All right. We're gonna keep rolling here, with Norfolk Southern again. Brian Osborn to cover the transports. Very happy to have Mark George, the CFO, Ed Elkins, Chief Marketing Officer, Luke Nichols from IR here. Clearly there's been a lot that's been in the news and affecting the industry and, of course, the company. I'm gonna turn it over to Mark, who will give us an update and, you know, then we'll come back for some questions. Mark, thank you again for being here. Really appreciate it. Turn it over to you.
Thanks, Brian. Good morning, everyone. Ed and I are looking forward to having a robust discussion this morning. I do wanna remind everyone that before we start, during our talk today, we will be making certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those described in our Form 10-K with the SEC and those related to the recent derailment. Before we get into business, you know, I just wanna take a few moments to discuss the very unfortunate derailment we had in East Palestine on February 3rd. I wanna remind everyone Norfolk Southern representatives were on site and took action to ensure the safety of the residents in close coordination with local, state, and federal officials. That work is continuing now. Thanks to the swift response from law enforcement, fire departments, several government agencies, and our crews, the initial impact was contained.
We also immediately established a family assistance center within the first 18 hours to address the needs of the community and to support those who were directly impacted. To date, we've committed over $24 million in aid to support the local community. Our family assistance center has helped nearly 5,400 families. We remain present in the community and very engaged. We actually average around 20 NS employees on the ground on any given day working directly with the community, addressing their questions, finding most effective ways to assist in the recovery process. Look, it's very imperative for us to make this right. This is gonna be a long process, but we're here for the long haul. It's imperative we do what's right for the community. That commitment also extends to the site remediation work that we're doing.
To date, we've recovered six and a quarter million gallons of impacted water. We've removed 3,226 tons of waste soil. We've flushed a mile of impacted waterways. We've also sampled approximately 200 drinking wells. Just last week during the Senate hearing in Washington DC, both federal and state EPA spoke of their rigorous testing of both water and air. They've both consistently come back clean from contaminants associated with the derailment. We recognize there's more work to do. Each day, our team is focused on that progress and making things right. An example of this, on February 22nd, we announced that we would actually lift our tracks again in the derailment area in order to evacuate the soil underneath, which was a change from our original plan that would have effectively and safely remediated the soil without removing the tracks.
This enhanced remediation plan was in respect of the direct result of the feedback we got from the citizens of East Palestine. Now, this process is gonna take up to eight weeks to complete. It is important to note that we will be remediating one track at a time. This will allow traffic to continue flowing on the second main line, albeit at reduced speeds while traversing through the remediation area. We will utilize alternate routing both to the north and to the south to mitigate bottlenecks in the area and, you know, try to soften the impact of this reduced capacity on our premier route. My guess, you're gonna start to see some speed impacts showing up on our AAR train speed as a result of that. Again, probably for the next eight weeks.
Anyway, you know, under the supervision of the FRA, the company has inspected all the wayside detectors in the area of the incident and found they were operating as designed. In addition, the NTSB preliminary report found that our crews were operating the train in accordance with all the rules and the procedures and that our hot bearing detectors were working as designed. Despite everything working as intended, we know there's more we can do to improve safety. Last week, we announced a six-point safety plan, which included the following actions. We'll enhance our network of hot bearing detectors by adding 200 new detectors, which is a 20% increase over the roughly 1,000 that are out there today on the network. It's going to bring the maximum distance between detectors to 15 miles. On average, we're amongst the lowest in the industry with only a 13.9-mile gap.
There are some gaps that are wider than that just due to terrain, curvature, etc. We're gonna make sure that we have no gap greater than 15 mi going forward. We're also gonna be working with manufacturers on the next generation of multi-scan detectors to scan a greater cross-section of the rail car bearings and wheels. We're also gonna work with our industry peers and complete a comprehensive review of the standards and practices for the use of these detectors, including reevaluation of the thresholds used to trigger an alarm. Additionally, we're gonna be deploying some acoustic bearing detectors, which actually analyze the acoustic signature of vibrations that are inside the axle and can identify potential problems that a visual inspection would not.
