Ladies and gentlemen, thank you for standing by, and welcome to J.B. Hunt's First Quarter 2020 Earnings Call. All lines are currently in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] A replay will be made available after today's call on the company's Web site at jbhunt.com. As a reminder, this call is being recorded.It is now my pleasure to hand the call over to Mr. Brad Delco, Vice President of Finance, and Investor Relations. Please go ahead, sir.

Good afternoon, and thanks for joining us. Hopefully, everyone has had an opportunity to review our earnings release that was issued earlier today. If not, you should be able to access the release on the Investor section of our Web site at jbhunt.com.Before I introduce the speakers on today's call, I would like to take some time to provide some disclosures regarding forward-looking statements. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates, or similar expressions are intended to identify these forward-looking statements. These statements are based on J.B. Hunt's current plans and expectations, and involve risks and uncertainties that could cause future activities and results to be materially different from those set forth in the forward-looking statements. For more information regarding risk factors, please refer to J.B. Hunt's annual report on Form 10-K and other reports and filings with the Securities and Exchange Commission.With that out of the way, I would like to introduce the speakers on today's call. This afternoon, I'm joined by our CEO, John Roberts; John Kuhlow, our Interim CFO, Chief Accounting Officer, Controller, and SVP of Finance; Shelley Simpson, our Chief Commercial Officer, and President of Highway Services; Nick Hobbs, our President of Dedicated; and Darren, our President of Intermodal.At this time, I would like to turn the call over to our CEO, Mr. John Roberts, for some opening comments. John?

Okay, thank you, Brad. Continuing with our format of opening remarks, let me start by thanking the J.B. Hunt teams around the country for the tireless commitment and hard work that has occurred and will continue in response to the conditions we've faced during this pandemic, and in particular, I want to recognize the efforts and sacrifice of our driving forces and our maintenance teams. We have had virtually full staff show rates every day. As you all know, drivers and maintenance teams cannot work remotely. Lastly, I wish to recognize the work of all office personnel in making a swift and effective adjustment to remote-style work to support our drivers and customers. On behalf of the leadership team, we greatly appreciate you all.Obviously our commentary on this quarter and the balance of this year will be disrupted by the impact of the COVID-19 situation in many ways. Please be advised that senior management across the company meets via conference twice daily on all macro issues relating to staffing, human resources' safety, and customer dynamics to stay very current and agile. We clearly cannot predict the timing or depth of the coming cycles, but by covering this data frequently we do get a sense for direction and potential magnitude of change. Our views on the current situation include focus on capital deployment, margin recovery, cost saving levers, prior recession performance, recent weekly-monthly performance trends, cash flow generation, CapEx projections, balance sheet strengthening and liquidity preservation, portfolio exposure, and recovery trends. We will touch on these topics and others as we review our work with you today and in the coming calls we will have.In all, we see the environment showing near-term disruption and turbulence, but expect the longer-term to present opportunities to capitalize on many of our existing priorities, including…

Thank you, John. As John mentioned, the team is going to cover specific on the segment results. So, I'd like to provide some comments on our approach to addressing the pandemic during the quarter and more importantly, going forward. We obviously entered the first quarter of 2020 with a very different expectation and what ultimately transpired. While the pandemic offers a level of uncertainty not seen in many years, J.B. Hunt is essential to the recovery, and our focus remains consistent, which is to sell for our customer's needs.We are confident in our balance sheet strength and liquidity position. Our target leverage ratio is one times EBITDA, which is where we landed at March 31. We're not afraid to go above this target in the near-term if conditions warrant, and we have the credit resources to do so. We ended the quarter with approximately $48 million in cash, and we currently have zero drawn on the revolver, which has $750 million of borrowing capacity, and an option to take that up to $1 billion. We remain confident in our ability to access cash, given the strength of our banker, and we maintain close communication with that group. In addition, we intend and expect to emerge from the current economic environment with our investment grade rating intact.With respect to cash flow generation, outside the risk of declines in the freight market, we view our largest risk going into the second quarter around our customer's liquidity and ability to pay. We monitor working capital on a daily basis and are in frequent communication with our customers and providers. We're beginning to see an increase in certain customers reaching out to discuss liquidity concerns, and while we understand their liquidity issues, we have to enforce our terms that we have agreed to. Our…

