Obviously, prominent trucking company, but, you know, number of other areas of business as well that we'll be digging into. And we have Mark Rourke, CEO, and Darrell Campbell, relatively new CFO. Darrell, how long have you been at Schneider?
2.5 years.
Oh, okay. All right. So-
I can't use the new card anymore.
Yeah. Okay, fair enough. It's like, fair. I guess, yeah, we've bounced around a couple of folks.
In this market, it's probably like dog years.
Yeah, exactly. That's, yeah, it's a... And it's been a tough market, so you maybe experiencing the upswing here. So there have been a lot of interesting signals in the market. I think a lot of folks in the room are going to care about what are you seeing in the broader market, right? We've seen some strength, some you know, better than normal seasonality, I think, in first quarter, some of that related to storms. But speak about those dynamics and what you're seeing in the marketplace from a supply-demand standpoint.
Yeah, lots—actually, lots going on for sure, right? And we've been talking about the capacity levels for several quarters and some of the, what we were calling shadow capacity. And then when you see some enforcement activity going on to get after some of those issues, which we can talk about, and you couple that with a little bit of demand, I think it really demonstrated that the supply-demand equilibrium is maybe a little closer than people were expecting. And certainly, weather highlighted that. But here we are, pretty well removed from the weather, and we're still seeing spot pricing being very attractive, particularly in the Midwestern, Northeastern geographies. And so the staying power of that, I think, is a very good signal.
I also think we have an administration and regulatory body that is serious about public safety, taking the actions necessary around the areas of CDL qualifications, school qualifications, ELD providers and compliance, and then certainly combine that with the things like non-domiciled CDL ELP. All of those, I think, are starting to have that effect that we all expected, and it's not gonna be like a big bang, maybe like we experienced with the ELD implementation way back in 2016 or 2017, but I think we've just seen a steady and consistent attrition of capacity. And because most of that activity is on the side of for-hire carriers, if you think of 3.2 or 3.5 million CDL holders, half of that is on the private fleet, half of that is on the for-hire.
It's actually, in our view, most of that change is happening in the for-hire space. So it's almost like a doubling effect when you see the numbers. And so that, and, and maybe some encouragement, a little bit on the industrial side, which we've been lagging for a few years now, with some of the fiscal policy, some of the tax bills, and you saw the ISM pop for the first time in a long time. All those things are, in our view, just a much more constructive setup than we came into 2025 with, relative to our discussions with customers and where we are in the beginning of the allocation season. So a lot going on. I think a lot of people trying to sift through what does all that mean.
I think from our view, from a pricing and from how we think about commitments, you know, I think we have a much more constructive environment.
One of the things that's been interesting to me, Mark, when we go out and talk to carriers, it sounds like there's a lot of optimism on the supply, supply constraints, some of the government enforcement actions, but it sounds like the demand environment is still a little uncertain. What's your sense on that? You mentioned some of these, some of these initiatives, the legislation coming around, you know, retail inventories maybe looking a little bit more balanced.
Mm-hmm.
What's your sense on what the demand picture looks like independent of these supply considerations?
Yeah, I think the demand picture has probably been surprising people because it's been very steady. The consumer has been very resilient. We haven't seen a lot of, you know, ups and downs relative to the demand. I would consider it, in the last 5, 6 quarters, very, very stable. You're right, I do think the inventory levels have been addressed, we don't talk to many customers that are sit there thinking, "I've got more inventory work to do." It's either at or below kind of where they would be historically. I think that's, again, another one of those constructive elements. As you mentioned, we have to see maybe a wait-and-see story on the industrial side a little bit, but any level of activity there is very friendly to trucking, particularly when we get into the manufacturing health here.
Because not only it's the finished good move, which we get on a finished product that may come through the port or, you know, come through up through Mexico, an industrial recovery gives us the intermediate moves, the raw materials, the intermediate steps. So it's a very healthy development for trucking. The fact that we haven't had that in three years, I think is a very good sign if we can see some continued momentum there.
So are you actively seeing a more supportive demand environment in terms of the customer conversations that you're having, or you're just saying some of these things are... There's potential?
