J.B. Hunt’s CEO on Supply-Driven Recovery

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On Apple, Spotify, YouTube or wherever you get your podcasts. Hi everyone. This is Lee Klaska when we're talking transports. Welcome to Bluebeg Intelligence Talking Transports podcast and I'm your host. Lee Klaska senior freight transportation and logistics analyst at Bluebeg Intelligence. Blueberg's in house research arm of almost 500 analysts and strategists around the globe. A quick public service announcement before we dive in. Your support is instrumental to keep bringing great guests and conversations to you, our listeners. And we need your support. So please, if you enjoy this podcast, share it, like it and leave a comment. Also, if you've got ideas, feedback or just want to talk transports, I'm always happy to connect. You can find me on the Blueberg Terminal, on LinkedIn or on Xat Logistics Lee. I'm very excited to have with us today. Billy Simpson, the president and chief executive officer of JB Hunt Transport Services. Her career spans over 31 years at the company where she has held many roles. JB Hunt trades under the ticker, JBHT and has a market cap of around $23 billion. Welcome to Talking Transport, Chile. I would thanks Lee. Happy to be here. Now, I'm just going to jog your memory a little bit. I think you and I first met when you were a director in pricing and yield management, which might have been in 2005. Wow. Okay. Yeah, you're going way back because that's where I had three babies, all two and end her for an end her way. Yeah. I remember it was like a sell side event and management brought you into talk. And I remember when we left the room, we were all impressed with you. And obviously, it's no surprise to see where you are today. Thanks, Lee. You're welcome. So everyone might not know JB Hunt. You should know him because they're on the roads and you see their trucks and trailers and containers all over the place. Can you give us a little history about the company and kind of the markets that you serve? Sure. Yep. So this, obviously, we are going to be celebrating our 65th anniversary and really excited about that milestone. You know, the organization is a multi modal. And I would say modal in different organization. We think of our customers and their supply chain and how we can actually help them move goods more efficiently through that supply chain. Our vision is to create the most efficient transportation network in North America. And that's by us focusing on our people and our customers. And so when you think about supply chain from point of board, gender manufacturing into North America all the way through the supply chain to final consumption, including your personal home, we can do kind of from one end to the other. And so our five business units are organized and arranged based on those different modes of transportation. And so we have been our modal dedicated, our trucking services are both in our GBT segment. That's where assets live from a trailer perspective. And then our brokerage business unit and then final mile services. And then that's all powered by our more than 31,000 people. And so we do believe our people are the greatest parts of our company. And if we take really great care of our people, they're going to take really great care of our customers. And ultimately our shareholders benefit. So it's just a little bit of a blur, very focused on North America as well. Okay. And you know, in the intro, I mentioned that you've been with the firm for 31 years. You know, so how has your perspective changed now that you know, you're the CEO of the company? Yeah. Well, first, who would ever think they'd be with the company for over 30 years? So that's been just interesting enough. But I think the more that you grow inside an organization, the more you recognize how much strategy plays into the next role that you're in. And so you really move away from being tactics into more strategy organizationally, but also the work that you do is really work through others. And so vision and strategy kind of gets set at the CEO level. And then really our team is really who helps execute and lay out what those strategies look like. And so it's been interesting to me. And if you were to ask me like, what's my favorite part of my job? It's probably talking to our people and just seeing the impact that they have on our business, the pride that they have. It's been energizing for me. And I get to see that more often. And you kind of have to look at it from that lens at the CEO level because not, you know, you don't have the ability to go execute on any one thing all the way down to the final implementation. It really is about working through other people. And you know, you speaking to people is, you know, the thing you like the most. I guess what's been the biggest challenge through this career progression of yours? The last four year free recession. It has been the most difficult from just the elongated downturn and how deep the downturn. It has been, has been really difficult challenging, but also gave us a great opportunity to really think about, okay, how can we invest in this downturn so that when we come out of it, it puts us in a position of strength. And so that's been a huge focus organization, but also lead managing short term needs. So make sure we have an ear and an understanding of what our shareholders need, but also don't take away the upside potential of the company, you know, once we come out of this downturn. And so that's been, it's been difficult. Probably more than what most people realize when I talk to people outside of the transportation industry and tell them, well, we've been in an elongated freight recession. They're like, what recession? Because you look at the stock market, look at other things. Certainly, you