Schneider National Ipo Filing

Schneider national ipo filing

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As filed with the Securities and Exchange Commission on March 6, 2017

Registration No. 333-215244



Washington, D.C. 20549








Schneider National, Inc.

(Exact Name of Registrant as Specified in Its Charter)


(State or Other Jurisdiction of

Incorporation or Organization)

(Primary Standard Industrial

Classification Code Number)



Identification Number)

3101 Packerland Drive

Green Bay, WI54313

(920) 592-2000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Christopher B.


Chief Executive Officer

Schneider National, Inc.

3101 Packerland Drive

Green Bay, WI54313

(920) 592-2000

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

William J.

Whelan, III

Johnny G. Skumpija

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, New York10019

(212) 474-1000

Paul J.

Schneider National- Update: What's up with me?


General Counsel, Secretary and Executive Vice President

Schneider National, Inc.

3101 Packerland Drive

GreenBay, WI54313

(920) 592-2000

Kenneth B. Wallach

Ryan R.


Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York10017

(212) 455-2000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,”“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filer
Non-accelerated filer☒  (Do not check if a smaller reporting company)Smaller reporting company


Title Of Each Class Of

Securities To Be Registered




Offering Price(1)(2)

Amount Of

Registration Fee(3)

Class B Common Stock, no par value

(1)Includes the offering price of any additional shares of Class B common stock that the underwriters have the option to purchase to cover over-allotments, if any.

(2)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Schneider national ipo filing

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The information in this prospectus is not complete and may be changed. We and the selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated March 6, 2017


Schneider National, Inc.

Class B Common Stock

This is Schneider National, Inc.’s initial public offering. We are selling              shares of our Class B common stock and the selling shareholders identified in this prospectus are selling              shares of our Class B common stock.

We will not receive any proceeds from the sale of shares being sold by the selling shareholders. This is our initial public offering and no public market exists for our Class B common stock.

We anticipate that the initial public offering price of our Class B common stock will be between $        and $        per share. Our Class B common stock will be listed on The New York Stock Exchange (“NYSE”) under the symbol “SNDR.”

Immediately following this offering, we will have two classes of authorized and outstanding common stock, Class A common stock and Class B common stock.

The rights of holders of Class A common stock and Class B common stock are identical, except with respect to certain voting and conversion rights. The record holder of our Class A common stock, the Schneider National, Inc. Voting Trust, is entitled to ten votes per share and holders of our Class B common stock are entitled to one vote per share.

Each share of Class A common stock is convertible into one share of Class B common stock at any time and automatically converts into one share of Class B common stock if it is withdrawn from the Schneider National, Inc. Voting Trust and/or is transferred outside the Schneider family. See “Description of Capital Stock—Class A Common Stock.” Outstanding shares of Class A common stock will represent approximately     % of the voting power of our outstanding capital stock following this offering.

Immediately following this offering, the Schneider National, Inc. Voting Trust, our controlling shareholder, will continue to control a majority of the votes among all shares eligible to vote in the election of our directors.

As a result, we will be a “controlled company” within the meaning of the corporate governance rules of the NYSE. See “Management—Controlled Company Status.”

We and the selling shareholders have granted the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an additional                  shares of Class B common stock at the public offering price, less underwriting discounts and commissions.

Investing in our Class B common stock involves risks. See “Risk Factors” beginning on page 20.

Per Share


Initial public offering price

$            $            

Underwriting discounts and commissions*

$            $            

Proceeds, before expenses, to us

$            $            

Proceeds, before expenses, to selling shareholders

$            $            
*See “Underwriting” for a description of all compensation payable to the underwriters.

The underwriters expect to deliver the shares to purchasers on or about                 , 2017 through the book-entry facilities of The Depository Trust Company.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete.

Any representation to the contrary is a criminal offense.

Morgan StanleyUBS Investment Bank
Citigroup        Credit SuisseJ.P. MorganWells Fargo Securities
BairdWolfe Capital Markets and Advisory

The date of this prospectus is                 , 2017.

