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Schneider National, Inc. is the largest trucking firm in the United States. Privately owned by members of the Schneider family, it was a relatively small player until the 1980s, when the trucking industry was deregulated. In that era when many small trucking firms failed, Schneider instead soared to the forefront, chiefly by deploying advanced communications technology. Schneider runs a fleet of approximately 14,000 trucks and 40,000 trailers, distinguished by a signature bright orange color. Its routes encompass the entire United States, and the company also has operations in Canada, Mexico, and Europe. The company also runs a logistics business, which helps other companies determine efficient ways to ship and distribute goods. Schneider is a leader in trucking logistics technology. It uses satellite links and the Internet to monitor aspects of its business, including how much sleep its drivers get and how quickly customers unload Schneider's deliveries. This allows the firm to operate at maximum efficiency. Schneider ships goods by boxed trucks, tanker truck, flatbed truck, in containers, and by rail.
Early Years
Schneider National was founded in 1935 by Al Schneider, known as 'A.J.,' in Green Bay, Wisconsin. Schneider was raised on a farm in east-central Wisconsin, and his education took him through the eighth grade only. He began with one truck, and took shipments through the Green Bay area. The company grew, as did the Schneider family. Eventually there were five sons and a daughter. One son, Don, worked his way up in the business, becoming president in 1971. Unlike his father, Don had a thorough education to match his home-grown business skills. He graduated from a parochial high school in Green Bay, and then went to St. Norbert College, graduating in 1957. After a period in the Army, Don Schneider entered the University of Pennsylvania's esteemed Wharton School of Finance and Commerce. With this valuable business degree in hand, Don returned to Green Bay in 1961 and became an instrumental Schneider manager. Ten years later, he assumed control of the company. Don Schneider seemed to have brought his father's company an unusual combination of skills. In a profile of the company in the October 31, 1994 Milwaukee Journal, an industry analyst proclaimed Schneider 'a trucker who thinks like an economist.'
Changes After Deregulation in the 1980s
Until 1980, thinking like a lawyer might have been the most valuable skill at a trucking company. Ttrucking was regulated by a web of state and federal statutes that determined minutiae of the industry's routes, rates, and loads. Thus Schneider was licensed to carry cellulose products, for example, but not paper products, and its lawyers had to negotiate for years in order to reclassify disposable diapers as a cellulose product so it could legally ship them. Both government rules and union contracts dictated much of the business. Schneider itself seemed versed in legal finagling. From 1978 to 1981 the company claimed its headquarters were in a facility it used in Illinois, thus getting the company out of a higher licensing fee it would have owed to the state of Wisconsin. The state of Wisconsin sued Schneider for $3.8 million in licensing fees in 1982, and the case was eventually settled on appeal in Schneider's favor. But when the trucking industry underwent deregulation in 1980, such bureaucratic wrangling became much less of a part of the way Schneider and other trucking companies did business. Truckers were freed to compete directly for customers. Around the same time, many large manufacturers and retailers were changing their business pattern, switching to so-called just-in-time delivery. Just-in-time meant that instead of warehousing huge stocks of common items, factories ordered raw materials as needed, and shipped finished goods directly to retailers. This cut costs associated with large inventories, but it put intense pressure on truckers. A truckers' delay of as little as 20 minutes could cause retailers annoying back-ups as they tried to get their goods out to waiting customers.
Don Schneider was quick to realize that his company had to change massively in order to adapt to the new business climate. Two major changes were in employee relations and in new use of technology. In the early 1980s Schneider began giving its drivers bonuses based on performance, while also eliminating perks like reserved parking spaces for upper echelon employees. Deregulation allowed the company to hire non-union drivers, which it did, while pledging to keep its union employees. In 1979, all 1,500 drivers belonged to the Teamsters union. As the company grew, the percentage of unionized drivers became smaller. By the early 1990s, only 500 Teamsters were left, out of a crew of roughly 10,000 drivers. Attrition of the union allowed Schneider more freedom to set its own policies for employees. This gave the company more flexibility, which it needed to adapt to the increased demands of its customers.
Schneider also pioneered the use of satellite technology in trucking. Traditionally, drivers on the road would find a phone at a truck stop and call a company dispatcher for a periodic check-in. This was sometimes a frustrating process, as pay phones were often engaged, or the dispatcher busy and unable to accept the call. Schneider National made a large investment in computer and satellite technology in 1988 to give it a new way to communicate with drivers. The company spent an estimated $50 million initially, and installed a satellite dish and communication console on every truck it owned. Each truck was linked by satellite to the company's home base in Green Bay. Specialized software ran continuous updates on the many variables of the business, not only keeping track of where each truck was, but logging how many hours the driver had slept, fuel use, and average time it took to unload at each customer's facility. Changes in routes could be beamed directly to the driver on the road, and if a customer needed an empty trailer in half an hour, the computer could determine which driver was nearby and eligible for another load. Schneider was the first major trucker to make use of satellite technology, and soon the rest of the industry was scrambling to keep up.
