RXO, Inc. (RXO) Earnings Call Transcript & Summary

All right. I'll sit here. Welcome back, still going on, almost done here, closing out strong with last couple of groups here in transports and logistics. So Brian Ossenbeck, cover the group for JPMorgan. Up next, we have RXO, Jared Weisfeld, Chief Strategy Officer. We're looking forward to getting straight into the Q&A. So there's certainly no shortage of things to talk about. [Operator Instructions]. But I'm perfectly happy to keep on going here even if I've left my voice behind a little bit from earlier today. But Jared, thanks a lot for being here. I appreciate taking the time.

Thanks, Brian. Thanks for having me.

So, maybe we'll start with the truckload market. We saw there was decent start to the fourth quarter or the fourth quarter is pretty good, rather decent start to the year. Then whether -- whether kicked in seasonality came back, but it's still a little hard to get a clean read on where things actually stand right now. What's your view on sort of the bottoms-up fundamentals right now?

So to your point, Brian, the fourth quarter, we saw some of the highest industry metrics we've seen from a freight KPI standpoint in the last 2.5 years, the highest since we've spun out of XPO back in 2022. Tender rejections approach 10% load-to-truck ratio approach 6:1, 7:1. So really indicative of supply has come out of the market over the last 2.5 years, not at a rate that is necessary to tighten the market sustainably, but certainly a market that is now more susceptible to changes in demand. So I think that's certainly encouraging. To your point, heading into January, we had some pretty severe weather events that cause the market to stay tight despite the typical seasonality that we usually see in January, which was very similar to last January of 2024 when there were also some pretty significant weather that disrupted the market. This was actually worse than last January in terms of the severity, when you think about basically half the country frozen under tundra effectively, right? So very limited ability to move freight. So when we think about the first quarter, what we talked about on our earnings call the first week in February was that our expectation was that the tightness that we saw in the month of January was going to abate and you would see spot rates move lower given all of that tightness that occurred because of weather, and you see what's going on from an industry metric standpoint where ultimately, we talked about our gross profit per load improving throughout the first quarter based on that view. And -- and you've seen what's happened to overall spot rates on industry standpoint since then.

So when you look at -- obviously, there's a lot of KPIs, maybe too many in some cases, when you look at just the broader ones we can consume. You obviously have a lot of internal ones, but from an external perspective, is it really the tender rejections and load-to-truck ratios that are kind of the leading indicator in your mind?

Yes, I think that's right. I'm not sure as much leading as coincidental in terms of indicators. But I think from an external standpoint, load-to-truck ratio and tender rejections are really good proxies for the overall state of the market. If you think about when the market turns to the point when we will see spot volumes on a sustainable basis, we'll need 10% tender rejections. And we'll need probably a load-to-truck ratio of 6:1, 7:1. And when I say 10% tender rejections, it's not 24 hours being at 10%, right, let's have it for a sustained period of time. To really give us confidence that we've entered that next phase of the freight cycle. And while we're on this point, I mean -- so I'm sure we'll get to talk about Coyote in a little bit. When we acquired Coyote, Coyote had a great tool called the Coyote Curve, which basically a view of the overall market, which is now rebranded the Curve. And we put out that market report probably 2 to 3 weeks ago now. And we talked about entering the next phase of the freight cycle, where we are now, for the first time, moving to an inflationary rate environment. And as you recall, RXO talked about for 2025, contract rates being up low to mid-single digits year-over-year when compared to 2024. And that really speaks to the fact that unit economics for many carriers are at unsustainable levels, right? Spot rates at the current rate, I mean, you'd have to go back almost a decade to get to similar spot rate levels, but carrier costs have gone up into the right. When you think about insurance and maintenance and tires, all of that has structurally moved higher. So your first question was where are we in the freight cycle? I think we are -- we have been bouncing along the bottom. For the first time we said in February that we are now moving off the bottom, but I think the shape of that recovery is still TBD.

