Pełna transkrypcja odcinka Jim Filter, Schneider | Steering Schneider Forward

while now. Current level of replacement rates are quite high, 13.1% year over year. Jim Filter: And I remember being in Mexico and talking to our CEO at the time, Chris Lofgren, about that very unique position that we were the only two people in the company that had operations, commercial people, HR and finance reporting to you. obviously the CEO role mo ⁓ know significantly more ⁓ requirements, but he you know, it wasn't lost on him on you know how important a role like that was in in development. Chris Caplice: ⁓ gap between spot and contract is twenty-four cents a mile where spots above contract and year-v-year change in spot rates is thirty point two percent and for contract is ten point six percent, quite high. Now that was what, two thousand ten, two thousand twelve. So that was post NAFTA? Right? And so how how was how were the relations between the US and Mexico? I'm trying to think back to that time. Jim Filter: Yes, absolutely. Yeah. They were very good and you know and and we just continue to see that grow, the relationships and continue to see cross border transportation grow. ⁓ but it was a great experience and ⁓ and the company outside the four walls of the building to you know not just investor types of people and customers, ⁓ but government officials well. Chris Caplice: Flatbed's been really driving a lot of this. A lot of the data center and AI center construction, whether it's actual steel, concrete, things like that for flatbed, but it's also, you know, spilling over into dry van as well. We're seeing it really propping up a lot of any demand that we're seeing in the truckload market. So big takeaways. Temp control ⁓ contract continued to drop from its peak in May. Dry van and intermodal increased slightly. We'll see how temp control does over the rest of the summer after this. Yeah. So it's interesting you mentioned the diversity of jobs around now do you develop your personnel within Schneider along those lines too, where you try to rotate people around? Because that's obviously some other companies will focus you and become an expert in a certain area. How do you balance that trade off? Of July bump. ⁓ spot rates are up across the board by just a point or so. But if you're looking year over year, they're 20 to 30 percent higher, and contract is about five to ten percent higher. So we are in a tight ⁓ higher ⁓ market, a tighter market. replacement rates are going through the roof, all are in the positive, seven to thirteen percent range. This is not new news. ⁓ Jim Filter: Yeah, well, we take succession plan very seriously and and it's a combination. It's also not just moving people around to keep people in motion because you want enough time in each role where you have an opportunity to make your mark, to build a team around you, see that through, develop the people on your team, ⁓ the job well enough that you can improve the processes. And if you do those things, generally you're gonna have better results. So we want people to be put in positions where they're gonna Chris Caplice: This has been going on since February, March. It's really taken hold, and now we'll try to figure out how long this will last. And similarly, the gap between spot and contract is positive, 14 to 25 cents a mile, except for intermodal, which again is a very different animal. All right. So that's it for 9 July 2026 for the truckload market update. Jim Filter: deliver great results and after you do that you get to start thinking about the next role and specifically wanna help people think about what are the right roles that are gonna help you just develop a a broader toolkit. Chris Caplice: Do you ever I'm curious, do you ever find people that really like the role they're in? They really don't want to move to another role? You get comfortable. Jim Filter: Absolutely. Yeah, yeah. And th there is nothing wrong with that. You can have a great career and spend the rest of your career in that one role. ⁓ and there are a lot of people that have had very long careers here in this organization and that and they've stayed in the same role for decades. And you want to appreciate that. They've mastered the job. And probably the most important thing is when you're in a role like that, and that's you know what your runway is, is that you continue to challenge yourself. ⁓ when I first started, there was a one of my peers had ⁓ been his job over three decades, and he was there working late at night just because we had moved. into Freightliner trucks and he wanted to know every detail. He had figured my my role in this company is to be an expert. And if something's changing, I want to be an expert on what is changing. So ⁓ never stop learning. Chris Caplice: Yeah, it it's funny, in the military, when when I was in and I friends were in there now still are pretty much retired at this point, but it was every two to three years you'd move to a new role. And so to your point, is that long enough to learn? Because it seemed to be you're you're learning, you're learning, and then you're exiting. ⁓ do you have what is there a sweet spot for that? Three years, four years? Jim Filter: Mm-hmm. Mm. Yeah. It it depends on the role. There's some roles that you may have had that similar experience in the past and and it's going you're gonna pick it up very quickly and you're gonna be able to make your mark, you're gonna develop people and that's gonna happen quick. And then there's others where it's going to take you a longer time to be able to develop the expertise, to develop a team, to see something through a market cycle to truly understand the full implications. So it's each role is a little bit different, and where you're coming from puts you at a different starting point as well. Chris Caplice: Yeah, that makes sense. So over your twenty eight years, I'll I'll round down now back from third. I don't want to make you look old. ⁓ So twenty eight years, ⁓ what's changed at the most y you've seen in the industry

