Schneider goes public and reveals a strong position

Schneider National has announced that it will stage an initial public offering (IPO) on the New York Stock Exchange. One of the largest of the US road freight providers, Schneider has remained family owned until now, although it appears that the present owners aim to retain a majority stake in the public company.

It was always difficult to get an accurate picture of Schneider’s business prior the publication of the details around the IPO although it was clear that it was one of the better managed and more important of the US road freight and logistics providers.

Certainly, the company has grown over the past few years. Revenue in 2011 was US$3.4bn and has risen steadily to $3.9bn in 2015. However, profitability has roughly doubled with net income rising from $72m to $140m over the same period. One of the major reasons for such higher profits is the fall in fuel prices.

In 2015 Schneider paid around half for fuel compared to 2011. In comparison, the revenue per truck excluding fuel costs has risen from $10,197m in 2013 to just $10,982m in 2015. Wage costs have risen modestly. Whilst customers in part pay for fuel through a surcharge, such a dramatic fall in such an important cost driver surely must have helped margins. 

Of course, Schneider is a large and complex business. It may be that the two other parts of the business are improving their profitability faster than road freight. Intermodal volumes are up by 7% over the past couple of years and yields have hardened but not enough to deliver big increases in profit. The ‘Schneider Logistics’ 3PL and 4PL business is around a fifth of the entire business of Schneider National. It is not apparent from the figures released how profitable this business is. It does have some important contracts in the automotive sector, managing warehouses as well as freight forwarding, but it does not seem likely that this could compensate sufficiently for weakness in the rest of the business.

Schneider does have debts of significance with liabilities of all kinds being over $900m. However overall bearing in mind the difficulties the US trucking market the company does seem to have done a good job of managing the core truck business to sustain profits at such a respectable level.

Source: Transport Intelligence, January 3rd 2017

Author: Thomas Cullen