Hello, and welcome to the Hub Group second quarter 2021 earnings conference call. Dave Yeager, Hub's CEO, Phil Yeager, Hub's President and Chief Operating Officer, and Geoff DeMartino, Hub's CFO, are joining me on the call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. In order for everyone to have an opportunity to participate, please limit your inquiries to one primary and one follow-up question. Any forward-looking statements made during the course of the call or contained in the release represent the company's best good faith judgments as to what may happen in the future. Statements that are forward-looking can be identified by the use of such words as believe, expect, anticipate, and project, and variations of these words. Please review the cautionary statements in the release. In addition, you should refer to the disclosures in the company's Form 10-K and other SEC filings regarding factors that could cause actual results to differ materially from those projected in these forward-looking statements. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to your host, Dave Yeager. You may now begin. Good afternoon, and thank you for participating in Hub Group's second quarter earnings call. Joining me today is Phil Yeager, Hub's President and Chief Operating Officer, and Geoff DeMartino, Hub's Chief Financial Officer. Like many logistics providers, these unusual times have created a great deal of risk for Hub Group, but also tremendous opportunity to distinguish our company among our customers, vendors, employees, and shareholders. All of our business lines are performing well and grew during the second quarter. Demand is very strong as we continue to focus on fulfilling the service and capacity commitments we have to our longstanding clients. Before we discuss our quarterly performance, I would like to review Hub Group's long-term growth opportunities and positioning, focusing specifically on our intermodal business, where several important macro trends are leading to a secular growth story that we believe will be sustained well beyond the current market conditions. Currently, there are many issues impacting intermodal, such as port congestion, labor and equipment shortages, and network imbalances. The freight transportation market has strong demand tailwinds that will carry at least through the first half of 2022. More importantly, we believe that the real growth story for intermodal will reach far beyond the near-term outlook. Intermodal's distinctive advantages are becoming more obvious following the recent period of elevated spending on consumer goods and the post-pandemic inventory restocking, which reflects the lowest retail inventory to sales ratio in history. The driver shortage is a key issue fueling the growth in intermodal, and we believe it's here to stay. E-Logs have limited the number of miles drivers can legally manage within a day, while the Drug and Alcohol Clearinghouse has sidelined 60,000 drivers as a result of the testing and centralized database. This challenge is exacerbated by the structural shortage we face due to a lack of new entrants into the driver workforce and an increasingly aging population of drivers. New drivers will have options and will choose to be home daily, drive new equipment, while earning a strong wage. These are all benefits that drivers in intermodal receive versus driving for an over-the-road motor carrier. Another significant issue is rapidly rising insurance premiums for trucking companies, which is being driven by nuclear verdicts that juries are conferring on plaintiffs. This dynamic continues to drive up carriers' operating costs, resulting in higher barriers to the expansion of trucking fleets. Environmental sustainability is becoming a far more prominent focus, both for our customers and for our institutional shareholders. Intermodal is a phenomenal way to invest in and improve the environmental impacts to the supply chain. Intermodal is 70% more fuel efficient than over-the-road transportation. In 2020, Hub assisted our clients in reducing their carbon emissions by 1.55 million tons as a result of converting over-the-road freight to more efficient intermodal transportation. In addition, intermodal has a distinct fuel efficiency advantage, which allows shippers to reduce their transportation spend during times of high oil prices. As a result of the underlying economics, intermodal is less costly than truckload, which is important to shippers, particularly in times like today when supply chain costs are on the rise. Longer term, as more and more of our customers build out their last-mile strategies, intermodal will be helpful in reducing middle-mile spend. The significant investments that Hub continues to make in containers, tractors, technology, and the development of our people provide a key competitive advantage relative to our competitors, in particular, the non-asset-based IMCs. These barriers to entry are becoming more significant as fleet size and trucking capacity becomes a larger issue. Last but not least, is that intermodal is the growth engine for the railroad industry. Our partners are investing significant capital to ensure we can continue to grow intermodal, which will enhance our service offering and competitiveness. We believe that these factors, taken together, provide a compelling backdrop for intermodal growth, and also for integrated solution providers like Hub Group, who can bring a full suite of services to support their clients. With that, I'll hand it over to Phil to discuss the performance of our service lines. Thank you, Dave. I wanted to also thank our entire Hub team for all of their effort in supporting our clients in this dynamic market. We have and will continue to overcome many challenges, but