Greetings and welcome to the ArcBest Third Quarter 2020 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards we'll conduct a question-and-answer session. [Operator Instructions] And as a reminder, this conference is being recorded Tuesday, November 3rd, 2020. I'd now like to turn it over to Mr. David Humphrey, Vice President of Investor Relations. Please go ahead.

Welcome to the ArcBest third quarter 2020 earnings conference call. Our presentation this morning will be done by Judy McReynolds, Chairman, President, and Chief Executive Officer of ArcBest; and David Cobb, Chief Financial Officer of ArcBest. We thank you for joining us today. In order to help you better understand ArcBest and its results, some forward-looking statements could be made during this call. As we all know, forward-looking statements, by their very nature, are subject to uncertainties and risks. For a more complete discussion of factors that could affect the company's future results, please refer to the forward-looking statements section of the company's earnings press release and the company's most recent SEC public filings. In order to provide meaningful comparisons, certain information discussed in this conference call includes non-GAAP financial measures as outlined and described in the tables in our earnings press release. We will now begin with Judy.

Good morning everyone and thank you for joining us for our third quarter earnings report. At ArcBest, you will hear us talk about our vision. We'll find a way and that appropriately describes what this year has been like for us and what our employees are seeking to accomplish. I am incredibly proud of our team for fighting through a pandemic; weathering the associated recession and being ready to respond to increased demand as our customers' businesses quickly come back online. 2020 is an extremely unique year and the challenges everyone faced going through the first half of the year, sit in contrast to what has played out over the last few months. 2020 is also filled with good examples of customers utilizing our integrated solutions to their advantage, our transformation into a provider of choice, and a leader in the logistics industry is purposeful and also responsive to the complexities faced by our customers. An indication of our effectiveness in serving customer needs is our third quarter in October sequential revenue trends, which are some of the best in our history. We closed out the third quarter with 32% of our revenues from Asset-Light solutions and on a preliminary basis in October, that percentage further improved to 34%. Our October progress is even more encouraging when you consider that our Asset-Based business is growing at 9%. We are proud to serve our customers always, but especially during these volatile times. In addition to improving revenue trends, we are encouraged that our third quarter consolidated non-GAAP operating income increased 20% year-over-year and 82% sequentially and represents one of the best third quarter performances in our history. The solid execution by our employees is enabled by a number of technology and analytics advancements that increased operational efficiencies and improved responsiveness to…

Thank you, Judy and good morning everyone. Let me begin with some consolidated information. Third quarter 2020 consolidated revenues were $795 million compared to $788 million in last year's third quarter, which was flat on a per day basis. On a GAAP basis, we had third quarter 2020 net income of $1.11 per diluted share. This compares to $0.62 per share last year. As detailed in the GAAP to non-GAAP reconciliation table in this morning's earnings press release, our adjusted third quarter 2020 net income was $1.22 per diluted share compared to $1.02 per share in the same period last year. ArcBest's third quarter 2020 effective GAAP tax rate was 24.9% and on a non-GAAP basis, the effective tax rate was 26.2%. We currently expect our full year 2020 GAAP tax rate to be approximately 25%, while the effective rate in the fourth quarter may be impacted by items discrete to that period. Full details of our GAAP cash flow for the third quarter are included in our earnings press release. At the end of September, our cash and short-term investments balance totaled $351 million. Our total liquidity, including our cash and borrowing availability under existing facilities was $644 million. Our financial covenant ratios under our credit facilities improved during the quarter and continued to be in a solid position. You'll recall that in March, as a proactive measure, to increase our cash position and to preserve financial flexibility at the beginning of the pandemic, we borrowed an additional $225 million that consisted of $180 million from our credit facility and $45 million from our accounts receivable securitization facility. In July, we repaid the $45 million borrowed on the AR securitization, and in August, we paid back the $180 million on the credit facility. In late September, we paid an…

