1 00:00:07,560 --> 00:00:10,280 Speaker 1: Hi everyone, this is Lee Claskal and we're Talking Transports. 2 00:00:10,320 --> 00:00:13,760 Speaker 1: Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host, 3 00:00:14,160 --> 00:00:18,480 Speaker 1: Lee Klaskow, senior Freight transportation logistics analysts at Bloomberg Intelligence, 4 00:00:18,720 --> 00:00:21,720 Speaker 1: Bloomberg's in house research arm of almost five hundred analysts 5 00:00:21,720 --> 00:00:25,120 Speaker 1: and strategists around the world. A quick public service announcement 6 00:00:25,120 --> 00:00:27,920 Speaker 1: before we dive in. Your support is instrumental to keep 7 00:00:27,920 --> 00:00:30,920 Speaker 1: bringing great guests and conversations to you, our listeners, and 8 00:00:31,000 --> 00:00:34,120 Speaker 1: we need your support, so please, if you enjoy this podcast, 9 00:00:34,159 --> 00:00:37,280 Speaker 1: share it, like it and leave a comment. Also, if 10 00:00:37,320 --> 00:00:40,160 Speaker 1: you've got ideas, feedback, or just want to talk transports, 11 00:00:40,440 --> 00:00:42,400 Speaker 1: I'm always happy to connect. You can find me on 12 00:00:42,479 --> 00:00:46,519 Speaker 1: the Bloomberg terminal, on LinkedIn, or on x at Logistics. Lee. 13 00:00:47,320 --> 00:00:50,680 Speaker 1: This is our first episode of twenty twenty six, coming 14 00:00:50,720 --> 00:00:53,400 Speaker 1: back from a short hiatus, and I want to take 15 00:00:53,400 --> 00:00:55,520 Speaker 1: a moment to wish you all in your family is 16 00:00:55,520 --> 00:00:59,040 Speaker 1: a very happy, healthy, and prosperous new year. I look 17 00:00:59,080 --> 00:01:03,320 Speaker 1: forward to bringing you more interesting conversations with decision makers 18 00:01:03,440 --> 00:01:07,440 Speaker 1: within the freight, transportation and logistics industries. Today, we're going 19 00:01:07,520 --> 00:01:09,840 Speaker 1: to do something a little different. I will be your 20 00:01:09,840 --> 00:01:12,760 Speaker 1: host and guest, yes you heard that right. We're going 21 00:01:12,840 --> 00:01:15,480 Speaker 1: to share with you our twenty twenty six outlook for 22 00:01:15,520 --> 00:01:19,399 Speaker 1: the freight markets, which we published in December. For those 23 00:01:19,400 --> 00:01:21,839 Speaker 1: that want to take a deeper dive into our outlooks, 24 00:01:22,040 --> 00:01:24,880 Speaker 1: they could be found on the Bloomberg terminal at big 25 00:01:25,959 --> 00:01:29,160 Speaker 1: And Before we look ahead, it's always good to see 26 00:01:29,319 --> 00:01:32,759 Speaker 1: where we came from. We would characterize twenty twenty five 27 00:01:32,920 --> 00:01:35,800 Speaker 1: as a year of significant uncertainty as it pertained to 28 00:01:35,959 --> 00:01:40,080 Speaker 1: the more protectionist policies of the Trump administration. This was 29 00:01:40,200 --> 00:01:43,240 Speaker 1: not the backdrop needed to help get the freight markets 30 00:01:43,280 --> 00:01:47,160 Speaker 1: out of aduldrums. The freight markets were also dealing with 31 00:01:47,240 --> 00:01:51,880 Speaker 1: other geopolitical risks in the Red Sea Wars raging between 32 00:01:51,880 --> 00:01:56,720 Speaker 1: Hamas and Israel and between Russia and Ukraine, and this 33 00:01:56,800 --> 00:02:00,560 Speaker 1: backdrop really weighed on freight stocks. You look at the 34 00:02:00,840 --> 00:02:03,120 Speaker 1: S and P five hundred, which was up around seventeen 35 00:02:03,160 --> 00:02:08,440 Speaker 1: percent in twenty twenty five, they really outperform the freight markets. 36 00:02:08,680 --> 00:02:12,440 Speaker 1: The best performing subcategory that we look at was the 37 00:02:12,600 --> 00:02:15,919 Speaker 1: bi express peer group, which is really FedEx ups and 38 00:02:16,000 --> 00:02:20,040 Speaker 1: Deutsche Post, which was up thirteen percent, still underperformed the 39 00:02:20,040 --> 00:02:23,280 Speaker 1: broader markets by foreigner basis points, but was the best performing. 40 00:02:23,480 --> 00:02:25,799 Speaker 1: That was followed by our rail peer group, which was 41 00:02:25,919 --> 00:02:30,519 Speaker 1: up eight percent. Then finally, the Truckload peer group and 42 00:02:30,560 --> 00:02:33,200 Speaker 1: the LTL peer group were down for the year. The 43 00:02:33,240 --> 00:02:36,760 Speaker 1: Truckload peer group was down eleven percent in twenty twenty 44 00:02:36,800 --> 00:02:40,919 Speaker 1: five and the LTL peer group was down thirteen percent. 45 00:02:41,280 --> 00:02:44,560 Speaker 1: You know, we've seen some recent strength since I would 46 00:02:44,600 --> 00:02:48,080 Speaker 1: say late November. This is really on the backs of 47 00:02:48,320 --> 00:02:52,360 Speaker 1: I guess, more optimism heading into the new year, especially 48 00:02:52,680 --> 00:02:57,680 Speaker 1: as it relates to the trucking market. Also, you know, 49 00:02:58,040 --> 00:03:02,120 Speaker 1: the economic backdrop has not been really really good. You know, 50 00:03:02,160 --> 00:03:06,720 Speaker 1: we have inflationary pressures, you know, just like we always 51 00:03:06,760 --> 00:03:09,800 Speaker 1: like to talk about eggs egg CPI. You know, that 52 00:03:09,880 --> 00:03:12,799 Speaker 1: has been down from its peaks, but it's still a 53 00:03:13,360 --> 00:03:16,799 Speaker 1: high relative to historical values. You Know, you have the 54 00:03:16,880 --> 00:03:20,320 Speaker 1: thirty year mortgage which has been trending down since the 55 00:03:20,320 --> 00:03:23,520 Speaker 1: beginning of twenty twenty four, but you know, still remains, 56 00:03:23,600 --> 00:03:26,200 Speaker 1: you know, above