Schneider National, Inc. (SNDR) Earnings Call Transcript & Summary

Good morning, everyone. It's Tom Wadewitz from UBS. We have a couple more freight transport presentations today. We -- the presentation now is with Schneider National. It's a pleasure to have them at our conference. We have a fireside chat with the CEO, Mark Rourke; the CFO, Steve Bruffett; and Steve Bindas, who leads the IR team, is on the line as well. So Mark, Steve and Steve, thank you so much for joining us. We appreciate your time. I appreciate you joining us at the conference. So we will run through fireside chat questions. And so I think plenty of topics to cover here.

Mark, why don't we start off with some thoughts in terms of trends in freight? And how -- we've heard from a number of other companies about improvement in May. How have you seen the freight markets develop in the kind of April, May and into early June?

Yes. Tom, thanks for having us. And we'll maybe break some comments up between some of the segments that we serve, both between Truck and Intermodal. But to your question relative to demand levels, it's increasingly clear that April is going to be, at least in our view, kind of the trough coming through the difficult COVID period, and we are seeing sequential improvement in demand in both our -- for our large for-hire Truckload segment as well as Intermodal, although Intermodal is recovering at a lower pitch rate, if you will, and again, largely dry because of the import situation. And also, I think a number of retailers or manufacturers that were shut down through the pandemic are just now getting on the front end of that recovery. And so I think we have some improvement opportunities in front of us because of that. And so the improvement in April to May that we're seeing in volumes isn't so much yet those shutdown portions of the economy. And so maybe a reason for some optimism as we get into June as we start to see more of that activity come online.

The -- I guess the last piece of your comments, you're saying some of the, I guess, shippers that were hurt -- were hit the hardest, had maybe the greatest reduction in activity. Have not yet ramped back up. Is that -- can you expand on that comment a little bit, kind of which shipper groups you are thinking of and perhaps the timing when they may start to put more freight into the market?

Yes, certainly, Tom, as we've disclosed prior in our dedicated fleet business, we had a little over 400, 430 or so units impacted by shutdown activity based upon kind of that what I don't consider a popular designation called nonessential. And we've probably got at the end of May, about 1/3 of that back in some level of start-up. So that's -- again, we expect most of all of that to start to return here in the month of June. So that's 1 representation on the truck side and the nonessential retail and some manufacturing that was shut down that's in our intermodal mix, which is more baked from an overall mix standpoint to "that nonessential category." And so they were impacted more dramatically. And so that improvement or that recovery is still in front of us. And so -- but make no mistake, we need to see the import activity come back to get fully healthy in our Intermodal segment.

So on the dedicated comment, you've had about 1/3 of that 430 units that has -- is back up and running. And you think all of them will be back up and running by the end of the quarter? Is that what you said?

We think we'll have most all of that back at some level, may not be for the whole month of June, but we'll start to see, we think, a pretty strong and full recovery by the time we get into the third quarter.

What about the pipeline on new business that start-up of new contracts have been delayed, have you seen kind of new business come online? Or is there still some of the pipeline that would come on in second half in dedicated?

Yes. The dedicated pipeline is very robust. And so certainly, we had several contracts that for all the right reasons, the customer felt with all the other difficulty and distractions relative to their business and the COVID situation that it made sense to kind of push those out and so we do have -- those dates are firm. And for the most part, we are ready with exact start-up dates to start to get back to a more normal cadence there. And the pipeline for other and new activity is very strong, as strong as we've had in couple of years. So we would expect that we'll start to see most all of that activity start to move through its normal course, and people are back online and working through that.

And so some of that, that you have visibility on the pipeline, you would expect to start-up in third quarter?

Correct.

Yes. Okay. What about on the -- I guess, the truck -- irregular route truck side, have you seen the shippers that have been hit harder, let's say, food service or specialty retail, shippers like that, it sounds like activity delayed in Intermodal, but what about in the irregular route truck? Have you seen that ramp up nicely in May? Or are those shippers still kind of not doing a lot, and that could be a further driver of improvement in freight when you look at June, July?

