Look no further than C.H. Robinson for evidence that the logistics industry is in disarray. The Eden Prairie-based company reported this week that third quarter profits were down 64%.
Eden Prairie's C.H. Robinson sees quarterly profits dip 64% as logistics disruptions continue
C.H. Robinson looks for more efficiency as freight markets remain depressed.
November 2, 2023 at 12:24PM
"As has been well documented by many industry participants and observers, global freight demand continued to be weak in the third quarter," said Dave Bozeman, C.H. Robinson's chief executive, in a earnings call.
C.H. Robinson is one of the largest third-party logistics companies in the world. It buys freight capacity on trucks, ships and cargo flights and resells them to shipping customers. But the industry currently has an oversupply of truckload capacity paired with lower freight demand.
Bozeman said C.H. Robinson is positioning itself as the partner customers can count on during the ups and downs of the industries and continues to make its operations more efficient and cost-effective to weather the current disruption.
"This has taken on greater importance to shippers who had exposure to transportation providers whose business models were not financially viable," Bozeman said Wednesday.
The trucking and logistics industry has been in flux all year. C.H. Robinson's quarterly revenue was $4.3 billion, down 28%.
The Seattle-based digital freight business, Convoy Inc., a private company that counted billionaires Jeff Bezos and Bill Gates as significant investors, shut down last week. In August the 99-year-old trucking firm Yellow Corp. filed for chapter 11 bankruptcy.
C.H. Robinson may see marginal gains from the demise of Convoy and Yellow, but the company also is seeing more competition from new entrants to the market.
"Amazon has entered the logistics business, which we believe increases the competitive pressures in the sector," wrote Jeff Windau, a transportation analyst for Edward Jones in a preview to C.H. Robinson's third quarter results. "While we believe it will take some time for Amazon to expand its network, aggressive pricing could pressure C.H. Robinson."
Amazon owns more than 50,000 trailers and has begun using them to ship other companies' freight across its established shipping lanes.
Bozeman told analysts on the company's earnings call they were concentrating on reducing waste and streamlining efficiencies while investing in productivity improvements including using generative artificial intelligence.
Bozeman, who was named CEO earlier this year, said he has been using his first few months learning the company's culture. He told analysts he has been encouraging the organization to be "quicker, more flexible and more agile in solving problems for our customers."
In the quarter ended Sept. 30, C.H. Robinson earned $81.9 million, down 64% from a year ago. Earnings per share were 68 cents, down 62%.
Adjusted EPS was 84 cents a share, down 53%, but still beat analyst expectations of 82 cents.
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