Public Company
Founded: 1905
Employees: 7,347 (2009)
Sales: $7.577 billion (2009)
Stock Exchanges: NASDAQ
Ticker Symbol: CHRW
NAICS: 488510 Freight Transportation Arrangement; 422480 Fresh Fruit and Vegetable Wholesalers; 541614 Process, Physical Distribution, and Logistics Consulting Services
As one of the leading third-party logistics (3PL) firms in North America, C.H. Robinson Worldwide, Inc., manages the transportation and distribution of materials, parts, supplies, and finished goods for its customers. From a network of 235 offices in North America, Europe, South America, Asia, Australia, and the Middle East, the company reported handling more than 7.5 million shipments in 2009 for more than 35,000 customers. As a third-party logistics company, C.H. Robinson does not itself own transportation equipment but rather contracts with transportation carriers to coordinate the movement of its customers’ freight. About 75 percent of the company’s revenues are derived from truckload and less-than-truckload services. The company also generates revenue from inter modal, ocean, and air transport, as well as custom brokerage fees and management fees, information services, and sourcing. C.H. Robinson’s sourcing operations (the founding business) comprise one of the largest fresh fruits and vegetables distribution networks in North America. Among the produce distributed by C.H. Robinson are its own lines, marketed under the brands The Fresh 1 and Our World Organics, as well as national brand names. C.H. Robinson began as a small brokerage business, functioning as intermediary between buyer and seller. With the development of the interstate highway system in the 1950s, however, the Minnesota company steadily evolved into a full-service transportation management supplier.
PRODUCE SHIPPING ROOTS
The company traces its origin to the early 1900s, when Charles H. Robinson established a small brokerage firm in Grand Forks, North Dakota, to ship produce to customers throughout the Red River Valley region of northeastern North Dakota and northwestern Minnesota. In May 1905 Robinson formed a partnership with Grand Forks-based Nash Brothers, the forerunner of the Nash Finch Company and the leading wholesaler in North Dakota. The partnership was incorporated as C.H. Robinson Company, and Robinson was named the company’s first president. According to popular legend, related by Lee Egerstrom in the St. Paul Pioneer Press,Robinson “sold out a couple of years later and ran off with Annie Oakley, the showgirl shootist of Buffalo Bill Cody’s Wild West Show fame,” dying shortly thereafter in 1909. Historical evidence has shown, however, that if such a relationship existed, it would have concluded before 1905. Moreover, Robinson did not die in 1909, nor were his shares in the company acquired by the Nash brothers and Harry Finch at that time. Nevertheless, by 1913 the partnership had ended, and the principals of the Nash Finch Company were the sole owners of C.H. Robinson Co.
The Robinson subsidiary served primarily as a produce procurement vehicle for Nash Finch and expanded rapidly by establishing branch offices in Minnesota, Iowa, Wisconsin, Illinois, and Texas, places where Nash had established its own warehouses. In 1919 Minneapolis became Robinson’s headquarters, from which the company continued to expand until World War II intervened some two decades later.
During the early 1940s, Robinson also faced action by the Federal Trade Commission (FTC), which concluded that the subsidiary and Nash Finch were in violation of the Robinson-Patman Act because of the price advantage Nash received over that of other wholesalers. As later explained in the Chronicle in its fall 1988 issue: “Rather than taking the case to court, C.H. Robinson Co. was split into two separate companies. The first company, C.H. Robinson Co., was formed by all offices selling produce to Nash-Finch warehouses, and the ownership of this company was sold to all Robinson employees. The other company, C.H. Robinson, Inc., comprised the remainder of the offices and was still owned by Nash-Finch Co.”
