June 17, 2025 • 46 mins
Ever-changing US tariff policies are creating uncertainty in supply chains and prolonging a tepid tone in freight demand. Leveraging technology will be critical for third-party logistics providers to remain nimble in this challenging environment. In this episode of the Talking Transports podcast, David Bozeman president and CEO of C.H. Robinson, joins Lee Klaskow, Bloomberg Intelligence’s senior transportation and logistics analyst, to share his insights about the state of the freight brokerage and forwarding industry and how efficiency initiatives and technology investments are driving the company’s transformation. Bozeman also discusses winning market share, its drop-trailer fleet and how the company is leveraging artificial intelligence and machine learning to reduce tasks that will allow its employees to better serve customers.
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Episode Transcript
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Speaker 1 (00:07):
Hi everyone, this is Lee Clasgow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transport Podcast. I'm your host,
Lee Klasgow, Senior Freight Transportation and Logistics analyst at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
strategists around the globe. Before diving in a little public
service announcement, your support is instrumental to keep bringing great
(00:29):
guests and conversations to you, our listeners, and we need
your support. So please, if you enjoy this podcast, share it,
like it and leave a comment. Also, if you have
any idea for future episodes or just want to talk transports,
please hit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at Logistics. Leave now onto our episode.
(00:50):
We're delighted to have Dave Boseman, CEO and President of
c H Robinson, which trades under the ticker HRW and
as a market cap of around eleven and a half billion dollars.
Dave joined H Robinson in June of twenty twenty three,
so happy anniversary. With a host of experiences from his
time working at the Ford Motor Company, Amazon Transportation Services,
(01:12):
Caterpillar and Harley Davidson. Welcome to the podcast. Dave, thanks
for being here.
Speaker 2 (01:17):
Hey, glad to be here. Lee, thanks for having me now,
c h.
Speaker 1 (01:21):
Robinson's the largest freight broker out there, but people might
not be too familiar with You can just give a
little background about the company.
Speaker 3 (01:28):
Yeah, sure can. And excited by the way, Lee, time
flies right. I'm going to my second year anniversary as
CEO of this great company, and I couldn't be more excited,
mainly because Robinson being a one hundred and twenty year company,
(01:48):
it always surprises people when I kind of tell the
tell of the tape with the numbers. But you know,
we managed twenty three billion dollars in freight with over
thirty seven million shipments annually. It really helped create the
modern logistics industry as we know it today.
Speaker 2 (02:08):
Robinson.
Speaker 3 (02:08):
We're proud that we lead full Truckload LTL, temperature control
and cross border freight and that's really thanks to our
unmatched scale, integrated global capabilities and lead you know, over
thirteen thousand logistics experts across thirty seven countries, so really
(02:30):
good scale here in Robinson. Proud to say it feels
you know if it feels different one hundred and twenty
year company.
Speaker 2 (02:38):
It's because it is.
Speaker 3 (02:39):
We've been really excited about what we've done in the
last couple of years. I'm proud to the team themselves
and just how much change we've kind of thrown at
them because we've gone through a transfer transformation that's really
I think shown up in the numbers, and we can
talk a lot more about that. But again, we have
(02:59):
the larger freight broker, and I always surprised people when
I say a couple of things that are super important.
Speaker 2 (03:09):
Number one, people.
Speaker 3 (03:10):
May not realize that, you know, Robinson has an LTL
business are less than trucklow business, and that is for us,
over a three billion dollar business overall. If you think
about it, more than half of our revenues come from
customers that use both our surface transportation and our global
forwarding services we have. You know, when it comes to truckload,
(03:36):
we move the most freight in North America by any
three po and of course that resulted in over eight
billion dollars revenue eight billion dollars of revenue in twenty
twenty four. So some really big, kind of scale numbers
that usually surprise people, and some that I'm super excited
about things like our drop trailer because again I'll aows
(04:00):
us to show up like an asset. This is a
business that was almost a billion dollars for US, nine
hundred million dollars of business for US, but it represents
over ten percent of our trucklow volume, so we feel
really good about that. And of course we move more
temperature control freight than any other three pl in North America.
(04:22):
And you know, finally, you know, two million cross border
shipments a year in North America, so we're touching one
out of ten shipments coming from Mexico in So the
bottom line is dealing with eighty three thousand customers. With
that level of scale of shipments, we see it all
and it allows us to have the largest data set
(04:44):
in the industry. And we'll get into that and talk
about it, but it really allows us to get a
good view of the world of logistics.
Speaker 1 (04:52):
So you came into the role from outside the company
two years ago, you know, an outsider coming in what
was kind of the state of the company, and you know,
you mentioned the company has been going through a transformation.
What tools did you bring to the job that has
really changed things for the better?
Speaker 2 (05:08):
Over at H. Robinson. Yeah, two years ago.
Speaker 3 (05:11):
I tell you, coming in Lee, there was a number
of things happening within the company. First of all, as
you know, we've been in an extended freight recession in
a sense, it's been almost three years, and this is
on a cycle that should last eighteen to twenty four
months or so. And I walked into somewhat right in
(05:36):
the middle of that. And then there were some things
within the company itself. You know, walked into a company
that had an activist investor that that was part of
the company. There was just a lot of things that
were going on, really high short position within the company.
But I got to tell you, before I took the role,
(05:56):
I did my homework and what I saw was a
company that was first mover all the things I just
talked about. It had had generational customers, It had people
who really wanted to win. And I decided to take
the role, and coming in I knew it wouldn't be easy,
but we had to.
Speaker 2 (06:17):
We had to change some things. And I underwent a
diagnosis and I've said this a lot publicly, and that diagnosis.
For five to six months, I fashioned myself as a
lean practitioner, so to your question, I really brought a
strong kind of lean operating model in view for a
(06:38):
company that's been around one hundred and twenty years and
lead you know, dove in hard and when you look
at a business, you have to scan it before you
can treat it. And that's what I set out to do.
Speaker 3 (06:51):
And coming off of that diagnosis, there were some things
that quite frankly, didn't.
Speaker 2 (06:55):
Feel good to the team.
Speaker 3 (06:58):
You know, it saw a culture that, for the most part,
we were in a number of companies do this. We
were admiring problems versus solving those problems. We were not
we were not moving fast enough right on our on
our decision making. We were swimming in different lanes. We
just were just we were just not a one Robinson approach,
(07:21):
you know. On the on the good side, I thought
I would see kind of older technology. It was just
the opposite. We had some really good technology and we
really had people who who understood about winning. So there
were some things that we started off pretty good, but
that led to having to start and introduce an operating model,
and we did that at the beginning of twenty twenty four.
(07:42):
It's a lean based operating model. It really drives discipline,
it drives execution, and then put that up against our
technology that we were already driving, and then with generative AI,
which I think we're leading the industry in those two
put us on a path of transformation, bringing in some talent,
changing some things around. And for the last five quarters,
(08:05):
I think you're seeing the result of some of that
transformation and we can certainly double click on on on
a number of those.
Speaker 1 (08:12):
Yeah, you know, I think you're bringing the lean of
framework into the company, very unique within the brokerage industry,
and definitely you seeing the benefits. And you know you
mentioned technology and you use that uh, you know, buzzword AI.
How are you guys using AI? Because at the end
of the day, the brokerage business is a relationship business.
(08:32):
So could you talk about, you know, what you're doing
in terms of implementing AI and how it's making you
more productive? I mean, I'm assuming you're just not cutting heads, right.
Speaker 2 (08:43):
No, absolutely not?
Speaker 3 (08:44):
Uh And and for us, uh that the words around
general of AI are are serious words that we we
looked at every day from a from a technology perspective,
and the way we're going about it, it's really about productivity.
And we start and with the way we've kind of
explained this is it's really about order to cash and
(09:08):
if you look down and you start on any of
these things, you have to start by when when an
order is generated or you can call it quote to
cash uh to the point where you receive revenue and
doing that, now everything in between there is a handoff.
Speaker 2 (09:25):
Everything, there is an opportunity.
Speaker 3 (09:28):
And right now, again, as I said, we have some
of the best logisticians in the world, and what they're
doing right now, you're not maximizing their talents if they're
doing manual medial task every day. And for the most part,
that's what they were doing. And so we saw a
huge opportunity in driving our large language models in generative
(09:51):
AI to to take away those manual tasks. So, for example,
if you look at our quoting process LEE, one of
the things I do within this lean operating model is
we do something like go to gimba. It means to
go to the work. And it's been different for Robinson.
I mean, as CEO, I go out spend time with
(10:14):
our great employees, sit at the desk for two hours,
understand the work. But I went out to really talk
about and see our new quoting process, and in that
I had an employee look at me and tell me.
He said, Miss Boseman, this is this has been fantastic
right now as quotes come in, as you can imagine,
we get thousands of quotes today in Robinson, and our
(10:38):
people have to respond to those quotes. They come in unstructured,
they come in and emails things like that. And yesterday
I refer to yesterday and today yesterday. What we would
have been doing on those quotes is, as he told me,
if I get to all of them, and I don't know,
I will respond to a Charlotte to fort Worth quote
(11:01):
and I might just put the number in there of
how much. Today we're using our genitive AI technology and
Lee it's giving the details of that load with all
the heuristics that we were not doing as a human.
