A&A CHRW Site Visit 9-2003

C.H. Robinson – Strength at the Core
September 1, 2003

Richard Armstrong

Recently, we had the opportunity to spend a couple of days with CH Robinson (CHRW). CHRW is expanding its offerings dramatically while preserving its core strength in trucking capacity management and supply.

We spent a day at the CHRW office in Milwaukee with Branch Manager Tom Donovan and his crew. I was impressed by the differences between Donovan’s operation and those of the transportation companies I worked in many years ago. The differences are central to CHRW’s ongoing success. Here is what I saw:

The salespeople, who also are responsible for operations, including carrier management and dispatching, are primarily college graduates (11 of 12 salespeople) who were hired right out of college and trained by CHRW.
All of the salespeople have reasonable base salaries and share in the branch’s bonus pool. Branch managers receive about two-thirds of their pay from the bonus pool of their branch. To our knowledge, only Expeditors provides incentives to non-executive staff as heavily.
The office is organized with open space so that salespeople can talk and collaborate on shipments and problems. The cooperative atmosphere spreads throughout the place. Camaraderie and the “we’re all in this together” spirit predominate.
Every customer has a primary point of contact, but all of the salespeople are responsible for insuring high quality service to the branch’s accounts, and are incented to do so through the performance compensation system.
CHRW has 150 offices operating with this same cooperative approach.
The truck management operating system “Express” was originally obtained with the American Backhaulers purchase. It was then combined with CHRW’s existing truck management system, Cosmos, The system continues to be expanded and modified. Express is easy to use. It provides easy access to shipments being handled in the CHRW network (companywide, approximately 12,000 per day, including significant LTL volumes). A neat feature of Express is one-screen capacity mapping for North America. At a glance a manager can see where the freight imbalances are. For example, on the day of our visit Florida, Georgia and most of the East Coast had 5-6 times or more trucks as loads. California was 2:1. The upper Midwest, as it should be in late summer and fall, had more freight than trucks.

In summary, CHRW’s branch offices involve quality people maximizing opportunities for their customers with strong IT support. This model is antithetical to transportation management approaches in which people support software. The major difference is that CHRW is an efficient, profitable company– major software dependent operators like Schneider Logistics and Transplace are unprofitable.

CHRW’s Home Office

CHRW is expanding its supply chain functionality organically. A major and important example is the shift to spread the capability of its Ross Division beyond publications to other verticals. The Ross Division handles processes from inventory management through customer delivery.

CHRW has built a European transportation capacity management operation based in Antwerp. This operation has traction and profitability. Indeed, the fragmental nature of European trucking is perfect for CHRW’s approach.

In addition, CHRW’s freight forwarding operation continues to grow. This operation handles 80,000 TEUs per year. The majority is import, but a significant portion is export. The airfreight operations are project oriented.

CHRW has created a service called TMC, which also uses the Express platform. TMC is designed for large accounts who want to handle their transportation rate negotiation and some transportation management in-house. TMC executes their customers’ routing guides as a 4PL. In those situations, Robinson may also be a large carrier to the customer as well. Data reporting back to the customer is where CHRW sees itself as excelling. This offering is a solid competitor to Schneider Logistics and other transportation managers who are selling their software to large accounts who insist on owning their transportation execution and planning.

CHRW continues to be very profitable and its prospects look great for the next several years. In our opinion, the major issue for CHRW top management is how fast, and how best, to further globalize its operations.