Yes. I would say perhaps starting a little earlier than some of the Intermodal recovery of those customers just because of the import implications as it relates to Intermodal, but we still have a number of those, very, very good companies, I think we'll be in very solid positions based upon what they do in the market in the second half of the year because of the value proposition, so think of value retail, for example, so I think we're very bullish on their prospects, but they haven't yet even in the month of May had much activity. So again, points to some of the recovery still being in front of us.

And would you expect the store reopenings as you have time for a broader reopening of the store footprint that, that will pretty naturally flow into increased truck activity?

Absolutely. Absolutely. So there's really 2 components of that, Tom, there's the inbound activity that into the DC and then there's the DC to the store activity. So different customers, we play in different elements of that. Some, we play in all of that; some, we play either the inbound side or the outbound side. So -- and that activity, in many cases, has not ramped up in any considerable way yet.

What's your sense of the level of inventory? Is there a lot of inventory in the warehouses? And perhaps there is opportunity to move it to stores? Or are the inventory levels low and you really need to get imports from Asia to come in? Or how -- I'm sure that varies depending on the type of good and et cetera versus nonessential. But how do you think about the level of inventory in the system that's kind of waiting to be moved?

Yes, Tom, it's a little difficult to be specific there because that is very customer specific. But certainly, we had a lot of inbound that was through that process, that stayed stagnant for a good period of time. So it hasn't been processed yet, and some of the customer activity is just getting that inbound starting to get processed. So again, customers are at various elements of that recovery. But I think the good news is that's starting to break loose, and we need the inbound to break loose before it gets to the outbound side and out to the stores.

Right. Okay. What -- the spot market metrics have improved nicely. And in terms of both, I think, load activity as well as showing some tightening. I mean, the market is still probably pretty loose, but some nice improvement off the level of the lows of late April. What do you think that means? Is that kind of a positive in terms of how quickly it's tightened or is that just kind of natural given how low the base was? How do you think about what's happening in spot market? And how meaningful is that to you in terms of the kind of pricing and customer discussions that you have?

Yes. We see spot price really plays in 2 critical elements of our portfolio. And Tom, you're right. It's hardened dramatically from the lows in April and a little bit geography specific, but certainly has improved. We're seeing -- again, we only play in the -- depending upon the cycle, 5% to 8% or so in the spot market on our large for-hire network. But we're seeing much improved opportunities and pricing, it can be much more selective there than certainly coming through the April time frame. And then the second place we see it is in our brokerage business on the capacity purchasing front, and we've seen some fairly solid hardening of the carrier capacity costs through the month of May. And so that compression falls right in line with those trends, which overall is a sign that capacity is tightening. There's some -- obviously some seasonal elements to this as we get into the last month of the quarter and some of the seasonality parts of the supply chain, but all of that is tightening and as we expected it would.

This is Steve. I'd pile on to that particular part of the commentary in that particularly in the spot market, we've all read and talked about what shape of recovery it will be, is it a V, is it a U or some other letter. As it relates to the spot market itself, my personal view is that it will be kind of a sawtooth pattern with some fits and starts as we go through the next couple of quarters. There'll be a lot of activity, but not necessarily in a smooth line as we go through the next couple of quarters. All of while, I think the underlying foundation is a good construct for the second half of the year. So I do think the general trend will be upward, it just may not be in a smooth line.

And is that -- Steve, is that comment with respect to spot rates or MDI or metrics like that? Is that -- that you're referring to in terms of the sawtooth?

I think it would be most evident in that more rapidly adjusting and resetting spot market, but the comment about a good setup for the second half applies across all of the spaces that we serve.

