All right. Okay. We're going here. I think we are live. All right. We're gonna go ahead and get started with the next presentation. It's a pleasure to welcome Union Pacific. I've got a lot of interesting things to talk about here. We've got Jim Vena, CEO; Jennifer Hamann, CFO; and Kenny Rocker, CMO or Head of Marketing. Pleasure to have all three of you here. Appreciate the strong, strong presence and participation in our conference. You know, we'll do this fireside chat like we've been doing. Jim, I don't know if, or Jennifer, if you have any initial comments you wanna make, and then we can dive into things.
Yeah. I wouldn't mind. Let's start off with boilerplate. We're gonna say a whole bunch of things, read it all. What's real interesting is we used to be able to put the boilerplate in a couple of lines, but now with the merger, lawyers have got about four or five pages of it. If we can go to the next piece, let me know when you've read it. Basically, everything we say is public information and to be used in the right way. If you want more detail, please go on our website to make sure that you get updated or get a hold of our IR people for any detail that you might want to have a question on.
What I really wanted to start off with is to talk about where we are with the merger application and where we are so far and what the path looks like to completion. Bottom line is, before we came to the point that we wanted to make sure internally that we were set and looking for an opportunity to be able to go through a merger with another railroad, we wanted to make sure that the company was in the right place. That was real important, that financially we were well set up. I think, Jennifer, you can correct me if I'm wrong or touch some of the points, but at the end of the day, I think we're in a good place, correct?
Very good.
That's it. Just very good. Okay. I was hoping that she talked for a couple of minutes, but that's okay. We're very good. Okay. That was real important to us is that, that we have the capability to be able to handle this merger and handle it with the, with the, the financial resources that Union Pacific has and where we were with debt, amount of free cash flow, the amount of opportunity that we have with who we are. We also needed to make sure that the railroad was operating at a high level operationally. Okay. That we weren't trying to fix the operation, the basic fundamental of who we are and what we're trying to do at Union Pacific. I think we've done a really good job. What we've done is, is we've changed the culture at Union Pacific.
We drive decision-making down now to the lowest level. That's not an easy thing to do when you've taken decision-making away because you have more information and easier information in the company. It's real important to be able to try to reverse that because the person at El Paso today has a better picture of what's happening at the U.S.-Mexico border, what the trains look like going across, the amount of traffic that needs to go, what the customers locally. Everything doesn't always operate perfectly. If there's something that needs to be a decision made there about how we operate today, they can talk to the customers locally and say, "Listen, do you mind if we're gonna be a few hours later or we need to change the way we service you today so that we can have the least amount of impact?" We're doing that.
Our culture is also now, if you make a mistake because you're willing to take ownership and make a decision, now we don't let them make decisions about what our dividend's gonna be. Okay. That's a different level. Jennifer won't even let me make that decision. Okay. All by myself. That’s key to who we are. I think people can see the key metrics that you see outside as far as we've been able to remove touch points on rail cars. We've been able to speed up the network. We have more resiliency. If we have something happen, we are able to recover faster. That's all real important. That was important to have in place. Given all that, we found the partner. We found the right partner for us.
We found the partner that we think that'll allow us to allow customers be able to move traffic and move their business across the United States of America seamlessly and remove touch points. We remove touch points. We're able to speed up their traffic, their business so that we remove hours and actual fact and some of the days of inventory and expense on their side that they have to do to be able to handle that traffic. For us, we think we're in the right place. Where are we after we announced? It took a lot of work. It's not simple to go through a merger with a company the size of Norfolk Southern and Union Pacific. It's an $85 billion transaction. We think and we know that it's financially a great move for the new Union Pacific.
We're the new Union Pacific just because of our heritage since 1862, since tied to Lincoln. For us, that's real important. I think we have a great brand, and that's who we're gonna be as we move ahead. That doesn't diminish the brand for Norfolk Southern. We'll make sure that we use it as a piece of our heritage and who we are moving forward because there are some very strong employees at Norfolk Southern. The ones I've met over the years and the ones I've met since the merger announcement, they have strong people that wanna win. That's the culture that we wanna have, a culture that we move ahead. We're moving forward with the application after we, and I was hoping that at the end of this week, in fact, it looked really good.