It's responding to every quote. It's doing it in ninety seconds,
(11:22):
and it's responding back in a conversational manner. So what
that has allowed us to do is twenty four to
seven we're able to make sure we respond to every
quote that comes our way. Our people love it. It
now takes away those manual tasks and allows our people
to do what they're known for, and that is solving problems,
(11:44):
helping customers solve their problems, very hard problems, and really
drive value into their business. And we just put out
a release a few weeks ago to say we have
officially replaced three million logistical manual task that would have
been done by individuals that are now done by our
(12:07):
generative AI or our large language models, which by the way,
is a technology that our own engineers are doing. So
it's not like, I mean, we're on obviously the AZOR
platform with Microsoft, but is our own engineers that develop
these large language models. That is a competitive advantage. It
allows us because they know the business, we can change
(12:28):
things quickly and we own that technology, not like we're
partnering up with someone and have to call them to
make changes. So it's been a huge change in that
order to cash process. We're in the early innings. We
have a long way to go, but I think that's
what you're seeing because it's a different Robinson right now.
Speaker 1 (12:45):
Right And so you know, for those that don't follow
the freight brokerage market, can you talk about like the
metric some of the big metrics, high level metrics that
you look at and kind.
Speaker 2 (12:54):
Of where.
Speaker 1 (12:56):
Where you were, where you are, and you know, I
know you laid out a lot of goals at your
investor day last year.
Speaker 2 (13:05):
We did.
Speaker 3 (13:05):
I'm glad you saw that too, Lee. That was We're
pretty proud about that investor day. It was our first
investor day we had in seven years, and we feel
like we laid out a comprehensive story. But it really
comes down to this. In the last couple of years,
we've posted up thirty percent productivity, fifteen percent in twenty three,
(13:27):
fifteen percent and twenty four starts compounding this thirty percent
improvement and productivity and productivity in a sense is a
measure that we're looking at as shipments per person per day.
It allows us to really measure how we're getting that
and we're doing that. We're getting that in a combination
(13:47):
of again the technology that I just kind of outlined
that allows us to get at that productivity, along with
our operating model that has introduced a speed and a
discipline within the company that allows us to the best
way I like to say it is we've gone from
a output based company to an input based company. And
(14:11):
in an output based company, Lee, we and most of
the industry does this, we tend to look at things
after they're in. You know, maybe the quarter is over,
you go back. I always say, you're doing autopsy on
the numbers, but the patient's dead at that point. And
so we've kind of moved to an input base. When
we put things in at Robinson, now we're changing them immediately.
(14:35):
If we're off plan, it shows up it's red. Now
we can go and change that immediately, and that allows
us to really drive that. So shipments per person per
day is a really big one that we're looking at.
An investor day, we also said that we are going
to increase We're going to do two things in this company.
(14:56):
One we're going to grow market share and two we're
going to expand our overall gross margins. And those two
things are vital for a company like ours within the industry,
and I think we've shown that because we have started
to actually grow market share while expanding margins in a really,
(15:20):
really tough macro environment. So I'm really proud of the
team and how they're getting after that.
Speaker 2 (15:25):
Right. You know, consensus expectations for c H.
Speaker 1 (15:29):
Robinson twenty twenty five our revenues to be down around
six percent, but earnings per share up five percent, So
I guess that's really that that margins story there, you know,
the brokerage industry, like I mentioned, it's really it's a
really I mean I view it as really a relationship market.
And you know, the tech only companies, you know, I
think we'll find it harder and harder to survive. Can
(15:52):
you talk about, you know, the culture that you have there.
Speaker 2 (15:56):
I'm assuming you know you need.
Speaker 1 (15:57):
To bring in younger people, you know, what do you
look for or when you're hiring people out of university
and college to come to the company and grow with you.
Speaker 3 (16:07):
Yeah, you're first of all, you're right, this is a uh,
this is a people industry. And you might remember obviously
there was the movement of the digital disruptors that really
came into the space and Robinson was not immune to
that and had to uh and had and was impacted
by that. With the digital disruptors coming in and while
(16:31):
the thesis was was laid out that they would disrupted industry,
I think one thing that I think I think they
discovered and the industry discovered is this is not one
that you can just solve just with with with a
digital solution all the way through it has to have
a component of people, and this is why we think
(16:53):
we have the best strategy in the industry, as is
industries leading technology enabled by our people are enabled by
this technology and we have again our people have developed
relationships with customers for many years, and our customers often
(17:16):
cite the reason we do business with you is because
of your people. They know the business sometimes better than
our customers and they can really help solve these problems.
So you have to have that relationship because this is
an industry lead that is hard. It's hard because you
have variability. Things happen, things change, things break, and just
(17:40):
an algorithm itself is not going to solve that. A
person would experience is going to solve that. But now
you know, putting technology, world leading technology in the hands
of those people makes it really powerful and that's what
you're seeing happen at Robinson. So what we look for
we look for some people who number one, they want
to come in. They've got to have that energy, they've
(18:02):
got to have that will to win. We want people
who are curious. We want people who understand that dynamic
of technology, but we also want people who understand customer service,
like to deal with customers like to solve problems. Robinson
is not the company that you go to for simplistic problems.
(18:23):
We solve really hard problems and we do it globally.
So having a workforce come in this energized that wants
to get after it, those are the ones that we
do and we reward them for that when they solve
those problems. So that's what we're constantly looking for and where,
and we're open to anyone who's listening to this. If
you want to join this team and have those characteristics,
(18:45):
then we're the place for you.
Speaker 2 (18:47):
Gotcha.
Speaker 1 (18:48):
You know you mentioned earlier drop trailers. You know that's
been a big growth area for a lot of you
know brokers. Can you talk about you know.
Speaker 2 (18:56):
Your fleet? Are we going to see C H.
Speaker 1 (18:58):
Robinson trailers out on the highways?
Speaker 2 (19:00):
Uh? You know why?
Speaker 1 (19:02):
Why why is it so popular?
Speaker 3 (19:04):
Well, I'll tell you this is why it's it's popular.
The beauty of Robinson and why I like the model
Right now, we're an asset light company, as you know,
and that asset light company is an advantage I think
within the marketplace because it's it's it allows us to
(19:25):
be nimble, it allows us to be flexible and it
allows us to to really get at it, and the
most important part, it allows us to have a really
good balance sheet that that really allows us to invest
in various times. Right It's been a really tough UH
freight market right now, but we've not stopped investing, and
(19:46):
that's because we have an investing investment great balance sheet.
A lot of that leaning on the fact that we're
an asset light company. However, when it comes to drop trailer.
Speaker 2 (19:57):
We do both.
Speaker 3 (19:58):
We own some trailers, over two thousand trailers that Robinson
actually owns. Our customers like this service, they call on
it and we utilize that service for them. We have
access to over ten thousand trailers through partners through our
we do business lead with over four hundred and fifty
(20:20):
thousand carriers and that allows us to really have access
to various trailers. And again it's a service that shippers
want to want to utilize and so we like to
say it allows us to actually show up like an asset.
That's why I'm so excited about this. The TAM a
(20:40):
total addressable market for the industry that we're going after.
By having these drop trailers allows us to get access
to certain bids that we would normally not have access
to if because some things are you just don't get
access if you if you're not an asset. We're able
(21:00):
to show up like an asset, but we're asset light
and that gives us that flexibility, allows us to go
up that value chain, and it's a key key element
of our growth strategy as well. So that's why I'm
super excited about drop trailer.
Speaker 1 (21:15):
Right, you know, I just want to change gears a
little bit and talk about something that's been you know,
a big concern for a lot of people in the industry,
which is fraud. Can you talk about you know, fraud
generally speaking within the broker industry and what h. Robinson
you know, is doing to kind of combat it. Yeah, well,
(21:35):
certainly fraud prevention. I mean, you've seen the headlines and
you've seen the numbers. It's a it's a serious issue
within the industry.
Speaker 3 (21:44):
Top priority for us at Robinson. I mean, you know,
rising cargo theft. We've strengthened security using advanced technology, rigorous
carr us vetting and real time load recovery. So we're
used in technology to really kind of go at this
and solve this problem. I also, you know, This is
(22:06):
one I'm excited about. When you start talking about our
operating model, these things pop up and I remember the
meetings that we're talking about in which fraud, you know,
pops up. It allows us to dive deep down to
the part where we can kind of solve this at
a root cause perspective.
Speaker 2 (22:24):
But it's something that we're we're driving at every day.
Speaker 3 (22:28):
I know that you had a conversation maybe a few
weeks ago before, but we have a partnership, our twenty
twenty four partnership with Highway Yes, and in Highway they
help us with the technology they have in enhancing that
identity protection that contributes to this whole you know, theft
(22:50):
free rate of we're proud to say nearly one hundred
percent in our NAS division, and that's pretty remarkable to
have a theft free rate of almost one hundred percent.
