Earnings call transcript Q4 2022

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Operator

Greetings. Welcome to the Union Pacific Fourth Quarter 2022 Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

conference are recorded website. available this for the reminder, presentation today’s on a is and being slides As Union Pacific’s is to pleasure now host, It Mr. introduce your my President Chairman, Lance Union CEO Pacific. Fritz, and for Mr. now may you begin. Fritz,

Lance Fritz

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

and our quarter challenging the Union while fourth issues. were The XXXX lengthy for service felt Pacific overall The employees. labor customers impact our and work our of negotiations tested force,

Two are page important the turn to things XXXX. as critically we

acknowledging there bumps way. trend how move to second, and the the we to were is of our And demonstrating and is day-in establishing all our car customers line stakeholders for although commitment consistent velocity day-out service forward, free along First, summer, improving since late excellence.

fourth morning to $X.XX fourth $X.X results turning per share. compares billion This quarter of Now $X.X billion share. of results. or income is our Union reporting quarter fourth net This per to $X.XX quarter XXXX or Pacific XXXX

operating continued winter points XXX XX% of XXXX, driven impact versus by quarter deteriorated weather. fourth service Our the ratio and challenges basis from

not For basis entire The Union the at points, expectations. finished inflation full XXX higher year, that fuel prices. Pacific did reported XX.X%, driven XXXX inefficiency, deteriorating beat operating ratio recognizes and by operational team

impact constraints our Crew impacted locations shifting a in critical on had by performance. demand real

that the seeing responded the manifested and better downs has through weather. since how we shortfall, As extreme address winter you resources and efforts, resiliency hiring network Thanksgiving hear shifting are into building to are in critical through of those you and network ups Eric, from benefits will operations the

growth Schneider a The business long-term statement volume onboarding great year. are of of delivering to customer commitment meet wins commitment. we demonstrated the is development recent to financial needs challenges aside, success. with on We that our achieved that for These critical proof

In XXXX, reduction made pace We also of emission significant blend biofuel our achieving to progress gas over initiative XX%. on XXXX This key increased to we greenhouse XXXX our targets. our target achieve climate goals. our is a in towards X.X%

a rate consecutive a Union million of XX.X year-over-year continue to addition, year, we to helped fuel avoid tons X% by improved customers sustainability. versus in In be lowering all-time truck. gas our at a fourth record. greenhouse will rail using rail for on emissions consumption basis, an our metric Pacific This leader

an for the environment. Kenny with on update start business let’s Now

Kenny Rocker

and compared volume in offset morning. Group Lance, quarter partially by up Business good decline you, was area. X% our Fourth Thank Gains in our to a Bulk were XXXX. Premium

higher freight revenue was surcharges and strong driven fuel up However, X%, price. by

for with Revenue Let’s revenue the car, closer year-over-year. groups. of was each to look X% XX% Volume take reflecting a driven Starting surcharges XXXX, these fuel Bulk. compared down X% solid gains. business was core in by per average and pricing higher a quarter up at increase

faced we grain products demand, as as grain decrease cycle times, and tough by service strong a Grain was and driven challenges Despite volume comparable. shuttle in X%, a export shipments. slow XXXX weather that down having market well

tough for year-over-year were to XXXX shipments softness XX% Fertilizer by comp potash with along reduced quarter. due down market carloads fourth another driven the

their reduced and X% beverage associated shipments materials. of due to Food volume was refrigerated and finished raw down product

late particularly ability flat from as and impacted and was the capture in And December. prices our natural challenges, to favorable in quarter, by service remained carloads lastly, renewable coal weather demand gas

were flat. core somewhat higher business Industrial car surcharges a the Industrial. quarter Volume shipments Moving average fuel mix. year-over-year on demand. X% down up Industrial driven offset and chemicals in gains, pricing for was negative by plastic lower to X% per X% Industrial due for the quarter, driven was revenue improvement a by to chemicals revenue and by

business efforts. up to our sand and part in continued primarily shipments materials. by growth, minerals in deliver was volumes in an construction year-over-year and X% Volume robust growth driven compared frac by driven development increase Metals to XXXX,

by declined Forest housing in corrugated box volume the XX% weak products year-over-year, demand softness driven and market.

Energy and were in regulatory by shipments petroleum driven X% and compared waste to specialized XXXX, markets. partially pure shipments soda offset from an ash demand, up changes increased by Mexico

the primarily in Turning X% per volume. for XX% to Revenue was a due fuel increase car revenue gains. increased and surcharge Average core to up Premium. revenue on higher quarter pricing XX%

up Automotive vehicles. was by replenishment driven X%, production strengthening for finished volume and inventory

shipments, due in easier X%, increased driven up by mainly was comp to XXXX. an volume international Intermodal

to rates truck volumes negative the domestic offset in aforementioned conversion over impact increased Schneider capacity, the partially declining due Although was decreased and soft roll with market December. the demand,

housing Now as indicators ahead you production, see and will can look to notice with we you watching we that the XXXX, starts. have are macro and interest that inflation and rates, challenges Industrial some with imports along we

with optimistic be strong focus production However, will development. our we business we that Industrial remain on

moving on eight. to now So slide

Here is crop were a sit which year we grain will in UP availability for served we XXXX our as challenging today. Bulk on with based Starting outlook commodities, expect affect our origin. market conditions, here drought

However, in low though prices continue will demand. will we support expect have gas see highs, come growth inventories coal, off continued even natural to -- their

based prices, our keeping index the are contracts. eye on price close gas natural given impact a of We

In renewable new development business continue for demand, wins. expect biofuel facilities online to production grow to to and diesel due addition, market shipments coming we solid

in forecast the to slightly for softening on production forest is and shrink Industrial demand Moving is to The in Industrial. products. XXXX

business wins. However, we with continued to see expect metal strength in new

rates the expect consumer domestic inventory spending. high and to And truck by lastly, for and international market lower levels, we temper be both entire Intermodal challenged, Premium,

as private however, our well that our new business to with market, as and Schneider, partners. We with to through IMC expect strong owners outperform other opportunities grow asset

production automotive expect inventory and to replenishment. by growth another driven this in spot segment be We bright strength

and our operating As I to express want up take to team. moment customers wrap the to I my gratitude comments, a my

want employees who month, our large events past customers. the safely our and impacted I the around thank to keep worked conditions running for network in harsh extreme Over weather clock to railroad our of the portions

our turn over Eric to operational will review to And with it I that, performance.