Yeah, I think those are probably a little bit more forward-looking statements. I think our customers are trying to, you know, get what's real and what's not in their world, right? Everybody has been under the same pressure to get inventories right. And I think the fact that we're not carrying that inventory, I think, can be a catalyst for a replenishment cycle. Not calling that just yet, but I think all those signs are much more positive. I think back to a year ago, right? We were still dealing with more of the capacity overhang, and I think that's what's probably first and foremost on the mind of the shipper is: What do I have at risk? I think the brokers are the first ones to feel that. I think you're seeing them come under tremendous stress on the contract business.
We're seeing a lot more mini bids, things that suggest that customers are trying to get things back out in the contract world and are holding together as much as perhaps we would have been a year ago.
Got it. So let's talk about the supply side now. Some of the government enforcement actions. Maybe give some parameters around the impact that you think it's having. I know there have been a lot of estimates out there, you know, 5%-10% of capacity potentially being vulnerable to being removed from, do you see that as a realistic target? Do you think it could be upside to that? And you mentioned, and I like that delineation of within the for-hire market, tt probably has an outsized impact. So how do you see that kind of impact flowing through?
Yeah, absolutely. And you know, first of all, we've had the pleasure of being with the regulators a few times as they're listening to the industry and trying to understand from the industry's perspective what's going on. And there's some very, very competent people at the DOT, and Sean Duffy and crew have done a terrific job, and they've given them the mandate and the resources to do it. So sometimes we think about government, are they as effective as their programs?
And I would tell you, in this case, it is a very competent staff with a mission to accomplish, and you're seeing it in a consistent drum beat week over week, whether it's the ELDs that are being, that are non-compliant, being pulled, whether it's self-certification of, of truck driving schools being pulled, the actions are, and the reinforcement is backing up the words. And so I think that's why we're actually feeling it in the marketplace, 'cause even the threat of enforcement has some self-selection that, that people make. And I think one of the underappreciated elements of this, we talk a lot about what's capacity in the industry, but it's also impacting the top of the funnel on the replacement capacity.
If you really hone in on the school networks, they're in a much different condition this year relative to number of people available, what's coming through, where the funding is at. So we're seeing pressure on both the school at the top of the funnel of the CDL creators and the folks that are in the industry coming out. And so that's a pretty powerful combination in our view, and I would not be surprised if the 10% number is not where we ultimately land.
Hmm. Wow, that's quite a statement. It'll be, you know, definitely a different world than what we've been in for the last three or so years. Talk about how that flows through, right? So we're seeing higher spot rates. How does that flow through the different parts of Schneider's business? And obviously, again, we spoke about, obviously, you have the Network business, the Dedicated business, the intermodal business. Where should we see that impact, and how much of an uplift could we see in terms of rates?
Well, as we've talked about, we have more in the spot market because we've been disciplined relative to contract renewals last year. So even in a not entirely constructive market, we were getting mid-single-digit increases, and if we needed to, we would put more trucks in the short term out in the spot market.
In Network?
In Network. So which is now more beneficial than it was a year ago because we have better pricing and above contract pricing in the spot world. So very constructive, and that's pretty immediate, right? We're able to... How do we upgrade and how we do that immediately. I also think it gives us confidence to go into the allocation season with getting paid for our value and starting to work our way back to what we need to cover for all the inflationary impacts. So it affects how we think about our going forward position. In Dedicated, people think, "Oh, gosh, so you're not going to be able to get as much recovery there because it's more stable," and true, which is really our intent of having a more consistent earning stream by putting more of our assets in long-term sticky contracts.
But almost everything we do, we have some level of backhaul, some level of opportunity to help the customer lower their entire expense, and we get to keep a great deal of that. So that's enhanced pricing helps our dedicated margins as well. And then ultimately, truck is the biggest competition, as Keith was saying, before us, relative to intermodal. So as that hardens, then that puts the equation to conversion, and we're indifferent. We would love for it to be on the train, we'd love it to be on our trucks. We try to present the value to the customer and let them decide where the value is best served.
Mm-hmm. In terms of the customer conversations that you're having, do you feel like they understand these pressures that could be coming on rates, and to what extent are they feeling it? Because it's interesting, like, you hear divergent opinions on this, where some carriers say customers still think this is all a blip, it's just weather, it's whatever, versus in some cases, it's maybe leading to some more constructive rate discussions. Give us some color around that, and then what can we look for in terms of price?
