The Transcripts, Transcripts
CSX Corp (CSX) Presents at Wolfe Research 16th Annual Global Transportation & Industrials Conference (Transcript)
CSX Corp (NASDAQ:CSX) Wolfe Research 16th Annual Global Transportation & Industrials Conference May 24, 2023 8:35 AM ET
Company Participants
Joseph Hinrichs – President, CEO & Director
Conference Call Participants
Scott Group – Wolfe Research
Scott Group
All right. Really happy to have CSX for our next Fireside Chat, Joe Hinrichs, President CEO, been, still less than a year,
Joseph Hinrichs
Less than eight months.
Question-and-Answer Session
Q – Scott Group
Less than eight months. Okay. Well, so first time at our conference, thank you for being here. We are going to get right into questions. Again, I’ll start but if you have any, raise your hand, not good to see a full room. So maybe just Joe give us a state of the railroad. What you’re seeing from a demand standpoint, what you’re seeing from a service standpoint, obviously, lots going on in the industry with labor, politics, maybe just quick statement. And then we’ll get into all the nitty gritty.
Joseph Hinrichs
Yes. Good morning, everyone. I thought I was joining a industry really got less attention in the auto industry. But certainly since my tenure here has gotten a lot of attention. I mean, at CSX, we’re obviously very proud of the progress we’ve made on the service front, talked about it in our earnings call for the first quarter, but we had our best ever service metrics in the first quarter, and then we’re seeing that continue in the second quarter.
We’ve had a number of kind of third-party endorsements of that recently. Service Transportation Board came out and said we no longer needed to do the incremental enhanced reporting because of our service levels and because they weren’t really hearing about complaints about CSX from customers, which was good. Then in the last week or so, the Journal of Commerce came out with a survey with the customers and by far the largest first place votes for the best intermodal service provider on the rails.
So those are good indicators of where we are making progress. It’s been an interesting time though, as you said. So we’re looking at the things we can control on the operating side, our service levels, how our network is flowing, manpower levels, those kind of things. I’m encouraged by the things that are progressing the things that we can control. But the overall economy is a mixed bag, and you’ve seen it.
Intermodal business is down so far this year double digits. We have a higher percentage of international intermodal of our intermodal than perhaps some others. So the international business has been softer. We are hearing that should get better in the second half of the year, as we’ve heard a number of retailers talk about on their earnings call about they think they’ll get their inventory levels in sync, but we’ll have to watch the consumer there.
Domestic intermodal come back a little bit. But even all the intermodal shipments, even the international shipments have sequentially increased the last couple of months but still much lower than they have been in the last several years. So intermodal, we’re watching very carefully.
But on the merchandise side, we’re having a strong start to the year. I guess we’re almost through May, so it’s almost halfway through the year. But our merchandise business is up, which is really good for us, being driven by a number of factors. So it’s a mixed bag. I think the consumer-facing stuff is a little softer. But the — for us, because of our service levels, we’re gaining share, we’re gaining share of wallet on the merchandise side, which includes coal and auto, we’re seeing a good start to the year.
Scott Group
Great. So I typically start the short-term volume trends, but there’s one thing you said I just stood out, I just want to follow up on it. So you talked about the Journal of Commerce ranked number one, twice so many boats as anybody else. We’ve seen in the last year or so, some big shifts in channel partners out West, seeing some in Mexico. We haven’t really seen any out east. And to your point, right, you’ve got a much bigger international than domestic intermodal franchise. Are there opportunities for you to get bigger with some of the big larger IMCs and get some market share wins given the service product?
Joseph Hinrichs
Yes, we do believe there’s an opportunity for CSX. We’re obviously talking to everybody. We have partnerships or relationships with everybody. Schneider moved to Union Pacific. We already had pretty much the strong relationship with Schneider there. We’ve been growing business with J.B. Hunt. But on the rail side, there’s two factors. Of course, there’s the CPKC opportunity, which is creating some different dynamics in the industry. And we see these as opportunities. Do you have good conversations because we can lead with our service product?
And so when you’re talking to a customer and you’re shipping from Mexico or from the West, obviously, the eastern piece of it is important, but so is the western piece of it or the Mexican piece of it. So we’re having good conversations. Again, I’d much rather be leading with our service levels where they are compared to our competition in those conversations. And we’re having — so for us, we’re having good conversations. And for us, I see it as opportunity.