We intend to add 13 of these detectors into our highest traffic routes on top of the five that we already have in service today. We are going to our fifth point here. We're gonna accelerate our digital train inspection program where we partner today with Georgia Tech, the Research Institute of Georgia Tech. We're developing next generation of the most advanced safety inspection technology. We're utilizing ultra-high-resolution cameras stationed in strategic locations on our network. This technology will give us 360-degree health checks on rail cars. That will help us improve our ability to detect and diagnose defects before they become a problem. Finally, you know, we recently joined the FRA Confidential Close Call Reporting System, which encourages railroaders to speak up if they see something unsafe.
In aggregate, I would say that these six points are probably gonna result in about $50 million of capital spend over the next two years. That would be incremental capital spend. Now, you know, regarding the costs of the derailment, you know, we're nearing the end of the quarter here. Our understanding of the associated costs is becoming clearer. There is still work that's happening. We're not gonna put a number out there today for you. I would expect that we'll have an update, you know, in our first quarter earnings release here coming up in April. Just to remind and put some perspective on the insurance coverage, which will allow you to frame it a little bit better. We've got basically two towers of insurance coverage. We have a third-party policy with a $75 million self-insurance retention limit.
We have a first-party policy for our own property damage, which also has a $75 million self-insurance retention. We have two separate policies each with $75 million of self-insurance limits. Now, the third-party policy attaches for coverage losses above $75 million and up to $800 million or $1.1 billion for a specific type of pollution releases. It is intended to protect against legal liabilities for bodily injury as well as property damage to third parties. Our first-party policy is intended to cover losses and damage to property that our company owns or is in custody of and the loss of certain types of revenue and other extra expense. Above $75 million, it covers 82% of the losses going up to a limit of $275 million.
All that said, when you're talking about insurance coverage, you know, there's many qualifiers, including the insurer's reservation of their right to further investigate claims and contest coverage. That takes a while to sort out. You know, there are express restrictions and sublimits of coverage, etc. We've just got to be a little patient here as we sort through all of the claims that we have with insurance. I also wanna take a moment to discuss another development. You know, we don't comment on litigation. You will have seen that, you know, there was a lawsuit filed by the state of Ohio yesterday. I can say that the filing shouldn't really be a surprise in a situation like this. It's not really a surprise to us. They wanna hold us to our commitments. We're committed to it anyways. That's great.
We'll be working with the Ohio Attorney General and other stakeholders to develop three programs for affected residents of the community as part of some final resolution. You know, you would have seen talked about a long-term medical compensation fund, a tailored protection program for property owners, and programs to protect drinking water over the long term. We're just starting discussions with the AG. We look forward to finalizing those details as we continue to support the community. You know, shifting to the business, I really wanna just remind everyone we are very excited about our new strategy that we shared going forward. We shared it at the Investor Day in December. I wanna remind you all it's rooted in three pillars, right? The first pillar is to safely deliver reliable and resilient service.
As we do that, that's gonna allow us to propel smart and sustainable growth. We will use that leverage to help us drive continuous productivity improvement. We're gonna execute on that strategy with a customer-centric and operations-driven mindset. We will navigate this East Palestine issue. We're gonna stay in the community. We're gonna resolve it. In the meantime, we got a business to run. We're running that business. We're really excited about the future. With that, Brian.
Okay. Thank you very much, Mark, for that update. Covered a lot of things we would obviously wanna be asking about. Maybe just a couple of quick ones before we go deeper into the business. You know, one thing we're all trying to monitor is just, like, what's the next step in the hearings and in the reports, the public field hearing and the NTSB. Is there any, I don't even know if it's been set or if you know. Is there any broad brush you can give us in terms of the timeline of next steps and how this is progressing? Anything that's been set that we can sort of put on our calendar?
