Greetings, and welcome to the ArcBest Second Quarter 2020 Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded on Wednesday, July 29, 2020.

I would now like to turn the conference over to David Humphrey, Vice President of Investor Relations. Please go ahead sir..

Welcome to the ArcBest second 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.

Before I turn it over to Judy, I'm going to take a moment to congratulate her on being named one of the top 10 women in logistics by Global Trade Magazine. This is a tremendous honor, and I want to let her know how proud we are of her on this well-deserved recognition. With that, I'll turn it over to Judy. .

Good morning, everyone. I appreciate all of you joining us this morning. As you are aware, the second quarter of this year started under the full weight of the coronavirus pandemic. Its impact was felt by everyone and in almost every aspect of the economy.

While the effects were still playing out during the first quarter call in May, you heard me mention that during times like these, I feel ArcBest shines the brightest. The sentiment has not changed.

In addition to having a strong balance sheet and the long-term relationships we have established with our customers, I credit much of the success we have had over the last three months to the hard work of our employees and to the culture we've created here, that cultivates creative problem solving for the challenges of the time.

I am incredibly proud of how our employees have operated in the face of adversity, especially our frontline teams who come in day-in and day-out, focused on keeping product moving and providing the type of world-class customer service that is expected when one does business with ArcBest.

We have made a lot of progress over the last quarter in fighting one of the sharpest declines in the economy since the great depression, and David and I are looking forward to going through the results with you today. In the Asset-Based business, we saw the shipping patterns of many of our customers highly affected by the pandemic outbreak.

The impact on individual customers varied with some like those shipping essential products seeing increased activity, while many others had business levels below the previous year. We experienced significant increases in residential delivery shipments related to growth in e-commerce.

Customers with an online order presence saw additional shipment volumes, especially those with products that are using the phone, such as exercise equipment and outdoor storage sheds.

Despite the growth in e-commerce with significant reductions in total shipment and tonnage levels in our asset-based network, it was imperative that we match our labor and other network resources with the business levels of the period.

At the height of the pandemic, we had to temporarily layoff approximately 1,000 employees and reduce many equipment and supplemental resources that are normally utilized in our network. Our operations team responded well to this heightened challenge.

And as a result, most all of our operational metrics we use in managing our business improved over last year second quarter, many by at least 5%. Also, despite the weak market, our yield management strategy caused us to be successful in achieving needed account pricing levels.

Reductions in the core account LTL-rated shipments handled in our ABF freight network were the biggest contributor to the total shipment and tonnage decline.

As we experienced earlier in the year during the second quarter, we've benefited from our strategy of utilizing lane specific data to identify capacity opportunities and fill them with truckload rated spot loads, as well as heavier transactional LTL-rated shipment.

During a period when shipment levels from regular customers were lacking, handling these spot shipments and lanes that had available capacity helped mitigate the total business declines we were experiencing, while allowing us to more efficiently utilize available network resources.

I am incredibly proud of how our operations, sales and yield teams responded during this unexpected period in our business.

They have executed at exceptionally high levels and illustrated our abilities to remotely maintain trusted customer relationships, while proactively flexing our asset-based cost structure and our account pricing in response to an ever changing environment.

Freight mix changes related to the lower business levels combined with the supplemental spot and transactional shipments that we opportunistically added in the network contributed to a decrease in total second quarter revenue per hundredweight.

Also, as we've seen for some time fuel surcharge revenue reductions compared to last year second quarter contributed to lower revenue per hundredweight comparisons. However, despite the sharp business reductions our industry experienced, we are pleased that pricing rationality continues.

Later in the call, David Cobb will offer more specific details on our contract renewals, but they were good and comparable with last year. Excluding the impact of transactional shipments and changes in fuel surcharge, we experienced high single digit percent price increases on our core account LTL business. Moving onto the Asset-Light segment.

Significantly fewer total shipments due to business closures and reduced customer shipping levels related to the pandemic combined with slightly lower total revenue per shipment were the primary causes of the year-over-year second quarter revenue decrease in ArcBest Asset-Light segment.

Automotive plant closures throughout April and May combined with continued weakness in industrial manufacturing reduce the demand for expedite services and that's impacted daily shipment counts in that portion of the business.

