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Speaker 1: Hi everyone, Welcome to Bloomberg Intelligence Talking Transport Podcast. I'm

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Speaker 1: your host, Lee Klaskow, Senior Freight Transportation religious X analyst

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Speaker 1: of Bloomberg Intelligence, Bloomberg's in house research arm of almost

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Speaker 1: five hundred analysts and strategists. Before diving in a little

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Speaker 1: public service announcement, your support is instrumental to keep bringing

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Speaker 1: great guests onto the podcast like the one we have today.

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Speaker 1: If you haven't already, please do take a moment to follow,

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Speaker 1: rate and share the Talking Transport Podcast. We appreciate your support.

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Speaker 1: I'm very excited to have Mark Rourke, CEO and President

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Speaker 1: of Schneider National, a leading provider of trucking, intermodal and

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Speaker 1: other logistics services. Schneider trades under the symbol SNDR and

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Speaker 1: as a market cap of three point eight billion dollars.

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Speaker 1: Mark joined Schneider in nineteen eighty seven as a service

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Speaker 1: team leader at the company's Sayville, Ohio location. Prior to

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Speaker 1: assuming his current role, he was the COO. He's held

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Speaker 1: a variety of leadership roles with increasing responsibility, including President

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Speaker 1: of Truckload Services, General Manager of Schneider Transportation Management as well.

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Speaker 1: Heals a bachelor's degree in Marketing from the University of

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Speaker 1: Akron and has attended programs on corporate governance and strategic

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Speaker 1: leadership at Harvard University. Mark serves on the board of

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Speaker 1: directors for the Green Bay Packers, the Shift Group, and

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Speaker 1: the Trucking Alliance. Welcome to the Talking Transport podcast, Mark.

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Speaker 2: Well, thank you.

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Speaker 1: So I'm assuming you're a Packers fan.

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Speaker 2: Well, if you live in Green Bay, Wisconsin, it comes

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Speaker 2: with the territory. It's actually required. But it's a great

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Speaker 2: joy to be on the Packer board and obviously is

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Speaker 2: a small community to have an NFL team, it's kind

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Speaker 2: of unheard of. So and we're happy with the trade

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Speaker 2: out here to New York. Hopefully you are as well

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Speaker 2: we are.

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Speaker 1: And I'm assuming do you guys when you have your

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Speaker 1: board meetings you wear cheese heads?

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Speaker 2: No? No, but the Packers now own the chief's head

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Speaker 2: and so we're encouraged to do so. But so far

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Speaker 2: I've avoided that.

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Speaker 1: Okay, Well, let's shift from football. Let's talk transports. So

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Speaker 1: can you give a little background about Schneider National.

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Speaker 2: Yeah, we are a large, diversified multimodal as you kind

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Speaker 2: of laid out in your opening there in the full

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Speaker 2: load space, So we have segments serving our customer needs

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Speaker 2: in full truckload as well as intermodal, which is where

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Speaker 2: we leverage the Class one railroads to take double stack

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Speaker 2: containers on the middle mile portion. And then one of

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Speaker 2: our fastest growing is third party logistics, where we bring

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Speaker 2: together third parties with customer freight and use our technology

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Speaker 2: to optimize and help customers solve problems beyond what we

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Speaker 2: have our own assets. And again a very growing portion

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Speaker 2: of what we do a lot less asset intensive. Obviously

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Speaker 2: we're leveraging other people's drivers and power and trailers to

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Speaker 2: serve our customer.

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Speaker 1: Right, And actually Bloomberg and Schneider have a lot in common.

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Speaker 1: Both of our colors are orange.

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Speaker 2: That's right.

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Speaker 1: You know, orange is a big part of our color scheme.

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Speaker 1: So if you're on the road and you see an orange,

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Speaker 1: it's likely Schneider, right.

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Speaker 2: That's right. And you know why that is. It's why

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Speaker 2: do they have blaze orange hunting jackets and construction barrels.

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Speaker 2: It's very visible. And that was really the behind that

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Speaker 2: that the safest color was orange, and Don Schneider felt

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Speaker 2: that was the best corporate color.

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Speaker 1: I think it's great, and safety is job one for transportation,

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Speaker 1: that's for sure. Can you talk about you know, you

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Speaker 1: know your transportation company, so you know, some people might

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Speaker 1: think it's a dirty industry what you're doing on the

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Speaker 1: sustainability side.

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Speaker 2: Well, you know what I like about the sustainability story

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Speaker 2: and message is it's one of those things where it's

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Speaker 2: good business as well as it's the right thing to

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Speaker 2: do and good for the environment. And so whether it's

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Speaker 2: taking empty mile waste out, whether it's improving your diesel

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Speaker 2: MPG year after year with new technologies and training of

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Speaker 2: your drivers to now alternate fuels like battery electric, all

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Speaker 2: of those things are good for the environment, but it's

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Speaker 2: also good for our customers and good for our bottom line.

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Speaker 1: Right. And you guys recently, I think you had like

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Speaker 1: a large fleet of battery electric trucks that you added.

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Speaker 1: Can you talk about how that's been working out and

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Speaker 1: maybe a little background behind the investment.

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Speaker 2: Yeah, your reference, we have about ninety four battery electric

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Speaker 2: trucks serving out in southern California the intermodal dre for

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Speaker 2: our Inland Empire out there at our ELMNTE South California location,

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Speaker 2: and very interesting. It was a three year planning project

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Speaker 2: because we actually do the on site charging, so we

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Speaker 2: have our own charging station in addition to deploying the

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Speaker 2: ninety four tractors. And I guess what we've learned is

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Speaker 2: the tractors are the easy part getting the trucks. The

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Speaker 2: more challenging part is how do you bring all that

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Speaker 2: together with the infrastructure working with a power company to

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Speaker 2: get the power distributed to your site, and then you

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Speaker 2: have to think about how you operate your business entirely different.

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Speaker 2: The range is much different than diesel. You know, when

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Speaker 2: we're used to fueling a diesel truck, whether it's three

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Speaker 2: in the afternoon or three in the morning, we generally

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Speaker 2: know what the pricing is going to be. With battery

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Speaker 2: electric and you're charging, it makes a difference whether you're

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Speaker 2: charging during peak hour times or whether you're charging in

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Speaker 2: the middle of the evening. And so a lot more

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Speaker 2: goes into our optimization algorithms to make sure that we

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Speaker 2: have a low cost effissient operation.

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Speaker 1: And because they're electric and they do have to charge,

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Speaker 1: I don't know if you know the numbers, and how

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Speaker 1: long does it take roughly to charge one of these

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Speaker 1: electric trucks.

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Speaker 2: Yeah, we can get to an eighty percent charge in

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Speaker 2: about four hours. These are very heavy duty liquid cool

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Speaker 2: This is a four point eight megawatt location and so

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Speaker 2: we can with sixteen charges up to thirty two trucks

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Speaker 2: at a time, and so it's a real commercial site.

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Speaker 2: And that's how we really think this industry is going

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Speaker 2: to have to adopt is put it where the truck

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Speaker 2: is operating at or where it rests, as opposed to

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Speaker 2: kind of over the road while you're out charging, it's

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Speaker 2: not nearly as efficient. So so that can get to

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Speaker 2: eighty percent charge and we get about two hundred to

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Speaker 2: two hundred and twenty miles in between charges, and that's

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Speaker 2: why it works best in those local operations shorthaul movements.

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Speaker 1: And are you doing anything with your fleet? Because you

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Speaker 1: know there's a new I'm sure you know this, there's

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Speaker 1: a new EPA admission standard for heavy duty trucks. I

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Speaker 1: believe it's twenty twenty seven. So are you guys doing

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Speaker 1: anything in terms of from a strategic standpoint of your

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Speaker 1: buying of trucks? Are you pre buying or you're not

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Speaker 1: there yet?

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Speaker 2: Yes, it's a little too early for that. And first

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Speaker 2: of all, I think there's two questions. How much do

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Speaker 2: you want to pre buy, and the second question is

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Speaker 2: how much supply will there be, how far ahead could

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Speaker 2: they manufacture even get with labor and supply chain challenges.

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Speaker 2: So I think that's a little bit unknown at this point.

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Speaker 2: But generally speaking, we don't like to take the first

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Speaker 2: generation engine right off the line. We'd like to see

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Speaker 2: that broken in in some burning period before we go

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Speaker 2: ahead and buy. So we'll have to see how that

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Speaker 2: plays out.

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Speaker 1: And so you know, from a growth strategy, is Schneider

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Speaker 1: more focused on organic growth or do you go into

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Speaker 1: the market and try to buy growth, whether it's a

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Speaker 1: trying to get into a new business or a new region.

