Schneider National at Morgan Stanley’s Conference: Strategic Growth Focus

On Thursday, 11 September 2025, Schneider National (NYSE:SNDR) participated in Morgan Stanley’s 13th Annual Laguna Conference, where CEO Mark Rourke and CFO Darrell Campbell outlined the company’s strategic initiatives amid a dynamic transportation market. The discussion highlighted Schneider’s focus on long-term growth and profitability, while addressing challenges such as capacity constraints and regulatory impacts.

Key Takeaways

• Schneider National is focusing on dedicated solutions for stability and consistent revenue.
• The company is testing autonomous truck technology and exploring electric vehicle options.
• Logistics is a key area for profitable growth, driven by technology and strategic acquisitions.
• Schneider anticipates a potential slowdown in intermodal due to inventory pull-forward.
• The company is open to strategic acquisitions that align with growth objectives.

Market Overview and Demand Trends

• Demand initially expected in Q2 did not materialize; August saw steady volumes.
• September is crucial for quarterly performance, with potential demand ramp-down.
• Contractual rates in the truckload market have increased in the mid-single-digit range.
• Uncertainty around inventory locations impacts inland moves.

Dedicated and Truckload Operations

• 70% of Schneider’s trucks are configured for dedicated solutions.
• Higher churn in dedicated business as some customers shift to network solutions.
• Retention rates remain above 90% despite churn.
• Opportunity exists to convert private fleets to dedicated solutions.

Industry Capacity and Regulations

• Capacity is impacted by enforcement of regulations such as B1 driver restrictions.
• The truck order backlog is below replacement levels, indicating potential capacity shifts.
• Progress in attracting female drivers, with numbers increasing from 7% to over 14%.

Intermodal Operations

• Flat pricing in intermodal, but growth expected from new markets like Mexico.
• Strong relationship with CPKC enhances operations in the Mexico market.
• Structural cost changes have improved margins despite flat pricing.

Logistics and Technology

• Logistics is prioritized for high return on invested capital, focusing on profitability.
• FreightPower platform enhances pricing and productivity in brokerage.
• AI deployment has improved carrier broker productivity by 61% year-over-year.

Future Outlook and Strategic Initiatives

• Testing of autonomous trucks with Aurora focuses on economic models and integration.
• Running 100 Class 8 EVs in California; exploring renewable diesel and natural gas.
• Strategic acquisitions expected every 12 to 18 months, focusing on dedicated, intermodal, and logistics.

Q&A Highlights

• Alignment with OEMs is crucial for success in autonomous technology.
• EV development depends on subsidies; focus on renewable diesel and natural gas.
• Open to transformative acquisitions that advance strategic goals.

For a detailed review of Schneider National’s strategic insights and market analysis, please refer to the full transcript below.

Full transcript - Morgan Stanley’s 13th Annual Laguna Conference:

Ravi: Awesome. Let’s keep this going. Next up, we have Schneider National, and I’m very happy to welcome back to Laguna CEO Mark Rourke, CFO Darrell Campbell, and Christyne McGarvey. That’s Christyne with a Y, VP of IR and Corporate Finance. Thanks so much for being back at Laguna. Let’s just kick off with the state of the world as we see it. I think, obviously, we’ve been up here for literally, I’ve been here for two days, and we still really haven’t settled the view on has there been pull forward at 2Q? What does 2Q, 3Q seasonality look like? What does 3Q, 4Q seasonality look like? Help us resolve that.

Mark Rourke, CEO, Schneider National: I’ll help us resolve that. Ravi, as we were sitting here earlier in the year, we expected maybe some of that pull forward air pocket to happen in the second quarter. It really didn’t happen.

Ravi: Yeah.

Mark Rourke, CEO, Schneider National: As we came out of the second quarter, we had a little slow start to July and then finished actually what we would consider above seasonal expectation a little bit from the volume. Maybe a little more optimistic as we headed into August. I think volumes have been steady, but I don’t think August we would characterize as overly robust and perhaps even a little bit sub-seasonal. We’ve been in this continued tight band of demand and not bouncing up or down too directly, which isn’t necessarily uncharacteristic of August. When you look at history in September, it’s usually kind of a telltale month of the quarter. As we look ahead to peak, I think is the question. I think the question on everybody’s mind is how much is pulled forward, particularly for intermodal, which is more import-driven.

