J.B. Hunt Transport Services (JBHT) 15 Oct 212021 Q3 Earnings call transcript

Company Profile

Participants

Brad Delco	Investor Relations
John Roberts	Chief Executive Officer
John Kuhlow	Chief Financial Officer
Shelley Simpson	Chief Commercial Officer and Executive Vice President, Human Resources
Nick Hobbs	Chief Operating Officer and President, Contract Services
Brad Hicks	President, Highway Services
Darren Field	President, Intermodal
Jon Chappell	Evercore ISI
Chris Wetherbee	Citigroup
Scott Group	Wolfe Research
Justin Long	Stephens
Amit Mehrotra	Deutsche Bank
Allison Poliniak	Wells Fargo
Ravi Shanker	Morgan Stanley
Jordan Alliger	Goldman Sachs
Bascome Majors	Susquehanna
Tom Wadewitz	UBS
Ken Hoexter	Bank of America
Todd Fowler	KeyBanc Capital Markets
Brian Ossenbeck	JPMorgan
Brandon Oglenski	Barclays

Call transcript

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Operator

Good day and thank you for standing by and welcome to the Third Quarter 2021 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Mr. Brad Delco. Thank you, sir. Please go ahead.

Brad Delco

morning. Good

the the some uncertainties like future expressions This intended of disclosures contain statements to introduce time take expectations call XXXX. statements I Private and forward-looking J.B. provide on based plans the be are expects, to regarding from within estimates identify Words speakers, such and I Reform These anticipates, materially cause statements. to would similar those in some Hunt’s may involve that that Securities as results to Before Litigation of intends, and Act set or meaning forward-looking risks are activities the these forward-looking could current different statements. statements. forward-looking forth

refer Form the report to J.B. information more Exchange For Hunt’s XX-K filings with other please on reports Securities and and Commission. regarding the factors, and annual risk

you of would our Services; Simpson, Roberts, of CEO, some This Nick and joined I like I’d am to I President Hobbs, Human CFO, Now, Kuhlow; the our At introduce call. today’s and opening Chief to John? speakers time, EVP Highway call President morning, Commercial of Officer Roberts; Contract Darren John Officer Brad Intermodal. this of Hicks, like the turn Services; CEO, John Operating our on Mr. by and Resources; to John to President Chief Shelley Field, comments. for

John Roberts

today. Thanks Brad. Good thank morning and us joining for you

momentum present continued quarter third of the to spoke last during The call. we our earnings

key reveals locations further smoothing the the key chains with season. from labor levels dialogue with increase labor irregularities across for a system. year, contract insulated to see the desired is and and persistent pent-up resulting customers contribute that services, port We of expansion inventory container also challenges dynamics these has company Dedicated labor fleets at office both in-stock preparation find customers. highs Final a holiday for and mentioned This congestion the and market our in challenged the our as as Planned port, our the segments trailing need and supply upcoming both have in customers. demand substantially patterns challenged we The We field on in not all should company above all from openings the teams. as for Mile The positively have the our and in to well additions reached our abate. headwinds drivers need we in all-time inbound

research Progress our with both these plans to on We programs quarter been are exhaustive in compensation during forward. shrink along the non-driver gaps will incentive our and positions, have the jobs our going gaps closing done made position has optimistic us. for and better we help comprehensive benefits and for and current continue to driver

all the of segments. executives pleased we will are generally today, our with performance As discuss

our However, with for we as improvement ample opportunities, of well and flows is as inventory business our contractor equipment the focused healthy and do service of in room intermodal. supply these utilization long-term well-positioned customers. Even have in in with chain see the our we needs Mile model for Final the

million years along their Lowell, safe of we annual our profession. total past our also accomplished our posted corporate and many pinnacle miles X with X continued X-day reaching drivers the over sessions and and over two In who drivers, for with between are honoring utilization the the the productivity entire our the million have for our mile a celebration families multimillion a We carriers of with the to we of by XXX team. with resulting tradition across company expanded of returned XXX encouraged shippers. in usage see weeks from progress gains The have us our platforms few

nicely. to all to I extremely We of contagious our see we best done that guidelines. over very been will we to recognize CDC energy for again. see website his comments. John our has women. of have Kuhlow out these and how call sessions good The following us incredible John? now to forward careful Please I check Nevertheless, carry person in the world these host will been us have assure turn it men a and

John Kuhlow

of quarters, XX% which Thank perspective. in morning, all Staying the our revenue a over segments. comments consistent result and with the everyone. our of you, John. Good providing third consolidated will of pleased on are with we a prior was Overall, year, recent up start by I couple from improvements growth quarter XXXX

from due Interest Our operating expense new pressures the a increase will income shortages, from demand the the prior result which businesses the they for over was also labor impacts $X.XX and contractual are labor XX% rate of growth increased with nearly is of but in an the discussions. resulting are implementing with challenges in second the in network our that significant had and quarter, quarter, chain we supply consistent quarter. our be slight we mixed just and in to well-known experienced again, to effectively in year some assets, share utilize congestion cost the our what The ability segment earnings per general that to issues, of addressed segments results increase in the prior year. and service persisted of XX% straining similar tax

costs of the compensation in were had incentive the heavy pressures announced of beginning the purchase higher primarily we approximately benefits. XXXX. a cash. employee At medical with to in in quarter million equipment transportation investment and for other $XXX costs We quarter the year, and Additional related cost ended

expect equipment. XXX to private have as our our able remain to order. leasing we We over our for are as obtaining expected needs a committed limited JBT CapEx JBI now containers orders result full these own and and and we CapEx constraints serve to constraints, ability in-service little all our the of our Considering add sourcing including continue having billion relationships X,XXX the just capacity as spend adjusting focus our on approximate shy of While remain solid over the in with to remainder vessels, a equipment during of in the year. equipment XXXX the to means, quarter place, this success are obtaining tractor customers for Through manufacturers. unconventional trailers $X noted well our our

