Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership, and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome Inside the Ice House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
The only question I hear as often as, can I ring the New York Stock Exchange trading floor bell, is the related one to this, how does the exchange actually decide who rings the bell? Well, the answer is we don't. Rather, we offer companies and other organizations the privilege of opening and closing the markets. We set the parameters on how many people can be on the podium, 14 in case you're wondering. It's really a space and a safety issue. But we leave the most important decision up to the bell-ringing group.
As we discussed way back in episode 122, the leaders of Uber, when it finally went public, chose its first intern, Austin Geidt, to do the honors for their listing ceremony. Typically, the bell-ringer for a high profile IPO is the founder or CEO of their respective organization. One exception to that is the favorite bell memory of my colleague, the executive producer of this show, Pete Asch, back in April 2017, a few months before I arrived here at the NYC, Schneider National, the company behind the 10,000 or so orange long-haul trucks that crisscross the country celebrated its initial public offering. Members of the Schneider family, it's then CEO Chris Lofgren and senior executives were all in the podium, but none of them rang the bell.
Instead, when it came time to announce the company's listing on the New York Stock Exchange, Schneider driver Bob Wyatt pressed the button and safely opened the markets. It's the most high-profile moment of his career, which spanned over 45 years and over five million miles across North American highways behind the wheel for Schneider.
Notably, as he informed everyone he spoke to that day, those feats were enshrined on his haul of fame plaque as safe years driving. Haul spelled H-A-U-L if you were wondering. When we went back to look up Bob ahead of this podcast, we were saddened see that he passed away in 2019, just two years after he left his mark here on our trading floor and on all of Wall Street with that long-haul trucker's contented smile.
His obituary on the Schneider website captures the essence of what we all imagine is the figure of an old-school trucker. The obituary said. "For those lucky enough to know Bob, they can confirm that he had uncompromising integrity. He was as tough as nails and his work ethic was unsurpassed. Like a modern cowboy, he was a mix of seeming opposites, strong yet kind, hardworking yet fun-loving, solitary, yet social. Our guest today, Mark Rourke was also on the bell podium for that historic day and has now returned to the New York Stock Exchange legendary veteran of his company. He's been with Schneider since 1987, but for the last five years has been in the company's driver's seat as its CEO. Our conversation with Mark Rourke on Schneider National's evolution, the technology driving the industry and how the future is safer, greener and brighter for drivers, clients, and investors. That's all coming up right after this.
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Josh King:
Our guest today, Mark Rourke is the CEO and president of Schneider National. That's NYSE ticker symbol, SNDR. Joined Schneider in 1987 as a service team leader and over his tenure's held a variety of leadership roles including COO, president of truckload services and general manager of Schneider Transportation Management. Mark serves on the board of the Green Bay Packers, the Shift Group and the Trucking Alliance. Welcome inside the Ice House, Mark.
Mark Rourke:
Great to be here. Thank you.
Josh King:
So how did Bob capture what the entire company wanted to share with the market that morning, that IPO that I talked about?
Mark Rourke:
Well, it just speaks to the culture of the organization that really does start with the folks that touch our customers every day. And Bob was such a unique and special person you didn't mention in that we actually had to get a waiver so he can wear his jeans and his jacket in, not in a suit and tie all. He was quite worried about that that day, but he was outstanding and we miss him today.
Josh King:
Mark, you began your career in 1987 when the company was still helm by Don Schneider, the son of Schneider's founder Al Schneider. I want to hear from him just with a little clip.
Speaker 4:
Think of all the people in the world and especially in North America that we're helping to live better. When you go to the store and on the shelf you come to the cereals and we had done some very creative things and as a result that price is more in line. Isn't that as valuable to helping the citizens of North America because they are going to get a better value in their money will go further.
Josh King:
Better value in the store shelves. Tell me about this family business that began with One Truck 1935 made its first interstate trip in 1958 for Proctor and Gamble. That's our NYSE ticker symbol, P&G.
Mark Rourke:
Yeah, really it's just an American success story. Our founder sold the family station wagon to buy a truck, wanted to help serve the paper and beer industry in Wisconsin to sit here 88 years later. Representing that dream is both surreal, but it's also a tremendous honor.
Josh King:
So the paper industry in Wisconsin, what did that industry need and what was his solution?
Mark Rourke:
The industry was taking over in Wisconsin because of the waterways and if you look up and down and still today up and down the Fox Valley paper mills are up and down the rivers and the lakes and it was just a key input to the process. And so when I started with the company back in 1987, our biggest customers were big paper and we would take it to the publishers out east magazines and paper-
Josh King:
The huge spools that would go on the printing presses.
