管理層發言
Ladies and gentlemen, thank you for joining us and welcome to Schneider National's Second Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Christyne McGarvey, Vice President of Investor Relations. Please go ahead.
Thank you operator. Good afternoon, everyone. Joining me on the call today are Jim Filter, President and Chief Executive Officer, and Darrell Campbell, Executive Vice President and Chief Financial Officer. Earlier today, the company issued an earnings press release. This release and investor presentation are available on the investor relations section of our website at schneider.com. Our call will include remarks about future expectations, forecast lines and prospects for Schneider. These constitute forward-looking statements for the purposes of the safe harbor provisions under applicable federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations. The company urges investors to review the risks and uncertainties discussed in our SEC filings, including, but not limited to, our most recent annual report on Form 10-K, and those risks identified in today's earnings release. All forward-looking statements are made as of the date of this call. Schneider disclaims any duty to update such statements except as required by law. In addition, pursuant to Regulation G, reconciliation of non-GAAP financial measures referenced during today's call can be found directly in our earnings release and investor presentation, which includes reconciliations to the most directly comparable GAAP measures. Now, I'd like to turn the call over to our CEO, Jim Filter.
Thank you, Christyne. Hello, everyone. Thank you for joining the Schneider National call today. I will start by offering my perspective on the freight cycle and how we are positioning the enterprise for success in this dynamic market. I will then turn it over to Darrell for his commentary on second quarter results, capital deployment, and our full-year earnings per share guidance. After that, we'll open up the call for questions. Looking at our performance in the quarter, we believe we are seeing the initial benefits of the actions we took to structurally improve the enterprise and position us to quickly and effectively capitalize on better market fundamentals. This includes effective revenue management, enhancements to asset efficiency and productivity, execution on our $40 million cost savings program, and our differentiated multimodal model. We continue to see meaningful opportunity ahead. We want to thank our associates, especially our professional drivers, for their hard work, which helped drive earnings to more than double sequentially, representing the strongest quarter-over-quarter improvement in the last decade. Many cycle indicators that showed signs of life in the first quarter gained momentum through the second quarter. Spot rates are already testing prior cycle highs, turndowns remain elevated, and utilization has increased meaningfully. Underlying demand trends were largely stable with some modest seasonal activity. As a result, we believe the market improvement to date has been supply-led. Regulatory action and enforcement on non-compliant supply, including in areas such as non-domicile CDL usage, English language proficiency, illegal cabotage, entry-level driver training, and ELD tampering all gained traction through the second quarter. Supply attrition has been faster than we initially expected and is removing the most irrational capacity from the marketplace. We would now categorize the market as driver-constrained. The long-haul driver population in the U.S. sits well below long-term averages and near the lowest levels seen over the last decade. However, we believe roughly half of the non-compliant capacity is left, with the remaining impacted supply expected to exit through next year. Against that backdrop, we believe we are only in the early stages of rate recovery and are maintaining a discerning approach to customer allocation events. We are balancing customer commitments with the need for rates that will support our strong service, recoup multiple years of significant cost inflation, and drive returns back to a level that is supportive of growth. Importantly, spot rates now exceed contract rates at a level that has historically preceded more meaningful contract rate improvement. While the pace of supply attrition is supporting price increases, it is also creating challenges in driver recruiting and retention, which is putting upward pressure on the cost of capacity. We remain an employer of choice. We will be disciplined in investments to add capacity, focusing on where we see clear demand, strong productivity, and returns that meet our expectations. We have aligned our pay structure to reward our hardest-working drivers to support retention while surgically reinforcing recruiting efforts, including growing the number of recruiters, expanding our AI capabilities, and enhancing starting driver pay in the most constrained geographies. Altogether, our second quarter results underscore the importance of price and productivity. Changing supply conditions are most acute in the over-the-road segment of the market, where irrational capacity has persisted. This, in turn, is creating the strongest initial opportunities in our network and logistics solutions. We have responded rapidly. In the second quarter, these segments captured premium opportunities as we supported customers through a quickly tightening marketplace. We expect dedicated and intermodal to see increasing benefit as we move further into the up cycle through contract renewals and freight allocation events. This flexibility is the benefit of operating a scaled, sophisticated, multimodal portfolio. Digging into our business segments in more detail. In truckload, we more than doubled earnings sequentially on 2% revenue growth, only possible through the organization's hard work on executing price, productivity, and cost reductions. Network price grew high single