Greetings, and welcome to the Union Pacific second quarter earnings call. At this time, all participants will be in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded, and the slides for today's presentation are available on Union Pacific's website. At this time, it's now my pleasure to introduce your host, Mr. Lance Fritz, Chairman, President, and CEO for Union Pacific. Mr. Fritz, you may begin. Thank you, Rob. Good morning, and welcome to Union Pacific's second quarter earnings conference call. With me today in Omaha are Kenny Rocker, Executive Vice President of Marketing and Sales, Eric Gehringer, Executive Vice President of Operations, and Jennifer Hamann, our Chief Financial Officer. We're also joined by our newly elected independent Chair of the Board of Directors, Mike McCarthy, who will take a couple of minutes to address the announcements we made this morning regarding my successor and our board. Mike, the floor is yours. Thanks, Lance. This morning, the board of directors announce that Jim Vena will be appointed the next Chief Executive Officer of Union Pacific. The board has also appointed Jim to the board of directors. Jim brings a strong rail operations background to Union Pacific with over 40 years of experience. This includes two successful years as our Chief Operating Officer from 2019 to 2020. After a comprehensive search process, it was clear Jim's track record of operating excellence was unparalleled, and he was the right candidate for the job. Jim will start as CEO on August 14th, and we look forward to welcoming him back to Union Pacific. The board also announced that Beth Whited will be appointed President of Union Pacific. Beth has over 35 years of experience at our company and has held leadership roles across multiple departments. Recently, she has led our strategy, sustainability, and workforce resource teams with great success. Going forward, the operations, finance, marketing and sales, supply chain, and technology functions will report directly to Vena. Whited will report to Vena, and her responsibilities will include the strategy, workforce resources, sustainability, law, corporate relations, and government affairs functions. In addition to these management changes, the board is appointing two new board members, Doyle Simons, former President and Chief Executive Officer of Weyerhaeuser, and John Wiehoff, former Chairman, President, and CEO of C.H. Robinson. Both bring to our board a wealth of skill sets, including operational expertise from leading large industrial public companies. As Lance indicated, as part of these changes, we are adopting a corporate governance best practice by splitting the role of company CEO and board chair. With my election to independent chair, Director Sheri Edison will take over leadership of the Corporate Governance, Nominating and Sustainability Committee. The board has created a new committee, Safety and Service Quality, which will have responsibility to review, evaluate, and monitor compliance with safety programs and provide oversight of the company's service performance. Director Jane Lute will lead this committee. The board is very pleased to make these announcements today, which represent a continued commitment to board refreshment to ensure that we have the right mix of skills and experience to oversee the company. We are confident that these new appointments set Union Pacific up for long-term value creation. Before I turn it back over to Lance, I would like to thank him for his leadership these past eight years. His accomplishments are many. Over the next few weeks, we will properly celebrate them. Most importantly, though, his leadership has set our company up for great success for the years to come. Thank you, Lance, and I'll turn it back over to you. Thanks, Mike. We appreciate your leadership throughout the process. I'm pleased to welcome back Jim to Union Pacific, and I'm confident that the company has the right leaders to advance the hard work that's underway. Let's turn to the business of the call and second quarter results. This morning, Union Pacific reported 2023 second quarter net income of $1.6 billion, or $2.57 per share. This compares to 2022 second quarter net income of $1.8 billion, or $2.93 per share. Our second quarter operating ratio of 63% was up 280 basis points versus 2022, primarily driven by lower revenue, inflationary pressures, and the previously disclosed one-time ratification bonus payment. Throughout the quarter, we provided our customers with a more consistent and reliable service product while generally meeting the demand that was available to us. Eric will discuss in more detail the progress we've made, but the bottom line is that the actions we've taken to strengthen our crew resources are improving the railroad. We also acted during the quarter to increase the efficiency of our network by rightsizing our locomotive fleet, using crews more efficiently, and making sequential improvements in train length. We finished the quarter with our resources better aligned with current volumes. As you'll hear from Kenny, while several of our markets showed growth, consumer-facing markets remained soft and drove the volume decline. However, the strength of our business development efforts enabled us to mitigate the macro impact and outperform our peers. let me turn it over to Kenny to provide more color on the business environment. Thank you, Lance. Good morning. For the second quarter, volume was down 2%, driven by weak market conditions in our premium and bulk business groups. Freight revenue declined 5%, driven by lower fuel surcharges and a 2% decrease in volume. We generated solid core pricing gains in the quarter to help offset some of those challenges. Let's take a closer look at each of these business groups. Starting with bulk, revenue for the quarter was down 3% compared to last year, driven by a 2% decrease in average revenue per car due to lower fuel surcharges and a 1% decline in volume. Grain and grain products volume was up 1% due to increased demand and business wins for renewable diesel feedstocks, coupled with strong shipments of domestic grain. A soft U.S. export grain market partially offset these gains. Fertilizer carloads decreased by 9% in the quarter due to an outage at a customer facility that reduced export potash shipments. Food and refrigerated volume was down 8% due to reduced beer imports early in the quarter, but those shipments eventually improved by June. In addition, drought conditions from the prior growing season negatively impacted both fresh and canned shipments. Lastly, coal and renewables volume was flat year-over-year. Low natural gas prices and reduced electricity demand from mild weather negatively impacted shipments, but that was offset by a favorable comparison to 2022. With our service improvements and additional resources, we are currently meeting available demand. Moving on to industrial. Industrial revenue was flat for the quarter, driven by a 1% improvement in volume, offset by a 1% decline in average revenue per car. Core pricing gains in the quarter were offset by lower fuel surcharges and a negative mix in volume. Industrial chemicals and plastics volume was up 2% year-over-year, driven by increased plastic shipments, partially offset by lower industrial chemical shipments due to challenged industrial production levels and reduced housing demand. Metals and minerals volumes continued to deliver year-over-year growth. Volume was up 2% compared to last year, primarily driven by growth in construction materials and increased frac sand shipments, along with new business development wins. Forest products volume declined 13% year-over-year, driven by challenging market conditions in housing and repair and remodel, coupled with lower corrugated box demand. Energy and specialized shipments were up 2% versus last year, driven by strong business development and increased demand for LPG and petroleum products. Turning to premium. Revenue for the quarter was down 11% on a 4% decrease in volume compared to last year. Average revenue per car decreased by 8%, reflecting lower fuel surcharge revenue. Automotive volumes were positively driven by continued strength in OEM production and inventory replenishment for finished vehicles and auto parts. Domestic intermodal wins were offset by a weak freight and parcel market, driven by higher inventory and a shift in consumer behavior as people spend more towards services than goods. International shipments were down due to decreased imports on the West Coast. Turning to slide seven. Here's our outlook for the rest of 2023 as we see it today. Starting with our bulk commodities, there is uncertainty in our second half coal outlook as inventories have been restocked, but extreme heat is driving up near-term demand and starting to push up natural gas prices. We expect near-term grain shipments to be challenged with tighter U.S. grain supply impacting volumes. With