The availability of lower cost capacity resources in the marketplace was another factor that contributed to the reduction in expedite business levels. Similarly, the asset-light revenue contribution from truckload brokerage was below the previous year as shipment counts and average shipment revenue declined.

The effects of the pandemic combined with declines in the petroleum industry impacted shipments from our traditional asset-light truckload customer mix.

The largest second quarter year-over-year revenue decline in that segment of our business were from customers in oil and gas, wholesale durable goods, and in the manufacturing sectors of metal products and industrial machinery.

Asset-light margin compression resulting from these market dynamics decreased second quarter operating income relative to the previous year. As also seen in the Asset-Based business, reduced consumer household goods moving activity during the uncertain pandemic period and favorably impacted Asset-Light financial results.

In these challenging times, we are finding that supply chain optimization and the need for unique logistics solutions is more important than ever for our customers. As a result, our managed transportation services continue to flourish and they were a positive contributor to the Asset-Light results.

Managed daily revenue grew 82% versus last year second quarter as we -- the first half of the year managed revenue has increased 69%.

Crafting managed solutions allows us to combine our experience, knowledge and the full impact of our assets and capacity resources in a way that helps our customers navigate the uncertainty they are facing in the current environment.

At FleetNet both roadside repair and preventative maintenance events declined reflecting the impact of the pandemic on the business activity of FleetNet's customers. As a result, second quarter revenue was below last year. The reduction in this quarter's operating income was primarily related to the lower event count.

And next, I would like to ask David Cobb to go over the earnings results and operating statistics..

Asset-based billed revenue per day decreased 7%; total times per day decreased 5%; total shipments per day declined 6. Total billed revenue per hundredweight decreased approximately 2% impacted by lower fuel surcharges and freight mix changes. Billed revenue per hundredweight, including fuel surcharge on LPL-rated shipments was flat.

It was driven by profile changes related to the addition of transactional shipments. Excluding fuel surcharge pricing on traditional published LTL business in July 2020 increased a percentage in the high single digits compared to July of 2019.

In addition, the average increases on contracts -- contractual renewals and deferred pricing agreements negotiated so far during July of 2020 are running ahead of those obtained in the recent second quarter and better than last year's third quarter In recent years the historical average sequential change in ArcBest asset-based operating ratio in the third quarter versus the second quarter has been roughly flat.

However, due to the impact of the COVID-19 pandemic, the 2020 sequential operating ratio comparison for this period may not be comparable to historical trends, depending on business levels through September.

We begin to take previously committed salary rate reductions and other cost reductions that I mentioned earlier will impact asset-based operating results in the third quarter relative to the second quarter. The impact of these additional costs on third quarter profitability was considered in our decision to restore them.

So some operational resources are being added back as business improves. Those costs will continue to be carefully managed the business levels.

And sequential change in the operating ratio will be influenced by the level of sequential revenue increase that exceeds the cost of restoration that I've mentioned previously and the annual contractual rate increases in union wages effective July 1 and needed health and welfare rates effective August 1.

For the Asset-Light business, in total, daily revenue in our combined asset-light businesses decreased 15% versus last year second quarter, reflecting revenue declines in both the ArcBest segment and at FleetNet.

The total asset-light business operating income was $2.1 million in the second quarter compared to operating income a $3.1 million last year, with the decreased primarily due to reductions in total business levels, particularly in our expedite operations.

Asset-light revenue for the ArcBest segment and excluding FleetNet is flat in July on a preliminary basis compared to the prior year. So far in the month, purchase transportation expanse is a greater percent of total revenue, which will result in overall margin depression for the month when compared to July a year ago.

This morning we filed an 8-K that included our second quarter 2020 earnings release along with an exhibit that provided some additional information about our current quarterly financial results, along with our recent business levels and our future expectations on certain financial metrics.

This information that includes more details on our July business trends should be helpful in modeling expectations for 2020 financial results. Now, I'll turn it over to Judy for some closing comments..

Thanks, David. Our outlook going forward remains positive, while none of us here are in a position to predict what the economy is going to do in the coming months. The indicators that we follow are shown signs of improvement. There are some predictions of a second wave of the virus in the fall.

