Hunt J B Transport Services Inc (JBHT) August 2026 Conference Transcript

Well, hello, everybody. Welcome to Deutsche Bank's Industrial Conference. I'm Richard Harnane. I am the freight transportation equity analyst here. And pleasure having you. We're here with J.B. Hunt today. We got a lot to talk about, so maybe we'll just get right into it. We got Brad Delco, Andrew Hall, Stacey Griffin, heads up, Brad Delco, CFO, Stacey Griffin does pricing at Intermodal, and Andrew Hall, who heads up the investor relations effort. So thank you all for being here. We really appreciate it. And yeah, like maybe we can just start by getting a mark to market on how you're feeling about the state of the cycle. The team sounded quite upbeat when we heard from you about a month ago now. You've entered what has historically been a seasonal lull, though, for demand. And just as you reflect on how the cycle went up to this period and the potential heading into peak, how do you feel? And I know you're going to tell me J.B. Hunt did way better than the cycle. But, yeah, just maybe frame how the cycle is going, and then we'll talk about how you're outperforming.

Well, first, Richa, thank you for having us. Great set of meetings thus far, and great to join you here for our webcast. Excited Stacey Griffin is joining us, who I think this is her second conference ever. And so we felt like intermodal is usually a popular topic, and considering she prices about one-third of the industry volume, no better person to come give some perspective on cycle and pricing opportunities ahead of us as we think about the value proposition of intermodal. Obviously, Darren's been talking a lot to investors and to the market about the value proposition, where we think it is. In terms of the cycle, I mean, I feel like we just started, right? You know, go back to fourth quarter, I think some of the things that we shared, you know, we do get forecasts from our customers. And what we noticed in the fourth quarter was our customers were very much performing in line with their forecast. But what was a surprise to us was covering some of that freight, meaning the supply or available supply of capacity was getting tighter. And so we were attributing most of what we were feeling in the market to supply attrition. I think as we moved into the first quarter, there were a couple anecdotes about forecasts being revised higher, and so I think we, at least internally, directionally, were like, okay, we definitely see supply correction continuing, but we do think that there's some positive elements of demand. And obviously, we've had ISM above 50 now for five or six consecutive months. You know, the one thing that I think is really missing is housing is, you know, anyone that probably moves freight knows that housing starts generally create a lot of demand. I think it also has an impact on supply, right? People would rather be working in construction and being at the same job site every day versus getting behind a wheel of a truck and driving across the country. And so I think that we are still very much in the early innings of a supply correction, but also I think there's opportunities for demand to get stronger. So I think what you have historically seen, and I brought this point up, I think, Risha, on our last earnings call, you know, the majority of our earnings come from intermodal or dedicated, call it 90 percent. and dedicated. These are five-year contracts, fixed and variable components to how we get paid. A lot of our CapEx there is success-driven, right? We'll get a contract from customers and go deploy capital. We underwrite all those deals to our ROIC targets. Really like that business, but it doesn't really have the sort of cyclical dynamics that I think most are accustomed to see in trucking. And we've proven that we have had double digit gap EBIT margins for 11 consecutive years in that business. Everyone knows that intermodal pricing generally lags truckload pricing by two to three quarters. And we saw a pretty meaningful inflection in our financial performance about a year ago, largely driven on things that we could control. And so So I think as we sit here today, what has us excited is when we think about most of our businesses usually lagging, kind of what we traditionally see in the transportation market, the fact that we've seen this much of an improvement in our financial performance with still a lot of tailwinds to come on the pricing side, I think is what has us excited.

Okay. Yeah, let's get into that. Brad, you reminded me what Darren said regarding J.B. Hunt's intermodal value proposition, right? Strongest in more than a decade. Maybe we can dig into that a bit more. Not over a decade ago did we have record levels of demand for the industry during the COVID-driven boom. So the comments suggest your value proposition is stronger than it was during that COVID time period. I guess, talk to us about why.

Well, sure. I mean, I think when we think about our value competition or value, we're thinking about how we compete in the market. And we really compete on cost, capacity, and service. And so when I think of where we are today, you have high fuel prices, you have truckload pricing that has moved higher and is moving higher, and you have good rail service. And so I think when you combine all three of those elements, to me, that's why I think the value proposition is the strongest we've seen. Service has been great from railroads. And when you have great service and you can offer a discount on truck prices and be more fuel efficient in doing that, I think that's sort of the trifecta.

