C.H. Robinson chief sees no truckload pivot until second half of 2024
The president and CEO of brokerage and third-party logistics provider C.H. Robinson Worldwide Inc. said he doesn’t see any meaningful pivot in the fortunes of the North American trucking market before the second half of 2024, noting that customer caution about ordering and still-bloated wholesaler inventory levels will mute activity through the first six months of the year.
In an interview with FreightWaves this week, David Bozeman said that in his first six months at the helm of Robinson (NASDAQ: CHRW) he has been struck by the “continued degradation” of the current downcycle, especially in truckload. The amount of oversupply of truck capacity this late in the cycle has not been what he expected.
Read more: C.H. Robinson’s new CEO doubling down on lean management, large language models
“It’s a deep freight recession,” he said.
Customers of the Eden Prairie, Minnesota-based company remain cautious about demand and inventory replenishment. Though much of the retailer destocking is behind the industry, red stocking efforts have yet to begin in earnest, Bozeman said. At the same time, wholesalers are more top heavy with product than he would like them to be.
Spot, or noncontract, truckload rates continue to bump along the bottom, curbed by the unfavorable supply-demand climate for providers, Bozeman said, noting that Robinson is in a strong financial position, though a “lot of our competitors remain in survival mode.”
In theory, the struggling brokerage market might be ripe for the M&A picking for a big player like Robinson. However, Bozeman said M&A is not a top priority and noted that acquisitions and subsequent integrations can be heavy drains on time, financial and human resources.
Well before Bozeman’s arrival at the end of June, there was talk that Robinson might be looking to sell its global forwarding operation, which could command premium prices in the wake of the post-pandemic period. As markets and prices cooled, however, the unit began to struggle and the notion of commanding a high sale price evaporated.
Bozeman said he “feels good” about Global Forwarding’s competitive position, noting that it is deeply involved in the big-ticket global trade lanes. He added, however, that if a prospective buyer offered to write a massive check for the unit, he would be obligated to have a conversation.
Bozeman said he will push to develop synergies between North American Surface Transportation (NAST) and Global Forwarding, Robinson’s two largest units, to drive integrated solutions and value propositions for customers. He is also targeting a 15% improvement in productivity metrics for 2024. Without elaborating, Bozeman said he felt “pretty good” about Robinson’s portfolio of tech solutions.
Bozeman is far from the only executive to wax downbeat about the truckload sector in the near term. The consensus among a recent gathering of representatives of privately held companies sponsored by investment firm Cowen & Co. was that truckload market weakness has persisted through the fourth quarter and would likely continue into the first quarter.
The over-the-road market continues to be “a mess,” one participant was quoted as saying in a note published by transportation analyst Jason H. Seidl, with rates looking similar to what pricing was in the trucking market 20 years ago.
Freight conditions worsened after Thanksgiving following a very modest seasonal uplift through November,” according to the consensus at the gathering. Digital brokers continue to bid down freight, and one participant said that freight capacity and pricing will be influenced by the fate of these brokers, many of which are facing tough times. One of the panelists — identified as a transportation attorney — said there will be many more bankruptcies to come in 2024.
The post C.H. Robinson chief sees no truckload pivot until second half of 2024 appeared first on FreightWaves.