If that occurs, it could impact fourth quarter business levels and our financial results for that period. However, we remain positive about the company's trajectory and are in a strong position to respond to whatever the rest of this very unpredictable year may have in store.

For those of you who have been following ArcBest for awhile, I hope that you can see how much the company has transformed over the last decade.

We have worked hard to diversify our business model to not only allow us to provide a wider range of solutions and services for our customers, but to also synergize these services to make each individual components stronger.

We have increased our utilization of data and technology led by our in-house ArcBest Technologies Group to integrate innovative solutions into our processes and the services we provide.

These efforts combined with our customer obsession and nearly a hundred years of shipping experience have paid off, and we continue to receive high marks from our customers. I know I touched on this in my opening remarks earlier, but I credit this to the strength of the culture that we have cultivated here at ArcBest.

Our team fully embraces our core values, and it's been this commitment that drives our team to excel regardless of the circumstances or the environment. 2020 has indeed proven to be a difficult year. And so far, we have successfully navigated the unexpected challenges it has presented.

I continue to admire how our employees have responded to the difficulties presented them over the last four months and how hard they have worked despite these setbacks to keep the essential goods moving throughout our nation.

With business trends improving and in acknowledgement of this heart work, we are very pleased to be able to reverse some of the cost savings measures we took earlier this spring. As always, we will continue to monitor business levels and make adjustments where necessary.

However, I truly believe that we have some of our best work ahead of us, and I look forward to sharing all of it with you in the coming months. And I'll turn it over to David Humphrey to conduct our question-and-answer session. .

Okay. Frank, I think we all ready to talk the questions. I know we've got some folks in the queue, so go ahead with that..

Thank you. [Operator Instructions] Our first question comes from Chris Wetherbee with Citi. Please proceed..

Hi, this is Liam on for Chris. Thanks for taking my question..

Good morning..

So, first question I want to start with the Asset-Based segment. I know that if this trend improve year-over-year especially in July, I'm just wondering if you could provide a little more color on the puts and takes when it comes to the sequential or a lot progression in the third quarter.

I know you said it may not be comparable to historical trends, roughly flat, but I was just hoping you could provide some context on the potential magnitude of deviation from that historical trend. .

Yeah. Let me start with kind of some thoughts around second quarter to third quarter alone the asset-based. As I mentioned revenues in July run at about 7% below July 2019 would be compare that to the first month of the second quarter, April revenue being down 21%, that resulted in an increase in revenues in July versus April.

That's going to be above our historical norm of a comparison of say those first months of the situational quarters. We mentioned -- Judy's comment about our productivity measures being really good in second quarter.

Many of those improved by 5% that's -- it's metrics left shipments previous, and why our load average -- our empty miles being down quite substantially. So you get that -- a lot of that comes from the various things.

And one of those being the flexibility of our labor contract provided for us to ability to make a decisive and I think timely resource changes. I didn't think that was going on.

And I think -- as I say, a lot of this -- just to give you a better context about the environment, but the dependents that get, allow our customers to kind of expand their appointment windows, until there was also less congestion on the streets when you think about closures and alike.

At the same time, we were able to manage our schedules to the customer requirements. We did add-on to this -- our ability to use the technology around our pricing programs. We're able to feel remaining empty capacity to build good line haul loads.

And so, we do expect productivity levels to weaken from, as we are serving customers, working through their disruptive supply chains as we move forward with this economic reopening, if you will. However, we do expect that productivity should remain in a good place compared to the prior year.

But if any -- from technologies that we talked about and that application things like our dynamically price rate, our network optimization software, our line haul, route optimization, lightning software, our load, and dispatch point planning software and mobile dispatch.

And so, with all that, I would say that so far in July, our shipment count is ahead of our DS&Y hours. Additionally, on top of that, pricing is -- maybe the good place and we do expect yield to cover inflation including the annual union wage and benefit increases.

So -- and certainly in down economy, it could improve the influence of revenue and then that’s from lots of August and September, but that -- I just want to give you a broader context of what we're seeing and kind of how second quarter would compare to those trends.

Does that help?.

