RXO, Inc. — Call Transcript 2025

Thanks for having us at your conference. Really appreciate it. So when we reported a few weeks ago, when we talked about still being in a prolonged soft rate market, and you look at some of the indicators that we were referring to, the month of October, if you look at Cass Freight Shipments, Cass Freight Shipments were down 7% year over year. And so it took another step back relative to September. And what's interesting is if you go back and you look at year-to-date 2025 Cass Freight Shipments, you're approaching Great Financial Crisis lows going back to 2008. So you think about over the last almost 15-plus years, overall shipments are really weak when you think about just the freight economy and the divergence that's occurred relative to the broader macroeconomy, which is reasonably healthy, right? Positive GDP growth, slowing inflation, services economy is strong. I think that speaks to the fact that goods relative to services are sitting at 15-year lows relative to consumption. So still in a prolonged soft rate market. But the one thing that we talked about on the call was that we believe the changes that are happening on the supply side are structural in nature and are something certainly to be paying attention to when you think about the FMCSA sizing about 200,000 non-domiciled CDLs potentially coming out of the market over the next few years. That's a big deal. And enforcement actions have sustained state by state. And I think the DOT is taking corrective actions to ensure safety across the board for our roads. And I think that has the near-term implication of what's transpired into our business because we procure capacity on the spot market as a truckload brokerage, and we've got a heavy contractual book of business. So what we saw embedded in our Q4 outlook, which I'm sure we'll get to, is that when you think about Q4, we've got this contractual book of business, and the cost of purchased transportation moved higher in the month of October as it relates to a lot of the supply tightening that I just referred to occurring. So sort of I said a lot there, overall state of the industry, and we can certainly dive into it. So, how do you think about from an activity perspective? I guess if you look at some of the other industry kind of characterizations, metrics, whatever you want to look at, does it seem like it's kind of shaping up as you would have had anticipated, or do you think it's kind of, do you see indications it's much different? So if you look at the industry-wide metrics over the last, call it, four weeks, load-to-truck ratio, tender rejections have all moved generally higher. Tender rejections sitting around 7%. Line haul spot rates have moved higher as well. They took a little bit of a dip here in November and then over the last few weeks have seasonally moved higher. So you're seeing the spot rates move higher ex-fuel. So all the freight KPIs are certainly moving, have been moving higher, which is good in terms of when you think about what must be true for a better environment related to spot opportunities. For someone like RXO, we typically talk about tender rejections hitting that 10%-plus level and load-to-truck ratio hitting 8 to 1, and then getting contract versus spot spread closer to parity. So all of those are moving in the right direction. I think the question is, how sustainable is that as you think about that into 2026? And I think certainly a part of what's been going on in terms of these key metrics moving higher has been the supply side when you think about all of the supply that's come out both cyclically and structurally over the last few months. So I think that's sort of how we see it right now in terms of tighter market. And all of that was contemplated in our Q4 outlook. When you think about the range that we gave for Q4, we talked about sustained tightening market conditions embedded within our outlook. What about from an activity perspective? Do you think it's kind of a normal peak season developing or a normal—maybe that's the right word—again, given the kind of broader weakness we've seen, but do you see the kind of seasonal uplift that would be characteristic of a peak season? We talked about a muted peak season, and I think if you look at just overall industry-wide volumes, this is not an RXO comment. You've seen overall tender volumes move higher over the last few weeks. Tough to tell if that's really attributable to peak season or more of a normalization of demand post-government reopening with respect to the shutdown ending. So you've seen a normalization on outbound tender volumes from an industry-wide standpoint, and that goes back into what I was saying earlier in terms of some of the key metrics in terms of load-to-truck ratio and tender rejections moving seasonally higher. But I still think it's we called for a muted peak season with respect to our Q4 outlook. I think heading into 2026, it all depends on, as we think about the intersection of supply and demand, do the enforcement actions sustain into next year? What happens by vertical, which certainly we can explore. Right. Okay. But in terms of that expectation of a muted peak, it sounds like broadly that's the way it seems to be playing out from an industry perspective. Yeah. I mean, what I would say is the outlook that we gave for Q4 was $20 million-$30 million of adjusted EBITDA. And we talked about how in our brokerage business, we typically see an increase, and we are going to see truckload volumes grow sequentially from Q3 to Q4. That's contemplated within our outlook. But what you're seeing is the typical seasonal uplift that we generally see from an adjusted EBITDA standpoint embedded within the outlook is that muted because of the rising costs of purchased transportation. We talked about that squeeze that really was severe in the month of October, and that is embedded within our Q4 outlook that sustains throughout the rest of the quarter. So that offsets some of the positive momentum from truckload volume moving higher. And then in our last mile business, we talked about how typically we see an increase from Q3 to Q4 from an adjusted EBITDA perspective, but embedded within our outlook is a decrease based on some of the slowing demand activity that we really saw after Labor Day. Right. Okay. So $20 million-$30 million sounds like kind of broadly tracking against that, that does embed some tightening. How do you think about government shutdown, and was that actually a big impact, kind of a depressing impact in October that would make sense of what you see in November that there'd be some lift as you got beyond that, or do you think it seems hard to gauge whether that was really a meaningful impact on freight or not? Yeah. From a direct exposure standpoint, it wasn't that much for RXO, but on the margin, as you think about just consumers' willingness to spend and what that means for overall consumer confidence and overall freight volume activity, I certainly think that marginally freight demand was impacted by the government shutdown. I think certainly a positive that the government reopened, and you think about one of the more obvious use cases with respect to government funding in terms of SNAP benefits, right? You've got 40-plus million Americans that are dependent on SNAP benefits. So when you think about food and beverage type exposure, that was definitely impacted by government shutdown with the reopening of the government and those funds continuing to flow. I think that was certainly a positive in terms of just overall industry volumes. Right. Okay. I think we look at the pattern the last couple of years for spot rates and truckload market tightness. It is typical to see some tightening in December. I think part of that's seasonal activity. Part of that's probably drivers late December kind of go to the sidelines and enjoy the holidays. That seems to carry into January. So if you just look at the chart of dry van spot rates ex-fuel, it seems pretty regular the last couple of years where you see that pick up. Now, maybe this is a touch earlier than that, but how do you kind of distinguish between, "Hey, this is normal seasonal pattern," versus, "Oh, the regulatory actions are really starting to bite and affect capacity"? What's interesting is that what's been occurring over the last two to three months is effectively unprecedented. When you think about overall industry volumes being so weak all year and you have tightening KPIs such as load-to-truck ratio and tender rejections moving higher, that's not intuitive, right? So when you think about in the month of October as a great example with Cass Freight Shipments down 7% year over year taking another step back relative to September, and despite that, you saw load-to-truck ratio and tender rejections move higher, that gives, I think, certainly us confidence that you're seeing supply come out with respect to some of the structural and cyclical dynamics that are playing out. When you think about from this baseline here throughout Q4 into Q1, it's a great question, and I think it's going to be a function of a couple of things. Over the last few years, you've definitely seen line haul ex-fuel rates move higher from Q4 to Q1. Weather has been a big factor for the last couple of years. So I think without getting into La Niña predictions for the first quarter and the sudden stratospheric warming that may or may not occur over the next 30 days and what that means for winter storms, I think you got to just put that in context where I'm not really sure what normal is anymore as it relates to the cadence from Q4 to Q1 on spot, but weather has definitely been an impact. We talked about that earlier this year in terms of impacting the month of January, and I think most of the truckload space talked about that as well. What's interesting, though, is that you're still having carriers operating below where they need to with respect to break even, right? So all of the we put out the RXO Curve, which came over from Legacy Coyote, used to be the Coyote Curve. And one of the stats that we put in the release a couple of weeks ago was that you look at carrier rates in terms of spot rates over the last 10 years, basically flat in terms of overall freight rates, but the cost to the carrier is up 34%: insurance, tires, maintenance, overall inflation. So you're at an environment that is not sustainable for many reasons just based on how unit economics work. So you think about some of the ORs that are out there for some of the trucking companies operating anywhere between probably 95%-115%. So, just, I think, speaks to the fact that we're operating in an environment right now that is very painful for many carriers given where unit economics are, and ultimately speaks to the need for rates to move higher longer term to achieve acceptable margins longer term. So what do you see in your own carrier base in terms of attrition that would result from this pressure? Is that something where there's been a change in the pace of attrition that's been meaningful? I think just kind of like headline type things. It does seem like you've seen more bankruptcies of kind of mid-sized trucking companies, I don't know, the last six months, let's say. There was a large one last night, yeah. Yeah. So the news flow does seem to reflect that, and it's kind of qualitative, but you guys have a lot of data and metrics. Are you seeing in your carrier base that there's like a higher pace of attrition? Our carrier base has generally been pretty stable. The overall RXO network has about 120,000 carriers and 1.6 million power units. And we take so much pride on the restrictions that we have in terms of what must be true to drive on behalf of RXO in terms of compliance and screening and onboarding processes, really thorough. And ultimately, you as a shipper, you want that thoroughness. You want to be comforted by the fact that you have a vetting mechanism that is in place to go ahead and ensure that it is the highest quality drivers. We can go ahead and start a trucking authority and get our CDLs, but we're not going to be able to drive for RXO on day one after receiving your CDL. We have very strict requirements. And then as you'd assume, you have to go ahead and work your way up to earn the right to drive highly lucrative and profitable freight. So we've actually seen some; it's been pretty stable in terms of the RXO core, and I think that's one of the advantages of being the third largest provider of brokered transportation in North America, having access to massive amounts of capacity. And ultimately, the shipper is longer term. When you think about all of these structural changes that are ongoing right now, what does the steady state look like when we get to the other side of this? You, as a shipper, and we hear this from our shippers, they want to do business with large-scale carriers, large-scale brokers that have balance sheets and the ability to invest throughout cycle and have access to massive amounts of highly qualified capacity. So, I mean, it's favorable you have broad access to capacity. Obviously, that's to your advantage. I guess what makes less sense to me, or less intuitive to me, is that with that larger capacity base, why would you not see attrition when it seems like there's so much pressure on the carriers? I think when you have to look into who is exiting the market right now, a lot of the exits have been non-domiciled CDLs, capacity that may or may not should potentially not even be in the industry, right? There's a ton, and this has been widely reported in terms of individuals that have first name "No," last name "Name Given," right? You think about who is getting some of these CDLs. This speaks to the pretty strict processes that we have internally in terms of who is driving on behalf of RXO. So no doubt over the last few years, you've seen overall carrier attrition a little bit just based on the cyclical pressures that we've talked about, but in general, it's a pretty stable base. And I think this also speaks to one of the advantages that we saw with respect to the purchase of Coyote last year. The carrier base for Coyote is very different from that of RXO. Legacy RXO, more owner-operators. Legacy Coyote, more medium-sized to larger carriers, access to a lot of these private fleets. And as you know, to drive on behalf of private fleet, you're generally going to be an employee and not have a non-domiciled CDL. So it speaks to the fact that we've got access to not only a massive amount of capacity, but very high-quality capacity. What's the advantage of using more owner-operator versus kind of mid-sized and private fleet, or is it just kind of like you get some advantage using everything? I think it's the latter. It's just the way the businesses were built. RXO was built on getting access to power lanes across owner-operators throughout the country, and Legacy Coyote was more of centralized capacity as it relates to medium to larger-sized private fleets. RXO, we tried to crack into the private fleet market, and we weren't as successful as Legacy Coyote was. So when we saw that difference in terms of the carrier networks and how complementary they actually were, sort of just different ways of building up the density that both networks had, and I think pretty complementary to each other. Okay. How do you think about Coyote, RXO Coyote synergies and opportunities? How much impact is there when you look in 2026? You're talking about cost synergies? Cost synergies, cost of purchased transportation, just overall impact that you could see in 2026 versus 2025. Sure. So let's set the stage in terms of the cost efficiencies throughout the organization. So since we spun from RXO, we've taken out over $125 million of annualized operating expenses. That includes about $60 million of operating expenses from Coyote. We announced a couple of weeks ago in earnings that we are instituting a new $30 million cost takeout on an annualized basis. So that brings the grand total from $125 million up to $155 million. When you think about the flow through into 2026, sort of two components to think about. There are the actions that were taken in 2025 from a synergy standpoint that will be fully realized into 2026. And then you think about the cost actions that we took in that we announced a few weeks ago that are being taken in the fourth quarter with the full annualized impact into 2026. Taken together, those combined numbers should be around $30-$35 million of annualized costs coming out of the model. I think that really does speak to us operating at a very efficient cost structure, highly. When we think about sort of the incremental leverage associated with that, we're talking about from gross profit down to EBITDA with respect to volume. It could be 60 cents plus on the dollar with respect to price. It could be 85 cents plus on the dollar with respect to the brokerage business. One other thing to keep in mind in terms of the $35 million year-on-year tailwind that will have in 2026 versus 2025 holistically across both operating expenses takeout and synergies. There is certainly inflationary pressure on the business. When you think about just overall cost inflation, that stat that I gave you earlier in terms of you think about insurance and tires and maintenance for a lot of the carriers, some of those certainly are true for us when you think about insurance and merit, etc. So you won't see all full $35 million year-on-year 2026 versus 2025, but certainly we continue to take out aggressive takeout costs aggressively. Even when you look in the last quarter, you look at last quarter versus the full quarter, when we closed Coyote in Q4 of last year, SG&A is down about $15 million or $60 million on an annualized basis. Pretty big number. So you mentioned $30-$35 million. How do we think about cost to purchase transportation and synergies from that? I guess that gets tricky when you say, "Well, spot rates are going up and we're going to get squeezed, but we're getting a benefit from combined, so it's probably hard to decouple." But is that a factor we ought to consider for 2026, or should we just say, "Hey, let's not focus on that because we know cost of purchased transportation overall is going up"? You should absolutely consider it for 2026 and beyond because it was part of the strategic rationale associated with the acquisition of Coyote. You think about the combined pool of purchased transportation dollars across Legacy RXO and Legacy Coyote, almost $4 billion of PT. The ability for us to improve spend can drop right from gross profit down to EBITDA. So that is a huge focus of the organization. We talked about last quarter how year to date we're seeing since the carrier cutover, which occurred on the technology side, May 1st. So over the last, call it five months, we've seen about 30-50 basis points of incremental buy rate favorability. We've given some framework whereby May of next year, which is the one-year anniversary of that carrier cutover. And just to help frame things and put things in perspective for everyone, we did the technology transition in multiple phases. One of the first phases was making sure that all carrier reps across Legacy RXO and Legacy Coyote were covering freight in one system, which is the RXO system, RXO Connect, and our proprietary TMS Freight Optimizer. That occurred on May 1st. And it's also a pretty iterative process where over time you'll have the ability for the carrier reps to improve productivity. You think about some of these carrier reps at Legacy Coyote, some of the most tenured in the industry doing this for 8-10 years operating off of Bazooka. So it takes some time to go ahead and learn the inner workings of the newer system and learn the freight that they have access to. By that one-year anniversary of May, we feel