Eric Gehringer

Kenny, and slide on the is of foundation at everything good Starting Thanks, XX, we morning. do. safety

our are and injury have efforts personal accountability. our to an leverage derailment improvement improve results, programs which performance culture and working at in safety full gains training lowest ownership These We solidify in to drove We these personal years. XX% to safety XXXX. through the X enhanced XXXX year look is level in our

goal While returning safely home overall, each the good progress, at our of end employee day. remains the

onboarding was for network our operate at XX necessary look slide operational attention focused performance, resources to fluid the meet crew customer to on now demand. current our and a a throughout Moving XXXX

I recruiting the than partners and members. was would their onboarding a workforce for work significantly have like pipeline in year it resources to currently We is and around team great our employees ago. stronger new and team in XXX as thank our training operating

continue across supplement That we the In region, our efforts will hiring backfill northern the as being crew challenges said, near-term, and borrow where in we persist. target shortfalls. will XXXX, crude continue locations outs to utilize for attrition to

of foundation and dedication operating teams. been resilient reduction is service increasing which product. am the made, tireless Another the not proud of work progress the accomplished have builds key inventory, element would a and we which for the without excess commercial and the strong fluidity I in of

in extreme blizzard some Nature the last Mother network. derail of and the conditions December temperatures of across progress weeks that to of with cool threatened much

However, responded our XXXX. we that we quickly demonstrating in rebounded team build resiliency and on greater can

improvement, and sequential plan look we With current that per compliance maintain measures miles demonstrating volumes XXXX. day freight car trip XXX progress as velocity into around to strengthen

for performance sequentially to velocity from were starting slide car trip last key trail results. our which XX, Now plan let’s and on the quarter’s Both results. flat review metrics auto quarter, and XXXX’s freight compliance manifest continue

did Near transition. Importantly, points chain however, compliance as business congestion less successfully the alleviated, end onboarded the Schneider quarter, inland the we sequentially, containers engaged improve in that manage Intermodal of supply trip the ramps. and remain plan Intermodal stack at actively to resulting XX

quarter declined recovering XX by the while train in sequentially XXXX’s efficiency locomotive focused review weather half network lost back challenges. winter network on volumes productivity, driven and to also strengthening team workforce Entering productivity. remains lower metrics, our the to like which and quarter Turning all length of the slide productivity fourth the measures, XXXX,

delivering to Moving exercise in capital while discipline spending, shareholders. our to our to we value continue XX, slide

by We are targeting Board of $X.X approval billion, our Directors. XXXX capital final pending spending of

the While long-term capital our last year, from we of guidance of spending revenue. expect projected XX% line in increase to with than less remain

will As existing This harden our will support always, infrastructure. safe and older spending operations. infrastructure, renew support assets capital our first dollars our

inflationary fleet, locomotives bring spending elevated in the locomotive driven currently $XXX XXXX. will million. XXXX, emission be environment, to the of goals. of addition productivity, not by a end will total the the For we build enhanced increased With XXX and modernized into higher also spending in but network the over modernized help reduction by the to X,XXX through towards progress modernizations only further carbon our These reliability resiliency capital

We to invest for capital continue growth.

allow the network we side, continue are capacity handle efficiency. to Empire On sidings invest productivity, will on car we and capacity us the to at And and more expanding our additional Kansas drive like footprint in in investing our in be terminal front, Inland we the Intermodal that improve loadings City. projects will

results demonstrated activities in dedicated Wrapping goal. are provides on to of meaningful XX our and our class Slide goal key a world to safety service roadmap the we XXXX through in XXXX. that an up our to management the in improvement towards slide continue improving We safety systems product XX, of safety. enhancement achieve

voice. recognize life of professionals our we the agreement quality importance concerns Additionally, of that

solutions to consistent employees provide continue win-win strong schedules. We that with service closely to a work and leadership find work enable union with product more our

improved time, will resources operational productivity reliable generate product for we and our a consistent At and efficiently more productivity. variability, our the will customers. enhancements support and sustain we same As use service further reduce technology drive performance,

over to our will review to it performance. Jennifer With that, I turn financial

Jennifer Hamann

Thanks, Eric, and morning. good

more XX. a gains fourth X% start XX% increase statement totaled These increase up income with totaled in revenue quarter on quarter billion. versus in the in slide on than volume. Operating by operating $X.X offset billion, X% a were which XXXX $X.X expense, Let’s

prices impact fuel X% $X.X quarter. expenses were XXXX. X% higher of the versus up declined of Excluding Operating income billion in the

Interest debt $X remained strong, gain million up benefit, income offset the average driven of investment. levels increased Other and million, technology a XX% estate more pension $XX as $XX income billion by which XXXX’s higher than on increased year-over-year. XX% sale expense to real

X%. income quarter had repurchases, share when ratio operating during fuel Fourth Net declined favorable billion prices points, at combined Falling basis and the quarter XXX increased XX-basis-point driven XX% flat impact. higher costs. earnings essentially inflation of of resulted per share operating with a But $X.XX. $X.X in by

XX fourth quarter, in XXXX. billion compared Looking $X.X quarter closely contributed totaled which XX revenue, basis breakdown provides at points. to the freight revenue, slide X% our a more fourth of up Volume

remained also and revenue totaling surcharge fuel quarter XXX revenue $XXX freight fourth year-over-year, basis million elevated, points. high stayed prices fuel As increased

with gains Fewer negative in pricing exceeded product inflation resulting mix, that XX-basis-point in negative freight International drove and business were than dollars forest core shipments shipments revenue. combined Strong higher a more the offset decline by Intermodal rock mix. a

driver summary our largest rate Turning was expense to fuel slide operating quarter XX% XX quarter of we rose produce fourth points fuel, to the a these the improving of up prices, a as overall for fourth higher productivity, record. X prices XX%. to fuel expenses, consumption our Combating continue again drive increase

levels benefits efforts was by X%, expense grew XXXX. wage increased throughout XXXX. inflation. versus workforce employee Total quarter driven compensation and hiring per X%, our up reflecting Cost primarily fourth Our XX%

overtime continued higher cost of addition, costs the from out inefficiencies borrow in pressures In and form in network quarter. the

services Purchased loop locomotive purchase materials fleet, elevated, a remained volume to expense XX%, active maintain and transportation larger driven related our cost subsidiary up inflation. at by expense and

on X%, car rents the driven other increased cycle hire and times impact of by Equipment expenses. slower

local in was well recovery the a offset state flat and and expenses insurance lower related quarter, to bridge higher casualty as fire, expense Other partial were XXXX as travel by as taxes.

have XXXX, service and job to across as efficiency we improve opportunities Board one Looking product. our recover the we to that’s

locations to be hire more backfill still Although and workforce, variable crews attrition. in volume we than critical we expect aggressively continue to to with will our

employee per wage expect inflation we be offset to in as cost elevated by X%, XXXX, is all-in increase For expected digits around the to is partially mid productivity. single inflation our while

we income. Depreciation around historic up higher expect to real year, last elevated remain expense estate X% versus and the below should driven XXXX other interest versus by and line, levels income be similar to

Finally, XX%. XXXX tax to annual we our around expect effective be rate

reported net X% growth. income annual fuel of quarter to an increase a with third year $X.X increased includes XXXX million fuel impact and are record, from full surcharges. surcharges, XX recap slide PEB Revenue and pricing operating on XX%, to billion, of driven which which of slide by Moving adjustment. as strong a results, shown the quick gains was include X% the $XXX just increased volume up the Record under

XX.X% components year degradation and fuel points basis operating operating ratio Network impacting respectively. reported PEB basis of year and full versus Our inefficiencies of points and primary were higher XXX the the the XX full deteriorated adjustment the XX points, ratio basis prices inflation XXXX. by with

per at record XXXX Earnings XX% a finished share the versus results. a $XX.XX, year increase

capital approach volume Our deploying that coupled to record back in increased capital consistent on invested and operating with a a disciplined growth produced drove our into income XX.X%. XX-basis-point improvement return to railroad

slide X% returns from full million XXXX. increase from operations billion, shareholder $XXX to balance to cash Turning on increased XX, year sheet a on the $X.X over

XXXX The at or our which first just capital $X.X investment, priority under billion for cash of finished XX% revenue. is