Stacey, anything you'd add there? well maybe i'll give stacy a more pinpointed question bring in your secret weapon right um given that value proposition then um incredibly interesting time i bet to be pricing this product um i would love to be a fly in the wall on the wall in your department but just maybe talk through what's different now about your pricing strategy versus maybe the last peak and you know what you make of the pricing outlook going forward you discovered it's interesting it's actually really exciting.

You know, we've certainly seen a mark that stick in the demand for J.B. Hunt's internal product. Really, you know, sneak back to the site that happened in highway spot rates and then followed by highway contract rates. And it's really generated increased demand for internal services. And so the value proposition is huge. And quite Frankly, we don't think we were able to fully reflect the value proposition of intermobile in the last 12 months. The environment we've been operating in simply didn't support it. But we have a clear line of sight on meaningful opportunities to get paid appropriately as we move into 2027. Now, recognizing there's that lag, that two to three-quarter lag, we see the opportunity that we did not see inside of the kind of great recession years that we have been in for the last few years. We talk about, and I think Erin sort of shared this previously, in the 2026 bid season, like in the first part of the bid season, the trans-card pricing world didn't respond as we expected to. It was more competitive than we expected. While we were both positive in price and volume, it wasn't significant inside of the transcon. So I'm expecting more opportunities and better opportunities as we go forward.

Has that transcon competitiveness, has that leveled off?

For 2026 this season is essentially done, and as we go forward in the next few months, we're really going to see how everyone is responding in this, quite frankly, very different market than what we were in this time last year. So it's too soon to tell.

Okay. And just thinking big picture about, you know, the pricing opportunity, I think intermodal historical gap between that and truckload is like 15%. Today, I think in certain markets, you're running as high as 35%. Does that mean, let me try to do math, 15% to 20% type long-term pricing opportunity as you narrow back to normalized levels, or is that not the right way to think about it?

First, I bear in mind a piece of that is fuel.

Okay.

Because that's an all-in battery. So fuel's going to move one way or the other. It depends on the day of the week, but that will move. But once you fill that out, I would say this. We don't anticipate that gap hitting any flyers. That's just not practical. It wouldn't make sense. We have drivers, too, inside of Intermodal. In fact, we require at least two for each load. if they're doing the pickup and the delivery. But I do think we'll have different magnitude in terms of the crisis cycle because of what's happening in that space. We've got to be able to cover that inflationary cost pressure. And we have to be able to support the rail environment. One thing to keep in mind, when an intermodal provider takes a rate to a customer, We're really taking a rate that's going to be shared with, in our case, J.B. Conn, and with at least one or two railroads. So there's a lot that we're addressing inside of that rate conversation.

Yeah, and I would just to clarify, Arisha, we typically see a 10% to 15% gap between intermodal and truck in the eastern network, and we typically see about a 25% gap in Transcon. So maybe just for the audience to make sure that's clarified. But clearly, I think the gap, as Stacey alluded to, is wider than that, and that's based on where we are today. I think our expectation is we've really yet to see all the anecdotal numbers we heard on more recent earnings calls from truckload guys as to where their contract truckload prices are resetting. We haven't necessarily seen that in their results or performance yet, right? And so I think truckload rates may continue to move up, which means that that gap, it will create more opportunity for Stacey and her team to make sure that we're getting the right value for what service we're providing.

Does that also mean the lag could be a little longer, like, you know, we're starting kind of later in terms of when we're seeing it in actual results, so it should flow through into your results maybe later? Are you optimistic that 2027 bid season will bring those kinds of opportunities?

Well, I think Stacey kind of tried to touch on that. I mean, I think the real big move we saw between supply and demand really was triggered in May around road check. And I think that's when we saw 20 or 30 percent intramunt move in spot rates. And at that point, you're sort of at the tail end of our bid season. And so I don't know, as Stacey was alluding to, that we were able to take, not take advantage, but let the market recognize where prices were going to land. And so I think as her and her team start back up in October, working on next year's bid season, there will be a lot more opportunities. I love what you said at some of our meetings today about the, what has your summer been like? What are we calling it?