that six percent mark. And then you 57 00:03:26,240 --> 00:03:29,079 Speaker 1: have consumer confidence which has been in the dul drums 58 00:03:29,120 --> 00:03:31,560 Speaker 1: as well. So you know, these things are just not 59 00:03:31,600 --> 00:03:34,960 Speaker 1: really painting a great economic outlook. And when I look 60 00:03:35,000 --> 00:03:38,480 Speaker 1: on the Bloomberg terminal at ECFC GO, I can see 61 00:03:38,480 --> 00:03:43,640 Speaker 1: consensus expectations for various economic indicators like GDP. So GDP 62 00:03:43,760 --> 00:03:46,119 Speaker 1: is expected to remain two percent and twenty twenty five 63 00:03:46,160 --> 00:03:51,200 Speaker 1: and twenty twenty six. Industrial production expected to accelerate slightly 64 00:03:51,240 --> 00:03:53,680 Speaker 1: to one point four percent growth from one point one 65 00:03:53,840 --> 00:03:56,480 Speaker 1: percent growth in twenty twenty five, and you have a 66 00:03:56,520 --> 00:04:00,840 Speaker 1: housing market that might increase ever so slightly. So you know, 67 00:04:01,520 --> 00:04:05,000 Speaker 1: it's not terrible, but it's certainly not not good either. 68 00:04:05,640 --> 00:04:09,840 Speaker 1: We would like to see, you know, GDP expectations accelerate 69 00:04:09,880 --> 00:04:12,560 Speaker 1: from the twenty twenty five level to be a little 70 00:04:12,560 --> 00:04:16,279 Speaker 1: more constructive on the demand side. So let's start off 71 00:04:16,640 --> 00:04:20,480 Speaker 1: looking at the sub segments within the freight transportation markets. 72 00:04:20,480 --> 00:04:23,960 Speaker 1: We're going to first start off looking at the truckload market, 73 00:04:24,320 --> 00:04:27,840 Speaker 1: and you know, the truckload carriers, you know, they've really 74 00:04:27,880 --> 00:04:33,039 Speaker 1: been hit by weak demand and weak price prices. We've 75 00:04:33,040 --> 00:04:36,799 Speaker 1: been in a freight recession for more or less four years. 76 00:04:37,360 --> 00:04:42,800 Speaker 1: We saw earnings adjusted earnings collapse for our BI truckload 77 00:04:42,800 --> 00:04:45,280 Speaker 1: peer group by forty eight percent in twenty twenty three 78 00:04:45,600 --> 00:04:48,520 Speaker 1: and another fifty one percent in twenty twenty four. Seeing 79 00:04:48,520 --> 00:04:52,400 Speaker 1: a slight increase this year and next year or should 80 00:04:52,400 --> 00:04:54,760 Speaker 1: say twenty twenty six, we could see a surge of 81 00:04:55,000 --> 00:04:59,760 Speaker 1: thirty nine percent in the median increase in adjusted earnings. 82 00:05:00,080 --> 00:05:03,480 Speaker 1: And you know, it's really the question that I think 83 00:05:03,520 --> 00:05:05,159 Speaker 1: a lot of people want to know is like, you know, 84 00:05:05,240 --> 00:05:07,120 Speaker 1: why is it growing so much? And it's growing so 85 00:05:07,200 --> 00:05:09,680 Speaker 1: much a because you know, you're going to have demand growth, 86 00:05:09,760 --> 00:05:12,800 Speaker 1: tep it, but demand growth, and you're gonna hopefully have 87 00:05:12,880 --> 00:05:15,600 Speaker 1: you know, some rates increasing, and that operational leverage that 88 00:05:15,680 --> 00:05:19,760 Speaker 1: these carriers will get really should drive to the bottom line. Also, 89 00:05:19,880 --> 00:05:24,640 Speaker 1: you could also get some better use prices for for 90 00:05:24,320 --> 00:05:27,440 Speaker 1: for their for their equipment that they're selling in the 91 00:05:27,480 --> 00:05:31,000 Speaker 1: secondary market. You know, supply is finally leaving the market 92 00:05:31,120 --> 00:05:34,960 Speaker 1: and it's being nudged towards the exit by the federal government. 93 00:05:35,240 --> 00:05:39,039 Speaker 1: We're seeing a real crackdown on English language proficiency non 94 00:05:39,080 --> 00:05:43,400 Speaker 1: dominancile driver licenses as well. And you know, when you 95 00:05:43,520 --> 00:05:45,320 Speaker 1: when you look at the numbers, there are roughly two 96 00:05:45,360 --> 00:05:48,480 Speaker 1: hundred thousand non domicile CDL holders out there in the 97 00:05:48,600 --> 00:05:50,960 Speaker 1: US and that's about seven percent of the driving pool. 98 00:05:51,200 --> 00:05:55,359 Speaker 1: And when you add in stricter ELD standards and the 99 00:05:55,440 --> 00:05:59,720 Speaker 1: crackdown on English language proficiency. We could see ten to 100 00:05:59,720 --> 00:06:03,920 Speaker 1: fifty teen percent of drivers being impacted and leaving the market. 101 00:06:04,160 --> 00:06:06,400 Speaker 1: While we don't necessarily think we're going to reach fifteen 102 00:06:06,440 --> 00:06:09,520 Speaker 1: percent of the market leaving overnight, you know, you could 103 00:06:09,520 --> 00:06:13,039 Speaker 1: see an acceleration in the exits that we've been seeing 104 00:06:13,279 --> 00:06:18,560 Speaker 1: that were driven primarily through bankruptcies. You know. Also, you 105 00:06:18,560 --> 00:06:20,960 Speaker 1: know we're not going to see as many drivers entering 106 00:06:21,000 --> 00:06:24,080 Speaker 1: the market because you've seen a crackdown on driving schools 107 00:06:24,080 --> 00:06:29,640 Speaker 1: with about three thousand training providers removed from the FMCSA 108 00:06:30,040 --> 00:06:32,800 Speaker 1: registry for failing to meet federal standards. And this will 109 00:06:32,839 --> 00:06:35,599 Speaker 1: reduce the number of drivers entering the market. So again, 110 00:06:35,760 --> 00:06:38,480 Speaker 1: that's really going to be good for the supply side, 111 00:06:38,960 --> 00:06:41,920 Speaker 1: and this should really drive utilization