Right. So when we think about seasonality, typically, June is a strong month for freight, arguably one of the strongest. How do you think about the kind of seasonality this year? I mean, do you think that it will just be kind of normal seasonality, June is better than May and you continue some of the momentum? Do you think it's maybe stronger than normal seasonality because you have some of this kind of store reopening tailwind? How do you think that, that will play out?

Tom, my view of that is certainly, we would expect momentum to continue to improve, really, as Steve mentioned, across all of the service offerings, just because of the things that you just mentioned, a combination of improved openings, of the economy across the country, some recovery back on folks who've had minimal activity in the last 8 to 9 weeks. And the seasonality as we get into various elements of produce, food and beverage and just the typical seasonal pattern. So again, it's early -- it's early in the month of June. So we don't necessarily see a large improvement necessarily in the import volume part of that for our Intermodal business although our business mix may have us -- have a little bit more of a recovery than otherwise. But I think it's the combination of all of those things that put this into an improving June condition. I wouldn't say it's above how you kind of phrase that question, but I wouldn't put it overly robust, but I think a nice continued improvement -- continuous improvement pace.

Right. Right. That makes sense. What about as you go into kind of second half, do you think that there'll be -- I mean, typically, you see strong June then maybe some easing in July, August, and then you go into the fall and the market picks up again. Do you think we'll see that type of pattern in spot market? Or I guess, Steve, to your comments, I don't know if the kind of sawtooth means you would see that kind of easing after some tightness in June? Or you think capacity attrition and some ramp-up in activity and store reopenings, gives you just continued upward momentum without seasonal easing?

I think the underlying tide, if you will, of seasonality will be there as a base construct as we go through the second half of the year. It's just on top of that, there will be some surges in activity and creating some spikes in the spot market. But I think there will be the return of a seasonal shape inherent in our business volumes.

Right, right. Okay. Let's touch base on pricing a little bit here. I think it's obviously pretty tough work conditions in April. I think your prior comments had been constructive in terms of kind of getting through it without too much damage on the contract pricing side, but you hear a spectrum of things. And the brokers talk about their contract pricing that's down maybe mid-single digits. In some cases, worse than that. But how do you think -- I think the asset players tend to come through better than the brokers on contract rates. How do you think about coming through the bid season? How much is priced, what the pricing looks like? And I guess if you can offer comments on irregular route truck as well as the Intermodal?

Sure. I'll tackle that. And they're pretty similar trajectories because they're predominantly contractual businesses, both our irregular route network and our Intermodal network. And we've indicated in previous conversations that we've been trending in the low single-digit decline year-over-year on contractual pricing in those spaces. And to date, that's largely continued. I do think for the reasons that Mark described as we progress through the year that there will be a continual firming of that contractual pricing environment, which is not to indicate we think it will be quite hot, but I think there's room for it to improve on a year-over-year comparison basis and get closer to that breakeven mark than being down low single digits.

Is there much difference in the competitive -- or competitive dynamic, maybe the wrong way to say, but just, I guess, the outcome on pricing between Truck and Intermodal? Or are they pretty similar, both in the low single digits?

Our experience has been quite similar year-to-date. It may differ across the broader space, but our experience has been productive and achieving nice awards and business wins and retaining some price discipline along the way to do it.

Right. Right. Okay. Let's see. How do you think about the capacity attrition in truckload and kind of what maybe some of your favorite indicators are for gauging what's actually happening with trucking capacity. Obviously, it's a fragmented market. So a little tough to measure. But what are your thoughts on what's happening with capacity attrition and kind of how you follow that?

Yes, Tom, I don't think we have a constructive market that folks are looking to forward investing capacity, certainly, you look at the truck orders. We follow closely, particularly in our broad carrier community within the brokerage arena, insurance renewals, not only who isn't renewing, but also how many trucks they are renewing versus perhaps the number of trucks they renewed in their policies a year prior. And we certainly have evidence of contraction going on through those indices to include several hundred carriers that chose not to renew contract -- or their insurance renewals. And some -- perhaps in the short term, the stimulus money is a bit of a lift. And as that subsides, I think we'll see continued attrition through the year. I don't see a lot of the large and midsized carriers adding to the capacity mix. And so I think we'll have a -- we often use the word constructive environment as we get into the second half of the year.

