Union Pacific (UNP) 21 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Lance Fritz	Chairman, President and Chief Executive Officer
Kenny Rocker	Executive Vice President, Marketing and Sales
Eric Gehringer	Executive Vice President, Operations
Jennifer Hamann	Chief Financial Officer
Ken Hoexter	Bank of America
Jon Chappell	Evercore
Brandon Oglenski	Barclays
Tom Wadewitz	UBS
Justin Long	Stephens
Scott Group	Wolfe Research
Jordan Alliger	Goldman Sachs
Amit Mehrotra	Deutsche Bank
Chris Wetherbee	Citigroup
Ravi Shanker	Morgan Stanley
Walter Spracklin	RBC
David Vernon	Bernstein
Brian Ossenbeck	JPMorgan
Allison Poliniak	Wells Fargo
Jason Seidl	Cowen
Ben Nolan	Stifel
Jeff Kauffman	Vertical
Cherilyn Radbourne	TD Securities

Call transcript

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Operator

Greetings and welcome to Union Pacific’s First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded and the slides for today’s presentation are available on Union Pacific’s website. It is now my pleasure to introduce your host, Mr. Lance Fritz, Chairman, President and CEO for Union Pacific. Thank you. Mr. begin. now may you Fritz,

Lance Fritz

Marketing Thank Chief you, Pacific’s today welcome Union and President morning Omaha Vice Gehringer, President of Officer. and quarter earnings good Operations; of Vice first Executive me Hamann, Kenny and Sales; conference Eric are Executive our to Jennifer Rocker, Rob and Financial call. in With

lives and people want Russia’s invasion on UP we our of have holding in Before Ukraine reflect them discuss down first in our to quarter turned had is family thoughts their Ukraine. the our results, The upside I close of hearts. and

have our want service by with expectations. dedicated a matching has to But Pacific team recognize We direct than select $XXX,XXX and employees’ to customers. recently, our our provide foundation to the generosity. team gifts Union our our customers’ a leveraged more They are X:X, charities to met for resources also donation their our I help, serving product that from aid. not

You have it will an a product. to confident is I our starting benefits. while to hear and providing in place in am grow service yield from customers recover long-term action ability to plan reliable Eric, our we

our again, proven employees have the As they rise occasion. no matter the time and to challenge,

or compares results, first reporting morning, income This of is $X.XX quarter to net our Turning XXXX first quarter per first to billion XXXX or $X.X share. this $X per quarter Union Pacific of billion results share. $X.X

with gains points the XXXX. robust environment growth demand Our mix. quarter, in volume first of a strong and and quarter Business drove development XX pricing ratio business improved coupled versus operating positive XX.X% X% basis the

improve our into That having impact the higher a we and costs service must ability their to our contributing on challenges the their is realize the also future. growth However, expect year and serve volume We quarter. this to performance markets. real in are customers to

the Kenny business So, for on update to an environment. let me turn first it over

Eric Gehringer

and good Thank morning. you, Lance

to compared a X% up was volume year quarter First ago.

premium both from by Solid global were driven gains was chain industrial fuel pricing than supply in business XX%, strong surcharges, group bulk our and revenue segments more a mix. our continued positive up Freight higher by offset gains in decline a and disruptions.

started And on that increased shipments from January X% products wins beer year-over-year X% offset closer the XX% food average increase in biofuels lastly, surcharges per longer demand. strong X% times. with for increase can grain and partially to driver gas favorable Fertilizer were these was and Coal last each reflecting of gains. year, natural continued by new revenue a fuel bulk, and pricing in XX% take prices up by main the by X% up increase agricultural and grew and solid fewer in shipments contract look revenue higher production compared and X. year-over-year Starting to import volume up the in car, cycle and of renewable core driven groups. due an goods due carloads grain business Let’s were increased of driven quarter a XX% volume were shuttle at the carloads two Grain refrigerated. to

Volume year-over-year paper. shipments. housing was by and also car shipments were swarm demand to Industrial from in and both primarily chemicals favorable boxes to X% surcharges corrugated up production. plastic and year’s coupled strong, X% XX% revenue Average gulf up comp by a last starts compared were core be and increased to of due strength paper. shipments with higher the improved quarter, demand shipments XXXX rise that X%, industrial, by scrap impacted deliver increase driven Volume in in to increase year-over-year in frac to fuel steel for compared XX% gains. grew continued revenue XX% was and on Forest the volumes volume. materials, the last pricing Moving sand an up by an down per and growth driven Products continue Energy industrial primarily growth. driven primarily interest driven strong year-over-year to specialized demand driven in for fewer petroleum construction Metals Despite rates, XX% and by shipments. lumber year, robust and minerals

we favorable construction had earlier. a addition, our from comp last storm mentioned that In in year’s market I

demand was volume were XX% semiconductor up was surcharge pricing supply car volume in quarter revenue for traffic. and a Turning vehicles to X%, disruption. decrease international increased recovers. by as for a gains, chain by to result revenue positive X% Automotive per year. driven by premium, fuel volume finished in X%, X% of driven XX% in the Average down revenue, up was as down core Shipments on last versus due parts ongoing Intermodal mix a auto increase an continued shortages. higher

was domestic development strength by continued capacity and shipments. However, in volume tight up truck quarter, the aided in business wins, parcel

now, lines. bulk as we expect level, fertilizer commodity, But with we the see will how to outlook the markets Now, for China inflation grow to watching Starting the on at export closely side. XXXX, Ukraine it market moving our our of on stands in how impact to we to especially be across micro will the outlook our and global here view volume. demand, due a events is overall our both rest our rising solid business and

when gas that on our depend continued recover prices coal, the how quickly comes to can it that through much we anticipate demand year. But will service levels. favorable how we extend natural to capture, For of we

on optimistic and business biofuel growth grain demand from development products are We wins. with

recovery. like it were coal, dependent For expect comp we on grain, is our year times tough cycle strong. improve, as service to a we have although exports to And last

premium, production. metals. to strength to development and the will to of sales our tight restocking, supply in growth truck forecast challenges expect pandemic do for industrial And our industrial business XXXX markets, our industrial will International and encouraged markets, more chemicals groups. uncertain continue see for This We and domestic plastics by is effects from intermodal the lastly, chain ongoing impact wins intermodal of development possible expect benefit inventory we Customer Moving its business shutdown supply many levels. and continue positively we petroleum strength, be shipments retail on wins. expansions in with commodity drive not to China. like return from to

supply semiconductor disrupt For expect we XXXX, improve chain China chip to may for while recent do supply of the components. the Ukraine throughout automotive, events certain in key and

eye in an keeping stand this impact are our an on and We on contact will have whether close customers. with production

to few want I up, the the team wrap how service I is current a insights on commercial share challenges. navigating As

insight that control. are centered we levers our inventory. improve to customers commercial Likewise, the team pulling in to can First, we is around help actions all service. are the discussions of our have take what been will our railcar provide Eric asking reduce on

am over the to performance. high our I are transparency engagement turn to encouraged having While review those have conversations will we level with operational our customers. Eric and I been it by of With difficult, that,

Kenny Rocker

Thanks, good Kenny and morning.