as a whole, the trucking transportation industry? Jim Filter: All right. Yeah. It's our use of technology. ⁓ i amazing, you know, you think about when we started, ⁓ generally Unix based systems, you know, green screens as you're working through and ⁓ you know, it w it was h helpful to have computers, but today, you know, you just can't imagine doing your role without being able to engage with your computer and Chris Caplice: Hmm. Jim Filter: What we're able to use AI for is is completely amazing and ⁓ you know, think about the the feedback mechanisms you create and now incorporating AI into those, that isn't even something I could have imagined ⁓ twenty years ago. Chris Caplice: You know, it's funny, I ⁓ three years ago I couldn't imagine AI. It's it's funny. I was talking ⁓ with some colleagues here at MIT, and someone's asked us to say ten years out, what will AI do to supply chains? And I said, who knows? Three years ago I wouldn't have thought the way that we're using it now. ⁓ do you think that visibility is one of the other big things that have come out, you know, the ⁓ tracking and tracing of that? Do you think AI is bigger than that, or is it just is it all just accumulating? Jim Filter: Yeah, you're absolutely right. ⁓ it's much bigger than just tracking and terms of ⁓ what we haven't even put together yet. I you know, it it's continuing to learn. ⁓ you know, the the AI that you build within your own networks as well as what's out there in the you know broader ethosphere. And it's continuing to evolve. So ⁓ you know it'll be interesting even three years from now, coming back and looking at well, what are we using it for then compared to today? Chris Caplice: Yeah. Right. What I'm what I'm finding is, and I've talked to some other people, when they're hiring people in, it's the younger kids that are coming in straight out of college who know the most out of AI. And these are the ones that are supposed to be replaced, but they're the ones that are most savvy ⁓ of how to use it. Are you finding that or you find something different? Jim Filter: Yeah. I'm yeah. You know, I see a lot of people that have been in in the industry for a long time that are using AI and ⁓ using it in everyday operations. So I I don't think this is limited to just people coming into the industry. If you've ⁓ developed your career knowing you can never stay satisfied with what your skill set is, you c you constantly need to ch change. Doesn't matter if you've been here forty years, ⁓ our current CEO, he's using AI as we're we're working on different things. I think he's Chris Caplice: Yeah, yeah. New the new kids? Okay. Jim Filter: doing very effectively. Chris Caplice: Yeah. So ⁓ back to the technology. You mentioned technology, that's mainly back office things that that you were talking about. What about in the cab? That's technology's pretty dramatically changed there as well, hasn't it? Jim Filter: Yeah. Right. Well we were thrilled when I started that we at least

had In cab satellite technology, we had implemented trailer tracking and we felt we were well ahead of the industry. But at the time we were looking at each number, each character that we were typing and sharing information with our drivers, and there were a lot of shortcuts the way they used it. And now for somebody stepping into a cab and having a tablet that is just more obvious in terms of what you're trying to accomplish, it's a little bit easier to use, and where we're moving is how do we get to a Spot where we can answer the question before it's even asked. That way ⁓ a driver doesn't have to reach back in and communicate and ask for a piece of information. We should just know, given how long you've been a driver, the situation you're being put in, this is an obvious question for you. And even if you don't ask it, I'm going to provide the right piece of information at the right time. Chris Caplice: This this raises another question I had, ⁓ the role of a driver. ⁓ Schneider's been very driver centric for a long time. You know, customers and drivers are very, very critical. Do you think the skill set that drivers need is changing? Has it changed and evolved? I mean, still I did a a ride along, gosh, ten years ago with a driver of yours in Chicago, and we're backing in. It was ⁓ moving containers, you know, back and forth, and I was just shocked at how Good they were backing into these tight spaces, but the skill set seems to have changed a little bit over the years. How do you how do you see that evolving? Jim Filter: Yeah. Yeah, the the number one ⁓ skill that I see when I you spend time with drivers is ⁓ just their ability to focus ⁓ for long periods of time, s you know, remain alert, ⁓ their attention to detail, that part hasn't changed. ⁓ you're looking for people that have that that capacity ⁓ to be able to continue to be productive day in and day out, but do it in a very safe manner. Chris Caplice: And and driver retention has been a problem with ⁓ with other companies in the past. Do you what's Schneider's strategy for retaining those drivers who pay attention to detail or have that those skills that you're looking for? Jim Filter: Yeah, we want to find a opportunity to Take drivers that we hire. This is the first job coming into the industry and show them a path of you can have a very long career here doing lots of different things. What we were talking about earlier, we were primarily talking about people that work in the office. The same thing applies to drivers. And you know, you might come into this industry like a lot of people and start in a network configuration. I want to go out there and see the country, and I'm I'm joining this because of you know that that desire to be mobile. ⁓ but over time is you know. Chris Caplice: Mm-hmm. Jim Filter: know you develop a family, you want to have a little bit more routine. We have jobs in dedicated or intermodal. And then after you've done that for a little while and maybe your family