1960S AND 1970S: MOVING INTO TRUCKING AND BECOMING EMPLOYEE OWNED
Up until this time, Robinson, like its competitors, was limited to rail transport for the majority of its shipments. Massive funding of the interstate highway system was about to alter that. The Federal Highway Act of 1956 catapulted Robinson into the trucking business. Initially working through its Omaha branch office, C.H. Robinson began capitalizing on opportunities for truck brokerage, launching what may have been the first such brokerage operation in the country. This involvement in managing the transport of “exempt” commodities (perishables that were exempt from government regulation) spread to 10 branches by the 1960s. Around mid-decade C.H. Robinson Co. and C.H. Robinson, Inc., consolidated their operations under the name C.H. Robinson Co. Wholesaler Nash Finch still held a minority stake of approximately 25 percent in the brokerage company, with Robinson employees owning the remainder.
This structural arrangement led to a natural conflict of interests, with Nash requesting more Robinson dividends to invest in its own operations and Robinson wishing to retain more earnings in order to accelerate the company’s growth. Finally, in 1976, both companies were satisfied when all remaining Nash shares were bought out, and Robinson Co. became an entirely employee-owned business. A year later, D. R. “Sid” Verdoorn was installed as company president and CEO, and Looe Baker was named chairman of the board. “With this new leadership in place,” recorded the Chronicle, “Robinson remained on its successful path—with a new commitment to data processing, and a continued dedication to the expansion of transportation and produce branch offices.”
1980S AND EARLY 1990S: EMPHASIZING LOGISTICS
In 1980 the federal government deregulated the transportation industry through the Motor Carrier Act, which effectively broadened competition in the field.
Robinson responded by establishing a contract carrier program and promoting itself not only as a purveyor of food products but also as a freight contractor, or middleman sourcing operation, for virtually all shippable goods. In just five years, the company’s average annual growth, measured by truckloads, doubled. The company was now posting more than $700 million in sales, with roughly 40 percent generated by truck brokerage and most of the remainder through produce sales. Commenting on Robinson’s evident edge in the truck contracting industry, John J. Oslund, of the Minneapolis Star Tribune, wrote, “Unlike most of its competitors, who are relative newcomers, Robinson has developed its expertise over more than 50 years in the dicey and competitive world of produce delivery.”
In January 1988, in a concentrated effort to become a full-service, multiple-carrier provider, the company launched its Intermodal Division (intermodal denotes shipping that involves more than one mode, such as both truck and rail). As explained in the Chronicle in its winter 1994 issue, “By combining its truck strengths with the recently improved service of rail carriers, Robinson saves customers significant dollars on long distance shipments.” In a number of subsequent moves, Robinson increasingly solidified its reputation as a well rounded, globally positioned transportation and logistics company. For example, in addition to systematically opening a number of new branch offices each year, in 1990 the company expanded its international service through the formation of C.H. Robinson de Mexico. Two years later, international freight forwarding and air freight operations were added through the acquisition of the oldest and largest freight forwarder, C.S. Greene International Inc.
During 1993, a particularly dynamic year for the company, C.H. Robinson made its first foray into the general food and beverage business with the acquisition of New York-based Daystar International Inc., a $40 million distributor of fruit juice concentrates. As Vice President Looe Baker III told Tony Kennedy, in an interview for the Star Tribune: “It’s a big deal for us, and you’ll see us make more moves…. [We’re] searching for ways to expand into diversified segments of the food market.”
During this time, C.H. Robinson continued to rely primarily on a vast network of independent truck operators, who together offered some 730,000 pieces of equipment, from containers on flatcars to refrigerated vans. Nevertheless, the company began to relax its policy of operating as a non-asset-based service firm by acquiring trucking fleets of its own. In early 1993, Robinson bought a trucking operation based in Sioux Falls, South Dakota, in order to service Carlisle Plastics, whose Western Division was also based there. Other fleet purchases, designed “to provide customer-specific service to large, heavy-volume accounts like Frito Lay” and to create greater flexibility for the company, included 100 48-foot refrigerated containers and 90 48-foot insulated containers. During this time, Robinson worked with over 14,000 shippers and moved more than 500,000 separate shipments annually.