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Speaker 2: Well, historically we've been an organic growth organization and more

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Speaker 2: recently though, we've looked at ways that can advance our

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Speaker 2: strategic content, particularly around specialty dedicated services, and so we've

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Speaker 2: made three acquisitions in the last two years and very

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Speaker 2: very happy with that outcome. So I think what you'll

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Speaker 2: see from us in the future is a bit more

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Speaker 2: balanced between organic growth, which is our primary opportunity, but

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Speaker 2: how we can augment that with successful customers that are

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Speaker 2: excuse me, carriers or other services that advance our strategic content.

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Speaker 2: So I think we're going to be an a shop

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Speaker 2: in the future versus just organic.

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Speaker 1: Out of your three businesses, is there one business that

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Speaker 1: probably has the most potential for organic growth versus the others.

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Speaker 2: Yeah, we think so. You know, obviously we're an intermodal

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Speaker 2: and from a domestic intermodal standpoint, the top four providers

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Speaker 2: there have about seventy percent market share, so there's just

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Speaker 2: not as many opportunities and assets that make sense there. Brokeraage,

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Speaker 2: we think is a place that we can grow organically

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Speaker 2: the best and the fastest, and so that really leads

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Speaker 2: us to specialty truck applications of some sort. It could

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Speaker 2: be tanker, it could be specialty dedicated things that generally

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Speaker 2: that have some type of moat built around them because

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Speaker 2: of the special type services that you might be briting

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Speaker 2: for your customer. We think that's the most likely, and

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Speaker 2: that's what we've done with the last three acquisitions.

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Speaker 1: Okay, great, and so let's talk about the trucking market.

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Speaker 1: There's you know, a lot to talk about. Where do

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Speaker 1: you see the trucking market today and kind of what

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Speaker 1: are your expectations going forward, because you know, rates have

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Speaker 1: been depressed for quite a long time. Some might argue

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Speaker 1: it's a demand issue. Some might argue it's a supply issue.

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Speaker 1: Where do you sit on that argument?

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Speaker 2: Well, Lee, this is my thirty six almost thirty seventh

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Speaker 2: year in the industry, and I don't think I've quite

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Speaker 2: lived through cycle like this one. We obviously go through cycles,

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Speaker 2: and it's really borne by the rapid run up of

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Speaker 2: the pandemic and post pandemic era to now the correcting

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Speaker 2: factor here on the other side of that, And so

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Speaker 2: I think it's a little bit of both. I think

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Speaker 2: it doesn't take much in our industry to get out

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Speaker 2: a whack. A couple percentage points on capacity, a couple

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Speaker 2: percentage points on demand can have the effect. But we

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Speaker 2: are definitely in an historical long cycle here. From a

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Speaker 2: down cycle standpoint, I think on average, twenty months is

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Speaker 2: what we generally find in our internal metrics as a

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Speaker 2: cycle either up or down right, and we are now

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Speaker 2: in the twenty four and twenty five fifth month of

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Speaker 2: this down cycle, so long by any historical standard.

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Speaker 1: And you know, GDP expectations for the next two years

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Speaker 1: is not great. It's around two percent, give or take

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Speaker 1: for twenty twenty four twenty twenty five, So barring some

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Speaker 1: craziness that increases the demand. So from our standpoint, you know,

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Speaker 1: we think that when rates are going to you know,

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Speaker 1: inflect positively and start moving forward, it's got to come

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Speaker 1: from the supply side. More so, that coupled with our

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Speaker 1: expectations of a more normalized peak season this year, which

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Speaker 1: we'll give you some good year of year growth numbers

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Speaker 1: relative to past peak seasons, what do you think has

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Speaker 1: to happen on the supply side.

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Speaker 2: Well, maybe just back to that demand piece. You know,

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Speaker 2: a year ago, we were dealing with the inventory overhang

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Speaker 2: from that and so that was very difficult to work through,

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Speaker 2: not only for our customers, but what the impact was

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Speaker 2: to the freight freight market. So that I guess the

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Speaker 2: good news as we sit here todayly that that is

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Speaker 2: largely most every customer we talked to believes they're through

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Speaker 2: that inventory correction, maybe not yet thinking they need to

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Speaker 2: be in the building of inventory based upon being a

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Speaker 2: bit more cautious, but at least that part of the

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Speaker 2: equation is behind us. And so I think, to what

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Speaker 2: your point, the supply side has been a little stubborn

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Speaker 2: to correct the overbuild that came through the pandemic led

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Speaker 2: build up, but we're starting to see modest and continual

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Speaker 2: correction opacity levels. We're starting to see some firming of

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Speaker 2: pricing contractually with customers. All those are signs that I

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Speaker 2: think we're starting to see some light at the end

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Speaker 2: of the tunnel. A little early to call it inflection,

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Speaker 2: but I think there are some things developing that we

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Speaker 2: might start to get back to your point of some

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Speaker 2: normal seasonality. We saw a little bit of that at

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Speaker 2: the end of the first quarter in March. We're getting

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Speaker 2: close to the holiday season here in the summer, and

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Speaker 2: we're seeing some pickup in the traditional food and beverage markets,

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Speaker 2: which is typical of seasonality. So a bit more encouraging

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Speaker 2: than we certainly were a year ago in this position.

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Speaker 1: And so you know, not only is Schneider a you know,

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Speaker 1: a diversified company in terms of the services, your customer

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Speaker 1: base is pretty diversified as well. So you're seeing all

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Speaker 1: sorts of the economy, whether it's you know, consumer products

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Speaker 1: or manufacturing. Can you talk about the mix of customers

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Speaker 1: that schn.

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Speaker 2: Yeah, that's one of my favorite parts about this industry

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Speaker 2: is the exposure you get to the various parts of

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Speaker 2: our economy. And we're predominantly serving in the consumer industrial

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Speaker 2: sectors for our customer base, but it's highly diverse, everything

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Speaker 2: from extreme value retail to home improvement retail to specialty

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Speaker 2: or big box all the way through automotive, chemicals, manufacturing,

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Speaker 2: and so highly highly diversified, and not one We don't

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Speaker 2: have any customer above five percent of our revenue, so

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Speaker 2: even within that a lot of distribution. And so the

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Speaker 2: question is where's the catalyst, And obviously the automotive market

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Speaker 2: is hung in there well manufacturing and the near shoring

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Speaker 2: coming back on the trend, I think from the supply chain,

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Speaker 2: we think Mexico is going to be a big winner

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Speaker 2: and perhaps even more near shoring in some of our

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Speaker 2: other US based locations. So I think maybe the manufacturing

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Speaker 2: is a little bit of a renaissance, maybe a little

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Speaker 2: bit ahead of us yet to come. But overall demand

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Speaker 2: across all that segment has been fairly steady. It just

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Speaker 2: hasn't been spectacular.

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Speaker 1: Did Schneider do a lot of across border traffic with Mexico.

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Speaker 2: Yeah, it's one of our rural strategic growth drivers. So

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Speaker 2: we've been in Mexico for thirty years, have an on

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Speaker 2: site presence both sales and operations in Mexico City. And

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Speaker 2: what we found is over time, while the decision makers

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Speaker 2: may be in Mexico City or somewhere in the US,

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Speaker 2: the collaboration between the two countries is important for things

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Speaker 2: to operate smoothly. And we've recently been the anchor of

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Speaker 2: the new Kansas the CPKC service intermotially coming out of Mexico,

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Speaker 2: and we think that is just going to be a

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Speaker 2: tremendous growth driver. Already seeing great success there because that

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Speaker 2: market's been underserved from a reliable rail service to convert

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Speaker 2: some of the over the road traffic. So a very

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Speaker 2: important growth driver for US.

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Speaker 1: Can you broadly talk about, you know, what kind of

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Speaker 1: products are moving southbound into Mexico and what kind of

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Speaker 1: products are moving northbound out of Mexico.

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Speaker 2: Yeah, Mexico's the largest trade partner with the US, and

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Speaker 2: about fifty percent of that at least northbound has to

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Speaker 2: deal with the automotive market. A lot of automotive parts,

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Speaker 2: and there's some automotive parts ago the other way to

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Speaker 2: be finished and then maybe come back domestically, and so

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Speaker 2: that is the biggest opportunity. But we're seeing you know,

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Speaker 2: electronics and food products. It continues to be very much

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Speaker 2: a manufacturing hub and diversifying across our service offerings.

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Speaker 1: In addition to CPKC, some of your other partners are

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Speaker 1: like Union Pacific in CSX. Broadly speaking, how has rail

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Speaker 1: service been, because you know, over the last couple of years,

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Speaker 1: it's been a challenge. It seems to be getting better.

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Speaker 1: But I'd love to hear your perspective on that.