While for finalized and we obtaining year to on expectations our in $XX exceed levels, for are largely continuing CapEx haven’t and to timing ability basis. regular the to a million initial $XXX XXXX anticipate equipment. but purchased our We yet, shares bringing the more the third XXXX buybacks for us plans million of will depend on quarter, the

opportunities the outlay In form to you on frontline recent principally special costs have in PTO quarters, metric buybacks Xx and balance the trending directly to cash we equipment, for and year employees related dividends, our for targeted leverage unfold, a for been towards needing bonuses net continue of as which on basis. will our to on EBITDA employees have We remainder the of updated quarantine. COVID,

While we to still these quarter. lapped prior have there quarters year and incur no this, now meaningful costs, of reconciliations providing such, the we are as

to to protocols. COVID around people continue my Shelley. the other I focusing monitor will it now over of of mandates the and turn and and vaccinations our We on impacts This health concludes state federal remarks. informed And while safety staying of

Shelley Simpson

I conditions, J.B. Thank updated general the you, thoughts XXX will focus our will our platform. give around progress John inside freight market we peak commercial on on digital thoughts updated good and also our My update making for are preliminary and season some morning. Hunt XXXX. planning multimodal

We see continue comprehensive valuable provide of opportunities the meeting in to for to supply plenty solutions. customers market services chain

all also contract modes We containers is by fluidity in West in elevated our not customers and adding with chain freight across their transportation. Hunt move platform Coast ports. remains our to frustrations get to out backlog closely find as develop us the efficient Pacific most to to we ability on While of working waiting XXX challenging, all immune to strategy impacts We and some capacity unloaded are the the differentiate plans the these tight customers that channels and believe these challenges as the get across Capacity at continues delivered. be spot way to remains ensure the our go-to-market sitting their to are share of Further unloaded. are evidenced our source freight. off the across fluidity to and execute supply and J.B. freight of waiting rates

peak the the is believe capacity in peak further and intensify into West even us, and compact upon December accordingly. bottlenecks While season preparing November we to ourselves Coast season are are needs going and

not we today As turn new and to of have moving truck is inefficiently will to intermodal the intermodal Freight which ripe conversion onboarding their about spend. rates, be customers’ we and freight, XX,XXX our our spot important, our elevated will optimize leveraging think when only containers. we also people, for optimize full planning at attention but more our to even equipment freight for technology XXXX,

on plans, on with we executing are the available. customers budget on enter our as we also year. to and stand season While focused focused needs deliver efficient we ready we for positioning And the to their solution most cost effective remain the meet again, of XXXX our peak our customers new

to carriers by trends and shipper transact value tools metrics are field. freight pilot a for being begun Hunt have and to the automation, With user our regards to as accelerate, and platform. and we our freight paste in in of of We continue activity the Carrier and and completed of the time frictionless continue to be rollout the further more to of real the extremely have in in shippers J.B. engagement XXX able personnel process. our automated between system encouraged digital matching seeing providing evidence optimize thoughtfully we multimodal some

productivity as system utilized. over additional rolled benefits see is and fully service quality year out the to expect We and next the

on their up to Those help I and our And platform, of us comments. and differentiates us believe concludes times. now is supply these I with move to the like to our to turn with shared network our chain quarter, and position which customers experience, North my expanding attributes and America. our lean create extremely believe about forward, I’d most you combined efficient to last believe challenging transportation tenured focused challenges. what why similar As That market over a we our continue on message and Closing sets through your during workforce comments in remain and people, technology access out achieve my Nick. broad into I the visibility I we scroll services it to improving to us customers transparency access, leverage in statement remain encouraged to mission we

Nick Hobbs

of Propelled XXX solutions. and highlighted backlog I businesses, fleet as will performance on the quarter. outsourced the well continue Service you Shelley my professionally to and current DCS as on you, execute Service and our remains the market team’s from Dedicated dynamics update Contract for pipeline operational by comments good demand business, the of tremendous focus I equipment our the trucks provide Mile In FMS. both largest Thank by I our will and also the driver proud source addition equipment. general truck quarter, of ability extremely perspective this any our both our the market an Final Dedicated availability, a in driver morning. or the business, to This see quarter. is in adds of to around ability single strong. number am we

mix costs But for solid both diverse case, business put As of to these have let we and we in across the roll geographies. pleased The been results costs as revenue. begin me the momentum verticals startup onboarding recognize with new on extremely sets did clear, historically be and forward. incurred stage margins industry as we we accounts quarter customer represents are before broad is we it a pressure as and growth the

out-of-cycle are higher wages to While for challenges, we the have workforce. driver adjustments in been instances most in facing to recruitment willing our support driving professional our support customers industry

demand on service. XX alluded of from have to As I XXX incremental update as strong an see continue for update, sold second call. trucks to trucks X,XXX of quarter earlier, as our And last year-to-date we we our our on September