Okay, great. And just to briefly follow-up on John Roberts and John Kuhlow's comments, I thought it'd be worth providing a little more detail in investor speak with regards to the quarter, and what challenges and opportunities we see ahead in what is likely to be a dynamic freight market.In our Intermodal business, we've talked about network imbalances for several quarters, and that trend continued with weaker imports into the West Coast. In some instances, we had stronger demand in backhaulings relative to headhaulings, which puts pressure on revenue per load metrics, as well as network fluidity. We anticipate network imbalances to continue, as well as volume pressure from both demand trends and competitive pressures, particularly in the East with declining truck rates, and lower fuel prices. We continue to monitor the flow of goods out of Asia in order to most effectively planned capacity needs on behalf of our customers, and because we're anticipating the question, we will go ahead and knock it off the list and provide our Intermodal volumes by month. January was plus seven, February was plus eight, and March was plus five. That said, we did see a more meaningful drop off in volumes in late March, which has continued thus far into April.In Dedicated, this business was built to withstand the severe ebbs and flows of demand cycles, and we acknowledge that we may have an opportunity to prove the strength of our model in the near future. That said, we should all recognize that DCS is not 100% immune to economic cycles, and we will see some impacts to the business that I'll let Nick discuss in more detail during Q&A, but in short, we feel confident in our ability to service our customers with the high level of service they've come to…

Certainly [Operator Instructions] The first question will come from the line of Chris Wetherbee with Citi.

Hey, great, thanks and good afternoon, guys. I guess maybe starting on the Intermodal side, Brad, thanks for the helpful color on loads per month in the commentary around April. I guess I know it's difficult to answer the question, but if you think about sort of the pace of what we've seen through the first two weeks of April, can you really give us some sense of what the magnitude of the drop-off might look like so far, and I guess in addition to that, when you think about Intermodal, maybe a little bit of color on sort of the percentage of the customers that may still be sort of operating and maybe what's kind of shut down as it stands currently?

Okay. This is Darren. So, we obviously knew this question would be early on. So, when we came out of March, there was an impact to import volumes on the West Coast as a result of the slowdown of exports from China or the China side of a slowdown based on what was going on in China. As we've come out of March and we're in to April, we're experiencing meaningful declines in volume probably to tune of mid to high single digits. As we get into what we're learning about the future, we don't have visibility into what probably the back half of May and June represent, but certainly for the next three to four weeks I would expect that trend to continue. And just my opinion and my opinion alone, I mean I would expect that the volumes in Intermodal to be in the double-digit negative for the quarter.

Okay. Okay, that's helpful. I appreciate that. And then maybe switching gears a little bit to the ICS side, and trying to just understand the strategy around 360 as we go through this process of turbulence over the next several weeks or months, I guess, depending on how long it lasts, are there toggles on the spending that we might see come through this where you'll preserve liquidity and sort of hold off on some projects that you wanted to -- or investments you wanted to make. How do you think about that in the context of what's going on with COVID?

Yes, so just as a reminder for us. Our investment was really in three areas that Brad alluded to. We have focused on our people side, which I think we have done a good job watching our people costs as we came through March, and are even watching that coming in to April. We also invested in the technology spend, and those projects are not one or two-month projects; those are projects that are planned out over a longer period of time. And those projects we believe are critical in helping us create a more efficient transportation network. That is our focus. We will continue that plan from a technology spend and have confidence based on some of the data that we're seeing from both customers and carriers.Finally on the scaling part of the process, that was really an acceleration of our shipments and revenue plan with our customers and with carriers. And as those are onboarding our ability to know exactly which customer or carrier should be connected at which time was really the risk that would happen and the association to that. For us, coming though COVID-19, we really -- if you think about what we invested in total, we invested about 77% in our scaling of the business. That was about 35% over planned. I talked about on the first quarter earnings release that January was constrained on the supply side and unusual activity the first two weeks, and that created pressure from a margin perspective -- unexpected in January. February did come to more normal, and then certainly March had the most pressure on it from a margin perspective in total. So from our plan, we did a nice job from a people perspective being better than plan in total, offset by worse margin and a slight miss to our revenue plan in total.

Okay. Okay, that's helpful. Thank you very much for the time, appreciate it.

Our next question will come from the line of Justin Long with Stephens Inc.

Thanks and good afternoon. Maybe to follow up on Intermodal, you addressed the volume side, but I'm curious how you're thinking about Intermodal pricing in this environment from a strategic standpoint. Do you see the downturn as an opportunity to leverage the scale and structural advantages of the network and maybe get a bit more aggressive on price to take share, or given Intermodal margins are below targeted levels going into this downturn what would you say you're more focused on trying to hold the line on price going forward, just curious how you're thinking about that balance over the remainder of this bid season?

