Brian Ossenbeck asked about the current state of operations after the recent severe storm, the recoverability of lost volume, and ArcBest's long-term footprint strategy regarding door count and market positions, especially given reduced CapEx.

Answer

President and CEO Seth Runser detailed the significant impact of the recent storm, noting it was one of the worst Januaries for service center closures, but highlighted the company's improved ability to navigate disruptions due to investments in tools and network capacity. CFO Matt Beasley added that ArcBest feels good about its capacity, having added nearly 800 doors to its real estate network over the last year, with strategic investments in organic builds and market opportunities, and upcoming projects like Denver adding significant capacity.

Brian Ossenbeck from JPMorgan requested more details on service levels and their connection to new freight receptivity and the recent GRI. He also asked for commentary on the NMFTA classification changes and how ArcBest is managing the transition.

Answer

Matt Godfrey, President of ABF Freight, discussed service, highlighting collaborative efforts and optimization initiatives that have driven efficiency. On the NMFC changes, President & CEO-Elect Seth Runser called it a positive for the industry. He stated ArcBest anticipated the change, proactively worked with customers, and leverages its proprietary BoxVision dimensioning technology, which made the implementation a 'non-event'.

Brian Ossenbeck asked for the rationale behind targeting the low end of the CapEx range, context on U-Pack's performance versus prior housing downturns, and when the Vaux (Vaux Vision) pilot would no longer be a non-GAAP adjustment.

Answer

CFO Matt Beasley cited the pace of real estate investments and potential property sales for the lower CapEx target. On Vaux, he said the accounting treatment will be reviewed as the business scales. CEO Judy McReynolds confirmed the current U-Pack weakness is consistent with past housing slumps, like in 2006.

Brian Ossenbeck of JPMorgan Chase & Co. asked for context on Q3 disruptions from hurricanes and strikes, questioned the October yield dynamics, and inquired about changes to the CapEx plan and interest in acquiring former Yellow Corp. facilities.

Answer

President Seth Runser noted that disruptions weakened demand in September and October and advised focusing on sequential trends due to unusual 2023 comps. CFO Matt Beasley explained the CapEx reduction was due to delayed real estate purchases. An executive confirmed ArcBest acquired four Yellow facilities and has submitted interest for more in the next auction phase.

Brian Ossenbeck asked Tracy Robinson about the underlying earnings power of the business, given the shift from double-digit to mid-single to flattish earnings growth despite headwinds. He also inquired if this is the appropriate time to increase CapEx through the cycle, noting the current year's reduction.

Answer

Tracy Robinson, CEO, explained that CN has invested significantly in its network (Edson Sub, Vancouver corridor, Prince Rupert, EJ&E) and locomotive fleet (now middle of the pack) to prepare for future growth. She emphasized the 18 months of structural cost reduction, which has made the 'underlying margin engine healthier.' She attributed current earnings trends to substantial mix and tariff impacts, expressing hope for normalization. Robinson stated that CN is 'poised' with existing capacity and will absorb growth as it comes, noting that weakness in forest products also frees up capacity in the Western region.

Brian Ossenbeck asked Tracy Robinson about the underlying earnings power of the business, given the shift from double-digit to mid-single-digit and now flattish EPS growth. He also questioned if more capital expenditure is needed through the cycle, despite the current reduction.

Answer

Tracy Robinson, President and CEO, explained that CN has invested significantly in its network (Edson Sub, Vancouver corridor, Prince Rupert, EJ&E) and modernized its locomotive fleet, positioning it for future growth. She emphasized structural cost reduction efforts over the past 18 months have made the underlying margin engine healthier, despite current substantial mix and tariff impacts. She believes CN is well-poised with its Western network, strong ag sector, and growing mining opportunities.

Brian Ossenbeck requested more detail on the proactive cost-saving measures being taken in response to the negative traffic mix, particularly in segments like forest products and refined products.

Answer

CEO Tracy Robinson clarified that while weakness in forest products and metals may persist due to tariffs, the issues in petroleum and chemicals were more temporary. EVP & Chief Field Operating Officer Derek Taylor detailed the operational response, including furloughing 740 T&E employees and storing locomotives and cars, while maintaining the ability to recall resources quickly as volumes rebound.

Brian Ossenbeck asked for clarification on the exposure of Canada-to-U.S. business via Canadian ports to tariff uncertainty and questioned the company's headcount and network flexibility after a challenging weather quarter.

Answer

Remi Lalonde, Chief Commercial Officer, quantified the exposure, stating that U.S. business is about one-third of their total international book. Patrick Whitehead, Chief Network Operations Officer, and CEO Tracy Robinson addressed network flexibility, noting a quick recovery post-weather, the presence of furloughed employees ready for recall, and significant year-over-year labor productivity improvements.

Brian Ossenbeck from JPMorgan followed up on West Coast port volumes, asking if lingering labor uncertainty is a factor, and also requested context on headcount and average compensation for Q4.

Answer

Chief Commercial Officer Remi Lalonde confirmed that labor uncertainty at West Coast ports and the Port of Montreal are headwinds. CFO Ghislain Houle addressed compensation, stating that Q4 average comp per employee is expected to be higher sequentially due to reduced capital work during the winter months.

Brian Ossenbeck asked for comments on the implications of the merger application filing for domestic intermodal and the broader competitive landscape, including a peer's Chapter 11 filing. He followed up by asking for more color on the 2026 CapEx increase, specifically if it's purely for replacement or includes growth.

Answer

Jim Filter, EVP and Group President of Transportation and Logistics, stated that the merger submission contained no significant new information and reinforced confidence in their intermodal team. He highlighted Schneider's strong intermodal position, with seven consecutive quarters of growth, differentiation in Mexico, and the Fast Track offering. Darrell Campbell, EVP and CFO, and Mark Rourke, President and CEO, clarified that the 2026 CapEx plan is primarily replacement-based to protect the aged fleet, focusing on asset efficiency rather than truck count growth. Mark Rourke added that lower CapEx in 2025 was partly due to tariff clarity and timing.

Brian Ossenbeck of JPMorgan inquired about the implications of the recently filed (and to be refiled) merger application on domestic intermodal for Schneider, and the broader competitive landscape given a peer's Chapter 11 filing. He also asked for more detail on the 2026 CapEx increase, specifically if it's purely for replacement or includes growth.

Answer

Jim Filter, EVP and Group President of Transportation and Logistics, stated that the merger submission reinforced confidence in Schneider's Intermodal team and their ability to navigate opportunities, noting no significant new information. He highlighted Schneider's strong Intermodal position, with seven consecutive quarters of volume growth, particularly in Mexico and with the Fast Track offering. Darrell Campbell, EVP and CFO, and Mark Rourke, President and CEO, clarified that the 2026 CapEx of $400-$450 million is primarily replacement-based to protect the aged fleet, with a focus on asset efficiency over equipment growth, and some timing shifts from 2025.

Brian Ossenbeck from JPMorgan Chase & Co. asked for management's initial perspective on the potential TransCon rail merger, its implications for intermodal growth and partnerships, and any areas of caution. He also followed up on the timing of peak season surcharges.

Answer

CEO Mark Rourke stated that it is too early to take a formal position on the rail news, emphasizing that 'details really matter' and any outcome must benefit customers and shareholders. He stressed Schneider's long history of adapting to landscape changes. EVP Jim Filter explained that the earlier-than-normal peak season surcharges are demand-driven, implemented to manage network efficiency and costs as customer volumes surge.