We certainly see a scenario where that could ramp down a little sooner than typical, which usually December.

Ravi: On the intermodal side.

Mark Rourke, CEO, Schneider National: Only on the intermodal side. The question is, where is the inventory? Even if it’s in here forward, if it’s still out on the West Coast, for example, in warehousing, we could still have the intermodal moves that actually get it into kind of the end markets. We don’t have perfect visibility to all. We expect that pull forward has occurred clearly. Where is that inventory at that ultimately leads to its inland move? We’re not ready to declare that we’re going to see this huge air pocket, but the probability is probably higher than what we experienced in the second quarter. On the truck side, I would say very similar. I think demand has improved. Obviously, as we came through the second quarter, as we came through July, we were predominantly through the allocation season from a contractual renewal standpoint.

Not a lot to report there, still in that mid to single-digit increase on the contractual side. Have a little bit more in the spot market, which allows us to have some more flexibility as the seasonal opportunities, if they come forth in the fourth quarter, we’ll certainly be prepared to seize those. We’ll have to see. Does the customer compete on price? Does it compete on volume more for share come to this holiday season? If that’s more of a volume play for our end customer, then maybe that gives us some more opportunity to move volume. I would say overall, though, as we sit here today, still in discussion, feels very similar to a year ago, which is probably what we said the last couple of years, right? We’re kind of in that same mode.

Probably more going on on the supply side when we get to that than maybe the demand side at this juncture.

Ravi: Got it. Just one follow-up there. We had a couple of your TLPers up here in the last 24 hours, and both of them seem to imply that project business for this year appears to be trending a little bit above last year. Would you see the same thing, or do you think it’s too early to tell?

Mark Rourke, CEO, Schneider National: It is in the same pockets as a year ago. The same segments of the economy, many of the same customers. Again, how robust they are depends how much project work there is. We are ready and we have our agreements in place. I would probably put it in very similar, but we will have to see what the demand totally is and maybe we could outperform a year ago.

Ravi: Got it. Have you started with 2026 negotiations at this point? What are some of the early offers, expectations going into mid-season for 2026?

Mark Rourke, CEO, Schneider National: Yeah, we’ll really characterize for us at this time of year and certainly into October, we’re into those strategic discussions for what is the customer’s goals for next year so that we get an understanding of what they’re trying to do. You know, Ravi, if we were here a year ago, we would have been talking to customers and certainly intermodal conversion was at the top of their list because they were expecting a tighter market. There was a discussion about they were going to favor asset solutions over brokerage. That’s the part of the discussions we’re in, not so much pricing or allocation events. I would expect that those two items, while one played out, certainly the move to more asset-based solutions, intermodal didn’t convert as much because of what was available on the truck side of the market.

I would expect as we get through this season, those same strategic initiatives that they talked to us a year ago, I don’t know if they’ll change a lot, but we’ll get into the more allocation as we get the page turns within the February timeframe. Today, it’s all about just setting kind of expectations, our interests, what we would like to see accomplished, and the next phase will be the actual events.

Ravi: Got it. Sticking with the TL side of the business, there’s also been some discussion on one way versus dedicated and kind of which is the focus area for now and what really ramps into the cycle. Obviously, some people saying we’re focused on dedicated for now because that’s a long-term opportunity and that’s stable business. Others are saying one way is where the torque is and we want to be kind of high into that going into the upcycle. What’s your view on that?

Mark Rourke, CEO, Schneider National: Yeah, we have 4,000 trucks or so into that one-way network, and we absolutely believe that’s where we have a great deal of operating leverage as the market improves just based upon that being the most depressed from a rate and a volume standpoint. However, as we think about strategically, our long view for a couple of reasons is we’re leaning into dedicated. Now, 70% of our total trucks, both counting our organic and our recent three acquisitions, we put into a dedicated configuration. Those are three to five-year contracts. You’re very deep. You’re not going through a network allocation event every year. Drivers generally, just like they prefer intermodal positions where they’re regularly scheduled, dedicated offers that many of those same characteristics. When you think about what the drivers desire, what we want to be for our shareholders is a consistent revenue and earnings stream.

