Hello, I'm Brad Stock, Assistant Vice President of Investor Relations, and welcome to Union Pacific's 2021 Investor Day. We're so pleased you have chosen to join us today for this virtual event as we lay out our vision for Union Pacific for the next three years and beyond. Now, with a virtual event, one of the challenges is that we're a little limited on the amount of time we have to delve into detailed subjects. In an effort to supplement what you'll see today, we have provided additional material to fill some of those gaps. On the platform you are watching this event from today, there will be slides that accompany the presentations in order to provide additional information. All of the slides, videos, and recorded Q&A sessions will be available after the event in the Resources section. You will also find today's agenda and speaker bios. All of the slides from today's presentations are also available on the UP investor website. Yesterday, we published our 2020 Building America Report, which is our sustainability report. It now includes all of the information you previously found in our fact book. Our ESG story continues to evolve, as does this report. We hope you find it to be thorough and helpful. A link to that report can be found on the platform as well. On today's agenda, you'll note that we have three separate Q&A sessions where sell-side analysts will have the opportunity to ask live video questions of our leadership team. In addition, through the platform, you have the opportunity to submit questions that we will weave into the conversation as well. With the Q&A sessions, please note that all of the speakers have been fully vaccinated. Finally, before we start today's activities, I must remind you of our safe harbor statement. Today's Investor Day presentations contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. In addition, management may make forward-looking statements orally or in other writing during, among other things, today's management presentations and question and answer sessions. These statements involve a number of risks and uncertainties. Actual results could materially differ from those anticipated by such forward-looking statements as a result of a number of factors or combination of factors affecting the operation of the business and other risks identified in today's presentations, in Union Pacific's annual report on the Form 10-K for the year ended December 31st, 2020, and in other reports filed by Union Pacific with the Securities and Exchange Commission. Forward-looking statements reflect the information only as of the date they are made. Union Pacific does not undertake any obligation to update any forward-looking statements to reflect future events, developments, or other information. With those housekeeping items covered, let's begin. I'm very pleased to hand the presentation over to our Chairman, President, and CEO, Mr. Lance Fritz. Hello, welcome to Union Pacific's Investor Day. While I'd much rather be doing this in person than virtually, my leadership team and I are excited to spend the next few hours sharing our plans to unleash the great potential of the UP franchise. You're going to hear two major themes in our remarks today. First, a firm commitment to precision scheduled railroading or PSR, and second, passion and a plan to grow our business volumes. Importantly, we'll translate how achieving those two objectives are going to enable us to continue our long track record of delivering industry-leading cash returns to our shareholders. Some of what we'll discuss today is a continuation of the great work already underway, and you'll also hear about some changes that we believe are critical to achieving the full potential of Union Pacific. Before I lay that foundation out for you, let's step back and reflect on our journey and the great progress we've made over the last few years. At our last Investor Day in May of 2018, we laid out the following objectives that we expected to achieve by 2020. Positive volume growth, pricing gains above inflation, a 60% operating ratio, capital investments of less than 15% of revenue, $20 billion of share repurchases, a dividend payout ratio of between 40% and 45%, debt to EBITDA ratio of 2.7x, and maintaining strong investment-grade credit ratings. Of course, we had no idea when we laid out those targets that we'd face a global pandemic that would severely impact the global economy. The fact that we were still able to achieve six of our eight objectives is remarkable. The two where we fell short, volume growth and share repurchases, were directly and heavily impacted by the pandemic. Our most remarkable achievement was a 58.5 adjusted operating ratio in 2020. That is 420 basis points better than 2018 with volumes down 13%. That achievement was a direct result of implementing PSR. PSR also enabled the roughly $18 billion of share repurchases and a 56% increase in the annual dividend during the period. Something that can get lost in all of those numbers is the how, and that is Union Pacific's employees. The women and men of UP made those numbers happen. They used their knowledge, their skills, their determination, and grit to fundamentally transform the railroad and generate exceptional performance. Before I get into our strategic plan, I think it is important to frame how we view the competitive landscape over the next three years. Everybody is experiencing the rapid transformation and consumerization of our economy. Supply chain and logistics are no different. It shows up in technology platforms and ecosystems used by our customers. It shows up higher expectations that customers have in their user experience. It shows up in our ability to react more quickly to changes in demand. It also enables us to have greater reach into customer supply chains. We'll talk about all of that later. Any discussion of the competitive landscape begins with our network, which is the strongest in the industry and a key differentiating factor for UP. As we will discuss over the course of today's presentation, one of the key objectives of our PSR initiatives is to enhance our efficiency and assure we are harnessing our network to better serve customers and drive growth. The competitive landscape is shifting around us. The most obvious example is all of the attention around Kansas City Southern and their potential merger partners. As you know, we believe any proposed merger should go through the STB review process to test the merger expectations around competition and improving service for customers. Of course, we welcome competition, and we also want to be on an equal playing field. We will fully participate in the STB process to seek equitable treatment that supports a competitive environment for our industry and for our customers. Regardless of moves by our competitors, we believe that our strong franchise positions us to win. Whether it's our access to the grain fields in the Midwest, the gateways to the East, the Gulf Coast petrochemical complex, the major population centers of the West, or the six major border crossings in and out of Mexico, we're positioned to win. Another area where we are seeing the competitive landscape shift is the emergence of autonomous trucks. This is a trend we've been following closely. This past December, we made an investment in TuSimple as a way to both stay connected to the developments and to leverage this technology in our own operations. We're currently evaluating autonomous drayage as a way to expand the reach of our network. Ultimately, our answer to autonomous trucks is autonomous trains. Using the positive train control platform we've already invested in, we believe the ability to reduce crew size is in our future. This provides for a safer and more sustainable method of transportation. Certainly from a public safety standpoint, running an autonomous train on a fixed track seems much safer than running 18-wheelers without drivers on our highways. Although rails today have a significant environmental advantage over trucks, the transition to electric trucks could change that dynamic. Again, Union Pacific is not standing still. We're working with both U.S. locomotive OEMs on innovative solutions, which you'll hear about later today. We are committed to making our low-emission profile even lower. Now, with this as backdrop, let's look at where we are today. Union Pacific will celebrate its 159th birthday in a couple of weeks. We're no stranger to sustainability and the need to think and plan for the long term. As we look ahead, we see new challenges, new opportunities, and the ability to leverage our enhanced agility. The strategic plan that we'll discuss with you today is framed with four driving principles. serve, grow, win, and doing that together. while these may be new words, the essence of our strategy is unchanged. Everything we do starts with serve and the transportation products we provide our customers. Precision Scheduled Railroading, which we first started implementing in late 2018, is the foundation for delivering customer-centered operational excellence. PSR isn't just a new operating plan or philosophy for us. It's now embedded in our culture, and we actually talk about it as Pretty Simple Railroading. We're applying that mindset to everything we do. We've done the extremely hard work of reducing layers in the organization, which reduced our administrative and management staff roughly 30% over the last three years. This has come with some real pain, but it was necessary to drive decision-making to where it belongs in our organization, closer to our customers. The results speak for themselves. Since 2018, we've increased our freight car velocity 6%, our dwell times are down 21%, locomotive productivity is up 30%, and workforce productivity is better by 19%, despite down volumes. As we look for volume growth in 2021 and beyond, we have work streams lined up against each of these metrics to drive further improvement, which leads to the next tenet of our strategy, grow. We have the best franchise in North America. We're providing one of the best service products in the industry, and we've got one of the lowest cost structures in the industry, and we have available capacity as we're using fewer assets to move our customers' freight. Similar to the cultural shift we've experienced with PSR, learning to grow and aggressively pursue growth requires a change in mindset. We've already taken a number of actions, particularly in our marketing and sales team, to position us differently in the marketplace. The culture shift isn't limited to our sales team. We have to push the entire organization to have a growth mindset. A great example is a program that we call Scouts, where we are empowering local operating employees to leverage their knowledge to find business development opportunities. We also see opportunities to grow by providing more services for our customers. Today's logistics and supply chains are complicated, and they're very tough to manage. We can help by adding services for our customers using breakthrough technology, which is part of the reason we hired Rahul Jalali as our new CIO. Rahul comes to us from Walmart and knows all about being committed to the customer. Rahul, Kenny, and the marketing and sales team are spending time with our customers to learn in great detail their experience with UP. That work is helping us break down the user experience barriers that keep our customers from doing more business with Union Pacific. In addition, we expect to grow by expanding our reach. We already do this today through our Loup subsidiary. It serves as an intermodal marketing company or IMC, especially in the service-sensitive auto parts sectors, as well as a transload provider for carload customers. As we've reduced car touches through PSR, we've curtailed a number of smaller yards. Beyond providing efficiency and service gains, emptying those yards creates opportunities for new transload locations, for storage in transit tracks and yards, for customer lease tracks. We're always looking for opportunities to better serve customers and win competitive business. If there's an opportunity to accelerate growth, either organically or inorganically, by helping solve a customer's problem or by filling a supply chain gap, we're going to pursue it. Successful execution of our plans to both serve and grow lead to winning. Our ultimate goal is to be the best. We are a logistics leader today, and we plan to continue to be one going forward. In the past, that leadership has manifested itself in our safety performance, our operating ratio, and our cash flows. Going forward, we'll continue to focus on driving all of those metrics while turbocharging our results by increasing our share of new and existing customers' transportation spend. Jennifer is going to wrap things up today with our financial targets, which are a clear win for our shareholders. Let me give you a quick spoiler alert. We will achieve a 55% operating ratio in 2022. Let me repeat that. We're going to achieve a 55 operating ratio in 2022. Our definition of winning extends to each of UP's four stakeholder groups, which is the final piece of the strategy together. For our communities, it's about being a responsible corporate citizen that cares about the environment, working to protect the waterways, air, and other natural resources. It's also about being a leader in diversity and inclusion and setting and achieving goals to make our workforce reflect the communities that we serve. For our customers, it's about being the best for them day in and day out, helping them easily find transportation solutions that make them more competitive. It's also about delivering their freight safely and damage-free. For our employees, it starts and ends with safety. We want every employee to go home safely every day. When it comes to employee injuries, the goal is zero, and nothing matters more. We also want to be an employer that supports its workforce and provides a work environment where each employee can be his or her full and authentic self. We believe employees are more productive when their financial success is aligned with the company's success. Right now, shareholders are voting on an employee stock purchase plan, which would be available to all employees and include a matching company contribution. For shareholders, it's about bringing together all the elements I've spoken about today to create sustainable long-term value. It's an exciting time to be at Union Pacific, and we are confident that the great track record we've established over the last several years will be even better going forward. The team at Union Pacific is motivated to succeed. We're developing a culture around serve, grow, win together, and I'm looking forward to putting our talent, our plans, and our goals on display for you today. With that, let's kick things off with how UP's working together to build a sustainable future. Our world is changing. Modernization is happening faster than ever. Risks are more intense, and changes to protect the environment are a must. Building a sustainable future 2030. Over the next 10 years, we envision investing in our workforce. Initiatives to recruit, develop, and retain a diverse workforce that reflects the world around us. Driving sustainable solutions. Seamless customer experiences built on innovative solutions. Championing environmental stewardship. Reduce GHG emissions that help us meet the goals outlined by the Paris Agreement. Strengthening our communities. Support for minority-owned businesses and philanthropic aid that strengthens communities. Together, we will build a stronger, more sustainable future. It's a phrase we hear more and more, ESG, but what does it mean? At Union Pacific, our approach to