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Speaker 2: Yeah, it is, you know, And our philosophy, Lee, is

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Speaker 2: that we really collapse our spending alignment around those three

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Speaker 2: primary providers. We don't try to split between because it

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Speaker 2: takes a lot of collaboration and a lot of efficiency

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Speaker 2: around the rail hubs. And so we align with the

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Speaker 2: Union Pacific and that's relatively new for us. We're in

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Speaker 2: our second year with them. Out of the West. We're

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Speaker 2: with the CSX in the East, and then CPKC not

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Speaker 2: only in an out of Mexico, but if we get

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Speaker 2: STB approval on the Meridian Speedway, we'll connect the Southwest

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Speaker 2: with the southeast as well. In service is really geographically specific.

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Speaker 2: The CSX in the East has been rock solid for

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Speaker 2: a number of years, very truck like the new CPKC

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Speaker 2: coming out of Mexico is a bullet train. It's been

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Speaker 2: on time, terrific execution where we've seen great improvements in

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Speaker 2: the West, and that's place we probably needed it certainly

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Speaker 2: the most sure and so the team at the UP

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Speaker 2: really focused in on that and we've seen dramatic improvement.

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Speaker 2: Got some more improvement to do, but it's taking the

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Speaker 2: service card off the table.

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Speaker 1: And it's broadly speaking from an intermodal standpoint. Do you

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Speaker 1: see more growth on the domestic side or on the

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Speaker 1: international side or the I don't know. I guess cross

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Speaker 1: border is considered what domestic or international?

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Speaker 2: Well, how we define it. If it goes in a

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Speaker 2: fifty three foot domestic box container, that's a domestic. International

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Speaker 2: is when it comes on the smaller you know, twenty

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Speaker 2: and forty footers that come into the come through the ports,

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Speaker 2: and maybe a little surprising, imports are really up quite

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Speaker 2: a bit yere over year, but we haven't seen it

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Speaker 2: fully translate into domestic volumes because they've been moving intact

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Speaker 2: more into the interior of the country. And I think

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Speaker 2: you'll start to see that change when they want to

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Speaker 2: get it back to Asia quicker, they'll start translating more

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Speaker 2: at the borders, and that is good for our inn

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Speaker 2: mold because they put that in a domestic box and

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Speaker 2: then we move it inland. So we're up in the west,

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Speaker 2: but not as much as some of the data would

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Speaker 2: suggest based upon imports.

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Speaker 1: So you guys do very little international. It's mostly domestic. Yeah,

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Speaker 1: we're one hundred percent from the ports. That's right, gotcha? Okay?

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Speaker 1: And is there I guess is there a region that

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Speaker 1: you think that's going to grow more? Is it the west?

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Speaker 1: Is it the east or is it the north South?

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Speaker 2: Yeah? Well, customers have done over time to d risk

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Speaker 2: is not bring as much as they used to through

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Speaker 2: the southern California ports and diversified a little bit more east, right,

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Speaker 2: and so which puts that more into the truck lines

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Speaker 2: versus the intermodial lines when you depending upon the length

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Speaker 2: of the hall when it does come through the east,

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Speaker 2: but most economically is coming through the west. It's the

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Speaker 2: cheapest way for it to get here, and it's a

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Speaker 2: great distribution arm. So it's still going to be incredibly important,

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Speaker 2: but people have diversified a little bit away. The fastest

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Speaker 2: growth opportunity though, we think is Mexico because there just

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Speaker 2: hasn't been a reliable product that customers will convert from

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Speaker 2: over the road to intermodal until the CPKAC service came

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Speaker 2: into play, and it's created a competition with some of

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Speaker 2: the other railroads as well. And you know, the whole

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Speaker 2: near shoring and the direct ford investment going into Mexico

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Speaker 2: is dramatic. That doesn't turn on overnight. It takes a

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Speaker 2: little bit of time, but over the next two or

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Speaker 2: three years, we would expect Mexico to be at the

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Speaker 2: top of our growth.

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Speaker 1: Right, let's just switch gears a little bit. You know,

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Speaker 1: one of the most important things about it of a

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Speaker 1: trucking company or really the driver, because they're the ones

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Speaker 1: that do the real hard work. Right, Can you talk

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Speaker 1: about the labor market, How has it been to higher drivers?

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Speaker 1: What is the you know, the turnover rate relative to

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Speaker 1: historical numbers. If you can just talk to that, that'd

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Speaker 1: be really interesting to hear.

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Speaker 2: Yeah, I think that's a very nuanced question, and I

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Speaker 2: woun't want to break it down in a couple of

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Speaker 2: different ways. First, really, if there has been a silver

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Speaker 2: lining about all this attention on supply chain, it's it's

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Speaker 2: brought attention, it's brought prominence and maybe a little bit

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Speaker 2: of pride to how important truck drivers are to the

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Speaker 2: whole economy of North America and so part going through

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Speaker 2: this supply chain crisis, it's it's attracted more new entrances

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Speaker 2: into the industry, which is which ultimately is a very

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Speaker 2: very good thing. Secondly, our conversion into intermodal, our conversion

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Speaker 2: into more dedicated is something that drivers prefer. I get

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Speaker 2: whole more often, schedules are more stamp, they might get

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Speaker 2: the same lanes serving the same customer, They get to

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Speaker 2: know the people, so all of that just like you

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Speaker 2: and I like to have relationships at work, same thing

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Speaker 2: with our driver community. And so our shift there has

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Speaker 2: helped the driver life balance, and it's helped our retention,

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Speaker 2: and that's all a good thing. And so our whole

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Speaker 2: configuration has helped us There. Doesn't mean that the over

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Speaker 2: the road driver is still incredibly important, but it's a

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Speaker 2: little bit more challenging for folks to say, I want

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Speaker 2: to be away from home longer. But again, all the

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Speaker 2: good publicity to the industry has allowed us to attract

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Speaker 2: and bring in different were up to thirteen percent female drivers.

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Speaker 2: It wasn't too long ago we would have been saying

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Speaker 2: we would have been mid single digits.

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Speaker 1: So that's probably well above the industry.

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Speaker 2: Yeah, and so much more to go. There's still way underrepresented,

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Speaker 2: but we have a good brand. Being a safety conscious

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Speaker 2: company is important to everybody, but I think especially to

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Speaker 2: our female candidates, and so we continue to press into

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Speaker 2: that and I think even the aging of America, but

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Speaker 2: it could be good for it. I don't know what

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Speaker 2: you think about doing after retirement. Maybe a part time

387
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Speaker 2: job moving some some freight around the country. And so

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Speaker 2: I just think we have to get more creative over

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Speaker 2: time to figure out how we serve our customers.

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Speaker 1: I drove a Class A truck once in a parking

391
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Speaker 1: lot and I murdered a lot of cones. So I

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Speaker 1: don't know if they want me on the road.

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Speaker 2: Yeah, I learned to drive before the CDL. Yeah, that

394
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Speaker 2: was important.

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Speaker 1: And so when when the market? When the spot let's

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Speaker 1: talk about the spot market. So when the spot market

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Speaker 1: titans And I know Schneider's really doesn't play in the

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00:20:30,160 --> 00:20:34,000
Speaker 1: spot market. It's very little part of your business.

399
00:20:34,080 --> 00:20:36,640
Speaker 2: Yeah, a little more today than it historically is. But yeah,

400
00:20:36,680 --> 00:20:39,080
Speaker 2: it's usually a five to seven percent play for us

401
00:20:39,080 --> 00:20:41,440
Speaker 2: to fill some empty lanes in our network business, so

402
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Speaker 2: it's not a not a big part of our approach.

403
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Speaker 1: Right And so for the listeners out there, the spot

404
00:20:47,320 --> 00:20:51,560
Speaker 1: market is you know, usually the leading driver to where

405
00:20:51,600 --> 00:20:54,640
Speaker 1: contractual rates go, and that's where most publicly traded companies

406
00:20:54,720 --> 00:20:58,280
Speaker 1: operate with, you know, eighty five to ninety nine percent

407
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Speaker 1: of their business in the contractual market on the carrier.

408
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Speaker 1: So you know, we have a lot of slack capacity

409
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Speaker 1: out there. Once capacity kind of tightens, and again that

410
00:21:08,440 --> 00:21:11,480
Speaker 1: could be from you know, people slowly coming out of

411
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Speaker 1: the market because they're not making any money. Right now,

412
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Speaker 1: do you expect the problems of the driver shortage. I'm

413
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Speaker 1: doing air quotes right now. The driver shortage is going

414
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Speaker 1: to come back, and things will get tough again to

415
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Speaker 1: recruit and retain well.