digits year-over-year in the quarter. We are quickly leveraging all our tools to extract price, including historically high spot exposure, advanced freight selection and acceptance technology, and a growing number of mini bids, among others. Spot rates became increasingly accretive through the quarter, and June saw levels of contribution that were on par with March of 2021. Network price renewals also accelerated with average price increases in the quarter of double digits, which we achieved while also improving incumbent retention. Tractor count was impacted by driver availability, but we were able to more than offset the reduction with improved productivity, which grew high single digits year-over-year. The asset efficiency gains we have made are now being compounded by better freight selection, and we actively managed truck count in the quarter to reduce unseated tractors. Turning to our dedicated business, we saw modest year-over-year price improvement in the quarter, supported by our self-help actions on portfolio quality. We remain disciplined in adding durable, dedicated solutions with returns in our targeted ranges, as that discipline is what drives earnings resiliency through the entire cycle. Proactively addressing pricing now is allowing us to get ahead of the increased cost of capacity and position the portfolio for higher quality growth. As we highlighted on our last call, these actions are creating some near-term churn. While productivity gains also contributed to the year-over-year tractor count decline, they helped drive margins higher in the quarter. Dedicated remains a key pillar of our long-term growth strategy, and the consistency and resiliency of earnings is a feature, not a defect. We continue to advance our sales initiatives with more than 500 new trucks sold year-to-date in 2026. We believe constrained driver supply, inflationary pressure in areas such as insurance, and emerging liability concerns all support long-term dedicated growth. We are also increasingly confident in our focus on specialty equipment where our retention remains highest. At the same time, the benefit of our diverse portfolio of solutions is that it gives us flexibility to meet customer needs as they evolve. As cycle conditions shift, network will be most responsive to market improvement, especially in an upcycle that remains primarily driven by supply attrition in the over-the-road segment of the market. As a result, in the near term, we may shift some capacity into our network configuration. However, we do expect Dedicated to benefit as those conditions translate through contract renewals and customer allocation decisions. As improvement accelerates, we will have the line of sight and capability to quickly return that capacity to capture these opportunities. This is the multimodal strategy working as intended. In Intermodal, second quarter results underscore the efforts we have made and continue to make to prioritize profitable growth. Over-the-road conversion opportunities expanded in the quarter, but as expected, drayage has become the primary constraint. Realizing nine consecutive quarters of volume growth, we remain disciplined in the second quarter. We elected not to chase growth that would have required expensive third-party dray when pricing was not yet supportive of the incremental cost. We are growing in areas where returns are commensurate with our service and cost, as evidenced by the strong growth in Mexico and in the East, where there are the most significant over-the-road conversion opportunities, and we have clear differentiation. Altogether, the segment delivered earnings growth despite some revenue pressure, reflecting our differentiators in lanes and service, containers and chassis asset control, effective network and revenue management, and the optimization of third-party costs. Looking forward, we have seen success with select targeted investments in company dray capacity, which added up through the quarter. At the same time, pricing renewals accelerated in Intermodal. Importantly, we are seeing even stronger out-of-cycle increases, a signal that the market is beginning to turn faster. We expect these efforts to gain traction through the third quarter, positioning us to profitably capitalize on the trifecta of over-the-road conversion tailwinds as we move forward, including elevated fuel costs, rising truckload prices, and strong rail service. We are pleased with our performance in this allocation season, which we expect to translate into volume growth in the second half. In Logistics, we extend the momentum from the first quarter, delivering double-digit year-over-year growth in both revenue and earnings. Brokerage net revenue per order improved both year-over-year and sequentially, supported by revenue management and premium project business. While we are addressing out-of-market contractual pricing, we are also leaning into expanded spot opportunities. Our spot exposure increased year-over-year and sequentially. Revenue management actions were amplified by productivity initiatives, especially those supported by our ongoing technology investment and leadership in agentic AI solutions. The projects that began the first quarter extended through much of the second quarter, though have now largely concluded. We expect the expertise we have built into these new verticals to remain a meaningful growth driver for Logistics, even as the project-based nature of the work may create some quarter-to-quarter variability. Altogether, we are encouraged by how the business has responded to the early innings of supply normalization and market improvement. Darrell will provide more detail on our earnings expectations shortly. We are confident that 2026 will be a year of meaningful earnings growth, supported by an improving rate backdrop and our enhanced ability to drive operating leverage. With that, I'll hand the call over to Darrell to discuss our results and guidance in more detail. Darrell?