environmental, social, and governance is woven into our DNA. Our railroad has had a front seat to some of the biggest cultural events of the last 160 years, and our ability to quickly adapt and keep America moving has made us successful. That resiliency will continue to serve us well as we reinforce our commitment by introducing a more comprehensive approach to ESG issues. Our approach addresses the evolving needs of our stakeholder groups over the next decade. We couldn't be more excited to share with you what's coming. The key to our success is always going to be our people, so we're really committed to fostering a diverse and inclusive environment. If you have a workforce that comes from different backgrounds and different perspectives, you're going to get more challenge to decision-making, you're going to get more different thinking about how you approach problem-solving, and you're going to get more creativity. Recognizing we still have work to do, in 2020, we set goals to reach new, much higher representation levels in our organization by 2030 for both women and minorities. A target of 11% female representation, which is a doubling, and 40% for minorities. We're implementing a lot of new tools to make sure that we have an inclusive environment. Particularly in the areas of professional development. We've created a wonderful program with the University of Nebraska at Omaha for employees to be able to earn a degree, either undergraduate or graduate, with no out-of-pocket expenses. Additionally, we've created training to help our team understand, how do I welcome diversity in the environment? How do I make people included? We're implementing a new program called Embracing Our Differences, which really helps us take it to the next level and create the kind of psychological safety for our employees that makes them be able to bring their very best self to work. For me, this is one of the most important things that we can do. We want to make sure that Union Pacific is that welcoming environment where everybody can be their best. Union Pacific is proud of the role it plays supporting the transition to a more sustainable future, one that provides innovative economic solutions. By transporting goods via rail, our customers are reducing their own carbon footprints by up to 75%. We developed the online carbon emissions estimator in 2011 to help customers understand their emission savings from shipping by rail versus truck. In 2020 alone, our customers eliminated an estimated 21.9 million metric tons of greenhouse gas emissions. We're proud to move environmentally responsible products, such as renewable fuels and the parts to build wind turbines. Over the past 10 years, we've moved more than 80,000 carloads of wind components. As we work to further reduce emissions, we're proud to provide our supply chain partners solutions that reduce their own carbon footprints. Earlier this year, the Science Based Targets initiative approved our targets to reduce absolute scope one and two greenhouse gas emissions from our operations 26% by 2030 against a 2018 baseline. We're examining every aspect of our operations to look for innovative solutions. Let me give you a few examples. We've already reduced our locomotive fleet through efficiencies gained with precision scheduled railroading, and we're leveraging our energy management system to identify fuel-saving opportunities. EMS works like cruise control. It's either being installed or we're doing software updates on high-horsepower locomotives with the goal of equipping the entire fleet by year's end. At Union Pacific, we recycle as many wood ties as possible, and we're working to keep even more out of landfills. One project we're investigating is burning used ties while sequestering the carbon to create energy that feeds directly into the power grid. It's an opportunity to power communities our railroad operates in. Union Pacific has the longest-running supplier diversity program in the rail industry. Since its launch in 1982, we've made significant progress, but we can do more, and we are. Last year, about $423 million in goods and services were purchased from more than 275 diverse suppliers in 35 states, and that's an increase of 29% from 2019. We're also driving our suppliers to play an active role. Currently, 89% of our strategic suppliers reported purchasing goods and services from diverse suppliers, demonstrating their own support for our communities. For 2021, we set yet another aggressive goal to increase our year-over-year diverse spend by 25%. To help us accomplish this goal, we've added two additional employees who focus on identification and outreach, and we've joined additional regional diversity councils to broaden our reach. Finally, we are thrilled to announce a new partnership with Hightowers Petroleum Co., a Black-owned business in Ohio that will handle our fuel card program. Under that program, we anticipate spending approximately $50 million annually, representing a tenfold increase in Union Pacific spend with Black-owned businesses. I am super excited about the progress we've made, and I'm even more excited about our opportunities ahead. When I think about communities, it's about how we aid and support them. We connect small towns and thriving cities to the globe, providing them with access and opportunities to both grow and prosper. The key component of being a community partner is being present. Our equipment and property must be clean. All our employees must be professional, and we must show up to help communities solve problems and answer their questions. One of the key tools to help us engage is Union Pacific's Community Ties Giving Program, dedicated to building and fostering those communities. Four years ago, we redefined and focused our philanthropic giving on the premise a successful community must be safe, have a strong workforce pipeline, and have vibrant community spaces. Last year alone, we provided $26.8 million, serving nearly 3,000 organizations with a significant portion providing direct assistance to those impacted by the pandemic. When you add up the data from the past four years, we have impacted 40 million people with over 18 million of those coming from underserved communities. We know our philanthropic giving has the potential to change a life. The decisions we make as a company can still change the arc of a community. Such a combination is humbling, yet incredibly powerful and some of the most important work we do here at Union Pacific. The work we're doing to forge a brighter, cleaner future is built around our ESG goals and initiatives and layered into our corporate strategy. Together, we will deliver value to each and every stakeholder. Hello, everyone. I'm excited to be here with you today to dive into our first pillar of our strategy, serve. Union Pacific's operating department is on a journey. It's a bold journey inspired by our desire for productive, sustainable growth, fueled by our deep conviction to serve as we build America through operational excellence. Operational excellence focuses on empowering those closest to the work to leverage the unconstrained potential of our collective team. The foundation of operational excellence is safety. We will continue to leverage our ever-evolving safety programs that empower our team members to own all facets of risk identification and mitigation. One of the many examples is our work this year to leverage advanced modeling and our system-wide network of weather sensors to reduce the risks of derailments caused by weather events. Another example John Turner will discuss is Union Pacific's proprietary Precision Train Builder software. These and many other examples are delivering on our safety commitment, not only to our team, but also to the communities we operate within. Now let's turn to PSR. As you heard from Lance, PSR has been our guiding force over the last two and a half years and has enabled us to make significant improvements to our service product and efficiency. While we are proud of our progress so far, there is no end in sight in terms of what PSR can do. With every accomplishment, we see new opportunities to redefine what is possible. What are some of those strategic productivity initiatives we will deliver over the next three years? Let's start with train length. Growing train length will remain critical to delivering continued productivity. We are laser-focused on leveraging process enhancements and capital investments to drive gains in train length, and John will discuss more details in a few moments. Next is locomotive productivity. We have delivered significant locomotive productivity over the past two years by storing excess units. The work to operate a lean locomotive fleet will never end, but those efforts are expanding to further focus on variability. We will deliver a 20%+ reduction in locomotive variability to drive an even more productivity. This aggressive goal we'll accomplish through our modernization programs, implementation of technologies like rail cleaner, and maintenance component overhauls that target repeat failure modes. To reduce the amount of touches required to move a car, we will continue to deliver on our commitment to simplify the network. For example, just last month, we implemented new transportation plans that curtailed four yards in Houston and one in Council Bluffs. Other curtailment opportunities remain, and each curtailed facility provides a new opportunity for our sales team to profitably grow the business. Finally, capital investment. Our journey is not focused on transportation alone. It has, and will continue to include our mechanical and engineering departments as well. We will continue to be judicious with our capital investments as we leverage process improvement and technology to reduce our total cost of ownership. That includes, but is not limited to active initiatives to automate material unloading, consolidation of material warehouses, and leveraging machine learning for items ranging from automated track inspection to automated work equipment. Shane Keller will review a wide range of productivity initiatives within those departments. As you heard Lance lay out, operational excellence includes a customer-centric approach to growth. The customer-centric approach reinforces our commitment to the service product we provide. what are some of those strategic service and growth initiatives we will deliver over the next three years? First and foremost, we are continuing to leverage our low-cost structure to secure new growth opportunities. Kenny and his team will share numerous examples later today. Next, we are implementing new technologies that not only improve the customer experience, but also allow customers to optimize their business as well. Third, and a question we often get is how we're positioned to handle growth. We'll demonstrate the capacity we are generating in line of road, terminals, and assets to efficiently handle growth our sales team plans to deliver. Finally, we will be agile in our ability to enter new markets with speed. Our new Twin Cities Intermodal Terminal is a perfect example. By being flexible with our transportation plan and willing to take more calculated risks, we can meet market demands quickly. As you'll hear later today, there are more opportunities on the horizon. Technology is prominent across all of these efforts, so our CIO, Rahul Jalali, will provide insight into how technology is supporting our efforts to serve our customers. Now, I'd like to turn it over to my leadership team, who will lay out additional service and productivity initiatives that include our drive to be more fuel efficient, benefiting our cost structure and reducing our carbon footprint. Let's start by hearing how operational excellence is driving opportunities on the transportation side. Today, I want to talk about service and productivity and how that ultimately turns into growth. Almost 23 years ago, I excitedly started my career as a brakeman. In my career, I've held every operating position except locomotive engineer, and I can tell you so much has changed since I switched cars and rode trains for a living. I vividly remember carrying all the paperwork, rule books, timetables, hazmat guide, and work orders. A work order is how a train person reports cars into and out of our customer's facilities. I lugged around so much paperwork, I can still feel the weight of it in my memory. In addition to the weight, technology did not allow us to report car movements until the end of our shift. This latency sometimes could lead to headaches for the railroad and our customers. Thanks to mobile work order and reporting devices, we've been able to address these issues by eliminating paperwork and reporting near real-time, making life better for our employees and our customers. Future enhancements will allow the device to align designated yard switches, improving service, productivity, and ultimately safety. Another position I held was as an agreement supervisor called a yard master. One way we are expediting the learning curve for yard masters is through an initiative to develop a terminal planning tool using in-house technology that utilizes algorithms to maximize car connections and throughput to improve service for our customers. The system allows the supervisor to focus on executing the plan and leading people. As Eric mentioned earlier, Union Pacific's proprietary train-building software is a decision tool that helps the team build complex train profiles, reducing the time it takes to complete work events and makes building longer trains easier and more efficient. Our productivity related to building longer trains has been a significant driver of our success and will continue to be in the future. Train length reduces demand for resources and the number of trains on the network. This generates capacity while improving service. The point of it all is that we need to be an and company. We are constantly balancing productivity and our customers' needs. To achieve our train length goals, we will leverage three key strategies. First, we'll leverage our previous investments. Our central corridor between Chicago and Green River, Wyoming, has multiple mainline tracks. The team developed a combo tool to identify opportunities to leverage these investments by combining manifest, bulk, and intermodal where it makes sense. Second, our strategic transportation plan adjustments is where we schedule train meets to take advantage of long sidings or multiple mainline segments. A train meet is a location where passing tracks are located for opposing trains to pass each other. Third, we'll continue to make strategic investments to extend sidings on specific corridors. We've already added over 40 sidings with another 60 siding extensions planned for the future. We are poised for growth with our primary corridors operating at 60%-70% of fluid capacity. In order to get the most of our franchise, we must match over-the-road capability with terminal capability. Utilizing PSR principles, we have reduced car dwell by around 20% since implementation. This has created headroom at busy facilities and allowed us to repurpose other facilities for future growth. From a terminal perspective, we are in fantastic shape to grow with our terminals operating around 70% of fluid capacity. In my career, I've seen huge market changes in coal, ethanol, frac sand, crude oil, and even our intermodal franchise. These changes make being nimble paramount to our ability to enter new markets. One way we are being responsive is by repurposing facilities to meet current market demand, enhancing our ability to grow and enter new markets. I have three great examples to share. First, in Chicago, we are repurposing a portion of the Proviso hump