Jason Seidl

Jason Seidl asked for an update on Werner's industrial markets outlook for 2026, given the increased exposure from the FirstFleet acquisition, and the historical correlation between ISM Index expansion and demand.

Answer

Derek Leathers, Chairman and CEO, expressed optimism for industrial markets, noting that a significant portion of their industrial exposure feeds into retail and e-commerce channels. He highlighted strong performance in Mexico cross-border freight due to supply chain shifts and foreign investment. He also acknowledged the difficulty in directly correlating ISM expansion to immediate demand in their specific industrial verticals.

Jason Seidl asked for an update on Werner's outlook for industrial markets in 2026, particularly given the FirstFleet acquisition, and the historical lag between ISM Index expansion and demand impact.

Answer

Chairman and CEO Derek Leathers expressed optimism for industrial markets in 2026, citing recent ISM Index data and consumer resiliency. He noted that a significant portion of Werner's industrial exposure feeds into retail and e-commerce channels, and highlighted strong performance in the Mexico cross-border franchise due to changing supply chains. Leathers admitted it's difficult to provide a precise historical lag for the ISM Index's impact on Werner's specific portfolio, given its feeder stock nature to retail.

Jason Seidl asked for a comparison of Dedicated versus One-Way Truckload margins, the long-term margin impact of recent Dedicated contract wins, and whether the margin gap between the two segments expanded in Q1.

Answer

CEO Derek Leathers explained that Dedicated historically outperforms One-Way margins and recent wins are margin-accretive. CFO Chris Wikoff reiterated the long-term target of double-digit TTS operating margins, noting key levers for improvement are showing gradual progress. Leathers confirmed the margin discrepancy between Dedicated and One-Way widened in Q1 due to significant competitive pressure in the One-Way segment.

Jason Seidl inquired about the outlook for the upcoming bid season, asking what rate increases are necessary for earnings growth in 2025, and requested clarification on how much of the $50 million cost savings target is considered permanent.

Answer

Chairman & CEO Derek Leathers stated it was too early to predict 2025 rates but noted positive early returns and improving market dynamics, with spot rates approaching contract levels. EVP, Treasurer & CFO Chris Wikoff clarified that over 60% of the cost savings are structural and sustainable, driven by operational innovation, technology, and M&A integration.

Jason Seidl asked for XPO's longer-term outlook on OR improvement, specifically where North American targets could sit, drawing a comparison to a peer's sub-70 OR discussion.

Answer

Mario Harik, Chairman and CEO of XPO, stated that XPO aims to eventually achieve ORs in the low 70s and potentially the 60s. He highlighted XPO's nearly 600 basis points of operating margin improvement since 2022 during a freight recession. Harik outlined key drivers: bridging a double-digit pricing differential (targeting an incremental point per year), increasing accessorial revenue to 15%, growing small to medium-sized customers to 30%, and leveraging technology/AI for low single-digit annual productivity improvements with potential upside.

Jason Seidl asked about XPO's longer-term operating ratio (OR) targets, considering productivity initiatives, industrial recovery, and growth in premium and local services, and followed up on the potential magnitude of AI's impact on productivity gains.

Answer

Mario Harik, Chairman and CEO, XPO, stated that XPO aims to eventually achieve an OR in the low 70s and eventually in the 60s, building on a nearly 600 basis point margin improvement over the last three years. He outlined levers including closing a double-digit pricing differential to best-in-class (targeting an incremental point per year through better service, increasing premium services to 15% from 12%, and local customers to 30% from 25%), and significant cost efficiency/productivity gains from technology and AI. Harik noted that while current plans assume low single-digit productivity improvement per year, AI's impact, which drove over two points in H2 2025, could offer more upside, though XPO remains conservative in its current expectations.

Jason Seidl asked for details on XPO's AI utilization in LTL, future AI initiatives, the company's position relative to peers in AI adoption, and an outlook for the European transportation segment.

Answer

CEO Mario Harik detailed five areas of AI application: two for revenue generation (AI pricing bots in pilot, AI lead scoring for sales, and sales productivity tools) and three for cost savings (linehaul exception management, enhanced P&D route optimization in pilot, and dock labor forecasting). He noted XPO's cloud-based infrastructure enables quicker AI integration. CSO Ali Faghri added that the European business continues to outperform in a soft macro, growing organic revenue for seven consecutive quarters, with strong performance in the U.K. and accelerated pricing growth, expecting to outperform normal Q4 seasonal EBITDA step-down.

Jason Seidl requested a deeper dive into XPO's AI utilization for LTL market improvement, future initiatives, and the company's competitive standing in AI adoption.

Answer

Mario Harik (CEO, XPO) detailed five AI areas: two revenue-generating (AI pricing bots in pilot for lane-level pricing, AI lead scoring and productivity tools for sales) and three cost-saving (line haul exception management reduced empty miles by 12% and diversions by 80%+; P&D route optimization in pilot; dock efficiency with smart labor forecasting). He emphasized XPO's decade-long investment in cloud-based technology enables quicker AI integration, positioning them ahead of peers.

Jason Seidl from TD Cowen asked for a quantification of the dollar savings from insourcing line haul to its future 2% goal and the potential cost savings from AI initiatives over the next three years.

