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C.H. Robinson Worldwide posted third-quarter gains in profit and revenue as it benefited from tight freight capacity.
The Eden Prairie, Minn.-based logistics and shipping company said third-quarter net income rose 81% to $247.1 million compared with $136.5 million in the same period a year earlier. Diluted earnings per share increased to a quarterly record $1.85 from $1.
Revenue increased 48.3% to $6.3 billion from $4.2 billion in the same period a year earlier.
The company’s operating profit rose 84.7% to $310.8 million.
C.H. Robinson logged higher prices and greater volumes across most of its operation.
“We’ve made steady progress in a sustained tight capacity environment through the continued repricing of our contractual portfolio and higher volumes of spot business,” CEO Bob Biesterfeld said during an Oct. 26 conference call with industry analysts and investors.
For the third quarter, C.H. Robinson’s North American Surface Transportation segment posted gains in revenue and operating profits. The segment’s revenue grew 30.5% to $3.8 billion compared with $2.9 billion in the same period a year earlier. Its operating profit jumped 21.6% to $149 million from $122.5 million. Higher truckload, less-than-truckload pricing and an increase in truckload shipments contributed to the gains.
The logistics firm’s truckload linehaul rate per mile, excluding fuel surcharges, jumped 27% in the quarter. But its cost per mile rose 26%. That was the first time in nine quarters that the growth in C.H. Robinson’s price per mile exceeded its growth in cost per mile, said Mike Zechmeister, the company’s CFO.
Revenue and operating profits rose by an even faster pace in the company’s global forwarding segment. Higher pricing for both ocean and airfreight, reflecting strong freight demand,and market share growth, accounted for the gain. The segment logged $2 billion in revenue during the third quarter, a 137.9% increase over $832 million in the same period a year earlier. The segment’s operating profit jumped 256.7% to $165.2 million compared with $46.3 million in the prior year’s quarter.
C.H. Robinson’s smaller business units — Robinson Fresh, managed services and other surface transportation — also reported improved financial performance. Operating profits rose 9% to $26.7 million at Robinson Fresh, 11.1% to $26.7 million at its managed services business and 30.4% to $19.8 million at its other surface transportation segment.
Of transportation modes, ocean freight had the biggest gain in operating profits during the quarter, rising 141.7% to $214.9 million. But truckload service remains C.H. Robinson’s most profitable operation with operating profits growing 32.7% to $333.1 million.
Heading into the holiday season, Biesterfeld said the company expects freight capacity to remain tight and for the business to perform well.
The coming months will provide opportunities for C.H. Robinson to raise prices as more than half of its contractual truckload business data is scheduled to reprice in the fourth quarter of this year and the first quarter of 2022.
Still there are hurdles ahead, demonstrated by the more than 70 containerships anchored off the Southern California port complex, waiting to unload, Biesterfeld said.
“There’s no question that we’re in a time of unprecedented supply chain disruption across the globe that reaches virtually every mode of transportation,” he said.
It won’t be resolved easily as a shortage of labor at the heart of the disruption “permeates throughout the entire supply chain,” he said.
For now, C.H. Robinson will continue to pursue “market share gains that align with our profitability expectations, and we’ll continue to invest back into the business,” Biesterfeld said.
C.H. Robinson ranks No. 1 on the Transport Topics Top 50 list of the largest logistics companies in North America.
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