I don't think there's anything yet with the NTSB at this point. We know we've got more hearings. I think Pennsylvania, there's a Pennsylvania Senate hearing on the 20th of March, and then there is a U.S. Senate Commerce, Science, and Transportation Committee hearing on the 22nd where Alan will be there.
Right.
I believe Chair Homendy from the NTSB will also be there. Look, it's gonna be a fairly long process. I think things will continue to emerge. Requests for hearings may continue to come.
Right.
So.
One of the other aspects of this is, you know, the NTSB's looking into the safety culture. The FRA has got the review. Both of those we couldn't really find much precedent for. But, you know, I guess from your perspective, obviously, it's all hands on deck. Alan's made a number of announcements from that. Is there, is there a concern or should investors be concerned that there's, you know, a broader safety culture problem? You know, it seems like there's just been a streak of unfortunate derailments, including during the congressional hearing. There's an unfortunate derailment. It's very high focus right now, of course. And derailments happen on the main line, you know, once a day for the whole industry.
From a safety perspective, can you give us some context in terms of how you feel how that's progressing internally? Because clearly, there's a hyper-focus from the outside looking in.
Yeah. I think, you know, Ed and I will comment there. I want to say when you're a railroad, safety is always an absolute and a super high priority because this is life-and-death exposures that we put people in, our own employees as well as the general public. We feel good about the safety culture. That said, we have to continue to improve it. We are absolutely committed to do that. I think Alan's made that very, very clear in the hearings and with the six-point plan. I know Paul Duncan, our new Chief Operating Officer, is screaming from the hilltops about the importance of safety. As we work with the craft unions and going out and doing site visits, we're making it very, very clear, and we have been since Paul's appointment, especially.
Safety is number one. I don't know. Do you wanna add anything to that, Ed?
No. You know, we have a long history of what I would call a very robust safety culture. That does not mean that we're sitting still.
Yeah.
You know, we have to do better. And we are committed to doing better and doing what's right not only for our employees who we want to go home safely every night or every day, but also for the communities that we serve. You know, for me, I started out on the ground. So I understand how lethal that environment can be, how dangerous it is if you don't do things right. And we are committed to making sure that we're gonna be a leader in safety across the industry.
Okay. Understood. Just on the labor front, you know, it's obviously been a challenge for the whole industry for a while. But there's been some progress. And you've made some of those announcements on the paid sick time.
Maybe you can just touch on how labor availability looks right now. I think we've seen a good step up in the pipeline. Clearly, you're leaning into that, but there are some areas that are still challenging. I'd just be curious to hear how those paid sick times, which is a big flashpoint in the negotiations, if those are in place and how they're working here in the early stages.
Yeah. We've actually reached agreement with eight of our twelve craft unions right now. That represents about 40% of our union employment. The two big unions are that, that represent the T&E workforce, which are the locomotive engineers and the conductors. We continue to work with them on the quality of life issues that matter most to them, which really is more around scheduling than paid sick time.
Right.
We're in active dialogue. We feel pretty good with the progress we've made with the other eight unions who we have an agreement for. We've got a path for another one here in the days ahead. It continues. The two big ones in terms of percentage of the union workforce are T&E. You know, their focus is something a little bit different, which is around scheduling, which we want to address with them because that's really where we have the hardest time hiring people is the unpredictable schedules. If we can work on a scheduling agreement with those unions, I think it'll really help us all, both the company and the union.
In terms of the availability in, in the pipeline, you know, relative to where demand is, where you where you expect it to come in, how is that, how is that situated? It feels like you're maybe finally turning a, a corner here in terms of getting more people where you want them to.
I think.
It is still a challenge.
Yeah. I think we're on track for where we wanna be in general with labor. There are still locations across the railroad that are below our minimum standards. We're hiring right now, targeting those. I think, Mark, there's what, 900 in the pipeline right now? Yeah. We got 900 conductor trainees in the pipeline still. We continue to replenish that with new hires.
Mm-hmm.
As we graduate people to join the workforce, we're kinda on track for a mid-year target of 7,600 employees in T&E. So that's good. Meanwhile, I mean, this is a living target, you know.