comfortable that we'll get to about 100 basis points of incremental buy rate favorability. But you also bring up a very important point that you need to distinguish the cost synergies and the cost takeouts from that of purchased transportation synergies because purchased transportation synergies will move with how the market is performing. So ultimately, if you are in an inflationary rate environment, it will serve as incremental cost avoidance. If you are in an environment that is status quo or perhaps loosening, you'll have the ability to benefit from incremental PT savings. Right. Okay. How do you think about the kind of algorithm for 2026 overall? Is it base case, you get a little bit of growth in freight, you get some tightening in the market, you get some rate increases? I don't know. What are some of the pieces that could come together in addition to what you've talked about on the cost side? This is the longest freight recession on record, so I think we're not going to get into predictions for 2026 in what is already a very unprecedented environment. But what I can talk to, and I think this is really important, is our ability to outperform the market. And if you think back 12 months ago, we just completed the acquisition of Coyote. But underneath the hood, it was still clearly two separate companies with us first beginning the tech integration journey, the operation integration journey. You think about where we are right now, the integration is effectively complete. We are integrated from a sales standpoint, integrated from an ops standpoint, carrier integration complete, shipper integration on the customer side materially complete. One CRM, one ERP, one pricing tool, combined data set of both Legacy RXO and Legacy Coyote in 12 months. This is the largest integration that's ever occurred in the asset light space, and we hit operationally our timeline in terms of tech integration, which was a very robust and aggressive timeline to begin with. So heading into next year as one RXO with the integration behind us, you think about RXO over the last 10, 15 years, profitable growth has been our algorithm. Outperformance in the brokerage market has been our algorithm. If you look back over the last 10 years, we have significantly outperformed the truckload market. Heading into 2026, the business has very good momentum as it relates to conversations with shippers and an integrated company across the board to go ahead and resume that outperformance that we've been accustomed to for the last decade. How much visibility do you have to that? I think when Drew talked about, has talked about this year, he said, "Okay, we thought rates would go up. They didn't go up as much as we thought, or they didn't really go up. The market would stay soft. And so we probably underperformed a bit on maybe market share or volume relative to the stance we took on rates." You have done some heavy lifting and putting the pieces together, but it's also now a new entity versus what it was when you had the strong track record of growth. So kind of what gives you confidence that you can go back to being growth above the market as you go 2026, 2027? So you think about as 2025 progressed, to your point, we took a stance on rates earlier in this year, and the market took another leg lower. So we think about where we are now versus 12 months ago at the time of the Coyote acquisition. We thought we were at or near the bottom of the freight cycle, and we thought that the market would move higher. It's taken a little bit longer, and there have been consequences as it relates to our truckload volume growth this year, which first quarter was down 8%, second quarter down 11%, third quarter down 12%. And at the midpoint of our outlook, we talked about down double digits again. So we've underperformed this year on the truckload side, to your point, no doubt, based on some of the pricing strategies that we engaged in. If we knew if it was going to be a softer market, we certainly did not have to be as aggressive as we were on some of the price increases earlier this year. But you sort of fast forward to where we are right now, and you think about the automotive headwinds that have impacted, and I want to be clear, it wasn't just Legacy Coyote, right? Legacy RXO, we are the largest provider of managed expedite in North America for automotive. So Legacy RXO, you look at our automotive volumes for the combined basis in 2025, they're down 20%-30% year over year. Fast forward to 2026, automotive stops being a headwind materially starting in Q1. Our truckload comps ease materially starting in Q2 of next year. And then in terms of your question on visibility, I think the conversations we're having with our customers have been very constructive. We've stabilized the volume. We talked about Q3, our truckload volume was up 1% sequentially. Q4 will be up again embedded within our outlook. And then when you think about off of that base, then being able to outperform the market irrespective of market conditions, we feel very good about that. What we don't know is the demand environment, where ultimately if the demand environment still remains soft, we could have a very good bid season, but ultimately what we call fill rates, right, would be challenged, whereby customers have a view of demand. And ultimately, if the shipper's forecast is off because the consumer deteriorates, as an example, their demand goes lower, and therefore our demand would go lower, even if you had that award. But in terms of the ability to continue to stay close to customers, servicing that freight exceptionally well now as one RXO, we feel very good about. Let's spend a little bit of time on the regulatory side. I know you look at a lot of the details of what's happening, the specific regulatory actions. You're thoughtful about how that manifests and how big the impact can be. What's your latest thought on what are some of the key regulatory actions that are taking place and how you think that is base case, how it affects the market in 2026? The biggest regulatory action that has been taken over the last, call it six months, I'd say have been twofold. One was the executive order, the Rules of the Road executive order in May of this year, which required English language proficiency on behalf of truck drivers and the ability to interpret road signs. And the second was the interim final rule from the DOT in September, which effectively paused the issuance of non-domiciled CDLs. Those are very significant in terms of the potential implications to the truckload industry, and we saw a preview of that in October in terms of the capacity that's come out. So sizing that up, I think the FMCSA has sized up 200,000 non-domiciled CDLs being impacted by the interim final rule on a base of 3.9 million. That's about 5% of overall capacity. But then you sort of break down that denominator, which is about 3.9 million trucks that are out there. What is the true denominator of the for-hire truckload market, excluding private fleets? Probably somewhere close to anywhere between 1 and 2 million. So it's a significant amount of capacity that could permanently leave the market, and that has long-term implications, which are positive for many constituents. One, it's positive for the roads and positive for driver safety. It's positive for large-scale carriers and large-scale brokers like RXO when you think about the ability for, like we were talking about earlier, shippers wanting to do business with carriers and brokers that have very rigorous training processes and qualification processes in order to go ahead and drive on behalf of RXO. And you think about what that could mean longer term. There's also brokers that are out there that leverage this non-domiciled capacity, and those business models might now go away. So you think about what that means in terms of market structure. I think it's a really good thing for the industry, and I think it's a really good thing for a large-scale broker like RXO. The top nine brokers post the acquisition of Coyote represented about 45%-50% of the overall industry structure. Longer term, we think the top five probably represent 50%-70%. So I think it's a winners-take-most-type market structure with respect to having the ability to invest throughout cycle, having the balance sheet, having the ability to stay close to customers, and having access to that massive capacity to weather a lot of the structural changes. But those are the two biggest changes that have occurred in 2025. Seems like DOT and FMCSA keep discovering kind of, or maybe identifying kind of, if you want to say fraudulent or questionable approaches, whether it's self-certification of ELDs. So perhaps you and I could sell ELDs, right, tomorrow? Maybe not any longer. Driver schools that are inadequate. So it's kind of this and that and the other thing. Do you think those other elements are pretty significant too? And do you think that there's just like so much momentum that this has got to have a big impact, or is it still unclear what this does? No, I very much agree with the former in terms of all of the actions in totality have the potential to be very significant in terms of what happens to the overall supply balance for this industry longer term. Because you're right, it's not just about the executive order on the rules of the road and English language proficiency. It's not just about non-domiciled CDLs. I mean, even in the last 24 hours, you've had the DOT identify almost half of the schools that are teaching these drivers to get the qualifications potentially be ineligible going forward. It's about 15,000 driving schools in the U.S., and almost 7,000 or 7,500 have been identified. That hit last night. I think yesterday also, the DOT identified Minnesota issuing one-third of their non-domiciled CDLs as potentially being problematic. So it's not just one issue. It is multiple. I think this is all in the name of improved driver safety, improved road safety, reducing fraud, reducing theft. This is a very good thing for the industry and longer-term steady state. I think that's an important point because you think about in the near term, no doubt it's impacting our business because you've got what I talked about earlier in terms of a current unprecedented situation with you look in October as a great example, load-to-truck ratio and tender rejections moving higher despite weaker demands because all of the supply is coming out. It's painful in the near term for us in terms of financial performance because we're getting squeezed on the buy side with weaker demand environments. There's no real creative spot opportunities to help offset that squeeze. That's also mechanical, right? That's what happens when you've got a large book of business with tier one enterprise shippers and no spot environment. You then fast forward to steady state. If you've got an environment that is cleaner from a supply standpoint with higher quality supply, higher quality brokerages, that is a good thing for freight rates longer term, and it's a good thing for road safety longer term. So in this framework where you have kind of flat-ish freight, but you have capacity coming down, you could have a good outcome for rates. However, it can be challenging for brokers. How long do you think, like each cycle's different, but if you look at historical cycles, how long do you think the squeeze lasts? I mean, is this like you're getting squeezed in October, starting to get squeezed in 3Q? I mean, is this run through 2Q next year? Could this run longer than that? I mean, it'd be nice to, I think you say it's a good, what is it, the good squeeze or something or a good, whatever term you use, but good and bad. But you'd like to get through the bad or the challenge and get to the good news on the other side. So any thoughts on how long that might last? Yeah. I don't have the crystal ball in terms of how long the squeeze will last. We are in unprecedented times in terms of going on year four of this freight recession. But I think we gave some color on the earnings call in terms of last time we had a squeeze like this. Within two quarters, we had that rebound. But ultimately, every cycle is different, and it comes down to supply and demand. So does supply keep coming out at the rate that it's been coming out? And do you see any kind of rebound in demand across the key verticals that we serve, which are food and beverage, industrial manufacturing, and retail e-commerce? The key signs that I look for are what's going on with the industrial manufacturing PMI, especially the new orders component, what's going on with building permits, as well as consumer confidence. Really, the housing market is also really important for the freight market, as you know. About 15%-20% of overall freight demand and every new truckload or every new home, sorry, is the equivalent of six to eight truckloads. So getting that long end of the curve to come down in terms of mortgage rates would be helpful. We are sitting at 12-month lows in terms of mortgage rates, and you've seen a recent increase in applications. So to the extent that sustains, that'll be good for our brokerage business, and it'll also be good for the last mile business given our exposure to big and bulky. What’s the prior period you referred to as an analogy for when there was a squeeze? We're going back to, I want to say, I think the 2019 timeframe for Legacy RXO when we saw that gross margin performance dip and then the two quarters subsequent to then rebounding. 2018 or 2019? I think 2018, 2019 around then. Okay. Okay. And that also speaks to the earlier question that you had, Tom, on why it's so important to continue to focus on our ability to procure transportation effectively, right? Regardless of what happens in the market, as we strive to hitting that 100 basis points of improvement of long-term productivity gains, I'm sorry, long-term purchase transportation gains, that'll clearly help offset some of the squeeze to the extent that we can achieve that faster. So when we think about our business model, you're never going to avoid the squeeze, right? We've got a book of business that's 70% plus contractual in nature, and our book of business is we've got a little S&P, but it's mostly large tier one enterprise shippers. So when you've got that large book of business with higher PT costs, that's what happens on the gross margin line in terms of the squeeze impact. And to your point, the good squeeze versus the bad squeeze, we've had multiple episodic squeezes over the last three plus years since we've spun, and it's been because every time there was an event, you think about Roadcheck week or any kind of winter storm, it's always met with rising rejection rates, rising load-to-truck ratios, but you always get back to the prior baseline because ultimately there was too much supply relative to demand. So we'll see how long this squeeze lasts. This has now been. We start to see a little bit of tightening into September, and now we're in December, and rates are still moving higher. So we should see if this sustains. Okay. We've got a little less than five minutes left here. I want to ask you about AI. So when we look at transport who can benefit, just structure what they do from use of technology and AI, we think C.H. Robinson is kind of blazing the trail of driving a lot of productivity gains. You see it in their pretty big headcount reduction numbers, 30% headcount reduction overall, 3Q 2025 versus 2022. And I think it's hard to decouple how much is lean versus AI, where was their starting point? The asset-light model does seem conducive. So I think eventually you'll see x letters benefit from that. I know there's some dispute on that, some debate, but my own view is C.H. Robinson isn't the only one that can realize AI gains. The degree, of course, is different and whether you have lean, but why shouldn't RXO also be a name that can see some real benefits from that? I mean, I tend to think we probably were pretty focused on Coyote integration. So that's a reason maybe it wouldn't be as transparent. But I know some of its starting point, what we're already doing, but help me think about why you shouldn't be able to do that, or is there kind of big future opportunity from use of generative AI, agentic AI? Absolutely agree with the premise that RXO has the ability to go ahead and benefit from leveraging AI in a strategic way that's transformative across the organization that improves our operating margins longer term. So I think the premise is absolutely sound. I mean, we spend more than $100 million a year on cash technology spend. That's not just, so that's across OpEX and CapEX. And we think about the investments that we've been making across the board. It goes back 10 plus years ago on the machine learning side in terms of some of the pricing algorithms, but specifically to your question on agentic and GenAI, we believe that we are entering an inflection point heading into 2026 with the rollout of many tools that we've been investing in for years. And it's not just the Coyote integration that, to use your words, sort of masked the investments that we've been making because we've been making these investments, and I would make the case that we've actually accelerated our timeline and our roadmap with the Coyote acquisition. One of the added benefits was when we bought the company. We saw what was on some of their tech roadmap, and we saw what was on ours, and in some cases, one was already on the other roadmap and vice versa. So the ability to go ahead and leverage best of both worlds, processes and order flows and workflows rather, into the combined tech data set, I think is really, really important. So it all starts with having a clean set of data, right? If you think about building upon an integrated data lake, RXO data, Coyote data, that's all one. On top of that, you have an orchestration layer, and then on top of that, you've got multiple agents that can go ahead and effectively increase productivity across the organization, as well as introduce the ability to unlock incremental margin from top of the funnel opportunities. It's not just a cost play. It's also a revenue in terms of incremental margin play. And it's also a productivity play, right? Our productivity over the last two years is up 38%. And we think we are still very much at the early innings of AI. So we've been rolling out GenAI and agentic AI and machine learning for a long time. This year in particular, I think we talked a little bit about this on the earnings call. If I look at some of the tools that have been implemented, we've leveraged agentic AI solutions from a carrier rep standpoint already, saving 10,000 plus man hours associated with the deployment of that technology. We've rolled out millions of lines of code in terms of leveraging some of the AI tools that are available to us as opposed to leveraging or in addition to leveraging some of our engineering talent. We've leveraged it in last mile in terms of image association and identification with respect to home installs. So it's across the board, and we are very much at the early innings with the opportunity to unlock significant potential heading into 2026 and beyond. So what inning do you think you're at? If we're doing this right, we're always in the first inning, right? Because ultimately, not to be cliché, but AI, we fundamentally believe that AI has the ability to structurally improve our margin profile longer term. I think it's also an important point that we are not a technology company. We are a tech-enabled company. How do we go ahead and invest aggressively in AI, aggressively in our tech roadmap, and then marry that with the best operators in the industry to have that solution where we're leveraging tech effectively and we're doing it with the best operators to have structurally higher margins longer term? Right. Okay. That makes sense. Jared, thanks so much for joining us. Thanks so much, Tom. Really appreciate it. Yeah. Thanks for joining us. Appreciate it. Thanks.