Mark Rourke:
Yeah. The parent roles I think they were called. And obviously the internet age and the digital age changed that industry dramatically and it's more of a specialty paper industry today, so it's a much, much smaller part of what we do. But it was the dominant industry in Wisconsin and it was the dominant industry for what we served.
Josh King:
Don was a driving force in the company's embracing technology and also navigating the impact of the Motor Carrier Act 1980. You said recently, I'm going to quote you here. "At one point we had more lawyers than we had salespeople" and not quite the image that I had growing up in trucking, which is less legal and more of a action movie. Just want to hear a little clip.
So Mark, I have this dear friend named Mort Engelberg, Hollywood producer who signed up Burt Reynolds and Sally Field to Star in the original Smokey and the Bandit. How did the decade after Smokey and the Bandit change trucking and what was your introduction to the business?
Mark Rourke:
Well really what happened is that whole deregulation and you moved from having to have authority or have you heard say that you could move on a lane for a certain commodity to you competed on your price, you competed on your service and your capability and that really unlocked the whole industry and Don's visionary to go out and get almost like an Oklahoma land grab. So how much share can we get? How fast can we grow? How many customers can we serve? And at the end of the day, if we do that well, we'll be relevant to our customers, we'll be relevant to our suppliers and we'll be able to grow this business. And that's exactly what happened and that's how I joined.
Akron, Ohio was the first facility that was outside the state of Wisconsin. It was halfway between New Jersey and Wisconsin. So when we were taking that paper out or at the time even I think meat we would take out occasionally, it was absolutely halfway in between. So it was the perfect gateway.
Josh King:
I visited Akron at one point to visit the old Jeep factory. You attended University of Akron. Did you grow up in Ohio and how did you end up 25 miles west in Seville working for Schneider?
Mark Rourke:
So I grew up there. Transportation was always big in Ohio. I think because of that gateway feature I could always kind of look to that as a potential career. But after I graduated that's when this whole deregulation really started to catch fire in the trucking industry and the rest is history I guess.
Josh King:
When in your tenure with Schneider did you end up moving to Green Bay and how did that community, the smallest to support a NFL team shape how the company operates?
Mark Rourke:
Well, it's still a Midwestern, I grew up in the Midwest and there's good Midwestern values and a great place to raise a family in Green Bay. And so it was a good transition for us. It was not always easy as a young person making that change, but looking back I couldn't be more pleased and it really does, the Green Bay Packers just represent that work ethic of the town and the connection they have to the community. As I've had a chance to be a board member now, I could really see how genuine and authentic that is, how the decisions that they make gets made through the lens of the community as well. It's part of the decision-making process and so it's a very unique situation where you could have 200,000 people in that entire Green Bay and metro area. 80,000 of them could be in that stadium on a given Sunday. It's amazing.
Josh King:
Paint a picture of that room, that boardroom and the people around the table and how they end up getting there. What's the process for picking a Mark Rourke or someone else to say, look, we want a representative sample of this community that is going to supervise the product that gets put on Lambeau Field?
Mark Rourke:
Yeah, it's a small community and the team is such in the fabric of the community and so they want folks that have leadership positions to help them represent that they're a very professional organization. And so we're on the periphery, clearly we're not in the football operations obviously and very active in the foundation and supporting charities and the local community leaders help them really think through and manage that process.
Josh King:
As you talk to your colleagues on the board and watch the league develop, what's your sort of state of the league thoughts as you run this unique organization in a league of 31 other sort of billionaire single owners?
Mark Rourke:
Well, I'm just so impressed at how much the Green Bay Packer leadership focuses on the fan experience, how they run all the operations to be the very best and they really do live that Lombardi creed. And so I don't get involved in so much of the season elements and I'm very new to the process and so I get the pleasure of seeing sales and marketing and all the unique things that they're doing to digitize their world just like we are starting to digitize ours.
Josh King:
Well I'm not going to let you off the hook completely about that on-field product. Where do you think you'll be playing next year?
Mark Rourke:
That's a million dollar or I guess that's maybe a $60 million question, but I know he will make, he's in the process of making that decision and obviously has great support in the community and we'll sit back and wait until to hear like everybody else.
Josh King:
So with that, let's sort of get back to the day job at Schneider. Over time, in your time with the company, you got to do a little bit of everything. As an article last year described your career, how did Schneider grow and evolve and how did those decades working across every aspect of the company prepare you to move into that COO role back in 2015?
