Executive Summary / Key Takeaways

• Schneider National, Inc. is strategically transforming its business, emphasizing a resilient, asset-based model centered on its Dedicated Truckload segment and differentiated Intermodal offerings, bolstered by recent acquisitions like Cowan Systems.
• The company is actively combating a challenging freight market and inflationary cost environment through rigorous cost containment, asset efficiency initiatives, and significant investments in AI-driven technology to enhance productivity and lower its cost to serve.
• Despite recent headwinds, including unexpected claims-related costs and sub-seasonal demand, Schneider's Q3 2025 adjusted EPS guidance of approximately $0.70 reflects a proactive approach to structural improvements and a strong pipeline for future growth, particularly in specialized Dedicated services and Intermodal.
• Schneider's competitive positioning is strengthened by its multimodal portfolio, unique Dedicated brands, and advanced digital platforms, which enable market share gains and provide a distinct value proposition against rivals.
• The long-term outlook is supported by anticipated supply rationalization in the broader trucking industry, driven by regulatory enforcement and declining Class 8 production, which is expected to create a more favorable pricing environment for disciplined carriers like Schneider.

The Orange Empire's Resilient Blueprint: Dedicated Strength Meets Digital Innovation

Schneider National, Inc. (NYSE:SNDR), a name synonymous with American trucking since its founding in 1935, is strategically reshaping its formidable presence in the surface transportation and logistics industry. From its humble beginnings as a single-truck operation, Schneider has evolved into a premier multimodal provider across North America, underpinned by a clear strategy: optimize capital allocation across its strategic growth drivers—Dedicated Truckload, Intermodal, and Logistics—while relentlessly pursuing cost containment and an effortless customer experience. This foundational approach, coupled with a keen eye on technological differentiation, positions Schneider to not only weather current market volatility but to emerge stronger in the long term.

The broader freight market presents a complex picture. While demand has been characterized as steady but unspectacular, significant supply-side rationalization is underway. Regulatory enforcement concerning English language proficiency and non-domicile CDL renewals, coupled with a year of Class 8 production below replacement levels, is creating a tightening capacity environment. This dynamic is expected to drive more substantial supply rationalization than the electronic logging device (ELD) mandate in 2017, which impacted capacity by an estimated 3% to 4%. This shift is already evident in parts of Schneider's business and among its trade partners, suggesting a more constructive environment for disciplined carriers heading into 2026.

Technological Edge: Powering Productivity and Differentiation

Schneider's commitment to technological differentiation is a core pillar of its strategy, enabling enhanced productivity, lower costs, and a stronger competitive moat. The company leverages data science and analytics to provide innovative solutions across its operations.

A prime example is its Freight Power platform in the Logistics segment, which facilitates efficient matching of third-party capacity with customer demand, particularly for its Power Only services. This platform, combined with AI-based digital assistant technologies and transformative digital employee models, is automating routine tasks. This frees up associates to focus on higher-value work, leading to tangible benefits. For instance, overall orders per day per broker in Logistics were up double digits in Q3 2025 compared to 2023 levels, and in areas with actively deployed AI tools, productivity is "several times better." This technology is helping brokers move away from less fruitful workloads, enabling them to spend more time on value-added activities. Schneider is also rolling out "Agentic AI" to other service offerings and support functions, dovetailing with its existing decision science platform for automated decision-making and enhanced productivity.

These technological advancements contribute directly to Schneider's competitive advantage by lowering its cost to serve, improving asset efficiency, and enabling more agile responses to market dynamics. This digital prowess is crucial in a competitive landscape where rivals like XPO Logistics (XPO) emphasize technology for freight brokerage, and it allows Schneider to maintain its operational reliability while enhancing its digital capabilities.

Strategic Evolution: Dedicated Dominance and Multimodal Prowess

Schneider's strategic journey has been marked by a deliberate shift towards a more resilient business model. Since becoming a public company in 2017, its Dedicated fleet has grown from 33% to 70% of its total Truckload segment, a testament to its focus on customer-centric, long-term contract solutions. The acquisition of Cowan Systems in December 2024 for $421 million, including real estate, was a pivotal move, adding approximately 1,900 trucks and 7,600 trailers and significantly bolstering its Dedicated capabilities. Cowan's lightweight equipment model and focus on specialty retail, food and beverage, and construction supplies broadened Schneider's vertical market reach. The integration of Cowan Logistics into Schneider Logistics, commencing in October 2025, is expected to drive improved margins through leveraging enterprise tools and eliminating redundancies.