We also are leading the industry in collaboration really to
share best practices and stay ahead of all of these
(23:11):
emerging trends. So again, fraud, we're on top of it,
we're driving it every day, but we're also trying to
be a leader in the space and drive that collaboration
because it's a big one.
Speaker 1 (23:23):
In this industry. Yeah, and thanks for that plug, Davey.
If I would recommend people to go back and listen
to my conversation with one of the executives from from
a Highway, A very interesting conversation. So, you know, broadly speaking,
what is the freight market telling you right now? Or
what are shippers telling you? Because you know you mentioned variability,
(23:44):
I think that that and uncertainty are some keywords for
twenty twenty five.
Speaker 2 (23:49):
What are you seeing?
Speaker 1 (23:51):
Where do you expect the market to go from here?
Speaker 2 (23:53):
Yeah?
Speaker 3 (23:53):
Well, first of all, I don't think I would surprise
you by saying if I use the word uncertain to you, right,
that wouldn't surprise you. So there are certainly and let
me just lay it out here, like we deal with
over seventy five hundred retail customers, okay, and they're they're
(24:15):
balancing some some some overall competing factors. So you've got
consumer demand. Consumer demand for the most part is muted,
ocean shipping rates are elevated, and you have tariffs that
are volatile as ever, and if you're if you're a
(24:37):
retail customer, I mean, you have to balance those three things.
And we're here to kind of help those those seventy
five hundred retail shippers deal with this. But but it's
important that everyone kind of understands those competing factors.
Speaker 2 (24:53):
You know, if we double click on some of that.
Speaker 3 (24:56):
As an example, you know, the the one hundred and
forty five percent terrors on the Chinese made goods, you know,
they hit just as retailers were bringing in their back
to school merchandise. You know, for the seventy five hundred
retail customers we served, I mean, many of them decided
to import only the most critical items because they had
(25:18):
to make a choice in doing that, and that would
be things like backpacks and tennis shoes and things like that.
We saw that with retailers purchasing this this kind of
China plus one China plus two strategy, all of our
retail customers are really trying to decide and we're helping
(25:38):
them with that, like moving it to different origins, you know,
different countries, and trying to bring products in freight on
his way to the port was turned back. Freight already
at the port was pulled and sent back. They were
just things that would happen when you start getting into
(25:58):
terrafs at this level. And as you know, a tariff
at one hundred and forty five percent, it's really a tariff.
At call it forty five percent, it's really not a tariff.
You start getting into the embargo territory, and in an
embargo territory, that changes the dynamics that are going on.
But now we have this kind of ninety day window
(26:20):
of lower tariffs, and our retail customers are focused on
the fall holidays. You know, from a planning, procurement and
shipping perspective, you know, there's still time to get that
merchandise in. I mean, domestically, we might see a surge
of freight for like Halloween and Thanksgiving later this month,
so shoppers, you know, may have a fewer you know,
(26:43):
back to school items to choose from. But at this point,
Lee it'll be enough glowing the dark skeletons and fake
vampire teeth that'll probably make it for Halloween. So my
whole point on that is that our retailers are balancing
a number of things. This uncertainty makes it really hard
(27:06):
for them to plan and and and we're we're working
with them every day to deal with that. And I
don't know that anyone else would would would kind of
differ with that, and it's just something that that we
have to deal with every day because I don't think
that this disruption will stop.
Speaker 2 (27:23):
Yeah.
Speaker 1 (27:23):
And and so that being said, are you seeing people
even pulling forward beyond Thanksgiving for like, you know, the
holidays in December? Are people pulling that demand forward as well?
So you could kind of see I don't know, not
a tsunami a freight, but but a big surgeon freight.
Speaker 3 (27:39):
Yeah, I think, you know, it's a it's a good point,
and we've been looking at it. The ideal timing for
let's just say for Christmas imports, it's more of a
question mark because again there's three major factors.
Speaker 2 (27:53):
They are all at play.
Speaker 3 (27:54):
Similar to what I talked about that consumer demand is muted,
you know, the ocean rates are elevated, and tariffs are
again volatile. So you know, if you're if you're a shipper,
it's like what's the bigger what's the biggest gamble you
have to deal with or the bigger gamble that you
deal with during the ninety day window, it's you know,
(28:16):
pulling holiday inventory forward while ocean rates are up and
demandsing those are uncertain, or is it waiting too long
and risking the tariffs go up again. You know, that's
the conversation a number of retailers and retail suppliers are
having with us right now as we kind of navigate this,
(28:37):
this this world of uncertainty. So we are seeing, no,
there's no one solution that's the same. Everyone's kind of
dealing with different solutions. Some of it pull ahead, some
of it wait and see if that makes if that
makes sense.
Speaker 1 (28:52):
You know, you mentioned earlier that we're in a freight
recession and we're in the third year of that recession.
A lot of people in December that it was going
to be over in twenty twenty five, you know, with
the incoming president and you know, low taxes, low regulation,
very good for business. Obviously tariffs change that. You know,
what are you expecting in terms of the truck market,
(29:13):
because obviously you guys are big buyers in the spot
market in terms of capacity, Are you expecting rates to
remain relatively depressed?
Speaker 2 (29:23):
Yeah?
Speaker 3 (29:23):
I think as you're seeing it again, this is one
that that you have to double click on because there
are some normal seasonal things that play here, and as
you know, we're we're into right now. What we would
call the produce and beverage season. And for people listening
(29:43):
to this, I mean obviously on the beverage season you
start having the kind of peak or pull in for
soda and beer and a number of things going into
the summertime and obviously would produce as well. So so
you naturally at this time see an increase right now
(30:04):
that's happening within within the broker space. So we're we're
kind of dealing with that that seasonality on on rates.
But as you know, there's a two sided part to this,
and we haven't talked a lot about yet, but the
capacity side of the house, that would be the carrier
capacity side, really drives that that kind of rate U
(30:28):
process that we're talking about. And for us at Robinson,
how we're looking at that that carrier capacity. Uh, it's uh,
it's been a world here, Lee and and what I've
said when we were at the Wells conference this week,
and when we start looking at at carrier capacity, we're
(30:50):
starting to call that that that's going to start getting
to somewhat normal in in twenty twenty six. Uh, it's
it's we don't think it's there yet. It has been
burning down. There were a number of reasons that it
was elevated that I'm sure you've talked to other guests on,
but essentially, through the pandemic, carrier capacity elevated at the
(31:14):
highest rates really in history, and it took time for
that to burn down, and that the reason it burned
down slow, in our opinion, is that in twenty twenty one,
there are a lot of profits that were made and
assets were paid off. This allowed carrier capacity to really
stay longer into the marketplace. There are other things that
(31:36):
kicked in when it came to banks given favorable rates,
they really didn't want to get into the used truck market,
so they gave favorable terms for carriers to kind of
keep their assets. But we think all of that is
kind of burning through now and getting back down to normalization,
(31:58):
but we think that'll be in twenty twenty. That's a
key component to start talking about rates that are happening.
So I think what you're going to see are are
kind of the normal rate increases for seasonality, but but
we still haven't seen We're still bouncing along the bottom here.
Speaker 1 (32:15):
Yeah, and from every season in my household, it's it's
an increase in Margarita's for the summertime. And also you
mentioned the Wales conference. For those that want to go back,
Chris Weatherby the analyst there. He's been a guest of
the podcast multiple times. You should check back what he
has to say about the space. So so it sounds
like you think it's going to come from more on
(32:36):
the supply side than on the demand side in terms
of a.
Speaker 2 (32:39):
Turn in truckload rates. Did I Did I hear that correctly? Well,
I would say that's gonna it's both, okay.
Speaker 3 (32:47):
I mean, you've got to have the carry capacity that
I now on the right side of the equation is
going to be the demand and and for demand that
that really has to happen. And I and I would
say for your listeners here from a freight perspective, there
are three key things that we look at here, Robinson,
(33:08):
and that's going to be manufacturing, retail, and housing.
Speaker 2 (33:13):
Those three are the.
Speaker 3 (33:14):
Ones that really kind of that that drive freight and
that that we really want to see kind of going
up into the right And to this point, if you
look at it, they've been somewhat they've been muted right
with interest rates. Let's talk about housing, you know, that's
been kind of flat to down H certainly as as
(33:35):
we're dealing with with some of the volatility that's happening manufacturing.
You know the story on manufacturing, it's it's everything from
automotive to industrial manufacturing. It's just you know, it's been
in a in a wait and see uh, in this
kind of period of uncertainty, and so that's kind of
(33:55):
that's mutant manufacturing.
Speaker 2 (33:57):
And in retail, we talked a bit about our ready.
Speaker 3 (34:00):
UH same thing the tariffs, UH is just uncertainty in
the economy and all of that is it's just a
a wait and see game on doing that. We certainly
would like to see that that go up into the right.
I don't see that that occurring for the most part
in this year.
Speaker 2 (34:21):
And you see that that call out as well. This
is why at.