improved operations and recent rain improving new crop supply forecasts, we remain optimistic about our opportunity to move incremental grain carloads in the fourth quarter. We expect our forecast for biofuel shipments of renewable diesel and their associated feedstocks to remain strong. We see solid market demand and continue to capture new business as production expands. Moving on to industrial. The forecast for industrial production is down in the back half of 2023. Demand for forest products will also remain below 2022 levels, despite some good business development wins on the metal side, it is being offset by a weaker-than-expected market. We expect to see continued strength in construction with new business wins. Finally, for premium, we expect challenges in the intermodal market from continued inventory destocking, inflationary pressures, and ongoing shift in consumer spending from goods to services. However, on the international side, we continue to outpace U.S. West Coast import market as customers shift more business to IPI. For automotive, we expect growth to continue, driven by strong OEM production and high shippable ground count. To wrap up, it's hard to say when the economy will begin to recover in certain sectors, but our diverse portfolio allows us to see positive momentum in many of our commodities. The team remains focused on winning new business and has a strong pipeline of opportunities with a great track record for closing deals. With that, I'll turn it over to Eric to review our operational performance. Thank you, Kenny. Good morning. Starting on slide nine, as always, safety remains job number one at Union Pacific, and we are committed to ensuring the safety of our employees, our customers, and the communities that we serve. Freight rail is the safest way to transport goods overland, and Union Pacific is doing its part to be even safer through ongoing investments in our network, employees, technology, and communities. That is evidenced by our safety performance, which continues to show improvement. Through the first half of the year, our reportable derailment rate and personal injury rate both improved, a direct result of our enhanced training programs and strong safety culture of ownership and personal accountability. Now let's review our key performance metrics for the quarter, starting on slide 10. This quarter, through the team's hard work, we made improvements both year-over-year and sequentially across key metrics that drive the customer experience. Freight car velocity improved 8% to 202 miles per day compared to the second quarter, 2022. This improved fluidity and resiliency was on display as we exceeded 200 daily car miles for 10 consecutive weeks during the quarter. While the current business mix is a headwind, there remain opportunities for continued improvement. Trip plan compliance, a sizable 17 and 8-point year-over-year improvement in Intermodal and Manifest and Auto TPC, respectively. Improved network fluidity, as evidenced by faster freight car velocity, train velocity, and lower terminal dwell, drove those improvements. Turning to slide 11 to review our network efficiency metrics. With the demand picture weaker, the team is taking action to rightsize resources to align with current volumes. For example, beginning in April, we took actions to remove locomotives from our active fleet, storing around 200 units through the quarter. While there is still room for progress, locomotive productivity improved 2% both sequentially and year-over-year, even as our gross ton-miles declined 1%. Greater crew availability is supporting solid service metrics, the impact of our hiring can be seen in our workforce productivity. To date, we have graduated approximately 1,200 TE&Y employees and have a strong pipeline of nearly 775 in training. These higher workforce levels, coupled with weaker volumes, resulted in a 5% decline in workforce productivity. With more crew resources, we were able to lower recrew rates and reduce our borrow-outs by roughly half during the quarter. We continue to drive productivity with train length, as evidenced by our sequential improvement of 2%. While down 1% year-over-year, this is good progress when you consider the headwinds soft Intermodal volumes presented to our train length initiatives. There are many more opportunities ahead for improved efficiency of our railroad. From redeploying brake persons to improving fuel efficiency, growing train length, and rightsizing our locomotive fleet, there is productivity to be captured. Wrapping up on slide 12, the well-being and quality of life for our employees remains a top priority, and we continuously collect feedback, collaborate, and look for solutions with our workforce. The historic agreements listed on slide 12 represent the results of our work together. Let's talk through each one of them in detail. Starting with paid sick leave, we now have ratified or tentative agreements with all 13 of our labor unions on this important quality-of-life initiative. The employee benefit is evident as they receive more paid time off to take care of themselves and their families. For the company, this definitely improves the attractiveness of our jobs, but is additional labor expense that will need to be offset. Our crew consist agreement with SMART-TD provides greater scheduling flexibility and the ability to redeploy brake or switch persons to work either in or outside the yard. More specifically, for our employees, it provides an expedited path for brake persons to become conductors and ultimately engineers, if they so desire. For the company, it allows us to now reduce brake persons where the work does not require the third person, allowing us to partially offset short-term hiring demands. It also sets the stage to establish ground-based, enhanced utility positions with fixed days off and greater certainty about their weekly assignments through scheduled shift work. Finally, TE&Y work rest provides engineers and conductors with a more predictable work schedule, which enhances the quality of life for our employees and their families. Currently, we have a ratified agreement with our engineers that provides an 11 days on, 4 days off work schedule, and we are currently negotiating work rest with our conductors. For the company, this enables the railroad to better manage staffing levels as we receive a more predictable, available workforce. That reduces labor and failure costs, which combined, support more consistent and reliable service, enabling long-term growth. We also believe it will improve our retention rate, reducing hiring expenses and lost productivity. Now, these agreements come with a cost, which Jennifer will detail more later. As we implement them, we expect a larger training pipeline in the near term, as well as elevated workforce levels in the future. When fully implemented, our current forecast is an additional 400-600 employees. Ultimately, the long-term benefit of these agreements is the positive impact on our employees and the service we provide for our customers. That enhanced service product will allow us to win in the marketplace. To close, I would like to express my appreciation to both our customers for their support and the Marketing and Sales team for their continuous work to capture available demand and win new business. With that, I will turn it over to Jennifer to review our financial performance. Thanks, Eric, and good morning. Let me start with a look at the walk-down of our second quarter operating ratio and earnings per share on slide 14, where we've outlined the major drivers. In a June 13th, 8-K, we disclosed a one-time ratification payment related to our SMART-TD break person agreement. That $67 million bonus increased our operating ratio 110 basis points and reduced our EPS $0.09. Falling fuel prices during the quarter and the lag on our fuel surcharge recovery programs positively impacted our operating ratio 200 basis points and added $0.04 to EPS. While improved operations generally allowed us to meet demand during the quarter, that demand was softer, and the combination of an elevated training pipeline, inflation, and negative mix all impacted our core results. Below the line, we net to a $0.07 EPS reduction from lower Nebraska state tax rates in 2023, as was noted in that same June 8-K, and a large 2022 real estate sale. Looking now at our second quarter income statement on slide 15, operating revenue totaled $6 billion, down 5% versus last year on a 2% year-over-year volume decline. Included in that is a $34 million reduction in accessorials related to lower intermodal volume and faster equipment turns. Operating expense of $3.8 billion was flat, resulting in second quarter operating income of $2.2 billion, which is down 12% versus last year. Other income decreased $70 million, driven by the 2022 real estate sale I mentioned earlier. Interest expense increased 7%, reflecting higher debt levels. Net