Schneider Partners With Norfolk Southern, Raises Outlook Despite Q3 Miss

Schneider partners with Norfolk Southern and raises outlook despite third-quarter earnings miss

Schneider National is moving its eastern intermodal business from CSX to Norfolk Southern under a new service agreement scheduled to begin in January. The announcement came alongside Schneider’s third-quarter results, which fell slightly short of analyst expectations but showed year-over-year improvement across several parts of the business.

The agreement will make Norfolk Southern Schneider’s primary eastern rail provider, while Union Pacific remains its western rail partner. Schneider shifted its western intermodal operations to Union Pacific in 2023. The company said the new arrangement will broaden access to eastern markets, increase network flexibility and create opportunities to move additional freight from truckload to intermodal.

“As we transition our primary eastern rail provider to Norfolk Southern, we’ll expand access to key markets, increase network flexibility and create new opportunities to better serve our customers,” said Michael Baumgardt, Schneider’s executive vice president of intermodal and logistics. “It will strengthen Schneider’s competitive position and enhance the reliable service experience our customers expect.”

Transition from CSX to Norfolk Southern

Schneider said it has established a dedicated transition team and a detailed implementation plan for the changeover. Company executives pointed to their experience with previous rail transitions as a reason for confidence in the process.

Norfolk Southern has also been making preparations, including investments in facilities and adjustments to track infrastructure to ensure adequate lift capacity, according to Schneider executives. The companies have described the transition as a planned network realignment rather than a disruption to Schneider’s broader intermodal strategy.

Schneider operates its intermodal service with company-owned equipment and personnel. Its assets include approximately 23,900 chassis, 26,800 containers, company-operated drayage operations and more than 60 rail hubs across North America. The company said that ownership structure will allow it to maintain control over key parts of the customer experience as the eastern rail network changes.

For drivers and fleet operations, the shift is significant because intermodal freight depends on coordination among rail service, drayage fleets, terminals, chassis and container availability. Schneider said Norfolk Southern’s larger eastern network should expand its reach and provide more options for serving existing customers, pursuing new freight and converting some truckload shipments to rail.

The move will not end Schneider’s relationship with Canadian Pacific Kansas City. Schneider has used CPKC for cross-border service, including its involvement in the Southeast Mexico Express, which connects Mexico with Texas and the southeastern United States.

Schneider President and CEO Jim Filter said the company does not need to use one rail provider for every lane. He cited Schneider’s continued use of CPKC alongside its western relationship with Union Pacific as an example of how the company approaches network partnerships.

Third-quarter revenue increased

Schneider reported adjusted earnings of 29 cents per share for the third quarter. That was 1 cent below the consensus estimate but 17 cents higher than the same period a year earlier.

Consolidated revenue rose 9% year over year to $1.59 billion, slightly above the $1.58 billion analyst consensus. Results benefited from lower net interest expense, including a reversal of interest accruals related to a claim settlement. A lower tax rate also provided a modest benefit. Those gains were partly offset by a separate claim affecting the logistics segment.

Despite the earnings miss, Schneider raised the lower end of its full-year adjusted earnings outlook by 10 cents. The company now expects adjusted earnings per share in a range of $1 to $1.10.

Truckload and intermodal show improvement

Truckload revenue, excluding fuel surcharge revenue, was $625 million, essentially unchanged from a year earlier. Revenue per truck increased 8%, but the average number of trucks in service declined by 8%.

Utilization improved in both major truckload operations. Dedicated-fleet utilization increased 3% year over year, while one-way utilization rose 21%. Schneider said it had sold dedicated service on 850 trucks during the year, although the company continues to work through the impact of a previously disclosed customer loss.

The truckload segment posted a 93% operating ratio, an improvement of 380 basis points from the prior year. However, the result was 120 basis points worse than the second quarter. Schneider also said one-way contract renewals were averaging just under 20% during the quarter, reflecting continued pricing movement as available capacity tightens.

Intermodal revenue, excluding fuel, increased 2% year over year to $288 million. Loads declined 2%, but revenue per load rose 3%. The intermodal segment reported a 92.1% operating ratio, 190 basis points better than a year earlier. Contract renewals were described as being in the mid-single-digit range.

Logistics reported breakeven results after a confidential claim settlement affected the quarter. Schneider also lowered its full-year net capital expenditures plan to between $325 million and $350 million. Net debt leverage stood at 0.1 times at the end of the quarter, down from 0.3 times at the end of 2025.

The Norfolk Southern agreement gives Schneider a new eastern rail platform while preserving its company-owned equipment and drayage model. Its execution will depend on coordinating terminals, rail capacity and local operations as service begins in January. For Schneider, the arrangement is intended to expand intermodal coverage and support growth while the company continues managing a mixed freight market.