Well, Justin, I mean you used the term, "Balance," and that's exactly how we think about it. I don't believe we have any one specific game plan out there that says based on the downturn of the demand for shipping we need to go take share. That's not necessarily our approach. Would we be opportunistic with customer opportunities when that business is something that would be beneficial to our network? Absolutely, but I would think we would have been equally opportunistic with that opportunity had we not been in any kind of a downturn. So I don't want to -- I would not suggest that we have changed our philosophy. Certainly we are communicating with our rail providers regularly, and when the opportunity exists, if it ever did, and we could look at reduce our cost in some manner that allowed us to offer a little bit more aggressive pricing where it wasn't about a margin sacrifice then we would certainly look to do that. And those -- again, all of that happens one customer, one proposal at a time.

Okay, that's helpful. And then secondly, maybe following up on the comment that John made in the prepared remarks around the risks from customers' liquidity, is there a way to think about the percentage of your customers or percentage of revenue that you view as a risk on that front? And maybe, Nick, we could kind of hear from you in terms of the mix of DCS business, how it breaks down by end market and the size of those customers as we think about that risk.

So we have evaluated what part of our customers move essential and nonessential goods in total and by segment. And our concern around the customer base in total, we have had communication with some customers that are having good conversation and calling us. Our bigger concern are customers that we're not hearing from, and so that has been, over the last several weeks, a main objective of our sales organization to really lean in and work closely with customers. We are having regular conversation daily with our customers just to make sure that we're staying on top of that. I do think it's a risk, but I do think that we're talking to customers on a regular cadence, and so far I don't see any surprise there.

Yes, and so far as our mix of business, I think you clearly see, particularly once this pandemic hit us, our flexibility to move assets around from some of our customers that were more impacted than other, essential versus nonessential, some of our retail apparel, those segments were down 11% or so, but food was up 16%, home improvement 21%, office furniture was just falling off basically, and some automotive suppliers was down as well. Our Ag was very consistent. So, we've got a very diverse portfolio. And you're going to continue to see that as we move forward. And so we were able to move some of those segments around for the -- they may have been shut down or they may be slow, we were able to move over -- on an average we've moved about a thousand trucks a day from their base accounts over to others.So, within Dedicated, we've repositioned any assets that where the customers have been slow over to where our customers are very, very busy. And again, that's something when you operate as a private fleet you struggle with, you don't have another outsource. But that's the advantage that we bring to a lot of private fleets. They have the same control and service with us and great visibility with the flexibility to move some assets.

And then on -- just to follow-up, Nick, on the terms and payment and that kind of thing in your business, are you seeing similar dynamics to what Shelley is seeing?

Yes, I would say we would see more -- we see the same. When I get over into Final Mile we're a little on the furniture side. Those are more dramatically impacted so the volume on the furniture folks is up a little bit more.

And I just want to emphasize too that the conversation that we're having with customers is very objective and crisp around how we, as John said, how we are set up pay our vendors. So when we get in to talking through extending terms, it's really not conducive in this line of work as it might be in others, but for us it's not really something we're supporting right now, and now getting good response.

Yes, I would just add, I think our customers understand the necessity of us keeping our drivers and maintenance employees there on the frontline ready for our customers. That has been viewed favorably from them. As well as we did change our payment terms for the carry community from a truckload space. So anyone that moved a shipment in Carrier 360 in the month of March, we have moved up their payment days to only pay in seven days. So we're trying to get them cash more quickly. We've explained all of that to our customers. They've been very receptive so far. We're just trying to be offensive, be in front of it, and make sure that they understand what we're doing to help.

Great, that's all really helpful. I really appreciate the time.

Our next question will come from the line of Scott Group with Wolfe Research.

All right, thanks. Good afternoon, everyone. So, want to start with you, Darren. Is bid season still happening and maybe can you share some of the results that you're seeing? And then if volumes are down in the second quarter double-digit, so year-over-year it's -- I guess it's down double-digit sequentially as well. What does -- any way to help us think about the margin sensitivity there and how much margins can be under pressure?