We had one contractor that needed to do some rework on some product, and they needed to, because we want to make sure that that final product is at the level that is exceptional so that when we give it to the STB, that they're comfortable that we've answered the questions and given them the information that they want. It looks like we're going to be closer to, in two weeks, that we'll have the application go in. Looks really good at this point that it does. Am I happy? No. Are we paying this contractor to be able to, this economist company, to do the work for us? Yes. I'll tell you, if it was Kenny, he'd be in big trouble. I'm just joking with Kenny.
At the end of the day, I think we wanna do it right. Expect us to have the merger in and, you know, close to the end of the two weeks from now that we'll hand it in to the STB and we'll start that clock process going. That's where we are. We're very comfortable with the railroad, how it is, comfortable with the decision to move ahead. We have a compelling story. The compelling story is pretty straightforward if you look at it. Is it good for the country? Absolutely.
is no way that the United States of America is the only country in North America that does not have a railroad that operates seamlessly across the country to be able to give the shippers, the producers, the industrial base that we have, the capability to move copper from Arizona easily into the eastern part of the U.S., whether it is lumber from the southeast that can cross the Mississippi getting into Texas and California seamlessly so that there is not the handoff that happens with two companies. It is also we are able to sell a product that gets them to market quicker. By selling that product quicker, we are able to open up more opportunity and more competition for others. We are also in the world economy here. This is not just as simple as looking internally at the United States of America.
You know, I was visiting one of the largest soybean crushers. It is the largest one in North America in Mexico. And they said to me, "Vena, you think that it's, you think that the issue of competition is the other railroad or the other railroads? It's actually another country." Brazil's trying to get in there to take that soybean that most of them are shipped from the United States of America into Mexico to get crushed. That's what we're selling. We're real happy where we are. It's been fun to watch the reaction, to tell you the truth. I've sort of enjoyed it. I was sure that it sort of gives me a feel if it was really as the CEO of a company, if your competitor is doing something that's illogical and will harm their business, then you know what? We're a little self-centered.
We would just not say anything. We'd let them do it. The reason we have so much noise coming from our other partner railroads is they see the advantage. They see the touch point removal. They understand what we're gonna be able to offer. They're going, "How do we compete against that?" You either get your game going, which a lot of them have with the new services that they've announced, trying to get ahead of the merger, or you need to do something on how you price and how you move things. That's why the complaints are there. I'm excited. I really am. I think the whole team is. Jennifer?
Actually, why don't Kenny, why don't you talk about fourth quarter volumes first?
I'm in the top right. Just, you can see the numbers. I won't read numbers to you. What I will do is go from top to bottom as you look at our bulk business. You know, we had a win on the coal side earlier this year, and we've seen natural gas prices favorable. That's been encouraging for us, our grain and grain products business. Jim talked about the grain side a little bit earlier. That's been strong, moving quite a bit into Mexico. Our industrial business, our carload business has also been pretty solid as you can see. If you look at it, markets like construction have been strong, plastics, industrial chem, our metals business. Just like what you're seeing out there in the macroeconomic indicators, housing starts are negatively, adversely impacting us. We're keeping an eye on that.
Our premium business, think of that as international and motor, domestic and autos. Domestic has been challenged, you know, negative around 4%-5% so far. International volumes, we've seen that sequentially go down throughout the year. As you all know, we've had a little bit of a surge over the last, call it, 18 months with stop and go with the tariffs. Really excited about our domestic intermodal business, which is, which has been a positive for us. We've seen quite a bit of over-the-road conversions. You know, Eric, we're here and Jim, the management team, we're coming from a place of strength with such a strong service product, that we still are encouraged as we continue to go throughout the quarter.
Yeah. That's a great place to leave off. If you look on the left-hand side of the slide, you see that strong service product depicted there. The network really is running very, very well. In fact, on Monday, we posted a freight car velocity of 245 miles per day, car miles per day. That's an all-time record. The team is really humming, high level of service, high level of efficiency. You see it's not just here in this quarter. It's been a track record that we've been building over the last several quarters. Unfortunately, that can't fully overcome what we're seeing in terms of some of the volume challenges that Kenny just referenced. You know, quarter to date down 4%. As we go into December, still have, you know, 30 days left to ship. We'll certainly running as well as we will.
We'll be picking up every carload that we can. We know that's against a very tough comparison against last year's December. We're also seeing the mix maybe be not quite as favorable as we would have hoped it would have been by this time in the year. Kenny referenced the international intermodal being down. That certainly helps us from a mix standpoint. Where you're seeing some of that growth, coal, rock, you know, those unfortunately are some of the lower-arch commodities that we move. You also have some of the higher-arch commodities like lumber, like some of the specialized, the food and beverage. Those, those are a bit pressured right now. Mix is slightly unfavorable relative to where we thought it was gonna be.