in that As our meets that and discuss greater are in service expectations deteriorated minutes, I the will service to customers. we a levels impact a detail few acknowledge having level our is not on

employees focused value We to return world performance. home employees programs and have guidance safety above consultant. we our network. fluidity and enhancements on each are as remain We resilient restore the through build mixed day. class from start to safety reliable and safer, all a We health more and to our all implement implementing year been external safely Safety the of and the results network achieving safety partnerships plans want our safety to

as in lower measures performance the episodic Now, and let’s led still were more our and the to and operating related a service COVID freight product. and velocity our service starting decreased car network plan an year, challenge quarter, compliance seeing and inventory, was X. metrics key growing review counteract increase trip private the state, infections. from Slide Coming sluggish however, reduced In on the XXXX. improvements team crew particularly metrics relative events were customer availability the resources February, for late to both into car meet network fluid while added Freight demands. in velocity the was in fragile, cars, This to

metrics, productivity first most XXXX to XX To in operate and also the continue rail compared productivity the X% recover we additional of network, Slide our levels. to to impacting efficiency locomotive declined results. efficient now network overall our quarter quarter. more brought performance network although due pre-PSR assist to to during the units utilization further Locomotive muted compared we Turning a online,

productivity workforce improved FTE. per record X% quarter to X,XXX First daily miles a

to-date network. in transportation We XXXX. the XXX continue graduated to attrition almost hire for growth In and normal over XXXX, graduated employees XXX employees with throughout we new

of of around onboarding We employees roughly our towards strong this we pipeline goal year. training have closer XXX work as a X,XXX employees

hiring to one workforce pools have, targets. Northern is locations work several And essentially resources year our to been those increase ago. partners compared our to continue to with Train the challenged at locations. We flat across region meet length hiring in our however, we

we length recover train volumes to XXXX. While international the to a soft continued initiatives, both us quarter and service These customers. coal continue train and present to to our network product headwind intermodal enabling are deliver advance compared productivity better length key trains, a grew which manifest first for efforts to for

to state illustrates Turning the and operations. chart of Slide XX current path our a on forward, discussion this

over flat rose inventory year, car X-day levels to relatively volume since while of week. our operating XX% Our beginning the levels the week remained

We and is action more are critical an needed. point inflection at

congestion. over-the-road working trains resources, number operations a collaborating on network fluid more actions team private network remained car the state. on ease to terminals transportation the mainline unions, reduce we The with inventory fluid all Our the active and To adjusting accomplish proactively operating buildup. our by plans selectively this, to focus entire improving fronts the increasing to will and is taking returning are on dedicated customers our and network with of reducing

build customers. Jennifer and turn review issues, some of our it resilient over that, growth to our to needs beyond With is to to Looking the today’s more our performance. meet financial goal of consistent I network a will

Jennifer Hamann

and morning. good Eric Thanks,

Slide the start with a and me share quarter per at look on earnings ratio XX. operating first Let

a As you Yuri of Union will ratio recall $X.XX quarter first XX you XX.X%, earnings year-over-year significantly heard operating points quarter from of share basis is Winter and impacted quarterly Storm Comparing results, first XXXX. of Lance, reporting that per improvement. Pacific

XX point quarter adding So and points, highway between points ratio contributed results but the our top are drag quarter, Rising to well earnings ratio impacted per the the as to lag the as both operating Core programs basis diesel the fuel These core EPS. our to growth were ratio, throughout we delivered. share. $X.XX on line per operational positive and by of results of in negatively XXXX, strong XX in $X.XX prices we WTI operating prices our the share. quarterly while inefficiencies surcharge a basis effect basis indicative $X.XX spreads widening fuel fuel and have XXX to

$X.X totaled expense revenue at Looking XXXX to up first volume billion, statement on our Slide operating $X.X growth. now income increased year-over-year Operating X% XX% quarter XX% versus XX, on billion.

Excluding the were of the expenses X% higher prices, up fuel impact in quarter.

income $X.XX. higher income due rate. operating a Expectations billion, for at margins first have incrementals Adjusted to lowered now quarter rate or states to versus billion repurchases, was XX.X% to totaled increase year rates. versus full lower year. $X.X XX% a effective last quarter First offset a unchanged XX%. per fuel several earnings increased are incremental record when resulted price, for of pre-tax Interest We our effective the in XXXX, of lower XX% end tax Net year which effective which up partially X% share is increased combined Investor a full tax levels, be reflecting estimate by by around $X.X lower interest tax Day rate. to partially share with mid-XXs, as Income debt income in lower XX% XXXX, the guidance. increased are the compared to offset expected expense XX% increased

revenue, combined closely freight gains diesel growth business to Kenny contributed freight breakdown mix. XXX The XX that Looking that volume supported as surcharge with the basis Fuel quarter successful growth. exceed billion, development basis support versus of revenue the points as price dollars. increased mix million demand business Lower environment higher fuel our freight up prices. XXX robust positive continues of totaled actions Broad-based $XXX the yield combined points revenue in Slide which revenue significant provides with inflation reflects surcharge XXX more revenue, basis positive first to XX% at points. intermodal higher industrial of XXXX. shipments, by drive volume, efforts, revenue surge These $X.X dollars discussed, a the drove

to on a summary operating provides move XX, expenses. quarter let’s which first our Now, of Slide

the ton of increase driver fuel, As noted was in XX% the XX% earlier, prices up primary a increased fuel miles. X% and higher expense on gross

Our negative fuel relatively business was offset compared the XXXX by was productivity. consumption rate flat mix favorable to as

was expense Looking the compensation and further benefits lines, X% up expense versus at XXXX.

engineering First in offset by increase management, quarter partially as and were X% workforce and levels a mechanical flat workforces. crews train increased X% our engine

growth. into related crafts to we employee to to over of per efforts inflation offset heard wage prepare costs recrew expenses. from recovery year’s increased and by as as support higher our hire well Eric, network result As a network as continue you time partially borrow-out inefficiencies weather-related Cost future last for transportation and X%

higher larger Other fleet. driven was expense local X% increased rents, other and locomotive Given employee by increased XX%, driven cost remain the and active Purchased we to equity second the to state subsidiary income. elevated the Loop expect is driven with up current material expense challenges, Equipment and and a TTX quarter. X% taxes cost quarter, by purchase transportation in travel. by volume-related associated and up maintain business lower higher services operational inflation, per now expense into our

and the increase. billion from in XXXX, to XX flows, billion cash to in operations quarter cash $X.X a XX% Turning Slide from increased $X our first

to billion repurchases. Our debt-to-EBITDA February. January, elevated spending million I a quarter, by finished dividends This and of the well we our to $X.X first cash capital quarter that in increased conversion free rate normalized start recognizing we adjusted share cash returned spending rating. want operational And $XX $XXX includes an program as the This of million $X.X on strong with program. executed declined fourth $XXX as quarter X.Xx our reflects in start in fuel higher as we changed have performance. Slide billion was dividends. million to both the million. continue cash cash credit investment since payments The several ratio we accelerated In guidance includes repurchase flow investment through to capital and things XX, XX% prices Wrapping from grade to provided $XXX a maintain up of shareholders share and XXXX from

sit those achievement here around today, make unlikely. we a XX.X% As pressures of operating ratio

and we year. look of this fuel in goals stabilization recovery in our product, to some our with starts service long-term that XX OR assuming However, achieve will still an a

are affirming provided price we for and previously Importantly, margins. incremental our volume, XXXX targets

of for are we with cash in Capital XXXX. also long-term and Our plans ratio remains and industry $X.X of at an guidance below year, within committed our remain leading spending the well unchanged. capital line XX% and dividend billion payout to repurchases revenue, share

Working Lance, to Union challenge, the I my a like factory especially turn during Before in is would to outdoor an to winter. back so but always express it I appreciation Pacific team.

delivering Our you. to will safely Thank desire employees though of another are undeterred results. back in turn their quarter financial to that, I serve our With it customers while solid Lance.