our team has worked diligently to support our customers while deepening the value we bring as a trusted supply chain partner. For the quarter, intermodal revenue was up 23% and volume increased 7% year-over-year. Transcon volumes increased 25%, local West was up 4%, and local East was flat. While gross margin as a percentage of sales declined 140 basis points year-over-year. While it has been a strong pricing environment, the benefits of our renewal and changes to our accessorial programs were not fully realized in the quarter. We believe the actions we have taken will support strong margin expansion throughout the remainder of the year. However, we are incurring higher costs, including an increase in third-party capacity usage, driver wage inflation, elevated rail costs, and customer facility congestion, all of which we are laser-focused on mitigating. In order to support our continued growth and demand, we have worked aggressively to ensure we will be able to receive all of our 3,000 container orders this year, and have put pay actions in place to recruit and retain drivers in our dedicated fleet. These actions, we believe, will support growth through this peak season and into next year. Logistics had strong results, delivering 25% revenue growth with gross margin as a percentage of sales largely flat year-over-year. We have continued to focus on improving yield and top-line growth through operational and commercial enhancements across our offerings. Outsourced Transportation Management has an excellent pipeline for growth given the challenges many shippers are facing in today's difficult logistics environment. We are better leveraging our technology and scale to drive efficiency and profitability. We will now be overlapping losses from last year at the peak of the pandemic and plan to see growth in the back half due to strong customer onboarding. We have enhanced our processes at CaseStack and are seeing sequential improvements in margin while sustaining strong top-line growth. Lastly, NSD has been a great integration thus far, and we are ahead of our target on our synergy capture, most notably in our sales synergies. These offerings stand alone are very powerful, but as we continue to bring these solutions together for our customers, we are creating a seamless experience that we believe will help our clients solve their recent and ongoing supply chain challenges more effectively. In fact, since the acquisition of NSD, we have had several new wins that have allowed us to manage the complete end-to-end supply chain from foreign factory to door to consumer, which we believe will be a growth engine for us well into the future. We had a very strong quarter in brokerage with 62% revenue growth on a 5% increase in volume and gross margin percentage compression of 240 basis points year-over-year. We have shifted successfully to support our customers' transactional and service recovery needs, managing 49% of volume in the spot market while ensuring we maintain commitments on contractual business for strategic clients. As we renew bids, we anticipate further opportunities for growth and margin enhancement. We plan to continue to invest in growing our sales and capacity generation teams while automating processes and procurement, which will enhance efficiency and scale in our operation and will lead to longer-term growth. Lastly, dedicated revenues increased 1%, while gross margin as a percentage of sales declined 470 basis points year-over-year. This decline in gross margin percentage was driven by increased M&R expense, as well as higher driver, third-party capacity, and insurance costs, all of which we are working to minimize and ensure we effectively manage with our clients. The operational process and leadership enhancements we have made to the business are improving returns on capital, and we have a strong pipeline for profitable growth. I will now turn it over to Geoff to discuss our financial performance. Thank you, Phil. We are pleased with our Q2 performance with revenue growth in all of our service lines and total company revenue up 26%. Gross margin was $121 million, or 12.3% of revenue, which is an improvement of 50 basis points relative to Q1 and 90 basis points relative to the second half of 2020. We continue to exhibit strong cost control with our quarterly cost and expenses equal to 8.5% of revenue as compared to 11.1% last year. Salaries and benefits expense for the quarter increased primarily due to incentive compensation and benefits expense, partially offset by lower salaries. Our non-driver headcount is down by 5% year-over-year, excluding the impact of the NSD acquisition, due to our efficiency and technology initiatives. General and administrative expenses declined by over $8 million as compared to the prior year, which included significant refrigerated trailer donation and consulting expenses. Hub Group's diluted earnings per share for the quarter was $0.78. This compares to $0.39 of diluted EPS in the second quarter of 2020. Our tax rate for the quarter was 23.8%. We generated $69 million of EBITDA in the quarter and ended with over $246 million of cash on hand. We have zero net debt, and our priorities for cash flow are to reinvest in the business through capital expenditures and strategic acquisitions. We are raising our 2021 EPS expectation to $3.50-$3.70 per share, up from the $3.20-$3.40 that we announced in May. For 2021, we expect revenue will grow in the high teens percentage range, with intermodal volumes up mid-single digits. We forecast gross margin as a percent of revenue of 12.5%-13.0% for the year, growing as a result of our rate increases and partially offset by higher costs for rail transportation, third-party drayage, and driver wages. We