Well, there's no such thing as an average customer. People are in different parts across that spectrum area. If you think about what I think is the consistent theme, I think there is recognition of the capacity situation and a state of transition. I think there's a lot of hope, though, that this has been exacerbated by the weather, and this is going to go back, and we have another year of fair, fair stability relative to what their pricing objectives are. I think that's maybe wishful thinking, and I can understand that position. I think what I look for is what's happening on particularly the more price-sensitive shipper, what's going on in their world, right? Where is their reject rates, where is their mini bid activity?
We can certainly see on that cadre of shipper, that they're feeling the distress first, which is very consistent with what you would expect when things start to get to a more hardened state. So way too early to call it. We've been through some head fakes, so I'm not here to tell you that happy days are totally here, but the environment feels. I think our customers are understanding. Last year, they went less brokers and more asset. I think that'll be another strategy this year. I think intermodal gets more in favor because it is a hedge against truck. But I think we're going to have a more constructive and really, we got to sit down and talk about what makes sense with our customers.
You're saying more of a shift towards asset-based carriers, and that momentum continues?
Yes, for sure.
Yeah.
For sure.
You had mentioned a moment ago, I think you said you were getting mid-single digit contractual rate increases. Do you see upside to that, to that number if some of these, you know, if, if this proves durable, if this tightness proves sustainable?
Yeah, we certainly at Schneider, and I think as an industry, we have not recovered from the inflationary impacts coming out of COVID, right? So getting more disciplined, and certainly what we did a year ago was necessary, and we will not be lagging where the opportunities arise, whether that be in the spot market or contract. And so, I go back to my opening statement, we've got a more constructive market, so I think that's very much in the cards. We've got to see it, it's got to be durable. All the other things that you put there as a caveat, I would agree with, but it's certainly more constructive.
All fair. Let's discuss the ability to grow, right? For years, I know I've been interacting with Schneider, and there's always been this ambition to grow, right? How quickly can you add to the fleet on the Network side, on the Dedicated side? How should we think about available capacity on the intermodal side?
Yeah. So I guess if we start with Dedicated, what we've said publicly, at least for the last several quarters, is you see that we're focused on earnings growth as opposed to just truck growth, right? So there's an ability to be more productive with assets that we have. So we've shown that, you know, even keeping our truck count flat, we can grow earnings. You know, there's inherently in every business or every portfolio, you have top performing accounts, and you have, you know, other accounts that there's an opportunity to improve. So we're focused on improving, you know, the bottom percentage of our portfolio that's underperforming, but also, you know, just doing more with less.
So, you know, most of our CapEx growth that you'll see for next year, or for 2026, I should say, is replacement, really, to protect our age of fleet. So, you know, that's kind of the Dedicated story. Network, you know, similar, we're restoring margins, but, you know, we have to see it before we're putting more, you know, more investments in terms of, you know, growth capital. Intermodal, a similar story. If you think about our trailing assets, our trailing assets, we could probably grow, you know, earnings 20%-25% without adding anything in terms of containers and chassis. So the growth will be in terms in dray tractors, as opposed to trailing equipment.
We're very focused on being more productive with assets that we have first, and then once we've maximized that productivity, then, you know, we'll be looking to add, you know, equipment.
So Darrell, you said, what's the level of kind of available capacity that you think of in the Network right now?
That quote was really intermodal, so-
Okay, that was intermodal.
Intermodal, we can go 20%-25%, without adding any trailing equipment.
Yes.
The growth would be dray, dray tractors.
So very attractive incremental margins. We're not making a ny additional capital investment there.
So, you know, in a nutshell, it's easier to be more productive with assets that we have. Once we get to that level of optimized productivity, then we'll add more assets.
One of the concerns that I think a lot of investors rightly have is that if we see this constraint on driver availability, it pushes up driver wages. How do you think about how much of the rate increases that you might be able to secure, ultimately, you're going to have to get passed on to, to drivers? Do you think you're going to have a pool of available drivers that are desirable and that, that kind of meet your needs, in order to, in order to grow, in order to expand? We're certainly coming off of a really difficult margin period.
Correct.