Lance Fritz

you, Jennifer. thank And

As but are an year uneven deterred. to start with the mentioned, have we we had not safety, Eric

consultants. changes process these a of with programs world for as result are the We implementing safety in catalyst our safety confident be experienced performance. our changes to work of am a will I class safety

remains demand from businesses. robust in heard as Kenny, see you customers their As growth opportunities our

a product that customers and need be we that sustainable, resilient reliable recognize depend on. our can to growth we However, for service

service. locomotives announced XX use fleet and advance the for all operations, we In units about We the is took leader in and nation’s Day, action full during These our electric and to in all with late not attention. long-term Improving and achieving by Our year. the step, battery success that Earth Wrapping for I be freight diesel the plans the exist undivided of creating has a our future. emissions. quarter largest up enthusiastic to XXXX January, with win zero protect for Union with sustainable this onsite an arrive this product the being journey With anticipate foundation remain emit XXXX. purchase use service fuel year am delivery to tomorrow we will our XXXX. on first our stakeholders. and complete stakeholders yard do strategy our carrier-owned in appropriate serve opportunities emissions challenges to with battery highlight a Current world’s feels begins successful to aside, we very to planet net-zero that it first a path by our XXXX remains confident will it Pacific locomotives

So with that, open for questions. line your up the let’s

Operator

And Instructions] with today with Hoexter be of coming our [Operator first line Bank your you. question. question Ken will proceed of America. Thank the Please from

Ken Hoexter

morning. Good Great.

up, – you your Just of up enhancing constraints meet company’s with that kind the obviously, network a can can do talk to following as well? these what has limiting scale fluidity of you to of how talk about the how the frees Thanks. Lance? And programs lot on improve targets? the on bit you outlook, and the it their little a breadth hiring that letter kind I service. do do about the What – of the to assets, of guess, on some up maybe Kenny, Maybe

Lance Fritz

the Ken. Yes. questions, Thanks for

start. will I So

terms fully In now XXX. is much our hiring, right hiring of pipeline pretty charged at

be graduating will healthy. need But able all like not need right We couple add help through X,XXX each of love would hundred where they now. be to like That customers we inventory would I us get it where us into the to will them pipeline, month. something That over would It’s another XXX our right pushed up get network it. we against really move the now. our help

of West particularly things trying mentioned are Northwest, northern and And Eric through some areas, into of are unique the that. doing way it the in so we couple in Pacific difficult there. we from When Chicago tier, a the the Wyoming middle all of call

take community them the on longer group to or best to great promise individuals society work who no take hiring. a them bad a something made in decisions, are of is board. but vet second with we called of chance the have life really that bring One showing we that’s then and from partner [indiscernible] threat the things And really where It’s and themselves.

our gone in training down Platte it expanded of hiring already chance have and Houston looks program and to that well. L.A., now Chicago, in who class great has have promise through We as those the North are communities second we in it first middle hiring like

we more develop to at to of railroad. attractive, doing a talent find training particular the So, content ready to a our And not timeframe jobs there program both so is to weeks, reduced XX in training be the perspective, do maybe it’s pools we same bit are number have in a to about make time, if have our XX from that perspective, to talent things bigger more of down a and we areas. little

to doing charged get them we are So out. everything we can pipeline the get and Kenny?

Kenny Rocker

Yes. letter Hey, Ken. We customers. of to out all a our sent

for us so make the We ensure that our Eric’s the opportunity and And conversation team thank we trying gave with those to we of and commercially all opportunity customers work conversations engaging give thank commercial us the them to what that having with I conversations. an a aware want inventory. of good team customers really our reduce railcar the to to customers have with are could best data-driven to had accomplish.

Trust encouraged difficult very to their I we have have tell the reduce with But have that. been there me some from you, railcar done will so conversations. and I our customers And willingness been inventory. initial their response

continue So we those discussions. to have will

utilize them be continue data. to will transparent We engage and and

Ken Hoexter

Thanks, Ken. Thanks, Lance.

Operator

proceed line Evercore. the question Our Jon question. Please from with Chappell your next comes with of

Jon Chappell

are biggest not add, relative you. And labor, looking workforce, look large. to labor. at Thank the when the people been have the labor, the everyone. with over Eric, morning, we issue. size really to amount you kind Good your of of that hit it’s It’s head we of

remedy right situation maybe worse now? exited capacity of constraints you bit the you on XQ lot out and additional what lot of complement kind XQ a a help network the headcount a get a It situation entered issues some than to can those of are quickly the are – you in So like feels that other and non-labor the can how quicker? you of quickly

Eric Gehringer

planned you hiring X,XXX point, Thank for Yes, this year. for And now, have we to John. your right people the question.

how And the many we only growth forecast that’s to that. need pace hire. now, also exactly not feel how we do on that, but we on have like are to We volume based we the

the recovering system, mean, one. Now, I when you think that’s number bullet about

charge got the beyond and have at we like have that, forefront we’ve You time. efforts done today, I are as Those to You being of pipeline. over we crews? in Lance judicious are that. recrewing crews on that use with said, right state, then we heard the things of go focus and those have Jennifer And now. opportunities our I

Third, I’d go to locomotives. down

we in As amount you locomotive at appropriate look of the on locomotives now, the right have fleet the Union system. the Pacific

closed some have Kenny with off started, We private now. our have system, and recover towards specific to number the them productively, reduce out that go transportation faster then but that’s The use down the them inventory right five eliminating do and those, I done, already the with right what more locomotives. the with very which Then partnership faster have on to made. car excess all we system. of we are plan of customers we’ve inventory. changes targeted of where the the they changes everyone working been to Those is opportunities finally, And focused John, in of been we

Jon Chappell

thank very much. Okay, you

Operator

proceed Our Brandon next line Oglenski your the from with Please Barclays. with question question. comes of

Brandon Oglenski

guess, And fluidity situation any or everyone you my Long Beack? the Lance quite? Hi, L.A., talk can for drastic thanks good has to taking in morning, improved Eric, in and question. I that

Lance Fritz

add then Eric Let me get ask a little started, detail. I’ll and to

are to We international partners our to our inland. put their more shipping ship international encouraging of ocean railroad boxes on

amount time, railroad. still our of And of love pointed been on is boxes all that to it’s more we have come network. that on we’d at lower are adding than and more – As of Kenny dwelling But dock we’re ready. those ratio that working us are are the The mentioned, to in an into they towards stand not historically. excessive back

Eric Gehringer

have it’s perspective, a at year. right at look to performance, only exactly capacity excess also dwell have relative when But Brandon, to be, those terminals. is We right. And not especially a that solid last we Lance in terminal specific where it we we need

to we can as that. more we volume, handle continue So get

we ready that. to for be still Now want

excess put and to continued have we resources an at-the-ready status. So

in Basin. but So they are L.A. available not are active, they the

those we efficiently. come, surges as So can them handle

Brandon Oglenski

you. Thank

Lance Fritz

Yes. Brandon. Thank you,

Operator

the Our line Tom comes UBS. question. proceed next from with with Please of your question Wadewitz

Tom Wadewitz

Good what May bit seemed to I to Meeting you about year, Analyst talked try last guess like, happened. back you morning. Yes. even the growth. little I – Lance, understand going It want to a And you you’re there that executed well like but really, you’re to been the difficulty obviously now I want – surprised think, But strategy. against it have handling I it. don’t almost seems by growth, say

So is there like a side? railroading is sport. surprise on I the know attrition an outdoor

get was and I a you long also, ago enough sometimes it then a just that labor your labor. takes – I commentary you But setback like had not while to that So recover. and feel on

I with how guess – And attrition? that then the ongoing, much what wanted might to happened? guess, see is ongoing? of issue? trying I So Is Thank Is I to have particular in you. that just that