Answer

CEO Mario Harik explained that insourcing currently saves about 5% per mile even in a depressed truckload market, plus additional efficiency gains. The main benefit is insulating the P&L from rate hikes in an up-cycle. Regarding AI, he quantified recent gains, such as a low-to-mid single-digit reduction in normalized line haul miles. While not providing a three-year dollar target, he stated they expect low-single-digit productivity gains annually in the current environment, with that rate expected to accelerate significantly in an up-cycle.

Jason Seidl from TD Cowen asked about the performance of contractual renewals when excluding the mix impact from local and premium services, and questioned the potential threat from Amazon and UPS entering the LTL space.

Answer

CFO Kyle Wismans stated that contract renewals accelerated in Q1, rising in the mid-to-high single-digit range, which drove strong yield performance. CEO Mario Harik addressed competitive threats, asserting that neither UPS nor Amazon poses a material threat. He characterized the UPS offering as focused on very lightweight, non-traditional LTL freight and noted Amazon's LTL exposure is minimal and its activities are more about filling internal network capacity.

Asked for details on the local customer segment, including its profitability compared to national accounts, its current percentage of the business, and its future growth potential. Also questioned what the optimal level of excess network capacity is.

Answer

Local business is higher-yielding and higher-margin. The goal is to grow this segment from its current low-20% range of revenue to over 30% over time. The current 30% excess network capacity is considered optimal for the trough of a cycle, as it provides a buffer for volume fluctuations and positions the company to capitalize on an eventual up-cycle.

Jason Seidl of TD Cowen asked about the extent of freight shifting from LTL to truckload due to rate spreads and how quickly that volume might return in a recovery.

Answer

Executive Mario Harik downplayed the impact, explaining that the price gap between an average LTL shipment ($380) and a comparable truckload move ($1,700) is substantial. He noted that the heaviest shipments most at risk of conversion represent less than 0.3% of the company's total volume, suggesting the overall impact is minimal and would reverse as truckload rates rise.

Jason Seidl with TD Cowen asked about employee headcount trends and the outlook for driver and dockworker pay increases throughout the year, assuming a market rebound.

Answer

CFO Adam Satterfield stated that Old Dominion consistently provides healthy raises, typically in September, and has improved employee benefits. He noted that fringe benefit benefit costs are expected to increase to around 41% of salaries and wages in 2026, and the company continues its discretionary 401(k) match.

Jason Seidl inquired about employee headcount, expectations for driver and dockworker pay increases throughout the year if demand rebounds, and the timing of the next raise.

Answer

Adam Satterfield, CFO, affirmed that Old Dominion prioritizes rewarding employees, citing 99% on-time service and a low cargo claims ratio. He confirmed healthy raises were given in September 2025 and improvements were made to benefit plans, expecting fringe benefit costs to be around 41% of salaries and wages in 2026. He also mentioned the discretionary 401(k) match. September is the usual timing for annual raises.

Jason Seidl from TD Cowen asked about Old Dominion Freight Line's recently announced 4.9% General Rate Increase (GRI), questioning how the company gauges compliance in a weaker market and if it anticipates weaker adherence compared to the previous year.

Answer

Marty Freeman, President and CEO, clarified that the 4.9% GRI is based on the company's costs and primarily affects only 25% of their non-contract customer base. He stated that Old Dominion Freight Line is not experiencing significant "kickback" from customers, as they explain the cost drivers behind the increase.

Jason Seidl inquired about the compliance to Old Dominion Freight Line's recently announced 4.9% General Rate Increase (GRI), asking if market weakness might lead to weaker compliance than last year, and the percentage of the customer base affected.

Answer

Marty Freeman, President and CEO, clarified that the GRI is based on annual costs and affects only 25% of the customer base (non-contract), with 75% being contract-based. He stated the company is not experiencing significant "kickback" on the increase, indicating consistent application.

Jason Seidl of TD Cowen asked for clarification on why ODFL expects losses on asset sales while others report gains, and if better July trends were due to a tariff-related pull-forward.

Answer

EVP & CFO Adam Satterfield explained that the losses are on the sale of very specific, older assets—ten-year-old, million-mile single-axle day cab tractors—which have limited demand. Regarding tariffs, he stated they have not received material customer feedback suggesting a pull-forward, and regional data does not indicate one.

Jason Seidl of TD Cowen sought clarification on why Old Dominion expects losses on asset sales when peers report gains, and asked if July's better-than-seasonal trend was due to tariff-related pull-forward.

Answer

EVP & CFO Adam Satterfield explained that the losses are on the sale of very old equipment, specifically ten-year-old, million-mile day cab tractors, which have limited demand. He also stated there has been no material customer feedback suggesting a tariff pull-forward, and regional data does not indicate a surge from import-heavy areas.

Jason Seidl asked for quantification of any freight pull-forward into March and for a breakdown of the reduced CapEx plan, specifically the year-over-year change in equipment purchases.

Answer

CFO Adam Satterfield could not quantify a specific pull-forward but noted the observation was based on strong March trends followed by a softer start to April. He detailed the revised $450 million CapEx plan: $210 million for real estate, $190 million for equipment, and $50 million for technology. The equipment budget was reduced from an initial $225 million.

Jason Seidl asked for quantification of any freight pull-forward into March and requested a breakdown of the reduced CapEx plan, specifically the change in equipment purchases.

Answer

CFO Adam Satterfield could not quantify a pull-forward but noted March's strong sequential tonnage growth. He detailed the revised $450M CapEx plan: $210M for real estate, $190M for equipment (down from an initial $225M), and $50M for IT. This is a significant reduction from the prior year's spending.