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You should rely only on the information contained in this prospectus.

Neither we nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus. We do not, and the underwriters do not, take any responsibility for, and can provide no assurances as to, the reliability of any information that others provide to you.

We are offering to sell, and seeking offers to buy, shares of Class B common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class B common stock.


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In this prospectus, unless the context otherwise requires, “the company,”“we,”“us” and “our” refers to Schneider National, Inc., a Wisconsin corporation, together with its consolidated subsidiaries.

Unless otherwise indicated, the information contained in this prospectus is as of                 , 2017, and assumes that the underwriters’ over-allotment option is not exercised.

In this prospectus, we refer to our Class A common stock, no par value per share, and our Class B common stock, no par value per share, as our Class A common stock and our Class B common stock, respectively, and, together, as our common stock.

Unless otherwise indicated, all references to our common stock refer to our common stock as in effect at the time of the completion of this offering.

Prior to the completion of this offering, our Class A and Class B common stock was considered redeemable under GAAP because of certain repurchase rights granted to our shareholders pursuant to the Schneider National, Inc.

Employee Stock Purchase Plan and certain agreements governing ownership of our common stock held by existing shareholders, including members of the Schneider family and their family trusts. All such repurchase rights will be terminated contemporaneously with, and contingent upon, the completion of this offering via amendments to these documents.

References to our redeemable Class A common stock or redeemable Class B common stock refer to our common stock prior to the termination of these repurchase rights contemporaneously with this offering.

This prospectus contains references to fiscal year 2016, fiscal year 2015, fiscal year 2014, fiscal year 2013 and fiscal year 2012, which represent our fiscal years ended December 31, 2016, December 31, 2015, December 31, 2014, December 31, 2013 and December 31, 2012, respectively.

“GAAP” as used in this prospectus refers to United States generally accepted accounting principles.


In addition to our net income determined in accordance with U.S. GAAP, we evaluate operating performance at an enterprise level using certain non-GAAP measures, including adjusted income from operations, adjusted EBITDA, adjusted net income, adjusted net income per share, adjusted enterprise revenue (excluding fuel surcharge) and adjusted operating ratio.

Management believes the use of non-GAAP measures assists investors in understanding the ongoing operating performance of our business by presenting comparable financial results between periods.

The non-GAAP information provided is used by our management and may not be comparable to similar measures disclosed by other companies, because of differing methods used by other companies in calculating adjusted income from operations, adjusted EBITDA, adjusted net income, adjusted net income per share, adjusted enterprise revenue (excluding fuel surcharge) and adjusted operating ratio. The non-GAAP measures used herein have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.


As used in this prospectus:

Asset-light network intermodal provider” means a provider that uses company-owned containers (and potentially chassis) or trailers and company-owned dray trucks in providing intermodal service.

This model is less asset intensive than a truckload model but affords more control over equipment quality and availability than a traditional non-asset intermodal provider.

Associate” means our employees and does not include owner-operators, which are independent contractors, or their owner-operator drivers or other employees.


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Brokerage” or “freight brokerage” means the customer loads for which we contract with third-party trucking companies to haul the load under third-party authority.

Bulk tanker trailers” means trailers capable of transporting large quantities of unpackaged cargo.

The cargo is moved either as a single undivided whole (one type of product), or in multiple divided compartments within the trailer (one or more types of product).

Chassis” means the frame and wheels of a trailing unit upon which a container may be placed.

Company assets” means assets owned by the company as well as those acquired under capital and/or operating leases.

Company containers” means cargo containers owned or leased by the company.

Company trucks” means trucks owned or leased by the company.

Container” means a cargo container used in the domestic intermodal market with dimensions approximately the same as a 53-foot dry van that can be lifted from a detachable chassis and placed on a railcar (as opposed to international intermodal containers, which are 20-foot or 40-foot International Standards Organization (ISO) containers).

Domestic intermodal containers are often double stacked on rail cars to minimize transportation cost.

