All right, we'll go ahead and get started. For those I haven't met, this is Justin Long. I cover rail, intermodal, and transportation equipment at Stephens. Our next fireside chat is with Norfolk Southern. Sitting next to me is Alan Shaw, CEO. Alan, appreciate you being here and continuing to support this event. Look forward to the discussion. This will be a fireside chat format, so I'll start with some questions. I'll also open it up to any questions from the audience as well. But with that, maybe Alan, you could just start with a general update on the business so far this quarter. We're now about halfway through. So what are you seeing relative to expectations in terms of, you know, volumes, service, operational performance? Let's just start broad, and then we'll dive into some more detailed questions.
Great. Thanks, Justin. It's, I enjoy coming here. It's always a pleasure to sit down with you, and thanks for hosting this event. Now, I will make some forward-looking statements today, which, as you know, are subject to risks and uncertainties, and I would invite your guests to take a look at those risks and uncertainties in our SEC filings and on our website. As I think about where we are right now, you know, we laid out a plan for the fourth quarter on our third quarter earnings call, and we're delivering on that. We said we're gonna improve service as we move through the fourth quarter, and we are.
We're about to start on peak season, you know, which generally starts the Monday of—and I'm talking about e-commerce peak—the Monday of Thanksgiving week. And we're ready, and I expect to see continued improvements in service as we move into peak and we move through December. As a result of that, as a result of the continued improvement in service and that positive trajectory, we have the capacity to handle more business, and we're attracting more business. And so last 6-7 weeks, our weekly volumes are at levels that, you know, we haven't seen for about 18 months. So that's positive for us as well, as well. We continue to focus on productivity.
A faster network is a less expensive network, and there are also some other things that we can do, and some turns of the dial that we can make to enhance productivity on Norfolk Southern, which I'm sure we'll have an opportunity to talk about. So the fourth quarter's basically playing out like we told everyone to expect on the third quarter call.
Okay, great. I know one thing you talked about, too, is with the OR. I think Mark said third quarter would be the trough, so it sounds like you're still confident that's the case, and you can see some sequential margin improvement here in the fourth quarter?
Yeah, I'm very confident of that.
Okay.
We said that the third quarter OR would be the most elevated of the year. I'm confident that that will be the case. We're gonna see some meaningful improvement in OR in the fourth quarter, and we understand that our commitment over the long term is to deliver industry-competitive margins. We're intently focused on that with a sense of urgency.
And so maybe let's dive into that a little bit more. I know that's clearly a focus for the company. When you think about closing that gap versus peers or getting to, you know, competitive margins in the industry, how much of that is seeing the positive operating leverage associated with volume growth versus more of a kind of internal self-help productivity opportunity?
Yeah, I'm gonna do this. It's a combination of that. You know, what we've talked about is a balanced plan of service, productivity, and growth to help deliver those industry-competitive margins. Certainly, volume growth will help productivity, and we expect volume growth in markets such as merchandise and intermodal, which candidly have. We've got a lot of room on those trains, right? And so that's. Those will come with pretty strong incrementals. A faster network is a less expensive network. We're spending $40-$50 million a quarter on service recovery costs. As service improves, those costs really start to go away, and as service stabilizes, we've got the opportunity to continue to iterate our operating plan for productivity and for service improvements, which should drive T&E productivity, fuel productivity, equipment rents, and locomotive productivity as well.
Okay, and maybe we can build on the service-related costs that are starting to come down. You also have the investments and the resiliency of the business that are, that are going up. On the latter piece, do you feel like we'll be at a peak in the fourth quarter in terms of some of those resiliency investments?
You know, I like the way you've, you frame it. It is an investment, right? It is an investment in the quality of our service product and our ability to handle growth and candidly, to drive productivity. It is elevated. As service improves, you know, that's gonna help. It'll be offset by the service recovery costs. There will be inflation next year. You know, it basically is associated with elevated headcounts. It's associated with inflation. It's an association with quality-of-life issues with our craft colleagues. All of those, over time, are gonna create benefits for us.
Okay. And maybe, we could focus on labor a bit and what you're seeing in terms of labor availability, attrition rates today. Have you seen any noticeable change on that front?