know, I've talked a little bit more recently that, you know, very difficult to predict, you know, when cycles stop and start, but we do think we're on a path of recovery. And so that's if that's refreshing. It's refreshing to be from that perspective, but it's been difficult. Last four years has been tough, tough on our people. I'm really proud of the work of our people and proud of the result of our people. And probably most proudly that we did a really great job of taking great care of our customers and had no mass layoffs with our people. And I think our shareholders, you know, have seen the results of the good work of our people. And so I'm really proud of that. And has this downturn during your career been the deepest and longest? No doubt. It's not been the deepest, but it's been the longest. So I've went up to two things together. Okay. Of course, you know, if I like it '09, '09 was pretty tough. However, that only lasted for about 18 months. And so when you think about going on year four, of course, because after second year, it was like, surely this isn't going to last much longer. And it was also difficult just to do the math behind why is there so much capacity? Why are we in the place that we're in? And certainly now I think we have a few more answers today. Right. I do want to talk about the trucking markets, but before that, I want to ask you about, you know, your relationship with the founders of J.B. Hunt. Can you talk maybe about how they shaped your career and kind of do you credit them to where you are today? Oh gosh. And one thing that I loved about Mr. Mrs. Hunt's thought process was that they truly did believe that their employees were like family. You know, Mrs. Hunt would have Thanksgiving dinner and bring over all of the drivers, maintenance technicians and office teams to come have Thanksgiving with her family. And so you think about that. Go back 65 years ago. And the mentality that they had of taking really great care of people, Mr. Hunt was known for walking around when you get there in the morning. He would go say, "Good morning to each person." And if you were on the phone, he might squeeze your shoulder just to let you know he sees you, you're here. And I think that alone has probably been the greatest impact for me because that started 65 years ago with them. And so you fast forward to today, how can a company grow to the size that we are and still have that mentality that people really, Mr. Hunt's saying, one of the things I found recently in the last two years. Just like one of my favorite sayings now was, "People is everything." That's one of his quotes. It really started back then and that's core to how we think about it today. Maybe secondly, because I could do a whole hour about Mr. Mrs. Hunt and the impact on me and the company. You know, I've gotten the opportunity to be close with Mrs. Hunt. And so by the time that I really stepped in the executive role 19 years ago, Mr. Hunt had already passed. So Mrs. Hunt was involved with the board and I got a chance to interact. And certainly the last decade I've interacted a lot with her. And I would tell you, she's very graceful, but she had a huge impact on the organization. She'll always talk about Mr. Hunt and all the success he had. But if you actually talk to the people that were here, it was really the combination of them together, along with good management that they surrounded themselves with. Mrs. Hunt was the structure and the disciplinary and the one that made sure that we would operate with excellence. Where Mr. Hunt was the big idea guy. He was the guy, as she says, that never met an idea he didn't like. And so when thing I love that she says, of course, these are her words, not mine. I would never call him this, but she would, he would come up with some big idea. And she would say, "Nah, Johnny, how are we going to do that?" And he would say, "I don't know what you're going to figure it out." Well, she, you know, in business, it does take a dreamer and a visionary, but it also takes a trailblazer or somebody that can really put the path in front of you and actually go down that path. And so a combination of those two things, she still today is an amazing encourager. She has the spunk in the wit of a 30-year-old at the age of 94. And, you know, one thing you would love, like she says, every time she passes a JB Hunt truck, just the level pride she has, she's always thanking the people and the good work of the people. So that brings me back to what I said early on, which is she believed in the strength of people, even today. That's really what she attributes to success of the company too. She always says, "You guys are the ones that took it and really did something with it." And I think that's great lessons to be learned from founders because their mentality is what takes a really small company and takes a company into a large company, but if you can have that small company mentality of around people, I think you get it less to both worlds. And who would you credit as maybe your biggest mentor during your, you know, professional career evolution? Yeah, I had several, but I would say my first, I really had three. So our former COO Craig Harper, he was, he was my sponsor. I didn't even know what that meant at the time, but I actually went in in 2001 to quit the company because I just had my son and just didn't think I could do it all. And he wouldn't let me quit. And just the level of support he gave me was the reason I stayed inside the organization. Kirk Thompson are then CEO. I got a chance to work with side-by-side every single day. And I didn't know that's what CEOs, the CEOs don't do that. I didn't know that. And I got to watch not just his intellect and strategy, but he was a level five leader. He made you believe in yourself and he would give credit