Q&A: Erin Van Zeeland, Schneider National Chief Commercial Officer (CCO) and Senior Vice President and General Manager of Logistics

Logistics Management Group News Editor Jeff Berman recently caught up with Erin Van Zeeland, Chief Commercial Officer (CCO) and Senior Vice President and General Manager of Logistics, for Green Bay, Wisc.-based truckload, intermodal and logistics services provider Schneider National. Van Zeeland addressed various topics, including: Peak Season, intermodal, logistics technology, and near shoring among others. 

Logistics Management (LM):  How do you view things, from a state of the market perspective on a year-to-date basis, and how are things looking, or feeling, compared to a year ago at this time?

Erin Van Zeeland: It is definitely a different year than what we saw last year. It's very clear that the truckload market is certainly a lot softer than what we were experiencing last year, even the previous couple of years. The marketplace is oversupplied. There was a lot of capacity that came into the market overall. And, so, that has all kinds of carriers looking for freight and working to secure freight either through the spot market or through bids that are not at durable rates, just to be able to keep the truck moving. And we've been in this period for a couple of quarters now, in terms of when you're coming off of 2020, 2021, and 22. 2022, and now you start to hit the experience where there's a little bit more concern around consumer spending and the ability to spend and those types of things so it's definitely softer.

LM: There are a lot of metrics, or indicators, to view when looking at different aspects of the freight economy. One of the first ones that always comes to mind for me are retail sales, and we see that in the form of reduced consumer demand coupled with inflation, inventories, and import activity, and others, too. What metrics were things are you watching and keeping a close eye on?

Van Zeeland: I think in terms of just the shippers that we work with in helping them with what they're trying to get through, they are feeling better about their inventory condition. Clearly, they filled up way too much and they weren't matching their inventory levels with sales and, obviously, that directly impacts transportation. The large shippers that we work with are feeling like they're in a much better spot. But they thought they would be fluid to the level of sales. It's just that sales is slower than what they would have expected it to be, so it still is having an impact on their overall demand for truckload services, but all got stuck, and you can see it in terms of just the consumption of trailers, the consumption of containers, how long product had to sit with the distribution centers absolutely full. We're seeing a lot more fluidness overall in that process, and, so, I would say that in some cases, they went to a lower than what they may be comfortable with inventory level, kind of bracing for what could be a more difficult market overall. And because the inventory in some cases is low, the service expectations are very, very high. And that's because they can't afford to not have their product on the shelf and there is not as much safety stock as much in the inventory.

LM: Do you think the reduced level of consumer spending at the moment is playing a major role into what you're seeing in terms of lower shipment counts and things like that?

Van Zeeland: I think a lot of shippers are working to gain share of wallet. So, while they have growth expectations for the upcoming 12 months, where they would have seen year-over-year growth in top line [revenue], it would have been much more price power that they were able to get it. It is it is going to be velocity is where they want to see their growth or volume, but they are going to need to be in a competitive position in order to earn that consumer wallet.

LM: Shifting gears, are you seeing any type of meaningful Peak Season activity? How are things shaping up?

Van Zeeland: It is interesting in that we are probably at peak planning. It's nowhere near the engineered orchestration of what they believe they're going to see for forecast and what we're going to need to bring in terms of tiered capacity. We're not at those type of levels like we would normally be. But I would say that a lot of our shippers are concerned about if they are going to have enough capacity, given they may have had more reliance in their bids with smaller carriers and our brokers, in order to get after a price point, or cost point, that they were trying to get to and so they are concerned around what their Peak Season would look like in terms of will the capacity still be there? We clearly believe that is a risk, and that does have a benefit as to the volume and the business that obviously comes across to us, as some may have chosen a more vulnerable position for their Peak Season planning then what they would have before.

LM: Schneider is very active within intermodal. How do you view the current state of intermodal, at the moment?