situation's change, you want something a little more complex, we have solutions like bulk, which are more technical. And then eventually I want to buy my own truck. Well we have a leasing arm to help put you into a truck and then a process so that you can You know, again, with the technology, you actually get to make the choices of which loads you're going to select so you're moving a little bit further up the value chain and want that experience. And so you can build a long career and it doesn't feel like a long career when you have these opportunities to try different things. Chris Caplice: Right, right. How how important and this is kind of a st stupid question, but how important is ⁓ the customer relations for a driver to be able to deal with the customers? 'Cause a lot of the work that you do with dedicated, I want to talk about that in a second, is like drop and hook, where there isn't as much face to face unloading, it's more more efficient. How how do you d grow them to be more customer facing? Jim Filter: Yeah and and specifically when you look at the best drivers, they find ways to be able to solve problems. ⁓ so you you go to a customer location and you know there ⁓ might be a situation where they're they're saying, hey, we we can't unload you right now for whatever reason. ⁓ to immediately be able to talk to a customer and and tell about well what solutions do we have? Could I could I drop this load? ⁓ do you need my help being able to move something around to be able to make this work? I when you spend time with the really best drivers, they they don't take the first well we can't do this. They become problem solvers and helpful and let me I I'm not gonna just go back to my truck and sit there and wait. I'm gonna try and find a solution so I can remain productive. Chris Caplice: See that's that's a great skill in any job, right? You're a problem solver, you're trying to solve these problems. Is that something you teach ⁓ that's something that you learn, I assume. But the question is, can you teach that or do you hire for that? Do you look for problem solvers or do you train them to be problem solvers? Jim Filter: I I think you have to yeah, train and experience and just ⁓ understand what the the capabilities are. Chris Caplice: Yeah. So let's talk about the current market. It's it's changed, obviously, in the last five, six months. ⁓ and so let's talk about the short term. The the current cycle that's coming up seems like it's not demand driven, it's more capacity or supply driven. What are your thoughts on that? Jim Filter: Yeah. Yes. Yeah, absolutely. In term of demand it's it's not falling up, it's stable, ⁓ but it's it's not moving tremendously up or down. When we came into this year we thought maybe we'd get a a couple rate cuts that might spur things like housing and automotive and now I'd say probably better odds that rates would go up rather than down. ⁓ so that Yeah. Yeah. Well I Chris Caplice: Where did that come from? I don't know, is that because of employment? The strong employment numbers? I was shocked. Jim Filter: Well, I would expect ⁓ higher fuel costs has something to do with that as well. So ⁓ you know, we don't control that part, but ⁓ what has changed dramatically here absolutely is capacity exiting and you know, everybody's talking about all of these regulations that are being enforced and absolutely it was required. The you know, we know that the roads can get safer and there are companies like Schneider that are making major investments in safety while others are doing the exact opposite of how do I skirt rules and Chris Caplice: Yeah, yeah, yeah. Jim Filter: You know, I do admire what the administration has done to say, no, we're gonna enforce the rules we already have. But there I I think we're all surprised how much capacity was kind of squirting ⁓ around the rules that already existed. And then the big change right now is and I know, I know you just did a ⁓ podcast on this, is the Montgomery case. And I'm not sure that we have completely absorbed how big of an impact that is ⁓ across this industry. Chris Caplice: Yes. Well that that's really interesting because I that's something if you talk to shippers, they really they know it's there, but they're kind of insulated. It's really the brokers that are really getting getting could be at at risk. And my my take of it talking to people and you probably has much more in-depth knowledge, of course, is it shouldn't affect the larger ones, it should affect some of the smaller ones. We could have a capacity, a reduction of some of the brokers just because the cost of doing business. What are your thoughts? Jim Filter: Yeah. Yeah, well I yeah, I think ⁓ way ⁓ way I'm thinking about this is that you know there there are absolutely economies of scale for large trucking companies. You know, the ability to acquire, build dense networks, all those. But over the last call it ten years, those economies of scale have kind of gotten washed away. That the small carriers have had some advantages and specifically it's been under the category of risk. That if you're a small carrier, you have a major accident, ⁓ Chris Caplice: Yes. Jim Filter: you know it's gonna be covered by insurance or you go out of business and you start another company. It's just it's over, it doesn't matter. But for a large trucking company you're absorbing that risk and that's why large trucking companies, because we're held accountable, we do make major investments. Every investment we can make ⁓ that's reasonable, we're gonna make it into into safety. ⁓ but that hasn't been distributed across the entire industry because of this broker preemption. And so you know, whether you're a a shipper or a broker, you're able to, you know, take kind of skirt around that that responsibility that you have to the motoring public. With the r elimination of this preemption, what that adjusts is say, no, everybody's going to have that responsibility to the

