1 00:00:07,840 --> 00:00:10,639 Speaker 1: Hi everyone, this is Lee Claska when We're Talking Transports. 2 00:00:10,680 --> 00:00:14,360 Speaker 1: Welcome to the Bloomberg Intelligence Talking Transports podcast. I'm your host, 3 00:00:14,640 --> 00:00:19,400 Speaker 1: Lee Klasgow, Senior Freight transportation and logistics analysts at Bloomberg Intelligence, 4 00:00:19,640 --> 00:00:22,760 Speaker 1: Bloomberg's in house research on of almost five hundred analysts 5 00:00:22,760 --> 00:00:25,799 Speaker 1: and strategists around the globe. Before diving in a little 6 00:00:25,800 --> 00:00:29,800 Speaker 1: public service announcement, your support is instrumental to keep bringing 7 00:00:29,840 --> 00:00:33,400 Speaker 1: great guests and conversations to you, our listeners, and we 8 00:00:33,440 --> 00:00:36,360 Speaker 1: need your support. So please, if you enjoy this podcast, 9 00:00:36,640 --> 00:00:38,960 Speaker 1: share it, like it and leave a comment. Also, if 10 00:00:39,000 --> 00:00:41,160 Speaker 1: you have any ideas for future episodes or just want 11 00:00:41,200 --> 00:00:44,560 Speaker 1: to talk transports, please hit me up on the Bloomberg terminal, 12 00:00:44,600 --> 00:00:47,760 Speaker 1: on LinkedIn or on Twitter at Logistics Lead. Now onto 13 00:00:47,800 --> 00:00:50,400 Speaker 1: our episode I'm very excited to have with us today. 14 00:00:50,560 --> 00:00:54,480 Speaker 1: Robbie Shanker Back onto the podcast. Robbie is a managing 15 00:00:54,520 --> 00:00:57,880 Speaker 1: director and lead analyst for North American Freight transportation and 16 00:00:57,960 --> 00:01:01,280 Speaker 1: Airlines for Morgan Stanley. He's been with Morgan Stanley for 17 00:01:01,320 --> 00:01:05,080 Speaker 1: over twenty years and has been covering transports since twenty sixteen. 18 00:01:05,600 --> 00:01:09,720 Speaker 1: Prior to covering transports, Robbie led coverage of North American Autos. 19 00:01:09,959 --> 00:01:12,319 Speaker 1: Welcome back to the podcast, Robbie. 20 00:01:12,520 --> 00:01:14,480 Speaker 2: Thanksuy, Always a pleasure to be here. 21 00:01:15,080 --> 00:01:18,800 Speaker 1: And I want to congratulate you. You are the first 22 00:01:18,800 --> 00:01:22,160 Speaker 1: guest to be on the Talking Transport podcast three times, 23 00:01:22,160 --> 00:01:24,880 Speaker 1: so I know that that's a big honor for you. 24 00:01:25,640 --> 00:01:27,080 Speaker 2: It is absolutely a big honor for me. 25 00:01:27,120 --> 00:01:29,120 Speaker 3: I don't know if I get a T shirt, but 26 00:01:29,200 --> 00:01:30,640 Speaker 3: if not, I'll make one for myself. 27 00:01:31,040 --> 00:01:34,480 Speaker 1: Okay, well, we'll send you a pad with Bloomberg on it. 28 00:01:36,040 --> 00:01:38,000 Speaker 1: So I wanted to have you on again because you 29 00:01:38,000 --> 00:01:41,120 Speaker 1: know we're coming up on the second quarter earning season. 30 00:01:41,520 --> 00:01:43,800 Speaker 1: Obviously it's a busy time for everybody trying to figure 31 00:01:43,800 --> 00:01:46,520 Speaker 1: out what's going on. What major trends are you looking 32 00:01:47,000 --> 00:01:49,080 Speaker 1: at going into two Q earning season. 33 00:01:50,240 --> 00:01:53,640 Speaker 3: Yeah, I think we continue to remain on cycle watch. 34 00:01:54,080 --> 00:01:58,080 Speaker 3: I think we have been for over three years now. 35 00:01:58,640 --> 00:02:02,760 Speaker 3: But what at this time last year was a will 36 00:02:02,840 --> 00:02:06,560 Speaker 3: it want it on upcycle versus down cycle is more 37 00:02:06,640 --> 00:02:13,079 Speaker 3: of a post tariff implications type cycle watch. Recall that 38 00:02:13,320 --> 00:02:16,200 Speaker 3: I think when I was on your show Lasting in January, 39 00:02:16,919 --> 00:02:18,800 Speaker 3: I was talking about a tale of two. 40 00:02:18,639 --> 00:02:20,920 Speaker 2: Halves in twenty twenty five, where we would. 41 00:02:21,280 --> 00:02:26,120 Speaker 3: See a robust first half as we restocked ahead of 42 00:02:26,480 --> 00:02:30,120 Speaker 3: tariff deadlines in the second half of the year. Clearly 43 00:02:30,840 --> 00:02:34,280 Speaker 3: that's not what happened. We were taken by surprise by 44 00:02:34,320 --> 00:02:37,400 Speaker 3: the timing, the magnitude, and the volatility of the tariff 45 00:02:37,400 --> 00:02:41,880 Speaker 3: announcements and that has led to a much choppier first 46 00:02:41,919 --> 00:02:45,600 Speaker 3: half than we had expected. But with the current ninety 47 00:02:45,680 --> 00:02:50,840 Speaker 3: day tariff window, we have seen an uptick in activity 48 00:02:51,040 --> 00:02:54,240 Speaker 3: in the last month or so, whether it's our TLFi 49 00:02:54,280 --> 00:02:58,120 Speaker 3: index or trucks pot RAITs, and the question is how 50 00:02:58,160 --> 00:03:01,840 Speaker 3: long will that sustain. We'll be see a second surge 51 00:03:02,000 --> 00:03:04,919 Speaker 3: towards the end of the second half of the second quarter, 52 00:03:05,639 --> 00:03:09,000 Speaker 3: and will that continue beyond the ninety day window or 53 00:03:09,040 --> 00:03:12,959 Speaker 3: will we see a cliff post that ninety first day. 54 00:03:13,200 --> 00:03:14,840 Speaker 3: I think these are the debates that are out there 55 00:03:14,919 --> 00:03:18,320 Speaker 3: right now, and obviously we're going to be we continue 56 00:03:18,360 --> 00:03:22,280 Speaker 3: to track broad macro geopolitical headlines as well. 57 00:03:23,360 --> 00:03:26,280 Speaker 1: So obviously there's a lot of uncertainty because the geopolitical 58 00:03:26,360 --> 00:03:31,480 Speaker 1: risks and effects on the freight markets. So like, are 59 00:03:31,560 --> 00:03:34,360 Speaker 1: you bullish on any sub segments because they've been really 60 00:03:34,400 --> 00:03:37,600 Speaker 1: you know, underperforming the broader markets, Whether if you're looking 61 00:03:37,640 --> 00:03:42,080 Speaker 1: at the LTL Space, truckload space parcel carriers. The only 62 00:03:42,120 --> 00:03:44,880 Speaker 1: ones that really been outperforming a little bit have been 63 00:03:44,960 --> 00:03:46,920 Speaker 1: the rails. But that's just just barely. 64 00:03:48,440 --> 00:03:51,080 Speaker 2: I think that's fair. I think for those who have 65 00:03:51,160 --> 00:03:52,440 Speaker 2: been following my research over. 66 00:03:52,360 --> 00:03:56,480 Speaker 3: The years, I'm generally a glass holf full guy, and 67 00:03:56,520 --> 00:03:57,600 Speaker 3: I'm generally a. 68 00:03:57,640 --> 00:03:58,640 Speaker 2: High conviction guy. 69 00:03:59,480 --> 00:04:02,800 Speaker 3: But it's very hard to have conviction in this kind 70 00:04:02,840 --> 00:04:09,440 Speaker 3: of environment, with constantly changing headlines and honestly the rules 71 00:04:09,440 --> 00:04:12,640 Speaker 3: of the game constantly changing. And if it is this 72 00:04:12,800 --> 00:04:16,600 Speaker 3: hard for me sitting here on Wall Street, can imagine 73 00:04:16,960 --> 00:04:21,640 Speaker 3: the average CFO or logistics manager out there how they're 74 00:04:21,680 --> 00:04:27,400 Speaker 3: going to be making even short term inventory management decisions, 75 00:04:28,120 --> 00:04:32,960 Speaker 3: let alone longer term strategic decisions on near sharing or 76 00:04:33,000 --> 00:04:33,640 Speaker 3: anything else. 77 00:04:34,640 --> 00:04:36,640 Speaker 2: So in this world of kind of. 78 00:04:36,560 --> 00:04:40,960 Speaker 3: Extreme volatility, I continue to believe that we will be 79 00:04:41,120 --> 00:04:44,479 Speaker 3: set up for a reasonably robust. 80 00:04:44,080 --> 00:04:45,400 Speaker 2: Second half of the year. 81 00:04:46,120 --> 00:04:49,200 Speaker 3: Now, all bets are off if the consumer slips into 82 00:04:49,240 --> 00:04:52,839 Speaker 3: a recession. And there are some very smart economists and 83 00:04:52,880 --> 00:04:55,640 Speaker 3: others out there who say that we have not yet 84 00:04:56,200 --> 00:04:59,320 Speaker 3: felt the impact of tariffs on the consumer, and that 85 00:04:59,400 --> 00:05:02,479 Speaker 3: happens in the back half of the year. So if 86 00:05:02,600 --> 00:05:05,520 Speaker 3: you are going to see the first broad based consumer 87 00:05:05,560 --> 00:05:07,920 Speaker 3: recession we've had since two thousand and eight. It's hard 88 00:05:07,920 --> 00:05:11,960 Speaker 3: to be bullish anything, but in all but that scenario, 89 00:05:12,480 --> 00:05:16,120 Speaker 3: I think you can be bullish select parts of the 90 00:05:16,120 --> 00:05:20,159 Speaker 3: transportation space. I think pretty much all of trucking, both 91 00:05:20,279 --> 00:05:25,400 Speaker 3: TL and LTL, but primarily TL I think will lead 92 00:05:25,560 --> 00:05:29,119 Speaker 3: us into that restock up cycle, especially if it's driven 93 00:05:29,120 --> 00:05:32,039 Speaker 3: by the consumer side. LTL will follow when it spreads 94 00:05:32,040 --> 00:05:35,240 Speaker 3: into the industrial and markets. We continue to like the 95 00:05:35,320 --> 00:05:40,520 Speaker 3: Canadian railroads as the best rail growth stories out there. 