C. H. Robinson (CHRW) Deutsche Bank’s Chicago Industrials Summit summary

Legal and regulatory environment

• Addressed the impact of a recent large nuclear verdict, emphasizing confidence in appeal and belief that such verdicts are not likely to become the industry norm.

• Highlighted the broader implications for commerce if nuclear verdicts persist, noting that 30% of U.S. commerce relies on brokers and calling for legislative action to establish a national standard of reasonable care.

• Detailed the facts of the case, including use of a carrier with a satisfactory FMCSA safety rating and no direct control over the driver, supporting optimism for a favorable appeal outcome.

• Stressed that most cases settle out of court and that the current situation is viewed as an outlier rather than a trend.

• Insurance cost inflation is acknowledged but considered manageable due to operational efficiency and the ability to pass costs through to customers.

Market outlook and performance

• Dry van spot rates have been supply-driven, with cautious optimism for demand recovery, especially in housing and retail sectors.

• Achieved 13 consecutive quarters of outperformance versus the Cass Freight Index, attributed to a robust system that excels in both low and high market cycles.

• Maintains a balanced approach between contract and spot markets, with a 93% acceptance rate on contractual pricing and strong performance in both segments.

• Expects elevated spot rates to persist due to capacity exits and industry consolidation, with revenue management capabilities supporting competitive procurement.

• Observes ongoing consolidation among small and medium brokers and carriers, with shippers consolidating their broker relationships and seeking quality partners.

Technology and operational strategy

• Lean AI strategy has automated repeatable back-office tasks, boosting productivity by 60% since 2022 and improving customer service scores.

• Technology is designed to augment, not replace, human touch, allowing customers to interact with humans when needed while benefiting from automation.

• Proprietary data and technology, combined with scale, provide a sustainable competitive advantage beyond first-mover status.

• Operating leverage is substantial, with 96% of AGP dollars flowing through to operating income in Q2, positioning the company for strong performance as volumes recover.

• Continues to pursue disciplined M&A and innovation, applying successful strategies from core businesses to Global Forwarding and seeking further growth opportunities.