So, okay, I'll answer the bid season question. Certainly bid season is ongoing. We have had -- we, really prior to a lot of people from the world going to work from home, we had completed pricing on about a third of our business, maybe a little bit more than that, and that the results of that first [indiscernible] were probably about what we had expected them to be before any of this challenge to the economy had taken place. While we for the last four weeks, we have a handful of customers that are -- have exercised a bid, they've received results, but they're not in a good spot to implement that bid and they've delayed the start of it. Some of those have communicated maybe a delay. An example would just be a May 1st to a June 1st delay in new pricing. Some of the customers have effectively said, "We will delay indefinitely until we can give you a different answer."We have a handful of customers that are asking us to go faster, and in those cases the reason they're going faster is they're actually -- they're shipping demands may actually be increasing for the second quarter, and they're looking to secure capacity and know that they've got the ability to do that. So for the most part, I would say that we have the -- the bid season has been what I would have expected it to. Now, every year we may price a project work for a host of different customers that are heavily involved in spring activities, and some of those kinds of projects may just not occur this year in Q2. So there's shipment volumes historically that are probably -- frankly they're just not going to ship, they're not going to happen. It's…

Okay, and then for Nick, so when you talk about repositioning trucks in Dedicated from guys that are shut to guys that are open, I guess who pays for that, and then, to the extent that you have customers that are not operating right now and you can't reposition those trucks, do they still pay you right now, or I'm not sure how that works?

Yes. Well, first of all, in Dedicated, all of our trucks are working. So, we've got them all moved around. They're supporting Intermodal in some places, but in other accounts, it's the other account that is surging up, they're looking for equipment, and so, we bring in other Dedicated. So, example, our grocery businesses, we serve probably nine or 10 different grocers. Our business is very, very robust, and so, basically can't handle it, and if they're up 16%-20%, we'll bring those trucks in from other accounts, and so, the account that is busy is the one that pays for them, and then we give a credit back to the other account, where if they had a private fleet, they'd be paying that driver pay and the cost of that equipment, and so, that's all set. So that's how that works.

Okay. Thank you for the time, guys.

Yes.

Our next question will come from the line of Jordan Alliger with Goldman Sachs.

Yes, hi, everyone. Just a question on Dedicated, can you talk a little bit -- yes, I think you alluded to it, maybe I missed some of that, on the -- and maybe it's hard to get a gauge for sure of your thoughts on truck adds to that business as we go through this year, given all the uncertainty, but maybe another way to think about it is, you know, going into the year, you're presumably talking to some new potential accounts, new potential business, have you seen it adding in instead of closing opportunities right now, or could you give any color on that? Thank you.

Yes, I will do that. I will just tell you that we were off to a really good start. In Q1, we signed contracts on 350 plus trucks. So, that's a very good quarter for us. We signed our last deal just a couple of weeks ago. With that being said, as we kind of look ahead, it's hard to get meetings, we're trying to do some teams meetings, Microsoft, Zoom you name it, but those are slowing down, customers have other priorities right now. So, we're seeing our verbal slow down just a little bit, and we expect that to continue just a little bit. If you look back at the recession in '08-'09, our sales went down by about 20%. So, I think it's probably pretty good to assume that that's pretty close to what will happen here. So, I think we gave a guidance of 800 to 1,000. So, it could be 600 to 800 on sales, but also during the recession, the way our model works is our customers long-term, they need to take a truck or two out, we see a lot of pressure on our fleets to downsize a little bit, and so, we'll take some of those out. We look at it for the long-term with the customer, and we'll take some of those out. So with that, our net adds may not be as robust this year as they have been in the past two or three years, but the demand is still out there for private fleets, and we still got a full pipeline, but we just think there's going to be a little pause till we come out of this, and then we'll pick back up again.

Got it, and then just a question, real quick question on the accrual, the $8 million, I'm assuming that time is up the loose ends, and it's related to 2019, and it's just in the one quarter and now that sort of put the bet at this point.

So, well, actually, we received the award at the end of 2019. I think we announced that on October 30. As we implemented that award and went through the first month or two of this year, we understood that we needed to true up the payment for how much we paid BNSF in 2019, and that's what that announcement was about. It was actually related to the entire calendar year for 2019.

And, hey, Jordan, this is Brad. I did want to clarify kind of Nick's response to it because I do think it's important. So, essentially, Nick said, originally truck sales of 800 to 1,000 this year, he thinks that sales process could see a 20% decline from his original estimates, but customers do have some optionality to shrink the size of their fleet, and so, net adds could be something slightly below that, but that's an opportunity where we see where we can take equipment that's already in the Dedicated fleet and repurpose those to some of these new awards, and that's some of the comments that John Kuhlow provided in terms of why you're seeing some flexibility in our capital budget. So, I just thought that would be worth highlighting there.