No. That's very helpful. Thank you. And also separately, I know I just want to talk when you'd mentioned about yields. I know you were saying that revenue per hundredweight ex-fuel and LTL-rated shipments was flat in July versus like a low single digit increase in the second quarter.

And I'm just wonder if you could provide some additional context on where you expect growth to trend going forward and how transactional shipments might be impacting that ticket..

Yeah, I would just say that, that a lot of what you're seeing in that revenue per hundredweight metric is mixed related in our business mix. And so, we would describe the pricing environment is as good, as positive, rational will be end of term. But -- so we see that remaining in a good place..

Got it. And finally, I'm just wondering if you could provide any additional color on the sequential expected change in the asset-light in the third quarter and you provide some comments from the asset-based above asset-light segment..

Yeah, I would -- as Judy mentioned, there were a number of industries and sectors that impacted the asset-light business. So, auto being one of those with plant shutdowns and then our moving business was impacted significantly with the customers hesitant to want to move in particularly in April.

And so, manufacturing as well was -- of those plants also shutdown. And so, sequentially you would with opening to have auto plants and manufacturing plants, that particularly helps our expedite services. And then you get -- as you see customers being more comfortable about moving. And so that would help our moving side of that business.

All of those are -- would we think trend positively from second to third quarter. I think the other thing that we're seeing in the market is whether this holds is a question, but capacity kind of tightened. So, there's been reports about spot rates moving, moving higher, you see the MBI being in a higher place as well.

So, all of those would typically bode well, I think for asset-light business as we move forward..

All right. Thank you for taking my questions..

Okay. Thanks a lot, Liam..

Thank you. .

Our next question comes from Todd Fowler with KeyBanc Capital Markets. Please proceed. .

Good morning, Todd..

Hey, Judy. Great. Good morning.

How are you?.

Good.

How are you?.

Good. So, I wanted to follow-up on the yield comments or the yield question there. Can you help square the 3.2% increase in contract during the quarter with a comment around the high single digit price increases you're seeing with core accounts.

And then the comment that pricing has improved sequentially now into the third quarter, it seems like a pretty quick response to some of the improvement in the tonnage of the volume environment.

Is that just normal contract renewals? Or do you have the opportunity to maybe replace some freight in the market as tonnage is coming back?.

Todd, do you know the additional component there is just our tariff based business, that would -- you would consider whenever you're thinking about us kind of holistically there on that core account LTL pricing. And so, what you typically think of with contract and deferred pricing arrangements is those are larger, more price sensitive accounts.

And those are good, solid, increase levels, I think. And to see that during this period is especially good. And so, I think you have to take all those pieces together to get to the overall result again. And then, as you know, that high single digit comment factors out the transactional and spot related type shipments that we attracted.

And those just so to follow that thought is we're making those decisions based on the capacity that we have. And we're looking at those on a incremental profitability basis and making sure that those improve our situation as we're making those pricing commitments. I hope that helps..

It does. No. And I understand all of that. And then just to follow-up on kind of the pricing opportunity in the third quarter.

Is that just normal contract renewals? The timing of those renewals coming through, or is that some additional pricing opportunity as tonnage is coming back?.

Well, it really -- I think it's kind of -- it's business as usual with one caveat and that would be that we have seen a little bit of delay in the finalization of some of our contracting deferred pricing renewals, just because of how this place -- so to speak, some of our customer contacts are as we go through this.

And so, we're not seeing anything overly troubling there, but we do see some delay, but we have contract renewals every month. And so, we're going through the normal process there. As we would -- in the third quarter, there's no difference activity, I don't think, then you would see in the first half of the year.

And we are taking any specific pricing action as the tonnage comes back, but just addressing our account-by-account level as we typically would.

And I think that you're looking at the profitability of the account, making adjustments based on that and having those conversations as you normally would to the extent you have that customer contact available..

Got it. Okay. That's super helpful. And then just to follow-up. Do you care to comment on what the monthly or trend was during the quarter? I mean, obviously, we're seeing the quarter average. We know that it was a very volatile quarter, different trends in April versus where you were in June.

And I'm just trying to -- I'm curious where you ended up in June and maybe just kind of a rough directional number, if it's not exact, say, give us an idea of where you exited the quarter versus where you started at. .