We think that’s a favorable mix for us, and we’ll still get incremental margin opportunities from back hauls, whatever we get a chance to upgrade. Our pricing will adjust for new business. There’s still margin opportunity growth in dedicated. Sometimes people think that’s stagnant and it doesn’t change. That’s not the case in that market, but clearly operating leverage for financial performance is most evident, and that’ll happen quickest in turn in our network business and our brokerage business.

Ravi: Got it. I’ll come to brokerage in a second, but just on dedicated itself, there has been some noise in recent quarters, some speculation of competitive activity there, elevated customer churn. What is going on?

Mark Rourke, CEO, Schneider National: Yeah, we this year have experienced more churn than certainly a year ago. We heard some of our competitors having more of that last year. We’ve had a higher % this year, and I would say certainly there’s some cases where we’ve lost other dedicated providers on renewals. More prominent is the customer may have moved from a dedicated solution to a network to take advantage of what they consider to perhaps be opportunistic on the price side, which really is around your 53-foot standard trailer, which our focus is more on the specialty equipment going forward. Competition is particularly things we’re interested in. It’s fairly rational, good competitors, but to bring the scale that not everybody can do what we do, and there’s a few that obviously are focused on the same markets we are, but it’s a very rational market.

The pipeline is back to levels that we’ve seen in 2024. We’ll have some dislocation because some of that ramp down of lost business will happen in advance of some of the startups. We’ll have some period in between, but we feel really good that we’ll be back in the growth mode. Every other time we’ve been at this level, the pipeline has translated into a growth period for dedicated. Even though you could say, hey, we’re not in the most robust market, there’s still a high degree of interest there.

Ravi: Got it.

Darrell Campbell, CFO, Schneider National: Even with the churn that we’re seeing, our retention rates are still in the 90+%.

Ravi: Oh, wow. Okay. That’s pretty good. Another debate we’ve had in the last couple of days is private fleets and the extent to which they have grown in the last couple of years, last five years, if that has exacerbated the supply problem, a capacity problem in the TL space, and whether that actually presents an opportunity for dedicated as those fleets mature and potentially the customers are like, take this thing off my hands, right? Thoughts there.

Mark Rourke, CEO, Schneider National: Yeah, that’s a great on-trend item and one that we’re very close to. For a number of years, we’ve kind of assessed the full truckload market to be about 50% for hire, 50% dedicated, I mean, excuse me, private fleet. There’s been a shift, particularly coming out of COVID where there was maybe lack of control, supply, pricing that pushed some folks either to grow their fleet or some customers even to get into private fleets. We would assess that 55-45, actually. That’s a pretty big movement, even 500 basis points. Darrell can speak to this, but I think there are some outside pressures, particularly customers that are now having to pay insurance that weren’t under their general liability coverage before because the insurance providers kind of looked at this as a different risk profile.

At minimum, we believe and we can see it in our pipeline, the growth is stopping, not for all, but for most. As trucks come for renewal, are they going to go to an augmented dedicated provider like us, or are they going to re-up? We think there’s a great opportunity to start to move that needle back towards that 50% line. We’re focused on taking advantage of that.

Darrell Campbell, CFO, Schneider National: Over the past year or so, as we’ve been talking to insurance carriers, they’ve been more focused on just the coverages that private fleets are paying, right? The general liability coverage would incorporate smaller fleets. As those fleets have grown and as those experiences have changed, there’s been more of a focus of separating those exposures into separate policies that for-hire carriers would typically see.

Ravi: When you look at that pipeline for Dedicated, do you see an elevated % of potential private fleet conversions?

Mark Rourke, CEO, Schneider National: We do. More so than we had a year ago in both ways, both in complete conversions, but also in augmentation. They may have a private fleet of their own, but they’re not adding to it. They’re looking for providers to perhaps augment what they’re doing with their private fleet.

