C. H. Robinson (CHRW) 19th Annual Global Transportation & Industrials Conference summary

Industry developments and regulatory impact

• The Montgomery ruling is expected to drive industry consolidation, particularly affecting small and medium brokers and carriers due to increased insurance costs and liability concerns.

• Larger, scaled brokers are positioned to benefit as shippers seek trusted partners with robust vetting and insurance coverage.

• Insurance costs are locked in until 2026, with any increases expected to be transitory and ultimately passed to shippers and consumers.

• The company anticipates 20%-30% of broker capacity could exit the market over the medium term due to these pressures.

• The company expects to be a consolidator, both organically and through M&A, as the industry restructures.

Operational strategy and productivity

• Achieved 50% labor productivity improvement in NAST and 45% in global forwarding since late 2022, driven by Lean and AI initiatives.

• Productivity gains are ongoing, with a commitment to single-digit improvements annually and no cap on future gains.

• Automation and technology have enabled 100% response to transactional quotes, up from 60%, improving win rates and customer service.

• The company maintains a disciplined approach to volume, prioritizing margin quality over sheer volume growth.

• Continuous improvement culture and technology integration are expected to further enhance efficiency and profitability.

Market performance and financial outlook

• Outperformed the market in North American Surface Transportation for 12 consecutive quarters, gaining share in both contract and spot markets.

• Maintained flat margins in Q1 despite a 20% year-over-year increase in spot costs, demonstrating strong revenue management.

• Committed to a $6 earnings target for the year, based on a zero-growth market, with confidence in achieving this even if market conditions remain negative.

• Mid-cycle margin target for NAST is 40%, with potential to exceed this, but the company prefers to retain flexibility for market share gains.

• Gross profit per load has increased meaningfully since mid-2023, outpacing industry peers.