How much of a headwind does that represent to getting back to kind of where you've been historically from a margin standpoint?
Yeah, from my perspective, we are in a margin recovery first, and at some point, certainly there'll be a sharing of that with the driver community, but that's not going to be on the front end of the process. We've got recovery work to do. What we're focusing with, on our driver community, is that we can give them a raise with asset utilization, asset improvement, better throughput, reducing friction, all the things. We're investing in AI. There's lots of things that we can do to be self-help, to help increase driver wages without changing the scale. And at some point, we'll have to adjust the market, whatever that market is, and we'll be there.
Nothing is more satisfying to me than when our driver recruiting team is humping, and really after trying to find. That's our best sweet spot, when the pressure is there. So I don't see that being a 2026 concern. And our goal is to get each of our drivers more money in 2026, but do it through how we utilize them and sweating our assets and improving our overall book of business to achieve that.
Mm-hmm. So you, you've been proactive. I think even before we, we started, our session, we were talking about some of the Mexico opportunity. You've been proactive in developing partnerships, especially in your intermodal for your intermodal network. Talk about what kind of growth opportunities that's opened up. How much more runway is there to go? And especially in the context of a tightening truckload market, it's really attractive, obviously, to be able to go to customers and have this intermodal offering. How do you see the opportunity there to, to grow?
Yeah, first of all, we're really happy with our underlying rail partners. The UP in the West, CSX in the East, are performing well. Keith and team are just doing outstanding relative to taking advantage of our strengths in Mexico. So from an overall service and fluidity standpoint, we're not operating at any barriers with our customers relative to reliability, and particularly with our model, where we own the trailer, we own the container, and we own 90%+ of the dray. So we think we have the best mousetrap, and we have really great underlying partners, and we've done that without a lot of help from the truck market to hedge for conversion. So our whole goal, really, from intermodal, is where's our differentiation, right? We're differentiated out of Mexico.
We just launched Fast Track, which will allow shippers that have time sensitivity and reliability sensitivity on the rail to be able to take advantage on a number of lanes throughout the network. We also try to differentiate with who we align with. There's a lot going on in the alignment world, as you know, relative to being an asset-based intermodal provider, but having the UP, CSX, and the CPKC combination. So we go to our customers with, "Hey, this is where we're differentiated. This is where we have the best. We're probably not as strong here, and that's what you should consider with the other guy, but be very clear about what we can provide to you from overall differentiation." That's really seven consecutive quarters of growth in intermodal, certainly those differentiators is what's behind our success.
We've been leading share growth, and we would expect we're going to be able to continue to do that.
What, what do you see as those differentiators? And, and if you don't mind, what are the areas of weakness or where you might go to a customer and say, "Maybe, maybe we're not the best provider for you?
Yeah. So as we look at a customer's book of business, we can really go through and analyze based upon our tools, based upon transit, based upon reliability, based upon cost, based upon perhaps location and closeness to the hub or the terminal, so that we have the best road solution based upon where our ramps are and the vis-à-vis our competitors. And we can be very clear about what those differentiators look like from those combination of factors. There are some places that, amazingly, we win business that we don't think we are the best option on because of some of those factors that we don't think are as in our favor as perhaps someone else. But they like the fact that we're concentrated, or they like what we do in some other places; they give us some other opportunities.
But we go in being very clear with the customer where the best use of the Schneider intermodal network is based upon our underlying partners and based upon our performance. And I think that's been behind the success of seven consecutive quarters of growth on an order count basis, despite not having a lot of, as we said, truck conversion push behind us. And if that's coming, which we think it is, that bodes very well for intermodal.
Yeah, I appreciate that level of candor. I'm, I'm sure customers do too, in terms of building that long-term relationship. You have your cost-out initiative that was rolled out really when, when some of... You know, when the market forces were a little bit different than what they are today. Maybe talk about some of those cost-out initiatives, how much momentum there is, how much more opportunity I guess there is.
Mm-hmm.
Is there any scenario where maybe we pull back on some of those things if the growth opportunities materialize in a little bit more robust way than expected? Give us some color around w hat's underway in that regard.