Thank you, David. What a difference six months has made. As people all over the country make their ways to the polls today, I can't help but think about what it means to cast a vote, and what an honor it is to be the recipient of one. In a very similar way, shippers and capacity providers do the same thing when they choose to do business with ArcBest. They choose ArcBest because they know they are going to get a good customer experience that includes solutions for all their logistics needs. Regardless of how unique a shipper situation may be, we have access to the right capacity and the will to find a way to get their goods moved wherever they need to be and when they need to be there. The same can be said for our capacity providers who trust us to match them with the loads they want when they want them. This focus on doing what is best for our customers as part of our customer obsession, and it is ingrained in the culture we have built here at ArcBest. It is also a driving reason behind why I am so optimistic about what the future holds for this company. Tremendous opportunity exists for us to sustain the momentum of the third quarter and continue to profitably grow our company by deepening our customer relationships, utilizing data and technology in our operations, and integrating innovative solutions in our services. It is the strength and abilities of our workforce and our leadership team that will seize upon this opportunity for growth as we head into 2021. And now I'll turn it over to David Humphrey to conduct our question-and-answer session.

Okay, Keith, I think we're ready for some questions.

[Operator Instructions] Our first question is from the line of Jordan Alliger from Goldman Sachs. Please go ahead.

Yes, hi morning everyone.

Hey Jordan.

On the cost side of the equation, I'm just wondering, if you could talk a little bit about some of the sustainability controls. I know you have to bring back people, but sort of exclusive of that. And as you look ahead to 2021 and the operating ratio, one assumes that the bulk of the industrial manufacturing recovery still lies ahead. How do you think about margin progression as we look into next year or maybe said another way, can we improve upon what you've already done thus far this year?

Well, Jordan thanks for the question. We certainly always strive to improve upon what we're currently doing. And I think the thing that has been really interesting to watch as we've seen this year unfold is, just the flexibility and adaptability of our employees and just the resources that we provide to customer needs in different environments. And so that's particularly encouraging when you think about what next year holds because we don't always know what that will be. And that's something that we constantly talk about at the company, just how difficult it is sometimes to know where things are headed to, but you commented about what's going on in the manufacturing sector, and we are encouraged by that. I think, yesterday's manufacturing PMI index was a positive. And typically, when we look out four to five months, that's impacting our results, and that's encouraging. And then also, we've commented on this call about the positives that come with the housing environment improving, and we are seeing sequentially some good trends on the retail side, although, I know, there's going to be some difficulty with some businesses there, but the e-commerce trends we're seeing are good as well and so we've got all that backdrop going on. And at the same time, I think within the business, we're seeing more opportunity for greater visibility of just the units of work that our employees are doing and how to better manage that or optimize that. And then the coordination that we see of the needs in the Asset-Based network or with our carrier partners to be able to match that up with the business that we have opportunities for with customers is really at a heightened level, and I'm encouraged by that as well. So, we're constantly working to try to improve and we see a lot of opportunity to use the foundation that we've laid here to do that, as we move forward into the next several months.

Just one real quick follow-up. The October strength in tonnage year-over-year, obviously very strong. But typically, though, as we go forward from here, I mean, November, December, I mean, [technical difficulty] year, so I'm just trying to get a sense of how to think about maybe a progression or is this a typical or atypical progression tonnage from here November and December?

Well, I'll take the first part and then David, I think, will have something to add. I mean, the October, when you compare that to September, the trends there for, I think, revenue shipments and tonnage are maybe the best we've had in a long time and maybe ever. And it's just a really, I think, interesting environment with certain areas strengthening. And again, some of that is because of the decline that you had in the second quarter in this pandemic recovery period, but I'll say that. And then, I think David will probably talk about some of the comparisons back to last year.

Yes, I think if you -- we had some generally easier comps and when you look forward into November and December. November being down, I want to say, around 11%, that sound right, David?

Yes.

In tonnage. Yes.

In tonnage, yes. Yes, I'm sorry. So, yes, it's -- there's a lot of luck that could happen. Obviously, there's an election going on and then the pandemic, but we're encouraged by the momentum that we're seeing right now.

Okay. Thanks a lot.

Appreciate it.

The next question is from the line of Jason Seidl from Cowen. Please go ahead.

Thank you, operator, Judy, David, David. Everyone good morning.

Hey Jason.

Hi Jason.

This is kind of piggybacking a little bit of what Jordan said. I mean, Judy, you brought it up. You said, this might have been the best October ever. And if you -- just looking on a sequential basis, you never have the same amount of tonnage -- total tonnage in 4Q, as you did in 3Q, at least, my model goes back 20-some years.