The other thing is, obviously, and we talked about this back in October, we do have some merger costs, $30 million-$40 million, that will be incurred here in the fourth quarter. If you look at our other expense line, probably a little bit of pressure there with a couple, casualty items. Probably a bit of a challenge for us here in the fourth quarter, more so than we would have liked to have had in terms of finishing out what really is otherwise gonna be a very strong year for us.
2025 is a year where a lot of firsts for our company, still leading the industry by the time we get to the end of the year in terms of operating ratio, return on invested capital, embarking on the historic venture of the merger with Norfolk Southern, and really executing on our strategy and on the fundamentals, which has helped position us to be where we're at today. Little challenge here and there, but very solid performance, great position to be in otherwise.
Tom, that's all we have. Like, we didn't come with a lot of slides. Bottom line is, it'd be boring if everything was perfect, right? I love the challenge. This quarter is interesting. I love it that we have the fundamentals right and what we're doing. Away we go.
Great. Yep. Thank you. Jennifer, maybe just to drill down a little bit on your comments. I guess whether you wanna look at, like, kinda OR year-over-year or earnings year-over-year, do you think you'll show improvement in 4Q or how, how should we look at that?
You know, it's given a 4% down volume, that's gonna be a very difficult thing for us to be able to do.
Including the $30 million-$40 million merger costs in the earnings number, it's, it's maybe a little difficult to be up year-over-year in earnings.
Yeah. As I mentioned, a little bit higher on the other and then just the mix not being quite as favorable as well.
What's a year gonna look like though? Overall, pretty good?
Oh, yeah.
When you look at it.
Full year, we still, like I said, full year.
Right.
We still feel very good about it. Still will have industry-leading OR and ROIC. Fourth quarter will be a challenge.
Any thought on how large the derailment is? Is that like $50 million with the two derailments combined or $20 million or any ballpark on that?
You know, we haven't sized it fully, but it will pressure that. You know, we've given some guidance on that other expense line. It'll probably pressure that towards the higher end of the range.
Okay. Maybe a one or two more for you and then, you know, swing back to some of the broader topics. How do you think about inflation next year? Is that kinda 3.5% or what’s just when we think about, you know, kinda some of the inputs to, you know, margin performance?
Yeah. I think he's, I think he's gonna get you to answer a question you usually don't answer. Go ahead. I love it.
No, not necessarily.
No problem at all.
Not necessarily. No. You know, we're still working on our 2026 plan a little bit. You know, I don't think you're far off. You know, 3.5%-4% probably isn't too far off. As you know, we've got agreements with all of our labor unions. That hasn't been up.
Ratified?
They're all ratified. Yeah, good point there. Which is great, to be done this early. You've got about a 4% wage increase there. You've got healthcare costs. You've got a few other items. That's obviously our challenge as a management team, and Kenny's challenge is to go out there, achieve strong pricing to help us offset that. We need to work on productivity to be able to offset the inflation as well.
Yeah. Kenny, I know you're, I would imagine this is partly your job. Maybe Jim, you're doing this too. We're all hands on deck. You got a lot of customer support letters for the deal, right? Do you take it a little bit easier on price given you're looking for customer support on the deal or is that no change? I mean, I don't know if Jim's here, so you gotta be careful, but.
We, we've always been disciplined on pricing. You gotta lead back to that slide with that service product where it is. We can walk in the customers. We're not talking about delays. We're not talking about issues. We can lead with the service product.
Right.
Talk about the price itself.
Yeah.
We're not shy or we're pretty dogged in that.
Yeah. You think price is stronger in 2026 and 2025 or similar? Or how would you think about it directionally?
Too soon to call. We haven't, you know, set that budget up. The key points are we got a strong service product and we're gonna be pretty disciplined around that. We always have.
Okay.
Tom, it's an interesting question to get asked about how you think about pricing. Of course, we wanna increase price, right? That's just inflation is going up. Costs are going up. You need to increase price and you need to increase more business and bring it on. That's what Kenny and the entire team are out there to do every day. Fundamentally, it's a different conversation when you can show the customer that we're moving their railcars faster today with that car velocity so that they need less of a fleet. They need less, impactful, less inventory, less all those things that people need. That helps on the conversation. We're also cognizant of the fact that you have to look at what the world, what the economy is.