continue to see strong consumer demand and low retail inventory levels, which is driving the need for our customers to restock. For the year, we expect costs and expenses of $355 million-$365 million. We expect our tax rate will be 24%-25% for the second half. Our 2021 capital expenditure forecast is unchanged at $165 million-$175 million. We will be adding 3,000 containers this year, along with 150 refrigerated containers and approximately 700 tractors to refresh and grow our fleet. We are also pleased to announce long-term revenue and margin targets. By 2025, we expect revenue will range from $5.5 billion-$6.5 billion, which represents compound annual growth of approximately 7%-12%. We expect half of this increase will be through organic growth, driven by our superior customer experience, strong value proposition, and our ongoing investments in our technology, containers, and tractors. We will continue to be active acquirers of non-asset logistics businesses that add to our suite of services, build scale in our core operations, and strengthen our customer relationships. We expect our long-term operating income margins will range from 4.0%-5.5%, and EBITDA margins will range from 7.5%-9.0%. Margins will benefit from the investments we are making in our business, both in technology and equipment, as well as our continued focus on operating cost efficiency. Dave, back to you for closing remarks. Thanks, Geoff. Our outlook through at least the first half of 2022 remains very optimistic. Demand is strong in all of our business lines as our customers continue to need cost-efficient solutions that offer high levels of service. With that, we'll open up the call to any questions. Thank you. We will now begin the question and answer session. If you have a question, please press star, then one on your touchphone. If you wish to be removed from the queue, please press the pound sign or the X key. If you use a speakerphone, you may need to pick up the handset before pressing the numbers. Once again, if you have a question, please press star, then one on your touchphone, and if your request comes through, the line will open. Our first question comes from Justin Long from Stephens. Your line is open. Thanks, and good afternoon. Good afternoon. I'll start with one on the longer-term guidance. Any color you can provide on the amount of capital that you feel like needs to be deployed in order to hit these targets? Geoff, it was helpful to hear that it's half organic growth, half acquisition-driven, but just wanted to clarify the capital that needs to be deployed. As we think about the range for both revenue and operating margins, it's a pretty wide range. How should we think about that? Is that a kind of trough-to-peak range? Maybe you could just talk about the key drivers on both ends of the spectrum. Sure. Happy to do that. This is Geoff. Half of our forecasted increase in revenue is going to be organic and half through M&A. We're going to continue to reinvest in the business, both through the CapEx that will support our organic growth rate, obviously through the acquisition spending that we see. On the organic side, we're looking at mid to high single-digit organic growth CAGRs. Certainly, intermodal is going to lead the pack there. We're going to continue to invest and build both our container fleet and our tractor fleet. We're going to look to improve the mix of drayage that we do on our own fleet, up to 80% over time. We have a very conservative capital structure that's going to allow us to make those investments. We're currently at net debt of zero. We've penciled out the capital expenditures required to hit that growth in the container fleet and the tractor fleet. We believe that can be up to approximately $200 million per year. That, combined with the acquisition spending that we're going to look to deploy over the next four or five years to meet these targets, we're comfortable we can handle that level of investment. Given the earnings power of the business over time, we're comfortable with the leverage that would be required to fund that. To your point on the operating and EBITDA margin ranges, the answer is yes, that those ranges are meant to encompass both a peak and trough pricing cycle. We're going to look to grow the margins over time based on the returns we're going to get from those investments we're making in the business on the drayage side, where there's a significant cost advantage to running more in your own fleet, as well as the operating cost efficiencies that we're going to continue to pursue, which as you know, we've been doing that over the last several years, and we'll continue to do that going forward. Do you think the high end of the operating margin range is something that could be achievable as we look into next year, just given the pricing dynamics? Obviously by then, we will have repriced and implemented everything from mid-season. Yeah, that's certainly going to be a key driver is another strong pricing cycle, and it's certainly possible we could be achieving that range coming out of next year. I guess last question from me, the outperformance in terms of operating expenses this quarter really stood out. We actually saw a sequential decline. Any color you can give on operating expenses in the second half and what that quarterly cadence could look like? Sure, yeah. Our guide for the year is 355 to 365, and doing the math, if you just use the midpoint, we are going to have more expense later in the year. We've had that as part of our forecast. We've talked about that. The big swing factor there is incentive compensation expense. Our intention in the way we're accounting for that expense is to book more of that in line with higher gross margins that we're intending to