to the people that that really did do the work. And I also got to hear him talk about his family. So I'm active with this family. And I was like, "Here's a guy that's in this big, huge position that also balanced in my mind so well. Remember, I'm a really, really young mom." And so those, and then the third one was Terry Matthews and he was our former president of Intermodal. I loved the way Terry thought. He was strategic. I was growing up in my career and I would go to him and talk about strategy and what that would mean. And I loved that his approach was very calm. Had a great thought process behind it. It taught me a lot. It's a combination of those three. You know, Craig believed in me from the beginning. You know, Kirk, I got to see strategy from a pricing. That was my first, you know, big management job. And then Terry also from a strategy. Those three probably shaped my career the most, but I've had many, many mentors the one way even today. Great. And can you talk about, you know, J.B. Hunt talks a lot about operational excellence. Kind of what does that mean like in practice day to day at J.B. Hunt? So think about like this, Lee, if you worked here at J.B. Hunt, I would talk to you about the work that you do, you are the expert in your work. I can't and I won't know how to do your job as great as you know how to do your job to the very best of your ability. And the company really comes together when you take all 31,000 of us at an individual level. Can't think about us together yet. You have to take it at an individual level. And each one of us has to execute at the highest level that's possible inside the work that we do. And when you do that, then you put 31,000 of us together. And now you have this brand called J.B. Hunt that's known for operational excellence. And so there's a couple of ways that would really help our people think about that. One is, you know, you have to think about from a customer's viewpoint at customers lens. Failing simple for them to connect to listen. You are supporting customers. Whether you're in a support area and supporting the people that talk to our customers or who directly talk into customers, we want to be number one on their scorecard. We want them to say J.B. Hunt really is the carrier I go to. I trust J.B. Hunt. I trust the people of J.B. Hunt. So if you're a driver and you're going into a customer, you're representing us every single person. So we evaluate that on how well do we perform? What's our net promoter score from our customers? Those are things that we really think about. And it's a Brad point for our people when they're really delivering on our customers promises. And so that's one way. But the other way that we really do is from a safety perspective. And so very, very proud of the results from really everyone across the organization. We are on our fourth year now of record performance from a safety perspective. And if you think about that, that's our drivers really adopting technology, really being the captain of their work and making sure that that they have a quiet cockpit and they're taking care of business not only inside their cab, but also the motor and public around them. And so from a safety perspective, I'm really proud we're never finished and we're never done from a safety perspective, but very proud of those. Results are just two really good examples. But anytime we're talking to the teams about operational excellence, they'll actually bring up, okay, here's the work that I did. And here's how I make sure they were excellent based on on my area. So unit to your point, it feels like the freight recession is over that we're in recovery mode. How quickly we recover, I guess remains to be seen. A lot of that is obviously being driven by on the supply side where, you know, demand, you know, we need to have 2% GDP growth. It's really not going to be driven that much by demand. Can you talk about what you guys are seeing on the supply side? What's driving, you know, that tightening? Well, I mean, I think things really started to change when enforcement started happening about this time last year. So if you just look at how the government and we applaud the work of the government just enforcing the regulations that are already therely. These aren't even new regulations. This is just making sure, you know, I listen and we do fire sites with our teams and Nick Hobbes, our COO and myself do those. And I hear Nick talk about, because he's been with the company 42 years. I'll be 32 next month. And he talks about, hey, when I was dispatching, it was, it wasn't possible for us to think about, for example, Capitage sending one of our trucks up to Canado without either dead heading back or getting a load. It was a big no-no. And then you fast forward to today. And there's so much happening or was happening before really the government stepped in and said, you know what? Everybody's just got to play by the what's legal. What are the rules and everybody abide by those rules? And so I think you've seen that tightening start to occur. I think they continue to come up with new executive orders or more enforcement. And I think if I go backwards Lee to two years ago, we had done the math on how much excess capacity was in the market. And that was driven really from the rise of prices in COVID and everyone, you know, small carriers thinking, okay, well, I'm going to add capacity because it's a good time to get in the market. If we think the math based on a history, we should have been out of this recession from a supply side only. About two years ago. And we started getting asked these questions like, why is why is it not changing? We didn't have good answers for that because the math didn't make sense to us. Now you fast forward to today. It makes a lot more sense as you're seeing those regulations