Yeah. Attrition rates are down slightly, which is a positive for us. You know, that tells me that we're doing the right things with our, our culture. We're doing the right things with folks, we're doing the right things with employee engagement, right? Because it takes it costs $50,000 to recruit, hire, and train a new employee. And typically, you're trying to do that during a period in which demand is elevated. And so you just don't, you don't have the right resources in place to handle the volume. That we're much better off if we can hold on to folks and use attrition where needed in specific spots to adjust the headcount, to match demand and to match the outlook. But, you know, we're, we're, we're continuing to see improvements in, in attrition.
There are some areas in which headcount or resource level isn't where it needs to be, but we are so much closer to target than we were this time last year. And so, as a result, again, we're doing exactly what we said we were gonna do. The number of conductor trainees in the pipeline continues to decline, and, you know, that's a very important phase of the employee life cycle, is training our employees. But when we're training them, they're not moving any freight, right? And so that really does impact our T&E productivity. And so, as the conductor trainee ranks continue to decline, because we're much closer to where we need to be, that in and of itself is gonna enhance T&E productivity.
It sounds like your expectation is the headcount will grow a bit sequentially as we move into the fourth quarter. At that point, do you feel like headcount will be pretty close to targeted levels, and if we see volume growth next year, you can leverage that and not have to add at all to headcount or not add a meaningful amount?
I'd say we're gonna be really close. Our goal will be to use the leverage of our fixed operating network and the capacity on existing trains to secure that additional volume and bring the productivity that's inherent in that. I think we probably need some more field supervisors in a couple of areas. That's something that we identified last fall, and we're continuing to hire there. But you know, ultimately, our goal is to really moderate the growth in headcount.
Okay. Well, I'll double back to a couple questions on volumes, and then I'll open it up to the audience if there are questions. But, you know, we've seen an improvement in volumes recently, to your point, you know, the highest levels we've seen in roughly a year and a half. Do you feel like any of this is just catch-up from some of the operational headwinds and challenges you've dealt with this year, or is it the market's getting better? How would you kind of pie chart what's driving the volume acceleration?
You know, I don't know that I would call any of it catch-up, all right? I think it's unhealthy for a railroad to assume that if it provides poor service, once service recovers, all of a sudden, that latent demand is gonna come back. You know, those customers, our customers are smart, and they're gonna look for alternatives. And so that... I'm just gonna assume that that business moved one way or another, maybe in the spot truck market. I think that as our network fluidity has improved, our cycle times on our equipment are improved, so we're presenting more capacity to our customers. And look, people want to ship via rail. It's less costly, it's safer, it offers more capacity, it's more sustainable. There are a lot of reasons people want to ship via rail.
The reason rail has ceded share to truck over the last 25 years is 'cause of service. One reason and one reason only. That's what we're trying to take off the table with our better way forward at Norfolk Southern, a new plan that we outlined, where we're investing in the cycle and committed to providing a good service product through the cycle. I think as our network velocity improves, it also makes our product more attractive to new entrants. With respect to markets, you know, you've talked to some of our channel partners in the intermodal space, and I think they're seeing some opportunities for growth as we move into next year. We've seen that in the domestic side over the last couple weeks. We've seen volumes start to pick up.
You know, we continue to take share from truck and international intermodal, metals and construction markets. Basically, anything associated with non-residential construction is really strong. You know, our volumes in automotive are elevated year-over-year. On the converse, you know, there's a lot of weakness in chemicals. There's weakness in domestic coal and energy markets. So it's, I'd say it's, you know, we got some things that are moving up, things that are moving down. You know, there's a cloud due to the geopolitical uncertainty out there, and so we're not in a position right now to talk about what 2024 looks like.
Any commentary on peak season, just since you brought up intermodal?
Yeah, it seems to have, like, the right shape of the curve for us, but the amplitude might not be as high. You know, we're tracking 80,000 units, 81,000 units a week in intermodal. You know, ideally, you'd like to see that closer to 88-89.
Mm-hmm.
And then, our e-commerce, our more premium product, will start to elevate here, in about a week.
Okay. I'll pause for a moment. Any questions from the audience? One over here.
You talked about capacity opportunities. When you think about capacity on existing trains, how much capacity is there for when you start building trains?
You know, that's a great question. I'm gonna caveat that really broadly, because obviously, it's dependent upon the specific location. But when you think about the mix of business, if you were to add additional coal, you're absolutely gonna have to add additional trains, right? Because each coal train, each grain train is effectively running at capacity. When you look at the markets where we think there are growth opportunities, right, in that single car network, in automotive, we don't run a lot of strictly automotive trains. Certainly, in intermodal, there you're adding additional boxes, additional multilevels, and really increasing the revenue density and the productivity of existing trains.