rates. We have data 112 00:06:41,960 --> 00:06:46,400 Speaker 1: from FTR on the terminal and their utilization rate for 113 00:06:46,480 --> 00:06:50,120 Speaker 1: the truckload market troughed at around eighty nine percent in 114 00:06:50,279 --> 00:06:54,400 Speaker 1: January twenty twenty two, and this is forecasted to hit 115 00:06:54,720 --> 00:06:57,839 Speaker 1: around ninety five point one percent in December of twenty 116 00:06:57,880 --> 00:07:00,440 Speaker 1: twenty five and then ninety six point two two percent 117 00:07:00,920 --> 00:07:03,680 Speaker 1: in twenty twenty six. And this is well above the 118 00:07:03,680 --> 00:07:06,760 Speaker 1: twenty year average of ninety one percent, and we're moving 119 00:07:06,760 --> 00:07:11,120 Speaker 1: into a seller's market and we haven't seen that in 120 00:07:11,160 --> 00:07:13,800 Speaker 1: a really long time. So, you know, we believe that 121 00:07:13,800 --> 00:07:16,920 Speaker 1: that the market is near equilibrium and these things that 122 00:07:16,960 --> 00:07:21,560 Speaker 1: we're seeing on the supply side should really push rates higher. 123 00:07:21,680 --> 00:07:23,840 Speaker 1: While we don't think again rates are going to increase 124 00:07:24,280 --> 00:07:27,320 Speaker 1: significantly higher early on in the year, we do think 125 00:07:27,360 --> 00:07:30,880 Speaker 1: that all gradual increase and you could see some positive 126 00:07:30,920 --> 00:07:34,320 Speaker 1: momentum of building towards the end of the second quarter. 127 00:07:34,560 --> 00:07:37,160 Speaker 1: You know, when you're looking at the LTL, the lesson 128 00:07:37,200 --> 00:07:42,000 Speaker 1: truckload sector, this is a more interesting sector for us 129 00:07:42,280 --> 00:07:45,440 Speaker 1: because at the end of the day, they have better pricing. 130 00:07:45,440 --> 00:07:47,040 Speaker 1: And the reason why they have better pricing, it's a 131 00:07:47,120 --> 00:07:53,080 Speaker 1: much more consolidated market and that is really driving their decisions. 132 00:07:53,120 --> 00:07:56,880 Speaker 1: And if certain businesses do not hit a certain ROI, 133 00:07:57,200 --> 00:08:00,560 Speaker 1: they're more than happy to walk away from that business. 134 00:08:00,920 --> 00:08:03,880 Speaker 1: You know. For twenty twenty six, Consensus is expecting twenty 135 00:08:03,880 --> 00:08:08,560 Speaker 1: two percent EPs growth on four percent revenue growth for 136 00:08:08,920 --> 00:08:12,760 Speaker 1: LTL peers that we cover, you know, companies like XPO, 137 00:08:12,840 --> 00:08:17,960 Speaker 1: Old Dominion, Saya, TFI, our Best. You know, they these 138 00:08:18,040 --> 00:08:21,440 Speaker 1: these carriers have really learned from the late two thousands 139 00:08:21,600 --> 00:08:26,000 Speaker 1: that using pricing as a weapon to gain share really 140 00:08:26,000 --> 00:08:29,000 Speaker 1: could backfire. And you know, it took a lot of 141 00:08:29,080 --> 00:08:33,920 Speaker 1: carriers years to reprice their business to get to those 142 00:08:34,160 --> 00:08:37,080 Speaker 1: rois that they really need to reinvest in their businesses. 143 00:08:37,120 --> 00:08:40,240 Speaker 1: So we don't think that carriers will be using price 144 00:08:40,800 --> 00:08:44,920 Speaker 1: to win share. And that's good because this discipline pricing 145 00:08:44,920 --> 00:08:48,360 Speaker 1: will likely offset flat to weak LTL demand in twenty 146 00:08:48,400 --> 00:08:51,800 Speaker 1: twenty six and help push revenue and earnings higher. There's 147 00:08:51,880 --> 00:08:56,120 Speaker 1: upside to consensus for revenue to increase a medium of 148 00:08:56,160 --> 00:08:59,400 Speaker 1: four percent for the peer group. On our kind of 149 00:08:59,480 --> 00:09:03,239 Speaker 1: more up pricing outlook, this could deal to d adjusted 150 00:09:03,440 --> 00:09:08,800 Speaker 1: EPs growth of around twenty two percent, which can halt 151 00:09:08,880 --> 00:09:12,880 Speaker 1: three consecutive years of earning declines. Pricing and productivity gains 152 00:09:12,880 --> 00:09:16,640 Speaker 1: are expected to drive slightly better margins, and it will 153 00:09:16,720 --> 00:09:21,080 Speaker 1: be the first annual improvement based on consensus estimates since 154 00:09:21,080 --> 00:09:24,400 Speaker 1: twenty twenty two. So twenty twenty six really shaping up 155 00:09:24,440 --> 00:09:26,360 Speaker 1: to be much better than we've seen it in a 156 00:09:26,440 --> 00:09:29,400 Speaker 1: couple of years for the LTL space, and any upside 157 00:09:29,640 --> 00:09:33,640 Speaker 1: will actually likely be driven by improved demand or productivity 158 00:09:33,640 --> 00:09:38,400 Speaker 1: initiatives at these individual carriers, And you know, it's worth noting. 159 00:09:38,400 --> 00:09:41,240 Speaker 1: You know why pricing discipline is so important is that, 160 00:09:41,320 --> 00:09:44,400 Speaker 1: you know, the industry is highly leveraged to pricing about 161 00:09:44,440 --> 00:09:47,640 Speaker 1: one hundred bases point declined and yield requires about three 162 00:09:47,720 --> 00:09:50,720 Speaker 1: hundred basis point increase in tonnage, and carriers will become 163 00:09:51,280 --> 00:09:54,480 Speaker 1: more mindful about managing yields and like I said, walking 164 00:09:54,520 --> 00:09:59,040 Speaker 1: away from freight that don't meet certain return on investment thresholds. 165 00:09:59,600 --> 00:10:02,120 Speaker 1: You know, we expect revenue P one hundredweight excluding fuel 166 00:10:02,120 --> 00:10:04,439 Speaker 1: search charges to be up by loads to mid single 167 00:10:04,480 --> 00:10:09,040 Speaker 1: digits next year, so it should be I guess I 168 00:10:09,080 --> 00:10:13,680 Speaker 1: would say a more constructive backdrop for the LTL market. 