Well I'm not going to give you the specific numbers or anything. But I will say, I mean, you could observe this by the different 8-K disclosures that we did throughout the quarter. April was a rough month. It really did not contribute much in terms of operating profit to the quarter.

And certainly June was a much greater contributor to the quarter's profits. And we were encouraged by that. And so, I think you see or hear some commentary from us about momentum, we feel like the momentum as we ended the quarter with certainly improved from where we were when we released our first quarter results. And so, I hope that helps you..

Yeah. No. That makes sense. And that's kind of what I figured and I was hoping to maybe get a little bit more granular, but I understand maybe not wanting to get to that level of detail, so..

Good try. Good try. Yeah..

I'll turn it over..

Hi, Todd. I appreciate it..

Thank you..

Okay. Thanks..

Thank you..

Our next question comes from the line of Jack Atkins with Stephens Inc. Please proceed. .

Good morning. David..

Good morning, Jack..

Good morning..

Thanks for taking my questions here. So, I guess, we're hearing quite a bit about e-commerce and there's obviously been a shift in sort of consumer purchasing behavior in the freight market, I think, reflecting that.

Is there any way to kind of think about the opportunity that you see in front of you guys from e-commerce, whether it's in the shorter term or longer term as just more B2C activity, it looks like it's here to stay.

Is there any way to kind of think about the opportunity that can provide an LTL network like yours as we look out over the next couple of years?.

Well, I mean, it's certainly a good opportunity, Jack. And I think that it's illustrated by what's been happening. We had a tremendous amount of growth in first quarter, even before the pandemic started. So that tells you something right there. I think our residential delivery shipments related to e-commerce in the first quarter were up 12%.

And in second quarter they were up 35%. And so, it really accelerated, but I think it's important to look back at that first quarter data point, because that was a good level of growth before the pandemic.

And I think this whole, stay-at-home change that's occurred with people has really contributed to greater comfort with having those kinds of transactions, these larger type items, whether it's -- the ones that I mentioned, exercise equipment or storage sheds, or if it's outdoor furniture or it's bigger items like televisions and other inside the house items, I think just because of the need to do it, I think more people are doing it and they're more comfortable with it.

And one of the things that's been great, I think advantage for us that we've encountered is that we've been in this business for a long, long time. I mean, we -- our U-Pack business was started in 1997.

So, all the way back then we had to get comfortable with going into neighborhoods, the requirements of delivering to a home and what that meant to our city routes and the requirements for our city drivers as they were encountering that type of environment.

And so, I think that -- what that helps is just the customer service side, to deliver great service, but it also helps you understand your costs and the timing and that sort of thing, which as we've seen this big increase, that's helpful to us.

And I think David mentioned this earlier, there have been some advantages which some of these we hope would continue, and that is just the comfort level to extend appointment windows by some of the shippers that are shipping goods to the home.

And we've seen that because of the pandemic, the desire to have in-house delivery of these things is not as high as it was. And so, we've done more curbside or threshold type deliveries, which is better for productivity for us. And then the lesser amount of traffic has also helped some of these things.

So, if -- I know some of those are not going to continue, but we're hopeful that our shipper customers that were experiencing see some of the benefits of this too, and would continue, which I think would allow us to do more and do it more effectively..

Okay. That’s great. Yeah. I'm sorry. David, go ahead..

Yeah. Just going to add a couple of things there. Just thoughts around.

Obviously, the pandemic accelerated the trend of increase in e-commerce and sales, but as you think about the expanded line of products that are being handled by e-commerce, LTL really works well to provide the flexibility that these vendor shipments to either retail performance centers or distribution centers.

And I know you were asking about to see to continue, but it's just -- it's also helping us there, we think -- and LTL in general. But when you think about the ABF brand and the value that we bring in the service component of that that's really valued and as customer expectations kind of increase over time.

So getting those service requirements met, retail rest program is part of that as well. All that kind of add to the benefit, I guess, of LTL and then ABF branded LTL.

But at the same time, our asset-light operations benefit from this e-commerce trend, I mean we don't even inside of that, I mean, you think about just the sourcing of product for one and how that sourcing is maybe being changed, whether it's near shoring or even into the U.S., that's one aspect.