income of $1.6 billion declined 14% versus 2022, which, when combined with share repurchases, resulted in a 12% decrease in EPS to $2.57. Looking more closely at our second quarter revenue, slide 16 provides a breakdown of our freight revenue, which totaled $5.6 billion, down 5% versus 2022. Lower year-over-year volume reduced revenue 175 basis points. Total fuel surcharge revenue of $707 million was $269 million less versus last year. The impact of falling fuel prices, as well as the lag in our surcharge programs, reduced freight revenues 425 basis points. The combination of price and mix in the quarter increased freight revenue 150 basis points. This gain reflects the strong pricing we've secured, while also recognizing some headwinds from certain coal and intermodal contracts, where the pricing is more reflective of current market conditions. Mix in the quarter remained negative, as fewer lumber shipments and more short-haul rock shipments outweighed the positive impact of lower intermodal. Turning now to slide 17 and a look at second quarter operating expenses, which totaled $3.8 billion. Compensation and benefits expense increased $177 million versus 2022, with nearly 40% of that amount reflecting the break person agreement. Second quarter workforce levels increased 4%. Although total transportation employees were up 7%, the active TE&Y workforce is only up 1%, which is a result of our robust hiring and elevated training pipeline. Excluding the impact of the one-time bonus payment, cost per employee increased 5% in the second quarter. We expect it to be up 3%-4% for the full year. Both second quarter and full year cost per employee reflect the impact of that larger training pipeline, as well as better crew efficiency, which are partially offsetting wage inflation. I'll provide more details on the impact of our new agreements here in just a bit. Fuel expense in the quarter increased 29% on a 29% decrease in fuel prices. Purchase services and materials expense increased 5%, driven by inflation, partially offset by decreased subsidiary drayage expense and more moderate locomotive repair expenses as we stored locomotives in the quarter. Equipment and other rents was up 8%, reflecting higher lease expense for new freight cars secured to support business volumes and lower equity income, slightly offset by lower car hire as we improved cycle times and moved less volume. Other expense grew 6%, primarily related to increased environmental remediation accruals, as well as persistently elevated casualty costs. Turning to slide 18 and our cash flows. Cash from operations in the first half of 2023 decreased to $3.9 billion from $4.2 billion in 2022. The primary driver was $445 million of payments related to labor union agreements. These payments also impacted free cash flow and our cash flow conversion rate. Year to date, we returned $2.3 billion to shareholders through dividends and share repurchases. We finished the second quarter with an adjusted debt to EBITDA ratio to 2022 levels at 2.9x as we continue to be A-rated by our three credit agencies. Wrapping up on slide 19. As you've heard from the team, we're pleased that the service product is enabling us to meet available demand. Unfortunately, as you heard from Kenny, consumer-facing markets like intermodal and lumber remain soft. Additionally, the outlook for coal has weakened since the start of the year, with some near-term opportunities given the extreme heat. Although we still expect to outpace industrial production in certain markets, weak demand for consumer goods has pushed our full-year volume outlook below current industrial production estimates, which are slightly positive. Unchanged is our expectation to generate pricing dollars in excess of inflation dollars. To date, we've made great progress repricing our business to reflect the impact of higher inflation, that momentum will continue. As it relates to fuel prices, I should point out that the tailwind we've experienced these past 24 months is now expected to shift to a headwind, both on the operating ratio and EPS front. Assuming fuel prices remain relatively stable, this will likely represent a negative second half impact of around $0.50 per share. Eric provided some great context on our labor agreements, although they clearly come with some upfront costs, we see opportunities as well. Starting with the sick leave agreements, our current forecast is that they will add roughly $50 million to labor expense in the second half of 2023, which is reflected in the cost per crew numbers I quoted earlier. We view these costs as added inflationary pressures that we will reflect in our pricing. For the break person agreement, we've already seen the impact of that upfront payment. Our expected payback period is roughly two years, as it allows us to redeploy crew personnel, save on costly borrow-out positions, as well as reduce our current hiring needs. Implementation of the BLET work rest agreement will start over the next month or so, with completion likely in 2024. For this year, we estimate the work rest implementation will cost upwards of $20 million. The challenge in putting a finer point on that estimate is both timing and forecasting employee behavior. We don't yet have an agreement with SMART-TD, and we are still working through some technology and logistics before we start the rollout. While we certainly expect better availability, better service, and more flexibility with our crew boards, providing more access to time off likely adds employees and expense. The exact math depends on how employees utilize this greater flexibility, as well as how we translate better predictability into increased levels of productivity and service that ultimately drive profitable growth on our railroad. Looking at our 2023 capital allocation, our capital plan remains $3.6 billion. We also plan to maintain our current dividend of $1.30 per quarter, as reflected in our dividend announcement this morning. We have paused share repurchases and don't expect to be back in the market for the remainder of 2023. While there's no change to our long-term capital allocation strategy, which is first dollar into the business, industry-leading dividend payments, and excess cash to shares, we recognize our cash flows are impacted in the current environment with volumes and costs. Wrapping up, we are well positioned to operate a better railroad in the second half of 2023, and for the long term, our strong fundamentals are unchanged and will allow us to generate significant value for our owners as Team UP drives service, growth, and improved profitability. With that, I'll turn it back to Lance. Thank you, Jennifer. As you've heard from the team, the first half of this year has been about laying a foundation for future success. Key to that foundation is safety and the quality of life of our employees, and I'm pleased with the progress we've been making on both those fronts. As you heard from Eric, we continue to make the railroad safer. While improvements in our safety metrics are critical, more encouraging are the positive strides we're making in our safety culture. The team has great momentum across our safety programs, which gives me great pride as I step away. I'm also encouraged by the progress we've made to address quality of life issues with our craft professionals, reaching historic labor agreements around paid sick leave, crew redeployment, and scheduled work. These agreements drive employee engagement and productivity to produce a better service product for our customers. As I wrap up time as CEO of Union Pacific, I'd like to express my deep appreciation to the board and shareholders of UP for giving me the privilege of leading the company for the past eight years. I'm proud of how the team has positioned Union Pacific to thrive for the years ahead, and I'm pleased to say that we've provided great value all along the way. Union Pacific is truly a special place. It's full of hardworking, dedicated railroaders who embrace the daily task of building America. It's been my greatest honor to lead this team. Their commitment to be the best for our communities, our customers, our investors, and for each other is remarkable. 