Lance Fritz

to just crew struggling TE&Y we was point with thought about, looked as we in was about a kind were you XXX That’s in year that half what coming to we’d back availability, had last XXX, able unavailable kept into XXX, to to pretty like volumes. the crew felt time. a this of were. for operating good say, spoke proving half that the with the let’s last But charged we really not job And handle back of improving. metrics We great We starting entering a year, holiday, were we talked hiring Tom. that where, done the out would January, struggling be mostly we And let actually all question, you, COVID out been unpack our availability, coming in were thought When that we having where and given which the pipeline me anticipating We to us be any case. up in year. great XXXX, really do to at of COVID-related. our XXX, of and we had

What Now we brought were more for. fragile, board. were navigate we think, fragile, than ourselves credit we we crews give but we on knew I could is we as thought happened we

clean getting all blows So up, we them getting the Usually, out in started result, from bring of it. the in built of and resources reasons excess inventory half started it’s winter. to to be to and as the we we happens didn’t. the for behind sense normally bear body This a we in exact back that time enough And around, February, world. have some able what make

see so more car that us right And into where get they of kind now. their inventory we down, customers slow that then need self-reinforcing put As in are freight they And a cycle. that’s turns satisfied. negative

doing our sure we’re on that. Eric than our a where talking making the train got and So oriented about work and T place that have, got more right now, off. should is we’ve inventory we’ve in us to and car what we we plan is given towards that volumes, wisely, wisely, was And use crews our power

where to while to us out it. And it’s of going work take that’s are. we So exactly a

after work to add anything is improvement want of the is to through the into that? increment going week we’d week third see it out We’re doing Eric, anticipation you week and quarter. we’re that. And quarter there as my to second after

Eric Gehringer

be exactly And covered velocity, focused can car to train you’ve think and that would report right. will week those velocity progress most on making of that’s whenever we terminal be I We publicly, dwell, you after it so that continue indicators a what week. operating see leading inventory. we

Tom Wadewitz

when Is guess, saying? you’re will it there your third time in frame view? I be that’s quarter kind a fixed of for

Eric Gehringer

things to the incredibly would time important fact four crews recovery. that so as a see XXX to we reinforce the XXX guided we’re Those that other getting the haven’t line. we I No, But about the crews are hiring pipeline, specific are every I listed. month. single

should focused do that quickly on you is on and how is as what everyone possible. they that do are know focused as right So we now,

Lance Fritz

KPIs Eric to Tom, point the mentioned. Yes, I back you that would

You’ll see happen. the recovery

that car every we’d You’ll publish velocity it week. in see

You’ll see publish that every dwell inventory. terminal it you’ll we overall and in in week, see it

Tom Wadewitz

for thanks time. Okay, the

Lance Fritz

you, Thank Tom. Yes.

Operator

from with Please Stephens. Our questions. next Long your with the line of question proceed Justin is

Justin Long

full Obviously, the there guidance. When if guidance. would pandemic wanted on seasonality progression seasonally, the the the is prior sequentially of mid-XXs think a assumes XXX that half improvement through in be good second back network can of if and you we curious saw ask the help year? operationally. say to OR morning. think OR to of in Just about levels, a with similar quarter go cadence us the that in the assumed I it the back year quarterly to second the Thanks points lot quarter. going your guidance, I to level But OR in basis it you in fair about about

Jennifer Hamann

Yes. targets. that it quarter is fuel, about, are that that’s Excuse but greater And sequentially to very to that really those thinking correctly. stronger and back able to operational is I growth really that’s have for and as leverage that be to growth that really demand to you volume me, thanks, important. make fluidity got think see there, in the be the Justin, half volume improvements then Kenny operational the assuming we robust the performance. believe hit we moderation leverage question. we’ve talked Obviously, second going – we’re It I about know some there,

as of quarter second quarter best that acknowledge a to have last year ever also I our was Now company.

sequentially a remiss and going in half. be very in the a should fact, we that’s be the back for that we’re quarter, will I to greater see but in improve, we And But comparison would say basis. on to improvement second year-over-year that improvement tough And us. think lead sequentially, going so to to

Lance Fritz

year. you which that is guidance the for the gave support a overall, And XXx

Jennifer Hamann

Yes.

Justin Long

And do on volumes second be they’ll think the for up basis? a you year-over-year quarter,

Jennifer Hamann

depend do second the year, recovery. industrial talked automotive when by was for and the on again, – driven recovery. That’s was to we of I volumes the driven and going the to going more really bulk And but half about the and recovery be that first to of be going think pace half the intermodal by

stronger little China. automotive potential While the a the prices case, international the of with are I natural the I’ll think the gas or heard intermodal Kenny some, there you you have happened fact that’s what’s that bit largely Ukraine and the headwinds in But of into recovery still about in year. of talk and half say, and terms also back headwinds

going to that coal support growth. that’s So

a think the network fluid dynamic you first move of still terms get to half. than in there. stronger I sits much And you have overall QX, demand second and to just really try in volume in we half as that do that the So of need

Justin Long

time. it. Thanks for Got the

Jennifer Hamann

bet. You

Operator

Thank you.

Our next sorry, you question Scott is of from the – proceed me, line with Research. Wolfe question. of Please Scott excuse Group

Scott Group

you then Hey, or and just Is raising at amount I fuel headwind that I what on thoughts? of the it, to XX But XX beginning thought got Jennifer, know decent Any that on by more you’re whatever, thanks. basis to worsening a forecast a basis mix thoughts decelerated that? from operating point the price any Good it, points. and to how is mix And morning. the is than ratio, QX. pricing think that year.

going earnings it to is So about, talking issues what it service previously. you margin or that about like fuel be right? thinking guidance guidance Am actually – but feels almost know is I thought we’re underlying I than ex better underlying on we’ve got

Jennifer Hamann

Yes.

sequentially. first in So me of hit there, terms let question your Scott,

negative robust. environment from mix But have that’s very the is is be sequentially, continues pricing do really to there. fourth first within demand going quarter really to quarter. There mix – – the environment is mix. And So that you

at yes, to lowest is growth at when But look you So it the premium piece still when the very arc. on relative was growth. really was coal, look the has are bulk, strong down. components of side, up and or where bulk But the industrial the coal arcs bulk you other the coal intermodal

So board industrial across where at your growth was, within impact. industrial with strong the a has similar growth car of the the revenue you and some within Petroleum, that look within And average and in got mix mix per the also you metals, that exception side lowest have group. the story that but when of you’ve strongest

see terms that that the through lessening is certainly the look of yield impact. fuel headwind OR When story sequentially. So year a an but we you the is OR, from in the headwind, to

to operational we volume And on, bit the able stronger the that and see piece that And think very performance, you half, we with very to piece that’s leverage. in mix. diligently being well the I control working our both the most all. the we’re so second coming leverage within but fuel are volumes a and that’s better that’s perhaps little And looking the need at when the those stress piece with maybe the I

industrial in OR guidance. to continue revised coming think that’s that how stronger, you growth If have I a little bit get the you to

Scott Group

Okay.

comes the Or naturally OR and catch that year as Just that just down? on? the up so assuming about are on fuel impact you the less you so surcharge, fuel, just is point understand I goes price the

Jennifer Hamann

stabilization It’s latter really say the the fuel there. price. a It’s you that in

up we’re so catching And the the was half year. fuel And going of last bit second little in up. a

things two those taking together, it’s So Scott.

Scott Group

it. guys. Appreciate you, Thank

Lance Fritz

Thank you.