Mm-hmm.
As we forecast demand, as we make changes to the training plan, as the actual volume, the mix of volume changes depending on where it is in the network, we're always moving around what the targets are. The 7,600 I mentioned, that's one number. I think of it as we have 95 discrete targets because we have 95 crew locations. There are some locations we are robustly healthy. There are other locations where we're still critically understaffed. In our core, kind of super core routes, you know, we probably still have about 15 locations where we are understaffed. That's where we're trying to channel a lot of our hiring efforts to get those up to speed. We're feeling a lot better about our crew issues right now than we were certainly a year ago, but even six months ago.
I guess what gets those last ones over the finish line, I mean, it's been a while since you've put, I'm assuming, every single effort you can think of, and then some into that. It sounds like the scheduling could be a big part of it. Some of it's, you know, just the region and the market.
Yeah.
You probably have to live with that to a certain degree. But, you know, on the flip side, it does feel like, you know, prior to the derailment, things were starting to really improve, you know, from a service perspective. Maybe you can address the last point of labor, at least where you think a steady state would be, and then talk about the network. I do think it was making some pretty significant gains before.
Yeah.
Obviously, the.
The service.
Fortune derailment.
Prior to the derailment, service is the best it's been in two years. Even coming out of the derailment, service is starting to get better again. I think from a getting back to labor, you know, the environment is helpful right now in that, you know, after the union agreements have been put in place, these are they pay well. These jobs pay well. It's getting easier to attract talent to take jobs like this now after the last negotiation we just had with the unions. Maybe a little bit of a softening market in labor is also helping in certain parts of the country. We feel good about the prospects now. I think, you know, a year ago, it was a labor crisis. I would say now it's just something we have to continue to work on.
Mm-hmm. No, I agree. I think we've learned a lot over the past year, year and a half in terms of what it takes in a post-pandemic environment to, to hire the modern or post-modern workforce. You know, it's not the same way that it was 35 years ago where you could gather up 500 people and then pick the best 10 or 12 of them, for, for what is really a very, very good job, a career, in fact. That takes different things now. And we've learned a great deal. And you're right. There are regionally, there are areas where unemployment is extraordinarily low still, which makes it a challenge in that region. We've become very creative.
I think one outcome of the last year has been we have a much different process and pipeline for how we attract new employees, which I think is gonna pay benefits from here on out.
One more for you, Mark, on that front before we get into more of the end markets. When we think about, and I think you've been pretty clear that there's, you know, there's inflation. You know, we can all see it. I think you've been reminding us not to lose sight of that because, you know, you still have inflation on the labor side. Obviously, it went up quite a bit with the new agreement. Other rail inflation is still trending pretty high. You get the book reset, but not all of it and not all at once, I would imagine.
I guess what I'm worried about is there's a little bit of an air pocket as we start the year, you know, for the industry in general because you still have to move, move the volume to get the higher rates. There could be a little bit of a lag. You know, I would think the model of inflation plus pricing is still very much there. I guess I'm just worried that industry-wide, there could be a bit of a, you know, mismatch here, at least to start the year. I don't know if you would agree to that or if you'd put some other context around it.
Yeah. I think certainly the cost inflation is there, although we are getting some relief on fuel.
Okay.
Fuel prices are coming down. You know, the wage inflation is embedded. That is one of the bigger elements of inflation that we have to suffer through. I will say, you know, I think what Ed and Ed's team is doing on core pricing is really, really good right now. You know, we wish volumes were even higher. I think the inflation side on the top line from core pricing is actually very, very solid. Ed, why don't you talk about.
Yeah. You know, our core pricing plan is still very solid. We're actually running right on track for where we expect it to be. Twenty-four quarters, we've had intermodal RPU increases in almost seven years on the industrial side. We have a long track record. Look, it all comes down to the value of the product that we're delivering. That's how we deliver value to our customers. That's how we deliver value to the shareholders. The service product is, as Mark mentioned just a second ago, entering the year, best service product we'd had in a couple of years. We finished up peak season extraordinarily strong for the parcel carriers. Cycle times are higher than they were or, in other words, faster than they were a year ago or even two years ago.
