Freight Brokerage Backdrop Remains Challenging for C.H. Robinson

C.H. Robinson dominates the $90 billion-plus asset-light truck brokerage market, and its immense network of shippers and asset-based truckers supports a wide economic moat, in our view. Although the company isn't immune to freight pullbacks, its variable-cost model historically helps shield profitability during periods of lackluster volume and pricing, as evidenced by a long history of above-average profitability. The firm's ownership of transportation equipment is minimal, and a large swath of operating expenses are tied to performance-based variable compensation, which moves with net revenue. We think the company remains well positioned to capitalize on gradual truck brokerage industry consolidation (including market share gains) despite intensifying competition.