XXXX billion. and cash finished rate at $X.X totaled flow Our XX% cash flow free conversion

versus increase dividend includes million a million than increase million $XX capital, and payments that $XXX cash pay more nearly settlements. back XXXX, $XXX of decrease in almost a for PEB in million an $XXX Although

XXXX billion. Our our as XX%, line the ratio long-term quarter second with a increase we shareholders payout in nearly dividend target, for in $X.X around was XX% dividend distributed and rewarded with

total, share significant shares owners $X.X at ongoing through billion our returned shareholder million In repurchases, XXXX, an all-in cost repurchases, X% between share we cash value. returned also $X.X or strong back $XX We in our of deliver and our to common dividends demonstrating commitment to buying of billion.

year strong by We we year A adjusted with to of debt-to-EBITDA Moody’s, the Fitch. at ratings our investment-grade rated consistent resolve credit S&P as X.X closed out an finished and the maintain ratio times,

expectations. year serve, a you in control saw Turning now we we of it’s the on in can XXXX, bag Kenny’s two cannot. ahead economic parts, and mixed our we on view of think about We don’t we what what indicators, the to slide terms and as markets control

team In in Schneider XXXX, of Industrial by markets outperform XXXX loadings with We further do wins franchise. and with UP control to the compete the foundation are the we those we exceed clearly Kenny’s great market. way for car positioned will profitable the across production. Board, the win that evidenced that is Onboarding be marquee the posting

direct which be we elevated. is to inflationary the area control Another where don’t current continues environment, have

control However, to we we know have our it improve operations. within

heard service it’s you productivity. As from our we while that improve the reliability lost Eric, product, imperative of regaining

pricing have we inflation dollars we exceed consistently, in to dollars demonstrated In expect addition, that generate XXXX. as

our expect of year there lag while XXXX and re-price and we actively full are to to on fully prices to also ratio improve thoughts on fuel we productivity current year-over-year impact our the improving our Assuming on productivity. That or a operating volume, our profitability price, basis. touch inflation until a said, will further business offset able be

that that our capital in continue strategy. the Pacific into to investments $X.X financial are to Union X% investments success allocation, we invest business continuing capital cornerstone Turning support an of XXXX and is with to to make billion. versus to significant increase opportunities we the Growth in expected long-term

the described, growth. also Eric investing to are carload locomotive addition In we and to support investments Intermodal

allocation of and cash of with returning plans owners dividend payout our excess around remain unchanged, rewarding capital XX% The an our share through remainder industry-leading repurchases.

at sheet levels, balance leveraged amount cash be years in the cash our and repurchases desired of predominantly than With available funded for will generation. from currently prior less the

value strong can Year in new confident the by comes our ability our stakeholders control, to focusing of With to opportunities on we XXXX. what we provide in are New and all

it I that, turn Lance. will So, with back to

Lance Fritz

Jennifer. you, Thank

by our The in has personal and to care best up exceptional, in resulting momentum. wrap safety for employee metrics imperative commitment Let’s continue one it’s employees We another made XXXX XX. five been in strides great slide on we on years. our made that safety

will into We to upcoming these better gains to our engagement, year. translate improve employees further and understand the about safety to in responding that performance derailment ideas is it’s look performance. to needs our about culture We listening and continue safety and

better enables Our hiring service pipeline product That network efficient and improving that recapture a strengthen and fluidity leads robust lost productivity. availability. to more crew us to

Over uncertainty wins, the of make economic in given have reflected the growth may demonstrated growth continue customer-centered in long-term objectives. in we the XXXX growth challenging of and strategic development to our we past will investments as capital years, backdrop, of while to be support commitment business couple our

success efficient long-term a and strategy a reliable built prove franchise, by service product, for for and best-in-industry have changed, fundamentals employees poised things and profitable growth Our are and not powered is Pacific great our more do Union to it. in XXXX to ready we

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

Operator

today proceed question our question. be [Operator Instructions] And of Please Chappell coming ISI. Thank from you. your Evercore Jon the with with first will line

Jon Chappell

a back over you, Good But a of laid you. go the Day can lower productivity these the some network, higher for we mean challenges, the eventually picture forward? and the if kind given improvements morning. backdrop, you the multiyear level delayed you et been out or that’s to are Investor going macro slower that of are aggregate confident question obviously, total you Thank I for reset does time Eric obtain plan challenges. weather, recent aggregate macro a improvement of bigger that, some cetera, the at labor service costs,

Eric Gehringer

Yeah. question. you Jon, thank for that

As we it in now and period a environment to certainly, actually of longer look come we at of what those time about may lays be think that, that fruition. us, the over front as right

that But initiatives about focused talked that comments, in on everyone here some focused only the those see technology activities and more but not we in are remains commitments that. of XXXX, I even prepared of my taken in some have that you the beyond on

think now, gave focused about but you Investor number opportunity right workforce of excess Day. the job long-term one now on That’s it out our all the are productivity. biggest the right still on we that is our drives targets we is locomotive to cost and we service that sitting from product that improve What’s front in that when us

Jon Chappell

Eric. you, Thank

Eric Gehringer

Thanks, Jon.

Operator

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

Amit Mehrotra

comes February. I to Intermodal impact reports and rags particularly yields, were you. some X% UP There fuel. a just you bit back question Thanks. Good rates Intermodal to to get yields about Intermodal develop of XXXX, color to maybe specific trade for in cutting but just on? and ask that by more Hey, Intermodal just expect overall the as December item effective yields yield the Kenny, how new how the morning. everyone. get excluding want in business wanted I Thank should expect that is we then this on trend little in

Kenny Rocker

a Yeah. Thanks lot, Amit.

First are we of the of XX% call stages to XX%. all, early in bid season, it,

heard me the my You out notes in call some in are marketplace. we softness seeing there

all have retaining been are business We there that that encouraged out we competing are for. the we

this, like are we competitive also it’s call tight do that, but things happen mechanisms we will is a think market can terms the market to make in I for tell some capturing year. have I you price business will and remain but make in the that get challenged sure what out of too what to that we sure soon as of the pricing, our throughout to upside

Lance Fritz

But of Kenny, see you are are this we ahead included, remaining still path we put is Kenny, inflation. that together, for Amit, also pricing And a our Lance. all clear as plan confident that we --

Kenny Rocker

Absolutely.

Amit Mehrotra

Thank you.

Operator

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

Brandon Oglenski

morning, and taking Good thanks Hey. my everyone, for question.

I the appear did if cost the just about you certain on that? your for price that XXXX fuel maybe be back was and above to talk a could does about? line, wondering surcharge on Jennifer, that also some that on answer, of recapture fuel was expense mix And speaking ability Kenny maybe expand just you period lagged inflation impact Just a revenue of discuss to of so the the

Jennifer Hamann

and there touch year, When years. But lot some of The in it, in to terms remainder contract question. a in piece. over XX% so part, call able of one there given segments the think That’s they we you roll is lag periods over longer our is structure, so about that term in any contracts are directly.

can there as those but and escalators, be escalators on are have generally limits those well. the Now lagging

as having what So we a are to impact. referring lag that’s

first question take to, our initiatives, in well of year. going we productivity step very still kind As to this Eric, as back back did confident a but the

think is We to X% have for have to us take historically seen acknowledge back little bit factor certainly inflation a that XXXX. the to gain that about and because kind that real number That’s is going when real. of we above a what it’s you

piece. that that’s So

a so You surcharge, for mentioned yeah, us you be point. fuel and what front EPS contributor was fuel depending positive on an that at to on income estimate some could headwind for operating prices, and also that us XXXX a in

XXX are we [ph]. I for [ph] it, year. closer XXX averaged, we the Right paying Overall, to, think, call now, XXX,

fuel when could you certainly think on the comparisons about that be year-over-year So difference a revenue. surcharge

Lance Fritz

he think also asked I about mix.