Thank you, Jim, and good afternoon, everyone. I'll review our enterprise and segment financial results for the second quarter and provide insights into our full-year 2026 earnings per share and net CapEx guidance. Summaries of our financial results and guidance can be found in our investor presentation, available on the investor relations section of our website. Starting with the second quarter results, enterprise revenues, excluding fuel surcharge, were $1.3 billion, up 4% compared to a year ago. Adjusted income from operations was $73 million, a 29% increase year-over-year. Enterprise adjusted operating ratio improved 110 basis points compared to second quarter 2025. Adjusted diluted earnings per share for the second quarter was $0.29, compared to $0.21 for second quarter of 2025. Earnings grew year-over-year across each of our business segments, supported by continued progress on the strategic initiatives Jim outlined earlier and execution against our $40 million cost savings target, where we remain on track. We're seeing meaningful progress from our ongoing technology initiatives, which are helping automate and streamline workflows, reduce headcounts, improve driver productivity, and lower third-party spend. From a segment perspective, truckload revenues, excluding fuel surcharge, were $628 million in the second quarter, up 1% year-over-year. This growth was driven by improvements in revenue per truck per week, which grew 5% year-over-year, and more than offset lower truck count, which have been impacted by a more constrained driver environment. Network revenues, excluding fuel surcharge, grew 8% year-over-year, driven by productivity and price, with revenue per truck per week up 16% year-over-year. Dedicated revenue per truck per week was up modestly year-over-year, reflecting ongoing portfolio upgrade actions. Truckload operating income was $51 million, a 28% increase year-over-year. Operating Ratio was 91.8%, an improvement of 180 basis points compared to last year. This marks the strongest profitability for our truckload segment since the second quarter of 2023. Earnings were positively impacted by our revenue management efforts that were supported by an improved truckload backdrop. We're also seeing the benefits from our cost savings program, where we're gaining traction in areas such as headcount and trailing asset efficiency. Intermodal revenues, excluding fuel surcharge, were $262 million for the second quarter, down 1% year-over-year. Revenue per order declined 2%, reflecting mix changes that drove a lower length of haul. Volumes grew modestly year-over-year, marking the ninth consecutive quarter of order growth. Intermodal operating income was $18 million, a 14% increase compared to the same period last year, and a strong sequential improvement supported by headcount actions and gains in tractor asset efficiency. Operating Ratio was 93%, 90 basis points improved compared to last year. Logistics revenue, excluding fuel surcharge, totaled $376 million in the second quarter, up 11% from the same period a year ago. We saw improvement in price, supported in part by opportunistic premium project business. Logistics income from operations was $12 million, up $4 million year-over-year. Operating Ratio was 96.8%, an improvement of 90 basis points from last year due to top-line growth noted earlier and effective management of net revenue per order, including capitalizing on spot opportunities. Productivity gains, including those from reduced headcounts and power-only trailer efficiency improvements, also contributed to strong performance. Turning to our balance sheet and capital allocation. Net CapEx in the quarter was $84 million compared to $53 million last year, primarily reflecting our efforts to improve the age of tractor fleet. As a result, free cash flow declined $35 million year-over-year in the quarter. Year to date, we have delivered nearly $35 million back to our shareholders in the form of dividends. Looking forward, our strategic priorities for capital are unchanged, and we remain focused on disciplined deployment, including supporting organic growth that's aligned with our areas of differentiation, accretive M&A, and robust shareholder returns. The strength of our balance sheet allows us to be nimble and execute on all