Front-loading and trade policy shifts drove a 17.3% decline in adjusted air gross profits to $33.5m as metric tons shipped fell 12.5% year on year
Trade policies and front-loading of volumes earlier in the year took their toll on CH Robinson’s air forwarding business in the fourth quarter.
The company’s air business saw adjusted air gross profits for the quarter decrease by 17.3% year on year in the fourth quarter to $33.5m on the back of a 12.5% decline in metric tons shipped and a 5.5% decrease in adjusted gross profit per metric ton shipped.
The company said that the performance of the forwarding business in the fourth quarter was affected by the front-loading of volumes earlier in the year as a result of global trade policies.
Last year, companies had moved volumes early to try and beat the implementation of tariffs in the US, which had resulted in stronger volumes earlier in the year.
The company added that performance was also affected by a dislocation of global demand and softer volume year on year.
The overall forwarding division reported a 12.7% year on year decrease in adjusted gross profits in the fourth quarter to $178m. Revenues for the period were down 17.3% on a year earlier at $730.9m.
To help tackle the current market conditions, the forwarding business has been developing a more centralised model with "standardised and Lean AI-enabled processes"
Average employee headcount for the forwarding business for the quarter was 11.8% down to 4,007.
"The fourth quarter certainly provided a challenging macro environment, with weak global freight demand, rising spot costs in trucking and falling ocean rates all providing headwinds to our business,” said president and chief executive, Dave Bozeman.
“However, we’ve consistently focused on controlling what we can control, which is providing differentiated service and solutions to our customers and carriers, executing with discipline, and continuously improving our business model and our cost to serve.
“This focus, and the strength of our Lean AI - which is the combination of our Lean operating model, industry-leading technology and the best logisticians - has enabled us to consistently outperform over the last two years, and we did it again in the fourth quarter.”
“International freight continues to be impacted by global trade policies, which caused previous front-loading, a dislocation of shipments and a more pronounced decline in demand after the third quarter peak season. Combined with excess vessel capacity, this caused ocean rates to decline substantially versus a year ago."
He added: "So the macro conditions for global transportation companies were difficult in fourth quarter, and we are not impervious to these volume and rate dynamics."