Final Now, by our that and to our Mile growth product. supported is update, differentiate we this in transitioning ability to Services be opportunities service market will our see solid

impact our costs in had quarters, recent our startup people profitability our quarter, several Relative result, of a our processes the factors. disproportionate to growth Similar a result to of smaller we support priced of pressured to a some given results. that business continue as and to investments the for As was base on Dedicated, make outlook. we

at our challenges, Additionally, second in addition trucks carriers labor the seat our for also facing in the those warehouses. are delivery contract to particularly customer

are furniture mostly as chain last categories. and to believe our challenges We are we issues and Finally leverage network goods potentially in transitory. these availability, impacting to product discussed in quarter, ability appliance our and deliver supply the turn,

Going forward, record we year a of business pace and are on we encouraged new by we are sales. onboarding new for the are

to growth that see to in we pipeline capitalize continue a We of plan on opportunities the solid future. both

dependent and Our largely service experience investments the success making ability will we to our the needed our differentiation. committed be that remain to achieve for differentiate on to customers’ customer

extremely Finally, the to close have we updates, our our field to focused on support in some on been hiring general efforts growth. operational

of true we we given discussed quarters, for driving career have personnel. local one Hunt operations applications, both attractive offers the of advancement concentration As and opportunities in the field managers This opportunities. believe past our work pay J.B. with top combined is also and most and regional in

a our employment more We wages opportunity. have to to rewarding to company continued benefits and to make make those adjustments even seeking attractive

support our Additionally, we closely with working equipment our to have order growth. in been providers

to pipeline, to as a and my trades remarks. to had concludes result. equipment both support That attentive have economy We stay our maintenance to our cost some continue of but fuel of hold

I will to turn over it So Brad.

Brad Hicks

and morning. in recognizing they segments of for Capacity comments Thank respond environment the Solutions members elevated demand I current trends. how and of off the Integrated ICS to all focus start will you, our to like on Nick my by to Trucks. good JBT I’d performance continue and

constrained capacity environment. opportunities Our technology platform is our to in into leveraging continues very by ability The our us be continue of opportunities extremely J.B. to team the our our and provide physical both that and well for is source with XXX investments provide capacity The to customers these enabled to people, an XXXbox. by in our source experience times. capacity solutions with trailer continues what our assets to and and to demanding and drop to technology Hunt customers continues truck trailing respond complemented pools us platform capacity present deliver

or solutions these our million. of to year-over-year Revenue $XXX the we areas people I invest segment XXXX first generated well customers. is This JBT approximately this We from start since million our trailer over capacity example comments our truck able $XXX continue JBT. in value-added in is for more with grew for our as is large our another us my XX% to We accomplish will of our to were believe as and focus fewer providing provide with on adequate period. returns that quarter to trucks has platform that versus maintaining organization’s This customers power-only for sustainable scaling XX% addressable into through our capacity on an yet desire our solutions focus the while with on XXXbox on capital. sourced provides markets drop revenue or opportunity growth.

operating XX% Our the third any generated the end XX% year million quarter trailing second of and capacity the from of increased segment since the versus the income, of quarter $XX.X and XXXX. highest prior

of disciplined record season, did as particularly margins million network. have gears up customer while the delivered sequentially we on supply said, Capacity to ICS ICS on period. last to grow, of forward, compress, capacity the parts scaling We elevated, trailer driving network to X% the XX% Solutions volumes platform, stay further of revenue, implementation continuation XX% the and year quarter, $XXX truckload of Shifting robust of Segment and continue all further quarter. Revenue the breaking a of higher peak solutions Going cost growth our needs to is the will volume third-party just The we rates or market chain while trends efficiencies, capacity our grew latter our versus timing was is in greater as the seen for our to expand achieved of gross could intensified dynamics across and our XXXX XXXX. points also grew drop basis the spot believe of That through contractual prior year-over-year. specifically which Integrated prior desire in segment, a sourcing same focusing of XXX in remains right tighten holidays. fourth quarter the congestion opportunities. even likely result quarterly

to giving solutions continue will work help In out to comments. platform. our is mission as to for our and productivity carriers top but of efficient there greater and capabilities delivering our our of of multimodal our and most drive ICS consecutive sourcing for evidenced I network functions digital This waste and we still platform our and expand well while segments America. to customers cost system has customers row, people solid the fourth efficiencies been the much will Darren. line deliver forward, great the the Going transportation effective scroll technology a for momentum freight platform our as invest remain and in drive committed over across and in to concludes see on will continue growth services by to much segments as the freight to people for our visibility while the accomplish, it carriers along we will pass on across our our closing, both North strongest JBT way, create investments and we done, the to us to that my quarter our

Darren Field

you, I comments my three items related focus Thank intermodal our morning. and business. to am good to going Brad on

support is rail meet are the onboarding of going First, I effort position our continued and conversion also and will and tremendous and I the accelerate opportunities. customers. finally, in review will to improve trailing And quarter. think the discuss services am discuss solid both fluidity investment people capacity for going capacity I to our to further for our the and in velocity we in put demand a seeing truck that we continuous us our to performance network to to

continued as that demand. fluidity to While the very temper doesn’t challenges volume remains across strong, our services intermodal our in that capacity network reflect available our demand to quarter for serve performance

for customers both the month, by chain. X% last and we provide of down providers core discussed believe Volumes volumes were equipment entire down fluidity labor the at the around supply us the quarter provide will customer and X% center rail down X% to at across and network August, in our rail our we and and has continued quarter, the availability challenges challenges locations, fluidity, the and of As capacity. around quicker in were terminals the help would July, September. additional Improvements down network combined of new containers X% particularly in in with onboarding for turns

need in equipment, last discussed to we to with encourage on of capacity. implemented equipment both and people our As our investment returns utilization support our programs additional significant quarter, customers generate we our protecting appropriate while better to

