Despite the uncertain economic conditions, US FTL, intermodal and logistics giant Schneider National achieved an adjusted EBITDA growth of 18.4% y-o-y to $613.7m on revenue growth of 6.3% to $1,401.8m in the first quarter of the financial year.
Cowan Systems immediately accretive
This quarter was the first in which the November 2024 acquisition Cowan Systems was counted in the company financials. Based in Baltimore, MD, Cowan Systems is primarily a dedicated contract carrier with a portfolio of complementary services including brokerage, drayage and warehousing. Cowan Systems’ Dedicated customers include leading producers of retail and consumer goods, food and beverage products, industrials, and building materials. The company operates approximately 1,800 trucks and 7,500 trailers across more than forty locations throughout the Eastern and Mid-Atlantic regions of the United States. Including Cowan Systems, Schneider will operate over 8,400 Dedicated tractors – approximately 70% of Schneider’s Truckload fleet – cementing its place as one of the largest dedicated providers in the transportation industry.
The acquisition proved accretive in both the Truckload and Logistics segments. CEO Mark Rourke said, “We expect to achieve between $20 million and $30 million of synergies at maturity.”
Truckload segment 68.5% operating income growth
Schneider’s Truckload division reported 68.5% y-o-y growth to $25.1m, in a large part due to the Cowan Systems acquisition. As well as the acquisition, the division benefitted from a 3% improved revenue per truck though this was partially offset by lower Network volumes. Rourke continued, “In Truckload, both Network and Dedicated delivered improved earnings year-over-year and sequentially driven by cost containment actions and improved freight pricing from second half of 2024 through first quarter of 2025 contractual renewals.”
Intermodal – 97.1% operating income growth
Intermodal reported revenue growth of 97.1% y-o-y to $13.8m on revenue growth of 5.3% to $260.4m in the quarter. Volume growth and revenue per order both grew, helping revenues but decreased rail costs from enhanced network optimisation and cost containment actions helped the profit growth to high double digit levels. Rourke said, “We nearly doubled earnings compared to a year ago on 4% order growth driven by increasing shipping activity in the West of Mexico. We have visibility to a portion of our customers taking freight pull-ahead actions in the face of tariff uncertainty.”
Logistics also helped by Cowan Systems
The Schneider National Logistics segment also reported high double digit earnings growth, this time at 50.0% y-o-y to $8.1m on revenue growth of 2.2% to $332.0m. This was in part helped by Cowan Systems, and the operating income came from effective brokerage net revenue management. Rourke added, “Logistics improved earnings 50% year-over-year as our FreightPower for shipper and carrier digital technology allows us to remain nimble to changing market dynamics across both less-than-truckload and truckload modes. Overall, brokerage freight volumes are challenged as shippers continue to favour asset-based solutions. Power Only grew volumes mid-single digits compared to a year ago as shippers and carriers value the simplicity and access of matching qualified small carriers to large trailer pool shippers.”
Intermodal to benefit from tariffs?
Uncertainty is rife in the US trucking industry at the moment, but Schneider is far less exposed to international trade than many of its rivals. Its sole cross-border offering is its contract with CPKC Railroad that offers cross-border traffic from Mexico. This has actually benefitted from trade tensions – Jim Filter, President of Transportation at Schneider National said, “Virtually, all the goods that we’re shipping cross-border are compliant with USMCA, which are currently exempt from tariffs, and we have a lot of differentiation in that product. We’re aligned to the only railroad that is a single-line railroad that brings you up to both the Midwest and to the Southeast U.S. That’s all asset-based and are really excellent execution within Mexico.”
The company has navigated its way through the current road freight recession that has occurred even before the current US Presidential Administration and may well be in a good place to benefit from any uplift in trade that occurs. Time will tell.
Author: Richard Shrubb
Source: Ti Insight
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