Speaker 1: Thanks for having us at your conference. Really appreciate it. So when we reported a few weeks ago, when we talked about still being in a prolonged soft rate market, and you look at some of the indicators that we were referring to, the month of October, if you look at Cass Freight Shipments, Cass Freight Shipments were down 7% year over year. And so it took another step back relative to September. And what's interesting is if you go back and you look at year-to-date 2025 Cass Freight Shipments, you're approaching Great Financial Crisis lows going back to 2008. So you think about over the last almost 15-plus years, overall shipments are really weak when you think about just the freight economy and the divergence that's occurred relative to the broader macroeconomy, which is reasonably healthy, right? Positive GDP growth, slowing inflation, services economy is strong. Thanks for having us at your conference. thanks for having us at your conference Really appreciate it. really appreciate it So when we reported a few weeks ago, when we talked about still being in a prolonged soft rate market, and you look at some of the indicators that we were referring to, the month of October, if you look at Cass Freight Shipments, Cass Freight Shipments were down 7% year over year. so when we reported a few weeks ago when we talked about still being in a prolonged soft rate market and you look at some of the indicators that we were referring to the month of october if you look at cass freight shipments cass freight shipments were down 7% year over year And so it took another step back relative to September. and so it took another step back relative to september And what's interesting is if you go back and you look at year-to-date 2025 Cass Freight Shipments, you're approaching Great Financial Crisis lows going back to 2008. and what's interesting is if you go back and you look at year-to-date 2025 cass freight shipments you're approaching great financial crisis lows going back to 2008 So you think about over the last almost 15-plus years, overall shipments are really weak when you think about just the freight economy and the divergence that's occurred relative to the broader macroeconomy, which is reasonably healthy, right? so you think about over the last almost 15-plus years overall shipments are really weak when you think about just the freight economy and the divergence that's occurred relative to the broader macroeconomy which is reasonably healthy right Positive GDP growth, slowing inflation, services economy is strong. positive gdp growth slowing inflation services economy is strong I think that speaks to the fact that goods relative to services are sitting at 15-year lows relative to consumption. So still in a prolonged soft rate market. But the one thing that we talked about on the call was that we believe the changes that are happening on the supply side are structural in nature and are something certainly to be paying attention to when you think about the FMCSA sizing about 200,000 non-domiciled CDLs potentially coming out of the market over the next few years. That's a big deal. And enforcement actions have sustained state by state. And I think the DOT is taking corrective actions to ensure safety across the board for our roads. I think that speaks to the fact that goods relative to services are sitting at 15-year lows relative to consumption. i think that speaks to the fact that goods relative to services are sitting at 15-year lows relative to consumption So still in a prolonged soft rate market. so still in a prolonged soft rate market But the one thing that we talked about on the call was that we believe the changes that are happening on the supply side are structural in nature and are something certainly to be paying attention to when you think about the FMCSA sizing about 200,000 non-domiciled CDLs potentially coming out of the market over the next few years. but the one thing that we talked about on the call was that we believe the changes that are happening on the supply side are structural in nature and are something certainly to be paying attention to when you think about the fmcsa sizing about 200,000 non-domiciled cdls potentially coming out of the market over the next few years That's a big deal. that's a big deal And enforcement actions have sustained state by state. and enforcement actions have sustained state by state And I think the DOT is taking corrective actions to ensure safety across the board for our roads. and i think the dot is taking corrective actions to ensure safety across the board for our roads And I think that has the near-term implication of what's transpired into our business because we procure capacity on the spot market as a truckload brokerage, and we've got a heavy contractual book of business. So what we saw embedded in our Q4 outlook, which I'm sure we'll get to, is that when you think about Q4, we've got this contractual book of business, and the cost of purchased transportation moved higher in the month of October as it relates to a lot of the supply tightening that I just referred to occurring. So sort of I said a lot there, overall state of the industry, and we can certainly dive into it. And I think that has the near-term implication of what's transpired into our business because we procure capacity on the spot market as a truckload brokerage, and we've got a heavy contractual book of business. and i think that has the near-term implication of what's transpired into our business because we procure capacity on the spot market as a truckload brokerage and we've got a heavy contractual book of business So what we saw embedded in our Q4 outlook, which I'm sure we'll get to, is that when you think about Q4, we've got this contractual book of business, and the cost of purchased transportation moved higher in the month of October as it relates to a lot of the supply tightening that I just referred to occurring. so what we saw embedded in our q4 outlook which i'm sure we'll get to is that when you think about q4 we've got this contractual book of business and the cost of purchased transportation moved higher in the month of october as it relates to a lot of the supply tightening that i just referred to occurring So sort of I said a lot there, overall state of the industry, and we can certainly dive into it. so sort of i said a lot there overall state of the industry and we can certainly dive into it So, how do you think about from an activity perspective? I guess if you look at some of the other industry kind of characterizations, metrics, whatever you want to look at, does it seem like it's kind of shaping up as you would have had anticipated, or do you think it's kind of, do you see indications it's much different? So, how do you think about from an activity perspective? so how do you think about from an activity perspective I guess if you look at some of the other industry kind of characterizations, metrics, whatever you want to look at, does it seem like it's kind of shaping up as you would have had anticipated, or do you think it's kind of, do you see indications it's much different? i guess if you look at some of the other industry kind of characterizations metrics whatever you want to look at does it seem like it's kind of shaping up as you would have had anticipated or do you think it's kind of do you see indications it's much different So if you look at the industry-wide metrics over the last, call it, four weeks, load-to-truck ratio, tender rejections have all moved generally higher. Tender rejections sitting around 7%. Line haul spot rates have moved higher as well. They took a little bit of a dip here in November and then over the last few weeks have seasonally moved higher. So you're seeing the spot rates move higher ex-fuel. So all the freight KPIs are certainly moving, have been moving higher, which is good in terms of when you think about what must be true for a better environment related to spot opportunities. For someone like RXO, we typically talk about tender rejections hitting that 10%-plus level and load-to-truck ratio hitting 8 to 1, and then getting contract versus spot spread closer to parity. So all of those are moving in the right direction. So if you look at the industry-wide metrics over the last, call it, four weeks, load-to-truck ratio, tender rejections have all moved generally higher. so if you look at the industry-wide metrics over the last call it four weeks load-to-truck ratio tender rejections have all moved generally higher Tender rejections sitting around 7%. tender rejections sitting around 7% Line haul spot rates have moved higher as well. line haul spot rates have moved higher as well They took a little bit of a dip here in November and then over the last few weeks have seasonally moved higher. they took a little bit of a dip here in november and then over the last few weeks have seasonally moved higher So you're seeing the spot rates move higher ex-fuel. so you're seeing the spot rates move higher ex-fuel So all the freight KPIs are certainly moving, have been moving higher, which is good in terms of when you think about what must be true for a better environment related to spot opportunities. so all the freight kpis are certainly moving have been moving higher which is good in terms of when you think about what must be true for a better environment related to spot opportunities For someone like RXO, we typically talk about tender rejections hitting that 10%-plus level and load-to-truck ratio hitting 8 to 1, and then getting contract versus spot spread closer to parity. for someone like rxo we typically talk about tender rejections hitting that 10%-plus level and load-to-truck ratio hitting 8 to 1 and then getting contract versus spot spread closer to parity So all of those are moving in the right direction. so all of those are moving in the right direction I think the question is, how sustainable is that as you think about that into 2026? And I think certainly a part of what's been going on in terms of these key metrics moving higher has been the supply side when you think about all of the supply that's come out both cyclically and structurally over the last few months. So I think that's sort of how we see it right now in terms of tighter market. And all of that was contemplated in our Q4 outlook. When you think about the range that we gave for Q4, we talked about sustained tightening market conditions embedded within our outlook. I think the question is, how sustainable is that as you think about that into 2026? i think the question is how sustainable is that as you think about that into 2026 And I think certainly a part of what's been going on in terms of these key metrics moving higher has been the supply side when you think about all of the supply that's come out both cyclically and structurally over the last few months. and i think certainly a part of what's been going on in terms of these key metrics moving higher has been the supply side when you think about all of the supply that's come out both cyclically and structurally over the last few months So I think that's sort of how we see it right now in terms of tighter market. so i think that's sort of how we see it right now in terms of tighter market And all of that was contemplated in our Q4 outlook. and all of that was contemplated in our q4 outlook When you think about the range that we gave for Q4, we talked about sustained tightening market conditions embedded within our outlook. when you think about the range that we gave for q4 we talked about sustained tightening market conditions embedded within our outlook What about from an activity perspective? Do you think it's kind of a normal peak season developing or a normal—maybe that's the right word—again, given the kind of broader weakness we've seen, but do you see the kind of seasonal uplift that would be characteristic of a peak season? What about from an activity perspective? what about from an activity perspective Do you think it's kind of a normal peak season developing or a normal—maybe that's the right word—again, given the kind of broader weakness we've seen, but do you see the kind of seasonal uplift that would be characteristic of a peak season? do you think it's kind of a normal peak season developing or a normal—maybe that's the right word—again given the kind of broader weakness we've seen but do you see the kind of seasonal uplift that would be characteristic of a peak season We talked about a muted peak season, and I think if you look at just overall industry-wide volumes, this is not an RXO comment. You've seen overall tender volumes move higher over the last few weeks. Tough to tell if that's really attributable to peak season or more of a normalization of demand post-government reopening with respect to the shutdown ending. So you've seen a normalization on outbound tender volumes from an industry-wide standpoint, and that goes back into what I was saying earlier in terms of some of the key metrics in terms of load-to-truck ratio and tender rejections moving seasonally higher. But I still think it's we called for a muted peak season with respect to our Q4 outlook. We talked about a muted peak season, and I think if you look at just overall industry-wide volumes, this is not an RXO comment. we talked about a muted peak season and i think if you look at just overall industry-wide volumes this is not an rxo comment You've seen overall tender volumes move higher over the last few weeks. you've seen overall tender volumes move higher over the last few weeks Tough to tell if that's really attributable to peak season or more of a normalization of demand post-government reopening with respect to the shutdown ending. tough to tell if that's really attributable to peak season or more of a normalization of demand post-government reopening with respect to the shutdown ending So you've seen a normalization on outbound tender volumes from an industry-wide standpoint, and that goes back into what I was saying earlier in terms of some of the key metrics in terms of load-to-truck ratio and tender rejections moving seasonally higher. so you've seen a normalization on outbound tender volumes from an industry-wide standpoint and that goes back into what i was saying earlier in terms of some of the key metrics in terms of load-to-truck ratio and tender rejections moving seasonally higher But I still think it's we called for a muted peak season with respect to our Q4 outlook. but i still think it's we called for a muted peak season with respect to our q4 outlook I think heading into 2026, it all depends on, as we think about the intersection of supply and demand, do the enforcement actions sustain into next year? What happens by vertical, which certainly we can explore. I think heading into 2026, it all depends on, as we think about the intersection of supply and demand, do the enforcement actions sustain into next year? i think heading into 2026 it all depends on as we think about the intersection of supply and demand do the enforcement actions sustain into next year What happens by vertical, which certainly we can explore. what happens by vertical which certainly we can explore Right. Okay. But in terms of that expectation of a muted peak, it sounds like broadly that's the way it seems to be playing out from an industry perspective. Right. right Okay. okay But in terms of that expectation of a muted peak, it sounds like broadly that's the way it seems to be playing out from an industry perspective. but in terms of that expectation of a muted peak it sounds like broadly that's the way it seems to be playing out from an industry perspective Yeah. I mean, what I would say is the outlook that we gave for Q4 was $20 million-$30 million of adjusted EBITDA. And we talked about how in our brokerage business, we typically see an increase, and we are going to see truckload volumes grow sequentially from Q3 to Q4. That's contemplated within our outlook. But what you're seeing is the typical seasonal uplift that we generally see from an adjusted EBITDA standpoint embedded within the outlook is that muted because of the rising costs of purchased transportation. We talked about that squeeze that really was severe in the month of October, and that is embedded within our Q4 outlook that sustains throughout the rest of the quarter. So that offsets some of the positive momentum from truckload volume moving higher. Yeah. yeah I mean, what I would say is the outlook that we gave for Q4 was $20 million-$30 million of adjusted EBITDA. i mean what i would say is the outlook that we gave for q4 was $20 million-$30 million of adjusted ebitda And we talked about how in our brokerage business, we typically see an increase, and we are going to see truckload volumes grow sequentially from Q3 to Q4. and we talked about how in our brokerage business we typically see an increase and we are going to see truckload volumes grow sequentially from q3 to q4 That's contemplated within our outlook. that's contemplated within our outlook But what you're seeing is the typical seasonal uplift that we generally see from an adjusted EBITDA standpoint embedded within the outlook is that muted because of the rising costs of purchased transportation. but what you're seeing is the typical seasonal uplift that we generally see from an adjusted ebitda standpoint embedded within the outlook is that muted because of the rising costs of purchased transportation We talked about that squeeze that really was severe in the month of October, and that is embedded within our Q4 outlook that sustains throughout the rest of the quarter. we talked about that squeeze that really was severe in the month of october and that is embedded within our q4 outlook that sustains throughout the rest of the quarter So that offsets some of the positive momentum from truckload volume moving higher. so that offsets some of the positive momentum from truckload volume moving higher And then in our last mile business, we talked about how typically we see an increase from Q3 to Q4 from an adjusted EBITDA perspective, but embedded within our outlook is a decrease based on some of the slowing demand activity that we really saw after Labor Day. And then in our last mile business, we talked about how typically we see an increase from Q3 to Q4 from an adjusted EBITDA perspective, but embedded within our outlook is a decrease based on some of the slowing demand activity that we really saw after Labor Day. and then in our last mile business we talked about how typically we see an increase from q3 to q4 from an adjusted ebitda perspective but embedded within our outlook is a decrease based on some of the slowing demand activity that we really saw after labor day Right. Okay. So $20 million-$30 million sounds like kind of broadly tracking against that, that does embed some tightening. How do you think about government shutdown, and was that actually a big impact, kind of a depressing impact in October that would make sense of what you see in November that there'd be some lift as you got beyond that, or do you think it seems hard to gauge whether that was really a meaningful impact on freight or not? Right. right Okay. okay So $20 million-$30 million sounds like kind of broadly tracking against that, that does embed some tightening. so $20 million-$30 million sounds like kind of broadly tracking against that that does embed some tightening How do you think about government shutdown, and was that actually a big impact, kind of a depressing impact in October that would make sense of what you see in November that there'd be some lift as you got beyond that, or do you think it seems hard