motoring public. So if there is an accident, ⁓ and right now it's starting with the broker saying, All right, that is something that ⁓ ⁓ brokers are gonna be liable for ⁓ the selection of carriers. And there are still going to be accidents, there's no doubt about that. Unfortunately there are accidents. But when you're hiring carriers that Chris Caplice: Sure, sure. Jim Filter: you know, the government has already listed them as a conditional carrier or there's known that there are challenges or that this is a chameleon carrier, there's there's responsibility with the broker. And I believe eventually that same responsibility feeds back to shippers themselves. If they are selecting brokers that knowingly are kind of chameleon brokers and trying to skirt the situation that way, I think shippers are going to be liable as well. And so you have this rebalancing of those economies of scale starting to ⁓ show themsel show value of what you're able to deliver from a a large carrier. Chris Caplice: So that's really interesting. You had a couple points. Let me try to unpack some of them. ⁓ the difference between large and small, I I I agree with that, but are you saying that this could lead to a consolidation of carriers? Because that you know, truckload carrier market is infamously long tail. It's really, you know, there's sixty two-thirds of the ⁓ capacities within less than five percent of the market, but the rest is spread out in a tremendous group of small carriers. Do you think that's gonna consolidate? Jim Filter: Okay. Right. I think there's ⁓ definitely a condition that would lead to some consolidation when you remove the you know the risk premium that a large shipper or large carrier is paying for today versus a small carrier and and that levels out, those other advantages for a large carrier start to shine through and then all the other technologies that we've talked about, there are efficiencies that you can get as a large carrier that I believe will start to play out in the market. Chris Caplice: Yeah. Mm-hmm. So one of the things that my thought is, and I think I saw some of this in the pandemic, you saw growth in in the whole carrier base. You just the whole industry grew, but not uniformly. You saw a lot of smaller ones come in because the cost of entry and exit is so low. And they came in because there was a lot of money to make. And the big ones, the larger carriers, grew as well. It's the middle, it's the twenty to a hundred kinds that those size fleets. And those ones I think are getting squeezed, but the owner operators Jim Filter: Yes. Chris Caplice: s have such flexibility. I just don't know if they're gonna go away. I I th my my sense is it's gonna really bifurcate the market. There'll be a lot of tiny guys and big guys. But the in the middle it's a big chasm to cross. Jim Filter: Yeah. I let me hit one more thing on the really small guy might make you think a little bit differently about this. So ⁓ coming out of the pandemic Chris

Caplice: Okay, sure. Jim Filter: If we back to 2022, we would show that we had 60,000 carriers that we were working with in our brokerage business. And we were proud of having 60,000 carriers. As cargo security started to take more prominence and we started focusing on cargo security, we started looking at things beyond safety that we should start read removing carriers from our portfolio. And we shrunk it to below 14,000 carriers. From 60,000 to less than 14,000. Chris Caplice: Okay. Jim Filter: Carriers. And there are you know the things that we list on the website that say we do this, this, and this. And then there's things that we do behind the scenes that we're not necessarily going to share because as soon as we say that, the bad guys are going to figure out another way to try to to get through that wall to penetrate. And we use ⁓ third parties for that. We have some own our own ⁓ measures that we take to be able to reduce that, but specifically what we're trying to avoid are the chameleon carriers. So that it it could be that. You know, true truck fleet that own a number of different MC numbers and they're shutting down one and starting a different one. So we're we've been working on how do you get a level up and look at who's really behind this really small fleet. And so I think something that's given an advantage if you're a one to five truck fleet is if I have a problem, I very quickly go and move over to something else. I shut down, I start up very quickly. ⁓ when everybody starts to tackle this issue the way that I think that they will. And we're not perfect and it's tough to find them. ⁓ we're not the government. I prefer if the government had a better betting system, ⁓ to be able to use all of their databases to help us out. I know there's some work there, but in the sh in the short term, you know, we're taking some actions that are reducing that. But yeah, if our data here is at all indicative of the rest of the industry, there's a really big number of carriers that would probably ⁓ fall out. Chris Caplice: So let me ask about chameleon carriers, 'cause I'll to be honest, I'd never heard that phrase before maybe six months ago. Is that a new phrase I've just been missing? Has ⁓ have we been t I know that the concept, but I'd never heard the phrase chameleon carrier, where it's just broken season. Jim Filter: Wow. Well, I I at least over ⁓ you know last three years we've been talking about relative to cargo security and you know some of the actions that were taken. The chameleon carriers was most commonly talked about at that point. But even before that, in terms of ⁓ the safety premium that we're paying, I had heard it in that context as well. So I I think it's just you know, it helps when the mainstream media is starting to pick ⁓ this up and everybody's talking about it now. Chris Caplice: Maybe that's it. Yeah, yeah. And you're raising the pr the question of carrier vetting, because this is a major challenge that shippers have.