really start to take hold. And so as we see that, there's pockets of tightness. I talked about the market being fragile and we were testing the elasticity of supply. Certainly we saw that in the first quarter. I'd mentioned that after our fourth quarter call. And you see really tough pockets, Ohio, Indiana, Texas. You know, there's locations in bigger cities that you see these tightening effects happen. And then just a little bit of demand. And you know, that's what's causing some of the recovery that really should have happened over two years ago. Is there something on the regulatory landscape that you'd like to see done so that all trucking companies are playing by the same rules? Do you think there's something easy out there that the government can do? Because there's been some crazy in mainstream media like on 60 minutes or CBS. They've highlighted some of the issues that the trucking industry has by the bad players, resetting ELD's electric logging devices. So drivers can drive beyond the hours of service. Are there things that you'd like to see done to curve that kind of behavior? Well, I mean, you just mentioned exactly where I was going to go, which is if you think about ELDs and the intent of an ELD, that really is to help make sure that everybody's operating under the hours of service rules. And so that's it. That's a really big one. If you think about the chameleon carriers, that's what you're referring to of what happened. And I don't know if you've got a chance to watch those episodes, but they're just shocking. When you see the driver literally pull off the previous DOT company and the next one is on there, you think about that going down the road with your family. Who is beside you? How should we be thinking about that? And so there's a lot that they've been working on that we fully support. Overall, I don't have one incremental thing that I think is on our list, but in full support as we think about what they're doing with the ELDs. There are some things that I would say from an insurance perspective that would be helpful because I think if you could vet out on the front end, people that are coming into the market, things have not changed since for 30 years. It hasn't changed how much insurance you have to have. What's the underwriting practices of those carriers that are coming on board. How much does it really cost? to get started. There should be a better vetting process. That's an area that we're helping focus and helping think about what should that vetting process look like on the front ends. If you can catch the carriers at the very beginning and say, okay, now they've had a good quality check that these carriers are good because it is a good business. You know, if we can get the right people in and maybe the people that aren't wanting to play by the rules, then now you could really have an a more effective network of carriers. And so anything that we can do around that, we're in support of. - So in your business, you mentioned you're in a bunch of different businesses. Where do you see the recovery first and where do you see the recovery last? - Well, typically what happens is you'll feel the tightening happen in the brokerage part of the business because that business is dynamic and pricing happens on a daily basis. So in the spot market. And so anytime we see the tightening in our brokerage business, that's typically a sign if it lasts longer that can happen over a short period of time but a longer period of time. And that starts to change our discussions with customers because their routing guides start to fail. And when trucking routing guides start to fail and what they expect from, you know, what they expect it from a bid versus what's actually happening, that's really where conversations start. And so we talked a little bit about that. We're having good conversation with our customers on brokerage perspective. We're talking to them from a truckload perspective. I would say intermodals in a little different scenario because there is this shortage happening in pockets of capacity. But if you think about the capacity overall for the rail network, that's gonna be in our containers and that's gonna be on the railroads and they've done a really nice job. Being consistent over the last couple of years. That's a good thing. But you're seeing it last in intermodal. So I would say that's my answer from a full mode perspective. And then when you think about the different types of business that we do, you know, it really just depends. If you look at the flatbed market right now, it's super tight. You know, what's causing some of that? I think some of the data centers and some of the other things that are happening there may be unusual. The temp is tight as well or tighter and then drive in is not as tight, but it's still, again, pockets of tightness. This is all supply side overall. And so as we think about that and think about the way we talk to our customers, the more that the customers' budgets are impacted, the more they're gonna want to hear, okay, what solutions do you have? How can you help me with my budget? How can we help them really save money over a longer period of time? - So can our recovery happen without demand accelerating from where it is today? On the Bloomberg terminal, GDP is expected to grow around 2.2% this year. And maybe 2% in 2027. Obviously higher oil prices for longer could take those numbers lower. But do you think the recovery has legs even without demand accelerating? - Well, we need a housing recovery. I would say that's kind of top of mind for us is how closely correlated housing is to truckload moves is really important. So we need the housing market to get in a better position. You know, we've only seen Lee, I mean, really the only time that there's been a supply side recovery was ours a service