Don Schneider
He fought deregulation, but thrived under it.
The color orange has become so synonymous with Schneider, the orange and white barrels that line highway construction zones have earned the nickname “Schneider eggs.”
If any trucking company can lay claim to being one of the biggest success stories in the industry, Wisconsin-based Schneider National would be that company. Schneider was the biggest truckload carrier before deregulation, and it came through deregulation successfully to become the largest truckload company in North America today, with $2.9 billion in revenues in 2003.
While chairman Don Schneider – the man responsible for so much of the growth – is not as involved in the day-to-day duties of the company as he used to be, it hasn’t slowed the firm’s growth. In the next 10 years, the goal of the privately owned fleet is to become a $10-billion organization.
And it all started with one truck back at the dawn of the regulatory period.
Schneider is named after Don’s father, Al, who founded the company in 1935. Al Schneider, who never finished grade school, sold the family car to buy his first truck, then went to work as an owner-operator for Bins Transfer & Storage.
By the late ’30s, he bought the company and changed the name to Schneider Transport & Storage, moving the office to a building once used as a stable. (In 1944 the company quit storing household goods, but the name storage wasn’t dropped until the 1960s.)
The company had some ICC authority for intrastate Wisconsin, some in Illinois and some in Minnesota, hauling paper products and foodstuffs.
In 1958, Schneider received its first interstate authority from the Interstate Commerce Commission, shipping for Proctor and Gamble from its plant in Green Bay, Wis., to another P&G facility in Cheboygan, Mich.
When Don joined his dad’s trucking company as manager in 1961, the office staff had grown to five and the company had become an important regional carrier. Al Schneider changed the colors on his trucks from blue and white to the now-famous bright orange.
In a 2002 interview with the Green Bay Press Gazette, Don recalled that his father was a deer hunter, suggesting that may have had something to do with the color change.
“He might have thought about safety, and blue and white doesn’t attract the attention orange does. He was a very pragmatic person,” Don said.
Now the color has become so synonymous with Schneider, the orange and white barrels that line highway construction zones have earned the nickname “Schneider eggs.”
The ’60s also marked the first decade where the company saw tremendous growth. During this time the company merged with Packer City Transport and Garrison Transport, which added to Schneider’s operating authority. By the end of the decade, Don took over as president of what had become an $80-million company.
In 1975, Schneider Transport installed the first advanced computerized control system for its operations. The move, which was way ahead of the curve compared to what the competition was doing, was not to be the last that would turn heads in the industry.
During the ’70s the company also added tanker trailers to its fleet, creating Schneider Bulk Carriers, as well as established the holding company, Schneider National.
By the late ’70s, Schneider had the largest set of truckload carrier rights in the country. It had four full-time ICC practitioners on staff trying to get authority and protect it. As a result, Schneider could haul almost any general freight to and from any spot in the United States. It was the largest truckload carrier and ranked No. 31 of the largest 50 carriers.
“The only way you could gain market share [in the regulated system] was by competing for authority,” says Bill Matheson, vice president and general manager of Schneider’s truckload services. “So we literally had more attorneys fighting for authority to grow the company than we did salespeople.”
Because of the company’s heavy investment in operating rights, Don Schneider fought to keep regulation.
With a master’s degree in economics from Wharton, Don personally understood that the deregulation was going to happen, according to Wayne Lubner, vice president of driver and contractor relations for Schneider.
He said Don had seen the effects of Wisconsin intrastate deregulation in the mid-1970s and knew the industry was going to have to change.
Following deregulation in 1980, the company took off like wildfire. A year later the ICC granted Schneider 49-state authority to carry all commodities, except explosives and bulk.
Lubner, who has been with Schneider for 32 years, says, “I remember a staff meeting where Don said, ‘This window of opportunity goes by just once. If you miss it, it’s gone forever. But if you hit, you have an opportunity to grow. We are going to hit it!’ ”
Nevertheless, the first years under deregulation were brutal, Lubner recalls. “Every week we’d see some of the most venerable companies in the industry going bankrupt. We had a 30% freefall in rates the first three years.”
To survive, the company cut pay – drivers and staff – improved miles per gallon, and slowed the fleet down. “In essence, we looked at every item in the income statement,” Lubner says. “But more importantly, Don kept the employees informed and asked for their help. We even changed the name ‘employees’ to ‘associates.’ Everyone in Green Bay knew Don’s vision – we would make it through this. Deregulation would not be an insurmountable obstacle.”
Schneider grew rapidly in the years following deregulation by turning regional relationships into national ones. For instance, says Matheson, with Proctor & Gamble – one of its biggest customers – “instead of having a relationship out of a single mill or several mills within a region, we were able to take it to a national level from a service perspective, and that allowed us to grow.”