Jason Seidl inquired about the impact of severe winter weather on January's tonnage, which was down 7.1%, and asked for the outlook on volume recovery and specifics on terminal closures.

Answer

President & CEO Marty Freeman explained that weather-related disruptions are typical for January and that most of the associated revenue is recovered within a few days. CFO Adam Satterfield added that while they don't detail terminal closures, January's tonnage underperformed the 5-year average by about 100 basis points, but he noted the historical seasonal uptick expected in February and March.

Jason Seidl asked if tonnage comparisons should ease in November and December following a difficult October comparison and inquired about the impact on weight per shipment.

Answer

CFO Adam Satterfield agreed that October presents the toughest comparison and that comps should ease. He noted that while weight per shipment was surprisingly down in Q3, it was showing a slight increase in October, which is a positive sign for productivity and potentially the broader economy.

Jason Seidl inquired about the low to mid-single-digit price increases in the Expedited segment, asking if this is the current average and what expectations are for the bid cycle. He also asked about the significant increase in bid activity, questioning if shippers are pulling forward bids due to concerns about future truckload supply-demand. Additionally, Seidl sought clarification on the warehousing segment's startup costs and booking trends, and the company's comfort level with its balance sheet leverage ratio for 2026 following recent acquisitions.

Answer

CEO David R. Parker confirmed that the 3.5% rate increase is the average for the first three weeks of January, expressing optimism for continued increases and potential for further adjustments in June. President Paul Bunn added that new business is being won at higher rates, allowing for capital redistribution. David R. Parker also noted that January bids are up 33% over Q4, driven by shippers trying to get ahead of potential capacity concerns and new customer acquisition. For warehousing, David R. Parker expects sequential improvement, with Q1 better than Q4 and Q2 better than Q1. President Paul Bunn addressed the balance sheet, stating that the current leverage is slightly above the long-term target but is expected to improve sequentially starting in Q1 2026, with a focus on integrating the Star acquisition and reducing debt rather than new acquisitions in 2026.

Jason Seidl from TD Cowen asked about the impact of the government shutdown on the Department of Defense business, including how the volume reduction would flow through the P&L and the expected speed of freight recovery post-reopening. He also inquired about factors that could accelerate capacity exits, such as actions by insurance companies or customers regarding non-domiciled drivers, and the company's ability to renegotiate rates with customers if the market recovers significantly after the bid season.

Answer

President Paul Bunn explained that about half of the Department of Defense business would be lost, with some trucks diverted to expedited loads. He noted that a full catch-up of volumes is unlikely due to holiday shutdowns, and a prolonged shutdown would significantly impact expedited results. CEO David Parker stated that insurance companies are likely to stop insuring non-domiciled CDL holders, and government pressure on issues like cabotage and ELD cheating will accelerate capacity exits. He cited a recent spike in negative MC number changes (over 400 last week) and rising rejection rates despite lower volumes as evidence of tightening capacity. David Parker expressed 100% confidence in the industry's ability to renegotiate rates mid-year if market conditions improve, emphasizing the need for fair pricing after years of stagnation.

Jason Seidl inquired about the financial impact of the government shutdown on the Department of Defense business, how much of that freight would be permanently lost versus eventually recovered, and the expected cadence of its return. He also asked what factors could accelerate capacity exits, such as actions by insurance companies or customers regarding non-domiciled drivers, and the company's ability to renegotiate contract rates mid-year if market conditions improve significantly by spring 2026.

Answer

President Paul Bunn explained that about half of the Department of Defense business would be lost, with a partial catch-up expected upon reopening, but full recovery hampered by holiday shutdowns. He noted that the impact on expedited results would be significant if the shutdown lasted the entire quarter. CEO David Parker stated that insurance companies are likely to stop insuring non-domiciled CDL holders, with California leading on policy. He also highlighted government pressure on cabotage cheating and observed a significant increase in MC number revocations, with volume down 17% but rejections up almost 2%. Mr. Parker expressed 100% confidence in the ability to seek rate increases from customers if the market allows, especially after four years without significant increases, citing a 'perfect storm' of demand opportunities and capacity leaving.

Jason Seidl inquired about the competitive landscape and margin outlook for the non-poultry Dedicated business, the company's strategy regarding commoditized versus specialized freight, and the current state of the M&A market amid macro uncertainty.

Answer

President Paul Bunn acknowledged that the non-specialized Dedicated market is highly competitive due to pressures from the weak one-way market, while specialized niches remain less pressured. He anticipates overall Dedicated margins will improve as weather normalizes and the company laps the severe impacts of the avian flu. CEO David Parker confirmed the long-term strategy is to increase the mix of specialized dedicated freight. Regarding M&A, both executives noted a high volume of smaller companies looking to exit, but the number of quality, intermediate-sized deals remains consistent.

Jason Seidl from TD Cowen asked about the historical recovery from bird flu, the state of the used equipment market, and the competitive landscape for the standard Dedicated business. He also inquired about the potential impact of tariffs on the Warehousing segment's growth.

Answer

President Paul Bunn described the bird flu's impact as seasonal and short-term, often followed by a catch-up in demand. Executive James Grant noted stabilization in the used equipment market. Bunn added that while the standard Dedicated market is competitive, Covenant is focusing on more specialized niches. Regarding Warehousing, Bunn clarified that its strong performance is driven by domestic production volumes and improved operational efficiency, not by port-related tariff concerns.