Yeah, good, good question. So I think our cost initiative started before 2025. We probably were more vocal about those initiatives, you know, this past year. So, you know, we look at those initiatives as ongoing, and we're looking at things that are structural. So, we've been talking about productivity actions. Productivity actions, you know, have, you know, dual benefit in terms of, you know, revenue per truck per week, but also a benefit in terms of cost. So a lot of the actions that we're looking at are asset-based productivity and people-based productivity. From a headcount standpoint, non-driver headcount for 2025 was down 7%. We believe that there's more that can be done, you know, going forward, and it's not a case where we start to grow and all these people come back, right?
We're thoughtful in terms of where, you know, where we're kind of taking those costs out. We're also looking at third-party costs across the board. Intermodal is a good example. I think Mark mentioned, you know, 90% of dray moves are done with our company assets. There's some third-party drays, so we're very disciplined in terms of those costs. Facilities costs across the board, we're looking. You know, we've been looking at the footprint. So, you know, we've been talking about structural actions, and to your point, when we start to grow, we expect to see leverage as opposed to, you know, cost returning.
Mm-hmm. Let's talk about some of the cost headwinds or areas where you're seeing inflation. I think you spoke to, you know, in the first quarter or I guess for 2026, right? Seeing some some inflationary headwinds around healthcare costs. We talked about some kind of unplanned auto shutdowns or extended auto shutdowns that represent a little bit of a headwind. And then, of course, on the logistics side, anytime you see the, you know, trucking rates start to move higher, that tends to squeeze margins. How should we think about how much of a headwind that represents for first quarter? You have your target out there for the full year, EPS. How should we think about the cadence of kind of earnings through the year in the context of some of those cost headwinds?
Yeah, I think, you know, most of the costs, so, you know, we had a $40 million cost and productivity savings target in 2025. We doubled down on that for 2026, so it's another $40 million. I think there's a recognition that we are in an inflationary environment, even though it's more stable. So, you know, we're mitigating much of that inflation, but it's not all. $40 million goes to the bottom line, if, if you know what I mean. Most of it is second half weighted. So some of the costs that you mentioned, we don't see them as ongoing. So the healthcare headwinds that we saw in the fourth quarter, for example, there's some specific reasons why we think usage went up, you know, in, in that period of time. We don't expect that to persist.
In the third quarter, we had some auto liability claims expense. You know, some of that normalized in the fourth quarter. So these are not ongoing, you know, headwinds, if you will. You also mentioned this carrier cost on the logistics side. That's short-term pain, we think, for long-term benefit. When you see, you know, spot prices elevate and impact carrier cost, we think that's a precursor to, you know, contract rates recovering. So, you know, we saw some of that inflection going into the back half of the fourth quarter persisting into the first quarter. But, you know, to the extent that those costs remain elevated, we believe that contract rates will also increase.
If you go back in time, you know, to kind of the COVID years, there are certain costs that, you know, are compounding, right? Which we've been mitigating. You think about equipment costs, with tariffs, for example, that's a headwind that obviously it kind of carries forward. There are certain maintenance costs that, you know, are higher because of tariffs. We, you know, driver, driver costs that you mentioned, and Mark kind of talked about a strategy there. There are certain costs that, you know, just given the magnitude of the PNL, you know, they have an impact. We're doing things to address those costs, but then, you know, most of the costs that you mentioned, we think are more transitory in nature.
Mm-hmm. Thanks for that color, Darrell, because, you know, I think it's really important to understand that some of these, some of these headwinds are temporary and then start to fade over time as you start to get, perhaps the pricing that, that you'd like to, like to see, and hopefully that flows through. So you have an outlook for 2026 adjusted EPS of $0.70-$1.00.
Mm-hmm.
To what extent should we see in that, you know, I don't want, I don't want to force you guys into saying anything that you don't want to say, but to what extent should we see that as, as a conservative target if we get a more supportive rate environment?
Mm-hmm.
How quickly can we start to see that flow through to margins to earnings?
Yeah, I think we acknowledge at least that the bottom end of the range will, you know, have some conservatism in it. So, you know, we ended the year at $0.63, as you know, adjusted EPS. Bottom end is at $0.70. In constructing the guidance, we said that the, you know, the $0.70 implies that what we saw in terms of conditions in the back half of 2025 persist. You know, the expectation is if we have more rate recovery, you know, capacity treats more, you know, demand inflects, that would prove to be, you know, more of a conservative view. But we're also focused on the things that are within our control, right?