So when a carrier chooses not to renew their insurance, then they just fall out of your broker system that indicates they're not -- they're going to stop operating? Or what does that mean?

Yes, that's our clearest indication that -- and through some follow-up that they're not renewing their insurance because they're not staying in the business. So...

And is that something that has been -- that several hundred, is that primarily owner-operator type setups or 3 to 5 truck setups? Or is that -- are you seeing that in kind of, I don't know, 25 to 50 truck fleets as well?

Yes, Tom it's not necessarily owner-operator group. That's not really the market that we attract in a broad basis into our brokerage business. So it's what we would call the micro carrier, the 5 to 15 trucks or so. So on the smaller side of that scale, but I think indicative of overall stress going on in that smaller carrier community.

And do you think -- do you have visibility to the payroll protection plan, the kind of who's using that, if the small -- those micro carriers are -- have been using that? Or if that's more the kind of 50 trucks and more type carrier might be utilizing that program?

Yes, we don't have terrific insight into that, Tom. We know certainly folks that are benefiting from that from our relationships, but we don't have enough, I think, insight to give you any better comment there. I think perhaps the other indices that we do see is, as you would expect, during these times, flight to quality from experienced driver standpoint. So we are almost exclusively and have been hiring any of our replenishment activities experienced drivers. And as we've said, a lot of stress on the incoming side, of the labor pool because so many of the schools that are public have not been open. And so we see very little activity on the new driver front end of the industry, which is -- has a lot of lag to it before that would get replenished depending upon kind of where the money is available, what labor is available. So when schools are public, facilities like that reopen. And so that's another contracting element because we don't, as an industry, have the top of the funnel of new entrants anywhere near typical level. So we kind of put all that together and triangulate around it and suggest the trends that we believe are underway will continue to play out here for the next couple of quarters.

Is there a way to kind of frame that in terms of how big the reduction has been in driver training schools? Is that -- I mean, is that half the schools are not running? Is it 80%? Is it kind of -- just thinking about the level of reduction in activity on the school side.

Yes, Tom, great question. And we have measured that. I don't have that in front of me, but it is substantial. I mean it's not -- it's -- I don't know if it's quite half, but it might be pretty darn close to that. I can't quite recall the number. I don't have that in front of me, but it's substantial.

Okay. So it could be 30%, 40%. It's not like it's 5% or 10%?

Right. That's the point.

Yes. Okay. Great. Do you do anything in this type of environment with your mix in terms of company drivers versus owner operators? I know you guys have strong system for bringing in owner operators and utilizing that element of capacity. But do you -- is there anything you can do or desire to do with changing that mix? Or is it just pretty stable and that's the way you want it?

Really, our strategy on that is to be fairly stable. We could do more than we're doing on the owner-operator front because of, again, the flight to quality and our program there. So we, through our engineering, have a sweet spot, we think where that makes sense, particularly because our model is really attractive relative to percent of revenue, self dispatch or order -- self-order selection, et cetera. So we've developed and understand what those sweet spots are. And so we don't like to move out of that mix one way or the other direction, we want to keep that mix pretty consistent.

Right. Okay. That makes sense. How do you -- let's see, how do you think about Intermodal growth? I know in the first quarter call, you -- obviously, second quarter environment is quite a bit different from first quarter, but you had some good traction on growth in the East and Mexico. In Intermodal, pretty positive outlook for the room to grow that. And I think it seems like you have a great relationship with CSX and kind of both of you are aligned looking for growth. How do you think about the opportunity for that and then maybe the timing to see some of the growth show up? I mean it's tough against the current cyclical backdrop, the market changing -- the freight market changes there are a big factor, but maybe if you could just provide some more color on how you think about that on kind of a medium-term basis and growth in Intermodal?