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Speaker 2: Demographics certainly aren't in our favor there, so you know,

417
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Speaker 2: it's never easy. Maybe a little bit easier now than

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Speaker 2: typical just because of the attraction factor and the publicity factor.

419
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Speaker 2: But the schools are doing well the people that we

420
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Speaker 2: deal with, and we can be a bit more selective geographically,

421
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Speaker 2: which is all good for our network. But I don't

422
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Speaker 2: think it's going to stay here as this is the

423
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Speaker 2: new normal. I think it will. I think it will tighten.

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Speaker 2: I think it will get more difficult, and I think

425
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Speaker 2: that will be a tightening of capacity. And really, for

426
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Speaker 2: the first time in a number of years, we're actual

427
00:22:01,640 --> 00:22:03,639
Speaker 2: getting a little bit younger in our driver fleet. That

428
00:22:03,760 --> 00:22:07,120
Speaker 2: was a place that we continue to skial older and

429
00:22:07,440 --> 00:22:10,080
Speaker 2: we actually have more millennials now than than boomers, and

430
00:22:10,520 --> 00:22:12,800
Speaker 2: so we've kind of been through that curve a little bit.

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Speaker 2: And it's a terrific nobles of profession. Right, you're making

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Speaker 2: a difference for the country, You're making a difference for

433
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Speaker 2: your family. So there's a lot of positives, but it's

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Speaker 2: still it's a highly skilled position and I think our

435
00:22:26,680 --> 00:22:28,160
Speaker 2: challenges will be out there for sure.

436
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Speaker 1: And so when you're recruiting new drivers, does Schneider have

437
00:22:32,040 --> 00:22:35,520
Speaker 1: its own driving schools or do you have strategic relationships

438
00:22:35,520 --> 00:22:37,199
Speaker 1: with driving schools across the country.

439
00:22:37,480 --> 00:22:40,680
Speaker 2: Yeah, we hire about half our folks experienced that may

440
00:22:40,720 --> 00:22:44,040
Speaker 2: come from a company that didn't quite work out from

441
00:22:44,040 --> 00:22:46,359
Speaker 2: them and we can be a better option. And the

442
00:22:46,359 --> 00:22:51,359
Speaker 2: other half come from what's considered CDL holders but not

443
00:22:51,880 --> 00:22:55,199
Speaker 2: having a lot of driving miles under their belt. So

444
00:22:56,080 --> 00:22:59,800
Speaker 2: our primary focus is working with third party schools, and

445
00:22:59,840 --> 00:23:01,680
Speaker 2: then we bring them in for a finishing a couple

446
00:23:01,720 --> 00:23:04,280
Speaker 2: of weeks of just schneiderrizing them, if you will, and

447
00:23:04,720 --> 00:23:07,600
Speaker 2: finishing up their skills so that we're confident they can

448
00:23:07,640 --> 00:23:11,240
Speaker 2: go out and be successful. We did, for the first

449
00:23:11,280 --> 00:23:13,119
Speaker 2: time since two thousand and nine, at the height of

450
00:23:13,119 --> 00:23:15,520
Speaker 2: the pandemic, kind of hit our nuclear button and started

451
00:23:15,520 --> 00:23:17,639
Speaker 2: our own schools back up. When I joined the company

452
00:23:17,680 --> 00:23:20,840
Speaker 2: in nineteen eighty seven through two thousand and nine, that

453
00:23:20,880 --> 00:23:24,720
Speaker 2: was our primary method as our own schools. Yeah, and

454
00:23:24,760 --> 00:23:26,719
Speaker 2: we we kind of go out away from that to

455
00:23:26,800 --> 00:23:29,760
Speaker 2: leverage other people's assets, and so we were in there

456
00:23:29,800 --> 00:23:31,320
Speaker 2: for a little while, but we're now just back to

457
00:23:31,359 --> 00:23:32,520
Speaker 2: the finishing school part.

458
00:23:32,400 --> 00:23:34,600
Speaker 1: Of that, okay. You know, and you can't talk about

459
00:23:34,680 --> 00:23:39,880
Speaker 1: labor without talking about inflationary pressures. Can you talk about,

460
00:23:40,000 --> 00:23:44,320
Speaker 1: you know, labor costs today, how have they been trending

461
00:23:44,320 --> 00:23:48,240
Speaker 1: over the last couple of years, and maybe other inflationary

462
00:23:48,240 --> 00:23:50,920
Speaker 1: pressures that you're trying to mitigate.

463
00:23:51,920 --> 00:23:53,880
Speaker 2: Yeah, I think that's at the heart of the issue

464
00:23:53,920 --> 00:23:56,160
Speaker 2: right now, when you have a depressed rate environment, yet

465
00:23:56,200 --> 00:23:59,960
Speaker 2: you're still dealing with the inflationary costs and they're port

466
00:24:00,119 --> 00:24:02,920
Speaker 2: and we've had significant raises to our drivers over the

467
00:24:03,000 --> 00:24:05,600
Speaker 2: last several years, and very important to do, very deserving

468
00:24:05,680 --> 00:24:09,600
Speaker 2: to do. Unfortunately, the rates aren't supporting the continuation of that,

469
00:24:09,680 --> 00:24:11,040
Speaker 2: and so we have to get some more help from

470
00:24:11,040 --> 00:24:14,480
Speaker 2: our customers. But we also had increases in insurance and

471
00:24:14,520 --> 00:24:17,840
Speaker 2: this hardening insurance market, we've had increases in equipment costs,

472
00:24:18,000 --> 00:24:21,040
Speaker 2: and so the good news is that's kind of plateaued

473
00:24:21,080 --> 00:24:24,280
Speaker 2: and we're now kind of whittling away at getting more

474
00:24:24,359 --> 00:24:27,600
Speaker 2: cost out of the business as opposed to it continuing

475
00:24:27,680 --> 00:24:29,960
Speaker 2: to rise. But we still have a lot to overcome

476
00:24:29,960 --> 00:24:31,879
Speaker 2: based upon the last couple of years. We're not going

477
00:24:31,920 --> 00:24:37,160
Speaker 2: to take our driver wages backwards. That's not a reasonable approach.

478
00:24:37,160 --> 00:24:38,880
Speaker 2: We have to get more productive of what we have

479
00:24:38,960 --> 00:24:42,000
Speaker 2: and we have to get some rate recovery to get

480
00:24:42,040 --> 00:24:43,920
Speaker 2: to a compensable rate for what we're doing.

481
00:24:44,040 --> 00:24:46,560
Speaker 1: And people that don't follow the trucking market that closely,

482
00:24:46,800 --> 00:24:49,320
Speaker 1: can you talk like, what's going on with insurance? Why

483
00:24:49,400 --> 00:24:52,920
Speaker 1: is insurance increasing so much for trucking companies?

484
00:24:53,359 --> 00:24:57,760
Speaker 2: Yeah, I think it's really across all categories of risk management,

485
00:24:58,560 --> 00:25:03,000
Speaker 2: from natural disasters to fires. But certainly the trucking industry

486
00:25:03,040 --> 00:25:09,720
Speaker 2: themselves has had some bad trends, not so much in performance.

487
00:25:09,720 --> 00:25:11,520
Speaker 2: I think we keep getting safer. We have never been

488
00:25:11,560 --> 00:25:18,760
Speaker 2: safer as a company. Yet, nuclear verdicts and high settlement costs,

489
00:25:18,760 --> 00:25:22,679
Speaker 2: inflationary cost relative to medical, inflationary costs relator to fixing

490
00:25:23,400 --> 00:25:26,320
Speaker 2: cars or trucks that might be involved in the accident

491
00:25:26,359 --> 00:25:29,160
Speaker 2: all put additional pressure on the bottom line, but also

492
00:25:29,359 --> 00:25:32,320
Speaker 2: for the risk management element of those who are ensuring you.

493
00:25:33,000 --> 00:25:36,240
Speaker 2: And unfortunately, not all of this is based upon facts.

494
00:25:36,320 --> 00:25:39,760
Speaker 2: There's just some venues that it's really hard to get

495
00:25:41,000 --> 00:25:44,520
Speaker 2: kind of the fair assessment of the facts and getting

496
00:25:44,520 --> 00:25:48,320
Speaker 2: to a reasonable and accommodating an appropriate settlement, and those

497
00:25:48,320 --> 00:25:50,800
Speaker 2: things just continue to rise, and as that continue to rise,

498
00:25:50,840 --> 00:25:52,560
Speaker 2: so does the insurance risk that come with that.