Operator

with line next Alliger Goldman question your with Please of Jordan question. proceed Sachs. Our from the is

Jordan Alliger

Yes. going unprecedented, think big-picture things take play. to Thanks. question. but and to methodology the adjustments to place? And a overall? long-term surprise Obviously, broader about of precision-scheduled into I others know PSR all Hi, And railroading after do resiliency put how through just a and the that you are negative to you a sort bit you PSR is need

Lance Fritz

Jordan that Yes. asking thanks question. for

PSR unequivocally, our So current railroad, been a benefit in the to environment. even has

amount go Let’s cars touch the it what It for to means the demand customer and customers time to means. need. back of satisfy fewest we necessary try our to

use we waste to line both can do don’t and our that other we purposes. terminals So by the allows That itself road of us work. capacity excess in have in for

also demonstrably proven years last PSR shared operating look PSR, readily. way have into out makes when the specialized Unequivocally, to the And at even of worse. trouble that worse, networks have otherwise. trains it prior when be more X that we’ve right operation we our that would into rapidly we trouble can gotten where through to sense than get are so can you in that cars our we’re now, deconstruct get advancing the would We we try more trouble when we environment,

resource us, now in because us. – lesson. Now place a got already to crew a for Shame it’s it what’s on wrong a on we we’ve to and short over a tough have network. it that get is, the out able when something went right to I’ll It’s the situation to lesson. period that’s be learned availability for time a not blame happening where of not be we And tough did of

get So we tightly our are as and need to and is them them look and that up, add for and same customers do with forward, can sure resources have coordinated matched a the our over up a as we resources we make planning what do we solid is their that for sure plan that better making rock job that match network resources and business of our processes frame our time is and how growth.

way into yes, It and helping manage unequivocally, the right to trouble. is remaining the that’s now, go. So we not PSR business is us why got

Jordan Alliger

Thank you.

Lance Fritz

Yes.

Operator

line comes Our Bank. the Amit next proceed Please from your Mehrotra with question. Deutsche question of with

Amit Mehrotra

or including XX Thanks. did basis. for XX% – if Hi, this in compare that kind the you to I’m the trying that to that is Jennifer, quarter incremental the a margin everybody. ex headline understand it’s headlines? or you target year, Because is fuel comparable of did, XX

Jennifer Hamann

of price. we’re that good Amit. about in always incrementals, talking terms No, fuel question, When that’s the it clarifying for to we normalizing a talk

first that the that’s to in we So the quarter. reported here comparable XX

Amit Mehrotra

Okay.

what So yes, that’s I thought.

service guys of maybe March XX context OR second the but And going XQ clarify obviously, of increase, to what wanted some do implication a subsequently to but very big step-up is up XX% I which these and issues? cumulatively on the a kind third fuel take depend thing quarter. the step to I going to even so growth sequentially, it’s is in going is up XX it to mean, then XQ, of is, in the One implication you’re ongoing was is I the assume surcharge, revenue quarter, a the big are and is, XQ, over that you

trying I’m of So disproportionately fuel of revenue the confidence improvement bridge, figure much that costs? quarters. the absolutely just fuel three on just next that that the to that in speak, comes is step-function increase how surcharge around so out And to

Jennifer Hamann

Yes.

of a our in OR. So being do I headwind mean, fuel see of the we price still terms

but we course As to the we year, our see Scott, and that flipping tailwind to I the of a that OR. OR don’t talked lessening impact see through being

That allow So surcharge, is the that the in math OR, seeing your terms with necessarily up fuel in I of I last you three about prices, seems a obviously, bit. don’t the it agree of that a stability year that. terms quarters fairly does said aggressive. would of fuel to know in which the But catch

Lance Fritz

and year. product also predicate Jennifer, half and service through quarter through the we that There Well, the of we to circle are just is that, one on and need is back the back. other the improving

Jennifer Hamann

And Absolutely. about the commentary that to volume back leverage. goes

Lance Fritz

Yes.

Amit Mehrotra

just joint into I one behind If question. asset-based making one there Great. with BNSF I them. venture obviously last an them, important for Lance, is is big with push could Hunt’s a sneak asset out Obviously, its IMC a in which behind the And largest intermodal think with bigger Hunt.

in strategy seems this competitor compete intermodal? the of have service investments on change amount Do be guys terms Does lot with business in what to your intermodal need to to that win to really in you – recently. of going that your in to You a play invest business intermodal do? at decent direct putting a won of need you more all

Lance Fritz

are and their in primary and story they IMCs, we partners doubling of for our to the BCOs very them down and Hunt talented, primary candidly, competitor for no a smaller having that hub that really intermodal. some and against for BNSF channel our we’ve UMAX and don’t use the market. are Schneider I between midsized with It program in EMP by compelling us. us, how that with it our XPO channel is changes been Swift Amit, fielding intermodal have domestic our think in long-term partner for done, surprise working fundamentally partner that strategy Knight competitors. approach the Yes, customers we’ve combine very world. us, and And always Hunt partners their J.B. adding when BNSF on users, is and our the competition effectively of the and channel fantastic formidable The got can And And along that. is domestic kind with of what partners grow you

Amit Mehrotra

Thank it. Appreciate much. you very

Operator

your Our question. next Citigroup. Chris Please Wetherbee the question is line from of with with proceed

Chris Wetherbee

Good there think from to Clearly, a business overall the I now question Lance, not Hi, perspective. is or moving you’re wanted service sort available Kenny of about morning. thanks. that’s for I Maybe a of demand capable environment. think that

be a bit there bigger of guess a maybe we the of demand little out. that think activity plays for the may on year? rest business the of stands of turning and the picture, I what outlook question thinking of So, as pace bit is a do rest it consumer of is right year perspective the you of the the really overall or then metering now. sort as amount And away

ground? of rest you’re So what from to of want expansion I the back, being service hearing of or what remain comes demand they sense a relatively the get a about hopeful think you’re plans Obviously, the to will there that terms hearing of want the I as on contraction strong, year. sense customers in but we’re get as

Lance Fritz

Yes, Kenny, do that? you handle want to

Kenny Rocker

Chris. Thanks, Yes.

things the some aside macro delving set You’ve that we’re of on.

China. We’re But been each look story. eye that disruptions when rates some ups very across a there our COVID are with out starts of and teams, it’s keeping optimistic I an there. Obviously, have the business on inflation in

as look coal they our prices are. where predicted You are high and going the are wins. None two they gas to about are talked of business, us that we at sustain as have would natural

that on you, area, very grain great. I Our very we as was Last then there. fertilizer and of look the business biofuels year export And is the will year, upside rest strong. the is stay tell been the strong. which expect there products the has throughout market demand grain we

markets development has same been and have that but Metals side, got really things are have out. also recovering some on have structural still very story, industrial expansions side. the mean There wins, been just some been us business strong. we Those the are very we’ve I got strong. helping On plastic some

parts our still our is keep lumber inventories And dealership be first strong. an finished XX it is built, starts. We our where auto recently. There or been international in year. so on improved need side, intermodal a in The the should some as the days. the paper be. will inventories On business are houses that’s that here on eye our still We and It’s to XX, not backlog see around move has then and premium of housing side, low. improving. customers. we business that still quarter. improved customers the had has throughout IPI to are talk We going We improving Car some vehicles amount

We’re more expecting that on volume. them turn of to

about good that can So commentary. we domestic really my up, we – things I mentioned has the feel control, intermodal as been in

We feel are control, some what from things we can that control. just of out got we of good an these other to about. So keep eye on our

Lance Fritz

And moment. a to brag for want I your Kenny, on team

experience. service customer grow customer in You’re the overall to business that and service Even customer, right product doing that we really perspective, where overall to experience, make existing enhancement the of the continued progress. pure facing context customer singles tremendous the and service now an work bring on continue scenes, the on development, a enhancing and a behind with the doubles, on we we development, from invest issues business through in we’re

Kenny Rocker

customer. engaging the and Yes. there They out are

Lance Fritz

Yes.