Right. I think that would be--

I'm not saying it, but you mentioned -- I think David mentioned that the normal sequential move in OR is up 200 points, but I don't think we're going to see that again, based on your tonnage levels and also the fact that, I think, David mentioned that you accrued $7 million for some of those payments for your employees in 3Q and only $4 million is going to be accrued in 4Q. How should we think about like a logical move on the OR 3Q to 4Q, because to me, I don't see it being 200 bps or worse given current trends?

Well, I appreciate your optimism, Jason. Yes. Yes. It's encouraging to see, I think, this -- what we're seeing in October from a revenue trend and if that momentum continues. I mean there's something there about that, is when you think about July, for instance, July revenue per day was down 6% versus last year's July. So, we're starting off in a good place, and the revenue per shipment trends are favorable, but as I mentioned, there's many uncertainties with the economy and the potential COVID impacts and political environment, but yes, I did -- as you pointed out, and you were astute to pick up some of those accruals that we have, but by and large, I think we're -- we've got some good momentum.

Okay. I was trying to fish out some direct commentary there. I guess, the other thing I want to look at, just conceptually, and you brought up where your purchase transportation is, and I appreciate that. A lot of the brokers that have reported or talked about 3Q being sort of the worst quarter they've seen in terms of the speed that the transactional market went against them for a lot of their contractual -- excuse me, the spot rate went against them for a lot of their contractual business. And so as spot sort of levels off and doesn't exactly tick the hockey stick up that it did in 3Q. Is that going to help margins in that business in 4Q versus 3Q?

In the Asset-Light business, I think, there's potential for that to occur as we're able to source our capacity at -- as that capacity pricing or as a market pricing to our customers is it catches up to that capacity pricing. That can happen. That's right.

Yes, well, the other thing that I was thinking about, though, just you think about elements that make capacity relax or tighten further. And one of the things that I'm interested in is the vaccine distribution and what impact that has and when that is and we really don't know. We know that our ground expedite business will likely play a role in that, but just as you were asking that question, I was thinking about what does that do to overall capacity tightness, for instance, in the fourth quarter. And that's an interesting thing to think about. So -- but I think what we think about with our Asset-Light business is, we're really trying to more, I guess, deeply penetrate the customer relationships that we already have and gain some business there with new opportunities, and we're at various stages of that with different customers. Whenever you've got a mature relationship, perhaps it's one thing. And as you've got a new relationship, it's another. So, as we grow, I think there will continue to be, particularly in truckload, some pressure on the margins, I think, in expedite, there's an opportunity for something better, but some unique things that are coming from this pandemic that caused me to, I guess, they have cautious optimism about that. That what I--

And Judy, do you guys have a contract to move the vaccine?

Well, no, but we're a source of capacity for that. And we're in conversations with different distributors and customers, and there's still a lot of unknown about the timing and the plan, but I would -- I'm mindful of that when I think about our ground expedite business and the readiness for that, and then again, the overall impact that it could have on capacity.

I think we all--

All right Jason.

Take care guys. Appreciate it.

Thanks a lot.

The next question is from the line of Jack Atkins with Stephens. Please go ahead.

Great. Good morning everybody. Thank you for taking my questions.

Good morning Jack.

Hey jack.

Hey Judy, hey David, hey David. So, I guess, Judy, going back to your comments in your prepared remarks about the productivity gains and the investments that you guys have made there in automation to drive improved network efficiency. I mean, when I kind of strip out the $7 million in bonus costs from the third quarter, you guys are kind of getting back to that third quarter 2018 OR at a lower tonnage level. So, can you maybe kind of walk us through where you are in terms of those automation and productivity investments? And sort of what's to come in 2021?

Yes, I mean, I think when we step back and look at the Asset-Based business and what has transpired, we've been building network optimization software for the last two years, and we completed certain phases of that in the fourth quarter of 2019, and we're starting to see that in the numbers, whether it's light lane, software or load point planning, those kinds of projects have really helped us, and we've got more of those in the hopper, as we move forward. The interesting thing, too, is just the close work with yield on some of this transactional LTL business, really has been responsive to customers and the channels they want to do business, but for instance, in the third quarter, it helped us reduce empty miles by about 16%. And it's also helped our city route density. And again, I commented earlier about the productivity improvements, which were, to some extent, from this, but also, I just think our software and our tools to more tightly manage the activities there has helped us. We introduced a mobile dispatch system that was implemented late in 2019. And it's helping us to better communicate with our drivers through messaging and automated alerts, and it's also improving our customer experience. So, we have really seen some impact, positive impact of those kinds of things. And again, I'm most pleased about the coordination of our yield decisions and addressing customer opportunities, while at the same time, creating operational efficiency. All that has, again, played out in a year where we've had some extreme ups and downs in business because of the pandemic.

