WERNER ENTERPRISES INC — Call Transcript 2025

Great. To round out the transports track on day one, we have Werner, and we're very happy to welcome back to Laguna Chris Wikoff, Executive Vice President, Chief Financial Officer and Treasurer, Nathan J. Meisgeier, President, and Chris C. Neil, Senior Vice President of Pricing and Strategic Planning. Gentlemen, thanks so much for being here. I think the debate continues on the macro and the cycle as to whether we are going into an almighty recession or we are going into a huge rebound. I'm sure you know the answer to that question. If you please enlighten us, that would be amazing. Absolutely. Yes, I'll get right to the answer. Maybe just to back up and we'll all take a bite at just overall describing the macro, at least from a demand standpoint. On the one-way side, that's been generally steady and generally seasonal. It's been more so on the dedicated and logistics business where we've seen some positive momentum, particularly in the second quarter, and that continues. In Dedicated Truckload Services, we saw fleet growth that we signed earlier in the year in the first quarter, really our biggest streak of wins, new logos across a number of different verticals. It takes time to implement that, but we've been doing that over the last quarter and continue through the third quarter. We like the trend there, really being reliability back in focus for shippers, and that's positive. When that's front and center with large enterprise shippers, that's when we're going to excel the most for our dedicated product. In Logistics, we were back to mid-single-digit growth on a year-over-year basis in the second quarter. A lot of different underpinnings for that. That was in our Truckload Brokerage, our PowerLink offering where we're brokering the driver and the tractor, and we own the trailer, and then also positive momentum in intermodal. That's been positive, more so volume-driven, also with a little bit of rate in the last quarter. That continues. Overall, a good trajectory in Dedicated Truckload Services and Logistics. Yeah. I'll say that on the tariff front, which is something that's been a challenge all year long with start, stops, tariff on Monday, it's paused on Tuesday, and it's back on Friday. Our customers have settled in nicely to this is the new normal for now. Whatever pent-up wait and see approach has really broken through. We think that we're settled into this is our normal now for our customers. We talk a lot about our discount customers and retail and food and beverage, and the good news about that is it's a constant replenishment of non-discretionary items. Both on who is the end customer, so the discount customer and people who are trading down into discount retail, that's healthy. Food and beverage, that's healthy. All of the non-discretionary, we feel like we've got a good inside track on that in terms of our customer base. I think the only other thing I'd add, which is the uncertainty that's out there, has led shippers to look for service providers that have more capabilities, scale, and high service. We've just seen more constructive conversations over the last couple of quarters that led partly to some of the dedicated wins that we talked about and just a general positive momentum, although stable, positive at the same time. You guys are using all the right words. If I were to just kind of do the sell side, kind of give me a thumbs up, thumbs down, do you feel better now than you did during your Q2 call? During the Q2 call? Yeah. I would say we generally feel the same. Q2 was certainly an improvement over Q1, and relative to where we were a year ago, overall, I think the fundamental trends are positive. We're in a better place than we were a year ago. All of the momentum that we're referring to is gradual, and it was more so in the second quarter, but it's encouraging to see that continue. Got it. Nate, just to follow up on what you said with your customers telling you that we now accept this as a new normal, is that a good thing or a bad thing? Because are they saying that the chopping and changing is a new normal and there's nothing we can do about it, and we just need to look in front of our nose? Or are they saying now that we know there is a tariff number, if it's a 10% or 15%, it doesn't matter what the number is, we can go plan ahead, build inventory, blah, blah, blah? Yeah, I think the answer is yes. It's both of those things. It's the we now know what this looks like. By the way, back when Liberation Day happened, it was what the hell is this going to look like? Now we've been dealing with it for long enough, we can build a plan. Uncertainty is the certainty of the day, maybe is the better way to summarize that. Some customers do get a little more certainty on what's their % rate and can build around that. We have heard a couple of times today the stats thrown out that one house equals anywhere from seven to seven and a half trucks. There is a lot of focus on unlocking the housing market to try to break a lot of log jams, including the transportation side. Would you endorse that view? What do you think happens next week? I am just asking you to pick 25, 50 bps, but do you think that is going to be enough to unlock that, or do you think we need more? I don't know that I would say that by itself is a catalyst for significant change. I think it all contributes and it's helpful. Having a rate cut is certainly positive from a consumer standpoint, which the consumer has held in there, been resilient, but also more recently selective. That's helpful. To your point, in terms of that opening up a logjam to building projects, new construction, and the supply chain that follows that, that can be very positive. Is it a catalyst to suddenly get into an upcycle and a meaningfully improved macro? We'll see, but it would be helpful. Got it. In this continued uncertain world, when you think of One-Way Truckload Services versus Dedicated Truckload Services versus Logistics, kind of as you highlighted at the top, where do you pour your resources into? Do you pour it into One-Way Truckload Services saying this is the torque of the cycle and kind of is going to be what explodes when the upcycle comes? Do you say Dedicated Truckload Services is a safe, sure bet, and so that's what we're going to focus on? Kind of how do you prioritize those three? Werner Enterprises has evolved, we've become more solution-oriented to large enterprise shippers. That's really the common thread across our entire portfolio: large-scale shippers in a number of different verticals. There are going to be homes within that complex supply chain for different modes, Dedicated Truckload Services, One-Way Truckload Services, and Logistics. Having all of those solutions is helpful as we approach the broad supply chain problems of our customers. To be more specific, where we see more pronounced growth is in Dedicated Truckload Services and also in Logistics. With Logistics getting back to mid-single-digit year-over-year growth in the second quarter and continuing, that is our fastest growing segment. The Dedicated Truckload Services fleet growth is also positive. There are pockets within One-Way Truckload Services being less commoditized and more highly engineered. It's also our one-way business that supports near shoring in our Mexico franchise. It's also the platform where new customers, new logos to Werner Enterprises, can get to know our solution, our brand, our service offering before entering maybe into a long-term contract in Dedicated Truckload Services. There are other ways that One-Way Truckload Services is beneficial to us. I think as we look to the future, there's more pronounced growth that we would see in Dedicated Truckload Services and Logistics. Got it. I'll come back to Dedicated Truckload Services in a second, but maybe first a peak season question. Kind of what are you seeing out there for peak season? I think you guys did comment on project business on your Q2 call. Has there been any kind of further developments or acceleration there? Yeah, first in terms of peak, just to zoom out on what peak means for Werner Enterprises. Typically, it's a couple of handfuls of customers that really make up our peak business. That's what we're talking about when we're talking about peak. It's early on. We've had some conversations with some of those customers. I would say it's generally positive, and still more time will tell. These are projections, right? These are outlooks with those customers. I would say it appears with those early conversations to be similar or potentially up in volume and/or rate. Still more to go. It's early, and projections can be very different from the actual and the reality, but it's generally positive. We're more concentrated in retail. I think some of the recent performance and earnings and commentary around retail has shown that some of the back-to-school traffic has been positive. That can be a positive indicator of peak. Maybe more to the upside than the downside, but still we need a bit more time to tell. Got it. Maybe you're going to switch gears and talk about pricing. One-Way Truckload Services revenue per total mile increased 2.7% year over year, and you guided flat to up 3% for Q3. It sounds like there's some potential for getting more. Obviously, 2025 bid season's over. What can you potentially look forward to going into the start of 2026? That kicks off, what, October for you? When does bid season for 2026 start? The 2026 bid season has really started. We're on the very early stages of that. We've received a handful of opportunities that would become effective in January mainly, but only a very handful. We're at the very, very beginning of the 2026 bid season. Kind of setting the stage here in terms of one-way pricing, it was up 2.7% in the second quarter. That was our fourth consecutive quarter where it had been up on a year-over-year basis, but still pretty minimal when you consider what's really needed in a more sustainable long term. It continues to be just a challenging, difficult backdrop out there in one-way. I think the setup is such that we'll continue to work with our customers that have leaned into the service and scale that we can offer in our one-way segment. All in all, it's going to continue to be a challenging bid environment in 2026, just like it was in 2025. It feels like things are a little better now than they were a year ago, but the setup is similar. At the same time, you look at our one-way sector or our one-way division, you look at the other one-way sectors out there, and they're under duress. It's a really tough environment. Clearly, what's needed is more than low single-digit increases, which is kind of what we've been enduring here over the last four quarters. When you think about what's important and what are the components of the one-way rate, you're thinking about contract rates, you're thinking about spot rates, and then mix. To your point, the bid season here in 2025 is over. We got relatively low to single-digit increases there. It was mixed, but that was kind of the average. Those rates are kind of baked, and that's what we'll endure for the rest of the quarter or the rest of the year. Spot rates have not been, they've kind of been at low levels. In fact, they've kind of fallen off a bit here in August. You're really looking now at spot rates that are similar on a year-over-year basis to what they were a year ago. We were hoping that that would be something that we would see some inflection with. Typically, you do in September. We'll wait and see. It's still early in September, but so far, it's been a kind of a muted spot rate environment. That's not been something that's been terribly helpful in the quarter. Then mix, because volume has been stable, mix has been similar to what it was in the second quarter heading into third quarter. Got it. That's helpful. What are you seeing out there on capacity? Are you seeing incremental changes in capacity coming out to the market? Any further commentary on the English language proficiency tests and the H1B visas with what you've seen out there in the marketplace? Yeah. Capacity, we keep seeing more attrition. There are some larger carriers that have gone out in the last few months. We're seeing a little more impactful, nothing obviously at the thousands of trucks per carrier, but hundreds certainly. The English language proficiency, the ELP, the enforcement numbers on that are getting to be significantly higher. First month was hundreds of out-of-service drivers. Second month was a thousand-ish. The numbers just came out for the last 30 days, and it's more like 2,000. Still not, I mean, we're talking about 3,500, 3,700 all in. That's not going to move the needle much. If you look at the trend line, obviously, that's doubling from month to month. We're hearing about more states that are now taking the enforcement seriously. It's a state-by-state battle. As you see more states come online with enforcement, we think that number continues to inflect upward. If you just take the last 30 days and annualize that, that's 25,000-ish drivers that go out of service and stay out of service in a year. That's a meaningful number. Obviously, that's a huge carrier that goes out and disappears in a year. We think that will have, we see that having more and more impact as enforcement comes more and more online. The B1 enforcement, that's something that we as an industry have been talking about for a long time in terms of getting that kind of shadow capacity out of the market, where cabotage is scavenging rates that no one else can, no one is doing it the right way and compete at those rates. We like the sound of all of that. Really, when it comes down to it, we're talking about safety first. The English language proficiency is about safety. It's about making sure that drivers can communicate with roadside enforcement. If there's an accident, that the driver can communicate with law enforcement on, is there someone else in that vehicle that you need to go rescue? What's in the trailer? Is that going to cause a safety problem for others? The ability to read and understand the more dynamic roadside signs is important. It's not just a stop sign and a yield sign and a speed limit sign. It's the one that says, vehicles over this weight need to take an exit right now. If you don't, we're going to have a big problem. That's a safety problem for everybody on the road. We're proud of the fact that our ELP compliance has stayed put. We've never really wavered on it at all. We have not used B1 drivers just because we could. We've got a large cross-border presence, and we could figure out a way to do it. We just don't think it's worth the risk. Got it. Right now, is enforcement mostly in the small states? Do you guys, what's your share like in those regions where you might potentially benefit if small carriers are put out of business? Yeah, it's in the states that you would expect it to be, with probably red states is the right way to say it. The federal government obviously is turning the screws on all states, especially the ones that are thumbing their nose at the enforcement. They're taking funding away from those states, which, you start hitting somebody in their pocketbook, and maybe they'll pay attention a little bit more. Yes, the states that are enforcing it are the ones you would expect. The ones that are getting the most pressure are also the ones that you would expect would be getting the pressure from the feds. Got it. Speaking of pressure, obviously, while this does not impact you guys, one factor that does impact you guys is insurance costs. You guys obviously, it happens on both sides. On the one hand, you had the good news with the favorable settlement of the verdict. That removes a big overhang that's been around for years. On the other hand, insurance is something that kind of inflates for everybody, right? What is the line of sight to resolving this over time? Is this just considered to be a normal course? How sympathetic are your customers when you say, you know, hey, my insurance is up 20%. I need to pass that through? Yeah, there's a lot there. On the Texas case, Ravi, I got asked about that every day for seven and a half years. We should probably just take up the rest of our time to talk about that big victory in Texas. This may be the last time. Only from you. Yeah, the answer is on the risk mitigation side, it starts with let's not have the accident in the first place. We're investing heavily in the safety technology on the truck. We're investing heavily in the quality of the driver that comes on board. We're investing heavily in the training for that driver, and it's having an impact. Our trend line on our accidents is down and to the right. Our trend line on our accidents per million mile is down to the right. Our trend line on our severity is down and to the right. All those trend lines are trending favorably. It