Chris Wetherbee

color. the Appreciate for Thanks it.

Operator

from proceed of your Please Morgan line is question Ravi next Stanley. with Our the Shanker with question.

Ravi Shanker

But well the with is curing? spoken that half that market of if I’m expectations do because you Thanks. if what the half year? you’re domestic coming peek of half, few and number to now. truck the service hearing kind bit on the little up? based what in question of STB a So So sneak are new BN have the tailwind to that you to obviously, want back starting it’s everything of of guys of into challenges a year, going accelerate number Good you the on to us right the morning, kind the there little will contracts everyone. about I said a kind intermodal one. outcome bit follow-up back what competition do be the about doing question gets give as to a the lot in intermodal the is And days, side back you into domestic get on on that’s think kind that what is of go in loosen Thank you. expectations on two a for as can the the

Lance Fritz

back domestic half the don’t you’re intermodal why question, after handle Kenny, I’ll and STB you to get done. the

Kenny Rocker

Thanks, sounds Ravi. and couple also questions like it A of Yes. pricing the demand there, environment. and

and favorable to the it’s year. sessions strong, been year year. domestic We’re on through XX%, a Last pretty bid versus close was solid almost a about halfway also our last side,

gone have rates spot here down recently. the Now

that. So But demand the has got an I’ll on to you, tell changed. we’ve not overall keep eye

more to on as we those look next at Again, back a coming night we the on but volume so going the we bids. business, we’re the that And continue few as the over year. brought at in to that competitive we’re half have look weeks of do swift

other itself should is that just work thing The where really dwell need not is of dwell where out. The we chain to the really is Chassis should supply still it not it be. containers be.

to ramps We compete And And improvement see and you comments at that’s on. what primary the then in you we’re so what I And Twin look investment focused in had the with pie the West. much competitors Inland Cities, we much Lance primary the Empire, in as our is want The doing GPS. we’re everything truck, we’ve than some made with some So said. about West. will want echo larger to there. competitor

Lance Fritz

not to as off more sense clearly, it. rail The as customers is entire of perspective. is ESG about in customers your STB Ravi, industry makes reliable, all hearing that kind And want the take service the Kenny, That’s all in improve the collective, our we’re we’re the we the trucks in to world, the great demand. a and Yes. week an product, talk on including place about. service is from that It just next appropriately where the hearing what a position highway. get STB providing question

and going to a I to conversations stable share the and those great opportunity reliable that’s consistent. that then improve to and for planning continue recover have be how to be think with and and prepared well discussion. We’re investing And to and STB going forward we’re

decisions somebody would encourage STB right, right, sure in getting And that advocate executing. or imagine, to resources I labor is knee-jerk some not as not this more the other We’re It’s solutions. guess, now. their perspective, rush from then There the complex this right are would make utilization that much our that going things will environment. docket are on to getting our about ready making and than all I

Ravi Shanker

It both. sounds you good. Thank

Lance Fritz

you. Thank Yes.

Operator

Walter from next the is question of Spracklin line with Our proceed RBC. with Please question. your

Walter Spracklin

much. morning very Thanks Good Hi. everyone.

on? capacity. available question over So really, up are is limited the to mentioned more to only labor, Lance, your would or ramp you of back historical I decision leading just it’s or you is some And over the ability to guess the respond if I lack if need resource. or resourcing if ability to is that to you to my looking STB, And discussions to track invest locomotives just that feel wonder railroad is a of standpoint, you network how the it investment ability and your to look be need And It so of well? you particularly, at at ways? the Chairman or the capacity that extend some ways about, labor invest problem like capacity you your having to from infrastructure goes on to lack not in do and and an as and

Lance Fritz

at Yes, you historic look look spend year, facts. a when right, take at billion that says exception anyone record railroad, track and at not billion, points statistics, to we $X in are And great our our under-investing. a Walter, investing $X under that’s the we the

are XXX XXX. X Today, And years our by really investment mean would given have we number That’s back put go excess should have years, what network trains You our or has or XXX we incremental time. That any plan at we making XXX. X I had network it. at on resources. be by overloaded into sure

the that T-plan. use implementation in can We in no capacity certain of terminals having that needed PSR longer excess that we have through by mothballed we have terms the terminal we of, done

to We we efficiency, and capacity and that got line-of-road growth continue can out we to that can grow continue we there plenty invest targeted of productivity safety, so in areas. use, have

shape, I locomotives. really about fungible and talking locomotives resources am like And more I were that, am great right. when talking So, in like the crews

where of are that have the when have once we then up put We so the at-the-ready around they we a positioned locomotives them can strategy have we and needed situation. out gotten network, them fire back

availability so get got foremost, have and to So, of be have all down back a crew have that the We had they call them that’s where work of kinds kind crews. it’s getting place still to service boards if but handle and alternative really furlough not in total go people talked and and volume really making one us, would training looking back expect. are a that to we coming. those. of can the into are we their – us need and Historically, us it’s status crewing But your going point, we utilization where its we got is a able resources to crew we Walter, boards, didn’t growth they available we still right, to first happens those benefits profile front at we resources us, to that and allows more of are we we paid, about, from getting quasi in quickly to entirety. demand get back where package that something job in have And sure to

Walter Spracklin

STB, least that’s force and And think some of out to they great beyond capacity take that, is the answer. do and to in you I think or you above action invest mentioned? years, all over you – to quarters will see you coming answer may your it that the of do sense capacity kind the just that kind you with resonating what some time prove or investments risk a that’s give at

Lance Fritz

I which we Walter, are speak and STB. communicating I the talked just hopeful facts, that about, I optimist, am the And support at effective am an to what that.

Walter Spracklin

the I it. much for you Thank appreciate very time.

Lance Fritz

you. Yes. Thank

Operator

from Bernstein. question. Next Please David the proceed your question with Vernon is with line of

David Vernon

resource will done the intermodal domestic resourcing you by still fairly on accommodate share again. incremental in you the into enough be for that, over questions Eric, obviously, accounts those has or that, accommodate have network an to XXXX, Two to Sorry. will of required bringing in the the end there big are side a year intermodal growth XXXX good now, Kenny’s job some as capacity right you wins? team

Eric Gehringer

Yes.

volume. So, thank that to be you we able for additional David, the will capacity have to the host question.

part the we capital working that been that not ensure process, making Now is as the to that’s on-boarding necessary have investments. of Oftentimes, we through investments. are process it’s process improvements. it’s And just always

of volume do on that not to the in we own the that? output we the our Knight-Swift see the to terminals their ready our example, all I us chassis, work efforts. I benefit When see are and about customers and gantry GX growth considering just us Terminal, Schneider fact For near am an and additional we buy the response, how lift being but those see equipment, that those our and all out now of coming that of Schneider, having from When Cities optimize when the completion on and Empire cranes, are Knight-Swift for to I railroad, Twin and that. I think account for doing the entire and on Intermodal see Inland getting

David Vernon

the Alright. the about be next equipment maybe XX%, think seeing added. a sounds going being Thanks a we growth channel the to UMAX you think going resourcing look private perspective years, to make over do container you is be for years into that And guys down X going road? you to those as years, like containers then franchise XX%, just we of X of be it lot your Are domestic that. the What X to follow-up. are years, Thanks. the fleet your in from trailing are quick the couple going is programs, intermodal When investments partners an also or EMP XX% equipment and to allowing like in capacity?