three. As of June 30th, we had $397 million in debt and lease obligations and $293 million in cash and cash equivalents. As a result, our net debt leverage was 0.2x at the end of the quarter. For 2026, we're revising our net CapEx guidance to the range of $350 million-$400 million, down from $400 million-$450 million. As noted earlier, our plan continues to reflect the use of CapEx to improve our age of fleet. The reduction from our previous outlook is driven by a lower need for trailing equipment and consistent with our ongoing focus on asset efficiency. Our areas of investment will continue to support growth across intermodal, especially dray capacity, and in dedicated, particularly in specialty equipment. We're raising our 2026 earnings per share guidance to $0.90-$1.10 from our previous range of $0.70-$1.00. Our guidance assumes an effective tax rate of approximately 24%. Second quarter results reinforce our confidence that the actions we've taken to lower cost to serve, enhance productivity, and prepare for this upcycle are delivering meaningful operating leverage. Based on our year-to-date performance, we're raising the top and bottom end of the full-year earnings per share guidance to reflect the progress we're seeing across the business. Our outlook continues to assume that supply attrition remains supportive of freight conditions for the balance of the year and that we continue to make progress against our $40 million cost savings target. At the same time, our guidance incorporates a range of outcomes for demand and the availability of driver capacity in the second half of the year. Demand has tracked largely in line with our base case to date. Looking forward, stronger demand could drive additional upside, while softer demand may moderate some of the benefits from supply rationalization. As we think about the remainder of 2026, we're bringing momentum from contract implementations and successful allocation events. It's important to note that we're anticipating the loss of a large dedicated customer, which will be more evident in the second half of the year. Additionally, our business mix has evolved over the past several years, including the addition of three dedicated acquisitions and a greater exposure to food and beverage and home improvement end markets. As a result, seasonal demand is typically stronger in the second quarter than in the third. Altogether, we expect earnings to grow meaningfully year-over-year at every point in our updated guidance range. I'll turn the call over to Jim for closing remarks. Jim?
Thanks, Darrell. Before we open the call for questions, I want to reinforce why we're encouraged by the direction of the business. We are a stronger, more efficient company than we were in the last upcycle, with a more resilient, dedicated solution, differentiated internal service, and scalable capacity across network and logistics. These improvements are being further supported by technology innovation, our cost savings program, and a proven acquisition playbook. Second quarter results show that the actions we have taken to structurally improve the enterprise are working. The freight backdrop is improving, capacity rationalization is progressing, and pricing momentum is building. Across the portfolio, we are seeing benefits from revenue management actions, productivity gains, a lower cost to serve, and a multimodal platform that helps us methodically capture opportunities. While uncertainty remains, particularly around demand and driver capacity, our confidence in the earnings trajectory has strengthened. We are maintaining a strong balance sheet, investing where we see clear returns, and continuing to execute against an unchanged strategy: earn customer loyalty through consistent execution, grow profitably where we create differentiation, improve on our low-cost operating model, and maintain disciplined capital allocation. With that, we will open the call for questions.
分析師問答
Go ahead.
Hi. I was wondering if you have a little more color on what you're hearing and seeing from your customer base regarding demand looking ahead, and maybe a little bit on the fleet—particularly thoughts about moving some more trucks into network. Can you talk about your thoughts for fleet growth as we look ahead over the next year or so? Thanks.