in 2018. - Right. - And that was a more robust year. We would hope for more demand because then it would be longer. And, but I do think the supply side is just correcting what's been a problem. And that's gonna put everybody in a better position. One of the things that I've talked about is if you think about how much the lack of enforcement around regulation has really impacted our industry, I would say it's more significant than what people can realize because the market is so fragmented and think about a driver that's been in this market and now was holding on after year two and now they moved to your three and at some point this even went amount. And these are really good drivers. They say this market's just like, so we're losing this group of drivers over the last couple of years that would have been in the market still I believe had the enforcement been there more. And so what kind of damage does that do longer term to somebody saying, hey, I wanna be a professional driver? If they think that the app turns only gonna be a couple of years and then they've gotta go through another four-year downturn that becomes a job market that I think people are less interested in. And so I think we have to have stability and making sure that the market just finds its way and I think that's okay from an equilibrium perspective, we have to make sure that that happens on a more regular basis or we could be talking about a more pronounced driver shortage when things get better and the cycles could be swing more than what they really should. - So obviously running a large trucking company, getting drivers in the seats is an important part of it and there's a lot of turnover for various reasons. How are you guys finding trying to seat tractors and finding the qualified people that you need? - Well, that's one part of the company. I'm always really proud of. I think that's one of our advantages in the organization is when we need drivers, we can really do our part to make sure we bring drivers on at J.B.H. and I don't know that that solves for the rest of the industry, but there's work that we can do. First, it just starts with how we respect them and what that looks like from a pay, a work time, a benefits, all of that. We do a really nice job there. Also listening to our drivers very closely. I think that's really important, but I would say right now, there's, I mentioned the Merleo, Ohio, Indiana are really difficult right now. We're having to solve those in different ways. And we're used to that when things tighten up in certain pockets, we then think about, okay, how can we have some drivers that'll redeploy to a certain area to help us? So we're doing some of that as we speak today, but if you see any corporate driver personnel before? - Yes. - So I think you know kind of what I would say at the machine looks like, because we can ramp up very quickly hiring the right amount of drivers, but I'd also say like, make sure that our turnover, is at where it is today and getting better, because the better we get in turnover, the less we have to go higher, but we're a growth company, and that's one really great thing about our company is we're going to grow and we're going to find drivers that want to perform the work that our customers expect from a safe perspective as well. And so if we're really great about where we're at, if that doesn't mean there's not some challenges right now. - And I suspect because some of your businesses like dedicated and intermodal, the drivers are probably home most nights or at least on a regular basis, so it makes a better work life balance as opposed to someone that's over the road that doesn't get home that often. - You're exactly right. If you look at our work 90% of our jobs are home, at least on a weekly basis. And so that's a lot of jobs that they're getting to be home, be with their family. Think about just the change the companies gone through to. You know, we used to have a lot of those are regular route over the road jobs that they were gone from their families two and three weeks of time, maybe sometimes even longer. And that change has been really good for our drivers. - When you're looking at your intermodal business, 'cause you know, we're talking about rates moving higher. We mentioned earlier oil prices are higher, so diesel prices are higher. I guess it makes intermodal more compelling for folks or shippers. - You know, can you talk about, you know, how the intermodal landscape has been changing over the last couple of weeks and months? - Yeah, actually, if I could just back it up for a little bit. - Sure. - I think people. - Back up the truck. (laughing) - Sorry to the, I don't know if people realize, you know, kind of where intermodal was at over the last decade, if you will. And if you back up into the PSR days, those days were really tough on our customers because there was not a lot of notice. It really was about, I think the concept was really good from a railroad perspective, but I don't think the delivery necessarily was very good. And so our customers, I happened to be on the commercial side at the time when this was happening as the key executive. And, you know, we would get very little notice when a lane would shut down or service was not consistent. It just was like up and down, so choppy that it was difficult for our customers to really count on. And so we fast forward to come into COVID. Of course, you know what happened in COVID across all transports, really difficult to make those things happen. And so intermodal actually lost share to the highway over that decade period. We really focused very hard starting in 2023 of changing the mindset of what our customers thought about intermodal because we really believe when customers think of intermodal, they think of JB Hunt. And so we wanted to make sure to solidify. And we did a lot of investment herely. And during peak seasons, we did a great job just delivering on behalf of our customers, making sure they knew intermodal could be longterm. And it could be a sustainable part of their supply chain. And that's been the work we've been doing over this three year period. And so we had an exceptional peak in 2023, another exceptional peak in 2024. And then we finished up last year. And I'll say all that because you ask about operational excellence earlier. That work to be top of mind to our customers that were the best in the business. So we're best at helping them think about mode conversion. Because if you can't do it really well with just the current business that you have, there's no way they're going to think about, okay, here's Freight that should be off the highway and end intermodal. That has been a great setup into 2026. As fuel prices have been higher and as routing guides have started to fail, our conversation to customers around, There's, you know, there's seven new allowances. 11 million shipments throwing the nation's how is that we believe can convert to an emol. Now those conversations are very differently because it's, you know, three years of really fantastic performance between the railroads and our company. And so they now have that experience. It helped, I would say, eliminate some of the sting that's been there through PSR. Now they know that an emolta is a viable product. And so that conversation is very different today. And when it has been, and certainly with fuel escalating over the last, you know, a couple of months, that's made it even more top of mind. I would say this also, Lee, if I put fuel aside for one second and just talk about the correction happening from a supply perspective, that is causing our customers around in Guads to fail. And that's what I meant when I said customers are very open-minded to say, well, what other ideas do you have for me to save money or get back to budget? Because that's how they evaluate themselves. And so talking about intermodal, that's the first step. Then add this escalation of fuel that also is making them that misdough budget. So the conversations around mode conversion are even greater. So, you know, we don't really think about our growth from just getting other people's intermodal volume. We believe there's so much on the trucking side that can convert, that it should be an organic growth and should be the conversation we have in customers. And I think we have a lot of success doing that right now. So 7 to 11 million loads, that's a lot of loads. So, like, what do you think? Because obviously they go back, some shippers will just go back and forth just on price. And even though truckload rates are moved up a little bit, they're still relatively soft, I would say. So is there like a price that you guys see more shippers looking at intermodal versus over the road? Well, I would say it really is consistency. Okay. So consistency is the most important component to a customer saying, okay, I can think about this as a conversion. If they feel that consistency over a longer period of time and the dedication that intermodal will be viable against truckload, then that's what makes them really interested. The discount, you know, if you think about a discount from all in truck pricing to all in intermodal pricing, you know, that really hasn't changed a lot except for the last couple of months. And we've seen the spread widen. And so that starts to get our customers interested. We see customers change. Depending on the lane, we'll see a customer change for maybe even no savings because the consistency of the service, maybe they're having pockets of problems in the truckload side. As I say, okay, no intermodal is going to run regardless. And that I can make that conversion. Now, most of them are going to want some discount because they're going to have to think about safety stock. And so how much incremental time do we have to put on to? But it can be very small in nature. If you looked at how much of a discount there is available or how much of a premium truckload is right now to intermodal, there's a big gap that has been forming over these last couple to a few months. And that also is creating a lot of conversations with customers because that means they can save even that much more money. So going back a couple of years, actually maybe many years, I guess I would consider you guys kind of like an early adopter for technology. You kind of leaned into it might have been like 10 years ago when you started 360. Can you talk about what you're spending money on and what you're seeing the productivity benefits from that spend? Yeah, so if I kind of go backwards lead to last year and just think about where we were at right after liberation day, our customers said, gosh, I don't know if I'm going to ship everything and everything is on hold. And we were sitting and going, wait, oh my gosh, we're at year three. We've got to take control and we have to put ourselves in a position to win in any environment. It's really when we call that organization to think about lowering our cost to serve. And we really took our entire executive team as the champion of 14 different areas. And they took that across the organization to say, here are the things that we could do that are different than what we've done in the past that also would not create or limit our upside when we come out of this recession. That's one thing. That's our $100 million cost takeout that we've articulated to the street. I'm very proud of our people's results. If you look to our first quarter, so we announced that in July of last year. And here the first quarter of this year, we were greater than a $30 million savings on our initiative. And Brad Delko talked about being greater than $130 million or on $130 million run rate. So really proud of that. But the second part of that, and this gets to your question. The second part of that that we did simultaneously is we did a 12 week track around transformation. And we really ask our people to think about how technology could really transform the way that they work. And it really was this grassroots effort to say, I want you to think about the work that you do today that you don't find meaningful. And I want you to work very closely and we had people assigned to each year. It worked very closely to think about how we can reimagine. And as we think about AI, it's not just AI. AI, we think is a force multiplier to the work we've already done in technology. And if you think about where we're at today, we have done a great job modernizing our systems. And if you think about really good AI, if your processes and your systems are in good shape, it's much easier for you to put AI across that overall. And so that's where we're at today. We're spending time looking at all of our processes by areas. We've identified our greatest opportunities. And make sure that we streamline our processes. And now really developing what those agents will be doing to really empower our teams. And so we say technology that empowers and our minds, that empowers our people. And you heard me say earlier, we don't do mass layoffs or we haven't done mass layoffs. So for us, we're thinking and getting our people to this thought process. We want to double the size of the company with maybe the same amount of people. I don't know, maybe the same plus some amount, but that's where technology can drive our efficiency and productivity. And that's something to be excited about. Now, when I say that, we're not going to automate our drivers and our techs. So you can't do that. But if you think about the obvious teams, those are the support teams to our drivers and our technicians. Those teams can scale much faster overall. So right now we have, let's see, over 60 agents that we have deployed with many more ideas around how we can drive efficiency. And that is really exciting to the organization. We think about how to showcase our talent, showcase our people, the work that they're doing. It's something that's really is, we call it mindset skill set tool set. So we have to have the right mindset. Our head of HR kind of gave that to us. I know we heard it from someone. So I don't know who came up with that. But if you think about having the right mindset, it really is about how do I do my work? And so I've given them lots of my own personal examples. I use AI every single day. And so we've enabled our teams in the office to have co-pilot licenses as well as Gemini. And they're able to use that. And really have the autonomy to think about how they do the work differently. And so I do think that mindset. And then we have to equip them with the right skill set. And then certainly the tool set is the technology that helps really bridge the gap between those two things. And I'm excited about the work that we think could happen overall, but technology is a core foundation to us. It's our people, our technology and our capacity. Those are the three foundations of the company and the places that we invest. And when you think about margin expansion going forward, do you think it's going to be more structural, the changes that you just talked about or do you think it's going to be cyclical? What do you think is going to contribute to the better margins over the next couple of years? Well, I'm going to kind of take it to what Deer and Field who leads in a modal for us talked about in our earnings call a year ago. You really said if you think about our business and intermodal, really have three points to get back within our margin target from an ORA perspective. And the first one needs to come from balance. So more efficient work that we can do more productivity. The second one will come from growth because we will hold our costs. We've already pre-invested, pre-funded our growth. And the third one will come from price from our customers. And so there is an embedded thought around price. How much, you know, Lee, I think it really just depends. I think we can't overcome all of the inflation that's happened with that our customers help and pay us for the value that we create. But I think we're closing the gap on how much that needs to be with the work that we've done without performing on our cost to serve. I certainly think our transformation can help. But, you know, we want to be in our margin targets in the good and the bad times. And so that's a good challenge for the company, how we're thinking about it and kind of what next steps are. But certainly I don't think that the price that we're getting paid appropriately reflects the value that we create. I haven't talked to a customer that disagrees with that in general. But, you know, it is the market. And so we have to compete in the market. And if the market continues to stay in this really competitive environment, then we have to find other ways to get within our margin targets. So, just talking about the brokerage business for a second, you know, obviously the earnings or margins aren't where you probably want them to be. What has to happen for that business to generate the margins that you require of that business? Yeah. And if I could just back up, I think this might be helpful. You know, when we went through COVID, one of the strategies that we called, and I I really called this strategy to help protect our customers that were across all of our businesses. In other words, our scroll became the most important part of how we protected customers. Because in brokerage, it was a people business, but also our technology really enabled us to grow very quickly. We were empowered with technology and we protected those customers. It turns out that we still do business with all of those customers, but it wasn't necessarily the best thing for ICS specifically to really put resources towards those customers because the customers went back to the way freight moved before. If you think about the freight that they built their business around for two years and then customers re-optimizing in that freight going away, there was a base cost that was there that was really difficult to be at without the right level of revenue. One of the things that Nick Hobbes has done and his team has done has reset what has happened from a cost perspective in ICS. If you look at 2025, we've lowered our operating expenses by 29 percent and improved our employer productivity, I believe, by 19 percent. They really got themselves in a good base case. They actually look at their first quarter performance. They beat our modeling on the expense side by 170 basis points. The margin was the biggest gap there and that's because the flip that was happening in the first quarter and the tightness that we saw. I will tell you, big strategy there is continue to bring on discipline growth. The right revenue with the right customers and really moderate and hold close on cost. If you're really good about the plan and the direction Nick has with the team and feel like we're going to have some good results here on the second quarter. Assuming this recovery has legs and it continues and you guys stick with your strategic plans, what do you think JB Hunt looks like in the next five years? Well, I think we'll be North American focused. That's not going to change based on, if you think about the market, we're a $12 billion company and we're the largest asset player of our size of what we do. UPS and FedEx are bigger than us but we don't do really what they do. But the market is huge. It's more than $600 billion. Each one of our five business units has a really great opportunity to grow. If we are disciplined in that growth strategy and maintain our operational excellence, there's no reason we can't double the size of the company. And so how big each business unit is will let our customers drive us. If you think about Intermodal and dedicated both in number one positions from a market show perspective, final miles up there either number one or number two, number five from a trucking perspective with our JBT business and a top 10 broker with ICS. All of those businesses have tons of room to grow. We believe we're going to scale the organization significantly and we're going to do all we can to scale a lot less from a cost perspective. That's going to create the margin expansion that we're looking for. So I think you'll you'll look up in five to 10 years and you know maybe, maybe surprise ourselves on how large the company is and with the earnings that we have as a result of that. You mentioned that the market's pretty big and you're in a lot of kind of silos there. Is there one part of the business in North America transportation that you're not in? I guess you could see yourselves get into. We're not as large in LTL and I think that will change over time. And I mean from a brokerage perspective. I don't see it in the asset part of the business. We think there's some really good TL carriers out there that we really work closely with. But I think that's part of the other part I think is our managed logistics services. So as we think about being a 3PL for customers, we're seeing more of our customers ask for that. So that's an area that we're investing in right now and really leaning into. I think that will also emerge for us. All right, and awesome. Before I let you go, I usually ask this of my guest before. We say goodbye. Do you have a favorite book about transportation or leadership that resonates with you? Well, I mean, my favorite book is the Mr. Hunts book. And there's a lot of stories in there. Even if you look at it today, it's called the Long Hall to Success. And if you look at some of the principles that he uses inside there, it's relevant even today. I pull it out from time to time to read it and I'm like these quotes and the way you approach businesses so so much the same. He talks about disruption. I'm like, we're in the middle of it. As we speak, you know, we think about the cycle of innovation. So disrupt, adapt, accelerate. He talks about that. He doesn't use those words, but he talks about that in the book. So that's my favorite. But it comes to transportation. But I would say, probably the leadership book that I use most is good to great by Jim Collins. And my primary part in that Lee is first two than what? And that's so important to me. You get the right people and the right team on the right seats on the bus. Then we can decide what direction we want to take it. But I do believe what Mr. Hunts said people is everything that is the first chapter or first couple chapters in that book first two than what that's probably my number one. All right. Great. Well, thank you very much for your time, Shalea. I really appreciate your insights today. Thanks. I appreciate getting the opportunity. And I also want to thank you for tuning in. If you like the episode, please subscribe and leave a review. We've lined up a number of break guests for the podcast. So please check back to hear conversations with C-suite executives, shippers, regulators, and decision makers within the freight markets. Also, if you want to learn more about the freight transportation markets, check out our work on the Bloomberg terminal at BIGO and on social media. Also, I'd like to thank our producers Miriam Truor and Edidia Somani for helping to pull this podcast together. This is Lee Klaska signing off and thanks for talking transport with me. Talk to you next week. 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