You know, you can price yourself out of a product by being stupid about how you price because something else will replace it.
Yep.
It's complicated. That's what Kenny needs to be able to do. We need to, sometimes we need to look at things a little longer term, Tom. That's something that railroaders have not done really well is to think about what is it that we're trying to do. If we're trying to build a market, sometimes you have to be smart about it. Now, don't get me wrong. This does not stop the pressure that Kenny and the team feel to go out there and price. We expect them with the high service level and what we're able to deliver for our customers, the value that we give, that we're looking for increases in prices. Kenny knows. If not, there's a car wash looking for a new manager at the end of the day.
Short order cook.
Short order cook. At the end of the day, that's his job, okay? And he's got it. I love having Kenny with us. All joking aside, he's got the right balance, understands the business, understands the markets. How long have you been doing this, Kenny?
Eight years.
But how long in marketing?
30 years.
Okay. He hates to tell people.
Somewhere around there.
They add up how old he is. Like, I don't know. I tell everybody I'm 67, okay? It doesn't bother me, Kenny, okay?
Tom, the other thing you asked about price. The main thing is we're also looking at volume growth too. I don't, I'd be remiss if all we said is, "Hey, we just talk about price." We're going in.
Yeah.
Trying to grow the business.
Yeah. We're building into places.
Yeah.
We're investing in our railroad.
Putting in new products in place. We're doing that too.
Jim, why do you offer that comment about sometimes rails do too much on price or need to be more long-term focused? Do you think that's something like UP has done a little bit or why, why would you add in that comment?
I think we have to be careful. It is a little nuance about the way we think. I do not want people to get this wrong impression that we are gonna use that as an excuse of what we come up with price.
Yeah.
There are certain markets. If you wanna grow the market, you need to have a longer-term view of what you wanna deliver. You need to be able to understand how you can nurture it and grow it. A lot of the business that we have has been with us for a long time, whether it's the lumber that comes from the north or the northwest or the east or the south, right, is there. There are some markets that we can build on to be able to grow it that you might, the only way you do it is to get people to transition away from what they're thinking, Tom.
Yeah.
It's as simple as that. I'm not talking this as a wholesale change. It's like that with intermodal. It really is that we need to start thinking about how we run it. Now, I'll give you an example. Remember in 2019 when I came to UP, we were going by a place in California. They were trying to, after the, it was the very first time they went on a train ride with me. They told me they were trying to get me to look out the window on the left-hand side of the railcar, the business car. I wanted to, I knew right away I needed to look to the right. When I looked to the right, there was this thing that looked like a train, two locomotives, four railcars, and an end-of-train unit, right?
I said to the, at that point, the guy who was the EVP, I said, "Was that a train?" He says, "Yeah." I said, "Four cars, two locomotives, and an end-of-train." I said, "How long, how many, how long have we been trying to grow the business?" "We've been trying to grow the business for years." I said, "That's as big as it gets? We're not that stupid. We'd walk away from that. It just doesn't make sense handling the regular train.
Yeah.
Okay? That's what I'm talking about.
That is where the efficiency part really comes in too because that lets us enter markets that are tough for us to compete in otherwise.
We see that opportunity with where we are, Tom. I'm excited about that. Too bad I'm not 45 years old. I'd have another 30 years to work, okay, and see that at Union Pacific.
If we shift over to the merger, I know you, you know, you don't have the application out. Obviously, you have done a huge amount of work on that. Seems like one of the key questions is how do you, what, what steps can you take, do you choose to take to enhance competition, right? Because that's something different than what we've seen in the past. I mean, I think, you know, different, you say, "Well, we'll provide track and trace. We'll provide customer access." I mean, you know, I wouldn't think you're looking to sell line segments. But, you know, there are different things that, you know, you could do. How, I don't, but I don't know if that's like too, too narrow of a way to look at it. How, how would you look at the ways that you can enhance competition?
Tom, it's a great question. It's one of the criteria that we have to deal with in the application and then later on when we give more information if required. It's something that, so what is enhanced? If you go look in the dictionary right now, enhanced means you improve a product, you give more service, and depending on if it's an economic enhancement or a structural enhancement. It's pretty straightforward. What we've talked about pretty clearly is an enhanced product. An enhanced product is there will not be one customer that will have less service than they have today. That's sort of the baseline. Anybody that's going from two to one because of this, and it's a very small amount because we do not have a lot of overlap. It's an end-to-end, and people smile.