169 00:10:13,880 --> 00:10:18,840 Speaker 1: You know what's worth voting is that the ISM Manufacturing 170 00:10:18,840 --> 00:10:22,439 Speaker 1: index that's been in contraction territory thirty five of the 171 00:10:22,520 --> 00:10:26,760 Speaker 1: last thirty seven months, and this is really kind of 172 00:10:26,800 --> 00:10:30,960 Speaker 1: a good barometer for future LTL demand. So you know 173 00:10:31,000 --> 00:10:33,000 Speaker 1: what that is telling us is that at least over 174 00:10:33,000 --> 00:10:36,240 Speaker 1: the next couple of months, a demand when you're looking 175 00:10:36,280 --> 00:10:41,800 Speaker 1: at tonnage, should probably remain you know, depressed or down 176 00:10:42,840 --> 00:10:45,800 Speaker 1: year over year. Let's switch gears now. You know, we 177 00:10:45,840 --> 00:10:47,920 Speaker 1: talked about trucks, we talked about the truckload market. We 178 00:10:47,960 --> 00:10:49,959 Speaker 1: talked about the LTL market, you know, I want to 179 00:10:50,000 --> 00:10:52,720 Speaker 1: talk a little bit about the the rail market. You know, 180 00:10:53,280 --> 00:10:56,000 Speaker 1: North America railroad earnings growth looks poised to pick up 181 00:10:56,000 --> 00:10:58,600 Speaker 1: in twenty twenty six, but may fall short of double 182 00:10:58,640 --> 00:11:03,120 Speaker 1: digits amid uncertain tied to the Trump Administration's tariffs. Slack 183 00:11:03,160 --> 00:11:07,080 Speaker 1: trucking capacity and low diesel prices could also hurt domestic 184 00:11:07,120 --> 00:11:12,120 Speaker 1: intermodal results. Railroads will focus on yield initiatives and productivity 185 00:11:12,240 --> 00:11:17,839 Speaker 1: to drive margins against the tepid demand backdrop. The proposed 186 00:11:18,040 --> 00:11:21,880 Speaker 1: Union Pacific and Norfolk Southern merger will obviously dominate the 187 00:11:21,960 --> 00:11:26,400 Speaker 1: industry this year. It faces high regulatory hurdles and we 188 00:11:26,440 --> 00:11:31,400 Speaker 1: don't think approval is necessarily guaranteed. The prospects for the 189 00:11:31,480 --> 00:11:35,000 Speaker 1: Surface Transportation Board approval have brightened, though, we would say, 190 00:11:35,960 --> 00:11:39,679 Speaker 1: but our view remains below consensus. We put up probability 191 00:11:39,720 --> 00:11:43,120 Speaker 1: of fifty five to sixty percent that it gets approval. 192 00:11:43,600 --> 00:11:48,720 Speaker 1: This is higher than our last probability of forty five percent. 193 00:11:49,200 --> 00:11:51,800 Speaker 1: And you know, we believe the regulatory hurdles to prove 194 00:11:51,800 --> 00:11:54,360 Speaker 1: the deal will enhance competition. Is in the public interest, 195 00:11:54,600 --> 00:11:57,360 Speaker 1: is not a layup for the two carriers. You know, 196 00:11:57,400 --> 00:12:00,200 Speaker 1: But like I said, you know, our outlook has improved. 197 00:12:00,240 --> 00:12:03,200 Speaker 1: Reports that the Supreme Court may allow President Trump to 198 00:12:03,240 --> 00:12:08,960 Speaker 1: remove Rebecca Kelly Slaughter from the FTC despite legal precedents 199 00:12:09,000 --> 00:12:13,480 Speaker 1: for independent agencies. The ruling could affect the firing of 200 00:12:13,720 --> 00:12:17,920 Speaker 1: the s TOB Commissioner Robert Primus, a Democrat who has 201 00:12:17,960 --> 00:12:23,240 Speaker 1: a pending wrong for wrongful termidation case with the hopes 202 00:12:23,280 --> 00:12:27,080 Speaker 1: of being reinstated. His dismissal helped the Republicans gain a 203 00:12:27,160 --> 00:12:30,800 Speaker 1: two to one majority on the board. There are two 204 00:12:30,840 --> 00:12:35,160 Speaker 1: open seats on the STB, including Primus's seat. He was 205 00:12:35,240 --> 00:12:38,560 Speaker 1: the only member to oppose the twenty twenty three Canadian 206 00:12:38,600 --> 00:12:44,080 Speaker 1: Pacific and Casey Southern merger, so that's actually worth noting, 207 00:12:44,240 --> 00:12:48,640 Speaker 1: and the sole Democrat, Karen Hudland's term expires at the 208 00:12:48,720 --> 00:12:51,640 Speaker 1: end of this year, and commentary by the US government 209 00:12:51,679 --> 00:12:55,880 Speaker 1: officials bolster's optimism that the UPNS merger can be done. 210 00:12:56,120 --> 00:13:01,079 Speaker 1: Commerce Secretary Howard Lutnik has said he supports consolidation if 211 00:13:01,080 --> 00:13:05,800 Speaker 1: it creates efficiencies. President Donald Trump called it a good deal. 212 00:13:06,360 --> 00:13:09,600 Speaker 1: Up is among also the donors to the White House's 213 00:13:09,640 --> 00:13:15,000 Speaker 1: ballroom following September's meeting between its CEO and Trump, which 214 00:13:15,080 --> 00:13:18,680 Speaker 1: probably can't hurt as well. While the lawyers battle it 215 00:13:18,720 --> 00:13:21,800 Speaker 1: out at the STB and the public relation machines on 216 00:13:21,880 --> 00:13:25,600 Speaker 1: both sides make their points heard, the operators, whether it's 217 00:13:25,679 --> 00:13:28,640 Speaker 1: Union Pacific or Norfolk Southern or its peers, are really 218 00:13:28,679 --> 00:13:34,880 Speaker 1: focused on improving margins and their overall earnings outlook. Consensus 219 00:13:34,920 --> 00:13:39,760 Speaker 1: expects adjusted EPs to grow in the high single digits. 