Freight demand is weak, but cost cuts help C.H. Robinson boost profits. Shares are rallying.

By Bill Peters

Company hopes to pad bottom line by 'removing waste and expanding our digital capabilities'

Shares of shipping logistics provider C.H. Robinson Worldwide Inc. rallied on Wednesday after the company reported a second-quarter adjusted profit that topped Wall Street's estimates, helped by tighter operations in its key North American transportation services.

Shares jumped 9% after hours.

The company - whose services connect people buying freight with the people hauling it over the road or on the water - reported the results amid continued subdued shipping demand, as the industry tries to rebound from the pandemic-era online-shopping boom in 2021 and the inflation spell that took hold in the years that followed.

In the meantime, C.H. Robinson (CHRW) and some others are trying to serve their bottom lines by cutting costs and staff. On Tuesday, the company said it would sell European surface-transportation business.

The company's adjusted per-share profit jumped 25% year over year to $1.15 in the second quarter, above Wall Street's expectations.

Sales of $4.48 billion were up 1.4% from the same quarter last year, helped by higher pricing for its ocean-shipping services. However, prices for its trucking services were still lower, as weaker demand keeps more trailers empty, and the sales figure overall was below expectations for $4.53 billion.

Adjusted operating margins rose, while operating costs and headcount fell. While sales in C.H. Robinson's North American Surface Transportation segment dipped, profits and truckload shipments were up.

Chief Executive Dave Bozeman, in the company's earnings release, said its truckload business grew market share. And he said he planned to grow the company's profits by "removing waste and expanding our digital capabilities."

"All of the changes that we're making are aimed at our North Star of generating incremental operating income and delivering higher highs and higher lows over the course of freight market cycles," he said.

Executives, in their drive to become leaner, said last summer that they've tried to look at all aspects of a shipping order, from quotes to booking to invoicing. They said at that time that they've looked into automation, self-service or eliminating some processes altogether.

FreightWaves this month reported that C.H. Robinson also made cuts to its sales staff, adding to those it has made since 2022, as it tries to bring more technology to its operations.

Elsewhere within the freight industry, investors have cheered rail operator Norfolk Southern Corp. (NSC) after it strengthened a much-watched efficiency metric.

Shares of C.H. Robinson are up 3% so far this year.

-Bill Peters

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07-31-24 2022ET

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