yard to expand our Global II intermodal ramp. This allows us to consolidate operations in Chicago, simplifying our network, increasing density for our intermodal franchise, which creates productivity and sets the stage for growth. In Houston, with projected car load growth in the Gulf Coast, we modified the infrastructure to support manifest growth through our Englewood hump yard, creating additional processing capability, again, creating growth opportunities. As we looked around the network, we saw an opportunity in our ramp portfolio, specifically in Minneapolis. As a result, we are being nimble and creative by entering the market with a pop-up facility. This is our first step before making a more permanent investment. We're employing a similar process in other markets, which we are extremely excited about. We continue to look for the best ways to utilize our franchise as our customers' transportation needs evolve over time. We wake up every day with a relentless drive to improve service and productivity, ultimately leveraging both to grow our franchise. Sweating the assets is about getting the most out of our equipment and increasing productivity. This is done through minimizing downtime and increasing reliability through predictive maintenance and upgrades. I'll highlight some of our initiatives that are generating increased workforce productivity, better equipment reliability, and lowering our cost structure. Our locomotive initiatives have reduced the size of our locomotive fleet. To see workforce productivity, we need to normalize to an employee-per-active-locomotive look. Said differently, the number of employees needed to maintain each locomotive. We've increased our productivity by 28% over the last five years. On the freight car side, reduced car dwell and increased car velocity have resulted in fewer cars in inventory. Like the locomotive side, when you normalize the number of employees per active car, you can see an almost 45% increase in workforce productivity. PSR is about working smarter, not necessarily working harder. We have a variety of technology that supports these smarter work processes. Let me highlight a suite of sensing technology that helps us identify and fix our rolling stock before they fail online. Hot box detector measures the temperature of the wheel bearing. We collect this data on individual cars to proactively fix and prevent online failures. Hot wheel detectors measure the temperature of wheels as they roll through on trains. This gives us a real-time view of the health of the car's braking system. Wheel impact detectors measure the impact load the wheel is putting on the rail. All three of these examples collect rolling and trending data on the health of the running gear. In the past six years, bearing derailments are down by 50%. Similarly, wheel cause derailments are down 70% over the last 10 years. During the pandemic slowdown, we closed several shops on both the engineering and mechanical side. As the demand for these facilities came back, we were very intentional and deliberate about the facility we wanted when we brought them back online. We took this opportunity to transform the culture of these work units. If we reopen the facility, they had to be world-class in safety, best in industry and productivity, and cost competitive, not only with other roads, but independent contract facilities as well. Our Jenks locomotive rebuild facility in North Little Rock is a perfect example of this. It is safer, more productive, and cost efficient. Our Jenks 2.0 facility has 50% fewer employees. It's 22% more productive and has lowered its cost by 40%. Today, the facility is 450 days injury-free. Our De Soto car and Denver maintenance way facilities have experienced similar results towards becoming world-class. Similar to the car side, we use an array of sensing technology that allows us to collect information on the health of our track and rail. Our current geometry cars are a rolling lab of sensors and computer equipment. They require a locomotive, a train crew, and two operators to operate the geometry car. We're currently partnering in the development of unmanned operations on both a locomotive and freight car. Each of these are in service today. We plan to have three locomotives and two AutoBoxes in service this year. An AutoBox can operate 24/7 at a fraction of the cost of our current systems. The geometry equipment I spoke about is not unique to UP. We do have equipment in design and production that isn't unique to our railroad that we are confident will produce excellent productivity gains. Let me highlight a couple of examples. We currently have patent-pending equipment we refer to as autonomous tie un loading. We've been developing this car over the last two years and are in our final design. The car that you see on the video is being tested in production today. By the end of the summer, we'll have five cars in service. This design can distribute ties three to 4x faster and requires 80% less labor than the conventional method. We have partnered with some local firms to develop a tie plate distribution machine. This machine alleviates some of the safety risks of our current operation and shows promise for significant labor savings. We plan on field testing next month here in Omaha. On the locomotive side, we continue to develop and enhance our energy management systems for both a fuel savings and train handling perspective. We're exploring alternate fuels where it makes sense. We're finalizing our strategy to test and deploy battery electric locomotives in our yard and local operations in California. In summary, we will continue to challenge the team to be smarter, use technology, automate where we can, and increase efficiencies. We will get there by fully incorporating PSR thinking into every facet of our engineering and mechanical teams. Woven throughout the message you heard from both John and Shane was the importance that technology plays in our pursuit for operational excellence. Our operating and technology groups have always closely partnered to look for innovative approaches to meet and exceed our ever-changing customer needs while improving safety and efficiency. Our CIO, Rahul Jalali, will now lay out his vision for how technology at Union Pacific will drive improvements and how we serve our customers into the future. Technology has always played a crucial role at Union Pacific. Our job is to make sure our teams and customers can engage in the fast, easy, most efficient way. I've been with UP for about six months, and I've spent a lot of time learning the business by walking our yards, talking to customers, and the mission is clear. Reduce friction by better enabling our internal teams to serve our customers in the most effective way possible. We're going to make some major strides on this in this coming year. Let me tell you about this. When I joined UP, one of the ahas I had right off the bat was to see how much of an advanced platform company we are. The most advanced companies on this planet are platform companies. In the past, you've heard about our development of an industry-leading logistics management platform, which I like to think as an air traffic control and transportation management system rolled into one, and internally we call it NetControl. It is a centrally connected brain of our complex business and is also an adaptive function to meet tomorrow's challenges, and I'm happy to announce that NetControl is being poised to go in fully live over the upcoming year. This home-built platform connects many of our systems products such as train, locomotive, dispatching, crew, and many more, allowing us to leverage our connected data to develop innovative products with speed and agility. It also gives us the ability to leverage advanced applications such as artificial intelligence, machine learning, Internet of Things, IoT, lovingly called, and produce friendly, flexible, customer-facing interfaces as well as deliver customer integration services with APIs. To give you a sense of the complexity, this platform includes 94 million lines of code. That makes it bigger than some of the leading social media companies and the code base that they have. It's also created in a very modern microservices architecture designed to be highly scalable and flexible. As a result, faster solutions for our customers, lower operational costs, and enabling us to be ready for the future, such as a serverless world and really a cloud-native deployments going forward. We're also seeing some early returns from this platform, that we've already implemented, the impact it's having. We're delivering AI-based tools which augment human decisions such as terminal optimization, which provides intelligent classification cuts in the yards for inbound trains. This has shown to reduce dwell time, in some cases, by as much as an hour every day. Second example, Movement Planner. It's a module of our dispatch system. We are putting intelligence into it for signals for a dispatcher for the meet and passes of trains on the network, allowing our dispatchers to focus on more important tasks while assets to be forward deployed faster. In closing, I would say the NetControl platform helps us modernize our operations to be running a better, safer, and more connected railroad today. What I'm really excited about is what it will allow us to do in the future. This gives us the ability to quickly adapt and deliver for the fast-changing needs of our operations and ultimately, our customers. The operating department has an abundance of projects and initiatives that will propel our railroad to new heights as we strive for operational excellence. We will leverage technology to improve safety, provide a better service product to our customers, and reduce our carbon footprint. We have the right team of leaders in place and a motivated team that is ready to deliver on those commitments. We're excited to grow with our customers, offering them new and exciting rail products as we convert more traffic to rail. Our network is ready for growth and to be leveraged to deliver strong financial results. with that, we're ready to answer your questions. Hello. I'm here to talk to you today about profitably growing the business. Everyone at Union Pacific is excited for the opportunities we have to grow Union Pacific now and into the future. We have a strong customer base that serves a diverse, yet balanced business mix, with a strong franchise stretching across 23 states, serving over 7,000 communities. We play an essential role in global trade with roughly 40% of our business moving internationally. Union Pacific has the premier franchise with Mexico, the only railroad with access to all six gateways to Mexico. The strength in our diverse business mix gives us stability through the economic ups and downs in our various markets. When we look towards the next three years, here are the economic indicators that correlate closely with our business. You see that industrial production is forecasted to average 2.8% annually. We also recognize that we will face continued challenges in our energy-related markets. Despite those hurdles, we have a solid strategy that you're going to hear about today that enables us to outperform the markets with our reliable service and our continued focus on enhancing the customer experience. Earlier, Lance talked about Union Pacific's strategy. Serve, grow, win together. For our commercial team, it's all about growth. What we want to hit very hard today is how. How we're going to grow. We're going to do that four ways. Grow with PSR, transform our sales culture, advance the customer experience, expand our network reach to serve new markets. These four areas will give us long-term and sustainable growth into the future. Growing with PSR. Growth starts first with having a solid service product that meets the needs of our customers. Since the start of our PSR effort, we're moving cars faster and utilizing both our assets and our customers' assets more efficiently, as Lance mentioned earlier. Our focus on faster transit times and improved reliability is opening doors for us to convert more truck business to rail, which is the most environmentally responsible mode of ground transportation. With the growing trend towards ESG, we also support moving a variety of sustainable commodities, from renewable energy like wind turbines and biofuels, to renewable products like recycled paper and plastics. Let's hear from the commercial leaders as they give you some very specific examples of how we're leveraging our PSR service product to grow into these markets. Our reliable manifest network puts us in prime position to capitalize on the emerging market supporting ESG. ESG has become increasingly important for UP, our customers, and our stakeholders. One market in particular with a strong growth potential is renewable diesel. Renewable diesel is a direct replacement for regular diesel, and it can reduce CO2 emissions by 80% compared to petroleum diesel. That's helping UP and our customers reduce our carbon footprint. A push towards ESG is continuing to increase demand for this environmentally beneficial product. In fact, annual announced production, which UP would have access to, has the potential to grow from 455 million gallons today to over 4.5 billion gallons by 2025. This gives our customers the ability to ship to growing markets like California, where demand is expected to double to over two billion gallons. To capture this outstanding opportunity, we are working proactively with existing producers as well as new market entrants to build out an end-to-end supply chain product that is the best in the industry. Another great opportunity for UP as a result of the increased renewable diesel production is the opportunity to handle the inbound feedstocks into these plants through our extensive network of soybean oil production, ethanol plants, and other feedstock sources. This provides our customers many options and a consistent supply of feedstocks no other railroad can provide. These products naturally fit into our existing manifest network as they are consolidated and supplied from smaller facilities throughout our network, and this allows our customers to avoid millions in capital costs of bulk storage and track infrastructure by facilitating those shipments that are continuously produced and consumed. Phillips 66 is a good example of a valued partner in this space. They're expected to begin production of renewable diesel at the Rodeo California refinery this year, supporting their sustainability programs. Union Pacific and Phillips 66 have collaborated to develop a supply chain that will deliver a consistent and ratable source of feedstocks for this new lower carbon intensity fuel. Our team has an aggressive strategy to continue to grow renewable diesel production on our network so we can participate in both the inbound feedstock and outbound product. Through this and the business we've already secured, we're anticipating this market to be a growth driver for UP for the next several years. Our efficiencies gained from PSR have also translated to a lower cost structure, which has allowed us to more effectively compete versus truck, where we have not been traditionally able to compete. Improved car velocity has also supported this penetration. We have examples all over our business that demonstrate this. For instance, in the fertilizer space, we have partnered with smaller co-ops, and we are now handling incremental carloads to 20 additional destinations. Our improved manifest service also provides optionality to customers alongside our unit train model. Customers are able to ship and receive their products in a consistent and ratable manner, ultimately integrating