Out of the 30,000 miles of railroad that we have, it's only a few hundred miles where we overlap with Norfolk Southern, okay? It's very small. Even in the terminals and everything else, okay? At the end of the day, what we're giving the rest is that product that they have today is gonna be faster. Everybody wants to talk intermodal, which is real important to us. Intermodal, we're competing against trucks and other railroads, but mostly trucks. That's where the benefit is. We think that it's underserved for a large piece of the country, both sides of the Mississippi on what can actually move using our intermodal product that we're not doing today because it's going by highway. We're enhancing in the city of Chicago where you don't have these crosshauls going from railroad to railroad. We will go direct.
Today, on a weekday, there's close to 1,000 movements by truck to go from one railroad to the other. If you're with the new Union Pacific, those things will be handed off rail to rail, not by truck. I could keep on going. Let me give you a couple more examples. The majority of our business is still manifest. It's still tank cars, box cars, flat cars, gondolas, all that. Anytime you have to go across the Mississippi to hand off, we'll build blocks in Houston for Philadelphia. We'll build blocks for Atlanta. We'll build blocks for other places where you don't touch that railcar again. The enhancement is you take 24 hours-48 hours. We have the best dwell in the industry, and we're well over 20 hours on our dwell through a hump yard, and not through dwell.
Some people include their trains going by. I wish, I don't do that. Like, I don't count the train that went by, stop, change crews as part of my dwell. The dwell is actually when we have to handle a car. At the end of the day, that's enhanced. I could keep on going. Jennifer, anything you wanted to add?
No, I mean, I think it's just when you think about how we're going to set some of this up. Obviously, we're gonna give a lot more details in the merger application. I wanna, you know, have a few teasers to hold on to. One of the things that we're doing, and we talked about this when we made the merger application, is something similar to what we have in the I-5 corridor. We're going to expand that beyond just the customers that are impacted by the merger. We're enhancing competition even for customers who aren't impacted by the merger. I think that's gonna be a huge win.
You bet. Kenny, anything you wanna add on the enhancement?
No, I, when you see the merger application, the beauty of it is it is breaking out different markets, sort of like what you mentioned, not just intermodal but on the carload side, on the unit train side, as far up to Boston, the watershed market. You will get a little bit more clarity.
We're keeping gateways open, okay?
Absolutely.
We're not into, we're not into if somebody wants to ship with the old Norfolk Southern and they wanna come west and they wanna go to Berkshire on the west, west side, Berkshire Northern Santa Fe. I'm good with that. You know, go ahead. We'll make the money off of the Norfolk Southern and, and because at the end of the day, I think railroads in general have thought about this a little too selfishly. I have no problem. You should always look for the best model to be able to increase the amount of business you have and not always say, "I want the longest length of haul. I wanna go from the southwest to Chicago before I go east." If we can cut that off and go differently, we're willing to do that. New Orleans is gonna be an important gateway for us.
CSX has got a strong franchise that goes straight across to the east, quicker in some areas. Unless they do not want to partner with us, we want to partner with them. I have told them that already. We want to continue to do that. We think that the enhancement piece is the easiest piece of this. I am not sure about trackage rights. Trackage rights to what? Like, people talk about trackage rights. Last time I looked, we do not have a lot of overlap, right? I guess maybe I should ask for trackage rights to Toronto in Canada because there are only two railroads there. Give them a third option. I do not think they would give it to me too easily. It just does not make a particle of sense to me, okay?
If you want to build in, Tom, we're building into three places right now. We're waiting for the STB to give us the decision and to build in. In Phoenix, we're building into two customers in Texas that the customers and we discussed, and we see an opportunity to spend our capital to be able to build in so that we give them optionality on what they originate. Every railroad has that capability to do that. Why would they look for trackage rights? That's the cheap and easy way to do that. We're in a business world here. We're not Santa Claus to give away trackage rights. I'm just trying to get into the Christmas season or the holiday season.
Clearly, clearly. Jennifer, when you talk about the I-5 model, I guess I would think, you know, you're doing something where there are the connecting points or the modest, very small, Jim, amount of overlap. Is that directly how you'd think about it? Did you apply that, you know, where the two railroads interchange or where would the I-5 model, like what you're talking about, region would?