Scott Group
Let’s bring it back more near term. Overall, volumes down 2%, 3% to start Q2. What’s doing better than you thought? What’s doing worse than you thought? It looks like mix, which was a nice positive in Q1. It will be a nice positive again in Q2. But overall, how are things doing versus plan and from a volume standpoint?
Joseph Hinrichs
Yes, I’d say Intermodal is a little softer than we expected, even though expected to be soft, but the merchandise business has been even stronger than we expected. Coal has been stronger. Now the thermal coal in the first quarter, replenishing a lot of inventories and with natural gas prices where they are, thermal coal may come off in the second half of the year if natural gas stays where it is. But met coal has been strong.
We expect that to continue throughout the year exports. But other areas, automotive year-over-year has been strong. Metals, grain, aggregates have been very strong year-over-year, actually, which is really good for us. So on balance, I think so far this year, we’re up about 4% on merchandise, which is with — in a healthy pricing environment.
So we feel good about that part of the franchise. Obviously, we want to see the intermodal come back as well. But on the software side, on the merchandise side, chemicals have been a little bit softer than we expected, mostly export plastics and some of the things of that nature. That’s the one that kind of sticks out. It’s a big part of our business. I mean it’s not down a lot, but it’s down a little bit, but that’s still a big one to watch.
Scott Group
And so as you think out to the second half of the year, it sounds like you’re hopeful international Intermodal gets something better.
Joseph Hinrichs
It’s starting to get a little better, although it’s still low.
Scott Group
Coal domestic coal, maybe with gas price gets a little bit worse. What about — what’s the visibility on merchandise. That’s been, I think, a nice positive surprise to start the year from a volume standpoint. Is that sustainable into the back half of the year? Or given macro, is that more of an upside sustainability or risk in your mind…
Joseph Hinrichs
Well, I think the things that are working for us this year will continue in the second half of the year. Aggregates for sure, which has been a good positive surprise. Metals, automotive. We see automotive being strong for the year and grain probably it’s more seasonal, but certainly grain could be as well. For us, those things should continue. We’re winning some business. We’re not giving out specifics, but we’re winning some business, winning some share. So that will help us in the second half of the year as well as some other things happening that will help us on the merchandise side.
I think domestic Intermodal has shown in the last couple of months’ progress. So maybe it’s bottomed. We don’t know if international has bottomed, but perhaps domestic intermodal has bottomed out, so maybe that we can see some sequential improvement there.
On the met coal side, that should continue exports should continue to be strong. We’ll see where pricing is. I mean, pricing is still healthy. It’s not the levels it was last year when it peaked, but it’s still healthy. So there’s a lot of puts and takes. But on balance, we’re seeing good positive revenue per unit growth largely due to the merchandise side.
Scott Group
Okay. So I want to talk about — you just mentioned every field, let’s talk about underlying pricing. I kind of see there’s some crosscurrents as I see it. It feels like we got surprised on inflation in the middle of last year. So it feels like maybe rails underpriced a bit versus their own inflation. So maybe there’s some catch up there. Your service has gotten a lot better. That should help pricing, right? Truck rates are under pressure. Maybe that hurts pricing at the margin.
So I guess with those crosscurrents, how are you feeling about overall pricing? Could it still actually accelerate from here? Does it naturally just start to slow? And then maybe just near term, like any color you want to share on how to think about like overall revenue per unit, railcar, Q1, Q2?
Joseph Hinrichs
Yes. As you know, we don’t guide on pricing. But we have said — we did said in our earnings call, we’ll continue to say that the pricing environment has been positive. And we’re pleased with where we are. We are very — we can easily discuss our inflation because the labor contract was very visible and things of that nature. And our customers are doing the same thing to their customers.
So the pricing environment should continue to be strong. We’ve already gotten through most of our contract negotiations for the year for the bigger ones, and so we feel pretty good about where we are. Our service levels being so much improved helps those conversations because clearly, it’s easier to have a conversation when you’re serving the customer better than you have been.
I think that from our standpoint, we should continue to see a healthy ability to price, certainly over the medium term above inflation. And so that’s a good environment for us to be in. We’re not really exposed to spot rates too much. I mean maybe on the fringe, a little bit of domestic intermodal, but not a lot, and most of our stuff is contract pricing. So we don’t get — we didn’t get the benefits of it a couple of years ago when it spiked up, and we don’t really get exposed to it too much right now.
Scott Group
Okay. You guys have been transparent and helpful around this storage revenue, $300 million headwind this year. Is that still the right number?
Joseph Hinrichs
Yes. We still see that being the right number.