Mark Rourke:
You know what I give Don so much credit for is over the horizon of the company. He never was afraid to creatively deconstruct the company and he always focused on the customer and as opposed to fighting change, he embraced change in how that could benefit the company. So for example, when we grew our intermodal offering, it was very destructive and very much a changing how we'd operate our entire truck operations.
Josh King:
For listeners, what's an intermodal offer?
Mark Rourke:
Well that's when we partner with the trains, the class one railroads where we'll pick up the container and shovel over to the rail yard and they'll do the middle mile, most of the long length of haul and then at the end we'll do the final mile into the customer. But that was what we used to do with our over the road truck fleet and so highly destructive to what we normally did, but that's where the economy was going, that's where the benefit the customer was going and Don embraced that and today we're a top three intermodal provider and if you hadn't done that, we wouldn't be relevant in that space today. And so with that came opportunity and growth and the ability to not have to leave the company to get different experiences, whether it be around the customer, whether it be around operations. And so you just got a great general manager development path because you've got challenged in different areas and so I'm so blessed to be here 35 years, but I never thought I had to leave to get that development to get those opportunities and so very grateful for that.
Josh King:
While you were Schneider's COO, you led the driver experience initiative, which included what's known as the Schneider Compass. How did tools rate my location, leverage technology and crowdsourcing to improve the driver and overall operational experiences?
Mark Rourke:
Who touches our customers most frequently and most directly is our driver associates. And so how we can best serve them and ultimately give feedback back to the customer to improve their operations is having ways to capture that feedback and challenges or where the issues are directly and so on. Every one of our times that we go into a shipper or a Constantine or a rail yard for that matter, we ask the driver to give us the feedback on four or five dimensions so that if there's an early warning sign that something's not working right, we have an improvement opportunity, we can get at it and improve their experience, improve our efficiency, but also help our customers do a better job serving their customers.
Josh King:
How is that data capture working now? Do they sit with a handheld device and it comes into HQ immediately and gets scrubbed or is it a longer process?
Mark Rourke:
No, it's all real time digitally captured. All of our drivers have tablets that they can take out of the cab in the cab where they do their work and we prompt them up that "Hey, what'd you experience there today"? And in a very few clicks they can give us that feedback and then we capture all of that digitally and put it together for our customers and we look at it internally to say, okay, what's working? What's not working? How do we get better?
Josh King:
What's sort of the average length of a driver's haul and how many hours do they work a day? And the question everyone wants to know who makes a pass of a long haul trucker on the highway or sees them at rest of like, are they sleeping in the back?
Mark Rourke:
Yeah, good many of our folks, probably 60% of our folks are sleeping in the back if they're out over the road for an extended period of time. So it gives them the flexibility of their schedule, what makes sense for them. But our average length of haul across our trucking business is probably, it's about 400 miles. When I started it was 1200 miles. And that really speaks to the impact that the intermodal offering has had on and also how we as consumers want our products quicker. And so the length of hauls have dropped as we put inventory closer and closer to the end consumer.
Josh King:
Is it federal, state or local law that governs how long a driver can be behind the wheel before they have to take a mandated break?
Mark Rourke:
Yeah, there's all federal rules there and now with electronic logging that's all captured. Again, when I started it was all paper and rulers and now it's all captured right off the engine and on electronic device.
Josh King:
According to a bunch of studies, mark us truckers spend over a third of their time behind the wheel idling in lines or parked outside of warehouses. Do those initiatives that you worked on also help alleviate those issues as well in terms of maximizing the efficiency of their time in the truck?
Mark Rourke:
Absolutely. And that's one of our biggest improvement opportunities, not as only as a company but an industry and how we've attacked that is the predominantly what we do is a drop in hook. We're we're not waiting in line to get to a dock to get someone with a forklift to come in and load us. We'd like to put it out in the lot and the customer can get it at their convenience to bring it in so we can turn our driver with another trailer, another load. And that just makes us more efficient and it's more respectful of the time of the driver.
Josh King:
You were in the front seat as COO working with then CEO Chris Lofgren, who I mentioned in the introduction when the company made its decision to do its IPO here in the New York Stock Exchange after 80 years as a private family owned company and nearly spinning off part of the business on the NYSE in 2001, why was it finally time to go public in 2017?
Mark Rourke:
Well, it gives us an opportunity to get access to capital and invest in things that we want to invest in to grow the business. It absolutely accomplished that goal. We're still closely held, we still have heavy family ownership of the organization so we can very much take the long view, but we also have responsibility to shareholders and have to deliver results on a consistent and quarterly basis. And the company has done very, very well since that decision.