This summer, many, many did, so many, M-A-N-Y, many, M-I-N-I, because we've had such tremendous opportunity come at us. For the pricing team, this summer is our lull, and because of what's happened in that highway space and our customers uncertainty around cost and capacity, We've had lots of opportunities coming to us to price business we've not seen before, reprice business that we saw earlier in the year, find solutions for our customers to move freight that's been moving over the highway into intermodal. So it's been a very active summer and it's been a great opportunity for us. So, you know, and Brad talked about just to adjust prices in front of that. The way our bid season works is in Q4, we reprice about 10% of our business, and then we reprice about 30% in each of the following three quarters. So when we, at the end of March, we will reprice around 40% of our business, and that will be under this new kind of understanding of the structural changes that have happened in terms of driver supply with an entire industry understanding of kind of that permanence that's at, and that we still don't know exactly where that's going So we see a lot of opportunity there as we move forward. But it will come slowly through the end of the year, and then it will start showing up once we get into 2020.

On the many, many bids, is that for more immediate sort of transactions, or is that something that we'll really see around the peak season in Q4?

It's for both. And so we've seen a large uptick in new customer names. So that's always exciting. It's certainly very exciting for our sales organization. So new customer names, maybe customers who have not explored intermodal before, a lot of that is Eastern Network, but certainly a lot of the same names. If we were looking at that phrase, it's the last to convert to intermodal that they're looking at now. Now, it's a long length of haul, but maybe it's going to our customer's customers, and having consistent on-time delivery is critical. So they've historically moved its highway, and now they're looking at an intermodal option. And in the trans-time space, JBI has the quantum solution with BNSF that is targeting that customer delivery freight where consistency around service and delivery is most important. It's not about speed. It's about consistency. If it's seven days, it's seven days every single time we're delivering it on time. So much greater interest inside of that. New customers. We're seeing projects. And we're seeing customers specifically look for, this is what I have moving over these next few months. What solution can you give me? So we're seeing those capacity concerns pop up for immediate needs, for, you know, peak, traditional peak season needs, but then just looking for that long-term conversion as well.

Oh, yeah. Does the service quality of violence in federal affairs have been talking about many years about that migration? Our service is great. I think all the shit that happens, or is it price forcing people to just look at their own?

The underlying rail service is good, and it has been good for about two, three years now. If you'd asked that question four years ago, it was definitely a different answer. It was a source of great frustration for intermodal carriers, for the railroads, and certainly for our customers. And what we heard from our customers is, I need intermodal rail service to be good. not just when volumes are low across the industry, right, but as volumes start lifting up, that service has to be stable. And that's what they're experiencing right now, which is really helping our customers have that modal conversion conversation inside of their own organization.

Yeah, I want to give Darren Field a lot of credit because he was sitting in a lot of these investor meetings three years ago, And he would always joke and say, well, I had the same conversations with folks at the railroad, which is, you know, of course, we all like rail service was good last week. Where's the volume this week? Like, and that's just not how that works, right? Like, you have to, it takes time. You know, they want to dip the toe in the water, right, before they jump in. And so here we are now, three plus years of really good, consistent rail service. yeah I think we're coming off of one of the worst freight recessions we've ever seen and in 2025 Jamie Hunt did an all-time record amount of intermodal volume and then in our most recent second quarter we grew eastern volumes 16% Andrew against a plus 15 comp and so I really feel like the highway to rail conversion story is playing out. I think there's lots of growth. We've talked about 7 to 11 million loads of opportunity out there. This is what Stacey and her team look at in price each and every year. This is volume that we think could and should go from highway to railroad. And the overwhelming majority of that freight that we see is in the east. And so you're sort of seeing that now play out with, I think we have five consecutive quarters of double digit volume growth in our Eastern network. And so hopefully both CSX and Norfolk Southern see and appreciate the opportunity in the business that we're creating and serving together.

And I definitely, I think, you know, I want to be mindful of like walking before we run, But just in light of that service improvement being offered by you and your rail partners, you know, we talk about getting back to historical ranges of, like, the gap between intermodal and truckload 10% to 15% in the east and 25% transcon. Can't it be better than that if the service product is better than it was in prior up cycles?

I mean, in theory, yes. But I think we would really need to see very consistent service. But, again, at the end of the day, as Stacey alluded to, speed is one factor. I think consistency of service is really what customers are looking for. And as long as we can be consistent and at a discount to truck, because it will be slower, then I think it's a really strong value proposition.