Importantly, provide results from these of programs additional from that say the this efficiencies. are designed benefit been capacity results would to mixed. that I the far program have thus gained

more locations our We other have results footprint. absolutely perspective, on provide Box simply from labor the further while deteriorated the capacity this that would been some not mixed have supporting of the believe customers, the even based quarter locations to and also in that customer prior in turns to severity I within in program move same of versus say, instances chain. for highlights customers’ more volume was we the the have improve, challenges quarter. the the I case prefer would fact quarter, across X.XX fell the X.XX supply which in the sequentially the view.

our the to and the an intermodal in continue continues the skilled equipment, as in international that labor to higher grow than and on is for chain fluidity our XXX Owning energy further trailing strong driver restrictions be intermodal service. and to market value the and us long-term and our personnel more own us prices our Intermodal’s to ability about rail particularly our to allows even that closing, intensive shipment power, market. operations supported alternative. when all-truck remains are are and continue as demand chassis to J.B. differentiated rail challenges a or highly average current In that source is in serve. continue hamper supply capacity severe around the the less optimistic We intermodal challenges solution growth combined to carbon congestion providers opportunities proposition our This driver business. with Customer plague Hunt sustainable and by congestion the view fact XX% platform including

will to meaningful the support We growth make to market. continue in investments the opportunities

savings take to by prepared order customers expect comments. to container our as for of That begin concludes meaningful bid we We us entire our up XXXX, the my delivery XX,XXX next cycle. provide early setting

Operator

the Your Instructions] [Operator of from line Jon with question first comes ISI. Chappell Evercore

Jon Chappell

the high-profile and that, handle the think volumes everyone. system are profitably? from the what question And do on you have and that Darren, more longer translates of know that your I we going made and do that and if for morning the don’t that Good you partners volumes? week, kind profitability plays announcement that if volumes? frankly, Like port of year operations capacity does in you your just gates conceivably. if How end the the I this that fluidity you. into you XX/X you’re do the with can the ship think start top if how quite the on Thank the overtime fluidity business administration finally, into layer forward. can of to you the And means costs? If open running XX/X? into of figure

Darren Field

Jon, Well, question. great

are that create demand customers, asking help We those us we growing are us. continue more continue in the to growing but capacity have us customers that be capacity help area unload fluid to to in as and for customers faster have we California, – solution Southern our a with to confident that

will equipment solution. offer to we additional we the quarter, continue onboarding for anticipate capacity also help. in We’re would our fourth participate the customers But that customers that certainly during additional as which will

receive to that’s is new have And this, of the the with to going working the of element while equipment able demand. same them. key getting to drive the customers it. we’re port So be But time, at out

that’s area, for them really important supporting that us. in really, We’re and

Operator

Citigroup. question Wetherbee Chris comes of next Your line from with the

Chris Wetherbee

to very can morning. what break strong is think base any core in go to that down the what we see a thanks. that to be quarters? potential and is just load the rate off have fluidity of underlying rate maybe you, want relative and comes that one you forward environment that next to kind building revenue you’re volume back going what a fees very, now to just the sort accessorial might of get maybe of of of I Darren, pickup. per way for hold wanted start kind several Good sort performance, network sense Hey, another the there the intermodal to of about sustainable obviously, side, utilization

Darren Field

Yes. We not remind any anticipated the And unfortunately, we’re able this. accessorial want sort going way. of we’re probably break in be to that to any to just not out going I down to commentary. entire growth list, and break

think for the going quarter that and our I was that while is strong always we cost core and pricing coverage also anticipate core into have. that pricing third were will exposure costs the we maintaining up,

more paying We’re drivers today.

hiring outsourced today. higher We’re rates at carriers

driving our down. out rail of providers utilization equipment is some And pricing in our certainly, That’s cost also the Our participate there. base.

that So point. factors we on at any probably this other have pricing, don’t those commentary are that really all and drive core

Operator

the line comes next from Research. with Scott Your of Group question Wolfe

Scott Group

Hey, thanks. Good morning.

Darren, to fair saw in get my follow-up second there, core accelerated would though pricing quarter? we just whatever I from a before the Just have it question, that is like

Darren Field

assume. It’s Yes. fair to

Scott Group

Okay.

early I about to just light at next about given least of XX,XXX So pricing. for trucking this can year? contractual just container year, how you you’re in maybe plans year your And are about companies the the talk next talking beyond pricing you count grow the mid-single-digit then environment, guess, that taking thinking

John Roberts

Okay.

achieve next is cost never of anything next pricing have we’re come to only compared decisions and us. an but a better way organization long returns focused much for continue we’re XX,XXX our base market to are the really we compared environment do kind doubt that. improve with no being will that improvements see opportunity say announced to what this Decisions would as And then just as expand the in fleet. to All to to just demand awful but today. go can earlier going are and that investments for said, as our the continue decision way of container the path if here. about off out we current to year. velocity that, probably at year velocity more into plans our we going and drive been offer the will environment to intermodal customers what’s into commentary that capacity on in relative we’re that anybody an see That’s onboard the this any set as with go available drive produce we converting can in pricing we highway early it we business Certainly, advancing to to like too think next to environment, equipment continue equipment have mean a not year can other for work lot this to frankly, the as point. the unknown before a about year, supporting is order equipment happening pricing we’ve the if always pricing, we the we that to the their that we today, customers experience fast truckload some that on surprised get place. put the of I our savings really and at on an as customer that of we of I There made is pricing I finalize