Ravi: Do you care what kind of dedicated businesses? I know one of your big competitors just almost exclusively does private fleet conversions. Do you care between augmentation versus convert?

Mark Rourke, CEO, Schneider National: What we care about is more the durability of the solution. If you’re putting yourself in a 53-foot van that is masquerading as dedicated and it’ll only flip back and forth, that’s the dedicated that, hey, we’ve had some churn because we have some in that category, but that’s not where our focus and growth is. We want to be able to be, what are we doing beyond just moving something from A to B? Are we helping stage product at the store? Are we moving rolled containers to the back of the store? Are we driving ATVs off and giving to the dealer? Something that’s just not a generic, I can hire somebody down the street for a penny less and I might make a change, right? Not that we don’t have 53-foot standard component, but that’s increasingly getting smaller and smaller as we remix the portfolio.

Ravi: Got it. Let’s talk about industry capacity. Obviously, you guys and your peers have been saying that that’s an inevitable squeeze coming at some point. How has that been evolving? Do you think the pace is accelerating, and how much of that is being exacerbated by these new rules on ELD and visas?

Mark Rourke, CEO, Schneider National: Yeah, I’ve been on this topic for a little while because I think, and I don’t know what the right word is, but sometimes you hear the word shadow capacity on the small operator that’s come in, come in after all this publicity relative to what went through COVID is a great opportunity that exists in trucking, which is one of the great, that’s how we even get started in 1935, a very similar way. When we step back and look at the rules, this administration, I think, has taken a much firmer stance, not put new rules on the books, but starting to enforce. We can definitely feel the B1 driver Mexico situation. I could see upwards of 20,000 drivers at some point in my view have been operating in that configuration.

It’d be hard to be overly precise, but when you look at the customer base and how we thought that was moving at the border, it was certainly having an impact. As just the mere threat of enforcement has a deterring effect, the opportunities and the pipeline of those types just kind of turned on. It just gives me further conviction that there was some impact to that enforcement activity, English language as well. That’s not just border. There’s other areas of the country, the upper Midwest, different populations that are impacted by that. We went out and surveyed a number of our power-only carriers and other carriers and certainly suggested that they’ve had to take action, which also releases capacity. As you mentioned, the tragic accident that happened in Florida and how CDLs in some states are being prosecuted, all of that is not adding capacity to the mix.

We think that’s a catalyst that we didn’t have a year ago. The other catalyst is you’ve been watching the new truck orders. We haven’t even been at replacement levels for months on end. Another good sign that things are changing on the capacity front.

Ravi: Sure. Do you think that these changes are somewhat structural in that when the upcycle comes, you’re not going to have another kind of free-for-all coming in, and it actually puts barriers to entry, or do you think it’s too early to tell?

Mark Rourke, CEO, Schneider National: Our industry is notorious for low barriers to entry, but I think, again, the enforcement of the basic rules helps. I don’t know if that’ll be a panacea that doesn’t attract. I think the other thing we’ve done as an industry really well is we’ve increased, and certainly in our book, attracting female drivers into the fleet. We went from 7% to over 14%, 15% now, which we’re proud of. There are other elements that we’ve tapped into and others have as well. That’s also helped on the driver front. It’s awful odd to me, it’s my 38th year in the driver condition, not being one number one issue on the list. Not been a whole lot of years. Right now, it’s other issues that are rate recovery and demand is far outstripping my concern level than driver level.

Ravi: I’m not sure if that’s a good thing or a bad thing, but anyway, it’s a thing.

Mark Rourke, CEO, Schneider National: It is a thing.

Ravi: Yeah. Let’s switch gears to intermodal. You said earlier that it’s probably a little bit of a trickier outlook for the back of the year than trucking. How would you characterize the pricing environment there, especially kind of demand capacity in that space?

