C.H. Robinson Worldwide's asset-light business model helped keep the Eden Prairie, Minn.-based truck broker and third party logistics provider in the black through 2008, though management said warning signs dominate the company's horizon.
"Although we had solid results in the fourth quarter, gross profit per business day growth in our largest business, North American truckload transportation, deteriorated as the quarter progressed," said chief executive and chairman John P. Wiehoff.
The company posted just a 0.2-percent gain in gross revenue for the fourth quarter, to $1.95 billion, but saw revenue for the year swell 17.3 percent, to $8.58 billion, compared with 2007. Net income for the quarter grew 4.3 percent, to $88.8 million, and 10.8 percent for the year, to $359.1 million.
"The environment remains unpredictable, and we do not know whether our experience so far in January is a good indication of what the full first quarter or the year will bring," Wiehoff said. "A sustained, slow freight environment is the most challenging for growth."
Though trucking business started to decline in the last quarter of 2008, lower cost of capacity kept the company's truckload and less-than-truckload gross profit margins up 3.1 percent for the quarter. Volume growth in management fees, customs brokerage and other logistics services increased miscellaneous transportation gross profits by 15.3 percent in the fourth quarter.
Ocean transportation gross profit soared 56.3 percent in the fourth quarter, to $18.6 million, more than a third of that contributed by C.H. Robinson's acquisition of Canadian forwarder Transera International.
Fourth quarter intermodal gross profit was up 28 percent on increased volumes and market expansion. But air gross profits were off 2.2 percent as customers switched modes to ocean transport, and without Transera profit in the air segment would have been down 4.3 percent.
Analyst Jon A. Langenfeld of Robert W. Baird & Co. said C.H. Robinson faced tough times ahead but would be well-positioned with its asset-light business model to gain once freight conditions improve.
-- William Hoffman, Traffic World