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Core carrier” means one of a shipper’s preferred truckload carriers. Generally, shippers utilize a core carrier or core carrier group to improve service levels, reduce the complexity involved with managing a large number of carriers and experience efficiencies created through the level of trust, shipment density and communication frequency associated with a core carrier.

Cross docking” means the practice in logistics of unloading materials from an incoming trailer or railroad car and loading these materials directly into outbound trailers or containers, with little or no storage in between.

CSA” means the Federal Motor Carrier Safety Administration’s Compliance, Safety, Accountability initiative, which ranks both fleets and individual drivers based on multiple categories of safety-related data in an online Safety Measurement System.

C-TPAT ” means the Customs-Trade Partnership Against Terrorism, a program designed to improve cross-border security between the United States and Canada and the United States and Mexico. Carrier members of the C-TPAT are entitled to shorter border delays and other priorities over non-member carriers.

Dedicated contracts” means those contracts in which we have agreed to dedicate certain truck and trailer capacity for use by a specific customer. Dedicated contracts often have predictable routes and revenue and frequently replace all or part of a shipper’s private fleet. Our dedicated contracts generally average three years and are priced using a model that analyzes the cost elements, including revenue equipment, insurance, fuel, maintenance, drivers needed and mileage.

Drayage” or “dray” means the transport of shipping containers from a dock or port to an intermediate or final destination or the transport of containers or trailers between pickup or delivery locations and a railhead.

We directly provide drayage or utilize third parties in the pick-up and delivery associated with an intermodal movement, or for the pick-up and delivery to and from an ocean shipping port and an inland destination.

Dry van or standard trailer” means a simple, enclosed, non-climate controlled 53-foot trailer that carries general cargo, including food and other products that do not require refrigeration.


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Electronic On-board Recorder” or “EOBR” means an electronic logging device that enables professional truck drivers and commercial motor carriers to track Hours of Service (HOS) compliance by monitoring the time spent by the driver in operating a truck.

Final mile” means the movement of goods from a distribution center, warehouse or cross-dock to a final destination at the consumer’s home or business.

First-to-final mile” means the movement of goods from a shipper to a distribution center, warehouse or cross-dock and then to a final destination at the consumer’s home or business.

Flatbed trailer” means an open trailer with no sides used to carry large objects such as heavy machinery and building materials.

For-hire truckload carriers” means a truckload carrier available to shippers for hire.

For-hire contract” means a contract with a customer providing for services based on spot market or lane-based pricing rates.

Fuel surcharge” means fees that are charged to a customer by a shipping company to pass through the costs of fuel in excess of a predetermined cost per gallon base (generally based on the average price of fuel in the United States as determined by the Department of Energy).

Shipping company customers, such as our truckload customers, pay surcharges. In our intermodal business, our railroad partners charge fuel surcharge to us as their customers.

Fuel surcharge revenue” means revenue attributable to fuel surcharges generated by Schneider.

Intermodal” means the transport of shipping containers (COFC) or trailers (TOFC) on railroad flat cars before or after a movement by truck from the point of origin to the railhead or from the railhead to the destination.

Less-than-truckload carriers” or “LTL carriers” means carriers that pick up and deliver multiple shipments, each typically weighing less than 10,000 pounds, for multiple customers in a single trailer.

Line haul” means the movement of freight on a designated route between cities and terminals.

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Loads/orders” or “loads” is used to refer to requests from our customers other than our intermodal customers for services.

Omni-channel retailers” means retailers that offer a variety of channels for a customer’s shopping experience, which may involve pre-purchase research.

Such channels may include retail, online, mobile and mobile app stores and telephone sales.

Orders” means requests from our intermodal customers for services.

Over-dimensional” means freight of a certain size or dimension that renders traditional shipping and packing methods used by less-than-truckload carriers inefficient or time-consuming for at least a portion of the transportation route when compared to trucks.