So to get from, you know, the bottom end of the range and the midpoint of the range, most of the actions that Mark talked about in terms of where's our differentiation. So intermodal, that's very clear. In Dedicated, we have a very clear strategy and a pipeline as it relates to specialty. We have a very clear, productivity, set of targets for Network. We also have contractual rate renewal targets for Network. So there are a multitude of things that are within our control, in addition to cost initiatives that get us to the midpoint. From the midpoint to the high end of the range, that's where some of the, you know, macro forces, if you will, in terms of demand, has the ability to get us even beyond $0.85.
Got it. We understand, of course, look, you know, again, as transports analysts, we live it every day, and we, we see how difficult the operating environment has been, but we're excited for kind of a cyclical upturn. Let's talk about what some of the opportunity could look like in, in an upturn. Your truckload operating margin was 3.8% last year. That's against a long-term target of 12%-16%, if memory serves correctly. Intermodal operating margin, 6.7% versus long-term target of 10%-14%, and then logistics margin was 0.8% versus long-term target of 3%-5%. What's your level of confidence in being able to get back towards those, back towards those long-term targets in an upcycle? What's the process by which it would happen?
And, you know, if you don't mind me asking, where do you feel the most confident versus least confident in the ability to kind of hit those targets?
Yeah, I guess, you know-
We probably describe that as getting to a normal cycle-
Yeah.
Not just an upcycle that we think we're capable of doing that. And so if you look at where we are coming through this downtime, we reconstructed our truckload business to be 70% presently in a dedicated configuration, 30% in a network, and that's by design. We want to get after a more durable and consistent earning stream relative to longer-term, stickier contracts. We sold 950 units last year. We also had a higher turn and churn year than we typically do, as customers may have looked for a one-way solution to save money here, strategy change, a plant shutdown, other items that just hit a little bit harder relative to the churn factor and some that we directed.
And so the ability in the pipeline to get after the new business that we want to get after to upgrade our portfolio where we can and where it's needed, we feel really good about it, and really gets us very close to the... at least the bottom end of the range without a big market recovery. The drag for us has been on the Network side, and you've seen a lot of stress, not only us and our competitors as well, relative to the Network side of the business, which we haven't got in the black for a couple of years now. That really, we just need to get into the mid-single-digit range on the margin targets and Network, and we're really on our way to really where kind of we've laid out as our goal.
I feel really good about intermodal as well, because we've had no price in two years, and we still are able to start to move margins based upon our, our cost disciplines, our differentiators. So getting a little bit of price, getting a little bit of volume on some of this conversion is a great deal of a flywheel for our intermodal business, and we're not all that far off on the, on the bottom end of the target.
Mm-hmm.
And then our logistics business, really the second half of the year, took the margin hit. And so with our Power Only offering, a more normalized, balanced market that allows for differentiation between our assets and how we can feed our logistics business, 3% doesn't seem too out of bounds for us, and maybe even one allocation cycle change. Probably takes us a couple allocation seasons to get our Network business totally back, at least contributing to the level that gets us in that range. But Dedicated is our wild card because we have a terrific balance sheet. We're going to really focus in on earnings improvement and earnings maximization, but we also success in the market. We can really put our balance sheet to use, both organically and acquisitively.
We made three really solid, dedicated acquisitions in the last 36-40 months and have an appetite to do more.
Can you give us any indication on what the margin profile looks like between Network and Dedicated?
Well, right now, there's not a margin profile in Network, so that, that's what we're working on. But we in a normalized market, they could be very, very similar, and typically, if you would take us back to the COVID era, pre-COVID, very, very you can play similar. They're just, the Network side becomes more volatile, more upside, more downside. With the Dedicated, we really take the top and the bottom part of those markets off, which is what's attracted us, plus it's what our drivers like to do, right? If you think about labor, if you think about choice that they have, whether the market tightens, where does our driver community in general want to be? Something like Intermodal, where it's very predictable, I'm home virtually every day in the market, or Dedicated, when I know what I'm doing every day.
