Operator: Good morning. My name is Gary. And I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2020 Saia Incorporated Earnings Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I will now turn the call over to Matthew Batteh, Saia's Executive Vice President and Chief Financial Officer. Please go ahead.
Matthew Batteh: Thank you, Gary. Good morning, everyone. Welcome to Saia's second quarter 2026 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should know that during this call, we may make some forward looking statements within the meaning of the Private Securities Litigation Reform Act of 2000. These forward looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. We refer you to our press release and our SEC filings for more information on the exact risk factors that could cause actual results to differ. I will now turn the call over to Fritz for some opening comments.
Frederick J. Holzgrefe: Good morning and thank you for joining us to discuss Saia's second quarter results. We are pleased to report a strong quarter that reflects the dedication of our team, the consistency of our service offering and the continued progress we are making on our long term strategy. Our results demonstrate the benefits of our disciplined execution, ongoing investments in our network and people and our commitment to delivering high quality service for our customers. Our second quarter revenue of $950 million surpassed last year's second quarter by 17.1% and is a record for any quarter in our company's history. Shipments per workday which were a record for a second quarter, increased by 4.4% and pricing and mix management efforts drove an increase in revenue per shipment, excluding fuel surcharge, of 1.5% compared to prior year. Our mix management efforts as well as improving freight backdrop contributed to a 3.9% year over year increase in weight per shipment. Notably, weight per shipment improved 4.9% sequentially from the first quarter of 2026 and improved the seventh consecutive month exiting the second quarter. Importantly, our mix management efforts and pricing actions are taking hold and as revenue per shipment excluding fuel surcharge improved throughout the quarter with June improving 4% from April and about 4% compared to June of last year. Operating income increased 26% year over year to $125 million Operating ratio for the quarter was 86.9%, an improvement from 87.8% in the second quarter of 2025, and a 480 basis point improvement sequentially from the first quarter, far outpacing historical seasonality of 250 to 300 basis points of improvement. Service levels continue to improve across key performance indicators during the quarter, reflecting our ongoing focus on putting the customer first in our daily operations. Despite lower headcount and increased shipments compared to prior year, we achieved a record cargo claims ratio of 0.3% demonstrating our ability to deliver high quality service across our now national footprint. We also continue to see the benefits of decentralizing our customer service operation. 1 year after that transition, an average customer inquiry handling time is improved by 50%, strengthening customer relations, improving responsiveness and enhancing the overall customer experience across our expanded network. Even as we have expanded our footprint, equipment base and team, we continue to see the benefits of our investments in our driver training and safety programs, Miles between preventable accidents improved by more than 45% compared to the second quarter of 2025 and hours between lost time injuries improved by 17% year over year. With our value proposition increasingly clear, we continue to see strong customer recognition of the service and reliability we provide. Contractual renewals were 10.7% for both June and for the quarter, reflecting our continued focus on pricing discipline and the value we deliver to customers. In addition, our GRI of 7.1% was implemented in early July, is consistent with the quality of service we deliver and our expectation that pricing appropriately reflects that value. Customers expect high quality service and our record level investment over the last few years reflects our dedication to providing unique solutions in every market. While customers always have options for managing their freight needs, our value proposition is becoming more apparent as demonstrated by continued investments in the customer experience. More than ever before, customers are choosing Saia, our expanded footprint is providing more opportunities with both new and existing customers. We recently announced the launch of Saia REV, a company-wide initiative, REV or Revenue Expanded, and Visible reflects our commitment to the customer. The customer will see our faster transit times expanded logistics capabilities and enhanced shipment visibility for them. This initiative demonstrates the value of our national network and continued commitment to improving the customer experience. As part of Saia REV, we were able to offer our customers faster and more consistent transit times, including more than 2,000 transit time improvements across our network. The initiative will also automate our guaranteed 10:00 a.m. delivery service, the earliest guaranteed delivery of any nationwide LTL carrier. In addition, the initiative will provide customers with dynamic real time shipment tracking updated ETAs and predictive insights to help anticipate special service needs. The announcement of Saia REV is yet another example of our best in class technology that will continue to drive improvements in our operation and enhance the customer experience. I will now turn the call over to Matthew for more details from our second quarter results.
Matthew Batteh: Thanks, Fritz. Second quarter revenue was a record for any quarter in the company's history increasing to $956.5 million, which is a 17.1% improvement over the prior year. While shipments per workday increased 4.4% and tonnage per workday increased 8.4%. Fuel surcharge represented 22.3% of total revenue for the quarter compared to 14.6% in the prior year. Revenue per shipment excluding fuel surcharge increased 1.5% to $303.12 compared to $298.71 in the second quarter of 2025. Reflecting continued execution on pricing and mix management initiatives. While our mix headwinds eased throughout the quarter, our Los Angeles Region business, which is generally our highest revenue per shipment, was still down about 2.5% shipments per workday year over year. Despite those mix headwinds, our pricing actions continued to take hold throughout the quarter, June revenue per shipment excluding fuel surcharge increased about 4% from June 2025. Revenue per shipment including fuel surcharge increased 12% compared to the second quarter of 2025. Yield, excluding fuel surcharge, decreased by 2.2% primarily reflecting a 3.9% increase in weight per shipment during the quarter, while yield including fuel surcharge increased by 7.9%. Adjusting for the impact of the 3.9% increase in weight per shipment and the 0.6% decrease in length of haul, as well as the lingering headwinds from declining shipments relative to the total in the Los Angeles region, all of which have negative impacts to yield core yield excluding fuel surcharge was up about 3% compared to prior year. We continue to see traction in our recently opened terminals, Our terminals opened in 2023 and 2024 operated in the low 90s and improved nearly 300 basis points compared to the second quarter last year. We successfully opened 5 new terminals in the second quarter we are excited about the opportunity to provide solutions for customers in these new markets. Length of haul decreased 0.6% to 888 miles compared to 893 miles in the second quarter of 2025. Shifting to the expense side for a few key items to note in the quarter. Salaries, wages and benefits increased $43.4 million or 11.1% compared to the second quarter of 2025. This increase was primarily driven by higher employee hours in response to increased volumes and higher compensation levels associated with improved company performance. In addition to a company wide wage increase in October 2025. Group insurance costs increased $7 million and workers' compensation