goes along with our mantra of nothing we do is worth getting hurt or hurting anyone else. That matters to us as our culture and our company approach. That's one. Two is, you're right, the customer question is one that for a long time it's been, well, that's your problem. As customers start feeling a little bit more of that pain directly themselves, whether it's on slip and fall accidents, premises liability, or their own auto liability claims, there's a little bit more sympathy there. A topic that's come up a lot today in our one-on-ones is private fleets. Those private fleets that have felt some of that pain, that are also our customers at the same time, they have empathized with us a little bit more and seen what we've been preaching about. Derek, our boss, likes to say, it's one thing to tell someone that it's raining. It's a very different thing for them to be standing out in the rain with you. As they are standing out in the rain with us, they sympathize a little bit more. The last point I would make there is we're taking different approaches in terms of we've always talked about settling claims at a fair price. We are now emphasizing doing it more quickly. The problem becomes if you have an accident on Monday and you have a lawsuit in your hand on Friday of the same week, which that's a real thing that happens on a regular basis, sometimes you don't have that opportunity. We're working hard to handle those claims fairly, resolve them quickly, resolve them at a fair price. When we need to, like Texas case, see, I'm going to bring it up again, we are going to take a case to verdict if we need to, when it's time to dig in and fight. Got it. Never speak up ever again. I'm happy to talk about it every day. That's good. I mean, it's something you said, it's private fleets because that has been a topic of discussion in recent months. There is a thesis floating out there that one of the reasons why there appears to be a persistent capacity problem in the TL world is the growth of private fleets that's left a lot of stranded capacity on the for-hire side. Do you endorse this view? What do you see out there? What do you think of that? Yeah, I think I'd concur that there was some growth in private fleets over the last four or five years, really. I mean, during the pandemic era, there was really a necessity for some of those companies to stand up their own fleets or increase the size of an existing fleet. I think that's occurred, and that's potentially part of the problem in terms of the One-Way Truckload Services market, just taking some of that volume off of that space and moving it over to the private space. Now I think those folks are in an interesting place because you have a truck now that's four or five years old. You're going to have to reinvest in that equipment and make some big CapEx if you're going to continue to operate with that. You have the insurance issues that are different, arguably, now than then, certainly not better now than they were several years ago. That's an additional risk factor that's out there that maybe wasn't quite as severe. You've got the driver issue where you think over the last handful of years, it's been, I mean, it's never easy to hire good quality professional drivers, but it's been easier than during the pandemic times and even other times where the market was more accelerating and drivers had more options. It's been a favorable environment to grow a private fleet. I think what we're hearing now is that the goal would be to hold them kind of where they are, hold them flat, less of a desire to grow those. Even in our own Dedicated Truckload Services business, we've seen a little bit more in terms of private fleet conversions coming to us, talking about how we can take on that fleet for them and take on that risk. Does that then set up this really good pipeline of private fleet conversions? When do you expect to see that usually? Does that conversion usually happen at the bottom of the cycle or when the upcycle shows up and the customer's like, whoa, I can't manage this, take this off my hands? I don't know if there's a time when you can necessarily point to when it happens more frequently. I think because of the factors I mentioned earlier, it is a unique time now with some of that equipment coming to, as I mentioned, and maybe as you think about an upcycle coming up and driver availability getting more challenging, now would be a time for them to consider an alternative. Got it. Moving on to Logistics, how has your Logistics segment been in the third quarter? Obviously, things appear to have gone relatively sideways in a good way. Are there opportunities here, or is it just something that we need to wait for the cycle to show up before that really inflects? Yeah, the second quarter Logistics was certainly a bright spot. We do see that continuing. Again, back to that mid-single-digit growth year over year, a number of different drivers to that growth. Some of it new awards, some of it more volume with large customers. Some cross-selling, seeing more cross-selling between our Truckload Transportation Services and Logistics, not cannibalizing, but more modes, more solutions to solve broader supply chain needs for our customers. Technology also contributing to that, as well as some project freight and pop-up freight, which continued through the second quarter into the third quarter. That project freight is now transitioning off, right behind it are some new awards that we're also ramping up within Automated Brokerage. That can come with a different margin profile as some of that mix change. Overall, that top line growth on a year-over-year basis, we're seeing that continue. That's been positive. Along with that, not only in the second quarter did we see that top line growth, we also had OpEx down 9%, salaries, wages, and benefits down double digits. Really pointing to technology, we started this technology journey in Logistics as really our first proof case. We've had a couple of years of that, and now we're really seeing that benefit where we're able to support more volume, but do it in a way that's better, faster, cheaper, and keep that cost profile low as we scale from here. We're excited about what we're seeing overall in the Logistics segment. Got it. What was the strategy? 5D and S? The technology was one of the Ts. Five Ts. Yeah, five Ts. Just on that point, I think in recent months, it's emerged that Truckload Brokerage is like the hottest thing in AI. Everybody's like, this is where you'll see these opportunities. Obviously, one of the large players in the space kind of has a press release every week about all these AI tools they're putting out. Do you feel like that is something that works for them that may not work for you guys? Because you guys have always focused on technology, have you been putting those tools in place as well? Do you think it can work for you? It is just part of our strategy of leaning into technology. Certainly, there are components of our Werner EDGE TMS Platform and our technology platform that are key. Surrounding that, we're also looking at other pioneering technologies in the space and looking for ways that we can plug that into the digital ecosystem and to test to see if they fail fast or if there's opportunities. It is just a broad focus on technology. There are a number of different ways that we're using that, some that are more mature than others. In the case of Truckload Brokerage, as you mentioned, and specifically in Logistics, one area that's continuing to scale is more automation and no-touch loads and load bookings. That is early on. There are other ways where we're able to have all of the freight in one system. It makes it easier for our employees. We're able to be more responsive to our customers, optimize freight selection, and bring shippers and carriers together. We are seeing a lot of benefit, and we're only going to see that grow from here. Got it. Switching gears to Dedicated Truckload Services, we had a previous session here where we had a CFO talking about churn within the space, customer churn, and how that's becoming an increasing problem and how they tackle that. What's your churn like? What do you see as the drivers of that? What is the solution? I think there's always going to be pockets of churn, more so in a pocket that are more transactional, more commoditized as our portfolio evolves, as Werner continues to evolve, being more, again, solution-oriented with large, complex supply chains, being more stickier, having solutions that are differentiated on reliability, on service, on that technology component. As we go forward, it's about long-term partnerships with large enterprise customers and seeing less churn. Churn is there. In Dedicated Truckload Services, in Logistics, in One-Way Truckload Services, having more wins than churn is obviously the goal. We've seen that more recently in Dedicated Truckload Services as well as Logistics. Excited to see more of it. Got it. When, not if, the upcycle shows up, how do you see that growth profile between the three segments? Which one leads? Which one will drive the margins? Maybe it's the same segment, but how do you see resources put into Dedicated Truckload Services versus One-Way Truckload Services versus Logistics? As I said earlier, as we look longer term, I think more pronounced growth in Dedicated Truckload Services and Logistics. Right now, Logistics is our fastest growing segment. It wasn't in the not-too-distant past where that was the same. We would see that continuing. Again, there's still valuable pockets for One-Way Truckload Services in supporting our PowerLink offering that sits within Logistics, in being an avenue to flex and surge with customer needs on the dedicated side to support our Mexico cross-border offering, to provide other kind of highly engineered solutions, and be some of the glue between these different modes. There's always going to be a sleeve of one-way business that's valuable to our portfolio, valuable to our customers. Dedicated is durable. It's longer term. It's difficult to serve. There's a high capital intensity to it over a multi-year period. Along with that comes a higher premium and margin expectation. It has been more durable, one of the more durable aspects of our portfolio during this down cycle. That's a place that will continue to play. These wins that we papered earlier in the year, it was good to see that they were in a number of new verticals for us. There was only about 25% that was in our more concentrated areas of retail, food, and beverage. The other 75% were in verticals of choice that we want to expand in. That's positive to just see more use cases in Dedicated Truckload Services. Got it. What does this evolving mix mean for your long-term mid-cycle margins? Obviously, Logistics is a high ROIC, low margin business. What's the target over time? Yeah, for our Truckload Transportation Services segment, we can continue to maintain a target, mid-cycle target of low double-digit margins. Obviously, a way to go from our more recent baseline. Second quarter was 2.7% or 2.8% adjusted OI in TTS. If you were to normalize that for some of the startup expenses, which were about $1 million, by implementing some of the new Dedicated wins and some other outliers in the quarter, we would call it closer to 4%. That's still a long ways from 10%, 11%, 12% as a mid-cycle target. Pace and timing, more uncertain to get there. In terms of the how and the levers and the roadmap to get there, we continue to maintain confidence in that. Really looking to mid-single-digit rate improvement on the One-Way side, more volume normalization in Dedicated with existing and new customers, as well as vertical expansion. That's number two. Three, improvement in gains in the used equipment market, which we saw in the second quarter, one of the best quarters for gains that we've really seen in two years. Then our ongoing focus on cost discipline, leveraging technology, and making those structural changes that can give us more operating leverage, particularly with a better environment. The sum of those is the pathway to low double-digit margins. Got it. Questions from the audience? Going up here. I was wondering if you could talk a little bit about the AV strategy that you guys have, the pilot that's going on with Aurora, and maybe thinking about, is there any sort of thoughts in terms of how it will change the business longer term? I know longer term, hours of service is obviously a natural one, but would it change the unit economics of the business much, or is a lot of the benefits being kind of shared with the multiple parties? Maybe over time, does that—sorry, I lost my own train of thought. I'll start with that, and then maybe I'll follow. Yeah, I'll start. We're excited about it. We're partnering not just with Aurora, but with a number of other autonomous suppliers, and we've been close to them since they've launched. A large part of that is our ability to give them feedback on the realities of what it means to be an over-the-road trucker. We've seen the technology. We've been in those trucks. I've personally been in all of their different products, seen it, and it's exciting. A few years ago, we talked about how those trucks were kind of like handing the keys to your car to a 14-year-old. If you said, "Hey, drive down this road, it's straight, keep it between these two lines, don't leave the road, and when you get to the end, just stop and I'll come help you out," the trucks could do that. Now it's way past that, and the trucks will move dynamically through traffic, figure out what's going on in a construction zone, figure out what's going on with other problems and hazards on the road. It's pretty exciting what it can do. Yet, how many loads are actually being delivered by autonomous trucks right now? A few. The impact today, not a lot. The impact in the near term is geographically limited. In that geographic limitation, it's exciting, and it's expanding all the time. The technology, just like Ravi was asking about AI earlier, and we weren't talking about that a couple of years ago, and now everybody talks about it, the autonomous, the leaps and bounds that the technology is making is pretty exciting. What do we see for that for our business? We will need more truck drivers in the coming years and in the out years than we have today, even in the bull case of autonomous. The American Trucking Association has run the math on that, and it's about a million more truck drivers need to enter the market in the next decade to be able to serve the increase in demand over that decade, even at the bull case of autonomous. The great thing that we can tell our drivers, and it's true, is if you're a 25-year-old coming into the market, you can have a truck driving job for the rest of your 40-year career. If you're a 50-year-old or a 60-year-old truck driver, you are absolutely OK. What it will do is it will improve quality of life and home time for some drivers, especially in the South. Hub-to-hub deliveries, absolutely. Long haul on a straight line across good roads with good weather, absolutely. It will need people to make the final delivery at the beginnings and ends of those locations. That's a long answer. We're excited about it. The people still running, the companies still running that race are all the real deal. Five to ten years ago, there were a lot more people running, and a lot of them aren't in the race anymore. Really quick, Mike. Hey guys, could you talk a bit about, I guess, going back to pre-COVID on the one-way side, the differences seem to be drop and hook, power only, as well as pricing transparency has increased a bit. How does that change for the industry? Not a Werner question, but more industry-wide, what that means for small owner-operators, what that means for large carriers, just how you think some of the changes over the last five or six years in the industry will have implications going forward? Yeah, certainly technology and just speed of information, to your point, has brought more transparency, real-time data, more information for a lot of different stakeholders in supply chain, shippers, carriers, providers. Decisions are more informed and more timely. I think it's really more about those that are going to differentiate, those that are going to be more successful going forward, is about how you use that information to optimize our network, our solutions, our pricing, how we use that information to automate certain decisions and put it all to work that benefits our customer with the optimal solution at a very competitive price. It's certainly made decision-making and other aspects of the industry, I think, more challenging. That's where we are. Those that will excel, I think, is about how that information is used. Great. We're out of time. Gentlemen, thanks so much for joining us, and we shall remain on Cycle Watch. Great. Thanks for having us. Thanks for having us.