Operator

question with comes of line next Stephens. the Your Justin from Long

Justin Long

to Does additional quarters? fourth the stick taking progression the could intermodal on Any improvement on the intermodal you front with box sequential Darren, there? get some container the of your receive Thanks in update cadence terms quarter the make to last morning. of it and containers these in quarter, of some turns of deliveries. thoughts love helpful that theme. you’re then the first. number see share in I’ll to and commentary next gave tougher good of expecting And then would also, the couple you containers

John Roberts

we X,XXX had had expected X,XXX said X,XXX while comments say mark. under equipment would weeks waiting literally somewhere just between unload and end We to highlighted just on to I’d anchored X,XXX that that Okay. we onboarded. hit point, that would I have think in get we boxes X,XXX the to certainly QX, prepared and were At of we we ago the in year this that

through with there influenced So onboarding. port like that so by here, but quarter the equipment we end, this work coming challenges. work fourth our will it. certainly an let X,XXX that not year, really continue has fourth and on in I’ll X,XXX and year, we the continue equipment, that boxes onboarding immune feel will of new to feel and Angeles good how the improved do The Los end to the is ability you to to that that math we get cadence about We to quarter. But we the approach of the we’re to

as focusing far box the only it. we’re are our somewhat improve influencing would sequential not influencer. related slower turn to moving that great to that than that cadence, question customers are on actions how their Certainly, every a number our with single As providers rail are day we And and anticipated. have that’s they

that said you getting can’t end I imagine QX worse. did. So this at would know have what, I at it the And point, of it

this turns to the a highlight number. that thoughts to with And time going forward. you on conversation want to that and customers any we’re coming won’t just improve a on to months. every moving end cautious be give two anticipate over month our we’re chasing of working any I’m So single day that kind I of really lot that

Operator

with of the Deutsche question Bank. next line Mehrotra Your Amit from comes

Amit Mehrotra

is to demand would maybe like liner bigger boxes and seeing I there wondering just it operator. side Hi, really am we rates higher guess, question kind beyond growth and it level on of J.B. are the imagine, ports. intermodal are I sure transloading. is have this beyond you’re real that Hunt, seeing what I if do trucking Darren, international opportunity year probably, a their volume a some and inland cycle release companies the a opportunity not if international that the in drive pent-up transloading next and it’s seems just but fuel for improvement. the real for prices a to of of Thanks, I less on of volume willing had if from move any I’m could

Darren Field

good I thoughts, I think question. Shelley on All both will Sure. this and comment

conversion various growth in our XX-foot For was intermodal highway a to empties for and represent of massive intermodal California time, felt get importing benefit equipment shippers certainly, the have we through container back a in the to But flows domestic that Southern international has flow long to opportunity. that in Asia, certainly does been and ports amounts first. of to order that the target a an

solution. I have of rail the the customers interior that various a the at looking lot with congestion for country terminals conversations think of are that international that driven throughout as

transload our Shelley, with have and that, years many know, primary grown don’t to growth and you on that. have comment. focus years many, now is for that a plan may anticipate capitalize in I for would coming We absolutely a the

Shelley Simpson

Yes.

areas. So intermodal grow we to in ability at our two look

sure transloading So for opportunity. be would an

container. the think about and driver give and so you our we If around critical the control the operations components: customers can at is because advantages the the chassis, railroads really the three we really our

to very very a different international us today what and create is to an constrained about allows than ability process fluid differently are from think when perspective. network And destination happens railroads there. at that Our the

a own The moves did that second lane part to over-the-road to which intermodal my conversions see we I any one space. do in that moving today, but about strategy is our rail shipments that of on highway our are in of opening remarks, that high in percentage talk intentional

can our through we And and platform, should digital be able customers information so J.B. access talk we’re multimodal gaining converting. Hunt and to what to our XXX to freight about know

come So on that’s quarter, peak be a the and big very through us to we our successful. focused fourth helping this for customers rest be of as going focus

intermodal. moving that with that’s move know to working the highway we price determine to are also on today the closely into them We

fluidity So I be quality of can would perspective you, what to tell high the turning earlier customers being I those revenue. able would on XX,XXX I on And in have we do equipment. would in to question really think, add around our good from a dependent what at load those boxes confidence

Operator

Your next question Fargo. line of the Poliniak Allison with from comes Wells

Allison Poliniak

Hi, morning. good

that be Or and elevated? same and guess to QX issue. quantify new start stays cost comments, Dedicated I the color FMS backlog to any turn from should that Is to looking inflation? a as at And would want impact has we’re assume business then helpful? we adds your Just does Just there the here? to the versus the way intensify it negative

Nick Hobbs

core very would of we we Yes. range guidance. the call that clearly, being operating at I our margin when see just look with our range, in say we what business, acceptable within our our –

that So and at that. out look internally we break

as are our is of rates. they certain to coming it We measure out are then startup hurdle those start-ups So very looking very well. getting good. operating And

more and pleased been just very would then little I backlog pricing historically. the probably performing. is And backlog it we’re the So with a how yes, from say, the that’s than has

still the There still on demand for side, Mile So our very, Dedicated our lot then full Final is and the very is got Final the the smaller side. services of Mile And base. demand on pipeline a and it’s there. a is on

dramatically start-ups just lot the contractor as well. a we’re so And seeing up impacting of rates that. Because really rates are are up and labor warehouse

costs So in we’re of getting there. a lot

chain some we’re costs But demand one So our impact the is well. for Final some But issues, is we’ve supply our labor say, there would I the still got that Mile, number as services startups. on addressing.