Speaker 3 (34:25):
Robinson we're we're you know, we're we're looking past the
macros and saying to ourselves, we're going to do the
self help within our company UH and making sure we're
we're driving a fit, fast focused approach within Robinson UH
and just and and outgrowing the market despite whatever condition
(34:47):
it is in. Our approach is to is to outgrow
the market or drive higher highs and higher lows within Robinson.
Speaker 1 (34:57):
That's our approach, right, and and the outlook for you
guys more optimistic. At twenty twenty six, consensus has you
guys with revenues up five percent and fifteen percent earnings
per share growth, so you know, back to double digit
EPs growth in twenty twenty six, assuming everything goes as planning.
You mentioned some of those economic drivers. It's worth noting
(35:17):
the ism has been a contraction territory for twenty nine
at the last thirty one months, which is obviously not good.
Consumer confidence is pretty low, and you know, organt rates
are high, so hopefully things will turn around and that
could paint a better twenty twenty six. Can you talk
about your your freight forwarding business and kind of how
(35:37):
that complements your brokerage business.
Speaker 3 (35:40):
Yeah, well, I love our freight forwarding business and for
a number of different reasons, I think it makes us
different than the industry and than and the competition we're
we're allowed to see. We opened this conversation by saying,
you know, fifty percent of our our revenues come from
(36:02):
you know, our customers that are using both our our
global forwarding as well as our nast services. Uh It
allows us to have a visibility globally. We like to
say that, you know, we're we're taking product from China
to North Carolina every day, and I don't know that
(36:23):
that anyone can say that because we're moving global goods
and so so our forwarding UH business is super important
for us in doing that. The other reason I really
like the business is, you know, we're putting that business
through our operating model that I talked about earlierly and
(36:43):
and it's really reacted favorably to that.
Speaker 2 (36:47):
UH.
Speaker 3 (36:47):
And this is a business that if you look last year,
the bear case on Robinson, right, the bare case is that, hey, Dave, listen,
when the market returns UH. You know, Robinson typically at
costs back in on a recovery market. And and we've
been fighting that barecase. And I feel pretty confident as
(37:10):
I'm talking to UH two shareholders that that listen. You know,
we have a Canarian a coal mine with our global
forwarding business. You look at that business last year, UH,
it grew each quarter UH year over year, while while
we're reducing headcount expense and overall expense in the business.
Speaker 2 (37:32):
So and essentially we we we.
Speaker 3 (37:34):
Disconnected headcount growth from volume growth uh off of the
model that that we were we were driving and they
and they drove productivity uh within that business.
Speaker 2 (37:45):
So we're super excited about that.
Speaker 3 (37:47):
Now we're starting to take the technology stack focus that
we intentionally use within NAS and we feel good about
the turnaround story we've had in our largest business, US,
in our NAS business, and we're now about to focus
that within Global Forwarding and so you know, we think
there's even more goodness to come within that business as
(38:11):
we go forward and apply what we know is a
winning technology stack on top of an already rigorous operating
model there and so that business just gives us that
flexibility globally to drive overall solutions for customers.
Speaker 1 (38:27):
So, you know, you mentioned the fact a couple of
times that one of your goals is to win share.
So is that the main place where you're winning share,
like your winning share in your forwarding business from a
brokerage customer and your vice versa maybe a forward customer
you're winning the share to come to your brokerage business
or is it just going out and getting new business?
(38:50):
Like how would you characterize how you're winning share or
where you're winning share?
Speaker 2 (38:56):
Yeah, I'd say i'd say it's both.
Speaker 3 (38:57):
So we're we're winning share in our and obviously in
our broker's business and our nas business, we're winning shared there.
And we're doing that obviously in some of the things
we've talked about already with our proprietary technology, using that
to get better pricing dynamics, doing that to get better
(39:21):
costing dynamics, giving us that optionality and that leverage to
drive that improved market share. And we're doing the same
thing within global forwarding, allowing us to capture some share
growth as well within that business. So we're doing it
(39:43):
in both to do that, but a long way to
go as well. And that's what we laid out really
an investor day, and while we feel good about those
numbers we laid out going out to twenty twenty six.
Speaker 1 (39:57):
So, you know, let's talk a little bit about you
if you don't mind. You know, we mentioned happy anniversary
your second year uh in the jobs, so congratulations. So
how did you get into transportation because you know, C. H.
Robinson wasn't necessarily your first transport stop, can just talk
about you know, how you kind of stepped into it,
(40:18):
which a lot of people if they're not born into
it that's kind of how they get into transports.
Speaker 2 (40:23):
Yeah, no, for sure.
Speaker 3 (40:25):
I you know, leave my my background started in Harley
Davison Motor Company and UH and I did really on
both sides, the operational side and and the and the
product engineering side.
Speaker 1 (40:39):
UH.
Speaker 3 (40:39):
And my my background is engineering as well, UH and
and and then driving that when you're in manufacturing, you
always kind of touch logistics and in some form of
fashion you don't realize it earlier in your career, but
you're you're becoming this kind of logistician, uh if you're
doing kind of deep manufacturing. And obviously from from Harley,
(41:02):
I went to to Caterpillar and and and in some
of my assignments and Caterpillar, from global mining to UH
to global purchasing, I really would have got on the
world stage when it came to overall logistics doing roll
on roll off, dealing with really big large carriers like
(41:23):
Willenius Wilhelm and and and others, and just dealing with big,
large logistics of obviously large equipment that we were manufacturing
and moving around the world.
Speaker 2 (41:34):
And then it really kind.
Speaker 3 (41:36):
Of hyper changed as I went from KAT to Amazon
with a mission of helping to build the middle mile
transportation business within Amazon UH and doing that with a
large a swath of technology UH professionals as well as
operational professionals, and proud of what we built there from
(41:58):
from air molds to sort centers to ground transportation carriers,
Amazon Free partners, all of that building that up kind
of kind of thrust me into the logistics space at
scale and then a short stint obviously at Ford Motor
Company and touching that business, but coming to Robinson is
(42:23):
bringing all the industrial as well as the tech experience.
Putting that all together, I think lended itself well to
take on the seat because I was able to see
the experience of the speed of that technology and driving
that technology in a space that wasn't used to it,
(42:43):
but being very familiar with the industrial side of overall logistics.
And that's what makes this so exciting with this transformation,
as that the technology that we're doing and the discipline
and operating is different that I think in the industry
and I think and it separates us from the industry
(43:04):
and the competition and really starts to kind of drive
us to be this kind of technology space company serving
an industry that is used to traditional logistics and I
think that's what you're seeing here. But that's how I
would answer that in kind of my evolution within the space.
Speaker 1 (43:22):
And and you know, I guess you know in this role,
what is your favorite part of the job. My favorite
part of the job is the people. I've always been
a people person, and it's.
Speaker 3 (43:34):
It's seeing that that glitter that gleam in the eye
of a person who says, yes, I get that I am.
I've got that energy, I've got that curiosity, I've got
that excitement that I just discovered something. Innovation is so
important to me, and discovery is so important to me.
(43:58):
And walking in here and getting a number of people
who had the DNA of winning and just recharging that
we like to say, getting our swagger back at Robinson,
seeing people wake up every day and had a twinkle
to say, yes, I don't even want to go home.
I want to keep like driving this this winning innovation.
(44:21):
That is the best part of my job, interacting with
people and seeing that that innovation come to life.
Speaker 1 (44:27):
Super And I always like to ask, you know, my
guests to this final question. You know, if you have
a favorite book about transportation or leadership that really resonated with.
Speaker 3 (44:36):
You Yeah, kind of a little a little one dated
right now, that's a that's a that's a hard question
because there's so many that I kind of like touch
and but there was one. It's called The New Abnormal.
It was reshaping business and supply chain strategy beyond COVID nineteen.
(44:59):
That was you'll see chefe and in twenty twenty. But
it kind of gets at a number of these things
around companies really starting to look and get in into
the resiliency of supply chains and really goes deep around
that ability to have to shift the supply chain based
(45:21):
on these kind of big events. And I would argue
that you can go back even further. You can go
to the financial crisis of two thousand and seven two
thousand and eight, in which companies started to look and say, hey,
we've got to pay attention to this, We've got to
drive a different intentionality in our supply chains.
Speaker 2 (45:41):
And I think it started to happen all through that.
Speaker 3 (45:43):
But I thought that was a pretty good book that
touched on a number of different factors that we're still
talking about hot and heavy today.
Speaker 1 (45:51):
Well, I have to check that one out, and I
want to thank you Dave for your Tom and your insights. Today,
we're coming up at the end of our time together.
Speaker 2 (46:00):
Yeah.
Speaker 3 (46:00):
Thanks Lee, and I just want to say again you're
you're doing a really nice job in the space. Your
audience is great. I'm not being biased here, but thanks
for having me on and being part of your the
audience that you've had on, You've had some really good conversations.
Speaker 1 (46:17):
I appreciate your kind words and much continued success to
you and C. T. Robinson during this transformation. I also
want to thank you for tuning in. If you liked
the episode, please subscribe and leave a review. We've lined
up a number of great guests for the podcast. Come
back to hear conversations with C Speed executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
(46:39):
want to learn more about the free transportation markets, check
out our work on the Bloomberg terminal at big or
on social media. This is Lee Glasgow signing off and
thanks for talking transports with me.