96 00:05:41,200 --> 00:05:46,120 Speaker 3: We are neutral with a cautious bent on the US rails, 97 00:05:46,640 --> 00:05:49,440 Speaker 3: and some of that is also reflecting the fact that 98 00:05:49,480 --> 00:05:53,960 Speaker 3: the market appears to have kind of founded defensive hideout 99 00:05:53,960 --> 00:05:56,279 Speaker 3: and the US rails yere to day looking at the 100 00:05:56,320 --> 00:05:59,839 Speaker 3: relative stock performance, and we continue to remain structurally bear 101 00:06:00,839 --> 00:06:05,640 Speaker 3: the intermodal companies, the freight forwarders and brokers, as well 102 00:06:05,640 --> 00:06:08,920 Speaker 3: as the parcels. So I think if you think there's 103 00:06:08,960 --> 00:06:13,200 Speaker 3: going to be a fairly robust back half driven by 104 00:06:13,279 --> 00:06:15,680 Speaker 3: consumer strengths, you should be long trucking. 105 00:06:16,040 --> 00:06:19,480 Speaker 1: It's interesting, so you're you're pretty optimistic on the second 106 00:06:19,480 --> 00:06:22,000 Speaker 1: half in terms of demand, and I guess that you 107 00:06:22,040 --> 00:06:24,320 Speaker 1: think that rates are going to go higher. So for 108 00:06:24,400 --> 00:06:27,719 Speaker 1: the truckload carries, what are you modeling for rates to 109 00:06:27,800 --> 00:06:28,799 Speaker 1: do in the second half. 110 00:06:29,640 --> 00:06:34,000 Speaker 3: Look, we've already seen spot rates up about eight percent 111 00:06:34,960 --> 00:06:37,640 Speaker 3: in a month in the past month, and I think 112 00:06:37,720 --> 00:06:42,200 Speaker 3: there are some indications in the markets preparing for a 113 00:06:42,320 --> 00:06:45,479 Speaker 3: pretty robust July and August as well, which would be 114 00:06:45,600 --> 00:06:49,360 Speaker 3: kind of countersignical. But obviously the cycle and seasonality does 115 00:06:49,400 --> 00:06:52,800 Speaker 3: not matter in the environment we are in right now, 116 00:06:53,440 --> 00:06:58,640 Speaker 3: and so our cure model continues to expect a double 117 00:06:58,680 --> 00:07:03,160 Speaker 3: digit increase in sport rates over the next six months. 118 00:07:03,720 --> 00:07:08,839 Speaker 3: And it's interesting that even in this extremely choppy environment, 119 00:07:09,760 --> 00:07:13,640 Speaker 3: the tls appear to have got low single digits, if 120 00:07:13,680 --> 00:07:15,680 Speaker 3: not mid single digit rate increases to. 121 00:07:15,680 --> 00:07:16,680 Speaker 2: The first half of the year. 122 00:07:17,280 --> 00:07:20,280 Speaker 3: I say that's actually a better outcome than people were thinking, 123 00:07:21,000 --> 00:07:23,920 Speaker 3: you know, probably twelve months ago, maybe even nine months ago. 124 00:07:24,480 --> 00:07:28,040 Speaker 3: And I think that can push into high single digits 125 00:07:28,400 --> 00:07:33,679 Speaker 3: when you start the first phases of twenty twenty six 126 00:07:33,840 --> 00:07:37,920 Speaker 3: mid season towards the back half of the year. So 127 00:07:38,680 --> 00:07:41,360 Speaker 3: I think if you are looking for an up cycle, 128 00:07:41,520 --> 00:07:44,240 Speaker 3: it's more of a twenty twenty six story at this point. 129 00:07:44,960 --> 00:07:48,679 Speaker 3: And I think if everything goes to plan, you should 130 00:07:48,680 --> 00:07:53,000 Speaker 3: be looking for sport rates comfortably double digits, if not 131 00:07:53,040 --> 00:07:57,760 Speaker 3: twenty percent up from here, and contract rates. 132 00:07:57,840 --> 00:07:59,360 Speaker 2: Up mid to high single digits. 133 00:07:59,520 --> 00:08:02,360 Speaker 3: Okay, this is especially true if you see some kind 134 00:08:02,400 --> 00:08:04,440 Speaker 3: of supply side catalyst, which you might get into in 135 00:08:04,440 --> 00:08:07,680 Speaker 3: a second, but you know, if whether it's the English 136 00:08:07,800 --> 00:08:11,560 Speaker 3: enforcement or other issues, if you see a kind of 137 00:08:11,920 --> 00:08:15,920 Speaker 3: other supply side catalyst, that could squeeze the cycle even 138 00:08:15,920 --> 00:08:16,880 Speaker 3: more so. 139 00:08:16,920 --> 00:08:20,120 Speaker 1: From a demand standpoint. So you're so like I've been, like, 140 00:08:20,280 --> 00:08:22,320 Speaker 1: you know, hearing from a lot of folks that you know, 141 00:08:22,520 --> 00:08:26,200 Speaker 1: maybe this peak season and back to school season might 142 00:08:26,320 --> 00:08:29,240 Speaker 1: like merge, we might have more of a plateau. But 143 00:08:29,400 --> 00:08:32,319 Speaker 1: after that plateau, because people are trying to get ahead 144 00:08:32,400 --> 00:08:36,439 Speaker 1: of you know, the ninety day tariff window, isn't there 145 00:08:36,480 --> 00:08:38,600 Speaker 1: just going to be another air pocket that that we're 146 00:08:38,600 --> 00:08:40,560 Speaker 1: going to have to deal with? Or you think that 147 00:08:40,960 --> 00:08:43,600 Speaker 1: the demand is going to be more on the industrial 148 00:08:43,679 --> 00:08:48,280 Speaker 1: side of of the market, which has been very slow and. 149 00:08:49,840 --> 00:08:54,559 Speaker 4: Relatively speaking, Yeah, look, I think that's a very plausible 150 00:08:54,600 --> 00:08:58,160 Speaker 4: scenario that we have a pretty decently strong two Q 151 00:08:58,520 --> 00:09:02,600 Speaker 4: and then it just falls off a cliff because we 152 00:09:02,840 --> 00:09:06,680 Speaker 4: just pulled forward all our demand for a peak season, 153 00:09:06,720 --> 00:09:11,360 Speaker 4: and we don't really have any major holiday related restocking. 154 00:09:12,160 --> 00:09:14,960 Speaker 4: Even if we actually do have a pretty decent holiday season, 155 00:09:15,520 --> 00:09:17,720 Speaker 4: that is a scenario, and that is a risk. 156 00:09:18,480 --> 00:09:22,280 Speaker 3: But my view is that I don't think two Q 157 00:09:22,520 --> 00:09:28,280 Speaker 3: has been nearly as strong or consistent as bran broad 158 00:09:28,360 --> 00:09:32,560 Speaker 3: based as it should have been. If you had seen 159 00:09:33,320 --> 00:09:38,600 Speaker 3: again broad based restalking across even in the entire consumer environment, 160 00:09:38,600 --> 00:09:40,440 Speaker 3: if it hadn't spread to industrials, I think you'd have 161 00:09:40,440 --> 00:09:42,720 Speaker 3: seen a much stronger two Q than you actually did. 162 00:09:43,559 --> 00:09:47,720 Speaker 3: We wrote a note, say a titled the window of 163 00:09:47,800 --> 00:09:54,199 Speaker 3: opportunity is now the day of the ninety day tariff suspension, 164 00:09:55,080 --> 00:09:59,360 Speaker 3: and that note kind of discussed a scenario where like 165 00:09:59,559 --> 00:10:04,160 Speaker 3: LU could broken supply chains if everybody tried to build 166 00:10:04,240 --> 00:10:09,840 Speaker 3: like a year or multiple years of inventory in nineteen days. 167 00:10:09,880 --> 00:10:12,760 Speaker 2: In that scenario, I would be concerned about a cliff. 168 00:10:13,640 --> 00:10:15,840 Speaker 3: I think what we have seen so far has been 169 00:10:16,160 --> 00:10:20,439 Speaker 3: an initial pent up demand pop and then a little 170 00:10:20,440 --> 00:10:25,840 Speaker 3: bit of a semi lull in June, potentially followed by 171 00:10:26,080 --> 00:10:28,640 Speaker 3: a little bit of a surgery and in July. I 172 00:10:28,679 --> 00:10:31,960 Speaker 3: don't think that is enough to drive an air pocket 173 00:10:32,080 --> 00:10:34,160 Speaker 3: or a cliff in the back half of the year, 174 00:10:34,360 --> 00:10:39,240 Speaker 3: especially if the consumer stays robust and let's say get 175 00:10:39,360 --> 00:10:43,600 Speaker 3: some level of inflation relief and interest rate relief and 176 00:10:43,720 --> 00:10:48,040 Speaker 3: tax rate relief, that should continue the d stock through 177 00:10:48,040 --> 00:10:50,079 Speaker 3: the back half of the year and into twenty six. 178 00:10:50,760 --> 00:10:54,480 Speaker 3: But we're very much dealing with scenario analyses here, right. 