Yes. We obviously like the intermodal space. As we like all the spaces we compete in. Our portfolio has been pretty carefully constructed over a period of years. And so we see growth opportunity across the space, just at different speeds. And when it comes to Intermodal, we probably put that in the medium category for growth opportunity long term, having gone through a period of relatively high growth in the space, but we see a natural tapering of that growth trajectory while still being a nice contributor to our overall earnings and revenue profile as we go forward. So I think we're very well positioned, both in the East and the West for continued both market share gains and to the extent the space itself grows, certainly capturing our portion of that growth.

And Tom, as I've mentioned, I think that in the precision scheduled railroad world, you have to be a great provider to the railroad to show your value, and we're very much committed to doing that. And our company dray model, I think, is exactly from overall control and aligned with the same objectives that the railroads have to be incredibly efficient not only in their discipline of how they run the railroad but within the property of the rail yards. And we believe we have growth opportunities, not only in the conversion activity from truck on a mode basis, but we also believe we can be a very attractive partner to the railroads to help them achieve their objectives, which gives us opportunity to take share within the space, particularly around the portion of the market that has a more difficult time to keep pace on the technology front and the execution front that makes the railroads efficient, which is what they're really driving towards. And so when we put all that together, we believe and still believe we have plenty of runway as it relates to share growth within the Intermodal offering.

Can you expand on that a little bit, Mark? I mean, I guess, we tend to think of Intermodal as being driven by J.B. Hunt, Schneider, Hub, maybe XPO has a piece. But the -- obviously, this part of the market that uses the rail container pools, and it's more of a pure kind of broker [ IMC ], is that the part of the market you're referring to that there's share gain? Or how are you thinking about that when you say that kind of applying technology, providing assets and how big a piece of the market is that kind of outside the big 3?

Yes, Tom, you're right on the point there. I think the top 3 providers, much different to truck, have 60%, 65% of share of the domestic intermodal market. And so all great competitors. But we believe again, just that longer tail that intermodal marketing portion of the segment is a place that we compete very favorably, and we continue to look for ways to take additional share.

Right. Do you think that the balance of what you have kind of West and transcon versus East and, say, Mexico, do you think that mix will shift over time? If you maybe have a better position to grow outside of the West? Or would you say you like the mix now and it probably stays pretty similar over the next few years?

Yes. We think -- well, certainly, the western part of the network is very important to the overall offering. And so not looking to downplay that at all. I do think perhaps over time, Mexico will benefit from the nearshoring and some of the control activities that I think folks will take as learning coming through this COVID issue. That will give us perhaps some additional growth opportunities, both in Truck and in Intermodal coming out of Mexico. But yes, the East is competitive. It's competitive not only on the rail side. You're also competing against truck, but we can still, I think, show a great value proposition to both the customer and the railroad relative, still have plenty of growth legs in the eastern part of the network. But I don't want that to come across is that the west is any less important. It's just where we saw the growth and where we're really leaning into here because of the current import situation is to take advantage of our strengths, which is on the eastern side of the network.

How large is the Mexico piece to you? Is that -- like, I don't know how specific you want to be, but I guess just to kind of get a gauge of it, is that 2% of loads? Is it -- I'm assuming it's not 10%, but is that -- is there a ballpark you can put that in? And I guess, I think maybe this is true on all lanes, but the kind of balance issue where -- is there a balance issue with Mexico that you have too much in terms of empties going one way? Or is that not -- is that something that's kind of -- that's not really a barrier to growing on the kind of U.S.-Mexico lane?