achieve later in the year as well. We will see a sequential improvement or sequential growth in costs and expenses towards the second half of the year. The other swing factor there, too, is gain on sale. Year- to- date, we've generated about $4 million of gain on sale of equipment, and that benefited the Q2 number as well. Okay. You're assuming no gains the rest of the year? Yeah, we haven't factored that into our forecast, but I think it's likely we're going to have, certainly have some. Okay, great. I'll leave it there. I appreciate the time. You're welcome. The next question comes with Scott Group from Wolfe Research. Your line is open. Hey, thanks. Afternoon, guys. Just want to follow up on a few things. If the intermodal business is going to become more asset intensive, shouldn't that warrant or require, I guess, better operating margins like we see from some of the other guys that do more of their own drayage? Sure. Yeah, this is Phil. Yes, I would agree that as we bring more in-house, our operating margin should increase. There are a few differences with our model. Obviously, we don't have capital going towards chassis, and have gone with a non-asset model there, really working with our rail partners on that. That's capital that is a little bit different, and would obviously be an adjustment from a margin perspective. Yes, our read and focus is going to be on getting to that 80%, getting there with a higher company driver mix, and that should drive a higher margin to the high end of the range and help us maintain that, I think, as well, during some of those trough pricing markets that inevitably will come about in future years. We think will help us sustain a stronger cost structure and margin. I would just add to that, too, we are going to continue to grow our logistics and our brokerage businesses, both of which are non-asset based. Typically have a lower margin profile, but obviously have a very attractive ROIC profile. Right. Can you talk about how you expect the cadence of gross margin in third and fourth, and if you have any sort of initial preliminary thoughts on what 2022 could look like? Sure. The guide for gross margin for the year is 12.5%-13.0%. We certainly expect to be north of 13% as we exit the year. I think the cadence you saw going from Q4 to Q1 to Q2, we expect we'll continue on that path. We've got, at this point, well through the end of the second quarter, 67% of our volume is repriced. We've got another big chunk that just went in. We're actually at, as we stand here today, about 80% repriced. With the repricings that have happened over the last 60 days, being the most significant on a year-over-year basis, just in terms of where those customers had their rates set at the May and June trough last year. There's a pretty significant pickup now in pricing and as a result, in margins that we'll be realizing in the second half. Okay, thanks. If I can just ask one more, maybe just some thoughts on some of the rail embargoes or whatever they are that I think it's more international than domestic, but any thoughts on that and how it's impacting costs and volumes in the third quarter? Hi, Scott, this is Dave. Right now, as far as the Union Pacific on the eastbound between Los Angeles and Chicago, that's strictly international, so it really does not negatively impact us. If anything, probably is a slight service enhancement. UP did actually shut down their intermodal network for, I believe it was four or five days recently. Candidly, I was a little skeptical. It actually did clear up their network, and allowed them to operate better. I think that, while it's somewhat unconventional, I think it's obviously something their operating people had given a lot of thought to and did actually help the fluidity somewhat. Got it. Thank you guys. Thanks. Our next question comes in. Todd Fowl er from KeyBanc, your line is open. Great. Thanks, good evening. On the longer-term targets, the inorganic piece of the equation, can you give us a sense of would you be looking for, you know, one or two large acquisitions to get to the inorganic piece? Is it a series of smaller acquisitions? How do you think about the level of leverage that you'd be comfortable with if a larger acquisition came sooner versus later in the process? Sure, yeah, we've actually modeled both scenarios. We've modeled a larger deal in one of the years, and we've kind of modeled out $200 to $300 million of revenue for the next three or four years. We're comfortable with both. We certainly think our capital structure can support either one. We're comfortable going up as high as kind of 2.5 to 3x EBITDA on the leverage side. Would like to get that down within the first year or two down to a more manageable level of under 2x. We're confident that the capital structure we have can support that capital investment need. Okay, that's helpful, Geoff. Just another one on the margin side. I would think that there would be some efficiencies as a larger organization. Spreading some overheads and some corporate costs across larger revenue base. It doesn't seem like maybe that's implied within the operating margin guidance. Is there a reason why you wouldn't see more overhead leverage from a larger organization, or is there something that within the guidance you've got holding you back from getting there in the short term? No, we would certainly intend to leverage the corporate expense overhead, which tends to be more fixed in nature. We've been doing that. I think if you look over the last 12-18 months, you've seen us do that, and we would expect to continue to do that. The range we gave was really meant to be more encompassing of up markets than down markets from a rate perspective. Got it. Okay. That helps. Just the last