Speaker 1: Great. To round out the transports track on day one, we have Werner, and we're very happy to welcome back to Laguna Chris Wikoff, Executive Vice President, Chief Financial Officer and Treasurer, Nathan J. Meisgeier, President, and Chris C. Neil, Senior Vice President of Pricing and Strategic Planning. Gentlemen, thanks so much for being here. I think the debate continues on the macro and the cycle as to whether we are going into an almighty recession or we are going into a huge rebound. I'm sure you know the answer to that question. If you please enlighten us, that would be amazing. Great. great To round out the transports track on day one, we have Werner, and we're very happy to welcome back to Laguna Chris Wikoff, Executive Vice President, Chief Financial Officer and Treasurer, Nathan J. to round out the transports track on day one we have werner and we're very happy to welcome back to laguna chris wikoff, executive vice president chief financial officer and treasurer nathan j Meisgeier, President, and Chris C. Neil, Senior Vice President of Pricing and Strategic Planning. meisgeier president and chris c. neil senior vice president of pricing and strategic planning Gentlemen, thanks so much for being here. gentlemen thanks so much for being here I think the debate continues on the macro and the cycle as to whether we are going into an almighty recession or we are going into a huge rebound. i think the debate continues on the macro and the cycle as to whether we are going into an almighty recession or we are going into a huge rebound I'm sure you know the answer to that question. i'm sure you know the answer to that question If you please enlighten us, that would be amazing. if you please enlighten us that would be amazing

Speaker 2: Absolutely. Yes, I'll get right to the answer. Maybe just to back up and we'll all take a bite at just overall describing the macro, at least from a demand standpoint. On the one-way side, that's been generally steady and generally seasonal. It's been more so on the dedicated and logistics business where we've seen some positive momentum, particularly in the second quarter, and that continues. In Dedicated Truckload Services, we saw fleet growth that we signed earlier in the year in the first quarter, really our biggest streak of wins, new logos across a number of different verticals. It takes time to implement that, but we've been doing that over the last quarter and continue through the third quarter. We like the trend there, really being reliability back in focus for shippers, and that's positive. Absolutely. absolutely Yes, I'll get right to the answer. yes i'll get right to the answer Maybe just to back up and we'll all take a bite at just overall describing the macro, at least from a demand standpoint. maybe just to back up and we'll all take a bite at just overall describing the macro at least from a demand standpoint On the one-way side, that's been generally steady and generally seasonal. on the one-way side that's been generally steady and generally seasonal It's been more so on the dedicated and logistics business where we've seen some positive momentum, particularly in the second quarter, and that continues. In Dedicated Truckload Services, we saw fleet growth that we signed earlier in the year in the first quarter, really our biggest streak of wins, new logos across a number of different verticals. it's been more so on the dedicated and logistics business where we've seen some positive momentum particularly in the second quarter and that continues. in dedicated truckload services we saw fleet growth that we signed earlier in the year in the first quarter really our biggest streak of wins new logos across a number of different verticals It takes time to implement that, but we've been doing that over the last quarter and continue through the third quarter. it takes time to implement that but we've been doing that over the last quarter and continue through the third quarter We like the trend there, really being reliability back in focus for shippers, and that's positive. we like the trend there really being reliability back in focus for shippers and that's positive When that's front and center with large enterprise shippers, that's when we're going to excel the most for our dedicated product. In Logistics, we were back to mid-single-digit growth on a year-over-year basis in the second quarter. A lot of different underpinnings for that. That was in our Truckload Brokerage, our PowerLink offering where we're brokering the driver and the tractor, and we own the trailer, and then also positive momentum in intermodal. That's been positive, more so volume-driven, also with a little bit of rate in the last quarter. That continues. Overall, a good trajectory in Dedicated Truckload Services and Logistics. When that's front and center with large enterprise shippers, that's when we're going to excel the most for our dedicated product. when that's front and center with large enterprise shippers that's when we're going to excel the most for our dedicated product In Logistics, we were back to mid-single-digit growth on a year-over-year basis in the second quarter. in logistics we were back to mid-single-digit growth on a year-over-year basis in the second quarter A lot of different underpinnings for that. a lot of different underpinnings for that That was in our Truckload Brokerage, our PowerLink offering where we're brokering the driver and the tractor, and we own the trailer, and then also positive momentum in intermodal. that was in our truckload brokerage our powerlink offering where we're brokering the driver and the tractor and we own the trailer and then also positive momentum in intermodal That's been positive, more so volume-driven, also with a little bit of rate in the last quarter. that's been positive more so volume-driven also with a little bit of rate in the last quarter That continues. that continues Overall, a good trajectory in Dedicated Truckload Services and Logistics. overall a good trajectory in dedicated truckload services and logistics

Speaker 1: Yeah. I'll say that on the tariff front, which is something that's been a challenge all year long with start, stops, tariff on Monday, it's paused on Tuesday, and it's back on Friday. Our customers have settled in nicely to this is the new normal for now. Whatever pent-up wait and see approach has really broken through. We think that we're settled into this is our normal now for our customers. We talk a lot about our discount customers and retail and food and beverage, and the good news about that is it's a constant replenishment of non-discretionary items. Both on who is the end customer, so the discount customer and people who are trading down into discount retail, that's healthy. Food and beverage, that's healthy. All of the non-discretionary, we feel like we've got a good inside track on that in terms of our customer base. Yeah. yeah I'll say that on the tariff front, which is something that's been a challenge all year long with start, stops, tariff on Monday, it's paused on Tuesday, and it's back on Friday. i'll say that on the tariff front which is something that's been a challenge all year long with start stops tariff on monday it's paused on tuesday and it's back on friday Our customers have settled in nicely to this is the new normal for now. our customers have settled in nicely to this is the new normal for now Whatever pent-up wait and see approach has really broken through. whatever pent-up wait and see approach has really broken through We think that we're settled into this is our normal now for our customers. we think that we're settled into this is our normal now for our customers We talk a lot about our discount customers and retail and food and beverage, and the good news about that is it's a constant replenishment of non-discretionary items. we talk a lot about our discount customers and retail and food and beverage and the good news about that is it's a constant replenishment of non-discretionary items Both on who is the end customer, so the discount customer and people who are trading down into discount retail, that's healthy. both on who is the end customer so the discount customer and people who are trading down into discount retail that's healthy Food and beverage, that's healthy. food and beverage that's healthy All of the non-discretionary, we feel like we've got a good inside track on that in terms of our customer base. all of the non-discretionary we feel like we've got a good inside track on that in terms of our customer base

Speaker 3: I think the only other thing I'd add, which is the uncertainty that's out there, has led shippers to look for service providers that have more capabilities, scale, and high service. We've just seen more constructive conversations over the last couple of quarters that led partly to some of the dedicated wins that we talked about and just a general positive momentum, although stable, positive at the same time. I think the only other thing I'd add, which is the uncertainty that's out there, has led shippers to look for service providers that have more capabilities, scale, and high service. i think the only other thing i'd add which is the uncertainty that's out there has led shippers to look for service providers that have more capabilities scale and high service We've just seen more constructive conversations over the last couple of quarters that led partly to some of the dedicated wins that we talked about and just a general positive momentum, although stable, positive at the same time. we've just seen more constructive conversations over the last couple of quarters that led partly to some of the dedicated wins that we talked about and just a general positive momentum although stable positive at the same time

Speaker 1: You guys are using all the right words. If I were to just kind of do the sell side, kind of give me a thumbs up, thumbs down, do you feel better now than you did during your Q2 call? You guys are using all the right words. you guys are using all the right words If I were to just kind of do the sell side, kind of give me a thumbs up, thumbs down, do you feel better now than you did during your Q2 call? if i were to just kind of do the sell side kind of give me a thumbs up thumbs down do you feel better now than you did during your q2 call

Speaker 2: During the Q2 call? During the Q2 call? during the q2 call

Speaker 1: Yeah. Yeah. yeah

Speaker 2: I would say we generally feel the same. Q2 was certainly an improvement over Q1, and relative to where we were a year ago, overall, I think the fundamental trends are positive. We're in a better place than we were a year ago. All of the momentum that we're referring to is gradual, and it was more so in the second quarter, but it's encouraging to see that continue. I would say we generally feel the same. i would say we generally feel the same Q2 was certainly an improvement over Q1, and relative to where we were a year ago, overall, I think the fundamental trends are positive. q2 was certainly an improvement over q1 and relative to where we were a year ago overall i think the fundamental trends are positive We're in a better place than we were a year ago. we're in a better place than we were a year ago All of the momentum that we're referring to is gradual, and it was more so in the second quarter, but it's encouraging to see that continue. all of the momentum that we're referring to is gradual and it was more so in the second quarter but it's encouraging to see that continue

Speaker 1: Got it. Nate, just to follow up on what you said with your customers telling you that we now accept this as a new normal, is that a good thing or a bad thing? Because are they saying that the chopping and changing is a new normal and there's nothing we can do about it, and we just need to look in front of our nose? Or are they saying now that we know there is a tariff number, if it's a 10% or 15%, it doesn't matter what the number is, we can go plan ahead, build inventory, blah, blah, blah? Got it. got it Nate, just to follow up on what you said with your customers telling you that we now accept this as a new normal, is that a good thing or a bad thing? got it nate just to follow up on what you said with your customers telling you that we now accept this as a new normal is that a good thing or a bad thing Because are they saying that the chopping and changing is a new normal and there's nothing we can do about it, and we just need to look in front of our nose? because are they saying that the chopping and changing is a new normal and there's nothing we can do about it and we just need to look in front of our nose Or are they saying now that we know there is a tariff number, if it's a 10% or 15%, it doesn't matter what the number is, we can go plan ahead, build inventory, blah, blah, blah? or are they saying now that we know there is a tariff number if it's a 10% or 15% it doesn't matter what the number is we can go plan ahead build inventory blah blah blah

Speaker 4: Yeah, I think the answer is yes. It's both of those things. It's the we now know what this looks like. By the way, back when Liberation Day happened, it was what the hell is this going to look like? Now we've been dealing with it for long enough, we can build a plan. Uncertainty is the certainty of the day, maybe is the better way to summarize that. Some customers do get a little more certainty on what's their % rate and can build around that. Yeah, I think the answer is yes. yeah i think the answer is yes It's both of those things. it's both of those things It's the we now know what this looks like. it's the we now know what this looks like By the way, back when Liberation Day happened, it was what the hell is this going to look like? by the way back when liberation day happened it was what the hell is this going to look like Now we've been dealing with it for long enough, we can build a plan. now we've been dealing with it for long enough we can build a plan Uncertainty is the certainty of the day, maybe is the better way to summarize that. uncertainty is the certainty of the day maybe is the better way to summarize that Some customers do get a little more certainty on what's their % rate and can build around that. some customers do get a little more certainty on what's their % rate and can build around that

Speaker 1: We have heard a couple of times today the stats thrown out that one house equals anywhere from seven to seven and a half trucks. There is a lot of focus on unlocking the housing market to try to break a lot of log jams, including the transportation side. Would you endorse that view? What do you think happens next week? I am just asking you to pick 25, 50 bps, but do you think that is going to be enough to unlock that, or do you think we need more? We have heard a couple of times today the stats thrown out that one house equals anywhere from seven to seven and a half trucks. we have heard a couple of times today the stats thrown out that one house equals anywhere from seven to seven and a half trucks There is a lot of focus on unlocking the housing market to try to break a lot of log jams, including the transportation side. there is a lot of focus on unlocking the housing market to try to break a lot of log jams including the transportation side Would you endorse that view? would you endorse that view What do you think happens next week? I am just asking you to pick 25, 50 bps, but do you think that is going to be enough to unlock that, or do you think we need more? what do you think happens next week? i am just asking you to pick 25 50 bps but do you think that is going to be enough to unlock that or do you think we need more