179 00:10:54,520 --> 00:10:56,839 Speaker 3: I mean, there's a scenario where we go into a 180 00:10:56,880 --> 00:10:59,439 Speaker 3: proper recession back half of the year. There's a scenario 181 00:10:59,520 --> 00:11:03,120 Speaker 3: where the overall macro is fine, but transports has a recession. 182 00:11:03,160 --> 00:11:06,120 Speaker 3: If we pulled forward and restocked into q uh and 183 00:11:06,200 --> 00:11:08,960 Speaker 3: there's a scenario where everything was pretty great. And so 184 00:11:09,480 --> 00:11:12,400 Speaker 3: that's also why the stocks in the market are somewhat 185 00:11:12,480 --> 00:11:13,960 Speaker 3: bereft of direction at the moment. 186 00:11:14,240 --> 00:11:16,400 Speaker 1: Right. You know, I love to have the cell side 187 00:11:16,440 --> 00:11:19,439 Speaker 1: on the podcast because you know, they're able to talk 188 00:11:19,440 --> 00:11:21,960 Speaker 1: about buy holed cell where that's something we don't do 189 00:11:22,040 --> 00:11:26,120 Speaker 1: Bloomberg Intelligence. So you know, so what within the truckload space, 190 00:11:26,200 --> 00:11:27,760 Speaker 1: who's your favorite name and why. 191 00:11:28,880 --> 00:11:32,600 Speaker 3: So Night continues to remain are a favorite name within 192 00:11:33,120 --> 00:11:36,679 Speaker 3: transports overall and the trucking space simply because they're the biggest, 193 00:11:37,280 --> 00:11:42,040 Speaker 3: it's probably the most representative and liquid stock. And I 194 00:11:42,040 --> 00:11:45,439 Speaker 3: think the management team there also has built a reputation 195 00:11:45,520 --> 00:11:48,640 Speaker 3: over the years of trying to stay half a step, 196 00:11:48,679 --> 00:11:50,400 Speaker 3: if not one step, ahead of the cycle. 197 00:11:50,880 --> 00:11:51,160 Speaker 4: UH. 198 00:11:51,200 --> 00:11:55,520 Speaker 3: They also are going into this upcycle more diversified than 199 00:11:55,520 --> 00:11:59,520 Speaker 3: they've ever been UH and probably with more operating leverage 200 00:11:59,520 --> 00:12:00,160 Speaker 3: than they've ever had. 201 00:12:01,160 --> 00:12:03,400 Speaker 2: So Nights are number one. 202 00:12:04,120 --> 00:12:07,960 Speaker 3: Although we like pretty much all the lt ls, all 203 00:12:08,040 --> 00:12:10,200 Speaker 3: the tls, and all the lt ls in the space, 204 00:12:11,000 --> 00:12:14,240 Speaker 3: with the exception of XPO, where we continue to I mean, 205 00:12:14,240 --> 00:12:15,880 Speaker 3: we like the company, we like the management team, we 206 00:12:16,040 --> 00:12:18,720 Speaker 3: like what they're doing, but we are not a huge 207 00:12:18,760 --> 00:12:23,320 Speaker 3: fan of the valuation there and kind of what's a 208 00:12:23,400 --> 00:12:24,240 Speaker 3: price into the stock? 209 00:12:24,720 --> 00:12:28,959 Speaker 1: Gotcha? Do you have a favorite LTL lesson truckload carrier 210 00:12:29,000 --> 00:12:29,640 Speaker 1: that you. 211 00:12:30,240 --> 00:12:33,440 Speaker 3: I think ODFL is the highest quality name in the space, 212 00:12:33,559 --> 00:12:36,280 Speaker 3: but on a relative risk reward basis, I would say 213 00:12:37,120 --> 00:12:41,080 Speaker 3: ARC Best in TFI, although ARC Best is slightly smaller cap. 214 00:12:41,720 --> 00:12:43,760 Speaker 3: But I would say Night as well. I think a 215 00:12:43,760 --> 00:12:45,960 Speaker 3: lot of people still view Night as a TL, but 216 00:12:46,080 --> 00:12:49,439 Speaker 3: they're kind of almost a national lt L, and so 217 00:12:49,559 --> 00:12:51,439 Speaker 3: I would say NIGHT for both t L and lt L. 218 00:12:52,720 --> 00:12:54,599 Speaker 1: So there's a lot of stuff going on in the 219 00:12:54,760 --> 00:12:57,160 Speaker 1: lt L space. FedEx Freight to announce that they're going 220 00:12:57,240 --> 00:13:00,280 Speaker 1: to spin off that company. Do you think that has 221 00:13:00,280 --> 00:13:03,160 Speaker 1: any real ramifications for the other players. Do you think, 222 00:13:03,679 --> 00:13:07,360 Speaker 1: you know what is a very rational pricing environment. Do 223 00:13:07,360 --> 00:13:10,360 Speaker 1: you think there maybe some of the players could lose 224 00:13:10,360 --> 00:13:12,240 Speaker 1: some discipline because of that spin out. 225 00:13:14,360 --> 00:13:14,839 Speaker 2: I think that. 226 00:13:14,840 --> 00:13:16,960 Speaker 3: Remains to be seen. First of all, I think that 227 00:13:17,040 --> 00:13:20,520 Speaker 3: spinout is still some time off. We'll see what FedEx 228 00:13:20,559 --> 00:13:25,120 Speaker 3: plays today in case they somehow accelerate that transaction or something, 229 00:13:25,160 --> 00:13:29,679 Speaker 3: but it's still probably twelve months away. And I think 230 00:13:29,720 --> 00:13:33,319 Speaker 3: everything we've seen so far, from the fact that they 231 00:13:33,360 --> 00:13:37,160 Speaker 3: have signed a long term operational agreement with FedEx Parcel, 232 00:13:38,040 --> 00:13:42,560 Speaker 3: the fact that the CEO that they announced last month 233 00:13:43,320 --> 00:13:47,080 Speaker 3: is an existing like the former head of the LTL 234 00:13:47,160 --> 00:13:49,880 Speaker 3: business and part of the current top management team of FedEx, 235 00:13:50,760 --> 00:13:52,640 Speaker 3: even the fact that they haven't changed the name. There 236 00:13:52,679 --> 00:13:58,640 Speaker 3: are very few spin off examples in history where the 237 00:13:58,720 --> 00:14:01,720 Speaker 3: spin co keep the name of the old cop. Usually 238 00:14:01,800 --> 00:14:04,280 Speaker 3: you try to distance yourself as much as possible from 239 00:14:04,320 --> 00:14:08,520 Speaker 3: your previous guys, to the market things you are completely independentity. 240 00:14:08,559 --> 00:14:10,600 Speaker 3: But the new entity is still going to be called 241 00:14:10,600 --> 00:14:13,840 Speaker 3: FedEx Freight, and I think all of that signals that 242 00:14:15,000 --> 00:14:18,360 Speaker 3: not much is really going to change in our view 243 00:14:19,240 --> 00:14:23,560 Speaker 3: from an operating standpoint for either FedEx Parcel or for 244 00:14:23,640 --> 00:14:27,840 Speaker 3: FedEx Freight, and from a go to market strategy. If anything, 245 00:14:27,960 --> 00:14:30,720 Speaker 3: FedEx is going to be hiring FedEx Freight is going 246 00:14:30,760 --> 00:14:33,400 Speaker 3: to be hiring three hundred new salespeople. 247 00:14:33,840 --> 00:14:35,120 Speaker 2: It's probably one of the. 248 00:14:35,040 --> 00:14:39,160 Speaker 3: First instances in corporate history where a company that is 249 00:14:39,240 --> 00:14:43,480 Speaker 3: by far the industry leader in the space is suddenly 250 00:14:43,520 --> 00:14:46,440 Speaker 3: on day's zero, going to end up having an all 251 00:14:46,520 --> 00:14:49,520 Speaker 3: new sales force of people who've never worked there before 252 00:14:49,760 --> 00:14:50,880 Speaker 3: or never done that before. 253 00:14:51,600 --> 00:14:53,160 Speaker 2: And it's going to be interesting to see how they 254 00:14:53,240 --> 00:14:54,120 Speaker 2: actually deal with that. 255 00:14:54,840 --> 00:14:57,760 Speaker 3: But I don't think that there's going to be much 256 00:14:57,880 --> 00:15:01,560 Speaker 3: change in LTL market dynamics as a result of this. 257 00:15:02,440 --> 00:15:08,360 Speaker 3: I'm paying much closer attention to how sticky LTL TL 258 00:15:08,440 --> 00:15:13,840 Speaker 3: conversion is. I'm paying a lot closer attention to how 259 00:15:13,920 --> 00:15:17,000 Speaker 3: much excess capacity is in the LTL space right now 260 00:15:17,280 --> 00:15:20,880 Speaker 3: and how is that deployed by the existing players. I'm 261 00:15:20,920 --> 00:15:23,720 Speaker 3: paying attention to what Amazon is doing, not so much 262 00:15:23,720 --> 00:15:26,280 Speaker 3: as Amazon kind of taking share in the market, as 263 00:15:26,360 --> 00:15:32,640 Speaker 3: much as is Amazon going to It's going to run 264 00:15:32,680 --> 00:15:35,880 Speaker 3: an LTL operation out of its existing warehouses instead of 265 00:15:35,880 --> 00:15:39,520 Speaker 3: cross dogs, and that I think would be fairly transformative 266 00:15:39,560 --> 00:15:42,520 Speaker 3: for the LTL space if you don't need a network 267 00:15:42,520 --> 00:15:45,680 Speaker 3: of cross dogs to do lter anymore. So I think 268 00:15:45,720 --> 00:15:48,280 Speaker 3: those our factors that I think are likely to be 269 00:15:48,360 --> 00:15:52,920 Speaker 3: more transformational to the LTL outlook raw than what fex 270 00:15:53,000 --> 00:15:53,280 Speaker 3: is doing. 