499
00:25:52,960 --> 00:25:55,000
Speaker 1: Yeah, it seems that lawyers are really going after the

500
00:25:55,000 --> 00:25:58,440
Speaker 1: trucking industry. You can't be driving on America's highways without

501
00:25:58,440 --> 00:26:01,720
Speaker 1: seeing a billboard about, you know, a lawyer touting the

502
00:26:01,760 --> 00:26:04,159
Speaker 1: fact that they go after trucking companies or hear it

503
00:26:04,160 --> 00:26:08,520
Speaker 1: on the radio. So it's definitely been an interesting development.

504
00:26:08,560 --> 00:26:13,399
Speaker 1: And those higher inflation or higher insurance costs are going

505
00:26:13,480 --> 00:26:16,840
Speaker 1: to probably you know, be the straw that breaks the

506
00:26:16,880 --> 00:26:20,720
Speaker 1: Camel's back for a lot of independent truckers, and that

507
00:26:20,760 --> 00:26:22,960
Speaker 1: could be the thing to bring the market to a

508
00:26:22,960 --> 00:26:24,560
Speaker 1: better equilibrium for rates.

509
00:26:25,160 --> 00:26:28,040
Speaker 2: Yeah, and that's an annual process, as you know, and

510
00:26:28,080 --> 00:26:30,719
Speaker 2: so depending upon where you are in that cycle, and

511
00:26:30,760 --> 00:26:33,879
Speaker 2: you see that that that certainly can be the difference

512
00:26:33,920 --> 00:26:34,960
Speaker 2: between staying and going.

513
00:26:35,359 --> 00:26:39,280
Speaker 1: Can you give us some broad trends about the bid

514
00:26:39,320 --> 00:26:43,119
Speaker 1: cycle that you know most trucking companies are usually talking

515
00:26:43,119 --> 00:26:46,480
Speaker 1: with their customers now and renegotiating rates. I know you're

516
00:26:46,480 --> 00:26:48,199
Speaker 1: not going to tell me exact numbers, but could you

517
00:26:48,280 --> 00:26:50,840
Speaker 1: just talk broad strokes, you know, how this time is

518
00:26:50,880 --> 00:26:53,040
Speaker 1: feeling versus previous cycles.

519
00:26:53,280 --> 00:26:56,280
Speaker 2: Yeah, let me put some context around your question. First.

520
00:26:56,359 --> 00:27:00,560
Speaker 2: What we're referencing as our network type businesses that route

521
00:27:00,680 --> 00:27:03,080
Speaker 2: going from one location to the next versus a dedicated

522
00:27:03,080 --> 00:27:05,399
Speaker 2: contract which is generally three to five years and you

523
00:27:05,840 --> 00:27:07,720
Speaker 2: have all those things ironed out on the front end

524
00:27:08,040 --> 00:27:12,879
Speaker 2: versus this annual process. So we generally at this stage

525
00:27:12,920 --> 00:27:15,240
Speaker 2: of the year, we're through forty to fifty percent of

526
00:27:15,280 --> 00:27:18,359
Speaker 2: our annual contract renewals. Is where we stand by the

527
00:27:18,359 --> 00:27:22,280
Speaker 2: time we come out of the second quarter, and the

528
00:27:22,320 --> 00:27:25,000
Speaker 2: good news is here. I think there's some hardening of

529
00:27:25,000 --> 00:27:27,520
Speaker 2: that that and not across the board, but I think

530
00:27:27,520 --> 00:27:30,120
Speaker 2: customers are looking to Okay, where are we in this cycle?

531
00:27:31,080 --> 00:27:32,720
Speaker 2: Maybe a year ago I was trying to use a

532
00:27:32,720 --> 00:27:35,400
Speaker 2: broker to get the last nickel I could, and now

533
00:27:35,440 --> 00:27:38,600
Speaker 2: I'm being a little bit more biased towards asset based providers,

534
00:27:38,640 --> 00:27:40,880
Speaker 2: which I think is good for a company like Schneider.

535
00:27:41,480 --> 00:27:43,680
Speaker 2: And so for as we came out of the first quarter,

536
00:27:43,720 --> 00:27:46,320
Speaker 2: for the first time in six quarters, we actually had

537
00:27:46,359 --> 00:27:50,720
Speaker 2: on average improvement in contractual price renewals and so, you know,

538
00:27:50,760 --> 00:27:54,800
Speaker 2: not enough to call it inflection and not at disjunction,

539
00:27:54,840 --> 00:27:57,960
Speaker 2: probably enough for our liking, but at least we're starting

540
00:27:58,000 --> 00:28:00,320
Speaker 2: to see some improvement. We would expect that as we

541
00:28:00,359 --> 00:28:02,119
Speaker 2: get here in the second quarter as well.

542
00:28:02,320 --> 00:28:04,320
Speaker 1: Is that any different than your intermodial business?

543
00:28:04,680 --> 00:28:07,280
Speaker 2: A little different. Yeah, truck is a little bit ahead

544
00:28:07,280 --> 00:28:10,679
Speaker 2: of intermobial. We on our most recent earnings call, we

545
00:28:10,720 --> 00:28:14,199
Speaker 2: had intermodal renewals in the first quarter, again around that

546
00:28:14,240 --> 00:28:19,639
Speaker 2: forty percent level of flat. Again, most of our costs

547
00:28:19,640 --> 00:28:21,840
Speaker 2: are with the third party being the railroad, so it's

548
00:28:21,880 --> 00:28:24,639
Speaker 2: a little different dynamic, and certainly last first quarter was

549
00:28:24,680 --> 00:28:28,320
Speaker 2: the most constructive renewals of a year ago. So we're

550
00:28:28,320 --> 00:28:30,200
Speaker 2: actually fairly pleased with that outcome.

551
00:28:30,920 --> 00:28:35,200
Speaker 1: And you know you mentioned the largest expenses the railroad piece.

552
00:28:35,320 --> 00:28:37,840
Speaker 1: Are they flexible because they like to talk about their

553
00:28:37,840 --> 00:28:40,520
Speaker 1: pricing power a lot on earnings calls, So are they

554
00:28:40,600 --> 00:28:44,200
Speaker 1: giving up any sort of price because of the reality

555
00:28:44,200 --> 00:28:44,880
Speaker 1: of the market.

556
00:28:45,200 --> 00:28:46,680
Speaker 2: Well, we want to make sure when we work with

557
00:28:46,680 --> 00:28:50,360
Speaker 2: our rail partners on intermodal and we serve as a

558
00:28:50,400 --> 00:28:53,360
Speaker 2: sales arm for them, there is that we're our interests

559
00:28:53,400 --> 00:28:55,480
Speaker 2: are highly aligned. And to do that, we have to

560
00:28:55,520 --> 00:28:58,680
Speaker 2: be highly aligned to the market. And so, without getting

561
00:28:58,680 --> 00:29:03,720
Speaker 2: into specifics, you know, we do have mechanisms that adjust

562
00:29:04,080 --> 00:29:07,240
Speaker 2: to the market over time, regardless the market's up where

563
00:29:07,280 --> 00:29:09,520
Speaker 2: the market's down, and that helps us make sure that

564
00:29:09,560 --> 00:29:12,200
Speaker 2: we stay aligned and don't get out a step and

565
00:29:12,240 --> 00:29:16,360
Speaker 2: therefore ends up hurting volumes or converting freight from the

566
00:29:16,400 --> 00:29:18,720
Speaker 2: train back to over the road at a big a clip.

567
00:29:18,920 --> 00:29:22,960
Speaker 2: And so that mechanism allows us, I think, certainly better

568
00:29:23,000 --> 00:29:26,400
Speaker 2: when the market doesn't change dramatically. It's more difficult when

569
00:29:26,400 --> 00:29:28,600
Speaker 2: the market goes up really fast or down really fast.

570
00:29:29,160 --> 00:29:31,600
Speaker 2: But most of the time that those mechanisms allow us

571
00:29:31,680 --> 00:29:34,640
Speaker 2: to stay highly aligned and keep a steady stream of

572
00:29:35,160 --> 00:29:36,640
Speaker 2: opportunity coming to the train.

573
00:29:37,200 --> 00:29:40,840
Speaker 1: So your trucking business, your intermodal business, asset intensive businesses,

574
00:29:40,960 --> 00:29:44,120
Speaker 1: you guys have to spend money to refresh the fleet.

575
00:29:44,320 --> 00:29:47,200
Speaker 1: Make sure you know you have a great, reliable and

576
00:29:47,280 --> 00:29:50,120
Speaker 1: save fleet. Can you talk about your your cap X program,

577
00:29:50,520 --> 00:29:54,320
Speaker 1: how much you's spending you know what is that is?

578
00:29:54,680 --> 00:29:57,160
Speaker 1: How much of that is our trucks and equipment versus

579
00:29:57,280 --> 00:29:59,360
Speaker 1: you know, technology and things of that nature.