Speaker 2: I don't know that I would say that by itself is a catalyst for significant change. I think it all contributes and it's helpful. Having a rate cut is certainly positive from a consumer standpoint, which the consumer has held in there, been resilient, but also more recently selective. That's helpful. To your point, in terms of that opening up a logjam to building projects, new construction, and the supply chain that follows that, that can be very positive. Is it a catalyst to suddenly get into an upcycle and a meaningfully improved macro? We'll see, but it would be helpful. I don't know that I would say that by itself is a catalyst for significant change. i don't know that i would say that by itself is a catalyst for significant change I think it all contributes and it's helpful. i think it all contributes and it's helpful Having a rate cut is certainly positive from a consumer standpoint, which the consumer has held in there, been resilient, but also more recently selective. having a rate cut is certainly positive from a consumer standpoint which the consumer has held in there been resilient but also more recently selective That's helpful. that's helpful To your point, in terms of that opening up a logjam to building projects, new construction, and the supply chain that follows that, that can be very positive. to your point in terms of that opening up a logjam to building projects new construction and the supply chain that follows that that can be very positive Is it a catalyst to suddenly get into an upcycle and a meaningfully improved macro? is it a catalyst to suddenly get into an upcycle and a meaningfully improved macro We'll see, but it would be helpful. we'll see but it would be helpful

Speaker 1: Got it. In this continued uncertain world, when you think of One-Way Truckload Services versus Dedicated Truckload Services versus Logistics, kind of as you highlighted at the top, where do you pour your resources into? Do you pour it into One-Way Truckload Services saying this is the torque of the cycle and kind of is going to be what explodes when the upcycle comes? Do you say Dedicated Truckload Services is a safe, sure bet, and so that's what we're going to focus on? Kind of how do you prioritize those three? Got it. got it In this continued uncertain world, when you think of One-Way Truckload Services versus Dedicated Truckload Services versus Logistics, kind of as you highlighted at the top, where do you pour your resources into? in this continued uncertain world when you think of one-way truckload services versus dedicated truckload services versus logistics kind of as you highlighted at the top where do you pour your resources into Do you pour it into One-Way Truckload Services saying this is the torque of the cycle and kind of is going to be what explodes when the upcycle comes? do you pour it into one-way truckload services saying this is the torque of the cycle and kind of is going to be what explodes when the upcycle comes Do you say Dedicated Truckload Services is a safe, sure bet, and so that's what we're going to focus on? do you say dedicated truckload services is a safe sure bet and so that's what we're going to focus on Kind of how do you prioritize those three? kind of how do you prioritize those three

Speaker 2: Werner Enterprises has evolved, we've become more solution-oriented to large enterprise shippers. That's really the common thread across our entire portfolio: large-scale shippers in a number of different verticals. There are going to be homes within that complex supply chain for different modes, Dedicated Truckload Services, One-Way Truckload Services, and Logistics. Having all of those solutions is helpful as we approach the broad supply chain problems of our customers. To be more specific, where we see more pronounced growth is in Dedicated Truckload Services and also in Logistics. With Logistics getting back to mid-single-digit year-over-year growth in the second quarter and continuing, that is our fastest growing segment. The Dedicated Truckload Services fleet growth is also positive. There are pockets within One-Way Truckload Services being less commoditized and more highly engineered. It's also our one-way business that supports near shoring in our Mexico franchise. Werner Enterprises has evolved, we've become more solution-oriented to large enterprise shippers. werner enterprises has evolved we've become more solution-oriented to large enterprise shippers That's really the common thread across our entire portfolio: large-scale shippers in a number of different verticals. that's really the common thread across our entire portfolio large-scale shippers in a number of different verticals There are going to be homes within that complex supply chain for different modes, Dedicated Truckload Services, One-Way Truckload Services, and Logistics. there are going to be homes within that complex supply chain for different modes dedicated truckload services one-way truckload services and logistics Having all of those solutions is helpful as we approach the broad supply chain problems of our customers. having all of those solutions is helpful as we approach the broad supply chain problems of our customers To be more specific, where we see more pronounced growth is in Dedicated Truckload Services and also in Logistics. to be more specific where we see more pronounced growth is in dedicated truckload services and also in logistics With Logistics getting back to mid-single-digit year-over-year growth in the second quarter and continuing, that is our fastest growing segment. The Dedicated Truckload Services fleet growth is also positive. with logistics getting back to mid-single-digit year-over-year growth in the second quarter and continuing that is our fastest growing segment. the dedicated truckload services fleet growth is also positive There are pockets within One-Way Truckload Services being less commoditized and more highly engineered. there are pockets within one-way truckload services being less commoditized and more highly engineered It's also our one-way business that supports near shoring in our Mexico franchise. it's also our one-way business that supports near shoring in our mexico franchise It's also the platform where new customers, new logos to Werner Enterprises, can get to know our solution, our brand, our service offering before entering maybe into a long-term contract in Dedicated Truckload Services. There are other ways that One-Way Truckload Services is beneficial to us. I think as we look to the future, there's more pronounced growth that we would see in Dedicated Truckload Services and Logistics. It's also the platform where new customers, new logos to Werner Enterprises, can get to know our solution, our brand, our service offering before entering maybe into a long-term contract in Dedicated Truckload Services. it's also the platform where new customers new logos to werner enterprises can get to know our solution our brand our service offering before entering maybe into a long-term contract in dedicated truckload services There are other ways that One-Way Truckload Services is beneficial to us. there are other ways that one-way truckload services is beneficial to us I think as we look to the future, there's more pronounced growth that we would see in Dedicated Truckload Services and Logistics. i think as we look to the future there's more pronounced growth that we would see in dedicated truckload services and logistics

Speaker 1: Got it. I'll come back to Dedicated Truckload Services in a second, but maybe first a peak season question. Kind of what are you seeing out there for peak season? I think you guys did comment on project business on your Q2 call. Has there been any kind of further developments or acceleration there? Got it. got it I'll come back to Dedicated Truckload Services in a second, but maybe first a peak season question. i'll come back to dedicated truckload services in a second but maybe first a peak season question Kind of what are you seeing out there for peak season? kind of what are you seeing out there for peak season I think you guys did comment on project business on your Q2 call. i think you guys did comment on project business on your q2 call Has there been any kind of further developments or acceleration there? has there been any kind of further developments or acceleration there

Speaker 2: Yeah, first in terms of peak, just to zoom out on what peak means for Werner Enterprises. Typically, it's a couple of handfuls of customers that really make up our peak business. That's what we're talking about when we're talking about peak. It's early on. We've had some conversations with some of those customers. I would say it's generally positive, and still more time will tell. These are projections, right? These are outlooks with those customers. I would say it appears with those early conversations to be similar or potentially up in volume and/or rate. Still more to go. It's early, and projections can be very different from the actual and the reality, but it's generally positive. We're more concentrated in retail. I think some of the recent performance and earnings and commentary around retail has shown that some of the back-to-school traffic has been positive. Yeah, first in terms of peak, just to zoom out on what peak means for Werner Enterprises. yeah first in terms of peak just to zoom out on what peak means for werner enterprises Typically, it's a couple of handfuls of customers that really make up our peak business. typically it's a couple of handfuls of customers that really make up our peak business That's what we're talking about when we're talking about peak. that's what we're talking about when we're talking about peak It's early on. it's early on We've had some conversations with some of those customers. we've had some conversations with some of those customers I would say it's generally positive, and still more time will tell. i would say it's generally positive and still more time will tell These are projections, right? these are projections right These are outlooks with those customers. these are outlooks with those customers I would say it appears with those early conversations to be similar or potentially up in volume and/or rate. i would say it appears with those early conversations to be similar or potentially up in volume and/or rate Still more to go. still more to go It's early, and projections can be very different from the actual and the reality, but it's generally positive. it's early and projections can be very different from the actual and the reality but it's generally positive We're more concentrated in retail. we're more concentrated in retail I think some of the recent performance and earnings and commentary around retail has shown that some of the back-to-school traffic has been positive. i think some of the recent performance and earnings and commentary around retail has shown that some of the back-to-school traffic has been positive That can be a positive indicator of peak. Maybe more to the upside than the downside, but still we need a bit more time to tell. That can be a positive indicator of peak. that can be a positive indicator of peak Maybe more to the upside than the downside, but still we need a bit more time to tell. maybe more to the upside than the downside but still we need a bit more time to tell

Speaker 1: Got it. Maybe you're going to switch gears and talk about pricing. One-Way Truckload Services revenue per total mile increased 2.7% year over year, and you guided flat to up 3% for Q3. It sounds like there's some potential for getting more. Obviously, 2025 bid season's over. What can you potentially look forward to going into the start of 2026? That kicks off, what, October for you? When does bid season for 2026 start? Got it. got it Maybe you're going to switch gears and talk about pricing. maybe you're going to switch gears and talk about pricing One-Way Truckload Services revenue per total mile increased 2.7% year over year, and you guided flat to up 3% for Q3. one-way truckload services revenue per total mile increased 2.7% year over year and you guided flat to up 3% for q3 It sounds like there's some potential for getting more. it sounds like there's some potential for getting more Obviously, 2025 bid season's over. obviously 2025 bid season's over What can you potentially look forward to going into the start of 2026? what can you potentially look forward to going into the start of 2026 That kicks off, what, October for you? that kicks off what october for you When does bid season for 2026 start? when does bid season for 2026 start

Speaker 3: The 2026 bid season has really started. We're on the very early stages of that. We've received a handful of opportunities that would become effective in January mainly, but only a very handful. We're at the very, very beginning of the 2026 bid season. Kind of setting the stage here in terms of one-way pricing, it was up 2.7% in the second quarter. That was our fourth consecutive quarter where it had been up on a year-over-year basis, but still pretty minimal when you consider what's really needed in a more sustainable long term. It continues to be just a challenging, difficult backdrop out there in one-way. I think the setup is such that we'll continue to work with our customers that have leaned into the service and scale that we can offer in our one-way segment. The 2026 bid season has really started. the 2026 bid season has really started We're on the very early stages of that. we're on the very early stages of that We've received a handful of opportunities that would become effective in January mainly, but only a very handful. we've received a handful of opportunities that would become effective in january mainly but only a very handful We're at the very, very beginning of the 2026 bid season. we're at the very very beginning of the 2026 bid season Kind of setting the stage here in terms of one-way pricing, it was up 2.7% in the second quarter. kind of setting the stage here in terms of one-way pricing it was up 2.7% in the second quarter That was our fourth consecutive quarter where it had been up on a year-over-year basis, but still pretty minimal when you consider what's really needed in a more sustainable long term. that was our fourth consecutive quarter where it had been up on a year-over-year basis but still pretty minimal when you consider what's really needed in a more sustainable long term It continues to be just a challenging, difficult backdrop out there in one-way. it continues to be just a challenging difficult backdrop out there in one-way I think the setup is such that we'll continue to work with our customers that have leaned into the service and scale that we can offer in our one-way segment. i think the setup is such that we'll continue to work with our customers that have leaned into the service and scale that we can offer in our one-way segment All in all, it's going to continue to be a challenging bid environment in 2026, just like it was in 2025. It feels like things are a little better now than they were a year ago, but the setup is similar. At the same time, you look at our one-way sector or our one-way division, you look at the other one-way sectors out there, and they're under duress. It's a really tough environment. Clearly, what's needed is more than low single-digit increases, which is kind of what we've been enduring here over the last four quarters. When you think about what's important and what are the components of the one-way rate, you're thinking about contract rates, you're thinking about spot rates, and then mix. To your point, the bid season here in 2025 is over. We got relatively low to single-digit increases there. All in all, it's going to continue to be a challenging bid environment in 2026, just like it was in 2025. all in all it's going to continue to be a challenging bid environment in 2026 just like it was in 2025 It feels like things are a little better now than they were a year ago, but the setup is similar. it feels like things are a little better now than they were a year ago but the setup is similar At the same time, you look at our one-way sector or our one-way division, you look at the other one-way sectors out there, and they're under duress. at the same time you look at our one-way sector or our one-way division you look at the other one-way sectors out there and they're under duress It's a really tough environment. it's a really tough environment Clearly, what's needed is more than low single-digit increases, which is kind of what we've been enduring here over the last four quarters. clearly what's needed is more than low single-digit increases which is kind of what we've been enduring here over the last four quarters When you think about what's important and what are the components of the one-way rate, you're thinking about contract rates, you're thinking about spot rates, and then mix. when you think about what's important and what are the components of the one-way rate you're thinking about contract rates you're thinking about spot rates and then mix To your point, the bid season here in 2025 is over. to your point the bid season here in 2025 is over We got relatively low to single-digit increases there. we got relatively low to single-digit increases there It was mixed, but that was kind of the average. Those rates are kind of baked, and that's what we'll endure for the rest of the quarter or the rest of the year. Spot rates have not been, they've kind of been at low levels. In fact, they've kind of fallen off a bit here in August. You're really looking now at spot rates that are similar on a year-over-year basis to what they were a year ago. We were hoping that that would be something that we would see some inflection with. Typically, you do in September. We'll wait and see. It's still early in September, but so far, it's been a kind of a muted spot rate environment. That's not been something that's been terribly helpful in the quarter. It was mixed, but that was kind of the average. it was mixed but that was kind of the average Those rates are kind of baked, and that's what we'll endure for the rest of the quarter or the rest of the year. those rates are kind of baked and that's what we'll endure for the rest of the quarter or the rest of the year Spot rates have not been, they've kind of been at low levels. spot rates have not been they've kind of been at low levels In fact, they've kind of fallen off a bit here in August. in fact they've kind of fallen off a bit here in august You're really looking now at spot rates that are similar on a year-over-year basis to what they were a year ago. you're really looking now at spot rates that are similar on a year-over-year basis to what they were a year ago We were hoping that that would be something that we would see some inflection with. we were hoping that that would be something that we would see some inflection with Typically, you do in September. typically you do in september We'll wait and see. we'll wait and see It's still early in September, but so far, it's been a kind of a muted spot rate environment. it's still early in september but so far it's been a kind of a muted spot rate environment That's not been something that's been terribly helpful in the quarter. that's not been something that's been terribly helpful in the quarter Then mix, because volume has been stable, mix has been similar to what it was in the second quarter heading into third quarter. Then mix, because volume has been stable, mix has been similar to what it was in the second quarter heading into third quarter. then mix because volume has been stable mix has been similar to what it was in the second quarter heading into third quarter