Jennifer Hamann

there in Mix. was knew I one more there.

the last it some think at the I mix and a down here negative at year, mean, and comparison, products, we year-over-year about look probably when year, in quarter of particular, grow fourth one yeah, fourth jumps fourth in Intermodal, quarter Intermodal shipments. you standpoint, quarter think when So segments International the the little it. then Industrial And mix really a higher in Intermodal of forest certainly about rock you weaker and you International the that from was plus out things was but substantially this saw

all-in of that Brandon. look there, kind So it’s and

think covers. it Now I

Brandon Oglenski

Yeah. Jennifer. you, Thank

did. You

Operator

Our Suisse. next your proceed Credit with comes Please Rosa question of from with question. the line Ari

Ari Rosa

morning. Good Great.

that’s ask bogey seems given for in like improvement the addition I about and exceed Intermodal target particular advantages the So It XXXX, wanted for a expected production. the given bit the the a Industrial service little business. railroad cost of growth to for low to of Schneider’s then

that what volume three-year of production? I how have production, growth? to that lot of in see five-year a of prospects kind UP thinking more a Industrial economic I for of expectation bit ahead for you exceed kind on about Industrial obviously growth the over to are volume horizon, little to longer a grow for And time kind am sorry, then recent significantly clarity in of years, terms means wonder You but of get

Lance Fritz

is this Ari, Yeah. Lance.

will to it us going I am going on XXXX. seeing then of you are commentary start as uncertainty says turn what to Kenny we a Clearly, perspective to broaden enter focus my I and a that to lot -- out. XXXX there’s is that am over I So from

an you the markets of Board is indicators so Kenny many shared You now are could Industrial some macroeconomic see can can the it see production, right in underlying of early hard fair in hear that in a driver and while the and across going it for on a to confident it we that just stop amount outperform which but we too that more ship, we and we granular little it’s uncertainty so what is becoming beyond that. the year given all see,

Kenny Rocker

Yeah.

this Lance, want can on I thing we team are one mindset commercial out right. hit drive team that the and business the and those So, control. the go markets There to think there development to we management is want after that some we really call, so are hard for that really of that’s to

feel them good there. confident Renewable about diesel the wins of we and and one is

and chem. that at parts vehicles, also along and plastics we line expansions side If good There some you auto feel about. the Industrial we look side finished in our the petrochem that area finished with that are are coming the won both vehicle area an is

we we there. have been talked also, wins about seen as very have then up And some metals bullish come and

and control along the the has been on things been improving velocity car way. that can very encouraged we So focused

Operator

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

Tom Wadewitz

Good morning. Yeah.

brush, the competition? You comment the have months. don’t bit per or just assuming you you per And over broad on to maybe above Intermodal you Can in rail little business kind pretty kind are what commentary. wanted inflation? can car. revenue then is coal last, of a the of effect say I like a of price on are Is competitive that talk revenue pricing, about and know, of touch and say an having you assuming stable? would some won dollars bunch when pricing a are car the you dynamic you What So changing on if things broader offer dynamic XX I

Jennifer Hamann

So, Tom, and the that part. address part let let first question, will me then take second of I the Kenny

give We for items. comments on are not to RPU for line guidance various directional going

that. also then that surcharge You that going fuel are the mix but to know the business of the pricing line. drive factors and within It’s certainly the

will into to be those out things what turns all that will XXXX. that play for So

Kenny Rocker

Yeah.

Let me inflation over be will mentioned lead very able feel price dollars. again that Lance we confident with something to that we the

to want to great team done I the commercial price our need say has of to a job the articulating that, market. So

When about we broadly the understand about some dynamics. those talk into one pretty have we talked They facing price is we Inflation that. are talk also too. market, customers But of our that, about investment.

of part am is investments, say I capital I is When what about talking plan. with what our Eric doing

of The sure is making we hill that are part other resourced the growth.

down conversations are that, So having and we in those on we with are are customers we articulating that.

Lance Fritz

This Hey, Tom. is Lance.

said. to of market right not pricing Intermodal certainly let’s that environment as, certainly, We year that or any as an just have doesn’t what and change in be of fruitful the harder. But It also year question loose darn a now, makes in job it’s half got a just your ago. say, space truck Kenny pretty to is recognize is that underlying the I think the and

Tom Wadewitz

that you guess? guide your Intermodal assume you those that have So in price pricing pressures I on

Lance Fritz

Yeah.

Kenny Rocker

Yeah.

Lance Fritz

All-in…

Kenny Rocker

Yeah.

Lance Fritz

and it’s it understand we assumed there. in …

Tom Wadewitz

Yeah.

Okay. Thank you.

Operator

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

Allison Poliniak

just we commentary, I as in put product to over evolving productivity of past service growth forth that there with thinking you wanted to service that and time? ease improve lot product terms drive the transparency headcount so the look sort a of or that be thoughts talk trying on any it’s of whether through this Hi. how doing morning. year. to obviously and are investment, of that that, investment you differently customers, business might with But Good that into on just being

Lance Fritz

for question. again. Allison, Lance is Yeah. you thank This the

takes support in We Intermodal broadly it and growth service will I about a in are our start of lot is thinking forms. different more necessary to what product the space.

We have made Technology. and Precision investments called UPGo Gate in things

machine enter technology you and gets before vision load Paperless clears, PGT pre to even if without allows with and exit and the will, stopping. trucks uses there. truck ramp essentially the the

holistic all UPGo our they and properties. own to it they a and once their the go, tool hell facility use job facilities on have are, on a they where know exactly know is of embedded where a so on be know IMCs platforms and can a improving signage exactly our a we our property, that can that done map the signing the of drivers

just them ramp the be now might off and faster and then then drivers experience over to, truck and you help move we it end. have don’t one able get that’s dray that if a more boxes first our But than drivers, example to service So Kenny, turn where Eric for on an that’s a why if better, property, turn product helps detail. our I extra better

Kenny Rocker

talked Twin about those up Premium our terms encouraged Inland in in show and filling you Allison, our out. And and confident of very Empire product about products we Cities in network. Lance, Yeah. again, those areas that feel

up in areas in And our it other like GPS, also in chassis. shows investments our investment

RailPulse. excited taking we with carload the On are really about what’s side, place

seeing network. both the and carload in across Intermodal on side our So Board it you are our

Eric Gehringer

when we it’s wants an modernizations, a are will locomotives from improvement Allison, I consistent that operating meaningful, couple reliability improved examples significant, we that in the service. and as all about of of about side those it’s drive and XX% variability involved think -- in as and And reliable service, it’s modernized, less talk

a variability that even service Improved crews or differently. us the crews, we trade about on do collectively we consistent When talking availability and about talking our are approach reliable think schedules are we talk the about how we product. improved again for and availability. our as has which for more drive we and about reduces consistent benefit even And

Allison Poliniak

Thank Great. you.