Operator

comes line next Stanley. with Morgan the Your Ravi of from Shanker question

Ravi Shanker

think before do we the a of that do guys launch what’s that drop just next into that launch We do into everyone. the think If had XQ? the there I problem. or on you Google the recognize think was morning how about of costs had? of the that and I on But update Thanks. problems, do for on kind you. suppose And ICS we going think that last is still Dedicated in that end a comment, is that about year, maybe the on mean the into how your how high-quality I product track Good partnership Thank can Shelley, scaling side, year? XQ? also kind about a while now. you we for this going follow-up high-quality

Nick Hobbs

in two there to questions good in get way a That’s one breath, I guess.

just own On that a going see say pent with still we’re while. that before for to the our with continue start-ups, to just the going dedicated feel to side, up, continue demand forward moving supply pressure we’re our and startups to I would is

Shelley Simpson

second have on would and confident looking the one, big working feel but along. a that’s we into. huge idea track projects Google good team our really that the a bigger focus Strategic We further Alliance, brought and is what And two on have in we our to that on And is we’ve still do say the is been I one then shape. timing-wise first about of that discussion, are of the

aspirational have We’re co-innovation yet would the top not ready to projects, that on in more but we be say do that of idea working release segment. whether a that we’re on a XXXX first two

Operator

with the Our next line of Jordan comes from Alliger question Sachs. Goldman

Jordan Alliger

morning. Hi, Yes.

to Just terms the intermodal supply maybe comments of margin I’m intensifying congestion offer? the nice together, in the had in step But situation? up putting can we how about number assess in it timing given kind a your of quarter. leasing. thinking sure you’re around I bottlenecks, difficult the supply benchmark quarter, Or in of the that chain a channel all not XX.X% XXXX is And heard fourth

Darren Field

targets we think really of first Well, in margin commentary, to our can don’t and anything think that call we’ve back the long-term XX XX beyond I quarter else. April, I at talked highlight about

now is in the right of the drive that to and equipment, factors intermodal. and growth achieve our return decisions achieve on mission are investment our Our those

Jordan Alliger

about you I the situation what costs any chain year, an – mean, on Just do level going alleviation following then? expect into supply around the though high next

Darren Field

that commonsense time people are that in the realize come congestion I we all there and think will a eases.

because ‘XX, But somebody short to loosen be at have that we’re up will the will not are bit. me surprised. a to the see. same We we of to predicting in of like wait and told to you, things have time, But very no when I’m going going happen stop idea. if second going half

Operator

of Your Susquehanna. next from Bascome the comes question line with Majors

Bascome Majors

board your for from is taking your down my permanent permanent in X, freight when question. X, management in you chain? sense decisions into And and capitalize things and on XX to Thanks are chain Yes. supply manage down just how in not Thanks. changing years supply road? but or with procure disruption, the city want senior surge year, are sit they months to their for at making what nature how the this X customers, level you that what next

Shelley Simpson

if anybody has try to anything to take add. will I that

side, There cost events in permanent chain that driving not the where much much the it uncertainty, or it’s shipping too I should or think long-term position whether be from where is is which unplanned our customers are from hopeful unplanned that how a is today. this operating even to. supply too shipping is on is going

general. want without is we have with are think seeing there efficiency. we COVID, deliveries more I can different see be we hope of we as that to do multitude theme to inflationary in do into good our could think can segments. we we moved So, not asking accelerate have in we do is they across with do our to we our something tell the leaning That’s to are solutions, that, rolled overall. before. gains providers February customers consider theme all are customers. chain. I XXXX. into idea done are in supply our better so share thing budgets And that something customers and to can a a that been we help Accelerate you have The across on our customers continued us five what customers market things total more them a I working seeing on looking Certainly, are was of and for Summit, create our not first say It last out meet Sales The their would we sets,

best being to are for we answers so And them. solving for open

lot labor, We also on a just they shipment but move that for in helps we in as locations, us, but not They our how are of personnel. agnostic to just need for office a a to as constrained their create so are the market DC differentiation help.

to it across the we be customers comes having take I a so our our Have our able be are efficient would board. chain. and to teams, to market right an technology, are when that And leading we into lot engineering going continue to more supply share help of confidence say,

Nick Hobbs

they just as would trying Shelley which what that control us, we are can, – add said. is take the everything to really I seeing into leans customers of

to into for the So, help experience side there, and on helping them the go ships. own they then their them the the ports [indiscernible] They are then us side us they wanting are fleet. with more are are intermodal getting leasing transload ships. Dedicated with to They control in on

and supply chain So, well really it’s of their that control customers with fits about gaining us. very

Brad Hicks

it our that of the how is way supply and our pressure I that last its of talented remain proud employees remarkably say, thing teams have constrain puts choppy Hicks, is stress group. our waters. helped on lot into The navigate Brad customers disruption recognizing this we And plans a would and chain those

our And found so team there of way just and on to is a lot a and environment our in customers. behalf of has pressure thrive that stress,

John Roberts

frankly demands to business. And expect just the is to filter visibility, we we as because me make and grow all P&Ls, which continue we is with Roberts Let approval to But have. returns we on the this the is on vital investments that returns of finish our that will the of the owners Board, and this have if thought expect and that reinvest. we those of getting are last needs to the we hit business do used John that step investments performance to customers are invested capital to our kind and the do – on question the return achieve we these

Operator

Your next question Wadewitz comes from the with man Tom of UBS.