160-plus years of success began and continues with our exceptional employees. I can't wait to see what they accomplish next. Thank you, Lance. On behalf of the employees of Union Pacific, let me offer our gratitude and appreciation for your leadership. We wish nothing but the best for you and your family as you embark on the next chapter. Before we begin Q&A, I'd like to lay out a couple guidelines for the call. In the interest of time and to accommodate everyone, please limit yourself to one question and one question only. Second, we understand that there's great interest in the leadership changes that were announced this morning, and we look forward to those discussions. However, today's call is to discuss our quarterly results, so please focus your questions on the business of the earnings call. With that, Rob, we are ready for your first question. Thank you. If you'd like to ask a question at this time, please press star one from your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question today will come from the line of Allison Poliniak with Wells Fargo. Please proceed with your question. Hi, good morning. Just wanna talk through Intermodal. I know there's obviously consumer weakness there, but is the, I guess, the pace of the decline moderating for you some? I guess with sort of the improved service that you're starting to see and that interest, you know, back on the West Coast ports, should we start to see or expect to see some of those, you know, business wins start to accelerate for you? Just any color, just thinking that maybe Intermodal starts to perform better for you in the face of even the consumer declines. Thanks. Good morning, Allison. You know, you look at it, I'll let you know we're really staring down at, you know, consumer spending. It's been flat the last few months, maybe several months, but it's differentiated as you look at goods versus services. We're clearly seeing, and I talked about it in my opening remarks, less on the goods and more on the services. The other thing that we're watching is just what's happening with demand. We're looking at that in terms of some of the contract rates which that are flattening out and the spot rates that have inched up a little bit. The fact that we have a really strong intermodal service product is a benefit for us. We're encouraged as a company, I'm encouraged as the commercial leader, that even though the imports have been down 23% year to date, we're only down a couple percentage points. In talking to our customers, we also believe that they'll be shifting a little bit more back to the West Coast port. That's going to be a gradual shift. That'll be a little bit more throughout 2023 and probably into 2024. Clearly, we're positioned here for the upside. Perfect. Thank you. Thank you, Allison. Our next question is from the line of Jonathan Chappell with Evercore ISI. Thank you. Good morning. I'm not sure if this is for Jennifer or Kenny, but Jennifer, you mentioned in your comments you're making great progress in repricing the business to some of these inflationary headwinds that you're facing. Can you give us an idea as to, one, you know, kind of where you stand in repricing the book of business to a lot of these new labor deals? Kind of, two, just in a softer macro backdrop, how these conversations are going and your confidence in your ability to fully offset the costs. Yeah, John, thanks for that question. I'll start and then pitch it to Kenny. Just as a reminder, when you think about our book of business, call it 25% or so is spot rates. You've got another, call it 30%-35% or so that is one year or less in duration types of contracts or arrangements, the rest then are multiyear deals. There is a cadence to which we're able to touch actively all of our business. Kenny, you want to maybe talk about the market? Yeah, Hey, John, the commercial team has done an excellent job articulating the need for some of the inflationary pressures, even if you want to call it the labor and pressures that are there, really inserting our service products along with those discussions. Now, candidly, in a very pragmatic way, our customers empathize with that. They're taking the same price increases in their markets, so they understand what we need to accomplish. There's a tremendous amount of resources that we're committed to on the CapEx side, which will help out with a consistent and reliable service. We feel very good. There's full confidence in pricing above inflation and making sure we cover those costs. Great. Thank you both. Thanks, John. Our next question is from Chris Wetherbee with Citi. Hey, thanks. Good morning, and congrats, Lance, on the next stage of your career here. I guess, wanted to take a minute and talk a little bit about sort of resources and where you think you are. I know, Eric, you talked about pulling some cost levers that were around locomotives and other assets. Jennifer, what should we expect with headcount as we move forward? You know, sort of when are you appropriately staffed for what you think the volume outlook may be, not just for this quarter, but maybe the next several quarters? Yeah. I'll maybe let Eric talk about how he feels about crew staffing levels. Just overall, in terms of our headcount, you know, we think as you look to the back half of the year, it's probably going to be, I'll call it, flattish or so from where we're at right now. You know, and continuing to hire and train and make sure that we've got a good, robust pipeline so that we're able to serve our customers appropriately. Just from an absolute FTE basis, that's kind of how we see things in the back half. Yep, just picking up from there, Chris, clearly, what you've seen in our performance is that we have reduced the amount of hiring that we've been doing right now. We stay very connected with Kenny as in his outlook, both for the fourth quarter as well as 2024, we're going to continue to adjust as we have to what that demand is. It's the same way I view the locomotive work that was accomplished during the quarter, the team stored 200 locomotives, if you actually look for now, in this month, we're actually above 200. We're treating it the exact same way. See the demand that's out there, plan your resource base accordingly. We should be crystal clear as well, Jennifer and Eric, Chris, that there's still work to be done. When we look into the third and fourth quarter, Eric outlined some of it in his prepared comments, we are not yet volume variable with what we're seeing in the marketplace. We took a step towards that in the second quarter. We got to keep taking steps in the third and fourth. Okay, that's helpful. Thank you. Mm-hmm. The next question is from the line of Justin Long with Stephens. Thanks. Good morning, Lance, congrats from my end as well. I wanted to ask a question about the outlook for the second half. You mentioned fuel being a headwind, in addition to that, the labor cost. Do you think EPS in the second half will be lower than the first half? Maybe, Jennifer, you could comment on the run rate for these labor-related costs as we move into 2024. I'm just curious if we can take this $50 million-$70 million and annualize it, or if that is expected to change. Jennifer, why don't I start? We're not going to provide some incremental or new guidance as regards earnings into the back half. Jennifer, you did a good job of outlining what the headwinds are, why don't we unpack that a little bit? I mean, certainly the one headwind we did size for you is the $0.50 impact, the negative year-over-year impact we expect to see on EPS from fuel in the third and fourth quarters. In terms of moving into 2024, if you think about that $50 million from the sick leave agreements that I mentioned, you know, most of those agreements were really effective in the second half. We had our non-ops that started a little bit in the first half. I think you can think about that as being something that will carry over and repeat itself in the first half of 2024. Beyond that, in terms of the implementation of the work rest, we're really reluctant, it would be difficult for us to size that more precisely because it is going to depend on the timing of how we roll that out, as well as the employee behavior that we see with that. That's something that we'll just keep you updated, but wanna make sure you do understand that that will be a bit of a headwind, but as we get greater clarity of that, as we go through our rollout, and start that rollout, and obviously, we still need to get SMART-TD done as well, you know, we'll be in conversation about that. Justin, I think as we look into the back half of this year, improving productivity, the hiring pipeline tones down a little bit, but we're still hiring. It probably looks like year-over-year about equal, I think, is what Jennifer was saying. Not sure what's going on in the marketplace, we gotta, you know, we gotta do everything we can to capture all the business that's available to us, and then fuel is gonna be a real headwind in the back half. Offsetting that, we get a tailwind from implementing the break person agreement, as we implement the work rest schedule, I am confident that generates both productivity and service product improvement. The issue is timing and magnitude. Got it. Thanks. Our next question is from the line of Brandon Oglenski with Barclays. Please proceed with your question. Good morning, thanks for taking my question. Lance, congrats on, you know, career here. I guess, you know, I know you guys wanted to ask about the quarter, but just looking back, Lance, over your course of being at Union Pacific, you know, what do you think went really right? What do you