580
00:29:59,480 --> 00:30:02,280
Speaker 2: Yeah. Yeah, And a little tale of two cities here

581
00:30:02,320 --> 00:30:04,800
Speaker 2: we can talk about twenty three and twenty four. First,

582
00:30:04,800 --> 00:30:07,360
Speaker 2: our factories wear out, so we have to replace them,

583
00:30:07,840 --> 00:30:10,680
Speaker 2: and we replaced, depending upon unit on a three to

584
00:30:10,720 --> 00:30:12,880
Speaker 2: five year cycle as it relates to the tractor, and

585
00:30:12,880 --> 00:30:15,640
Speaker 2: a little bit longer, much longer, ten to fifteen years

586
00:30:15,640 --> 00:30:19,120
Speaker 2: on a trailing piece of equipment. A year ago, our

587
00:30:19,200 --> 00:30:22,440
Speaker 2: CAPEX was five hundred and seventy five million. Because we

588
00:30:22,440 --> 00:30:24,360
Speaker 2: were catching up from the pandemic. We couldn't get all

589
00:30:24,360 --> 00:30:26,640
Speaker 2: the trucks that we wanted to get, so our fleet

590
00:30:26,680 --> 00:30:29,800
Speaker 2: got a little bit older than we desire or optimize around,

591
00:30:29,800 --> 00:30:35,960
Speaker 2: and that raises maintenance costs, increases downtime. So we knew

592
00:30:35,960 --> 00:30:38,280
Speaker 2: we had to get some younger to get caught up

593
00:30:38,320 --> 00:30:40,880
Speaker 2: once the OEMs were in a position to do that.

594
00:30:41,600 --> 00:30:43,880
Speaker 2: Fast forward to this year, well, where we needed to

595
00:30:43,880 --> 00:30:46,160
Speaker 2: be on age a fleet. We don't have to buy

596
00:30:46,360 --> 00:30:49,120
Speaker 2: chassis for our intermodal. We've got our ratios right there,

597
00:30:49,120 --> 00:30:51,680
Speaker 2: and so our capex this year will be three hundred

598
00:30:51,680 --> 00:30:54,200
Speaker 2: and fifty to four hundred million, still a big number,

599
00:30:54,760 --> 00:30:57,480
Speaker 2: but not that outsize five hundred and seventy five million

600
00:30:57,600 --> 00:31:01,120
Speaker 2: that we experienced a year ago. So still lots of

601
00:31:01,160 --> 00:31:04,240
Speaker 2: money to reinvest in the business, and the vast fast

602
00:31:04,240 --> 00:31:07,080
Speaker 2: majority of that is on rolling stock is you know,

603
00:31:07,080 --> 00:31:08,880
Speaker 2: we do a lot of tech, but it pales in

604
00:31:08,880 --> 00:31:12,719
Speaker 2: comparison to buying a tractor, container or trailer.

605
00:31:13,080 --> 00:31:16,120
Speaker 1: So when companies talk about you know, technology and AI,

606
00:31:16,360 --> 00:31:18,680
Speaker 1: they usually get an additional multiple out of their stock.

607
00:31:18,800 --> 00:31:21,560
Speaker 1: So this might be a good conversation for you what

608
00:31:21,600 --> 00:31:24,880
Speaker 1: do you what are you guys doing as it relates

609
00:31:24,920 --> 00:31:28,080
Speaker 1: to leveraging AI, and you know, AI is a very

610
00:31:28,120 --> 00:31:32,040
Speaker 1: broad category. So whether it's machine learning or you know,

611
00:31:32,360 --> 00:31:34,720
Speaker 1: the real cool stuff that we're hearing about today with

612
00:31:34,840 --> 00:31:35,880
Speaker 1: artificial intelligence.

613
00:31:36,000 --> 00:31:38,240
Speaker 2: Yeah, yeah, there's always a hype cycle out there somewhere,

614
00:31:40,000 --> 00:31:42,320
Speaker 2: but it's you know, technology is very important size of

615
00:31:42,360 --> 00:31:45,280
Speaker 2: our company. For example, on our truckload business, we're dealing

616
00:31:45,320 --> 00:31:50,000
Speaker 2: with seven thousand origin destination pairs. You know, you throw

617
00:31:50,040 --> 00:31:55,480
Speaker 2: the complexity of third party capacity on that, intermodal ramps

618
00:31:55,520 --> 00:31:59,120
Speaker 2: and schedules, and so we need to have technology that

619
00:31:59,200 --> 00:32:02,240
Speaker 2: really allows us to deal with that in real time

620
00:32:02,320 --> 00:32:04,720
Speaker 2: so that we can price to a customer in sub

621
00:32:04,760 --> 00:32:08,040
Speaker 2: seconds on a spot market or for our brokerage business,

622
00:32:08,440 --> 00:32:11,120
Speaker 2: and all of that has some element of AI associated

623
00:32:11,160 --> 00:32:16,160
Speaker 2: with it, and learning models that adapt and adjust to

624
00:32:16,240 --> 00:32:18,520
Speaker 2: what they're seeing on win rates and what they're seeing

625
00:32:18,560 --> 00:32:22,560
Speaker 2: in this geography versus that geography, and so our care

626
00:32:22,600 --> 00:32:27,400
Speaker 2: and feeding into those models is where our investments are.

627
00:32:27,680 --> 00:32:31,400
Speaker 2: Because we've been through the digital transformation. We're digitally connected

628
00:32:31,400 --> 00:32:35,320
Speaker 2: to shippers, we're digitally connected to third party carriers, and

629
00:32:35,400 --> 00:32:38,960
Speaker 2: so it's the decision science, your decision making science. We

630
00:32:39,080 --> 00:32:41,160
Speaker 2: used to think about, let's put the best information we

631
00:32:41,200 --> 00:32:44,000
Speaker 2: can in front of our people and let them make

632
00:32:44,040 --> 00:32:46,480
Speaker 2: the decision. To hey, we've been doing this long enough

633
00:32:46,520 --> 00:32:49,080
Speaker 2: that the models are good enough. Let's not have them

634
00:32:49,080 --> 00:32:51,320
Speaker 2: make the decision. Let's let the machine make the decision

635
00:32:51,680 --> 00:32:54,480
Speaker 2: and lets us deal with the exceptions. Allows us to

636
00:32:54,520 --> 00:32:56,480
Speaker 2: put our people a little higher in the value chain,

637
00:32:57,040 --> 00:32:58,960
Speaker 2: and it allows us to be more efficient and let

638
00:32:59,000 --> 00:33:03,040
Speaker 2: the machine and the AI or the robot do what

639
00:33:03,120 --> 00:33:04,200
Speaker 2: it does best.

640
00:33:04,720 --> 00:33:08,200
Speaker 1: And then out of your businesses, is the most opportunity

641
00:33:08,240 --> 00:33:12,160
Speaker 1: for productivity gains the brokerage business or is it one

642
00:33:12,200 --> 00:33:13,160
Speaker 1: of the other businesses.

643
00:33:13,640 --> 00:33:15,560
Speaker 2: Well, what I like about brokerage it's a great test

644
00:33:16,120 --> 00:33:19,520
Speaker 2: ground for us on new technologies. And so if you

645
00:33:19,560 --> 00:33:25,960
Speaker 2: think about brokerage today, we can price almost instantaneously. We

646
00:33:26,040 --> 00:33:28,160
Speaker 2: know who the best carrier is. That can be done

647
00:33:28,160 --> 00:33:32,600
Speaker 2: almost instantaneously. Or think of the eBay experience. Go out there,

648
00:33:32,640 --> 00:33:35,040
Speaker 2: we put a price, they hit by. Now nobody touches

649
00:33:35,080 --> 00:33:36,960
Speaker 2: it and it goes. If they're a qualified carrier, we

650
00:33:37,000 --> 00:33:39,280
Speaker 2: know who they are. Got to be a little more

651
00:33:39,280 --> 00:33:43,000
Speaker 2: careful today. Organized crime and cargo theft is a bigger

652
00:33:43,000 --> 00:33:45,640
Speaker 2: issue than it's ever been, not only in our industry

653
00:33:45,680 --> 00:33:49,040
Speaker 2: but the country. And so you get all those checks in,

654
00:33:49,120 --> 00:33:51,720
Speaker 2: you can get a lot of frictionalist transactions done which

655
00:33:51,720 --> 00:33:54,960
Speaker 2: allow us them just to raise our productivity. Then we

656
00:33:55,000 --> 00:33:57,120
Speaker 2: generally can take that into other aspects of our business

657
00:33:57,200 --> 00:34:01,160
Speaker 2: and learn there and then and take it in. So

658
00:34:01,680 --> 00:34:04,440
Speaker 2: we're excited about AI. We want to make sure we're

659
00:34:04,480 --> 00:34:08,280
Speaker 2: smart about it and and and we think that's something

660
00:34:08,280 --> 00:34:09,719
Speaker 2: that will continue to invest in.