Van Zeeland: I would say that we are really excited about our intermodal capabilities. If you would go back into what was happening in in the pandemic, having enough capacity and chassis and having them in the right spots and all those types of things, and quite frankly, the difficulty on rail service, those pieces were different problems that we were solving than what we have had. Today, it's very fluid in terms of rail service services gone up, and the capacity availability is there, but I would tell you that we're really bullish about is what our full network looks like with the CPKC, what we have on the CSX and, obviously UP, it is going to require, both in terms of sustainability, as well as in terms of just what's the right way to move freight, over-the-road conversion and looking at freight that's over-the-road and getting into the rail and making sure that it stays durable on the rail. That network and how it's performing is a really exciting part of our even looking at the bids, as well as the current freight, and the opportunity for conversion and then specifically with what we're seeing getting manufactured and developed in Mexico and how we can help supply that newer supply. It is an exciting part of our portfolio. We expect to double our intermodal volume by 2030, and I would say that we are well on our way associated with what the network looks like and the demand opportunities. Some of them are more locked up over-the-road, but all of the commercial discussions are about where is there opportunity to move it to rail.

LM: I was talking with an intermodal consultant, and he was telling me that one of the major drivers, or one of the major things intermodal really need to be addressing, is for intermodal to be as “truck-like” as it can. What are your thoughts on that?

Van Zeeland: With CPKC now having one line being able to go specifically from, let's say, Monterey into the Midwest…when that capability looked like it was going to come to fruition, expected rail transits were getting laughed off, with people saying “there's no way that you can hit that rail transit.” What's true is that we're not only hitting it, we're beating it. You're better than truck on that lane. So, you think about Mexico into the Midwest better than truck and as we get Mexico into the to the Southeast, really the Meridian Speedway we expect that to be the same.

LM: Can you please provide a quick rundown of your partnerships with the Class I railroads?

Van Zeeland: We have a partnership really on the transcontinental West Coast into the East with the Union Pacific probably going on two years in that move. And we like what that brings to our customers that have freight that comes into the ports and or goes cross-country because of the places that we can hit, as well as the amount of train starts that we have—working with different providers we had lots of train start so this allows us to be much more fluid in that space. Union Pacific is incredibly important on the West and for transcon CSX is our chosen partner and we have a differentiation with them in the East. And they have incredible service performance and a lot of a strong opportunity to be better than truck in certain lanes on the East Coast network. And then the newer one is the CPKC and that’s associated with that, that merger and what we have created with them in that front.

LM: You mentioned Mexico. There seems to be a renewed sense of sentiment in regards to Mexico becoming more of a manufacturing player and what that means for nearshoring. What's your presence like there and how do you sort of see the nearshoring layout shaping up?

Van Zeeland: If you just stepped back a little bit, you would think about when globalization was big, almost everything went to China, because China was the best way to get products made and then get them into the West Coast, through that ocean liner and then obviously through the rail network on the West Coast coming in. That was significantly compromised during the pandemic and where customers, or companies, were originally going for the lowest-cost solution, it was too vulnerable in terms of when they weren't able to get to that supply, just even the zero Covid created way to risk for way too many customers. So, they started either moving west in Asia, or they started to come more into Mexico and so we see a lot of our shippers in all kinds of different verticals wanting to have an investment in Mexico. Last year was their largest year from foreign investment into that country. And the number one country that went into Mexico was China, because they also wanted to avoid some of the tariffs. They want to be closer to their customers. And, so , we believe, Mexico and domestic U.S. is essential. And we believe that changes supply chains quite considerably, and both what you're seeing on the automotive side, what is going to be manufactured here, whether it's semiconductors or whether it's automotive parts or end product. The way that the U.S. and Mexico will participate in that global supply chain is quite a bit different in everything we understand than what it would have been even five years ago.

LM: What is Schneider is up to on the tech front these days? How does Schneider view AI at this stage of the game?