Maybe we could go back to the resiliency cost. So based on the annual run rate, now it's $200+ million of resiliency, and I've used the word investment, so I'll use that again annually. But when you think about getting a return on those investments, how long do you think that takes in terms of the volume and pricing benefits that should eventually come from that?
It's a pretty short turnaround on the investment. Pretty quick payback. Number one, as service continues to improve because of these investments in resiliency, service recovery costs, you know, overtime, recrews, equipment rents, those will start to come, you know, taxi expenses, those will come out, right? We'll also see the additional opportunity for price. You know, we are and continue to lean into price, and as the quality of our product improves, there's a double coupon. There's more demand for the product. That's a goodness. So volume gets up, but the value of the product increases too, so we can charge more for it, and we fully intend to do that. So pricing will help offset that as well.
When you think about the year-over-year change in pricing today versus what it could look like in the next 12 months, do you feel like the setup would support an acceleration of pricing in the next year as service improves, or does the macro backdrop make that difficult?
We'll just set coal, export coal aside, right?
Sure. Unique animal.
Yeah, it is. And you understand as well as I do what the drivers are, right? So I think in merchandise, yeah, there's absolutely the opportunity for continued strength there, and frankly, we're above our plan this year on our pricing and our merchandise network. The intermodal space is gonna be dependent upon what's going on with the truck market and with truck pricing. But again, as our service quality improves, it's gonna attract more business for us and more business for our channel partners.
Okay. I think there was a question over here.
Yeah, just on the pricing front, like, it feels like there was probably an 18-month period where there was sort of super normal inflation and probably more. I think most folks are suggesting that you'll at least be able to do inflation coming out for next year or 18. So do you think if there being the ability to maybe take a little bit of that back, clawback what you've lost over the last 18 months, ability to increase inflation?
Yeah. So-
Or something-
I think the question, I think, is, you know, inflation was superheated for a while. Pricing was not able to keep up with that. As inflation in the rail space cools, and there's some forecast that inflation will be relatively flat in the rail space next year. Can you catch up on that gap? That's absolutely correct. That's absolutely what we think will happen. You know, the average duration of our contracts is about two and a half years, and so if inflation spikes in any given year, we're not necessarily gonna be able to fully incorporate that into all of our contracts. I'll make it really clear, we don't do inflation plus pricing, right? We don't do cost plus pricing.
We price to the value of our product, and over time, that kind of mindset has allowed us to secure pricing in excess of inflation. I know that's a key component of the investment in rails, and we're fully committed to that, and that's the right thing to do.
Maybe just a follow-up on that. You suggested that inflation or input cost inflation could be flat next year, which I think would be a departure from what we've heard from the other folks. Labor, I think we know, is at whatever it is, 4, you know, 4.5 in the background. So what would be the drivers that would be sufficient to offset that, to have?
Well, I'm referring to AILF, All-Inclusive Less Fuel, which is an industry guide for rail inflation. It's included in some contracts. I think there's productivity that can help us offset that.
Maybe we could double back to some of the truckload conversion commentary. You know, one of the questions I get a lot is, you know, when rail service gets better, how long does it take for a shipper to decide that they're gonna pull the trigger on converting from truck to rail? Is it, you know, is it weeks? Is it months? Is it quarters? I know it's gonna depend on the situation and the customer, but generally speaking, when do you feel like you can hit that inflection point?
Yeah, I think including the merchandise business and the automotive business, I think it's relatively quickly. I think for some customers, it's gonna take longer. You know, they frankly need to see rail service at targeted levels through an economic cycle. There are a lot of customers right now who just would really want to ship more with us today if we could present the capacity to them, because of those inherent advantages to rail that I talked about. So yeah, we're seeing it right now, as volumes have picked up, as service has picked up, but I know there's a lot more out there as we demonstrate and continue to demonstrate our ability to deliver good service through an economic cycle.
You know, that's a lot of the stuff that we're working on with our channel partners is going after a different type of product that's out there. You know, right now, a lot of intermodal business is just the same shipper sending them to themselves, right? What we want to do is get to the place where we can pick up business from customer A to customer B because of the confidence that customer A has in our service product. That's a much bigger pie in the intermodal space than what rail participates in right now.
Just given the momentum and service and the opportunity for conversions that sounds like are starting to materialize, you know, as we look into next year, do you feel like that secular theme is it enough to support an outlook for volume growth? You know, how confident without getting into specifics, obviously, how confident are you can grow volumes next year?