Hi everyone, this is Lee Clasgow when We're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transport Podcast. I'm your host,
Lee Klasgow, Senior Freight Transportation and Logistics analyst at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
strategists around the globe. Before diving in a little public
service announcement, your support is instrumental to keep bringing great
(00:29):
guests and conversations to you, our listeners, and we need
your support. So please, if you enjoy this podcast, share it,
like it and leave a comment. Also, if you have
any idea for future episodes or just want to talk transports,
please hit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at Logistics. Leave now onto our episode.
(00:50):
We're delighted to have Dave Boseman, CEO and President of
c H Robinson, which trades under the ticker HRW and
as a market cap of around eleven and a half billion dollars.
Dave joined H Robinson in June of twenty twenty three,
so happy anniversary. With a host of experiences from his
time working at the Ford Motor Company, Amazon Transportation Services,
(01:12):
Caterpillar and Harley Davidson. Welcome to the podcast. Dave, thanks
for being here.
Speaker 2 (01:17):
Hey, glad to be here. Lee, thanks for having me now,
c h.
Speaker 1 (01:21):
Robinson's the largest freight broker out there, but people might
not be too familiar with You can just give a
little background about the company.
Speaker 3 (01:28):
Yeah, sure can. And excited by the way, Lee, time
flies right. I'm going to my second year anniversary as
CEO of this great company, and I couldn't be more excited,
mainly because Robinson being a one hundred and twenty year company,
(01:48):
it always surprises people when I kind of tell the
tell of the tape with the numbers. But you know,
we managed twenty three billion dollars in freight with over
thirty seven million shipments annually. It really helped create the
modern logistics industry as we know it today.
Speaker 2 (02:08):
Robinson.
Speaker 3 (02:08):
We're proud that we lead full Truckload LTL, temperature control
and cross border freight and that's really thanks to our
unmatched scale, integrated global capabilities and lead you know, over
thirteen thousand logistics experts across thirty seven countries, so really
(02:30):
good scale here in Robinson. Proud to say it feels
you know if it feels different one hundred and twenty
year company.
Speaker 2 (02:38):
It's because it is.
Speaker 3 (02:39):
We've been really excited about what we've done in the
last couple of years. I'm proud to the team themselves
and just how much change we've kind of thrown at
them because we've gone through a transfer transformation that's really
I think shown up in the numbers, and we can
talk a lot more about that. But again, we have
(02:59):
the larger freight broker, and I always surprised people when
I say a couple of things that are super important.
Speaker 2 (03:09):
Number one, people.
Speaker 3 (03:10):
May not realize that, you know, Robinson has an LTL
business are less than trucklow business, and that is for us,
over a three billion dollar business overall. If you think
about it, more than half of our revenues come from
customers that use both our surface transportation and our global
forwarding services we have. You know, when it comes to truckload,
(03:36):
we move the most freight in North America by any
three po and of course that resulted in over eight
billion dollars revenue eight billion dollars of revenue in twenty
twenty four. So some really big, kind of scale numbers
that usually surprise people, and some that I'm super excited
about things like our drop trailer because again I'll aows
(04:00):
us to show up like an asset. This is a
business that was almost a billion dollars for US, nine
hundred million dollars of business for US, but it represents
over ten percent of our trucklow volume, so we feel
really good about that. And of course we move more
temperature control freight than any other three pl in North America.
(04:22):
And you know, finally, you know, two million cross border
shipments a year in North America, so we're touching one
out of ten shipments coming from Mexico in So the
bottom line is dealing with eighty three thousand customers. With
that level of scale of shipments, we see it all
and it allows us to have the largest data set
(04:44):
in the industry. And we'll get into that and talk
about it, but it really allows us to get a
good view of the world of logistics.
Speaker 1 (04:52):
So you came into the role from outside the company
two years ago, you know, an outsider coming in what
was kind of the state of the company, and you know,
you mentioned the company has been going through a transformation.
What tools did you bring to the job that has
really changed things for the better?
Speaker 2 (05:08):
Over at H. Robinson. Yeah, two years ago.
Speaker 3 (05:11):
I tell you, coming in Lee, there was a number
of things happening within the company. First of all, as
you know, we've been in an extended freight recession in
a sense, it's been almost three years, and this is
on a cycle that should last eighteen to twenty four
months or so. And I walked into somewhat right in
(05:36):
the middle of that. And then there were some things
within the company itself. You know, walked into a company
that had an activist investor that that was part of
the company. There was just a lot of things that
were going on, really high short position within the company.
But I got to tell you, before I took the role,
(05:56):
I did my homework and what I saw was a
company that was first mover all the things I just
talked about. It had had generational customers, It had people
who really wanted to win. And I decided to take
the role, and coming in I knew it wouldn't be easy,
but we had to.
Speaker 2 (06:17):
We had to change some things. And I underwent a
diagnosis and I've said this a lot publicly, and that diagnosis.
For five to six months, I fashioned myself as a
lean practitioner, so to your question, I really brought a
strong kind of lean operating model in view for a
(06:38):
company that's been around one hundred and twenty years and
lead you know, dove in hard and when you look
at a business, you have to scan it before you
can treat it. And that's what I set out to do.
Speaker 3 (06:51):
And coming off of that diagnosis, there were some things
that quite frankly, didn't.
Speaker 2 (06:55):
Feel good to the team.
Speaker 3 (06:58):
You know, it saw a culture that, for the most part,
we were in a number of companies do this. We
were admiring problems versus solving those problems. We were not
we were not moving fast enough right on our on
our decision making. We were swimming in different lanes. We
just were just we were just not a one Robinson approach,
(07:21):
you know. On the on the good side, I thought
I would see kind of older technology. It was just
the opposite. We had some really good technology and we
really had people who who understood about winning. So there
were some things that we started off pretty good, but
that led to having to start and introduce an operating model,
and we did that at the beginning of twenty twenty four.
(07:42):
It's a lean based operating model. It really drives discipline,
it drives execution, and then put that up against our
technology that we were already driving, and then with generative AI,
which I think we're leading the industry in those two
put us on a path of transformation, bringing in some talent,
changing some things around. And for the last five quarters,
(08:05):
I think you're seeing the result of some of that
transformation and we can certainly double click on on on
a number of those.
Speaker 1 (08:12):
Yeah, you know, I think you're bringing the lean of
framework into the company, very unique within the brokerage industry,
and definitely you seeing the benefits. And you know you
mentioned technology and you use that uh, you know, buzzword AI.
How are you guys using AI? Because at the end
of the day, the brokerage business is a relationship business.
(08:32):
So could you talk about, you know, what you're doing
in terms of implementing AI and how it's making you
more productive? I mean, I'm assuming you're just not cutting heads, right.
Speaker 2 (08:43):
No, absolutely not?
Speaker 3 (08:44):
Uh And and for us, uh that the words around
general of AI are are serious words that we we
looked at every day from a from a technology perspective,
and the way we're going about it, it's really about productivity.
And we start and with the way we've kind of
explained this is it's really about order to cash and
(09:08):
if you look down and you start on any of
these things, you have to start by when when an
order is generated or you can call it quote to
cash uh to the point where you receive revenue and
doing that, now everything in between there is a handoff.
Speaker 2 (09:25):
Everything, there is an opportunity.
Speaker 3 (09:28):
And right now, again, as I said, we have some
of the best logisticians in the world, and what they're
doing right now, you're not maximizing their talents if they're
doing manual medial task every day. And for the most part,
that's what they were doing. And so we saw a
huge opportunity in driving our large language models in generative
(09:51):
AI to to take away those manual tasks. So, for example,
if you look at our quoting process LEE, one of
the things I do within this lean operating model is
we do something like go to gimba. It means to
go to the work. And it's been different for Robinson.
I mean, as CEO, I go out spend time with
(10:14):
our great employees, sit at the desk for two hours,
understand the work. But I went out to really talk
about and see our new quoting process, and in that
I had an employee look at me and tell me.
He said, Miss Boseman, this is this has been fantastic
right now as quotes come in, as you can imagine,
we get thousands of quotes today in Robinson, and our
(10:38):
people have to respond to those quotes. They come in unstructured,
they come in and emails things like that. And yesterday
I refer to yesterday and today yesterday. What we would
have been doing on those quotes is, as he told me,
if I get to all of them, and I don't know,
I will respond to a Charlotte to fort Worth quote
(11:01):
and I might just put the number in there of
how much. Today we're using our genitive AI technology and
Lee it's giving the details of that load with all
the heuristics that we were not doing as a human.