Speaker 1: Got it. That's helpful. What are you seeing out there on capacity? Are you seeing incremental changes in capacity coming out to the market? Any further commentary on the English language proficiency tests and the H1B visas with what you've seen out there in the marketplace? Got it. got it That's helpful. that's helpful What are you seeing out there on capacity? what are you seeing out there on capacity Are you seeing incremental changes in capacity coming out to the market? are you seeing incremental changes in capacity coming out to the market Any further commentary on the English language proficiency tests and the H1B visas with what you've seen out there in the marketplace? any further commentary on the english language proficiency tests and the h1b visas with what you've seen out there in the marketplace

Speaker 4: Yeah. Capacity, we keep seeing more attrition. There are some larger carriers that have gone out in the last few months. We're seeing a little more impactful, nothing obviously at the thousands of trucks per carrier, but hundreds certainly. The English language proficiency, the ELP, the enforcement numbers on that are getting to be significantly higher. First month was hundreds of out-of-service drivers. Second month was a thousand-ish. The numbers just came out for the last 30 days, and it's more like 2,000. Still not, I mean, we're talking about 3,500, 3,700 all in. That's not going to move the needle much. If you look at the trend line, obviously, that's doubling from month to month. We're hearing about more states that are now taking the enforcement seriously. It's a state-by-state battle. As you see more states come online with enforcement, we think that number continues to inflect upward. Yeah. yeah Capacity, we keep seeing more attrition. capacity we keep seeing more attrition There are some larger carriers that have gone out in the last few months. there are some larger carriers that have gone out in the last few months We're seeing a little more impactful, nothing obviously at the thousands of trucks per carrier, but hundreds certainly. we're seeing a little more impactful nothing obviously at the thousands of trucks per carrier but hundreds certainly The English language proficiency, the ELP, the enforcement numbers on that are getting to be significantly higher. the english language proficiency the elp the enforcement numbers on that are getting to be significantly higher First month was hundreds of out-of-service drivers. first month was hundreds of out-of-service drivers Second month was a thousand-ish. second month was a thousand-ish The numbers just came out for the last 30 days, and it's more like 2,000. the numbers just came out for the last 30 days and it's more like 2,000 Still not, I mean, we're talking about 3,500, 3,700 all in. still not i mean we're talking about 3,500 3,700 all in That's not going to move the needle much. that's not going to move the needle much If you look at the trend line, obviously, that's doubling from month to month. if you look at the trend line obviously that's doubling from month to month We're hearing about more states that are now taking the enforcement seriously. we're hearing about more states that are now taking the enforcement seriously It's a state-by-state battle. it's a state-by-state battle As you see more states come online with enforcement, we think that number continues to inflect upward. as you see more states come online with enforcement we think that number continues to inflect upward If you just take the last 30 days and annualize that, that's 25,000-ish drivers that go out of service and stay out of service in a year. That's a meaningful number. Obviously, that's a huge carrier that goes out and disappears in a year. We think that will have, we see that having more and more impact as enforcement comes more and more online. The B1 enforcement, that's something that we as an industry have been talking about for a long time in terms of getting that kind of shadow capacity out of the market, where cabotage is scavenging rates that no one else can, no one is doing it the right way and compete at those rates. We like the sound of all of that. Really, when it comes down to it, we're talking about safety first. The English language proficiency is about safety. If you just take the last 30 days and annualize that, that's 25,000-ish drivers that go out of service and stay out of service in a year. if you just take the last 30 days and annualize that that's 25,000-ish drivers that go out of service and stay out of service in a year That's a meaningful number. that's a meaningful number Obviously, that's a huge carrier that goes out and disappears in a year. obviously that's a huge carrier that goes out and disappears in a year We think that will have, we see that having more and more impact as enforcement comes more and more online. we think that will have we see that having more and more impact as enforcement comes more and more online The B1 enforcement, that's something that we as an industry have been talking about for a long time in terms of getting that kind of shadow capacity out of the market, where cabotage is scavenging rates that no one else can, no one is doing it the right way and compete at those rates. the b1 enforcement that's something that we as an industry have been talking about for a long time in terms of getting that kind of shadow capacity out of the market where cabotage is scavenging rates that no one else can no one is doing it the right way and compete at those rates We like the sound of all of that. we like the sound of all of that Really, when it comes down to it, we're talking about safety first. really when it comes down to it we're talking about safety first The English language proficiency is about safety. the english language proficiency is about safety It's about making sure that drivers can communicate with roadside enforcement. If there's an accident, that the driver can communicate with law enforcement on, is there someone else in that vehicle that you need to go rescue? What's in the trailer? Is that going to cause a safety problem for others? The ability to read and understand the more dynamic roadside signs is important. It's not just a stop sign and a yield sign and a speed limit sign. It's the one that says, vehicles over this weight need to take an exit right now. If you don't, we're going to have a big problem. That's a safety problem for everybody on the road. We're proud of the fact that our ELP compliance has stayed put. We've never really wavered on it at all. We have not used B1 drivers just because we could. It's about making sure that drivers can communicate with roadside enforcement. it's about making sure that drivers can communicate with roadside enforcement If there's an accident, that the driver can communicate with law enforcement on, is there someone else in that vehicle that you need to go rescue? if there's an accident that the driver can communicate with law enforcement on is there someone else in that vehicle that you need to go rescue What's in the trailer? what's in the trailer Is that going to cause a safety problem for others? is that going to cause a safety problem for others The ability to read and understand the more dynamic roadside signs is important. the ability to read and understand the more dynamic roadside signs is important It's not just a stop sign and a yield sign and a speed limit sign. it's not just a stop sign and a yield sign and a speed limit sign It's the one that says, vehicles over this weight need to take an exit right now. it's the one that says vehicles over this weight need to take an exit right now If you don't, we're going to have a big problem. if you don't we're going to have a big problem That's a safety problem for everybody on the road. that's a safety problem for everybody on the road We're proud of the fact that our ELP compliance has stayed put. we're proud of the fact that our elp compliance has stayed put We've never really wavered on it at all. we've never really wavered on it at all We have not used B1 drivers just because we could. we have not used b1 drivers just because we could We've got a large cross-border presence, and we could figure out a way to do it. We just don't think it's worth the risk. We've got a large cross-border presence, and we could figure out a way to do it. we've got a large cross-border presence and we could figure out a way to do it We just don't think it's worth the risk. we just don't think it's worth the risk

Speaker 1: Got it. Right now, is enforcement mostly in the small states? Do you guys, what's your share like in those regions where you might potentially benefit if small carriers are put out of business? Got it. got it Right now, is enforcement mostly in the small states? right now is enforcement mostly in the small states Do you guys, what's your share like in those regions where you might potentially benefit if small carriers are put out of business? do you guys what's your share like in those regions where you might potentially benefit if small carriers are put out of business

Speaker 4: Yeah, it's in the states that you would expect it to be, with probably red states is the right way to say it. The federal government obviously is turning the screws on all states, especially the ones that are thumbing their nose at the enforcement. They're taking funding away from those states, which, you start hitting somebody in their pocketbook, and maybe they'll pay attention a little bit more. Yes, the states that are enforcing it are the ones you would expect. The ones that are getting the most pressure are also the ones that you would expect would be getting the pressure from the feds. Yeah, it's in the states that you would expect it to be, with probably red states is the right way to say it. yeah it's in the states that you would expect it to be with probably red states is the right way to say it The federal government obviously is turning the screws on all states, especially the ones that are thumbing their nose at the enforcement. the federal government obviously is turning the screws on all states especially the ones that are thumbing their nose at the enforcement They're taking funding away from those states, which, you start hitting somebody in their pocketbook, and maybe they'll pay attention a little bit more. they're taking funding away from those states which you start hitting somebody in their pocketbook and maybe they'll pay attention a little bit more Yes, the states that are enforcing it are the ones you would expect. yes the states that are enforcing it are the ones you would expect The ones that are getting the most pressure are also the ones that you would expect would be getting the pressure from the feds. the ones that are getting the most pressure are also the ones that you would expect would be getting the pressure from the feds

Speaker 1: Got it. Speaking of pressure, obviously, while this does not impact you guys, one factor that does impact you guys is insurance costs. You guys obviously, it happens on both sides. On the one hand, you had the good news with the favorable settlement of the verdict. That removes a big overhang that's been around for years. On the other hand, insurance is something that kind of inflates for everybody, right? What is the line of sight to resolving this over time? Is this just considered to be a normal course? How sympathetic are your customers when you say, you know, hey, my insurance is up 20%. I need to pass that through? Got it. got it Speaking of pressure, obviously, while this does not impact you guys, one factor that does impact you guys is insurance costs. speaking of pressure obviously while this does not impact you guys one factor that does impact you guys is insurance costs You guys obviously, it happens on both sides. you guys obviously it happens on both sides On the one hand, you had the good news with the favorable settlement of the verdict. on the one hand you had the good news with the favorable settlement of the verdict That removes a big overhang that's been around for years. that removes a big overhang that's been around for years On the other hand, insurance is something that kind of inflates for everybody, right? on the other hand insurance is something that kind of inflates for everybody right What is the line of sight to resolving this over time? what is the line of sight to resolving this over time Is this just considered to be a normal course? is this just considered to be a normal course How sympathetic are your customers when you say, you know, hey, my insurance is up 20%. how sympathetic are your customers when you say you know hey my insurance is up 20% I need to pass that through? i need to pass that through

Speaker 4: Yeah, there's a lot there. On the Texas case, Ravi, I got asked about that every day for seven and a half years. We should probably just take up the rest of our time to talk about that big victory in Texas. Yeah, there's a lot there. yeah there's a lot there On the Texas case, Ravi, I got asked about that every day for seven and a half years. on the texas case ravi i got asked about that every day for seven and a half years We should probably just take up the rest of our time to talk about that big victory in Texas. we should probably just take up the rest of our time to talk about that big victory in texas

Speaker 1: This may be the last time. This may be the last time. this may be the last time