Josh King:
Shortly after the IPO. You got the call to lead Schneider starting April, 2019 following Chris's retirement. Now I think that makes you only the fourth president in the company's 88 years. How did that conversation with Chris go and what advice did he give you?
Mark Rourke:
The company takes a session planning very, very seriously. And so we had a chance over a multi-year period to work on the things and be exposed to the items that only you get a chance to do when you're sitting in the CEO chair. And Chris was incredibly gracious and supportive and while you never really know till you get there, I would say the transition for the company was not eventful and which is exactly what you're looking for. And I'm really, really pleased and fortunate to have that two or three year period to learn through that transition.
Josh King:
In the transition, I mean going from Al to Don to Chris to you and suddenly you're public and you come to New York to meet with investors of all people and have to do these things called quarterly calls. Did the management team and approach change at all? Did the culture change at all once you were a public company? You could see the value of the share price go up and down.
Mark Rourke:
That was a very much as our thought process going through this that we didn't want to change the culture of the organization. We don't have a ticker symbol capture in the lobby. That's not what we're about, but it is a change because we have to do things slightly differently, obviously as a public company. But to Don's credit, he had ran the company very much like a public company with an independent board of directors, actually put the entire voting trust into the control of the independent directors so again, that could be have governance and have a company that was built to last beyond him. And so that part of the transition was quite easy cause we were used to running with a outside independent board of directors, the things that you mentioned coming to New York and that's all the things we had to start to build some muscle around, but we're starting to get there.
Josh King:
We talked about the way Bob was in the podium in his jeans and his carhartt jacket. You're sitting across from the table wearing an orange tie, probably reminiscent of the side of the trucks. How did that brand of orange evolve and what's the power of it as those trucks move across the highway?
Mark Rourke:
Yeah, it's very purposeful and Don's thought was, what's the safest color? He's a hunter hunts Wisconsin. So what do you wear when you're out in the woods in Wisconsin? You wear your blaze orange, what's safe around the roads? You always see the orange construction barrels. And so he selected Omaha Orange as the color of the company with the safety culture in mind and it's now everywhere.
Josh King:
So even before going public, Schneider made a lot of high profile acquisitions along its development from Schneider Transport and Storage to the modern Schneider National. And you're here in New York and bankers want to know what you're doing next I suppose, but did going public help the company compete as M&A has heated up across the industry as they've seen more consolidation of your competitors?
Mark Rourke:
Yeah, we think consolidation is a likely outcome or a highly fragmented industry we've made and started to get back into some acquisition targets and had some success in the last year. We've actually did two and we have a strategic intent to grow around dedicated contract services for our customers, which is a long-term contract. We're doing specialty services, it's not in irregular route set up.
Every day we're running the similar routes and providing perhaps some value added services along that besides just driving from A to B. And that's really one of our strategic growth drivers and had the fortune to find a company in Ohio again, believe it or not, MLS. And I think it was December 31st, about 10 o'clock at night when that finally came down. So we didn't have the greatest holiday but couldn't be happier sitting here a year later and how well that's gone and how that well integrated into our business. And we're looking for more.
Josh King:
Looking for more. So after the break, Mark Rourke, the CEO of Schneider National and I are going to talk about the technology, demographics and trends that are shaping the industry today and into the future. And whether looking for more includes expansion in any of those areas. That's all coming up right after this.
Speaker 5:
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Josh King:
Welcome back. Before the break, I was talking to Mark Rourke, the CEO of Schneider National, about his career and the development of the company over the past 88 years. So Mark Schneider's committed to reducing CO2 per mile emissions by 7.5% by 2025, 60% by 2035. In late January, schneider got its first shipment of 100 battery electric trucks from Daimler Truck North America. How many will the fleet have an operation by the end of 2023? What impact do you think EV trucks are going to have on the company's long-term efforts to decrease its carbon footprint?
Mark Rourke:
Yeah, we'll have a hundred operating by the end of the year. We just started taking delivery here in January and those will be deployed out in Southern California and it's absolutely imperative to, our ability to get to 60% reduction is zero emission vehicles. The other big emission reduction opportunity is converting over the road to intermodal and between those two, those are how we're going to get after that carbon emission goals that we've set out for ourselves.
Josh King:
Do you spend a lot of time invaders factories and learning more about this stuff and sort of paint a picture for our listeners about where you see the whole industry either maybe 10 years out as you see moving up a hill, that 18 wheeler throwing off a lot of smoke as its engine revs up to get up to altitude?