271 00:15:54,600 --> 00:15:58,520 Speaker 1: Gotcha okay? And on the truckload side before before we 272 00:15:58,600 --> 00:16:02,200 Speaker 1: leave the truckload area, is there a name that you're 273 00:16:02,320 --> 00:16:05,360 Speaker 1: negative on or you're pretty much neutral to positive on 274 00:16:05,680 --> 00:16:06,680 Speaker 1: all the names that you cover? 275 00:16:07,120 --> 00:16:09,000 Speaker 3: Now, we think the rising tide will lift all the 276 00:16:09,000 --> 00:16:11,840 Speaker 3: boats in the space. We have an equal weight rating 277 00:16:11,880 --> 00:16:15,600 Speaker 3: on Heartland, which is our lowest ranked DL in our coverage, 278 00:16:15,640 --> 00:16:19,360 Speaker 3: But I'd say overall be a pretty bullish trucking as 279 00:16:19,360 --> 00:16:19,680 Speaker 3: a whole. 280 00:16:20,560 --> 00:16:23,800 Speaker 1: Now, you know, I don't follow Heartland. I used to 281 00:16:24,240 --> 00:16:26,680 Speaker 1: a long long time ago. But aren't they the most 282 00:16:26,720 --> 00:16:29,080 Speaker 1: leverage to the cycle given the fact that they really 283 00:16:29,120 --> 00:16:30,680 Speaker 1: don't do anything else besides. 284 00:16:30,440 --> 00:16:33,600 Speaker 2: Truckload correct But at the same time they do very 285 00:16:33,640 --> 00:16:34,280 Speaker 2: little spots. 286 00:16:34,360 --> 00:16:36,200 Speaker 3: They kind of they have their own little kind of 287 00:16:36,280 --> 00:16:38,480 Speaker 3: moat and their own little niche, and they kind of 288 00:16:38,680 --> 00:16:43,960 Speaker 3: run the business. I would say they kind of stick 289 00:16:44,000 --> 00:16:47,080 Speaker 3: to their knitting rather than being super dynamic and kind 290 00:16:47,080 --> 00:16:51,120 Speaker 3: of blowing with the wind, and so that makes them 291 00:16:51,560 --> 00:16:55,920 Speaker 3: a great stock to own and great earnings algorithm. 292 00:16:55,600 --> 00:16:56,840 Speaker 2: For certain parts of the cycle. 293 00:16:56,880 --> 00:16:59,440 Speaker 3: But again you're probably going to see more pork to 294 00:16:59,480 --> 00:17:04,440 Speaker 3: the cycle at more dynamic and more spot exposed tls 295 00:17:04,480 --> 00:17:04,960 Speaker 3: out there. 296 00:17:05,280 --> 00:17:09,040 Speaker 1: So you're underweight both FedEx and UPS. FedEx is reporting 297 00:17:09,080 --> 00:17:10,840 Speaker 1: at the close todays. We don't need to talk about 298 00:17:10,840 --> 00:17:12,000 Speaker 1: it because that's not going to have much of a 299 00:17:12,040 --> 00:17:16,359 Speaker 1: shelf life for us. But kind of structurally, why so 300 00:17:16,480 --> 00:17:18,880 Speaker 1: negative on the parcel providers. I mean, they have been 301 00:17:19,000 --> 00:17:22,560 Speaker 1: underperforming the markets, but what's driving that call for you? 302 00:17:23,440 --> 00:17:25,840 Speaker 3: Look, we have been long term structural underweights and the 303 00:17:25,840 --> 00:17:29,679 Speaker 3: parcel names largely because most simply put, I think e 304 00:17:29,720 --> 00:17:32,960 Speaker 3: commerce parcel delivery is just a very challenged business. I 305 00:17:33,000 --> 00:17:37,440 Speaker 3: think you and I and most listeners of your podcast 306 00:17:37,480 --> 00:17:39,680 Speaker 3: are probably never going to pay for shipping ever again 307 00:17:39,760 --> 00:17:43,359 Speaker 3: for something they buy online because we're basically conditioned to 308 00:17:44,800 --> 00:17:48,560 Speaker 3: getting free shipping for something we buy online. And at 309 00:17:48,600 --> 00:17:52,359 Speaker 3: the same time, the cost of delivering our packages has 310 00:17:52,400 --> 00:17:56,600 Speaker 3: been steadily going up a because of general inflation. 311 00:17:56,840 --> 00:17:58,400 Speaker 2: But also because of service levels. 312 00:17:58,480 --> 00:18:02,080 Speaker 3: What used to be afford delivery window is now a 313 00:18:02,119 --> 00:18:04,520 Speaker 3: one day or a same day delivery window. What used 314 00:18:04,560 --> 00:18:06,240 Speaker 3: to be a five day week service is now a 315 00:18:06,280 --> 00:18:08,679 Speaker 3: seven day week service. They now need to go to 316 00:18:08,800 --> 00:18:11,680 Speaker 3: many more addresses in the US, They need to keep 317 00:18:11,720 --> 00:18:17,760 Speaker 3: investing in their network, kind and tech, and so when 318 00:18:18,080 --> 00:18:23,720 Speaker 3: the pricing power overall is low and the investments needed 319 00:18:24,040 --> 00:18:27,840 Speaker 3: to drive that are high, that puts a lot of 320 00:18:27,840 --> 00:18:30,560 Speaker 3: pressure on returns overall. At the same time, you've seen 321 00:18:31,160 --> 00:18:36,359 Speaker 3: the competitive structure change in this industry with the emergence 322 00:18:36,400 --> 00:18:41,240 Speaker 3: of Amazon Logistics and a lot of small, mom and 323 00:18:41,320 --> 00:18:44,040 Speaker 3: pop and regional players. In addition to let's say the 324 00:18:44,080 --> 00:18:47,200 Speaker 3: re emergence of the US Post Office, you've seen e 325 00:18:47,200 --> 00:18:50,320 Speaker 3: commerce supply chains entirely change. We wrote a big report 326 00:18:50,359 --> 00:18:55,400 Speaker 3: on the regionalization of the Parson delivery market last year 327 00:18:55,720 --> 00:19:01,840 Speaker 3: and how a long haul, high speed air and express 328 00:19:01,960 --> 00:19:07,320 Speaker 3: truck moves have been replaced by shorthaul, local truck and 329 00:19:07,440 --> 00:19:11,440 Speaker 3: van moves that completely changes their e commerce supply chain. 330 00:19:12,359 --> 00:19:17,160 Speaker 3: We just published a note on the rural opportunity here. 331 00:19:17,200 --> 00:19:20,600 Speaker 3: We think it's a brilliant dollar e commerce and retail 332 00:19:20,600 --> 00:19:26,120 Speaker 3: opportunity that's currently untapped, and the question is when Amazon 333 00:19:26,200 --> 00:19:30,399 Speaker 3: is putting four billion dollars into rural expansion and Walmart's 334 00:19:30,400 --> 00:19:33,480 Speaker 3: investing as well, it looks like UPS and FedEx are 335 00:19:33,880 --> 00:19:35,920 Speaker 3: maybe pulling back on capex somewhat. 336 00:19:36,640 --> 00:19:39,080 Speaker 2: So I think there are multiple. 337 00:19:38,800 --> 00:19:45,400 Speaker 3: Structural challenges in the space being a standalone e commerce 338 00:19:45,600 --> 00:19:47,560 Speaker 3: parcel delivery company. 339 00:19:48,200 --> 00:19:50,359 Speaker 2: Now UPS and fedexs are obviously not standing still. 340 00:19:50,400 --> 00:19:54,080 Speaker 3: They're making their own tech investments, They've made acquisitions, they're 341 00:19:54,119 --> 00:19:57,880 Speaker 3: pushing into healthcare. They're obviously taking a very close look 342 00:19:57,920 --> 00:19:58,959 Speaker 3: at costs. 343 00:19:59,560 --> 00:20:04,679 Speaker 2: But ultimately, I think you need to solve your revenue problem. 344 00:20:04,880 --> 00:20:08,159 Speaker 3: Uh and and that's what may take a little longer 345 00:20:08,200 --> 00:20:10,600 Speaker 3: than than than we think people may appreciate. 346 00:20:11,200 --> 00:20:14,040 Speaker 1: Yeah, for those that are listening, if you if you 347 00:20:14,280 --> 00:20:17,399 Speaker 1: go back to the episode previous to this one, I 348 00:20:17,440 --> 00:20:21,000 Speaker 1: spoke with the CEO of clear Jet. They're a kind 349 00:20:21,040 --> 00:20:25,240 Speaker 1: of new parcel UH provider where it's really you know, 350 00:20:25,520 --> 00:20:31,159 Speaker 1: they're taking a narrow body capacity and putting parcels in 351 00:20:31,200 --> 00:20:35,280 Speaker 1: that and then using you know, gig economy folks to 352 00:20:35,440 --> 00:20:38,520 Speaker 1: do the final delivery. It's a pretty interesting model that 353 00:20:38,640 --> 00:20:42,959 Speaker 1: you know, really provides the service that FedEx and UPS 354 00:20:43,119 --> 00:20:45,960 Speaker 1: are at a lower cost. So for those that want 355 00:20:46,000 --> 00:20:49,280 Speaker 1: to learn more, I recommend taking a listen to that. 356 00:20:51,400 --> 00:20:56,600 Speaker 1: So is there anything Is there anything besides an increase 357 00:20:56,640 --> 00:21:00,000 Speaker 1: in demand that the parcel guys can do to really 358 00:21:00,320 --> 00:21:03,680 Speaker 1: show improvements, because you know, they're all doing their own 359 00:21:03,760 --> 00:21:07,320 Speaker 1: cost cutting and productivity measures and trying to change your 360 00:21:07,359 --> 00:21:12,800 Speaker 1: networks to be more receptive to B two C versus 361 00:21:12,840 --> 00:21:16,400 Speaker 1: B to B. But is it really just about volumes 362 00:21:16,400 --> 00:21:17,040 Speaker 1: for them? 363 00:21:17,800 --> 00:21:20,760 Speaker 2: Not at all. It's not about an increase in demand. 