Okay. And at least in the sort of near-term view, it sounds like based on what we spoke -- talked with you guys about only a couple of weeks ago, it seems like we're kind of on track to the first quarter. We're coming off the bottom out of the weather and March is always the biggest month of the quarter. Maybe against that, we have a lot of tariff uncertainty. Is that showing up in the business in your conversations or the shipper behavior. And we've heard that pretty consistently throughout the -- throughout the week here. It's just wait and see because you just don't know?

Yes. I really think it's customer by customer, where I think there are some customers who see the volatility that's happening down in D.C. in terms of trade policy. And with that uncertainty, do they want to hedge their bets and maybe go ahead and bring some volumes on faster than they would have otherwise. There are some other customers that are maybe taking the view, and listen, this is so erratic right now where you've got the on again, off again and will tariffs actually go into implementation on April 1, and you're seeing that more of that wait-and-see approach. But I think that what's interesting is that the industry, despite all of the volatility in the equity markets. The freight market KPIs have generally been pretty stable, right? If you look at tender rejections, they actually moved up to about 6% over the last few weeks from an industry standpoint, which is counter seasonal. As you know, February is generally the weakest month or one of the weakest months of the entire year. So -- and load-to-truck ratio is still staying around 5:1. So I think that -- it will be interesting, to your point, March is always a very large month as a percentage of the quarter. So it's certainly encouraging to see the freight market KPIs remain relatively stable.

So one more question on the cycle, like we -- I think this is what you should say is this is a question you ask when you're at the bottom of the cycle, which is like what's different and basically why could we stay here for even longer than we think, which is a little bit disheartening to think about. But we see trailer pools who have gotten more popular technologies probably helped with better visibility. We've got more private fleets. So -- when you look at regards one of the folks do the curve, is there anything that they feel structurally different that could actually make the recovery happen a little bit slower. If we do have some of these factors, obviously, we've already felt a lot of them with carriers hanging on for a long time, but anything beyond that?

So I think where you're going on that is if you think about some of the differences that have occurred this cycle versus prior cycle. I think one of the most stark differences is that the freight economy has decoupled so significantly from the macro, right? The macro is reasonably healthy, long-term unemployment. I mean, unemployment is still at 4% relative to long term, very modest, right? We're still seeing some healthy wage growth. But you think about that mix shift from goods to services that has really occurred, which impacted the overall freight economy. I think that certainly stands out where GDP has been positive growth now coming out of COVID. But the freight economy. If you look at overall freight volumes relative to 2019, probably for the industry, down mid-single digits, right? Very different picture on overall GDP. You've certainly seen private fleets add some capacity with respect to some of the strength that you've seen in Class 8 orders over the last few years. But on the other side of that, if you look at over the last 2 years, 20% of brokerages have gone out of business. right? To be fair, a lot of brokerages came in during COVID, but you think about the brokerage industry with 15,000, 20,000 brokers. I mean it's a staggering amount, 20,000 have -- 20% have gone out of business. So I think that speaks to the fact that the industry structure is evolving, where we believe it will be a winners take most type market structure with the acquisition of Coyote, the top 9 brokers now represent about half of the brokerage market. So even if you do have some -- as you think about the shape of the recovery, as you think about large shippers wanting to do business with financially stable carriers, I think that plays to our strength in a pretty big way, especially after the acquisition of Coyote.

So just on that point, it does feel like you've seen more of a hybrid approach from asset-based and asset-light like more truckers have bigger brokerages and more asset-light brokers have bigger trailer pools, for example. So I don't know where you would PEG RXO on that continuum, but is there -- is there a need internally or desire internally to have maybe a little bit more of an asset base to the extent that, that would make sense?