Owner-operator” means a trucking business with whom we contract to move freight utilizing our operating authority, generally by pulling Schneider trailers attached to the owner-operator trucks driven by owner-operator


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The driver of an owner-operator truck may also be the owner of the associated owner-operator trucking business. Owner-operators have the ability to select the loads that they choose to move.

Schneider national ipo filing

Owner-operators are generally compensated on a percentage of revenue basis and must pay their own operating expenses, such as fuel, maintenance, the truck’s physical damage insurance and driver costs, and must meet our specified standards with respect to safety. Owner-operators hired by other companies in our industry are generally compensated on a per-mile basis.

Preferred lanes” means the routes along which we strive to direct most of our trucks.

Private fleet” means the trucks and trailers owned or leased, and operated, by a shipper to transport its own goods.

Private fleet outsourcing” means the decision by shippers using a private fleet to outsource all or a portion of their transportation and logistics requirements to for-hire truckload carriers. Some shippers that previously maintained their own private fleets outsource this function to for-hire truckload carriers, like us, to reduce operating costs and to focus their resources on their core businesses.

Revenue per order” means revenue (excluding fuel surcharge) per order.

Revenue per truck per week” means the revenue (excluding fuel surcharge) that a truck, available to work, generates (on average) over a work week.

Specialty equipment” means trailing equipment, other than dry vans, used in our truckload segment. Examples would be flatbed trailers, bulk tanker trailers and temperature controlled trailers.

Stop-off pay” means the compensation we receive from customers for stopping a haul to pick up or unload a portion of the load or to allow for a sample testing of the product being transported.

Straight truck” means a vehicle with the cargo body and tractor mounted on the same chassis.

Team driving” means two drivers occupying a single truck who alternate between driving and non-driving time (such as time spent sleeping and resting) in order to expedite the shipment and maximize the overall production of the truck by decreasing idle time in transit to its destination.

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Temperature controlled” means an enclosed, temperature controlled trailer, generally used to carry perishable goods.

Third-party logistics provider” or “3PL” means a provider of outsourced logistics services.


In logistics and supply chain management, it means a company’s use of third-party businesses, the 3PL(s) to outsource elements of the company’s distribution, fulfillment and supply chain management services.

Total miles” means the miles driven both with and without revenue-generating freight being transported.

Tractor” means a vehicle with the ability to tow a trailer, generally by the use of the fifth wheel mounted over the tractor’s drive axle.

Trailer” means a cargo body that is mounted on a separate chassis and attached to the back of a tractor or, in the case of a tandem rig, the tail of another trailer attached to a tractor.

Trans-loading” means the process of transferring a shipment from one mode of transportation to another, through multiple forms of transportation including ship and rail.

It is most commonly employed when one mode of transportation or one vehicle cannot be used for the entire trip, such as when goods must be shipped internationally from one inland point to another.


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Truck” means a vehicle that carries goods in a cargo body mounted to its chassis, such as a straight truck, and/or in a trailer towed by the vehicle, such as a tractor.

Schneider national ipo filing

Our truck fleet is mostly comprised of Class 8 tractors, which are generally over 33,000 pounds in gross vehicle weight rating.

Truckload carrier” means a carrier that generally dedicates an entire trailer to one customer from origin to destination.

Unbilled miles” means miles driven without revenue generation for us.

White glove” means a delivery service in which the shipped items are unloaded from a truck and then unpackaged and placed into a specific location designated by the customer.


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The following summary highlights information about our business and the offering of our Class B common stock that appears elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our Class B common stock. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.


We are a leading transportation and logistics services company providing a broad portfolio of premier truckload, intermodal and logistics solutions and operating one of the largest for-hire trucking fleets in North America. We believe we have developed a differentiated business model that is difficult to replicate due to our scale, breadth of complementary service offerings and proprietary technology platform.

Our highly flexible and balanced business combines asset-based truckload services with asset-light intermodal and non-asset logistics offerings, enabling us to serve our customers’ diverse transportation needs. Since our founding in 1935, we believe we have become an iconic and trusted brand within the transportation industry by adhering to a culture of safety “first and always” and upholding our responsibility to our associates, our customers and the communities that we serve.