Scott Group
Okay. So we should see 1 more step down in Q2, and that will sort of be the…
Joseph Hinrichs
Yes. I don’t know if we’ll be quite there at the run rate, but we think the number is still the right number for the year.
Scott Group
Okay. Now one other area where you’ve maybe been a little less sort of transparent helpful is like just the sensitivity around met. So we’ve seen met come in a little bit. Is there — how should we think — what is the — if we’re in this low to mid-$200 range. What is the sensitivity we should think about for coal ARPU? Does it go back to where it was in 2018, 2019? Or does it stay above that? Any sort of help color you want to?
Joseph Hinrichs
Yes. I mean I don’t have the experience from ’18, ’19, rather. But we think north of $200 where it’s still a pretty healthy environment. So we feel pretty good about that. Curtis Bay is running really well, knock on wood, which is our port in Baltimore. That’s allowing us to have more throughput through there. So we feel really good about where we are. And if it stays north of $200, we should be in — we’ll be in good shape.
Scott Group
Now you’re certainly bringing some fresh perspective, some fresh ideas. Just a thought, right? Do you have ever — do you ever think about, hey, we’ve got this met coal business that creates just earnings volatility. Let’s sort of reduce that volatility and not, we maybe lose a little bit of the upside and the way up, but not purchase not the risk on the way down. We’re sort of in this healthy range, around low to mid-200s, let’s sort of try — go back to our customers and try and lock it in. Is that something you think about?
Joseph Hinrichs
It’s a fair question. We’ve given some thought to it on a list of priorities of things we’re working on right now, that’s not making the highest priority list. Actually, what we’ve been really more focused on is getting more volume and with our customers who are seeing the service differentiation are talking to us about how can we get more volume flowing. There’s another mine coming on this year on our network. So we’ll look at everything, but that’s not something that we’re working on right now.
Scott Group
Okay. One more sort of near-term question and we’ll get to some of the longer-term opportunities. So I would just say we think is helpful to just help sort of get expectations where they need to be. Q1, excluding the insurance gain, $0.46, 61.7% OR, excluding that gain, right? That’s usually your seasonally weakest quarter of the year. Should we expect from that level, should we expect to see sequential margin earnings growth Q2, the rest of the year? How are you — how do you see the model playing out?
Joseph Hinrichs
Well, historical — as Sean Pelkey said in our earnings call, historically, second and third quarters are the better earnings or better margin quarters. So I don’t think there’s anything that changes that from a seasonality standpoint.
However, there are things still evolving, right? We talked about fuel surcharge is a lag. And so as fuel has come down, we have more benefit in the first quarter than we’ll have in the second quarter as an example. Met coal prices have come off a little bit more they were in the first quarter. So there are a few things that are — will change in the second quarter versus the first quarter.
But generally speaking, I think the trends are comparable. That’s one of the things we have to watch those on a year-over-year basis in all levels, even sequentially quarter-to-quarter. What are the things that are outside our control that are changing? And those are two of them. We’ve already talked about demurrage, but fuel surcharge is lagging. And met coal, while it’s also lags, we’ll see some effect of that if the prices stay down in the second quarter.
Scott Group
One of the offsets, though, in a good way is right, we had a lot of costs last year with service. Service has gotten a lot better. We start to see some of that cost come off in Q1. Is there more cost just from better fluidity that comes off in Q2, the rest of the year?
Joseph Hinrichs
Again, I think, Scott, as Sean mentioned this at the end of the first quarter earnings call, I think we should see some of that. We are still hiring a little bit. We’re trying to get to 7,400. We’re about 100 shy of that right now. So we’re still doing some hiring every week, trying to offset attrition and get ready for the summer months.
But the network is flowing pretty well. I mean obviously, we have incidents that occur on occasion, but I think, generally speaking, we’ve done more pay cyclic deals, which are not significant increases in cost, but are slight increases in cost. And then we have the fluidity of the network. And if we can keep the network flowing the way it is, we should be in pretty good shape.
Scott Group
So let’s turn to the network. Service metric is really good right now. Is the plan to — do we need to get service even better? Or is it from here, we just sort of let’s keep what we’ve got, maintain it. And then with that in mind, do we need to be — you said maybe 100 more people? Do we need to add more than that? Or is that — we get to that and then we’re sort of done on the headcount growth side.
Joseph Hinrichs
Yes. I think — so on the service levels, we always want to get better, but I think the highest priority is providing consistency and predictability over an extended period of time. So the customers get confident that we’re committed to these levels and that we’re going to be able to support them.