364 00:21:20,760 --> 00:21:22,000 Speaker 2: Demand was never the problem. 365 00:21:22,280 --> 00:21:25,560 Speaker 3: If anything, e commerce growth has been the one thing 366 00:21:25,640 --> 00:21:28,879 Speaker 3: that's that it can steadily count on this economy. I 367 00:21:28,920 --> 00:21:32,320 Speaker 3: think last year the overall e commerce kind of tam 368 00:21:32,440 --> 00:21:35,040 Speaker 3: grew ten percent year over year, kind of in in 369 00:21:35,080 --> 00:21:39,440 Speaker 3: a pretty dull macro environment, and so demand's. 370 00:21:39,040 --> 00:21:39,560 Speaker 2: Not the issue. 371 00:21:40,200 --> 00:21:46,240 Speaker 3: The issue is margin, a creative demand, and we think 372 00:21:46,280 --> 00:21:51,280 Speaker 3: that the slice of the pie that kind of meets 373 00:21:51,760 --> 00:21:57,119 Speaker 3: the incumbent parcels criteria for kind of doing returns could 374 00:21:57,119 --> 00:22:00,320 Speaker 3: be shrinking as more and more competitors and the market 375 00:22:00,400 --> 00:22:04,200 Speaker 3: enter the market. There's more kind of ship from store 376 00:22:04,320 --> 00:22:08,480 Speaker 3: and click and collect options, and ultimately it comes down to. 377 00:22:08,520 --> 00:22:10,919 Speaker 2: Like you ask me, kind of what would change it? 378 00:22:11,640 --> 00:22:14,159 Speaker 3: What would change it is that you and I should 379 00:22:15,480 --> 00:22:17,640 Speaker 3: be willing to start paying for something that we've got 380 00:22:17,640 --> 00:22:21,240 Speaker 3: for free for the last fifteen years. And until that changes, 381 00:22:21,920 --> 00:22:27,359 Speaker 3: it's kind of hard to see the revenue wind, you know, 382 00:22:27,480 --> 00:22:29,440 Speaker 3: change the direction from which it blows. 383 00:22:29,880 --> 00:22:31,760 Speaker 1: All right, So changing gears a little bit. You know, 384 00:22:31,640 --> 00:22:36,000 Speaker 1: you spoke about railroads. You mentioned that the Canadians you prefer, 385 00:22:36,160 --> 00:22:42,000 Speaker 1: so I guess Canadian National and Pacific Kansas City. What's 386 00:22:42,119 --> 00:22:45,280 Speaker 1: driving that conviction for those two relative to its peers. 387 00:22:46,240 --> 00:22:50,560 Speaker 3: I think they have very good networks within North America. 388 00:22:51,240 --> 00:22:54,000 Speaker 3: I think they have exposure to very good end markets 389 00:22:54,040 --> 00:22:59,440 Speaker 3: and multiple end markets. They don't have exposure to some 390 00:22:59,560 --> 00:23:04,840 Speaker 3: challenge gend markets like coal and domestic intromodel in the US, 391 00:23:05,400 --> 00:23:09,480 Speaker 3: and so all put together, including the investments that they've 392 00:23:09,480 --> 00:23:12,359 Speaker 3: made over the years, we think that they have the 393 00:23:12,520 --> 00:23:15,280 Speaker 3: capacity with their network and the end market is to 394 00:23:15,320 --> 00:23:21,080 Speaker 3: support growth that will drive double digit EPs growth over time. 395 00:23:21,800 --> 00:23:24,359 Speaker 3: I think it is going to be a slightly more 396 00:23:24,760 --> 00:23:29,239 Speaker 3: challenged growth environment within the US, although I'd say the 397 00:23:29,359 --> 00:23:34,640 Speaker 3: US rail EPs growth algorithm is a little bit TBD 398 00:23:35,440 --> 00:23:38,679 Speaker 3: because I think we go into this upcycle with a 399 00:23:38,840 --> 00:23:41,800 Speaker 3: very different setup than we've done the last i'd say 400 00:23:42,000 --> 00:23:45,040 Speaker 3: four or five up cycles, where I say, for the 401 00:23:45,080 --> 00:23:47,920 Speaker 3: first time in twenty years, all the rail CEOs are 402 00:23:48,000 --> 00:23:52,040 Speaker 3: aligned on the view that they need growth to drive 403 00:23:52,080 --> 00:23:57,600 Speaker 3: earnings rather than focusing on other areas like PSR or 404 00:23:57,720 --> 00:24:00,760 Speaker 3: cost cutting or never mind. The volumes will go off 405 00:24:00,760 --> 00:24:04,160 Speaker 3: for the price and a bunch of different things, and 406 00:24:04,240 --> 00:24:07,000 Speaker 3: so it'll be very interesting to see if they can 407 00:24:07,040 --> 00:24:10,119 Speaker 3: actually convert on that or not. And again it's just 408 00:24:10,200 --> 00:24:13,159 Speaker 3: like parcel, it's not just about volumes. Volumes actually have 409 00:24:13,160 --> 00:24:15,439 Speaker 3: been pretty decent the last couple of years, it's just 410 00:24:15,520 --> 00:24:17,679 Speaker 3: not dropped through to the bottom line. So the question is 411 00:24:18,119 --> 00:24:21,879 Speaker 3: are you able to get margin a creative volume growth 412 00:24:21,920 --> 00:24:25,480 Speaker 3: into the upcycle or not, especially because our data shows 413 00:24:25,560 --> 00:24:28,320 Speaker 3: us that the last three up cycles going back ten years, 414 00:24:28,760 --> 00:24:34,520 Speaker 3: the market has shown a tendency to pivot towards truck 415 00:24:35,080 --> 00:24:39,440 Speaker 3: rather than rail going into an up cycle because service 416 00:24:39,560 --> 00:24:42,960 Speaker 3: becomes a lot more important than price when you need 417 00:24:43,119 --> 00:24:47,800 Speaker 3: to restock your shelves on an expedited basis. So it 418 00:24:47,840 --> 00:24:50,200 Speaker 3: depends on sort of how this upcycle plays out as well. 419 00:24:50,840 --> 00:24:55,639 Speaker 3: But I would say pretty high confidence on the ability 420 00:24:55,680 --> 00:24:58,920 Speaker 3: of the Canadian rails to grow somewhat of a show 421 00:24:59,000 --> 00:25:03,040 Speaker 3: me story on whether US rail earnings growth will be 422 00:25:03,080 --> 00:25:06,280 Speaker 3: closer to mid single digits or high single digits or 423 00:25:06,320 --> 00:25:07,000 Speaker 3: load double digits. 424 00:25:08,040 --> 00:25:10,480 Speaker 1: You know, you mentioned domestic inner model in the US, 425 00:25:10,520 --> 00:25:14,560 Speaker 1: and that was you know, I guess from what you said, 426 00:25:15,119 --> 00:25:19,920 Speaker 1: a headwind for the US carriers given their exposure to it. 427 00:25:20,440 --> 00:25:23,280 Speaker 1: I'm just curious. You know, if the truckload market improves 428 00:25:23,320 --> 00:25:25,240 Speaker 1: like you know you think it is in the second half, 429 00:25:25,800 --> 00:25:29,000 Speaker 1: isn't that good for domestic innermodel demand and rates? 430 00:25:29,800 --> 00:25:30,280 Speaker 2: Yes and no. 431 00:25:30,720 --> 00:25:34,240 Speaker 3: I think it depends on how and why the market improves. Again, 432 00:25:34,280 --> 00:25:37,040 Speaker 3: we've seen the last three upcycles going back ten years, 433 00:25:37,600 --> 00:25:40,440 Speaker 3: truck spot rates in each case hit new record highs 434 00:25:40,480 --> 00:25:43,800 Speaker 3: in some cases up to twenty thirty forty percent. Contract 435 00:25:43,840 --> 00:25:47,760 Speaker 3: rates were high single digits, double digits, And yet truck 436 00:25:47,880 --> 00:25:50,320 Speaker 3: took a lot of share from rail because in an 437 00:25:50,359 --> 00:25:54,560 Speaker 3: up cycle where you need to restock on an expedited basis, 438 00:25:55,280 --> 00:25:58,159 Speaker 3: you don't as a shipper, don't really care about price. 