Mark Rourke, CEO, Schneider National: Yeah, on a like lane basis, as we talk, flat has been kind of the new norm there, and that’s what we expect to happen as we’ve been through the whole renewal season. We don’t see a lot of change there. What would change would be our mix, growing more out of Mexico, growing more out west, having a little bit more shrink in the east just because of the truck alternative. We’ve been able to have a nice steady growth pattern there, and that’s not with a great deal of conversion. It’s been these new markets. Mexico was way underrepresented relative to what we believe was capable there. Now with the new service into the southeast with the connection with the CSX, which we haven’t been through an allocation season there yet with that service, it’s been more ad hoc as opportunities come out of cycle.

As we get into our third cycle now with the CPKC in and out of Mexico, we think there’s still, we went on our measurement, 6% market share to 30% because I think we absolutely have the best solution there. We’re going to lean into our differentiators and be very clear to our customer base. This is where we have the best solution relative to transit and proximity to ramp, and here’s the benefit you get for that. We may not be as well positioned on these lanes. That’s fine. We want you to understand where our strengths are.

Darrell Campbell, CFO, Schneider National: Despite flat pricing, we’ve grown margin, right? That’s some structural changes that we’ve made as it relates to cost and productivity that are coming through despite that backdrop.

Ravi: Got it. I think CPKC shouts you out in almost every conference call, and it’s kind of not often that the rail operator shouts out the IMC. Clearly, you guys have a good relationship there. On that cost side, can you just talk about some of those initiatives that you have on the chassis side and on the cost side that kind of helps you do that and how much more bandwidth you have?

Darrell Campbell, CFO, Schneider National: Yeah, the cost initiatives are across the board. Intermodal is one example of the productivity initiatives. We’re just doing things to fill empty lanes, going into the areas of differentiation that set us apart, reducing friction costs, working on the box repositioning, all those things that are coming through. On a truckload side, similarly, we’re working on tightening our ratios, whether that’s tractor to driver or trailer to tractor as well. We’re looking at facilities, we’re looking at third-party costs, we’re looking at headcount reduction across the board. If you look at sequential improvement in our earnings in truckload, 60% from Q1 to Q2, despite low to mid-single-digit growth, that’s just a culmination of all those initiatives that started more than two years ago that we continue to go through. These are structural. We’re not cutting to the bone.

We have to make sure that in the upcycle, we’re positioned to react. We’re seeing whenever there’s a small inflection, there’s a disproportionate impact to earnings because we’re being very thoughtful in those initiatives.

Ravi: Got it. Understood. Let me ask you about the biggest topic of discussion at the conference, which is the rail merger. I think a couple of your peers came out with statements kind of supportive, but correct me if I’m wrong, I don’t think you have just yet.

Mark Rourke, CEO, Schneider National: Correct.

Ravi: Thoughts on the reason?

Mark Rourke, CEO, Schneider National: Yeah, we’re not against, we’re just being thoughtful and we think details matter in this category. What is the service design? What are the concessions? What changes? What other things? There might be another story or two that comes out between now and the end. Once the dust settles there, I think we’ll weigh in and we’ll also look at what’s best for our organization. We’re really happy with our three providers today. The CPKC is absolutely great for us in Mexico. UP has really done a nice job under Jim Filter relative to its service reliability. Excited about what CSX with the tunnel being done and some of the things that they’ve been dealing with there. They’ve been a solid performer on the service performance for a number of years.

In fact, one of the reasons we went to the UP was because of its improved connections with the CSX around steel wheel and some efficiency on cross-towning in a number of key markets for us. While those may not be the two that’s in the connection talks, they’re still very efficient things that we gain through that. I think you’re seeing these other announcements come out to talk about the cooperation that they’re having. We just want to see what that whole design looks like. We’re confident we’ll be able to adapt our strategy to take advantage of whatever that end game is and look forward to getting the clarity that everybody else is looking for.

Ravi: Got it. If I were to ask you a purely theoretical question.

Mark Rourke, CEO, Schneider National: Purely.

Ravi: There’s been a lot of debate with very polarized views about whether you need a merger to achieve end-to-end service improvement or if you can get almost all the way there with a partnership alone. Obviously, depending on who you are, you have very different views here, right? As somewhat of an unbiased party, what is your view?