Lance Fritz

Allison. you, Thank Yeah.

Operator

of line is question from your Please Wolfe Scott The proceed with Group Research. the question. with next

Scott Group

Hey. Thanks. Good morning.

Lance Fritz

Hi.

Scott Group

year? cost that just get how and in this are it us is margin here, improvement? on getting Just from -- you about sort and negative thinking slightly is revenue better? the reaccelerates flat, other then running improvement inflation mix I confidence running is now. in price around do if X% guess, Jen, price So we do I year? how for mix is get on any the separately, that for confidence think maybe, guess you right of it margin And help the color

Jennifer Hamann

Yeah.

So in that. which them. I at headwinds a are improvement of with do there are year I go ability and you the we our will and confidence pointed key couple the we and confident just Certainly, and to the start looking have levers, to are around things margin of then in about you the terms price as But the talked productivity. volume, know, are back to how

wildcard is volume plays So we that will out. and see a certainly how

the productivity is that we we Pricing, are we upside will confident bit, there. it a price have know to will dollars. we dollars And confident that price side, are -- inflation exceed lag then our going although

to we identified Yes, But need we steps still the we we and and do actions what heal also those a to adding some resources improve that to there’s taking have are of that we that. against put opportunities know up know network pipeline today. and to

loads then do hills, us you gives opportunities that know mixing as volume are We today. And more the on as that we Bulk network side. still and the

get to base. more us So opportunities those leverage for across that are cost

there’s we we call it, little $X.XX obviously, which And ago are paid plays or fuel, before right I XXXX. mentioned so for what playing see bit certainly we will a a than less year full less, or But out. we now, that what year how paying the and were then,

and combination in that the OR of at, up a we believe be those are setting improvement. So we way all factors things are able that drive will that are looking Scott, to we those

what there. playing I To your and geared we question maybe really see more on out question so think other a accessorials that’s towards revenue,

the softness Intermodal quarter probably fourth into come in expectation a that the we little seeing be bit. us for that seen supply in have healed, of accessorials down and my As bit chain XXXX They here would were market, down going well. a a little are as has we bit as

Lance Fritz

a that’s And good right? thing,

Jennifer Hamann

Absolutely. Yeah.

Lance Fritz

and I chassis. in that’s match have supply street the get the kind And mean, that last holiday. out. We putting They elevated up inventory that are Intermodal boxes still we to post to piece some want to going reflects time chain. want the of that’s fluidity still Christmas we for that entire are excess fluidity. network worked the There’s

Kenny Rocker

Yeah.

Scott Group

you. Thank

Operator

the question BMO question. Chamoun Fadi next proceed from Markets. is with Our of Please line your with Capital

Fadi Chamoun

X% at so you unique the can what understand are little you had a few in back get headcount kind XXXX, you Thank remaining we costs help maybe, play now Good last are that bit, really us numbers in productivity main velocity is, to the those XX% like the of couple is we network were to if you lower morning. still Jennifer, a network side resources lot those the can a congestion flat. on need ago, were were in have operational I in going if Question XX%, Do do has quarter couple higher I car ago than but think your that years quarters? to got forward. to to things levels data volumes of question higher, operating have look a fourth these than been when to get is you. it spend productivity, the what are and But locomotive you the of compare running and the they well, years

Jennifer Hamann

caught that wasn’t your don’t were quantify part our Yeah. you the costs XXXX. to I for think asking question but first congestion there, basically network of I for what totally I were the know -- Fadi, I

basis We and weighted had probably the of a a we equally degradation our -- PEB operating that was than have points, when on The and congestion rest basis fairly at and basis, other and two. the quantified was of look combination XXX we that year-over-year XX that points ratio between that of not you inflation fuel.

that’s that. would think I how So about

It that wage and lines. certainly through feeds inflation. all opportunity our feeds through is the That of

Now of that, some obviously, real. is

rates, Those about higher use more away, recrew the we and all us then talk crews, have We more we it’s fact XXXX, that’s held have you that how vans. had in real. deadhead those heard have We costs, out we borrow categories. and the higher the But cost know PEB. inflate

we contractor that our we service, higher come into that costs with year-over-year were on suppliers as of as just in inflation, services, all those faced addition of Purchased a to inflated more that inflation saw were the basis saw through. putting some locomotives and you

opportunities casualty on other know we have a then we there And standpoint. the line, from

to talk a higher brought us times heard of and that about couple us. different in XXXX the You that cost casualty

all now attacking. those very that are So we on focused elements are much

yet. are we right-sized asked You

heard locations. still we are short say, us crews critical have You in

hiring. are We still

Fadi Chamoun

Yeah.

Jennifer Hamann

network. That the does and three our still need we well, us improve things things helps as that hire -- So more able reliability, folks volumes to we their we helps only that bring to to terms two in our onto are folks our fluidity, it move can well, improve we and recrew outs in back people those location our working reduces locations, as rate. and base have home cost your there of then move that the borrow critical helps you

Fadi. So there, parts of a moving lot different

one element, know in looking business what but and it. are looking isn’t are are we in You us impacted just to Those the that we XXXX. XXXX at how that’s do our that’s things

Lance Fritz

Yeah.

part change. changed structural I think resources, achieve how the Fadi’s critical of is utilization, the nothing structurally you structurally locomotive a of question road something question, on how you car like, freight other achieve And line utilization. on terminal, did five and

little going that historically. end. we differently did we at That the means a than bit at tight probably not on Board We so crews forward staffed look are more

we thousands and We not have also hundreds, that. want a a are sure to to we the have in counterparties negotiate bit it’s making then got that place back watch staffed that looser, extent that’s that

a probably that’s I at only an that’s probably risk as and headline. the So think thing, major opposed to

Jennifer Hamann

volume more reduce to ultimately. helps And

Lance Fritz

It us In growth. supports that. right. That’s for

Fadi Chamoun

you. Thank

Operator

Stephens. question. proceed from line comes your the Justin question next with Our Long, Please of

Justin Long

If last Thanks question. on points good the to congestion. just follow from up run last that it OR morning. there seems quick was like headwind of I the math, around year and XXX guess I to basis

to guess, think growth? on volume get you that recapturing see the or that growth reasonable back OR, you weighted? I can of productivity, I half is kind what absence see as half need of the year-over-year, you the in about will is to probably OR first improvement of so lost So Jennifer, say improve cadence this call do in doesn’t it volume back And to more order

Lance Fritz

anticipate is can productivity Yeah. with, start a yes. Jennifer, -- recover volume as you without we is, growth tailwind. growth? why volume The well, answer I you And can don’t which get

Jennifer Hamann

Yeah.

out pointing is, piece So there in saw a fuel headwind cadence it the only fuel the of was I’d thing us really the in of bigger part the year latter than the where of to terms earlier part and say of the year. to you

the pick some the saw of part You up latter the inflation in of year.

that because I that half either thinking XXXX differences So first models look there are you at ask be you half, to way there, there’s some just closely there. your need there through would trade-offs to pretty in second

Justin Long

Okay. Thank you.

Lance Fritz

Justin. Yeah. Thank you,

Operator

with Capital of line The your next Walter RBC the question proceed with Please from Spracklin is Markets. question.