439 00:25:58,320 --> 00:26:00,840 Speaker 3: You care more about service, and rock, as we all know, 440 00:26:01,000 --> 00:26:05,280 Speaker 3: is significantly faster and more flexible than rail. Now, make 441 00:26:05,280 --> 00:26:08,879 Speaker 3: no mistake, I think rail and domestic infromodal will also 442 00:26:08,960 --> 00:26:11,880 Speaker 3: benefit from the rising tide, but I think it will 443 00:26:11,920 --> 00:26:16,119 Speaker 3: be a third or fourth derivative benefit. And I'm not 444 00:26:16,320 --> 00:26:22,040 Speaker 3: sure either the cycle will extend or if there's the 445 00:26:22,160 --> 00:26:24,960 Speaker 3: scale of the benefit they will see. When you consider 446 00:26:25,359 --> 00:26:32,560 Speaker 3: the offsets from fuel prices, mix and the three and 447 00:26:32,600 --> 00:26:35,359 Speaker 3: a half percent labor inflation, they sort of locked into 448 00:26:36,119 --> 00:26:38,920 Speaker 3: if that's going to be enough to drive the bottom line. 449 00:26:39,000 --> 00:26:41,960 Speaker 1: Right and the rails. Did you know during the last 450 00:26:42,320 --> 00:26:45,440 Speaker 1: I guess trucking peak during the pandemic, they really missed 451 00:26:45,440 --> 00:26:49,000 Speaker 1: out on an opportunity to take more volumes just because 452 00:26:49,040 --> 00:26:51,200 Speaker 1: they just didn't have enough people on the ground to 453 00:26:51,600 --> 00:26:57,280 Speaker 1: operate the networks. So in the US, do you have 454 00:26:57,359 --> 00:26:59,879 Speaker 1: a RRO that that you that you that you like? 455 00:27:00,280 --> 00:27:03,440 Speaker 1: Were you kind of neutral to underweight on those? 456 00:27:04,040 --> 00:27:07,520 Speaker 3: So we are neutral on Union Pacific and CSX and 457 00:27:07,560 --> 00:27:11,080 Speaker 3: we have an underweight rating on Norfolk Southern. We think 458 00:27:11,119 --> 00:27:14,560 Speaker 3: that that Union Pacific, you know, probably is viewed as 459 00:27:14,600 --> 00:27:18,640 Speaker 3: a you know, a cyclical core holding, almost like a behamoth. 460 00:27:18,760 --> 00:27:22,240 Speaker 3: Like if you are a large investor who actually investment cyclicals, 461 00:27:22,280 --> 00:27:25,479 Speaker 3: you almost have to own Union Pacific by default. And 462 00:27:25,560 --> 00:27:27,800 Speaker 3: so I'd say, you know, that's probably the auder. 463 00:27:27,560 --> 00:27:31,040 Speaker 1: Of preference and what's driving the underweight on Norfolk Southern. 464 00:27:32,000 --> 00:27:34,200 Speaker 2: Again, I think they are doing all the right. 465 00:27:34,000 --> 00:27:37,119 Speaker 3: Things, and I think, you know, I obviously like the 466 00:27:37,160 --> 00:27:39,520 Speaker 3: fact that they brought john or there. I think they 467 00:27:39,560 --> 00:27:42,959 Speaker 3: are absolutely focused on productivity and service. I'm just not 468 00:27:43,000 --> 00:27:45,119 Speaker 3: sure how much dry powdered there still is. Kind of 469 00:27:45,200 --> 00:27:50,480 Speaker 3: our numbers have shown clearly that Norfolk Southern. I don't 470 00:27:50,480 --> 00:27:52,359 Speaker 3: think Norfolk Southern really has a cost problem. I think 471 00:27:52,400 --> 00:27:54,840 Speaker 3: it has a revenue problem. They have had the lowest 472 00:27:54,920 --> 00:27:57,119 Speaker 3: costs per car load of any North American Class one 473 00:27:57,200 --> 00:28:01,240 Speaker 3: railroad in the last ten years. They also cut the 474 00:28:01,280 --> 00:28:05,639 Speaker 3: most during the PSR years. But they also have the 475 00:28:05,680 --> 00:28:08,760 Speaker 3: lowest revenue per carload of any North American classman railroad, 476 00:28:08,800 --> 00:28:12,800 Speaker 3: and I think that's probably the bigger issue. So again, 477 00:28:12,840 --> 00:28:14,560 Speaker 3: my problem is not so much with the company or 478 00:28:14,600 --> 00:28:18,040 Speaker 3: the management team or as much as it is with 479 00:28:18,680 --> 00:28:21,440 Speaker 3: market expectations and what's priced into the stock presk. 480 00:28:22,280 --> 00:28:25,000 Speaker 1: So within the rail industry, I'm hearing more and more 481 00:28:25,000 --> 00:28:28,639 Speaker 1: about consolidation again for some crazy reason. What are your 482 00:28:28,680 --> 00:28:33,280 Speaker 1: thoughts on consolidation. Do you think it's a probability that 483 00:28:33,320 --> 00:28:35,240 Speaker 1: we'll see it anytime soon? 484 00:28:36,680 --> 00:28:38,840 Speaker 2: Your word's not mine on the crazy reason. 485 00:28:39,480 --> 00:28:43,560 Speaker 3: But yeah, we can go into the genesis of where 486 00:28:43,560 --> 00:28:46,160 Speaker 3: the speculation came out and such. But I think everybody 487 00:28:46,200 --> 00:28:48,160 Speaker 3: knows that it is going to be very, very hard 488 00:28:48,200 --> 00:28:52,480 Speaker 3: to do real M and A in North America unless 489 00:28:52,840 --> 00:28:57,240 Speaker 3: the STV changes its rules. And I think the jury 490 00:28:57,360 --> 00:29:01,040 Speaker 3: is out and it's anybody's guests on the ability and 491 00:29:01,120 --> 00:29:05,000 Speaker 3: willingness of the STB to change those rules to get 492 00:29:05,000 --> 00:29:05,920 Speaker 3: any transactions through. 493 00:29:07,680 --> 00:29:11,600 Speaker 1: And barring those rules, I mean, obviously we would all 494 00:29:12,160 --> 00:29:15,719 Speaker 1: understand up from a cost standpoint, the benefit for a 495 00:29:15,800 --> 00:29:20,320 Speaker 1: merger between like a Union Pacific with a Eastern rail 496 00:29:20,440 --> 00:29:24,000 Speaker 1: like a like a CSX or a Norfolk Southern. But 497 00:29:24,160 --> 00:29:26,760 Speaker 1: do you think there's real benefits for the shippers, because 498 00:29:26,800 --> 00:29:28,920 Speaker 1: that's what you know, the regulators really care about. 499 00:29:29,840 --> 00:29:32,600 Speaker 3: Uh. Yeah, And I think that's why those rules were 500 00:29:32,640 --> 00:29:38,320 Speaker 3: originally made looking at kind of the potential slashed risk 501 00:29:38,480 --> 00:29:43,880 Speaker 3: of downstream follow on mergers as well. And again, it'll 502 00:29:43,880 --> 00:29:46,440 Speaker 3: be interesting and I think somewhat surprising if the STV 503 00:29:46,760 --> 00:29:49,680 Speaker 3: just decided to go back on those rules. 504 00:29:50,560 --> 00:29:52,720 Speaker 2: But yeah, I think. 505 00:29:54,320 --> 00:29:56,800 Speaker 3: You saw in the case of the last reel Amnate transaction, 506 00:29:57,600 --> 00:30:00,440 Speaker 3: although that was pretty unique with CPKC kind of revenue 507 00:30:00,440 --> 00:30:03,040 Speaker 3: synergy number was a lot higher than the cost entergy number. 508 00:30:03,400 --> 00:30:05,200 Speaker 3: I think that sort of needs to be the case 509 00:30:05,200 --> 00:30:06,680 Speaker 3: for any transaction going forward. 510 00:30:07,200 --> 00:30:09,320 Speaker 2: Uh And and you're going to need. 511 00:30:09,200 --> 00:30:16,480 Speaker 3: To sell the prospect of better service with fewer interchange interchanges. Again, 512 00:30:16,560 --> 00:30:19,080 Speaker 3: I think there needs to be a lot of show 513 00:30:19,120 --> 00:30:20,440 Speaker 3: me in that process. 514 00:30:20,840 --> 00:30:21,760 Speaker 2: Gotcha, okay? 515 00:30:22,800 --> 00:30:27,840 Speaker 1: And so you know you're underweight C. H. Robinson. We 516 00:30:28,120 --> 00:30:33,640 Speaker 1: recently had their CEO Dave Boseman on the podcast, and 517 00:30:33,800 --> 00:30:38,520 Speaker 1: you're also underweight expeditors a freight forwarder. Could you just 518 00:30:38,640 --> 00:30:42,520 Speaker 1: explain why you're so negative on the non asset guys. 519 00:30:43,240 --> 00:30:46,080 Speaker 3: Sure, so, on the forwarding side of the business, we 520 00:30:46,120 --> 00:30:50,880 Speaker 3: think that there's still some frath to give up, not 521 00:30:50,960 --> 00:30:54,000 Speaker 3: post pandemic as much as you know, post Red Sea disruptions, 522 00:30:54,040 --> 00:30:57,320 Speaker 3: although kind of recent headlines notwithstanding. But I think by 523 00:30:57,400 --> 00:31:02,760 Speaker 3: their own admission, there is some kind of almost over 524 00:31:02,880 --> 00:31:05,080 Speaker 3: earning in the last couple of years to give up 525 00:31:05,400 --> 00:31:08,640 Speaker 3: as conditions they're normalized. But it's it's mostly on the 526 00:31:08,720 --> 00:31:11,360 Speaker 3: NASA business that kind of, you know, are some of 527 00:31:11,360 --> 00:31:15,000 Speaker 3: our concerns. Now again, I'll give the management team all 528 00:31:15,040 --> 00:31:17,320 Speaker 3: the credit in the world for taking out a lot. 529 00:31:17,120 --> 00:31:19,760 Speaker 2: Of cost in in the last eighteen months. 