Absolutely. It's really encouraging to see that. So, I guess my follow-up question, if I could ask about yield trends. When I look at the commentary on contractual rate renewals, it was a little bit of a deceleration there versus what you saw in the second quarter versus some peers that saw an accelerating trends and obviously, everything we're hearing about capacity in the LTL that works out there that's very tight. Could you maybe talk about what you're expecting to see in terms of contractual renewals as we move into the fourth quarter and into 2021? Would you expect to see that number accelerate?

Well, I think, when we look at what happened in the third quarter, I'd just remind you of some of the conditions that our customers were in. I mean, we had a lot of businesses that during the second quarter close or were at a place where they really weren't in normal activity or normal modes of things. And so what we were doing was being patient and waiting for some of the contractual renewals that arose naturally during, say, the second quarter months. And some of those were deferred or pushed out into later months of the year. And some of these companies are not in a great position themselves. And so all of that is in mind, plus, I think, on top of a lot of actions on our part with CMC and other price improvement actions that we've taken over the years, to which, I believe, have been appropriate to make sure that we're getting paid for the space that's used on a trailer, but all that's in place, and then you have the environment of the pandemic and what that means to those negotiations. And so I wouldn't take a lot of instruction from the third quarter's results just by itself. I think you have to look at what we do over a longer periods of time. And you think -- I think you would agree that we're very disciplined in this area. And I would continue to expect us to be. And we're always reviewing the profitability of our accounts and the opportunities that we have, but we also know what a good long-term customer looks like, and we appreciate having them, and I think that, part of that was present as you look at the third quarter results.

Jack, we'll move this along.

Thank you, Judy. Thanks David.

Thanks a lot. Appreciate it.

The next question is from the line of Chris Wetherbee from Citi. Please go ahead.

Thanks. Good morning guys.

Hi Chris.

So, wanted to touch maybe on the resources and headcount in particular. So, David, I think you mentioned, that you are generally able to sort of hire the people you wanted to. And I guess, maybe getting a little bit more specific for 4Q. Can you give us a sense of sort of what you need for the fourth quarter in terms of headcount and maybe how that kind of factors into that sort of historical progression seasonally of OR from 3Q to 4Q?

Well, I think the -- as you saw, and as I mentioned, we had some elevated PT to handle. When you think about these business volumes that were really volatile, in terms of the decline and then the rapid increase. And the other interesting thing about the way that business came back is that -- it's not even across our system. So, in other words, we have certain geographic locations that have a bigger resource need and bigger business volume return than others. And so when you have that sort of imbalance across the network, it requires us to use some outside resources just to serve our customers and serve areas. And so -- and it's easier or to find appropriate people in different places. And certainly, the pandemic has put a challenge on just our normal recruiting efforts, we'll just see...

Yes, well, and to that point, we had, I think, at the highest point, about 1,000 of our labor employees on layoff. And today, that number is less -- probably around 100 or so. But to David's point, one of the statistics that we gathered in advance of this call was his: 72 service centers experienced double-digit growth for allocated weight and 53 service centers experienced double-digit decline. More than 50% of our locations experienced double-digit year-over-year swings in their business levels. So, that's a part of this whole story that's really interesting. And so I think when we're looking to hire, I think it's in a lot of places, but those areas where we've had the declines, not as much. There's not as much of a need there, as we move forward. And certainly, the business levels are ahead of where the hiring has been in terms of overall employee count, and you see that reflected in our purchase transportation utilization, but a lot of that issue is because of this imbalance issue that we've seen. So, we're trying to work through a lot of things here. Thank goodness, we have the ability to use rail and road power to be able to help us balance and we'll probably see less of that, as time goes on, and as we hire, but it's a process that we have to go through to get more in balance, including our customers getting more in balance.