Jason Seidl from TD Cowen asked for clarification on the success criteria for rate increases, the potential earnings leverage in 2025, the outlook for capital expenditures, and the specific timing of the LTL line haul slowdown.

Answer

CEO David Parker confirmed a 2-3% rate increase would be a success. Executive James Grant explained that such an increase would provide significant operating leverage, as costs are already absorbed in the P&L. He also projected 2025 CapEx to decrease to the $50-60 million range, primarily for maintenance. Executive M. Bunn specified that the LTL line haul softness began after July and continued through Q3.

Jason Seidel asked when the business mix, particularly regarding manufacturing and industrial production, might normalize for ArcBest, or if the current fluctuating mix is becoming the new norm for the company.

Answer

Chief Commercial Officer Eddie Sorg stated that mix has been a key driver for several quarters, influenced by the prolonged freight recession impacting manufacturing, industrial production, and housing markets. He explained that the trade-out of softer business for new opportunities drives the mix, and while they manage it for profit, it's largely tied to the macro environment. President and CEO Seth Runser added that customer retention is strong, but customers are simply producing less.

Jason Seidl inquired about the normalization of ArcBest's business mix, asking if the current volatility is the new norm and when stabilization can be expected, particularly concerning the mix of freight.

Answer

Eddie Sorg, Chief Commercial Officer of ArcBest, explained that the mix has been driven by the ongoing freight recession, impacting manufacturing, industrial production, and housing markets. He noted that the trade-out of softer business for new opportunities drives the mix, and while ArcBest maintains a disciplined pricing approach, predicting stabilization is difficult due to macro factors. Seth Runser, President and CEO, added that customer retention is strong, but customers are simply producing less, and the housing market continues to challenge U-Pack business and weight per shipment.

Jason Seidl from TD Cowen asked about the company's strategic push into the Small and Mid-sized Business (SMB) market, questioning if it's becoming more price-competitive, its relative price sensitivity, and if the freight profile differs from larger accounts.

Answer

Chief Commercial Officer Eddie Sorg explained that while ArcBest is focused on the SMB market, pricing is customer-specific. He characterized this business as 'stickier' and historically less price-sensitive than large enterprise accounts. Sorg noted the freight profile is a 'mixed bag' across numerous verticals, but the value proposition allows ArcBest to excel.

Jason Seidl inquired about the specific actions ArcBest is taking to offset weather impacts on its Asset-Based operating ratio (OR) and questioned the downward trend in pricing increases, asking about potential market pressures.

Answer

President Seth Runser explained that continued productivity improvements, lower purchase transportation costs, and adjustments to annual incentive plans are helping to offset weather-related challenges. Chief Strategy Officer Christopher Adkins addressed pricing, stating that the Q4 result was in line with Q3 and that the environment remains rational. He emphasized the company's discipline in securing increases to offset inflation, highlighting the full-year 4.9% increase as a strong result given the freight recession.

Jason Seidl of TD Cowen requested specific figures for the sequential changes in weight per shipment and length of haul from September to October to better understand the flat ex-fuel yield performance.

Answer

Executive Christopher Adkins cited abnormal mix changes, partly due to weather effects, that influenced the stats. CFO Matt Beasley specified the changes were a 'low single-digit increase in weight per shipment and in the low single-digit decrease in length of haul,' asserting they were not indicative of a broader pricing trend.

Jason Seidl asked about potential continued freight leakage to competitors in 2026 and Norfolk Southern's strategies to counter it. He also inquired about the specifics of the $300 million reduction in the 2026 capital expenditure budget.

Answer

President and CEO Mark George acknowledged a 1% revenue headwind but affirmed the company's aggressive stance, offering new services. Chief Commercial Officer Ed Elkins cited new services in Louisville and Ayer. CFO Jason Zampi explained CapEx reduction stems from asset efficiency and network fluidity, enabling less equipment spending. COO John Orr added that productivity gains allow for protecting core investments while supporting future growth.

Jason Seidl inquired about the potential for continued freight 'bleed' to competitors throughout 2026 due to the enhanced competitive environment and the steps Norfolk Southern is taking to mitigate this. He also asked for details on the $300 million reduction in capital expenditures (CapEx).

Answer

President and CEO Mark George and Chief Commercial Officer Ed Elkins acknowledged a 1% revenue headwind from past competitive losses but stated the company is 'fighting back' with new services like Louisville and Ayer, Massachusetts. CFO Jason Zampi and COO John Orr explained the CapEx reduction stems from asset efficiency, improved network fluidity, and leveraging prior strategic investments, allowing for reduced equipment spending while maintaining network safety and reliability.

Jason Seidl asked management to detail the levers they can pull to manage costs amid market uncertainty and followed up with a question on how to think about headcount for the remainder of the year.

Answer

CEO Mark George highlighted a focus on details like taxi usage, meals, and consultant spending, alongside larger initiatives in IT and administrative functions. COO John Orr mentioned core cost takeouts in T&E, mechanical, and fuel, while maintaining resource flexibility. Regarding headcount, management stated they are managing via attrition and controlled hiring, expecting headcount to remain flat with Q4 levels but will adjust if top-line pressures manifest.

Jason Seidl of TD Cowen asked about the company's agility in managing costs amid market uncertainty, inquiring about specific levers for cost control and the outlook for headcount.