I'm not really going to talk too much about next year because of that geopolitical uncertainty that's out there. We're working on our plan right now for next year, but you know, volume levels right now would create the opportunity for growth next year, you know, if you map that out.
And since you brought up the economy and geopolitical changes, what's your kind of view on the state of the economy today and next year? What's the feedback you're hearing from your customers? I think it's a finger in the wind exercise for everyone, but would love to just get some real-time feedback from you.
You know, I as we moved into this year, there was a lot of pessimism on the economy. And I you know, a lot of forecasts for a recession. The chances of the recession continue to go down, I think, because of the macro outlook. Certainly, that's what most of the banks are saying. So I think the economy is not super heated, although GDP was, what? 4.9% in the third quarter.
Mm-hmm.
So there are some aspects that are going well. It. I think it's performing better than what we would have thought. I think the long-term prospects for it are really strong. You know, we're in what I call a manufacturing super cycle. You look at investments in new factories in the United States, and it's 3x what it was on average in the decade of 2010 through 2020. And Justin, most of that's in our service region, right? Those are coming in the Southeast and in the Midwest, and we've got a best-in-class industrial development team, so it's probably going to have an outsized positive impact on us. You just... You know, you look at the EV market. There have been $70 billion of EV investment announced in all of North America, and about $30 billion of that's on our lines.
So we're in a great spot for long-term growth and manufacturing, and also in consumer markets, because in the consumer space, because of, you know, our geography, where we serve 60% of the consumption in the United States, and also because of our powerful intermodal franchise in the East.
Maybe we can build on that a bit more because the other rails have talked about the industrial development pipeline and the momentum there, despite the fact that real-time volumes have been under pressure. Is there a way to frame up what that industrial pipeline looks like for Norfolk today versus a year ago, and how much of a contributor to growth that could be in future years?
Yeah, I think Ed Elkins, our CMO, talked on our call about how just the stuff that's recently been announced is about 8,000-800 carloads a year for us, primarily in merchandise. You know, if you look at our network, nine of the top 10 states for doing business, as identified by Site Selection Magazine, are on our network. You know, we serve the Southeast and the Midwest. That's a great opportunity for growth. And, you know, Ed likes to talk about a Battery Belt, which is, you know, kind of like Indiana, Kentucky, Tennessee, into the Southeast. That's our network, right? And so there's I'm really confident that we're going to have a lot of strength in our merchandise franchise going forward because of onshoring.
Okay, great. I'll take a quick pause. Any questions from the audience? If not, maybe we can talk about coal. Obviously, a unique animal, but what, what are you seeing as we kind of move through the fourth quarter and, and both the domestic coal market and the export market relative to what you were expecting?
So I think in the export market, the met prices and the API 2 have started to slide a little bit, but they're still at really elevated levels. So I think, you know, low-vol premium is at $300 a metric ton. It was at, like, $343. I think API 2 is hovering around $120, which is still really strong. That will ultimately have an impact on coal RPU, but demand remains really high, and our coal volumes are pretty strong right now, which is good for us. On the utility side, we're seeing the nuclear plants come back into the market, and while we're really, really happy to have that business, and it's certainly accretive to the bottom line, it does come with a lower RPU for us.
Okay, so it sounds like moving into the fourth quarter, reasonable to expect some sequential pressure in coal RPU?
Yeah, but strength in volumes.
Strength in volumes.
Yeah.
Okay. 2024 is some of the third-party projections for coal are fairly pessimistic. Are there items within the Norfolk network, new business, mix shift changes you alluded to, that could help offset some of the broader pressure we could see in the coal market?
Yeah, you know, I think, we've got a really strong export market. And so NS has got a good balance between, utility, domestic utility, and export, and a good balance in the export markets between metallurgical and thermal. So we've got a pretty diverse portfolio there.
Okay. Question over here.
Yeah, maybe just to follow up on that goal side. You guys sort of mapped out within your service territory. It sounds like some of the previously planned coal conversions or closures have been getting pushed out. Is that something you're seeing in your service or territory as you sort of these things out?
Yeah, we're seeing, as I noted, a little bit more strength in that, in the merchant market, which is where I think we were gonna see a lot of some of this, these closures. Ultimately, it's still gonna be a secular decline, and I don't think it would be prudent for us to plan otherwise.