It's responding to every quote. It's doing it in ninety seconds,
(11:22):
and it's responding back in a conversational manner. So what
that has allowed us to do is twenty four to
seven we're able to make sure we respond to every
quote that comes our way. Our people love it. It
now takes away those manual tasks and allows our people
to do what they're known for, and that is solving problems,
(11:44):
helping customers solve their problems, very hard problems, and really
drive value into their business. And we just put out
a release a few weeks ago to say we have
officially replaced three million logistical manual task that would have
been done by individuals that are now done by our
(12:07):
generative AI or our large language models, which by the way,
is a technology that our own engineers are doing. So
it's not like, I mean, we're on obviously the AZOR
platform with Microsoft, but is our own engineers that develop
these large language models. That is a competitive advantage. It
allows us because they know the business, we can change
(12:28):
things quickly and we own that technology, not like we're
partnering up with someone and have to call them to
make changes. So it's been a huge change in that
order to cash process. We're in the early innings. We
have a long way to go, but I think that's
what you're seeing because it's a different Robinson right now.
Speaker 1 (12:45):
Right And so you know, for those that don't follow
the freight brokerage market, can you talk about like the
metric some of the big metrics, high level metrics that
you look at and kind.
Speaker 2 (12:54):
Of where.
Speaker 1 (12:56):
Where you were, where you are, and you know, I
know you laid out a lot of goals at your
investor day last year.
Speaker 2 (13:05):
We did.
Speaker 3 (13:05):
I'm glad you saw that too, Lee. That was We're
pretty proud about that investor day. It was our first
investor day we had in seven years, and we feel
like we laid out a comprehensive story. But it really
comes down to this. In the last couple of years,
we've posted up thirty percent productivity, fifteen percent in twenty three,
(13:27):
fifteen percent and twenty four starts compounding this thirty percent
improvement and productivity and productivity in a sense is a
measure that we're looking at as shipments per person per day.
It allows us to really measure how we're getting that
and we're doing that. We're getting that in a combination
(13:47):
of again the technology that I just kind of outlined
that allows us to get at that productivity, along with
our operating model that has introduced a speed and a
discipline within the company that allows us to the best
way I like to say it is we've gone from
a output based company to an input based company. And
(14:11):
in an output based company, Lee, we and most of
the industry does this, we tend to look at things
after they're in. You know, maybe the quarter is over,
you go back. I always say, you're doing autopsy on
the numbers, but the patient's dead at that point. And
so we've kind of moved to an input base. When
we put things in at Robinson, now we're changing them immediately.
(14:35):
If we're off plan, it shows up it's red. Now
we can go and change that immediately, and that allows
us to really drive that. So shipments per person per
day is a really big one that we're looking at.
An investor day, we also said that we are going
to increase We're going to do two things in this company.
(14:56):
One we're going to grow market share and two we're
going to expand our overall gross margins. And those two
things are vital for a company like ours within the industry,
and I think we've shown that because we have started
to actually grow market share while expanding margins in a really,
(15:20):
really tough macro environment. So I'm really proud of the
team and how they're getting after that.
Speaker 2 (15:25):
Right. You know, consensus expectations for c H.
Speaker 1 (15:29):
Robinson twenty twenty five our revenues to be down around
six percent, but earnings per share up five percent, So
I guess that's really that that margins story there, you know,
the brokerage industry, like I mentioned, it's really it's a
really I mean I view it as really a relationship market.
And you know, the tech only companies, you know, I
think we'll find it harder and harder to survive. Can
(15:52):
you talk about, you know, the culture that you have there.
Speaker 2 (15:56):
I'm assuming you know you need.
Speaker 1 (15:57):
To bring in younger people, you know, what do you
look for or when you're hiring people out of university
and college to come to the company and grow with you.
Speaker 3 (16:07):
Yeah, you're first of all, you're right, this is a uh,
this is a people industry. And you might remember obviously
there was the movement of the digital disruptors that really
came into the space and Robinson was not immune to
that and had to uh and had and was impacted
by that. With the digital disruptors coming in and while
(16:31):
the thesis was was laid out that they would disrupted industry,
I think one thing that I think I think they
discovered and the industry discovered is this is not one
that you can just solve just with with with a
digital solution all the way through it has to have
a component of people, and this is why we think
(16:53):
we have the best strategy in the industry, as is
industries leading technology enabled by our people are enabled by
this technology and we have again our people have developed
relationships with customers for many years, and our customers often
(17:16):
cite the reason we do business with you is because
of your people. They know the business sometimes better than
our customers and they can really help solve these problems.
So you have to have that relationship because this is
an industry lead that is hard. It's hard because you
have variability. Things happen, things change, things break, and just
(17:40):
an algorithm itself is not going to solve that. A
person would experience is going to solve that. But now
you know, putting technology, world leading technology in the hands
of those people makes it really powerful and that's what
you're seeing happen at Robinson. So what we look for
we look for some people who number one, they want
to come in. They've got to have that energy, they've
(18:02):
got to have that will to win. We want people
who are curious. We want people who understand that dynamic
of technology, but we also want people who understand customer service,
like to deal with customers like to solve problems. Robinson
is not the company that you go to for simplistic problems.
(18:23):
We solve really hard problems and we do it globally.
So having a workforce come in this energized that wants
to get after it, those are the ones that we
do and we reward them for that when they solve
those problems. So that's what we're constantly looking for and where,
and we're open to anyone who's listening to this. If
you want to join this team and have those characteristics,
(18:45):
then we're the place for you.
Speaker 2 (18:47):
Gotcha.
Speaker 1 (18:48):
You know you mentioned earlier drop trailers. You know that's
been a big growth area for a lot of you
know brokers. Can you talk about you know.
Speaker 2 (18:56):
Your fleet? Are we going to see C H.
Speaker 1 (18:58):
Robinson trailers out on the highways?
Speaker 2 (19:00):
Uh? You know why?
Speaker 1 (19:02):
Why why is it so popular?
Speaker 3 (19:04):
Well, I'll tell you this is why it's it's popular.
The beauty of Robinson and why I like the model
Right now, we're an asset light company, as you know,
and that asset light company is an advantage I think
within the marketplace because it's it's it allows us to
(19:25):
be nimble, it allows us to be flexible and it
allows us to to really get at it, and the
most important part, it allows us to have a really
good balance sheet that that really allows us to invest
in various times. Right It's been a really tough UH
freight market right now, but we've not stopped investing, and
(19:46):
that's because we have an investing investment great balance sheet.
A lot of that leaning on the fact that we're
an asset light company. However, when it comes to drop trailer.
Speaker 2 (19:57):
We do both.
Speaker 3 (19:58):
We own some trailers, over two thousand trailers that Robinson
actually owns. Our customers like this service, they call on
it and we utilize that service for them. We have
access to over ten thousand trailers through partners through our
we do business lead with over four hundred and fifty
(20:20):
thousand carriers and that allows us to really have access
to various trailers. And again it's a service that shippers
want to want to utilize and so we like to
say it allows us to actually show up like an asset.
That's why I'm so excited about this. The TAM a
(20:40):
total addressable market for the industry that we're going after.
By having these drop trailers allows us to get access
to certain bids that we would normally not have access
to if because some things are you just don't get
access if you if you're not an asset. We're able
(21:00):
to show up like an asset, but we're asset light
and that gives us that flexibility, allows us to go
up that value chain, and it's a key key element
of our growth strategy as well. So that's why I'm
super excited about drop trailer.
Speaker 1 (21:15):
Right, you know, I just want to change gears a
little bit and talk about something that's been you know,
a big concern for a lot of people in the industry,
which is fraud. Can you talk about you know, fraud
generally speaking within the broker industry and what h. Robinson
you know, is doing to kind of combat it. Yeah, well,
(21:35):
certainly fraud prevention. I mean, you've seen the headlines and
you've seen the numbers. It's a it's a serious issue
within the industry.
Speaker 3 (21:44):
Top priority for us at Robinson. I mean, you know,
rising cargo theft. We've strengthened security using advanced technology, rigorous
carr us vetting and real time load recovery. So we're
used in technology to really kind of go at this
and solve this problem. I also, you know, This is
(22:06):
one I'm excited about. When you start talking about our
operating model, these things pop up and I remember the
meetings that we're talking about in which fraud, you know,
pops up. It allows us to dive deep down to
the part where we can kind of solve this at
a root cause perspective.
Speaker 2 (22:24):
But it's something that we're we're driving at every day.
Speaker 3 (22:28):
I know that you had a conversation maybe a few
weeks ago before, but we have a partnership, our twenty
twenty four partnership with Highway Yes, and in Highway they
help us with the technology they have in enhancing that
identity protection that contributes to this whole you know, theft
(22:50):
free rate of we're proud to say nearly one hundred
percent in our NAS division, and that's pretty remarkable to
have a theft free rate of almost one hundred percent.
We also are leading the industry in collaboration really to
share best practices and stay ahead of all of these
(23:11):
emerging trends. So again, fraud, we're on top of it,
we're driving it every day, but we're also trying to
be a leader in the space and drive that collaboration
because it's a big one.
Speaker 1 (23:23):
In this industry. Yeah, and thanks for that plug, Davey.
If I would recommend people to go back and listen
to my conversation with one of the executives from from
a Highway, A very interesting conversation. So, you know, broadly speaking,
what is the freight market telling you right now? Or
what are shippers telling you? Because you know you mentioned variability,
(23:44):
I think that that and uncertainty are some keywords for
twenty twenty five.
