The head of the largest freight brokerage in North America told American Shipper this week that capital fueling acquisitions and new technology will push his company and industry as a whole.
C.H. Robinson CEO John Wiehoff said there’s a pretty straightforward reason why there was so much acquisition activity in the third-party logistics and freight brokerage markets the last two years: the low cost of capital and an active investment community.
“There were new people in the industry deploying that capital to get scale, because being bigger has benefits,” Wiehoff said in an interview with American Shipper Monday at the Council of Supply Chain Management Professionals annual conference in Orlando.
He would know, since Wiehoff directs the largest freight brokerage in North America, and sizable divisions in freight forwarding and managed transportation services.
Wiehoff said investors backing everything from major multibillion dollar acquisitions to logistics technology startups is good for his company and the industry for two reasons: it means capital is flowing into logistics and transportation, and it’s pushing established companies to innovate.
“It’s good for us as an industry that capital is coming in and that supply chain is being seen as important,” he said. “When there’s this amount of change going on, you have to be ready to move. The challenge for us is what are the good ideas and what’s sustainable. So much has changed over the past 20 years, but the core objective really hasn’t changed.”
C.H. Robinson has not abstained from the acquisition fray, making major purchases in freight forwarding (Phoenix International in 2012 and, more recently, its Australian agent APC) and brokerage (Freightquote in 2015).
“We’ve focused on the benefits of scale without the dilution of integration and service levels,” he said.
While some have speculated that the brokerage market is ripe for a period of intense consolidation, Wiehoff noted that most of the acquisitions that have occurred have been companies with 1 percent or less market share buying smaller companies.
“By any metric, it’s still extremely fragmented,” he said.
Where the company is truly trying to differentiate itself is in the application of technology, whether through its managed services product, which American Shipper profiled in June, its forwarding capability, or recent advances designed to meet the needs of its network of carriers and smaller shippers.
Wiehoff cited mobility and location services as two of the more fundamental dynamics driving the company’s technology development.
That includes tools that allow users of its transportation management platform Navisphere to execute and track using a mobile phone, and data-driven mapping functions that correspond with modern users’ workflow preferences.
While C.H. Robinson is cognizant of the threat provided by technology startups, the idea that the industry could gravitate en masse to an Uber-type model of capacity matching is unlikely, he said, and not just because of the unique characteristics of freight.
Uber has been successful, he said, because it’s challenged a highly regulated industry that has failed to respond to that challenge. But the freight transportation industry, at least from a trucking perspective, went through deregulation in the early 1980s. That was its “Uber moment,” he said, not today.
C.H. Robinson CEO: M&As and startups are good for logistics