Before the end of 1993, the company enhanced its European presence by acquiring a 30 percent stake in Transeco, a French motor carrier; Robinson later acquired the remaining shares for full ownership of Transeco. Other international activity included the opening of offices in Mexico City; Santiago, Chile; and Valencia, Venezuela. In 1994, on the verge of celebrating its 90th anniversary, Robinson expanded its intermodal strategy with two purchases, Atlanta-based Commercial Transportation Services Inc. and Boston-based Bay State Shippers Inc., both for undisclosed amounts. The company also had plans to broaden its The Fresh 1 line to include more value-added items. Annual volume for the 28-item line numbered between six and eight million packages. Careful not to underestimate the potential of the brand, Robinson believed it could yet become “as recognizable to the trade and consumers as the likes of Dole, Del Monte and Chiquita.”
1995–2000: GOING PUBLIC AND EXPANDING THROUGH ACQUISITIONS
C.H. Robinson continued to expand its logistics capabilities in the late 1990s. In 1995 the company entered the full-service logistics market through the formation of C.H. Robinson Logistics. This new division focused on developing and managing the logistics operations of customers throughout the entire supply chain. Two years later, the company entered the burgeoning market for expedited freight transportation, focusing on full trailer load shipments, through another new division, CHR-Ex.
At this time, the company remained entirely owned by current and former employees. With a number of the shareholders wishing to cash in at least part of their stakes, the company went public in October 1997. An initial public offering that month of about 25 percent of the company, or 10.6 million common shares, sold for $18 per share (which exceeded the expected price of $15 to $17) and generated about $190 million for the 101 people who sold shares. The initial market value of the company, which was at this time renamed C.H. Robinson Worldwide Inc. to reflect its increased international profile, totaled $743 million. Shares began trading on the NASDAQ under the symbol CHRW. Gross revenues for 1997 reached $1.79 billion, while net revenues amounted to $206 million, a 15.1 percent increase over the previous year. (Net revenues were considered by the company to be a more accurate gauge of performance than gross revenues, as they deducted from gross revenues the cost of the transportation contracted for by the company and the purchase price of the products sourced by the company.) Overseas markets accounted for 16 percent of revenues in 1997.
Sid Verdoorn, CEO of the firm since 1977, was named to the additional post of chairman in 1998. John P. Wiehoff, who was named senior vice president and CFO in July 1998, was promoted to president of the company in December 1999. The leaders initiated a string of acquisitions in 1998, as C.H. Robinson continued to seek opportunities for growth and as the transportation industry entered a period of heightened consolidation. During 1998 two acquisitions were completed for Preferred Translocation Systems, a non-asset-based 3PL firm specializing in partial truckloads, and Comexter Group, an Argentinean firm specializing in South American transportation, freight forwarding, trading, and customs brokering. Another overseas acquisition, that of Norminter S.A., was consummated the following year. Based in Caen, France, Norminter was a non-asset-based third-party logistics company with offices in France, Germany, Spain, and the United Kingdom. Also in 1999, C.H. Robinson acquired Vertex Transportation Inc., which was based in East Rochester, New York, and provided third-party logistics services throughout North America.
The largest of this string of acquisitions came in December 1999 when C.H. Robinson paid about $136 million in cash and stock for American Backhaulers, Inc., a privately held logistics firm based in Chicago. American Backhaulers specialized in over-the-road transportation services and had annual gross revenues of about $285 million. In August 2000 C.H. Robinson entered a new segment of the market through the purchase of Brooklyn Center, Minnesota-based Trans- Consolidated Inc., which was a third-party logistics firm specializing in refrigerated partial truckload shipments for perishable food manufacturers.
THE 21ST CENTURY: CONTINUED GROWTH
Growth through acquisition played a major part in C.H. Robinson’s strategy in the early 21st century, as it consolidated its position domestically and globally. In January 2002 the company acquired Smith Terminal Transportation Services, Inc., one of the largest 3PL providers in Florida. The following year, C.H. Robinson acquired Frank M. Viet GmbH Internationale Spedition, an international freight and forwarding and third party logistics company based in Hamburg, Germany. Continuing its global expansion, C.H. Robinson announced in June 2004 that it would open seven offices in China, as well as acquire select assets of Dalian Decheng Shipping Agency Co., Ltd. (DDSA). In December 2004 C.H. Robinson acquired US Traffic Inc., a provider of transportation and logistics services. In February 2005 C.H. Robinson expanded its produce division with the acquisition of Food Source Procurement LLC, a provider of produce sourcing and distribution services. That September, C.H. Robinson purchased, in separate agreements, German and Italian companies. Gebr Hirdes GmbH was a Hamburg-based provider of freight forwarding and distribution, logistics, and warehousing services, and Bussini Transport Srl., based in Milan, provided international freight forwarding, customs brokerage, and domestic truck services.