And so, supply chains are changing, I guess, just -- to just shortcut that. And so, we're able to help with particularly around our managed solutions. And we saw that with our managed solutions growth in the quarter and has been growing, just that need for customers assistance on developing supply chains and designing, optimizing those.

And so, we're there to help them with that. And then our services from international on our asset-light side to be full load brokerage or expedite services, all that is there to help us continue to e-commerce trend I think..

Okay. That’s great. Thanks so much for the color guys. .

Thanks a lot. .

Appreciate it..

Thank you..

Our next question comes from Scott Group with Wolfe Research. Please proceed..

Good morning, Scott..

Good morning..

Hey, good morning, guys. It's Rob on for Scott this morning..

Hi, Rob..

Judy, just to kind of follow-up in terms of the asset-based war, we saw the exit -- exiting kind of at a much stronger profitability spot in June than probably historically we ever have. You guys have called out for the Asset-Based segment we're back into roughly 190 to 260 basis points of sequential incremental headwinds.

Can you speak a little bit more in terms of, should we be expecting if normal seasonality plays out over the next kind of couple of months, should we be expecting kind of sequential margin improvement? Can margins be flat, or do we have to go backwards because of the incremental costs, which would -- which are coming on?.

Well, we feel like that what we experienced in the second quarter really shows you the alignment that we're able to manage our costs to the business level. And that is certainly our intention as we move forward.

And the -- obviously the July results as they relate to what we experienced in the second quarter, but also with June we're seeing some growth there and there's the -- again, David went through some of the details and I did as well on the yield side, but we're not seeing a kind of a concerning change or anything there.

And I think some of the technology enhancements that David mentioned, are going to continue. And I think the visibility that we have of our costs and ways to help ourselves with those costs, which the transactional LTL shipments and other things that we've done to try to improve the utilization, will continue if they need to.

And what I think we have going forward is a -- an ability to serve our core account LTL customers more because we're seeing their businesses reopen.

And the one thing that I would mention, though, in addition to all of that is I think in the second quarter what you had, especially at the beginning was an opportunity to really adjust cost because you had the knowledge that a lot of businesses were shutdown.

As we're coming into the rest of the year, I even have in front of me a map that shows just the lumpiness of the restarts of all of our customers. That's difficult to manage. And I think that making sure that we're serving our customers well, even as uneven as that is, it is something to consider as you think about the next month.

And as we close out 2020, it's not perfect. This is a difficult business on a regular day. But you start adding some of those elements into it, it becomes even more of a challenge.

But what I'd say, and we've done a lot of looking at this back to 10 years ago, the Great Recession, or even other periods where we've had these downturns, our visibility into the cost levers in the business, our ability to use line haul optimization, light lane notifications, a mobile app to better manage the activities of our city routes and make us aware of any issues, holding our people accountable to the standards that we need to, those kinds of changes in the business have really been encouraging and, I think, very helpful and allowed us to gain the result that we did in the second quarter.

And some of the cost actions that we took, we stated that those were temporary. And to address what we weren't really sure was the situation that we were going to be dealing with. I mean, we had concerns not only at the business drop, but also of some of the customer collections and those kinds of things. And we're really past that now.

And we appreciate that we are, and rest -- restoring those is really the right thing to do given the momentum in the business. And so, we're pleased to be able to do that..

Okay. And I guess a quick following up. In terms of the July update for the tonnage per day or the shipments per day up 4% and 3% sequentially.

How does that compare to normal seasonality versus June levels for ABF freight?.

It's much better than normal, much better. It's on the high end of the kind of the best ever..

All right. Appreciate it. I'll hop back..

Rob, I think we will move along [ph]. Thanks..

Our next question comes from David Ross with Stifel. Please proceed..

Hey, good morning. This is Matt on for Dave. Thanks for taking the questions..

Hi, Matt.

How are you?.

Good morning..

Good. Wanted to get a bit more color on what you're hearing directly from customers regarding their plans heading into August, the rest of the summer.

And then, I guess, specifically, you proved a little bit more detail around how much auto shutdown their impact result in order on the asset-light side and sort of how we should think about that going forward. Thanks..