Great, thanks very much.

The next question will come from the line of Ken Hoexter with Bank of America.

Great. Good afternoon, everybody. Appreciate the remote balance. So, may be John or Brad, just to follow-up on that, the CapEx discussion there, you've talked about some canceled container and tractor orders, can you talk about the new CapEx guidance, what level of growth of assets are you now targeting? I don't know if you want to talk by segment or maybe just walk us through how you get that, what the reduction and what your growth targets are? Thanks.

Yes. So, Ken, this is John Kuhlow. Just to kind of clarify most of the -- we have the ability to cancel, but today, it's mostly timing or delaying those orders. So, until we kind of have a better sense of what our needs are, but to give you a little bit more deeper perspective on CapEx, we're probably at about $400 million or maintenance and by segment that's roughly $50 million for truck around 130 or Intermodal and 150 per DCS. Now, keep in mind that also includes what we include in the maintenance is our investments in the back office technology for the company, and that's still around $80 million to $90 million for the year. So that's how we get to the $4 million and then the rest is primarily Intermodal and Dedicated for any success base growth that we might have in those segments.

Great, and then, can you just talk about the Final Mile now that you're breaking it out, can you maybe just delve into how asset like you're talking about moving around the assets. I just want to understand the flexibility as you have customers shutting the financial flexibility of that segment, what kind of losses, you know, the current and near term or is that just if you're not using it, you don't pay.

So, okay, let me give some answers on that we have that basically broken down into three channels. The first channel is furniture, and that is probably 95% asset light. So when they shut down, we may still have some buildings and then some of those we build the customer for those buildings still ongoing. So it is multiple things there you look at, but then for the equipment, it's all contractors, so our contractors, we try to get them connected for paycheck protection to afford them and the direction of a bank to help them through this time, so that costs will go away.Then the second channel is retail replenishment. That's basically our off price retail, and they are basically all shut down right now they're non-essential, and so that's where we have some company drivers. And so, on that channel we have tried to outsource as much as we can, but we also have some different types of equipment in there that can't go do Intermodal or Dedicated work. So there's about 300 of them. And so, we've chosen to pay them so that when the retailer's come back online, we will be ready to go, and we expect when those off price retailers come back, the volume will be pretty good.And then on the appliance side, which is the third channel, those are up, those are essential. And so, we're still doing deliveries for them. In some areas there is just to the doorstep not inside, but in other areas it is still inside. That volume in general is down 10% or 15%, but it is still up and going. And that is 50-50 of company employees and non-asset on the appliance side. And so we were agnostic, and we'll pass both of them to a customer and let them pick and choose on how they do that.

Great. Thanks, guys; thanks, Nick. Appreciate it. And we'll take an extra freezer if you're going.

Okay.

The next question comes from the line of Todd Fowler with KeyBanc Capital Markets.

Great. Thanks, and good afternoon everybody. I guess maybe, Nick, just to put kind of a bow on the overall Dedicated comments that you have, I think that -- I understand what you're saying about the reduction in the net adds, but can you help us think, you know, Darren gave some comments on his expectations for Intermodal volumes. I would think in 1Q, there was probably some benefit of the pantry stacking that was happening, how should we think about overall dedicated revenue, maybe on a year-over-year basis as we move into the second quarter and the rest of the year? And then the other question about the margin profile, you know, if we do see revenues decline, how would you expect the margins in the dedicated segment to hold up? Thanks.

Great. I would just tell you that typically in Q2, we see a big spring surge for home improvement. And so that takes our volume up and our revenue up at some of those accounts. We haven't really seen that. We've seen a little bit, but not a lot, but what for I've kind of seen and what I've looked at is, we had a pretty good Q1, and our volume is still across the board very consistent and dedicated compared to Q1 of this year, and it's maintaining. Yes, it's been shifted around different customers, but we're not seeing that fall off any. So at this point, we feel good about our volume being about the same as what it was in Q1, but you would typically see our volume surge up some. Margins, I will still tell you that the margins 11 to 13 ought to be pretty good goalposts for us to hit, but again, there is a lot of moving parts, but I think we feel very comfortable with what we're saying at this point in Q2.

Great, that's helpful. And then just for my follow-up, Shelley, I'd be curious to get your commentary on shipper behavior right now in the market. Are you seeing shippers thinking about modal change, more demand for one service versus the other? Obviously available truck capacity or more available truck capacity, I'm just curious kind of what the shipper response in the market has been changed [technical difficulty].