Yes. We don't generally disclose to that level of detail within the network, Tom. But -- so I generally lump things together to give you some indication of -- as we came out the first quarter, our eastern and Mexico portion of the network grew year-over-year 20%. So we try to give some indication of where the momentum in the business is. And so that's how we represented that. You're right, there is some -- can be some balance issues as it relates to North versus South bound on both Truck and Intermodal, but we work diligently on our networks and a good portion of what we do there is loaded both directions, but we also have some empty repositioning that you have to do relative to the natural imbalances there. So again, I think we're well positioned to work through those. And Mexico is an important part of what we do. We just don't generally put out the exact numbers.

Yes. No, that's fine. I wasn't trying to kind of ask for something new, just, I guess, trying to get a sense of the magnitude. But it sounds like you're pretty optimistic on that as a source of potential growth. The -- I want to move to technology. I think we've got 7 minutes left or so in the fireside. And I know technology is a big point of emphasis for you and you have a lot of capability as a result of long period of spending with Quest and then Quest X. So can you give us some thoughts on what you're doing in technology? And what type of functionality or impact that creates on kind of a medium-term basis?

Yes, happy to, Tom. And certainly, we are not pulling back short, mid or long term relative to those commitments and investments. And a couple of places that we think we'll show additional investment this year is our digital connection to both the shipper and the carrier community, particularly on the long end of the tail, the smaller shipper or the smaller carrier. We've announced our platform there with Schneider Freight Power, which really just enables folks who don't have a great deal of sophistication either through a TMS or based upon their size and commitment to technology that can come in and get immediate quotes, booking orders, automated status updates, et cetera. That's not going to be our Fortune 100 group that's going to come through that channel. But there is a channel that we believe can be a very cost-effective way to get after the longer tail of the market. And so you'll see us make some additional investments there, which really is about automating across our value chain to make that very easy, but also cost effective for us to target that end of the market. The second piece of that is on our direct channels and really emphasize via this whole work from home and the COVID experience that we've kind of went through. Is move from a place that largely our technology platform put a bunch of terrific user information in front of folks to help them make balanced decisions against customer needs, the business needs to make good decisions to now being so mature through those business models and algorithms and the things that we've done over the years to drive both yield improvement, but also network improvement and effectiveness for the customer is moved from putting information in front of folks to make decisions to making those decisions in a much more automated fashion. And so whether that's on order acceptance, on dispatch, it's really across that value chain that we're -- because of all the work of the -- over the years to get to this point, we believe now we're on this march of increasing automation through our business process, which allows us to lower our cost to serve, become both a margin driver for the business, but also helps us become even increasingly competitive across all of our platforms, whether that's intermodal, truck or the logistics brokerage side of the house. So those are our emphasis that you'll continue to see us make investments. In fact, I think Steve indicated last time, we actually ramped up investments for calendar year 2020 because of that encouragement.

What's the level of stepping up in the spend? I mean, I think I've heard $100 million of kind of annual spend on technology from Schneider. I don't know if that's been a consistent pace for a while or if that includes a step-up. But how do you think when you say a step up, do you -- how much of a step up are you talking about?

This is Steve. It is an increment to what we'd already planned this year in the tech space, and that was part of we were updating our overall net CapEx expectations for the full year, which we lowered overall because of fewer growth units that we were assuming for the year, but we wanted to make the point that we weren't reducing our tech spend, we were, in fact, increasing it. So it was an incremental amount to what was already planned.

Do you think that $100 million spend, is that something that's kind of -- I mean, obviously, that's a lot of money on tech. Is that the level that you think you want to stay at to continue to develop a lot of capabilities or how you think about what you need to spend looking forward the next couple of years?

Yes. For the next several years, I think that, that level is probably appropriate for us. What we emphasize internally is how much of that spend is going to develop new capabilities versus just keeping the lights on or maintaining things. And so we try to be -- put tension on that discussion and keep us moving forward and not just thinking in incremental advancements, but how can we make step function improvements in our cost structure and/or how we go-to-market and enable our services to say yes to customers at an even higher rate than we do today. So there's a lot of opportunity in there, but there's also an absorption rate time that you need to factor in the pace of change in which you can absorb things in an organization. So we want to push that edge a bit and how fast we can go. Obviously, we have the capital to invest if it's got a place to go, but we need to be able to implement things and get value out of them also. So we -- it is a pacing type of discussion we go through. And we -- like I said, we put tension on that to go as fast as we can go, but still get value out of our investments, so.