530 00:31:20,640 --> 00:31:24,560 Speaker 3: They do appear to be very focused on technology and productivity, 531 00:31:24,920 --> 00:31:29,360 Speaker 3: uh and using AI tools to kind of deliver that 532 00:31:29,520 --> 00:31:32,080 Speaker 3: operating leverage, which is not something usually talk about when 533 00:31:32,080 --> 00:31:34,120 Speaker 3: it comes to an asset light company. Like, they don't 534 00:31:34,160 --> 00:31:37,959 Speaker 3: have assets, so they don't really have operating leverage, except 535 00:31:37,960 --> 00:31:40,920 Speaker 3: that they're people are their assets, and so if they 536 00:31:40,920 --> 00:31:43,680 Speaker 3: can figure out a way to either give them the 537 00:31:43,760 --> 00:31:46,160 Speaker 3: tools or kind of you know, use tools in their 538 00:31:46,200 --> 00:31:49,680 Speaker 3: stead uh tech tools, I mean, they can kind of 539 00:31:49,680 --> 00:31:53,720 Speaker 3: deliver some opening leverage there. Again, I think, much like Norfolk, 540 00:31:54,040 --> 00:31:58,600 Speaker 3: I think that the market you know, maybe overestimating the 541 00:31:58,640 --> 00:32:00,600 Speaker 3: sustainability of some of the game they've had the last 542 00:32:00,600 --> 00:32:02,000 Speaker 3: few years. I mean, they have taken out a lot 543 00:32:02,000 --> 00:32:04,520 Speaker 3: of cost kind of I think what's happened in sh 544 00:32:04,600 --> 00:32:09,480 Speaker 3: Robins so far is a little closer to PSR rather. 545 00:32:09,360 --> 00:32:14,440 Speaker 2: Than a transformation in the way they do business. 546 00:32:15,200 --> 00:32:18,719 Speaker 3: Now, maybe I'm wrong, and maybe they will kind of 547 00:32:18,920 --> 00:32:23,160 Speaker 3: show a tremendous amount of growth in the number of 548 00:32:23,160 --> 00:32:26,000 Speaker 3: transactions per head count using some of their AI tools 549 00:32:26,000 --> 00:32:27,840 Speaker 3: and automation when the upcycle shows up. 550 00:32:28,560 --> 00:32:31,280 Speaker 2: But again I think that remains a show me story. 551 00:32:32,000 --> 00:32:35,000 Speaker 3: And in the meanwhile, I continue to think that digitization 552 00:32:36,040 --> 00:32:38,280 Speaker 3: is not a genie that you can put back in 553 00:32:38,320 --> 00:32:42,200 Speaker 3: the model. On the asset light side, we have already 554 00:32:42,200 --> 00:32:48,440 Speaker 3: seen a lot of this digitization bring price transparency, transaction, automation, 555 00:32:49,360 --> 00:32:53,880 Speaker 3: the ability of small tech startups to penetrate the space 556 00:32:54,040 --> 00:32:58,480 Speaker 3: very quickly, the ability of large shippers to vertically integrate 557 00:32:58,520 --> 00:33:03,360 Speaker 3: into the space. We think others within the UH trucking 558 00:33:03,400 --> 00:33:08,080 Speaker 3: and transportation ecosystem can verticalate vertically integrate into the space 559 00:33:08,120 --> 00:33:12,480 Speaker 3: over time. And so I think all of that probably 560 00:33:12,520 --> 00:33:16,040 Speaker 3: makes this a more competitive, lower margin business. 561 00:33:16,440 --> 00:33:16,600 Speaker 2: UH. 562 00:33:16,600 --> 00:33:21,680 Speaker 3: And usually kind of you know, technology adoption brings price deflation, 563 00:33:21,880 --> 00:33:24,080 Speaker 3: and I think that's a risk to. 564 00:33:24,200 --> 00:33:26,400 Speaker 2: The structural rest to the brokers over time. 565 00:33:27,080 --> 00:33:30,239 Speaker 3: At the same time, UH kind of depending on how 566 00:33:30,240 --> 00:33:34,080 Speaker 3: the cycle plays out, if there's a quick uh sudden 567 00:33:34,200 --> 00:33:38,080 Speaker 3: surge and spot rates UH, that could put broker margins 568 00:33:38,160 --> 00:33:40,360 Speaker 3: under pressure until they can reprice for it. 569 00:33:40,800 --> 00:33:40,960 Speaker 2: UH. 570 00:33:41,000 --> 00:33:45,480 Speaker 3: And also our surveys have shown that shippers have a 571 00:33:45,520 --> 00:33:49,520 Speaker 3: preference to move to asset based carriers who have more 572 00:33:49,640 --> 00:33:54,480 Speaker 3: visibility and certainty UH in their truck supply, especially given 573 00:33:54,960 --> 00:33:58,640 Speaker 3: UH some of these you know headlines around fraud uh 574 00:33:58,720 --> 00:34:03,560 Speaker 3: and some of the obviously the driver headlines around availability 575 00:34:03,600 --> 00:34:07,920 Speaker 3: with English proficiency and such. If shippers are concerned about 576 00:34:07,920 --> 00:34:10,759 Speaker 3: the availability of truck supply in enough cycle, they will 577 00:34:10,760 --> 00:34:12,160 Speaker 3: move towards acid based carriers. 578 00:34:12,160 --> 00:34:13,720 Speaker 2: That's what's happened in past cycles. 579 00:34:14,080 --> 00:34:15,680 Speaker 3: Our surveys have shown that's what's going to happen to 580 00:34:15,719 --> 00:34:20,799 Speaker 3: cycle as well, and so both margins and share could 581 00:34:20,840 --> 00:34:23,800 Speaker 3: cyclically come under pressure if there's a sudden up cycle 582 00:34:23,800 --> 00:34:24,120 Speaker 3: as well. 583 00:34:24,400 --> 00:34:29,040 Speaker 1: Gotcha, you mentioned AI When it comes to technology, do 584 00:34:29,120 --> 00:34:33,400 Speaker 1: you think AI is going to be more impactful for 585 00:34:33,520 --> 00:34:38,120 Speaker 1: one sub segment of freight transportation and also just to 586 00:34:38,239 --> 00:34:44,160 Speaker 1: dovetail on that with regards to technology autonomous trucking, your 587 00:34:44,160 --> 00:34:46,800 Speaker 1: thoughts on when it's going to come sure? 588 00:34:47,239 --> 00:34:47,839 Speaker 2: So on the. 589 00:34:47,760 --> 00:34:50,839 Speaker 3: First point, yeah, I think we wrote one of the first, 590 00:34:50,880 --> 00:34:52,880 Speaker 3: if not the first report on the Street on AI 591 00:34:52,960 --> 00:34:56,239 Speaker 3: and freight transportation back in twenty twenty three, I think 592 00:34:56,239 --> 00:34:56,560 Speaker 3: it was. 593 00:34:57,520 --> 00:34:59,560 Speaker 2: And yeah, look, I think. 594 00:35:00,239 --> 00:35:04,600 Speaker 3: Freight transportation is probably the largest industry in the world, 595 00:35:05,280 --> 00:35:08,680 Speaker 3: with an over one trillion dollar time in the US 596 00:35:08,719 --> 00:35:10,840 Speaker 3: and like six trillion dollar time globally. 597 00:35:11,400 --> 00:35:12,400 Speaker 2: That doesn't make anything. 598 00:35:12,920 --> 00:35:14,920 Speaker 3: We just move everybody else's stuff from point A to 599 00:35:14,920 --> 00:35:20,800 Speaker 3: point B that makes this entire industry one giant process function, 600 00:35:21,480 --> 00:35:27,800 Speaker 3: and technology is very good at improving the efficiency, productivity, 601 00:35:29,280 --> 00:35:35,400 Speaker 3: sustainability off process functions. And so I think there's no 602 00:35:35,560 --> 00:35:39,759 Speaker 3: industry in the world that benefits from technology, whether it 603 00:35:39,880 --> 00:35:43,040 Speaker 3: is and I'm going to throw every single tech buzzword 604 00:35:43,040 --> 00:35:46,799 Speaker 3: of the last decade at you, like you think of AI, 605 00:35:47,120 --> 00:35:54,080 Speaker 3: machine learning, autonomous blockchain, even humanoid robots, and automation, which 606 00:35:54,120 --> 00:35:56,479 Speaker 3: is an area that we're very focused on and written 607 00:35:56,480 --> 00:35:59,120 Speaker 3: a lot of research on. I think freight transportation is 608 00:35:59,120 --> 00:36:00,759 Speaker 3: going to be one of the biggest fisheries of that. 609 00:36:01,960 --> 00:36:05,000 Speaker 3: Obviously as an industry a very large employer, but not 610 00:36:05,080 --> 00:36:10,000 Speaker 3: necessarily an employment of choice, especially for a lot of 611 00:36:10,040 --> 00:36:13,879 Speaker 3: young people, and there is going to be a driver 612 00:36:13,920 --> 00:36:16,960 Speaker 3: shortage over the years. It is a dangerous job in 613 00:36:17,000 --> 00:36:21,799 Speaker 3: many cases, whether it's truck driving or railroads or in warehouses. 614 00:36:22,480 --> 00:36:25,359 Speaker 3: And so that's where I think AI and automation can 615 00:36:25,440 --> 00:36:27,360 Speaker 3: really step in and add value. And I think it 616 00:36:27,400 --> 00:36:31,960 Speaker 3: can be up and down the transportation valuation. But let's 617 00:36:31,960 --> 00:36:36,760 Speaker 3: say particularly focused on the asset light guys, and particularly 618 00:36:36,800 --> 00:36:39,560 Speaker 3: focused on anything to do with truck driving or warehousing. 