We are the second largest truckload company in North America by revenue, one of the largest intermodal transportation providers in North America by revenue and an industry leader in specialty equipment services and e-commerce fulfillment. We categorize our operations into the following reportable segments:

Truckload – which consists of freight transported and delivered with standard and specialty equipment by our company-employed drivers in company trucks and by owner-operators, executed through either for-hire or dedicated contracts.

Intermodal – which consists of door-to-door, container on flat car service by a combination of rail and over-the-road transportation, in association with our rail carrier partners. Our intermodal service offers vast coverage throughout North America, including cross-border freight through company containers and trucks.
Logistics – which consists of non-asset freight brokerage services, supply chain services (including 3PL) and import/export services.

Our logistics business typically provides value-added services using third-party capacity, augmented by our assets, to manage and move our customers’ freight.

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We also engage in equipment leasing and provide insurance to support owner-operators, which combined with our limited Chinese truck brokerage and logistics operations, account for our remaining operating revenue.

Our portfolio consists of approximately 10,500 company and 2,850 owner-operator trucks, 37,900 trailers and 18,100 intermodal containers across North America and approximately 19,300 enterprise associates.

We serve a diverse customer base across multiple industries represented by approximately 16,000 customers, including nearly 200 Fortune 500 companies. Each day, we transit over 8.9 million miles, equivalent to circling the globe approximately 360 times.

Our logistics business manages nearly 23,000 qualified carrier relationships and, in 2016, managed approximately $2 billion of third-party freight. Our portfolio diversity, network density throughout North America and large fleet allow us to provide an exceptional level of service to our customers and consistently excel as a reliable partner, especially at times of peak demand.


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We believe we offer one of the broadest arrays of services in the transportation and logistics industries, ranging from dry van to bulk transport, intermodal to supply chain management and first to final mile “white glove” delivery.

We believe we differentiate ourselves through expertise in services that utilize specialty equipment, which have high barriers to entry.

Schneider national ipo filing

With our recent acquisitions of Watkins and Shepard Trucking, Inc. (Watkins & Shepard) and Lodeso, Inc. (Lodeso) we have established a national footprint and expertise in shipping difficult-to-handle consumer items, such as furniture, mattresses and other household goods, which based on internal research conducted by management have been in the forefront of the transition in consumer purchasing patterns to the e-commerce channel. Our comprehensive and integrated suite of industry leading service offerings allows us to better meet customer needs and capture a larger share of our customers’ transportation spend.

Customers value our breadth of services, demonstrated by 21 of our top 25 customers utilizing services from all three of our reportable segments.

The following graphic demonstrates the breadth and diversity of our service offerings:

In 2007, we launched Quest, a multi-year, comprehensive business processes and technology transformation program, using technology from our strategic development partner, Oracle Corporation.

As part of this transformation, we created a quote-to-cash technology platform, which we refer to as our Quest platform, that serves as the backbone of our business and seamlessly integrates all business lines and functions. Our state-of-the-art Quest platform allows us to make informed decisions at every level of our business, providing real-time data analytics to optimize network density and equipment utilization across our entire network, which drives better customer service, operational efficiency and load optimization.

We also realigned our organization to give our associates a direct line of sight to profit-and-loss responsibility both within their business lines and across the organization.

This organizational change combined with our Quest platform empowers our associates to proactively pursue business opportunities that enhance profitability while maintaining high levels of customer service. We believe our over $250 million investment in technology and our related organizational realignment over the past several years have enabled us to improve our profit margins and put us in a favorable position to expand our profit margins and continue growing our business.


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Since refocusing our strategy and initiating our Quest technology and business transformation in 2007, we have experienced strong revenue growth and margin expansion, which is demonstrated in the following table.

(in thousands)2016 Fiscal Year3-Year CAGR(1)

Operating revenue


Adjusted enterprise revenue (excluding fuel surcharge)(2)


Net income


Adjusted EBITDA(3)


Adjusted net income(3)

(2)Adjusted enterprise revenue (excluding fuel surcharge) is a non-GAAP financial measure.