Answer

President and CEO Mark George detailed granular cost controls, including on consultant usage. COO John Orr noted resource flexibility and optimized hiring. Both George and CFO Jason Zampi expect headcount to remain flat with Q4 levels, managed through attrition and controlled hiring, but will adjust based on volumes.

Jason Seidl asked about the normal seasonal progression for intermodal performance and merchandise trip plan compliance from Q3 to Q4, and what to expect for those metrics in 2025.

Answer

COO John Orr explained that his philosophy is to operate through environmental challenges and recover quickly, supported by strong customer communication. CMO Ed Elkins added that Q3/Q4 2024 flows were distorted by port issues, but the network demonstrated resilience. An executive also noted that improved train velocity underpinned the strong performance.

Jason Seidl from TD Cowen inquired about the current BCO utilization levels, particularly in light of recent severe winter storm activity, and later asked how Landstar's AI initiatives are contributing to generating more bids in the marketplace, contrasting it with competitors' approaches.

Answer

President and CEO Frank Lonegro, VP and CFO Jim Todd, and VP and Chief Safety and Operations Officer Matt Miller addressed the storm's impact, estimating 5,000-6,000 impacted loads but anticipating recovery, and highlighted an 8% year-over-year increase in BCO utilization for Q4 2025. Frank Lonegro and VP and Chief Corporate Sales, Strategy, and Specialized Freight Officer Jim Applegate explained that Landstar's AI strategy, unlike C.H. Robinson's, focuses on empowering independent agents and BCOs to work more efficiently and confidently in the spot market, rather than primarily reducing internal costs. They detailed how AI enhances pricing tools, complex freight management, and load matching to drive growth.

Jason Seidl inquired about the impact of recent winter storms on BCO utilization and Landstar's strategy for leveraging AI to generate more bids in the marketplace, contrasting it with competitors.

Answer

President and CEO Frank Lonegro, VP and CFO Jim Todd, and VP and Chief Safety and Operations Officer Matt Miller discussed the storm's impact on loads (estimated 5,000-6,000 loads down) but noted historical recovery and strong BCO utilization. VP and Chief Corporate Sales, Strategy, and Specialized Freight Officer Jim Applegate explained Landstar's AI strategy focuses on enabling agents and BCOs to work smarter and faster, particularly in the spot market pricing, rather than primarily cost reduction like some competitors.

Jason Seidl asked for a breakdown of the end markets driving strength in the heavy haul segment and questioned the potential impact of new English proficiency rules on the overall driver supply.

Answer

CEO Frank Lonegro and Executive James Applegate described the heavy haul growth as broad-based, with strength in machinery, electrical, building products, and energy. Regarding driver supply, Lonegro and Executive Matthew Miller stated that while Landstar's own fleet is unaffected due to high standards, the new out-of-service enforcement for English proficiency could significantly tighten overall industry capacity, potentially impacting up to 100,000 drivers.

Jason Seidl from TD Cowen asked for details on the drivers behind the 15% increase in heavy haul revenue per load and the increased demand in that segment. He also inquired about the company's exposure to potential tariffs related to China and U.S.-Mexico trade.

Answer

Executive James Todd attributed the heavy haul strength to broad-based demand from sectors like aerospace, defense, and auto. Executive James Applegate added that it is a strategic initiative with investments in leadership and agent development. CEO Frank Lonegro highlighted technology investments in rating and routing as key contributors. Regarding tariffs, Lonegro clarified that the company's primary exposure is to U.S.-Mexico cross-border trade, which Executive James Todd quantified as over $540 million in 2024 revenue.

Jason Seidl asked for more details on the technology used to redirect Ground Saver parcels to the USPS versus in-house, the extent of its network deployment by year-end, and its longer-term impact on margins and productivity.

Answer

Nando Cesarone (EVP and President of U.S. Operations, UPS) confirmed the Ground Saver network would be fully operational by the end of January, with matching algorithms controlled by UPS. Matt Guffey (EVP, CCO, and CSO, UPS) highlighted the opportunity to differentiate the product portfolio with an economical option and the new ability to utilize USPS Destination Delivery Units (DDUs), which was unavailable a year prior. Carol Tomé (CEO, UPS) emphasized the DDU opportunity for maintaining high service levels.

Jason Seidl requested more details on the technology used to redirect parcels to the USPS for GroundSaver, including network equipping by year-end and its long-term margin and productivity benefits.

Answer

Nando Cesarone (EVP and President of U.S. Operations, UPS) stated the GroundSaver network would be fully operational by the end of January, with matching algorithms controlled internally. Matt Guffey (EVP, CCO, and CSO, UPS) emphasized that the USPS relationship allows for product differentiation and an economical option for customers, leveraging DDUs (Destination Delivery Units) for service. Carol B. Tomé (CEO, UPS) highlighted the importance of using DDUs to maintain high service levels.

Jason Seidl sought to clarify the impact of customers drawing down inventories, asking how this affects near-term volumes and how long this drawdown period might last.

Answer

CEO Carol Tomé estimated the drawdown period could be 30-90 days for larger importers. However, CFO Brian Dykes explained that the volume impact is mitigated by shifting trade lanes, projecting a ~25% decline in China-U.S. volume would be offset by a 40% increase in China-to-Rest of World shipments. He affirmed that UPS has the network flexibility to manage these shifts.