In 2006 C.H. Robinson acquired two more companies. These were Payne Lynch & Associates Inc., a provider of transportation brokerage services, and Triune Logistics Pvt Ltd, a logistics services provider based in India. In July 2007 C.H. Robinson acquired LXSI Services Inc., a provider of logistics services.
Presiding over this string of acquisitions was John P. Wiehoff, president and CFO since 1999, who was named CEO in 2002, replacing Sid Verdoorn, who had served as CEO of the firm since 1977. The company’s board of directors elected Wiehoff, at age 44, as chairman of the board in August 2006.
Not immune to litigation, C.H. Robinson agreed to pay $15 million in April 2006 to settle a suit brought by several current and former female employees alleging sex discrimination. The settlement was covered by the company’s liability insurance. The acquisitions continued, with the $51.7 million 2008 purchase of Transera International Holdings Ltd., a project forwarding company headquartered in Calgary, Canada. Transera was one of the largest privately owned project forwarders in North America, with annual gross revenues of about $125 million. Further solidifying its position in the United States, in July 2009 C.H. Robinson acquired International Trade & Commerce, a U.S. customs brokerage company specializing in warehousing and distribution and headquartered in Laredo, Texas. In September 2009, C.H. Robinson bought Rosemont Farms Corp. Inc. and Quality Logistics, two Florida companies that market and transport produce, for $29 million. The purchase secured access to the growing end of produce distribution for the company.
By 2009 C.H. Robinson had grown revenue to $7.58 billion, less than the $8.58 billion in 2008, but better than the prerecession $7.32 billion of 2007. Net income, a better indicator of a company’s financial health, remained steady in 2009 at $3.61 million, almost unchanged from the 2008 net income of $3.59 million. With no debt, strong cash flow, and a motivated workforce that continued to own the bulk of the company stock, C.H. Robinson appeared likely to maintain and solidify its position in the third-party logistics industry.
COMPANY PERSPECTIVES
C.H. Robinson helps our customers ship their products around the world, managing the transportation and logistics of all kinds of cargo—from electronics to automobile parts to fresh produce. We also provide our customers with valuable services and resources that drive efficiency into their systems and processes. The items that you purchase and consume every day are a direct result of the supply chain that we’ve helped keep in motion for the past 100 years.
KEY DATES
| 1905: | Charles H. Robinson joins with Nash Brothers to form a partnership, C.H. Robinson Company, to ship produce to customers in the Red River Valley. |
| 1913: | With end of partnership, Nash Finch Company (successor of Nash Brothers) gains sole ownership of C.H. Robinson Co. |
| Early 1940s: | Company is divided in two, with one company owned by its employees and the other owned by Nash Finch. |
| Mid-1960s: | The two successor firms are consolidated under the name C.H. Robinson Co., with Nash Finch owning about 25 percent and employees the remainder. |
| 1976: | Nash Finch’s shares are bought out and the firm becomes entirely employee owned. |
| 1997: | Company goes public and changes its name to C.H. Robinson Worldwide, Inc. |
| 2000: | Trans-Consolidated Inc. is acquired, marking C.H. Robinson’s entry into a new segment, refrigerated partial truckload shipments for perishable food manufacturers. |
| 2002: | John P. Wiehoff, president and CFO since 1998, is named CEO, replacing Sid Verdoorn, who served as CEO of the firm since 1977. |
| 2005: | Purchase of FoodSource Procurement LLC, a provider of produce sourcing and distribution services. |
| 2006: | C.H. Robinson expands into India with the acquisition of Triune Logistics Pvt Ltd. |
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