Speaker 4: Only from you. Yeah, the answer is on the risk mitigation side, it starts with let's not have the accident in the first place. We're investing heavily in the safety technology on the truck. We're investing heavily in the quality of the driver that comes on board. We're investing heavily in the training for that driver, and it's having an impact. Our trend line on our accidents is down and to the right. Our trend line on our accidents per million mile is down to the right. Our trend line on our severity is down and to the right. All those trend lines are trending favorably. It goes along with our mantra of nothing we do is worth getting hurt or hurting anyone else. That matters to us as our culture and our company approach. That's one. Only from you. only from you Yeah, the answer is on the risk mitigation side, it starts with let's not have the accident in the first place. yeah the answer is on the risk mitigation side it starts with let's not have the accident in the first place We're investing heavily in the safety technology on the truck. we're investing heavily in the safety technology on the truck We're investing heavily in the quality of the driver that comes on board. we're investing heavily in the quality of the driver that comes on board We're investing heavily in the training for that driver, and it's having an impact. we're investing heavily in the training for that driver and it's having an impact Our trend line on our accidents is down and to the right. our trend line on our accidents is down and to the right Our trend line on our accidents per million mile is down to the right. our trend line on our accidents per million mile is down to the right Our trend line on our severity is down and to the right. our trend line on our severity is down and to the right All those trend lines are trending favorably. all those trend lines are trending favorably It goes along with our mantra of nothing we do is worth getting hurt or hurting anyone else. it goes along with our mantra of nothing we do is worth getting hurt or hurting anyone else That matters to us as our culture and our company approach. that matters to us as our culture and our company approach That's one. that's one Two is, you're right, the customer question is one that for a long time it's been, well, that's your problem. As customers start feeling a little bit more of that pain directly themselves, whether it's on slip and fall accidents, premises liability, or their own auto liability claims, there's a little bit more sympathy there. A topic that's come up a lot today in our one-on-ones is private fleets. Those private fleets that have felt some of that pain, that are also our customers at the same time, they have empathized with us a little bit more and seen what we've been preaching about. Derek, our boss, likes to say, it's one thing to tell someone that it's raining. It's a very different thing for them to be standing out in the rain with you. Two is, you're right, the customer question is one that for a long time it's been, well, that's your problem. two is you're right the customer question is one that for a long time it's been well that's your problem As customers start feeling a little bit more of that pain directly themselves, whether it's on slip and fall accidents, premises liability, or their own auto liability claims, there's a little bit more sympathy there. as customers start feeling a little bit more of that pain directly themselves whether it's on slip and fall accidents premises liability or their own auto liability claims there's a little bit more sympathy there A topic that's come up a lot today in our one-on-ones is private fleets. a topic that's come up a lot today in our one-on-ones is private fleets Those private fleets that have felt some of that pain, that are also our customers at the same time, they have empathized with us a little bit more and seen what we've been preaching about. those private fleets that have felt some of that pain that are also our customers at the same time they have empathized with us a little bit more and seen what we've been preaching about Derek, our boss, likes to say, it's one thing to tell someone that it's raining. derek our boss likes to say it's one thing to tell someone that it's raining It's a very different thing for them to be standing out in the rain with you. it's a very different thing for them to be standing out in the rain with you As they are standing out in the rain with us, they sympathize a little bit more. The last point I would make there is we're taking different approaches in terms of we've always talked about settling claims at a fair price. We are now emphasizing doing it more quickly. The problem becomes if you have an accident on Monday and you have a lawsuit in your hand on Friday of the same week, which that's a real thing that happens on a regular basis, sometimes you don't have that opportunity. We're working hard to handle those claims fairly, resolve them quickly, resolve them at a fair price. When we need to, like Texas case, see, I'm going to bring it up again, we are going to take a case to verdict if we need to, when it's time to dig in and fight. As they are standing out in the rain with us, they sympathize a little bit more. as they are standing out in the rain with us they sympathize a little bit more The last point I would make there is we're taking different approaches in terms of we've always talked about settling claims at a fair price. the last point i would make there is we're taking different approaches in terms of we've always talked about settling claims at a fair price We are now emphasizing doing it more quickly. we are now emphasizing doing it more quickly The problem becomes if you have an accident on Monday and you have a lawsuit in your hand on Friday of the same week, which that's a real thing that happens on a regular basis, sometimes you don't have that opportunity. the problem becomes if you have an accident on monday and you have a lawsuit in your hand on friday of the same week which that's a real thing that happens on a regular basis sometimes you don't have that opportunity We're working hard to handle those claims fairly, resolve them quickly, resolve them at a fair price. we're working hard to handle those claims fairly resolve them quickly resolve them at a fair price When we need to, like Texas case, see, I'm going to bring it up again, we are going to take a case to verdict if we need to, when it's time to dig in and fight. when we need to like texas case see i'm going to bring it up again we are going to take a case to verdict if we need to when it's time to dig in and fight

Speaker 1: Got it. Never speak up ever again. Got it. got it Never speak up ever again. never speak up ever again

Speaker 3: I'm happy to talk about it every day. I'm happy to talk about it every day. i'm happy to talk about it every day

Speaker 1: That's good. I mean, it's something you said, it's private fleets because that has been a topic of discussion in recent months. There is a thesis floating out there that one of the reasons why there appears to be a persistent capacity problem in the TL world is the growth of private fleets that's left a lot of stranded capacity on the for-hire side. Do you endorse this view? What do you see out there? What do you think of that? That's good. that's good i I mean, it's something you said, it's private fleets because that has been a topic of discussion in recent months. i mean it's something you said it's private fleets because that has been a topic of discussion in recent months There is a thesis floating out there that one of the reasons why there appears to be a persistent capacity problem in the TL world is the growth of private fleets that's left a lot of stranded capacity on the for-hire side. there is a thesis floating out there that one of the reasons why there appears to be a persistent capacity problem in the tl world is the growth of private fleets that's left a lot of stranded capacity on the for-hire side Do you endorse this view? do you endorse this view What do you see out there? what do you see out there What do you think of that? what do you think of that

Speaker 3: Yeah, I think I'd concur that there was some growth in private fleets over the last four or five years, really. I mean, during the pandemic era, there was really a necessity for some of those companies to stand up their own fleets or increase the size of an existing fleet. I think that's occurred, and that's potentially part of the problem in terms of the One-Way Truckload Services market, just taking some of that volume off of that space and moving it over to the private space. Now I think those folks are in an interesting place because you have a truck now that's four or five years old. You're going to have to reinvest in that equipment and make some big CapEx if you're going to continue to operate with that. Yeah, I think I'd concur that there was some growth in private fleets over the last four or five years, really. yeah i think i'd concur that there was some growth in private fleets over the last four or five years really I mean, during the pandemic era, there was really a necessity for some of those companies to stand up their own fleets or increase the size of an existing fleet. i mean during the pandemic era there was really a necessity for some of those companies to stand up their own fleets or increase the size of an existing fleet I think that's occurred, and that's potentially part of the problem in terms of the One-Way Truckload Services market, just taking some of that volume off of that space and moving it over to the private space. i think that's occurred and that's potentially part of the problem in terms of the one-way truckload services market just taking some of that volume off of that space and moving it over to the private space Now I think those folks are in an interesting place because you have a truck now that's four or five years old. now i think those folks are in an interesting place because you have a truck now that's four or five years old You're going to have to reinvest in that equipment and make some big CapEx if you're going to continue to operate with that. you're going to have to reinvest in that equipment and make some big capex if you're going to continue to operate with that You have the insurance issues that are different, arguably, now than then, certainly not better now than they were several years ago. That's an additional risk factor that's out there that maybe wasn't quite as severe. You've got the driver issue where you think over the last handful of years, it's been, I mean, it's never easy to hire good quality professional drivers, but it's been easier than during the pandemic times and even other times where the market was more accelerating and drivers had more options. It's been a favorable environment to grow a private fleet. You have the insurance issues that are different, arguably, now than then, certainly not better now than they were several years ago. you have the insurance issues that are different arguably now than then certainly not better now than they were several years ago That's an additional risk factor that's out there that maybe wasn't quite as severe. that's an additional risk factor that's out there that maybe wasn't quite as severe You've got the driver issue where you think over the last handful of years, it's been, I mean, it's never easy to hire good quality professional drivers, but it's been easier than during the pandemic times and even other times where the market was more accelerating and drivers had more options. you've got the driver issue where you think over the last handful of years it's been i mean it's never easy to hire good quality professional drivers but it's been easier than during the pandemic times and even other times where the market was more accelerating and drivers had more options It's been a favorable environment to grow a private fleet. it's been a favorable environment to grow a private fleet I think what we're hearing now is that the goal would be to hold them kind of where they are, hold them flat, less of a desire to grow those. Even in our own Dedicated Truckload Services business, we've seen a little bit more in terms of private fleet conversions coming to us, talking about how we can take on that fleet for them and take on that risk. I think what we're hearing now is that the goal would be to hold them kind of where they are, hold them flat, less of a desire to grow those. Even in our own Dedicated Truckload Services business, we've seen a little bit more in terms of private fleet conversions coming to us, talking about how we can take on that fleet for them and take on that risk. i think what we're hearing now is that the goal would be to hold them kind of where they are hold them flat less of a desire to grow those. even in our own dedicated truckload services business we've seen a little bit more in terms of private fleet conversions coming to us talking about how we can take on that fleet for them and take on that risk

Speaker 1: Does that then set up this really good pipeline of private fleet conversions? When do you expect to see that usually? Does that conversion usually happen at the bottom of the cycle or when the upcycle shows up and the customer's like, whoa, I can't manage this, take this off my hands? Does that then set up this really good pipeline of private fleet conversions? does that then set up this really good pipeline of private fleet conversions When do you expect to see that usually? when do you expect to see that usually Does that conversion usually happen at the bottom of the cycle or when the upcycle shows up and the customer's like, whoa, I can't manage this, take this off my hands? does that conversion usually happen at the bottom of the cycle or when the upcycle shows up and the customer's like whoa i can't manage this take this off my hands

Speaker 3: I don't know if there's a time when you can necessarily point to when it happens more frequently. I think because of the factors I mentioned earlier, it is a unique time now with some of that equipment coming to, as I mentioned, and maybe as you think about an upcycle coming up and driver availability getting more challenging, now would be a time for them to consider an alternative. I don't know if there's a time when you can necessarily point to when it happens more frequently. i don't know if there's a time when you can necessarily point to when it happens more frequently I think because of the factors I mentioned earlier, it is a unique time now with some of that equipment coming to, as I mentioned, and maybe as you think about an upcycle coming up and driver availability getting more challenging, now would be a time for them to consider an alternative. i think because of the factors i mentioned earlier it is a unique time now with some of that equipment coming to as i mentioned and maybe as you think about an upcycle coming up and driver availability getting more challenging now would be a time for them to consider an alternative

Speaker 1: Got it. Moving on to Logistics, how has your Logistics segment been in the third quarter? Obviously, things appear to have gone relatively sideways in a good way. Are there opportunities here, or is it just something that we need to wait for the cycle to show up before that really inflects? Got it. got it Moving on to Logistics, how has your Logistics segment been in the third quarter? moving on to logistics how has your logistics segment been in the third quarter Obviously, things appear to have gone relatively sideways in a good way. obviously things appear to have gone relatively sideways in a good way Are there opportunities here, or is it just something that we need to wait for the cycle to show up before that really inflects? are there opportunities here or is it just something that we need to wait for the cycle to show up before that really inflects

Speaker 2: Yeah, the second quarter Logistics was certainly a bright spot. We do see that continuing. Again, back to that mid-single-digit growth year over year, a number of different drivers to that growth. Some of it new awards, some of it more volume with large customers. Some cross-selling, seeing more cross-selling between our Truckload Transportation Services and Logistics, not cannibalizing, but more modes, more solutions to solve broader supply chain needs for our customers. Technology also contributing to that, as well as some project freight and pop-up freight, which continued through the second quarter into the third quarter. That project freight is now transitioning off, right behind it are some new awards that we're also ramping up within Automated Brokerage. That can come with a different margin profile as some of that mix change. Overall, that top line growth on a year-over-year basis, we're seeing that continue. That's been positive. Yeah, the second quarter Logistics was certainly a bright spot. yeah the second quarter logistics was certainly a bright spot We do see that continuing. we do see that continuing Again, back to that mid-single-digit growth year over year, a number of different drivers to that growth. again back to that mid-single-digit growth year over year a number of different drivers to that growth Some of it new awards, some of it more volume with large customers. some of it new awards some of it more volume with large customers Some cross-selling, seeing more cross-selling between our Truckload Transportation Services and Logistics, not cannibalizing, but more modes, more solutions to solve broader supply chain needs for our customers. some cross-selling seeing more cross-selling between our truckload transportation services and logistics not cannibalizing but more modes more solutions to solve broader supply chain needs for our customers Technology also contributing to that, as well as some project freight and pop-up freight, which continued through the second quarter into the third quarter. technology also contributing to that as well as some project freight and pop-up freight which continued through the second quarter into the third quarter That project freight is now transitioning off, right behind it are some new awards that we're also ramping up within Automated Brokerage. that project freight is now transitioning off right behind it are some new awards that we're also ramping up within automated brokerage That can come with a different margin profile as some of that mix change. that can come with a different margin profile as some of that mix change Overall, that top line growth on a year-over-year basis, we're seeing that continue. overall that top line growth on a year-over-year basis we're seeing that continue That's been positive. that's been positive Along with that, not only in the second quarter did we see that top line growth, we also had OpEx down 9%, salaries, wages, and benefits down double digits. Really pointing to technology, we started this technology journey in Logistics as really our first proof case. We've had a couple of years of that, and now we're really seeing that benefit where we're able to support more volume, but do it in a way that's better, faster, cheaper, and keep that cost profile low as we scale from here. We're excited about what we're seeing overall in the Logistics segment. Along with that, not only in the second quarter did we see that top line growth, we also had OpEx down 9%, salaries, wages, and benefits down double digits. along with that not only in the second quarter did we see that top line growth we also had opex down 9% salaries wages and benefits down double digits Really pointing to technology, we started this technology journey in Logistics as really our first proof case. really pointing to technology we started this technology journey in logistics as really our first proof case We've had a couple of years of that, and now we're really seeing that benefit where we're able to support more volume, but do it in a way that's better, faster, cheaper, and keep that cost profile low as we scale from here. we've had a couple of years of that and now we're really seeing that benefit where we're able to support more volume but do it in a way that's better faster cheaper and keep that cost profile low as we scale from here We're excited about what we're seeing overall in the Logistics segment. we're excited about what we're seeing overall in the logistics segment