Thanks, Jordan. Let me start with what we're hearing from customers related to demand and what we're seeing macro, then touch on fleet growth. Regarding demand, it's playing out largely as expected. Underlying demand is largely stable. We saw a little seasonal activity in the quarter related to both summer holidays and the World Cup. Our customers in areas like food and beverage saw a bit of a lift. Looking forward, the consumer has been resilient through macro noise, but there are risks that are not completely behind us—primarily inflationary pressure from higher energy costs and the continued impact of interest rates on end markets like housing. That's why we're focused on a broad portfolio of customers for cushioning. The reality of this market is that it's being driven by supply. Even a small ripple in demand was enough to make the market move because there is no excess supply. Customers recognize that the market has changed and that disruptions will result in rapid shifts because there's no way to absorb shocks. Regarding the fleet, we're excited about supply exiting and the tightening driver market. In Dedicated, we've continued to see strong sales—more than 500 year-to-date—offset by some near-term churn. This is a good opportunity to restore profitability in that area. For Network, we have not been satisfied with our performance and need to restore margins there. Restoring Network margins is our first priority before we look to grow driver fleet again.
Thank you.
If we look at the public data that we can follow, second quarter was a period of frenetic activity with spot rates and tender rejection rates escalating at unprecedented levels, despite the stable demand drop you talked about. Since then, in the public data, it's been kind of sideways and maybe even walked back a bit. From your internal metrics—turndown rates or what you're hearing from customers—does it feel like the market is leveling out and cooling off a bit, or is this just seasonality consolidating after a challenging period?
Thanks, Bascome. We saw something very similar last year where late July shows spot rates change a bit. This mirrors what we saw a year ago—seasonality. It hasn't changed what we're seeing in the marketplace. Spot rates are not the only way we extract price, though they're important. Even if spot moves sideways, spot remains about 15% higher than contract price, which gives us several ways to extract price: allocation events, post-allocation opportunities, and freight selection. Even if spot is sideways, there's still positive opportunity. Customers increasingly realize this is not temporary when you see sideways movement. We've been comfortable keeping elevated spot exposure because of that 15% delta between spot and contract. We continue to think we're in the early innings of a rate recovery and will maintain elevated spot exposure until the gap between spot and contract narrows. Bascome, I think we're missing you here.
Good afternoon. Jim, on intermodal, you're a significant player in both asset-based trucking and intermodal, and we are seeing rotation from truckload to intermodal. Do you see this as a permanent structural move, or is it opportunistic given that volumes aren't fully there yet, truckload pricing is high, and share might shift back? Do you think this is the new normal for intermodal?
Thanks, Ravi. We are seeing a trifecta of opportunities in intermodal: elevated fuel costs, higher truckload rates, and improved rail service. The rail service is structurally different now and opens opportunities customers can see. Our growth has been strong in Mexico—17 consecutive quarters—driven by our ability to operate with CPKC, and in the East with over-the-road conversion. Customers are responding to truckload rates and fuel and are attracted by our multimodal strategy because we can cover them across modes—our trucks or logistics solutions. I believe we have continued opportunities to grow. This has been two years, nine quarters of growth, and we've grown through weak times.
Thanks. Maybe as a follow-up, you mentioned a large upcoming dedicated loss. Can you shed more light on that—quantify the impact so we can better understand the guidance increase, and provide color around the loss?
Ravi, think of Dedicated as designed to be consistent and resilient. Over the four-year down cycle, Dedicated remained resilient, but performance isn't where it needs to be. Improving conditions give us the opportunity to proactively address bottom-performing agreements and reallocate resources to higher-performing opportunities. As a byproduct, this creates near-term churn, which we've experienced the last couple of quarters. Our focus is on revenue per truck per week improvement. In this cycle, you'll see more pronounced improvement in that metric due to contract renewals and productivity actions. After we work through these, there's an opportunity to grow with durable deals. We feel good about our ability to sell trucks in this area and restore margins.