costs increased $2.2 million reflecting inflationary claims costs. These increases were partially offset by a 1% decrease in headcount at quarter end versus the prior year. Excluding line haul drivers, headcount decreased 1.7% compared to the second quarter of 2025, reflecting our continued focus on cost management and maximizing workforce efficiency. Purchase transportation expense, which includes both non asset truckload volume and LTL purchased transportation miles increased by 47.3% year over year and represented 8.9% of total revenue compared to 7.1% in the second quarter of 2025. This increase was primarily driven by higher volumes, our disciplined approach to headcount significantly higher diesel fuel costs embedded in purchase transportation rates. Since purchased transportation includes fuel higher diesel prices contributed to the year over year increase. Truck and rail PT miles represented 15.4% of total line haul miles in the quarter up from 12% in the prior year. The year over year increase in miles was largely driven by greater rail utilization as we continue to optimize our national network. Fuel expense for the quarter increased by 49.6% compared to the prior year company line haul miles increased 3.2%. The increase in fuel expense was primarily the result of a 50.3% increase in national average diesel prices on a year over year basis. Claims and insurance expense increased by 6.9% year over year primarily driven by the development of open cases and increased claim activity. Depreciation expense of $64.2 million in the quarter was 2.6% higher year over year primarily due to ongoing investments in revenue equipment, our terminal network and technology. Compared to the second quarter of 2025, cost per shipment increased 10.9% primarily due to higher fuel costs in the quarter. Salaries, wages and employee benefits also increased on a per shipment basis reflecting higher compensations costs associated with improved operating performance as well as the 3% company wide wage increase implemented in October 2025. Purchased transportation costs on a per shipment basis were also higher driven by increased usage compared to the prior year and higher fuel costs. Total operating expenses increased by 15.8% in the quarter compared to Q2 2025, with the year over year revenue increase of 17.1%. Operating ratio improved to 86.9% compared to 87.8%. A year ago. Our tax rate for the second quarter was 24.9% compared to 25.3% in the second quarter last year, our diluted earnings per share were $3.51, a 31.5% increase compared to the second quarter a year ago. Turning to the balance sheet, we ended the quarter with $84 million of cash on hand. After paying down our revolver balance during the quarter, total debt outstanding at period end was $100 million further strengthening our financial flexibility. I will now turn the call back over to Fritz for some closing comments.
Frederick J. Holzgrefe: Thanks, Matthew. While 2026 has included periods of volatility, volumes appear to be stabilizing in several external economic indicators suggest the operating environment is improving. Fuel costs remain elevated from pre March level and continue to fluctuate meaningfully on a day to day basis. Demand improved into the second quarter as is typical and I was pleased with our team's ability to handle the increased volume while achieving a record cargo claims ratio. While external metrics continue to point to an improving demand environment, the macro landscape continues to be dynamic. Importantly, we remain focused on driving returns on the investment we have made over the past several years. And it is clear that shippers are choosing Saia more than ever before. At Saia, we have positioned the company to support customers next phase of market recovery by expanding our terminal footprint modernizing our growing fleet and maintaining a disciplined focus on driver training and development. Since 2022, we have deployed approximately $1 billion in real estate investments adding 33 terminals to our operations and relocating or expanding more than 25 others. This network investment has increased our operational door count by approximately 25% since 2022. In addition, since 2022, we have deployed $1 billion in expanding and enhancing our fleet resulting in a 20% increase in tractor and trailer counts. While we have carefully managed headcount to align with current volumes, we ended the second quarter of 2026 with 26% more line haul drivers than we had at the end of the second quarter of 2022. In LTL, capacity is created through more than just physical footprint, our investments in our network fleet and most importantly our people, set us up for continuing up for a continuing improvement in the freight backdrop. We have highlighted over the last several years, we have been very intentional about making investments that support our value proposition. Q2 results were gratifying in the sense that we began to see returns for the substantial investments that we have made in our company as evidenced from the free cash flow returns. Our customers benefited from our ability to scale meet and exceed their expectations quickly and efficiently. Our strong execution has allowed us to be the organic growth story in the industry and a strong steward of shareholder capital. At the same time, we are also acutely aware that we are in the very early innings of reaching our company's full potential. As we look forward, we continue to see opportunities to invest in our maturing network and we will be able to support these investments with continuing operating cash flow improvement. With that said, we are now ready to open the line for questions operator.
Operator: We will now begin the question and answer session. To ask a question. If you are using a speakerphone, please pick up your handset before pressing keys. If you have additional questions, you may rejoin the queue. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Jonathan with Evercore ISI. Please go ahead.
Jonathan Chappell: Thank you. Good morning. Let's start with the obvious 1. Matthew, to the extent you can give July shipments and tonnage how that looks relative to seasonality? It sounds like you are exit rate in June on certain metrics was much improved from April. So just that July trend and what that pretends for, potential seasonality in the OR in the current quarter.
Matthew Batteh: Sure John. I will go ahead and give the full quarter for Q2 details. For April, shipments per day were up 5.6%, tonnage per day up 6.9%, May shipments per day up 3.7%, tonnage per day up 8.4%, June shipments up 3.9%, tonnage up 9.9%, In July month to date, obviously, we have still got a couple of days but shipments are tracking up about 1%, tonnage up about 7.5% on a per day basis. Keep in mind, as Fritz talked about in the commentary, put a GRI in at the beginning of the month of 7.1%. Anytime you do that, and we have seen this in history, there is always some shipment volatility embedded in there. That continues, you know, for a period of time. So that is included in the results, but that is where we are tracking right now on a on a shipment to tonnage basis with a couple days left. From an OR standpoint, if you look at history and when we talk about history, we remove you know, the COVID years and some of those ones that have 1-off items to try to give a more realistic view. Typically, you see is about a 150- to 200- basis point degradation Q2 to Q3. there is a range in there. We where we are now and, you know, assuming kind of fuel hanging in around where it is now, our quarterly shipments getting a seasonal typical performance, we think we can be around 100 basis points of sequential degradation. So, ahead of the typical 150 to 200. Great. I am gonna leave it at that. Thanks, Matthew.
Operator: The next question is from Jordan Alliger with Goldman Sachs. Please go ahead.
Jordan Alliger: Yes, hi. Just sort of curious if you could give a little more color around your demand comments. I mean, weight per shipment has been pretty positive. I know you are doing a bunch of stuff with mix, but can some portion of that be ascribed perhaps to sort of better economic or volume related prospects? Thanks.
