Robinson (NASDAQ: CHRW), the leading North American nonasset third-party logistics provider, reported its financial and operating results for the third quarter of 2021 on Tuesday after markets closed.
Robinson has continued to reap the benefits of the pursuit of more profitable business in the less-than-truckload and ocean freight arenas. The continued pursuit of these opportunities has allowed for another record quarter, during which gross revenues grew by 14.5% sequentially and earnings per share increased by 28.5% quarter-over-quarter.
Robinson generates roughly 60% of the company’s revenue through its North America Surface Transportation (NAST) division, which includes truckload, LTL and intermodal freight brokerage. The remaining revenue comes primarily from Robinson’s Global Forwarding division, which arranges international ocean and air shipments. The company’s other divisions, which include Robinson Fresh, generate less than 8% of total revenue.
NAST generated $3.8 billion in gross revenue during the third quarter, an increase of 30.5% y/y. The higher gross revenue was driven by higher truckload and LTL pricing as well as truckload shipments. Overall, NAST volumes increased by 2.5% during the quarter. Average truckload linehaul pricing, which excludes fuel surcharge, increased by 27% in the quarter.
NAST adjusted gross profit increased by 25.1% y/y to $460.1 million. Truckload gross profit increased by 36.5%, thanks in part to a 30% increase in adjusted gross profit per load and a 4.5% increase in shipments. LTL adjusted gross profit increased by 11.5% y/y on a 1% increase in LTL volumes.
The rising costs of purchased transportation have led to further NAST adjusted gross profit margin compression in the quarter, down another 10 basis points (bps) from the second quarter to 12.1%. Average truckload linehaul cost per mile, excluding fuel surcharge, increased by 26% in the quarter. Over the past year, adjusted gross profit margin has compressed by 40 bps as capacity conditions have remained extremely challenging.
Robinson CEO Bob Biesterfeld highlighted the company’s ability to leverage tech investment in the current environment. “The trajectory of our business is heading in the right direction as we continue to leverage our tech-plus strategy to help customers navigate through an extremely challenging and capacity-constrained environment, which we expect to continue,” Biesterfeld said in a statement.
NAST income from operations increased 21.6% in the quarter to $149 million. Robinson did face an increase in operating expenses of 26.8% due to higher incentive compensation and to the benefit realized from the company’s short-term, pandemic-related costs reduction initiative. NAST headcount increased by 0.9% during the quarter.
Global Forwarding continued to shine bright for Robinson, recording revenues of $2 billion, up 138% year-over-year and 36% sequentially. Income from operations totaled $165 million, up 257% y/y. The company attributes the revenue growth to higher pricing and volume in both ocean and air offerings, thanks to a strong demand environment, capacity constraints and market share gains.
Global Forwarding adjusted gross profit margin continued to narrow to 15.7% from 16.5% in Q2.
Robinson is reaping the benefits of the capacity constraints on the ocean. Adjusted gross profit for ocean freight increased by 141.7% y/y, while volumes grew just 12% in the quarter. Volume growth is slower than the previous quarter (up 29% y/y), but Robinson was able to grow adjusted gross profit per shipment by 116.5%.
Air freight experienced a 50.5% increase in metric tons shipped, leading to a 76.2% increase in adjusted gross profit in the third quarter.
“Demand for our global suite of services and for the benefit of our powerful technology platform continues to be strong, and digitalization continues to take hold and be engrained in an increasing percentage of our business,” Biesterfeld said in a statement.