think maybe could have been done better to keep track, you know, maybe with potentially more volume growth looking back? Maybe looking forward, what do you think are the biggest challenges or opportunities for the industry, maybe not even just UNP? You know, is it technology? Is it regulation? Is it M&A? Would love to get your thoughts. Yeah, Brandon, thank you for that question, and we'll try to keep this to be the only question on that, so I'll try to make the answer fulsome. In terms of what am I proud of, what did I think we got right as a team, one is, I love the team that we've assembled. It's world-class. I love the work that we've done on sustainability. I love the fact that we are an inclusive workforce. You can see it in our Board, you can see it on our management team. I like the progress that we've made on safety. We've got more to do there. I love the fact that we transitioned from our previous transportation model and way of running the railroad to a PSR model that's a better service product for our customers. In terms of what we needed to do better, we were not consistent and reliable through my eight and a half years of serving as the chairman, President, COO, and that needs to be remedied. As we look into the future, that's exactly what we need to continue to do. We've got a strategy, Serve, Grow, Win Together, that's built off the foundation of consistent and reliable service. I am confident we're oriented, organized, and capable of doing that. We've got to prove it to our customers. Because, Brandon, our customers tell us as we demonstrate reliability, there's more of their order book available to us, plus there's more market participants that'll start doing business with us. That's the unlock for growth, and growth is the unlock for significant value creation in the future for everybody, for all of our stakeholders. Thank you, Lance. Yep, thank you. Our next question is from the line of Ravi Shanker with Morgan Stanley. Please proceed with your question. Great. Thanks, everyone, again, from me as well, congrats, Lance, on a great career. Just on the volume guide itself, can you confirm just how much that kind of volume outlook did move? You're now gonna be kind of below a raised benchmark, just trying to get a sense of kind of how much that did move. Also, is industrial production the right benchmark for your kind of volume growth in the long term, just given the consumer exposure here, or do we have to look at some combination of IP plus GDP? Jennifer, you wanna start that? Yeah, I can start it. You know, you raise a good point, Ravi. I mean, we do think, looking backwards, certainly, that industrial production has been a better gauge. You're right, we have great franchise diversity, which we've talked to and Kenny mentioned, too. With the growing intermodal portfolio, there are certainly components of that, but it's really driven by consumer spending, and a lot of that consumer spending comes from industrial production. You know, it's hard to really separate from that. You know, in terms of what's changed from where we started the year, you know, certainly coal is something that, with natural gas prices falling as it did late January, early February, that certainly took a big chunk of that demand away from us. Now, you've heard us talk about the heat, and you're seeing that, and you're seeing maybe a little bit of inflection in natural gas prices, so we're watching that. You know, the other piece, though, is on that consumer side, you know, onboarding a new intermodal customer coming into the year, we expected that to be a big tailwind to our volumes. Just the way that that consumer spending and consumer goods purchases has dropped, that's just had a really outsized impact. You know, all I'll say is that, you know, we're looking at consumer spending by the week, and I feel very encouraged that we have onboarded over the last couple of years, a couple transformative customers onto our domestic intermodal network. As we see that movement move up, we're gonna be in a great position, and so that's encouraging for us as a company. Very good. Thank you. Thank you, Rob. Our next question is from the line of Brian Ossenbeck with JP Morgan. Please proceed with your question. Hi, good morning. Thanks for taking the question. First, just wanted to follow up on pricing to the labor inflation. Do you think getting rate is enough to offset those costs, or do you need to get some productivity benefits from the work rest, the break, brakeman, and then possibly even the utility role? Just for Kenny, can you just comment more about price mix? You mentioned specifically the coal and intermodal pricing were resetting lower in the quarter. Does that continue throughout the rest of the year? You can give some parameters in terms of how to think about that plus mix in the back half. Thank you. Kenny, why don't I start with the what about the agreements and getting price and productivity out of them? The short answer, Brian, is we are confident that we can continue to price above inflation. We've just seen a few agreements like paid sick leave, add to the inflation in our comp and benefits, and Kenny's team is tasked now to get out there and make sure that we recoup that. In terms of productivity, the break person agreement is just a clear path on productivity. We can reduce three people to two people on crews where we don't need three people, we can either redeploy them or lower our hiring demands. That clearly just in that 1 example. There are other examples, like in work rest, Brian, we'll be able to get productivity out of that. Today, there's a percentage of our workforce when they're called to take a train, they are not available to us, and we don't know that before we call them. That creates failure costs and disruption in the network. I'm gonna presume, and I think the experience where work rest schedules are in place, that unpredictability drops dramatically. When that happens, we get better utilization of our assets, and we lower failure costs in the network. The only question for us is order of magnitude and when, as we implement. Yeah, a couple of things here. Let's just take coal for first up. You've heard us talk about this. We do have a couple of mechanisms that are in place that allow us and our customers to be competitive with natural gas prices. You know, one of the things that we have seen out there is the fact that there has been a slight uptick in terms of demand based on the extreme heat that we've seen. We've seen that also impact again, in the near term, you know, natural gas prices out there. We're seeing more demand out there. We are working closely with Eric and his team as we speak, to add more sets and add more inventory into the network. We're looking at the forward curves to just see, you know, how long that will last. We're always looking at that, and we're looking at that by the week. Switching to domestic intermodal on the pricing side, you know, we like the fact that we have our customers that are competitive in the marketplace and that we're competitive against truck. You know, some of those mechanisms will go up as things tighten, and some during a loose market like where we are now, might move down a little bit. The key is to make sure that we can capture the volume against truck and make sure that we're competitive. All right, thanks, Kenny. Congratulations, Lance. Yep. Thank you, Brian. Our next question is from the line of Fadi Chamoun with BMO Capital. Please proceed with your question. Yes, good morning. Thank you. Congratulations, Lance. Question on the opportunity for volume. Like, if you think about a 0 GDP environment over the next, say, 12 months, what can service improvement deliver in terms of growth? Where are maybe some of the verticals you think that you can make a difference in the service level and ultimately start to see more reducing critical opportunities to grow the business? Yeah, Fadi, thanks for the question. Let's just walk through, you know, if you look at our outlook slide, I'll supplement that with a few more specifics. You know, on our biodiesel, the renewable diesel market, you know, we've got seven different facilities on us. We're gonna land another facility here by the end of the year. We're very encouraged by that. That's a key part of our growth strategy. We mentioned that a couple of years ago during Investor Day. Very proud of our commercial team for securing that. Construction, you know, our rock business, for example, those are areas where Eric's team is just delivering great service. That's showing up in terms of carloads. We're, you know, adding a few more sets there. We're seeing more carloads that are coming on because of that, and some of that is market-related, as there's just more infrastructure that's out there. You talk about the service product, we look at auto parts, you know, coming out of Mexico. We've seen a pretty fast and growing EV