619 00:36:40,239 --> 00:36:43,920 Speaker 3: On the latter question again, I think autonomous trucking is here. 620 00:36:44,280 --> 00:36:49,239 Speaker 3: I think Aurora has obviously launched commercial driver lest operations 621 00:36:49,239 --> 00:36:52,439 Speaker 3: in Texas in the end of April and they're doing 622 00:36:52,719 --> 00:36:57,960 Speaker 3: over one thousand miles of driverlest running every week and 623 00:36:58,040 --> 00:37:01,720 Speaker 3: generating revenues on that. They will start serial commercial production 624 00:37:02,760 --> 00:37:05,799 Speaker 3: in towards the end of next year or early twenty 625 00:37:05,800 --> 00:37:06,360 Speaker 3: twenty seven. 626 00:37:07,000 --> 00:37:09,920 Speaker 2: And when that happens, I think anybody. 627 00:37:09,520 --> 00:37:12,400 Speaker 3: In this industry can go out there and buy a 628 00:37:12,480 --> 00:37:16,160 Speaker 3: truck that can drive itself. So I think you when 629 00:37:16,160 --> 00:37:19,240 Speaker 3: we talk to folks across the industry, whether it's carrier, 630 00:37:19,280 --> 00:37:23,280 Speaker 3: shippers or brokers, there are a lot more enthused about 631 00:37:23,320 --> 00:37:24,280 Speaker 3: autonomous trucking. 632 00:37:24,440 --> 00:37:27,839 Speaker 2: And like I know, we've been talking about autonomous trucking. 633 00:37:27,600 --> 00:37:31,239 Speaker 3: For over ten years now, but when we first started 634 00:37:31,239 --> 00:37:34,040 Speaker 3: talking about it, there was a lot of eyebrows raised, 635 00:37:34,160 --> 00:37:36,799 Speaker 3: followed by a lot of laughter and a lot of 636 00:37:37,080 --> 00:37:39,560 Speaker 3: not in my lifetimes, which became a lot of not 637 00:37:39,680 --> 00:37:40,800 Speaker 3: in my careers. 638 00:37:41,640 --> 00:37:42,640 Speaker 2: Now we don't get that. 639 00:37:42,760 --> 00:37:49,080 Speaker 3: Now it's taken very seriously and it's a very credible thing. Obviously, 640 00:37:49,960 --> 00:37:53,239 Speaker 3: you still need the industry to partake of the technology 641 00:37:53,239 --> 00:37:56,200 Speaker 3: in a big way. For that to happen, someone needs 642 00:37:56,239 --> 00:37:58,160 Speaker 3: to go to a carrier and toss them. 643 00:37:58,600 --> 00:38:00,040 Speaker 2: The keys to a pack. 644 00:38:00,120 --> 00:38:03,399 Speaker 3: Or Volvo or Dameler or any other brand truck and say, 645 00:38:03,800 --> 00:38:06,319 Speaker 3: here's this truck that's going to go drive itself. Go 646 00:38:06,400 --> 00:38:10,120 Speaker 3: drive it or go put it into operations, depending how 647 00:38:10,120 --> 00:38:12,160 Speaker 3: we're going to use it and when they see it 648 00:38:12,200 --> 00:38:14,600 Speaker 3: for themselves, I think this industry will be full of 649 00:38:14,760 --> 00:38:18,560 Speaker 3: fast followers, gotcha. 650 00:38:19,160 --> 00:38:21,640 Speaker 1: And you know I don't cover airlines. I'm more concerned 651 00:38:21,680 --> 00:38:24,120 Speaker 1: about the movement of stuff versus people, But I know 652 00:38:24,200 --> 00:38:26,680 Speaker 1: you cover them. So what's your favorite airline? 653 00:38:26,719 --> 00:38:29,880 Speaker 3: And why we are very bulished the US airline space 654 00:38:29,880 --> 00:38:32,239 Speaker 3: We have been pretty much since the trough of the pandemic. 655 00:38:32,719 --> 00:38:38,560 Speaker 3: I think travel is now considered a staple for most households. 656 00:38:38,560 --> 00:38:42,240 Speaker 3: Like we do a monthly consumer survey here Morgan Stanley, 657 00:38:42,400 --> 00:38:48,240 Speaker 3: and travel has been consistently rated as the third highest 658 00:38:48,360 --> 00:38:52,280 Speaker 3: spending in tent category off only groceries and household staples 659 00:38:53,040 --> 00:38:55,400 Speaker 3: for high end consumers and number one spending. 660 00:38:55,120 --> 00:38:55,880 Speaker 2: In tent category. 661 00:38:56,200 --> 00:38:58,120 Speaker 3: And I think that's structural, and I think that's not 662 00:38:58,160 --> 00:39:02,080 Speaker 3: going to change anytime soon. So very strong demand. At 663 00:39:02,080 --> 00:39:06,040 Speaker 3: the same time, this industry is premiumizing. I think that 664 00:39:06,160 --> 00:39:11,320 Speaker 3: is a very very important trend. The US airline industry 665 00:39:11,320 --> 00:39:16,359 Speaker 3: basically saw price deflation for like three decades, over three 666 00:39:16,360 --> 00:39:20,280 Speaker 3: decades going into the pandemic, and in the last decade 667 00:39:20,280 --> 00:39:25,960 Speaker 3: in particular, this industry almost a race towards commoditization, where 668 00:39:26,000 --> 00:39:29,239 Speaker 3: the low cost carriers were growing very quickly and the 669 00:39:29,280 --> 00:39:34,319 Speaker 3: mainline carriers were launching basic economy products to try to 670 00:39:34,480 --> 00:39:36,440 Speaker 3: compete with the low cost carriers, and so it was 671 00:39:36,480 --> 00:39:39,440 Speaker 3: sort of a race to the bottom on fares, and 672 00:39:39,640 --> 00:39:44,280 Speaker 3: experience for the average flyer coming out of the pandemic 673 00:39:44,320 --> 00:39:47,640 Speaker 3: has been the exact opposite. There's been this push to 674 00:39:48,080 --> 00:39:50,480 Speaker 3: like everybody wants to fly in the front of the plane, 675 00:39:50,520 --> 00:39:54,960 Speaker 3: everybody wants to access the lounge before takeoff, everybody wants 676 00:39:54,960 --> 00:39:57,399 Speaker 3: a premium credit card to get the free check back 677 00:39:57,480 --> 00:40:01,640 Speaker 3: and the early boarding. And so this industry is premiumizing 678 00:40:01,960 --> 00:40:03,960 Speaker 3: to the point where you are now seeing the low 679 00:40:04,000 --> 00:40:08,200 Speaker 3: cost carriers introduce a first class product for the first time, 680 00:40:08,920 --> 00:40:13,200 Speaker 3: open lounges for the first time, fly to exotic destinations, 681 00:40:13,200 --> 00:40:16,680 Speaker 3: and try to penetrate international markets for the first time. 682 00:40:17,280 --> 00:40:18,800 Speaker 2: And that's very good for this industry. 683 00:40:18,800 --> 00:40:21,960 Speaker 3: Over all, in addition to the fact that supply remains 684 00:40:22,080 --> 00:40:29,239 Speaker 3: structurally constrained at least on peak levels because of aircraft availability, 685 00:40:29,280 --> 00:40:35,120 Speaker 3: pilot availability, gate availability, ATC capacity, maintenance capacity, and none 686 00:40:35,160 --> 00:40:38,080 Speaker 3: of those things are fixing themselves any time soon. So 687 00:40:38,480 --> 00:40:41,920 Speaker 3: we like the US airline industry as a whole. We 688 00:40:41,960 --> 00:40:45,400 Speaker 3: actually have no underweight rated stocks in the US airlines 689 00:40:45,480 --> 00:40:50,680 Speaker 3: right now, but our top three picks are Alaska, Delta, 690 00:40:50,719 --> 00:40:55,120 Speaker 3: and United. But we also like Americans, Southwest and Sun Country. 691 00:40:55,400 --> 00:40:57,719 Speaker 1: All right, great, well, Robbie, I really want to thank 692 00:40:57,719 --> 00:40:59,920 Speaker 1: you for your time and insights today. I think we're 693 00:41:00,080 --> 00:41:03,359 Speaker 1: coming up on the hour, so thank you so much 694 00:41:03,400 --> 00:41:04,399 Speaker 1: for joining us. 695 00:41:04,880 --> 00:41:05,920 Speaker 2: Absolutely, thanks for having me. 696 00:41:06,000 --> 00:41:06,080 Speaker 3: Lee. 697 00:41:06,160 --> 00:41:06,960 Speaker 2: Hope to be back soon. 698 00:41:08,400 --> 00:41:13,520 Speaker 1: You sure, we'll do check the mail and I want 699 00:41:13,520 --> 00:41:15,800 Speaker 1: to thank you for tuning in. If you liked the episode, 700 00:41:15,840 --> 00:41:18,440 Speaker 1: please subscribe and leave a review. We've lined up a 701 00:41:18,520 --> 00:41:20,759 Speaker 1: number of great guests for the podcast, so please check 702 00:41:20,800 --> 00:41:24,719 Speaker 1: back to your conversations with C speed executives, shippers, regulators, 703 00:41:24,840 --> 00:41:28,160 Speaker 1: and decision makers within the freight markets. Also, if you 704 00:41:28,160 --> 00:41:31,160 Speaker 1: want to learn more about the freight transportation markets, check 705 00:41:31,200 --> 00:41:34,000 Speaker 1: out our work on the Bloomberg Terminal at Bigo and 706 00:41:34,080 --> 00:41:37,239 Speaker 1: on social media. This is Lee Klaskow signing off, and 707 00:41:37,280 --> 00:41:38,840 Speaker 1: thanks for talking transports with me.