Okay. Well, customers -- we're -- overall, we remain really, I'd say, cautiously optimistic about the momentum that we're currently seeing with our account base. Customers and states are really reopening, which is helping our business volumes.

Our sales team has really been able to continue to engage with customers despite this remote work, which is really encouraging. And we're able to use our technology stack and our resources and the ability to be able to do that. And so, we feel pretty good about that.

And many of our large accounts are asking us to help bring some stability to their supply chain in this uncertain environment. David mentioned that. And it's a great opportunity for us to position the integrated solutions that we have or even managed solutions. And so, our pipeline is strong.

We're seeing more and more of our customers looking to us, because of the multiple and again, integrated solutions that we have.

We've seen our -- as you mentioned, our expedite business levels pick up and that's a pretty -- within the Asset-Light segment, that's a sizable component of the utilization of our straight trucks and our cargo vans in that business. And that's good.

It's -- on the expedite business, it's somewhat less than it used to be because of the work that they do with other manufacturers or high value products in the life sciences vertical.

But if you combine auto and manufacturing, other manufacturing, and that together is, I don't know, somewhere between 30% and 50% of the total that you have there, maybe a little bit more when you look at the work that we do with 3PLs, because that's auto influenced as well. And so, we're encouraged that the auto plants are coming back online.

We're seeing that have a positive impact as indicated by the information that we have in our 8-K. And I think, that's something that was weak even in 2019, and as we started the year. So, if we can see some normalization there, it will help our asset-light results.

And then with the disruption in supply chains, the work that we do in that division is really helpful in certain instances. And our customers have -- they know us to rely on us for that. And I think that is something that's a benefit as we go forward until things settle out..

Excellent. Thank you..

Thanks..

Thanks a lot, Matt..

Our next question comes from Jeff Kauffman with Loop Capital Markets. Please proceed. .

Thank you very much. Congratulations..

Thanks. .

Thank you. Good morning, Jeff..

Different question. I was looking at the cash flow statement and I know you -- some equipment, but it looks like you've only spent about $10 million on CapEx on the cash flow statement year-to-date.

What are your thoughts on capital spending for the remainder of this year and maybe kind of reaching out to next year, and how should we be thinking about CapEx spending?.

Yeah. So, keep in mind, when you look at our cash flow statement that we do finance some of the -- some of our capital spending with equipment notes. And so if you look at the bottom of our cash flow statement, you'll see equipment finance with notes essentially. And so that would be our total.

You'd want to add that -- we can talk offline about the numbers there. Yeah. It's about another $14 billion, Jeff..

Okay. Thank you, David..

But as we mentioned in our supplemental or exhibit down there too, that our CapEx range is expected to be $95 million to $100 million for the year for 2020..

Okay. That's unchanged from where you were before then basically..

Yeah. We've narrowed the range on the pad..

All right.

And can you talk about what you're seeing on the real estate market? Are you -- with a lot of the distress carriers out there, any attractive properties that are making sense to you? And can you talk maybe a little bit about how shipper supply chains have been moving around through this whole COVID crisis and is that making you rethink geographically where you might want to be located?.

We're -- part of our process, we are constantly reviewing kind of where our business is. And so that is an ongoing evaluation, that solid real estate department. And so, I think that bodes well for us. So, they're evaluating properties on a constant basis.

And including maybe exchanging properties that we have selling in other words, that happens from time-to-time and that you may have noticed we did have a gain on a property sale this quarter. And so that happens as we move our businesses around to accommodate where our customers centers are.

And so, yes -- I mean, I think, e-commerce trend is probably driving a bit of warehouse need as inventory levels maybe elevated from where they've been historically just to accommodate the kind of e-commerce trend and just more real-time for customers as their expectations for deliveries have increased.

I think, there's some pressure on kind of that warehouse type space, but that's kind of the take that I've seen on it. So, my read is maybe somewhat a little bit different than what you see in the news, but it's probably similar. So..

Okay..

Hey, Jeff. We can move along, we got a couple more. We want to try to get it before the top of the hour, but I appreciate you jumping in with us..

Thank you..

Thanks, Jeff..

