In It For The Long Haul

Von Todd Datz

Then there´s that little issue of the economy.

Like many industries, trucking has been slammed by thedownturn. Higher fuel prices hit where it hurts most - atthe pump, the lifeblood of a transportation company. Theslowdown in manufacturing has led to fewer shipments,another blow to truckers. Insurance costs have risen. Andused truck values have recently declined in theneighbourhood of 30 per cent.

Schneider doesn´t have it nearly as bad as others in theindustry, especially smaller companies, which suffer more ina sour climate. "This is a marketplace where size matters,"says A.G. Edwards´ Broughton. "You buy trucks cheaper andfuel cheaper." He also notes Schneider´s high level of lanedensity, which means that once a trucker delivers a load,there´s a greater chance the trucker´s next load isnearby. As he explains, "100 trucks chasing 100 loadsnationwide are worse off than 1,000 trucks chasing 1,000loads."

Higher levels of lane density lead to higher levels of assetutilization, which gives large players like Schneider a legup in the 400,000 company-strong (or weak, as the case maybe) trucking industry. "Last year more trucking companiesfiled for bankruptcy than in any other year in the last 10or 11," Arves says, adding that this year looks nobetter. There is a silver lining in those dark numbers forSchneider, however. "It takes a lot of excess capacity, ifyou will, out of the industry," Arves notes.

But even well-positioned companies such as Schneider can´tafford to sit back and wait for the upturn. It´s pursuing anaggressive cost-cutting strategy, looking to save US$50million this year. It´s also cutting its purchases in halfand being more conservative in its growth plans. Technologyspending is also staying flat compared with last year´sspending. But has Schneider changed its view on the benefitstechnology brings to the table? Absolutely not.

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