Okay. Maybe we can switch gears and talk about some of the bottlenecks for the industry. You discussed the tightness around drivers, particularly dredge drivers in the market at large that was on your last call. We believe a lot of your competition relies more on that type of third-party list versus you. Is that creating an opportunity for share shifts?

Yes, absolutely does. And it's not just the opportunity for share shifts. Our dredge operations and the efficiency we drive with that really does give us a competitive advantage. We outsource in J.B. Hunt and Remodile about 10% to 15% of our greatest moods. And we've done that intentionally. We could make that number of light work, but then we would be building the church for Easter Sunday. That's not the most efficient way to do it. And when there's heat, we want to be able to tap in to those outsourced trade carriers as well. So it's important that we have them as part of our structure. But that really gives us an advantage, certainly on our service, which is very meaningful. But we have a driver hiring sheet, which allows us to tackle the challenges that are existing right now in the industry in a meaningful way with how we recruit that hire our drivers and the investments we might get to reach I need for that, which is kind of where it starts.

Yeah, Risha, I love sharing this, but Kurt Thompson was, I think, a 52-year employee of J.B. Hunt. He was our CFO, CEO, chairman, now honorary founding director. And back when I was in your seat and covering the stock, Kirk would just make things very simple. and he said, let's just be honest, Brad, there's only two types of freight markets, one with too few freight and one with too few drivers. Which one would you rather be in? And so right now we're in a market where there is a driver shortage. And so yes, every single transportation company is facing driver wage inflation and driver pressure. And so you're ramping up your hiring teams, you're ramping up your people teams because he who has the driver wins. And so JV Hunt has very attractive jobs. If you actually, I don't, we say this in most meetings, but more than half of our trucks are day cabs, which means people will come to our terminal, park their car, jump in a truck, work a shift, come back to the terminal, get in their car and go home. And so our dedicated average length of dedicated, we have 12,600 trucks. I I think our average length of haul, Andrew, is like 180 miles. And so I think our driving jobs are typically viewed very favorably in the industry, and so I think that's been an advantage for us in recruiting and keeping the best drivers on the road.

Along with that adage, yeah. You go first.

Richie, go ahead.

So the intermodal margin, like long-term guy, whatever you call it.

Margin target range is 10 to 12.

So, you said that obviously well for these regulatory functions that have been ruled upon or enacted. I really can't think it's better to set up for that to be, like, better than 10 to 12. And there was, like, two years ago, right? People were like...

I was about to say that. two years ago, people said, there's no way we'll ever get to those margin targets. And now people are like, why can't we go higher? First of all, if anyone knows me, they know how much passion I have and how much I love talking about margins or not. We think and what really informs our decisions as to what we're targeting in our cost structure, as well as where we feel like our margin should be based upon our businesses is truly based on returns on capital. And so So based upon what capital we think is required that we have to continue to invest in, our chassis, our trucks, our terminals, our maintenance infrastructure, a 10 to 12 margin we believe is a very fair and appropriate return on the capital we take, particularly for risk, right? We are all in the business of managing risk. Clearly, putting 80,000 pounds on a highway has proven to be a very risky business, and so we have to be compensated appropriately for that risk.

I think that's a really good answer. Then our growth should be better.

So we would love to be in our 10 to 12 margin range, and if we can still execute and believe we will stay very focused on executing our lower cost to serve initiative, we should be able to grow faster. And so clearly, those opportunities are being presented to the team with, again, setting record volume coming out of a freight recession.

Just to tie my next question into that margin framework, back to the driver point, inflation, do you think that driver pay increases that we're having to implement, albeit in selective markets still nothing broad-based per what you last said, do you think it's similar to what we saw during COVID?

Is it more manageable? um i think i think it's different um i think for the first time we saw real labor challenges across not just truck driving but warehousing i mean i think all industries were facing some sort of labor challenge during covid um in terms of the driver challenge i think it will be difficult so long as we continue to enforce the regulations that exist today. I mean, keep in mind this supply that's come out of the market isn't a function of new regulation. It's just the enforcement of existing regulation. And so where we go from here, not quite sure, but it feels like we're going to see more supply come out of the market as we enforce non-domiciled CDLs, obviously cabotage. What are some other ones, Andrew, I'm missing? CDL schools. ELDs, the self-quote certification that, yes, this thing is compliant, and maybe they're not, so a lot still more to come on the supply side.

