Freight Broker C.H. Robinson Digs in Against Activist Investor

“We’re going to take our time,” C.H. Robinson interim Chief Executive Scott Anderson, who most recently served as the company’s chairman, said of the search for a permanent replacement for Bob Biesterfeld, who was ousted as CEO on New Year’s Eve. 

Ancora, which owns 1.9% of C.H. Robinson and has two representatives on the board, launched a campaign in early 2022 to have the company, which counted $24.7 billion in gross revenues last year, focus more tightly on its core domestic operations and challenges by digital-focused upstart companies.

C.H. Robinson executives said on the Wednesday earnings call that the global forwarding arm, which moves freight by air and ocean, is essential to the company’s success.

Michael Zechmeister, C.H. Robinson’s chief financial officer, said more than half of the company’s revenues are generated by customers who use both the company’s global forwarding and its domestic unit, which moves freight by truck, rail and air. He said revenues from customers using forwarding services combined with other services grew at a 4% higher compound annual growth rate than revenues from shippers using single services. 

“We believe in the ability to leverage both of those businesses, and that’s our plans going forward,” Mr. Zechmeister said.

Fourth-quarter revenue at the forwarding arm fell 53% to $1 billion and the operating profit plunged 81% to $28.2 million. 

C.H. Robinson is by far the largest player in the U.S. domestic freight brokerage market that matches freight shippers with available trucks. It is also among the top two U.S.-based companies in the global forwarding market that transports cargo by air and ocean.

The Eden Prairie, Minn.-based company is struggling as freight volumes and rates drop from record highs during the Covid-19 pandemic. The company recently laid off 650 employees, 3% of its global workforce, as part of cost-cutting measures designed to deliver annualized savings of $150 million. 

The company overall recorded a 14% increase in gross profits in 2022 of $3.6 billion. But earnings fell in the second half of the year when freight demand softened as consumers pulled back spending on goods.

Revenues dropped 22% year over year in the fourth quarter of 2022 to $5.1 billion and operating profit fell 43% to $164 million.

Several analysts issued reports following the earnings call expressing frustration the company wasn’t moving more quickly to change its business strategy or to replace its CEO. Bascombe Majors, an analyst at Susquehanna Financial Group, wrote on Thursday that C.H. Robinson appeared to be “in limbo.” 

Acquisition-focused Danish forwarder DSV A/S was reported last year by Reuters to be a prospective buyer of C.H. Robinson’s forwarding operation. Chief Executive Jens Bjørn Andersen said on a Thursday earnings call that the company is still looking for acquisitions. 

Cleveland-based Ancora in the past has taken small stakes in underperforming companies and launched public campaigns calling for changes to boards and executive leadership as well as the sale of assets. It is active across a swath of industries, with stakes in companies ranging from struggling retailer Bed Bath & Beyond Inc. to packaging manufacturer Berry Global Group Inc.

In the logistics sector, the firm launched a campaign in 2021 targeting expedited trucking company Forward Air Corp.

Ancora launched a proxy fight at the Greeneville, Tenn.-based company and pushed executives to quickly refocus on Forward Air’s expedited less-than-truckload business, which consolidates small shipments in a single trailer. The business has since become more profitable.

Write to Paul Berger at [email protected]