⁓ because they're you're right, the government, ⁓ the FMCSA, it's not perfect. there are companies out there trying to do this. it's a challenge. It's a challenge to try to do that. Do you see technology playing a role with Do you do you see that getting better over time? Jim Filter: Right. Yeah, yeah. So that's clearly word We can't do this with just people going and searching and you're gonna do this manually. ⁓ technology, I think it would be helpful for an industry standard, ⁓ obviously for the government to help as well, to be able to use all of their tools to dig in deeper. But you know, the the government is not going to be able to inspect every single carrier out there. That that's not likely to happen. But perhaps there's some technology here that would help, specifically ELDs. ⁓ you know, you Think about ELDs, ours are ⁓ all certified by the manufacturer. And there's something like 900 ELDs that have been self-certified. In Canada, the ELDs are certified by the government. They have 40 ELDs. So it tells you that perhaps maybe one of the opportunities would be to have the government or some other way to certify ELDs, and then could the ELDs provide additional data back to the FMCSA in terms of just the way that people are. Chris Caplice: So, what do you think is stopping that? That seems to be a common sense approach to this to regulate the the ELD manufacturing. What do you think is stopping that? Jim Filter: You know, I I think we could get there. ⁓ you know, as we talked to ⁓ Secretary Duffy, I This probably wasn't even a year ago, and we were talking about some of the basic regulation that we felt should be enforced. We talked about ⁓ B1 cabotage being violated. ⁓ we were talking about, you know, some of the skirting of the rules with the entry-level driver training, and it it was really that was the primary issue, but the way you could also see that was with d non-domicile drivers. And I I I'm truly amazed how quickly they acted in response. There are you know items where it's it's almost overnight that you see these changes. And so ⁓ I think there'll be a point where they're gonna address that, they're gonna address some of the insurance l levels, things like that. ⁓ and when they move, as soon as you know they're comfortable with ⁓ that it's they've done the appropriate analysis, they move very quickly. Chris Caplice: Are surprised at the speed? 'Cause ⁓ people have been talking about this for a number of years, but it seems like it was an open secret. Jim Filter: Yeah. It it was because, you know, we've we've had similar discussions with a number of administrations on some similar topics of hey there are things going on out there that really should be regulated or and just enforced. And ⁓ you know, people would agree with you and say they're taking actions, but pretty minimal in terms of what came out of that. This one surprises us because they did what they said they were going to do. Chris Caplice: Why do you think it happened

so quickly? There were some accidents that happened, some pretty high high profile things and it kind of r revealed some things again to the mainstream press. Do you think that the public pressure pushed it? Or is it more pressure from the industry? Jim Filter: Yeah. ⁓ and there's always there's been accidents for a long time and and accidents were you know should not have happened. What I I think this ⁓ administration and Secretary Duffy have done is they're very effective in storytelling of why is this important. And ⁓ you know, getting people to move on actions when you can get both sides of the aisle to say, yes, it's important that we are not putting dangerous carriers or dangerous drivers on the road. Let's go and do something. They've been effective in getting that done and then there's always going to be a another side to every single issue when they they've been very good at being able to say I understand that there is another side but this is bigger and that's why we're gonna do this so hop on the bus cause we're moving. Chris Caplice: Yeah, it's definitely been ⁓ this administration is not afraid of taking dramatic action ⁓ to to move quickly. Whether whether you approve the action or not, no one can deny the speed ⁓ with which it it's been happening. Let me let me talk about go back to some of the things we started with. You're coming as a CEO. ⁓ I'm sure you're thinking of this. What are you what are your big priorities? What do you want to do in the tenure, the next forty years that you'll be CEO? Jim Filter: They are not, no. That's right. That's right, absolutely. Okay. Yeah. And yeah. Yeah. So ⁓ you know, the first thing we talked about this market the opportunity and and Chris Caplice: Yeah, yeah. Jim Filter: You know, I've had a large role in this organization, so it's it's not like I haven't had the ability to influence ⁓ going into it, but like anybody coming into a role, you come in and say, hey, there's a there's a small number of things that I really want to prioritize. And you know, the first one for me is organic growth and specifically growing where we have differentiation and our customers have needs, and making sure we're allocating capital to where we're getting the best return. And then the the second is reducing our cost. Chris Caplice: Mm. Jim Filter: To serve. So we've just been talking about AI and a number of other technologies. ⁓ I think we have an opportunity to look at how we provide our service and take structural costs out. We've done that each of the last two years. And what's amazing is we've been doing that each year. You still keep finding more opportunities. And so I want to make sure that we, you know, stay focused on that. Then the third. Yeah, sure. Chris Caplice: When when you say structural costs, let me I'll come back. What do you what do you mean? Do you mean like more of the overhead of the ⁓ administrative costs? What what do you mean by the structural costs? Jim Filter: Yeah, there's a combination of that structural I I really I'm avoiding just saying, Hey, there's there's costs that I'm taking out today that They're gonna find their way back into your business is the best way to think about that. It's a combination of fixed and variable, back office, ⁓ as well as what how we actually execute. ⁓ yeah, no, no, no. Appreciate that. And the the third one is building these strategic relationships with our customers. You know, their their roles are changing dramatically as well. we always want to stay on top of that. So we want to stay close to our customers. We have this broad portfolio, but we're gonna constantly shape that portfolio. Chris Caplice: Got it. Okay. I cut you off. You were going to a to a third. Jim Filter: based