Brian Ossenbeck inquired about the impact of expected import deceleration on Schneider's updated guidance and sought details on new business wins in Intermodal and competitive pressures in the Dedicated segment.

Answer

EVP & Group President Jim Filter stated that while 15-25% of Intermodal business is tied to imports, new business wins are expected to largely offset potential volume declines. He also noted the potential for a 'bullwhip' effect if trade restarts abruptly. CFO Darrell Campbell confirmed that guidance scenarios account for tariff impacts and moderating prices. CEO Mark Rourke added that new Intermodal awards will begin implementing in Q2 and that Mexico remains a durable strength. Filter specified that the most competitive part of the Dedicated market is in standard equipment, while Schneider focuses on differentiated areas like private fleet conversion and specialty equipment.

Brian Ossenbeck inquired about capacity leaving the market, particularly among small fleets, the number of stacked intermodal boxes, and the expected impact from normalizing import patterns.

Answer

EVP and Group President Jim Filter confirmed that capacity reduction from small fleets is ongoing. He reported that about 10% of Schneider's intermodal boxes are stacked, and the company has the capacity to grow volume by 30%. Regarding imports, he noted that shipper actions are varied and supply chains are complex, so no dramatic shifts are anticipated.

Brian Ossenbeck asked for clarification on the amount of retention expense included in the OpEx guidance and its impact. He also asked COO John Orr about the potential application and impact of reciprocal switching in an Eastern network, drawing on Orr's experience in Canada, and whether this issue would persist with or without M&A.

Answer

CFO Jason Zampi clarified that retention expenses are part of merger-related costs and are excluded from the non-GAAP OpEx guide. COO John Orr stated that providing exceptional service through PSR 2.0 would negate the need for reciprocal switching, differentiating the U.S. market from Canada's duopoly. He emphasized the company's commitment to reliability and resilience, aiming to give customers no reason to seek alternatives.

Brian Ossenbeck asked about the amount of retention expense included in Norfolk Southern's OpEx guidance and its performance. He also sought COO John Orr's perspective on the potential impact and challenges of reciprocal switching if applied to the Eastern network, drawing on his Canadian experience.

Answer

CFO Jason Zampi clarified that retention expenses are part of merger-related costs and excluded from the non-GAAP OpEx guidance. COO John Orr stated that proposed reciprocal switching reflects customer service dissatisfaction, but Norfolk Southern's commitment to exceptional service through PSR 2.0 aims to negate the need for such measures, distinguishing the U.S. market from Canada.

Brian Ossenbeck from JPMorgan asked for elaboration on how intermodal business could return to Norfolk Southern's network without a merger, focusing on service or price. He also inquired about the sustainability of fuel efficiency improvements and the potential to achieve best-in-class levels compared to peers.

Answer

Chief Commercial Officer Ed Elkins asserted that the Union Pacific-Norfolk Southern route via Meridian Speedway is the fastest and shortest for West Coast to Southeast freight, combined with exceptional terminal capacity, making it a compelling value proposition for cargo owners. Chief Operating Officer John Orr confirmed that fuel efficiency is a strategic priority, driven by disciplined management of speed, locomotive productivity, and a revamped train service plan. He noted that investments in upgrading the locomotive fleet to nearly 80% AC, combined with running 23% less horsepower per ton year-to-date compared to 2019, provide significant runway for further improvements.

Brian Ossenbeck followed up on intermodal business returning to the network, asking what changes (service, price) would facilitate this. He also questioned if Norfolk Southern's fuel efficiency improvements could reach best-in-class levels, given past challenges.

Answer

Chief Commercial Officer Ed Elkins highlighted the Meridian Speedway as the fastest route for West Coast to Southeast freight and Norfolk Southern's exceptional terminal capacity. Chief Operating Officer John Orr attributed fuel efficiency gains to a comprehensive strategy balancing speed, locomotive productivity, and fuel burn, noting room for further improvement. President and CEO Mark George added that the upgrade of the locomotive fleet to nearly 80% AC from high teens six years ago provides significant runway for future efficiencies.

Brian Ossenbeck asked for a quick follow-up on land sale timing for the full year and a more detailed question for John Orr about the network's improved resiliency and what market opportunities this creates, especially relative to peers.

Answer

CFO Jason Zampi clarified that full-year land sales are still expected in the $30-$40 million range, noting their lumpy nature. COO John Orr expressed satisfaction with the network's resilience, attributing it to capital investments and resource management. He highlighted the ongoing transformation with a new zero-based plan. CCO Ed Elkins added that the reliable service is helping win back market share lost over the past few years.

Brian Ossenbeck from JPMorgan Chase & Co. sought clarification on the timing of land sales and asked about the network's improved resiliency and the market opportunities it creates.

Answer

CFO Jason Zampi confirmed the full-year land sale forecast is unchanged at $30-$40 million, with lumpy timing. COO John Orr credited the network's resilience to capital investments and a new zero-based plan. CCO Ed Elkins added that this improved service is enabling them to win back market share.

Brian Ossenbeck asked whether the value from improved and more consistent service is expected to translate more into market share gains or into upside on pricing and yield.

Answer

CMO Ed Boyle responded that the focus is on expanding wallet share with customers, both by reclaiming lost business and winning new-to-rail freight. He noted they have successfully translated service value into price, particularly in merchandise, and expect that to continue. CEO Mark George added that improved service provides leverage on both fronts: pricing and volume share recapture.

Brian Ossenbeck inquired about the future capital intensity of the business, given asset reductions, and how this connects to the company's plans for share repurchases.

Answer

CEO Mark George stated that reducing the locomotive fleet allows for lower and more focused capital deployment. He anticipates CapEx will decrease next year, enabling a modest resumption of share repurchases, supported by cash from line sales. An executive, likely COO John Orr, added that capital commitments for locomotives are being pushed back.

Brian Ossenbeck from JPMorgan Chase & Co. followed up on the 140 basis point sequential OR headwind, asking if it implies a fourth-quarter weighted improvement and questioned the confidence in volume growth.

Answer

Mark George, CFO, responded that he expects continuous productivity gains throughout the back half of the year. He projected that the third and fourth quarter operating ratios would look 'somewhat similar,' as ongoing productivity momentum would help offset the typical seasonal volume softness in Q4.

Brian Ossenbeck from J.P. Morgan asked for Keith Creel's perspective on the proposed reciprocal switching rules in the U.S., questioning their applicability compared to Canadian practices, potential concerns for CPKC, and the broader industry implications, especially regarding future M&A.

Answer

Keith Creel, President and CEO, stated that if CPKC provides good service, reciprocal switching isn't a threat. He highlighted differences between the proposed U.S. rules and Canadian interswitching, emphasizing the need for fairness, balance, and consideration of unintended consequences to avoid harming customers.

Brian Ossenbeck inquired about CPKC's perspective on reciprocal switching as proposed in the U.S., its applicability compared to Canada, potential concerns if implemented, and whether the industry will face this issue regardless of M&A.

Answer

President and CEO Keith Creel stated that good service negates the threat of reciprocal switching. He highlighted differences between Canadian and proposed U.S. models, emphasizing the need for fairness, balance, and consideration of unintended consequences, while agreeing that customers should have alternatives if service is poor.