Frederick J. Holzgrefe: Thanks, Jordan. Good question. Pride ourselves to stay pretty close to the customer So we typically are communicating with customers on a daily basis We actually survey customers. And if you look at their sort of sentiment right now, if you go back to April, people were expecting improvements in the second half or through the second quarter into the balance of the year improvements. What I think is exciting to see right now is that as we survey again, people are continuing to confirm that, meaning that they are they see the trends are for their respective businesses, and that they are positive about the back half of the year. Would Matt and I and the team, we are at the same time, we are cautious because we are kind of a show us sort of thing and the results so far have been we have been pleased with what we have seen. So I think that it is it is a positive trend. Like the sentiment that is out there. Now we got to keep executing and deliver the results. Okay.
Operator: The next question is from Tom Wadewitz with UBS. Please go ahead.
Thomas Wadewitz: Yes. Good morning. To see the momentum in the business. You provided some color, I think, on June revenue per shipment year over year. I think said like 4% ex fuel. How do you think that progresses? I mean, it sounds like your contractual renewal is 10%, 7%. So that is a bit stronger. Do you think that if you look out a quarter or 2 or I do not know if it is longer, you would see that growth in base revenue per shipment move up from that 4% in June. We do expect that to move higher and kind of converge with some of the headline pricing numbers that you are talking about? That would be the first question. Thanks.
Matthew Batteh: Yeah. Thanks, Tom. If you know, 1 of the things that we have been talking about pretty consistently over the past year was just some of the mix nuances that are different in our business than maybe some others. The LA region that we have been talking about consistently that was down double digits last year. It shrunk, still down about 2.5%. Year over year. But what we talked about is as we started to get past those and lap those, especially with our continued efforts on the pricing front and mix, and we would expect to get back toward what we are typically seeing from ourselves in that revenue per shipment. So we were pleased with the progress year over year throughout the quarter. Revenue per shipment from April to June, this is ex fuel, was up about 4%. So that is good traction, good progress for us. Inside the quarter, which we really like. But we have gotta keep pressing the gas pedal on that. The growth from Q1 to Q2 continue to come in these 1- and 2-day lanes. Again, we have got a national footprint We are able to solve more problems for customers. Typically, those that are not going as far, the pricing is a little bit different. But even with that, we improved revenue per shipment pretty substantially within the quarter. So a lot depends on what the world looks like, right? But our view and what we have been working on is that continued improvement. Like we said, once we started to get past this mix, headwind and mix abating a bit, late through the quarter where we are seeing numbers that are more consistent with what we are accustomed to on our side.
Frederick J. Holzgrefe: Yeah, Tom, I would just add that you only get to do that when service execution is at a high level. And it has been. And I think that as we see that sort of that mix impact normalize a bit here, We are we feel very confident that we will continue to drive the results and drive the appropriate returns for the significant capital we have deployed here. Our results, I think, speak to that. And we highlighted in the both the revenue per shipment and yield improvements, once you reflect some of the headwinds on yield that certainly that looked pretty good for us.
Thomas Wadewitz: Okay. Yes, great. And then, I guess, the follow-up question, just on labor productivity, I mean, I think you have had some good optimism on the ability to drive labor productivity when you see growth. But I think there is also inflation in that line. So maybe if you just give some thoughts about how should we think about the kind of growth in your comp and benefits line Just, you know, I guess the 2 pieces, kind of productivity versus just the inflation impact Thanks.
Frederick J. Holzgrefe: Yes. Tom, we do not take it a break on cost. We manage that pretty closely. I think we put together in the quarter or this quarter, we actually first of the month had put a wage increase company wide. that is reflected in our guide for the quarter. Yeah, I think we will do a good job of offsetting a fair amount of that with continued productivity improvements. Technology we deploy in this business allows us to not only to improve transit times, but also the implications of that, if you can run your network more efficiently, you share that benefit by offering a transit time to a customer that we could not before, but that is also the read through for that on the cost side that is a more efficient way for us to run the network. So it is a win. That helps us drive productivity improvements on 1 side. On the flip side, most importantly, got an incremental service out of that. And so we are excited about that kind of rollout. Okay. Thank you.
Operator: The next question is from Ken Hoexter with Bank of America. Please go ahead.
Ken Hoexter: Hey, great. Good morning, Fritz and Matthew. Can you walk us through the fuel contribution to results in the second quarter and then maybe thoughts on impact to the operating ratio and what is built into expectations. So Matt, you noted kind of seasonal outperformance 2Q to 3Q, maybe talk about what is fuel, what is pure? Pricing? Thanks.
Matthew Batteh: Well, we do not break out the impact of fuel. But keep in mind, in LTL fuel surcharge is a percentage of the base rates. And I look at our base rates, if it is cheaper than everybody else out there and that is our pricing opportunity. But we when we think about pricing, we think about everything that goes into that, the work that we do for our customer, but we are focused on core pricing increase. Obviously, fuel can move around a little bit, but we have investments in the fleet, in fuel tanks, and everything that we do to provide some service to our customers. So I look ahead the results for Q2, even if I normalize, we still would have outperformed what is normal sequential Q1 to Q2 from a seasonality standpoint. And that is been our commentary all along. We have made these investments in order to outperform. So fuel is going to move around a little bit. what is embedded into our guide is fuel hanging on national average around what it is right now. Your guess is as good as ours as to what that probably looks like. We track that relatively closely, but you know, we are focused on driving core price. Again, to reiterate that when you get more on the base revenue per bill, you get more on fuel because that is just a component of the base rates ex fuel. Yes.
Ken Hoexter: So Matt, I guess the stock is down 8%. I guess we have seen this a couple of times on earnings days, but maybe it is just an AI transport trade today. But maybe delve into should we be seeing more in rate from you if you are catching up? I mean, yield per shipment down 2.2%. I know that is tied to weight per shipment and then your revenue per shipment up 1.5%. How do you think tracking versus peers in kind of catching up given you are now nationwide coverage and trying to grow into that? Or is it more a focus on still maybe filling the network into some of the new service centers?