Speaker 1: Got it. What was the strategy? 5D and S? The technology was one of the Ts. Got it. got it What was the strategy? 5D and S? what was the strategy 5d and s The technology was one of the Ts. the technology was one of the ts

Speaker 2: Five Ts. Five Ts. five ts

Speaker 1: Yeah, five Ts. Just on that point, I think in recent months, it's emerged that Truckload Brokerage is like the hottest thing in AI. Everybody's like, this is where you'll see these opportunities. Obviously, one of the large players in the space kind of has a press release every week about all these AI tools they're putting out. Do you feel like that is something that works for them that may not work for you guys? Because you guys have always focused on technology, have you been putting those tools in place as well? Do you think it can work for you? Yeah, five Ts. yeah five ts Just on that point, I think in recent months, it's emerged that Truckload Brokerage is like the hottest thing in AI. just on that point i think in recent months it's emerged that truckload brokerage is like the hottest thing in ai Everybody's like, this is where you'll see these opportunities. everybody's like this is where you'll see these opportunities Obviously, one of the large players in the space kind of has a press release every week about all these AI tools they're putting out. obviously one of the large players in the space kind of has a press release every week about all these ai tools they're putting out Do you feel like that is something that works for them that may not work for you guys? do you feel like that is something that works for them that may not work for you guys Because you guys have always focused on technology, have you been putting those tools in place as well? because you guys have always focused on technology have you been putting those tools in place as well Do you think it can work for you? do you think it can work for you

Speaker 2: It is just part of our strategy of leaning into technology. Certainly, there are components of our Werner EDGE TMS Platform and our technology platform that are key. Surrounding that, we're also looking at other pioneering technologies in the space and looking for ways that we can plug that into the digital ecosystem and to test to see if they fail fast or if there's opportunities. It is just a broad focus on technology. There are a number of different ways that we're using that, some that are more mature than others. In the case of Truckload Brokerage, as you mentioned, and specifically in Logistics, one area that's continuing to scale is more automation and no-touch loads and load bookings. That is early on. There are other ways where we're able to have all of the freight in one system. It makes it easier for our employees. It is just part of our strategy of leaning into technology. it is just part of our strategy of leaning into technology Certainly, there are components of our Werner EDGE TMS Platform and our technology platform that are key. certainly there are components of our werner edge tms platform and our technology platform that are key Surrounding that, we're also looking at other pioneering technologies in the space and looking for ways that we can plug that into the digital ecosystem and to test to see if they fail fast or if there's opportunities. surrounding that we're also looking at other pioneering technologies in the space and looking for ways that we can plug that into the digital ecosystem and to test to see if they fail fast or if there's opportunities It is just a broad focus on technology. There are a number of different ways that we're using that, some that are more mature than others. it is just a broad focus on technology. there are a number of different ways that we're using that some that are more mature than others In the case of Truckload Brokerage, as you mentioned, and specifically in Logistics, one area that's continuing to scale is more automation and no-touch loads and load bookings. in the case of truckload brokerage as you mentioned and specifically in logistics one area that's continuing to scale is more automation and no-touch loads and load bookings That is early on. that is early on There are other ways where we're able to have all of the freight in one system. there are other ways where we're able to have all of the freight in one system It makes it easier for our employees. it makes it easier for our employees We're able to be more responsive to our customers, optimize freight selection, and bring shippers and carriers together. We are seeing a lot of benefit, and we're only going to see that grow from here. We're able to be more responsive to our customers, optimize freight selection, and bring shippers and carriers together. We are seeing a lot of benefit, and we're only going to see that grow from here. we're able to be more responsive to our customers optimize freight selection, and bring shippers and carriers together. we are seeing a lot of benefit and we're only going to see that grow from here

Speaker 1: Got it. Switching gears to Dedicated Truckload Services, we had a previous session here where we had a CFO talking about churn within the space, customer churn, and how that's becoming an increasing problem and how they tackle that. What's your churn like? What do you see as the drivers of that? What is the solution? Got it. got it Switching gears to Dedicated Truckload Services, we had a previous session here where we had a CFO talking about churn within the space, customer churn, and how that's becoming an increasing problem and how they tackle that. switching gears to dedicated truckload services we had a previous session here where we had a cfo talking about churn within the space customer churn and how that's becoming an increasing problem and how they tackle that What's your churn like? what's your churn like What do you see as the drivers of that? what do you see as the drivers of that What is the solution? what is the solution

Speaker 2: I think there's always going to be pockets of churn, more so in a pocket that are more transactional, more commoditized as our portfolio evolves, as Werner continues to evolve, being more, again, solution-oriented with large, complex supply chains, being more stickier, having solutions that are differentiated on reliability, on service, on that technology component. As we go forward, it's about long-term partnerships with large enterprise customers and seeing less churn. Churn is there. In Dedicated Truckload Services, in Logistics, in One-Way Truckload Services, having more wins than churn is obviously the goal. We've seen that more recently in Dedicated Truckload Services as well as Logistics. Excited to see more of it. I think there's always going to be pockets of churn, more so in a pocket that are more transactional, more commoditized as our portfolio evolves, as Werner continues to evolve, being more, again, solution-oriented with large, complex supply chains, being more stickier, having solutions that are differentiated on reliability, on service, on that technology component. i think there's always going to be pockets of churn more so in a pocket that are more transactional more commoditized as our portfolio evolves as werner continues to evolve being more again solution-oriented with large complex supply chains being more stickier having solutions that are differentiated on reliability on service on that technology component As we go forward, it's about long-term partnerships with large enterprise customers and seeing less churn. Churn is there. as we go forward it's about long-term partnerships with large enterprise customers and seeing less churn. churn is there In Dedicated Truckload Services, in Logistics, in One-Way Truckload Services, having more wins than churn is obviously the goal. in dedicated truckload services in logistics in one-way truckload services having more wins than churn is obviously the goal We've seen that more recently in Dedicated Truckload Services as well as Logistics. we've seen that more recently in dedicated truckload services as well as logistics Excited to see more of it. excited to see more of it

Speaker 1: Got it. When, not if, the upcycle shows up, how do you see that growth profile between the three segments? Which one leads? Which one will drive the margins? Maybe it's the same segment, but how do you see resources put into Dedicated Truckload Services versus One-Way Truckload Services versus Logistics? Got it. got it When, not if, the upcycle shows up, how do you see that growth profile between the three segments? when not if the upcycle shows up how do you see that growth profile between the three segments Which one leads? which one leads Which one will drive the margins? which one will drive the margins Maybe it's the same segment, but how do you see resources put into Dedicated Truckload Services versus One-Way Truckload Services versus Logistics? maybe it's the same segment but how do you see resources put into dedicated truckload services versus one-way truckload services versus logistics

Speaker 2: As I said earlier, as we look longer term, I think more pronounced growth in Dedicated Truckload Services and Logistics. Right now, Logistics is our fastest growing segment. It wasn't in the not-too-distant past where that was the same. We would see that continuing. Again, there's still valuable pockets for One-Way Truckload Services in supporting our PowerLink offering that sits within Logistics, in being an avenue to flex and surge with customer needs on the dedicated side to support our Mexico cross-border offering, to provide other kind of highly engineered solutions, and be some of the glue between these different modes. There's always going to be a sleeve of one-way business that's valuable to our portfolio, valuable to our customers. Dedicated is durable. It's longer term. It's difficult to serve. There's a high capital intensity to it over a multi-year period. As I said earlier, as we look longer term, I think more pronounced growth in Dedicated Truckload Services and Logistics. as i said earlier as we look longer term i think more pronounced growth in dedicated truckload services and logistics Right now, Logistics is our fastest growing segment. right now logistics is our fastest growing segment It wasn't in the not-too-distant past where that was the same. it wasn't in the not-too-distant past where that was the same We would see that continuing. we would see that continuing Again, there's still valuable pockets for One-Way Truckload Services in supporting our PowerLink offering that sits within Logistics, in being an avenue to flex and surge with customer needs on the dedicated side to support our Mexico cross-border offering, to provide other kind of highly engineered solutions, and be some of the glue between these different modes. again there's still valuable pockets for one-way truckload services in supporting our powerlink offering that sits within logistics in being an avenue to flex and surge with customer needs on the dedicated side to support our mexico cross-border offering to provide other kind of highly engineered solutions and be some of the glue between these different modes There's always going to be a sleeve of one-way business that's valuable to our portfolio, valuable to our customers. there's always going to be a sleeve of one-way business that's valuable to our portfolio valuable to our customers Dedicated is durable. dedicated is durable It's longer term. it's longer term It's difficult to serve. it's difficult to serve There's a high capital intensity to it over a multi-year period. there's a high capital intensity to it over a multi-year period Along with that comes a higher premium and margin expectation. It has been more durable, one of the more durable aspects of our portfolio during this down cycle. That's a place that will continue to play. These wins that we papered earlier in the year, it was good to see that they were in a number of new verticals for us. There was only about 25% that was in our more concentrated areas of retail, food, and beverage. The other 75% were in verticals of choice that we want to expand in. That's positive to just see more use cases in Dedicated Truckload Services. Along with that comes a higher premium and margin expectation. along with that comes a higher premium and margin expectation It has been more durable, one of the more durable aspects of our portfolio during this down cycle. it has been more durable one of the more durable aspects of our portfolio during this down cycle That's a place that will continue to play. that's a place that will continue to play These wins that we papered earlier in the year, it was good to see that they were in a number of new verticals for us. these wins that we papered earlier in the year it was good to see that they were in a number of new verticals for us There was only about 25% that was in our more concentrated areas of retail, food, and beverage. there was only about 25% that was in our more concentrated areas of retail food and beverage The other 75% were in verticals of choice that we want to expand in. the other 75% were in verticals of choice that we want to expand in That's positive to just see more use cases in Dedicated Truckload Services. that's positive to just see more use cases in dedicated truckload services

Speaker 1: Got it. What does this evolving mix mean for your long-term mid-cycle margins? Obviously, Logistics is a high ROIC, low margin business. What's the target over time? Got it. got it What does this evolving mix mean for your long-term mid-cycle margins? what does this evolving mix mean for your long-term mid-cycle margins Obviously, Logistics is a high ROIC, low margin business. obviously logistics is a high roic low margin business What's the target over time? what's the target over time