So the most important thing now for us is to sustainably do this over time. We’d like to get better. I mean, still — I mean, if you look at it, depending on the metrics and you look at the merchandise side, 85% to 86% of the time in the first quarter, we were there, that still means 14% of the time we weren’t there in the window that we were supposed to be. So — and they’re pretty big windows. I mean they’re not like trucking, which is usually a two-hour window.
So we have room to improve, and we should expect ourselves to improve. But the most important thing that we’re hearing from customers is we’re really happy with the improved service, just keep it going and make sure we can count on it.
On the manpower front, I wouldn’t be surprised if given what we’re seeing in some of the business, essentially, if intermodal comes back that we may need 100 more people or so, but it’s not a big — a significant number and it would be to support keeping our network flowing and also support vacation and whatnot. So I don’t see dramatic improvements or increases in headcount required to support more improvement or sustained improvement on the service side.
So we feel pretty good about where we are. It’s been a little struggle to kind of continue to grow the headcount because of attrition and hiring in the right spots. But we feel I mean says about where we are now. Same 400 is close to where we want to be. So we’re feeling pretty good about that.
Scott Group
So we had an intermodal panel yesterday with some of your channel partners. I ask what’s giving me range 1 to 10, what’s rail service right now? And they said, well, overall rail service right now is a 7. But, by the way, I would put CSX to 10. They said, but, right, all of our history says that volumes and service have an inverse correlation. As soon as volumes get better, service gets worse. And so I guess my question is, right, what — what are you going to do differently to ensure that whenever we get this volume recovery, right, that we can maintain the service.
Joseph Hinrichs
Yes. I mean I don’t think there’s a fundamental reason why there has to be that inverse correlation. I mean if you think about it, if you’re adding a few cars on to an intermodal train, it’s not going to dramatically change your network fluidity and should actually help your incremental margins. So I don’t understand why that’s happened in the past. I wasn’t here. But I think the key thing is the operational discipline and focus on the service metrics. And so it’s fundamental, and it sounds pretty basic, but it’s all about each yard, each terminal watching on-time originations and arrivals, and that’s — those are the building blocks.
If the trains leave on time, and arrive on time at the different destinations along the journey, they’ll eventually get there on time. And so it’s getting back to those building blocks. And if we keep that discipline and keep that focus, I’m really proud of our operating team, how they’ve been able to do this. There’s no reason why some — yes, if we had a 50% increase in volume, we’d have a problem.
But if we have a somewhat marginal increase in volume, the 10% that we — that’s been down, let’s say, intermodal, we should be able to handle that. And to be candid, our intermodal service over the last several years, maintained a pretty high level at higher volumes. It was the merchandise side that really struggled.
So obviously, they go across the same track, go through the same yard. So I’ll just reiterate what I said, there’s no fundamental reason why that has to be the case. I think we have to just make sure that we keep the disciplines that are working for us now if volumes come back on the intermodal side to support the service levels that we expect of ourselves.
Scott Group
So it sounds like in summer side, we’re not like we want more — we want a volume recovery, maybe a gradual volume recovery, it’s maybe a recovery, that huge snapback that could be tougher.
Joseph Hinrichs
Yes, because, again, if you need manpower, it’s hard to get it quickly, number one. And number two, the one thing that I’ve learned in my first 8eight months in this job is just how important it is to keep those yards and those terminals flowing. When things get gummed up, it’s like the airline industry, when you get people and equipment in the wrong place, and you can’t — it takes a lot of work to get it back into sync.
And so gradually, obviously, it’s easier to make sure that you can maintain that. If you bombard the system with a bunch of new trains, a bunch of — you have the risk of a certain yard or terminal getting locked up and then you’ve got the corresponding effects across the network. But for us, we’re watching all that every day. But we’ll take volume increases either way, and we’ll make it work.
Scott Group
But it sounds like you don’t feel like you necessarily need to do something very different that sort of limits the incremental margin on the way…
Joseph Hinrichs
Correct. We don’t. Again, I have a lot of confidence demonstrated by how they — how well they’ve been making the improvements in the last six, seven months with our operating team, Jamie Boychuk and the whole team, I believe that we can handle it and do it the right way.
Scott Group
And so just as I think about as not — when volumes start to grow and do you think, right, we’ll add headcount with that. Do you think over time that volume should grow faster than headcount as we add some cars to existing trains, do you think it’s more 1 for 1? How do you think about that longer-term algorithm?