with their supply chain and improving speed to market. We recently won brand new business with a grain products customer by selling these advantages. UP's reliable manifest solution actually reduced overall cycle time when taking into account dwell at origin and destination. This improves equipment utilization, thus requiring the customer to have a smaller fleet to maintain and reduces expenses that come with it, like leases, maintenance, and storage. In addition, choosing a manifest option eliminated the customer's needs to invest in new track and storage infrastructure. Our consistent and reliable service matches the consistent production and consumption of the product. last, we were able to show the customer that UP's network and service provide supply chain flexibility. This customer is able to optimize their production and supply their customer from multiple plants versus having to ship all the product from a single origin. Overall, PSR has been a game changer, not only for productivity, but also by revealing previously untapped levers to accelerate growth. As Kenny shared, our team is intensely focused on growing our carload business. As consumers and manufacturers respond to cultural and environmental shifts to use recycled products, we're seeing more interest in developing supply chains to move those products by rail. Our service offerings fit well here. Not only are we directly supporting ESG initiatives by participating in the recycled goods supply chain, there's the added benefit of moving the freight in an environmentally preferable way. These recycled products are typically very low value, so for us to be able to move them profitably, we have to have a low cost structure, which is a benefit we have seen from PSR. Cullet is a good example of where we've seen this work. Cullet is recycled glass that is collected and then reused in the manufacturing process. It gets added to new material and is melted in the furnace to produce new bottles, jars, and other glass products. We've worked with several of our cullet customers to relook at lanes where we were not successful in the past, and our new lower cost structure is allowing us to win the business. We've even partnered with Loup using transloads to win shipments of cullet from Oregon into California. Historically, cullet has been a smaller market for us, but it's growing. In 2020, we grew our cullet shipments by over 40% as we continue to find more opportunities to grow. We're using the cullet sales model to widen our approach to other recycled commodities like paper, plastic, and even carpet. As ESG becomes more prominent, we are excited to insert our low-cost rail product as a solution. Beyond recyclables, PSR is helping us grow in other industrial markets. Our ability to attract new customers to Union Pacific and grow our core business is demonstrating success. We're seeing it from thousands of new forest product shipments previously moving truck to our sales team developing creative solutions to grow utilizing our Loup subsidiary or latent capacity. Our team's energized, and I'm looking forward to what's to come. Personal vehicles are evolving from internal combustion engines to electrification. Within this is a second evolution where electric vehicle manufacturers, which I'll refer to as EV, are the first of their kind to market direct to consumers. Direct to consumers mean that EV manufacturers have different requirements. For example, they require speed to market. Union Pacific, through PSR, has been successful in delivering EVs to the market faster, more efficiently, and reliably. The proof is in Union Pacific's premier finished vehicle network and the success that we're already realizing in the EV space, both with existing name brands and new emerging ones. Keep in mind that for every carload of EVs we handle, we take an average of 1.2 trucks off the highway. In 2020, we took nearly 9,600 trucks off the highway, and in 2021, we will exceed 31,000. That's a 322% increase in just a year in the number of trucks we are taking off of our nation's congested highways for the EV market alone. If you step back and you look at the potential we have to convert other automotive and intermodal freight to rail, we can make a big difference on the sustainability initiatives for our customers. Simply put, Union Pacific is the rail transportation leader in the EV market. As a result of our PSR efforts and our intense focus on meeting EV direct-to-consumer requirements, we are poised to realize significant growth in this segment. A new level of B2B supply chain execution has arrived with the rapid change in consumer online purchasing. This change requires us to rethink how we deliver freight for redistribution. There is, of course, speed to market, but there is also frequency to market. Consumers are buying every day of the week with the expectation that shipping happens every day of the week as well. Take myself, for example. When I place an online order on a Sunday morning, I expect by that afternoon to receive a notification that says, "Your shipment is on its way." PSR has been a critical part of our evolution into serving the B2B e-commerce market. As Jason Hess referenced earlier, through PSR, we continuously review our network in order to provide a safe, reliable, and efficient service product. What we don't talk about as much is how PSR allows us to increase the frequency of our service across the week. As a result, we've been able to evolve and meet the needs of this growing market. We've won in a big way with multiple small packager shippers and retailers, and that's why e-commerce is an important part of our growth strategy. We are strategically positioned for long-term growth in the e-commerce sector and look forward to continuing to grow with the industry leaders. Now, I want to move to the next area of growth, transforming our sales culture, as it takes the sales team to get business development wins over the finish line. When I say transform our sales culture, what I mean is that we're focusing on these three things, people, technology, and processes. First, let's start out with people. There's been a lot that has happened with our sales team over the past two years. We made changes to remove layers in the organization and increase our response time to our customers. We've consolidated our sales model to be more simplified and easier for us to support our customers. Second, when we talk about technology, here's what we've done. We have better tools to make it easier for our sales team to do their jobs so they can spend more time hunting. We've invested in new technology to be faster in price quotes by almost 30%. We've integrated more data within our sales management tools to get a full 360-degree picture of our customers. Lastly, when it comes to processes, we've changed our selling approach with more players throughout the supply chain. We are prospecting more in new markets that have opened up for us and going after more targeted campaigns to win new business by reconnecting with customers who may have moved away from our railroad. One more example is our Locals with Capacity campaign, which is a collaboration with operating to identify pockets in the manifest network where we can grow our volume by putting more density on local trains. These types of wins are base hits, but we're finding ways to optimize the network and grow with our customers. This is the right type of business that we want to go after. More importantly, we're marketing our improved service product to win with larger customers, too, like Hyundai Merchant Marine and The Hub Group. They are recognizing the value that we're bringing to their companies as a reliable transportation provider. Finally, with the strong drive towards growth, we established a new incentive program to motivate and reward our sales team that supports the hunter mentality. You've heard Lance say that we're transforming the culture for the entire organization. It's not just the sales team. The whole organization is changing and focused on growing the business. Enhancing the customer experience enables us to grow faster. The world is changing, and we are investing in technology to make sure we're providing a competitive, cost-effective service product to help our customers grow. We're optimizing our customer's journey as they do business with us, and this is how we're delivering a strong customer experience that sets us apart in our industry. We recognize the need for technology to help grow our business for both our intermodal and carload markets. Lance highlighted my previous experience in retail and leading technology with a customer mindset. As I joined UP, literally on day one, Kenny challenged me to have a maniacal focus on solving real customer needs. This is what I like to call customer obsession, which for technology, is really enabling our marketing and sales teams to deliver experiences and service offerings which become a differentiator for our business. We're taking several steps to do this, and as Kenny spoke about the culture earlier, we're also changing the way within technology to work with our internal and external customers differently. We have a new customer experience initiative underway, which brings the customer's needs to a heightened level of visibility by directly feeding customer insights into our cross-functional agile development teams, who quickly deliver solutions to the pain points within 30 to 90 days, and not years. Just in the few months, we have had co-interviewed with Kenny's team around 40+ customers, which has resulted in 25+ enhancements, updates, new initiatives underway within our systems and processes. Another key item that I want to highlight is the success we're seeing with our application programming interfaces or APIs, as they're lovingly called, powered by our NetC ontrol platform that I spoke to you earlier about. Union Pacific's really been a leader in this space to develop the custom APIs to integrate directly with the customer supply chains, allowing customers to gain real-time visibility using their own systems without having to interact with ours, which is saving them time by reducing previously manual processes and steps in order to reduce friction in using the UP services. To date, we've developed close to 40+ integration services for our customers based on their needs in the areas such as enhance supply chain visibility, equipment, waybill details, case management. Let me cite an example of multiple integrations we've provided to a large EV company from Northern California, really allowing them to gain visibility on their product flow, such as advanced shipment notifications, bay updates, which shows location on origin and destination ramps, shipment ETA notifications. For these leading manufacturer, it was an absolute must-have for their service providers so they could participate in delivery execution, giving them the ability to better plan their business operations. because of our continued investment in the foundational technology platforms, we can meet these types of custom integration requirements for customers in matter of weeks, enabling us to quickly expand our book of business, taking care of our customers so that they can take care of their customers. All around works are better. In closing, I would say our technology expertise and mindset of customer obsession will be both a catalyst and a driver that will transform us from being a reactionary customer interactions to automated, integrated ecosystem player. Our relentless focus is to reduce friction throughout the customer journey. The strain that we're seeing in today's supply chains demonstrates the need for new uses of technology to connect shippers, carriers, and 3PL companies. At Union Pacific, we're launching a number of new initiatives we're calling Intermodal Excellence. These initiatives will leverage technology, improve business processes to create efficiencies needed to deliver greater capacity, service quality, and growth. A strength of our intermodal franchise is the broad relationships we have with shippers, intermodal marketing companies, motor carriers, and ocean carriers. We are making this diverse channel of customers more efficient by integrating our transportation management systems with customer systems and with other supply chain partners. For example, obtaining early notification of upcoming shipments enables us to ensure we have the terminal and train capacity available. We can give the most time-sensitive loads priority, while less urgent freight is deferred to days with lower demand. This method of operation is consistent with PSR principles of running regular, balanced train schedules while also ensuring service commitments are made. Increasing the capacity of our intermodal terminals is critical to enable growth and improve profitability and asset utilization. One way of doing this is to speed up the flow of trucks and containers through our ramps. We are currently modernizing the gate systems at our intermodal terminals. Technology will enable dray drivers to pre-clear loads that come into the gate. After an inspection portal automatically confirms the identity of the load and documents the physical condition of the equipment, the driver will be able to enter the gate without stopping. Gate transactions will go from minutes to seconds. Further enhancements, such as a real-time yard inventory system and a train load planning optimizer, will quickly guide the dray carriers to the optimal location in the yard to either pick up or drop off a load. We are also creating better tools for our intermodal operations managers. We are giving them better real-time insights into current and potential problem areas. For example, we are creating a system that helps monitor and manage the flow of assets across our network, including locomotives, well cars, chassis, and containers. It will compare resource availability with projected demand and train schedules to predict where and when constraints may occur, and with enough foresight to correct problems before they affect service. We are using technology, better business processes, and deeper integration with our customers to enhance the competitiveness of Union Pacific's intermodal product to ensure it remains a long-term growth engine for the company. The last focus area for our growth strategy is expanding our network reach to integrate deeper within our customer supply chains and grow our geographical footprint. UP has a great franchise. We want to unleash this franchise strength along with our improved service product to reach more customers. In all our markets, the bulk team is intently focused on expanding our network reach to meaningfully grow car loads. We constantly pursue increasing our physical footprint through locating new facilities or reactivating or expanding existing access. We also strategically target industries and customers to extend broader across and integrate deeper within the supply chain. An example of these pursuits in action is our expanding participation in the beverage market. We have experienced great success with this business, primarily through aligning with a large winner in the space, Constellation. With this strategic partner, we have achieved and expect to continue year-over-year growth. Two examples of how we are doing this. Number one, a focus on product development and our ability to insert them into the rail supply chain. As an example, seltzers have become increasingly popular beverage choice. The industry is expected to grow 35% in 2021 alone, with case demand more than doubling in the next five years. Recognizing this, we recently worked with Constellation to convert seltzer moving in truck into the rail network. The second thing