Van Zeeland: Let me start with how do we think about the investment in tech? We think the investment in tech is incredibly important and is the differentiator that we bring to customers and what we can help them see and optimize solutions for all those types of things. So, you think about one of our tech pieces that we put into place probably maybe three years ago was FreightPower, which is where shippers and carriers participate so that we can have known capacity shipper solutions across asset and non-asset capability to create that matching. So, we love that. And those are all baked in deep, call it data science, models so we know how to think about the price cost equation and what solutions we put in front of our customers and really help them ensure that they have visibility of their supply chain. We are doubling and tripling down on tech investments that will help us bring value to customers, carriers, and drivers. On the AI side, I would say we are in the early innings there as well. We certainly have that capability and now really more through Microsoft and ChatGPT, because we didn't want to be open out there, it is helping us with even, if you think about some sales processes, and some communication kinds of things. How do you just get tighter and more effective with what your communication is? I think Microsoft calls it CoPilot, that's a good name for it. And because it never is the answer but it is faster to you by working with them for the right answer, whether it's responding to RFPs whether it's in communication in response to messages that are coming in, all of those types of things. But we do believe it's a co-pilot, and it will be more embedded into our solutions for tighter communication. The bigger item is kind of how do you separate the wheat from the chaff? How do you decide what is a repeatable process that can be executed by this automated way versus what needs people relationships and engagement to get to the right durable answer and that's a lot of what we're doing. If you think about something as easy as appointment setting, you know we do 1000s and 1000s of appointment setting every day, and a lot of times it makes sense to just take that model and ask the question because some customers are still in a process of “that's an e-mail.” We can make that an email on a bot with AI. But when you drop 50 loads on the same day, same lane, I have to take that out of the process…that would be just a rudimentary example of how we would use it.

LM: What are some of the things you're hearing from your customers in terms of their challenges, their issues? What are the ways that you're coming back at them when they present a challenge, or an issue, in order to you know, to help them to help them move that freight to help them be more efficient to help to help them work better?

Van Zeeland: We have a lot of incredible customers. They care a lot about what they want to be able to do for their customers today and into the future. What we are doing more than ever is really call it a supply chain assessment, understanding how they're sourcing, how they're getting product to market, where there are opportunities for them to do things differently. This is exactly the right time to do things differently. And really helping them through the scenario analysis, in terms of where Is there too much effort in their process? Where Is there too much risk? And how do we lead them to a solution that's good for them there. It's not one size fits all, even if you think about from a bidding perspective, what freight should be under a multi-year agreement that's mastered to some kind of index that's moving but that you're not disrupting networks as the market cycle changes. And what freight should be in your national bid and what should be on a spot board? And how do you think about what that strategy is so that you're able to participate yet not be in the violent swings associated with what the marketplace is doing? So, those types of things we have a lot of customers that were engaged with deeply helping them think about how do I design my supply chain? And then how do I design my procurement and service processes so that I can engineer the experience I need to get, because I don't need to be at this level all the time and how do we help them get it?

LM: In terms of the different verticals that you serve as a company, are there certain best practices for certain verticals that work more efficiently or effectively than others:

Van Zeeland: I'll give you two. One is on the automotive side. We believe that the solution looks much more like a control tower. You have a lot of visibility that's needed throughout that supply chain. You need to be able to manage that variability without creating an earthquake. And, so, that full visibility and execution capability to take this off the train, put it on a team, being able to do that versus working through it with multiple providers. That is very much needed. And there's a huge benefit in the automotive space as we bring those kinds of solutions full ownership of capability. It's not all dedicated, because dedicated is more for a consistent amount of capacity, so when you need to be able to manage all of it as a sole source, how do you get that tech and capacity solution control tower? That's your best practice there. I would say on the retail side, it really is more about how much control do you have your vendor inbound? And how much control do you have of your vendor inbound as it relates to the way you interact with carriers and so are we all on the same page as to how you get appointments, how you adjust if certain loads are not ready? How do you take friction out of that process? So, when we work with shippers that have vendors engaged in their tools that they set the expectation, we're all on the same page around what needs to happen here, and they preset appointments and they're open and they're flexible, as it relates to securing capacity because when you're very rigid in that space, and when you put the carrier in the middle of working between a difficult vendor and a retail expectation, then that creates a lot of waste. That's where we have been engaged with major retailers around how do you take the friction of that process off? Because if we can be higher utilization and you can get better service and there's better visibility, then you can get that cost out of the supply chain.