Mark Rourke:
It is really exciting. There are great vehicles to drive. If you've been in an electric car, it's very, very similar. There's high efficiency of energy that gets right to the wheels and so it drives like a car, it drives up a hill. So you'll get out of that starting spot a lot quicker. So people will be adjusting to that. So our drivers love them. What we have to get better though is range over time and cost over time. Right now in a diesel equivalent, we could go 1100, 1200 miles in between fuelings, we can go about 200 miles in between charges. And so it's a much different operation and you have to apply that in operations that can deal with that constraint.
Josh King:
You see the range getting longer or do you see the charging infrastructure getting better or both?
Mark Rourke:
Yeah, I think you'll see battery technology advanced, which will help with range and perhaps will wait because that's the other big constraint. A lot of batteries have a lot of weight, which means less cargo. But the number one issue that we have as a country is the infrastructure. How do you get the alternative energy, whether it be hydrogen, whether it be electric, distributed in the amount that you need to the locations that you need to take advantage of that. And that's been our big learning with three years in the process right now, just on the infrastructure for charging in our Southern California fleet, which is where those first hundred are going. And that's taken more time and more effort. And again, I think people will get better at that over time, but that to me is the biggest constraint for the country right now.
Josh King:
The other aspect that you talked about in the sustainability area, the sort of transition to more intermodal, talk about one of your partners, specifically Union Pacific NYSE ticker symbol UNP, their efforts to reduce carbon emissions and streamline operations within and across the nation's borders.
Mark Rourke:
Yeah, we just recently moved our Western partner to the UP. We did that in effective here in January. They did a terrific job. Our whole planning team were quite excited because they offer more lane pairs, which allows us to convert more that over the road for emission reduction. They also have more departures frequently throughout the week. And so that fits very well with our goal of doubling intermodal by 2030. And they have very efficient, which is also an important connections with our eastern partner, which is the CSX. And so we put all that together and we said, Hey, the UP relationship and what they can do is paramount to our success and our goal of doubling intermodal by 2030.
Josh King:
For the uninitiated like me, thinking about how you at Schneider choose your partners and thinking about the CSX network, call it in the eastern part of the country and Union Pacific and the West, what's the friction in terms of changing a partner? You must have gone through a big process to say Union Pacific offers a lot of roots, a lot of different places that we can build our intermodal business, but how tough is that decision? What's involved in doing that?
Mark Rourke:
It's difficult decision because it's disruptive, right? You're changing locations, you're changing facilities, you're changing technology. When you're integrated with a class one railroad, you're deeply integrated. And so to disconnect that and take that to a new, you have to be really thoughtful about that and you have to be convinced that that's better for your business. And we had a good partner before. We just feel this is the best for our business long term and we're off to a great start.
Josh King:
What's the customer benefit in terms of working with a CSX and a UP and a Schneider to increase my operations and efficiency if I'm Best Buy?
Mark Rourke:
Well, everybody has their best routes based upon their connections. And so when we go out and talk to our customers, we're really talking about the strengths that we have from originative destination B, and so that's paramount cause we want to be fairly close on both ends to be most efficient. But we also offer with that exchange that you get an economic benefit of taking advantage of a double stack container on the rail, which is more efficient and more cost effective, and you also have less fuel expounded in that transaction. So there's savings in a couple different ways for the customer and then you throw the emissions on top of it. You've got really a very strong value proposition for those trying to reduce that.
Josh King:
Back in July of 2022, you talked about the return of seasonality to the trucking industry and the impact it was having across the freight market on prices and demand. What does that mean for the company's continued growth seasonality?
Mark Rourke:
Well, we're coming off just an unprecedented period, the Covid era, if you will, where we had two years that almost every day was like peak holiday season shipping. And so therefore there really wasn't seasonality where you go through different products at different times of the year or different volumes or different flows. It was all the same every day. It was almost groundhog day and so very challenging period for our customers, very challenging for us to be able to do everything our customers wanted them to do us to do for them. And now as we're starting to get back to some level of normalcy, we're seeing the seasonality start to come back into end of the business.
So generally if you're going to get hot patio furniture delivered into a home improvement store, there's a certain time of year that comes in and you have a certain, usually through the imports, through our intermodal offering then into our DC to store. So you have these typical patterns that you can plan for. When Covid kind of threw all that out the window, it was like whenever people could get the product, they would get it and it didn't really matter what time of year it was and everything was just off its normal cadence. And so we're starting now, get back to what we would consider more normal planning.