Ravi, this is Darrell. Our pipeline is robust, and that's one reason the pipeline can absorb shocks. We highlighted this because in the third quarter it's going to be more evident as we implement some of those wins.
Understood. Thanks very much.
Welcome.
Good afternoon. Jim, it's a little surprising to see logistics EBIT almost doubling sequentially and up over 50% year-over-year in a quarter where many logistics companies were squeezed by a parabolic move in spot pricing. Is this a Schneider-specific cost advantage? Our power-only model? Something special that went into this in a quarter that was challenging for many peers?
Thanks for the question. We discussed this a bit last quarter as benefits were already coming through. We're not different from the rest of the industry; we had some headwinds from rising third-party carrier costs that weighed on contract-rate business, including power-only. However, we had strong execution on premium project business—projects that began in the first quarter continued into much of the second quarter and created additional wins. In addition to project business, we focused on revenue management to address net revenue pressures and leaned into spot opportunities. We addressed some out-of-market contract rates and increased spot exposure. Right now, our mix is roughly 60/40 spot versus contract compared to about 50/50 historically. Beyond commercial actions, tech investments, particularly in AI, have improved frontline productivity by 17% year-over-year in the second quarter. So it's a combination of commercial activity, revenue management, and execution on the loads.
Got it. You specifically called out gains on equipment sales in truckload and intermodal EBIT in the press release. Those might be a step up from normal. Can you quantify that as we consider the 2Q to 3Q bridge?
In the second quarter, we did see a bit more in gain on sale. We saw pricing improvements on those sales and sold more units. It's not extremely material, but there was a step up from the first quarter to the second quarter. For the remainder of the year, we expect some robustness in the market related to pricing.
Got it. Thank you.
Welcome.
Good afternoon. On the intermodal revenue per order pressure, you noted mix impact with local conversion. What about core yields directionally on shorter-haul versus longer-haul lanes? How should we think about yield trajectory in the near term?
Thanks, Bruce. We don't comment on pricing by region, but here's directional color. The rate per order impacts in the second quarter were primarily length-of-haul and mix related. Contract renewals have been increasing each of the last four quarters. We expected intermodal to lag truckload, but drayage tightness has become the catalyst to move pricing. Our contract renewals were low single digits in Q2, but we're trending toward mid-single digits, which is what we need to invest in dray or utilize third-party capacity at higher price points. We're focused on getting to a price point where we can accept more loads. As we reach that pricing, we'll be able to grow not only in the East and Mexico but across our markets.
Great. Super helpful. Thanks, Jim.
Great.
Good afternoon, Jim and team. Congrats on your first call leading. We've also seen the driver ads in Westchester—clearly working. Looking at your guide and outlook, is second quarter the strongest, and how should we think about momentum into third quarter? Is fuel aiding? Any considerations for driver pay and cost as capacity tightens? You mentioned moving trucks between dedicated and network—can you give parameters or timing for that so we can model it?
Thanks, Ken.
Ken, you hit on many of the things we're considering. To frame the guide: we assume continued supply attrition. We said this earlier in the year and remain confident supply will exit the market. We're executing on cost savings, productivity actions, and revenue management. With two quarters behind us, we see signs of those efforts coming to fruition and driver capacity exiting faster than we initially thought. All segments grew year-over-year, which is remarkable. We raised the top and bottom end of our guidance based on those facts. We saw strong sequential growth—earnings doubled quarter-over-quarter from Q1 to Q2—which results from execution plus market help. As we go into H2, we bring that momentum. Network and Logistics, where irrational capacity entered, are seeing the effects come out fastest in pricing. Dedicated and Intermodal, which are more contract-based, should see benefits in H2 from renewals and allocations. We do model scenarios around driver cost and availability, and demand is a swing factor—particularly important for peak and Q4. Regarding seasonality, our business mix has shifted with acquisitions, increasing exposure to food & beverage and home improvement, which historically creates stronger Q2 seasonality. For Logistics, project business was pronounced in Q2 and will be less pronounced in Q3. We also noted the loss of a large dedicated customer, which will impact Q3. All these factors are in our modeling for the rest of the year.