Mark Rourke, CEO, Schneider National: I think on current what was considered intermodal lanes, they’ve done a really good job of taking friction out. I think the Mexico story was very unique because it was very hard to keep fluid well cars and empties getting back to an unbalanced market. The CPKC really solved that. I’m not sure that’s the same single line problem that gets solved by a transcon, a railroad merger. That being said, what’s important, as we say in the service design, when we say that, are there other lanes that aren’t as effective today that this combination or other concessions make something more attractive to get truck, right? We think it’s bigger than just how does today get better, but what’s new opportunity that exists based upon ultimate design. That’s the part that could unlock further conversion opportunities from truck to intermodal.

Anything that allows us to do that, that takes improved transit, improved experience, takes friction out, we’re going to be supportive of because that ultimately allows us to be more successful in converting over the road to intermodal. We don’t believe right now is the time to kind of weigh in until we better understand all of that.

Ravi: I’ve always thought that there’s been maybe a little bit of tension between being a TL and an intermodal at the same time. Maybe it’s the best of both worlds, maybe it’s the worst of both worlds. How do you make sure that your TL business does not suffer from this combination being very good for IM and vice versa?

Mark Rourke, CEO, Schneider National: Yeah, Ravi, this is paramount to what I just give Don Schneider so much credit for, right? When this all was emerging, it would have been very easy. We had a number of competitors fight the change, right? Defend the core, defend my today. Don said we have to adapt to where the economy or where the customer is going and where the economics are going. If he didn’t make that decision, that really was very destructive to our truck business at the time, to accelerate towards that, we wouldn’t be who we are today. It’s very hard to get in and get scale, right? I think that’s a very important lesson. We don’t let what today is get in the way of what the future needs to be, whether that’s autonomous, whether that’s intermodal conversion, because ultimately the customer will decide.

What we think about the world is let’s give them two great solutions that based upon their cost and transit and service requirement, we can do this or we can do that and let them choose where the value is. We don’t worry about cannibalization. There’s enough to go around. We just want to make sure that we give the customer the best chance to choose us.

Ravi: Got it. You have a third solution as well, which is Logistics.

Mark Rourke, CEO, Schneider National: We do.

Ravi: Obviously, a big focus area for you. You’ve made some key acquisitions in that space. A, talk about what the current environment points to for the logistics space, and B, also strategically where that goes over time.

Mark Rourke, CEO, Schneider National: Yeah, we love that logistics business because it allows us to grow our business earnings over time without putting as much capital to play. From a return on invested capital standpoint, very, very accretive. We also have standards that we want to make sure that we’re not just chasing volume. We don’t have a goal to sell our Brokerage to a private equity firm. We want to deliver results on a consistent basis and be profitable for our shareholders. We focus on profitability first, growth second in that business. Our tools and our guidance systems are set up to do that. That being said, it has been a more difficult year for us on the truckload mode because of the customer’s aspiration to be more asset-centric. We’ve done really well on the other modes like LTL.

Power only has done really well because then that feels much more like our network offering. We’ve grown now not only the upcycle, but we’ve consistently grown our power only offering through this quote unquote down cycle. We do so at a better return because we’re getting additional net revenue because of the trailing asset being part of that. We look forward to being able to capture the incremental volume quickly. Our tools are set up to do that. We’re not constrained because it’s not our driver and our truck. A very important part of the future, we’re just in a bit of a lull as it relates to truckload mode as it relates within our standard.

Darrell Campbell, CFO, Schneider National: I think there’s opportunity as well as related to Cowen, right? With the Cowen acquisition came the logistics business. We believe that there’s synergies between our operations and theirs. Part of bringing them into kind of the Schneider logistics network, we think has a lot of uplift.

Ravi: Got it. One of your peers has been very aggressive with rolling out tech tools and/or cost cuts. I think there’s some debate as to which side of that dial is pushing it. Thoughts on that, what are you doing in that regard in both of those aspects?

