Schneider National (SNDR) 16th Annual Wells Fargo Industrials & Materials Conference summary

Market overview and industry dynamics

• Demand has remained generally stable, with some pockets of strength, particularly in production, but capacity is exiting the market rapidly, especially irrational and non-compliant operators.

• Regulatory actions and the Montgomery case are driving increased scrutiny on safety and compliance, leading to further market consolidation and more selective carrier and broker vetting.

• Spot rates have been dynamic due to capacity exits, regulatory enforcement, and seasonal events like Roadcheck and Memorial Day, with expectations for continued upward pressure.

• Shippers are increasingly aware of structural shifts in capacity and are adjusting their expectations and practices, especially regarding safety and liability.

Business performance and operational focus

• Productivity and utilization improvements have driven revenue per truck per week higher, with a 7% increase in Q1, primarily from better utilization rather than fleet expansion.

• Dedicated operations remain more stable due to multi-year contracts, but both dedicated and network businesses are focused on maximizing productivity and backhaul opportunities.

• Cost and productivity initiatives, including a multi-year $40 million cost savings program, have focused on non-driver headcount reduction, asset efficiency, and third-party spend.

• Driver attraction and retention strategies emphasize productivity, career progression, and lifestyle flexibility, supporting a hire-to-retire approach.

Pricing, margin recovery, and forward outlook

• Contract rates are recovering, with shippers who previously took large decreases now facing double-digit increases; multiple allocation events are expected to be needed for full price recovery.

• Margin targets for truckload (12%-16%), intermodal (10%-14%), and logistics (3%-5%) are seen as achievable as pricing improves and cost actions take hold.

• Intermodal volumes have grown for eight consecutive quarters despite flat pricing, with expectations for future pricing lift as capacity tightens and third-party drayage becomes necessary.

• AI is being leveraged for efficiency and differentiation, but effectiveness and industry experience are seen as critical to avoid pitfalls.