Just over a year has passed since Schneider National’s $390 million acquisition of Baltimore-based Cowan Systems.
The combination has benefited both businesses, according to company executives. When discussing its Q3 results with analysts, Schneider credited a 17% year-over-year revenue growth primarily due to dedicated freight volume gains from Cowan.
As for Cowan, now a subsidiary of Schneider, it has opened opportunities for its existing customers, according to Steve Wells, president of Cowan. Retaining the carrier’s brand also has translated to a smooth transition.
Wells discussed the carrier’s integration with Wisconsin-headquartered Schneider with Trucking Dive and what’s ahead for both companies.
Editor’s note: This interview has been edited for brevity and readability.
How has becoming part of Schneider National enhanced Cowan’s services?
It's really strengthened our ability to really deliver dedicated solutions. The way they've done that is really leveraging their expertise and their expansive support network. And you’ve got to remember, Cowan, for 100 years, was a privately held, regional carrier, but Schneider, obviously having a presence across the entire U.S., really has given us an opportunity, by virtue of acquisition, to expand our operating geography.
The partnership between the two organizations, really, we went into this with a tenet of improving the customer and employee experience. We've done that in particular in areas like maintenance, driver recruitment and, to some extent, technology. We've been able to leverage Schneider’s size, scale and industry experience to really bring some of the added value solutions in those areas to the Cowan organization.
Schneider preserves brand names of companies it acquires. How has that benefited Cowan’s transition?
When we went through the process of selling the Cowan organization, it was extremely important to preserve the brand to the extent that we could. It was extremely important to the Schneider team to preserve our brand. We have a strong reputation. We have a loyal customer and driver base. Preserving our brand really ensured a seamless transition. It provided no disruptions to customers or employees.
From my perspective, just personally, it reinforced the value that Schneider places on Cowan's identity. But also through acquisition, it's given us the opportunity to really grow under their ownership as a subsidiary company. So with Cowan, our differentiator is the lightweight fleet, and part of that comes with that brand reputation, and we're known for being a heavy-haul carrier. But we're also well known for a high level of service execution as well. So from a just-in-time service perspective, we want to maintain those foundational values of the Cowan organization throughout, and Schneider definitely supported that and allowed that to happen throughout the post-acquisition phase.
Did this combination open opportunities for some of Cowan’s existing customer base?
Absolutely. I think the interesting part of the Cowan side of the equation is that we did have some customers that Schneider had very little or no business relationship with at time of acquisition. So it's given us an avenue for our incumbent customers to have access to more freight solutions. When you think about Cowan's niche in the business, it was really dedicated-van fleets. Schneider brings a whole host of services, from intermodal and specialty haulage, a robust brokerage operation and supply chain management. A lot of those solutions where we didn't necessarily have those capabilities at all, or very limited capabilities in a space, it's really expanded that for us.
So when you look at the customer experience, in the past, Cowan would have not pursued some of those opportunities with our customers. That's allowing us the opportunity to really pursue some of those alternative needs from our customers. And at the same token, Schneider is opening up their customer base to us as well, so we have access to their customer base.
I think the year since the deal, one of the bigger benefits we've experienced is really just that our sales and ops teams have really integrated well. It's given us an opportunity to collaborate and maximize opportunities. I know from the calendar side, we take a lot of pride in customizing solutions for existing and prospective clients. For Cowan and Schneider, it just really provides more tools in the toolbox to expand beyond our traditional service area west of the Mississippi.
Did the combination help with employee recruitment and retention?
Having been an acquirer in the past, in our legacy privately held company of Cowan, we made several acquisitions during the history of the company. So I certainly had that perspective of it going into this, but I had not been the acquiree. I've seen where acquisitions have gone sideways in the past. From my perspective, the transition was really smooth, really, thanks to extensive pre-work, due diligence leading up to the announcement.
There was a really good communication plan that we collaborated on. It didn't hurt that we shared the same values. We have similar cultures. So that really made the integration easier. It was natural. And from a retention standpoint for the Cowan employees’ viewpoint, being part of a larger organization like Schneider has created more career development opportunities. That's really positively impacted employee engagement.
There's a level of excitement because as a small, privately held carrier, there are only so many career paths that you could take within an organization. The biggest impact on retention was just the prospects of more career opportunities across a broad network and the Schneider services across the country.
What’s next for Cowan and Schneider going forward?
From an operating strategy standpoint, there's obviously so much I could share. But what I will say is from the Cowan perspective, we're excited really about the opportunities that are ahead and have a lot of support from Schneider.
We're positioned to really capitalize on an improving freight market and really grow our dedicated operations. So if you retrospectively look at Cowan, in the past several years, obviously, being a privately held company, with all the pressures that you experience in the industry, we were somewhat capital constrained. We had to limit our investment in the business as part of just being a responsible fiduciary to the organization.
Looking forward, we're really going to expand our services, especially our specialized services. We have a lot of interest in our lightweight and just-in-time solutions, especially into new geographies. We're already in progress in the first quarter of an expansion into new territories, which really includes the Gulf Coast and Texas market, and that was driven by demand from incumbent, key clients who needed our services in new areas. That's a good example of what the acquisition has meant to Cowan. Giving us that ability to really expand into a new geography that traditionally, we would not have participated in in the past.
There's also that strong, pent up demand from a lot of our customers who have enjoyed the level service we provided over the years, but have been somewhat capped in their ability to expand business with us. A lot of those handcuffs have been removed, and it's given us an opportunity to really ramp up our sales efforts.