Mark Rourke, CEO, Schneider National: Yeah, our FreightPower platform, generally some of our most innovative technology starts in the brokerage side, and then we learn how to deploy and then kind of use it across more parts of our portfolio. AI, that’s the buzzword. Maybe we’ll make it FreightPower AI or something, get better evaluation.

Ravi: You can’t hear our website if you’re not hearing AI.

Mark Rourke, CEO, Schneider National: Yeah. We’ve been using that for years, particularly around the decision science, taking in whole boats of structured and unstructured data to help us price both on the buy side and the sell side in brokerage and then obviously translate to how that makes sense on the assets. We’ve deployed other use cases now with voice and generative language model. It’s amazing how you can talk and feel like you’re really talking to somebody. You stutter, you have the ums, you do all the things that you would normally do in a conversation. It’s taken some of that meaningful work that you have to do, but it’s not always value added and put our people against other more important work. We probably didn’t get as much press on this, but in the last quarter, we grew our carrier broker.

Matching the load to the broker through automation and through the AI, a 61% improvement in productivity year over year. We don’t have less broker. We redeployed them in other places to generate freight versus put it against the carrier side of the house. There are many use cases. We’ve got some in intermodal we’re pursuing. Many of those are enhancing the job so that we can grow the business without growing people. Some of them are replacing lower level tasks that we can actually have less folks in the business. It’s very, very interesting. We’re on the early innings of all of this, but we think there is a myriad of use cases. Transport and transportation, I think, is a great place to deploy.

Ravi: Got it. Any questions in the audience? Average?

Unidentified speaker: I wanted to ask you a little bit on the autonomous side.

Mark Rourke, CEO, Schneider National: Sure.

Unidentified speaker: You guys are doing tests with Aurora.

Mark Rourke, CEO, Schneider National: Are you with an autonomous company?

Unidentified speaker: I am not.

Mark Rourke, CEO, Schneider National: Okay.

Unidentified speaker: Interesting.

Mark Rourke, CEO, Schneider National: He wishes he was.

Unidentified speaker: I’m interested in hearing, I have an idea in my mind where the amount of work and effort and time that you guys put in right now to validate what needs to be done to deploy those into your fleet over time, as well as the cost to just put them into service. Is there a world where we see accelerating gains and share gains because when autonomous trucks become here and now, that it’s the smaller fleets and the mom and pops that can’t really do that as effectively as you guys can?

Ravi: Please ignore the guy sitting in the fourth row when you answer.

Mark Rourke, CEO, Schneider National: Right behind him?

Ravi: Yeah.

Mark Rourke, CEO, Schneider National: Yeah, we’re very bullish on the future as it relates to how we can deploy the technology. We have a belief that those who are aligned with the OEMs and engineering from the ground up, as opposed to the other systems that are kind of added after the fact, is the right. We happen to believe that the winners are associated with a couple like Torque and Aurora, who I think was before us in here. Good solutions, the technology is amazing. Probably have to figure out a little bit about liability in this world. Everything we do probably means everybody’s liable versus somebody being liable. That’s generally how the world’s working today. Having some clarity there, I think, would be important in the economic models, right?

We’re so focused, at least on our end, on how would we integrate and what’s the learning that goes into play on how we could deploy across our network. Getting to where those use cases are best deployed, I think, is really the next step. How does the economic exchange happen that makes sense for us, makes sense for our customers? The technology is really impressive and you know we’re on the cusp.

Ravi: Mark, what do you need to see to put out a press release saying we are going to buy 1,000 autonomous trucks or put in an order for, like, I mean, I’m not saying it should happen now, but what do you need to see to get there?

Mark Rourke, CEO, Schneider National: Yeah, I think it’s understanding the economic model and where does it best fit. I think it’s, you know, this industry, while density on individual lanes is amazingly not dense. I mean, even if you look at even with somebody as large as us or you combine even multiple carriers together, there’s not a lot of lanes that moving truck that would just, you could put, you know, let’s put 15 on this a day and kind of run back and forth. Where can we do that at scale and how do we operate? That’s what we’re trying to learn with the pilots that we’re doing. The liability piece, right? I mean, I’ve been in this a long time.