Joseph Hinrichs
Yes. I think the volume can grow faster than headcount just because of the nature of — it doesn’t need extra — if you’re adding cars to existing trains, you don’t need additional headcount really to do that. But we want to make sure we’re growing headcount to support that as well. The nuance here that’s really important is that this is a service industry and a service business. It’s highly reliant on our employees to provide that effort.
And so making sure that, that balance of taking care of them and their needs in support of the service we’re providing is critical. So if we tip over where people aren’t getting time off. If they’re feeling rushed in the yard, we’ve got to add some people to help make that happen. But we still have very healthy incremental margins in that scenario. So there’s the nature of our business is such that the incremental margins are substantial.
Scott Group
And so you just mentioned employees like you’ve taken a leadership role here. Obviously, the whole industry, we’re paying a lot more. Now we’ve done some stuff with paid sick leave, like, are we in a place where like — are we in a healthy place — or do they — is there now, okay, we got this, we got this now we want that? Like is there — what’s the next thing that they want? Are we now in a place where like things are good again.
Joseph Hinrichs
Well, I wouldn’t say they’re good again. I think we’re in the early innings of a baseball game, but we made some progress, some substantial progress and important progress. There’s a long 100-plus-year history of Acromona’s relations between the companies and the unions and the employees in this rail industry. And — we believe in CSX. I personally believe very strongly that if we’re going to achieve the optimum results of our business, we’ve got to get our employees to feel value appreciated included.
And so the things we’re doing changing our attendance policies, the paid sick leave deals, which we led the industry on establish a template which are now progressing nicely. All those things are part of moving us forward. The union contract taking three years was a step backwards, having go to Congress to do that was a step backwards. So we have to continue to make progress. We start negotiations again at the end of next year on a five-year contract because we took so long to do the first one or the last one.
So I’d say we’re in early stages, but we’re making progress, especially at CSX, we’re making progress. But we’re hearing from our employees that they also like our customers, they want to make sure this is sustainable, that its — they were committed to listening and solving problems to be able to make it a place.
And it’s in our interest to do so, not just because they provide the service but because we need to attract and retain people in this industry to do the work. And it’s getting harder and harder to do that because the youth of our country don’t — they don’t think about these kinds of jobs when they’re playing video games or when they’re at home doing their homework. So we’ve got work to do.
Scott Group
By the way, if there are any questions, raise your hand. I’ll keep going. So it very much feels like this whole industry wants to start growing. And I talked to investors, they’re like, yes, but they haven’t done it, right? I mean I look at CSX, like your volumes have declined eight of the last 11 years, right? What fundamentally changes going forward that takes you from a down a little bit historical volume CAGR to an up a little bit volume CAGR. And is there anything that you see that’s specific to either CSX or the east that sort of says, “Hey, we can for about starting to grow, we can become a leader on growth”.
Joseph Hinrichs
Yes. I think there are a number of factors that help support us in that conversation. Our location, we’re in the East, the Southeast is where a lot of the distal development is happening on the nearshoring or onshoring or reshoring whatever words you want to use is helpful to us because it’s in the south — lot in the Southeast, which is where we’re based, and we’ve had a number of big wins there with our industrial development team.
I think on the intermodal side, we have to continue to demonstrate our service capabilities and continue to partner people to make that happen. There are other things like our acquisition of Pan Am, we see growth longer term in the New England region of our business as we get the Pan Am network where we want to be to be able to run the speeds and double-stack, et cetera, that we want quality carriers over time should be additive to our business as well with the solutions we’re providing there with the ISO tanks.
There are a number of things unique to CSX, our industrial development work. That being said, the fundamental improvement in service, sustainability of service makes it a lot easier to get with customers and say, okay, you can trust us now. We’re committed to this, let’s talk about what your needs are and you can rely on rail to provide those needs because we haven’t given them that confidence or that reason.
And so what we’ve been doing lately is going to customers and saying, okay, you see what we’re doing. We’re committed to it. Let’s do a whiteboard process where we get in a room and say, what are you really — how much do you move and where does it go and how can we be part of the solution. And we’re seeing more and more acceptance and even excitement around that because of our service levels.
So service begets the opportunity to talk about growth. But in addition, we have some unique things to CSX and on the Southeast part of the country especially that helps support us as well. And we’ve already have a number of wins, which you heard Kevin Boone say in our last earnings call that we think you can get one to two points of revenue growth from the industrial development wins in ’24, ’25 and beyond that’s also supportive.
Scott Group
Okay. So let’s — I’m going to assume we’re going to start to get some growth, okay? You’re a railroad. You’re going to get price. If we get volume and price, is there any reason why we don’t continue to get margin?