220 00:13:39,960 --> 00:13:44,240 Speaker 1: We're about nine percent in twenty twenty six. CSX looks 221 00:13:44,280 --> 00:13:47,080 Speaker 1: like it's going to lead that growth with about fifteen 222 00:13:47,120 --> 00:13:51,439 Speaker 1: percent of adjusted earnings growth in twenty twenty six. And 223 00:13:52,040 --> 00:13:55,199 Speaker 1: what's driving this is they had a tough twenty twenty five, 224 00:13:55,720 --> 00:13:59,480 Speaker 1: they're moving past two major construction projects, and they're ready 225 00:13:59,480 --> 00:14:03,920 Speaker 1: to reap the rewards of better fluidity. Canadian Pacific Kansas 226 00:14:04,000 --> 00:14:07,560 Speaker 1: City is right behind them with around fourteen percent growth 227 00:14:07,600 --> 00:14:12,079 Speaker 1: forecasted on their earnings according to Consensus, and that's really 228 00:14:12,400 --> 00:14:17,080 Speaker 1: thanks to new service opportunities on their network and probably 229 00:14:17,160 --> 00:14:21,520 Speaker 1: some new business wins which this network will provide it. 230 00:14:23,000 --> 00:14:26,000 Speaker 1: You know, we can't talk rail without talking tariffs. The 231 00:14:26,080 --> 00:14:31,280 Speaker 1: trade war has unleashed a flood of uncertainty our Canadian peers, 232 00:14:31,320 --> 00:14:35,000 Speaker 1: Canadian National and CPKC have the most to lose here. 233 00:14:35,040 --> 00:14:37,960 Speaker 1: About thirty two percent of CNS revenue and thirty nine 234 00:14:38,000 --> 00:14:42,120 Speaker 1: percent of CPKC revenues is cross border. If the Supreme 235 00:14:42,200 --> 00:14:45,560 Speaker 1: Court rules in favor of the Administration's tariff powers, these 236 00:14:45,600 --> 00:14:51,000 Speaker 1: railroads are going to have a very stiff headwind to navigate. Also, 237 00:14:51,800 --> 00:14:57,520 Speaker 1: the Administration wants to we negotiate the USCMA agreement next year, 238 00:14:57,880 --> 00:15:01,520 Speaker 1: and we're definitely going to be watching watching that. The 239 00:15:01,560 --> 00:15:05,680 Speaker 1: ever changing US trade policies and falling consumer confidence may 240 00:15:05,720 --> 00:15:09,520 Speaker 1: create another challenging demand backdrop for the North American rails 241 00:15:09,880 --> 00:15:13,440 Speaker 1: in twenty twenty six. They're trying to augment what the 242 00:15:13,480 --> 00:15:17,960 Speaker 1: economy provides with new services and industrial development opportunities. Intermol 243 00:15:18,120 --> 00:15:22,600 Speaker 1: volume is contending, though currently with lower diesel prices and 244 00:15:22,640 --> 00:15:27,280 Speaker 1: excess trucking capacity, which is driving spot rates low and depressed, 245 00:15:27,920 --> 00:15:33,000 Speaker 1: which limits their opportunity there. As we mentioned earlier, a 246 00:15:33,040 --> 00:15:37,640 Speaker 1: tighter truckload market would really benefit intermodal here, making intermodal 247 00:15:37,680 --> 00:15:42,160 Speaker 1: a lot more compelling. North America volume growth could accelerate 248 00:15:42,200 --> 00:15:45,480 Speaker 1: to two zero point one percent in twenty twenty six 249 00:15:45,640 --> 00:15:49,200 Speaker 1: from one point four percent this year based on the 250 00:15:49,280 --> 00:15:53,160 Speaker 1: median consensus estimate, growth will ultimately be driven by the 251 00:15:53,160 --> 00:15:57,560 Speaker 1: Trump administration's trade policies, which have been a headwind for demand, 252 00:15:57,920 --> 00:16:02,080 Speaker 1: as well as inflationary tr which again their data is 253 00:16:02,120 --> 00:16:05,520 Speaker 1: available on the Blueberg Terminal forecasts US rail traffic will 254 00:16:05,520 --> 00:16:10,240 Speaker 1: be zero point seven percent lower in twenty twenty six, 255 00:16:10,560 --> 00:16:13,640 Speaker 1: which is a little more twice than the drop expected 256 00:16:13,760 --> 00:16:17,120 Speaker 1: this year in one hundred and forty basis points more 257 00:16:17,160 --> 00:16:21,480 Speaker 1: barrassed than consensus, CPKC is expected to lead growth up 258 00:16:21,560 --> 00:16:26,720 Speaker 1: five percent on broad based gains in potash, Automotive and intermodal. 259 00:16:27,040 --> 00:16:30,480 Speaker 1: Intermotive declines in the US may accelerate to one point 260 00:16:30,520 --> 00:16:33,880 Speaker 1: five percent in twenty twenty six from point seven this year. 261 00:16:34,480 --> 00:16:39,200 Speaker 1: Based on FTR forecast, Consensus is more constructive with the 262 00:16:39,240 --> 00:16:42,400 Speaker 1: medium forecast of two point eight percent intermodial growth for 263 00:16:42,440 --> 00:16:46,320 Speaker 1: public Class one peers this year. Norfolk Southern is the 264 00:16:46,320 --> 00:16:50,040 Speaker 1: only rail that Consensus is modeling for intermodial declines at 265 00:16:50,120 --> 00:16:53,920 Speaker 1: point nine percent from increased competition following its announced merger 266 00:16:54,080 --> 00:16:58,480 Speaker 1: with Union Pacific. The Trump administration will have airing implications 267 00:16:58,480 --> 00:17:03,320 Speaker 1: for intermodial markets. Protectionist policies may limit imports with Clarkson's 268 00:17:03,360 --> 00:17:06,760 Speaker 1: forecasting North American portlifts will rise zero point four percent 269 00:17:06,840 --> 00:17:09,880 Speaker 1: in twenty twenty six. On the other hand, stricter enforcement 270 00:17:09,920 --> 00:17:14,800 Speaker 1: of English language proficiency standards and reduced non domicile commercial 271 00:17:14,880 --> 00:17:18,760 Speaker 1: driver licenses could tighten markets, drive uprates, and make intermodal 272 00:17:19,200 --> 00:17:24,879 Speaker 1: intermodal more compelling for shippers. Railroads are courting new businesses 273 00:17:24,920 --> 00:17:28,400 Speaker 1: and services to spurare growth beyond what the economy provides. 