Walter Spracklin

morning, word, the factor not you that not I is question, I there that focus enter the you I a you into being yield that core to that. and congestion will your the surcharge going them against carload are on another of much. does to come back make away, search, on. search Thanks understanding will But better -- charges we a Jennifer, side, drivers key call sorry, to Yeah. mentioned lack mix price to the and that very just number is that of per weigh were, everyone. that -- Good to Are for charges meaningful sure equation? just were congestion of so levying and with registered the want wanted and enough fuel revenue not those they it, through XXXX. or just

Lance Fritz

Jennifer, want to take you that?

Jennifer Hamann

I think congestion you were surcharges? referencing

Lance Fritz

talking I about think he’s accessorial…

Jennifer Hamann

Oh! Accessorial.

Lance Fritz

…cost.

Jennifer Hamann

that we less that expect be driver Again, us. significant I but do could Okay. see they as don’t for a year-over-year,

Walter Spracklin

are compare a what your on that Okay. are does Fair EIA I your there’s understanding talk on enough. area, we just from hearing catchment lot deteriorating you got about know the seeing just plus catchment and How area? And the a you statistics, with that outlook. side, coal what of in coal

Kenny Rocker

Kenny?

Kenny Rocker

of the low year. inventories gas will Yeah. of the even and We prices there. tell feel good for these move forward natural you, bit out a coal about quite able there’s rest in being I to the still curve

assure that’s you, willing can receive that there. I out coal demand able those are to and So customers

Walter Spracklin

for Thanks Okay. time. the

Lance Fritz

Yeah. Thank you, Walter.

Operator

The the next from Please Bascome with with question proceed of Susquehanna. Majors your line is question.

Bascome Majors

question. my taking for thanks Lance,

you for change? as of Thank other do leadership skill leader can Any sets seen to Class term you think Board line the transition a What on time the around you. have longer business? we plans? the the that some really As UP, the start the focused next little Chairman the at to talk Xs bit of of

Lance Fritz

Bascome. Sure,

So the both needs any leadership transition on the skills and of our do we Board team are, team. Board skills management have announced review matrix what our also as of leadership timing. the the a not We or development and periodically

strong that are on make running that, a and don’t eye announced, a occur. on I when are what does sure will as it company about And so, thinking we Board it a for, we transparent and is sure will yeah, anything what knows make looking we has basis, we while have

Bascome Majors

you. Thank

Lance Fritz

Yeah.

Operator

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

Jordan Alliger

Good morning. Hi. Yeah.

beat again the But Just well? last part a maybe in sort right a as truck of Thanks. had truck do to too. rates the customers, are terms where longer really near When Intermodal curious, now up of what guys year service business of have that mean, happen environment important is so. story tough are term, you and to an in what shifting are big open customers tell or of, I some term wise and you hey, time obviously, they going be from and could trying back so that rails

Lance Fritz

of that, truck. Yeah. you Kenny, we want winning off business because to still take are

Kenny Rocker

you haven’t I earlier winning I said of and pieces are from business that truck, driven from seen I that, what Yeah. economy. that we move the lot is them. large tell are and mean any is definitely by would still they we away A

with very via investment in we again and realize that in are that customers mode. they us. lanes Clearly, move maybe we investment our stay some our short-term versus we our or in may at have have investing, we service can a and the hiring But transparent of have, so been seen this our phenomenon is another CapEx, challenges that some truck

Lance Fritz

playing joined helping of part quite we role can in of bigger more of their customers, and areas. in us and to driving us detail understand us. look bigger a the good marker opposed a that’s initiatives one has say are Dallas greater Kenny, those Well, at also we just at on for are We making sustainability serious that, how that be just been many that some they our less asking are sophisticated as Sustainability progress them we that’s in sustainability look Index and and

Kenny Rocker

you talking it about of if bit a now, talked at velocity some you our couple Lance, about summer we earlier, and the ago. car I to improvement, a were little mean, this have seen Eric from look I and days

we If you onboard on our Premium look at at as network, fourth that quarter third quarter is to improving sequentially Schneider.

So that gives us lot a of confidence.

Lance Fritz

Right.

Jordan Alliger

other myriad shifts sort back the -- Coast some think West of a the Coast on year reasons. just of over And mean, probably that, of just for shares, side you I of East lost this continuing to of the that Do the XXXX? course

Kenny Rocker

bit I might port ambiguity think, they that happen. in you on little saw and -- challenges really, what thought of the that labor some a I was of

see bit we that to as think up back the port. Coast will more volume West clear little you I come a port of on see that the that

sure to customers. Again, can and make are all Inland for telling we those the Dallas our are the more the we investments bullish Empire, act, everything areas of you that GX around would am we relo Dallas. Dock make competitive to I doing,

Jordan Alliger

Thank you.

Lance Fritz

Yeah. Thank you.

Operator

The Please is question next from question. Cherilyn Securities. Radbourne your of the with line proceed with TD

Cherilyn Radbourne

about ask the there. for My morning. did inventory the and very one. Intermodal. of is to most good the I important outlook picked question sort factor Thanks much Clearly, up last cycle that on International want next

with your addressed? of implicit is you recovery thought I that for curious potential on Beach, which that, on then West in the settlement Intermodal. market the mean labor share along for just think So in I curious your LA, regarding Coast was I the would also timing guidance a a thoughts second Long for whether in And and what half am you

Lance Fritz

Coast. Let that’s me start, labor West Kenny, the and I negotiation to in going will on the talk

lot want say, hasn’t has of a a that last announced July year. So of I up, There been progress in publicly. started been negotiation. There to

they to a to with share sight have temperature line they reach the directors that agreement that of there’s and port us agreement. reach going the an But are there’s confidence is low

think are I we So that okay. perspective be to from going

Kenny Rocker

Yeah.

as bag mixed are of they time we get with customers, issues these will As think when resolved. inventory spending a some

So quarter. saying third back some half are of

us, For going not the are time. or so we time precise at be to to try that

focused we got said want really have making are the that service double sure should on we that we where it product What improvement. are on I to I seeing down just and is what sequentially,

that it large growth trying or walking when a to We towards and when a are shows pop. have onboarded customer we up capture

Cherilyn Radbourne

Thank you.

Operator

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

Ravi Shanker

years? word get a path XX there, kind are that to fair OR given really everything so on obviously, this I from that here, macro call like Thanks. terms prospective life Good lot to for in inflation, cetera? the a gap topline where of a your kind just morning, peers. given like big in the Two-part a What and just of to mean in what do what the I way EV focus area have the need said going far, given of, think of of of your else you coming How don’t the life, of of employees What everyone. quality you is of does big question lift is we and kind that are negotiating costs, bring we et terms also, that wise. seems that looking about think the away is are think our you for? exactly And quality kind

Lance Fritz

for Thanks the Yeah. question, Ravi.

life, can handle and a negotiating So Jennifer, then then, Eric, on you maybe, quick there, start will can a you we I on quality and XX what up with are comment follow just OR. of

came that agreed work other to things our big signed are negotiate is like out bundled were issues and directive a employees, life was one. PEB work. thing the scheduled things to into for the in of craft one quality unscheduled now and that that’s There the So going tentative agreements of to but

way that’s employees amount an in handled. a the are on that our of unscheduled call There’s is the that railroad fair the craft staffing job and for

craft to will work let And professions. in Eric those discussions, so create in a because detail. we I forward path is kind more for into that predictability actively get of be to are the able those there

