CEO Bozeman said the recovery will be driven as replacement demand for goods picks up. — Bloomberg
WASHINGTON: C.H. Robinson Worldwide Inc expects the freight recession will linger into next year, but sees a recovery taking hold in the second half of 2024.
Chief executive officer Dave Bozeman said in an interview that the recovery will be driven as replacement demand for goods picks up.
Meanwhile, trucking rates will increase as capacity comes out of the market, in part due to bankruptcies like Yellow Corp.
Shippers are being cautious about restocking products after getting caught with too much of the wrong merchandise following the pandemic, Bozeman said,.
The current trend towards services spending doesn’t require as much freight, he added.
US trucking capacity hasn’t shrunk much in 2023 because carriers have a cushion from the large profits earned during 2021 and 2022 and their government stimulus payments, including the employee retention credit money that’s still flowing, he said.
C.H. Robinson, which coordinates the movement of freight for customers, doesn’t own trucks.
“We’re starting to see some contraction, but we need to see a lot more,” said Bozeman, who took over as CEO at the freight brokerage in June after stints at Ford Motor Co and Amazon.com Inc.
Freight demand also turned negative this year as trade from China softened.
Spot rates in the trucking industry are down about 10% from a year ago, according to the research firm Stephens Inc, underscoring the weakness.
C.H. Robinson has responded by cutting costs and investing in technology to increase efficiency, such as large language models that can process customer emails into freight orders, Bozeman said.
The company will meet its goal of increasing its shipments per employee at the North America Surface Transportation unit by 15% this year and expects to gain another 15% on this efficiency indicator in 2024, Bozeman said.
Most of that will be done through attrition, he added.
“We’re moving fast and hard now in a down market to be ready for an up market,” he said. — Bloomberg