Matthew Batteh: Well, I will start and then Fritz will come on the top of this. But I think you had said, Ken, revenue per shipment down 2%, revenue per shipment is up. In the quarter. You may have missed the yield. But if I normalize for all the things that we talked about, so if I just look at April to June, revenue per shipment ex fuel is up about 4%. And if I normalize for actually, this is this is all in. Revenue per shipment up about 4%, yield up 2%, and that is on weight per shipment that increased throughout the quarter. So typically, a heavier weighted shipment is going to have a lower yield. We have talked about how we track it on a revenue per shipment basis. But 1 of the things that we have talked about is the mix headwinds for us of expanded network, more things in a 1- and 2-day lane that are typically shorter Our Los Angeles Region business is a big chunk of our business. We have got a good business model out there. that is been down consistently. it is starting to become more even, which hopefully we see a little bit of a bounce back. But importantly, our June progress showed where we expect to be and we are pushing even harder on that. The reality is as a national player, we are able to command a higher price point. We are able to say yes to more things. Customers have more opportunities to use us for all of their services. that is going to help us drive more and more price. Yeah.
Frederick J. Holzgrefe: And I think that the most important thing is I kind of think about how to--what do customers what do customers think about that? And customers think Saia is doing a great job They see the service, they see the national reach. We see that in our shipments and tonnage numbers that is the most emphatic endorsement that we are doing a good job for the customers when you get more business So that is kind of the simple measurement there. Then I look behind that and I look at specific, service, claims ratios are record low. I look at all the on time performance they have pickup completion, every metric that we have, we see strong performance there. And that is reflective and supportive of what you are seeing in the top line result. I look at the kind of underlying performance in a still challenging operating environment. And I look at from Q1 to Q2, we outperformed historic OR performance in that period significantly. So I cannot speak to it. I do not spend a lot of time focusing on daily trading activity. But I do focus on what we are value we are creating both for Saia shareholders and for our customers. And when you create value for the customer, there is an opportunity for us to create value for Saia shareholders. I like what we are doing there. Fritz, can I just squeeze in 1 more thought here?
Matthew Batteh: I guess if you are targeting 100 basis points of deterioration, in OR, does that mean you are looking at a worse OR year over year? Or am I misreading the performance from last year? Keep in mind, Ken, we have 2 wage increases. Embedded in that number. So we did our wage increase last year in October. And we did 1 early July, the July 1 this year. So that comp has 2 wage increases in it. The timing difference. Okay. Got it. Thank you, guys.
Operator: The next question is from Brian Ossenbeck with JPMorgan. Please go ahead.
Brian Ossenbeck: Hey guys, good morning. Thanks for taking the question. So maybe just to help understand a little bit more of the margins or the operating leverage with tonnage starting to inflect pretty significantly in maybe putting some of the mix headwinds behind you. You know, adjusting the yield all those mixed things you talked about, Matthew, you are still tracking fairly behind where the renewals are. Just looking at the leverage in the quarter, just was there additional costs that are still not fully absorbed in sort of the new network? They have new areas you are trying to still fill in from density perspective. So want to see how to interpret all that for this quarter in particular.
Matthew Batteh: Cost embedded in which part, Brian? Can you just make sure make sure I understand it. Oh, just yeah. Just the new terminal. So, are they still ramping up? Are there still areas in pocket of density you still need to fill in? Are you shifting the mix? Like, I guess, why are we seeing better incrementals on this sort of tonnage as you expand here? I got you.
Frederick J. Holzgrefe: Yeah. I mean, the 2023 and 2024 openings improved about 300 basis points. They are operating in the low 90s. We that is great progress. We are pleased with that, but they have got room to go. And 1 of the things that is that we track very closely is that some of these get up to speed a lot faster, some take a little bit more time. Our sales team's hitting the street talking with customers. And we are getting more at bats with customers and not just the new markets, but in our legacy markets as well because we can solve more problems easier to do business with. That gets us price. So, yes, there is certainly opportunity that we see to continue to push those forward. Pleased with progress, but by no means do we think those are at maturity. Yeah, Yeah, Brian, I would just add on. I mean, I think that is early innings on the whole network value here, right? So as we take advantage of all the 33 new openings in the last number of years, all the relocations and all the enhancements that we have made the opportunity to generate additional returns out of that, that is still there. Made a little bit of progress in the second quarter. Is there more to go? Absolutely. And I think we are on well on our way and just got to keep focused on care of the customer and that will get it done. All right.
Brian Ossenbeck: Thanks for that. Just a sort of a follow-up, just thinking about labor availability in this new network of expanded terminals, some of you are still adding a few more here and there. Do you think about visibility into, you know, the pockets where they might be a little bit tighter or you might have to manage a little bit closer now that you are covering a bigger and broader network. Are you are you managing that through different sort of tools? Like, do you feel confident that is not going to be a problem? Maybe you can just walk through you know, managing the network, assuming we get a better upturn here, given it is going to be quite a bit larger, and I would assume a bit more complicated than what you have done in prior upcycles.
Frederick J. Holzgrefe: Yes. Sure, Brian. Listen, labor the driver population nationally we all know is tightening up and it certainly competitive. And the average driver is a bit older and continues to age over time. What we find, we, like most in the LTL business, have the opportunity to get drivers home every day, right? So, you have a competitive advantage versus other sort of modes in the sector around recruiting jobs so that we know that is there. Now, I think what is specific to Saia, I think this is important, is that where we differentiate. We are very pleased with our Driver Academy program. We have done a great job of seeding drivers to that, and I think that continues to scale You know, as we build out that national network, it gives us an opportunity to continue to build out our Driver Academy program. Adding additional locations for training and training our drivers. And that is a great opportunity as part of recruiting new employees to the company and say, look, we can provide a career track and in a company that is growing. And I think you get that second part as a Saia-unique story. Look, we are this is a business that is growing. it is a growth story in the industry. You have an opportunity to come work for us, be part of something that is pretty successful. We are very proud of the culture that we have developed. And I think that sort of culture leads to employee engagement. And those are all I get it, those are in many ways soft, but those are how you recruit and retain drivers. And that is kind of our mission. We feel pretty good about it. We always have markets in which you got to be challenged and you are going to be challenged and you double down on recruiting. that is just the nature of it. But we feel like our recruiting machine is pretty good. Our driver academy is really good. And that culture is excellent to be able to put that all together. Okay, guys. Thanks very much.
Operator: The next question is from Stephanie Moore with Jefferies. Please go ahead.
Stephanie Moore: Great. Thank you. Good morning. So maybe since you are down the conversation around labor, I wanted to touch a bit about where your capacity, specifically in the labor stands as volumes were to continue to improve from here. Then the incremental hiring actions you would need to see. that is all. Thanks.
Operator: Stephanie, I am going to repeat your question because you are echoing a bit.