Eric Gehringer

Yeah.

state pilot Kansas where the now one actually are focused work a engaged on example, we have a of way we people as schedule. defined working Ravi, a in adjustments some do of the in right are collectively that to are we we So, group where the that

point, the to today, So vast on-call employee of is basis. majority base our Lance’s an on

side and for are on ensure pilot, that that’s Y to side. is a what have actual have they that on a the that’s translating specific in actually TE for days out the that this watching of which off So the they scheduled the where are and in schedule of people we carved have more transportation to work. then In we them are handful to availability and days planned occur we to

making much it I thought we on. we next the And That’s and for solution into the so of are on we that sure focused entire both working for putting win-win into the year beneficial are the year is looking period sides. are for that it we because are this and net carry bet impact

Jennifer Hamann

mean, Ravi, is And your goal I heard and to I that, again. have Yeah. us that will questions, OR our XX then, you that talk reiterate still

that today because can’t have about doesn’t you are and challenges new the a we not doesn’t things there. path a facing. that line of all have put on improve us improve, of that don’t that we have mean to time to terms But We heard a we that mean get here path talk the in

Lance service back and as have of it the as improve that as improves predictability, opportunities what life, product service to it well. to and heard relative goes we quality improves availability, we really pricing And ability and grow with to that further both Eric, you from comes our product improve our crew

pursuing that’s in are So and things. view my those it’s a how circle we going about virtuous

Ravi Shanker

you. Thank

Operator

The with next question is from Citi. the line Please proceed your with of Wetherbee question. Chris

Chris Wetherbee

give until come sort us morning. and to is and able take will you ultimately to it to of of periods? the and resources performance. sense Maybe getting to you where improving [inaudible] be as maybe think sort relative network long both heads to that the you network sort Can about are Thanks. how of head of of you you back second a get about a that we think optimal half, as growth Hey. dynamic up the back and Good of think I thinking have sort wanted to support kind half first efficiency in you count

Lance Fritz

that I of bit Yeah. where at Chris, the take, support end. little adding particularly going But first asking part the we are are we is fluidity second half, and broke on is about, it in a network you some and tight long to up half? headcount crews a what to heard you is resources how network

not So I What we fine is we how when we performing look coming you exactly are putting into on declare network victory. XXXX a say will button is, fluid. the at and are

demand are to that the We in and the and a areas are that network that we actively to grow in lesser network extent the limiting in support would got ship still in for our have growth. tight hiring maybe coal, spots ability rock all like those

graduating pipeline this like have is are to something in got full, at and people month The a XXX XXX we the we a point. pipeline month XXX

demand just is fundamentally around. say happening to well hard when It’s of kind it’s exactly year. being that this given So pretty healed could shift

is grow able that not as fluid We to demand wants and now, are the ship support operate that meeting right all are game add volume to resources continue plan the we demand we still are to. network and like to a

Chris Wetherbee

you. Thank

Operator

is America. your question next of of from Bank proceed with The question. Hoexter, Please line the Ken

Ken Hoexter

the morning taking question. thanks Good for Hi. and

from… Can the clarify Just, Jen, put service impacted by for see typically about. given points you on background that you maybe you range much deterioration guess know how said I looking you OR just improvement, you that of issues talked improvement, can XXX the are a is and of I basis you

Lance Fritz

Yeah.

Ken Hoexter

to that just for, quarter. pointed thoughts a look then Is year, anything Open that Anything quarter different? Lance, couple any unseasonable expect of fourth different, things out And of issue? STB first you remediation or the mandate? totally CPK this from … should second a you or on that Thanks. there something one different Access out expectations

Jennifer Hamann

OR order I year. you refrain am is guide of soon or It a the too Ken, going giving So, just giving the in really the range. to magnitude from on

am here but are January XXth sure We give you. sitting I I wrong. to to try, that be on I’d could

So to are going temptation. resist we that

any to the we to that, trying are fast meter as think improve about not we that progress. and important can, as can, demonstrate seen going I as think are work us thing to you do as is to we hard we have

be that, topline. go the Our and are service, team is you how deliver fluid, inflation. when about more the think volumes that goal better know and and leverage it, some other are to they what fuel knows obviously, with those it. about more that influence There to across things But

here not also to patterns. have to you we of am impacted end the had the going way the I and hard are whether at our close normal any We with going of a the XXXX sequential guidance to relative give the weather, hit quarter. it sequential really volumes here

year. of the the We here here have again in weather had some start

know generating your watch service best metrics. we and with across positive So financials watch barometer us, how growth how the to are Those operating the are volumes, hang the are positive network. and we

Lance Fritz

all really It Admitted. start product. service with our Yes. does

of their on have decision STB the and the STB idea Open to for following Access some Access, a part. we terms Clearly, Ken, is Open a fed think that’s now so we In the pending back quite bad perspective. time from that

service else customers interchange negatively and and riding particular would that where demanding the the not trains service access puts open those has product the those impact are investment product occurred. It It for anyone using.

We circumstance sense. makes this ways. at allowing in don’t access certain a no say lot of looked when have a We hell

We have it. done

negotiated it. have We

think, allowing it’s of the short periods would overall not context we But out. point to in interchange determine for should it be, it conceived, done help have to be where in better. -- their service broader currently as bad customer We customers product,

Operator

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

Brian Ossenbeck

Good morning. Hey.

getting Thanks senior couple And lastly, little And that probably more Lance, up So a hear weeks? will STB impacting take that fourth you as you the hot clears in Jennifer, to us hearing another be your for pay after expect couple do folks with just of just retire the anything all continue headcount, much. of better if I button next on of confirm the about hard that not? any something trends One, you XXXX. mind. to a it are attrition that? for Eric, month, back if or changes from last some talking tell for different look thoughts or you spot exactly the as the don’t comes a for great follow-ups, when from like for the topic the to else two-day embargoes, maybe would what of then on hear implications but very quarter mix didn’t if for sounds

Jennifer Hamann

your I Brian. question, All start right. mix will with

really we it expecting for of when about it’s year increased to you for are the So the think mix pretty with Schneider. onboarding shipments Intermodal have simple and negative XXXX, with a

toughness you Kenny the product the then to tough Those we marks XXXX. mix in And for are heard up Industrial about talk grain add side. some negative us that then on and things of also expecting question and markets

Eric Gehringer

post side, the seen attrition not PEB. payment have attrition of the any On we the

and necessary We continue we will to watch very that closely incentivize. where

Lance Fritz

happened pay January Yes. And right? XXth, last the big -- that back

Eric Gehringer

correct. That’s

Lance Fritz

and to be now, right if it should start. So that basically Brian, seeing we it’s point, in should occurs, something your hand,

on of terms STB the In embargos.