Jason Seidl inquired about the volume impact from customers drawing down inventories and the potential duration of this destocking trend.

Answer

CEO Carol Tomé estimated that importers were buying ahead by 30-90 days and doesn't expect the drawdown to last much longer due to storage constraints. CFO Brian Dykes noted that while this creates near-term pressure, shifting trade lanes are providing a significant offset. He cited an expected ~25% decline in China-U.S. volume being counteracted by a 40% increase in China-to-rest-of-world shipments.

Jason Seidl sought clarification on CSX's 2026 growth outlook and asked how long natural gas prices need to remain elevated to impact coal volume, and how to monitor this trend.

Answer

Maryclare Kenney, SVP and Chief Commercial Officer, CSX Corporation, clarified that the muted growth outlook was for 2026. She explained that increased power demand and higher natural gas prices support domestic utility coal volume, but the duration of planned plant closure delays and producer capacity are key monitoring points.

Jason Seidl asked SVP and Chief Commercial Officer Maryclare Kenney about the duration natural gas prices need to remain elevated to influence coal volume, and the most effective way to monitor this trend.

Answer

SVP and Chief Commercial Officer Maryclare Kenney stated that increased power demand and higher natural gas prices support domestic utility coal volume. She noted that planned power plant closures might be delayed, creating more demand and opportunity. However, she highlighted that the key uncertainty is how much additional volume producers can actually support.

Jason Seidl asked Kevin Boone about the marketing agreement with BNSF and its build-out through 2026, including contract length, and the positivity surrounding coal, specifically domestic demand and data centers.

Answer

Kevin Boone, EVP and Chief Commercial Officer, attributed coal optimism to shifts in the political/regulatory environment, data center demand for electricity, and efforts to maximize utility plant utilization. For intermodal, he explained recent announcements are outcomes of long-term discussions with partners to create efficient service options, with improved industry service enabling quicker execution.

Jason Seidl of TD Cowen asked for the outlook on trip plan compliance for Q3 and whether CSX is hearing any updates regarding the potential appointment of a fifth member to the Surface Transportation Board (STB).

Answer

EVP & COO Mike Cory confirmed they expect trip plan compliance to return to or exceed prior levels. President & CEO Joseph Hinrichs added that he was encouraged by July's results and noted the STB received no customer complaints about CSX during Q1's challenges. He declined to speculate on the STB appointment.

Jason Seidl asked about the outlook for intermodal yields (RPU), considering the potential for a mix shift between international and domestic freight and recent industry commentary on soft domestic pricing.

Answer

EVP and CCO Kevin Boone stated that with bidding season largely complete, a significant pricing inflection in the second half of the year is unlikely. He noted that a mix shift toward domestic freight would generally be positive for RPU, but acknowledged there are many moving parts in the current environment.

Jason Seidl asked if intermodal freight that shifted to the West Coast due to port strike fears would return east and what the yield impact would be, and also inquired about sentiment regarding the ILA's January 15th deadline.

Answer

CCO Kevin Boone expressed hope for a labor agreement before the deadline to eliminate uncertainty. He believes the long-term trend of freight moving to the East Coast will continue, driven by manufacturing shifts and port investments. He added that CSX is somewhat agnostic, as it can benefit from transcontinental moves, but sees the overall East Coast trend as a net positive.

Jason Seidl asked how much of the truckload gross profit per load improvement was attributable to the recent carrier migration and unified pricing, and inquired about the expanding Managed Transportation pipeline.

Answer

CFO Jamie Harris attributed the improvement to a combination of pricing strategy and better procurement costs, highlighting the outperformance of typical seasonality as proof of their impact. CEO Drew Wilkerson noted the Managed Transportation pipeline is up sequentially and is being successfully diversified beyond its historical base of automotive and industrial into food & beverage, CPG, and technology.

Jason Seidl inquired about the current level of industry tender rejection rates and the outlook for Q1. He also asked about the expected performance trends for RXO's freight forwarding business in 2025.

Answer

CSO Jared Weisfeld noted that tender rejection rates remained elevated between 6% and 6.5% in early Q1, supporting the view that the market is bottoming. CEO Drew Wilkerson commented that the freight forwarding business has performed well, benefiting from an inventory pull-forward from Asia and successful diversification into domestic services and customs brokerage, particularly at the Laredo facility.

Jason Seidl from TD Cowen requested more details on the strong growth in reverse logistics, including its revenue contribution and sources. He also questioned the apparent conservatism in the low end of the company's organic growth guidance.

Answer

CSO Kristine Kubacki noted that reverse logistics represents over 10% of the sales pipeline and is driven by new e-commerce wins. CEO Malcolm Wilson added that the company's organic growth guidance is intentionally conservative, giving the incoming CEO flexibility. He stated it is difficult to foresee a scenario where results would fall to the low end of the range given current visibility into Q3 and Q4.

Jason Seidl of TD Cowen asked if the path to the 2027 guidance has changed, questioned the timeline for resuming M&A activity, and requested more detail on the e-commerce returns business.

Answer

CFO Baris Oran reaffirmed the 2027 plan, stating the components (core growth, automation, Wincanton) remain the same and the company is on track. He clarified that the near-term focus is on debt paydown and organic growth, with M&A not on the short-term agenda. CEO Malcolm Wilson added that the returns business is integral to e-fulfillment and is seeing volumes recover in line with the broader e-commerce rebound. He noted the trend is toward faster, more detailed processing to maximize value, which plays to GXO's tech strengths.