Those are the two things that labor most wants to get after, and that's the strength of our portfolio. So I think we're a little more going to be resilient when the market does get tougher because of what we have to offer, and the Network is really the hardest, most irregular route, most irregular schedule business. And so that's why you get paid so much when the market's well, and that's what gets really punished when the market goes the other direction.
And we've seen, you know, encouraging signs, even in softer market conditions. So as Mark mentioned, in Intermodal, we have no price. Pricing is flat, but we've grown earnings, even in the fourth quarter. Revenues were down, margins were up, right? A lot of that is the self-help items that we've been implementing. Network is the same, you know, similar story. We had some significant headwinds, some of those one-time items that you mentioned. Even with those headwinds, we grew earnings year over year, right? So with some help from the market, it's not unfathomable that we, you know, get to those longer term targets, but it's gonna take a couple of cycles.
One of the challenges that we have as transport analysts, and I think transport investors, face sometimes, is especially for the truckload carriers. We're used to cycles. We understand cycles are a part of life. But historically, carriers, and it's not even a Schneider-specific comment, but carriers have kind of struggled to compound earnings over time, right? To show that, you can kind of have higher highs and higher lows through the cycle. What's being done differently, and maybe it's the cost-cutting initiatives, maybe it's more of a focus on Dedicated, maybe it's some of these partnerships on Intermodal and focusing on load growth, but how do we get comfortable with the idea that Schneider can kind of compound earnings through the cycle?
Yeah, absolutely. What we're focused on, we have a number of initiatives, particularly around technology, where we can ramp our business without having to grow the people count to the same degree as what a historical level would be. And we just, you know, we've never had the influx of a non-domiciled CDL holder to the degree that's really wrecked the capital structure of trucking on a recovery basis, right? So as we get through that, and I think we're seeing evidence that we're getting through that, and the structural changes we made in our business, the Dedicated concentration, our differentiators in intermodal, and each of those have different asset intensities and margin profiles, right? Where most asset intensive truck, less so in intermodal, and virtually no capital outside of technology on the logistics side. So we're focused on return on invested capital.
How does that mix play out? That's all a function of our mix, but I think we're structurally different. That, if you talk about a frustration, we've done some really good things in our Dedicated business, the acquisitions, and our Network business is masked it all, because of the really once that I would consider... I've been in this industry 38 years, I've never seen a four-year cycle, and now we're just getting the total evidence of why that was.
Yeah, it's been a remarkably deep down cycle. It's remarkable. We have been talking about rail M&A a bit, and as you know, Keith and team were here, just-
That was a little while. That was a clinic.
Yeah, yeah. I mean, Keith is great. How do you think about Schneider's role in the rail M&A debate, right? Talk about what, you know, where you plan to weigh in or where you think you could weigh in, how you see your positioning for a world that might have a future UP/NS, how you think it's going to shape the North American rail network, and how Schneider benefits or maybe in some cases, might be vulnerable.
Yeah, from, well, obviously, we're coming at this strictly from an intermodal view and not some of the other lines that the railroads operate in. But, you know, first and foremost, we're really, as I said, happy with where we are today and our linkages, our integrations with our three primary partners. And we've had the experience and the muscle to change railroads when we needed to. We've done that recently with BN to the UP. We did that with the CPKC. So we're not concerned about changing our ability to execute and protect our customers and do all the things that we need to do to be a great operator, regardless of where the landscape ends.
That being said, we want to make sure we have the best differentiation we can and the best intermodal network that we can, and that may involve a change, it may not involve a change. Part of what we're in discussions with lots of folks presently around how we want to ultimately weigh in on what our ultimate position will be. There are some really exciting things that are kind of laid out, perhaps in the UP/NS, relative to what are those pairs, what are, what is the concessions, how does that all play together? We don't have all the detail yet to really kind of weigh in and make a definitive statement. We've been one of the ones who've been silent, waiting for that. We don't think it made any sense without the knowledge that we don't presently have to come out and take a position.
But very confident in our ability to deal with it. Not that it's not a big deal, it is a big deal, and we're taking it seriously, but we're going to be very confident in the end that we're going to be able to be stronger going out of it than we came into it.
