Consultant’s Insight: C.H. Robinson divests freight forwarding office in Argentina

C.H. Robinson ’s global freight forwarding division continues to face pressures in a market with excess capacity and muted demand. While rumors swirled last year that the company might sell the division, it assured investors that it planned to keep it. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] “As we look at the combination of NAST [North American Surface Transportation] and Global Forwarding, we’ve seen some great opportunities from a cross-selling standpoint between the two,” Chief Financial Officer Mike Zechmeister told analysts earlier this year. “And as we pointed out, if you look at the last 12 months, we’ve had over half of our revenue in adjusted gross profit come from customers who use both Surface Transportation and Global Forwarding services.” Indeed, Zechmeister highlighted research the company did, looking at the past five years and at customers who use both NAST and Global Forwarding versus customers who use one or the other, that found that the five-year compound annual growth rate for customers who use both was 400 basis points better than those who use one. However, the domestic and international markets have not been kind to C.H. Robinson and other logistics providers. With a new chief executive, Dave Bozeman , service reviews and cost-cutting across the organization are underway. Then-interim CEO Scott Anderson told analysts in February that “global supply chains are getting more complex, and partners that can solve problems … can create tremendous value for multiple players, including Robinson.” Leaving Argentina With growing complexity in global supply chains often comes shifts in trade lanes and the need to optimize networks. During the first quarter, for example, C.H. Robinson opened a freight forwarding office in Dubai and, during Q3, it announced it would divest its operations in Argentina . Despite forwarders such as DHL and Rhenus Group recently expanding services into Argentina, Zechmeister told analysts this week that operating there had “become challenging due to its strict monetary policies and rapid currency devaluation.” Instead, C.H. Robinson plans to use a local independent agent or agents to ensure continued service to customers with shipments in the region. Argentina is in its worst drought in more than 60 years, jeopardizing its top exports of processed soy and corn. In addition, it is facing 99% inflation and local and international debt repayments to bondholders and the International Monetary Fund . C.H. Robinson has other offices in South America, including Brazil, Colombia and Chile. Where C.H. Robinson stands While C.H. Robinson is considered a Top 10 ocean freight forwarder, according to Armstrong & Associates ’ latest ranking, it is ranked 19th for airfreight forwarding in Air Cargo Next ’s Power 25 list of the top freight forwarders, having transported 285,000 tonnes in 2022. In a recent 2024 outlook webinar, C.H. Robinson Director of Global Operations and Strategy Alan Rowlett described the 2023 freight forwarding market as a “reset” and said that diversification of trade lanes, resulting from supply chain constraints, will introduce higher valued goods from more locations. We’ll likely see more closures and consolidation in C.H. Robinson’s global network as it prepares to take further advantage of changing sourcing strategies emerging in Southeast Asia and the Middle East.

Consultant’s Insight: C.H. Robinson divests freight forwarding office in Argentina

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