on where our customers are going and want to make sure that we're we're helping them do their jobs. And then the last one is is scaling this business through acquisitions. You know, so we're really proud of the acquisitions. We've made three in the last five years. They've all grown, performing really well. And so we just have a really good playbook for how to deliver those and then deliver on the synergies. And so I want to be able to continue to do that. And we're going to stay disciplined. There's going to be times where you look around and There's nothing that you're really excited about, so we're not you know gonna do anything ⁓ that you know contradicts being disciplined, but you know, I I I do see opportunities out there for us. Chris Caplice: So ⁓ so going back to the the cost of service strategic ⁓ relations, I'm I'm just curious. ⁓ one of the things we were talking about before, what's changed in the industry over thirty years or twenty-eight years, whatever, is the operations that Schneider has had over that time period. I'm thinking I'm thinking of dedicated. Dedicated is roughly what seventy percent of your business now? Well do you know what it was of truckload? How much of that w what percent was ⁓ dedicated, say twenty years ago? Do you have any sense? Jim Filter: Yes. Seventy percent of our seventy percent of our truckload segment is dedicated, yeah. ⁓ I could tell you when we went public in twenty seventeen it was thirty percent. ⁓ so completely different, yes. Chris Caplice: Okay. Yeah. Yeah, it it seems like some of the biggest changes that I've noticed is one move to dedicated, but also opening the brokerage. So it seemed like the thing that didn't happen was the one way over the road contract that which would used to be the bread and butter. ⁓ and moving away from that. Can you explain why and why it makes sense to go to those two extremes of the of the spectrum? Jim Filter: Yeah. Yeah. Yeah. Yeah. Yeah, customer supply chains have changed. You know, I remember where you know, ninety percent you would be carrier of the year, ⁓ and people were patting you on the back, now that gets you fired. ⁓ so you you i Chris Caplice: Mm. Jim Filter: The the expectations for how supply chains work

today are so different than what they were fifteen years ago because of e-commerce and the amount of inventory that's being held at different locations. And so in the past, 15 years ago, we could design a network solution and say, all right, I might not pick it up on this day, but I'll move it on this day, we're gonna do that. That that doesn't work anymore. And so ⁓ more often you need to provide a a dedicated solution to hit the service levels that come. Customers are looking for. And so really it's a response in the you know, changing our business to realign with the way that supply chains are working. And then you know, with the brokerage business, we always had a brokerage business. It was an overflow of, you know, if we couldn't move it on our own truck, it was an overflow. And then there was a point where we realized, well, there's this really long tail of customers, and we should also have our own ⁓ generation team here. An opportunity of, you know, maybe we wouldn't hope. that freight with our own asset most often, but we want to lean in and provide solutions to our customers for all the things that I wouldn't use one of my assets for. And you know, customers were looking, well, what else can you do to fit in around the edges that may sometimes you do use our truck, sometimes you don't. And that really has been woven into the fabric of how we're operating today. So when our our logistics teams go out there and they put together a solution and it's really focused on what the customer needs. And sometimes they're gonna be using third parties, but all of our owner operators are gonna see that freight and they have an opportunity to select that and say, Yep, I wanna move that, and then they can go and grab a Schneider trailer and execute that load. ⁓ so they have visibility and sometimes we're using a third party. ⁓ so it's just integrating all the the different capacity types we have together. Chris Caplice: Yeah, it seems like shippers are finally recognizing. I mean, when I came in this business back in the nineties running bids, it was like everything put up to bid. Everything I want to contract on everything. And now shippers are starting to recognize that there's about twenty percent of their freight is random. It's just g you they they don't know what it's gonna be and try to plan it is waste everyone's time. Jim Filter: Yeah. Well you have those that that long tail and then you also have special projects. so we do a lot of special projects thing about in construction where you're gonna deliver a whole bunch of loads in a short period of time, need a high service level and then you're never gonna go there again. Well that doesn't really work when you're trying to build a network and you're not gonna build dedicated Chris Caplice: Yep. Right, right. Jim Filter: ⁓ that's where I I need to use these fourteen thousand different carriers to put together a solution that combines Schneider and everything else that we do. Chris Caplice: You you pretty much described the build out of all the data centers for for AI or whatever that's that's happening. And there's been a lot of press about are we overbuilding and whatnot, but that's gotta be causing so much challenge and opportunity for you guys. And is it mainly flatbed for that? I would think it would be mainly flatbed. Is it a mix of of ambient as well? Jim Filter: Yes. Yeah. ⁓ ambient as well. You know, flatbed is you're doing the construction kind of the outside of the building, ⁓ but there are plenty of you know, you're not moving servers inside of a flatbed usually. but the other construction materials. So ⁓ we have a you know combination of different types of vehicles that we're using provide ⁓ help data centers get started up. Chris Caplice: Do you do you have a whole unit? I mean you could almost stand up a whole unit that just does that for for 'cause it's so specialized in you. Yes, it's changing location, but you're doing kind of the same thing over and over again. It's almost cookie cutter. Jim Filter: Yeah. Yeah. Yeah, and that's sort of number of different people within our logistics business that really become experts in, you know, one domain and, you know, attend the conferences, how do you get to really understand that domain and then come back to our business and say, this is what we need to be able to provide great service. So how do you change how we operate to align to what they need? And so not only in this one but a number of ⁓ you know different