You know, we're able to present more value to our customers right now, and it is showing up both in terms of rate as well as volume in many markets.
Okay. It doesn't sound like I should be a little less concerned in terms of the start to the year. It seems like there's still the volume component, I guess, is what I'm getting at. Like, you're still going to need the volume to show up to get the higher rate, which it.
Yeah.
You know, probably will at some point.
I think.
It always does.
I think rate, rate is good. Volume is the issue right now for us.
Right. Okay.
So.
If there's any questions in the room, raise your hand. We'll try to get you a mic. Ed, wanted to come back to this flexible freight concept that you introduced to the investor today.
Sure.
You know, with the service getting better, you know, I would assume that those conversations are easier to have. You know, it's also called flexible freight. I would assume that maybe it goes the other way. It's a big number. I think $60 billion, $61 billion.
Mm-hmm.
Maybe you can just step back and say how you got to that number, like what's in that bucket, what's not. And then, you know, before, derailment or at least, you know, you would you expect that to really start to show up once you get back to those service levels on a more consistent basis?
Sure. What we started with, the total trucking logistics market for North America, which is like $860 billion in total, and then started backing into that number of what is our addressable market, both in terms of geography but more importantly, markets. What you see there with $61 billion, which sounds a little bit precise, but it's probably not as precise as it appears, it is a subset of that total market predicated off, number one, geography. Number two, our capabilities and the markets that are truly flexible freight. You know, our definition of flexible freight is a market or a product that can derive value from truck or from rail depending on how much value is presented to them in terms of service quality. It's not just intermodal because that's where my mind goes first is to intermodal.
It's certainly the most obvious piece of flexible freight out there. We are clearly targeting growth in our intermodal markets. There are markets beyond that, whether it's coiled metal, whether it's agriculture, whether it's food products. There are a number of markets and commodities that can derive exceptional value from a safe, reliable, resilient service over a long period of time. That's exactly how we believe we're gonna deliver the value that will allow our customers, both current and future, to build their businesses around that service as part of its supply chain. You know, it's manifesting itself in some markets now as we can present more empty cars because of faster cycle times. There are customers that absolutely wanna load that car today. We're seeing that in markets where we can deliver a faster cycle time and more empty equipment.
Other markets and other customers, it's gonna take some time for them to unwind the alternative arrangements that they probably had to make over the past two years to keep their factories running and to service their customers. The most important thing that we're doing right now is building that roadbed of reliable, resilient, and safe service for our customers so that they can make that choice when, when they have the opportunity, to use rail. You know, it's, it's not an on-off switch per se. I think we probably have to go through a full cycle of ups and downs to demonstrate to customers that this time is different. That's really what our message is this time is different. Customers, very, very rightfully so, are saying, you know, "Show me" to some degree. That's fair.
There are lots of customers that, like I said, can derive value right now in our.
Is one of the things they're asking to, you know, put more industrial development behind there, which has always been a focus. I don't know if that's ramped up a bit, in terms of helping develop the sites, maybe buying some new properties or accelerating some of the developments. Is that one of the proof points that customers are asking for?
Yeah. You know, the macro trends are very favorable for, I would say, our geography when it comes to whether you wanna call it reshoring or onshoring or just simply new real estate and industrial development. You know, 9 of the 10 top states for doing business are on our network. The other one is Texas, which we have very good connections to with our interline partners. We feel very well positioned, particularly in the Southeast, for new industrial development. Everyone probably saw the announcement from Scout Motors that they're going to open a new plant in South Carolina. They'll be served by Norfolk Southern. We're excited about that. That is kind of the tip of the iceberg, so to speak, in the EV and battery world, which we've seen a tremendous amount of investment and interest in new development.