Pacific peers. used for The so of in than use it it for XXXX two-day historically So, yeah, specific a We is reason we our were all that very a Union a hearing. embargoes in and had reason use resort. we more last called as

embargoes in that impacted it, use we why the the Elliott reason winter occurred call Lakes either storm is something negatively region. The like, network Great has if really

circumstance product weather, as to we control in that an to trying winter we are from we will flow. get the So recover don’t embargo use that overwhelmed

we car wonderfully network It’s fluidity, growth. well. controlled under so That’s to It’s stop our not flow, feedback in see because it. the can product basically in network quite operating its and get worked you velocity overall that area, are can the

they we an a to control we that very last to embargoes as customers, control last and excess We would use inventory also them embargo. and will what do a use engage excess targeted understand as inventory, We what in circumstances then help help could resort. resort, the see

about them for vast majority get last serving The before customers the end That’s to inventoried protecting customers. serving where at mile delivery and yard. are our up the yards of cars the they

can has than product what more it the handle customer yard crowd others. particular they can for supports what a business, if And service in out serving their that inventory way or

called so those So that’s we than is we the were anyone reason more in else. use

not a customers that our how going what’s out STB and hearing. know customers with in the -- want our to to from they we more with exactly remedy We am continuing why I lot conversation to heard of is and sure and come What granularity. through

that. modified have So customers they to so we what we our communicate that understand

on And are going how we have our we been and level using more customers of that we feedback inventory and the to and commitment in absorb changes embargoes make engage excess additional so pause Kenny? inventory the can some effectively yard was we that it. approach serving with on excess

Kenny Rocker

Two talking pretty All all of for about, the difficult right, of some give solutions win to release conversations them creating our whether customers. positives the talk. this serving with number line, the of you us are was it’s visibility yeah, that make that getting have things, yard. rates Brian, out the one, the quick. for the cars title had that that I will inventory we on in tech Lance X them has come is But

a of their that the with integrate working We chain. have supply can that we weeks customer here them shared couple and those solutions tech ago so are they into that with

Brian Ossenbeck

very Thank you much.

Lance Fritz

Brian. you, Thank Yeah.

Operator

The next your of is Jeff question. proceed from Research. question Vertical with Kaufman Please with the line

Jeff Kaufman

the have much. been for reopening potentially of with quick, lot economy you Kenny, COVID China make I Pacific? what policy this and mean Thank do will changes in mine answered. a very their because the just Union

Kenny Rocker

what have seen fits will have see little bit Historically, to there. we and starts. of out We is what a plays

impact not a much up have I start bit is also looking later, least levels be at it little an that inventory they may be as near-term, right the what in it we time. may will in think at the of

need demand really in issue So a consumer there, spending than of be fits starts. and and out more What uncertainty we bit a so the the is there lot little definitely Asia. more some to

Jeff Kaufman

Thank you.

Operator

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

David Vernon

for wanted on here. are about I we I of only come adding if resources and quickly guys. we go back exact opposed more the one, resourcing level resilient, be in resources the are does automotive morning, leverage table. add What service adding Also to making to to Good less going more future it really number here bit at how Hey. dynamic it guys know looking is kind the around questions based one little thinking but resourcing as the change that’s and changes looking are we a you right on heads a to put the to model to crew keep that of will get won’t are make XXXX one I theme resources the to the see of now? growth? forward

Jennifer Hamann

Yeah.

to up in do expect how David. many hire we You do there what hiring about think question a and forward? was a I were basic going versus your we at But bit, cadence volumes was, breaking think maybe quite XXXX different

year, make be attrition In obviously demand it XXXX to that we some levels. able today. meeting positive are still just change place carries if volumes probably we a I see But what obviously at we We sure that and are would the with take right to have we in could said of volumes for happen not have that’s crews us. to that, so relative impact to of it hiring there we to going see would similar know for that all advantage terms with the we assumptions think, be negative the or

hiring, our about that larger cushion, us give and you of I things think heard say will keep if I talk Boards little that established I would we fact maybe we see as Lance have can terms we be bit how will in A demand. think, the and a In mean, once about those fluctuations can you Eric

better that reliability to to we and pricing and expect be leverage Again, productivity. better able volumes overall more service into

that, should the think be And long-term. a in we worst so for think be really the it when us case you impact bottomline neutral, of but about positive

David Vernon

amount adding right I are resources of I volume understand positive mean, we in be long-term, foundation do but, the Yeah. to now, correct? will the same more the essentially

Jennifer Hamann

you seeing today. Yeah. XXX have I say. flow would got When mean through are training people today, XXX, I that you in

Lance Fritz

Yeah.

Jennifer Hamann

the that already numbers we I would is there. say that headwind freight, in moving those actively out have today is Not that

Lance Fritz

freight are Well and a completely from it’s substantial because moving they unproductive perspective.

Jennifer Hamann

Right.

Lance Fritz

But support we attrition anticipate to need growth. backfill both them we and

David Vernon

added for guys. color Thanks Right.

Lance Fritz

Yeah.

Jennifer Hamann

Thanks.

Lance Fritz

David. you, Thank

Operator

you. Thank

Our Please from line and Company. of question. final question proceed with the your with Cowen is Jason Seidl

Jason Seidl

year look positive that where Thank else and bit you, back improve position, and lost wanted plan you longer want to get anchorman the any flowing little you business you be compliance think referenced needs to the as to some RailPulse Ron the to to guys a do that? do you where of fit make trip up you the growth visibility the help I And you that’s this to am Operator. Intermodal, of assuming outlook to look won’t guys. that [ph] is will back But more need the think freight you network. domestic The and year. last be do to a the term, needs get sort there? of do trucks, marketplace competitive then rail what basically Schneider I I natural Bergan I to with

Kenny Rocker

Jason. you. that Thanks for question, tell I Yeah. will

growth put with the and investment been products the team We railroad encouraged about little to talked into all we today. support we have management have here as the that those a bit

of think that some focus us. think do an our ultimately drive for bit earlier impact. drivers which the Twin us. do We their the think customers is a Cities transformative experience. transformative our that reduce have do their help for We We will that will Lance on technology, costs facility helps Inland What with is little mentioned that Empire Intermodal

exactly Jason, and ease asking we everything and sure know are focus of said, you put we making for do customers for. just on And what our RailPulse is then, of lot carload can business a business our

Eric Gehringer

with to have from Intermodal performance like, Jason, eight, that been trip be. our XX% handful XX%, And very side, want of on an starting service product, years we the last the over compliance, we where the is plan consistent

are experience last close them. we their two what’s to to also make very and most sure most over or is reflective the But and are measuring of continue important to customers we to our that years what

So in stay to we tuned the how voice. about service think because we line customer’s customer evolve with continue

Jason Seidl

get freight guys XX% in you it -- demand that more network? normalized inflecting is that the And above, is a or market there when in on getting of to starts if terms

Eric Gehringer

that think to what when way about outdoor The we recognizing are as we XX%, really factory. you is are to get an

our gets winter, XX,XXX reevaluate et are outdoor There’s deal XX,XXX to job, still? within because with miles, We place with cetera. opportunity factory cetera, strive We a the even an we done nobody to hey, that do it’s et to what’s challenges miles. XX%, have here of next to get and but then the being

Jason Seidl

enough. Fair Appreciate commentary the as always.

Lance Fritz

Yeah. Thank you, Jason.

Operator

question-and-answer Fritz to Lance time, reached comments. end turn the we of for and will have the session this over closing the At floor Mr. I

Lance Fritz

for are for care. results, quarter help to you first thank we and very again our take your about all this forward you April your talking then Rob, questions, you morning thank much with until please in looking

Operator

will This today’s you. Thank conference. conclude

you participation. at thank your lines for time. your We this disconnect do may You

Union Pacific (UNP) 24 Jan 232022 Q4 Earnings call transcript