C.H. Robinson beats the Street, will pursue market share where margins are

About three quarters of Robinson’s revenue is generated by its North America Surface Transportation (NAST) division, which includes truckload, LTL and intermodal freight brokerage. The remainder comes from Robinson’s Global Forwarding division, which arranges international ocean and air shipments. 

In the second quarter, NAST posted revenues of $3.6 billion, up 44.9% year-over-year and up 12.5% since the first quarter. Income from operations totaled $151 million, up 10.4% compared to the year-ago period and up 11% from the first quarter. 

NAST adjusted gross profit margins compressed from 13.1% in the first quarter of 2021 to 12.2% in the second quarter. It appears that NAST’s gross margins were wider in the first quarter due to a temporarily looser capacity environment in January and February that reversed itself in March and then stayed tight through the second quarter. 

Truckload volume was up 6% year-over-year, while LTL volumes grew 23.5%.

Global Forwarding was the standout in the quarter, recording revenues of $1.45 billion, up 105% year-over-year and 31.8% higher than the previous quarter. Income from operations came in at $108 million, up 84.1% year-over-year and 19.3% higher than the previous quarter. 

Global Forwarding’s adjusted gross profit margin narrowed to 16.5% in the second quarter from 18.5% in Q1. 

Ocean freight was far more profitable for C.H. Robinson in the second quarter of 2021 than in the second quarter of 2020. While volumes were up 29% year-over-year, adjusted gross profit grew 91.7%, nearly doubling. Those year-over-year comparisons are very similar to the same numbers seen in Q1 (93.9% adjusted gross profit growth on 27% more shipments), suggesting that ocean markets are still in turmoil, with rates inflating just as rapidly this year as they did when the COVID recovery began in the middle of 2020. Ocean adjusted gross profit grew 11.5% quarter-on-quarter.

Robinson management expects strong demand and capacity constraints to keep freight markets hot through at least the rest of the year.

“Given the current structural constraints around expansion of supply, coupled with a continued reopening of the economy and other factors, we expect the current market conditions to persist through 2021,” Biesterfeld said in a statement. “Within NAST, we expect to grow our truckload and LTL volume during the remaining quarters of this year. Within our Global Forwarding business, there continues to be a robust pipeline of business and, as we move toward the peak holiday season, we expect ocean and air demand to remain strong into early 2022.”