When I talk about what my issues are, not the driver, it’s like every time that we turn a mile, we’re putting so much risk because of what’s going on in the country right now. Unfortunately, there’s a lot of momentum on reform. We can talk about that at a different time. It’s just getting those use cases down and how do we make that translate to that we’re not just doing it to put press releases out, but we’re doing it because it makes sense for our margin performance, our customers, and we can deploy. I’m confident that we’re going to get there. It’s just we’re a little soon in that process.

Ravi: Got it. You’ve also been a leader in deploying EV. What’s the update there, especially given some of the changing ESG requirements?

Mark Rourke, CEO, Schneider National: Yeah, we’re running about 100 Class 8s out in California. That whole piece from learning how to be a charging station and deploying them operationally has gone exceedingly well. Very proud of our team, both operations and our equipment engineering group. Really no negative trade-offs there. We’re not probably exactly break even, but we’re pretty darn close to diesel, which without the subsidies would be very hard. That’s kind of the styminess now without the subsidies. I don’t really see a lot of development of us in the electric space in the next 24 months. I think you’ll see us do a little bit more in the natural gas space, particularly with the new Cummins engine and customers’ interest level with a little more range. It gives us a little more opportunity and not so weather sensitive.

Our alternative place, I think, will be in the renewable diesel and perhaps natural gas, more so than electric in the next couple of years.

Ravi: Got it. Any more questions from the audience? Nothing.

Unidentified speaker: I believe it’s been a little less than a year than your last acquisition. How should I think about your appetite for M&A going forward? If that’s a priority, where are you fitting into your portfolio, whether it’s asset light or more on the asset-based side?

Mark Rourke, CEO, Schneider National: Great, thank you.

Darrell Campbell, CFO, Schneider National: Good question. I think publicly we’ve said that every 12 to 18 months we expect to do something inorganic. We have very specialized areas that we think are strategic areas of growth. We talked about dedicated and specialty within dedicated, intermodal, logistics. You think about the intermodal landscape and the fact that it’s very concentrated in terms of the players there. Probably not a whole lot of opportunities for acquisitions there. From a logistics standpoint, based on where multiples are, it would probably be not as compelling to do an acquisition in that space today. We’ve found a good niche in terms of dedicated, right? There’s a playbook that we’ve seen. We’re not looking at fixer-uppers. We’re looking at different areas of differentiation where we don’t currently play, whether that’s a vertical, a type of specialty play, a geography that we don’t specifically cover.

The last three acquisitions that we’ve done have fit that profile. We have the luxury of focusing on organic growth, which is our number one, as well as inorganic growth because of the strength of our balance sheet, right? We’re at 0.6 times levered. The success of those acquisitions means that with the accretion, we can delever pretty quickly. Even with Cowen that we did in December of last year, by June of this year, we already started to delever. That wheel keeps moving. We have a strong pipeline of potential acquisitions that we look at, but they have to fit that profile that ultimately enhances return.

Ravi: Would you ever consider opening a new front with LTL?

Mark Rourke, CEO, Schneider National: I mean, you know, I don’t think that’ll be where we kind of lean into, Ravi, on LTL. I think maybe there’s already adequate capacity there. Where will we differentiate and can we cobble something together? I think we have just better opportunities in our strengths of intermodal and truck, particularly dedicated. I would also say, though, that we would consider Darrell’s comments for more programmatic type acquisition, like the last three we did. The Cowen was the largest at 1,800 trucks. If there was something more transformative that advanced our strategy and had a bigger play and a bigger splash, I think we have the wherewithal and the interest and certainly the board support to do it. We’re thinking bigger too, not just programmatic, but it’d have to be the right fit.

We’ve got a lot of people that like to talk to us about what those right fits are. It’s a good time to be in those discussions.

Ravi: Got it. Let’s hope it’s a good time for the cycle as well. Thanks so much for joining us here today. We will see you at Laguna next year.

Mark Rourke, CEO, Schneider National: Thank you.

Darrell Campbell, CFO, Schneider National: Thank you.

Ravi: Thanks, Mark.

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