Frederick J. Holzgrefe: It sounds like you want to know how much capacity we have on our link. Labor line? I am sorry. Yes, I am sorry. This probably better. Yes. Maybe just yes. Incremental capacity on the labor side, particularly if we continue to see volume improve from here. So any incremental hiring activity, we would we would need to see. You know, I think we feel pretty good right now where we are from a recruiting perspective. There are some markets certainly where we will have to add people. We do-- we are pretty diligent about matching sort of our labor to the available hours, both drivers and dock workers to current freight environment. As the network develops, and we pointed it out in the notes at the beginning, we will we will probably add line haul drivers as we look for as the network scales, we have the opportunity to build some efficiencies around that. So what you would see there is you would see a trade between our PT line and salary wages and benefits. So, I would recommend studying those lines, you know, to some extent together simply because that it is a trade 1 way or the other. But I think that, you know, we feel pretty good about the headcount. I think it probably, has got a little bit of flex in there still. Around additional utilization, maybe a few overtime hours. But we are also mindful that the business you do not want to add the heads such that you as it becomes seasonal into the fourth quarter, you are in a position where you are maybe over hired. But we feel pretty good where we are. There are going to be a handful here and there that we add, but I do not think it is going to be a meaningful change.
Stephanie Moore: And then just 1 follow-up to the pricing commentary earlier, so very good GRI and contract renewals that we can obviously see here. But, you know, maybe just talk a bit about your customer acceptance. Are they starting to maybe realize some of your size and the service benefits that you have made as of late, and is it starting to kind of come through on the pricing side, or do you think these pricing numbers are more so a reflection of the tightening market? Thanks.
Frederick J. Holzgrefe: I look around Stephanie and I just like I know our customers have options. And we have been very, very focused on making sure we get the right pricing in place. As you look at our the realization numbers that Matthew highlighted for us in the second quarter, sort of the improvements 4% revenue per shipment improvement from June versus April just in the quarter. I think what you are seeing there is that yes, certainly the market is tightening up But customers also knowing they have choices, they are going to go somewhere that although we are pushing rates, they are going to go somewhere where they are going to get great service. And that is what I am excited about here. I think we will see a realization. I think, yes, there is there is some structural change out there, but at the same time, I think customers are also intently focused on if they are going to operate out the national carrier, they expect consistency. And that is something we can deliver. So the opportunity for us to continue to see realization of both the contractual renewals and the GRI, I feel pretty good about. The early indications on the GRI from July is that we see pretty good acceptance there. Now sometimes you will lose a little bit of business in there, but your total mix of revenue and profitability is better. So you do not necessarily keep all that volume, but you keep the volume you want. All right. Thank you.
Operator: The next question is from Scott Group with Wolfe Research. Please go ahead.
Scott Group: Hey, thanks. Good morning. So I understand sort of the impact of the double wage, but I guess the other side is we have an early GRI, arguably we have like a double GRI. I guess I am struggling a little bit with like, we got good tonnage growth. Fuel tailwind, like, why is margin flat to down a little bit in Q3? Everyone else sort of was guiding you know, 100 to 300 basis points of improvement. I totally get like we have this big network build out. In a down cycle, like, why the margin gap widened it felt like when the cycle started to turn positive, the margin gap would start to narrow, and it feels like it is still widening. So I do not I do not know. Just any thoughts there? And then maybe just along that, like, any thought on, like, the full year margin, Matthew?
Matthew Batteh: Well, a couple of things, Scott. I mean, the 2 wage increases are impactful, right, because you have got the second wage increase that is off of a higher starting point than the first 1 was. So that is that is a compounding effect. You know, we are the shipments and tonnage numbers that I gave obviously reflect a little bit of volume volatility as part of the GRI. We have not historically done a GRI in July. So, it certainly helps offset that, but you do have a little bit of volume volatility It sounded like you are comparing a little bit to peers across the space and what they gave. When we do that, you get some near term volume volatility that obviously plays into how that goes from a sequential basis. But we are full steam ahead on our pricing actions and we are not going to slow down. We monitor what we track. What we get from customers very closely. Fritz alluded to it. We are seeing good acceptance on the pricing side from the GRI, but again, there is a little bit of volume volatility as you see that. So but the wage increase portion of it is impactful. When you have got 2 of those in there off of a higher starting point, those dollars are real. But that to us is just a timing difference. Richa? It was October last year we were pulling it up and did it on the normal cadence of July this year. From a full year standpoint, 1 of the comments that we have made earlier, had given the 100 to 200, and we said getting to 200 probably included some pretty solid mid single digit shipment growth for the full year. It was positive in Q2. We have still got a long way to go. it is not as robust as we maybe were hoping when we heard all the ISM numbers. remaining there is definitely some positivity out there. Frederick's talked about the customer sentiment survey pretty, you know, pretty rational, feeling good about their business. But still feel like we can get to the 100 basis point of OR improvement. We will see what the back half deals us. But we are pushing towards that. If we really see volume ramp in the back half and things are super seasonal, that could likely tick up a bit, but we still feel like we can get to that point. We obviously, if you just do the math, we have to outperform what we do normal seasonality certainly in Q4. But we are pushing towards that. And I think it is important to know that point out for us is that our normal Q2 to Q3 OR typically gets 150 to 200 basis points worse. This year we are highlighting 100 basis So it is it is incrementally improved. Kind of our historic trend. So we want to are we pushing to get it better? Yes, absolutely. Okay.
Scott Group: And then I know that this has been touched on a little bit already, but wanted to come back to like the realized price discussion. Like, you know, I totally get the mixed things. And so, like, if you just look at, like, revenue per shipment and revenue per hundredweight, just take an average, try to, like, normalize for some of the mix. Like, it is been flat. To down, like, last 4 or 5 quarters. Like, you go back, like, 10 years, it is it was never you never had a single negative quarter. It was, like, average 5, 6%, you know, like, when do we get back to that? Like, I do not know. I know you do not like to give, like, yield updates, but like, I do not know, it feels like maybe it would be really helpful if you start doing that. To help us with our modeling. I do not know. Just some any thoughts there.