I think it is critical to make sure that we -- it's critical to make sure that you've got the right mix of assets. What do we want to do? We want to provide exceptional service to our customers, and we want to increase the stickiness of that relationship. So we say asset-light for reason doesn't mean no assets, right? But it does mean that we do absolutely have strategic trailers throughout the organization. Mostly are leased, but being able to go ahead and serve that kind of capability, drop trailer capability, trailer pool type capabilities to our customers. I mean that is a win-win in terms of value proposition to our customers. It increases the stickiness of that relationship with healthy margins. So you will absolutely continue to see us pursue an asset-light strategy that includes both our brokerage business, but marrying that brokerage business with opportunities to add trailer capabilities as well.

So we're in the -- I'll say the thick of bid season, but certainly ramping up to a pretty active part of it. What we've heard at least in our conversations and even some other folks here this week is that not really starting off to be the most exciting, I think, maybe a little bit more in line with your view of RXO's view of low single digit to mid-single for the full year. Anything you can offer on that perspective in terms of where things are standing you still on that trajectory? Or is it little too early to tell?

Yes, absolutely. I think most of bid season starts, call it, October, November time frame and then runs through basically through the end of March. You'll have some carryover, but a large percentage of our book will go through bid season during that time frame. And we feel really -- we feel really good about the outcome from a bid season standpoint. Contract rates for RXO 2025 versus 2024. Holistically, as if we owned Coyote in the prior year, will be up low to mid-single digits. And based on early customer feedback and the awards that we're seeing, we feel confident that we're going to grow volume year-over-year 2025, 2024. Again, that's as if we owned Coyote last year. One of the real nice benefits of closing Coyote earlier than expected back in the September time frame was being able to go to our customers, our shippers for a vast majority of those bids and have a unified pricing strategy across the org. So I mean -- and this is an important point because we talked about how legacy Coyote revenue per load on the truckload business was price lower relative to legacy RXO. And we knew that as part of diligence. What we didn't know was that the market would behave in such a way throughout 2024 where you would tighten up, but not tighten up to the point where you see spot volumes, right? You've had these, call it, 4 or 5 episodic squeezes since we've spun over the last 2.5 years where the market tightens, but you don't really tighten to the point of seeing those spot volumes. And that's precisely what occurred. So when you think about the financial results of Coyote over the last, call it, 3 to 6 months because of the developments in the market, having that unified bid strategy going to market, repricing that business and growing volume, I think we'll certainly prove to be a good outcome for 2025.

So just on that point, do you go to market differently with Coyote under the same umbrella. I think what you guys said is what I just mentioned, it was underpriced relative to things like mid-single digits, at least relative to where you -- where you think you could have gotten. So maybe you can expand a little bit on that, like what is the opportunity? And how do you go to market differently, if at all, there's still kind of 2 separate brands?

On the second part first, the long-term opportunity is to improve the Coyote gross margin and gross profit per load profile similar to that of RXO, right? You think about some of the uniqueness of the Coyote gross margin per load profile. I mean, pre-acquisition legacy Coyote, 20% to 25% of their business was SMB, small to medium business. That is the richest gross margin per load across the entire company, legacy RXO and legacy Coyote. So continuing to grow that business, I think, is critically important. So that's the longer-term vision. As we execute on the opportunities of the combined org and especially as we execute on the purchase transportation synergies, which we can start to benefit from once the tech integration is largely complete, you'll be able to go ahead and reduce cost of purchase transportation across the org and at legacy Coyote to really improve that gross margin profile longer term. On the first part of your question, as it relates to bid season strategy, at this point, there -- it's one RXO and it's customer by customer, lane by lane, right? So if there are customers where you can lean on the relationship, and this is a relationship-driven business, right, where -- listen, it might not be the right thing to do to strategically increase price to the extent that you're talking about, but maybe you go for a lower price increase and you talk about earning load-by-load winning that spot volume over time, which can then be accretive, that could be a great outcome because if you think about legacy Coyote in Q4, they didn't really have a lot of spot opportunities and legacy RXO did see some benefits, especially after hurricanes Helene and Milton. So being able to go ahead and put Coyote in a position to win those spot volumes. I think, is -- sets us up for success over the long term.