Josh King:
Had a little side hustle for a couple years of making seltzer. We produced it in upstate New York, put it in a warehouse, really wanted to sell it on Amazon. Learned water is not a very good thing to sell through Amazon, but nevertheless, learned a little bit about their processes where their inventory of our stuff running low, you press a button and magically a truck appears at our warehouse, picks it up and brings it to an Amazon distribution center. You've now seen from 87 at the beginning of your tenure at Schneider to the present how disruptive Amazon has been to so many different types of industries and moving goods from their origin to market to the customer's front door. Give me a little primer on how you deal with that kind of disruption in what Amazon is up to.
Mark Rourke:
Well, I think they've changed consumer expectation for everybody. And so as you would expect, other retailers and other businesses haven't stood still and they've made the adjustments to compete, but the demands for speed and the demands for where inventory is one of the reasons the average length the hall is shrunk so much is because we're putting inventory in more places to respond to that expectation consumers have, and there's various strategies.
There's the home delivery strategy that you mentioned there with someone like Amazon, but there's also buy online pickup in store, and there's all kinds of other ways that other retailers can take their brick and mortar advantage to apply against that solution. And so we're there to help them regardless of what their strategy is because the store can be a powerful tool for both in-person buying and also for buying online.
Josh King:
Talking about strategies, Mark, we talked in the first half of the show how during your tenure as COO, you leveraged technology to help drivers, but in the last year you've launched Schneider Freight Power. What does the platform offer bulk shippers and why is Schneider best positioned to help make this technology play?
Mark Rourke:
B2B is a little behind what we've experienced as consumers in the B2C world. And so what we're doing with freight power for shipper and for carrier is a way to just to digitally connect. And so you can see status, you can get a price, you can do everything from your phone to your mobile and not have to pick up the phone and call somebody as our younger people are learning, we'd much rather do interactions that way, but business is starting to go that way. And so that's what we're after with freight power for shipper and carrier is just to find people that want to operate in a different way and do so in a way that's very seamless and easy for them to do it.
Josh King:
Schneider's involved in a number of projects like this one that was being reported by NBC's Jake Ward. Let's take a listen.
Speaker 6:
Imagine looking in your rear view mirror and seeing this 70,000 pound 18 wheeler behind you without anyone at the wheel. Well, we are pretty much there because this truck is driving itself. Aurora Innovation already has autonomous trucks like this one cruising the highway just with a babysitter at the wheel.
At Aurora, we're building a self-driving technology.
Sensors track what's going on around the truck and an onboard computer not only drives, it does so as politely as possible so it won't freak out anyone else on the road.
It's a combination of hardware, software, and data services that allows us essentially operate vehicles autonomously.
These trucks all share a common robot brain and that brain has driven 5 million real world miles. Every time one truck drives, they all get smarter.
Josh King:
I don't know if Bob Wyatt would want to be known as a babysitter behind the wheel, Mark. But in addition to Aurora, you've announced projects with companies like Torque and Too Simple. How is Schneider shaping a more autonomous trucking future and how do you think autonomous trucking is going to shape the future?
Mark Rourke:
The technology is advancing and what's really neat about it's helping in today's world, even though it's not quite ready for full autonomous and the industry is working towards that, but there's benefits along the way. It's how collision mitigation got to the point where that could be on the trucks today and help drivers be safer. And so as we continue to adopt in the step towards autonomy, the industry will be safer as a result. So there's benefits along that journey.
But ultimately what we think is the most likely outcome it'll look more like the intermodal product offering. Maybe we'll have a driver pick up first mile where it's easier to do with a driver because of all the mapping requirements for autonomous and maybe the exit to exit and the highway could be done autonomously and we'll drop it at an exit and then have a driver do the final miles. So that's one such scenario that could A, benefit the industry but also benefit the driver. Those are very attractive positions. They can be home every day and for those who want to have a more-
Josh King:
Sort of more like a harbor pilot.
Mark Rourke:
Yeah, very much so. We're not there yet. We got probably years of development to get, but there's learning along that path and we'll continue to be at the forefront to learn how to best integrate that into our operations when the time is ready.
Josh King:
It's going to take a while to get there, and at least for the next couple years, you're going to need to continue to find the drivers that are going to fill what's expected to be a 160,000 person shortfall for the industry. How are you leveraging social media through TikTok videos like this to attract the new talent that you need?
Speaker 7:
My name is Wes we on and I'm on the Schneider Ambassador team. While I started my driving career back in 1990. I've been with Schneider since 1999 and I've been a training engineer since 2000. Because of Schneider's training, I've walked over 2.4 million accident-free miles, and I'm also a member of the Schneider Hall of Fame with over 23 consecutive years of safe driving. Now I'm a teacher at heart, so my passion is in helping others gain the skills they need for their career. My goal here is to demonstrate that Schneider's core values, safety, integrity, respect, and excellence can help you to be a safe and successful driver as well. I hope to see you out there, motor safe.