Great. Very helpful. Thanks, Darrell. As a follow-up, you mentioned moving trucks from Dedicated to Network. Can you discuss the scale, capacity, and time frame so we can model it?
Ken, we will move capacity where we see the best market opportunities. The value in a multimodal approach is being able to move drivers between opportunities. We're opportunistic and disciplined. Right now, market pricing suggests more opportunities in Network, so we may shift some tractors there. We'll make those moves as the market dictates.
Understood. Thanks, Jim. Thanks, Darrell.
Thanks for taking the question. Jim, can you clarify the comment on dray drivers? It sounded like pricing is nearing the point to expand capacity or fill gaps in the network. Also, it sounded like you're getting more out-of-cycle bids or allocations in intermodal—can you put that in context compared to prior cycles?
Thanks, Brian. On dray capacity: we had opportunities to grow much faster in the quarter but remained disciplined because some opportunities required expensive third-party dray when pricing did not support incremental cost. Even though we could have moved more freight, it would not have been accretive. We are leaning into growing our dray capacity and have had success—the bulk of that growth occurred at the end of the quarter, and we're continuing to add capacity now that market rates are improving. Customers are willing to fund our ability to grow company dray or use third-party capacity, which gives us confidence to continue growing. On out-of-cycle activity, when customers see turndown activity, they are willing to sit down and have discussions, and that's where we're seeing out-of-cycle opportunities.
Understood. Quick follow-up on B-1 and cabotage: there's been significant activity. Have you seen that translate to opportunities in your network?
Yes. Take a step back: this is a matter of public safety. Since 2016, the number of trucks involved in injury crashes has increased 18%. Companies like Schneider have been investing in safety and reducing accident frequency, yet crashes are growing because not all companies follow regulations. Regarding cabotage, we're starting to see lane impacts because about 30,000 drivers had visas revoked and can no longer cross the border and perform cabotage. That reduces capacity. Other enforcement actions—non-domiciled drivers, entry-level driver training—are also accelerating. The first two-thirds of impacted capacity came off faster than we anticipated, and about half of the non-compliant capacity is still left. If legislation like Dalilah's Law is enacted, capacity could exit abruptly. Broker preemption ending may remove carriers with unsatisfactory ratings, a few percent of capacity. ELD enforcement is largely in front of us and could have a major public safety impact because many ELDs were improperly certified and tampered with. When you combine what's behind us and what's ahead, the market structure is changing: capacity won't grow as fast as after the pandemic, and this recovery could last longer than past recoveries.
All right. Thanks, Jim. Appreciate the perspectives.
You bet. Thanks, Brian.
Good afternoon. You had strong growth in revenue per truck per week in Network. How much further gain could we see in third quarter? In Dedicated, how should we think about the relationship across the cycle—if Network rates rise 15%-20% over two years, would Dedicated capture half of that? How would you model the relationship?
Tom, Network revenue per truck per week grew 16% year-over-year, a strong performance. Network benefits from multimodal flexibility. During the downturn, we focused on productivity and cost improvements that were masked by price. Now that price is moving, those improvements compound. Price comes through allocation events, elevated spot exposure, many bids, and freight acceptance. Productivity gains were high single digits driven by asset efficiency, removing unseated tractors, and higher driver utilization from freight selection and optimization. Cost reductions we implemented over multiple years are now visible. In Dedicated, it's difficult to map a simple ratio between Network and Dedicated price moves because Dedicated involves multi-year contracts where we seek durable, fair pricing for both sides. Some Dedicated contracts had pressure later in the cycle and those are the ones we're addressing. Overall, we expect Dedicated revenue per truck per week to start improving immediately in the third quarter.