661
00:34:10,120 --> 00:34:12,839
Speaker 1: Yeah, when I talked to freight brokers, you know, whether

662
00:34:12,880 --> 00:34:14,959
Speaker 1: it's c suite folks or people in the front line,

663
00:34:15,280 --> 00:34:17,600
Speaker 1: the two things that are always talking about is technology

664
00:34:17,680 --> 00:34:21,439
Speaker 1: and fraud. You know, it's it's pretty pretty incredible about

665
00:34:21,440 --> 00:34:24,080
Speaker 1: the amount of fraud that that's going on in the

666
00:34:24,120 --> 00:34:27,319
Speaker 1: in the brokerage space, and then probably takes a lot

667
00:34:27,360 --> 00:34:28,080
Speaker 1: to try to fight that.

668
00:34:29,680 --> 00:34:31,840
Speaker 2: Yeah, So it's one of the things that the beauty

669
00:34:31,880 --> 00:34:34,279
Speaker 2: of digital is you can make it frictionalists, but it

670
00:34:34,280 --> 00:34:37,760
Speaker 2: can also create vulnerabilities if you don't have proper checks,

671
00:34:37,800 --> 00:34:42,520
Speaker 2: and particularly in today's stolen credential world. Right, So it's

672
00:34:42,600 --> 00:34:44,680
Speaker 2: it's forced us to do some things differently. It's forced

673
00:34:44,719 --> 00:34:47,799
Speaker 2: us to actually to back off some things, to put

674
00:34:47,800 --> 00:34:50,880
Speaker 2: some more manual steps in the process in certain geography,

675
00:34:50,960 --> 00:34:54,359
Speaker 2: certain commodities, and so we have to stay one step

676
00:34:54,400 --> 00:34:55,360
Speaker 2: ahead of the bad guys.

677
00:34:55,920 --> 00:35:00,600
Speaker 1: You mentioned a hype cycle before with technology that same vein.

678
00:35:00,880 --> 00:35:02,600
Speaker 1: What are your thoughts on autonomous trucking?

679
00:35:03,840 --> 00:35:06,880
Speaker 2: Well, if you've ever been in one, it is absolutely

680
00:35:06,880 --> 00:35:10,120
Speaker 2: amazing how far it's come right, you know we're involved.

681
00:35:10,560 --> 00:35:12,760
Speaker 2: You know, our philosophy here is we believe the best

682
00:35:12,800 --> 00:35:16,000
Speaker 2: solution is one that's engineered from the ground up with

683
00:35:16,080 --> 00:35:20,440
Speaker 2: the OEM because of all the redundancies versus applications that

684
00:35:20,480 --> 00:35:23,800
Speaker 2: try to do it aftermarket, and so that's our bias.

685
00:35:23,880 --> 00:35:27,920
Speaker 2: But and so we're involved with two and we're involved

686
00:35:27,920 --> 00:35:30,480
Speaker 2: in the freight hauling space still with the safety driver

687
00:35:30,600 --> 00:35:33,400
Speaker 2: in the truck, and one of those folks are going

688
00:35:33,480 --> 00:35:35,640
Speaker 2: to be testing later in the year without without the

689
00:35:35,640 --> 00:35:39,920
Speaker 2: safety driver, but in very very specific lane configurations. And

690
00:35:40,000 --> 00:35:43,360
Speaker 2: so to us, it's it's early and we have to

691
00:35:43,400 --> 00:35:46,600
Speaker 2: make sure that you know who's liable something goes wrong.

692
00:35:46,719 --> 00:35:51,520
Speaker 2: And back to our lawyer question earlier. But the technology

693
00:35:51,560 --> 00:35:54,520
Speaker 2: is advancing and it's it's amazing how good it is.

694
00:35:54,760 --> 00:35:57,800
Speaker 1: Oh, okay, great, And so you know, you see the

695
00:35:57,840 --> 00:36:01,840
Speaker 1: application being very I guess regional specific because from what

696
00:36:01,880 --> 00:36:04,160
Speaker 1: I understand, it doesn't really work that well in the snow,

697
00:36:05,280 --> 00:36:08,680
Speaker 1: so it really it needs to be called the desert.

698
00:36:09,000 --> 00:36:11,320
Speaker 2: Yeah. Well, they're working on it, but certainly, you know,

699
00:36:11,480 --> 00:36:14,759
Speaker 2: I think ultimately the lead that the best application. It

700
00:36:14,840 --> 00:36:17,359
Speaker 2: might look initially like our intermodial business a little bit

701
00:36:17,360 --> 00:36:20,120
Speaker 2: maybe we're going to have a driver do the first mile,

702
00:36:20,480 --> 00:36:23,520
Speaker 2: let that do the middle mile, and then the driver

703
00:36:23,640 --> 00:36:27,040
Speaker 2: do the final mile delivery. And that's great for our drivers.

704
00:36:27,040 --> 00:36:30,160
Speaker 2: That gets more local positions, really cuts into the economic

705
00:36:30,239 --> 00:36:34,279
Speaker 2: case of what's the total cost to serve on that

706
00:36:34,360 --> 00:36:36,600
Speaker 2: lane when you break it up and do it. So

707
00:36:36,680 --> 00:36:38,120
Speaker 2: we kind of got to get through all of those

708
00:36:38,160 --> 00:36:41,040
Speaker 2: economic cases to see but I think that's how you

709
00:36:41,040 --> 00:36:43,719
Speaker 2: at least get started and allow the technology to do

710
00:36:43,760 --> 00:36:45,720
Speaker 2: what it does best. And maybe it's that highway exit

711
00:36:45,760 --> 00:36:48,799
Speaker 2: to exit is how you get some density going.

712
00:36:48,920 --> 00:36:51,200
Speaker 1: We'll definitely be interesting to watch see where it progresses

713
00:36:51,239 --> 00:36:55,440
Speaker 1: from here. You know, with technology and with the equipment side.

714
00:36:55,560 --> 00:36:58,280
Speaker 1: Can you talk about how technology has made the trucks

715
00:36:58,320 --> 00:36:59,360
Speaker 1: and the driver is safer?

716
00:37:00,080 --> 00:37:02,320
Speaker 2: Yeah, it's you know, one of the things that I

717
00:37:02,400 --> 00:37:06,400
Speaker 2: think is so beneficial on this journey to autonomous is

718
00:37:06,400 --> 00:37:09,640
Speaker 2: what you can adopt along the way. And you know,

719
00:37:09,680 --> 00:37:12,000
Speaker 2: the first thing that we got to put on all

720
00:37:12,000 --> 00:37:16,960
Speaker 2: of our equipment was collision mitigation technology. And you know,

721
00:37:17,000 --> 00:37:18,759
Speaker 2: at first you had to work through the bugs of that,

722
00:37:18,840 --> 00:37:24,040
Speaker 2: but it's astonishing we've reduced rear and collisions by nearly

723
00:37:24,080 --> 00:37:28,640
Speaker 2: seventy percent and the severity by over eighty. As you

724
00:37:28,640 --> 00:37:32,000
Speaker 2: can imagine, anything that's kinetic energy is bad when it

725
00:37:32,040 --> 00:37:35,840
Speaker 2: transfers from a truck to a car, and so terrific.

726
00:37:35,920 --> 00:37:39,440
Speaker 2: Now lane mitigation, we're getting to mirrorlests where you can

727
00:37:39,600 --> 00:37:44,920
Speaker 2: eliminate blind spots. We're all automatic transmissions, so people of

728
00:37:44,960 --> 00:37:48,759
Speaker 2: smaller stature now don't feel as intimidated by all the

729
00:37:49,200 --> 00:37:53,120
Speaker 2: physical movements or took to drive a truck. So it's

730
00:37:53,520 --> 00:37:57,640
Speaker 2: it's a much different environment and and amenities like AP

731
00:37:57,960 --> 00:38:01,279
Speaker 2: used to cool and he the truck without having to

732
00:38:01,320 --> 00:38:05,440
Speaker 2: idle it. The tablet based communications. Uh, the industry has

733
00:38:05,480 --> 00:38:06,479
Speaker 2: come a very long way.

734
00:38:06,920 --> 00:38:10,200
Speaker 1: So you lead a you know, a large storied you

735
00:38:10,200 --> 00:38:13,560
Speaker 1: know company, can you maybe talk about is there anything

736
00:38:13,680 --> 00:38:14,440
Speaker 1: keeps you up at night?