Lance Fritz

that? Kenny, do to you want handle

Kenny Rocker

in I have Yes. about our EMP I the invest in to mean out go and strategy our equipment about GPS there we and with earlier. feel good that talked we UMAX. really

heard about pie. to across can can that the the win that and We with talk board. investment. the chassis see the community, side we we me grow private We have with and win You want asset IMC

about it. how that’s are we so And thinking

on As limits any want asset that don’t put private But other carriers their growth. are out on we to them will anything we would strategy. there, engage clearly, inhibit

Lance Fritz

guess, versus are with private I given ratio it’s on Kenny, we and Hub, continued the grows seeing privates probably would the the of EMP, growth Schneider fair that to the side. towards UMAX first of us say through Knight-Swift, then growth

Kenny Rocker

good. That’s Yes.

David Vernon

Thank you, guys. Alright.

Operator

Ossenbeck your from with question. Please question next of Our is the proceed Brian line with JPMorgan.

Brian Ossenbeck

taking question. Hi. Good Thanks morning. for the

next of here the in improvement a lot quarters. on service clearly, So depends couple

Lance, Lance UP the else Just always And But really are mention sustainable of on? wanted risk then few at industry what the the sense, better to did are about? a be maybe labor bit ebbs from overall something able and you to just is worried grow things to to What or terms there? in able like flows focused then, to future. on manage and better how being get needs a in and more your these this or the you get there being plan, There feel that Eric, volume variability. you you to really get about will

Lance Fritz

for, Well, you in in that then I you that why on the of of to are Eric the the it half are and of half bumps terms Brian, back question, don’t that mitigating. front over planning some night will start the with I turn

terms more in of question. and how a is So, that be resilient to robust, to lot there

of is Some control. it our direct

Some to our be in partnership it has with customers. of

in and to to have our what’s jobs easier control, our more direct we So, and that sure hire flexible are more attractive into. make

that of place locomotive and industry is we but ground. much, coming being of where opposed stay and get partners doesn’t union are a huge over in on and two the to can to into person they going the benefit now sound shift like are thing that day. at negotiate one the people back that job work. one called people staying not doing potentially all trying as on a one turn the moving as in and home the So, That a cab a ground from road, an middle That’s right our hours those to mandated or home at to away their with of person the are then as onto lifestyle

So, oughts do to connects but our needed getting work I manpower our to work there is an more smaller other connection back is consistent, do. into not it’s excess and that, when how resilient, back balance. perspective. our to need that things that is more craft where professionals about being the that flexible that an from There labor reliable, still are obvious like not more it’s their – to have force, obvious we enhancement we go talked and in and a sitting place where but are the have around, work-life more

team do boards is a of that on first property how work unions there with and and So, part? in negotiation you handle lot our and that have do just Eric, we and our we to work our then overall. national in plan and our to negotiation design want

Eric Gehringer

Yes.

are we as to fundamentals of out winter. the you that, So, doing I Brian, and we think what with coming are off of, recovery the first de-risk basic about start just would

of period variability. time where of coming seen We are we a higher out have

we have a which spring, impact time come the consistent, more especially of of been with it’s into period in weather. As we

of have right we thing couple it’s we most really now. important times, the a here mentioned it Second, sit but as

at been look in service our of you If previous challenges, it’s times terminals.

We but have the get serving to the customers. to been terminals, That able starts that right our getting must terminals, we to terminals, case and right the yards way. terminal the not our that both That’s large now. volume terminal. now is case fluid to have volume our slow the in locals the stay The then

trains we bringing about so space That’s get de-risking into way backlog. don’t handle properly think but the also a we so them we it, landing it. So, terminals time, can the and on

the want every in that are sure crews, to right look crew-preserving counts. as crew we about you we make way call talked another mode If we now. We at

that One length. of the with we is do train ways

to X,XXX that We we So, on average. feet feet recovery. February XXX January, the sitting around year-to-date. added and minimize That’s you another of are feet out all go if back March that we de-risking in to every feet line XXX opportunity a XXX on the trains and we That’s ensuring taking another number the of way to system January, can were in road.

that’s it’s the activities focused that, like all team on. and is entire what So,

Brian Ossenbeck

Lance, can just give merger. very Alright. thoughts us Eric. you, quick CPKC if the Thank That’s helpful. some you on

responses the tomorrow. from CP back are think due I

the you. on that that updates concerns in UP helpful. Thank be any has voiced So, would

Lance Fritz

would are. to just concerns reiterate Yes. what need we that three Brian, I for. down It remedies our really boils we things think

to continue access Mexico enjoy kind for that competitive we customers We Mexico. think to price into first from on they rates. the and like about that’s certainty have our of is The the prop need to border from

is our attention. bad congested rights a a border in we area Houston it the that way. about train today area. of a Houston. a need in congested Second, a is crossings And spike to what the and third, KCS treatment, a have KCS, the truck maintain to at lot CP requires through we on have trackage It’s the treatment converting on fair that with high-volume and equal talked – significant it’s bridge. and not moving It’s

tilt that or it rapid a XX in can’t capital introduce accept trains the in day Houston, without you a period another into place X having will first, that. If network and we

they are capital a going execute to it’s So, sure train advance, that increase the traffic it we Houston, in make is Houston doesn’t plan result. so crater to and going of amount as spent if through want that the to

Brian Ossenbeck

Thank you, it. Lance. I appreciate

Lance Fritz

you. Thank Yes.

Operator

next Poliniak line your question from is Please with with Our Wells question. the of Allison Fargo. proceed

Allison Poliniak

morning. good Hi,

notable target. becoming And I your thoughts any their conversations obviously, an steps, that part UNP number You a as important of agreement? that, being there? one, are guess as had But you with recognized? of is towards development, increasingly decision having towards new to a is that sustainability then execute with Just business in mentioned

Lance Fritz

you take want Yes. Thank to Allison. that? do Kenny, you,

Kenny Rocker

Yes.

Those the number focus them, have there. know RFPs the I that are ESG type on have of are consumer-facing seeing typically petrochem where have And a customers. in and We component. to – call that always customers are, in are customers more RFP the formal more we we will customers and that wanted sustainability area,

provide you actually we thing our Pacific do know selling the that Union it’s we sitting by in is that commercial moving tell that. value team customers with other our So, the walking their and I down will through them that and is methodology.

value commercial and part yes, on our the from proposition. So, fill more as that engagement more awareness it’s customer our part to proactive of team

Allison Poliniak

you. Thank Great.

Operator

next with from line Please proceed of Our is your question. the with Cowen. question Jason Seidl

Jason Seidl

operator. good Hi. Thank side. morning. little Lance bit you, and to to go wanted I team, the a intermodal back

to last have here it potential case there supply again? As be We terms have of bunch you what’s worry events over bunch and some up that base swan the of had your scenario to in international side, black talked we a people, of in of think about seems the years. a the on of chain clogging couple

confidence able with going they China once, in. set to one a all come do another like ports don’t ports you What’s summer? got we going be Now lot have handle think all handle If they are I of shipments that the into at that? up just people to withholding are UP these the And it. to how you to back think coming

Lance Fritz

an so and detail. need we get part of overwhelmed. to with in agreement to, space. and take I in significant and side truck partner railroad, dray that a is a it in yet to could start, I centers it I place in on onslaught to want place focus doesn’t Eric add not want are with am Jason, companies But turn and kind at me where a labor that on then depend where international network over to you intermodal what distribution Let Kenny in the we of more and warehouses the the bit volume

more distribution truck in hiring that and companies about still centers. us? local Eric, more So, need in and and we Kenny available labor companies what and But dray

Kenny Rocker

it am at good I say network would – about you our And we looking of it The say. intermodal head, hit I the I stands feel as mean think condition that Eric Yes. on as I today. I the

with make very coming We sure towards customers us. to a what’s really forecast of that have the clear we closely been working have

We through do that. we to out these the can been have technology where China. But are tough yes, of

coming another going We that us. eye containers of slug to is an have on there got be to to it keep because are

Eric Gehringer

for members And is it West on almost the one that Working been all of year have the us will we to different to we events House West active to Committee us allows different really up Coast. are that. now even that us transparency to resourcing it leveraging the who interact think White with what we our continue happening have that help out, industry biggest sometimes that to understand to are in months it ports. a is that for allows down stakeholders comes on the providing weeks, us, out in chain because better be it continues into on about the we full And And is entire opportunities active

Jason Seidl

Okay.

freight now year system? you say, better had onslaught sum but throughout let’s have ago to guys up, still you So, than to visibility difficult would did, handle, if I an the that of be a

Lance Fritz

That’s fair.