to gauge whether that was really a meaningful impact on freight or not? how do you think about government shutdown and was that actually a big impact kind of a depressing impact in october that would make sense of what you see in november that there'd be some lift as you got beyond that or do you think it seems hard to gauge whether that was really a meaningful impact on freight or not Yeah. From a direct exposure standpoint, it wasn't that much for RXO, but on the margin, as you think about just consumers' willingness to spend and what that means for overall consumer confidence and overall freight volume activity, I certainly think that marginally freight demand was impacted by the government shutdown. I think certainly a positive that the government reopened, and you think about one of the more obvious use cases with respect to government funding in terms of SNAP benefits, right? You've got 40-plus million Americans that are dependent on SNAP benefits. So when you think about food and beverage type exposure, that was definitely impacted by government shutdown with the reopening of the government and those funds continuing to flow. I think that was certainly a positive in terms of just overall industry volumes. Yeah. yeah From a direct exposure standpoint, it wasn't that much for RXO, but on the margin, as you think about just consumers' willingness to spend and what that means for overall consumer confidence and overall freight volume activity, I certainly think that marginally freight demand was impacted by the government shutdown. from a direct exposure standpoint it wasn't that much for rxo but on the margin as you think about just consumers' willingness to spend and what that means for overall consumer confidence and overall freight volume activity i certainly think that marginally freight demand was impacted by the government shutdown I think certainly a positive that the government reopened, and you think about one of the more obvious use cases with respect to government funding in terms of SNAP benefits, right? i think certainly a positive that the government reopened and you think about one of the more obvious use cases with respect to government funding in terms of snap benefits right You've got 40-plus million Americans that are dependent on SNAP benefits. you've got 40-plus million americans that are dependent on snap benefits So when you think about food and beverage type exposure, that was definitely impacted by government shutdown with the reopening of the government and those funds continuing to flow. so when you think about food and beverage type exposure that was definitely impacted by government shutdown with the reopening of the government and those funds continuing to flow I think that was certainly a positive in terms of just overall industry volumes. i think that was certainly a positive in terms of just overall industry volumes Right. Okay. I think we look at the pattern the last couple of years for spot rates and truckload market tightness. It is typical to see some tightening in December. I think part of that's seasonal activity. Part of that's probably drivers late December kind of go to the sidelines and enjoy the holidays. That seems to carry into January. So if you just look at the chart of dry van spot rates ex-fuel, it seems pretty regular the last couple of years where you see that pick up. Now, maybe this is a touch earlier than that, but how do you kind of distinguish between, "Hey, this is normal seasonal pattern," versus, "Oh, the regulatory actions are really starting to bite and affect capacity"? Right. right Okay. okay I think we look at the pattern the last couple of years for spot rates and truckload market tightness. i think we look at the pattern the last couple of years for spot rates and truckload market tightness It is typical to see some tightening in December. it is typical to see some tightening in december I think part of that's seasonal activity. i think part of that's seasonal activity Part of that's probably drivers late December kind of go to the sidelines and enjoy the holidays. part of that's probably drivers late december kind of go to the sidelines and enjoy the holidays That seems to carry into January. that seems to carry into january So if you just look at the chart of dry van spot rates ex-fuel, it seems pretty regular the last couple of years where you see that pick up. so if you just look at the chart of dry van spot rates ex-fuel it seems pretty regular the last couple of years where you see that pick up Now, maybe this is a touch earlier than that, but how do you kind of distinguish between, "Hey, this is normal seasonal pattern," versus, "Oh, the regulatory actions are really starting to bite and affect capacity"? now maybe this is a touch earlier than that but how do you kind of distinguish between "hey this is normal seasonal pattern," versus "oh the regulatory actions are really starting to bite and affect capacity" What's interesting is that what's been occurring over the last two to three months is effectively unprecedented. When you think about overall industry volumes being so weak all year and you have tightening KPIs such as load-to-truck ratio and tender rejections moving higher, that's not intuitive, right? So when you think about in the month of October as a great example with Cass Freight Shipments down 7% year over year taking another step back relative to September, and despite that, you saw load-to-truck ratio and tender rejections move higher, that gives, I think, certainly us confidence that you're seeing supply come out with respect to some of the structural and cyclical dynamics that are playing out. When you think about from this baseline here throughout Q4 into Q1, it's a great question, and I think it's going to be a function of a couple of things. What's interesting is that what's been occurring over the last two to three months is effectively unprecedented. what's interesting is that what's been occurring over the last two to three months is effectively unprecedented When you think about overall industry volumes being so weak all year and you have tightening KPIs such as load-to-truck ratio and tender rejections moving higher, that's not intuitive, right? when you think about overall industry volumes being so weak all year and you have tightening kpis such as load-to-truck ratio and tender rejections moving higher that's not intuitive right So when you think about in the month of October as a great example with Cass Freight Shipments down 7% year over year taking another step back relative to September, and despite that, you saw load-to-truck ratio and tender rejections move higher, that gives, I think, certainly us confidence that you're seeing supply come out with respect to some of the structural and cyclical dynamics that are playing out. so when you think about in the month of october as a great example with cass freight shipments down 7% year over year taking another step back relative to september and despite that you saw load-to-truck ratio and tender rejections move higher that gives i think certainly us confidence that you're seeing supply come out with respect to some of the structural and cyclical dynamics that are playing out When you think about from this baseline here throughout Q4 into Q1, it's a great question, and I think it's going to be a function of a couple of things. when you think about from this baseline here throughout q4 into q1 it's a great question and i think it's going to be a function of a couple of things Over the last few years, you've definitely seen line haul ex-fuel rates move higher from Q4 to Q1. Weather has been a big factor for the last couple of years. So I think without getting into La Niña predictions for the first quarter and the sudden stratospheric warming that may or may not occur over the next 30 days and what that means for winter storms, I think you got to just put that in context where I'm not really sure what normal is anymore as it relates to the cadence from Q4 to Q1 on spot, but weather has definitely been an impact. We talked about that earlier this year in terms of impacting the month of January, and I think most of the truckload space talked about that as well. Over the last few years, you've definitely seen line haul ex-fuel rates move higher from Q4 to Q1. over the last few years you've definitely seen line haul ex-fuel rates move higher from q4 to q1 Weather has been a big factor for the last couple of years. weather has been a big factor for the last couple of years So I think without getting into La Niña predictions for the first quarter and the sudden stratospheric warming that may or may not occur over the next 30 days and what that means for winter storms, I think you got to just put that in context where I'm not really sure what normal is anymore as it relates to the cadence from Q4 to Q1 on spot, but weather has definitely been an impact. so i think without getting into la niña predictions for the first quarter and the sudden stratospheric warming that may or may not occur over the next 30 days and what that means for winter storms i think you got to just put that in context where i'm not really sure what normal is anymore as it relates to the cadence from q4 to q1 on spot but weather has definitely been an impact We talked about that earlier this year in terms of impacting the month of January, and I think most of the truckload space talked about that as well. we talked about that earlier this year in terms of impacting the month of january and i think most of the truckload space talked about that as well What's interesting, though, is that you're still having carriers operating below where they need to with respect to break even, right? So all of the we put out the RXO Curve, which came over from Legacy Coyote, used to be the Coyote Curve. And one of the stats that we put in the release a couple of weeks ago was that you look at carrier rates in terms of spot rates over the last 10 years, basically flat in terms of overall freight rates, but the cost to the carrier is up 34%: insurance, tires, maintenance, overall inflation. So you're at an environment that is not sustainable for many reasons just based on how unit economics work. So you think about some of the ORs that are out there for some of the trucking companies operating anywhere between probably 95%-115%. What's interesting, though, is that you're still having carriers operating below where they need to with respect to break even, right? what's interesting though is that you're still having carriers operating below where they need to with respect to break even right So all of the we put out the RXO Curve, which came over from Legacy Coyote, used to be the Coyote Curve. so all of the we put out the rxo curve which came over from legacy coyote used to be the coyote curve And one of the stats that we put in the release a couple of weeks ago was that you look at carrier rates in terms of spot rates over the last 10 years, basically flat in terms of overall freight rates, but the cost to the carrier is up 34%: insurance, tires, maintenance, overall inflation. and one of the stats that we put in the release a couple of weeks ago was that you look at carrier rates in terms of spot rates over the last 10 years basically flat in terms of overall freight rates but the cost to the carrier is up 34% insurance tires maintenance overall inflation So you're at an environment that is not sustainable for many reasons just based on how unit economics work. so you're at an environment that is not sustainable for many reasons just based on how unit economics work So you think about some of the ORs that are out there for some of the trucking companies operating anywhere between probably 95%-115%. so you think about some of the ors that are out there for some of the trucking companies operating anywhere between probably 95%-115% So, just, I think, speaks to the fact that we're operating in an environment right now that is very painful for many carriers given where unit economics are, and ultimately speaks to the need for rates to move higher longer term to achieve acceptable margins longer term. So, just, I think, speaks to the fact that we're operating in an environment right now that is very painful for many carriers given where unit economics are, and ultimately speaks to the need for rates to move higher longer term to achieve acceptable margins longer term. so just i think speaks to the fact that we're operating in an environment right now that is very painful for many carriers given where unit economics are and ultimately speaks to the need for rates to move higher longer term to achieve acceptable margins longer term So what do you see in your own carrier base in terms of attrition that would result from this pressure? Is that something where there's been a change in the pace of attrition that's been meaningful? I think just kind of like headline type things. It does seem like you've seen more bankruptcies of kind of mid-sized trucking companies, I don't know, the last six months, let's say. So what do you see in your own carrier base in terms of attrition that would result from this pressure? so what do you see in your own carrier base in terms of attrition that would result from this pressure Is that something where there's been a change in the pace of attrition that's been meaningful? is that something where there's been a change in the pace of attrition that's been meaningful I think just kind of like headline type things. i think just kind of like headline type things It does seem like you've seen more bankruptcies of kind of mid-sized trucking companies, I don't know, the last six months, let's say. it does seem like you've seen more bankruptcies of kind of mid-sized trucking companies i don't know the last six months let's say There was a large one last night, yeah. There was a large one last night, yeah. there was a large one last night yeah Yeah. So the news flow does seem to reflect that, and it's kind of qualitative, but you guys have a lot of data and metrics. Are you seeing in your carrier base that there's like a higher pace of attrition? Yeah. yeah So the news flow does seem to reflect that, and it's kind of qualitative, but you guys have a lot of data and metrics. so the news flow does seem to reflect that and it's kind of qualitative but you guys have a lot of data and metrics Are you seeing in your carrier base that there's like a higher pace of attrition? are you seeing in your carrier base that there's like a higher pace of attrition Our carrier base has generally been pretty stable. The overall RXO network has about 120,000 carriers and 1.6 million power units. And we take so much pride on the restrictions that we have in terms of what must be true to drive on behalf of RXO in terms of compliance and screening and onboarding processes, really thorough. And ultimately, you as a shipper, you want that thoroughness. You want to be comforted by the fact that you have a vetting mechanism that is in place to go ahead and ensure that it is the highest quality drivers. We can go ahead and start a trucking authority and get our CDLs, but we're not going to be able to drive for RXO on day one after receiving your CDL. We have very strict requirements. Our carrier base has generally been pretty stable. our carrier base has generally been pretty stable The overall RXO network has about 120,000 carriers and 1.6 million power units. the overall rxo network has about 120,000 carriers and 1.6 million power units And we take so much pride on the restrictions that we have in terms of what must be true to drive on behalf of RXO in terms of compliance and screening and onboarding processes, really thorough. and we take so much pride on the restrictions that we have in terms of what must be true to drive on behalf of rxo in terms of compliance and screening and onboarding processes really thorough And ultimately, you as a shipper, you want that thoroughness. and ultimately you as a shipper you want that thoroughness You want to be comforted by the fact that you have a vetting mechanism that is in place to go ahead and ensure that it is the highest quality drivers. you want to be comforted by the fact that you have a vetting mechanism that is in place to go ahead and ensure that it is the highest quality drivers We can go ahead and start a trucking authority and get our CDLs, but we're not going to be able to drive for RXO on day one after receiving your CDL. we can go ahead and start a trucking authority and get our cdls but we're not going to be able to drive for rxo on day one after receiving your cdl We have very strict requirements. we have very strict requirements And then as you'd assume, you have to go ahead and work your way up to earn the right to drive highly lucrative and profitable freight. So we've actually seen some; it's been pretty stable in terms of the RXO core, and I think that's one of the advantages of being the third largest provider of brokered transportation in North America, having access to massive amounts of capacity. And ultimately, the shipper is longer term. When you think about all of these structural changes that are ongoing right now, what does the steady state look like when we get to the other side of this? And then as you'd assume, you have to go ahead and work your way up to earn the right to drive highly lucrative and profitable freight. and then as you'd assume you have to go ahead and work your way up to earn the right to drive highly lucrative and profitable freight So we've actually seen some; it's been pretty stable in terms of the RXO core, and I think that's one of the advantages of being the third largest provider of brokered transportation in North America, having access to massive amounts of capacity. so we've actually seen some it's been pretty stable in terms of the rxo core and i think that's one of the advantages of being the third largest provider of brokered transportation in north america having access to massive amounts of capacity And ultimately, the shipper is longer term. and ultimately the shipper is longer term When you think about all of these structural changes that are ongoing right now, what does the steady state look like when we get to the other side of this? when you think about all of these structural changes that are ongoing right now what does the steady state look like when we get to the other side of this You, as a shipper, and we hear this from our shippers, they want to do business with large-scale carriers, large-scale brokers that have balance sheets and the ability to invest throughout cycle and have access to massive amounts of highly qualified capacity. You, as a shipper, and we hear this from our shippers, they want to do business with large-scale carriers, large-scale brokers that have balance sheets and the ability to invest throughout cycle and have access to massive amounts of highly qualified capacity. you as a shipper and we hear this from our shippers they want to do business with large-scale carriers large-scale brokers that have balance sheets and the ability to invest throughout cycle and have access to massive amounts of highly qualified capacity So, I mean, it's favorable you have broad access to capacity. Obviously, that's to your advantage. I guess what makes less sense to me, or less intuitive to me, is that with that larger capacity base, why would you not see attrition when it seems like there's so much pressure on the carriers? So, I mean, it's favorable you have broad access to capacity. so i mean it's favorable you have broad access to capacity Obviously, that's to your advantage. obviously that's to your advantage I guess what makes less sense to me, or less intuitive to me, is that with that larger capacity base, why would you not see attrition when it seems like there's so much pressure