we did is network alignment and investments with the breweries and destination facilities to continue handling projected rail growth. Our team is now actively employing this market leadership and expertise to bring new beverage market participants into a rail-centric distribution model that has proved successful. In addition to beer, wine, and seltzers, this also includes capturing energy drinks, teas, juices, milk alternatives, and other evolving consumer trends. We continue to leverage data and our relationships to convert prospects to rail, whether they're new production players or on the other side of the supply chain. As a result, additional destination capacity continues to be added on UP to support the growing beverage network. All of these actions and partnerships set us up for a bright future to win in this market. We're seeing a huge opportunity in the world of transporting auto parts and finished vehicles, and Loup is playing a key role in that growth. As you know, Loup is a wholly-owned subsidiary of Union Pacific Railroad, and we are entrenched in the automotive industry. We serve the auto parts market through our door-to-door intermodal service product, and we provide auto manufacturers or OEMs shipment tracking visibility for their finished vehicles at the VIN level via our ShipmentVision suite. We're digging deeper into the auto parts supply chain, converting business from truck to intermodal, and transitioning shipments away from congested highways into a more efficient and environmentally responsible rail solution. How do we do it? Our team leverages the strength of the UP franchise, which provides access to the largest intermodal network in North America, reliable service product with the most truck-competitive lanes, and an excellent customer experience due in part to our full-service door-to-door premium solutions. Through our automotive expertise and the trusted relationships we have with OEMs and their suppliers, we build optimized supply chains. With a proven track record of value creation, Loup continues to find opportunities to grow in the marketplace, inclusive of even the most time-sensitive materials needed for the production of new vehicle models. To give you an example, late last year, Loup was awarded a significant share of inbound transportation of auto parts for General Motors' restyled 2021 Tahoe and Suburban in Arlington, Texas. To highlight a current example, Ford recently awarded us the opportunity to move inbound auto parts for the launch of the new 2022 Bronco at the Michigan Assembly Plant. We are honored to support this key new product and will continue to provide our consistent and reliable service. In addition to established OEMs, we are actively working with parts suppliers and emerging manufacturers. Every piece of business we convert to intermodal lowers the overall cost of a vehicle and reduces the impact on our environment. We are proud to play a part in helping our customers streamline their supply chains while also achieving their ESG goals. Union Pacific has by far the best service product to support the auto parts market and to move shipments between Mexico and the U.S. efficiently and safely. As we look forward, we are excited to build on this growth momentum, continuing to help our customers win in the marketplace now and well into the future. Expanding our reach also means developing new locations on UP to serve our customers. Over the past three years, we have constructed close to 200 track projects with customers to support over 325,000 annual car loads of sustainable economic growth. We have an experienced network and economic industrial development team to help customers find optimal locations to build their facilities to be rail-served. Our industrial development team works closely with local municipalities on economic development to utilize Focus Site programs. Today, this program features over 25 shovel-ready sites on our rail network. These are large-scale development areas, over 125 acres per site, that have already been pre-approved for rail access. These sites are strategically located with prime access to roads and highways, and these sites are accessible to utilities, which make it easier and quicker for companies to get a new facility up and running. One premier site that I'd like to highlight is Prime Pointe Industrial Park, a 3,000-acre site located just south of Dallas to support manufacturing, distribution, refrigeration, cold storage, and bulk transloading. It's strategically located close to major interstates and sits adjacent to our Dallas intermodal terminal. For the past few years, we've been able to attract new customers to this site, like KTN and the Biagi Bros. Currently, we have over 15 sites ready for development with either direct rail service or short dray to our intermodal facility. We're excited to feature Prime Pointe as a great speed-to-market solution for our customers, including Mexico. Chemical production in the United States, especially in the Gulf Coast, continues to expand. Since 2010, completed, under construction, or planned investments total over $200 billion. Since the first plastic expansion in 2017, we have grown our market share by serving nearly 90% of the expansions that have come online, and that doesn't happen by accident. It takes innovation, creativity, and a passion to win. We are the industry leader in the rail transportation of plastics. With our superior Gulf Coast franchise, best access to the nearby Mexico markets, export optionality, and our best-in-class storage and transit infrastructure, we have built the premier rail transportation for product for plastics. Let me share an example of how we approach product development to support our plastics customers. Early on, we recognized that there was a supply chain constraint for producers to get their products to the global markets. We designed the Dallas to Dock product. Since launch in late 2018, Dallas to Dock has taken off. In 2020, during the global COVID pandemic, we saw volumes increase 25%. Due to the success of the product, KTN, our Dallas to Dock partner, recently completed an expansion of warehouse space and additional packaging lines, doubling its capacity. Dallas to Dock at Prime Pointe is providing industry leaders with supply chain optionality for their export products. Looking forward, we are committed to developing solutions that will help us continue to win business and grow our market share in plastics. Dallas to Dock is a great example of one of the service offerings we've developed for our plastics market, but we have additional creative transportation solutions that we're bringing to other markets to help extend our reach. Take our export grain facility in Chicago, for example. We announced this new service offering last week. This is one creative solution where we utilize an existing facility to co-locate with shippers and receivers to meet demand. Expanding our network reach includes our co-location strategy. One area of focus is in Chicago at our Global IV intermodal facility with our G4 transload initiative. Global IV's grain export strategy, which is anticipated to begin early in the fourth quarter of this year, is our initiative to increase the competitiveness of our international intermodal market segment. In short, we're creating a more efficient containerized supply chain. Historically, much of the grain exports moved bulk, and then containerization started to happen. There is still an opportunity to have a more fully defined containerized strategy. Our belief is that finding and developing opportunities for exports will increase our overall international competitiveness, providing better economics for our customer base. Success with our Global IV transload initiative is creating the most competitive export program in the Chicago marketplace. With co-location, we create efficiencies within the supply chain. Effectively, we eliminate one dray from the bulk containerized loading taking place directly at our terminal. This dray savings is material to the exporter and makes Union Pacific more competitive for the intact import move. Over the past 10 years, we've invested almost $1.8 billion to support commercial facilities, of which over 60% has been in the intermodal space. We believe intermodal is a growth engine for UP. Kari and I are very excited to share with you a couple key projects we have to expand our intermodal network. Both of these investments will strategically position UP closer to the fastest-growing retail markets for intermodal and has the potential for significant opportunities for truck conversions in the future. The first project is our Twin Cities Intermodal Terminal to give the marketplace a new alternative to a faster, direct, and reliable intermodal service for regional shippers and receivers in the Midwest. This pop-up facility began operations on January 4th of this year. We started out with domestic service between California and the Twin Cities. as the facility expands, we will add international traffic into it. Now turning to the West Coast, I'm very excited to share with you a game-changer for us. Today, we're announcing our new intermodal expansion into Southern California with our Inland Empire Intermodal Terminal. Our new Inland Empire Intermodal Terminal creates a tremendous opportunity to position Union Pacific directly in the heart of this massive import distribution region. The plan is to expand our intermodal presence into our West Colton yard, which will allow us to reduce dray costs, create new solutions for our customers, and compete effectively for domestic freight. Today, there are roughly 2 million imports trucked from the ports of L.A. and Long Beach to the Inland Empire. Conservatively, we estimate the Inland Empire market size to be around 1.5 million intermodal units annually. This area is the fastest-growing region of industrial warehousing space in Southern California and continues to be a leader across the United States. In fact, there's more than 625 million sq ft of existing warehousing space just in the Inland Empire. That's equivalent to 15 million short and long-haul truckloads of freight. We're about a month away from introducing our pop-up ramp, which will be capable of 45,000 lifts within our West Colton yard. This will bring to life our first intermodal presence in this region. Beyond the pop-up, we will continue to increase our footprint with the goal of addressing the needs of the community, including taking local truck freight off the highway. Union Pacific's expansion into this region is an exciting new development, and it demonstrates our commitment to intermodal and the advantage of Union Pacific's franchise to serve new markets. In closing, the team and I talked about some really great examples surrounding how we're growing the business. I want to make it clear to all of you that we will outperform the market by growing with PSR, transforming our sales culture, creating a better customer experience, expanding our network reach, especially with investments we are committing to make in the intermodal space to serve new markets. I'm excited for the opportunities we have to grow Union Pacific into the future. We're now ready to take your questions. I am UP. Union is not defined by they and them, us and we. In they and them, us and we, there is always an I and always a me. This is what is meant by I am UP. I am up, heeding calls to follow the notion of forward motion, though tired, I'm inspired, the loop and the locomotion. I am the union of interconnection where tension meets invention, an ocean of signs and signals where ideas get ignition. I admire Engineer Empress Stephenson. She just gave me lots of guidance, and I've been able to call on her for anything else that I might need advice on. Just being a woman out here, too, it's admirable. To me, Jon Jensen is the union. He comes to work every day with a positive attitude and does whatever he needs to do to get the job done. Union Pacific to me is Mike Cook, the director of our North Platte Diesel Shop. He brings a passion to everything he does and cares about this railroad and everyone in it. I am the last light standing, ensuring food is on the table. I am the window at the station, here to help make things more stable. I am the rallying cry to unify as we strive to make ends meet. The traction and the tread, where steel grit defies defeat. Matt is the conductor on the YSP51. He ensures that our new intermodal service in East Minneapolis is well taken care of, and he works really well with the contractor to ensure we are delivering a great service. Kevin Merton, because he's a team player, he's always available, and he definitely helps me out when I have questions. Steve Spencer, UP. Positive attitude and always willing to help. Wheels grinding steel problems into real solutions. I am a choice and a voice, surviving every evolution. I am freight and animation, the diesel and the steam. I carry fuel that feeds our nation and dares each of us to dream. Jim Hill is UP to me because he displays a great work ethic every day. He's always willing to jump in and help and always supportive to his staff. I admire Brad Groce. I admire him because he never complains about anything, he just comes to work and does his job. Help out people if he can. I want all of our employees to know how much I appreciate the fact that we've got the best team in the industry. We've got the best team in the world. There is truly nothing we can't do when we put our minds to it, and we prove that day after day after day. I am history innovating, 160 years long. I am made and in the making. I am 30,000 strong, racing and activating. They is I, and I is we. I am made and in the making. Collectively, I am UP. I am UP. I am UP. I am UP. I am UP. I am UP. I am UP. Good afternoon, everyone. I'm Jennifer Hamann, the CFO of Union Pacific. It's my privilege today to take the exciting Serve and Grow activities that Eric and Kenny and team just discussed and translate that into how UP shareholders win in terms of our financial targets over the next three years, or between 2022 and 2024. Lance kicked us off today with a scorecard from our 2018 Investor Day, and I want to reiterate his point. Union Pacific produced remarkable financial results over the last three years, despite the global pandemic. In particular, cash returns to shareholders totaled more than $25 billion over the period as we increased the annual dividend more than 50% and repurchased shares representing roughly 15% of our average market cap from 2018 to 2020. Now, by itself, that $25.2 billion of cash returned from UP to shareholders over the last three years is a big number, and it's industry-leading. UP's total cash returns to shareholders as a percent of average market cap was nearly 22% between 2018 and 2020, a full two percentage points higher than the next highest rail, and four and a half points above the rail average. These results clearly demonstrate UP's leadership position in the industry and our commitment to shareholder returns. A key driver enabling our performance was the decision to adopt PSR and the dramatic efficiency gains we realized. When we embarked on our PSR journey in late 2018, we ended that year at a 62.7% operating ratio, which put us squarely in the middle of the rail pack, fourth of seven railroads. In 2019, our first full year of embracing PSR and changing how we do business, we reported an operating ratio of 60.6% as we moved from fourth to third and narrowed the gap. Last year, excluding Brazos, we reported a 58.5% operating ratio, moved from third to second, and again narrowed the gap. Importantly, no railroad has stood still over this period. The industry is collectively becoming more efficient. For this