producer that we're growing with on the auto part side that we're excited about. We've secured a new automotive OEM on our line back in the spring that has brought business to us. That same OEM will be bringing on business in the first quarter. Boy, we're pretty excited there. Kinda last but not least, I'll just say that overall, the team has been engaged on bringing new business in different ways. We have a new industrial park that's gonna be landing on us in the Buckeye, Arizona area, so that's great. We've got a customer that will be doing reusable plastic. Just you think about the ESG connection. We can create our own business development with the service that I mentioned with Eric, and we're excited about it. it's proving, Kenny, your BD pipeline is up what? It's up around 20%-25%. The team is just doing a fabulous job going out there and expanding the market. That's in a. That's in a down market, and so we're, hey, we're pumped up about it. That's good. I'm surprised you didn't mention intermodal as being one of the opportunities that service get better. Is this because the truck market competitiveness right now, you need a little bit of support there, or is there more to it than that? Okay, well, you're gonna get me riled up today. First of all, we talked about a couple, you know, transformative wins that we feel good about. I'll tell you, as a management team, bringing on Inland Empire, which is a new product, bringing on a new Port Houston service product that Eric has given us with five new lanes, bringing on Twin Cities, absolutely, we feel good about domestic intermodal. At some point, you need the demand to be there. What you're hearing me say is that we're prepared as that demand comes on, and we're adding new products, we're adding new services, we're adding new customers. We're excited. Kenny, at the risk of making this drag on too long, you should mention Falcon Premium too. Let me back up and just say, you know, there's been a lot of debate out there, Lance Fritz, in the marketplace, and we feel very good about the service products that we have with Falcon Premium. On a broader sense, there are other class ones associated with that, so it's not just one class one. It's the other class ones that we're interacting with, too, that we feel good about. We've got a shorter route structure. We've got a better schedule. We've got the relationships with the customers. Eric Gehringer and his team are continuously improving that service product, so we're encouraged how that looks in the future. Thank you. Thanks, Fadi. The next question is from the line of Amit Mehrotra with Deutsche Bank. Please proceed with your question. Thanks. Hi, everyone. Lance, congrats, all your success. Wish you the best. I guess, Eric and Jennifer, I know borrow-outs have been pretty expensive, and I think last time we checked, you had, like, 250 borrow-outs in the network. Can you just give us an update on that? It feels like maybe that's an opportunity over the next six to nine months. Just generally, in terms of non-fuel costs, it feels like the network is running a little bit heavy on non-fuel costs. I know there's obviously cost inflation and labor inflation, some idiosyncratic things, but, you know, as maybe the volume comes back and you can become much more volume variable, is there an opportunity to kind of hold the line on the non-fuel cost structure given some of the positive things that you can do on the borrowouts and kind of other cost items that are proving more stubborn right now? Yeah, thank you for the question. Let's back up in time. We came into the year and think about our first quarter earnings report, we were talking about borrowouts in the context of while we were making great progress in our hiring, we still had pockets of the system, specifically about seven locations, where we were utilizing borrowouts because of the difficulty to hire. In any given year, there's some level of borrowouts used, even in just dealing with seasonality, for example, the grain harvest that comes in the fall. If you look at the quarter, what we've reported is that we've taken our borrowout count down by 50%, approximately. That is a process that continues as we look for volume to continue to grow. We have those as options, but as we're looking every week, to your point, to control our costs, those are ones that we adjust literally on a weekly basis. There may be a place, as we fast-forward three months, four months, six months, where you may use them in very small numbers, but our goal is to reduce our borrowouts as quickly as we possibly can. As far as the non-fuel cost, you know, it follows the same recipe that we've shared before. One, we just finished talking about it, which is how we think about our labor costs and ensuring that we're being conscious of that. Two, you go to your next expensive cost, or at least outside of fuel, is you're gonna look at your locomotive fleet. The reduction that we've made in the quarter is a strong move in the right direction. The reduction we've even made in July is another strong move on top of that, and we'll look forward to reporting to that in future quarters. All eyes on, we wanna grow the business, and we need to be volume variable until we see more of that growth coming. Yeah, I mean, just to build on what Eric's saying there is, you know, if you look across all of our cost categories, setting depreciation aside, we know we have opportunities within all of those to be more efficient. You know, as we continue to improve cycle times, that has a very direct flow-through in terms of our car hire expenses. On the purchase services and material side, you know, Eric mentioned the locomotives, there's other opportunities we have in there to work on our costs and even comp and benefits with some of the headwinds that we know we have. There's opportunities to be more productive and use that crew base more efficiently. You know, to your point, volume can certainly be a friend when it comes to the cost structure. I think the fact that you've seen us make some progress as volumes are going down, and you saw us build train length even as volumes came down, and in particular, intermodal volume, those are the things that we're gonna keep working on here, well, always, but certainly in the back half of the year, to continue to drive better efficiency and get better alignment between the resources and the cost structure and the volumes that we're moving. Yeah. Okay, makes sense. Thank you very much. Appreciate it. Thank you. Our next question is from the line of Bascomee Majors with Susquehanna. Please proceed with your question. Lance, as you wrap up your eight years as Union Pacific's Chairman, President, and CEO, how do you expect the push and pull of the senior decision-making process between marketing, operations, and HR change with those roles split between three people, and Beth elevated from just leading the HR and sustainability efforts into that newly standalone President position? Thanks. Yeah, Bascome, thanks for the question. First, you got to note, Jim Vena is our CEO. He runs the company. Beth reports to Jim, so I don't anticipate any meaningful dislocations or push-pull created by org structure. Having said that, there are some natural creative tension in the business all the time. There's creative tension between the operating team and the commercial team. There can be creative tension between the team that is controlling versus the team that's spending. You know, just, you can name any number. The, the most important thing is, we've got a fabulous operating executive joining us as our CEO. He's got a great track record, and he's gonna be laser-focused on making sure that we're providing the best service product to our customers so that we can translate it into growth. He's gonna do a very good job of making sure the team works together. We're working well together today. I anticipate we'll be working well together a month from now. Beth's role is gonna be making sure that she's supporting all of that effort effectively through workforce resources, through the work we do with communities, through the work we do in D.C. I anticipate better, not worse, as we move forward. Thank you. Yep. Thank you, Bascome. The next question is from the line of Ken Hoexter with Bank of America. Hey, great, good morning. Congrats, Lance team, and the board on the next steps and on naming Jim as CEO. So many moving parts with the labor agreements. Obviously, Jen ran through some of the cost side from the pay increase of last year to what you're now adding on after the main contracts. Maybe can you take a minute, walk us through some of the benefits that you see? And I presume these are all Union Pacific add-ons. You know, maybe differentiate what is UP add-on versus the industry. And just thoughts on your outlook. I think you removed the operating ratio from your target. Is there a thought on the scale that you want to