For a reconciliation of operating revenue, the most closely comparable GAAP measure, to adjusted enterprise revenue (excluding fuel surcharge), see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

(3)Adjusted EBITDA and adjusted net income are non-GAAP financial measures.

For a reconciliation of net income to adjusted EBITDA and adjusted net income, in each case for which net income is the most comparable GAAP measure, see “—Summary Historical Consolidated Financial and Other Data.”

Schneider was founded in 1935 by Al J. Schneider in Green Bay, Wisconsin, and further developed under the leadership of his son, Donald J. Schneider. Schneider’s deeply-rooted culture embodies several core values:

Safety First and Always
Integrity in Every Action
Excellence in What We Do

We put these values into practice through the Schneider “Value Triangle” of operational excellence.

A guiding tenet of our business for over a decade, our “Value Triangle” provides a key reference for our associates to consider when making business decisions at each level of the company, including the needs of our customers, our associates and our business and its shareholders. We believe managing and balancing these often competing interests compels us to weigh the collective benefits to all of our stakeholders for every business decision.


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Trucking is the primary means of serving the North American transportation market and hauls approximately 70% of freight volume within the United States, which is embodied in a common phrase used within our industry: “if you’ve got it—a truck brought it.” Trucking continues to attract shippers due to the mode’s cost advantages relative to air transportation and flexibility relative to rail.

Truckload growth is largely tied to U.S.

Trucking firm Schneider National raises $550 million in IPO

economic activity such as GDP growth and industrial production and moves in line with changes in sales, inventory and production within various sectors of the U.S.

economy. Truckload volumes are also positioned to benefit from secular trends in e-commerce retail, which is expected to grow at a 13% CAGR from 2014 to 2019 according to e-Marketer. Based on estimates by the American Trucking Associations (ATA), the U.S. trucking industry generated approximately $726 billion in revenue in 2015 and is expected to grow at a CAGR of 4.8% from 2016 to 2022.

The U.S. truckload industry is large and fragmented, characterized by many small carriers with revenues of less than $1 million per year, less than 50 carriers with revenues exceeding $100 million per year and 10 carriers with revenues exceeding $1 billion per year, according to 2015 data published by Transport Topics, an ATA publication.

According to Department of Transportation (DOT) data, there were over 550,000 trucking companies in the United States at the end of 2015, approximately 90% of which owned 10 or fewer trucks.

Regulations and initiatives to improve the safety of the U.S. trucking industry have impacted industry dynamics. We believe the recent trend is for industry regulation to become progressively more restrictive and complex, which constrains the overall supply of trucks and drivers in the industry.

Examples of recently enacted and upcoming regulations and initiatives include the Comprehensive Safety Analysis (CSA) initiative (2010), Hours of Service (HOS) rules (2013) and mandatory use of electronic logging devices to enforce Hours of Service (HOS) rules (2015), hair follicle (2016) and sleep apnea screening (upcoming), installation of speed limiters (2016) and phase 2 emission standards (2016).

We believe small carriers will likely be challenged to maintain the utilization required for acceptable profitability under this regulatory framework.

Domestic Intermodal

Domestic intermodal transportation involves the transportation of freight in a 53-foot container or trailer, combining multiple modes of transportation (rail and truck) within the United States, Canada and Mexico.

Eliminating the need for customers to directly handle freight when changing modes between rail and truck, intermodal transportation holds significant productivity, cost and fuel-efficiency advantages when moving mass freight.

Domestic intermodal volumes are largely driven by over-the-road conversions from truckload to intermodal and from the volume of overseas imports into the United States, such as from China. Our management estimates the North American intermodal and drayage market to be $22 billion.

According to the Association of American Railroads (AAR), intermodal has grown from 27% of all railcar loads in 1990 to 49% in 2015. Domestic intermodal accounts for 50% of total intermodal volume according to the Intermodal Association of North America (IANA). With fuel costs likely to increase in the long-term, fuel efficiency regulations set to tighten and labor shortages in the trucking industry, the intermodal market is well-positioned to take on freight capacity as trucking markets face external pressures.