Josh King:
The work of finding and creating and molding a Schneider driver. How do you do it?
Mark Rourke:
Yeah, it's one of the most rewarding things that we get a chance to do is see someone just thrive in their career. And with our brand, we do attract and safety orientated culture, and that's the benefit of that being first and always on how we approach our business and what a great representation that TikTok was. And that's almost exclusively how we reach candidates today. It's all digital, it's through Facebook, it's through Instagram, it's TikTok, that's how we get out and get our message out. And the days of paper applications and newspaper ads, that's not where it's at today. And so those ambassadors are so real and can make it so real. They're our best advertisers.
Josh King:
Profile, what will be a successful driver for Schneider?
Mark Rourke:
We have all walks of life. We have PhDs, we have NASA engineers, and we have folks that came from the manufacturing world that were looking for a better wage, better benefits, more adventure in their life, and we're growing women, which is incredibly important. We're up to 12% of our professional drivers being women. And few years ago that was 6% to 7%. And so the technology and the trucks and the safety orientation's only going to help us do more attracting across a very broad section of the country.
Josh King:
Along that kind of recruiting effort comes sort of changes in the law. People can enter the driving field a lot earlier than it ever before. In June of 2022, you spoke with Wisconsin Public Radio about a pilot project to get more 18 year olds behind the wheel of long haul roots. How is the process to create an apprenticeship program to get high school grads into the field with a 90% first year attrition rate gone?
Mark Rourke:
One of the disadvantages we have as an industry is bridging that gap of an apprenticeship between 18 and 21 coming up. You have to go somewhere else before you're eligible to drive a truck. Conversely, you have to balance that with, as you maybe think when you were 18 years old, and what's the safety risk taking. And so we have to balance the risk of that and our insurance company. So we're still feeling our way through, but something that gives us a chance to connect with younger people earlier in their career we think is a benefit.
Josh King:
So Mark, one of the things that struck me as I was doing my own long haul drive last night and had the opportunity to actually listen to a state of the union rather than focus on the optics and watching it was something that President Biden said, I think is related to the creation of new chip factories in the United States and the jobs that were going to come from it, they could pay $150,000 a year making ships here in the United States. And one of the things he pointed out was like, this is not the kind of a job that requires four years of a college education to be successful at, and yet we are going to be making ships forever, and these are jobs that can last forever.
I would think maybe that the same is true in the truck driving industry where you mentioned the fact that you have PhDs who are behind the wheel, but it's not necessary. What are your thoughts about this culture that does sort of drive the image of success toward graduation from a four year college and what that means versus the reality of modern America where it says you could have a great career and not have to go through that?
Mark Rourke:
I think you hit on it. I think it is a cultural issue that is what success has to look like, and I think there's many paths of success, and I couldn't agree more. There's very noble professions that you can have a very successful career build skills over your lifetime in trucking and interacting with customers and all the technology it takes is one of those careers. And so I think that has to be more in the national discussion about the paths of success. And they all don't lead to a four year university.
Josh King:
Wisconsin is a hearted of machinery and manufacturing. You have your own sort of jobs website where people can sign up to work for Schneider National. Your colleagues have a hundred thousand dollars plus jobs available, and yet sometimes the choices that people make, whether they're going into the retail industry or something else that is not sort of career track, how does that make you feel when you see these really good hands on jobs out there and what do we need to do as a community, a culture, a nation to have people thinking about more career track earlier in their lives?
Mark Rourke:
And you hit on it, there's opportunities in so many facets of the economy for skill building and great careers, hands-on you learned new skills and get paid a very, very handsome wage. And I just don't think that gets into the psyche of the community and of the young person enough. And I think we as in a business community have to bridge those opportunities better than today because there's paths of success far in excess of just going to a four year or a two year college. And so I hear it all the time from my counterparts in the community, whether it's a machinist, whether it's a welder and a hundred thousand dollars positions that they are struggling to get filled and we just have to find a way to bridge that gap because it's a great opportunity.
Josh King:
What's the way to communicate to a 16, 17, 18 year old? Is it directly to them? Is it through their parents? Is it the conversation around the dining room table?
Mark Rourke:
Well, I think it starts in all of the above, and I think our incentive structure with the high schools that are tied to the colleges. We have to have a way to get in and break that cycle a little bit. At least get on even footing to talk about what other opportunities are available for folks. And maybe it is the incentive culture of education that we have to help them see and as a business community, how we can best serve the state and how we can best serve the country.