274 00:17:28,760 --> 00:17:34,399 Speaker 1: At csx's November twenty twenty four analyst Day Management quantified 275 00:17:35,280 --> 00:17:39,800 Speaker 1: it's twenty twenty five to twenty seven merchandise pipeline at 276 00:17:40,000 --> 00:17:43,679 Speaker 1: one point two billion, to be fueled by chemicals, followed 277 00:17:43,680 --> 00:17:48,120 Speaker 1: by minerals, AG, food and metals. A new project, though, 278 00:17:48,160 --> 00:17:49,800 Speaker 1: can take a long time. It can take about one 279 00:17:49,840 --> 00:17:52,679 Speaker 1: to two years to come online in another twelve to 280 00:17:52,720 --> 00:17:58,679 Speaker 1: eighteen months to become fully operational. CPKC highlighted two hundred 281 00:17:58,720 --> 00:18:02,040 Speaker 1: million in new business operatortunity starting up in the fourth 282 00:18:02,119 --> 00:18:05,240 Speaker 1: quarter of twenty twenty five. So let's switch gears again. 283 00:18:05,359 --> 00:18:08,639 Speaker 1: Let's hit the parcel markets so stronger yields and productivity 284 00:18:08,640 --> 00:18:13,240 Speaker 1: gains will help accelerate earnings growth for leading global parcel carriers. 285 00:18:13,280 --> 00:18:17,840 Speaker 1: Such as FEDEXUPS and DHL in twenty twenty six. Pricing 286 00:18:17,920 --> 00:18:21,120 Speaker 1: should get a boost from search charges, and carriers will 287 00:18:21,119 --> 00:18:24,360 Speaker 1: focus on revenue quality as they go after more profitable 288 00:18:24,359 --> 00:18:29,960 Speaker 1: customers and end markets. This could include healthcare markets, reverse logistics, 289 00:18:30,440 --> 00:18:33,640 Speaker 1: and more of a focus on small to midside customers 290 00:18:33,880 --> 00:18:39,160 Speaker 1: versus these large enterprise customers like Amazon, which are mostly 291 00:18:39,480 --> 00:18:45,159 Speaker 1: lower margin business. This will mitigate volume headwinds from the 292 00:18:45,280 --> 00:18:48,199 Speaker 1: end of the Diminimus exemption on low value shipments. In 293 00:18:48,240 --> 00:18:51,560 Speaker 1: the ever changing tariff policies, we expect volume to increase 294 00:18:51,600 --> 00:18:54,640 Speaker 1: more or less in line with global GDP, which can 295 00:18:54,680 --> 00:18:58,360 Speaker 1: Sensus pegs at around two point nine percent. Parcel carriers 296 00:18:58,520 --> 00:19:01,800 Speaker 1: have made strides with lost controls and productivity, which can 297 00:19:01,880 --> 00:19:06,680 Speaker 1: help buffer against broader macroeconomic challenges. UPS, for example, has 298 00:19:06,720 --> 00:19:10,640 Speaker 1: targeted three point five billion in twenty twenty five cost reductions, 299 00:19:10,920 --> 00:19:13,960 Speaker 1: which really equates to about three dollars and fifteen cents 300 00:19:13,960 --> 00:19:17,760 Speaker 1: to share. We expect more productivity improvements from all the 301 00:19:17,800 --> 00:19:21,520 Speaker 1: carriers in twenty twenty six. When they start reporting their earnings, 302 00:19:21,520 --> 00:19:25,200 Speaker 1: they'll probably lay out their expectations and you know, FedEx 303 00:19:25,280 --> 00:19:30,119 Speaker 1: is also holding a an analyst date in February of 304 00:19:30,119 --> 00:19:32,879 Speaker 1: twenty twenty six, So they'll probably have a lot to 305 00:19:32,920 --> 00:19:35,600 Speaker 1: say about, you know, where they think their costs are 306 00:19:35,720 --> 00:19:40,720 Speaker 1: going as they continue to restructure parcel carriers. EBIT growth 307 00:19:40,760 --> 00:19:44,560 Speaker 1: may rise around ten percent in twenty twenty six, per consensus, 308 00:19:44,600 --> 00:19:48,440 Speaker 1: after this year's tepid one point one percent growth. Now 309 00:19:48,520 --> 00:19:52,840 Speaker 1: you know, another subcategory in logistics are truck brokers. We 310 00:19:52,960 --> 00:19:55,440 Speaker 1: want to spend some time there now, you know. Revenue 311 00:19:55,440 --> 00:20:00,000 Speaker 1: growth for leading truck brokers like H Robinson or rx 312 00:20:00,040 --> 00:20:03,560 Speaker 1: H JB Hunt. You know, they might rebound in twenty 313 00:20:03,600 --> 00:20:07,320 Speaker 1: twenty six following a one point one decline in twenty 314 00:20:07,400 --> 00:20:13,200 Speaker 1: twenty five, and earnings recovery may also only be possible 315 00:20:13,359 --> 00:20:18,000 Speaker 1: in twenty twenty six, with analysts projecting medium twenty five 316 00:20:18,000 --> 00:20:22,800 Speaker 1: percent EPs growth following a twenty one percent deterioration in 317 00:20:22,880 --> 00:20:26,959 Speaker 1: twenty twenty five. The trajectory of demand growth will depend 318 00:20:27,040 --> 00:20:31,720 Speaker 1: on how various US protectionist policies play out, which good 319 00:20:31,760 --> 00:20:35,600 Speaker 1: weigh on brokerage volumes if they stick. Also, margins will 320 00:20:35,640 --> 00:20:38,359 Speaker 1: get a boost from the deployment of artificial intelligence and 321 00:20:38,480 --> 00:20:43,119 Speaker 1: large language models that have driven significant productivity improvements. With 322 00:20:43,440 --> 00:20:47,720 Speaker 1: those brokers that have embraced these emerging technologies. You know, AI. 323 00:20:47,720 --> 00:20:51,120 Speaker 1: I'm kind of on the bandwagon here. This is one 324 00:20:51,119 --> 00:20:55,679 Speaker 1: of the few technologies or emerging technologies that you know, 325 00:20:56,720 --> 00:20:59,200 Speaker 1: come across our desk that you know, we're actually seeing 326 00:20:59,240 --> 00:21:04,520 