As met prices have rebounded, and I know there's been a lot of volatility, but it feels like you've increased some of your minimums in those contracts. Is one, is that true? And two, if so, is the downside protection with export coal pricing better as we move into next year than it's been historically? Is there a way you can help us think about that?
Yeah, I really don't want to talk about pricing and contract structures for a number of reasons. I'm sure you can appreciate that. I would say that at the level, the inherent commodity price levels that we just talked about, we're in good shape.
Okay. And is there anything else just broadly looking at the business from a mix perspective that we should be mindful of going forward? I know in intermodal, it seems like that's probably leading the charge on volume growth going forward, or at least over the long term, based on your investor day last year. But I know there's mix within mix. You mentioned some things in coal, but anything else that comes to mind?
Yeah, that's a, that's a good question. So when I, when I think about RPU, and I think about it a lot you know, I look for a couple of things. I look at the mix within coal between export and domestic, and within export, met and thermal. Thermal typically has a lower RPU, met is typically higher. The stuff moving in the north, it tends to be shorter haul than the stuff moving in the south, so that's an issue for us we've got to pay attention to. Within intermodal, domestic has a higher RPU than international, and that's one of the things that's really pressured our intermodal RPU less fuel this year, is that international has performed much better than domestic. That's not normally the case. You know, overall, I think over the long term, we're gonna see more strength and more growth at a higher rate than in domestic than we do in international.
And then this year, because of some of the issues with some of the Canadian ports, there were more evacuation of empties moving on our network, which further pressured our our overall RPU in intermodal. And then you move on to merchandise. You know, I'm always happy to see chemicals business. That's been pretty weak this year because of the you know, energy markets. Yeah.
Okay. So it sounds like within coal, you know, let's say export outperforms domestic, that's a good thing.
That's goodness.
If you look at intermodal, say, domestic intermodal starts outperforming international-
Good
... kind of, see a reversal, that's good.
Goodness.
Maybe nothing too major that changes in merchandise, so generally speaking, mix should be stable to better going into next year. Is that how you're thinking about it?
As our velocity improves and we're able to handle more metals business, that will certainly help RPU, and that'll create more of a positive mix within merchandise. Again, we're ahead of our plan and price in merchandise, so that'll help too, moving into next year.
Okay. Maybe we could shift to the CSR acquisition, was recently approved. Any update on the timing of when you would expect that to close? And maybe you could just go over the rationale for that transaction again.
Sure. So that's a line about 360 miles on the core of our network that links Chicago and Atlanta, you know, pretty important for us. We've been leasing it since about 1880 and under various long-term leases. Each time we renegotiate the lease, we take a rate increase. It was an opportunity for us to purchase this and candidly no longer have operating lease expenses. I'll tell you, when we executed this and got the deal signed, the three preceding CEOs at Norfolk Southern all reached out to me and congratulations. So that tells you how long we've been working on trying to acquire this property. It goes all the way back to Mr. Goode. We expect to close on that in the middle of March, and we expect to have that be funded by free cash flow and by debt.
Okay. And if I look at where leverage is today, it's kind of at or above targeted levels, slightly. That's a pretty big check that will have to be written. Will that influence the level of buybacks we see next year, and would it be fair to say that we could see a pause in buyback activities for the most part in 2024?
So as you, as you think about our capital distribution, right, it certainly is investments in safety and resiliency and, and growth and productivity, and then it's dividends, and then it's share buybacks. You know, as we write that big check, yeah, it certainly would... It's reasonable to expect that it's gonna impact the level of share buybacks.
Okay. And with East Palestine costs as well, any change to your thoughts around what you could see in the next, you know, couple quarters or so?
Yeah, we right now, we've accrued about $900 million in costs. Those are the costs that are estimable for us right now. That can certainly increase with additional environmental costs, with fines. I will tell you that we've—we have exited the most intense phase of the environmental remediation. We did that about three weeks ago. That's really good for us. It's really good for the community. That'll help the cost structure. We started to receive insurance checks, right? And so that, that'll help offset that going forward. That $900 million does not include, you know, insurance or third-party claims, which we're in the process of. So there'll be a lot of puts and takes on that, but the-
Okay
... the environmental remediation is in a really good shape for us.
Okay, good to hear. From a CapEx perspective, are you anticipating any major changes going forward?