Tom, I think another one of our approaches to this is, certainly, we have a lot of very effective direct channels that we invest in from a technology standpoint to connect with shippers and carriers, but we also believe that we can leverage others outside the Schneider 4 walls to meet people where they're at. And so connecting to other platforms that a carrier community may already be at or other ERP systems that shippers may already be at. And so what we're looking to do is leverage our reach and sometimes that's us investing in our capability directly; and some other time, it's us collaborating and integrating with folks that -- so we don't have to sit here and drive everybody to us, we can drive to them. And so we look for that balance because we think that can not only accelerate speed to value, but it also can accelerate the speed, period, to getting to that value. So not investing for a series of years at a loss position, we want to get returns and get value as we're making those investments.

Yes, that's great. I have just 2 more quick ones on that. We're actually right at the time, but I'm going to run over just a couple of minutes here with maybe the last 2 questions. So I guess just to follow up on the 2 things you mentioned, Mark. Are those -- the Schneider Freight Power and then what you talked about in terms of some of the automation, is that geared really towards the kind of smaller shipper and would have less of an impact on how you interact with the largest shippers? Or is there a component of large shipper activity, whether it's spot loads or other things that would also be affected by those 2 elements you mentioned with the Schneider Freight Power and then some of the automation?

Yes, absolutely. It could be a part of the experience that a larger shipper has could go through Freight Power, but there's also a lot of other channels because of the size and scope and multimodal capability that we're providing to them that will go through a more traditional process that they prefer. But certainly, as we think about bringing the small carrier to the large shipper via the Orange Box, spot locations, yes, absolutely, there's a play across that differently by shipper. And so the flexibility to do that and the connecting points is very much at the heart of what we're trying to do there, Tom. So you picked up on the nuance. That's exactly the case.

Okay. Let me offer 1 last one. How do you think about the kind of, I guess, I think, evolution of the market, not kind of revolution. But it seems that there's kind of a handful of players that have the scale to make these big investments. And some of those players have assets. Schneider, notably, J.B. Hunt, C.H. Robinson doesn't have the assets, but certainly, the scale and the presence and a lot of freight in their system. And then you have other players. How do you think the market evolves over time? I guess I'm thinking brokerage, but there could be other elements. Is there a kind of a period where the advantage of the bigger players really accelerates, and you see the kind of -- not a winner take all, but a group of the winners kind of accelerate their share gain and their scale. Or is this more kind of evolutionary and you just kind of gradually do better than the overall market over time?

Well, I think this is a place -- and while brokerages, to your specific question, is highly fragmented, I do believe there is a concentration effort ongoing. Whether we get to 3 or 4 or 10, I don't quite know what the end game is, Tom. But the level of sophistication necessary, the investment in technology necessary to do these things, I do believe leads to some consolidation at the top. I happen to think the combination of companies that bring asset type services with non-asset type services, and you can start to blend those as we've been talking about here with the Orange Box or Orange Container, is a very interesting proposition, both for the company here at Schneider, but also the value that we can bring to the marketplace. And so I don't think that's the only way that value can be created in this space. But I tend to believe that the big will get bigger, and there will be fewer at the top when this is all done. And the question is, when is it all done. But I think that trend will continue.

Right. Right. Okay. We should wrap up with that. We're about 5 minutes over. So just so many good things to talk about, and you guys have such great insights and position in the market. So Mark, Steve and Steve, thank you so much for spending time with us today at the UBS Conference, Industrials and Transports. Thanks for all the great insights. We appreciate your time, and hope you have a good day.

Great. Well, thanks for the invite, Tom.

Okay, great. Thanks.