put together on costs, or are we just leaving that off altogether? Thanks. Yeah, I'll start off, Ken Hoexter. When we did our 8-K in June, we took the operating ratio improvement off the table for the year, and that hasn't changed. Certainly, you heard us talk about some of the headwinds that we have. We are not, you know, with the addition of the labor expenses, volumes, you know, moving away from us, obviously some fuel headwinds relative to OR in the back half of the year, we don't expect year-over-year improvement. You know, our task, kind of touched on this a little bit with the question from Amit Mehrotra, is to get better, you know, from where we sit today. I'm not going to forecast, you know, what our OR is going to be in the back half of the year, but we're going to work really hard to improve each and every day, and that's both in terms of being more productive with that cost structure, as well as going out and selling in the marketplace and doing all we can to drive profitability on that side. I don't know. Eric. Yep. On the agreement side, if we start with sick days, you know, the opportunity that Lance mentioned, I'll just reinforce, is we see the opportunity to improve the attractiveness of our jobs, and as a result of that can have a positive impact on how we do our hiring. If you go to the break person deal, clearly, the biggest opportunity there is to reduce break person labor in line with where the jobs are no longer needed. It also allows us to partially offset some of our hiring in the short term. Of course, we get the benefit of establishing a ground-based enhanced utility position. As Jennifer pointed out, the payback period on that is approximately two years. If you look right now, we're about 60% the way through that implementation. Certainly on the 11 and 4 scheduled work, it really boils down to improved availability, as Lance pointed out, and more efficiently managing our staff levels with more latitude on how we do that under this new agreement. Thank you. Yep. Thank you, Ken. The next question is from the line of Scott Group with Wolfe Research. Please proceed with your question. Hey, thanks. Good morning, best of luck to you, Lance. Jennifer, just wanted to make sure I understood the answer to that last question. Relative to the 62 adjusted OR in Q2, you're just not giving any color, or are you saying it's probably gonna get worse? The OR second half versus that 62. I'm just not sure what you're trying to message there. Kenny, CN last night was talked about raising their expectations for the upcoming US grain harvest, with some better rain recently. Just your thoughts on how you think about the grain harvest in your territory going forward. Thank you. Going back to, you know, you're really asking a sequential question. You know, again, we had a 63 re-reported OR. If you're stripping out the break person agreement, you know, that was 1.1 points in the quarter. If you look at what we have done historically as a company, you tend to see some of your better margins in the third quarter, tends to go up a little bit then in the fourth quarter, when you're just thinking about kind of that normal seasonality. We are going to work to make sequential improvement. I'm not telling you that we're making sequential improvement, but that is the task that has to be ahead of us. We have to work to improve the cost structure, and we've already made some progress. I think you certainly saw that. I know it's a little bit of a messy quarter with all that was going on in it, but when you strip some of the noise out, there was, you know, particularly when you're comparing first quarter to second quarter, we did make gains. Not year-over-year, but sequentially, we did make some gains there. I think that's the way to think about it into the back half of this year. Scott, I tell you, we look at, you know, the weekly crop report, and I, you know, call it five, maybe six weeks ago, it wasn't looking great. Since then, we've had rain in areas that we serve and participate in, so it's looking much better. You heard in my comment that, you know, we think there's a opportunity for incremental grain in the fourth quarter, and so we're staring that down and working with Eric's team to make sure we can capture it. Thank you, guys. Yep. Thank you, Scott. The next question is from the line of Walter Spracklin with RBC. Please just see with your question. Hi. Best of luck there, Lance, on the future. Just a question here, wrap up here on coal. I know you'd indicated that that was an area of discrepancy from where you were looking at before. Really on the revenue per carload, revenue per RTM, that's taken a notable step down. I know your peers have talked a lot about, you know, CSX talked about a 15% decline in their rates on coal. Now, a lot of that is tied to export met, which is not in your mix, but you did see a similar type of step down in cents per RTM. Just wondering if that's something that you expect to continue for the foreseeable future, what's driving it? What could make it change up or down from this point going forward? Yeah. Walter, we did mention that in my prepared remarks, that that was a bit of a headwind. What's happened with natural gas pricing, that certainly is flowing through in terms of some of the rates. We did that similar to Intermodal in terms of keeping competitiveness for those plants that are dispatching into the grid, keeping them competitive, and we're continuing to ship coal. Still profitable for us, but there is some pricing differentials there. It really depends on how you see the rest of the year playing out in terms of how that's going to look. If you just compare last year's net gas prices to where we're at this year, that tells you there's gonna be some ongoing pressure there. Yeah. I think the differentiation there is sequential versus year-over-year. Year-over-year is gonna continue to see some pressure. Probably- we've seen as much pressure as we're gonna see. Kind of flat from this point going forward? You know, could be. I mean, obviously, watch natural gas prices. Sure. Yep. Okay, thank you. Thanks very much. Yep. Thank you, Walter. Our next question is from the line of Jason Seidl with TD Cowen. Please proceed with your question. Hey, thanks, operator. First off, Lance Fritz, good luck in the future, and, you know, congrats to both Jim Vena and Beth Whited, if they're listening in. Some quick things. One, wanted to look a little bit about regulation. You know, we've seen the FRA now is looking for a public comment period on train weights and lengths. Wanted to know if you guys think this is sort of a precursor for more regulation from them, and two, maybe if you could talk a little bit about anything anticipated on reciprocal switching. Lastly, squeezing in here, Jennifer Hamann, when was the last time you guys didn't repurchase shares in a quarter? Jennifer, you wanna go first, then I'll take the others? Yeah. You know, I would go back to second and third quarter of 2020, when the pandemic hit and there was such a drop in volumes, we paused our share repurchases then, for at least a couple, I'm pretty sure for the full second quarter, part of the third, or part of the third quarter, I think, is when we restarted that. You know, we manage the share repurchase piece with our excess cash, and that's always been the flexible part of our shareholder return, and that's how we're managing it today. Yeah. Jennifer, we've been crystal clear that we've turbocharged our excess cash by using the capacity of our balance sheet, and that capacity now has been largely used, and it's all about growing cash from operations and operating income at this point. Exactly, Lance. You know, obviously, with some of the earnings pressures we're facing this year, that's not giving us- Yeah that incremental capacity we've seen. Jason, talking about what's going on in Congress and at the STB. In Congress, the Railway Safety Act, we've been crystal clear about things in there that we think are appropriate, like there should be some additional regulation and laws regarding the preparedness of emergency responders, the information that's at their disposal. We believe the same is true on tank car standards. There's an opportunity to pull forward tank car standard improvements. We also think there's room for regulation to step into Wayside Detection. We've done a ton of things in Wayside Detection voluntarily. It is not regulated, and if it were to be regulated appropriately, that makes some sense. There's some things in the Railway Safety Act that don't make sense, like coupling train size with safety. On our railroad, mainline and siding derailments are down 25% plus, while train size is up 20% over the last, call it, 4 years. There's just no correlation in our experience between safety and train size. Likewise, there's no correlation anywhere in the world between train crew size and safety. That should be left to