Brian Ossenbeck from JPMorgan Chase & Co. asked if merger alternatives like partnerships have been exhausted, a requirement for approval, and whether CPKC's own recent integration challenges could be seen as a negative precedent for a more complex UP-NS merger.

Answer

CEO Keith Creel stated that the complexity of integrating two different systems is 'thousands fold' more difficult than integrating one's own, suggesting the risk for a UP-NS combination is immense and could make the 'entire nation sick.' He challenged whether the applicants had truly exhausted all partnership opportunities, citing CPKC's own successful 'step on, step off' interchange with NS in Chicago as an example of what can be achieved without a merger, and noted CPKC has not exhausted its own partnership opportunities.

Brian Ossenbeck of JPMorgan Chase & Co. asked for more detail on the minimal impact to cross-border traffic and inquired about the expected pace of the share buyback program.

Answer

EVP & CMO John Brooks noted that while there was some initial choppiness in auto and steel, cross-border flows have smoothed out, highlighting new auto parts business with Schneider. EVP & CFO Nadeem Velani added that the share buyback has been aggressive, with 20% of the program already complete, and they expect to finish the full 4% program by year-end.

Brian Ossenbeck questioned the assumptions behind the 2025 inflationary environment and asked for expectations regarding the timing and pace of the reinstated share buyback program.

Answer

EVP and CFO Nadeem Velani explained that inflation has moderated, with non-labor costs near 2-2.5% and labor inflation around 3%, creating an opportunity for margin improvement as the company targets pricing in the 4-4.5% range. On capital returns, Velani confirmed that significant deleveraging is complete and the company will resume shareholder returns in a balanced manner, addressing the dividend and then deploying substantial free cash flow to share repurchases.

Brian Ossenbeck asked if political uncertainty in the U.S. and Mexico has already impacted foreign direct investment and if competitor issues in Mexico create a grain market share opportunity for CPKC.

Answer

EVP and CMO John Brooks stated he has not seen a slowdown in customer investment plans in Mexico, noting that the fundamental benefits of a North American economy remain strong. Regarding grain, Brooks acknowledged that competitor challenges have created some opportunities, but emphasized that CPKC will remain disciplined and not oversell its network to ensure service reliability. He added that the second Laredo bridge span is a key sales tool that provides capacity certainty for future growth.

Brian Ossenbeck asked Eric Gehringer about 'doing hard' and raising the bar, specifically regarding Union Pacific's labor resource buffer for potential upside. He also asked Jim Vena about his M&A stance, including not addressing other rails' comments, focusing on the STB's three main points, and his lack of concern about publicly providing the 'red line' information.

Answer

Eric Gehringer, Executive Vice President of Operations, explained that hiring plans cover attrition and adjust for union agreements and technology initiatives, emphasizing non-labor productivity (fuel savings from modernizing locomotives, energy management systems). Jim Vena, Chief Executive Officer, clarified that Union Pacific carries extra people through guarantee payments, forming a hidden buffer. On the merger, Jim Vena dismissed other railroads' 'fiction' and reiterated confidence in the compelling case, accepting the 'red line' as part of the process despite not seeing its merit, emphasizing transparency.

Brian Ossenbeck asked Eric Gehringer, EVP of Operations, how Union Pacific plans to continue setting operational records and raising the bar, particularly regarding the labor-side resource buffer in case of positive upside or unforeseen uncertainties. He also asked Jim Vena, CEO, for an update on the M&A discussions, specifically whether Union Pacific is addressing comments from other railroads or solely focusing on the STB's three main points, and his level of concern about publicly providing the 'red line' (walk-away clause).

Answer

Eric Gehringer, EVP of Operations, explained that their 2026 hiring plan accounts for attrition and adjusts for technology initiatives and operational fundamentals. He highlighted significant non-labor savings from fuel efficiency programs, including locomotive modernization and energy management systems. Jim Vena, CEO, clarified that Union Pacific is not addressing 'fiction' from other railroads but is focused on the STB's specific questions. He reiterated his dislike for providing the 'red line' publicly, as he believes it doesn't add to the merger's merits, but confirmed it will be provided as part of the process, expressing confidence in the compelling case for the merger.

Brian Ossenbeck from JPMorgan Chase & Co. asked for a philosophical view on increasing shipper options through concepts like reciprocal switching or open access, and whether Union Pacific might consider a direct-to-shipper intermodal offering.

Answer

CEO Jim Vena explained that Union Pacific's philosophy is centered on providing high-level, tailored service to win business, regardless of the regulatory environment. He stated the focus is on leveraging technology and innovative solutions to make it easier for customers to use their network, thereby moving more freight from highways to rail and helping customers succeed in their own markets.

Brian Ossenbeck of JPMorgan Chase & Co. asked about the potential impacts of Section 301 tariffs on China and changes to the harbor maintenance tax for Canadian ports, as well as the effect on U.S. export grain.

Answer

EVP Kenny Rocker responded that customers need more certainty before making major supply chain shifts but that UNP is actively competing for U.S. business. He noted that while past trade disputes altered grain flows, their agile network successfully pivoted volumes to the Gulf and Mexico, and they continue to see growth in areas like biofuels.

Brian Ossenbeck of JPMorgan Chase & Co. requested more details on the second regional brakeperson agreement and the status of rolling out predictable work schedules for engineers and conductors, including any expected impact on compensation.

Answer

CFO Jennifer Hamann confirmed the 4% all-in comp per employee guidance for 2025 accounts for these changes. EVP of Operations Eric Gehringer clarified the brakeperson agreement transitions employees to conductor roles as technology reduces demand. CEO Vincenzo Vena emphasized that new work schedules are being implemented to be cost-neutral, ensuring productivity is maintained while providing employees with better work-life balance.

Brian Ossenbeck of JPMorgan Chase & Co. sought more context on the timeline for overcoming the labor and inflationary challenges that executive Vincenzo Vena has previously mentioned.

Answer

Executive Vincenzo Vena reiterated his initial assessment that overcoming these pressures would take a couple of years. He expressed comfort with the company's current position and its ability to deliver on its three-year financial targets through high service levels, pricing, and growth, despite headwinds like the 20% decline in coal.

Brian Ossenbeck asked Kevin Boone for a breakdown of the 200-300 basis point operating ratio (OR) improvement guidance, specifically how much is attributed to non-recurring items from 2025 versus new initiatives, and the underlying inflation assumptions for 2026.

Answer

EVP and CFO Kevin Boone stated that approximately $150 million in unique charges from 2025 (severance, technology write-off, Blue Ridge/Howard Street Tunnel costs) will not repeat in 2026. He projected overall inflation in the 3%-3.5% range for 2026, with union labor wage increases around 3.75% and slightly higher healthcare inflation, while non-labor inflation is expected to be lower due to procurement efforts.

Brian Ossenbeck inquired about the components of CSX's 200-300 basis point operating ratio improvement guidance, asking how much is due to non-recurring items from 2025 and the expected inflation rate within the guide.

Answer

Kevin Boone, EVP and CFO, CSX Corporation, stated that approximately $150 million in unique charges from 2025 (severance, technology write-off, Blue Ridge/Howard Street Tunnel costs) will not repeat. He outlined inflation expectations, including a 3.75% union wage increase, higher healthcare costs, and lower non-labor inflation, totaling 3-3.5% overall.

Brian Ossenbeck asked Steve Angel about CSX's strategic positioning relative to peers pursuing transcontinental mergers and if M&A is part of his mandate, given his prior industry experience.

