Schneider National Inc. executives said last week that the tight supply-demand dynamics that helped them grow operating profits some 70% in 2021 look like they will last for much of this year, giving them plenty more pricing power.
Speaking to analysts and investors on a Feb. 3 conference call after Schneider reported fourth-quarter net income of $134 million (versus $76.9 million in late 2020) on revenues of nearly $1.6 billion, President and CEO Mark Rourke called the market “constructive and supportive” and said Wisconsin-based Schneider is “carrying a lot of price momentum into the year contractually.”
Rourke and Jim Filter, general manager of Schneider’s intermodal division, didn’t share detailed pricing numbers but said customers facing several sorts of inflationary pressures generally have been more open to paying more for additional certainty that their goods will move smoothly along the nation’s road or multimodal routes. Filter noted that a growing number of customers also are looking to sign longer-term contracts.
Schneider National is the ninth-largest for-hire carrier in the U.S., according to the 2021 FleetOwner For-Hire 500.
“The demand and the supply issues are still prevalent,” Rourke said on the conference call. “So we would expect that we're still going to have pretty favorable freight conditions for the full year. But again, that all has to play out.”
Pricing power showed up in Schneider’s 2021 numbers: Excluding fuel surcharges, full-year revenues came in at nearly $5.2 billion, up 22% from the year before. That helped fuel adjusted operating profits, which jumped to $533 million from $301 million in 2020. Fourth-quarter operating ratios were 83.3% (versus $86.2% in late 2020) for truckload and 82.8% (versus 90.8%) for intermodal.
To help meet the continued strong demand, Schneider is—like a number of its peers—markedly ramping up its capital spending plans. After spending a net of $271 million last year and $237 million on equipment and property, Rourke and his team are looking to put to work $450 million in 2022. Rourke noted that the company took delivery of 1,300 containers in the fourth quarter, which pushed it full-year container net growth to 3,300, or 15%.
Shares of Schneider (Ticker: SNDR) fell about 2% Feb. 4 to close the week at $25.42. They have climbed nearly 20% over the past six months.