So in terms of the market structure in the bids right now, are shippers doing more mini bids? Do you see some of them are locking in or willing to lock in some capacity. I think the answer is probably -- it depends because of the size of the market and the fragmentation. But maybe you can give a little bit more color on that in terms of how they're approaching this bid cycle in the third year of a freight recession and a big overhang from tariffs?

I'd say you're -- on the margin, you're seeing more shippers look to lock in rates for a longer duration relative than we've seen over the last 2.5 years, where we were in a down market for the last 2.5 years, and shippers, they're very smart. They're -- they've got very sophisticated procurement teams, especially at the Fortune 1000, and they wanted shorter duration because ultimately, their view was that we were in a declining market and they didn't want to lock in the rate for longer. Now that we are in an inflationary environment for the first time in 2.5 years, and we're starting to see contract rates move higher. Part of that speaks to the unsustainable carrier unit economics for many carriers that are out there. I think you're certainly starting to see the nature of those conversations evolve to -- let's have a conversation about a 12-month contract as opposed to a 3- or a 6-month contract, right? And you should assume that if we are taking duration risk i.e., longer contracts. Clearly, that will be accompanied with a stronger revenue per load profile relative to a shorter duration contract.

Okay. So the idea with Coyote is you can still close some -- you get the spot market exposure potentially more over time, they didn't have much already and then close the gap on the revenue per load or the amount that it was under priced. Was that -- is that a mix issue in terms of why they were below on a pricing perspective or it was just the -- it wouldn't be?

Not a mix issue. Their SMB, business carries a very strong gross margin per load. I think it's more on that enterprise middle market piece where they had a different strategy in 2024 as it relates to price relative to RXO. And we've been very open about that RXO took a firmer pricing strategy last year, cost us a little bit on volume, but you saw that manifest itself in improved gross margin per load and you saw that legacy RXO gross profit per load in Q4 actually increased relative to Q3 and legacy RXO gross margin percentage in Q4 on the brokerage business was about 14.5% relative to consolidated about 13.2%. So as you think about executing on, executing on service, going to bid strategy, bid season with one unified strategy and then increasing contract prices across the org. I think the goal is not overnight, but long term, how do we go ahead and get the Coyote gross margin profile for most of that business, there's a piece of that business where unit economics are a bit different, which I'm sure we'll get to. But for most of that business, how do we go ahead and get that in line with RXO longer term.

Just to the point on SMBs, I think you said 20% to 25% was Coyote in terms of their SMB mix?

20% to 25% of legacy Coyote's volume pre-acquisition was about SMB -- was SMB. That's right.

Okay. So where is -- I don't know if you talk about blended combined consolidated at this point or RXO legacy how you going to approach that, but I think it is an interesting point from mix perspective and also from a potential margin implication as well?

Yes, absolutely. I mean we want to grow that SMB business longer term. And when you hear us talking about synergies, you'll notice 2 buckets are noticeably absent from that. One is SMB, because we want to grow that business; and two is sales, right? This is -- we want to grow our sales force and especially at the bottom of the market, we want to be getting closer to our customers, not cutting the org. So I think when we think about SMB and what that mix looks like on a combined basis, Coyote roughly more than doubled the volume of the combined enterprise. So if you think about that 20% to 25% volume, it's probably now, call it, low double digit as a percentage. One of the strategic merits of the deal was that SMB was always on our road map, but it was very small, immaterial as a percentage of RXO volume. So being able to acquire that capability with Coyote I mean they've got almost, I mean, call it 250, 300 sellers dedicated to SMB, right? So on the ground spread across multiple offices. And really, I mean, that's the heart of the U.S. economy, right? I mean, half of GDP, almost half of all employment coming from SMB. So being able to go ahead and leverage that in a pretty accretive way given that gross margin profile, we really like that SMB business.