Meanwhile, Schneider prospered financially. The trucking market in the 1980s was characterized by intense competition and recessive prices, yet Schneider managed to grow at around 20 percent annually. Revenue in 1981 was a modest $200 million, but by 1992, revenue exceeded $1 billion. Because the company was privately held, it was able to reinvest freely with an eye to long-term profits, and Schneider continued to put money into technology and new ventures.
Expansion in the 1990s
With its rapid growth, Schneider needed to expand its facilities in the early 1990s in order to accommodate more drivers. The company began work on a huge facility in Memphis in 1990, building a driver service center and operations center and enlarging an existing maintenance center. The driver service center gave drivers a place to relax, rest, and shower while their trucks were being refueled or repaired. Originally planned in the late 1980s as home base for about 600 drivers, by the early 1990s the Memphis site grew into a hub for close to 1,000 truckers. The expansion cost Schneider an estimated $6 million. Schneider also employed its high technology at its new service center. When drivers refueled in Memphis or at any of the company's other major service centers, their mileage was automatically beamed to Schneider's headquarters in Green Bay. If a truck was using an atypical amount of fuel, the computer could note that, and alert personnel of possible maintenance needs on that vehicle. The investment in cutting edge technology let the company save money over the long term, by giving it such tight control over its fleet.
Schneider also began investing in equipment in the early 1990s, specifically truck trailers that could be used on railways. Schneider entered the so-called intermodal transport industry in 1991, working with Southern Pacific railway to serve routes between the Midwest and southern California. Though industrywide far more freight was shipped by road than by rail, being able to combine the two often gave the company more efficient routes. By 1992, Schneider had worked out intermodal shipping agreements with several more railroads, giving it access to most major markets in the United States. Schneider invested some $12 million dollars in the early 1990s, replacing existing truck trailers with trailers that could be stacked on flatbed rail cars. Then the company spent around $600 million over several years to buy a new kind of convertible trailer called a roadrailer. The roadrailer was a modified truck frame that could use steel rail wheels and travel directly on train tracks. Unlike stackable containers, which required special lifting equipment found only in rail yards to place them onto rail cars, the roadrailers could move onto rail tracks anywhere there was a spur. This gave Schneider the kind of flexibility it liked.
Schneider National was an innovative, fast-growing company in the 1990s. It had surpassed much of its competition by embracing change and new technology. In 1993 the company formed a subsidiary, Schneider Logistics, to in effect sell its shipping expertise to clients. Large manufacturers were working to reduce inventory and streamline operations to improve profits, and Schneider was good at seeing how that could be done best. Schneider Logistics garnered large contracts early on, including one with General Motors to improve the delivery of auto parts to its dealers. By 1995, Schneider Logistics had 140 contracts, ranging in size from about $2 million for small companies to $200 million for such large firms as General Motors and auto parts maker PPG Industries. By the mid-1990s, Schneider was getting 15 percent of its profit from its logistics division, and the subsidiary was the fastest-growing part of the company.
Branching Out in the Late 1990s and After
By the late 1990s, Schneider National was the nation's largest full-load trucking firm, with sales approaching $3 billion. The firm had distinguished itself in the 1980s by moving quickly into advanced communications technology. As the Internet changed the face of business in the United States in the late 1990s, Schneider found a way to adapt. In June 1999, the company launched a new subsidiary, Schneider Brokerage, which handled a web-based service. Schneider Brokerage operated a web site called the Schneider Connection, which posted trucking jobs online and let shippers find available loads. Schneider also found other ways to work with the Internet. In June 2000 Schneider Logistics formed an alliance with an online construction service business, ContractorHub.com. ContractorHub.com brought together businesses looking for construction contractors and contractors looking for jobs. Schneider Logistics provided the new company with its expertise in shipping, order fulfillment and tracking, and gained exposure through ContractorHub.com's wide marketing.
By the year 2000, Schneider's logistics subsidiary had grown so rapidly and profitably that the parent decided to spin it off to the public. Schneider wanted cash to help pay for more technological development at Schneider Logistics, and to allow the subsidiary to expand into international markets. This was the first time the closely held Schneider had let any piece of it fall to investors. However, the company announced it would sell off only a minority share in Schneider Logistics. The majority would still be held by Donald Schneider and other shareholders of the private parent firm.
Principal Subsidiaries: Schneider Logistics; Schneider Brokerage.
Principal Competitors: J.B. Hunt Transport Services; Covenant Transport Inc.
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