C.H. Robinson’s Q2 revenue increases 1.4%

Freight forwarder C.H. Robinson reported $4.5 billion in revenue for the second quarter, an increase of 1.4% year over year. [caption id="attachment_57137530" align="alignright" width="300"] (Courtesy/C.H. Robinson)[/caption] THE BIG PICTURE: In line with other freight forwarders like DSV and Kuehne+Nagel , C.H. Robinson’s earnings reflect a normalizing supply chain following about 18 months of decreased revenue. C.H. Robinson reported a 4.3% YoY decline in revenue in Q1 and a 28.7% YoY decline in revenue for full-year 2023 . “We continue to focus on ensuring that we’ll be ready for the eventual freight market rebound,” President and Chief Executive David Bozeman said on the company’s July 31 earnings call. BY THE NUMBERS: Eden Prairie, Minn.-based C.H. Robinson reported $921.2 million in revenue for its Global Forwarding division, up 18.1% YoY. The company also reported for Q2: Adjusted gross profit of $687.4 million, up 3.3% YoY; Operating expenses of $509.3 million, down 4.4% YoY; Net income of $126.3 million, up 29.7% YoY; Adjusted earnings per share of $1.15, up 25% YoY; and Revenue for the North American Surface Transportation division of $3 billion, down 2.9% YoY. WHAT THEY’RE SAYING: The global and North American freight markets continue to fluctuate due to seasonal, cyclical and geopolitical factors, C.H. Robinson executives said. “The transit interruptions in the Red Sea have resulted in vessel reroutings that have extended transit times,” Chief Financial Officer Mike Zechmeister said on the call. “In Q2, this put a strain on global ocean capacity and created varying levels of port congestion and container shortages. ... The Red Sea disruption continues without any clear timeline of when it will be resolved.” The Red Sea crisis has been driving a shift from sea to air and from sea to multimodal, according to IATA analysts. Nevertheless, C.H. Robinson saw reduced gross profits for air in Q2. “We're streamlining our processes, applying lean principles and leveraging generative AI to drive out waste and optimize our cost,” Bozeman said. “Although we continue to fight through an elongated freight recession, we are winning and executing better at this point in the cycle.” C.H. Robinson executed a new operating model in Q1 that uses frequent reviews to determine if operations are on track or need remediation. “Since we began implementing the new operating model in Q1, we're getting better at being vocally self-critical and driving transparency and accountability, and we’ve been able to shine a light on some error states that negatively contributed to our results,” Bozeman said. “We're also getting better at making decisions faster and taking quick action on countermeasures to correct those error states and improve our performance.” STATE OF PLAY: The company’s revenue increase was primarily driven by higher pricing in ocean and partially offset by lower pricing in truckload, according to the earnings report. Adjusted gross profits broke down as: Air: $30.9 million, down 8.4% YoY; Ocean: $116.7 million, up $8.5% YoY; Truckload: $274.2 million, up 5% YoY; Less-than-truckload: $145.8 million, up 6.3% YoY; Customs: $26.7 million, up 6.1% YoY; and Other logistics services: $57.3 million, down 13.9% YoY. Air’s YoY fall in adjusted gross profit was driven by an 18% decrease in adjusted gross profit per tonne shipped and partially offset by an 11% increase in tonnes shipped, according to the earnings report. Operating expenses fell 4.3% YoY, largely due to lower technology expenses and cost optimization efforts, according to the company. Average employee headcount in Q2 decreased 11% YoY and personnel expenses fell 4.3% YoY. FLASHBACK: C.H. Robinson ranked 20th on Air Cargo Next ’s Power 25 list of top freight forwarders, moving 266,475 tonnes of air cargo in 2023. NOTEWORTHY: C.H. Robinson announced July 30 that it will sell its European Surface Transportation business to sennder Technologies for an undisclosed amount. “This move is consistent with our strategy to drive focus on profitable growth in our four core modes of North American truckload and LTL, and global ocean and air,” Bozeman said. MARKET REACTION: Shares of C.H. Robinson ( NASDAQ: CHRW ) were up 14.78% from market open to $102.21 as of market close today. The freight forwarder has a market capitalization of $11.98 billion.

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