on the carriers? i guess what makes less sense to me or less intuitive to me is that with that larger capacity base why would you not see attrition when it seems like there's so much pressure on the carriers I think when you have to look into who is exiting the market right now, a lot of the exits have been non-domiciled CDLs, capacity that may or may not should potentially not even be in the industry, right? There's a ton, and this has been widely reported in terms of individuals that have first name "No," last name "Name Given," right? You think about who is getting some of these CDLs. This speaks to the pretty strict processes that we have internally in terms of who is driving on behalf of RXO. So no doubt over the last few years, you've seen overall carrier attrition a little bit just based on the cyclical pressures that we've talked about, but in general, it's a pretty stable base. I think when you have to look into who is exiting the market right now, a lot of the exits have been non-domiciled CDLs, capacity that may or may not should potentially not even be in the industry, right? i think when you have to look into who is exiting the market right now a lot of the exits have been non-domiciled cdls capacity that may or may not should potentially not even be in the industry right There's a ton, and this has been widely reported in terms of individuals that have first name "No," last name "Name Given," right? there's a ton and this has been widely reported in terms of individuals that have first name "no," last name "name given," right You think about who is getting some of these CDLs. you think about who is getting some of these cdls This speaks to the pretty strict processes that we have internally in terms of who is driving on behalf of RXO. this speaks to the pretty strict processes that we have internally in terms of who is driving on behalf of rxo So no doubt over the last few years, you've seen overall carrier attrition a little bit just based on the cyclical pressures that we've talked about, but in general, it's a pretty stable base. so no doubt over the last few years you've seen overall carrier attrition a little bit just based on the cyclical pressures that we've talked about but in general it's a pretty stable base And I think this also speaks to one of the advantages that we saw with respect to the purchase of Coyote last year. The carrier base for Coyote is very different from that of RXO. Legacy RXO, more owner-operators. Legacy Coyote, more medium-sized to larger carriers, access to a lot of these private fleets. And as you know, to drive on behalf of private fleet, you're generally going to be an employee and not have a non-domiciled CDL. So it speaks to the fact that we've got access to not only a massive amount of capacity, but very high-quality capacity. And I think this also speaks to one of the advantages that we saw with respect to the purchase of Coyote last year. and i think this also speaks to one of the advantages that we saw with respect to the purchase of coyote last year The carrier base for Coyote is very different from that of RXO. the carrier base for coyote is very different from that of rxo Legacy RXO, more owner-operators. legacy rxo more owner-operators Legacy Coyote, more medium-sized to larger carriers, access to a lot of these private fleets. legacy coyote more medium-sized to larger carriers access to a lot of these private fleets And as you know, to drive on behalf of private fleet, you're generally going to be an employee and not have a non-domiciled CDL. and as you know to drive on behalf of private fleet you're generally going to be an employee and not have a non-domiciled cdl So it speaks to the fact that we've got access to not only a massive amount of capacity, but very high-quality capacity. so it speaks to the fact that we've got access to not only a massive amount of capacity but very high-quality capacity What's the advantage of using more owner-operator versus kind of mid-sized and private fleet, or is it just kind of like you get some advantage using everything? What's the advantage of using more owner-operator versus kind of mid-sized and private fleet, or is it just kind of like you get some advantage using everything? what's the advantage of using more owner-operator versus kind of mid-sized and private fleet or is it just kind of like you get some advantage using everything I think it's the latter. It's just the way the businesses were built. RXO was built on getting access to power lanes across owner-operators throughout the country, and Legacy Coyote was more of centralized capacity as it relates to medium to larger-sized private fleets. RXO, we tried to crack into the private fleet market, and we weren't as successful as Legacy Coyote was. So when we saw that difference in terms of the carrier networks and how complementary they actually were, sort of just different ways of building up the density that both networks had, and I think pretty complementary to each other. I think it's the latter. i think it's the latter It's just the way the businesses were built. it's just the way the businesses were built RXO was built on getting access to power lanes across owner-operators throughout the country, and Legacy Coyote was more of centralized capacity as it relates to medium to larger-sized private fleets. rxo was built on getting access to power lanes across owner-operators throughout the country and legacy coyote was more of centralized capacity as it relates to medium to larger-sized private fleets RXO, we tried to crack into the private fleet market, and we weren't as successful as Legacy Coyote was. rxo we tried to crack into the private fleet market and we weren't as successful as legacy coyote was So when we saw that difference in terms of the carrier networks and how complementary they actually were, sort of just different ways of building up the density that both networks had, and I think pretty complementary to each other. so when we saw that difference in terms of the carrier networks and how complementary they actually were sort of just different ways of building up the density that both networks had and i think pretty complementary to each other Okay. How do you think about Coyote, RXO Coyote synergies and opportunities? How much impact is there when you look in 2026? Okay. okay How do you think about Coyote, RXO Coyote synergies and opportunities? how do you think about coyote rxo coyote synergies and opportunities How much impact is there when you look in 2026? how much impact is there when you look in 2026 You're talking about cost synergies? You're talking about cost synergies? you're talking about cost synergies Cost synergies, cost of purchased transportation, just overall impact that you could see in 2026 versus 2025. Cost synergies, cost of purchased transportation, just overall impact that you could see in 2026 versus 2025. cost synergies cost of purchased transportation just overall impact that you could see in 2026 versus 2025 Sure. So let's set the stage in terms of the cost efficiencies throughout the organization. So since we spun from RXO, we've taken out over $125 million of annualized operating expenses. That includes about $60 million of operating expenses from Coyote. We announced a couple of weeks ago in earnings that we are instituting a new $30 million cost takeout on an annualized basis. So that brings the grand total from $125 million up to $155 million. When you think about the flow through into 2026, sort of two components to think about. There are the actions that were taken in 2025 from a synergy standpoint that will be fully realized into 2026. And then you think about the cost actions that we took in that we announced a few weeks ago that are being taken in the fourth quarter with the full annualized impact into 2026. Sure. sure So let's set the stage in terms of the cost efficiencies throughout the organization. so let's set the stage in terms of the cost efficiencies throughout the organization So since we spun from RXO, we've taken out over $125 million of annualized operating expenses. so since we spun from rxo we've taken out over $125 million of annualized operating expenses That includes about $60 million of operating expenses from Coyote. that includes about $60 million of operating expenses from coyote We announced a couple of weeks ago in earnings that we are instituting a new $30 million cost takeout on an annualized basis. we announced a couple of weeks ago in earnings that we are instituting a new $30 million cost takeout on an annualized basis So that brings the grand total from $125 million up to $155 million. so that brings the grand total from $125 million up to $155 million When you think about the flow through into 2026, sort of two components to think about. when you think about the flow through into 2026 sort of two components to think about There are the actions that were taken in 2025 from a synergy standpoint that will be fully realized into 2026. there are the actions that were taken in 2025 from a synergy standpoint that will be fully realized into 2026 And then you think about the cost actions that we took in that we announced a few weeks ago that are being taken in the fourth quarter with the full annualized impact into 2026. and then you think about the cost actions that we took in that we announced a few weeks ago that are being taken in the fourth quarter with the full annualized impact into 2026 Taken together, those combined numbers should be around $30-$35 million of annualized costs coming out of the model. I think that really does speak to us operating at a very efficient cost structure, highly. When we think about sort of the incremental leverage associated with that, we're talking about from gross profit down to EBITDA with respect to volume. It could be 60 cents plus on the dollar with respect to price. It could be 85 cents plus on the dollar with respect to the brokerage business. One other thing to keep in mind in terms of the $35 million year-on-year tailwind that will have in 2026 versus 2025 holistically across both operating expenses takeout and synergies. There is certainly inflationary pressure on the business. Taken together, those combined numbers should be around $30-$35 million of annualized costs coming out of the model. taken together those combined numbers should be around $30-$35 million of annualized costs coming out of the model I think that really does speak to us operating at a very efficient cost structure, highly. i think that really does speak to us operating at a very efficient cost structure highly When we think about sort of the incremental leverage associated with that, we're talking about from gross profit down to EBITDA with respect to volume. when we think about sort of the incremental leverage associated with that we're talking about from gross profit down to ebitda with respect to volume It could be 60 cents plus on the dollar with respect to price. it could be 60 cents plus on the dollar with respect to price It could be 85 cents plus on the dollar with respect to the brokerage business. it could be 85 cents plus on the dollar with respect to the brokerage business One other thing to keep in mind in terms of the $35 million year-on-year tailwind that will have in 2026 versus 2025 holistically across both operating expenses takeout and synergies. one other thing to keep in mind in terms of the $35 million year-on-year tailwind that will have in 2026 versus 2025 holistically across both operating expenses takeout and synergies There is certainly inflationary pressure on the business. there is certainly inflationary pressure on the business When you think about just overall cost inflation, that stat that I gave you earlier in terms of you think about insurance and tires and maintenance for a lot of the carriers, some of those certainly are true for us when you think about insurance and merit, etc. So you won't see all full $35 million year-on-year 2026 versus 2025, but certainly we continue to take out aggressive takeout costs aggressively. Even when you look in the last quarter, you look at last quarter versus the full quarter, when we closed Coyote in Q4 of last year, SG&A is down about $15 million or $60 million on an annualized basis. Pretty big number. When you think about just overall cost inflation, that stat that I gave you earlier in terms of you think about insurance and tires and maintenance for a lot of the carriers, some of those certainly are true for us when you think about insurance and merit, etc. So you won't see all full $35 million year-on-year 2026 versus 2025, but certainly we continue to take out aggressive takeout costs aggressively. when you think about just overall cost inflation that stat that i gave you earlier in terms of you think about insurance and tires and maintenance for a lot of the carriers some of those certainly are true for us when you think about insurance and merit etc so you won't see all full $35 million year-on-year 2026 versus 2025 but certainly we continue to take out aggressive takeout costs aggressively Even when you look in the last quarter, you look at last quarter versus the full quarter, when we closed Coyote in Q4 of last year, SG&A is down about $15 million or $60 million on an annualized basis. even when you look in the last quarter you look at last quarter versus the full quarter when we closed coyote in q4 of last year sg&a is down about $15 million or $60 million on an annualized basis Pretty big number. pretty big number So you mentioned $30-$35 million. How do we think about cost to purchase transportation and synergies from that? I guess that gets tricky when you say, "Well, spot rates are going up and we're going to get squeezed, but we're getting a benefit from combined, so it's probably hard to decouple." But is that a factor we ought to consider for 2026, or should we just say, "Hey, let's not focus on that because we know cost of purchased transportation overall is going up"? So you mentioned $30-$35 million. so you mentioned $30-$35 million How do we think about cost to purchase transportation and synergies from that? how do we think about cost to purchase transportation and synergies from that I guess that gets tricky when you say, "Well, spot rates are going up and we're going to get squeezed, but we're getting a benefit from combined, so it's probably hard to decouple." But is that a factor we ought to consider for 2026, or should we just say, "Hey, let's not focus on that because we know cost of purchased transportation overall is going up"? i guess that gets tricky when you say "well spot rates are going up and we're going to get squeezed but we're getting a benefit from combined so it's probably hard to decouple." but is that a factor we ought to consider for 2026 or should we just say "hey let's not focus on that because we know cost of purchased transportation overall is going up" You should absolutely consider it for 2026 and beyond because it was part of the strategic rationale associated with the acquisition of Coyote. You think about the combined pool of purchased transportation dollars across Legacy RXO and Legacy Coyote, almost $4 billion of PT. The ability for us to improve spend can drop right from gross profit down to EBITDA. So that is a huge focus of the organization. We talked about last quarter how year to date we're seeing since the carrier cutover, which occurred on the technology side, May 1st. So over the last, call it five months, we've seen about 30-50 basis points of incremental buy rate favorability. We've given some framework whereby May of next year, which is the one-year anniversary of that carrier cutover. You should absolutely consider it for 2026 and beyond because it was part of the strategic rationale associated with the acquisition of Coyote. you should absolutely consider it for 2026 and beyond because it was part of the strategic rationale associated with the acquisition of coyote You think about the combined pool of purchased transportation dollars across Legacy RXO and Legacy Coyote, almost $4 billion of PT. you think about the combined pool of purchased transportation dollars across legacy rxo and legacy coyote almost $4 billion of pt The ability for us to improve spend can drop right from gross profit down to EBITDA. the ability for us to improve spend can drop right from gross profit down to ebitda So that is a huge focus of the organization. so that is a huge focus of the organization We talked about last quarter how year to date we're seeing since the carrier cutover, which occurred on the technology side, May 1st. we talked about last quarter how year to date we're seeing since the carrier cutover which occurred on the technology side may 1st So over the last, call it five months, we've seen about 30-50 basis points of incremental buy rate favorability. so over the last call it five months we've seen about 30-50 basis points of incremental buy rate favorability We've given some framework whereby May of next year, which is the one-year anniversary of that carrier cutover. we've given some framework whereby may of next year which is the one-year anniversary of that carrier cutover And just to help frame things and put things in perspective for everyone, we did the technology transition in multiple phases. One of the first phases was making sure that all carrier reps across Legacy RXO and Legacy Coyote were covering freight in one system, which is the RXO system, RXO Connect, and our proprietary TMS Freight Optimizer. That occurred on May 1st. And it's also a pretty iterative process where over time you'll have the ability for the carrier reps to improve productivity. You think about some of these carrier reps at Legacy Coyote, some of the most tenured in the industry doing this for 8-10 years operating off of Bazooka. So it takes some time to go ahead and learn the inner workings of the newer system and learn the freight that they have access to. And just to help frame things and put things in perspective for everyone, we did the technology transition in multiple phases. and just to help frame things and put things in perspective for everyone we did the technology transition in multiple phases One of the first phases was making sure that all carrier reps across Legacy RXO and Legacy Coyote were covering freight in one system, which is the RXO system, RXO Connect, and our proprietary TMS Freight Optimizer. one of the first phases was making sure that all carrier reps across legacy rxo and legacy coyote were covering freight in one system which is the rxo system rxo connect and our proprietary tms freight optimizer That occurred on May 1st. that occurred on may 1st And it's also a pretty iterative process where over time you'll have the ability for the carrier reps to improve productivity. and it's also a pretty iterative process where over time you'll have the ability for the carrier reps to improve productivity You think about some of these carrier reps at Legacy Coyote, some of the most tenured in the industry doing this for 8-10 years operating off of Bazooka. you think about some of these carrier reps at legacy coyote some of the most tenured in the industry doing this for 8-10 years operating off of bazooka So it takes some time to go ahead and learn the inner workings of the newer system and learn the freight that they have access to. so it takes some time to go ahead and learn the inner workings of the newer system and learn the freight that they have access to By that one-year anniversary of May, we feel comfortable that we'll get to about 100 basis points of incremental buy rate favorability. But you also bring up a very important point that you need to distinguish the cost synergies and the cost takeouts from that of purchased transportation synergies because purchased transportation synergies will move