Question-and-Answer Session
Operator
Yes. (Operator instructions) And our first question will come from the line of Jon Langenfeld from Robert W. Baird. Please go ahead.
Jon Langenfeld – Robert W. Baird
Good afternoon guys.
Mike Uremovich
Hi, Jon.
Jon Langenfeld – Robert W. Baird
Mike, can you talk a little bit about the operating expenses within the intermodal division? How much of the cost controls there are things you are doing versus the benefit of having a more consistent network out there with specifically the UP?
Mike Uremovich
A lot of it is – a lot of it recently, Jon, has been network because obviously that smoothes the workflow and in addition speeds the turn on the boxes. So, I would credit that with some very – a large portion of the cost effort.
Jon Langenfeld – Robert W. Baird
And even on the SG&A side, I mean, it seems even from an absolute perspective seems as low as it’s [ph] spent for quite sometime. What’s going on in that line, again, specifically in intermodal?
Mike Uremovich
Well, as you know, across the company in total, we committed to get aggressive in our SG&A spend. And we have done that across all of the units as well. I don’t know as I would isolate just intermodal in that area, though it is clear intermodal has done a nice job in controlling expenses. But that's been pretty much across the board I think.
Jon Langenfeld – Robert W. Baird
That’s more internal whereas the Op expenses, such Op expenses are more external?
Mike Uremovich
Yes.
Jon Langenfeld – Robert W. Baird
Okay. All right. Good perspective there. And then when you think about the pressure on the gross margins with intermodal, you kind of laid out a couple things there. Burlington Northern ramping that up in fuel costs and then just the squeeze on some of the pricing out there, but if you had to put them in order of magnitude, what’s the biggest pressure point as it relates to that gross margin line?
Mike Uremovich
Probably fuel. And I suspect that I would probably put price second.
Jon Langenfeld – Robert W. Baird
And do you have fuel caps out there with your customers?
Mike Uremovich
Fuel caps? How do you mean?
Jon Langenfeld – Robert W. Baird
Well, I mean, do you get to a point on some customers where they quit paying fuel surcharge?
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