In 1984 Schneider purchased International Transport of Minnesota, the largest flatbed and heavy hauler at the time. Schneider National Carriers was formed a year later by joining all of the separate business units purchased in the 1970s and 1980s.
The move officially divided the company operations into union – with Schneider Transport – and non-union, with SNC.
Even before deregulation, it was becoming apparent that the company would have to make changes when it came to its labor force. “It was very clear that a truckload union carrier was not going to be able to compete in the marketplace,” Matheson says.
Technology was another important factor in being able to compete, Schneider believed.
“Don Schneider is a visionary who understood that technology could make it all happen,” Lubner says. “His vision was to be on the leading edge of technology.”
In 1986 Schneider National took what was considered a radical step at the time, becoming the first trucking operation to install two-way satellite communications systems in all its trucks.
“It was really our belief, because our assets operate on an irregular route basis, having visibility to the assets was paramount in order to provide a superior level of service,” Matheson says. “Shippers wanted to know where the freight was and the status of it. Also, it was a more effective and efficienct way to communicate with our drivers.”
In fact, Lubner recalls, Don Schneider saw driver communication as perhaps the most important facet of the satellite system. “I remember Don saying, ‘I want drivers off those pay phones.’ Don didn’t see it as a cost center, but as a tool that would allow Schneider to scale the business, communicate with drivers, track loads (not drivers), and support the customer.”
Schneider’s bold move was greeted with mixed reaction in the trucking industry.
“Some were hoping we could lead and learn so they could shortly follow, while others were highly skeptical,” Matheson says. The final result, he said, was a big dividend.
“Our belief was – from a productivity standpoint and from a service perspective – we could create a breakthrough, and ultimately it did,” he said.
Such increases in productivity led Schneider to get authority to haul into some Canadian provinces in 1989, and in 1992 the company hit the $1-billion revenue mark for the first time. Four years later the company surpassed $2 billion in revenues.
Despite Schneider’s early adoption of technology such as satellite communications, the company was one of the last major holdouts when it came to converting its fleet from cabovers to conventional tractors. Don Schneider was quoted as saying he would switch to conventionals “when hell freezes over.”
Finally in 1994, Schneider realized it was time for a change.
“The driver situation was at a point to where if we were going to compete for the best drivers in the industry, we were going to have to have equipment that was competitive from a driver attractiveness standpoint,” Matheson says. “Also, few OEMs were investing in cabover products any more, and they weren’t going to continue to produce a competitive product just for one customer.”
While many of the largest carriers in the United States are publicly held companies, Schneider remains private. There are no plans to change that. Company officials believe being privately held gives the company a competitive advantage on a couple of fronts.
“The first is that we believe we are able to make decisions with the best interest of the organization – and not for shareholders putting pressure on the organization. That can lead to decisions that may not be best for the long-term interests of the company,” Matheson says. “Additionally, we believe there’s an advantage of having the rest of the industry wondering how we are performing.”
While many find it unusual that Schneider remains a privately held company, a more recent development surprised even more people.
In 2002 Don Schneider, now in his late 60s, was replaced as president and CEO by Christopher Lofgren. Lofgren had spent more than 10 years with the company, joining as vice president of engineering and systems at the logistics unit, and previously served as chief information officer and COO. Don has retained the title of chairman of the board.
The decision was made by the company’s independent board of directors, first appointed by Don to look after the best interests of the company.
“He [Don] is less involved in the day-to-day activities of the organization, but Don has just had tremendous stewardship for the organization in the sense he has prepared it over a period of many years to pass the baton to Chris Lofgren,” Matheson says.
Don Schneider’s thinking for the future hasn’t changed one bit, Matheson says. “He clearly has aspirations for the organization to be here forever and he makes sure we continue to grow and provide value.”
By 2015, the company plans to be a $10-billion organization with an even broader portfolio of services than it has today. “We will be heavily involved in international business with freight, and that’s going to be a major growth driver for us,” Matheson said.
So far the company is well on the way to meeting that goal. In late 2004, Forbes magazine ranked Schneider National as the nation’s 63rd largest privately held company.
Even with such clear-cut goals and growth, Matheson says, Schneider – as well as the rest of the truckload industry – still needs to address a bigger challenge if they want to succeed.
“Clearly the truckload industry is going to have to be much more competitive in the employment marketplace if we are going to attract drivers who are willing to stay in the industry,” he says. “We have an obligation to see the best people are seated in those trucks. This industry is just going to have to pay more to get the quality of drivers in order to grow and meet the needs of shippers.”
That, he says, will allow Schneider to fulfill its mission set forth by Don Schneider: “We are safe, courteous, hustling associates who create solutions that excite our customers.”
— Evan Lockridge