737
00:38:15,600 --> 00:38:21,520
Speaker 2: Well? Just about everything, but uh we can sleep. Yeah, yeah,

738
00:38:21,560 --> 00:38:24,480
Speaker 2: you know there's Uh, the industry is appears to be

739
00:38:24,480 --> 00:38:26,600
Speaker 2: coming under more and more regulation. Right, we went through

740
00:38:26,600 --> 00:38:30,879
Speaker 2: a big deregulation period and now you know a lot

741
00:38:30,920 --> 00:38:38,240
Speaker 2: more direction coming about whether it's green trucks, and faster

742
00:38:38,360 --> 00:38:41,080
Speaker 2: than the mandate, the mandates coming faster than the technology,

743
00:38:41,960 --> 00:38:45,319
Speaker 2: certainly faster than the cost offsets. And so you know,

744
00:38:45,400 --> 00:38:47,759
Speaker 2: as I think about how we make all that work

745
00:38:47,800 --> 00:38:50,080
Speaker 2: for the consumer, for our shippers, and for us. I

746
00:38:50,080 --> 00:38:52,560
Speaker 2: think we're getting ahead of ourselves a bit, and I

747
00:38:52,560 --> 00:38:54,520
Speaker 2: think it would be good to step back and look

748
00:38:54,560 --> 00:38:59,400
Speaker 2: at the total system costs. We love to be greener.

749
00:38:59,400 --> 00:39:01,080
Speaker 2: It's good for our business, but it has to be

750
00:39:01,120 --> 00:39:05,359
Speaker 2: economically feasible, and so that's a concern concern of ours.

751
00:39:05,400 --> 00:39:07,440
Speaker 2: We talked a little about the demographics, the aging of

752
00:39:07,440 --> 00:39:08,920
Speaker 2: the of the country. We got to make sure we

753
00:39:09,000 --> 00:39:13,240
Speaker 2: continue to attract people and keep them engaged in the business.

754
00:39:13,280 --> 00:39:15,799
Speaker 2: And and so those are probably the two things that

755
00:39:16,120 --> 00:39:17,319
Speaker 2: right now are top of a list.

756
00:39:18,239 --> 00:39:21,600
Speaker 1: And just you know, curious, So you know, I mentioned

757
00:39:21,640 --> 00:39:24,520
Speaker 1: earlier your first job at at Schneider, how did you

758
00:39:24,760 --> 00:39:28,800
Speaker 1: get into transportation? Did you? How did you get there?

759
00:39:29,200 --> 00:39:34,640
Speaker 2: Well, from from Macron, Ohio area, and the seventy six

760
00:39:34,719 --> 00:39:37,720
Speaker 2: and high seventies and seventy all that came together there.

761
00:39:38,400 --> 00:39:41,880
Speaker 2: And when Schneider first moved away from and got to

762
00:39:41,920 --> 00:39:44,399
Speaker 2: a field location outside of Wisconsin, that was the first

763
00:39:44,440 --> 00:39:47,880
Speaker 2: place because it was halfway between New Jersey and Chicago,

764
00:39:47,920 --> 00:39:50,759
Speaker 2: which was a major trade lane, and so a lot

765
00:39:50,800 --> 00:39:53,759
Speaker 2: of transportation growing up in that area always was fascinated

766
00:39:53,800 --> 00:39:57,200
Speaker 2: by how things moved, and a little bit of a

767
00:39:57,280 --> 00:39:59,680
Speaker 2: unicorn to be at the same company thirty six years later.

768
00:40:00,520 --> 00:40:04,840
Speaker 2: But starting learning from drivers, Working with drivers was a

769
00:40:04,920 --> 00:40:07,640
Speaker 2: very rewarding start. Learned a lot and I didn't have

770
00:40:07,640 --> 00:40:10,399
Speaker 2: to leave the company to get new and different experiences

771
00:40:10,480 --> 00:40:12,520
Speaker 2: because of the depth and the breadth of our company.

772
00:40:12,600 --> 00:40:17,160
Speaker 2: And so a little bit of a American story of

773
00:40:17,640 --> 00:40:20,000
Speaker 2: coming in at the very front line and having the

774
00:40:20,040 --> 00:40:23,200
Speaker 2: opportunity to lead such a great American brand.

775
00:40:23,520 --> 00:40:26,880
Speaker 1: And how long have you been at the corporate the

776
00:40:26,920 --> 00:40:28,360
Speaker 1: corporate headquarters?

777
00:40:28,840 --> 00:40:31,680
Speaker 2: All roads for us eventually lead to Green Bay, Wisconsin.

778
00:40:31,800 --> 00:40:34,160
Speaker 2: So I came to Green Bay at nineteen ninety five,

779
00:40:34,840 --> 00:40:36,800
Speaker 2: and so I've been there a good long time and

780
00:40:36,840 --> 00:40:39,480
Speaker 2: I've been CEO since twenty nineteen.

781
00:40:40,160 --> 00:40:42,879
Speaker 1: And we'll green Bay Packers. Will they have a winning

782
00:40:42,920 --> 00:40:43,560
Speaker 1: record this year?

783
00:40:43,840 --> 00:40:45,680
Speaker 2: You know, we got a little tougher schedule this year,

784
00:40:45,719 --> 00:40:47,600
Speaker 2: but how they came on at the end of the

785
00:40:47,680 --> 00:40:50,960
Speaker 2: year with all the young offensive talent in particular, I

786
00:40:50,960 --> 00:40:52,279
Speaker 2: think there's a lot of optimism.

787
00:40:52,440 --> 00:40:54,839
Speaker 1: Yeah, I'm a Giants fan, I'm not that optimisty this year,

788
00:40:55,000 --> 00:40:58,359
Speaker 1: so I hope for the best, but my expectations are

789
00:40:58,440 --> 00:41:01,839
Speaker 1: kind of low you know, in your journey, is there

790
00:41:01,920 --> 00:41:04,719
Speaker 1: like a book that you read about transportation or leadership

791
00:41:04,719 --> 00:41:07,080
Speaker 1: that really stuck with you that you know, maybe people

792
00:41:07,080 --> 00:41:11,120
Speaker 1: that are you know, people that are interested in transportation

793
00:41:11,360 --> 00:41:12,960
Speaker 1: or leadership might might want to read.

794
00:41:13,640 --> 00:41:16,480
Speaker 2: You know, I don't have a lot of those that

795
00:41:16,640 --> 00:41:19,400
Speaker 2: just kind of to me are transformational. I was, and

796
00:41:19,480 --> 00:41:21,840
Speaker 2: this might be a little bit odd, but Phil Knight's

797
00:41:21,840 --> 00:41:26,960
Speaker 2: Shoe Dog about how to just persevere in business and

798
00:41:27,000 --> 00:41:29,719
Speaker 2: bet on yourself and bet on your company versus taking

799
00:41:29,800 --> 00:41:33,440
Speaker 2: the easy road. You know, I think about our company

800
00:41:33,480 --> 00:41:37,319
Speaker 2: being around ninety years next year, and we've had to

801
00:41:37,320 --> 00:41:41,759
Speaker 2: overcome a lot of depressions and recessions, and so that

802
00:41:41,880 --> 00:41:44,959
Speaker 2: just seemed to resonate with me about you know, stick

803
00:41:45,000 --> 00:41:47,799
Speaker 2: to your principles, stick to what you believe in, bet

804
00:41:47,840 --> 00:41:50,040
Speaker 2: on your people, and bet on yourself. I think is

805
00:41:50,120 --> 00:41:51,600
Speaker 2: kind of the Schneider story as well.

806
00:41:51,920 --> 00:41:54,080
Speaker 1: All Right, well, Mark, I really want to thank you

807
00:41:54,080 --> 00:41:56,400
Speaker 1: for the time. It was a great conversation. Thank you,

808
00:41:57,000 --> 00:41:59,280
Speaker 1: and thanks for tuning in. If you liked the episode,

809
00:41:59,320 --> 00:42:01,880
Speaker 1: please subscribe and leave a review. We've lined up a

810
00:42:01,920 --> 00:42:04,279
Speaker 1: number of great guests for the podcast. Check back to

811
00:42:04,320 --> 00:42:08,520
Speaker 1: hear conversations with C suite executives, shippers, regulators, and decision

812
00:42:08,560 --> 00:42:11,080
Speaker 1: makers within the freight markets. Also, if you have an

813
00:42:11,120 --> 00:42:13,279
Speaker 1: idea for a future episode, please hit me up on

814
00:42:13,320 --> 00:42:16,439
Speaker 1: the Bloomberg terminal or on Twitter at logistics Lee. Thanks

815
00:42:16,480 --> 00:42:17,600
Speaker 1: everyone and take care.