Our next question comes from Stephanie Benjamin with SunTrust. Please proceed..

Good morning, Stephanie. .

Hi, good morning. .

Good morning..

I wanted to touch on your strategy to bring in transactional truckload or LTL business. Obviously, it's been very helpful with improving some efficiencies during the quarter, particularly with some of the volumes.

Do you have any kind of plan change of that strategy as we look forward, maybe as the traditional LTL business, some of those volumes start to improve. Any color there would be helpful. Thanks..

Yeah. Well, Stephanie, the interesting thing about that strategy is that it is nimble and flexible with whatever's going on at the time. And certainly we favor our core LTL accounts in terms of being sure that we're servicing them or making our services available to them.

But this strategy that we have been using is really designed to meet the customer where they are. What it allows us to do, these were opportunities that we were getting before, and we're just better equipped to take advantage of those in the right instances.

And I mentioned the visibility of a cost opportunity to make more efficient in the asset-based operation. And so, what I would say is that that is going to be adjustable depending on the circumstance for that day or that week. And I think our team has really come together.

I think our yield strategy team's working well with the operations team and making sure that we make more efficient the resources that we're deploying. But again, it's a good customer experience, because it's meeting the customer where they are.

It's a quote that they were already involved with, and we're just able to meet their expectations and then also a target that where we need it to make more efficient the network..

Got it. I appreciate the time. I'll leave it at that. Thank you..

Thanks, Stephanie..

Thanks, Stephanie..

Our next question comes from Sanjay Ramaswamy with BofA. Please proceed. .

Good morning, Sanjay..

Hey, guys. Hey. Thanks for taking the question. Maybe just talking -- I think, in your prepared remarks, Judy, you mentioned the color -- some color on how you've been utilizing some lane specific data to fill with truckload rated shipments and given the sizable inflection in truckload spot rates.

So you just kind of provide a little bit more color on how you expect that to change -- continue, maybe the duration of that given a more rational in the LTL pricing environment..

Well, actually, I think that was similar to what the question that I just answered for Stephanie. But again, we're very focused on utilizing that to meet the needs of both our network and the customers. And I think that what you've seen from the core account LTL customers that we have, we have good increases.

So, the combination of that I think worked very well in the second quarter. We're seeing that work well in the month of July where we've seen some strengthening. And I think just keeping those activities, synchronized, so to speak, is really the best advantage that we can have.

And we intend to continue to do that and based on the needs that we have in the network, and then again, meeting the customer need as we go forward..

Okay. Great. That's it for me. Thanks..

Thank you..

Okay. I think we've got time for one more. I think it's a follow up question.

Can you queue that one up?.

We have a follow-up from the line of Todd Group, Wolfe Research. Please proceed. .

Hey, guys. Thanks again for the follow-up.

With regard to Panther and kind of the Asset-Light segments, as we think about kind of overall truckload rate inflation, should we think in aggregate about the Asset-Light segment benefiting or hurting from kind of higher truckload rates and obviously an offset in terms of purchase transportation on a go forward basis for earnings?.

Well, that's an interesting question. Rob, I think, it depends what I said, because we have seen -- I mean, just this week, areas of the country that are very tight and I think you have to -- we have to navigate around those and do a good job with that to make sure that they're not deteriorating, that net revenue that, that we desire to grow.

But I do think that as with a tight capacity environment or tight order capacity environment as we go through the rest of the year, that will become more recognized by customers and strengthen our ability and a lot of situations where expedited involved are designed that way anyway in terms of the way that, that works with the customer, contract or the relationship.

So, we would expect that as capacity is tight or that over time, that would be beneficial to net revenue growth for us.

David, did you have anything you wanted to add?.

No. I would agree with that. Just to your point, I think that's probably where you're doing, Rob, just periods of time you may have a tightening or a tightening of the net revenue margins, and then expanding.

And so, as the cycle moves and as Judy pointed out, I think it's about the customer recognition of the market environment that you're playing in, in order to get the spread. .

That should have been more difficult, I think, is the customer side of that. Yeah..

Okay. We'll, I think that concludes our call. We thank you for joining us this morning. We appreciate your interest in ArcBest. So that concludes our call. Thanks a lot..

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day everyone..