Dive Brief:
- Schneider National’s Q1 operating income tumbled 75% as year over year revenues fell more than $100 million on weak demand amid a slumping freight market, the company reported Thursday.
- President and CEO Mark Rourke told analysts the company’s full-load freight down cycle has surpassed 600 days, which he characterized as “long by any historical standard.”
- Like other carriers awaiting a freight turnaround, Schneider is focused on controlling costs and is optimistic that better times are ahead. Its truckload segment provided hope with a $1.1 million YoY revenue increase. “The pipeline remains strong,” Rourke said, adding that recently closed contacts should provide a lift in Q2 and Q3.
Dive Insight:
Schneider M&A is paying dividends: The carrier credited truckload revenue gains to organic and acquisitive growth. The company has targeted the dedicated segment for growth and bolstered that business with its acquisitions of M&M Transport in August 2023 and Midwest Logistics Systems in January 2022.
Similar to other carriers, Schneider has also coped with weak rates, as weekly truckload revenues per truck for Q1 were $3,853, a 4% YoY drop. Truckload income from operations tanked 76% to $14.9 million when compared to a year ago, driving an ratio to 97.2%, up from 88.3% in Q1 2023.
But the carrier is confident its dedicated business will improve.
“Our dedicated business continues to grow into strong account start up activity,” EVP and CFO Darrell Campbell said on the call. “A year over year consistency and dedicated revenue per truck per week is indicative of the resilient nature of the dedicated portfolio.”
However, the carrier isn’t painting a rosy second half as it lowered its per share guidance range, previously $1.15 to $1.30, to between 85 cents and $1.
Schneider is hopeful of some market improvement in H2 as inventory levels continue falling. Rourke views this as conditions showing some indication of returning historical seasonal trends, but not a return to normal.
“We’re not suggesting that we’re through the cycle completely, but that’s how we’re thinking about seasonality,” he said. “I would characterize it fairly typical as we would normally see it through history.”