year, we've set a target of 150- 200 basis points of operating ratio improvement, and we've now said we think we're going to be closer to that 200 basis points of improvement. Lance earlier drew a line in the sand on that 55% operating ratio goal. Next year, 2022. Beyond that, Union Pacific will be an efficiency leader in the rail industry. Given our route structures, our business mix, our pricing discipline, and our efficient operations, we should have one of the lowest, if not the lowest, operating ratio in the rail industry. That's the goal, and we're setting that target with every expectation that the industry as a whole will continue to improve, much like it has the last several years. One driver that will help us achieve that goal is our operational efficiency, or Serve. You heard Eric, Jon, Shane, and Rahul all talk about their productivity pipeline and plans to improve safety, leverage technology, grow train length, and increase capital efficiency. We expect these activities will produce a cost structure that continues to improve. Now, we've historically framed our efficiency gains in terms of productivity, giving an annual productivity target and reporting our progress quarterly. Inside of UP, the number's meaningful and actionable, but it can't be calculated externally. We will finish this year reporting against our $500 million productivity target. As we transition to growing volumes, however, a better yardstick will be incremental margins, which we expect to be in the mid to high 60% range over the period. Turning now to grow. In April, we revised our 2021 growth expectations to be around 6%, which factors in a full two percentage point drag related to lower coal and energy shipments. Going forward, we expect to outperform industrial production and achieve volume growth of 3% compounded annually, or a CAGR. Although energy markets may fluctuate, coal will remain a headwind, so included in that 3% growth CAGR is a coal volume drag of roughly a half point. As Kenny and team discussed, our opportunities for growth are broad-based, but the primary growth driver will be intermodal. The ongoing shift to a larger intermodal portfolio will drive mixed pressure, but through our disciplined pricing and intermodal efficiency opportunities, we are confident that we will leverage that volume and produce strong results. We also remain committed to achieving core pricing gains in excess of our inflation dollars over the next three years as we provide our customers with that excellent service product that's more environmentally friendly than trucks. Connected to our growth expectations are our capital plans. Over the last four years, we've averaged capital spending at a sustainable level of less than 15% of revenue. That will continue this year, and we don't see that changing over the planning horizon. The investments in the Twin Cities Intermodal Terminal and in the Inland Empire Intermodal Terminal are factored into this guidance, as well as other investments in infrastructure and technology to support our growth expectations. A key driver behind our ability to grow with less capital intensity is PSR. Our increased freight car velocity and locomotive productivity creates capacity within both our freight car and locomotive fleets. Similarly, the curtailed manifest yards and intermodal terminals represent capacity in our network for growth. In addition, today's demonstrated efficiency gains associated with train length initiatives support growth. Our plans to serve and grow over the next three years position Union Pacific to deliver higher returns on invested capital, or ROIC. To grow ROIC, the pace of our earnings growth needs to be greater than the growth of the capital base generating those earnings. Again, that is right in the sweet spot of PSR. Specifically, we expect to deliver a low double-digit earnings CAGR, driven largely by our improved earnings and enhanced with ongoing share repurchase activity. With regard to the invested capital base, we will remain disciplined, both in the capital investments that I just described, as well as in the use of our balance sheet. Given our split rating between Moody's and S&P, we are not drawing a bright line in terms of a single metric like debt to EBITDA as we have in the past, as it really means two different things to the different agencies. We have consistent dialogue with the rating agencies. They understand our long-term commitment to maintain a strong investment-grade credit rating, while at the same time, using our balance sheet to reward shareholders and optimize our cost of capital. We've demonstrated that mindset and practice since we announced our leverage change back in 2018, and will continue to manage accordingly. Looking back at our ROIC performance, 2014 was the company's previous high-water mark for returns at 16.2%. As we look ahead, we'd certainly expect to make strong gains back towards that 16% range this year, and then average around 17% or so between 2022 and 2024. Last, but certainly not least, I want to talk about cash. Cash is truly king, and Union Pacific has demonstrated a remarkable ability to generate cash and be resilient in that cash generation. Over the last three years, which includes the pandemic, we generated nearly $26 billion in cash from operations. Over that same period, we returned almost 100%, or $25.2 billion to our shareholders in the form of dividends and share repurchases. That past performance establishes a track record of strong cash returns to shareholders, and our goal is to do even more in the coming years. As we announced a couple of weeks ago at our first quarter earnings release, we are targeting share repurchases in the $6 billion range for this year. The majority of those repurchases are funded by cash from operations, as well as reducing our year-end cash balance to a more normalized level from $1.8 billion at the end of 2020 to closer to a billion by the end of this year. We also expect to get back in the mode of consistent dividend increases as we generate strong earnings growth in 2021. Beyond that, for 2022 to 2024, we look forward to translating growing business volumes into greater cash generation and a strong cash conversion rate. As a result of our strong cash generation through the pandemic and our disciplined capital deployment, we crossed the threshold of 100% cash conversion for the first time ever last year when our business volumes actually fell 7%. As we look ahead to our financial targets for 2022-2024, including our capital spending plans, we expect to average roughly 100% cash conversion rate over the period. In terms of how we deploy the cash, the first call will be to reinvest in the business, and as I've just discussed, we will invest for growth, but at a historically lower level of capital intensity. Next, we prioritize our dividend. Union Pacific shareholders have received a dividend since 1899, 122 years consecutively. In 2018, we raised our dividend payout ratio target to 40%-45%, the highest in the rail industry and competitive within the industrial space. Now, from a practical standpoint, we've really been operating closer to the high end of that range. Today, we're officially dropping the low end and setting a dividend payout target at roughly 45% of earnings. The remaining cash, which includes cash from new debt, will go to share repurchases. In addition to the $6 billion in shares we plan to repurchase this year, we would look to buy back another $18 billion- $19 billion between 2022 and 2024. Said another way, over the next four years, we'll repurchase roughly 17% of our market cap at today's prices, and recall, that's on top of the 15% of average market cap purchased the last three years. I am proud of all that the men and women of UP have accomplished since our last Investor Day, and the financial targets we've established today translates into another win for our owners. As you've heard from the entire team today, we have a strong plan to grow the top line, have margin improvement, and at the same time, maximize capital utilization to again produce industry-leading returns to our owners. We will serve, grow, and win together. With that, we'll move on to our final Q&A session. Thank you. That opens the last Q&A session. Over to you, Lance. Thank you very much, Vanessa, and welcome to our final Q&A panel. I've got Kenny Rocker and Jennifer Hamann with me, as well as Rahul Jalali and Eric Gehringer. We're ready, Vanessa, to go to the first video question. Excellent. Our first question comes from Jordan Alliger from Goldman Sachs. Jordan, your line is now open. Please go ahead. Yeah. Hi, everyone. Thanks for taking the time. Question for you on intermodal and volume targets. You mentioned the 3% CAGR. Presumably, that includes intermodal. I'm just wondering, how do you look at intermodal growth over this timeframe from a growth percentage standpoint? Thinking about your sales force for a bit, as you try to get the truck conversions, particularly domestically, what would you say is the biggest stumbling block that gets run into? It certainly can't be price. Thank you. Yeah, Jordan, we're not going to deconstruct that 3% any further, at least not today. No, other than to say, when you look at our total portfolio, our premium business is about half of our portfolio today. As we look forward, that portfolio in total as a percentage of the total pie, will probably grow a couple% a year. You can think about that from a mix perspective. You will see that grow a couple% a year over the time period, Jordan. I'll maybe have Kenny talk to you about that last part of your question. Sure. I think the last part of the question, where are there any barriers to helping us get that domestic product? I'll tell you, the service product that we have has been allowing us to grow that business. We feel really good about some key network lanes that we have, getting into Dallas, further into the southeast, getting up to the Midwest. We've been encouraged by the amount of volume that we have been able to win here on our domestic business here recently. Cool. Thanks for the question, Jordan. Appreciate it. Vanessa, let's get another question from video. Thank you. Our next question comes from Jon Chappell from Evercore ISI. Jon, your line is open. Thank you. Good afternoon, everybody. It's Evercore ISI. Lance, when we go through Jennifer's presentation, it checks basically every box that you want to hear, the massive improvement in the OR, the productivity gains, the cash conversion at 100%, the buybacks, the dividend growth. You layer that on top of Kenny's with the network and the top-line growth opportunity. Anybody who's new to the story would think that Union Pacific's been the best performing rail stock for the last several years. Unfortunately, that hasn't been the case. Maybe to turn it to you, why do you think that the stock has lagged a little bit, given all the positive momentum you've had, both operationally and financially? What do you think are the two or three most important takeaways that we should take holistically from this presentation to make us think that Union Pacific will go back to that equity premium valuation that you've had prior to the last couple of years? Yeah, Jon, I'm really proud of what the team has accomplished, and whether you look at the last handful of years or the last 10 years. We're top quartile in TSR in the last 10 years. The last handful of years, we talked about 420 basis points of margin improvement. We're now industry leading the last two quarters, and we anticipate to stay there. When we look into the future, Jon, what makes me very confident is lowest cost structure in the industry, and we're not going to sit on our laurels. We're going to keep driving that. That's new. We've got a transportation plan and network that's greatly simplified and is reliable and consistent with better service. That's new for us. we've got a better ability to price at market, to understand our markets, and to be aggressive at product development for our markets, maybe than we've been historically, where we were perhaps a little bit more cautious. You put all that on top of the industry's best franchise, and that's why the presentation, in your words, ticked every box. Everything we presented today, we fully anticipate to achieve, like we anticipated achieving the 2018 numbers, and the only thing that got in the way was a pandemic. that's a great point. Thank you, guys. Yep, thank you. Vanessa, let's get another one from video. Thank you. Our next question comes from Allison Landry from Credit Suisse. Allison, would you please unmute your video and audio? Thanks. Jennifer, you've obviously talked about a lot of free cash flow conversion, raising the dividend target. Kenny, one of the things that you talked about was network reach and extending that. Are there any opportunities for UP to look at maybe short line or regional short line systems? Do you guys have any land holdings that are excess that perhaps you could redevelop to capitalize on either shipping supply chains or secular growth trends? 100% to both. We do periodically and routinely review short lines as potential extensions. When we also talk about reach, Allison, you should be thinking about us using our current land holdings as ways to enhance our ability to reach customers. Kenny, you've got a ton of opportunity there. Yeah. Thanks, Allison. We talk about Prime Pointe. One of the things that we haven't talked a lot about, but you heard it in the video, is our Focus Sites. We have 10 of those sites that have over 1,000 acres. All of them have at least 125 acres. We've got some key wins in Iowa, located a customer for renewable diesel up there. A couple of key wins down in New Mexico, and then also up in the Midwest in Wisconsin. we're really taking advantage of our network and being very aggressive about doing that. Yeah. If I recall, some of those key sites, just off the top of the list, 6,000+ acres in the Denver-Aurora, Colorado area, 2,500 acres in the Las Vegas, Nevada area. There's another couple of thousand. You've got them in really sweet sites around the territory. Class I metropolitan areas. Yeah. That's very encouraging. That's a great question, Allison. That's a turbocharger as far as we're concerned. Thank you. Let's take an online question at this time. There's been minimal discussion of price. Can you discuss price mix looking forward? are we talking about cost plus and revenue growth as primarily volume dependent, Kenny? Yeah. We're always a market-based pricing company, but we also, with the service product, are able to get price in the marketplace. Clearly, it's favorable now, but even in the future with this more reliable service product, the team will be very focused on making sure that the price reflects the service that we have out there. Jennifer, you? Yeah. We are not a cost-plus pricer. We want to make sure, and we will make sure, as we have historically, that each piece of business on our railroad earns its return. We feel very confident about that. Our overlying or overlaying message in terms of pricing dollars above inflation dollars, and certainly we see great opportunities and in tight capacity markets like we're seeing today and a great service product, we're very optimistic and we're very insistent on appropriate pricing for our business. Amen. Let's take one more online. How is UP positioning itself to maximize the benefits of a more inflationary environment while minimizing the costs? What operating or capital line items do you expect to see the most inflationary pressures over the next one to three years? Jennifer, you want to handle that? Yeah. when we think about inflation, and we think about our inflation guidance over the next three years, we are looking for inflation to be a little bit higher. 