Speaker 1: deployed and actually seeing benefits of, you know, going right 327 00:21:04,600 --> 00:21:08,440 Speaker 1: to the bottom line. So it's pretty exciting to see 328 00:21:08,760 --> 00:21:11,600 Speaker 1: this to continue. And you know, I think we're in 329 00:21:11,720 --> 00:21:15,000 Speaker 1: early innings in terms of you know, the benefits that 330 00:21:15,040 --> 00:21:17,720 Speaker 1: AI will have, and we expect the players with the 331 00:21:17,720 --> 00:21:21,840 Speaker 1: most compelling technology stack will reduce costs, pass those savings 332 00:21:21,840 --> 00:21:25,280 Speaker 1: as shippers and drive market share gains. You know, more 333 00:21:25,280 --> 00:21:30,159 Speaker 1: and more of a broker's workflow is becoming automated, allowing 334 00:21:30,200 --> 00:21:33,480 Speaker 1: employees to focus on what matters, which is building relationships 335 00:21:33,680 --> 00:21:36,320 Speaker 1: as well as providing its customers and carriers with a 336 00:21:36,400 --> 00:21:40,200 Speaker 1: higher level of service when things go awry. Finally, let's 337 00:21:40,200 --> 00:21:43,160 Speaker 1: head out to see, if you will. Global marine shipping 338 00:21:43,280 --> 00:21:46,000 Speaker 1: is facing a challenging twenty twenty six and this is 339 00:21:46,040 --> 00:21:50,600 Speaker 1: really being driven by supply growth outpacing demand across the board. 340 00:21:50,720 --> 00:21:53,159 Speaker 1: So whether it's we're talking about tankers, dry bookers, or 341 00:21:53,200 --> 00:21:58,800 Speaker 1: contanna liners, we're expected to see that transpire this year. 342 00:22:00,040 --> 00:22:02,679 Speaker 1: If we focus on the container liner market, you know, 343 00:22:02,840 --> 00:22:07,600 Speaker 1: we're expecting declining rates and low single digit vyume growth, 344 00:22:08,240 --> 00:22:12,240 Speaker 1: which really isn't painting an encouraging picture for container liners 345 00:22:12,640 --> 00:22:17,520 Speaker 1: in their earnings. Supply growth outpacing demand over the coming 346 00:22:17,640 --> 00:22:21,880 Speaker 1: years will continue to weigh on rates, fueling more downside 347 00:22:21,960 --> 00:22:25,360 Speaker 1: risk to earnings expectations. In our view, some liners might 348 00:22:25,440 --> 00:22:29,199 Speaker 1: even struggle to generate positive EBIT this year. Revenue and 349 00:22:29,200 --> 00:22:32,760 Speaker 1: earning expectations will likely move lower in our view as 350 00:22:32,840 --> 00:22:38,040 Speaker 1: rates continue to struggle to find support. EPs for Bloomberg 351 00:22:38,040 --> 00:22:41,720 Speaker 1: Intelligence top container liner peer group is expected to fall 352 00:22:42,080 --> 00:22:45,800 Speaker 1: forty three percent in twenty twenty six, following last year's 353 00:22:45,880 --> 00:22:49,280 Speaker 1: forty five percent decline, and this is all on six 354 00:22:49,400 --> 00:22:54,200 Speaker 1: seven percent lower revenues. Global container supply is on pace 355 00:22:54,280 --> 00:22:57,920 Speaker 1: to outpaced demand by around two hundred and seventy basis 356 00:22:57,920 --> 00:23:02,800 Speaker 1: points in twenty twenty five, according to Clarkson's, which is 357 00:23:02,880 --> 00:23:06,760 Speaker 1: forecasting spreads to widen to around five hundred and twenty 358 00:23:06,800 --> 00:23:11,960 Speaker 1: basis points in twenty twenty six, and you know, really 359 00:23:12,119 --> 00:23:15,239 Speaker 1: widen even further in twenty twenty seven. You know, the 360 00:23:15,359 --> 00:23:17,840 Speaker 1: order book as a percentage of the container liner fleet 361 00:23:17,880 --> 00:23:20,240 Speaker 1: sits around thirty three percent, which is well above the 362 00:23:20,280 --> 00:23:22,959 Speaker 1: twenty year average of around twenty eight percent, and at 363 00:23:23,040 --> 00:23:25,800 Speaker 1: level is really not seen since twenty ten. And this 364 00:23:25,880 --> 00:23:28,960 Speaker 1: is all based on Clarkson's data. The inflated order book 365 00:23:29,000 --> 00:23:33,960 Speaker 1: has been driven by a combination of decarbonization efforts, fleet redouals, 366 00:23:34,000 --> 00:23:37,920 Speaker 1: and demand for larger vessels. The industry doesn't take a 367 00:23:38,720 --> 00:23:41,879 Speaker 1: discipline approach to capacity, really never has and this is 368 00:23:41,920 --> 00:23:44,720 Speaker 1: really driven the boom and bus cycles that we're kind 369 00:23:44,720 --> 00:23:48,239 Speaker 1: of familiar with in the global liner industry, you know, 370 00:23:48,720 --> 00:23:52,840 Speaker 1: the industry was also you know, shipping industry in general, 371 00:23:52,960 --> 00:23:56,120 Speaker 1: whether it's the liners or bulkers or tankers, have been 372 00:23:56,359 --> 00:23:59,680 Speaker 1: hurt by the WHO these attacks on ships operating in 373 00:23:59,680 --> 00:24:04,959 Speaker 1: the right see The number of traversing the Suez Canal, 374 00:24:05,680 --> 00:24:08,320 Speaker 1: at least as it relates to liners, is down around 375 00:24:08,320 --> 00:24:12,480 Speaker 1: eighty percent since December of twenty twenty three. This isn't 376 00:24:12,480 --> 00:24:16,680 Speaker 1: as great for the dry bulkers, which are down around 377 00:24:16,680 --> 00:24:19,119 Speaker 1: forty eight percent and the tankers are thirty eight percent. 