Great. Maybe let's talk about peak. Your expectations heading into the peak month, these mini-bids are going to start showing up, but how do volumes typically shift from first half to second half? how could this year be better or I mean we've already talked about how it could be maybe better but how could be maybe worse than normal any sort of any other things you're worried about?

I'd say there's nothing I'm worried about. Every season it's just a little bit different, a little bit nuanced you know if you look at just generally speaking the traditional peak like as measured by Southern California right I think the Southern California outbound for those retail importers will typically surge anywhere between, call it, 10% and 25% during a peak season. And it's a fairly sizable range, but I think that range effectively captures what is considered normal over the course of multiple years. There could be other factors at play from year to year, whether it's a shift between Eastern port and the Western port, although anything that's happening there is kind of done for . Consumer spending could still be a surprise one way or the other. You know, raw velocity has been very stable and good, so we don't necessarily anticipate any challenges there. So we feel like it's going to be normal. There's just a range of what normal is.

In terms of it being maybe better than normal, peak surcharges, the way I understand it is last year around July was when you introduced them to customers. But during the peak season, I think customers could generally work towards the limit of those peak surcharges and then maybe solve around you because they didn't want it to avoid paying the fee fees, and now with the cycle much tighter, maybe it'll be more difficult for them to navigate that. So should we expect better from peak surcharges this year versus last?

Sounds like guidance.

No. That's not what I say here. But I do want to speak to peak surcharges specifically if we navigate that because it is absolutely something that we navigate with our customers every year. You know, the whole idea around heat surcharges is around recovering costs. There's a significant amount of cost associated with moving those empty containers, incremental empty containers, into Southern California specifically to handle those above normal volumes. We'll do unnatural things with our drivers as well. It will outsource more, but we'll literally fly drivers into Southern California to work for a couple weeks at a time to support peak season. And then we do a lot of unnatural moves to drive velocity and cover our customer's freight. But then there's costs associated with that. There are costs that the railroads occur. And a peak season surcharge is the mechanism for recovering that cost. So, in my seat, from a pricing perspective, I hear fairly consistently that our peak season surcharges are above what the industry is warm up. I'm not in a position to speak to what others do, but we're in a cost recovery effort when we're talking about peak season surcharges. And certainly, our customers are looking for our solutions this year. And we've been having those conversations with the customers since they did their bid. Particularly in the first half of the year, as the customers are planning, what is my 12-month solution for capacity based on what my forecasts are? We talked about what that peak season structure would look like inside of their bid, trying to remove uncertainty for them and help facilitate the planning.

Interesting. And regarding all these sort of unnatural moves you're doing, heaven and earth for your customers, kind of what you do, just, again, tell us about, like, the competitive landscape. Like, are your competitors able to keep up? Do they have the resources? Because from our perspective, it seems like it's challenging out there, especially if you're reliant more on third-party days, struggling, and things like that.

I think right now, I mean, Jamie is going through this as well, but I think the industry is, you know, you have to sort of balance your customer really wants you to be all things, but it also in the same way doesn't necessarily want to pay you to be all the things. And you have that sort of tug of war. And I think our industry typically sees some of the inflationary costs hit them first, whether to prove out your service or prove out the model. ahead of when the pricing comes. And so I do think right now you're seeing an industry that is struggling with hiring drivers. You know, our management team meets every week. We met last week. And again, I told you all that the Kurt Thompson quote, it's a good thing, generally speaking, but our driver need is the strongest or the highest it has been all year, which means our driver need is the strongest it's been since 2022. And so that sort of tells you we are, you know, we've probably more than doubled, if not tripled the size of our driver recruiting team. They're hitting the phones. We're increasing advertising and marketing to get drivers in. And this is all so we can get ahead and make sure that we are prepared to meet what we're anticipating to be strong demand and to meet what I think our customers expect us to do from a growth perspective. And so, again, I think we're sort of in this limbo stage where you are seeing some of those cost challenges hit some of the businesses, but you're having to go out and try to get cost recovery from customers. And I know we certainly have opportunities to do that with peak season, but I think we're going to have a lot of opportunities to do that once our next round of mid-season starts in October.

Can we switch gears and talk about ICS and truckload a bit? You know, there's going volumes there quickly. you talk about how those are more leading businesses for you. But yeah, purchase transportation costs remain headwinds. What has to happen for that growth to translate into meaningful operating profit, still operating well below what you saw during the last peak in those? And how quickly can customer pricing catch up?