Answer

Steve Angel, President and CEO, emphasized a patient approach to M&A, focusing on running the current franchise to its best ability to build value and capitalize on strategic opportunities from a position of strength.

Brian Ossenbeck of JPMorgan Chase & Co. asked for President & CEO Joe Hinrichs' unique perspective as a former shipper on the potential benefits and challenges of rail consolidation, and how CSX could create more value for customers.

Answer

President & CEO Joseph Hinrichs emphasized that improved customer service is key to profitable growth. While avoiding speculation on specific mergers, he stated that CSX is open to any opportunity that creates shareholder value, grows the business, and better serves customers. He highlighted the industry's potential to collaborate to compete more effectively with trucking.

Brian Ossenbeck asked if the missed revenue opportunities from Q1 are still available to be captured and requested an update on the full-year EBIT growth guidance provided in the prior quarter.

Answer

EVP and CCO Kevin Boone stated that while some revenue was perishable, a significant opportunity remains to meet existing market demand in Q2. CFO Sean Pelkey declined to provide specific EBIT guidance due to macro uncertainty but affirmed that the current operational issues are temporary and the 3-year targets from Investor Day remain intact.

Brian Ossenbeck asked if the Howard Street Tunnel project would cause meaningful deterioration in service metrics and inquired about the general health of the network and staffing levels after recent disruptions.

Answer

EVP and COO Mike Cory responded that traffic has already been rerouted in Q4, so service metrics should not be dramatically affected going forward. He affirmed the network's fundamental health, noting strong performance outside of hurricane impacts. He also stated that headcount is stable and the company is well-positioned to handle future growth and productivity improvements.

Brian Ossenbeck asked about CSX's ability to achieve a positive price-cost spread in the coming year, considering set labor cost increases, and inquired about progress on work rule negotiations.

Answer

CFO Sean Pelkey stated the dollar spread between price and inflation has been positive all year and projected wage inflation below 4% for next year. CCO Kevin Boone noted a bottoming truck market presents a pricing opportunity. CEO Joseph Hinrichs added that settling wage agreements early enables more productive, long-term conversations with unions about work rules, safety, and efficiency.

Brian Ossenbeck sought more detail on the LTL market, specifically if the softer demand seen in Q4 was market-wide or network-related, and how the expanding network, including length of haul, would impact margins throughout the year.

Answer

CEO Adam Miller noted a demand shift downward from early October, requiring cost adjustments. He highlighted that the expanded LTL network allows bidding with larger shippers, potentially leading to longer lengths of haul. CFO Andrew Hess added that the unified LTL brand is enhancing sales efforts and that network design improvements are enabling participation in new business opportunities.

Brian Ossenbeck asked for more details on the LTL market, specifically if the softer demand observed was a market trend or related to the company's network expansion, and how expanding the length of haul would impact margins and its timeline.

Answer

CEO Adam Miller explained that LTL demand moderated from early October, necessitating cost adjustments. He noted that the expanded network allows bidding with larger shippers, potentially leading to longer length of haul and leveraging truckload relationships. CFO Andrew Hess added that the shift to a unified LTL brand is enhancing sales efforts, and ongoing network design is optimizing freight flow, enabling participation in new business opportunities.

Brian Ossenbeck inquired about the timeline for building density in the LTL network to absorb costs from new facilities and asked about the potential for M&A to fill remaining coverage gaps, particularly in the Northeast.

Answer

Executive Adam Miller stated that LTL volumes are building consistently, allowing participation in ongoing bids and helping with cost absorption. He noted that while M&A is a possibility for 2026, the focus for 2025 is on organic growth and integrating the 37 new locations and the DHE acquisition. Executive Andrew Hess added that many Q1 costs for new facilities are now in the baseline, and the focus is on improving variable wage efficiency, insourcing maintenance, and leveraging fixed costs as volume grows.

Brian Ossenbeck requested an update on U.S. Xpress, noting its margin improvement lagged other segments, and asked about its potential for outsized gains and the reason for an increase in gain on sale.

Answer

Executive Adam Miller explained U.S. Xpress will target higher percentage rate increases due to its lower starting point. Executive Andrew Hess added that its OTR operating ratio has improved ~700 bps since acquisition, with future gains coming from rate, seated truck count, and replacing high-cost leases. Miller attributed the higher gain on sale to an initiative to rightsize the trailer fleet by selling older, low-book-value assets.

Brian Ossenbeck from JPMorgan Chase & Co. asked for details on fleet utilization and tractor count plans across brands, and for the financial impact of recent hurricanes.

Answer

Executive Adam Miller noted plans to reduce the U.S. Xpress tractor count slightly to align with dedicated business needs. Executive Andrew Hess explained that hurricanes disproportionately impacted the U.S. Xpress and AAA Cooper brands, affecting LTL and Intermodal results. Executive Brad Stewart added that while the storms were a headwind, emerging truckload opportunities are offsetting the negative impact on Q4 guidance.

Brian Ossenbeck sought clarification on whether the discussed costs are separate from non-GAAP spin-off costs and inquired about the MD-11 fleet's return-to-service timeline, noting an expected incremental headwind in Q3 due to peak season.

Answer

John Dietrich, EVP and CFO, FedEx, confirmed the costs are separate and included in reportable earnings. He stated MD-11s are expected to return in Q4, with significant costs in Q3, particularly December, due to peak season and expensive outsourced lift. Raj Subramaniam, President and CEO, FedEx, reiterated the company's commitment to safety and collaboration with authorities on return protocols.

Brian Ossenbeck sought clarification on whether separation costs are included in the EPS guide and asked for more details on the MD-11 return-to-service process, specifically why the headwind increases in Q3.

Answer

EVP and CFO John Dietrich confirmed that the identified separation costs are included in reportable earnings. He noted MD-11 aircraft are expected to return in Q4, with incremental costs in Q3, particularly December, due to peak season and expensive outsourced lift. President and CEO Raj Subramaniam emphasized safety as the top priority, working with authorities on protocols.

Brian Ossenbeck asked for more detail on the expected peak season strength, differentiating between FedEx-specific factors and underlying market conditions, and sought additional context on FedEx Freight's outlook for stabilization and improvement.

Answer

EVP & Chief Customer Officer Brie Carere stated that a significant portion of peak volume growth is attributed to FedEx's business acquisition in the latter half of the previous year, expecting slightly elevated numbers versus the overall market, driven by large B2C retailers. For FedEx Freight, she acknowledged industrial economy pressures but anticipated yield increases in the back half due to lapping benefits and a disciplined focus on revenue quality.

Brian Ossenbeck inquired about the improving pricing environment, asking what factors have changed and how FedEx is balancing network utilization with pricing initiatives like fuel surcharges and fees for oversized packages.

Answer

EVP & Chief Customer Officer Brie Carere confirmed an improving pricing environment, attributing it to both market conditions and a strong focus on revenue quality. She highlighted successful pricing levers, including a large package strategy and a 2% fuel surcharge change, noting that Q4 saw the best year-over-year yield improvement for Home Delivery and Ground Commercial.

Brian Ossenbeck asked for an update on the competitive and pricing dynamics, seeking to understand what led to the described improvement and how FedEx is balancing network capacity with pricing initiatives like fuel surcharges.