Speaker 2: Yeah, for our Truckload Transportation Services segment, we can continue to maintain a target, mid-cycle target of low double-digit margins. Obviously, a way to go from our more recent baseline. Second quarter was 2.7% or 2.8% adjusted OI in TTS. If you were to normalize that for some of the startup expenses, which were about $1 million, by implementing some of the new Dedicated wins and some other outliers in the quarter, we would call it closer to 4%. That's still a long ways from 10%, 11%, 12% as a mid-cycle target. Pace and timing, more uncertain to get there. In terms of the how and the levers and the roadmap to get there, we continue to maintain confidence in that. Really looking to mid-single-digit rate improvement on the One-Way side, more volume normalization in Dedicated with existing and new customers, as well as vertical expansion. That's number two. Yeah, for our Truckload Transportation Services segment, we can continue to maintain a target, mid-cycle target of low double-digit margins. yeah for our truckload transportation services segment we can continue to maintain a target mid-cycle target of low double-digit margins Obviously, a way to go from our more recent baseline. obviously a way to go from our more recent baseline Second quarter was 2.7% or 2.8% adjusted OI in TTS. second quarter was 2.7% or 2.8% adjusted oi in tts If you were to normalize that for some of the startup expenses, which were about $1 million, by implementing some of the new Dedicated wins and some other outliers in the quarter, we would call it closer to 4%. if you were to normalize that for some of the startup expenses which were about $1 million by implementing some of the new dedicated wins and some other outliers in the quarter we would call it closer to 4% That's still a long ways from 10%, 11%, 12% as a mid-cycle target. that's still a long ways from 10% 11% 12% as a mid-cycle target Pace and timing, more uncertain to get there. pace and timing more uncertain to get there In terms of the how and the levers and the roadmap to get there, we continue to maintain confidence in that. in terms of the how and the levers and the roadmap to get there we continue to maintain confidence in that Really looking to mid-single-digit rate improvement on the One-Way side, more volume normalization in Dedicated with existing and new customers, as well as vertical expansion. really looking to mid-single-digit rate improvement on the one-way side more volume normalization in dedicated with existing and new customers as well as vertical expansion That's number two. that's number two Three, improvement in gains in the used equipment market, which we saw in the second quarter, one of the best quarters for gains that we've really seen in two years. Then our ongoing focus on cost discipline, leveraging technology, and making those structural changes that can give us more operating leverage, particularly with a better environment. The sum of those is the pathway to low double-digit margins. Three, improvement in gains in the used equipment market, which we saw in the second quarter, one of the best quarters for gains that we've really seen in two years. three improvement in gains in the used equipment market which we saw in the second quarter one of the best quarters for gains that we've really seen in two years Then our ongoing focus on cost discipline, leveraging technology, and making those structural changes that can give us more operating leverage, particularly with a better environment. then our ongoing focus on cost discipline leveraging technology and making those structural changes that can give us more operating leverage particularly with a better environment The sum of those is the pathway to low double-digit margins. the sum of those is the pathway to low double-digit margins

Speaker 1: Got it. Questions from the audience? Going up here. Got it. got it Questions from the audience? questions from the audience Going up here. going up here

Speaker 5: I was wondering if you could talk a little bit about the AV strategy that you guys have, the pilot that's going on with Aurora, and maybe thinking about, is there any sort of thoughts in terms of how it will change the business longer term? I know longer term, hours of service is obviously a natural one, but would it change the unit economics of the business much, or is a lot of the benefits being kind of shared with the multiple parties? Maybe over time, does that—sorry, I lost my own train of thought. I'll start with that, and then maybe I'll follow. I was wondering if you could talk a little bit about the AV strategy that you guys have, the pilot that's going on with Aurora, and maybe thinking about, is there any sort of thoughts in terms of how it will change the business longer term? i was wondering if you could talk a little bit about the av strategy that you guys have the pilot that's going on with aurora and maybe thinking about is there any sort of thoughts in terms of how it will change the business longer term I know longer term, hours of service is obviously a natural one, but would it change the unit economics of the business much, or is a lot of the benefits being kind of shared with the multiple parties? i know longer term hours of service is obviously a natural one but would it change the unit economics of the business much or is a lot of the benefits being kind of shared with the multiple parties Maybe over time, does that—sorry, I lost my own train of thought. maybe over time does that—sorry i lost my own train of thought I'll start with that, and then maybe I'll follow. i'll start with that and then maybe i'll follow

Speaker 4: Yeah, I'll start. We're excited about it. We're partnering not just with Aurora, but with a number of other autonomous suppliers, and we've been close to them since they've launched. A large part of that is our ability to give them feedback on the realities of what it means to be an over-the-road trucker. We've seen the technology. We've been in those trucks. I've personally been in all of their different products, seen it, and it's exciting. A few years ago, we talked about how those trucks were kind of like handing the keys to your car to a 14-year-old. If you said, "Hey, drive down this road, it's straight, keep it between these two lines, don't leave the road, and when you get to the end, just stop and I'll come help you out," the trucks could do that. Yeah, I'll start. yeah i'll start We're excited about it. we're excited about it We're partnering not just with Aurora, but with a number of other autonomous suppliers, and we've been close to them since they've launched. we're partnering not just with aurora but with a number of other autonomous suppliers and we've been close to them since they've launched A large part of that is our ability to give them feedback on the realities of what it means to be an over-the-road trucker. a large part of that is our ability to give them feedback on the realities of what it means to be an over-the-road trucker We've seen the technology. we've seen the technology We've been in those trucks. we've been in those trucks I've personally been in all of their different products, seen it, and it's exciting. i've personally been in all of their different products seen it and it's exciting A few years ago, we talked about how those trucks were kind of like handing the keys to your car to a 14-year-old. a few years ago we talked about how those trucks were kind of like handing the keys to your car to a 14-year-old If you said, "Hey, drive down this road, it's straight, keep it between these two lines, don't leave the road, and when you get to the end, just stop and I'll come help you out," the trucks could do that. if you said "hey drive down this road it's straight keep it between these two lines don't leave the road and when you get to the end just stop and i'll come help you out," the trucks could do that Now it's way past that, and the trucks will move dynamically through traffic, figure out what's going on in a construction zone, figure out what's going on with other problems and hazards on the road. It's pretty exciting what it can do. Yet, how many loads are actually being delivered by autonomous trucks right now? A few. The impact today, not a lot. The impact in the near term is geographically limited. In that geographic limitation, it's exciting, and it's expanding all the time. The technology, just like Ravi was asking about AI earlier, and we weren't talking about that a couple of years ago, and now everybody talks about it, the autonomous, the leaps and bounds that the technology is making is pretty exciting. What do we see for that for our business? Now it's way past that, and the trucks will move dynamically through traffic, figure out what's going on in a construction zone, figure out what's going on with other problems and hazards on the road. now it's way past that and the trucks will move dynamically through traffic figure out what's going on in a construction zone figure out what's going on with other problems and hazards on the road It's pretty exciting what it can do. it's pretty exciting what it can do Yet, how many loads are actually being delivered by autonomous trucks right now? yet how many loads are actually being delivered by autonomous trucks right now A few. a few The impact today, not a lot. the impact today not a lot The impact in the near term is geographically limited. the impact in the near term is geographically limited In that geographic limitation, it's exciting, and it's expanding all the time. in that geographic limitation it's exciting and it's expanding all the time The technology, just like Ravi was asking about AI earlier, and we weren't talking about that a couple of years ago, and now everybody talks about it, the autonomous, the leaps and bounds that the technology is making is pretty exciting. the technology just like ravi was asking about ai earlier and we weren't talking about that a couple of years ago and now everybody talks about it the autonomous the leaps and bounds that the technology is making is pretty exciting What do we see for that for our business? what do we see for that for our business We will need more truck drivers in the coming years and in the out years than we have today, even in the bull case of autonomous. The American Trucking Association has run the math on that, and it's about a million more truck drivers need to enter the market in the next decade to be able to serve the increase in demand over that decade, even at the bull case of autonomous. The great thing that we can tell our drivers, and it's true, is if you're a 25-year-old coming into the market, you can have a truck driving job for the rest of your 40-year career. If you're a 50-year-old or a 60-year-old truck driver, you are absolutely OK. What it will do is it will improve quality of life and home time for some drivers, especially in the South. Hub-to-hub deliveries, absolutely. We will need more truck drivers in the coming years and in the out years than we have today, even in the bull case of autonomous. we will need more truck drivers in the coming years and in the out years than we have today even in the bull case of autonomous The American Trucking Association has run the math on that, and it's about a million more truck drivers need to enter the market in the next decade to be able to serve the increase in demand over that decade, even at the bull case of autonomous. the american trucking association has run the math on that and it's about a million more truck drivers need to enter the market in the next decade to be able to serve the increase in demand over that decade even at the bull case of autonomous The great thing that we can tell our drivers, and it's true, is if you're a 25-year-old coming into the market, you can have a truck driving job for the rest of your 40-year career. the great thing that we can tell our drivers and it's true is if you're a 25-year-old coming into the market you can have a truck driving job for the rest of your 40-year career If you're a 50-year-old or a 60-year-old truck driver, you are absolutely OK. if you're a 50-year-old or a 60-year-old truck driver you are absolutely ok What it will do is it will improve quality of life and home time for some drivers, especially in the South. what it will do is it will improve quality of life and home time for some drivers especially in the south Hub-to-hub deliveries, absolutely. hub-to-hub deliveries absolutely Long haul on a straight line across good roads with good weather, absolutely. It will need people to make the final delivery at the beginnings and ends of those locations. That's a long answer. We're excited about it. The people still running, the companies still running that race are all the real deal. Five to ten years ago, there were a lot more people running, and a lot of them aren't in the race anymore. Long haul on a straight line across good roads with good weather, absolutely. long haul on a straight line across good roads with good weather absolutely It will need people to make the final delivery at the beginnings and ends of those locations. it will need people to make the final delivery at the beginnings and ends of those locations That's a long answer. that's a long answer We're excited about it. we're excited about it The people still running, the companies still running that race are all the real deal. the people still running the companies still running that race are all the real deal Five to ten years ago, there were a lot more people running, and a lot of them aren't in the race anymore. five to ten years ago there were a lot more people running and a lot of them aren't in the race anymore

Speaker 1: Really quick, Mike. Really quick, Mike. really quick mike

Speaker 5: Hey guys, could you talk a bit about, I guess, going back to pre-COVID on the one-way side, the differences seem to be drop and hook, power only, as well as pricing transparency has increased a bit. How does that change for the industry? Not a Werner question, but more industry-wide, what that means for small owner-operators, what that means for large carriers, just how you think some of the changes over the last five or six years in the industry will have implications going forward? Hey guys, could you talk a bit about, I guess, going back to pre-COVID on the one-way side, the differences seem to be drop and hook, power only, as well as pricing transparency has increased a bit. hey guys could you talk a bit about i guess going back to pre-covid on the one-way side the differences seem to be drop and hook power only as well as pricing transparency has increased a bit How does that change for the industry? how does that change for the industry Not a Werner question, but more industry-wide, what that means for small owner-operators, what that means for large carriers, just how you think some of the changes over the last five or six years in the industry will have implications going forward? not a werner question but more industry-wide what that means for small owner-operators what that means for large carriers just how you think some of the changes over the last five or six years in the industry will have implications going forward

Speaker 2: Yeah, certainly technology and just speed of information, to your point, has brought more transparency, real-time data, more information for a lot of different stakeholders in supply chain, shippers, carriers, providers. Decisions are more informed and more timely. I think it's really more about those that are going to differentiate, those that are going to be more successful going forward, is about how you use that information to optimize our network, our solutions, our pricing, how we use that information to automate certain decisions and put it all to work that benefits our customer with the optimal solution at a very competitive price. It's certainly made decision-making and other aspects of the industry, I think, more challenging. That's where we are. Those that will excel, I think, is about how that information is used. Yeah, certainly technology and just speed of information, to your point, has brought more transparency, real-time data, more information for a lot of different stakeholders in supply chain, shippers, carriers, providers. yeah certainly technology and just speed of information to your point has brought more transparency real-time data more information for a lot of different stakeholders in supply chain shippers carriers providers Decisions are more informed and more timely. decisions are more informed and more timely I think it's really more about those that are going to differentiate, those that are going to be more successful going forward, is about how you use that information to optimize our network, our solutions, our pricing, how we use that information to automate certain decisions and put it all to work that benefits our customer with the optimal solution at a very competitive price. i think it's really more about those that are going to differentiate those that are going to be more successful going forward is about how you use that information to optimize our network our solutions our pricing how we use that information to automate certain decisions and put it all to work that benefits our customer with the optimal solution at a very competitive price It's certainly made decision-making and other aspects of the industry, I think, more challenging. it's certainly made decision-making and other aspects of the industry i think more challenging That's where we are. that's where we are Those that will excel, I think, is about how that information is used. those that will excel i think is about how that information is used

Speaker 1: Great. We're out of time. Gentlemen, thanks so much for joining us, and we shall remain on Cycle Watch. Great. great We're out of time. we're out of time Gentlemen, thanks so much for joining us, and we shall remain on Cycle Watch. gentlemen thanks so much for joining us and we shall remain on cycle watch

Speaker 2: Great. Great. great

Speaker 4: Thanks for having us. Thanks for having us. thanks for having us

Speaker 2: Thanks for having us. Thanks for having us. thanks for having us