That's right. And those would be -- kind of back to your, I think, your question in terms of incremental cost sequentially. It's -- those, I would view more as offsetting. So, as we were able to do that work internally, it may be actually an opportunity for us to lower overall cost per shipment.

Yes. It's certainly more -- I think more stable and more ideal.

Hey Chris, we'll move this along.

Not a problem.

Appreciate it.

The next question is from the line of David Ross from Stifel. Please go ahead.

Yes, good morning everyone. I'll try to avoid Humphrey hook.

The clock is ticking.

I know, I know. I want to just talk about the network. Now, that it's not a downsizing exercise and tonnage is growing again. Where does the facility count stand today? And do you think that you're going to be up or down on number of terminals in 2021?

Dave, I think there's probably relative stability there, is what I'd say. I think our current count is maybe 241 facilities, something like that, but I think there's relative stability there. One of the things when you're -- you've been in business for almost 100 years, you really have more of a longer-term perspective on some of these things. And certainly, we're going to react if we see sustained business growth that causes us to really invest in those resources, but until we see things, I think, become more settled through this pandemic period and that sort of thing, it's a little bit hard to see what is going to be continuing, but I like being in a growth mode, and we're focused on that, and we have some room to grow. Certainly, I think it was mentioned earlier that we're at lower tonnage levels than we've run through a similar system. And so -- but as I mentioned earlier, with the imbalance of where we've seen growth and where we've seen declines in business, some locations are certainly tighter than others, and that's a part of this equation, too.

So, David, as we look at the 2021, is there any need for, I guess, lumpiness in the CapEx? Any preliminary thoughts on facility expansions that may take that CapEx number higher than it otherwise would be or should it be more of a replacement year with the fleet?

Yes. And I think, that's a good question. We will -- as we normally do, provide an update on our CapEx plans for 2021 and when we released our fourth quarter results. I guess to maybe think about that in terms of -- when we started 2020, our original CapEx plans were -- estimate was around $135 million to $145 million. And so at the beginning of the pandemic, we lowered that from those original plans and our current expectation is around $90 million to $95 million for this year. So, I would think of that in terms of, we want to maintain our replacement cycle on revenue equipment. We want to continue our other maintenance items and strategic investments. So, probably a higher level than 2020. And maybe a point to gauge would be that estimate that we provided at the beginning of the year is a starting point, but it will be to finalize those plans and you think about that and then as Judy said, there's tightness in certain areas. And real estate is certainly always a consideration as we develop our CapEx plan.

Excellent. Thank you.

Thank you, man. We'll see you.

The next question is from the line of Ken Hoexter with Bank of America. Please go ahead.

Hey, good morning.

Good morning Ken.

Hi Ken.

So, just maybe following up on the capacity question from Chris, but if you maybe talk about what capacity you have to absorb that 10% growth in October, and if that continues, how do you adjust? I just asked that because Dave noted that PT cost will subside. And then why is truckload down, given the tight spot market? I thought you get the slowdown from that in the PT cost?

Yes, interesting question. Well, I think whenever we look at some of our labor planning, for instance, our shipments are -- have not moved up as much as the tonnage or the weight. And so I think that helps us from a resource ability to handle that. And again, we already talked through the elevated purchase transportation, which is a combination of rail and road power that we're utilizing there. And I think that's an interesting thing to think about as we move forward, but I feel like that we can handle that okay. And that -- remind me of the second part of your question?

The truckload in this kind of market, doesn't it usually get the spillover?

Yes, the truckload. Yes, it is an interesting thing that we're experiencing here. We're actually seeing, I think, an opportunity to have more LTL transactional shipments, which we are focused on and bringing on some new relationships and then also servicing some existing ones and I think it really is more a story of the availability of that than it is the truckload spillover. So, we just wanted to be sure to point that out, as we're looking at year-over-year and we just see that the more optimized answer for us because of the network needs that we have and the empty capacity needs that we needed to fill, was to utilize those LTL transactional shipments, which we feel good about the overall results that, that had and how that coordinates well with the published business that we have.

And then real quick for Dave Cobb, your thoughts on data tech investments. Are we seeing that scale if CapEx is staying low here?

Well, it was -- I think Ken's question was about the tech investments -- the spend on tech investments.

Yes. No. So, we're fully invested there and we want to continue to do that. I mean that's -- we're seeing the results, I think, of investments that we've made over the years in our results. And so we continue to invest in both software and hardware items and I think that's going to be in our CapEx build, as we plan for 2021.