So when we look at Coyote and the financial performance over the last, I guess, since the close. It's underperformed at least our expectations. I think probably years as well when you look at just where it started and where it's ended up. And I think you talked about some of the reasons for that with the pricing, the maybe the peak season, the squeezing of the margin on the market side. So what else is there to kind of get your arms around? Or is it self-help? Is it market related like what caused it and therefore, can we talk about how you're approaching repairing that or getting it to that point where you're talking about parity over time, just put more context?

Yes, absolutely. So in terms of the actual integration thus far, it is exceeding our expectations. I mean when you talk about the operations of the business, I mean, less than 2% voluntary turnover of senior leadership, I think that is a very strong number and ahead of our expectations. You think about retention of customers, like the strategic merits of the deal was rooted in the fact that not only did we talk about SMB where RXO didn't really have an SMB presence, the customer overlap was very small. Right? So when you think about one of the key risks to an asset-light merger, customer overlap is clearly one of them. So the fact that legacy RXO served retail, industrial, automotive, on the truckload side, and legacy Coyote served food and beverage and transportation with a very -- one large significant customer there that, I'm sure you're aware of, the overlap wasn't there, right? So, that really speaks to the strategic merits of the deal and you think about the financial performance, to your point, as it relates to the last 6 to 9 months, it goes back to what we talked about at the very beginning of the conversation, right? You had 2 very different pricing strategies. And you had market developments that effectively yielded a squeeze on that truckload business, especially on that enterprise business section of the business that we're correcting literally right now, right? So you think about bid season that we're going through, the ability to go ahead and have one unified pricing strategy, the ability to go ahead and talk about contract volumes or volumes for the combined org being up year-over-year 2025 versus 2024 and to have pricing being up low to mid-single digits. I think we're feeling really good in terms of the integration. A long way of saying, the P&L is performing as it should, given the input of the variables, right? When you think about market conditions, pricing, that's all, you think you run that through the model, the P&L is performing as it should. So we're all about making sure that we are priming the model for incremental operating leverage when the market turns and we're taking out significant cost in the business. If you think about $50 million, at least on the cost side from an SG&A standpoint. And we put a framework in place for $40 million of PT savings to the extent that we execute on that $4 billion pool of combined purchase transportation dollars, and then you add that up with the base EBITDA of the business, like when all said and done, we have to execute, but we're going to be able to buy this multiple down to mid-single digits for an asset class that trades at 15 to 20x. So we're feeling great about it.

So you mentioned a few of the concerns we've had as well just -- just the nature of combinations of asset-light businesses. You talked about the turnover of the employees, shippers and when you're trying to push more price in this case, is that a risk? And have you seen people walk away because it is a softer market and people are still looking for rates if they can get them some more going longer term. But what can you say about the customer retention and acceptance? Because now you're one RXO, but people who are Coyote shipper before are now getting a higher price?

So they're getting a higher price relative to prior. But remember, legacy Coyote pricing was below relative to legacy RXO, right? So you're coming back more towards market. And if anything, I'd say we're seeing the exact opposite of what you're describing where now shippers. I mean, some of Coyote's relationships going back 15, 20 years on the shipper side, right? Large shippers for a period of time didn't know where this asset would end up during 2024. Now you have the sense of relief in terms of -- there was a period of time we didn't know where the asset was going. It's coming to RXO and they know that it's part of a 3PL that is large and financially stable and will be here for the long run and the fact that we talk about 20% of brokerages going out of business over the last 2 years and the market structure really playing to the benefit of those that have scale if anything, the customer conversations have been incredibly constructive post deal announcement.

Good. So I guess the other part you mentioned, it sounds interesting is the synergies, of course. So they've been moving up over time. Obviously, there's a cost to execute on some of them. But can you talk a little bit more about maybe the bigger chunks of that and also the purchase transportation, which the $4 billion spend that's $40 million, 1% savings. When does that come? Is that when everything is green and online from a systems perspective? Can you get some of that earlier?