collective bargaining and what technology enables. As we look at Congress, that's what we're thinking about. As we look at the STB, as we've said before, we help them understand how the railroad industry works, how our reinvestment works, and when it comes to reciprocal switch or forced open access, we help them understand that would have a real negative impact on investment. It would not improve service product, they should be very, very careful as they think about whether or not that should be implemented and how to implement it. Lance, Jennifer, appreciate the thoughts. Thanks, Jason. Our next question is from the line of Tom Wadewitz with UBS. Please proceed with your question. Good morning. You know, Lance Fritz, wanted to wish you well in the next thing you do, retirement, whatever it is. I guess one just clarification. I think, Kenny Rocker, you commented earlier on intermodal yields, are 3Q. Are we expecting more sequential pressure on revenue per car in intermodal and 3Q? So that just clarification. Then the broader question, really, when we look at the industry, you know, I think historically there was opportunity from productivity and price to improve margin. Certainly, UP did that in a massive way over, I don't know, 15 years, right? But it just seems like there's this inflation in the cost base and, you know, pricing's good, but not enough. Do you think it's fair to look forward and say, "Look, margin improvement's really about volume, and without volume, you're maybe have a tough time to improve the margin?" I think that seemed to be true, maybe, you know, for industry, not just for UP, but I don't know if you have thoughts on that and then maybe clarification on intermodal. Thank you. Yeah, Tom Wadewitz, let me start with your essential question about the three legs of the stool. We've forever talked about, we drive margin improvement through productivity, price, and the benefit of volume. To your point, we've leaned heavily on productivity and price historically, and we said we're gonna have to lean more heavily on volume. That's not going to be the only leg of that three-legged stool, Tom Wadewitz. It's still true. While inflation got on us quick, the way our contracts and our business relationships are set, it takes us a while to recoup that inflation through price. Kenny Rocker's team has been crystal clear that they own the requirement to do that, and they're following through, but it's gonna take a little while. On productivity, like we just demonstrated this quarter, we created a new agreement, makes all the sense in the world. It came with a roughly $70 million price tag immediately. Implementing it is going to get the payback and will be paid back in about two years. So there, Tom Wadewitz, the opportunity for productivity, price, and volume to still drive margin improvement exists. We're in kind of a unique environment right now regarding timing, and we are for sure going to have to rely on volume more heavily going forward. Yeah, just a short answer. No, we're not expecting increased pricing pressures on that intermodal side of the house. Okay, you think stable revenue per car, 3Q versus 2? That's how you should be thinking about it. Okay, great. Thank you. Thank you, Tom. Our next question is from the line of Ben Nolan with Stifel. Please proceed with your question. Thanks. Kenny, you mentioned the Falcon Premium a little bit ago. I'm curious if you have any early takes. How are things thus far developing the way that they thought you would or that you thought they would? Any early indications that of how you're expecting it to play out over the back half of the year? I think you're asking, have we seen any success stories? Yes, we've had some early wins. Of course, the focus is over the road. I mean, that's the size of the prize. Rail is a very small part of that traffic that's, you know, moving out of Mexico or into Mexico. As I also said, as we continue to improve the speed and consistency there, we expect to make more inroads. Okay. So far as expected? Yeah. I mean. Yep. we're getting more reception from customers that are open to opening their books and giving us a shot, for sure. All right. I appreciate it. Thank you. Thank you, Ben. Our next question is from the line of David Vernon with Bernstein. Please proceed with your question. Hey, good morning, guys, and Lance, congratulations and good luck. Eric, with the 400-600 heads that we need to add in for the part-time off, or paid time off, agreement, how many of those people are going to be on property by the end of this year? How should we think about reconciling that with a flat headcount number from 2Q? Are we making reductions in operations, or is it coming out of other areas? Thanks. Yeah. I'll actually jump in on that one. It is when you think about the 400, 600 incremental that we talked about from the labor agreements, that's incremental from what we would have otherwise been staffing at a given volume level. That is completely consistent with and taken into account with when we also say, as we look at headcount levels now to the end of the year, we think, you know, not a, not a whole lot of change. Jennifer, it's for all agreements. It's for all agreements, which, again, we're going to be implementing over not just the back half of this year, but well into 2024. We also pointed out in our commentary that that number is going to be highly impacted by the behavior that comes from these agreements, and we're not ready today to say exactly what that will look like. We'll continue to work to it, though. Absolutely. He had the back half of his question there. Yeah. which was about offsets and... The offsets really haven't changed from the ones that I answered a few moments ago. They really focus on the availability on the 11 and four, and they focus on the break person, about actually removing break persons off of positions that are no longer needed. If you were to say, like, how much of the $400-$600 is in this year versus coming into next year, is it a quarter? Is it half? Just, is there a way to directionally sort of indicate where, how much is going to be in this year? You know, again, it does depend on what the behavior is, there will be some amount, you know, maybe a quarter to a half. That's probably not a bad estimate. You know, sick leave, obviously, that part we have fully done now, so any heads that we think that we need to add for that's done. Obviously, we get offsets this year, too, with the break person agreement. There's a bit of a netting effect, it really is pace and timing of the BLET work rest, getting SMART-TD. Of course, we will, because it's really the training piece of it, right? We're going to need to, for BLET, we need to put more engineers in the training pipeline. With that, you need to continue to hire some conductors. There'll be some portion, you know, 50% might be at the max side, I would say, but probably somewhere in there is a safe bet. Jennifer, I think you'd said this, but your total guidance sequentially for the back half, labor being flattish- Yes. includes all that? Yes, it absolutely includes all of that. All right. Thank you. Thank you. Our final question is from the line of Jordan Alliger with Goldman Sachs. Please proceed with your questions. Yeah, hi, morning. More of an operational question. Curious, trip plan compliance, where do you think that needs to go, both at the manifest and intermodal level, but specifically on intermodal, is the way to think about modal conversion accelerating, tied to a certain level of trip plan compliance for that? If so, you know, where do customers really take note, and you start to see an acceleration of market share gains? Thanks. Thank you for the question, Jordan Alliger. We've been very consistent that when you think about the intermodal TPC, you're talking about a number that starts with an eight, and when you're thinking about manifest and autos, it starts with a seven. That's highly informed and continues to be evolving. We went through a very large engagement with our customer base through Kenny Rocker's team towards the back end of last year that has informed this year on how we think about that, more specifically to segments within those customers. That work continues because- Go to Old Dominion. And as we've re- But- As we've reinforced before, we know that our customers are sensitive, and in fact, very sensitive to our service. That's why we're encouraged by the progress we made, and in no way are we saying that our service is where it needs to be now. It was a great step in the right direction. We've got more work to do. Great. Thank you. Yep. Thank you, Jordan. Thank you. Thank you all for your questions, and thank you for joining us on the call today. We appreciate your interest and your ownership in Union Pacific, and I hope you have a great rest of your day. Take care. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines at this time. Thank you.