The Dedicated segment continues to be a growth engine. In Q3 2025, new customer wins were realized at three times the rate seen in the first half of the year, with a robust pipeline skewed towards specialty equipment. This focus on specialty equipment, which constitutes "well over half" of the Dedicated business, offers higher retention rates (400 basis points higher than standard equipment) and greater differentiation. While some churn in standard equipment Dedicated operations was observed in Q2 and Q3 2025, new business wins are expected to more than offset this, leading to sequential growth in net fleet count for the remainder of the year. The company also anticipates enhanced revenue per truck per week in Dedicated by tightening truck-to-driver ratios and redeploying underutilized capital.

In Intermodal, Schneider has demonstrated impressive market share gains, with Q3 2025 volume growth of 10%, several times the industry rate. This growth is a direct result of strategic actions, including expanding into new verticals like automotive and improving service levels. Mexico volumes, in particular, surged over 50% in Q3 2025, benefiting from Schneider's relationship with CPKC (CP) and offering service 1 to 3 days faster than competitors. This asset-based dray, chassis, and container offering, combined with strong rail relationships, creates reliable and valued solutions. Despite flat rate renewals and a negative mix impact on revenue per order (due to softer West Coast outbound volumes and shorter hauls), Intermodal operating income grew and margins modestly improved in Q3 2025. Schneider is well-positioned to grow Intermodal volume up to 25% with its current trailing equipment.

The Logistics segment, an asset-light strategic contributor, continues to leverage its Freight Power platform. Power Only revenues grew for the sixth consecutive quarter in Q3 2025, with volumes at 98% of peak levels and net revenue per order showing high single-digit percentage improvement year-over-year. This strength helps offset pressure in traditional brokerage volumes as shippers increasingly favor asset-based solutions.

Financial Performance and Outlook: Building Leverage for Recovery

Schneider's financial performance in Q3 2025 reflected a mixed environment, with strong revenue growth partially offset by increased costs. Enterprise operating revenues increased by $136.70 million, or approximately 10%, to $1,452.40 million in Q3 2025 compared to Q3 2024. This was driven by increases across all segments, including a $92.30 million rise in Truckload revenues (excluding fuel surcharge), an $18.40 million increase in Logistics revenues (excluding fuel surcharge), and a $16.70 million increase in Intermodal revenues (excluding fuel surcharge).

However, net income decreased by $11.20 million, or approximately 37%, to $19.40 million in Q3 2025. This was primarily due to a $7.80 million decrease in income from operations and a $5.10 million increase in other expenses, partially offset by a $1.70 million decrease in income taxes. Adjusted net income also saw a 31% decline to $21.70 million. A significant factor impacting profitability was an unexpected $16 million increase in claims-related costs in Q3 2025, stemming from unfavorable developments on prior-year claims, which impacted earnings per share by $0.07. These costs, while not expected to repeat in Q4 2025, highlight the inflationary litigation environment.

For the nine months ended September 30, 2025, enterprise operating revenues increased by $323.30 million, or approximately 8%, to $4,274.70 million. Income from operations for the nine-month period increased by $9.60 million, or 8%, to $132.40 million, driven by volume growth in Dedicated and Intermodal, and higher rates in Dedicated and Network. However, net income for the nine months decreased by $2.90 million, or 3%, to $81.50 million, primarily due to a $14 million increase in interest expense related to the Cowan acquisition and judgment-related interest.

Schneider's liquidity remains robust, with cash and cash equivalents increasing by $76.50 million to $194.10 million as of September 30, 2025, compared to December 31, 2024. The company's net debt leverage improved to 0.5x at the end of Q3 2025 from 0.6x at the end of Q2 2025. Net capital expenditures guidance for the full year 2025 was revised down to approximately $300 million from a previous range of $325 million to $375 million. This reduction reflects a strategic decision to pause tractor orders, driven by productivity and asset efficiency initiatives, and a reevaluation of the total cost of ownership model in light of new tariffs, aiming for higher free cash flow without compromising fleet age.