one, and I'll turn it over. As you think about the updated guidance in the second half, what are some of the puts and takes that would put you at the high end or the low end of the range? It's still a relatively wide range given the fact that we've just got two quarters to go. I'm just kind of curious what you've got your eye on at both ends of the range. Thanks. Yeah, sure, Todd, this is Phil. I think the puts and takes will be, obviously, we think we're going to realize really strong pricing and have a very strong peak season. Network fluidity is certainly something that we're watching very closely in the intermodal segment. The ability to get turns out of the capacity that we have. There's obviously rail service challenges on line of rail, congestion in terminals, chassis shortages. You have drayage congestion, both with our third parties and our own drivers, as well as customer facility congestion. We're putting in actions to mitigate all of those challenges that we're facing. We've done some very large driver wage increases. We've put in new incentives to align their behavior with our performance, whether it's safety or retention bonuses or night and weekend work, productivity pay, all those things are going to be very beneficial in solving that. We've adjusted [our asset tutorial] programs with our customers and are being very proactive there, and I think have really aligned better operationally with our rail partners. I feel as though we're making the right progress to be able to mitigate that fluidity challenge. At the same time, that would probably be the largest factor that we're watching is can we continue to get network fluidity improvements? We saw that quarter-to-quarter Q1- Q2. We need to maintain that through Q3. Beyond that, we feel very good about the market. We have really strong onboardings coming in our logistics division, coming on in dedicated that will support margin expansion and growth. Brokerage just continues to perform very well. I would say the biggest washout is just going to be making sure that we continue to get the network fluidity up in intermodal, and we'll be in a great position to hit the high end of that range. Okay. Sounds good. Good luck. Thanks for the time. Thanks, Todd. Your next question comes from Jason Seidl from Cowen. Your line is open. Thank you, operator. Gentlemen, good afternoon. Wanted to talk a little bit about the drayage capacity. In 2Q, what% of your business was going third party versus your own internal drayage? Yeah, in Q2, we did about 52% on our own fleet. What does that compare to the prior year? Last year, we were at about 61%, last year Q2. Really starting at the end of Q2 last year, we really did very well in bid season and took on a lot of volume, really starting at the beginning of July last year. Our percent on our own fleet did start to come down in the second half of last year to the mid-50s, and so we're kind of at the lower end of that range now in Q2. Okay. Third-party capacity, how much more expensive is that for you in this current market right now? Yeah, typically is a gap of 10%-15%, can be depending on the lane, if it's regional or longer haul, obviously that cost increase is going to be a higher amount on a dollar basis, but maybe lower on a percentage basis. Really varies in that range there. Yes, we've certainly seen a tightness in third-party capacity. There's a lot of loads available. We have strong relationships with our third parties that help us manage through these sort of market fluctuations. We also need to make sure we're staying competitive in the rates that we're paying. What's the plan to get up to 80%? Most trucking companies are always trying to keep up and raise rates. How are you going to get from 52 now to 80% by 2025? Sure. It's a mix of making sure that we have a great place to work. Competitive wages, strong incentives to have the right behavior, celebrating what our drivers are doing every day. We have a great offering where we have a very new fleet. Our drivers are home every night. As Dave mentioned in his prepared remarks, drivers have choice, and we think that within intermodal in particular, we just have a great career opportunity from being able to be home, making a very strong wage, having consistent work, and very good equipment, and a great experience. Really it's going to be making sure we stay very competitive with those wages and making sure that we maintain that great driver experience. I do think that it is very doable. Right now is certainly a challenging time in hiring drivers. I anticipate, though, that we'll maintain a high level of consistency in adding drivers as maybe wages normalize somewhat, and we don't see the kind of inflation that we're currently seeing. It's certainly a challenging market, but will not be the market forever, and we plan to make sure we're staying very consistent in our approach so we can hit that level. Okay. I appreciate the time, as always. I'll turn it over to somebody else. Thank you. The next question comes from Bascome Majors, Susquehan na, your line is open. Yeah. Good evening, and thanks for taking my questions. With the bids that you've implemented very recently, can you talk a little bit about the gap between truckload pricing in the East and West, and how that compares to the last few years? Any other period you'd like to benchmark against? Sure. Yeah. This is Phil. There is obviously a continued conversion to intermodal as prices and capacity availability in the truckload space are becoming less available. We have been able to, in our bid, we're about 80% effective as of August 1st. We've been able to see rate increases depending on where base rates were in the low to high teens, even some as high as 20%, and are focused on