Yes. One thing, Ken, that I would say is that our tech spend as a percentage of revenue, we feel like is on par with other companies that we compete with. And -- but what's interesting about it is, we feel like that more of our spend goes to what we would call strategic investments rather than just run the business. That's what our comparisons show. So, we're really happy about that, and we feel like that's a great thing for advancement.

Thanks a lot Ken.

Appreciate. Thank you very much.

The next question is from the line of Scott Group from Wolfe Research. Please go ahead.

Hey. Thanks. Good morning guys.

Hi Scott.

Hi Scott.

So, I just want to quickly go back to that last point about truckload spillover. I thought the October update is that TL spot shipments were up double-digits. Is that not truckload spillover?

You're talking about our in the Asset-Light piece of the business?

I thought, I'm just reading in the double-digit percentage increase in truckload rate at spot tonnage moving in the Asset-Based network in October.

Well, that is more of our U-Pack business. We -- the U-Pack business that we do is truckload rated.

Okay.

So, it's not what -- I think when the thought is about truckload spillover, that's not conceived and that thought is that it would be U-Pack moving business.

So, yes, that's what's driving that.

Okay. And then, Judy, just a couple of bigger picture questions. If we look over a 10-year period, I think you had -- never had an OR better than 97 in the LTL business. And now we've got three years in a row, 93 to 94 on OR. What do you think is the right -- is there a new range to think about for your LTL margins through a cycle? And then just separately, I saw a presidential memorandum around pensions. And just wondering your thoughts there and what is the good outcome for you guys to think?

Yes. Well, I think that's certainly a part of that OR range. We know for sure, but one of the things that we've noted is that we have had nearly 350 basis point improvement in the operating results for the Asset-Based business since 2016's recession. And I think we would all agree that this period here is certainly more difficult to navigate than what was there in 2016. So, that is really, I think, noteworthy for us and does, I think, create a new range of thinking on the operating performance for the Asset-Based business. And I mentioned earlier some of the visibility and management tools and optimization as well as the coordination with yield strategy in terms of the best business that we could have in the network. And I really think that, that's a strong contributor to the improvement there and we've always had an opportunity for more consistent results. And I think that's what I'm very focused on is trying to create greater consistency, whether it's quarter-to-quarter, in terms of seasonality in the business, or if it's in the cycles. And I think that's my objective. And I think if we were to accomplish that, I think we could see further improvement in the operating performance for the Asset-Based business. And then on top of it, it would be more consistent. And again, technology, analytics advancements, visibility and then great execution, all of that comes together as a part of that story.

Okay. Thank you.

Thanks a lot Scott. Appreciate you.

The next question is from the line of Todd Fowler from KeyBanc. Please go ahead.

Great. Thanks and good morning.

Morning Todd.

Hey Todd.

Hey good morning everyone. Just on the thoughts on pricing and really kind of dovetails in with what you just talked to Scott about on being more consistent. Because you guys have done just a really good job throughout this cycle in being disciplined with pricing. How do you think about the range of contract renewals over the course of the next cycle? Is it something where maybe it's not as high as what we've seen in the past because you've been more consistent? Or is there still the opportunity to go out and get high single or low double-digit contract renewals on some of your freight. And then if you could also just dovetail in some thoughts on the GRI. I know you guys typically don't need, but is this an environment where we could see a sooner a GRI, just given some of the freight dynamics? Thanks.

Well, I think when you -- we think about the contractual renewals, I think the -- I don't have it in front of me, but the history on that would show you or tell you that it would be pretty unusual to be in those high single-digits. I think that's pretty unusual, although I think we've made a lot of progress over time and you look at maybe some comparisons that we would have back to pre-2017, the cubic minimum charge action that we took, it would -- the improvements that we've had would be pretty dramatic, but I think that when we look at it, it's a combination of business that's good for us and works well for us and the network as well as being responsive to what customer needs are. And I think for the period of time that's upcoming here, I think companies or businesses in general are not in their optimal range of profit margins. And I think what's going to be on their minds is that; they've got to continue to keep their logistics costs in check. And that's one of the reasons why I like our strategy as well as I do because we're able to bring a variety of solutions to a given circumstance and bring that together in a way that perhaps overall, reduces logistics costs for our customers, but also gives us the payment or the increased level that we need for a given solution. And so -- but I do recognize that over longer periods of time, logistics, I think, for our customers is a strategic weapon for them, and I think they're very focused on it. And I think they've seen pretty good size increases, and this year is going to be a very disrupted year for them. So, they're going to be focused on trying to get to a better place. And that's, again, why I like our integrated solutions that we bring to bear or that we offer, that creates greater consistency in business from a customer, which we always benefit from, but it also helps us accomplish both of those goals, one that's really customer-focused and the other that's focused on our improvement in costs and profitability.