We've got the four gateways that we have down the middle of the country.
Okay.
Those would be the interchange points.
That would be, and then can you add a little bit more? Like, when you say the I-5 model, what does that mean?
So the.
People who do not necessarily.
Oh, okay. I'm sorry. What that is, is basically it's a pricing mechanism that's available to the other railroads. This will be available to Berkshire Hathaway. It'll be available to CSX that they can give through pricing to customers that are solely served on one end or the other.
You bet.
It's a model that is in existence today. We've used it very successfully and grown that lumber business.
No, I was late in the lumber team at the time, and we've grown it over those years. It's responsive. That railroad won't have to contact us or the other connecting party.
It'll be competitive. That's the main thing.
I think we're gonna make it even better than the model that we have there.
Yeah.
So yeah.
Tom, in a couple of weeks, we'll have it, the detail in the merger.
Okay. It sounds like that's an important piece of.
It is.
Yeah. It's one of them. You bet.
Okay. Do you think something like that causes your, I mean, you talked about enhanced competition being faster service 24 hours- 48 hours out, right? That's pretty clear. Is there a, some customers get lower prices? Because when you're, you know, shipper, you think about price and service as the two key levers, right? So is there a lower price piece to the enhanced competition?
Yeah. I was thinking that if I went to a bank, I should tell them that if they merge, I'd like to have my fees dropped. That does not happen. It's the service that you sell. It's what you do. That's not the position that we're in. We adjust prices up and down. We need to do, depending on what the market and where we are and what the capability of the customer is, short-term and long-term. We do that already. We're not changing this. What we know for sure is customers that are go, that need to cross and hand off to another railroad are gonna see less cost on their, on their, what they're doing. Not just the railcar, not just, less inventory, which is significant.
Kenny does a great job of describing all the things that we have to do, Kenny, or a customer has to do when they're dealing with two customers, two railroads.
Yeah. That's a, that's a ease-of-doing-business, scenario. Let's just get in the weeds for a minute. If you're a customer, let's just say you're a carload customer coming out of the Gulf into Charlotte or Atlanta, and you've gotta put in two waybills, you've gotta ask for two rate requests, then you've gotta go out there and try to monitor the two lanes. Some people use IntelliTrans, Bourque Logistics, FourKites, some of these other places. Some people have large, what I'll call back offices, full of FTEs for each different railroad that's in place. When we talk to customers, there's a fleet department, and all they do is just manage maintenance and repair. They've got an insurance policy 'cause the last thing you wanna do is shut down a plant. You have an insurance policy of extra cars. We see tremendous value there.
Back to your first question, though, this whole thing around prices and everything, a lower cost structure will help us get in the markets like the watershed market. That will help us go in. When I say watershed, I'm talking, you know, the Mississippi, call it 250 miles out or east or west. That's a benefit there. You bet.
Right. Okay. There was one of the executives from Norfolk did a presentation at RailTrans.
Okay.
Mike McClellan.
Yeah. Smart guy.
Very smart guy.
Yeah.
Got a lot of respect for him. You know, he knows you're in the intermodal business.
You bet.
Very, very well.
He does.
He made some interesting points. I think he was talking about, you know, like pre-Conrail, you know, the intermodal market for Harrisburg to Atlanta just did not develop because Conrail was not incentivized to have their containers move short haul. They go on to NS to Atlanta, and they lose.
Right.
Control of containers, right? And then they do the acquisition, and you're like, Harrisburg to Atlanta, I wanna say that might be their largest intermodal market, right? It was a, you know, really interesting example of when you put two railroads together, it can create just, you know, new markets essentially.
You bet.
Do you think of any particular markets, could be intermodal, could be carload, where you say, "Hey, it's this OD pair that, you know, just doesn't work today, but it's a really big freight market, and I get really excited about it"?
Yeah. Let me start off, Jim. Just, you look at everything in that Ohio Valley and the Detroit area and the Columbus, the Toledo, the Louisville. We just offered up a new service product to go over from West Coast points, origin in the Louisville, Kentucky, you know, where it's drayed across, trucked across, across tremendous. Same thing, Chicago going to the, I'll call it northeast, but I'm talking in that, again, Ohio Valley, Detroit area. There is value that's there for sure.
Okay. That's kind of the destination market. And where's the, the origin is West Coast starting though, or where?
It could be West Coast. It could be Mexico.
Mexico.
