C.H Robinson, Hub Group Report Strong Second-Quarter Earnings

Freight brokers C.H. Robinson Worldwide Inc. and Hub Group Inc. reported stronger second-quarter earnings July 26 because of lower transportation costs.

C.H. Robinson reported profits were $143.1 million, or $1.00 per share, a 4.3% jump compared to the year-earlier period. Hub Group posted earnings jumped 12% to $20.7 million, or 61 cents, compared to the same period a year ago.

Revenue. on the other hand, dropped at both companies. C.H. Robinson reported revenue declined 6.9% from $3.5 billion to $3.3 billion, but the income before taxes and interest increased because of a larger 7.5% drop in total costs and expenses. Transportation costs dropped the most from $2.6 billion to $2.3 billion year-over-year, in part, according to the company, to lower fuel costs. Overall costs and expenses dropped from $3.3 billion to $3.1 billion.

The intermodal market had a 22% drop in net revenue year-over-year, which C.H. Robinson blamed on lower intermodal volumes and a preference to use truck instead of rail transportation to ship freight. However, the truckload segment reported net revenue dropped 1.4%, despite a 3% jump in volume and 4,400 new contracted carriers. Less-than-truckload had a 7% increase in volume and a 9% increase in net revenue. Ocean, air and customs brokerage reported a combined 10% increase in net revenue year-over-year because volume of shipments grew at a faster rate than the drop in prices. C.H. Robinson also posted better results for its transportation management, warehousing and small parcel services.

“In North America, excluding the estimated impacts of the change in fuel prices, our average truckload rate per mile charged to our customers decreased approximately 7.5% in the second quarter of 2016 compared to the second quarter of 2015. In North America, our truckload transportation costs decreased approximately 8%, excluding the estimated impacts of the change in fuel prices,” the company wrote in a press release.

Like C.H. Robinson, Hub Group’s profits rose because of the drop in transportation costs. Revenue declined 5% from $899.5 million to $855.6 million year-over-year, while transportation costs fell 7% to $741.1 million. The broker, based in Oak Brook, Illinois, cited lower fuel surcharges as responsible for the drop in revenue.

Profits before taxes and interest also increased in the two divisions within the Hub Group, although revenue also dropped in both divisions. The hub segment, made up of intermodal, truck brokerage and Unyson Logistics, combined for a 6% drop in revenue year-over-year to $648.5 million. The hub segment accounts about 75% of the Hub Group’s overall revenue.

Intermodal, which accounts for more than two-thirds of the hub segment’s overall revenue, decreased 6% to $438 million, and overall intermodal volume fell 2%. Truck brokerage revenue dropped 11% year-over-year to $83 million, and Unyson Logistics revenue decreased just 1% to $127 million. Nevertheless, after transportation costs, operating income rose 24% to $27.2 million in the division.

Profits in the mode segment were down about $400,000 to $7.1 million, or about 5%, while revenue decreased only 1% to $232 million.

C.H. Robinson reported earnings per share that matched analysts’ estimates. as compiled by Bloomberg, while Hub Group reported earnings at 3 cents higher. However, C.H. Robinson’s net income was slightly lower than the estimates from analysts while Hub Group slightly beat the estimates.

C.H. Robinson Worldwide is No. 4 on the Transport Topics Top 50 list of the largest logistics companies in the United States, Canada and Mexico.  The Hub Group is No. 29.