Yes. And I'd just add, Todd, I think you hear it in Judy's voice, just the interest in -- from the customer's perspective, and that's really our vision and reason why we see a long-term sustainability in our program here.

Yes. Okay. That helps. And then just any thoughts you care to share on a GRI would be great? Thanks.

Yes. The GRI, yes, David, do you want to comment about that?

Yes, just -- as a reminder, we had a 5.9%, back in February of, I think, around February 20--

It's late February.

Yes -- of this year. And then the previous February -- early February, we did another one or did the one before that. So it's -- what we're always -- our yield folks are always monitoring the customer relationship side of that. So let's -- to try to determine when it's the right time for a GRI. And we're typically not going to be the first in the marketplace to announcement, but at this point, we haven't made any decisions about that timing. And so we'll evaluate input from our sales group and their discussions with customers. And as Judy mentioned, all this disruption that our customers are experiencing, we want to evaluate that and consider that in all these decisions.

All right, fair enough. Thanks for the time this morning.

Thank you.

Thanks a lot Todd.

The next question is from the line of Stephanie Benjamin with Truist. Please go ahead.

Hi, good morning. Hi Judy, hi David, hi David.

Hi Stephanie.

Hi. I wanted to talk a little bit about the Asset-Light margin improvement. I think you guys demonstrated some pretty efficient cost controls, particularly, given the higher purchase transportation costs. Could you talk a little bit about the sustainability of those cost controls, how we should think about that, as we go into the fourth quarter and in 2021? And just any efforts you have made -- I know a lot of efforts on the Asset-Based side to improve the margin profile, but I'd love to hear what's been going on behind the scenes on the Asset-Light side? Thanks.

Yes, I would just say that we're -- I think what you see there is some reflection of our technology and how we're doing a number of things systematically in digital tools that we put in place, Stephanie. And so that's helping us there. And we want to -- our focus is to sort of minimize the transaction cost related to those loads. And so it's good to see that. And we've got a long ways to go there. We've got efforts around, just this full back-end touchless sort of transaction that we want to get to. And we've made some advancements, but we've got some ways to go there, I would say. Again, shipment visibility and just automating that tracking for our customers and carriers in connecting those carriers electronically with our loads and all those initiatives have advanced, but--

Yes, I've got another example that I think is just worth sharing is, we're using AI to read e-mails and to categorize e-mails and that helps us with acting on them quicker, it helps us with the customer experience, but it also, for instance, if there -- if it's an email that's directed at a document that's needed, we can deliver that without a human being involved. But -- so that's an example of what we're doing that is -- I think, automation or at a minimum, it's enablement of our people, but we still strongly believe in the value of the human involvement in our customer relationships, but we're trying a number of things to enable our people better and to have the more routine be addressed by a technology answer and where it's more complicated or where the human intervention or involvement is important, we're doing that as well.

Yes and then -- and just on the -- just attracting more shipments, that's an area that we're also looking at growing. I mean, we've done some of that, but -- so from just obtaining those customer quotes and booking those through our APIs and through our Arcb.com connection, that's an area that's going to hopefully advance as well.

Our understanding, too, of customers and the channels they want to do business in is advancing. And we're trying to direct our resources in an appropriate way.

We see a lot of opportunity there for that piece of the business to grow.

Got it. Really appreciate all the color. Thanks so much.

Thanks Stephanie.

Okay, Stephanie. Thanks a lot. Well, listen, that's all the folks that we've got lined up for questions. So, I guess that ends our call. We want to thank you for joining us this morning. We appreciate your interest in ArcBest and this concludes our call. Thanks a lot.

That will conclude the conference call for today. We thank you for your participation, and you can now disconnect your lines.