Jason Seidl of TD Cowen asked about the margin profile of Hub Group's transcontinental business and questioned whether rail service or falling truck prices has been more critical in winning freight back to intermodal on those lanes.

Answer

President & CEO Phillip Yeager explained that transcontinental business is typically accretive, with a positive mix impact on both revenue and margin per load. He stressed that both superior service and competitive cost are essential for converting freight from trucks. He noted that the proposed UP/NS merger could enhance both factors by potentially removing 24 to 48 hours of transit time, making the intermodal offering significantly more compelling.

On behalf of Jason Seidl of Cowen and Company, an analyst inquired about the expected earnings contribution from the new EASO joint venture, its long-term cross-selling opportunities, and customer sentiment regarding Mexico investments given the regulatory environment.

Answer

Executive Phillip Yeager described the EASO transaction as strategically important and immediately accretive, with significant long-term synergies from cross-selling and drayage integration. He noted that customer conversations show a strong, ongoing commitment to nearshoring in Mexico. CFO Kevin Beth clarified that since the deal closed late in Q3 (October 23), the most significant financial accretion will be realized starting in 2025.

Jason Seidl of TD Cowen asked if Saia's flat July tonnage was influenced by any tariff-related pull-forward in its consumer business. He also sought clarification on the timing of tougher Q3 comps and whether density gains in new terminals were from new or existing customers.

Answer

EVP & CFO Matthew Batteh said tonnage trends have been relatively stable with no specific pull-forward to call out. He confirmed tougher comps begin in the back half of Q3, as Saia opened 11 terminals in that period last year, mostly in August and September. President & CEO Frederick Holzgrefe reiterated that the initial density gains come from penetrating existing customers in new markets, with winning new local customers being the next leg of the growth opportunity.

Jason Seidl of TD Cowen asked about the last time Saia experienced flat LTL pricing and inquired about the portion of contractual business scheduled for repricing in Q2. He also sought clarification on April shipment trends and the specifics of the company's CapEx cuts.

Answer

President and CEO Fritz Holzgrefe noted that Q1 revenue per shipment ex-fuel was up 2.3% and couldn't recall the last time pricing was flat. Executive Matthew Batteh stated that contract renewals occur ratably throughout the year, with no specific bid season. He confirmed April shipments were tracking down ~2% year-over-year (flattish adjusted for Good Friday). Regarding CapEx, he explained the cuts were mainly on the real estate side, as most revenue equipment was already delivered.

Jason Seidl from TD Cowen attempted to normalize the October tonnage growth of 6.5% by asking what it would be without the impacts of hurricanes and a competitor's cyberattack last year. He also asked what market conditions would prompt Saia to expand a recently opened terminal.

Answer

CEO Fritz Holzgrefe declined to provide a normalized tonnage figure, stating the company is focused on delivering for customers and earning share, not chasing specific volume targets. He explained that terminal expansions are driven by a long-term view to ensure high service levels and flexibility over several years, rather than by immediate volume needs.

Jason Seidl of TD Cowen asked about the potential size of the market available to the rail industry by accessing more watershed traffic, whether through mergers or closer collaboration between railroads.

Answer

CEO Jim Vena explained that the key to opening new markets is building a fundamentally efficient railroad that can deliver a high level of consistent service. EVP of Marketing & Sales Kenny Rocker added that through their interline alliances, they are always looking to open new markets, and the current strong service product allows them to pursue new growth opportunities.

Jason Seidl of TD Cowen asked for the outlook on salaries, wages, and benefits per employee following a strong Q1, and for clarification on where a prior-year $46 million gain was recorded.

Answer

CFO Jennifer Hamann confirmed they are maintaining the full-year guidance for a 4% increase in cost per employee, citing upcoming wage increases and union negotiations. She clarified that the $46 million gain in Q2 2024 was recorded in the 'other expense' line item.

Jason Seidl of TD Cowen asked about the potential impact on volumes and cross-border business if new tariffs are imposed on Mexico, given Union Pacific's significant exposure.

Answer

CEO Vincenzo Vena stated that the company is prepared to react to any scenario and that potential negative impacts could be offset by other factors like regulatory or tax changes. EVP of Marketing and Sales Kenny Rocker added that the key is preparedness, as commodity origin points can shift, and the operational team has proven its ability to adapt to such changes and maintain fluidity.

Jason Seidl of TD Cowen inquired about the LTL segment, asking for an update on building tonnage in the Western U.S. following the DHE acquisition and for commentary on the current LTL pricing environment.

Answer

CEO Adam Miller reported that building tonnage in the West has been successful, though system integration has created cost headwinds that are now being addressed. He described the pricing environment as consistent, with contract renewals in the mid-to-upper single-digit range. CFO Andrew Hess added that to maintain high service during this rapid growth, the company incurred some temporary cost inefficiencies, which they are now working to optimize as they focus on long-term value over short-term margin.

Jason Seidl asked for an update on B2B versus consumer trends, noting continued pressure on the B2B side. He also inquired about what drove the better-than-expected performance in May and what trends were observed in June.

Answer

EVP & CCO Brie Carere confirmed no marked improvement in the industrial economy, which pressures B2B. She stated the May strength was driven more by stronger customer onboarding from their sales pipeline than a discernible consumer pull-forward. President & CEO Raj Subramaniam added that Q4 demonstrated significant operating leverage even with B2C-driven volume.