378 00:24:19,200 --> 00:24:22,440 Speaker 1: Lower liners have been probably more targeted due to the 379 00:24:22,520 --> 00:24:25,720 Speaker 1: high value of their cargo and the fact that much 380 00:24:25,720 --> 00:24:29,840 Speaker 1: of the freight was headed to Western nations. Also, tankers 381 00:24:29,880 --> 00:24:33,280 Speaker 1: hauling crude from Iran and Russia are more likely to 382 00:24:33,440 --> 00:24:37,960 Speaker 1: use the Suez, given Russia support of Iran, which obviously 383 00:24:38,000 --> 00:24:40,880 Speaker 1: back to the Houthis. A reopening of the water way 384 00:24:40,920 --> 00:24:44,640 Speaker 1: would add significant capacity to an already loose market. Some 385 00:24:44,680 --> 00:24:48,520 Speaker 1: liners have started returning to the Suez. They at least 386 00:24:48,560 --> 00:24:52,639 Speaker 1: been testing it as the Hoothis have paused their attacks 387 00:24:52,920 --> 00:24:55,320 Speaker 1: for as long as the cease fire between Israel and 388 00:24:55,359 --> 00:25:00,360 Speaker 1: Hamas holds. We expect any return will be It's low 389 00:25:00,600 --> 00:25:04,399 Speaker 1: given that the risks haven't fully dissipated, and the ones 390 00:25:04,400 --> 00:25:07,280 Speaker 1: that are returning on the liner side, it's really a 391 00:25:07,359 --> 00:25:11,560 Speaker 1: southbound move, so from Europe to Asia and those The 392 00:25:11,560 --> 00:25:14,600 Speaker 1: reason for that is those ships tend to have less cargo, 393 00:25:14,920 --> 00:25:19,560 Speaker 1: so less value on board and probably less of a 394 00:25:19,640 --> 00:25:23,399 Speaker 1: risk for insurers. One small bright spot on the water 395 00:25:23,680 --> 00:25:27,080 Speaker 1: is dry bulk. Dry bulk ton miles demand is set 396 00:25:27,080 --> 00:25:30,200 Speaker 1: to pick up to around two point one percent as 397 00:25:30,280 --> 00:25:34,840 Speaker 1: China's appetite for bulk commodities remains resilient and trade tensions 398 00:25:34,880 --> 00:25:40,280 Speaker 1: hopefully cool slightly this year. But even there, the supplied 399 00:25:40,320 --> 00:25:43,679 Speaker 1: demand gap is narrowing and it's going to be a 400 00:25:43,720 --> 00:25:49,160 Speaker 1: battle for profitability for players like Starbulk and Good Golden Ocean. 401 00:25:49,840 --> 00:25:53,200 Speaker 1: So that is something that definitely we need to watch. 402 00:25:53,600 --> 00:25:56,560 Speaker 1: So as we wrap up our twenty twenty our twenty 403 00:25:56,560 --> 00:26:01,320 Speaker 1: twenty six outlook, you know what's the big picture. It's 404 00:26:01,359 --> 00:26:05,960 Speaker 1: finally seems to be on the right path to at 405 00:26:06,040 --> 00:26:10,240 Speaker 1: least a better market. But you know there is really 406 00:26:10,280 --> 00:26:14,800 Speaker 1: going to be dependent on the pace of how supply 407 00:26:14,920 --> 00:26:17,439 Speaker 1: it leaves the market. So you know, the faster the 408 00:26:17,480 --> 00:26:22,960 Speaker 1: supply leaves, the better rates will be sooner and better 409 00:26:23,000 --> 00:26:25,879 Speaker 1: for earnings. Railroads, I think it's really going to be 410 00:26:26,040 --> 00:26:30,760 Speaker 1: about TEPI demand and you know the drama between up 411 00:26:31,560 --> 00:26:36,400 Speaker 1: Norfolk Southern those that are for the merger and those 412 00:26:36,440 --> 00:26:38,280 Speaker 1: that are against it. So I think it's going to 413 00:26:38,280 --> 00:26:41,600 Speaker 1: be a very interesting twenty twenty six as these pr 414 00:26:41,680 --> 00:26:47,400 Speaker 1: machines go into full full speed ahead. You know three 415 00:26:47,400 --> 00:26:50,120 Speaker 1: pls like the freight brokers are becoming you know, more 416 00:26:50,200 --> 00:26:54,280 Speaker 1: tech enabled, and that is really going I think to 417 00:26:54,400 --> 00:26:57,000 Speaker 1: drive the market. You know, as you mentioned earlier, I 418 00:26:57,000 --> 00:26:59,199 Speaker 1: think it's really all about tech. It's going to be 419 00:26:59,359 --> 00:27:01,960 Speaker 1: those It's really going to be between the haves and 420 00:27:02,000 --> 00:27:07,639 Speaker 1: have not which could you know hasten the consolidation of 421 00:27:07,680 --> 00:27:11,399 Speaker 1: the market, and you know, finally global shipping, we would 422 00:27:11,800 --> 00:27:16,280 Speaker 1: consider it. You know, the supply demand dynamics are not encouraging, 423 00:27:16,840 --> 00:27:20,520 Speaker 1: so you know, rates could could feel some pressure across 424 00:27:20,560 --> 00:27:23,520 Speaker 1: the board. So you know, a lot of uncertainty still. 425 00:27:23,560 --> 00:27:26,320 Speaker 1: While twenty twenty five was a year of uncertainty, I 426 00:27:26,359 --> 00:27:30,760 Speaker 1: think that common thread will probably continue this year and 427 00:27:30,800 --> 00:27:33,200 Speaker 1: it'll be very interesting to see how things play out. 428 00:27:33,720 --> 00:27:35,479 Speaker 1: And I also want to thank you for tuning in. 429 00:27:35,600 --> 00:27:40,120 Speaker 1: If you liked the episode, please subscribe and leave a review. 430 00:27:40,560 --> 00:27:43,359 Speaker 1: We've lined up a number of great guests for twenty 431 00:27:43,400 --> 00:27:46,520 Speaker 1: twenty six. We'll be talking to c suite executives, shippers, 432 00:27:46,560 --> 00:27:50,480 Speaker 1: and regulators that are navigating these opportunities and challenges ahead. 433 00:27:50,760 --> 00:27:53,720 Speaker 1: If you want to dive deeper into any of the 434 00:27:53,760 --> 00:27:57,080 Speaker 1: information that we spoke about today, please feel free to 435 00:27:57,200 --> 00:28:00,000 Speaker 1: jump on the Bloomberg terminal at big or you can 436 00:28:00,040 --> 00:28:03,440 Speaker 1: follow her work on social media. This is Lee Glasgow 437 00:28:03,640 --> 00:28:05,840 Speaker 1: signing off. Thanks for talking transports with me.