closing the gap that we've seen. Obviously, transcon volumes have a higher rate differential versus truckload. That is a part of why you have seen us grow our long-haul business. That's why transcon was up over about 25% in the quarter, is we think that that's longer term intermodal business versus chasing where there might be shorter haul business that might convert back to truckload. That gap is larger in price, but we're getting larger increases there to make up for that gap. I would say, that's in that 20%-30% range at this point. You look in the East and the shorter haul lanes, and that's going to be, depending on the lane, somewhere in that 12%-18% sort of differential, and we are obviously staying focused on closing that gap as well. We have seen some increased costs, as we mentioned, with drivers, third parties, slow return times, but we are making sure that we're being transparent with our customers around that and not letting that compress yields either. Still opportunities out there, and I think as we get through and come onto the new cycle of bids that'll be coming in soon, we'll see that those have significant increases associated with them, as well as those prices kind of last quarter of last year got the benefit of maybe being on the front end of bid season. Thank you for that detail. I realize the capacity's simply not there to convert as much as people would like to convert today, are you having longer term discussions or early conversations about next year? How has this environment changed the kind of duration and look forward of that capacity discussion? Any visibility into the opportunity to grow this business in 2022 and beyond? Sure. Yeah. I think there are many discussions taking place around longer-term sort of agreements. It has to be with the right customer where you're strategic and have built a long-term relationship because obviously, those only really have the value of whether you trust each other and are going to live up to both sides of that arrangement. We're very open to making those sorts of arrangements, but certainly with the right clients. I believe there's going to continue to be rate inflation going into next year. We want to make sure that those agreements are structured correctly to ensure we aren't taking on business that isn't going to allow us to expand our margin. That helps us with locking down network-friendly freight. That helps us with having visibility for capital expenditures and what we need to do there to support growth, and gives customers, which is what they need right now, is certainty. That is something that we continue to have discussions on, I think you'll see more contracts moving to a longer term index-based sort of relationship. That'll be good for all parties as we move forward. Thank you. Our next question comes from Tom Wadewitz from UBS. Your line is open. Hey, guys, this is Maitrayan. I'm on for Tom. Wanted to ask about the intermodal container adds. You mentioned that you expect to get the full 3,000 in this year. Could you just talk about whether you think you can start getting those in 3Q or if they'll be more 4Q weighted? Yes. We're going to get 55%-60% of those in Q3, we think. We've been very aggressive in ensuring that those get in. We're bringing more in loaded than we have in the past. Typically, we bring those in empty. In order to get on ships, we've converted more to a loaded status, and that's helping us get that prioritization. Also helping our customers get capacity for imports. That's a new program that we've really worked hard on. I think the team's done a great job there. Once again, we're anticipating we're going to get that 55%-60% in Q3, and then the remainder really kind of in the October to 1st week of November timeframe in Q4. Those won't spill over into December or anything. We're feeling very good about that. Okay, that's great. Could you provide the intermodal volume growth by month in the quarter? Then if you've got July month- to- date, that'd be great as well. Sure. Yeah. April up 19% year-over-year. May was up 6%, and June was flat. Month to date July, we are down about 6% year-over-year. I would add that in July it is improving, this is Dave, on a weekly basis, as we're focusing an awful lot in what we would term as dead days when a container is sitting idle. There's a lot of focus on that. We can only control so much as far as with service or with the destination warehouses. There is areas within our control that we believe we can continue to enhance our turn times, which will enhance the amount of capacity we have. Okay, great. Thanks for the time. Thank you. Just as a reminder to enter the queue, please press star then one on your touchtone phone. That's star one to enter the queue. Our next question comes from Charles Yukevich from Evercore. Your line is open. Thank you for taking my question. Good afternoon. I'd like to ask about the electric truck fleet pilot with Daimler. Could you give us an update on your experiences thus far and what potential you see for electric trucks within dedicated and drayage? It's a great question. We're really excited about the pilot we're running. It's in Southern California. We have learned a great deal thus far. Our drivers really enjoy the truck. It's a very smooth ride. We've gotten very good with regenerative braking, which allows us to elongate the usage of the battery beyond just the baseline 200 miles that it has. That's very exciting, and I think something that gives us a lot of opportunity. Our length of haul is typically around 90 miles, the application for electric is phenomenal and fits with the turns that we get out of our drivers on a daily basis. Really, it's going to be about weight, which is a current issue that we need to continue