Tariffs trim Schneider National’s 2025 growth expectations

Multimodal transportation provider Schneider National said it still expects to see growth and operational improvement across its three businesses this year, just at a more subdued pace given the tariff overhang. So far, the changing trade landscape hasn’t produced any dramatic shifts in customer demand.

Rates across its truckload segment have increased by low- to mid-single-digits this year. However, the carrier is taking less volume from some shippers when the rate isn’t desirable. It now expects rate and volume growth in the segment to be more muted moving forward. (Schneider is approximately one-third of the way through its TL bid season.)

The Green Bay, Wisconsin-based company reported first-quarter adjusted earnings per share of 16 cents on Thursday, 2 cents ahead of the consensus estimate and 5 cents higher year over year. The increase was primarily due to the December acquisition of dedicated carrier Cowan Systems.

Schneider (NYSE: SNDR) cut its full-year adjusted EPS outlook to 75 cents to $1, a 17% reduction (at the midpoint) from its initial guidance. The updated outlook bracketed the current consensus estimate of 89 cents. The company expects continued y/y improvement in results the rest of the year.

“In constructing our revised outlook for the full year, we considered the current trade policy and increased economic uncertainty and the resulting moderating impact on both price and volume,” said Schneider CFO Darrell Campbell on a Thursday call.

He said the company will look to offset the impact from a weaker economy with continued tractor utilization initiatives and cost takeouts. The company has identified more than $40 million in cost reductions, many of which are tied to AI-enabled efficiency programs.  

TL to rise, just not as much

Schneider’s TL unit saw a 14% y/y revenue increase to $614 million, mostly due to the acquisition. Average trucks in service increased 13% y/y, and revenue per truck per week (a utilization metric) was up 3% y/y. Rate-per-mile improvement in both the dedicated and one-way segments helped push utilization higher.

Schneider continues to cull the one-way fleet as it views the current economics of this portion of the TL market as “uninvestable.”

The unit reported a 95.9% operating ratio (inverse of operating margin), 130 basis points better y/y and 60 bps better than the fourth quarter.

Guidance calls for the TL segment to see “more moderate pricing improvements” and lower volume growth than previously contemplated. Net fleet growth is expected within dedicated, but management flagged some customer churn in the near term that it expects to be more than offset by new business wins. It said customer retention in dedicated is still in the low-90% range.

Schneider said cost synergies from the Cowan deal should be $20 million to $30 million over time.

Intermodal could see near-term boom or bust

The company’s intermodal segment reported a 5% y/y increase in revenue to $260 million. Loads were up 4%, and revenue per load (excluding fuel surcharges) was up 1%. This was the third consecutive quarter that yields were up y/y.

Management said intermodal bid season is producing an increase in volume allocations but yields remain largely flat. Looking forward, it expects a continuation in volume growth alongside moderate pricing improvement. The new business wins are expected to offset any tariff-related demand destruction.

Roughly 15% to 25% of Schneider’s intermodal volume is tied to imports, mostly to the West Coast and Mexico. The company said its cross-border business is compliant with the United States-Mexico-Canada Agreement and largely unimpacted by tariffs currently.

Intermodal reported a 94.7% OR in the quarter, 250 bps better y/y. Roughly 10% of Schneider’s container fleet is idle, which is lower than some peers. It estimates it could grow volumes by 20% to 25% without adding equipment. The unit turned each container nearly four times on average in the quarter, a 5% y/y improvement. (Incremental capacity can be captured as container turns improve.)

It doesn’t see the need to remove capacity currently as it believes longer-term intermodal fundamentals are very favorable. It also said there is a possibility that a sharp falloff in imports could create a bit of a near-term supply shock, although that is not Schneider’s base case.

“The conditions are ripe for a bullwhip. It appears that imports may be dropping faster than consumer demand, and a lull in shipping could be the catalyst that removes additional capacity from the market,” said Jim Filter, group president of transportation and logistics.

He said quick trade resolution could provide “an abrupt restart to imports with less capacity than there is today.”

Logistics revenue was up 2% y/y to $332 million. The Cowan acquisition offset legacy volume declines and weaker revenue per load. The unit reported a 97.6 OR, 70 bps better y/y.

A decline in volumes with improved net revenue per order is the guidance for the logistics segment.

Schneider reeled in its net capex plan to a range of $325 million to $375 million from $400 million to $450 million previously. It will continue to allocate capital to fund dedicated and intermodal tractor purchases while maintaining normal replacement cycles for trailers. It said it would have a more asset-light approach in dedicated, utilizing owner-operators when it can.

Shares of SNDR were up 1% at 2:21 p.m. EDT on Thursday compared to the S&P 500, which was up 1.2%.

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