We're seeing manufacturing hope. I don't know if it's forever, but certainly for the meantime, change its approach from just in time to, to some degree, just in case. I think there were some significant lessons learned during the pandemic about supply chain resilience that are gonna play very well for Norfolk Southern and for the United States, quite frankly. When you think about a very large consumer base that has a lot of money, that has rule of law, has great infrastructure, you know, you wanna be close to your markets. And I think that's what many manufacturers are starting to pursue.
One other area we've focused a lot on just in the normalization of all things that we cover is just the accessorials, demurrage, the storage fees, which are, you know, a byproduct of all the congestion in a bunch of different areas. I know you, in the guidance, you have that rolling off to some degree. It's a little harder to track now. What is kind of the cadence you would expect, or any suggestion you expect to roll that off? I'm assuming there's some offset because congestion came with additional costs, which I think you've sized in the past. You know, the net effect is you're not gonna see it all drop off the top line without some offset.
It's just trying to figure out to what degree and to what magnitude those two might actually offset each other. Of course, over what time?
I think, you know, fall of 2021 is when supply chain congestion started, arguably. My proxy has generally been the steamship line rates on the ocean for.
Mm-hmm.
For the spot market in terms of, you know, what's happening inside that global supply chain. You know, those prices have come down by a factor of 10, I think, something like that on the spot market. That signals to me that there is less congestion overall throughout that supply chain and less pressure, right? The other thing to think about is in 2020, we ended the year with goods purchased at a level that was probably 2025 level in terms of if you drew a straight line from 2019 to 2025 based on the trend from 2016 onward. We had a very elevated goods consumption in this country with the supply chain. We use warehouses as a proxy designed for, you know, 2019 volumes.
It was a sort of a large amount of freight trying to move through a fairly small funnel. Over the past three years, the U.S. warehousing, you know, infrastructure development has built out somewhat. And we've seen goods consumption flatten out. It hadn't really fell, but it's flattened out. So now you have a bigger pipeline for that to move through. We're seeing the supply chain congestion that is manifesting itself as accessorials or storage charges because an ocean box doesn't have anywhere to go, so to speak. We're seeing that lighten up and really begin to signal to us that the supply chain congestion is finally moving beyond where it has been for the past couple of years.
You know, for those of you that have heard our quarterly calls, every quarter, I thought it was gonna start. I think finally we're in a place where it is actually starting to loosen up. I think 2023 will be the year that that happens. It's probably actually happening faster than we thought this year.
Okay.
We're seeing it really unwind quicker than we had anticipated.
In terms of the cost associated with that, is that happening at the same time? You have a little bit of a lag in some cases.
Oh, there's a lag. In some cases, you know, you're leasing properties and lands, you know, that may take a year or two to fall off. It's not that they're not being used still.
Mm-hmm.
You know, the cost of servicing that new business, that storage service business, you know, will take a little bit more time to fall out.
One area that's been volatile as it usually is, is coal, very strong in some markets, not so much in others. The natural gas price being where it is, begs the question of how much longer, until we have to worry about restocking ending and potential plant closures and things of that nature. Maybe you can just give a quick update on the domestic side and if you wanna weigh in on export as well.
Sure. You know, four years ago, everybody said gas will never be over $3 again. One year ago, everybody said it'll never be less than $4 ever again. Here we are today with a price that's kind of back to where it was on natural gas. There's a lot of volatility out there. For sure on the domestic side for electricity generation, we're seeing what are now in the 2023 year, robust stockpiles at the utilities. There's strong competition from gas, so we're seeing some pressure there. We don't have any planned retirements that are significant in the immediate term. You know, the challenge right now, I think, is the world needs BTUs.
There's been a tremendous amount of disruption about where those BTUs come from and where they go to. I'm not sure that we're at an end state yet in terms of, you know, how that all gets resolved, either in Europe or in Asia. We remain pretty guarded, you know, about that global environment. I will say for export, you know, particularly for metallurgical, there is an underserved global market probably for metallurgical coal. The U.S. has some new production, and we are benefiting from some new production on our footprint that we think will benefit the world. We're staying up against it in terms of the tons that we're able to move. We feel for now pretty good about the export markets. Anything else you wanna say on that?