Answer

EVP & Chief Customer Officer Brie Carere stated that the pricing environment is improving, aided by the company's focus on revenue quality. She highlighted several pricing levers, including a large package strategy, monetizing rural coverage, and a fuel surcharge adjustment. She noted that Q4 saw the best year-over-year yield improvement for Home Delivery and Ground Commercial services.

Brian Ossenbeck of JPMorgan asked about the ability to continue pushing price in the current environment and the source of the positive momentum in the European business.

Answer

EVP and CCO Brie Carere confirmed positive momentum in Europe, citing seven consecutive quarters of parcel market share gains driven by improved service and productivity. On pricing, she noted discipline in the premium segment, the importance of surcharges for harder-to-handle packages, and an improving pricing market overall.

Brian Ossenbeck of JPMorgan Chase & Co. asked about the competitive pricing environment, the growth of deferred services, and the effectiveness of various surcharges in the second quarter and into the second half of the year.

Answer

EVP and Chief Customer Officer Brie Carere acknowledged the market is competitive but rational, with yields pressured by the economy and a mix shift toward deferred services. She stated the team is executing well on surcharges for things like peak and large packages, which are being enhanced by new dimensional capture technology. However, she noted that base rates remain pressured due to the broader economic environment.

Brian Ossenbeck questioned the drivers behind the negative mix shift in both U.S. domestic and international markets and asked for the rationale behind implementing significant price increases, including GRI and surcharges, in a weak demand environment.

Answer

EVP and Chief Customer Officer Brie Carere explained that the pricing actions are a holistic strategy to ensure service quality and profitability, particularly during the condensed peak season. She expressed confidence in the GRI capture rate and noted that while international yield faced pressure in Q1, she expects it to taper due to strong Asia export demand and the stickiness of certain surcharges.

Brian Ossenbeck asked about the potential impact of a government shutdown and SNAP funding on XPO's LTL business, as well as how the recovering truck market affects consolidation and direct competition.

Answer

Mario Harik (CEO, XPO) stated no significant impact is expected from a government shutdown. He highlighted grocery consolidation as a $1 billion+ high-margin market where XPO is expanding, having secured preferred carrier status with six large grocers and a pipeline of over 100 customers. He noted that the direct conversion of truckload capacity to LTL is small (sub-1%), with an additional low-to-mid single-digit range of tonnage expected to return to LTL from truckload as truckload rates recover.

Brian Ossenbeck inquired about the direct or indirect impact of a government shutdown, the potential effect of SNAP funding running out, XPO's grocery consolidation initiative, and how the truck market's recovery or stabilization affects XPO's business.

Answer

CEO Mario Harik stated no expected impact from a government shutdown on LTL volumes, as XPO does minimal government business. He highlighted grocery consolidation as a significant growth opportunity (north of $1 billion market), where XPO achieved preferred carrier status with six large grocers in Q3 and has a pipeline of 100+ customers. He estimated that a truck market recovery could bring low-to-mid-single-digit incremental tonnage back to LTL from truckload conversions.

Brian Ossenbeck from JPMorgan Chase & Co. asked about the market impact of NMFC classification changes, followed by a detailed inquiry into XPO's cash flow, future CapEx levels, leverage targets, and the scale of its share buyback program.

Answer

CFO Kyle Wismans stated the NMFC changes are not expected to materially impact pricing and that XPO is focused on customer communication. On capital allocation, he explained that CapEx will moderate, and free cash flow will increase due to lower cash taxes and EBITDA growth. The priority is funding the business, then deleveraging towards the 1-2x target, evidenced by a recent $50 million debt paydown. Excess cash will then be used to accelerate share buybacks in the back half of the year and into the next.

Brian Ossenbeck of JPMorgan Chase & Co. asked for the outlook on yield ex-fuel or revenue per shipment for the second half of the year under the company's two potential margin improvement scenarios.

Answer

CFO Kyle Wismans indicated that XPO expects favorable pricing trends to continue throughout the year, supported by industry dynamics where pricing typically outpaces cost inflation. He reiterated that XPO expects to deliver above-market yield growth due to its specific initiatives, such as growing its small and medium-sized business portfolio and increasing accessorial revenue, implying strong yield performance in either scenario.

Brian Ossenbeck from JPMorgan Chase & Co. asked for the outlook on yield ex-fuel or revenue per shipment for the second half of the year under the different margin improvement scenarios.

Answer

CFO Kyle Wismans stated that XPO expects to continue delivering above-market yield growth for the remainder of the year, driven by strong contract renewals and a constructive pricing environment. He noted that the industry typically prices 100-200 basis points above inflation, and XPO aims to outperform that benchmark through its initiatives in the SMB channel and with accessorial charges.

Inquired about the ramp-up progress of newly integrated facilities and the potential impact of the upcoming NMFTA freight classification changes on the company's small and medium-sized business customers.

Answer

The upcoming NMFTA freight classification change is not expected to be material for the company, and they are focused on customer outreach to ensure a smooth transition. Regarding new facilities, the sale of the Brooklyn site was part of the strategic plan, and they will continue divesting certain acquired properties in 2025, noting interest from non-LTL companies.

Brian Ossenbeck of JPMorgan Chase & Co. asked for clarification on October volume trends, including any hurricane impact, and for color on customer conversations across different segments.

Answer

Executive Mario Harik confirmed a hurricane impact in late September and early October. He noted that industrial demand was softer than retail, with industrial shipments down at twice the rate of retail. He also highlighted strong, company-specific growth in the local channel, where shipments were up over 10% despite the broader market softness.

Brian Ossenbeck asked about the implications of the decreasing length of haul for the network and industry, and Old Dominion Freight Line's approach to dynamic pricing compared to the rest of the industry.

Answer

Adam Satterfield, CFO, explained that decreasing length of haul reflects regionalism and e-commerce trends, with next-day/second-day lanes comprising 70% of revenue, and shippers leveraging time in the supply chain. He stated Old Dominion Freight Line does not subscribe to dynamic pricing, preferring consistency and cost-plus pricing to support investments in service and efficiency.

Brian Ossenbeck from JPMorgan asked about the implications of a decreasing length of haul, whether it reflects the demand environment or a shifting mix, and how it impacts network operations. He also sought Old Dominion Freight Line's perspective on dynamic pricing and its prevalence in the industry.

Answer

Adam Satterfield, CFO, explained that the decreasing length of haul is influenced by regionalism, e-commerce growth (70% of revenue is next-day/second-day), and shippers leveraging supply chain time for longer hauls. He stated that Old Dominion Freight Line does not use dynamic pricing, preferring a consistent, cost-plus approach driven by annual cost changes and technology investments to ensure service and efficiency.

Brian Ossenbeck asked for Old Dominion's perspective on the recently proposed changes to the freight classification system by the NMFTA and their potential impact.

Answer

President & CEO Marty Freeman characterized the proposed shift to a density and cube rating system as 'a big to do about nothing' for the time being. He explained that while it offers a better rating system for carriers, shippers are not required to adopt it immediately, suggesting a gradual transition rather than an abrupt market change.

Brian Ossenbeck asked about any impact from recent hurricanes on the network and for commentary on the upcoming NMFTA class system changes moving toward dimensional-based pricing.

Answer

CFO Adam Satterfield reported some temporary revenue loss from the hurricane but no significant damage to the network. Regarding the NMFTA changes, he views them as a strategic advantage for ODFL, as the company is already well-equipped, dimensioning approximately 75% of its freight today.