2.25%, when you look back historically, it was maybe more like 1.5%, 1.6%. Where we see the biggest opportunity for us going forward is really leveraging that low-cost structure to be a bigger helper and supporter of our customers so that we can further be not just a service leader, value leader, but also help them as they're looking at inflationary pressures within their own cost structure. When we look at what it means for us, certainly on the capital side, you think about rail ties, those are areas where we may see inflation, but you heard Shane talk about tremendous opportunities that he has to drive productivity in the engineering space. If you look at it on the OE side, certainly our largest cost component on the OE side is within comp and benefits. Health and welfare is inflation pressure that we continually see, and we don't necessarily expect that to change going forward either. Those would be the ways I would bracket that thinking in terms of our own internal cost pressures. Yeah. Hey, Vanessa, let's go back to you for another video question. Thank you. Our next question comes from Ken Hoexter from Bank of America Securities. Ken, your line is open. Please go ahead. Great. Good afternoon. If you're talking, I guess maybe 3% IP plus volume growth, plus pricing above inflation, about 2%- 3%, you're talking about 5%- 6% revenue growth or are you thinking more than that? I guess if that's what leads you then double-digit EPS, within that, you talked a lot about the success of PSR. Are there any other major things to be done, any other major gains like the Inland Empire? Can maybe talk about the scale of the benefits or potential benefits from the one-man crews? Yeah. Jennifer, you want to handle revenue guidance? Yeah. To your point, Ken, we don't have specific revenue guidance out there. It's the 3% volume growth. I think the thing that's important to note with that is above industrial production, but that also includes a half a point headwind from coal. Much like we're seeing coal and energy headwinds impact our volumes today, that's in that 6% guidance for 2021. Think about on a growth basis, we'd be looking at closer to 3.5% volume growth absent that coal headwind. I think t hat coal headwind. I want to point out is on the crew question that you were asking, there's no assumption related to one-man crews within our volumes going forward. Yeah, that's great. I think part of that question was also, so you're going to generate some revenue, then you're generating low teens or double-digit EPS, and there's probably some cost, Eric, opportunity in there and product opportunity. Why don't we talk a little bit about that? Sure. On the cost opportunity side, we're going to continue to focus on our train length. We're going to grow that train length to 10,000 feet or above, and we're going to stay very consistent on locomotive productivity and being able to grow that as well. Those are the two biggest ones that we've historically been able to capitalize on. As Jennifer pointed out, again, Shane has a tremendous number of different productivity initiatives that relate in engineering and mechanical. I also see us still finding additional opportunities on the automation side as we think even more broadly in conjunction with Rahul also. Yeah. Rahul, there's a ton of opportunity in automation, isn't there? Oh, there's a ton. We're just getting started to scratch the surface from a platform perspective, you heard me talk about all the platforms that we're launching. The amount of data that's generating and the ability to help both our internal and external customers in integrating a total customer journey, as well as optimizing what we can do for Eric's team here. You bet. All of that user experience levered with our customers makes it easier to grow with them, which helps the top line, and also makes it so that we don't have as much churn, which helps the bottom line. That's fantastic. Thanks for that question, Ken. Vanessa, let's go to the next video question, please. Thank you. Our next question comes from Scott Group from Wolfe Research. Scott, please go ahead. Okay. Thank you. Jennifer, I understand you're not giving revenue guidance, but when you think about the net of price and mix, do you think revenue outpaces the volume guidance you're giving us? Can you just clarify, you talked about the rating agencies wanting different things. I guess, if you've got sort of the rating agencies on board with your thinking, do you have willingness to use more leverage on the balance sheet than your targets if they were on board? I'll talk to the first question there. You're basically asking is revenue with price going to give us positive yields? Yes, we would expect that as we look over the horizon. Even with some mixed pressure, we do expect that to be on the positive side. In terms of your ratings question, I think it's important to point out when we put out the specific target of the 2.7% back in 2018, we were going through a change in our capital structure. We were adding pretty significant leverage, and so it was important to put a marker out there in terms of where we were going to take that to. As we sit here today, we've largely gone through that process. We believe that we, not fully, but pretty nearly optimized our capital structure. We're going to continue to use our balance sheet and the capacity that we generate there as we continue to grow earnings and use that to reward shareholders. When you think about a bright line measured on a quarterly basis, we think that through our dialogue with the rating agencies, the fact that we've proven to be very disciplined in terms of our capital deployment and that we don't plan to significantly change our leverage, that bright line on a quarterly basis just really doesn't make sense for us. We're going to continue to reward our shareholders with our balance sheet while maintaining a strong investment-grade credit rating. Yeah. Thanks for the question, Scott. Thank you. Yep. Let's go to an online question. Does the guidance of low double-digit EPS growth include share repurchases, Jennifer? That's an easy one. Yes, it does. It's both the growth that we're going to generate from the business as well as share repurchases. Those are both included in that guidance. Perfect. Vanessa, do we have another online question? Yes. We have several. Our next question comes from Tom Wadewitz from UBS Securities. Tom, your line is open. If you would unmute your video, please go ahead. Yeah, great. Thanks for the chance for another question. I've got two. First, I want to get a sense of where you're at on some of the intermodal initiatives. A couple of things you mentioned, like the grain match backs program at Global 4, and also kind of leveraging the real estate footprint. It seems like those are nice levers for your international intermodal growth. I'm just wondering how early in that process are you? Have you been doing match backs for a long time, or is that kind of first inning of something you could do for a long time to support international growth? The second question, Lance, for you really. I guess if I think back to prior CEOs, I think back to Jim Young. I think Jim was very much about every car has to pay its way and earn a return, and it was a long period of price and really capturing a lot of price. How do you think about what you want to be the kind of framework for your time as CEO? Is it going to be really transition to volume growth and volume becomes more important than price, or do you think it's about balance? Thank you. Thank you, Tom. Kenny, you want to start out on match backs, and is that new to us? No, not at all. Thanks for the question, Tom. It's not new to us. We've always had a number of products in the marketplace. We're excited that we've been able to turbocharge those products. When you think about the products that we have in Pocatello, Idaho, that's coming online this summer. We talked about the G4 grain match back that's coming online by the end of this year. Even that Inland Empire product, we're excited because we're going to start that up, and Eric and the team are giving us a product here this summer. Feeling really bullish by how quickly we've been able to bring those on, and especially when we talk about the Twin Cities intermodal product, too. Yeah. Fantastic. Tom, let me put my answer in the context of let's go out a few years and I'm retired or at a retirement party, and I'm celebrating with the leadership team, and what we're celebrating is we're clearly the best damn railroad in the world, and more importantly, we're clearly a logistics leader. Our safety record is second to none. We've demonstrated best margins in the industry. We've demonstrably improved our return on invested capital, and we've also become more meaningful to the share of spend of our customers when it comes to the logistics and supply chain. we did that by adding new products and services that were really meaningful to them, help them solve problems in their markets. If we can say those five things, I'm having a hell of a retirement party. Volume's on the list, but it's not? Volume is an enabler, right? The way we think about volume, Tom, is the market's going to present to us what's available, and the more we can do, the more will become available to us. The better our cost structure, the more is available to us. The better our service product, the more is available to us. The more we remove barriers to doing business with us and make ourselves ridiculously easy to plug into, the more is available to us. I look at that and think all of that comes at a price. There's a market clearing price, and it's not one thing, it usually is a band. We want to be at the top end of that band, and we want it all to pay for itself. With a lower cost structure, we make it a little easier. Yeah, we don't think of those things in terms of volume and prices being mutually exclusive. Same way with growing versus our operating ratios. We still very much are in a place where we believe that we can do both of those things together. Amen. Thanks for the question, Tom. Thanks for the time. Yep. Let's get another video question, Vanessa. Thank you. Our next question comes from Amit Mehrotra from Deutsche Bank Securities. Amit, if you could unmute your video. Here we go. Please go ahead. Thanks. Jennifer, I'm sure you're going to miss the incremental margin questions, but thank you for putting it out there. First question, I guess that's just a two-parter. First question is, what is the volume CAGR of 3% assume, if anything, on the outcome of what's happening at KSU? Is there some headwind assumed? Is it neutral? Is there nothing assumed? I just want to clarify the OR comment for next year. I think Lance said 55 OR, but in the slides it's 55.x. Are you saying that it's going to be 55 at some point next year, but the annual is going to be a little bit above 55? If you can just clarify that. Thank you. Yeah. In terms of the operating ratio, Amit, we're not putting a 55 dot, fill in the blank. We're going to be comfortably operating in that 55 range in 2022. What the exact basis point is after that, we're not putting that because obviously we've got to finish out 2021. You heard us up our guidance in the first quarter in terms of being closer to the 200 basis points of improvement this year. We need to get through this year to really put a finer point on 2022, but it is going to be firmly in that 55 range, and that's going to be our launch point, obviously, to continue to improve from there. In terms of your question about the merger, we believe very strongly that we've got a great competitive landscape, a great competitive force in terms of looking at our franchise. Regardless of what happens with the KCS, we feel very confident in being able to reach our operating ratio targets. Yeah. That's exactly right, Amit. We're going to continue to compete and make sure our customers have good fluid and competitive access to Mexico to and from like they do today. Vanessa, let's take another question online if we could. Excuse me, no question. Sorry, Lance. Were you looking for a video question? Our next question comes from Brian Ossenbeck from JP Morgan. Brian, please unmute your video and audio to be able to ask a question. All right. Thank you. Two questions here. One on fuel consumption. Eric, you mentioned a bunch of productivity initiatives on the operating side. I didn't hear fuel as one of them, but as you know, UP has been lagging peers for a while now, even though you've got some new equipment, better efficiency, and it sounds like maybe a new service they're putting in for fuel economy towards the end of the year. Do you think you can close that gap? Do you assume you can close that gap? I guess bigger picture, why is the gap stayed as big as it has so far? just to maybe clarify on the incremental margin range for Jennifer, mid to high 60s, I would think maybe you can do a little bit better towards the high end of the range because it sounds like you've got 60%-70% capacity on the network where you have 30%-40% additional. It sounds like a lot of room to run some additional trains. The thoughts on that and fuel economy if you could. Thanks. Eric, start. On the fuel conservation, Brian, you pointed out, and I can kind of do it in reverse. When you look across the industry, we're always very careful as we think about comparing to other railroads because no two railroads are exactly the same. We face certain challenges in the west part of our system with grade and curvature that others don't have to. Now, that doesn't mean that we don't expect to improve year-over-year in fuel consumption. The work that Shane mentioned with the modernization of 300 locomotives by the end of 2022, that will contribute to that. Our work in leveraging EMS and how we can turn off locomotives or at least idle locomotives more effectively than we can today, that will help on fuel consumption. Our overall broad strategies around still reducing the fleet. We've often said we don't have 3,000 more locomotives to put into storage. That doesn't mean that we're satisfied with where our fleet is. We want to grow that, but we want to do it with still a lean base. There's still opportunities. Even when you think about converting locomotives from DC to AC and being able to run that, you're getting more tractive effort, which allows you to actually reduce your fleet as well. I guess I could go on and on, but it's a very long, strong portfolio of initiatives that you should continue to see us make progress on. Relative to peers, I'll let you make those comparisons. I just would point out that we're a little bit different, but we still need to be successful regardless to our own mark. We are competitive. Absolutely. We're the best in the West, and we're going to continue to improve. We've got some tailwinds and some headwinds, and we're going to use the tailwinds to our advantage and overcome the headwinds. Yeah. In terms of your incremental margin, incremental margin mid to high 60s average over the period, we think that would be very strong performance, and it certainly gives the ability for us to take on growing volumes in a very cost-effective way. When you heard John talk about some of the excess capacity or our room to grow, I really think of that more in terms of capital dollars, and that really goes to our capital efficiency that we see going forward and why we're very confident that we can continue to grow while staying below that 15%. That means I don't need to put incremental investment into a terminal or into line of road to try to grow. That's where that capacity comment really came to, that John was speaking