C.H. Robinson Worldwide, Inc.

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C.H. Robinson Worldwide, Inc.

8100 Mitchell Road
Eden Prairie, Minnesota 55344-2248
U.S.A.
Telephone: (952) 937-8500
Fax: (952) 937-6714
Web site: http://www.chrobinson.com

Public Company
Incorporated: 1905 as C.H. Robinson Company
Employees: 3,677
Sales: $2.88 billion (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: CHRW
NAIC: 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 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 137 offices in the United States, Canada, Mexico, Europe, and South America, the company during 2000 handled more than 2.3 million shipments for a wide range of customers, numbering more than 14,000. 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. Just in the area of North American motor transport, the company has contracts with more than 20,000 carriers. About 85 percent of the company’s revenues are derived from these transportation activities. Generating about 10 percent of sales are C.H. Robinson’s sourcing operations (the founding business), which comprise one of the largest fresh fruits and vegetables distribution networks in North America. Among the produce distributed by C.H. Robinson is its own line, marketed under the brand The Fresh 1, as well as national brand names. The remaining 5 percent of revenues derive from the company’s transportation-related information services, which include payroll, fuel management, and payment services. 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 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—virtually everywhere that 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 (Fall 1988): “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., was comprised of 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 ten 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 (Winter 1994), “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.”

Company Perspectives:

C.H. Robinson Worldwide is a non-asset-based company. We invest in bright, dedicated people. In early 2001, we had approximately 3,700 employees to serve our customers. New employees, hired for their high creativity, flexibility, and customer service skills, receive training on the job and during internal workshops. Our employees work in 138 offices worldwide, and have the expertise and technology to move products from origin to destination, anywhere in the world, door to door.

Last year, more than 14,000 customers entrusted us with more than 2.3 million shipments worldwide. Every day, CHRW develops and executes solutions to shipping challenges. Our service begins with multimodal transportation, extends to global logistics management of supply chains, and covers every point in between. We are experts in many industries and through our extensive carrier network we have the flexibility to meet nearly any logistics need.

There are many transportation companies. But only CHRW can execute a full range of transportation, logistics and sourcing services with a single call.

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 it’s 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.”

Late 1990s and Beyond: 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 trailerload 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: Preferred Translocation Systems, a non-asset-based third-party logistics 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.

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.
1980:: U.S. government deregulates the transportation industry; C.H. Robinson responds by promoting itself as a contract carrier for virtually any shippable product.
1988:: Company enters the intermodal business.
1992:: Freight forwarder C.S. Greene International is acquired.
1997:: Company goes public and changes its name to C.H. Robinson Worldwide, Inc.
1998:: Preferred Translocation Systems and Comexter Group are acquired.
1999:: Three acquisitions are completed: Norminter S.A., Vertex Transportation Inc., and American Backhaul-ers, 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.

Results for 2000 highlighted the rapid pace of C.H. Robinson’s growth. The gross revenues figure of $2.88 billion represented a 27 percent increase over the previous year, and the net revenues of $419.3 million were a 43 percent gain over the $293.3 million total of 1999. Looking to the new century, the company was aiming to continue to increase its net revenues by at least 15 percent each year. Strategies to achieve this growth included the development of customer-specific logistics solutions, rapid growth in the partial truckload and short-haul sectors, the addition of more domestic branches and the expansion of intracontinental distribution networks, and an increased use of technology to aid in communication with customers and to improve efficiency. 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 rapidly growing third-party logistics industry.

Principal Subsidiaries

C.H. Robinson International, Inc.; C.H. Robinson Venezuela, C.A.; C.H. Robinson de Mexico, S.A. de C.V.; C.H. Robinson Company (Canada) Ltd.; C.H. Robinson Company; C.H. Robinson Company, Inc.; CHR Aviation, LLC; Daystar-Robinson, Inc.; Fresh 1 Marketing, Inc.; C.H. Robinson Worldwide-LTL, Inc.; Robinson Holding Company; C.H. Robinson Company LP (99%); Wagonmaster Transportation Co.; Robinson Europe, S.A. (France); Robinson Italia S.r.L (Italy; 95%); C.H. Robinson Poland Sp. Zo.o; Comexter Robinson S.A. (Argentina); Comexter Trading Company; Comexter Cargo, Inc.; Robinson Europe (France); C.H. Robinson (UK) Limited; Robinson France SARL; Norminter Iberica (Spain; 98%); E.G.C. SARL (France); T.E.A. 100% Payment & Logistics Services, Inc.; T-Chek Systems, Inc.; Robinson Logistica Do Brasil Ltda. (Brazil).

Principal Competitors

Ryder System, Inc.; GeoLogistics Corporation; Exel plc; BAX Global Inc.; EGL, Inc.; Schneider National, Inc.; CNF Inc.; GATX Corporation; CSX Corporation; FedEx Corporation; Fritz Corporation.