Brian Ossenbeck asked about ongoing density headwinds for the GroundSaver product in Q3 and Q4, and how revenue per piece is expected to track into Q4, including insights into base rate momentum, mix improvement, and fuel contributions.

Answer

Carol Tomé, CEO, confirmed that density continues to be a challenge for GroundSaver, resulting in an estimated $100 million cost drag in Q3, which underscores the importance of the renewed relationship with the USPS. Brian Dykes, CFO, projected Q4 revenue per piece growth to be slightly above 6%, driven by strong base rate improvement and holiday demand surcharges, with slightly less mix improvement compared to Q3 due to lapping prior year actions.

Brian Ossenbeck asked if density headwinds for the Ground Saver product persisted in Q3 and are expected in Q4, and requested more detail on how revenue per piece is projected to track into Q4, considering mix dynamics, product changes, base rate momentum, and fuel contributions.

Answer

Carol Tomé, CEO, confirmed that density remains a challenge for Ground Saver, attributing an estimated $100 million cost drag in Q3 to this issue, which underscores the importance of the renewed USPS relationship. Brian Dykes, CFO, projected Q4 revenue per piece growth to be slightly above 6%, driven by strong base rate improvements, slightly less mix improvement due to lapping prior year actions, and robust holiday demand surcharges.

Brian Ossenbeck asked about the speed of the supply chain pivot to a 'China Plus One' strategy and also inquired about capital allocation priorities and the cash portion of restructuring costs.

Answer

EVP Kathleen Gutmann stated the shift is already happening, with double-digit export growth from non-China Asia lanes. CFO Brian Dykes confirmed no change to capital allocation policy, highlighted the strong balance sheet, and estimated that restructuring charges are approximately 60% cash and 40% non-cash, subject to future updates.

Brian Ossenbeck inquired about the speed of the 'China Plus One' supply chain shift, especially for SMBs, and asked for an update on capital allocation priorities and restructuring costs.

Answer

Executive Kathleen Gutmann confirmed the shift is already happening, with double-digit export growth from non-China lanes like Vietnam. CFO Brian Dykes reaffirmed the company's capital allocation policy, highlighting a strong balance sheet with a 2.26x debt-to-EBITDA ratio. He estimated the restructuring charges would be approximately 60% cash and 40% non-cash, subject to updates.

Brian Ossenbeck of JPMorgan Chase & Co. inquired about the implications of the Amazon volume reduction on peak season operations and any potential complications with Sunday delivery now that SurePost is fully handled in-house.

Answer

CEO Carol Tomé stated that peak will be operated as usual, though likely with fewer leased assets. EVP and President, U.S. Nando Cesarone elaborated that the company will not need to rent as much equipment (aircraft, tractors, trailers) or set up as many temporary facilities, as these variable costs can be pulled back in line with the lower volume.

Brian Ossenbeck inquired about the specific customer concerns driving the softer peak season volume forecast and whether UPS is facing pushback on pricing and surcharges.

Answer

CEO Carol Tomé explained that customers have tempered forecasts due to a compressed holiday shipping season and external projections of slower e-commerce growth, potentially shifting consumers to in-store shopping. Executive Matthew Guffey added that collaboration on holiday surcharges is strong, resulting in one of the 'best keep rates' seen. CFO Brian Dykes noted that surcharge changes were designed to capture a larger volume set.

Brian Ossenbeck requested more specifics on rental demand, asking if its weaker-than-seasonal performance had particular reasons. He also sought clarification on the e-commerce productivity miss, specifically if it was a vertical-wide issue or a one-off customer problem.

Answer

Tom Havens, President, Fleet Management Solutions, explained that Q3 rental demand was slightly below expectations and typical seasonal trends, primarily due to flat demand from non-lease customers and muted demand from lease customers. He noted strong rate discipline with a 5% year-over-year increase in RPD. Steve Sensing, President, Supply Chain Solutions and Dedicated Transportation Solutions, clarified that the e-commerce productivity miss was a one-off situation related to a specific forecast.

Brian Ossenbeck from JPMorgan Chase & Co. asked about the proximity of used truck values to their residual value estimates and what actions might be triggered if they fell below. He also sought to clarify if the bonus depreciation benefit is a one-time event or a structural cash flow improvement.

Answer

EVP & CFO Cristina Gallo-Aquino stated that the company is not concerned about used truck sale prices falling below residual values, noting that any such event would be temporary and not trigger material adjustments. She also confirmed that the cash benefit from bonus depreciation is expected to continue for the next several years, making it a structural improvement.

Brian Ossenbeck of JPMorgan Chase & Co. asked for details on the process if used vehicle prices were to fall below Ryder's residual value range. He also questioned the potential impact of the 2027 EPA standards and any associated pre-buy activity on Ryder's business.

Answer

EVP and CFO Cristy Gallo-Aquino explained that a drop below the residual range would trigger an incremental charge on inventory, but this downside is covered in the low end of their guidance. CEO Robert Sanchez added that such low prices are historically rare. Regarding the 2027 EPA rules, he stated that Ryder has not factored any pre-buy into its forecast, noting any potential long-term benefit to used truck values would be a positive but is not included in current targets.

Brian Ossenbeck from JPMorgan Chase & Co. requested an overview of the competitive landscape across Ryder's lease, Dedicated, and Supply Chain Solutions segments in the current 'lower for longer' freight environment. He also asked about the impact of recent hurricanes on operations and rental demand.

Answer

Tom Havens, President of FMS, noted that lease competition is focused on redeployable assets but remains disciplined on new capital. Steve Sensing, President of SCS and DTS, stated that in Dedicated, the primary competition is the spot market, while the supply chain segment remains solution-based with stable rates. Regarding the hurricanes, management confirmed that operations were fully restored with minimal damage, and while there was a small, localized uptick in rental demand, it did not have a meaningful impact on overall results.

Brian Ossenbeck asked about J.B. Hunt's pricing expectations across different modes for the upcoming year, particularly referencing mid-single-digit increases in ICS. He also questioned how the 'lowering our cost to serve' initiative would impact the durability of current performance and position the company for stronger results during an eventual market upcycle, even if rates remain flat.

Answer

COO Nick Hobbs clarified that his previous comments on ICS pricing referred to recent bid wins, not a forecast for next year's rates, emphasizing a focus on more complex, higher-rate business. CFO Brad Delco added that the $100 million cost reduction initiative, targeting structural costs, is designed to improve incremental performance when market conditions become more favorable, setting the business up for stronger returns.

Brian Ossenbeck inquired about Nick Hobbs' commentary on ICS pricing, asking for expectations across different modes for the upcoming year. He also questioned if the structural cost reductions would make J.B. Hunt's performance more durable, even if rates remain flat, and potentially better during an upcycle.

Answer

COO and President of Highway and Final Mile Services Nick Hobbs clarified his pricing comments referred to recent ICS bid awards, not future rate expectations, highlighting success in less commoditized business. CFO Brad Delco affirmed the structural nature of the $100 million cost reduction initiative, aiming to drive stronger incremental performance when the market improves, and emphasized the company's conservative approach to sharing progress.

Brian Ossenbeck from J.P. Morgan asked for a more detailed description of the $100 million cost savings target, including its dependency on volume, potential headcount impact, and whether it includes items like container utilization.