That's coming in that north-south corridor that we use today. My point, though, is that you have a lot of business that's originating from different places that's actually getting trucked in and drayed in. And I'm not talking, you know, 20 miles or 30 miles. I'm talking some pretty good distances.
Yeah. Is that just a piece from Chicago, or is it the whole move is going truck instead of intermodal?
A little bit of both. I'm referring to both, though. I'm referring to more collaboration. Once, you know, post-merger, seeing a lot of that business going steel wheel.
You know, our partners that we have and customers that we have and some that we don't have, they understand that market, especially on the intermodal side, as good as anybody.
Of course, we need to partner with them to see exactly what that opportunity is, Tom. That is real important for us with the customers that we have and the general market of where it is. We see that. That is part of what we are selling, being able to, you think about what we sell today. We sell the western 23 states in the United States of America. We tell people, "You are coming out of Mexico. If you want to go straight north and south to Chicago, you have some options, okay? If you want to go to Salt Lake, if you want to go to Seattle, if you want to go to Denver, if you want to go" and I could keep on going, Las Vegas, Phoenix. I love Phoenix this time of the year.
It's a pretty nice year, but it's okay in Phoenix too. At the end of the day, that's what we wanna sell. What we'll be able to sell with a combined railroad is, "Where do you wanna go? Do you wanna go to Atlanta? Do you wanna go to Philadelphia? Do you wanna go here? Do you wanna move from Philadelphia just across to Omaha?" Not very many people will. If you're moving to Omaha, guess what, right? There's something there for you. That's what we're gonna sell. I think the opportunity is great.
Okay. Let's see. I'll give you two questions as we're counting down on time here, so I give you a chance to take a shot at both. I think of the Houston market. And I don't know if, Kenny, if this is a good one for you, but it seems like Houston's probably underserved from an intermodal perspective. I would think Houston generates a lot of, certainly a lot of chemical traffic, plastics on the Union Pacific that, you know, may not have efficient destination to eastern markets. Is that like a big opportunity? I guess for you, Jim, you know, when we watched the Norfolk's results, I would say your results were a bit stronger in 3 Q than theirs. You know, you see some shift to traffic, some challenges they have.
Does it concern you when there's, you know, evidence of some deterioration in their margin and their performance, you know, while you're waiting this fairly long process to get control?
Kenny, you wanted to answer that Houston.
I'll start. Over the last few years, you've seen us put up products up against the Houston market.
Mm-hmm.
When I say products, Dallas to Dock is one where we've got excess containers up in Dallas going back to the West Coast. We have also added here over the last, call it, year or so, origins out of Houston to inland points, you know, five or six inland points. I feel good about building those up. I do not know if you're talking about post-merger, but yes, there is an opportunity.
Yeah. Post-merger.
Absolutely. To go more to the southeast and get more of that product to the southeast. That's intermodal and carload.
Right. Okay.
You still want me to answer that second question?
Yeah. Sure. Absolutely.
What was the second question? What was it?
Oh, yeah. Just the, you know.
About the results.
You know what I'm saying?
I got it. I'm trying to waste the last minute so I don't have to answer it. Real simple, okay? Minute and 34. If I keep on delaying, it'll be a real short answer. Bottom line is, is this, is, I know what we've done, and we've done a great job of delivering because of the fundamentals. Remember what I've always said. If you dwell on OR, you make bad decisions about what your what your outcome needs to be for the business and service for our customers. If you look at OR as a result, which we do, which I always have, I never give OR numbers. I've been pretty clear that every railroad should be within 100 basis points of each other when it comes to OR. Somebody doesn't wanna believe me, so what? I've only been railroading for 47 years, okay?
Second point is, Norfolk Southern needs to manage their business. I can't tell them what to do. I do see opportunity. I would be remiss to not say that there is opportunity. They're working hard. I see it from outside looking in. The combined railroad, I see the opportunity. I think I've done a pretty good job of thinking where we can take it as a combined company. Got it done. Got 23 seconds left.
Okay. Great. With that, you know, Jim, Jennifer, Kenny, thanks so much for joining us here. Appreciate all the great insights and, you know, great perspective. Thank you for joining us.
Listen, Tom, thank you very much.
Thank you.
Appreciate the questions, good questions. I love seeing you again. Thank you very much. All the best of the holiday season to you if I don't see you beforehand.
Yeah. Likewise. Same to you. Thank you, Jim.