Certainly, being flexible, I think, works to your advantage. I'll check if there are any questions in the audience, but in the meantime, you know, I'll ask. On the logistics side, I'm curious, because there's been a lot of talk about how technology is changing that the competitive dynamics in that industry. Maybe give us your thoughts on how Schneider is positioned, and if we could broaden it out even a little bit to kind of how technology is impacting the broader industry. Should we expect consolidation there? And how does Schneider maybe position itself to continue to win in that space?
Yeah. Yeah, I think the revolutions that we've been through from a technology over time, I think benefits those with scale, right? I think the most vulnerable, the smaller, maybe too big to be nimble and not big enough to have scale, is maybe the most difficult place in the market to be that mid-tier. And so I think that's a place to advantages like ourselves, and because we have the scale to go ahead and invest in AI, to do the things necessary, to look at your cost to serve, take friction out of the business, improve the service experience. And we are probably in the bottom of the second inning on that relative to the AI work.
I try not to be surprised every day, but I am surprised every day how effective it can be, how our people embrace it and say, "Hey, this allows me, by doing this, to get to a higher level in the value chain with the customer or with the business," and, you know, not fighting this because it looks like it's a disruptive force for the people. So, really, really encouraged. I think 2026 will be a very interesting year in our development and across really all aspects, our shared services, all the way through our service offerings.
So, by being already a tech-forward company, it just kinda comes natural, and I think this gives us the confidence to accelerate in places just because of the early returns that we've seen. So very excited about that, and I think ultimately, that allows us to compete more effectively because it lowers our cost to serve. Don Schneider said 50 years ago, "Low-cost position wins in the end," and I think these technologies are gonna allow us to do that.
Schneider is certainly well-positioned, you know, to continue to be a winner in the market. Let's go to questions in the audience.
Yeah.
Thanks so much. With your 2025 wins going into 2026, can you talk about the cadence of your truck adds versus startup costs throughout the 4 quarters?
Yeah. So question for those who are gonna hear, it's about Dedicated and they're kind of your carry forward from 2025. I mentioned that we sold 950 or so units of new business. We had substantive startup activity in the fourth quarter, particularly around 3 larger opportunities that I will believe largely get through in the first quarter. In early first quarter, on 2 of them, we'll have some lingering because of the size and scale on the third. So those are all very good things, and again, as we think about the 2026 period, other wins, we'll look at how do we raise the returns on the portfolio first before we kind of add capital.
So our pipeline suggests that we're off to another solid year in Dedicated, a bit more skewed to the stickier things that we're targeting, which is specialty equipment that doesn't get as easily disrupted by network solutions or, you know, standard 53-foot trailing equipment. So a little bit of hangover here in the first quarter. Obviously, the weather was pretty significant in January. It's a little bit of carryover into February that we'll have to get through. I think the team did a terrific job of dealing with that disruption to try to keep costs as reasonable as we could. But I don't know if I've been around a long time, but having facilities closed from Dallas, Texas, through Carlisle, PA, on the same snowstorm is a pretty unique experience.
But, so feel really good about that. So we're not after a magical number of 70/30 between Dedicated and Network, and obviously, we have a balance sheet to put if we can get everything moving where the direction we move to include acquisition.
That's great. So, Mark, I see we're effectively at time, but let me see if there are any, you know, closing comments or closing thoughts, you might want to leave us with. And I'll phrase it particularly in this context: What do you think is kind of the most misunderstood thing about Schneider, and kind of where is the opportunity that you're most excited about?
Yeah, well, first of all, thanks for having us, and I think you did a great job covering the basics for the industry today. You know, we're very proud of our truckload history, and there's no question that Schneider has been known for a long time for the trucking side of the business. We really maybe misunderstood is how multimodal we really are when we're talking, you know, $2.5 billion in truck, over $1 billion in intermodal, and $1 billion in logistics, and how we can play with and help our customers with a whole series of solutions to grow our business without having to have a driver and a truck in every one of those locations because of some of these non-asset services that we can bring to bear.
So we love our trucking heritage, but we're probably here a little bit more than just a trucker these days.
Mm-hmm. All right, great. Well, we're excited to see what you folks can do in the upcycle, and hopefully, we have a little bit of macro tailwind ahead of us. Mark, Darrell, thank you both for-
Thank you.
your time and a fascinating conversation.
Thank you.