Speaker 2 (23:49):
What are you seeing?
Speaker 1 (23:51):
Where do you expect the market to go from here?
Speaker 2 (23:53):
Yeah?
Speaker 3 (23:53):
Well, first of all, I don't think I would surprise
you by saying if I use the word uncertain to you, right,
that wouldn't surprise you. So there are certainly and let
me just lay it out here, like we deal with
over seventy five hundred retail customers, okay, and they're they're
(24:15):
balancing some some some overall competing factors. So you've got
consumer demand. Consumer demand for the most part is muted,
ocean shipping rates are elevated, and you have tariffs that
are volatile as ever, and if you're if you're a
(24:37):
retail customer, I mean, you have to balance those three things.
And we're here to kind of help those those seventy
five hundred retail shippers deal with this. But but it's
important that everyone kind of understands those competing factors.
Speaker 2 (24:53):
You know, if we double click on some of that.
Speaker 3 (24:56):
As an example, you know, the the one hundred and
forty five percent terrors on the Chinese made goods, you know,
they hit just as retailers were bringing in their back
to school merchandise. You know, for the seventy five hundred
retail customers we served, I mean, many of them decided
to import only the most critical items because they had
(25:18):
to make a choice in doing that, and that would
be things like backpacks and tennis shoes and things like that.
We saw that with retailers purchasing this this kind of
China plus one China plus two strategy, all of our
retail customers are really trying to decide and we're helping
(25:38):
them with that, like moving it to different origins, you know,
different countries, and trying to bring products in freight on
his way to the port was turned back. Freight already
at the port was pulled and sent back. They were
just things that would happen when you start getting into
(25:58):
terrafs at this level. And as you know, a tariff
at one hundred and forty five percent, it's really a tariff.
At call it forty five percent, it's really not a tariff.
You start getting into the embargo territory, and in an
embargo territory, that changes the dynamics that are going on.
But now we have this kind of ninety day window
(26:20):
of lower tariffs, and our retail customers are focused on
the fall holidays. You know, from a planning, procurement and
shipping perspective, you know, there's still time to get that
merchandise in. I mean, domestically, we might see a surge
of freight for like Halloween and Thanksgiving later this month,
so shoppers, you know, may have a fewer you know,
(26:43):
back to school items to choose from. But at this point,
Lee it'll be enough glowing the dark skeletons and fake
vampire teeth that'll probably make it for Halloween. So my
whole point on that is that our retailers are balancing
a number of things. This uncertainty makes it really hard
(27:06):
for them to plan and and and we're we're working
with them every day to deal with that. And I
don't know that anyone else would would would kind of
differ with that, and it's just something that that we
have to deal with every day because I don't think
that this disruption will stop.
Speaker 2 (27:23):
Yeah.
Speaker 1 (27:23):
And and so that being said, are you seeing people
even pulling forward beyond Thanksgiving for like, you know, the
holidays in December? Are people pulling that demand forward as well?
So you could kind of see I don't know, not
a tsunami a freight, but but a big surgeon freight.
Speaker 3 (27:39):
Yeah, I think, you know, it's a it's a good point,
and we've been looking at it. The ideal timing for
let's just say for Christmas imports, it's more of a
question mark because again there's three major factors.
Speaker 2 (27:53):
They are all at play.
Speaker 3 (27:54):
Similar to what I talked about that consumer demand is muted,
you know, the ocean rates are elevated, and tariffs are
again volatile. So you know, if you're if you're a shipper,
it's like what's the bigger what's the biggest gamble you
have to deal with or the bigger gamble that you
deal with during the ninety day window, it's you know,
(28:16):
pulling holiday inventory forward while ocean rates are up and
demandsing those are uncertain, or is it waiting too long
and risking the tariffs go up again. You know, that's
the conversation a number of retailers and retail suppliers are
having with us right now as we kind of navigate this,
(28:37):
this this world of uncertainty. So we are seeing, no,
there's no one solution that's the same. Everyone's kind of
dealing with different solutions. Some of it pull ahead, some
of it wait and see if that makes if that
makes sense.
Speaker 1 (28:52):
You know, you mentioned earlier that we're in a freight
recession and we're in the third year of that recession.
A lot of people in December that it was going
to be over in twenty twenty five, you know, with
the incoming president and you know, low taxes, low regulation,
very good for business. Obviously tariffs change that. You know,
what are you expecting in terms of the truck market,
(29:13):
because obviously you guys are big buyers in the spot
market in terms of capacity, Are you expecting rates to
remain relatively depressed?
Speaker 2 (29:23):
Yeah?
Speaker 3 (29:23):
I think as you're seeing it again, this is one
that that you have to double click on because there
are some normal seasonal things that play here, and as
you know, we're we're into right now. What we would
call the produce and beverage season. And for people listening
(29:43):
to this, I mean obviously on the beverage season you
start having the kind of peak or pull in for
soda and beer and a number of things going into
the summertime and obviously would produce as well. So so
you naturally at this time see an increase right now
(30:04):
that's happening within within the broker space. So we're we're
kind of dealing with that that seasonality on on rates.
But as you know, there's a two sided part to this,
and we haven't talked a lot about yet, but the
capacity side of the house, that would be the carrier
capacity side, really drives that that kind of rate U
(30:28):
process that we're talking about. And for us at Robinson,
how we're looking at that that carrier capacity. Uh, it's uh,
it's been a world here, Lee and and what I've
said when we were at the Wells conference this week,
and when we start looking at at carrier capacity, we're
(30:50):
starting to call that that that's going to start getting
to somewhat normal in in twenty twenty six. Uh, it's
it's we don't think it's there yet. It has been
burning down. There were a number of reasons that it
was elevated that I'm sure you've talked to other guests on,
but essentially, through the pandemic, carrier capacity elevated at the
(31:14):
highest rates really in history, and it took time for
that to burn down, and that the reason it burned
down slow, in our opinion, is that in twenty twenty one,
there are a lot of profits that were made and
assets were paid off. This allowed carrier capacity to really
stay longer into the marketplace. There are other things that
(31:36):
kicked in when it came to banks given favorable rates,
they really didn't want to get into the used truck market,
so they gave favorable terms for carriers to kind of
keep their assets. But we think all of that is
kind of burning through now and getting back down to normalization,
(31:58):
but we think that'll be in twenty twenty. That's a
key component to start talking about rates that are happening.
So I think what you're going to see are are
kind of the normal rate increases for seasonality, but but
we still haven't seen We're still bouncing along the bottom here.
Speaker 1 (32:15):
Yeah, and from every season in my household, it's it's
an increase in Margarita's for the summertime. And also you
mentioned the Wales conference. For those that want to go back,
Chris Weatherby the analyst there. He's been a guest of
the podcast multiple times. You should check back what he
has to say about the space. So so it sounds
like you think it's going to come from more on
(32:36):
the supply side than on the demand side in terms
of a.
Speaker 2 (32:39):
Turn in truckload rates. Did I Did I hear that correctly? Well,
I would say that's gonna it's both, okay.
Speaker 3 (32:47):
I mean, you've got to have the carry capacity that
I now on the right side of the equation is
going to be the demand and and for demand that
that really has to happen. And I and I would
say for your listeners here from a freight perspective, there
are three key things that we look at here, Robinson,
(33:08):
and that's going to be manufacturing, retail, and housing.
Speaker 2 (33:13):
Those three are the.
Speaker 3 (33:14):
Ones that really kind of that that drive freight and
that that we really want to see kind of going
up into the right And to this point, if you
look at it, they've been somewhat they've been muted right
with interest rates. Let's talk about housing, you know, that's
been kind of flat to down H certainly as as
(33:35):
we're dealing with with some of the volatility that's happening manufacturing.
You know the story on manufacturing, it's it's everything from
automotive to industrial manufacturing. It's just you know, it's been
in a in a wait and see uh, in this
kind of period of uncertainty, and so that's kind of
(33:55):
that's mutant manufacturing.
Speaker 2 (33:57):
And in retail, we talked a bit about our ready.
Speaker 3 (34:00):
UH same thing the tariffs, UH is just uncertainty in
the economy and all of that is it's just a
a wait and see game on doing that. We certainly
would like to see that that go up into the right.
I don't see that that occurring for the most part
in this year.
Speaker 2 (34:21):
And you see that that call out as well. This
is why at.
Speaker 3 (34:25):
Robinson we're we're you know, we're we're looking past the
macros and saying to ourselves, we're going to do the
self help within our company UH and making sure we're
we're driving a fit, fast focused approach within Robinson UH
and just and and outgrowing the market despite whatever condition
(34:47):
it is in. Our approach is to is to outgrow
the market or drive higher highs and higher lows within Robinson.
Speaker 1 (34:57):
That's our approach, right, and and the outlook for you
guys more optimistic. At twenty twenty six, consensus has you
guys with revenues up five percent and fifteen percent earnings
per share growth, so you know, back to double digit
EPs growth in twenty twenty six, assuming everything goes as planning.