verticals we we're developing that expertise. Chris Caplice: Yeah. Mm-hmm. That makes sense. Let me flip to something we talked about two and a half years ago, ⁓ EVs, electric electrification. California had the big, big push and you guys responded. You had an all electric fleet there. How is it going since then, since twenty twenty three when we talked? Jim Filter: Okay. Yes. Yeah, so we still have those hundred electric trucks that are operating there. Matter of fact, I ⁓ just heard earlier today we're testing somebody else's electric truck. Just because we have some companies, the OEMs that said, Hey, we we wanna compare ourselves benchmark and you guys are the ones that are doing this at scale. ⁓ we'd like you to get your feedback. So occasionally we're getting additional electric trucks to to try out. ⁓ but yeah, it's running well. We've we have over ten million miles ⁓ on those electric trucks and ⁓ Very proud of what we've accomplished out there. Chris Caplice: What about ⁓ the driver experience? Are you having to force drivers to drive these E Vs or are they clamoring to drive the E Vs? Yeah. Jim Filter: They're clamoring to drive the E Vs. You know, it's similar to earlier in my career. I remember when we were, you know, moving from you know the standard transmission to automatic and people are you're never gonna take me out. ⁓ usually when you get a driver into an electric truck, I had several out in California said, Yeah, you're not gonna be able to move me

back into ⁓ you know a diesel truck. So I I will wait here until there's an electric truck available for me and that's who I wanna drive. Chris Caplice: So have you seen the ⁓ cost of acquisition or the cost of operation change over time? Has it is it starting to decrease or is it still one of the big barriers? Jim Filter: Well what made it possible for us were a series of grants ⁓ that enabled us to do that. And what we've seen is a little bit of a step back in the grants that are available. And so you know, until we see grants start to come back in, I I'm not expecting that we're gonna see ⁓ an expansion into the this 'cause the the cost of those vehicles is still quite a bit more than a standard diesel tractor. Chris Caplice: But if you look at the different size, like vans now for like local delivery, the cost differential for an E V van and an ICE, an internal combustion engine van, they're about the same. So do you think over time the price will drop for that? Jim Filter: Yeah, quite yeah, quite possible. ⁓ know, the other ⁓ component, you know, for local deliveries, you're you know, a very short length of haul. That's the same thing that we have in our intermole operations, that's primarily where we're using this. We also we're using it in some dedicated operations as well. ⁓ but to scale this beyond that you need the you know longer Chris Caplice: Sure. Jim Filter: runway here and you know, there's some manufacturers that are coming out with ⁓ an extended range that would make it ⁓ viable for more configurations, but we're not quite to that spot yet. Chris Caplice: Yeah, and ⁓ one of the things we talked about ⁓ was w one of the big challenges that you had ⁓ opening up in in California for that was getting the the grid, getting the utility to be able to provide that power. I'm curious, I I have a hypothesis that eventually, twenty, thirty years from now, electricity will be eas readily available and cheap because we're gonna overbuild now because the the deep pockets of the AI and the data centers, you know, Microsoft's reopening Three Mile Island, all this stuff. My hypothesis, we're overbuilding just like we did for cables back in 2000. Some companies will go bankrupt, there'll be loss of money, but then we'll have all this capacity. what are your thoughts? Am I am I out of the out in the left field? Jim Filter: Yeah. Well we've also heard maybe AI can help us figure out where we can get more energy from because it wants to sustain itself. So I ⁓ I think that's quite possible. Chris Caplice: Yeah. Yeah, 'cause I right now the i if we electrified all vehicles, we d the grid wouldn't handle it. And so I think we're kind of s pushing the problem. ⁓ but we'll see. We'll see what what happens with that. Jim Filter: Yeah, I think the other on both sides of the equation, the the capacity of electricity as well as the demand that over time you start to look at the consumption of electricity and you'll start to you know moderate ⁓ you know, what

am I really going to use AI for and how do you make AI more efficient so not everything has to go to a data center. Chris Caplice: And and that's happening already. The cost per token is dropping dramatically. You get it's funny when things come out, some people like Chicken Little will say, you know, ⁓ if you they do the math assuming that nothing improves and you know, all energy in the world are gonna be used to do AI. ⁓ and it's just, you know, it's w the beautiful thing about the US and other economies like this is they're constantly looking for better ways to do it. And the cost per token is dramatically dropping. And they're we're just scratching the surface. Again, this is three years old. Jim Filter: Right. Chris Caplice: Four years old. It's shocking. Jim Filter: Yeah, the the counter to that might be that, you know, those those companies are not making money with the tokenization. So at a certain point they've they will have to increase to you know, they're they're lowering it to g increase adoption. Will they increase it later when they have you hooked and you've already moved off of it? So I I think the way that you structure AI make sure that your your discipline and implementation is very important. Chris Caplice: Right. So talking about EVs, we g also also have to talk about AVs, right? So autonomous vehicles, we're seeing some pilots still going, and I guess ⁓ re read about Pepsi doing some and and d usually in the southwest of the United States where it's flat, dry, regulatory environments friendly. What do you what what what's Schneider's take on autonomous vehicles? Jim Filter: Yes. Yeah. Yeah, well there's still you know, some technical issues that have to be You know, we need to have ⁓ the chassis that has redundant systems ⁓ that hasn't been built out yet and then that same company has to also be very effective in terms of mapping new locations. ⁓ but you know every challenge these A B companies ⁓ and we've worked with both Torque and Aurora, ⁓ they've been able to overcome each one of those and and very quickly. So I believe that we're gonna continue to go down that path. And address each one of the technical issues, but there's still some adaptive issues out there. So if you ask me what do you what do I think it looks like 20 years from now, very easy to say, yeah, likely we're gonna have lots of A-Bs. But I don't think the path between here and there is a straight line. I think we're you know going to see a little bit of a sine wave and ⁓ adoption that There's gonna be some places that it works and doesn't work until you get to a spot where eventually you know, all of those adaptive issues, ⁓ especially being commercially viable, ⁓ come into play. ⁓ Chris Caplice: Yeah. I I just had a a podcast with Mike Roth from NACFEE, the ⁓ North American ⁓ I'm gonna get the acronym wrong. Freight of fish carrier freight efficiency, I wanna say. And he called the messy middle, the transition from where internal combustion engines to