On timing, when will we start to see strength in revenue per truck—will it show up in third quarter or is there a longer lag?
We expect to start seeing improvement in Dedicated revenue per truck per week already in the third quarter.
Good afternoon. Darrell, you talked about third-quarter seasonality relative to second quarter. Can third-quarter profitability be higher than second quarter, or should we assume second quarter is higher than third? Also, regarding drivers and the post-Montgomery environment around brokerage, can you refresh us on how Schneider vets carriers, any changes post-Montgomery, and how that might impact available capacity or create opportunity for your logistics business?
Good question. We don't guide by quarter, but for color: seasonality has shifted over time with our business transformation. Recently, more seasonality has shifted into Q2. We also have dynamics like logistics specialty project business and the loss of a large dedicated customer that affect Q3. We do see a lot of momentum going into H2. Capacity exiting the market affects price and productivity, and we've already seen price and productivity drive results in Network. We expect momentum to continue and price benefits to come through in Dedicated and Intermodal as well. At every point in our guide, we expect year-over-year improvement across segments.
Okay. Thanks. On the bigger picture regarding drivers and brokerage post-Montgomery, how do you think about carrier vetting? Have you made changes post-Montgomery? Is there an opportunity for Schneider in logistics?
Chris, this likely further constrains capacity. Many brokers may avoid carriers with conditional or unsatisfactory FMCSA ratings. That might be a few percent of the market. Transfers of drivers to new carriers, even if safe, can reduce capacity. Schneider has qualifying standards beyond carrier safety ratings: we qualify approximately 60% of carriers that apply. That doesn't mean the 40% are unsafe; some are safe but lack tenure or are chameleon carriers we disqualify. This creates opportunity for our logistics segment—some shippers are pivoting away from small brokers and require higher insurance levels that serve as barriers to entry. We implemented these standards years ago, reducing our carrier count from about 60,000 to less than 14,000 to improve cargo security, and many of these filters also enhance safety. Litigation is a risk to supply chains; we're investing heavily in safety training, technology, and compliance to reduce accident frequency. We believe tort reform is important to ensure fair, predictable outcomes aligned with actual conduct.
Helpful perspective. Appreciate it. Thank you.
Thank you.
Two questions. You mentioned the trifecta for intermodal conversion but volumes were flat in the quarter—where do you think growth goes? Also, does the changing mix of the business change where annual margins can go? With more Dedicated or exposure to food & beverage, does long-term operating ratio potential change, or is this a seasonal mix shift?
Scott, on Intermodal volumes: we could have grown double digits in the quarter but chose not to because some growth would have required expensive third-party dray and been unprofitable. We've grown nine consecutive quarters and can be selective. Now that we're growing dray capacity and seeing price that supports it, we have room to grow in the East and Mexico and across markets. We set up peak season programs with shippers early because we see those opportunities.
Scott, seasonality commentary was just to give context. The long-term margin view is unchanged. Our acquisitions came with shifts in mix that we welcomed. We purposely targeted those acquisitions. We've taken purposeful actions to structurally improve the business during the downturn. Truckload is more skewed toward Dedicated now. We've invested in Intermodal differentiation and made Network and Logistics scalable and flexible through technology investments. These actions make us stronger as the market improves. Long-term margin targets remain: Truckload 12%-16%, Intermodal 10%-14%, Logistics 3%-5% in normal market conditions. We've not been in a normal situation, but as capacity exits the market, we're already seeing benefits and line of sight to our long-term ranges. Today, truckload margin is already 8%, Intermodal 7%, and Logistics is within long-term ranges. Evidence supports the ability to reach targeted margins.
All right. Thank you.
Thank you, Scott. We appreciate everybody joining the call today. Have a great day.
This concludes today's call. Thank you for attending. You may now disconnect.