So the largest bucket of synergies from an SG&A standpoint are duplicative vendors, real estate consolidation, duplicative roles, duplicative leadership roles, all of that goes into that number. And we've now doubled that estimate from our original point estimate of at least $25 million, which is sitting now at at least $50 million, with the words at least still attached to it. So clearly, the goal is to continue to run past the $50 million that we have out there. And we're moving expeditiously on that. I think the largest bucket that is still to come will come later this year when the tech integration is substantially complete, which we are on track for, to be done by the end of Q3, substantially done by the end of Q3. And after we sunset Bazooka, which is the legacy Coyote TMS, transportation management system.

It's a great name.

I was was about to say, we've got an incredible name. We're going to sunset Bazooka. We'll be able to go ahead and start to realize some of the synergies there. And I think we've sized that to start at $15 million hitting later this year with the full impact hitting in 2026. And to put things in perspective, legacy Coyote was spending about $50 million in tech spend prior to acquisition, OpEx plus CapEx. So you'll see that decline materially heading into 2024 -- sorry, heading into 2026, going backwards. When you think about the purchase transportation opportunity, that is an opportunity that we are really excited about because that is idiosyncratic to RXO. We can control the destiny as it relates to executing on that road map. Obviously, we need to execute. But it's a $4 billion combined pool of transportation dollars across legacy Coyote and legacy RXO. We knew during diligence that there were certain lanes where RXO bought better and certain lanes that Coyote bought better. And when we are -- you should think about the tech integration as a phased approach. And you should assume that we are prioritizing. And I talked a little bit about this on the earnings call last month, you should assume that we are prioritizing coverage because we know the P&L benefits could be substantial, right? As you think about -- that $40 million framework in addition to being able to sunset any tech, that's supporting the carrier network, right? So being able to leverage that. And I think interestingly, over the last month or so, we've been running pilot programs across the org. And we've had a little known fact. I mean, legacy Coyote, I think has one of the most, if not the most tenured carrier org across brokerage. You think about some of these individuals who have been here -- been there since the beginning when Jeff Silver founded the company back in 2006. So very senior tenured carrier rep org. And we've seen really promising results from the pilots. You should think about some of the legacy Coyote carrier reps running simultaneously, Bazooka and Freight Optimizer, which is the internal RXO TMS that we're going to be migrating to. And we are covering freight of existing RXO shippers with the carrier network of legacy Coyote in an efficient manner that is so far tracking to at least that 100 basis points of savings. So, it's still early days. But as we think about rolling out a train or trainee model, where we're teaching the very senior leadership on the carrier side on how to use the TMS. They then are going to teach that to all of their direct reports. So when time comes to transition on the coverage side, it's not the first time they're seeing Freight Optimizer, right? They want to make sure that they've got hundreds of hours locked in to make sure that they know how to use the system when it goes live. So long response, but happy to go into detail.

No, that's helpful because I think that was question I was thinking of as you're going through that, like if you're doing the cutover, if I heard you correctly, substantially done at the end of the third quarter, then you're going into peak season. And the concern would be, obviously, that you have new technology, people who are not necessarily used to it, working out some bugs during a pretty demanding time for freight.

And just to be clear, technology is substantially complete by the end of Q3, and we're prioritizing carrier ops ahead of that. Right? So, if you think about that phased approach to your point, we're going to -- we're going to derisk bid season -- peak season rather. And we're going to go ahead and derisk the transition by having as the entire carrier org up and running on simulation and pilots well before the actual cutover date.

Okay. And then financial benefit sometime in fourth quarter?