Answer

EVP & CFO John Kuhlow described it as a structural cost initiative across salaries, benefits, and equipment. President of Dedicated Brad Hicks cited technology and AI as efficiency drivers. CEO Shelley Simpson noted the goal is to automate work and redeploy people to growth areas. President of Intermodal Darren Field added that creative equipment use, like replacing leased trailers and reducing storage costs with BNSF, is also part of the plan.

Brian Ossenbeck of JPMorgan asked why Intermodal profitability per load is at a historic low despite record volumes, whether contracting terms might change, and how truckload-to-intermodal conversion is progressing.

Answer

Darren Field, President of Intermodal, acknowledged dissatisfaction with margins, citing intense competition from highway capacity as a primary challenge. CFO John Kuhlow added that highway-to-intermodal conversion remains a top priority for customers, driven by J.B. Hunt's strong service performance and customers' long-term planning for potential shifts in the truckload market.

Brian Ossenbeck sought more detail on the Dedicated segment's outlook for modest growth, highlighting the impact of customer churn and start-up costs on near-term profitability.

Answer

Bradley Hicks, President of Dedicated Contract Services, confirmed that known fleet losses will persist into Q2 2025. Executive Brad Delco added that new contracts are typically breakeven for the first six months due to start-up costs, meaning the financial benefits of 2025 fleet growth will likely materialize more significantly in 2026.

Brian Ossenbeck inquired about rail service performance out of the West, the impact of project freight in the ICS segment, and potential operational changes at BNSF under its new consultant.

Answer

Darren Field, President of Intermodal, clarified that the BNSF consultant is focused on the merchandise network, which should not negatively impact Intermodal and could even be a positive. CEO Shelley Simpson reinforced the focus on market expansion with BNSF. Bradley Hicks, President of Highway Services, confirmed some project work in ICS contributed to healthy gross margins.

Brian Ossenbeck of J.P. Morgan inquired about the expected timeline for realizing revenue synergies from the Wincanton acquisition and asked for management's view on whether the period of peak supply chain disruption has passed.

Answer

CEO Malcolm Wilson projected that significant revenue synergies from Wincanton would materialize in 18-24 months, similar to the Clipper acquisition, with new contracts likely in 2026-2027. Regarding the supply chain, Wilson described the current environment as 'relatively calm' with no major disruptions, noting the primary trend is a gradual manufacturing shift away from China, which benefits GXO.

Brian Ossenbeck from JPMorgan Chase & Co. asked for details on the new NHS contract, including its origin, ramp-up expectations, and potential for further healthcare expansion. He also inquired about the broader macro environment, customer inventory levels, and the role of bonded warehouses amid tariff discussions.

Answer

CEO Malcolm Wilson described the NHS deal as a 'landmark' contract and a 'mini M&A' that leverages the Clipper acquisition, with no significant start-up costs expected. He noted strong performance across regions, with some inventory build in North America. CFO Baris Oran added that requests for bonded warehouse services have increased but are not yet financially material.

Brian Ossenbeck of JPMorgan Chase & Co. requested more context on the UK CMA's review of the Wincanton acquisition, specifically what the agency is examining, and asked for details on the strategy behind improving multi-tenant warehouse utilization.

Answer

CEO Malcolm Wilson explained that a Phase II review by the CMA is not uncommon for a deal of this size and that GXO will work collaboratively to clarify market vertical definitions in the competitive UK market. He noted this could delay integration until Q2 2025 but remains confident in a positive outcome. CFO Baris Oran detailed that utilization improvements come from both a focused sales effort to fill available space and strategically consolidating or not renewing leases on underperforming sites.

Brian Ossenbeck of J.P. Morgan asked about the real-world impact of increased English Language Proficiency (ELP) enforcement on driver capacity and questioned if customer procurement strategies were shifting between Dedicated, One Way, and brokerage services.

Answer

Chairman & CEO Derek Leathers stated that while ELP enforcement is ramping up slowly, it is contributing to capacity attrition, though the full effect is hard to measure. He noted a clear 'flight to quality' among customers, who are increasingly seeking a portfolio of solutions (truckload, brokerage, intermodal) from a single provider. Leathers also observed less customer enthusiasm for growing private fleets, which strengthens Werner's Dedicated pipeline.

Brian Ossenbeck of JPMorgan Chase & Co. asked for details on the new $25 million cost savings program for 2025 and questioned if there was further opportunity to increase miles per tractor.

Answer

CFO Chris Wikoff explained the $25M target balances cost discipline with supporting growth, with savings driven by operational innovation and technology. CEO Derek Leathers added that while they will continue to engineer the fleet, the bulk of the step-level improvement in miles per truck has already occurred, establishing a new baseline. He now expects more incremental improvements rather than the large gains seen recently.

Brian Ossenbeck questioned if the One-Way fleet size was now optimized for utilization or if further adjustments were needed, and asked about the key levers for improving profitability in the Logistics segment, particularly the balance between self-help and market recovery.

Answer

Chairman & CEO Derek Leathers responded that utilization gains are driven by sustainable technology and network engineering, not just fleet size, and that Dedicated will likely grow as a percentage of the total fleet. EVP, Treasurer & CFO Chris Wikoff and Mr. Leathers detailed that Logistics profitability levers include technology integration on the EDGE TMS platform, cost controls, and growth in Power Only, which provide a strong foundation for leverage when market volumes return.

Brian Ossenbeck of J.P. Morgan asked about the potential capacity impact from the new English Language Proficiency (ELP) rule and inquired about insurance cost trends, including underlying claims severity and the outlook for renewals.

Answer

CEO Frank Lonegro and VP Matt Miller stated they see no direct impact to Landstar from the ELP rule but noted it's too early to assess the broader market impact. Regarding insurance, CFO Jim Todd acknowledged that claims severity was running higher in 2025, but highlighted that the company achieved a favorable, flat year-over-year insurance renewal in May.

Brian Ossenbeck asked about the potential impact of the ongoing CVSA roadcheck week on out-of-service rates due to English proficiency rules, and whether a new 90-day tariff window could accelerate freight pull-forwards.

Answer

Executive Matthew Miller and CEO Frank Lonegro stated they do not expect a meaningful impact from roadcheck on this issue until official enforcement guidance is released. Regarding tariffs, Lonegro acknowledged that while it's too early to see a trend, it is academically possible that shippers could accelerate imports before the 90-day window expires, but it's difficult to quantify.

Brian Ossenbeck of J.P. Morgan Chase & Co. inquired about the declining BCO (Business Capacity Owner) count, its potential bottom, and the speed of recovery if rates improve. He also asked about the performance and strategic outlook for the cross-border business amid political and trade uncertainties.

Answer

CEO Frank Lonegro and Executive Vice President Joseph Beacom explained that BCO declines are moderating but will likely continue through Q4 and Q1 due to seasonality and the prolonged downturn. They believe BCOs will return quickly with a sustainable rate increase, citing the model's proven ability to add capacity rapidly. Regarding the cross-border business, Lonegro affirmed the long-term positive trajectory from near-shoring, despite near-term softness from political and trade policy uncertainties. Beacom added that while some large accounts are slow, the company is gaining traction with new accounts in Mexico's interior.

Brian Ossenbeck of J.P. Morgan inquired how long it might take for LTL service improvements to translate into better yields and requested an update on operational changes at Daseke, including asset rationalization and process improvements.