Yeah. And so ICS is our brokerage business. And I think generally where pricing is more transactional. And so we can move price a little bit faster in that business. I believe the second quarter was kind of like the squeeze quarter, if you will, for a broker, right? You're going out and buying capacity at spot. You actually have some contract mix in terms of how you're getting paid by your customer. And we saw pretty meaningful year over year gross margin pressure. I think the opportunity is just, one, resetting price and making sure you're buying most efficiently. out in the market. And so we have been able to scale that business. I think the one thing I am proud of is it was the first quarter we've made money in how many?

Many, many.

A couple of years. But we did that when I think you saw probably peak pressure on that relationship between revenue and PTE. And so to the extent, like you mentioned, or you were alluding to like the July blip yeah July is always the second worst freight month of the year besides February and so I'm sure you saw margins improve in July and if you're running a brokerage business because it just wasn't as tight and it typically that's very seasonal and very normal before things start picking up in mid-August as you go into peak so I think that team's been working really hard at getting back to consistently being profitable. And we got one quarter in and hoping to keep the momentum going.

And you'd be disappointed if it wasn't in the black against quarter.

If I answer that, I think I'd be giving guidance.

All right. Let's talk about the broker liability issue. So ICS, very large broker in the market. We had one of the largest nuclear verdicts in the industry brought against your peer CH Robinson recently. Just what do you make of the unfortunate outcome of the case and implications for your business ICS and maybe the industry at large?

Yeah, I mean, I think it just, it's a big headline and it puts a big spotlight on each broker's process around how they select their carriers. And I think bottom line is you have to make sure you have a very, very consistent and firm process and it's airtight. And so to the extent you're making exceptions as to why you did or did not hire a carrier to haul a load, you just need to make sure you're well documented on your reasons and got to feel really good about your team and your safety culture. And I think one thing, Hunt has a very strong culture. Hunt has a very strong safety culture. We've been reporting, this is outside of brokerage, but we've been reporting on our DOT preventable accidents per million miles. First year after we rolled out inward-facing cameras, and I believe we're one of the only publicly traded companies with inward-facing cameras. Risha, you might be able to correct me if I'm wrong there. we saw 25 improvement in our dot preventable accidents per million miles that was a record safety performance year for us the year after that we improved it further three percent the year after that was 2025 we've proved that further 10 and i think andrew on the second quarter we said year to date we're 11 or double digits better than last year so we're on our we're on pace to have a fourth consecutive year of record safety performance. And so our industry has to manage risk and putting 80,000 pounds out on the highway each and every day is a meaningful risk to our motoring public. So we have to make sure we're hiring the best drivers. We have to make sure that we're training our best drivers and we have to make sure we're keeping bad actors out of our industry. And I think there's just, I'm glad to see a lot of energy around that both in Washington as well as across our business.

Okay. Let's talk about cost savings. Coming up less, which I think is natural as you grow. We move further into an upcycle. Less significant is paid to cost takeout, but it is a good story here. Like you said, you started generating strong returns even before the cycle started to turn. But talk about what else is left there.

Talk about what inning you feel like you're in. you know 130 million run rate 135 135 yep yeah where do we go from there i think that um you know shelly recently was talking with our team at our town hall our cost to serve initiative wasn't a one year one and done type of event i think it's more of a mindset and and richie kind of goes back to what you were asking if we can be competitive and lowering our cost to serve, it's just going to allow us to grow faster. And when we can grow faster, it creates more opportunities for our people. We obviously are a very people-focused organization. We believe we take care of our people. They take care of our customers and takes care of the business. And everybody in this room would be very happy with the outcome of how we perform there. What inning are we in? I think we are probably through a lot of the low-hanging fruit in terms of the $100 million that we originally identified. Obviously, we exceeded the publicly stated target, but I think the real challenge for us now is as we are growing and as we are scaling, making sure we stay very disciplined to our cost metrics and we stay in those ranges. And so as we scale, we can scale in a way that allows more of a price to help repair our margins. That's one of our three priorities for the year is to continue to repairing our margins. And so what's not really in terms of where we are very early innings, I think, is as we think about all of the processes we have across our organization and where we think technology and particularly AI can help us. We think AI has a lot of opportunity to drive improvements in our processes and take out costs and give our people better opportunity to do more meaningful work. And so I think we're early in that stage and hopefully more to come that we can share in the future.