Matthew Batteh: I will start and then Christian can go. But revenue per shipment was up sequentially from Q1 to Q2. I mean, we highlighted the increase of 4% revenue per shipment growth inside the quarter. So from April to June, revenue per shipment up about 4%. that is progress. that is I mean, we are we have meaningfully expanded the network and you have got growth in these 1- and 2-day lanes that are going shorter. You see that From a yield basis, it is up in the quarter as well. Despite what is a headwind from weight per shipment. On yield, per shipment from April to June is up 1.5 and yield during that period is up 2. So despite the headwind from weight per shipment yield inside the quarter, is up. So we have had the mix impacts. Hopefully the Los Angeles region continues to come back That gap has shrunk, but we are seeing that progress. I mean, for us, inside the quarter, again, up 4% is good traction. We are continuing to push on it, but when you have opened as many terminals as we have over the past several years, you do get a little bit of different mix. But importantly, 18 terminals now, we are able to solve more problems for customers. There are more reasons for them to choose Saia. Over time, that helps us get more pricing. But we are feeling like we are making progress as exemplified in the quarter. Thank you, guys.
Operator: The next question is from Christian Wetherbee with Wells Fargo. Please go ahead.
Christian Wetherbee: Hey, thanks. Good morning, guys. I guess maybe just want to touch a bit on that weight per shipment comment that you were making, Matthew. I guess as we think forward it seems like every month of 2Q and then into July, we are seeing a bit of an acceleration on weight per shipment. I guess, can you give us just a sense of how you may sort of think about that as you go through the third quarter? And maybe talk to some of the specific mix dynamics are pushing that? Guess where are you seeing that opportunity coming into the network? What specific verticals or just these are company initiatives? That would be great. Thank you.
Matthew Batteh: Good chunk of it is our initiatives. So when we talk about the GRI, that does not impact all customers equally. We look at that business as well as all of our business. But when we take that GRI, we take it granularly based on lanes and weight per shipment mix, and we have put a heavy emphasis on making sure that we are getting paid correctly on some of those lighter weighted shipments. Pushed hard on all segments, but that 1 in particular. A component of it likely is a little bit of strengthening in the backdrop. We are not seeing any huge TL spillover by any means or anything like that. But typically, you see ISM get a little bit more positive, you get some of that on weight per shipment. But we focus very critically on getting the right mix of business with our customers. And with the national footprint, we have the opportunity to pursue different verticals like we have talked about in the past. That gives us a better chance to solve that for customers. Yes.
Frederick J. Holzgrefe: Christian, I would add, I do not-- I think what is positive, and it is a bit nuanced here, but positive in the sense that I look at customer sentiment, I think it is pretty consistent. So I do not know that there is necessarily a sector of the economy or something that we see anyway that is underperforming, outperforming. We do continue to highlight the LA region broadly. But in terms of if I matrix this to more sort of industry verticals, I think that we do not really see a call out there. So it is pretty broad based. And as Matthew pointed out, we tend to we are very focused intently focused on customers that value the service and the network that we are providing. Ones that maybe do not or more of a commodity, looking for more of a commodity, we have been pushing the rates and that is pushed out some things. And so I think that the positive trend here is that it is true, right, sort of across the board, it is pretty uniformly kind of positive, I would say. And then exciting about it is that, you know, the customer acceptance is important. And I think we are seeing that. Okay. that is helpful.
Christian Wetherbee: And I guess maybe that sort of leads into the next question, which is just, yeah, I know there is a lot of focus on 3Q and maybe this year from an OR perspective. But I guess bigger picture, you guys seem to be doing a lot of work on customer mix and network dynamics, making sure you are kind of in a better position. I think it is obviously early to be talking about 2027, but if you can give us a sense of what you think sort of the margin algorithm is, if you will, bigger picture beyond what we are seeing this year as you guys are putting in this work. And it does sound like you have some building confidence, maybe cautious confidence that we are going to see maybe more of a sustained uptrend. So like, I guess, how do we think about sort of what the network can provide in a normalized growth environment? Beyond this year.
Frederick J. Holzgrefe: Now I get excited. I think this is we are just scratching the surface of the potential of our network, So, with 118 facilities, a national footprint. We have proven that we can provide high levels of service to customers. We can scale our metrics-- service metrics-- are getting better. I mean, as you-- there were anecdotes out there in the second quarter around embargoes and competitors and dealing with volume challenges and all that sort of thing. We are not them. Well, you know what, while everybody else is trying to figure out just do business with Saia because we have got we are getting it done for our customers. So most important that is a key element of what we have to do. Then when I look into the longer term opportunity for this business, we can operate this business below 80 OR, no question. It should start with a 7. This pace at which we get there it is going to be the backdrop is going to have an influence. In that, right? So the stronger economic backdrop, the opportunity for us to accelerate that OR improvement year over year is absolutely there. This opportunity for us to take those Matthew highlighted the terminals that have been opened. The last few years they operate in the low 90s. Well, you know what, that we have terminals today that operate with a 7 handle. Regions of the company that are operating in the low 80s. So I look at that and I am like as we mature those facilities there is a unique opportunity to really drive returns in this business. And we are in a position right now where we are generating strong cash flow. So to the extent that we might supplement our network and make additional investments, we are going to be able to do that from operating cash flow. that is a really big deal. And that is a opportunity for us to really drive not only our OR, but drive the operating returns for the company just in total. Okay.
Operator: The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.
Ravi Shanker: Just to piggyback off the previous response, what exactly is the issue in the LA region? Does Forgive me if I missed this, but is that a SAIA specific issue because of majority of terminals? Or is it a regional issue with customers? Or what is going on there?
Frederick J. Holzgrefe: We have just seen in that region of the country. We have had we had some customers, that were pretty major for us. And this is going back almost a little over a year at this point. We have lapped this, but it was in a part of our Q2 result year over year that were pleased with the sort of kind of operating performance of those. So we exited those customers. We did not see other sort of business in that market. to backfill that. So that has been a challenge just from the total metrics that you see. So the revenue per shipment coming out of the LA region, it would be the highest in our company. And when you have sort of double digit volume declines year over year in the second quarter, early parts of the second quarter, that is a headline, top line headwind. So that is been what we have called out. And, you know, listen, we think we have probably got to steady state there. And I think we should be in a position we feel like we can grow from here.
Ravi Shanker: Got it. So just to clarify, did the exit of that happen this quarter? So that will be a drag that continues for the next 3 or 3 No.
Frederick J. Holzgrefe: No. So as we pointed out for the last 5 quarters going back to Q2 or Q1 of last year. The headwind, from the LA region has been there throughout the year. We finally lapped that and I think we are past it, in June of this year. So, it is been a challenge for us and it is influenced or impacted our top line revenue metric for over a year. Okay, understood.