The intermodal market is comprised of service providers of differing asset intensity, with customers being served by either non-asset intermodal marketing companies (IMCs) or asset-light network intermodal providers such as Schneider. While IMCs are the most prevalent intermodal solution provider, asset-light network intermodal providers offer differentiated higher-value solutions to customers given the reliability, geographic breadth and high service levels of company assets (trucks, containers and even chassis) compared to non-asset IMCs.


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The domestic intermodal segment is highly consolidated, where the top three intermodal providers operate over 50% of the U.S. dry van domestic container fleet, according to management estimates. Network density, size and scale are critical barriers to entry in the intermodal market.

Increasing sophistication and complexity of shippers’ needs require network density and the ability to deliver reliable capacity. According to AAR, railroads have been spending record amounts in recent years to maintain and improve their infrastructure and equipment, which we believe supports growth of the intermodal industry and improves the efficiency and reliability of the railroad component of our intermodal service.

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The logistics industry is a large, fast-growing and fragmented market that represents an integral part of the global economy. As supply chain complexity increases, corporations have elected to focus on innovation, design, sales and marketing of their products rather than supply chain operations.

Increased material costs coupled with enhanced global competition impose margin pressure on manufacturers, requiring the outsourcing of noncore transportation logistics to supply chain specialists who offer a combination of scale, strong technology platforms and lower costs.

Additionally, more shipments of inputs and products will be transported using multiple modes and technical expertise, driving shipper preferences for logistics providers with an asset-based network to complement their third-party capacity. Transportation asset owners often provide logistics services to meet excess demand and provide customers with greater breadth of services.


We believe the following key strengths have been instrumental to our success and position us well to continue growing our business and market share:

Iconic large-scale diversified North American truckload provider with a modern fleet

Over the past 80 years, we have become one of North America’s largest and most trusted providers of truckload services, including specialty equipment services.

We have established a leading position through our commitment to provide an outstanding level of customer service. In 2016, we received 27 awards from customers and the media in recognition of our exceptional service and reliability.

We operate one of North America’s largest truckload fleets with approximately 11,900 trucks and 37,900 trailers used in our truckload business.

Given our large scale, we offer both network density and broad geographic coverage to meet our customers’ transportation needs across North America. Our scale and strong balance sheet provides us with access to capital necessary to consistently invest in our capacity, technology and people to drive performance and growth, and to comply with regulations.

Our scale also gives us significant purchasing benefits in third-party capacity, fuel, equipment and MRO (maintenance, repair and operations), lowering our costs compared to smaller competitors.

Over the past several years, we have made significant investments in safety-enhancing equipment and technology, including roll stability, collision avoidance, forward facing cab cameras, training simulators and real-time truck sensor monitoring.

Our relentless focus on safety not only enables us to better uphold our responsibility towards our associates, customers and the community, but also provides a critical competitive advantage in an industry with increasingly stringent safety and regulatory requirements and results in lower operating risk and insurance costs.

In 2010, we were among the first large-scale carriers to fully equip our fleet with EOBRs, providing improved network management and safety.

Unlike carriers that have yet to undertake the electronic logging device implementation process, we have significant experience operating with EOBRs and are well-positioned to benefit from the upcoming legislation on mandatory electronic logging device standards, which we expect will tighten truckload capacity and subsequently increase rates.


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Industry leading and highly scalable Quest technology platform integrated across all business lines and functions

Our early investment and adoption of next generation technology and data analytics is a competitive advantage.

We believe we are the only truckload and intermodal industry player of size to have completed, integrated and culturally adopted a comprehensive quote-to-cash technology transformation that allows us to efficiently match capacity with customer loads/orders.