Yes. I mean I think the good news is that it's such a tenured carrier rep floor where it shouldn't take too much time for them to get the speed on Freight Optimizer. But at the same time, we shouldn't have the expectation that we're going to push a button and then you get the $40 million of annualized savings in T+1, right? So there'll be some learning curve. But because Freight Optimizer is very easy to use, was built on a micro services architecture, combined with the fact of the very senior carrier rep tenure of legacy Coyote. We're feeling pretty good about that.

So the big customer we talked about or alluded to earlier, with Coyote, obviously, UPS, which is going through a decent-sized transition of their own, with their biggest customer, Amazon. So I just want to see if you can give us some context in terms of how that affects RXO when you have that couple of layers of big customers moving around, will that change seasonality because that's probably a big fourth quarter shipper? Are there any other things you're worried about or looking at is those things are approaching and are more public now?

As you can appreciate, I'm not going to comment on a customer's customer. But what I can comment on is one of the guiding principles of closing the deal was making sure that we had a long-term commitment from UPS. And they are a great customer. We talked about at the time of closing, they represented about mid- to high teens as a percentage of total legacy Coyote volume and about 10% of gross profit dollars. Our goal is to grow that business longer term. We're going to provide exceptional service to that customer. In fact, in Q4, during peak season, it was the highest service levels that we've ever had servicing that customer, which is obviously, a great way to start things off post closing of the acquisition. The goal is to grow that business longer term. We are governed by a multiyear contract, which I'm sure you know, is not common in this industry. So we've got a contract that runs through January 2030. With minimum volume commitments. So we're -- we do it as a partnership, right? We've got daily dialogue, monthly dialogue with our partners over at UPS to make sure that everyone is on track to hit the minimum volume commitments, and the goal is to continue to provide that customer with excellent customer service and grow that business longer term.

Is that dialogue changed since it's external and coming out as opposed to maybe it was internal before and just kind of like a tool that they're using for peak season and for their own network. Does that relationship change a little bit?

If you go back to the origins of Coyote and UPS, I mean, they've been growing that business for a long time now, right? And you think about leveraging the Coyote network, especially for peak season with exceptional service levels, I mean, that's very difficult to replicate. So it goes back to my prior comment that it's always been viewed as a partnership, and we are effectively an extension of their service arm. So we need to make sure that we are delivering at the highest possible service level requirements. To that customer, and it's been a very seamless transition so far.

Okay. Well, I've got one more question we've been asking everybody this week on cargo theft and cargo security. So I think it's always been a problem for a while for the industry, not necessarily RXO or Robins or anybody else's specific problem. But certainly something that shippers are talking more about. We're seeing more trade press articles about it as well and it's not just brokerage or truckload, it's rail and everything else in between. So what are you hearing from -- like how important is that in your conversations with shippers? And are there any initiatives that you can talk to you about either within RXO or across the industry to try to address that problem?

It's incredibly important. And I think we've talked now in particular, on the last few earnings calls about some of the tech advancements that we've made to our platform, precisely for that reason. I mean you think about the nature of the goods that are getting shipped with some of our customers, especially those that are high-value type goods. I mean RXO has won some of the strictest carrier requirements to even drive on the RXO network. That's number one. Number two, being able to make sure that we've got the safeguards and the guardrails built out across the network to ensure that the right loads are getting picked up. There's constant dialogue with that driver. Having those security precautions built into the system from a tech standpoint throughout RXO Connect, I think it has been a very big focus for the organization, especially over the last couple of years. It's always been a big focus, but -- to your point, I think it's been heightened concern for the industry, and we take that very seriously, right? We take I go back to my prior comment on being able to service customers freight and service it well, that extends very much to this concept of security. So making sure that when we're booking a load and covering a load, it is done with the strictest level of service requirements that protects the customers' freight. We take that responsibility very seriously, and we've got the technology to implement to protect the customers for it.

Okay. Very good. Well, right on time. Good job.

Thank you so much.

Thanks very much Jared, appreciate being here.

Absolutely. Thanks, everyone.