to. All right. Thanks for those questions, Brian. Thank you. Thank you. We're going to go online next. The question is, are you indifferent from an ROIC or operating ratio perspective, whether growth comes from intermodal or carload business? Let me get started and then I'll turn it over to either Jennifer or Kenny. We love every single one of the products on the railroad. We're like a proud parent with their children. Having said that, carload's wonderful because it's a unique aspect of the Union Pacific franchise. We've got a better carload network than our primary rail competitor in the West, and it allows us to convert even more traffic from highway. It's harder because it involves local switching and some other things, but it's unique to our franchise and it leverages it, and we love that. We love intermodal too, though. Yeah. I would say, just going back to the long-term guidance, the targets that we put out there for ROIC, growing to 17%, incremental margins, mid to high 60s over the period, that bakes in the fact that we do see the intermodal, the premium portion of our network growing faster. I think that's just a fundamental fact. When you look at where Kenny and team are targeting, it's truck markets. while some of that may convert to carload business, a good portion of it is going to convert into intermodal business. Yeah. I think if we could snap our fingers, I'd like to double frac sand, double grain, and have a whole boatload of domestic intermodal growth, too. Maybe that'll happen. Let's go to Vanessa, a video question. Thank you. Our next question comes from Justin Long from Stephens. Justin, please unmute yourself. Your line is open. Thanks, my question actually builds on the prior question. I wanted to ask about incremental margins just because historically, I think we've been under the impression if you rank order things, merchandise would be well ahead of intermodal. After implementing TSR, could you talk about that gap today when you look at incremental margins of merchandise versus intermodal? Are we to the point now where they're both in that range of mid to high 60s, or is there still a pretty meaningful gap? There is still a gap today, and that's really where you heard us talk about, in fact, Jon Panzer talked about Intermodal Excellence. We recognize that because that is going to be a growth engine for us, we need to be diligent about improving the cost structure within that space. It's not on par today, but we want to grow in that area. We're not going to limit growth because it's not on par because we think we can drive very strong cash returns from that business, and that's very much what we're focused on doing. Again, to Lance's point, we don't necessarily have the luxury today to wave a magic wand that's going to drive where the business is going to be. We want to be in a position to have the service product, have the capacity, and have the efficiency to handle what comes to us so that we can grow and do so very profitably. Yeah. Train length is our friend across the board, though, Justin, right? Whether we're dropping a couple of containers into an existing intermodal train or adding a car onto an existing manifest train length growth is our friend. Vanessa, let's get one more from video, and then I'll go to online. Thank you. Our next question comes from Chris Wetherbee from Citigroup Global Markets. Chris, your line is open. Please go ahead. Great, thanks. I guess I wanted to ask a question about the operating ratio potential of the business. I guess going back a long time, covering you guys, you've generally set sort of absolute targets around operating ratio, and obviously, the incremental margin targets are quite good, but aren't an absolute target. I guess maybe conceptually, how are you thinking about where you stand today versus where you've been at several of these investor days in the past where you felt the need to sort of set those meaningful targets? When you think about the incremental margin opportunity, how do you sensitize that around volume? You have a volume forecast, and we'll see what the economy gives us, particularly maybe as we get farther out into the forecast period. Can you still achieve those types of incremental margins and give you a softer volume environment? Yeah, let me start, and then I want to turn it over to Jennifer. It's a great question, Chris, and what you're seeing is a very deliberate and specific evolution movement away from just trying to focus solely on operating ratio and kind of feeding that beast by setting a specific target out into the future that we're going to chase down. Because candidly, I think when we look at the future of our railroad, we're not giving up in any way or saying, "Boy, we think we're going to get slippage in operating ratio," but we just don't think slavish focus to that one number is very productive. Yeah, I think, kind of similar to when we talked about leverage targets, when we put out the 55 operating ratio target, we were not leading in the industry as we are today. We were, in fact, lagging, and so we thought it was important to put that target out there to help our shareholders and people understand, we think this is the potential of our franchise. We still think there's more potential, obviously, because I said we're going to have one of the best, if not the best, operating ratio going forward from this point. It's not like we're saying we're going to take our foot off that gas. We've moved into the position where we think we need to be, and we're going to maintain that. This isn't going to be a one and done. We want to sustainably be here and hold that position. We expect people to continue to improve. We know the rail industry is very focused on improving the efficiency, and so that's how we're viewing ourselves. In terms of incrementals, if we have less than the 3% kind of volume CAGR, we will be very diligent in making sure that the volume we do bring on and the growth that we are able to generate has very strong incrementals. I think, we again, feel very positive about our ability to grow. Kenny and team have a great plan put together, and you're going to like the results that we deliver from that. We appreciate the question, Chris. We're going to go online now. It's a question for Rahul. Coming from a customer of the rail industry, do you see any obvious technology improvement opportunity that the rail industry can tackle to improve service? Coming from retail, it was all about taking a customer's perspective into removing the pain points that we have in our customer daily journeys. One of the ahas I had here was the quality of the technologists that we have, top-notch. Taking a perspective of what are those folks working on, because rail industry traditionally has been an inward outlook, and we're kind of changing the perspective a little bit, with Kenny's team, of doing an outward in-look and looking at the entire customer journey map and removing the pain points, in that map via better customer touch points, removing the pain points, codifying, datafying the interactions, and really making it easy to do business with. That's for our external customers. That principle then applies to my friend here, Eric, for our internal customers in automating and basically putting technology in precision schedule railroading and really coin the word technology schedule railroading. Really codifying that and datafying those processes and making it better for our customers. Yeah. Fantastic. Thank you, Rahul. We're going to, Vanessa, go to you for two more video questions. Let's get our first. Thank you, Lance. Our next question comes from Fadi Chamoun from BMO Capital Markets. Fadi, your line is open. Please go ahead. You may have to unmute yourself. Okay. Thank you. talking about growth, clearly it's a focus to you, but also a focus for the entire industry, and it feels like it's also driving some M&A in the industry currently. Obviously, M&A is potentially a source of friction reduction from the rail network. It could potentially unlock step function change in the cost structure, improve the service. I understand there's some reluctance for the East-West M&A story currently. What other things that you can do, given that the growth issue is a kind of common enemy for the entire industry right now, what can the industry do in terms of tackling the opportunity to grow by developing maybe a product that appeals to the customer that are more direct lines service between East and West that can unlock that addressable market? Fadi, great question. Let me touch just a moment on what you mentioned in terms of the merger potential for Class I railroads, and then get into how can railroads create product that looks like it's from a single source. You know that our concern with Class I mergers going forward is all about the STB's ability to regulate the industry. They are the sole determinant of approval of a merger, and in doing that, their regulations say they have to look at three things. It has to enhance competition, it has to have better outcomes from a service perspective for all customers, and they have to consider the downstream impacts. In that, they have full and open authority for whatever the regulations are required in order to make that happen. In that last piece, the re-regulation of the railroad, that's the piece that we would be concerned about. In the current proposed transactions, whether it's the CP or the CN, we're going to be an active participant at the STB to make sure that as they're going through that process, we understand it, they hear our voice and what it means for our customers to continue to have good, unfettered, competitive access to and from Mexico. That might inform kind of future decision-making. Setting that aside, what a merger does, maybe first and foremost, there's a lot of synergy opportunities, which basically means being able to get rid of cost. It allows the two merging railroads to create single line service. The reason single line service looks attractive is it's one touch point for the customer, it simplifies the customer's journey, and the variability at the interchange goes away. Those are things that we can solve with our Class I partners. We do it actively today, Eric all the time, and Kenny all the time. That's right. Correct. it's a great question, Fadi. Bottom line is we're just going to have to continue to look for opportunities to be much simpler to do business with customers, make sure our interchange customers are identifying partners, are identifying the best interchange points for the service product, and then making that interchange fluid and rapid. There's no magic to it, really. It's pick and shovel work, and we do know how to do that. Vanessa, let's go to one more video question, please. Thank you. Our last question comes from David Vernon from Sanford C. Bernstein & Co. David, would you please unmute your video and audio? Absolutely. Lance, having opened a Pandora's box on merger questions, I figure I'll just put this one out for you to consider. One of the values that's being proposed in either the CP or CN combination with KCS is the ability to compete more effectively with truck traffic, which is a very large market between Texas and Chicago, where you have single-line service. What's missing in your product today that is creating that opportunity that the other railroads see? What can we expect to see you guys do to get after that opportunity, to maybe accelerate growth even faster? We see a ton of truck opportunity as well. It is in existence today. A lot of that opportunity happens at the maquiladoras just inside of Mexico. Some happens deeper in Mexico in terms of manufacturing, and some happens in the Texas Gulf Coast, where we already serve and provide good outlets to and from those manufacturers and producers. I would say, I don't see any magic in the CP KCS, CN KCS, other than the thing I'm most concerned about, which is KCS market power in Mexico being projected into the United States and Canada, i.e., our customers on Union Pacific need to continue to have the kind of access they have to and from Mexico, so that they can both get access to Mexican industry and also benefit from Mexican industry and economy in their own supply chains. That's what we're focused on in the process at the STB. I appreciate that question, David. Yeah, please. I was just going to say, so absent the Mexican reach question, what about that Texas to Detroit corridor? I understand you do a lot of intermodal today that actually originates in trucks over the border and comes into a yard. If that is such a large opportunity, what's stopping you from going after that today? Nothing. We're going after it, and we're generally penetrating today. Let me jump in. Thanks for that question. We are winning. We're winning today. We've been able to win quite a bit of auto parts business here. We talked about it publicly. A few wins that were all truck, very sizable, up and down that north-south lane, but then also coming out of Mexico, headed west. We're winning today, and we want to increase on those wins. We got good partners into and out of Detroit in the form of other Class I railroads that serve that area. We're going to keep working it, David, because there's more opportunity, as you point out. We appreciate that. Definitely. Thanks a lot. We're going to go to our last question, which is, thank you, which is online, and the question is, in labor negotiations, is there any focus on greater flexibility to be able to shift crews between districts in order to react to short-term or unexpected changes in demand patterns? the short answer is yeah, and we also have some of that flexibility today. In today's world, we have the ability, Eric, to borrow out crews from one area to another. Now, that's at the crew's discretion. We invite them, and most times we get plenty that say yes and take advantage of it. in the context of national negotiations, I'm not sure that's a specific thing we're asking for in this round. No, not in this round. To your point, we have success with the current process, and it may be something we may still enter into in further negotiations if it becomes particularly important to us. Right. We do have a host of other things that are part of work rule modifications that we think could really benefit the railroad that are part of this round, and some can happen at national, and some can happen on property. As we need something to change in our labor contracts, we have the ability to get them modified in negotiation with our labor unions. Thanks for that question online. Okay, that's going to conclude our day today. We very much appreciate all of you taking the time to spend roughly three hours with us to go over what our game plan is for the next handful of years, our confidence in that game plan, how it's constructed and wired together, and the team that's going to be responsible for making it happen. You're going to be able to see a replay of this event. It will be posted in the next 24 hours. As you heard today, we're very excited about what the future holds for Union Pacific. Our future is exceptionally bright. I think the numbers that Jennifer shared at the tail end of the prepared comments in the video section speak for themselves. We heard somebody basically, in their question, say, "Hey, you ticked every box. We totally agree with them. Our future is built on service, which is customer-centered operational excellence. Growth, both in car loads, in service, in products, in reach. Winning, being the best in the industry and being a logistics leader, and doing that together so that all four stakeholders are moving in the right direction with us. With that, we thank you all for spending time with us. Take care.