Okay, I think that it is time that we have had a -- what I would call a crisis in the market. We tend to accelerate our relationship with our customers. And I would tell you, I feel like during this crisis, we are doing that very thing. I think John Kuhlow mentioned this in his opening remarks, but we're really focused on two key objectives here in the second quarter. The first one is taking care of our people, and making sure that that's first and foremost, that we're taking care of our people and each other. And the second one is meeting our customer's promises. And as a result of that, I will tell you, Todd, every customer needs something a little bit different. The customers that Nick talked about that are very robust right now in the grocery side. Those customers are really utilizing all of our services across the company, and we're bringing as much capacity as needed to help them I would say in nearly every segment, every service that we do business with other customers that are shut down, we're having a different conversation with them.To add on to what Darren said about bid season, I also think that probably 80% to 90% of our customers have stayed on the path of what they're doing from a bid perspective. The other ones are just in a wait and see environment. I think our mix of business is fairly healthy and thankfully for us, the customers that are doing well, we tend to do a lot of business with those customers as well. And I think that has helped us coming into this. I think our customers are open minded if we went back to any point in time that we had a downturn or pressure from a profit or revenue perspective at a customer level. They're very open-minded to doing business the most efficient way that we can do business together. So I would say every customer is pretty open-minded as to what we need to do and how we need to grow.Then lastly, I have seen our customers lean more into us wanting to do more business. If you look at just graphics maybe from a highway perspective, but this should pretty much be across the board, how we get the most business I would say small-to-mid sized customers. You see our largest customers, mid-to-large customers really doing much better during this kind of crisis than you see are small, even some medium and micro shippers. There's the customers that are either shut down or trying to work through the crisis and having a little more difficult time in total, and that too we're being more flexible with, they tend to be in our highway services. So for them, the price will be fluid, and if the market is going down, we'll be able to help them save money.

Okay, sounds good. Thanks for the time everyone.

Our next question will come from the line of Brian Ossenbeck with JP Morgan.

Hi, thanks, good evening. Darren just wanted to ask you about real service expectations, because there're some pretty significant declines going on those networks, and I think maybe relative to the last couple years, there is more integration, more blending and balancing, so to speak within those service lines. So do you think that's going to have any impact on what you would expect from an Intermodal service perspective as they look at down volume 20% 30% in some cases?

The Intermodal service we're experiencing in our network today, their capacity available and on time performance of the trains, is the best in my 25 year career. And I think that's probably because of their decline in volumes in certainly they implemented operating plans, many of them over the last three to four years that are working out and having some success, but yes, it is my belief that right now rail is the best we have ever experienced.

Okay, this is a follow-up for Shelley on the brokerage side. With the volatility even beginning in a year, it does seem like there is a decent amount of competition. Is that really changed at all? As you've seen even more of that in the last couple of weeks on the way up and the way down, do you think there is going to be - this is going to trigger any sort of consolidation and how people really lean towards 360 in this environment. Is it driven the material benefit or anything you can really pinpoint would be helpful.

And Brian, I would say I haven't seen any dramatic change from a competitive landscape. I think that's how we started the year. It is similar to that as we stand today. I do think that because the fragmentation of brokers, there are some brokerage companies that aren't doing as well, and so they are a lot more aggressive particularly in the spot environment. I have seen our customers really stay to the providers that they have selected already, whether it's asset or non-asset, so I haven't seen a huge fall off from published business or awarded business moving to someone else. I think from a consolidation perspective, I think it's been difficult from our brokerage perspective to weather the storm. If you think about the cyclicality of brokerage, we really started seeing the shift happened in 2019 as the market was correcting from a brokerage perspective, brokers are really changing the price while PTE was rising in total and that some of what I commented in December and January, the supply side starting to tighten, I think that part of the business will continue to have some push as we've moved into second quarter and PTE has had pressure on it downward because shipments aren't as plentiful. It comes down to how much can the price really change before that impacts the supply side of the equation, and then I think there could be consolidation as a result from both brokerage and from the carrier perspective.From a 360 perspective, we have gained more confidence through this crisis that our platform is actually helping us perform more agile and be very open and transparent about the data with our customers. What we have found is our customers are leaning in more to us from a total shipper perspective, I believe on the earnings release, we reported that our shipment count grew 44% in the platform, and that's a direct result of what we're doing in the truckload space. Our customers have also leaned into us from a 360 box perspective as they have started learning what we can do from a platform, really putting together the right truck on the right load at the right, they start to see that change their business in total, and that's how we started and why we started our 360 Box business. Our customers in Q1 leaned into that part of our model and we actually had a slight increase in revenue from our plan in Q1, we feel comfortable with that plan and the complementary nature between the drop and hook part of the business over the market, which is about half of the Tier market with the live load business, which is the other half of the market. We think that's part of the inefficiency that exists and when you put those two networks together, that we can create a more efficient network. Our customers are leaning into that and we feel comfortable about our growth plans in 360.

