Margin Outlook
Q: Will Operating Ratio improve further this year?
A: Management expects continued improvement in Operating Ratio but does not provide specific guidance. They are confident in making gains quarter-over-quarter, focusing on service product and cost structure, despite uncertainties like interest rates and fuel prices.

Volume Growth Capacity
Q: Can you handle more carloads per week?
A: Yes, they have capacity to handle more than 155,000 carloads per week. With a couple of hundred extra crews available, 500 stored locomotives ready for deployment, and increased train lengths, they can handle additional 5,000–10,000 carloads per week without adding train pairs.

Margin Improvement Drivers
Q: How did margins improve despite lower volumes?
A: The improvement resulted from operational efficiencies and cost management. They optimized the network, drove decision-making closer to operations, and provided the service sold to customers. They see further opportunities for productivity gains.

Pricing and Mix Trends
Q: How will the 3.5% price/mix trend evolve?
A: While not providing specific numbers, management expects positive mix due to intermodal staying weak and continued aggressive pricing efforts. They are exceeding inflationary dollars and having deliberate conversations with customers, aligning improved service with capital investments.

Efficiency and Cost Reduction
Q: Is there more room for efficiency gains?
A: Yes, there is room for further efficiency improvements before volumes return. They are increasing train lengths (with a 300-foot improvement in manifest trains over last year ), reducing touchpoints, and adjusting train plans more quickly. They have removed 500 locomotives from service and see opportunities for more reductions.

Near-shoring and Mexico Growth
Q: What about customer commitments to near-shoring?
A: Near-shoring is real, with significant investments observed. They have a strong commercial presence in Mexico, seeing growth in North-South corridors and increased volumes through six gateways. New plants, including automotive, will come online, and they are set up to handle increased feedstocks and finished products.

Coal Revenue Outlook
Q: Is coal revenue expected to decline further?
A: Coal markets remain challenged due to low natural gas prices. Management believes coal is at trough levels but isn't relying on a rebound. They focus on growing other markets to offset coal declines, leveraging their franchise to win regardless of coal performance.

Competitive Dynamics
Q: Does competitors' margin focus benefit you?
A: Management welcomes competitors' margin focus, believing it allows them to compete effectively. They emphasize efficient service and competitive pricing, aiming to win customers by providing better service and leveraging their franchise. They do not prefer specific partnerships but focus on being the best option for customers.

International Intermodal Outlook
Q: What is the outlook for international intermodal?
A: Despite a prior customer loss, international intermodal has been strong, with increased IPI business through their network. They've seen growth due to challenges with the Panama Canal and East Coast labor concerns. They expect volumes to remain strong in Q2 but are cautious about the second half of the year.

Crude by Rail Growth
Q: Is crude by rail a growing business?
A: Yes, they are seeing strength in moving certain types of oil domestically and are excited to capitalize on this emerging commodity. While not at levels seen ten years ago, they are moving as much as possible and seeing growth in this area.