In terms of all the volatility you've seen on the, on the ocean side, going back to that, freight moving from the west to the east for the obvious reasons to diversify, but also because of labor uncertainty. I think Norfolk, Port actually has a new, service product with Norfolk Rail Line on, on April 1st, if I'm not mistaken, to go inland to Memphis. I'm sure you're, you're trying to take advantage of what's moved and trying to keep it sticky. How has that progressed? What's the timeline of that? Because I'm assuming that the shippers, when things go back to normal, they won't necessarily go back to the old way of, of moving things. How do you feel the network's positioned to maybe hang on to, to some of that, freight when it trying to prevent it from moving back?
Sure. You know, Memphis is an interesting market. It's sort of mid-continent. Fifteen years ago, if I had to draw a line about how far you could penetrate inland from the East Coast, it didn't really get the, it certainly didn't get to Memphis. It didn't get much past Atlanta maybe. Over time, the steamship lines and the ports have really invested in making optionality something that their customers can benefit from. I go back to one of the old adages, that is, water miles are always cheaper than land miles in general. There are very robust routes and structures now to deliver freight to the East Coast, whether it's from Southeast Asia as manufacturing migrates or even from China.
What we're trying to do is provide for our customers that same optionality and give them the opportunity to benefit from the investments that steamship lines and ports have made, to deliver that product to the East Coast and serve some of those hinterland markets that, before, really weren't, you know, feasible from an East Coast location and do it in a very efficient way. We're responding to customer demand essentially by trying to develop these new services.
In terms of the other side of intermodal, what's the domestic market look like? I mean, we still have a pretty weak truck market trying to find a bottom, but, you know, it's cheaper to move on rail. Service improves, consistency improves. So are you seeing, you know, kind of the end of the competitive dynamic with some of the switching and the shorter haul? Or are people not really making that decision, you know, just yet? I know we're in mid-season, so it's a little hard to tell, but.
Yeah. I.
What's your sense coming out of it?
I would underline the weak, truck market. You know, it's been a challenge. It is right now and has been for a little bit of time. The indications that we're getting from mid-season so far, which, you know, sort of climaxes around April, is that customers are able to find a lot of value with the product that we're offering. You know, our job right now, coming out of peak season last year, we said it, is we have to demonstrate to our customers' customers that we are a service that they can put in the bank, right? That's what we're doing right now is we're laying that roadbed of outstanding intermodal service that's gonna give our customers like J.B. Hunt and Hub Group the opportunity to convince their customers and prospective customers that they can bet on intermodal.
The only way that they can do that is if we demonstrate it to them. That is what we are really focused on right now.
We have a couple minutes left, but I know we covered several end markets, including some of the bigger themes of the port shift from coast to coast and the nearshoring, onshoring. Obviously, you can't miss a question on coal. What else is, you know, interesting from a near and multi-year perspective when it comes to some of the end markets you're looking at, some of the opportunities that you're seeing? Maybe that some of it's tied to industrial development. What else did we didn't cover that maybe we should be focused on when it comes specifically to the Norfolk franchise?
I think, you know, in the long term, it's always interesting to look at the pipeline of projects that you have on the industrial development side. Those are projects that some of them finish, some of them, you know, start, and some of them just never show up. That pipeline for us continues to be extraordinarily strong, particularly in historical context. You know, we look at what makes up that pipeline of prospective projects. A lot of it's battery, a lot of it's EV. A lot of it is other traditional industrial plays, whether it's steel or whether it's plastics or something related to petroleum. You know, the U.S. is good at a few things. One of them is generating or producing BTUs. The other one is producing calories.
We continue to remain very bullish on both the AgM arkets as well as some of those industrials.
Okay. Thanks for wrapping it up there. I think we'll end it there. Mark and Ed, thank you very much for your time. Appreciate the update and all the insights today. Thank you.
Thank you, Brian.
Thank you.