All right, thanks for covering all that, Shelley. Appreciate it.

You're welcome.

The next question will come from Tom Wadewitz with UBS.

Yes, good afternoon. So I wanted to see if you could offer some perspective. Perhaps John, just in terms of this cycle maybe compared to 2008, 2009, it seems like 2008, 2009 kind of the best comparison we have in terms of a sharp decline in freight. And your thoughts on how this might be, is that a good comparison? Is this likely to be similar or their reasons, it would likely be different. And I guess in particular within that, if we look at Intermodal performance, you did see some pressure on price and you saw some pretty considerable pressure on margin in 2009, but maybe it's a little different this time around. So appreciate any thoughts you have on that kind of cycle comparison?

Yes, we spent some time going back and thinking about how we got into that recession, what the drivers were and then the results coming out of it. Nick and I had a good conversation today about what channels were open during that time that kind of closed down on us and how we sort of remodeled the portfolio, and that's really the time in DCS where we pointed our efforts more towards private fleets away from capacity management that doesn't completely take us out of the churn in the downturn and then the outcoming results from the recovery, but we think that we got a better view there and we will no doubt see some impact going in, but our approach on that side of the business is to serve the customer in every way that we can knowing that it's a long game and so we really stay away from and have benefited from not getting into short-term and our thinking or our approach really with any of our segments. On our trucking and highway business, I'm so much more encouraged and confident in that business because of all the work that's been done in everything from the geographies that we serve, the length of halls that we're in, the way we've set the equipment up, there's a lot more versatility there.So as far as going in to a downturn and then how we come back out, I think we'll be more nimble and more quick to be able to respond. When you own every truck and every trailer, there's only so much you can do and that can really put pressure on pricing and margins and performance that takes a long time to recover from, I think we'll see that differently coming out. On Intermodal, it's a good answer, going into a recovery, depending on pricing or has historically been, I think that fuels a big deal in Intermodal that can be a real plus or maybe not, not an event, and I think with low fuel prices and I expected they'll stay low for a while. So, we'll probably see that be a little different from the past. In total though, I really feel like we're in as good a position as we've ever been, our pricing approach is so much more rich and robust than it's ever been in the past. Our timing of response is so much better than it's ever been. I mean, we are coming from months to weeks now where we can see changes in the markets that we serve and are able to respond so much more quickly, and I predict that will even get better. I think the more data we get into our system the better we're going to be able to respond as we start to come out of what would be considered I guess a downturn. That's what we're expecting anyway. I don't know if you guys want to add anything to that?

I would say, I think that the level of data that we have that John talked about has grown exponentially. And today we use that data primarily from a human perspective. So we spend a lot of time from a people perspective validating what is or is not happening with customers, carriers, with our own drivers in the work that we're doing. In our future, we're working towards more machine learning and AI that we'll do more prediction and be able to solve for that more in real time.So what John talked about that would take us weeks, has moved to only a couple of weeks to days at this point, that still has too much human interaction in that process. And the machine can learn over a period of time with the right level of data. And so for perspective inside 360, we set new records in both February and March and the key statistics that we watch and then we've taken another step change here in April.So, of the 40 plus stats that we watch, 75% of those broke new records here in the last week to two weeks. And those continue to move forward. So the level of data is growing by almost triple digits and anytime that you can do that and actually use the machine to do it's very difficult at a human level to consume it, but at the machine level, I think solving for that over the next one to three years will change the way we can do business and be able to offer better answers for our customers.

And I would just say on the Dedicated side that our base of business is so much more solid today than it was back in 2008, 2009, and we don't have as much quasi dedicated in there, it's more solid private fleets and so I think we're rock solid base to be able to weather the storm even better than we did in 2008 and 2009.