Our Quest platform allows us to assess our entire network every 90 seconds, resulting in real-time, round-the-clock visibility into every shipment and delivery, route schedules, truck and driver capacity and the profitability of each load/order. Our Quest platform enables us to minimize unbilled miles, optimize driver efficiency and improve safety, resulting in increased service levels and profitability. We manage the purchasing of over 500,000 gallons of fuel per day and communicate to our drivers optimal timing and locations for refueling through our Quest platform, which increases our fuel efficiency and lowers our fuel purchasing costs.

We have become a pioneer in applying “decision science” technology to trucking and intermodal freight that enhances driver and asset efficiency, leading to higher profitability and driver satisfaction. We receive and process millions of driver and equipment location updates daily, allowing us to select the optimal driver, truck and trailer for each load/order.

Company pitched investors on decades of stability and steady growth in a slumping industry

This has been a key driver of increased profitability per load and operating margin improvements over the last few years. We believe that our Quest technology and business transformation provides us with a clear advantage within the transportation industry from which we are continuing to realize the financial benefits.

Leadership in fast-growing e-commerce, final mile and other specialty equipment markets

Our recent acquisitions of Watkins & Shepard and Lodeso have allowed us to rapidly expand our customized home, commercial and retail delivery offerings with “white glove” service for brick and mortar and e-commerce customers.

New components of our final mile services include real-time shipment tracking for customers and our proprietary Simplex technology, which integrates with retailers’ e-commerce infrastructure, providing seamless end-to-end solutions and visibility for complex final mile deliveries.

E-commerce has increasingly become the preferred channel for purchasing difficult-to-handle items, an area in which Watkins & Shepard and Lodeso specialize.

Our expertise in this channel and national footprint in the final mile market positions us well to capitalize on this high-growth market opportunity that traditional less-than-truckload and package delivery operations generally cannot serve.

We have established a major nationwide presence in numerous specialty equipment freight markets with premium pricing and higher barriers to entry, including bulk chemicals, energy services and other specialty liquids.

Our large specialty equipment asset base positions us to serve customers across the country, which differentiates us from most of our regional-based competitors and positions us well to take market share with large customers who value our geographic reach.

A leading intermodal business with built-in cost reductions through transition to a company-owned chassis model driving profitability

We are currently one of the largest intermodal providers in North America by revenue and are well-positioned for future growth in intermodal freight through our nationwide network and company container model.

Our long-standing railroad relationships with BNSF Railway, CSX Transportation, Canadian National Railway, Kansas City Southern Railway and other regional rail carriers, such as Florida East Coast Railway, provide rail access nationwide. Our customers value our intermodal network over IMCs due to our consistent access to capacity through our company assets and high-quality drayage services that provide a larger geographic reach around intermodal terminals.

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We are in the process of converting from our rented chassis model to a company-owned chassis model. This conversion will lower our all-in chassis operating costs, improve service reliability, as well as increase driver efficiency and satisfaction, by increasing our control over the chassis


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operations of our intermodal business.

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We expect to complete our conversion to a company-owned chassis fleet by December 2017. We believe that our balanced network and large base of company assets provide a significant competitive advantage that would be difficult for other carriers to replicate.

Fast-growing non-asset logistics business expanding our customer base and complementing our asset-based network

Our non-asset logistics business represents our fastest-growing segment and complements our asset-based businesses with freight brokerage services and comprehensive supply chain management.

In the three years from January 1, 2014, through December 31, 2016, our logistics segment operating revenue grew at a CAGR of 16.5%. Our logistics business not only provides additional services to existing customers and incremental freight to our assets, but helps to facilitate the expansion of our customer base and offers opportunities for cross-selling our suite of services. In 2016, our logistics business helped generate approximately $147 million in revenue for our truckload and intermodal segments.

The scale of our asset-based network and our relationships with over 20,000 third-party carriers allow us to provide our brokerage and supply chain services (including 3PL) to our customers at competitive rates. By also offering warehousing, trans-loading and port drayage, we can provide customers with a suite of services that covers their entire North American transportation supply chain.

Diversified and resilient revenue mix supporting stable growth through business cycles