Eric Gehringer

Yes, fair. absolutely

Jason Seidl

terms make the switching. Okay. wanted terms percent real getting in your follow-up the would reciprocal hearings not But any on to on to for go. that was be to to to where I your am exposed U.S.? total in going that’s going obviously what quickly, out reciprocal want business would second. exposure just I your there business, STB come back of prognostication a of to There to of switching

Lance Fritz

is them are and fix supply engaged put STB freight things concerned forced remedy say remedy call on chain is current switching are All That’s will those do It It right. could time would you with a to access not do open wholesale forced And a access, open What cars. is we hard I where deeply couldn’t understand problems, nail give we we down number places – it it for don’t we would two to that right do. need. right in instance, and to, help switching would reciprocal what and it now. what dwell isn’t now. increase absolutely the

make with there needed not switch for STB the we that’s through in have where it can somebody, already has transactions. circumstance be reciprocal very it areas where exist to is limited a does might it Now other where mandated previous a conditions agreed say or railroads sense that and on that

continue the where, – how action how could couldn’t So, with place then it there understand we help, to and our STB is to it’s get taken, sensible. concerns, if a help it them what help work to

Jason Seidl

as always. Thanks I time the appreciate guys.

Operator

proceed line with Our Ben next your question is Please from Nolan the of Stifel. with question.

Ben Nolan

Thanks.

question So, of Kenny. I for have a maybe sort two-part

surprised higher was you that of ramp-up talked is incentivizing gas the up petroleum prices, maybe toggle what seen coal, ability more. the volume I up? side, then And natural gas am more toggle the to that. ability your the just what’s has drilling little on been First, a about your everything growth of continue is also sort for pretty around oil not then have to And domestically remarkable, guys is a given curious little else color to that there? similarly, that customers you how the but market there side, on guess there much and I I on in and activity

Kenny Rocker

two on coal lot, a the again, Thanks Yes. you have things. side, Ben. different got Yes,

the in didn’t will forecast the $X is as have got we you, the some wins that development prices. gas it range. business stands that here and that, encouraging also And gas of Certainly, today, – last be rest natural the prices year it’s have year. predict you tell I You I natural the throughout would

hiring have know capital utility of customers, our more we we terms out in more do As we investment more the to quite to that bit and talk of have see done get ground. product out. to per get a they don’t any made of that they of But that trying se get

And we not you here on team part with understand connected are and it, just working are and Gulf a Texas those spreads your year that, a with between of for about Canada from petroleum. very business. forecast stay oil so crude where call the them is that, Eric’s should should this perspective. And just perspective then what is that’s not And we be. I it think And with yes, our

And seeing so We your up in that see, drilling point, the show are to the commodities. impact you there. that’s other do

talked We the frac drilling other we drilling into I sand. that’s that process of are seeing pipe, lot OCTG, go a about There the are that moving. chemicals are industrial seeing. some

So, that’s our on where up that’s railroad. showing

Lance Fritz

had There that context, doesn’t the in in more and the walking look like places, Kenny, cycle they bit we Eagle up super did capital production. the heat of And market it Permian the little on last in that are Ford. and to a seems be like slower strong spending, discipline

Kenny Rocker

Absolutely.

Ben Nolan

Thank Alright. you. I appreciate color. the

Operator

Vertical. next question with of your Jeff comes with question. line Please from proceed the Kauffman Our

Jeff Kauffman

service much asked very and lot’s the disruptions. to about a on Coast. been have and thanks shippers term, off little in A really me go a one, squeezing you Thank the given and West seen lot Number things. I for Coast, of focus short-term here. Kenny, we East instability the short-term longer to want three

I customers approaching talking So, ability we company’s the saying, Lance first which longer a are any product talk And you your know the on has to topic playing are out? to around in longer happened How efforts I the as you Ukraine. really you But know was I of Union “Listen, hasn’t the the long term, going your part donation of is out And see lot secondly, the and the a there can of what’s rethinking know changed us?” that are large customers help term? telling to do then then globe. this how re-shoring, about in Pacific move And of yet. But what degree customers this. run,

So, maybe UP. talk over X-year, say, X-year, a areas opportunities, three period about those X-year for

Kenny Rocker

that interesting side. up be to on what’s I one-off permanent It’s a the intermodal. international would call shipment It’s will intermodal of it, international you from, bring hard directional a to going change that tell versus

We with coming an a to where international move have carrier that’s West. have East we do here worked

so about And permanent there disruptions we again, a our from global some happens conversations basis. of will about move. hearing And where what customers from. are Yes, And that the we see that they make near-shoring. more source we excited I think are believe about will

solutions think investments the there, really the to are customers can not to then and that last provide I thoughts about we mirror always our have Ukraine was And seen those talking those question conversations. you as about those – them. We we

off out border solid So, we from about relationship very when one. from got you gave We West the have really Mexico of products six is good feel come East clearly just about West. I access, to the an to of going anything you that and think example moving Coast, still wants Canada. our

So, we are prepared.

We million have got on $XXX in intermodal network. investment our

more growth. So, we are for prepared

Jeff Kauffman

all That’s Okay. I have. Thanks.

Lance Fritz

Thank you, Jeff.

Operator

Thank you.

come Securities. the from will today Cherilyn TD line question Radbourne question. final your Our proceed with of Please with

Cherilyn Radbourne

good much very morning. and Thanks

me. for one quick a Just

we but about of move also terms rage season, interchanges peak terminals, current and both talk towards of capacity with just state could the the you to was your I your start As Chicago the in forth. hoping own rails, other so Gateway,

Eric Gehringer

we New look true we even same first, simply one fluid speak we from Sure. Orleans. We I with area, to tight at those carriers. perspective. issues. that Right other and in with focused were on, those and most want those we Chicago it’s because don’t to the are it’s But through point. about Orleans, focused remain at New the we and look work we on amount doesn’t challenges Memphis where no as work we Yes. we happy Cherilyn, be I a look – specifically asking an but such otherwise, all That this am as am would our but through just now, interchange have intermodal a as the if one at it’s mean issues. very most right always basis track terminals strong really work through of day-to-day that at And relationships If a on so are. operations concerns small now, I

Cherilyn Radbourne

time. Thank for the you

Lance Fritz

Alright. you, Cherilyn. Thank

Operator

closing concludes Lance This the the question-and-answer I Fritz to now session. will turn comments. over call back for

Lance Fritz

all Alright. Thank engaging you us for your morning this thank for you, with questions. and Rob, and

second care. results. then, you forward our talking with to We quarter looking Until to are discuss July in take again

Operator

today’s Thank you you. Ladies thank does participation. teleconference. gentlemen, and This conclude for your

a your may You have disconnect day. now lines wonderful and

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