with how the market is performing. So ultimately, if you are in an inflationary rate environment, it will serve as incremental cost avoidance. If you are in an environment that is status quo or perhaps loosening, you'll have the ability to benefit from incremental PT savings. By that one-year anniversary of May, we feel comfortable that we'll get to about 100 basis points of incremental buy rate favorability. by that one-year anniversary of may we feel comfortable that we'll get to about 100 basis points of incremental buy rate favorability But you also bring up a very important point that you need to distinguish the cost synergies and the cost takeouts from that of purchased transportation synergies because purchased transportation synergies will move with how the market is performing. but you also bring up a very important point that you need to distinguish the cost synergies and the cost takeouts from that of purchased transportation synergies because purchased transportation synergies will move with how the market is performing So ultimately, if you are in an inflationary rate environment, it will serve as incremental cost avoidance. so ultimately if you are in an inflationary rate environment it will serve as incremental cost avoidance If you are in an environment that is status quo or perhaps loosening, you'll have the ability to benefit from incremental PT savings. if you are in an environment that is status quo or perhaps loosening you'll have the ability to benefit from incremental pt savings Right. Okay. How do you think about the kind of algorithm for 2026 overall? Is it base case, you get a little bit of growth in freight, you get some tightening in the market, you get some rate increases? I don't know. What are some of the pieces that could come together in addition to what you've talked about on the cost side? Right. right Okay. okay How do you think about the kind of algorithm for 2026 overall? how do you think about the kind of algorithm for 2026 overall Is it base case, you get a little bit of growth in freight, you get some tightening in the market, you get some rate increases? is it base case you get a little bit of growth in freight you get some tightening in the market you get some rate increases I don't know. i don't know What are some of the pieces that could come together in addition to what you've talked about on the cost side? what are some of the pieces that could come together in addition to what you've talked about on the cost side This is the longest freight recession on record, so I think we're not going to get into predictions for 2026 in what is already a very unprecedented environment. But what I can talk to, and I think this is really important, is our ability to outperform the market. And if you think back 12 months ago, we just completed the acquisition of Coyote. But underneath the hood, it was still clearly two separate companies with us first beginning the tech integration journey, the operation integration journey. You think about where we are right now, the integration is effectively complete. We are integrated from a sales standpoint, integrated from an ops standpoint, carrier integration complete, shipper integration on the customer side materially complete. One CRM, one ERP, one pricing tool, combined data set of both Legacy RXO and Legacy Coyote in 12 months. This is the longest freight recession on record, so I think we're not going to get into predictions for 2026 in what is already a very unprecedented environment. this is the longest freight recession on record so i think we're not going to get into predictions for 2026 in what is already a very unprecedented environment But what I can talk to, and I think this is really important, is our ability to outperform the market. but what i can talk to and i think this is really important is our ability to outperform the market And if you think back 12 months ago, we just completed the acquisition of Coyote. and if you think back 12 months ago we just completed the acquisition of coyote But underneath the hood, it was still clearly two separate companies with us first beginning the tech integration journey, the operation integration journey. but underneath the hood it was still clearly two separate companies with us first beginning the tech integration journey the operation integration journey You think about where we are right now, the integration is effectively complete. you think about where we are right now the integration is effectively complete We are integrated from a sales standpoint, integrated from an ops standpoint, carrier integration complete, shipper integration on the customer side materially complete. we are integrated from a sales standpoint integrated from an ops standpoint carrier integration complete shipper integration on the customer side materially complete One CRM, one ERP, one pricing tool, combined data set of both Legacy RXO and Legacy Coyote in 12 months. one crm one erp one pricing tool combined data set of both legacy rxo and legacy coyote in 12 months This is the largest integration that's ever occurred in the asset light space, and we hit operationally our timeline in terms of tech integration, which was a very robust and aggressive timeline to begin with. So heading into next year as one RXO with the integration behind us, you think about RXO over the last 10, 15 years, profitable growth has been our algorithm. Outperformance in the brokerage market has been our algorithm. If you look back over the last 10 years, we have significantly outperformed the truckload market. Heading into 2026, the business has very good momentum as it relates to conversations with shippers and an integrated company across the board to go ahead and resume that outperformance that we've been accustomed to for the last decade. This is the largest integration that's ever occurred in the asset light space, and we hit operationally our timeline in terms of tech integration, which was a very robust and aggressive timeline to begin with. this is the largest integration that's ever occurred in the asset light space and we hit operationally our timeline in terms of tech integration which was a very robust and aggressive timeline to begin with So heading into next year as one RXO with the integration behind us, you think about RXO over the last 10, 15 years, profitable growth has been our algorithm. so heading into next year as one rxo with the integration behind us you think about rxo over the last 10 15 years profitable growth has been our algorithm Outperformance in the brokerage market has been our algorithm. outperformance in the brokerage market has been our algorithm If you look back over the last 10 years, we have significantly outperformed the truckload market. if you look back over the last 10 years we have significantly outperformed the truckload market Heading into 2026, the business has very good momentum as it relates to conversations with shippers and an integrated company across the board to go ahead and resume that outperformance that we've been accustomed to for the last decade. heading into 2026 the business has very good momentum as it relates to conversations with shippers and an integrated company across the board to go ahead and resume that outperformance that we've been accustomed to for the last decade How much visibility do you have to that? I think when Drew talked about, has talked about this year, he said, "Okay, we thought rates would go up. They didn't go up as much as we thought, or they didn't really go up. The market would stay soft. And so we probably underperformed a bit on maybe market share or volume relative to the stance we took on rates." You have done some heavy lifting and putting the pieces together, but it's also now a new entity versus what it was when you had the strong track record of growth. So kind of what gives you confidence that you can go back to being growth above the market as you go 2026, 2027? How much visibility do you have to that? how much visibility do you have to that I think when Drew talked about, has talked about this year, he said, "Okay, we thought rates would go up. i think when drew talked about has talked about this year he said "okay we thought rates would go up They didn't go up as much as we thought, or they didn't really go up. they didn't go up as much as we thought or they didn't really go up The market would stay soft. the market would stay soft And so we probably underperformed a bit on maybe market share or volume relative to the stance we took on rates." You have done some heavy lifting and putting the pieces together, but it's also now a new entity versus what it was when you had the strong track record of growth. and so we probably underperformed a bit on maybe market share or volume relative to the stance we took on rates." you have done some heavy lifting and putting the pieces together but it's also now a new entity versus what it was when you had the strong track record of growth So kind of what gives you confidence that you can go back to being growth above the market as you go 2026, 2027? so kind of what gives you confidence that you can go back to being growth above the market as you go 2026 2027 So you think about as 2025 progressed, to your point, we took a stance on rates earlier in this year, and the market took another leg lower. So we think about where we are now versus 12 months ago at the time of the Coyote acquisition. We thought we were at or near the bottom of the freight cycle, and we thought that the market would move higher. It's taken a little bit longer, and there have been consequences as it relates to our truckload volume growth this year, which first quarter was down 8%, second quarter down 11%, third quarter down 12%. And at the midpoint of our outlook, we talked about down double digits again. So we've underperformed this year on the truckload side, to your point, no doubt, based on some of the pricing strategies that we engaged in. So you think about as 2025 progressed, to your point, we took a stance on rates earlier in this year, and the market took another leg lower. so you think about as 2025 progressed to your point we took a stance on rates earlier in this year and the market took another leg lower So we think about where we are now versus 12 months ago at the time of the Coyote acquisition. so we think about where we are now versus 12 months ago at the time of the coyote acquisition We thought we were at or near the bottom of the freight cycle, and we thought that the market would move higher. we thought we were at or near the bottom of the freight cycle and we thought that the market would move higher It's taken a little bit longer, and there have been consequences as it relates to our truckload volume growth this year, which first quarter was down 8%, second quarter down 11%, third quarter down 12%. it's taken a little bit longer and there have been consequences as it relates to our truckload volume growth this year which first quarter was down 8% second quarter down 11% third quarter down 12% And at the midpoint of our outlook, we talked about down double digits again. and at the midpoint of our outlook we talked about down double digits again So we've underperformed this year on the truckload side, to your point, no doubt, based on some of the pricing strategies that we engaged in. so we've underperformed this year on the truckload side to your point no doubt based on some of the pricing strategies that we engaged in If we knew if it was going to be a softer market, we certainly did not have to be as aggressive as we were on some of the price increases earlier this year. But you sort of fast forward to where we are right now, and you think about the automotive headwinds that have impacted, and I want to be clear, it wasn't just Legacy Coyote, right? Legacy RXO, we are the largest provider of managed expedite in North America for automotive. So Legacy RXO, you look at our automotive volumes for the combined basis in 2025, they're down 20%-30% year over year. Fast forward to 2026, automotive stops being a headwind materially starting in Q1. Our truckload comps ease materially starting in Q2 of next year. If we knew if it was going to be a softer market, we certainly did not have to be as aggressive as we were on some of the price increases earlier this year. if we knew if it was going to be a softer market we certainly did not have to be as aggressive as we were on some of the price increases earlier this year But you sort of fast forward to where we are right now, and you think about the automotive headwinds that have impacted, and I want to be clear, it wasn't just Legacy Coyote, right? but you sort of fast forward to where we are right now and you think about the automotive headwinds that have impacted and i want to be clear it wasn't just legacy coyote right Legacy RXO, we are the largest provider of managed expedite in North America for automotive. legacy rxo we are the largest provider of managed expedite in north america for automotive So Legacy RXO, you look at our automotive volumes for the combined basis in 2025, they're down 20%-30% year over year. so legacy rxo you look at our automotive volumes for the combined basis in 2025 they're down 20%-30% year over year Fast forward to 2026, automotive stops being a headwind materially starting in Q1. fast forward to 2026 automotive stops being a headwind materially starting in q1 Our truckload comps ease materially starting in Q2 of next year. our truckload comps ease materially starting in q2 of next year And then in terms of your question on visibility, I think the conversations we're having with our customers have been very constructive. We've stabilized the volume. We talked about Q3, our truckload volume was up 1% sequentially. Q4 will be up again embedded within our outlook. And then when you think about off of that base, then being able to outperform the market irrespective of market conditions, we feel very good about that. What we don't know is the demand environment, where ultimately if the demand environment still remains soft, we could have a very good bid season, but ultimately what we call fill rates, right, would be challenged, whereby customers have a view of demand. And ultimately, if the shipper's forecast is off because the consumer deteriorates, as an example, their demand goes lower, and therefore our demand would go lower, even if you had that award. And then in terms of your question on visibility, I think the conversations we're having with our customers have been very constructive. and then in terms of your question on visibility i think the conversations we're having with our customers have been very constructive We've stabilized the volume. we've stabilized the volume We talked about Q3, our truckload volume was up 1% sequentially. we talked about q3 our truckload volume was up 1% sequentially Q4 will be up again embedded within our outlook. q4 will be up again embedded within our outlook And then when you think about off of that base, then being able to outperform the market irrespective of market conditions, we feel very good about that. and then when you think about off of that base then being able to outperform the market irrespective of market conditions we feel very good about that What we don't know is the demand environment, where ultimately if the demand environment still remains soft, we could have a very good bid season, but ultimately what we call fill rates, right, would be challenged, whereby customers have a view of demand. what we don't know is the demand environment where ultimately if the demand environment still remains soft we could have a very good bid season but ultimately what we call fill rates right would be challenged whereby customers have a view of demand And ultimately, if the shipper's forecast is off because the consumer deteriorates, as an example, their demand goes lower, and therefore our demand would go lower, even if you had that award. and ultimately if the shipper's forecast is off because the consumer deteriorates as an example their demand goes lower and therefore our demand would go lower even if you had that award But in terms of the ability to continue to stay close to customers, servicing that freight exceptionally well now as one RXO, we feel very good about. But in terms of the ability to continue to stay close to customers, servicing that freight exceptionally well now as one RXO, we feel very good about. but in terms of the ability to continue to stay close to customers servicing that freight exceptionally well now as one rxo we feel very good about Let's spend a little bit of time on the regulatory side. I know you look at a lot of the details of what's happening, the specific regulatory actions. You're thoughtful about how that manifests and how big the impact can be. What's your latest thought on what are some of the key regulatory actions that are taking place and how you think that is base case, how it affects the market in 2026? Let's spend a little bit of time on the regulatory side. let's spend a little bit of time on the regulatory side I know you look at a lot of the details of what's happening, the specific regulatory actions. i know you look at a lot of the details of what's happening the specific regulatory actions You're thoughtful about how that manifests and how big the impact can be. you're thoughtful about how that manifests and how big the impact can be What's your latest thought on what are some of the key regulatory actions that are taking place and how you think that is base case, how it affects the market in 2026? what's your latest thought on what are some of the key regulatory actions that are taking place and how you think that is base case how it affects the market in 2026 The biggest regulatory action that has been taken over the last, call it six months, I'd say have been twofold. One was the executive order, the Rules of the Road executive order in May of this year, which required English language proficiency on behalf of truck drivers and the ability to interpret road signs. And the second was the interim final rule from the DOT in September, which effectively paused the issuance of non-domiciled CDLs. Those are very significant in terms of the potential implications to the truckload industry, and we saw a preview of that in October in terms of the capacity that's come out. So sizing that up, I think the FMCSA has sized up 200,000 non-domiciled CDLs being impacted by the interim final rule on a base of 3.9 million. That's about 5% of overall capacity. The biggest regulatory action that has been taken over the last, call it six months, I'd say have been twofold. the biggest regulatory action that has been taken over the last call it six months i'd say have been twofold One was the executive order, the Rules of the Road executive order in May of this year, which required English language proficiency on behalf of truck drivers and the ability to interpret road signs. one was the executive order the rules of the road executive order in may of this year which required english language proficiency on behalf of truck drivers and the ability to interpret road signs And the second was the interim final rule from the DOT in September, which effectively paused the issuance of non-domiciled CDLs. and the second was the interim final rule from the dot in september which effectively paused the issuance of non-domiciled cdls Those are very significant in terms of the potential implications to the truckload industry, and we saw a preview of that in October in terms of the capacity that's come out. those are very significant in terms of the potential implications to the truckload industry and we saw a preview of that in october in terms of the capacity that's come out So sizing that up, I think the FMCSA has sized up 200,000 non-domiciled CDLs