to work with our partners on. It's going to be about infrastructure, right? The cost of electricity, the ability to support that sort of charging on a more large scale. Because it is a more expensive asset, more capital intensive, how do we make sure that we're getting a higher level of turn out of that asset, not having it charge for eight hours? If we can cut that down to one hour, you can flip seat more, get more utilization, and therefore, make sure that we're getting a high return on that investment. Very excited though with what we've seen thus far. I think the applications are great. We have put orders in for a 2023 receipt of some electric trucks, and so we're very excited about that. Overall, gone very well. That's great. Thanks for the update, Phil. Welcome. Our next question comes to Brian Ossenbeck from JP Morgan. Your line is open. Hey, thanks. Appreciate you taking the question. Just want to come back to, I guess, the opening remarks on the longer term potential for intermodal. I think those are all coming into focus a bit more every day. What do you have embedded from the conversion story into your long-term financial targets? You probably have a range, but maybe you can give us a little bit of context as to what level of growth you think is reasonable given the investments and given the conversations around service, around ESG, and everything that kind of rolls up into there. Has this environment made it harder to sell the conversion because of the service, or are people willing to look through that? Yeah, I would say we're anticipating, as Geoff mentioned, high single- to double-digit organic growth rates, and that would be the same with our intermodal segment, which would be pretty consistent with what we've seen in the past. I do think, though, to your point, that there's an opportunity to continue to convert more in that we're seeing the fuel efficiency and ESG component of the environmental friendliness come in actually more as a financial metric given what our large customers are committing to from a CO2 emission reduction. That is something that will become more and more important in the calculus, and so we plan to invest into that and could certainly exceed those targets. In the short term, I would say that the capacity availability has been a challenge, that more and more folks are looking for options. We're being selective on what business we take on. We want to make sure that operationally, it's going to allow us to turn our assets, utilize our drivers and our third parties as effectively as possible, and that we're going to be able to provide an effective service. Now, that might mean different things to different people at this moment in time. Some customers really just want to see you pick up the box and get it off their dock, and that's fine. Others continue to hold us to that high standard of service. There is a different tolerance, I would say, across different customers right now, depending on the activity in their supply chain and their ability to continue to keep freight moving and what options they're getting from other providers. We're continuing to stay selective on what's going to be a good fit for us in the network, generate the right amount of yield as well. I would just add, longer term, we have been and expect to continue to take share from other non-asset intermodal players based on the investments we're making, both in our container fleet and our tractor fleet, which allows us to offer a superior service product to the marketplace. Got it. You mentioned ESG, and I think there was some commentary earlier about how much emissions you've been saving customers. Is that getting to the point where it's on their scorecards, it's in the bids? Is it sort of a nice to have, or are people really dialing into Scope 3 emissions and figuring out ways to reduce those numbers, or at least be more aware of them going forward? Yeah, this is Dave. With a lot of our larger, more sophisticated clients, they certainly are monitoring their CO2 emissions and are very focused on reducing the amount that they're responsible for. It's not part of a bid at this point in time, but I do think that as this continues to evolve, that we're going to see more and more emphasis on it, and certainly many of them are monitoring it now. I think it's just a question of when they actually execute their selection on transportation providers based upon it. Great. If I can just ask one quick follow-up. You mentioned rail service in the West with UP and the embargoes and things we've seen there. Can you just give us some quick comments on the East? Obviously, chassis are tight everywhere, but we've seen some metering as well from some of those facilities. Is that part of the reason why things are a little bit tough to start July? Maybe you can give us some context as to how it's improving from here. Thank you. Sure. Yeah. I think you're aware of some of the challenges in the East, that includes some terminal congestion, chassis shortages, and other challenges in yards and facilities. We are seeing those improve. We're seeing long dwell boxes come down. We're seeing chassis availability improve, and that has all been sequentially. That was a big part of the issues we had in July. With that improved sequential fluidity, we're looking forward to having a strong close to Q3 into the back half in Q4 as well. All right. Appreciate the time. Thank you. Thanks. That concludes our question and answer session. I'll turn the call back over to Dave Yeager for final remarks. Well, again, thank you for joining us on the earnings call. As always Phil and Geoff and I would be available if you have any additional questions. Thank you again. Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect.