J.B. Hunt Transport Services, Inc. (JBHT) Earnings Call Transcript & Summary

All right. All right, everyone. Good morning. Let's go ahead and get started with the next presentation. So this morning, I'm really excited to have J.B. Hunt with us today. Presenting today is Nick Hobbs, the company's COO, and I believe, still the President of DCS and Final Mile; John Kuhlow, the company's CFO; as well as Brad Delco, the Vice President of Investor Relations. So for those of you that may not know me, I'm Tyler Brown. I'm the senior analyst here at Ray Jay. So I cover both the transportation sector, and Nick and John, I don't know if you know this, but I cover also the trash, the garbage industry. So I have quite a bit going on. I've had quite a bit of companies today. But like I said, I'm really excited that you guys are joining us today. So again, Nick, this is a generalist conference. I can't remember if you've been to our conference down in Orlando physically. But there's a lot of generalists out there, a lot of people who might be new to the story. So what I was hoping is, here in the beginning, if we could just kind of, at a very high level, just talk a little bit about J.B. Hunt, what you do, the services you provide, where you kind of sit in the supply chain. And maybe talk just a touch, and we're going to get into it, maybe just a touch about J.B. Hunt 360. And then we'll kind of -- after that, we'll kind of go into some Q&A. We have about 40 minutes. [Operator Instructions] So with that, Nick, I think I'll turn it over to you.

All right. Thanks, Tyler. And no, I haven't been to your conference. It's typically Florida in February. So I get New York City in the summer, it's usually what I get. So I don't get the Florida conferences in the winter. So Delco has to work on that for me. But real quick, just a quick overview. We're made up of 5 divisions. Basically, what we really do, though, is we really focus on supply chain and try to give solutions to our customers. And so we really focus closely on our customers, and our largest division is our Intermodal division. We run cross-country. The West Coast, we're exclusive with the BNSF. And then in the East, we do the Norfolk Southern and the CSX. And so our Intermodal division is our largest. And then we move on into our Dedicated division. And our Dedicated runs over 10,000 trucks. I should have said, Intermodal has 100,000-plus containers, so a very large market share. On the Dedicated side, we run over 10,000 trucks. On the Dedicated, we're private fleet replacement, very different from a lot of our other competitors. In that, we really focus on the private fleets and trying to free up their capital, take their risk away. And so we're really zeroed in on that. A tremendous growth story there, very, very consistent margins. So a good story there. Our next group is, we'll call it Highway Services. That's a combination of our brokerage division and our truckload. And that segment has really been focused on a lot of growth recently, a lot of investment into J.B. Hunt 360, that's kind of a wrapper around that. We'll get into some more detail on that. But at the Highway, we're agnostic on whether it's our power or somebody else's power. We've got a lot of things going on there. We've got 360box that's in there that gives us a lot of flexibility on the power type and really gives us a lot of flexibility, which surges up and down, and ability to provide answers to our customers in that segment. And then a smaller division, it's about $700 million in revenue ballpark, is our Final Mile Services. And with that group, that's big and bulky going into the home. We have over 100 facilities nationwide. We hook up appliances, full installation of appliances in new homes, existing homes. We also do furniture, fitness equipment. So we're trying to do big and bulky. Basically, everything the parcel folks don't want to do, we'll do, we'll cross the threshold and go in there. And we kind of got into all these businesses just by listening to our customers. I remember back in the late '80s, I've been around here for 37 years when Intermodal just started. That started with Mr. Hunt, having conversations with customers and trying to provide good customer solutions, and he cut a deal with Mr. Haverty. So Intermodal, as we know it today, sprung up from there. So just really focused on our customers and providing a great solution there. So I won't talk much about 360, I think we'll get into that here in just a little bit. So Brad, anything else?

I mean Nick covered it. I mean, clearly, Nick being here for 37 years, he knows a little bit about the company, what we do, and certainly, has a great story to share and tell.

Yes. It's funny, Nick. So I kind of grew up in that Northern Arkansas area. And I just remember those old flat nose can tractors, that's what J.B. Hunt was. But it is interesting. The story has really morphed over the years with the Intermodal product, and we'll get into that. But John, I just want to start really quickly. There's been a lot of chatter out here. We've heard it from the rails, from the LTLs. Just maybe could you start and just talk a little bit about how the weather obviously impacted you, that kind of polar vortex right through the middle part of the country. I don't know if you can give much color. You don't give a ton of guidance, but just any help on kind of how that's played out here in Q1?

Okay. Sure. Yes. We turned the corner on 2020. And although we're not through COVID, we kind of felt like we were catching the gear there. And then February hit, and as you mentioned, the winter struck. The winter has obviously -- a lot of people are comparing it to the '14. This one was much more compressed, came on faster, feels like it's lightening up quicker. But it was probably one of the hardest winters that we've ever seen, and it's spread throughout the U.S. And so we're still -- it was mostly in February. We're still climbing out of that. We haven't closed February yet, but some preliminary early indications. We feel like it's probably anywhere from a $15 million to a $20 million impact across our business segments. And so Intermodal hit the worst both on -- just on the highway with their drayage operations, but then also the congestion at the rails as they were trying to figure out their ramps. And so widespread. Some of the business will recover. We hope to get some of that back in March, but it was definitely a hard hit in February.

This -- is $15 million to $20 million, I'm assuming you're talking EBIT profit, more than just like revenue?

That's right, yes. Yes, that's operating income.

Okay.

Yes. And Tyler, just to be clear on that, that -- I mean, it's not like if we just said that's what weather costs. But thinking about the impact to actual loads, so for example, it probably hit Intermodal by 25 -- 20,000 to 25,000 loads, and you think about what that contribution might be to that business. So my guess is, as you could imagine, you cover transports, the impact to network businesses was probably more severe. It certainly has tightened the market up in terms of where supply/demand is. And so there'll probably be positive repercussions of that as we move forward, too. So -- but hard to say. Weather is weather, it's always an outdoor sport. We typically don't make excuses. So...

Yes. No, that -- but it's very helpful. It seems like it's a bit unusual. One other thing that has been maybe plaguing the network, so to speak, is the West Coast port congestion. And just before we kind of get into the story, can you -- is there any comments there? Has that kind of loosened up? Or is that still -- is it still pretty crazy off the West Coast?

Yes. I would say, I think congestion is still pretty bad on the West Coast. I think as John was alluding to, coming into the first quarter, we started kind of hitting a new year, and we felt like we were making some good progress. As Darren alluded to on our last conference call, there's things that we're working with our Western rail provider to iron out some of the inefficiencies and really offer, hopefully, some creative ways to utilize what capacity is available best. So making good progress. Obviously, the weather hit set us back. I feel like we've seen a pretty meaningful improvement, even just last week from where we were the week before. But it's probably still going to be a week or 2 before we get back to normal with sort of the level of fluidity we saw with the network prior to the winter storms.

Okay. Perfect, Brad. No, that's very helpful. So I do want to kind of shift gears just into Intermodal. Okay, Nick, Brad promise me we could spend 40 minutes talking about Intermodal margins, but maybe we'll set that off to the side. I won't belabor that too much. But I do want to talk about the volume opportunity, and we still believe that there is a story in Intermodal. But at a high level, do you still subscribe to the idea that there is still substantive modal conversion opportunities? I know a lot of the low-hanging fruit has been converted. But the last couple of years, Intermodal volume has been pretty elusive, or at least, growth has been elusive. And I know there's a lot of things, PSR, West Coast ports and this thing called COVID. I get that there's a lot going on. But just at a high level, how do you guys think about that modal conversion opportunity longer term?

I'll let Nick take it.

Okay. Yes. We still think there's a lot of opportunity, particularly in the East. We think that now that PSR is there and they've got their lanes down pretty tight, we think there's a lot of opportunity to pick up some freight from the road over there. But we also think there's still some out West. It depends on what imports do and how the ports work out. The supply chain has been so disrupted this year just with inventories and various different products selling faster than others. But if you just kind of get back to the norm, I still think there's a lot of growth opportunities out there. We've been talking with a lot of our customers, and there's tremendous demand out West. And so we still feel good about that growth, where the economy is going. But I would say that East is where I see a lot of the most mode conversion, and I think you'll see that. Hopefully, our numbers will dictate that at the end of the year.

Yes. And Tyler, I think I've heard Shelley -- Nick, correct me if I'm wrong on these numbers. I've heard Shelley talk about, we bid on something to the tune of $100 billion worth of freight a year. Now obviously, we don't win all of it. But that gives you a lot of data and insight into what lanes, at what prices kind of the freight would sort of clear the hurdle, if you will. And we still think there's $7 million to $11 million conversion opportunities that are out there. What obviously would sort of drive that? Fuel prices, obviously, is one of the kind of drivers. Obviously, how tight is the truckload market or what is the cost, if you will, to get a new truck driver into a truck. And so when you think about some of the kind of fundamentals that are playing out as we speak today, it sets up very favorable for Intermodal, and I think we are clearly seeing that in our business. I spoke with Darren yesterday, and he said -- we were on our fourth quarter call, and we had a views on demand, we had a views on pricing. And I would tell you I feel like things have been stronger than what we thought even back in January. Now again, we just alluded to weather, but demand for Intermodal service is strong. There's a reason why, I think also, and we can get into this at some point in the future, the carbon footprint of Intermodal is a lot better than truck. And so there's just a lot of good reasons to think why Intermodal will continue to be a strong secular growth industry and one where, I think, as the largest domestic player, we should see some benefits of that in the future.

Yes, Brad, we will. We will certainly get into that on the sustainability side. But I want to talk about J.B. Hunt 360 because I feel like there's a story here as well. And Brad, you -- I think, actually, last year at our conference and, I know, Shelley has talked about this, too. But when I think about how will J.B. Hunt 360 help with conversions, because I think last year, you mentioned something on the order, there were 100,000 loads floating around in 360 that due to price capacity, whatever it might be, were ripe for conversion. So I'm curious has 360 helped to find conversion? And then we'll talk even more, but I would think that, that would even help your smaller and medium-sized business with conversion because that is an area where again, as an outsider, it feels like Intermodal has very much been a big-box story, large, large shippers and less on the small and medium size.

Yes. I think you're right. I think that the platform will clearly give us a lot of visibility into what demand there is for the transportation solution and what lanes and at what price. I think the number was probably closer to 160,000 versus your 100,000 that we saw in the platform last year that could have, should have, would have moved to Intermodal. However, as most people are aware, we were quite restricted on our capacity, and we did all that we could to honor the commitments we made to our customers, unfortunately, with little, if not, any capacity to "surge." Even with customers, we normally do surge within during the peak season. So yes, I think the amount of visibility and transparency and data we would have into shipments and how they move and what sort of the clearing price is for a particular lane would present a lot of opportunities to convert additional freight to Intermodal. Nick?

I was just going to say, you were -- Tyler, you're right on small to middle-sized customers that has been with traditional small brokers, we think that's a tremendous opportunity. And we've really got a sales focus on that, trying to penetrate that market. And once we get that in, that will set up for a lot of conversions.

Absolutely. Okay. That's great. And then I want to talk about -- and you -- Brad, you talked a little bit about it with box turns and fluidity. So first off, my working assumption here is that PSR is likely holistically positive for Intermodal. I mean in theory, it should improve speed and reliability of the rail networks. So I think here's my big question, do you agree with that? Does it feel like PSR will put out a better product for Intermodal over the long term, even though there might be some fits and starts upfront?

I mean I've covered the rails a long time ago, Tyler, but my general understanding is that PSR will improve the consistency of service, and hopefully, the speed of service. And I don't see how either one of those would be bad for selling Intermodal as an alternative to truck and the market wouldn't be very beneficial for us.

Right. So now I know there has been a lot of hand-wringing over Intermodal margins. And maybe at some level, the shippers will decide whether or what that margin profile will ultimately look like based on willingness to pay. We'll set that aside. But the one thing that does continue, again, to plague the network, is really this fluidity. And I mean, if I base it on my really poor rudimentary calculations, I mean, if I looked at your box turns in both '19 and '20, I mean they're about as low as they've been, and our model goes back all the way to 2002. And again, I know there was some PSR disruptions and we have West Coast port and everything that's going on. But is that a big opportunity from a margin perspective as well to get those turns, given my calculation of [ 1 7 ] back to [ 1 9 ] and to [ 2 0 ], which I think is kind of where the normal stasis of things have been in the past?

Yes. We've always -- and I'll let Kuhlow add where he thinks I'm leaving you astray, Tyler, but I think we've always talked about price being the biggest driver for margin, and the box turns really being -- we're talking tens of basis points versus hundreds of basis points. But as you know, margins are not what we focus on. What we focus on is returns on capital. And if you think about the impact of turns on returns on capital, it is far more meaningful. And so if we're able to, on the same capital base, get X number of turns more, which means X number more revenue and X amount of more EBIT and do your notepad calculation, clearly, the turns could have a more profound impact on ROIC than maybe just margins by itself, if that makes sense. Kuhlow, I don't know if you wanted to...

No. I think that, that's the best way to look at it. I think Brad described it right. I would also just say on the turns comment, certainly, that is an opportunity to help. We have been seeing somewhat of a shift in customer behavior. And so that's holding those up a little bit, and we'll just have to make sure that we're pricing things right, and that will help out. But what Brad said is right. The primary focus is ROIC, and that's how we watch it, and that's how we'll continue to monitor it.

Yes. I mean with 100,000 boxes, changing your turns can create a lot of capacity. So I do want to talk a little bit about the environment just from a pricing perspective. So I know we're kind of well into bid season, particularly on the Intermodal side, but I'm just curious how those -- how that's kind of playing out. I am curious because we saw some interesting forecast from TTX that basically showed a pretty healthy box addition across the whole industry. But I'm just curious, any comments about the pricing environment? I'm assuming it still feels very conducive for the carrier.

I'll just repeat kind of what I said before. If you focused on just sort of fundamentals, demand for the service and where we felt like pricing, we've even had some comments at one of our last conferences. I feel like things are at least, worst case scenario, in line with our expectations, but probably trending even a little bit better than what we thought.

Okay. That's helpful. And then just my last one on Intermodal, and Brad, you touched on this. And maybe we'll get to ESG kind of at the end of the -- at the presentation. But do you feel that shippers are starting to look to Intermodal as a way to save on those Scope 3 or whatever emissions? Is this a story that -- when you go out to a customer, is this the story that you're starting to hear resonate with shippers? Are there shippers that are literally making the choice, I get it on price, I get it on service, but is there also this sustainability angle? Or are we just not there yet?

I think we're still early. I think it also depends on the shipper. I mean European shippers tend to focus on that aspect of the Intermodal offering maybe a little bit more. I think right now, the reason why the demand for Intermodal services is so high is because of how challenging the truck market is and really how challenging it is to find truck drivers, and I know Nick can speak at length to that. But fuel prices are going up. It's harder to find truck drivers. It's harder to find capacity. You're seeing more an elevated spot activity in 360 or in our brokerage platform. And all of that tells us that our customers right now are struggling to get capacity and where they can get consistent capacity, which historically, Intermodal has been able to provide consistent capacity, that's where they're going. And I think that's why demand for that -- for Intermodal is so strong right now.

I'll just add on that. From -- what I hear from the customers is they've kind of accepted that already. That's a good pickup in ESG. And they're really moving on to electric trucks and what we're doing on electrification and what we're hearing there. So that -- so ESG is a big component, but I think they've already said we recognize that in Intermodal. That's good. And now what's the next thing is what we're doing on the ESG front.

Interesting. Okay. Very interesting. So I do want to shift over to Dedicated and to Final Mile. So I want to talk about -- because there -- again, there kind of seems to be some hand-wringing out there. I mean DCS, I think, makes up now 40% to 50% of the whole company-wide EBIT mix. And maybe for some reason, people think this should negatively impact the multiple, which in some way boggles my mind. But -- and I get it that it is an asset-heavier business. It maybe carries a slightly lower return profile, but frankly, I need the 10-K to kind of make sure I strip out the Final Mile and everything in there. But I just want to talk about how this model is fundamentally, at some level, de-risked because -- and maybe you didn't help everybody understand that you're matching assets, you're deploying capital with a contract in hand. So while it may be a slightly lower returning segment, on a risk-adjusted basis, isn't this kind of business off the charts good?

I think it's a really solid business. I've been in it for a long time. So -- yes, I love the business model. Like I said, I've been here 37 years and been in Dedicated 20 plus of it. It is a great model. When you think about 98% retention, you mentioned the long-term contracts, our average contract is 4.5 years in term. I'd say our minimum is a 3-year, but we have some 7- to 10-year contracts, and they are matched up with the assets. And so every deal is priced uniquely. There's no broad-brush assumptions. You go in and you engineer and design how many assets, how many miles, driver pay, what cost. So it's a cost-plus business, and we design it in with that. It's got indexes built into it that allows for cost adjustments as you go. So it is a very solid business, and you're going to see -- continue to see very solid growth. There's a lot of demand. The market is $50-plus billion that we have qualified. We're the largest but still a real small percent. And so we're going after those private fleets. And it's across a lot of industries. It's not just tied to one industry. So again, a lot -- to me, you take a lot of risk out of that by being very diversified in industries from agricultural all the way to manufacturing, to steel, to retail. You just name it, it's a broad-brush. And to me, the great testament of that was back in March of last year, almost 10,000 trucks. We moved 1,000 of them from retailers and other businesses that are shutdown over to grocery and retail that was needing to double because of all their volumes. So that flexibility and that density, you just see that across the marketplace. So if you take care of the customer in that, there's -- it's a great business model. And again, as Brad said, we measure it based on return on invested capital, and we feel very, very good about it.

Yes. And you kind of led into my next question. I mean COVID, I think it just reinforced this whole thesis in spades. I mean if you just look at the business and how it performed last year, just like you talked about, it's very, very sticky business. And again, I think it just really owes to -- I hate to use the word de-risked, but it seems to be a much less risky profile than going out, whether it's the generic truck market or even Intermodal at some, where you have to go fight for volumes year in and year out.

Yes. I totally agree. The deal is just to make sure that we can continue to sell. And to me, from what I'm seeing in the marketplace with the $50 billion that we got qualified, that's all nonunion in spaces we already play in. So it's a very compelling story. We can go sell it to small customers, to large customers. And our sale is really simple in that we're experts in supply chain and logistics, so let us go take that. We'll purchase your fleet from you. If you own the equipment, we'll purchase that. We'll schedule it into the contract. And then also, by the way, we're very good, and we've got a great safety record. So we'll take your ability and risk away from you. So you don't have that on your balance sheet. So you free up capital. You take the risk away. And then you run it more efficiently because that's what we do. We've got engineers that design and run those fleets as opposed to making widgets or sell in retail or whatever you're doing. We're the experts. And by the way, with J.B. Hunt, since we got this density, we can design the peaks and the valleys. We've got the balance between industries that peak at different times. And so if you're running a private fleet and you're set doing this, you don't have the ability to move over to your neighbor over here that we may be running that fleet. So we can optimize across there and help each other out. And so that's another value we get with just our density in the marketplace that we can do that. And then there's a nice little play that we can also do with Intermodal because Intermodal comes in on one side of the building, we go out on the other side. And so we can drive empty miles out through that process. And then you just lay on 360, and when we have the visibility to all that freight, we have the ability to find more backhaul and fill in much more efficiently. So it's a pretty sweet solution that we can sell. I tell my sales team, they got a really easy job.

I'm sure they would agree.

Yes.

No. So -- yes. But I do want to talk -- just a touch about the margins there. The margins have been really good. So maybe just help people understand, there's 2 investments. So when you do start up a contract, there's a capital commitment, right? You're buying the trucks, you're committing the capital, but there's also probably a P&L burden upfront. It takes probably, what, 6 months, to get a contract up to probably where you kind of want it margin-wise. Last year, obviously, you didn't add a ton of new trucks. This year, maybe you will. So can you just talk a little bit about the dynamics on the P&L just with the margins and how start-up costs kind of flow through there?

Yes. So the way we design these fleets, again, we've been doing this for so long, we design in and price in the start-up cost. And we schedule that to be recouped over the life of the contract. So when we start up, we know we've got to reposition equipment. We got to hire drivers. We got to reload managers because we're on site with the customer. So we price all that in. And so you'll see it hit our P&L. The first few months as we get up, we're not as efficient in running the fleets the way we should. It just takes us a little while to get our groove going. And all that's priced in, and then we recover all that over the life of the contract. So you'll see when we grow, you may see a quarter or 2 that it takes a little margin hit overall in our book of business if we have a lot of growth just because of the amount of expense to start that up and hire drivers and train them and then reload the equipment and get all those things. We may put in a facility there on site, but all that is priced in, and we recoup it over the life of the contract.

Absolutely. And I guess I...

But we're getting so large that it's easier to kind of -- you don't see as much in the variations of the overall.

Well, exactly. But you kind of touched on this and maybe I didn't fully appreciate the peaks and valleys. And actually, you gave a great example in COVID, where you took retail-centric trucks and moved them over to -- or sorry, for industrial onto retail, however, it went. But the point is that actually, as you get bigger, I would think you actually get better just based on the scale because to your point, you can drive empty miles maybe out. I don't even know, maybe J.B. Hunt 360 could even play in there for backhaul opportunities. I'm not sure. I don't know if you can talk about that just super quickly.

Yes. No, that's exactly right. And I'll give you the example of -- we were running a tire fleet up in PA, and they just outsourced one location to us. They still run private fleet in their other. And during COVID, they shut their trucks down, they still had to pay their drivers. We took the fleet, moved over to a grocery fleet and helped them out. So we gave them credits for their fixed cost. So that's when the CEO said, "Hey, this is a really good deal. I was nervous about this. Let's go get some more of this. That is very flexible." So we were able to do that. Then to your point on 360, where we get the longer length of hauls and they want high service going out 400, 500 miles, it's critical for us to have backhaul to be able to do that. And so we can extend our Dedicated Services out further because we have visibility to the backhaul coming in through 360. So those all play very nicely. So yes, the more density you get, the better it is.

Yes. Okay. I thought that was very useful. I do want to touch real quickly on Final Mile. So I guess, not surprisingly, it's not super profitable. I think you began to break this segment out. So John, you've talked about how ROIC is your "guiding light." Totally appreciate that. But my presumption is at a 2% to 4% type of EBIT margin, that may not be enough. You are deploying capital there. You've been making some acquisitions. So I must not be seeing something. And so what I'm trying to kind of understand is what is the long game in Final Mile? Is it that scale will ultimately drive the margins there? Or is it more asset-light than I'm maybe appreciating and maybe those margins can provide pretty good returns? But can you just talk, first off, a little bit about Final Mile, the secular growth? And then just kind of where you want to see that profitability to get the returns that maybe you want?

Yes. So I will take that. Final Mile, with our big and bulky, we are setting it up. We're agnostic to whether it's assets or non-assets. We let the customer kind of pick and choose in it. Again, we look at it on an ROIC basis. And so when we look at that, we're excited about there's -- that space is growing 15% to 17% annually. A lot more people are buying online, needing deliveries. And so you're seeing a lot of the big customers start to change their supply chain to be able to do that. So we think there's a lot of growth there in that segment. We think it can be $14 billion to $16 billion in revenue, and we're probably #2 in that size-wise right now. And so we're excited about that. But we want the same model. We're going to give great service. And we have been making some investments, and the investments have been very strategic to get us in some industry. So it got us in furniture to begin with, then our latest acquisition was to get us in fitness. We already had the appliance side. On the appliance side, it's probably half to 60% of it is with assets. The other is non-assets. Furniture is all non-asset at this point. Fitness is all non-asset. So you're going to see our mix change. So I would just say the long game is we're going to continue to see our margins improve, but ultimately, it's going to be based on the ROIC. And so it's going to be a mix of assets and non-assets. There could be some government regulations with the Biden Administration and contractors and all that. So we're agnostic. We can kind of go whichever way we want to go. You got the AB5 out in California that makes it challenging out there for contractors. So we're -- we think we're set up nicely. So we're making some investments. We will get the proper return on them. And what we're working on right now is our existing business. We're having a lot of success in getting some margin improvement there with pricing. And so our model is we do these acquisitions while we grow. We give great service. And it's just like on the Dedicated side, you give great service, you can get the acceptable returns, and the customer will stay with you. And so we're starting to see that play out on the Final Mile side as well.

Okay. Perfect. So Brad, we got about 5 minutes. I'm going to close my eyes. I'm going to take a swing. I'm going to talk about J.B. Hunt 360 because I feel like still the market is grappling with what it is and what it isn't. So let me just give my thoughts and see if I'm right. But to me, this is really a souped-up brokerage platform, and it's really designed to take waste out of the system for both carriers and shippers. And it basically lets them come together in a digital way to talk to you without actually having to talk to you. And then at the same time, there's kind of like this optimizing overlay that helps shippers put the right freight with the right mode, the most efficient capacity. It also helps carriers get the best and most efficient freight for them, which reduces their waste. And on top of that, it probably brings freight in and out of your own assets to optimize your own assets. So how far off am I? Am I pretty close? Or am I way off the fairway?

Tyler, I mean I can't disagree with what you said. I mean I -- going back several months ago, when John Roberts announced several leadership changes, Nick was promoted to COO; Shelley kept the COO -- CCO position, but also Head of People. People always thought of Shelley being sort of 360, and I think she had a lot of innovative ideas there and working with our CIO, Stuart. But you're exactly right. So Shelley is selling 360 and the services and the offerings that they can provide to our customers. And so it is definitely very outward facing in terms of how do we find or how do we match all this capacity that's in this market with all this demand for these services? And how do we do it in a way where it's the most efficient with the least amount of friction? Let's give the customer visibility, let's give them transparency, let's let them see what a truck would cost, let's let them see what a truck would cost in the morning versus in the afternoon or on this day versus that day, pick up time or appointment time at this time versus that time. So there's a whole idea about really creating a lot more transparency. Again, that's all, as you alluded to, outward facing. On the other side, Nick as Chief Operating Officer is looking at all that and saying, these are our 150,000-plus pieces of equipment that J.B. Hunt manages, whether it be containers, trailers, hay trucks, sleeper cabs, Dedicated trucks or Intermodal trucks and does that matter now. And so as Nick, I think, coming out of Dedicated has spoken to many a times, density in markets creates a lot of opportunity to drive efficiencies. And we have density in a lot of markets, not just with Dedicated assets, but with Dedicated and Intermodal assets or Dedicated in truck and Intermodal assets. And so I think, Nick and a lot of what he is doing is, how do we take this platform and say, Shelley, what does it do for the customer? And how do we sell that? And then on the back side of that, with all this data, with all this information, how do we use it to optimize the efficient movement of our assets because we do want to generate better returns on the investments we make. So Nick or John, I don't know if you'd add anything to that. But Tyler, I think that's what you said. I just tried to say it a little differently.

Yes. I'd say, Tyler, I mean, just...

Yes. And -- yes, please.

No, go ahead.

No, no, no, please.

No. I was just saying that I think something that is not as well known is how we use that from a consolidated effort, and Brad talked about it. But it's kind of came out through our brokerage, our ICS division, but it really spans the entire J.B. Hunt platform. And so I think that, that -- Nick is using it for backhaul. We're using it for dray operations when we need some assistance there. And so it's -- we're really seeing benefit across the board.

Yes. It feels like this Venn diagram with these bubbles, and it's just about kind of getting all those bubbles to kind of work together. And then you announced the partnership, though, with Google, and I'm curious about that because my hunch is that's what's going to help power some of the optimizing tools. Brad, you may agree -- what is that -- do you want to dispatch a truck in the morning, at noon, in the evening, et cetera, et cetera. My hunch is that's kind of what that is powering. Maybe I'm right, maybe I'm wrong.

Yes. I mean we -- other than what was in the press release, there's not much I could say, but I would just add to it. If you think about where we were sort of moving and what direction we are moving, I think there's a lot of investment being made around data science. And we just wanted to -- if you think about what -- or to simplify what I think the alliance with Google is we are going to collaborate together on ways to solve industry problems, right? And I think we certainly had and are very familiar with what some of the industry problems are. And so we thought we could continue to go down this path if we strategically aligned with what I would consider to be a global superpower in technology. Hopefully, there would be some benefit in terms of either the ability to scale and/or the ability to move faster or increase the speed at which we can accomplish some of the things that are sort of on our road map. And I think that's probably a simplified way of thinking about it.

Perfect. Our time is up. It went too quick. I certainly appreciate you guys joining us this morning. And so with that, thank you, and we will talk soon.

Thanks, Tyler.

Thanks, Tyler.

Thank you, Tyler.