Okay, cool. CapEx, you pre-funded a lot of that. I think that's part of the allure to the JVHunt story for sure. I guess if you continue to grow at a similar trajectory as your impressive first half suggests, how long before you need to start investing in more equipment? And until then, is 5% CapEx to sales the right rule of thumb?

We shared this. What is it as a percent? I think it depends on the pricing and the fuel environment. But $700 million feels about right when I think about what our maintenance CapEx is. that's net so that's gross capex less proceeds as i as i mentioned in dedicated a lot of our capex is success based so we will go out and sign a five-year contract what's in that contract is the equipment obviously whether it's specialized or or standard equipment and then we'll go out and procure that equipment in order to meet the needs of that new contract so my hope is that our capex starts trending up a lot because i have to fund a lot of the growth that that's coming in in dedicated brad hicks recently talked about you know seeing a record pipeline there and so that that has us excited about um i think deploying capital and what we think are very good return type of business for intermodal obviously we have plenty of intermodal containers to grow into, but we will continue to need to buy and grow our chassis count and replace trucks. But most of that should be captured within our maintenance cap. That's the 700 million that I laid out. Do I want to tell you when I think we're going to need to buy more containers? I don't know. But if we keep growing like we are, it's not as far out in the future as we thought it was maybe a year ago. So growth has been good. First volume growth quarter since 2014 in the second quarter. So I think it just, again, speaks to what we just started the conversation with, which is the value proposition of intermodal is quite strong right now.

Okay. Let's switch gears, talk about autonomous trucking real quick. You've invested in technology. In fact, I think one of your partners is presenting next door. What do you say to folks that consider this as something that threatens maybe the terminal value for your partners in railroads? Brad, yeah, like I know you feel sort of passionate about this topic, and I think you do a good job addressing it. So talk to us about that.

Well, I mean, I think there's still a lot of unknowns. What is it going to cost? I think we really like what we see in terms of the technology and we think the technology is real and we think there are real safety benefits to that technology. Why can't we apply some of that technology to the trucks we already have today on the road to make them even safer? I think that's something that needs to be explored. We think that autonomous trucks have an opportunity to expand the addressable market in intermodal, right? So if you have long drays that make a certain intermodal move not as economic as maybe truck or as their circuitous miles, then you can bring autonomy into play there. But at the end of the day, again, I'm not a physicist, but steel on steel creates less friction than rubber on road. And so the most fuel efficient way of moving freight will be rail over doesn't matter who is or is not driving the vehicle it's just going to always be more fuel efficient to move move it over the the rail versus the highway and so i think that there will be opportunities um for a lot of new technologies and entrance to sort of create value in transportation it is a very large market and there's plenty of opportunity for us to grow organically in this large addressable market.

Speaking about growth opportunity, maybe we can end with this Transcon rail merger that's being proposed right now, made some steps forward in recent months. Your view on the evolution of partnerships and just how you see this affecting J.B. Hunt, especially if your primary partner in the West has a product that could prove to be maybe less attractive next to a seamless end-to-end rail product.

A lot in that question. I would just say, you know, we've been pretty neutral on this, and we think that there's opportunities and risks that come with some of the unknowns, and I think our teams are still looking at and reviewing all the facts and filings, and as you know, there are many pages to them. At the end of the day, I think what I'm encouraged about is real meaningful opportunity, value, and growth with intermodal, and I think who they partner with is going to be very important. I think the key to running a successful intermodal business is having density, and in order to have density, you have to have a lot of volume, and thankfully, we do have a lot of volume. I think we've proven an ability to create a lot of value for our customers. And so, you know, we're going to be very mindful of what is in the best interest of our customers and make sure that we're doing what's best for them going forward.

Maybe to combat me directly, I think you've given a helpful stat on how much of your business is actually true. And to end transconverses just stops in the middle, right? So it's not like, can you remind me of that?

Have we given that?

Andrew, you're definitely getting that.

We have, yeah. I don't think we've provided that.

All right, fine. We'll see we do there. But all right, with that, I think we're up to time. So thanks so much for your time today and for participating. Stacy, it was great to have you and a fresh perspective. And thanks for everyone in the room.

Great. Thank you, Rochelle.