Business Strategy and Outlook| Matthew Young, CFA |
C.H. Robinson dominates the $80-plus billion asset-light highway 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 downturns, its variable-cost model helps shield profitability during periods of lackluster freight demand, as evidenced by a long history of above-average profitability. The firm's ownership of transportation equipment is minimal, and a large portion of operating expenses are tied to performance-based variable compensation, which tends to move in line with net revenue growth. We think the firm remains well positioned to capitalize on truck brokerage industry consolidation (including market share gains) despite intensifying competition.