Ravi Shanker: And just maybe as a little sidebar. there is been a lot of focus on autonomous trucking recently, kind of as we push towards commercialization of this potentially in 2027. You guys are pretty keen on kind of being in the forefront of technology here, especially with EV trucks. I am wondering kind of what the latest update is on kind of how much you are looking at this. Thank you.
Frederick J. Holzgrefe: Listen. We are always gonna look at available technology across either diesel, gas or LP or electric. The electric we have been a launch Tesla customer for quite a while. So, we stay pretty close to the development pipeline. So I think that, you know, we have seen the announcements, we are working with them on that and listen, if it is viable, that would be something we would consider for sure. We are most important though that I think the near term technology in the business for us is really about safety sort of focus, collision avoidance. Some of the technology deployed in an autonomous application would be a fantastic even if it was not if you had a driver enabled or driver on board. That autonomous sort of technology would be fantastic as a collision avoidance technology at the same time. So, you know, if we can maybe it is not autonomous right away, but if it is a opportunity for us to improve our safety profile even more, we are an investor. So that makes sense to us. Very good. Thank you.
Operator: The next question is from Eric Morgan with Barclays. Please go ahead.
Eric Morgan: Hey, good morning. Thanks for taking the question. I wanted to ask 1 on purchase transportation. Know you have contracts in place there, so it should be insulated from the spot market volatility and I know fuel is a big driver in the quarter, but I guess just curious if you have a sense for where you are landing or expect to land on core contract renewals with your carriers that line, just given what is happening in the freight market? And maybe if you could speak to the opportunity to in source more, Fritz, I think you referenced adding more line haul drivers. So do not know if you have, like, a target that you would like to see that 15% move towards. Thanks.
Matthew Batteh: I will do the rate part, Eric, and then we will hand it to Fritz. So, you are right. I mean, the vast majority, 95 plus percent of what we do is contracted. We view PT and we look at it on an optimization basis of whether that should be insourced or outsourced. We do not use it if it cannot meet service. it is an extension of how we operate. So that is number 1 first and foremost. But since the vast majority of it is contracted, we are relatively insulated as we are right now from the rate. So if I look at just the blended PT cost per mile, it was up about 3 ex fuel, up about 3% year over year. And now that is a combination of using more rail. Our rail percentage is a total of the mix of increased compared to where we were last year. Now, at some point, I am sure we are gonna have some conversations with those providers that are gonna wanna increase rates, but we the vast majority of that increase was usage general, but also driven largely by fuel. But just from the base blended rate increase, rate inflation year over year is about 3%.
Frederick J. Holzgrefe: Yes, would just add that the way we think about this, I think both if we run our own line haul network or we use PT, in both cases, we are going to have fuel expense, right? So that is kind of part of it, that is sort of a given. So then the equation is going to be alright. So what is cost optimal for us? So our game plan is identical to what it always would be. And if there are times that we have got, an to better balance our network and utilize company driver, we absolutely will. And if there are times that hey, a PT option makes sense to optimize that, we have pointed out over time that rail service is good long cross country rail is pretty good and cost effective. And if we meet customer expectations, mission accomplished and we got cost optimal on the way that is even better. The PT line obviously is up right now because we include PT fuel there. But that does not go to zero. From a cost perspective, if we add a driver that is actually as we know incremental salary and wages, and would also be incremental fuel expense. So, the underlying core dynamic how we manage that does not change. Now, if the rates in the truckload market are such that it makes more sense for us to hire more drivers to do that, we will. And that is just part of the cost optimization. And the good news is we have got tools and technology. We model that pretty well. And so that is how we are operating going forward. Thank you.
Operator: The next question is from Bascome Majors with Stephanie. Please go ahead.
Bascome Majors: To follow-up on part of Christian's question earlier, I mean, it did sound in the prepared remarks that, Fritz, you are seeing this quarter in some ways as an inflection point and the path from investing in the network to earning a return on that investment. In the network Can you walk us through maybe in a little more granular detail, like, what is giving you that feeling? What well, why now the time it feels like that inflection is happening and just do you have the confidence that longer term we will see more periods where you are able to get price and volume at the same time, to really drive that return and margin higher. You know, versus 1 or the other. Thank you.
Frederick J. Holzgrefe: Yes. it is a fair question. What I would tell you is what I am what I am positive about you are looking at the last several months we are now talking about positive sort of sentiment. Good volume performance, for us. And you string a few of those together and you are like, that feels like a pattern. This feels pretty firm. The dynamics in the marketplace are appear to be firm like that, like our core execution. I think the incrementals for us are all about as we continue to mature facilities that operate in the sort of low 90s OR and make them look more like our best-performing facilities. that is an opportunity there that is going to help drive incremental margins. So I think that there is probably in our sentiment survey that we talked about earlier, I think you see customers are net positive. So that is as long as they continue to be net positive, I continue to see good core volume performance on our side and core execution. That makes you feel a little bit more confident that the results are on their way. And looked at Q2 and looked pretty good. And I look at the kind of performance intra quarter, I was really pleased with that. So I think that bodes well for us. And I think that longer term, potential of the business, we are just scratch in the surface I think that is exciting. Thank you.
Operator: The next question is from Bruce Chan with Stifel. Please go ahead.
Jizong Chan: Hey, good morning guys. Good to see the OR progress in some of the newer terminals. And I know Fritz, you talked about leaning a bit more into the local account density is the kind of next leg of improvement there. Maybe you can just talk about any changes that you are making to the Salesforce structure or incentive structure to drive that And then, you know, lastly, any thoughts around you know, timeline for those terminals to kinda come up to parity with the rest of the network?
Frederick J. Holzgrefe: Yes. So Bruce, I think what we are we are seeing and it is continued to be as we mature those facilities, we have made the investments in the salesforce in those markets. We think that they are the incentive plans are in place that makes sense. In some cases, you are developing a market where somebody does not know who we are, right? So our team's got to get in there and sell that, sell the value proposition. Selling the value proposition is all about letting them know that we have got a national network. We do a great job picking things up on time, delivering on time, no damage, right? Those are all important. You could-- 1 strategy 1 could take is you could say, look, let's go give them an introductory low price and do something like that. We are absolutely not going to do that. Because this we have deployed way too much capital for this to not generate a return from the outset. So it is a methodical process to do that. It does not happen right away. And 1 of the exciting things is you hear about periodically, Last week I found out about a new win we got in the market that we opened 2 years ago. And it was a long sales cycle, but our folks stayed in front of the customer. We got our shot and we won it. And we took it from a national carrier that everybody's heard of. So that customer now realizes that, hey, you know what, Saia has got a great value or a very great service. We perform. And that is been pretty that is been exciting to see. it is a methodical process. The environment has not been the best and I think we performed well, but it is the environment continues to improve, I think we will see the impact of that sort of those sorts of investments. Okay, great. Thank you.