The company's full-year 2025 adjusted EPS guidance is approximately $0.70, assuming an effective tax rate of 24%. This guidance incorporates the Q3 claims costs, and excluding that impact, aligns with the lower end of previous expectations, which assumed tempered seasonality. Management expects sub-seasonal volume trends and spot rate volatility in Truckload Network, while Dedicated earnings are set to benefit from new business implementations despite start-up friction costs. Intermodal is projected for flat pricing but above-market volume growth, with Logistics facing continued pressure on Truckload volumes.

Competitive Landscape and Strategic Positioning

Schneider operates in a highly competitive industry, facing direct rivals such as J.B. Hunt Transport Services, Inc. (JBHT), Knight-Swift Transportation Holdings Inc. (KNX), Old Dominion Freight Line, Inc. (ODFL), and XPO Logistics, Inc.. Each competitor brings distinct strengths, shaping Schneider's strategic responses.

Schneider's multimodal portfolio and emphasis on specialized Dedicated services provide a key differentiator. While J.B. Hunt Transport Services, Inc. is often perceived as more advanced in intermodal integration, Schneider's focus on regional shipping and customized solutions, particularly with its four Dedicated brands (Schneider, Midwest Logistics Systems, M&M Transport, and Cowan Systems), allows for greater flexibility and tailored offerings. The company's lightweight equipment model, enhanced by the Cowan acquisition, resonates with customers seeking increased payload capabilities, providing a competitive edge in specific end markets like specialty retail and food and beverage.

Against Knight-Swift Transportation Holdings Inc.'s asset-light approach, Schneider's more asset-intensive model is balanced by its long history, focus on safety, and driver training, fostering strong customer loyalty. In the LTL-dominated arena of Old Dominion Freight Line, Inc., Schneider's broader portfolio, including intermodal and logistics, offers more comprehensive solutions, with its cross-border capabilities in Canada and Mexico providing a unique advantage. While XPO Logistics, Inc. emphasizes technology for freight brokerage, Schneider's Freight Power platform and AI-driven productivity tools demonstrate its commitment to digital innovation, allowing it to compete effectively in real-time tracking and efficiency.

Schneider's ability to gain market share through new customer awards by combining elements of its portfolio to sole-source facilities or geographies underscores its competitive strength. This strategy, particularly effective for value retail and food and beverage customers, lowers operational complexity for shippers and bolsters Schneider's network through increased freight density. The company's disciplined approach to freight allocation, even foregoing volume with some shippers to maintain price discipline, further highlights its commitment to profitable growth over sheer volume.

Risks and Challenges

Despite its strategic strengths, Schneider faces several risks. The "wildcard" of demand-side uncertainty, particularly concerning consumer health and industrial activity, remains a significant factor. The ongoing evolution of trade policy and potential tariff impacts introduce volatility to both price and volume, as well as equipment costs and maintenance expenses. The industry also grapples with persistent inflation in accident claims and equipment-related costs, exacerbated by a litigious environment characterized by nuclear verdicts and inflated settlements. While Schneider has achieved an all-time low in DOT reportable accident frequency, the variability in insurance and claims expenses remains a challenge. Furthermore, the owner-operator segment faces difficulties due to current market conditions, impacting Schneider's strategy to expand variable cost capacity.

Conclusion

Schneider National is executing a deliberate and comprehensive strategy to enhance its earnings power and long-term shareholder value. By fortifying its Dedicated Truckload segment through strategic acquisitions and a focus on specialized services, expanding its differentiated Intermodal offerings, and leveraging advanced digital technologies, the company is building a more resilient and efficient multimodal platform. While the current freight market presents challenges, including sub-seasonal demand and inflationary cost pressures, Schneider's proactive approach to cost containment, asset efficiency, and disciplined commercial actions positions it favorably for an eventual market recovery. The anticipated supply rationalization in the broader trucking industry, driven by regulatory changes, is a significant tailwind that is expected to create a more constructive pricing environment. Investors should recognize Schneider's commitment to structural improvements and technological leadership as key drivers for sustained profitability and market leadership in the evolving transportation landscape.