Now, you know, if you recall our Investor Day in December of last year, you know, we said that we're gonna invest through the cycle, and we're gonna do it at a lot more ratable level, right? And key strategic assets that I know we're gonna need 5-7 years from now, and that's, that's locomotives, that's intermodal terminals, it's freight cars that help us compete with truck, it's track infrastructure, and it's technology, and, and it's our people. And so, you know, what the desire to there, Justin, was, is you're a lot more consistent. You're not always approaching the market when demand for that type, the locomotives or cars or chassis is wicked high, right? Which means the prices are higher. So that helps you control costs and control productivity.
It also makes it a lot more consistent, so it's easier for Mark George to, you know, include into our, our cash flow projections. And so as I, as I think about next year, you know, if it, if it does go up, it's only gonna be modest.
Okay. And can we unpack the locomotive strategy a bit more? You know, locomotive investments going forward, do you anticipate being in the market for new locomotives anytime soon?
Well, this year we went out and acquired a handful of used locomotives. You know, as you know, for Norfolk Southern, most of our locomotive capacity investment has been converting, let's say, dated DC units to effectively new AC units. We'll continue to do that. We got about 240 more left to go on that, so that's gonna create a big boost in capacity and productivity for us. We expect that we'll be at about 70% penetration of, of DC unit, pardon me, AC units, 75% penetration of distributed power. That's a big productivity, that's a big service, that's a big capacity advantage for us.
So that 240 units, once you're done with that, is there runway beyond to continue these rebuilds?
We'll look into the market to see if we can find older units-
Okay
... available, but that would pretty much chew up what's available for us in our current inventory.
Okay. It sounds like new locomotives, we'll just kind of see on how the demand environment plays out.
Yeah, we'll see on the demand environment and our own productivity as well.
Okay. And maybe same question for rail cars. If we think about your investment levels this year versus what they could look over the next several years, would you expect that to be pretty ratable, as you mentioned, for overall CapEx?
Yeah, that's, that's the intent, right? Is I don't want to get ahead of the curve. I certainly don't want to get behind the curve.
Okay. You know, one thing that's come up a lot is, technology, and I feel like the rail space, to be frank, has lagged a lot of other subsectors within transportation. And, that's been one of the issues when you think about capitalizing on this truck-to-rail conversion opportunity. What are some of the things Norfolk is doing to change that?
Yeah, look, I agree with you. You know, it really is about. You're talking about it from an external-facing environment, right?
Right.
So, it really is about ease of doing business. I know that the truck market has a right now has got a, you know, better digital interface with customers generally than the rail market. One of the things that we just did is we acquired DrayNow. You know, pretty minimal investment, but that basically is a technology company that is going to help us interface with our customers. We know that the drayage costs are a pretty significant component of that end-to-end cost for our customers, particularly in the intermodal space, but also there's a merchandise component too, because we do a lot of transload stuff too. So that's going to help us improve the visibility, that's going to help us improve productivity. You know, we were the leader.
We're the ones who launched RailPulse, which is an industry-wide effort to enhance visibility on our rail cars and ultimately equip the entire North American rail car fleet. You know, our goal is to combine that simplicity of truck with the efficiency of rail.
Okay.
We've got a better cost structure. If we can provide a competitive service product, we're safer, offer more capacity, we'll win. That's the goal.
Okay. Any final questions from the audience? If not, I'll end with the last one. I feel like the rail industry as a whole has started to collaborate a lot more, and we've seen management changes that might be helping with that. When you think about the opportunity for Norfolk, specifically to collaborate better with some of the Class I rails, where do you see the most opportunity going forward from things that have either been announced or things that could be on the horizon?
Well, you've seen some recent announcements from us, right? With the FEC, with CN. You know, I continue to... We continue, pardon me, to work closely, particularly with our western partners. You know, 50% of our business originates or terminates offline. You know, we hired Stefan Loeb, former Chief Marketing Officer of a short line company, to work specifically with us on first mile, last mile, and collaborate with short lines. You know, we partner with over 260 short lines, which is the most of any Class I railroad in America. So yeah, there's a lot of opportunity, and again, it's kind of that thought process that led us to do RailPulse.
We have to think of ourselves as competing in this supply chain ecosystem, and if all we're doing is throwing costs over the fence at a customer or another, a short line partner, then that end-to-end solution probably isn't going to be effective, and it's probably not going to win versus truck. We got to partner with them to make that interface much more efficient. That's, that's ultimately how we'll win.
Okay, well, we'll wrap it there. But, Alan, thank you so much for the time and, and support, and great to see you.
Justin, it's a pleasure to be here. Thank you.
Thanks. Thanks, everybody.