Josh King:
So getting enough drivers, at least until the industry begins to evolve toward autonomous is one issue, but without the equipment for them to use is another problem facing the industry. In November, you spoke about the difficulty in finding inventory to replace aging fleets. Is this result of the microchip shortages and other supply chain issues that are facing retail vehicles or are there additional barriers to getting large trucks on the road?
Mark Rourke:
Yeah, it's been a challenge really for the last two years, not only on the truck side but the trailing equipment side. So we've been under allocation even as a huge purchaser of equipment every year just because of the scarcity of resources, whether labor to make a trailer or labor to make a truck or as you mentioned, a series of parts issues from around the globe because how tightly the globe is connected relative to the supply chain. And so we don't have as many new trucks as we wanted. We're a little older in our fleet than we want, and so we're going to start knocking that down here as we get into 2023 and 2024, it's still a challenge.
Josh King:
Congress passed the CHIPS Act. President Biden last night at the State of the Union address talked a lot about the emphasis on building and making in America. Presidents have said this for a hundred years. You're a buyer, you go where the equipment is based on what people have and their ability to produce the trucks that you need. What is the state of domestic production versus the international manufacturers?
Mark Rourke:
On the truck side and the trailer side, almost all of that is state side. The componentry though comes from around the world and that's where the challenge has been. But I do think to your point, I think there will be a trend more nearshoring. I think Mexico can be a winner here. I think companies are looking to get their supply chain less risky, which means more domestic production where they can, but those are multi-year efforts that those don't happen overnight. But we do see our customers looking for strategies to shorten that supply chain and take risk out of it.
Josh King:
Talking about overnight as we wrap, we've talked about a lot of topics in our conversation. How are you looking Mark at 2023 and what is keeping you awake at night either out of excitement for what is offered in front of us or concerns that the industry is facing?
Mark Rourke:
Well, we're presently just dealing and getting through some of the excesses that got created through the supply chain issues of Covid and the overhang that inventory had in the country. And so I'll be really interested by the time maybe this comes out, what our retailers' report on their inventory levels here coming up in the first quarter. My sense is that we're getting closer to getting back to a normal replenishment cycle, which we think strength will build from a freight economy standpoint throughout 2023.
Josh King:
You've been there since 1987, you've seen technology evolve. What ways do you look at your screen and say, things are all right, or we got issues here?
Mark Rourke:
This time of year. We also followed those weather channels pretty heavily too, and well, you've been quite fortunate out here, this year. Other parts of the country haven't. So weather can be hurricanes, all those things can really be throw a monkey wrench in what we're trying to do. So we're probably weather junkies first and foremost. Digitally, we know where all our assets are and all of them have either a satellite or a cellular connection that we know what if they're empty, if they're loaded. And so that we can be most efficient because that's what we want to do is take the empty miles and all the inefficiency out be by having the best information possible to make decisions. And so give our team great credit and it's important to run a good operation on behalf of your customer.
Josh King:
Running a good operation on behalf of your customer. That's really all a company can do when it starts its legacy 88 years ago comes public on the New York Stock Exchange in 2017 and prepares it for the future. You've talked about what you see 2023 sort of processing the back load that we've built up over the last couple years through Covid. But sketch for me, Schneider and 10 years from now.
Mark Rourke:
We see ourselves as a growth company. One of the things that we have a terrific legacy as a truckload carrier and we're very, very proud of that. But we're also proud of the fact that half our revenues now and half our earnings are coming from non-traditional services that are much less asset intensive. So we've talked intermodal several times on this podcast, but also our growing logistics and brokerage, we're leveraging and bringing freight together with third party carriers, with our trailer, with their trailer. And that's also a great service to our customers, but it helps us grow our business without having to have a driver in every location and a truck in every location. We can leverage others. And so that's where technology really comes to bear. We would see our company continue to evolve in that way.
Josh King:
Well, I look forward to watching your evolution. Look forward to welcoming you back to the New York Stock Exchange for, I guess in 2027 will be your 10th anniversary of the IPO. Let's do it again, shall we?
Mark Rourke:
Yeah, we should.
Josh King:
Thanks a lot for coming in.
Mark Rourke:
Thanks.
Josh King:
That's our conversation for this week. Our guest was Mark Rourke, the CEO and president of Schneider National. That's NYSE ticker symbol SNDR. If you like what you heard, please rate us an iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, or you want to hear from leaders of listed companies like Mark Rourke of Schneider National, email us at [email protected] or tweet us at icehouse podcast. Our show is produced by Pete Asch with production assistance and editing from Ian Wolf. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information, and do not sponsor, approve or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitution offered to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of clarity.