Joseph Hinrichs
There’s no fundamental reason why you shouldn’t see improved margin with growth because, again, the incremental margin is greater than the whole margin in most cases, almost all cases. Now the opportunity to dramatically improve margins from here is limited. That’s already at least at CSX and some other places has already happened. But as you said, you have — if you can show growth, you can have some small incremental margin improvement and return a lot of capital to shareholders, you can show strong earnings per share growth beyond your growth in volume and/or in price because you’ll be returning — as we have, you’ll be returning some of that excess capital to your shareholders.
Scott Group
I mean, right, so if you do volume price, a little margin and buyback, right, the pieces should be there to — or if you can sustain that, that’s a double-digit earnings algorithm. Is that…
Joseph Hinrichs
I’m not going to predict I’m not going to provide that guidance. But yes, that equation can work. And so we’ve shown the ability to improve margins. We’ve shown the ability to price certainly beyond inflation. We at CSX have shown the ability to start delivering much higher levels of service, sustainable now for five or months, and we’ll keep doing that. And we’re having — and we’re showing some wins and some merchandise growth volume — more merchandise volume growth, sorry. So — and Intermodal is where it is. So yes, those fundamentals should work for us and they should work for CSX in a strong way.
Scott Group
And so let’s keep going. If we get the volume growth, right, do we — does something have to change about the capital intensity or revenue grows, I’m sure CapEx grows, but does CapEx grow faster? Or do we sort of — can we keep this sort of 15%, 16% of revenue on CapEx side…
Joseph Hinrichs
Yes, we don’t see substantial capital growth beyond where, kind of where we are. Remember, we’re investing in quality carriers, ISO tanks, we’re investing in Pan Am, and we’re investing in — obviously, most of our capital goes in and investing in our network. I will say I’m very impressed and pleased with what the team has done over the last several years.
The CSX network is very — I mean, it’s not perfect, but it’s very healthy. We’ve got big projects like the Howard Street Tunnel in Baltimore and great projects in Chicago and stuff that we’re working on with our government partners. But generally speaking, we don’t see a significant increase in capital required to support growth.
Scott Group
So if the earnings come through the cash conversion should be very strong?
Joseph Hinrichs
It should be, yes.
Scott Group
Let’s just — we’re getting close on time. I just want to wrap up just on the DC environment. You’ve been very involved there. We’ve had some conversations. What if anything are you expecting out of this safety bill. It feels like we’ve had some progress taking some of the stuff on train length and train weight out. Is there more stuff we want to get out of this build? Do you think we’ll end up with a two-person crew mandate? What are you expecting from the safety bill?
Joseph Hinrichs
Yes. I think the Senate Bill is moving forward, and we think there are things in the Senate bill that aren’t good for the industry and don’t belong in that bill. The house is being more thoughtful, more waiting for the NTSB to give its comments and et cetera. So usually, it’s a Senate that takes more time and is a little more thoughtful. In this case, it seems like the house is where that’s happening. And so we think that’s productive.
We don’t believe — I mean at CSX, we weren’t pursuing a single-person crew or conductor on the ground as you know, but we don’t believe a two-man crew mandate should be in a safety bill. There’s no evidence of what happened has anything to do with how many people were in the crew. And we don’t know where technology is going to take us over time. So we don’t want to — but we don’t believe that should be in the bill, whether — but we’re not pursuing that.
There are other things like that, that are in the bill restrictions on automatic inspection and time standards and it gives a lot of authority to the secretary of transportation to have a lot of oversight, those are the kind of things we’re like we want to talk about. But there’s a lot of good stuff in the bill around tank cars, first responder training, some other things that we’re really supportive of.
So I think we’ll end up — we will definitely end up with a bill, I think, between both houses. I think it’s going to take a little more time as the house is taking its time to make sure it’s thinking it through. And in the end, I think the industry will be better off, because we’ve learned a lot from what’s happened working together on safety, et cetera. But there’s still more work to do in D.C. And we got to make sure that what we’re — that the Rail Safety Act is about rail safety and not about other agendas or other objectives that other parties have. So that’s what we’re saying focused on.
Scott Group
But do you feel like you’re making progress to that point of…
Joseph Hinrichs
I think we’re making progress I think there’s still things in the Senate bill that we think don’t belong in there, but we are making progress.
Scott Group
Okay. We’re going to have to wrap. Thank you so much.
Joseph Hinrichs
Thank you, everybody. Appreciate it. Thanks.