That's all very helpful. I just had a brief follow-up and Shelley with respect to Intermodal contract pricing. I mean, you have more data, you're better at responding yourself, but you still don't control the market. So do you think I mean is it realistic to expect that truckload contracts and Intermodal contract pricing will be meaningfully down if rate stays weak for a while, or you think there's a chance we don't see that on the Intermodal side?

Yes, so I would just say in general across all the businesses, it is a longer-term play from a bid perspective. So any customer that's in the spot market, they're going to get the benefit or the other side of what's happening from a price perspective. And so there are some customers that are in the spot market. And as customers we want to help get through this spot market. So if they want to take advantage of what's happening in the market today, we talked to them about being fluid in their pricing approach and we're very open minded to that across our business in total, but I would say, I don't think that being down meaningfully would play into this bid season, we're too far into the bid season. Our cost structure, everything is longer-term, be very difficult for us to offer significant discounts off of our base costs that we have today.

Great, thank you for the time.

And we will take one final question. The final question comes from the line of Ben Hartford with Baird.

Thanks for fitting me in. Shelley, just a final point on the supply situation what you're seeing within the brokerage market, the comment that you had made about changing the payment terms in March, I think is interesting. And then the approach that you guys are taking from a cash management standpoint, but I guess first thing with regard to the change in payment terms in 360. Do you anticipate that being a permanent change and if so, I guess in the context of the cash collection cycles being constrained throughout 2Q and 3Q presumably across the industry, do you see this as an opportunity to kind of accelerate the build-out of scale attracting supply into the 360 platform? And to what extent does that change payment terms play into that?

Yes, so we did offer those carriers payment terms changes for the month of April, but we're also walking them through how they can get paid all for free within two days. And so, that payment is made available to them over the long-term. And so if a carrier is interacting in 360 and they perform their work inside the platform, they upload their bills, give us their -- the documentation and they're paid back to their checking account in two days all for free. This is significant change for them over a factoring company, that they may be paying a much higher percentage two in total. We do think that's an important component to building scale in the platform. So we are very close to the carrier community and walking them through how they can take advantage of that.

And then, just to be clear, as you see the balance of the year now within ICS on the gross margin and on the EBIT line, the level of compression in the first quarter from a gross margin perspective and the operating losses, are these representative run rates in your mind as you kind of play out the year. I know it's very unclear the year, but just trying to get a sense for, was it unique this quarter, and it'll kind of normalize back up a little bit and still run operating losses, or is this kind of a new run rate for the balance of the year?

Well, certainly I think it's too early to call the entire year. I think I could talk about the next couple of weeks and have a lot of confidence. And then as we get past that, I get less and less confidence. Again, we're spending a lot of time taking care of our people and focusing on meeting the promises of our customer says there are two objectives. I do think here in April, maybe over the next couple of weeks, margins have improved as shipments have declined in total and we've come-off of those higher margins going or higher PTE numbers. In total, I did talk about being 35% over plan, I would expect to be under plan in Q2, in total from this scaling part of our business, but it'd be way too early for me to call what I think will happen for the year, I would say we're committed to our long-term plan of building the most efficient transportation network and to do that, we have to be scaled. And so that is going to be our focus over the short and long-term.

Understood, thanks.

Hey, Ben, this is Brad. Just to kind of reiterate the comments I made on my opening remarks, as you should expect gross margins will fluctuate based on the relationship between supply and demand and the markets we serve. Clearly that relationship was quite challenged in Q1. So we have seen the market loosen up. So hopefully that would imply we've seen a little bit of relief on net revenue margins at least thus far in April.

Understood, appreciate the time.

With that, we have reached our allotted time for questions. I'll hand it back to the speakers for closing remarks.

Thank you. This is John Roberts. I'll just close this by saying that on March 13 we called a meeting with our executive team without much time and said on Monday that was a Friday, Monday we would be working remotely in response to a coming Pandemic and unknown challenges. We have responded to that in a way that I really didn't fully appreciate or expect and I just would like many CEOs I've seen on CNBC, I'm incredibly proud of the people in this company for the way they're handling this unknown, and I've talked to some folks downstairs earlier today about these cultures don't lie, and I think in all the conversations we're having about rates and loads and volume and equipment, CapEx that's vitally important, no doubt, but underneath all of that is a team of 30,000 people that are picking up and delivering freight every single day, taking care of customers, making sure we keep this place healthy and solid, and that is I think something we should not overlook. We appreciate your time today. We look forward to talking to you in the coming weeks.

And this does conclude today's conference call. We thank you for your participation and ask that you please disconnect your line.