Operating Ratio Improvement
Q: What's driving the 400–500 bps OR improvement guidance?
A: Management expects a sequential improvement of 400 to 500 basis points in Q2 operating ratio, driven by modest seasonal volume increase and significant cost reductions. They highlighted cost relief in compensation and benefits due to unwinding service costs and restructuring benefits from reducing 300+ non-agreement workers. Fuel efficiency and productivity gains, including crew start savings and overtime reduction, will further contribute to the improvement. The company anticipates $250 million in productivity over the next six months.

Operational Changes Under New COO
Q: How does the aggressive approach affect operations and risks?
A: New COO John Orr emphasized that enhancing productivity and service are complementary goals. He is focused on restructuring yard and local plans to improve efficiency and reduce dwell times. The company is confident that these changes will drive performance without compromising service or safety. Management believes that accelerating operational improvements is necessary to meet their strategic objectives.

Intermodal Lane Rationalization
Q: Is the intermodal lane rationalization complete?
A: The company has completed a rationalization of about 15% of its intermodal lane portfolio, focusing on low-density and non-strategic lanes, which represented a small portion of intermodal revenue. This allows them to redeploy capacity to high-growth lanes delivering exceptional value. Management continues to evaluate the network to ensure resources are allocated to areas with the greatest growth potential.

Customer Response to Operational Changes
Q: How are customers reacting to the changes?
A: Customers are encouraged by the improved service levels, with intermodal service described as the best in a generation and sustainable. The company is earning trust and seeing positive responses, including new volume converting from the highway. The improved service reliability is expected to support growth in both intermodal and merchandise segments.

Impact of PTO and Sick Leave Regulations
Q: How does new sick leave impact operations?
A: Management acknowledges that new sick leave regulations are a national issue and is focusing on crew productivity and yard efficiency to mitigate any impact. They are increasing the capabilities of each assignment and balancing crew availability commitments with labor organizations. Everything is being scrutinized, including yard operations, to ensure they meet operational needs efficiently.

Potential Yard Closures
Q: Will any yards be closed?
A: John Orr stated that all aspects of the network are being evaluated, including yard operations. He is challenging the historic reasons for each yard to ensure they meet current and future operational needs. The company is open to changes and will roll out a redefined yard operating plan in the next 30 days, which may include yard closures.

Management's Confidence in Targets
Q: How confident is management in achieving targets?
A: John Orr expressed high confidence in achieving the set targets sustainably. He emphasized that by improving execution, plan compliance, and reducing waste, the company is already on the path to delivering impressive results without compromising service or safety.

Meridian Speedway Concession
Q: Does the Meridian Speedway impact Mexico traffic?
A: Management clarified that the agreement related to the Meridian Speedway is not a consequential concession and does not impact Mexico. It affects the Dallas business, which is largely defined by abundant truck capacity.