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Robinson (NASDAQ: CHRW), the leading third-party logistics service provider in North America, released its financial and operating results for the third quarter of 2021 on Tuesday after markets closed.
Robinson continued to reap the rewards of pursuing more profitable activities in ocean freight and ocean freight. The continued pursuit of these opportunities resulted in another record quarter, in which gross revenues increased 14.5% sequentially and earnings per share increased 28.5% quarter over quarter.
Robinson generates approximately 60% of the company’s revenue through its North America Surface Transportation (NAST) division, which includes full freight, LTL and intermodal brokerage. The remaining revenue comes primarily from Robinson’s Global Forwarding division, which organizes international sea and air shipments. The company’s other divisions, including Robinson Fresh, generate less than 8% of total sales.
NAST generated $ 3.8 billion in gross revenue in the third quarter, a 30.5% year-over-year increase. The higher gross sales are attributable to higher prices for full truckloads and partial loads as well as full load shipments. Overall, NAST volumes increased 2.5% during the quarter. The average full truck price, which excludes fuel surcharge, increased 27% in the quarter.
NAST’s adjusted gross margin increased 25.1% year-on-year to $ 460.1 million. Truck gross margin increased 36.5%, in part due to a 30% increase in adjusted gross margin per load and a 4.5% increase in shipments. LTL adjusted gross margin increased 11.5% year-on-year on a 1% increase in LTL volumes.
Higher purchased transportation costs caused NAST’s adjusted gross profit margin to compress further in the quarter, down an additional 10 basis points (bps) from the second quarter to 12.1%. The average full truck cost per mile, excluding fuel surcharges, increased 26% in the quarter. Over the past year, the adjusted gross profit margin decreased by 40 basis points as capacity conditions remained extremely difficult.
Robinson CEO Bob Biesterfeld highlighted the company’s ability to leverage technology investments in today’s environment. “Our company’s trajectory is in the right direction as we continue to leverage our tech-plus strategy to help customers navigate an extremely difficult and limited capacity environment, which we plan to continue,†said Biesterfeld in a press release.
NAST’s operating profit increased 21.6% in the quarter to $ 149 million. Robinson faced a 26.8% increase in operating expenses due to higher incentive compensation and benefits realized through the company’s short-term pandemic-related cost reduction initiative . NAST membership increased 0.9% during the quarter.
Global Forwarding continued to shine for Robinson, posting revenue of $ 2 billion, up 138% year-on-year and 36% sequentially. Operating revenue totaled $ 165 million, up 257% year-over-year. The company attributes the revenue growth to higher prices and volume of sea and air offerings, driven by a high demand environment, capacity constraints and market share gains.
Global Forwarding’s adjusted gross profit margin continued to decline to 15.7% from 16.5% in the second quarter.
Robinson is reaping the rewards of capacity constraints on the ocean. Sea freight adjusted gross margin increased 141.7% year-on-year, while volumes only increased 12% in the quarter. Volume growth is slower than in the previous quarter (up 29% year-on-year), but Robinson was able to increase adjusted gross profit per shipment by 116.5%.
Air freight saw a 50.5% increase in metric tonnes shipped, leading to a 76.2% increase in adjusted gross margin in the third quarter.
“Demand for our global suite of services and for the benefit of our powerful technology platform continues to be strong, and digitization continues to take hold and be embedded in a growing percentage of our business,†said Biesterfeld in a press release.