Operator: The next question is from Richa Harnain with Deutsche Bank. Please go ahead.
Richa Harnain: Hey guys, thanks for squeezing me in. So first, to ease some of the consternation, I guess, around the margin guide on 3Q and the wage increase. Matthew, are you willing to say kind of or have you triangulated just like if it was not for this wage increase I guess, in July, what would the OR progression have looked like? I. E, what is, like, the impact of it? And then you know, July trending up 7.5% on tons, is that in line better than seasonality? And what are you assuming for the remainder of the quarter, like, in August and September, more in line with seasonality, better Just curious on those 2 items before I ask maybe a more bigger picture thoughtful 1. Thanks.
Matthew Batteh: Sure. Well, do not typically give a whole lot of in the wage increases just part of our total strategy around labor and how we attract and retain employees among many other things. But if I look at the impact of that, it is generally about a point on the OR. We have talked about that at various intervals throughout history. that is a bigger number than what it used to be on a just total dollars basis because of size of the company's change But the starting point continues to be higher because the average wage has moved up over time. And again, there is 2 in this quarter compared to 2 in this Q3 compared to Q3 of last year. So that impacts that. From a volume standpoint, on a shipments basis, we are trailing seasonality a little bit in July. But again, we did a 7.1% GRI in July. You always have volatility on a shipment standpoint when you do a GRI, whether we do that in October like we did last year or July, We are seeing good realization, flow through on the price. We expect a chunk of that business to come back to us over time. that is typically what you usually see. For the quarter, what we are saying in terms of the embedded guide is that we get back to a shipment seasonality for the quarter. So if you look in some of our history, like last quarter, May was a little lighter than seasonal. Back up. Some of the months nuances with the pricing actions and GRIs and things like that can move around. But for the quarter, we are projecting normal shipment seasonality Q2 to Q3.
Richa Harnain: Okay, thanks. And then if I could just ask 1 more. Just these product upgrades you guys have initiated, Fritz, you talked about improving transit times on 2,000 lanes. You know, your 10AM guaranteed time being some somewhat differentiated in the industry, claims etcetera. That showed service improvement. You know, just, like, if I look at your yield growth, that is performing better than normal seasonality, I guess, or outperforming what we have seen usually in 2Q. Just should we see some continuation of that as I think about Q3 and Q4 or should the acceleration pick up just trying to think through as customer acceptance and all of these good service sort of improvements kind of go into your pricing, what we should expect for that line item? Thank you.
Frederick J. Holzgrefe: Yeah, thanks. Good question. I think what our expectation is this is going to continue to support both the contractual renewals and the GRI So customers are those are pretty big numbers, right? And so the enhancements that we are offering, that is just additional value to the customer. And I think that is going to help us with stickiness around that. I think mix things that Matthew highlighted that were impacting us in Q2 and you look at that sort of core take the mix impacts out of the our yield number, it was 3%, that was pretty good. So we are pretty pleased with that. And I think what you see going forward with these sort of service enhancements, I think that the opportunity for us to continue to earn those kinds of improvements and maybe even accelerating. I think that is totally plausible and reasonable. that is the reason why we did that is to be able to, hopefully, make that happen, make that realized because it is that those are important investments that we have made technology investments that we have made to be able to support the customer. So absolutely expect to continue to see both revenue per shipment improvement and yield improvement over time. And that was part of why we offered those sorts of things. We think we can be rewarded for those kinds of investments. All right. Thank you.
Operator: The next question is from Jason Seidl with TD Cowen. Please go ahead.
Jason Seidl: Thanks, operator. Hey, guys. Thanks for squeezing me in here at the end. I want to go back to GRI. You guys mentioned that there is noise around sort of your tonnage when you guys implement them. So how should we look at this in terms of as a historical basis? Is this sort of at the higher end of noise, at the lower end of noise, which you have seen thus far?
Matthew Batteh: Well, the magnitude of our GRIs is increased over the years. Part of that has been our ability to close the footprint gap and do more for customers. But importantly, we are cheaper than everybody else and we need to push harder to close that gap. Is enhanced by the opportunity to provide service in every market. I would say that this is normal of what we are seeing. it is we are doing it in a different time now. July compared to October. Some years it is been in January. GRI in the past. But we are seeing better than normal acceptance rate on the price, The shipment volatility and the shipment noise that you see in the 30 to 45 day period after, I would not say is any different than what we would typically say. Okay.
Jason Seidl: that is good color. And then if I can go to sort of like, a long standing theme here about freight coming back from the truckload sector to LTL. So maybe you can give us a little bit of color on that. And maybe what is the longer term opportunity in terms of aiding tonnage growth? Is this like you can add a percent? Can we get up to like 3% over time? How do you guys look at that?
Frederick J. Holzgrefe: Yeah. I think that is I think we are still waiting to see what that kind of a number, what that could be over time. I do not know that it was necessarily a huge impact. Maybe it was 2%, 3%, maybe at a high point, maybe it was 5% sort of impact on the industry in total. Think we still need to see settle out, I would say, before we you know, conclude what exactly the impact was. But I think that what you do see right now is that you know, there is certainly heightened focus around you see you see heightened focus around freight credit going to the its traditional historic modes, right? So you do not necessarily see that kind of crossover or spillover you described as much, if at all. So it will be interesting to see how that plays out over time. Most importantly, the thing that we need to do in these kinds of environment, if it flips the other way, meaning that there is a spillover into our space as truckload volumes come here, it is we are an LTL business. Our assets are set up for that. And we need to make sure that we have got the appropriate pricing in place and service in place, that we, you know, handle the freight that we should handle in our sort of part of the market. So I think that will be it remains to be seen how that is going to shake out over time. Fair enough. Appreciate the time guys.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Fritz Holzgrefe, Saia's President and Chief Executive Officer, for closing remarks.
Frederick J. Holzgrefe: Thanks all for calling in to hear about our record second quarter, which we are excited about. And how it sets us up for continued long term value creation for our shareholders. We are excited about the opportunity and certainly just scratching the surface as to what the potential of the business is. And look forward to giving you an update. Next quarter. Thank you.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.