fifty and he said fifty years. I was shocked at that, that eventually batteries will probably win. Maybe. Jim Filter: Yeah. Chris Caplice: ⁓ but in between that there's a bunch of options and we shouldn't pick our option for each of those. Do you see the same thing happening for A Vs? That of you know, fifty years from now when we're all retired and all this, do you think it'll be what do you think that state will be? Jim Filter: Yeah. Yeah, and well and this messy middle in beginning, there's there's configurations that'll fit very well. You know, you think about an LTL or parso, those line halt shipments. I'm going the same two points, it's it's balanced both directions, and and you can find opportunities to be able to execute that ⁓ you would ex expect to be fairly efficiently. ⁓ but Chris Caplice: Sure. Right. Jim Filter: You know, long term if we go up fifty years, yes. I I think we will we'll get to a generation that eventually looks around and says, I feel safer that there's a computer making the decision than a human making a decision behind the wheel. We're not at that spot, nowhere close to it. I and you know, you think about what's going on with trains today. you know, they have positive train control. So if something happens inside that locomotive, the positive train control is taking Chris Caplice: Right, right. Jim Filter: over, but they are mandated to have two people inside of every train, despite the fact that the real people making decisions are back at those headquarter locations or executing all the switches and all the turns. ⁓ So I I think, you know, until you get to a generation that says, you know, I think it's more important that that we execute safely and all the other benefits here, ⁓ that's where we're gonna be this messy middle ⁓ working through this. Chris Caplice: Sure. So train consists and and how that's evolved over time. ⁓ the last Coleman was here up until what, the 80s? So ⁓ that's a whole nother podcast that we're not going to go into. ⁓ but ⁓ yeah, it's it's interesting to see what what's gonna happen long term. Let me ask you just a kind of an open-ended question. How many years in the future, how many generations forward where people will say, I can't believe people drove their own cars? Jim Filter: Yeah. Yeah, yeah. Yeah. Chris Caplice: Just like we can't say, I can't believe people riding horses going to going to Jim Filter: Yeah. Well you talk about, you know, people that are coming out of college right now, ⁓ how often they're looking at, you know, their own decisions, what they came up with versus what AI told them. And ⁓ you know Chris Caplice: Yeah. Yeah. Jim Filter: same time right now they're they're experiencing this and they see that it doesn't always make the right decision. And so I think this generation that's coming in, they're that first one that is a little bit more balanced. It's maybe the generation after that that is even more so and believing in the concept. Chris Caplice: Yeah. No, that's I think the critical thinking is a skill that's not going to go away because it's I used to have to, you know, do things by hand and all this stuff and that's gone. But the idea of getting an answer quickly now, that's that's that's table stakes. Table stakes. But the question is what do you do with it? So we'll see how that evolves. But let me ask you one more question, then I'll let you get back to being CEO. What do you want the sixth CEO of Schneider to say about your tenure? Jim Filter: Yeah. Yeah. ⁓ well that's a great question and you know I I love how your your questions are you know you really dive into these but despite that I'm gonna reframe this a little bit of what what is the what is the fifth CEO gonna say about the fourth CEO? So let me just start with that. And you know when I look at Mark's tenure year, ⁓ what he's done in terms of being able to look at the environment and see changes before they were actually happening. Chris Caplice: Okay. You're allowed to do that. You have a license. ⁓ okay. Sure. Yep, yep. Mm. Jim Filter: And find ways that we could adapt this company. You mentioned one which was dedicated, that in his tenure we switched from being 30% dedicated to 70% dedicated in our truckload. We talked about the BEVs, made a big bet saying, look, sustainability, it's not going to be a straight line adoption. It's what our customers really want now, but we want to have this option because it's not going to go away. It's a long-term trend with Chris Caplice: Yeah. Jim Filter: little bit of cyclicality in the middle, I wanna make sure that we're out in front of that. And so he did it in a disciplined way so that we're generating return. And then just looking at opportunity for acquisitions in this industry, seeing that, wow, this is really right, but we've got to get better at doing it. So it's not just run out there and do it, but let's figure out a way to do it better. And you know, we've we changed a lot of how we're executed and now we've successfully done three of those. At the same time, he's really You know, you asked about what's changed. What hasn't changed is relationships and investing in people. And so he made investments in people, whether it's customers, it's investors, and obviously all the people here, not just me, but very deeply in this organization, because of how he's cared about people and and their development and about this company. And so, you know, that's that's what I have to say about Mark and I I guess I would hope that, you know, someday the six CEO would have that to say about me. Chris Caplice: Hopefully not for a long, long time. We'll we'll see how that goes. All right. Well, Jim, thank you so much for taking time out of your schedule. I know you're scarce resource right now. You've got a lot on your plate, so I really appreciate it. Thanks a lot. All right. Everyone stay tuned for the truckload market update. Jim Filter: ⁓ That's right. That's right. Thank you, Chris. Appreciate it.