Answer

Alain Bedard, President, CEO & Chairman, stated it will take a few quarters of consistent performance to build shipper confidence and achieve better pricing. Regarding Daseke, he said the company is reducing its truck and trailer count, noting they have too many trucks idling due to a 10% drop in miles. He emphasized the goal is to shift Daseke's operators from 'good truckers' to 'good business truckers' and improve the OR from 90 towards 85.

Brian Ossenbeck questioned how TFI can gain SMB share without simply competing on price and asked about the impact of tariff volatility on cross-border activity.

Answer

Executive Alain Bedard explained the strategy is to rebalance the customer mix toward a more normal level of SMB freight, which will be achieved by improving service to reduce churn, not by cutting prices. Key service improvements include reducing missed pickups and moving freight off rail. On cross-border, he noted LTL is soft (down 10-15%) due to uncertainty, and while truckload volumes to the U.S. are normal, backhauls to Canada are weak. This is factored into the Q2 guidance.

Brian Ossenbeck asked for more detail on the customer mix shift at TForce Freight away from SMB, and inquired about the path to profitability for Daseke, questioning how much is within TFI's control versus the economic cycle.

Answer

Executive Alain Bedard stated the mix shift is due to a combination of a difficult environment, competition, and a market perception of average service, which the company is fighting. For Daseke, he explained that profitability is hampered by excess equipment from commitments made by the prior owner. He said TFI has a clear path to improve Daseke's costs by shedding assets and reducing overhead during 2025, aiming to bring the specialty truckload segment's OR back below 90% later in the year.

Brian Ossenbeck asked for an explanation of the implied counter-seasonal earnings step-up in Q4, given the full-year guidance. He also requested an update on TFI's interest in the remaining Yellow terminal assets up for auction.

Answer

CEO Alain Bedard explained that Q3 was unusually weak, particularly in the Specialty Truckload segment due to correctable issues at Daseke, and he expects a rebound in Q4. On the Yellow assets, Bedard stated TFI is only bidding on one very small site to replace a leased facility, emphasizing that the company already has significant excess terminal capacity and is not looking to expand its footprint through the auction.

Brian Ossenbeck of JPMorgan Chase & Co. sought clarification on whether Saia's Q3 operating ratio guidance included the impact of a potential wage increase. He also asked about the implications of a major competitor delaying the NMFTA density-based pricing implementation.

Answer

EVP & CFO Matthew Batteh confirmed the Q3 OR guidance is inclusive of their current forecast, which is still evaluating the wage increase timeline. Regarding the NMFTA changes, Batteh stated Saia is not backing down from the implementation, viewing it as a positive long-term trend for the industry. He noted Saia already dimensions 75% of its freight and is working closely with shippers on the transition.

Brian Ossenbeck of JPMorgan Chase & Co. asked for any specific call-outs on end-market strength or weakness and about visibility into coastal import volume trends. He also requested context on when the newly opened 'startup' terminals might become profitable.

Answer

President and CEO Fritz Holzgrefe noted that customer caution is consistent across all industries, with no specific standouts, but observed that coastal areas and heartland industrial markets are softer. Executive Matthew Batteh explained that new terminals are long-term investments and are not expected to reach company-average profitability in the first couple of years. He emphasized that the national network allows them to win more business from existing customers in both new and legacy markets, a process that builds density over time.

Brian Ossenbeck of JPMorgan Chase & Co. asked for more details on pricing trends, the market's acceptance of the 7.9% General Rate Increase (GRI), and clarification on the 'other operating expense' line item.

Answer

Executive Matthew Batteh highlighted that the company's internal focus is on revenue per shipment, which is trending positively, rather than yield metrics impacted by freight mix. He noted strong contractual renewals and good GRI acceptance, despite some initial volume shifts. He clarified that the 'other operating expense' line primarily reflects gains or losses on equipment and real estate disposals.

Brian Ossenbeck from JPMorgan Chase & Co. asked for Saia's perspective on the recent Mastio survey results, which showed a slight decline in relative service performance. He also inquired about the impact of recent hurricanes on October volumes and the potential for a catch-up.

Answer

CEO Fritz Holzgrefe contextualized the Mastio results, noting the entire industry improved and Saia's rapid growth with new terminals and employees created a challenging operating environment. He affirmed the company's commitment to improving service. Regarding the hurricane, both Holzgrefe and Executive Matthew Batteh confirmed it created noise in October results, and that not all disrupted volume necessarily returns.

Brian Ossenbeck asked about the Intermodal network's utilization and balance, rail service performance, and its effect on truckload conversion. He also requested an update on the status of stacked containers and drayage capacity.

Answer

Executive Phillip Yeager reported strong progress, with empty repositioning costs down 17% year-over-year and container turn times 4% better. He described rail service from partners as 'phenomenal and resilient.' Yeager noted that 20-25% of boxes are currently stacked, providing 35% incremental capacity before new investment is needed, and that the insourced drayage percentage improved by 400 basis points sequentially.

Brian Ossenbeck of JPMorgan Chase & Co. inquired about transloading activity and whether international freight strength was spilling over into the domestic network. He also asked for details on system capacity, including available containers, drayage resources, personnel, and the percentage of the container fleet currently stacked.

Answer

Executive Phillip Yeager confirmed that strong West Coast volumes indicate continued transloading activity. Regarding capacity, he stated the company can handle 30% incremental growth with its current container fleet and is not planning to purchase any in 2025. He noted about 20% of the fleet is stacked. For drayage, the focus is on returning to 80% in-sourced drivers from 73% in Q4. CFO Kevin Beth added that employee productivity has increased across all business lines, supported by technology investments.

Brian Ossenbeck asked about the competitive dynamics in the full truckload market, particularly with new entrants, and sought more color on the confidence in achieving the guided contract rate increases.

Answer

CEO Drew Wilkerson stated that brokerage has always been competitive and RXO differentiates through service, technology solutions, and long-tenured customer relationships averaging over 15 years. CSO Jared Weisfeld reiterated high confidence in the low to mid-single-digit contract rate increases, which are already being implemented and will see a full run-rate impact in Q3, supported by strong service results.

Brian Ossenbeck of JPMorgan Chase & Co. requested color on April business trends and asked whether truckload capacity is beginning to exit the market in a sustainable way, considering factors like tariffs and fuel prices.

Answer

CEO David Bozeman reiterated the policy of not providing intra-quarter guidance but noted Q2 is historically stronger. Michael Castagnetto, President of NAST, added that the March-to-April sequential volume decrease was less than the prior year. He confirmed capacity continues to exit but sees no sustainable market inflection yet, describing the market as "bouncing along the bottom."

Brian Ossenbeck requested color on current demand trends across customer verticals and the company's positioning as the Q1 truckload bid season begins.

Answer

President of North American Surface Transportation Michael Castagnetto noted that Q4 saw high route guide adherence and a competitive spot market. He stated the company feels good about the health of its contractual business, having outperformed the Cass Shipment Index in that space. For the Q1 bid season, he said they are not yet seeing an uptick in overall demand but are confident in their pricing strategy and customer engagement.

Brian Ossenbeck asked what specific conditions are needed for the truckload market to turn, what indicators the company is watching for an inflection point, and for their best estimate on the timing of a recovery.

Answer

CEO Dave Bozeman explained that while carrier capacity is exiting the market, the pace is too slow to cause an inflection. He stated that a true market turn requires a significant increase in demand, which is not currently apparent. The company is focused on delivering "higher lows" during this extended freight recession and is prepared to react when the market does turn.