being impacted by the interim final rule on a base of 3.9 million. so sizing that up i think the fmcsa has sized up 200,000 non-domiciled cdls being impacted by the interim final rule on a base of 3.9 million That's about 5% of overall capacity. that's about 5% of overall capacity But then you sort of break down that denominator, which is about 3.9 million trucks that are out there. What is the true denominator of the for-hire truckload market, excluding private fleets? Probably somewhere close to anywhere between 1 and 2 million. So it's a significant amount of capacity that could permanently leave the market, and that has long-term implications, which are positive for many constituents. One, it's positive for the roads and positive for driver safety. It's positive for large-scale carriers and large-scale brokers like RXO when you think about the ability for, like we were talking about earlier, shippers wanting to do business with carriers and brokers that have very rigorous training processes and qualification processes in order to go ahead and drive on behalf of RXO. And you think about what that could mean longer term. But then you sort of break down that denominator, which is about 3.9 million trucks that are out there. but then you sort of break down that denominator which is about 3.9 million trucks that are out there What is the true denominator of the for-hire truckload market, excluding private fleets? what is the true denominator of the for-hire truckload market excluding private fleets Probably somewhere close to anywhere between 1 and 2 million. probably somewhere close to anywhere between 1 and 2 million So it's a significant amount of capacity that could permanently leave the market, and that has long-term implications, which are positive for many constituents. so it's a significant amount of capacity that could permanently leave the market and that has long-term implications which are positive for many constituents One, it's positive for the roads and positive for driver safety. one it's positive for the roads and positive for driver safety It's positive for large-scale carriers and large-scale brokers like RXO when you think about the ability for, like we were talking about earlier, shippers wanting to do business with carriers and brokers that have very rigorous training processes and qualification processes in order to go ahead and drive on behalf of RXO. it's positive for large-scale carriers and large-scale brokers like rxo when you think about the ability for like we were talking about earlier shippers wanting to do business with carriers and brokers that have very rigorous training processes and qualification processes in order to go ahead and drive on behalf of rxo And you think about what that could mean longer term. and you think about what that could mean longer term There's also brokers that are out there that leverage this non-domiciled capacity, and those business models might now go away. So you think about what that means in terms of market structure. I think it's a really good thing for the industry, and I think it's a really good thing for a large-scale broker like RXO. The top nine brokers post the acquisition of Coyote represented about 45%-50% of the overall industry structure. Longer term, we think the top five probably represent 50%-70%. So I think it's a winners-take-most-type market structure with respect to having the ability to invest throughout cycle, having the balance sheet, having the ability to stay close to customers, and having access to that massive capacity to weather a lot of the structural changes. But those are the two biggest changes that have occurred in 2025. There's also brokers that are out there that leverage this non-domiciled capacity, and those business models might now go away. there's also brokers that are out there that leverage this non-domiciled capacity and those business models might now go away So you think about what that means in terms of market structure. so you think about what that means in terms of market structure I think it's a really good thing for the industry, and I think it's a really good thing for a large-scale broker like RXO. i think it's a really good thing for the industry and i think it's a really good thing for a large-scale broker like rxo The top nine brokers post the acquisition of Coyote represented about 45%-50% of the overall industry structure. the top nine brokers post the acquisition of coyote represented about 45%-50% of the overall industry structure Longer term, we think the top five probably represent 50%-70%. longer term we think the top five probably represent 50%-70% So I think it's a winners-take-most-type market structure with respect to having the ability to invest throughout cycle, having the balance sheet, having the ability to stay close to customers, and having access to that massive capacity to weather a lot of the structural changes. so i think it's a winners-take-most-type market structure with respect to having the ability to invest throughout cycle having the balance sheet having the ability to stay close to customers and having access to that massive capacity to weather a lot of the structural changes But those are the two biggest changes that have occurred in 2025. but those are the two biggest changes that have occurred in 2025 Seems like DOT and FMCSA keep discovering kind of, or maybe identifying kind of, if you want to say fraudulent or questionable approaches, whether it's self-certification of ELDs. So perhaps you and I could sell ELDs, right, tomorrow? Maybe not any longer. Driver schools that are inadequate. So it's kind of this and that and the other thing. Do you think those other elements are pretty significant too? And do you think that there's just like so much momentum that this has got to have a big impact, or is it still unclear what this does? Seems like DOT and FMCSA keep discovering kind of, or maybe identifying kind of, if you want to say fraudulent or questionable approaches, whether it's self-certification of ELDs. seems like dot and fmcsa keep discovering kind of or maybe identifying kind of if you want to say fraudulent or questionable approaches whether it's self-certification of elds So perhaps you and I could sell ELDs, right, tomorrow? so perhaps you and i could sell elds right tomorrow Maybe not any longer. maybe not any longer Driver schools that are inadequate. driver schools that are inadequate So it's kind of this and that and the other thing. so it's kind of this and that and the other thing Do you think those other elements are pretty significant too? do you think those other elements are pretty significant too And do you think that there's just like so much momentum that this has got to have a big impact, or is it still unclear what this does? and do you think that there's just like so much momentum that this has got to have a big impact or is it still unclear what this does No, I very much agree with the former in terms of all of the actions in totality have the potential to be very significant in terms of what happens to the overall supply balance for this industry longer term. Because you're right, it's not just about the executive order on the rules of the road and English language proficiency. It's not just about non-domiciled CDLs. I mean, even in the last 24 hours, you've had the DOT identify almost half of the schools that are teaching these drivers to get the qualifications potentially be ineligible going forward. It's about 15,000 driving schools in the U.S., and almost 7,000 or 7,500 have been identified. That hit last night. I think yesterday also, the DOT identified Minnesota issuing one-third of their non-domiciled CDLs as potentially being problematic. So it's not just one issue. It is multiple. No, I very much agree with the former in terms of all of the actions in totality have the potential to be very significant in terms of what happens to the overall supply balance for this industry longer term. no i very much agree with the former in terms of all of the actions in totality have the potential to be very significant in terms of what happens to the overall supply balance for this industry longer term Because you're right, it's not just about the executive order on the rules of the road and English language proficiency. because you're right it's not just about the executive order on the rules of the road and english language proficiency It's not just about non-domiciled CDLs. it's not just about non-domiciled cdls I mean, even in the last 24 hours, you've had the DOT identify almost half of the schools that are teaching these drivers to get the qualifications potentially be ineligible going forward. i mean even in the last 24 hours you've had the dot identify almost half of the schools that are teaching these drivers to get the qualifications potentially be ineligible going forward It's about 15,000 driving schools in the U.S., and almost 7,000 or 7,500 have been identified. it's about 15,000 driving schools in the u.s and almost 7,000 or 7,500 have been identified That hit last night. that hit last night I think yesterday also, the DOT identified Minnesota issuing one-third of their non-domiciled CDLs as potentially being problematic. i think yesterday also the dot identified minnesota issuing one-third of their non-domiciled cdls as potentially being problematic So it's not just one issue. so it's not just one issue It is multiple. it is multiple I think this is all in the name of improved driver safety, improved road safety, reducing fraud, reducing theft. This is a very good thing for the industry and longer-term steady state. I think that's an important point because you think about in the near term, no doubt it's impacting our business because you've got what I talked about earlier in terms of a current unprecedented situation with you look in October as a great example, load-to-truck ratio and tender rejections moving higher despite weaker demands because all of the supply is coming out. It's painful in the near term for us in terms of financial performance because we're getting squeezed on the buy side with weaker demand environments. There's no real creative spot opportunities to help offset that squeeze. That's also mechanical, right? I think this is all in the name of improved driver safety, improved road safety, reducing fraud, reducing theft. i think this is all in the name of improved driver safety improved road safety reducing fraud reducing theft This is a very good thing for the industry and longer-term steady state. this is a very good thing for the industry and longer-term steady state I think that's an important point because you think about in the near term, no doubt it's impacting our business because you've got what I talked about earlier in terms of a current unprecedented situation with you look in October as a great example, load-to-truck ratio and tender rejections moving higher despite weaker demands because all of the supply is coming out. i think that's an important point because you think about in the near term no doubt it's impacting our business because you've got what i talked about earlier in terms of a current unprecedented situation with you look in october as a great example load-to-truck ratio and tender rejections moving higher despite weaker demands because all of the supply is coming out It's painful in the near term for us in terms of financial performance because we're getting squeezed on the buy side with weaker demand environments. it's painful in the near term for us in terms of financial performance because we're getting squeezed on the buy side with weaker demand environments There's no real creative spot opportunities to help offset that squeeze. there's no real creative spot opportunities to help offset that squeeze That's also mechanical, right? that's also mechanical right That's what happens when you've got a large book of business with tier one enterprise shippers and no spot environment. You then fast forward to steady state. If you've got an environment that is cleaner from a supply standpoint with higher quality supply, higher quality brokerages, that is a good thing for freight rates longer term, and it's a good thing for road safety longer term. That's what happens when you've got a large book of business with tier one enterprise shippers and no spot environment. that's what happens when you've got a large book of business with tier one enterprise shippers and no spot environment You then fast forward to steady state. you then fast forward to steady state If you've got an environment that is cleaner from a supply standpoint with higher quality supply, higher quality brokerages, that is a good thing for freight rates longer term, and it's a good thing for road safety longer term. if you've got an environment that is cleaner from a supply standpoint with higher quality supply higher quality brokerages that is a good thing for freight rates longer term and it's a good thing for road safety longer term So in this framework where you have kind of flat-ish freight, but you have capacity coming down, you could have a good outcome for rates. However, it can be challenging for brokers. How long do you think, like each cycle's different, but if you look at historical cycles, how long do you think the squeeze lasts? I mean, is this like you're getting squeezed in October, starting to get squeezed in 3Q? I mean, is this run through 2Q next year? Could this run longer than that? I mean, it'd be nice to, I think you say it's a good, what is it, the good squeeze or something or a good, whatever term you use, but good and bad. But you'd like to get through the bad or the challenge and get to the good news on the other side. So any thoughts on how long that might last? So in this framework where you have kind of flat-ish freight, but you have capacity coming down, you could have a good outcome for rates. so in this framework where you have kind of flat-ish freight but you have capacity coming down you could have a good outcome for rates However, it can be challenging for brokers. however it can be challenging for brokers How long do you think, like each cycle's different, but if you look at historical cycles, how long do you think the squeeze lasts? how long do you think like each cycle's different but if you look at historical cycles how long do you think the squeeze lasts I mean, is this like you're getting squeezed in October, starting to get squeezed in 3Q? i mean is this like you're getting squeezed in october starting to get squeezed in 3q I mean, is this run through 2Q next year? i mean is this run through 2q next year Could this run longer than that? could this run longer than that I mean, it'd be nice to, I think you say it's a good, what is it, the good squeeze or something or a good, whatever term you use, but good and bad. i mean it'd be nice to i think you say it's a good what is it the good squeeze or something or a good whatever term you use but good and bad But you'd like to get through the bad or the challenge and get to the good news on the other side. but you'd like to get through the bad or the challenge and get to the good news on the other side So any thoughts on how long that might last? so any thoughts on how long that might last Yeah. I don't have the crystal ball in terms of how long the squeeze will last. We are in unprecedented times in terms of going on year four of this freight recession. But I think we gave some color on the earnings call in terms of last time we had a squeeze like this. Within two quarters, we had that rebound. But ultimately, every cycle is different, and it comes down to supply and demand. So does supply keep coming out at the rate that it's been coming out? And do you see any kind of rebound in demand across the key verticals that we serve, which are food and beverage, industrial manufacturing, and retail e-commerce? The key signs that I look for are what's going on with the industrial manufacturing PMI, especially the new orders component, what's going on with building permits, as well as consumer confidence. Yeah. yeah I don't have the crystal ball in terms of how long the squeeze will last. i don't have the crystal ball in terms of how long the squeeze will last We are in unprecedented times in terms of going on year four of this freight recession. we are in unprecedented times in terms of going on year four of this freight recession But I think we gave some color on the earnings call in terms of last time we had a squeeze like this. but i think we gave some color on the earnings call in terms of last time we had a squeeze like this Within two quarters, we had that rebound. within two quarters we had that rebound But ultimately, every cycle is different, and it comes down to supply and demand. but ultimately every cycle is different and it comes down to supply and demand So does supply keep coming out at the rate that it's been coming out? so does supply keep coming out at the rate that it's been coming out And do you see any kind of rebound in demand across the key verticals that we serve, which are food and beverage, industrial manufacturing, and retail e-commerce? and do you see any kind of rebound in demand across the key verticals that we serve which are food and beverage industrial manufacturing and retail e-commerce The key signs that I look for are what's going on with the industrial manufacturing PMI, especially the new orders component, what's going on with building permits, as well as consumer confidence. the key signs that i look for are what's going on with the industrial manufacturing pmi especially the new orders component what's going on with building permits as well as consumer confidence Really, the housing market is also really important for the freight market, as you know. About 15%-20% of overall freight demand and every new truckload or every new home, sorry, is the equivalent of six to eight truckloads. So getting that long end of the curve to come down in terms of mortgage rates would be helpful. We are sitting at 12-month lows in terms of mortgage rates, and you've seen a recent increase in applications. So to the extent that sustains, that'll be good for our brokerage business, and it'll also be good for the last mile business given our exposure to big and bulky. Really, the housing market is also really important for the freight market, as you know. really the housing market is also really important for the freight market as you know About 15%-20% of overall freight demand and every new truckload or every new home, sorry, is the equivalent of six to eight truckloads. about 15%-20% of overall freight demand and every new truckload or every new home sorry is the equivalent of six to eight truckloads So getting that long end of the curve to come down in terms of mortgage rates would be helpful. so getting that long end of the curve to come down in terms of mortgage rates would be helpful We are sitting at 12-month lows in terms of mortgage rates, and you've seen a recent increase in applications. we are sitting at 12-month lows in terms of mortgage rates and you've seen a recent increase in applications So to the extent that sustains, that'll be good for our brokerage business, and it'll also be good for the last mile business given our exposure to big and bulky. so to the extent that sustains that'll be good for our brokerage business and it'll also be good for the last mile business given our exposure to big and bulky What’s the prior period you referred to as an analogy for when there was a squeeze? What’s the prior period you referred to as an analogy for when there was a squeeze? what’s the prior period you referred to as an analogy for when there was a squeeze We're going back to, I want to say, I think the 2019 timeframe for Legacy RXO when we saw that gross margin performance dip and then the two quarters subsequent to then rebounding. We're going back to, I want to say, I think the 2019 timeframe for Legacy RXO when we saw that gross margin performance dip and then the two quarters subsequent to then rebounding. we're going back to i want to say i think the 2019 timeframe for legacy rxo when we saw that gross margin performance dip and then the two quarters subsequent to then rebounding 2018 or 2019? 