Jason Seidl asked for a breakdown between B2B and consumer trends, noting continued pressure on B2B, and inquired about what drove better-than-expected performance in May and trends seen in June.

Answer

EVP & CCO Brie Carere confirmed no marked improvement in the B2B industrial economy. She attributed the May strength to successful onboarding from their sales pipeline rather than a clear consumer pull-forward. President & CEO Raj Subramaniam added that Q4 demonstrated significant operating leverage even with B2C-driven volume, indicating potential upside when B2B recovers.

Jason Seidl of Cowen asked if the expected moderation in LTL shipment declines is due to temporary factors like weather shifts or fundamental improvement, and also inquired about proposed changes at the USPS.

Answer

EVP and CFO John Dietrich attributed confidence in LTL growth to factors like the expanded sales force, improved service, and back-office focus. EVP and CCO Brie Carere added that FedEx Ground Economy is well-positioned against the USPS Ground Advantage product and that competitor pricing and service challenges create acquisition opportunities.

Jason Seidl of TD Cowen inquired about the commercial agreements that will exist post-spin, specifically their duration and how bundled service offerings for customers using both parcel and LTL will be handled.

Answer

EVP and Chief Customer Officer Brie Carere explained that the majority of FedEx Freight's volume is already negotiated on independent contracts, which will be honored. She noted the company pivoted years ago to negotiate Freight separately. For smaller customers on bundled 'earned discount' programs, she anticipates a nuanced strategy will be developed. EVP and CFO John Dietrich added that many intracompany agreements already exist and will simply be enhanced, not created from scratch.

Jason Seidl asked about the macroeconomic assumptions underpinning the company's forward guidance and inquired about the potential impact of a hypothetical East Coast port strike on air freight volumes.

Answer

President and CEO Raj Subramaniam noted the weak industrial PMI but also saw e-commerce growth and modest global trade improvement. He stated the outlook assumes a moderate industrial production improvement in the second half but is based on low growth expectations overall. CFO John Dietrich added that historically, port disruptions generally favor air freight, and they are monitoring the situation.

Jason Seidl questioned if new business in the Dedicated segment is being won at better margins than the business being churned. He also asked about the outlook for truckload pricing and how many bid cycles would be needed for normalization, given rising costs.

Answer

CEO Mark Rourke stated that new Dedicated business is consistent with their existing margin profile and return hurdles, not materially eroding or enhancing margins. He affirmed that the pricing market has bottomed but acknowledged uncertainty from tariffs could impact spot prices. Rourke expressed confidence in continued pricing progress through discipline. EVP & Group President Jim Filter added that an increase in shipper 'mini allocation events' reinforces their pricing strategy, and Mark Rourke confirmed that carrier capacity continues to exit the market at a steady pace.

Jason Seidl asked if the lightweight fleet model from the Cowan acquisition could be adopted elsewhere and sought clarification on the reduction of the long-term logistics margin guidance.

Answer

CEO Mark Rourke clarified that Cowan's dedicated fleet is mainly company drivers and that Schneider sees an opportunity to expand its successful lightweight model into new geographies. CFO Darrell Campbell explained the logistics margin target was refined from 5-7% to 3-5% due to a mix shift toward traditional brokerage following the Cowan acquisition, not a change in the outlook for the higher-margin power-only business.

Jason Seidl inquired about the 2025 CapEx guidance of $700 million to $900 million, seeking to understand the underlying assumptions driving the low and high ends of the range.

Answer

CFO John Kuhlow explained that approximately $600 million to $700 million is allocated for replacement capital, primarily for power units. He clarified that the variability in the range is largely dependent on the success-driven growth of new business sales within the Dedicated Contract Services (DCS) segment.

Jason Seidl of TD Cowen inquired about the source of recent 'pop-up' project work, the outlook for ocean freight pricing in 2025, customer reactions to potential tariffs, and the expected impact on EBITDA margins for the upcoming December quarter.

Answer

Executive Bohn Crain clarified that the project work was storm-related, stemming from recent hurricanes, and would positively impact the fiscal Q2 results. He anticipates near-term ocean prices will stay robust due to tariff hedging and Red Sea disruptions, but the long-term view is uncertain. Crain confirmed a customer pull-forward of goods in anticipation of tariffs. He guided that while absolute gross margin dollars would rise from the project work, the overall EBITDA margin percentage would likely decrease due to the nature of the business (charters).

Jason Seidl asked for more details on the company's use of algorithmic pricing and how the adjusted gross profit margin on freight priced this way compares to the legacy business.

Answer

Arun Rajan, Chief Strategy and Innovation Officer, explained that all pricing, including algorithmic, is anchored to the company's overall revenue management goals and disciplined operating model. CEO Dave Bozeman added that a digital pricing engine is essential for scale and serves as a starting point, with their teams providing a critical "human in the loop" element to ensure service and execution.

Jason Seidl asked what specific actions are being taken to correct U.S. LTL service issues and whether current pricing assumes service improvement. He also inquired about the trend of truckload carriers taking LTL freight and when that might reverse.

Answer

CEO Alain Bedard stated that service improvements, such as moving more freight from rail to road and instilling a culture that eliminates missed pickups, are prerequisites for better pricing down the road. He believes the pressure from truckload carriers will only ease when that market gets busier, which he speculates might not happen until late 2025, pending a broader recovery in consumer spending.