Tom Wadewitz

Yes. Good morning.

you just drayage. will to labor could if markets. about then if component, do constraint. you that warehouse, I intermodal like think of that impact to what that on labor wanted is about elements, broader effect, do – talked some of so, think that labor you own a if terminals, being whether availability rail, of related of quarters does your that if in about I look mandates? people particular labor, the what the guess labor labor, a And am see you. some you I a thoughts into labor the paying you about offer And optimistic function it goes increase? thinking how I So, And you I And wonder side? kind Are Thank particular. if just mean more? seems out comment intermodal it’s you could on couple a vaccine

Darren Field

Okay.

Nick and some Let we as that labor around thoughts me well other have then and on availability vaccine take comment driver first, will thoughts. and mandates and

they it’s to think we rail they drivers our an at transportation for we that. and to and rapid recruiting difficult. intermodal in providers. a at running, that that eyes actions addition end labor. I truck be to have. pace that And organization on to been I bottleneck the extremely is for there the the are So, providers – of get certainly, difficult compete their that’s most where demand system at don’t in we are to we want are rest that it’s thing not terminals, and rail in means customer that been qualified our believe day, is retain are are think it And the that The to workers But warehouse inside continues is unload our the facing come the place counter and the immune us the – all never drivers. today is than costs customers’ attract find I a challenge difficult ability challenging. has It’s certainly more very, to rail the have labor, simply to and I for providers that. very it significant to contract and the of have

customers chains a may situation. what efficiently it. ask achieve of which our line line to don’t we have to kind will seems see And their we more? about is goals you what to more improvements so question have future sight you labor I any of sight dramatic the know to that in we have attack logical to and a us have real their supply But do process this they when of that some in that that changes. Nick,

Nick Hobbs

the a – in the that testing, bureaucracy. drivers. board, it. There I working I becomes then will its if all will helping we see just supply third-parties an so will mandate on situation some on OSHA, be Biden of see But to with that. continuing on are compliant the follow confusion More we chain lot would be and it’s be will situation, wages. causing with throughout more. across vaccine compliant be tremendous gets we And that say time, the is compliant labor even going pressure that the chain. really it and the I the we tax, or don’t supply the much be Yes. order it’s quite with maintenance we that on process. with it It or than through for other

on make So, but it we industry, will will impact some have it the through.

Operator

comes Ken Your America. Bank from next of question line with Hoexter of the

Ken Hoexter

John and on team the the results operating Good congrats in quarter. Great. morning. great tough

the on statement last clarify Just there. to

you there demand Any if on move across break, underlying we on aside intermodal. shift the shift chain, what see perspective or the your would not peak benefit right? then Brad a like be So, obviously, chain, from It’s you increased. seeing or volumes just we have not are demand any in Thanks. the Shelley, the great? of far past from Nick, or give as thoughts underlying so from supply outside down I increased is supply wages thoughts on congestion, of any some saw peak Darren quick to But guess

Shelley Simpson

Ken those thank you for comments.

that as are are peak and make empty, at from those us we Many into to all next for go somewhat quarter December. and surprised if quarter hearing in directly is the replenishment even into first a our as know and well of more you peak of year. store. and the of today, shelf will in I pushing are think And second longer November that customers happening what’s to as the they

believe been we in inventory maybe right shelves environment it will that has places time. be same do than in to more So, in a their get first really typical trying quarter and unusually the the stronger the

say in retailers, budget about optimistic, of from now. do would I But us is that feel the comment, really customers have total, half there. are would feel be to means I like more a yes, the more to of season, here don’t need have which right won’t season. been In second those that And strong last people on the be cards sales for there Christmas are Christmas well. good. asking in to us January because this And products asking replenish, leaning more perspective obviously, still year that then are So, the will trying gift and demand demand, they great think their I if as right through comments be process and goods because this really any shelves more retail shopping we and

Operator

KeyBanc Markets. Capital question comes of Todd Fowler the Your from next with line

Todd Fowler

Thanks and Great. morning. good

So also on that point. know in we that, to market. of been half in there Brad, in I that has the kind the hit out lot I know the the second of when marker has this a cross kind I profitability ICS. could step-up of ask wanted a inflection year, of But there been was brokerage currents

is we look of to XXXX, as And where you year also in a X%? to little that a talk improvement can about the So, in the ICS be targeted range X% bit profitability? margin can

Brad Hicks

Todd. Thanks, Yes.

of trend, tremendous last QX. unknowns to discussed We have our of put morning for and over as scale. we they really provide the as customers as us are time But segments leaning continue strategy our the this technology continue and even or look on with and our solutions our we as our I all are that ICS. several move in And back need, Obviously, we forward answer, think quarters, there successful allow in we have remain J.B. amount the company at you by have to that continued intermodal Hunt the supportive length progress our to investments people and that in efficient whether on that’s being highway products are that are we XXXbox, well very been in the a on we able optimistic to that our customers. able to into of will whether in made most being in them that’s and

with the forward continue no as I guess very really a to take remain so pleased the scale leverage we platform. progress reason and to we create won’t steps different we that see said And way,

Shelley Simpson

empty have important Shipper I shelves, platform. looking do that. start you of will, to enough good carriers add is Scale XXX. We with that that at side if you the and have and try freight. coming our the first Carrier looking we And in for then percentage we have we so a might further believe shelves on launched lot platform are of a into also did our to We because products. don’t XXX

able platform focused to that so And making destination carriers search location we product the our sure be what is are want very on in, they at that for and time. get they the for come right the need to

high We confidence with in have actually seeing the we continuing very amount and we records are environment. that time this different been in carriers constrained the measurements even break to of have that

a We are mode new in with carriers.