You mentioned some of those economic drivers. It's worth noting
(35:17):
the ism has been a contraction territory for twenty nine
at the last thirty one months, which is obviously not good.
Consumer confidence is pretty low, and you know, organt rates
are high, so hopefully things will turn around and that
could paint a better twenty twenty six. Can you talk
about your your freight forwarding business and kind of how
(35:37):
that complements your brokerage business.
Speaker 3 (35:40):
Yeah, well, I love our freight forwarding business and for
a number of different reasons, I think it makes us
different than the industry and than and the competition we're
we're allowed to see. We opened this conversation by saying,
you know, fifty percent of our our revenues come from
(36:02):
you know, our customers that are using both our our
global forwarding as well as our nast services. Uh It
allows us to have a visibility globally. We like to
say that, you know, we're we're taking product from China
to North Carolina every day, and I don't know that
(36:23):
that anyone can say that because we're moving global goods
and so so our forwarding UH business is super important
for us in doing that. The other reason I really
like the business is, you know, we're putting that business
through our operating model that I talked about earlierly and
(36:43):
and it's really reacted favorably to that.
Speaker 2 (36:47):
UH.
Speaker 3 (36:47):
And this is a business that if you look last year,
the bear case on Robinson, right, the bare case is that, hey, Dave, listen,
when the market returns UH. You know, Robinson typically at
costs back in on a recovery market. And and we've
been fighting that barecase. And I feel pretty confident as
(37:10):
I'm talking to UH two shareholders that that listen. You know,
we have a Canarian a coal mine with our global
forwarding business. You look at that business last year, UH,
it grew each quarter UH year over year, while while
we're reducing headcount expense and overall expense in the business.
Speaker 2 (37:32):
So and essentially we we we.
Speaker 3 (37:34):
Disconnected headcount growth from volume growth uh off of the
model that that we were we were driving and they
and they drove productivity uh within that business.
Speaker 2 (37:45):
So we're super excited about that.
Speaker 3 (37:47):
Now we're starting to take the technology stack focus that
we intentionally use within NAS and we feel good about
the turnaround story we've had in our largest business, US,
in our NAS business, and we're now about to focus
that within Global Forwarding and so you know, we think
there's even more goodness to come within that business as
(38:11):
we go forward and apply what we know is a
winning technology stack on top of an already rigorous operating
model there and so that business just gives us that
flexibility globally to drive overall solutions for customers.
Speaker 1 (38:27):
So, you know, you mentioned the fact a couple of
times that one of your goals is to win share.
So is that the main place where you're winning share,
like your winning share in your forwarding business from a
brokerage customer and your vice versa maybe a forward customer
you're winning the share to come to your brokerage business
or is it just going out and getting new business?
(38:50):
Like how would you characterize how you're winning share or
where you're winning share?
Speaker 2 (38:56):
Yeah, I'd say i'd say it's both.
Speaker 3 (38:57):
So we're we're winning share in our and obviously in
our broker's business and our nas business, we're winning shared there.
And we're doing that obviously in some of the things
we've talked about already with our proprietary technology, using that
to get better pricing dynamics, doing that to get better
(39:21):
costing dynamics, giving us that optionality and that leverage to
drive that improved market share. And we're doing the same
thing within global forwarding, allowing us to capture some share
growth as well within that business. So we're doing it
(39:43):
in both to do that, but a long way to
go as well. And that's what we laid out really
an investor day, and while we feel good about those
numbers we laid out going out to twenty twenty six.
Speaker 1 (39:57):
So, you know, let's talk a little bit about you
if you don't mind. You know, we mentioned happy anniversary
your second year uh in the jobs, so congratulations. So
how did you get into transportation because you know, C. H.
Robinson wasn't necessarily your first transport stop, can just talk
about you know, how you kind of stepped into it,
(40:18):
which a lot of people if they're not born into
it that's kind of how they get into transports.
Speaker 2 (40:23):
Yeah, no, for sure.
Speaker 3 (40:25):
I you know, leave my my background started in Harley
Davison Motor Company and UH and I did really on
both sides, the operational side and and the and the
product engineering side.
Speaker 1 (40:39):
UH.
Speaker 3 (40:39):
And my my background is engineering as well, UH and
and and then driving that when you're in manufacturing, you
always kind of touch logistics and in some form of
fashion you don't realize it earlier in your career, but
you're you're becoming this kind of logistician, uh if you're
doing kind of deep manufacturing. And obviously from from Harley,
(41:02):
I went to to Caterpillar and and and in some
of my assignments and Caterpillar, from global mining to UH
to global purchasing, I really would have got on the
world stage when it came to overall logistics doing roll
on roll off, dealing with really big large carriers like
(41:23):
Willenius Wilhelm and and and others, and just dealing with big,
large logistics of obviously large equipment that we were manufacturing
and moving around the world.
Speaker 2 (41:34):
And then it really kind.
Speaker 3 (41:36):
Of hyper changed as I went from KAT to Amazon
with a mission of helping to build the middle mile
transportation business within Amazon UH and doing that with a
large a swath of technology UH professionals as well as
operational professionals, and proud of what we built there from
(41:58):
from air molds to sort centers to ground transportation carriers,
Amazon Free partners, all of that building that up kind
of kind of thrust me into the logistics space at
scale and then a short stint obviously at Ford Motor
Company and touching that business, but coming to Robinson is
(42:23):
bringing all the industrial as well as the tech experience.
Putting that all together, I think lended itself well to
take on the seat because I was able to see
the experience of the speed of that technology and driving
that technology in a space that wasn't used to it,
(42:43):
but being very familiar with the industrial side of overall logistics.
And that's what makes this so exciting with this transformation,
as that the technology that we're doing and the discipline
and operating is different that I think in the industry
and I think and it separates us from the industry
(43:04):
and the competition and really starts to kind of drive
us to be this kind of technology space company serving
an industry that is used to traditional logistics and I
think that's what you're seeing here. But that's how I
would answer that in kind of my evolution within the space.
Speaker 1 (43:22):
And and you know, I guess you know in this role,
what is your favorite part of the job. My favorite
part of the job is the people. I've always been
a people person, and it's.
Speaker 3 (43:34):
It's seeing that that glitter that gleam in the eye
of a person who says, yes, I get that I am.
I've got that energy, I've got that curiosity, I've got
that excitement that I just discovered something. Innovation is so
important to me, and discovery is so important to me.
(43:58):
And walking in here and getting a number of people
who had the DNA of winning and just recharging that
we like to say, getting our swagger back at Robinson,
seeing people wake up every day and had a twinkle
to say, yes, I don't even want to go home.
I want to keep like driving this this winning innovation.
(44:21):
That is the best part of my job, interacting with
people and seeing that that innovation come to life.
Speaker 1 (44:27):
Super And I always like to ask, you know, my
guests to this final question. You know, if you have
a favorite book about transportation or leadership that really resonated with.
Speaker 3 (44:36):
You Yeah, kind of a little a little one dated
right now, that's a that's a that's a hard question
because there's so many that I kind of like touch
and but there was one. It's called The New Abnormal.
It was reshaping business and supply chain strategy beyond COVID nineteen.
(44:59):
That was you'll see chefe and in twenty twenty. But
it kind of gets at a number of these things
around companies really starting to look and get in into
the resiliency of supply chains and really goes deep around
that ability to have to shift the supply chain based
(45:21):
on these kind of big events. And I would argue
that you can go back even further. You can go
to the financial crisis of two thousand and seven two
thousand and eight, in which companies started to look and say, hey,
we've got to pay attention to this, We've got to
drive a different intentionality in our supply chains.
Speaker 2 (45:41):
And I think it started to happen all through that.
Speaker 3 (45:43):
But I thought that was a pretty good book that
touched on a number of different factors that we're still
talking about hot and heavy today.
Speaker 1 (45:51):
Well, I have to check that one out, and I
want to thank you Dave for your Tom and your insights. Today,
we're coming up at the end of our time together.
Speaker 2 (46:00):
Yeah.
Speaker 3 (46:00):
Thanks Lee, and I just want to say again you're
you're doing a really nice job in the space. Your
audience is great. I'm not being biased here, but thanks
for having me on and being part of your the
audience that you've had on, You've had some really good conversations.
Speaker 1 (46:17):
I appreciate your kind words and much continued success to
you and C. T. Robinson during this transformation. I also
want to thank you for tuning in. If you liked
the episode, please subscribe and leave a review. We've lined
up a number of great guests for the podcast. Come
back to hear conversations with C Speed executives, shippers, regulators,
and decision makers within the freight markets. Also, if you
(46:39):
want to learn more about the free transportation markets, check
out our work on the Bloomberg terminal at big or
on social media. This is Lee Glasgow signing off and
thanks for talking transports with me.
Host
Lee Klaskow
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Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show. Clay Travis and Buck Sexton tackle the biggest stories in news, politics and current events with intelligence and humor. From the border crisis, to the madness of cancel culture and far-left missteps, Clay and Buck guide listeners through the latest headlines and hot topics with fun and entertaining conversations and opinions.