2018 or 2019? 2018 or 2019 I think 2018, 2019 around then. I think 2018, 2019 around then. i think 2018 2019 around then Okay. Okay. Okay. okay Okay. okay And that also speaks to the earlier question that you had, Tom, on why it's so important to continue to focus on our ability to procure transportation effectively, right? Regardless of what happens in the market, as we strive to hitting that 100 basis points of improvement of long-term productivity gains, I'm sorry, long-term purchase transportation gains, that'll clearly help offset some of the squeeze to the extent that we can achieve that faster. So when we think about our business model, you're never going to avoid the squeeze, right? We've got a book of business that's 70% plus contractual in nature, and our book of business is we've got a little S&P, but it's mostly large tier one enterprise shippers. So when you've got that large book of business with higher PT costs, that's what happens on the gross margin line in terms of the squeeze impact. And that also speaks to the earlier question that you had, Tom, on why it's so important to continue to focus on our ability to procure transportation effectively, right? and that also speaks to the earlier question that you had tom on why it's so important to continue to focus on our ability to procure transportation effectively right Regardless of what happens in the market, as we strive to hitting that 100 basis points of improvement of long-term productivity gains, I'm sorry, long-term purchase transportation gains, that'll clearly help offset some of the squeeze to the extent that we can achieve that faster. regardless of what happens in the market as we strive to hitting that 100 basis points of improvement of long-term productivity gains i'm sorry long-term purchase transportation gains that'll clearly help offset some of the squeeze to the extent that we can achieve that faster So when we think about our business model, you're never going to avoid the squeeze, right? so when we think about our business model you're never going to avoid the squeeze right We've got a book of business that's 70% plus contractual in nature, and our book of business is we've got a little S&P, but it's mostly large tier one enterprise shippers. we've got a book of business that's 70% plus contractual in nature and our book of business is we've got a little s&p but it's mostly large tier one enterprise shippers So when you've got that large book of business with higher PT costs, that's what happens on the gross margin line in terms of the squeeze impact. so when you've got that large book of business with higher pt costs that's what happens on the gross margin line in terms of the squeeze impact And to your point, the good squeeze versus the bad squeeze, we've had multiple episodic squeezes over the last three plus years since we've spun, and it's been because every time there was an event, you think about Roadcheck week or any kind of winter storm, it's always met with rising rejection rates, rising load-to-truck ratios, but you always get back to the prior baseline because ultimately there was too much supply relative to demand. So we'll see how long this squeeze lasts. This has now been. We start to see a little bit of tightening into September, and now we're in December, and rates are still moving higher. So we should see if this sustains. And to your point, the good squeeze versus the bad squeeze, we've had multiple episodic squeezes over the last three plus years since we've spun, and it's been because every time there was an event, you think about Roadcheck week or any kind of winter storm, it's always met with rising rejection rates, rising load-to-truck ratios, but you always get back to the prior baseline because ultimately there was too much supply relative to demand. and to your point the good squeeze versus the bad squeeze we've had multiple episodic squeezes over the last three plus years since we've spun and it's been because every time there was an event you think about roadcheck week or any kind of winter storm it's always met with rising rejection rates rising load-to-truck ratios but you always get back to the prior baseline because ultimately there was too much supply relative to demand So we'll see how long this squeeze lasts. so we'll see how long this squeeze lasts This has now been. this has now been We start to see a little bit of tightening into September, and now we're in December, and rates are still moving higher. we start to see a little bit of tightening into september and now we're in december and rates are still moving higher So we should see if this sustains. so we should see if this sustains Okay. We've got a little less than five minutes left here. I want to ask you about AI. So when we look at transport who can benefit, just structure what they do from use of technology and AI, we think C.H. Robinson is kind of blazing the trail of driving a lot of productivity gains. You see it in their pretty big headcount reduction numbers, 30% headcount reduction overall, 3Q 2025 versus 2022. And I think it's hard to decouple how much is lean versus AI, where was their starting point? The asset-light model does seem conducive. So I think eventually you'll see x letters benefit from that. I know there's some dispute on that, some debate, but my own view is C.H. Robinson isn't the only one that can realize AI gains. Okay. okay We've got a little less than five minutes left here. we've got a little less than five minutes left here I want to ask you about AI. i want to ask you about ai So when we look at transport who can benefit, just structure what they do from use of technology and AI, we think C.H. so when we look at transport who can benefit just structure what they do from use of technology and ai we think c.h Robinson is kind of blazing the trail of driving a lot of productivity gains. robinson is kind of blazing the trail of driving a lot of productivity gains You see it in their pretty big headcount reduction numbers, 30% headcount reduction overall, 3Q 2025 versus 2022. you see it in their pretty big headcount reduction numbers 30% headcount reduction overall 3q 2025 versus 2022 And I think it's hard to decouple how much is lean versus AI, where was their starting point? and i think it's hard to decouple how much is lean versus ai where was their starting point The asset-light model does seem conducive. the asset-light model does seem conducive So I think eventually you'll see x letters benefit from that. so i think eventually you'll see x letters benefit from that I know there's some dispute on that, some debate, but my own view is C.H. i know there's some dispute on that some debate but my own view is c.h Robinson isn't the only one that can realize AI gains. robinson isn't the only one that can realize ai gains The degree, of course, is different and whether you have lean, but why shouldn't RXO also be a name that can see some real benefits from that? I mean, I tend to think we probably were pretty focused on Coyote integration. So that's a reason maybe it wouldn't be as transparent. But I know some of its starting point, what we're already doing, but help me think about why you shouldn't be able to do that, or is there kind of big future opportunity from use of generative AI, agentic AI? The degree, of course, is different and whether you have lean, but why shouldn't RXO also be a name that can see some real benefits from that? the degree of course is different and whether you have lean but why shouldn't rxo also be a name that can see some real benefits from that I mean, I tend to think we probably were pretty focused on Coyote integration. i mean i tend to think we probably were pretty focused on coyote integration So that's a reason maybe it wouldn't be as transparent. so that's a reason maybe it wouldn't be as transparent But I know some of its starting point, what we're already doing, but help me think about why you shouldn't be able to do that, or is there kind of big future opportunity from use of generative AI, agentic AI? but i know some of its starting point what we're already doing but help me think about why you shouldn't be able to do that or is there kind of big future opportunity from use of generative ai agentic ai Absolutely agree with the premise that RXO has the ability to go ahead and benefit from leveraging AI in a strategic way that's transformative across the organization that improves our operating margins longer term. So I think the premise is absolutely sound. I mean, we spend more than $100 million a year on cash technology spend. That's not just, so that's across OpEX and CapEX. And we think about the investments that we've been making across the board. It goes back 10 plus years ago on the machine learning side in terms of some of the pricing algorithms, but specifically to your question on agentic and GenAI, we believe that we are entering an inflection point heading into 2026 with the rollout of many tools that we've been investing in for years. Absolutely agree with the premise that RXO has the ability to go ahead and benefit from leveraging AI in a strategic way that's transformative across the organization that improves our operating margins longer term. absolutely agree with the premise that rxo has the ability to go ahead and benefit from leveraging ai in a strategic way that's transformative across the organization that improves our operating margins longer term So I think the premise is absolutely sound. so i think the premise is absolutely sound I mean, we spend more than $100 million a year on cash technology spend. i mean we spend more than $100 million a year on cash technology spend That's not just, so that's across OpEX and CapEX. that's not just so that's across opex and capex And we think about the investments that we've been making across the board. and we think about the investments that we've been making across the board It goes back 10 plus years ago on the machine learning side in terms of some of the pricing algorithms, but specifically to your question on agentic and GenAI, we believe that we are entering an inflection point heading into 2026 with the rollout of many tools that we've been investing in for years. it goes back 10 plus years ago on the machine learning side in terms of some of the pricing algorithms but specifically to your question on agentic and genai we believe that we are entering an inflection point heading into 2026 with the rollout of many tools that we've been investing in for years And it's not just the Coyote integration that, to use your words, sort of masked the investments that we've been making because we've been making these investments, and I would make the case that we've actually accelerated our timeline and our roadmap with the Coyote acquisition. One of the added benefits was when we bought the company. We saw what was on some of their tech roadmap, and we saw what was on ours, and in some cases, one was already on the other roadmap and vice versa. So the ability to go ahead and leverage best of both worlds, processes and order flows and workflows rather, into the combined tech data set, I think is really, really important. So it all starts with having a clean set of data, right? If you think about building upon an integrated data lake, RXO data, Coyote data, that's all one. And it's not just the Coyote integration that, to use your words, sort of masked the investments that we've been making because we've been making these investments, and I would make the case that we've actually accelerated our timeline and our roadmap with the Coyote acquisition. and it's not just the coyote integration that to use your words sort of masked the investments that we've been making because we've been making these investments and i would make the case that we've actually accelerated our timeline and our roadmap with the coyote acquisition One of the added benefits was when we bought the company. one of the added benefits was when we bought the company We saw what was on some of their tech roadmap, and we saw what was on ours, and in some cases, one was already on the other roadmap and vice versa. we saw what was on some of their tech roadmap and we saw what was on ours and in some cases one was already on the other roadmap and vice versa So the ability to go ahead and leverage best of both worlds, processes and order flows and workflows rather, into the combined tech data set, I think is really, really important. so the ability to go ahead and leverage best of both worlds processes and order flows and workflows rather into the combined tech data set i think is really really important So it all starts with having a clean set of data, right? so it all starts with having a clean set of data right If you think about building upon an integrated data lake, RXO data, Coyote data, that's all one. if you think about building upon an integrated data lake rxo data coyote data that's all one On top of that, you have an orchestration layer, and then on top of that, you've got multiple agents that can go ahead and effectively increase productivity across the organization, as well as introduce the ability to unlock incremental margin from top of the funnel opportunities. It's not just a cost play. It's also a revenue in terms of incremental margin play. And it's also a productivity play, right? Our productivity over the last two years is up 38%. And we think we are still very much at the early innings of AI. So we've been rolling out GenAI and agentic AI and machine learning for a long time. This year in particular, I think we talked a little bit about this on the earnings call. On top of that, you have an orchestration layer, and then on top of that, you've got multiple agents that can go ahead and effectively increase productivity across the organization, as well as introduce the ability to unlock incremental margin from top of the funnel opportunities. on top of that you have an orchestration layer and then on top of that you've got multiple agents that can go ahead and effectively increase productivity across the organization as well as introduce the ability to unlock incremental margin from top of the funnel opportunities It's not just a cost play. it's not just a cost play It's also a revenue in terms of incremental margin play. it's also a revenue in terms of incremental margin play And it's also a productivity play, right? and it's also a productivity play right Our productivity over the last two years is up 38%. our productivity over the last two years is up 38% And we think we are still very much at the early innings of AI. and we think we are still very much at the early innings of ai So we've been rolling out GenAI and agentic AI and machine learning for a long time. so we've been rolling out genai and agentic ai and machine learning for a long time This year in particular, I think we talked a little bit about this on the earnings call. this year in particular i think we talked a little bit about this on the earnings call If I look at some of the tools that have been implemented, we've leveraged agentic AI solutions from a carrier rep standpoint already, saving 10,000 plus man hours associated with the deployment of that technology. We've rolled out millions of lines of code in terms of leveraging some of the AI tools that are available to us as opposed to leveraging or in addition to leveraging some of our engineering talent. We've leveraged it in last mile in terms of image association and identification with respect to home installs. So it's across the board, and we are very much at the early innings with the opportunity to unlock significant potential heading into 2026 and beyond. If I look at some of the tools that have been implemented, we've leveraged agentic AI solutions from a carrier rep standpoint already, saving 10,000 plus man hours associated with the deployment of that technology. if i look at some of the tools that have been implemented we've leveraged agentic ai solutions from a carrier rep standpoint already saving 10,000 plus man hours associated with the deployment of that technology We've rolled out millions of lines of code in terms of leveraging some of the AI tools that are available to us as opposed to leveraging or in addition to leveraging some of our engineering talent. we've rolled out millions of lines of code in terms of leveraging some of the ai tools that are available to us as opposed to leveraging or in addition to leveraging some of our engineering talent We've leveraged it in last mile in terms of image association and identification with respect to home installs. we've leveraged it in last mile in terms of image association and identification with respect to home installs So it's across the board, and we are very much at the early innings with the opportunity to unlock significant potential heading into 2026 and beyond. so it's across the board and we are very much at the early innings with the opportunity to unlock significant potential heading into 2026 and beyond So what inning do you think you're at? So what inning do you think you're at? so what inning do you think you're at If we're doing this right, we're always in the first inning, right? Because ultimately, not to be cliché, but AI, we fundamentally believe that AI has the ability to structurally improve our margin profile longer term. I think it's also an important point that we are not a technology company. We are a tech-enabled company. How do we go ahead and invest aggressively in AI, aggressively in our tech roadmap, and then marry that with the best operators in the industry to have that solution where we're leveraging tech effectively and we're doing it with the best operators to have structurally higher margins longer term? If we're doing this right, we're always in the first inning, right? if we're doing this right we're always in the first inning right Because ultimately, not to be cliché, but AI, we fundamentally believe that AI has the ability to structurally improve our margin profile longer term. because ultimately not to be cliché but ai we fundamentally believe that ai has the ability to structurally improve our margin profile longer term I think it's also an important point that we are not a technology company. i think it's also an important point that we are not a technology company We are a tech-enabled company. we are a tech-enabled company How do we go ahead and invest aggressively in AI, aggressively in our tech roadmap, and then marry that with the best operators in the industry to have that solution where we're leveraging tech effectively and we're doing it with the best operators to have structurally higher margins longer term? how do we go ahead and invest aggressively in ai aggressively in our tech roadmap and then marry that with the best operators in the industry to have that solution where we're leveraging tech effectively and we're doing it with the best operators to have structurally higher margins longer term Right. Okay. That makes sense. Jared, thanks so much for joining us. Right. right Okay. okay That makes sense. that makes sense Jared, thanks so much for joining us. jared thanks so much for joining us Thanks so much, Tom. Really appreciate it. Thanks so much, Tom. thanks so much tom Really appreciate it. really appreciate it Yeah. Thanks for joining us. Appreciate it. Yeah. yeah Thanks for joining us. thanks for joining us Appreciate it. appreciate it Thanks. Thanks. thanks