growth most for component to us go is getting the as in revenue but only that’s into a line for way, important our for primarily customers side to the well. bottom different not us profitability but business, So, scaling allowing demand back our in

Operator

the comes question of Ossenbeck line JPMorgan. Your from next with Brian

Brian Ossenbeck

last When a spot quarters, quarter. more the had and Hi. volume question. you at back that contract thought. of Good three the Brad, train maybe morning look last taking and Shelley on of has sort thanks follow-up this for than shifted that ICS

look there So, about play, mentioned in against is Thank top to will productivity help the the for XXX continue touch a balancing in opportunity are thinking volatile on you line you efforts period? this there expectations share? do the then at you you maybe things really that bit more think which was more when on continued can you. like flat taking a of how elaborate grow XXX, this in are mix or you this so automation, is in productivity quarter-over-quarter And least can just

Brad Hicks

Brian, we saw come going come that we we back that and release. season And maintaining And I QX win. then I about customers have talked didn’t a we grow back at us. started the to really XXXX. see And were to strategy of to QX you If into started levels our in through Yes. end cost QX. we bid the we will into QX we take And that the start. momentarily,

and would Obviously, kicked get successful And maybe from anticipate for year, forward so standpoint to about season be historical weeks wanting balanced bit this more little to continue from just a we published and a bid ago. X.X a move perspective. off

create freight the opportunities. against And so in balance to to we fits, continue spot will published that see but our it’s expectation certainly to grow where

that in are patterns really and disruption goes that spoke to where Shelley different. of Some the freight of demands the earlier call, back different freight are

And we forward, as is balance. published elongated some think look to moving I But needs. do you spot believe to of more see that contributing about will

Shelley Simpson

to down it’s that the growing And a customers the answer I about, been total and add our and talking it see per solution would top prudent for us We customers, you just Brian, do contracted disciplined of platform of turning that’s in have of there you to Brad or as in shipments see platform. committed outside more contract of our our scaling ourselves day accept about. better every customers our spot have very order the spot on that test not are for that to than we market, believe what part that capacity. that, our reason better is customer are and in a we to we well thousands And been creating talked asking a

question and to think go J.B. XXX that carriers I of shippers, a that. that’s helps really ecosystem connect I around your our to Hunt think full our If our has important. we So, automation, people

across automation intended our is intended people. groups those platform. in the current is interconnected So, to three that Their for automation are

and automation will ideas shippers both for help productive long-term also people really internally other our Shipper that’s more for and carriers Carrier that our so for system. them and XXX XXX as have over And new our well. be But connecting we the

Brad Delco

Hey, Catherine, one we more have time for question.

Operator

Brandon And the comes with from line last of Oglenski our question Barclays.

Brandon Oglenski

in Hey guys the sneaking at me for and thanks end.

I do rates, lot the customers accretive flipside the to like how the at I much seeing are questions it much So, side. going mean I cost this to guess on that’s will so of getting and possible revenue see year, be encapsulate we or new we we the think inflation negative are And how I try of we business. get this side your and just And a transitory should much be even maybe on doing cost could the next it mean if efficiencies thinking up I is the cost of supply is but margins? opens chain to here.

Shelley Simpson

equipment and a are We we think can of total. today said that static to a better, more is But in driver customers down cost costs I great don’t that down. that question. our wages across many get this happening their taking not efficient costs underlying of certainly stay. I move experiencing chain see the environment to budget all own will in drivers, hope goods. or unplanned going see segments so that our wages way There taking customers the the to be supply their for more that the are today in price I really their that that’s long-term a I in budget.

Our is cheaper. not any getting equipment

in long-term. that addition, capacity over them So, become base the is our are efficient, predictable will areas way into serve that shipments really much can and cost more we so cost our new of continue, out high taking help more completely customers those servicing is be going norm. moving segment are But two to in are the costs question to the

Brad Delco

Okay. you, Yes. Thank Catherine.

to John I comments. some wanted out close with think

John Roberts

a we touch great that going on is the the I I opportunities in and you just to setup think but Hunt ladies present good for say Dedicated business. job at guys did thought will a did to sometimes that [ph] are that We this get information close good I growth happening cover, Yes. of have forward. up us around and J.B. work much table. get the too to

we of just I much I to in think but didn’t highway have but not are services Mile, dynamics we across Final talk we short-term then think the last And start continue some to our see that definitely industry-leading business, this there. board, time. about value disruptive creating least, the

comprehensive a want agnostic I approach we think how help. make an the it as you is point view can with of I chain management supply to see

present value We will to best our that customers. the can help we

feel than well I and positioned. and And to company see connect to the starting so I we able adjust like And quickly the past. much that is team today the the is are we have think in how parts how more pivot

are done team. about and course proud just that am be Of there. is ‘XX, take work of to I we to through a of I talking there want this super lot

nice just job. sometimes deserves I we this this. say We that have – to take got close nice a morning, deep just ourselves sometimes think And with that team not I hard the we work breath hey, ourselves, do. And and only this job. kept And need in up we it’s will to

We are lot a We about labor. working the side. hard on heard people

We they J.B. us team. member ability our business. teams, single us I well are deeply stabilize right They going keep resources that that and and now the every executive is at the us as Hunt we thankful people are And of to are our teams, things human to underway. and keep invested to level moving, in customers have benefits mentioned, help our compensation serve in

And are to so you. call we Catherine, the being appreciative. Thank on for you today. back

Operator

concludes conference thank your participation. you call. We Ladies gentlemen, for this and today’s

disconnect. may You now

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