AI and a Midwestern Sensibility Power This Global Logistics Company

Dave Bozeman is CEO of C.H. Robinson Worldwide, the pride of Eden Prairie, Minn., and one of the world’s biggest freight logistics and shipping companies, though he likes to think of the 100-plus-year-old company (founded by one Charles Henry Robinson) as a technology enterprise.

Bozeman is a Midwestern guy through and through, with an MS in engineering management from the Milwaukee School of Engineering and a BS in manufacturing design from Bradley University in Peoria, Ill. He worked at Caterpillar (also in Peoria), Harley-Davidson, Ford Motor, and Amazon before working at C.H. Robinson, which arranges for goods to be shipped by planes, trucks, ships, and rail. C.H. Robinson’s customers are all over the map and include names such as Microsoft, Deere, and Coca-Cola.

C.H. Robinson went public in 1997; its stock has gained 41% since Bozeman became CEO in June 2023, trailing the S&P 500’s 53% gain in that span. However, the stock has gained almost 40% over the past six months while the index has climbed 23% higher as the company has increased its profitability. (The stock’s trailing twelve month price to earnings ratio of 29 is slightly higher than that of the S&P 500.)

Much of the stock’s gains came after the company reported an unexpected jump in second-quarter earnings in late July. Net income for the period totaled $152.5 million, up 20.8% from a year ago. The strong performance came despite revenue decreasing 8.0% to $8.2 billion in the quarter, which was due in part to the company selling its European surface transportation business and enduring some weak pricing. Investors will look for more growth when the company reports third-quarter earnings on Oct. 29.

I spoke with Bozeman about shipping, artificial intelligence, and tariffs as part of our At Barron’s interview series. Below is an edited version of the conversation.

Barron’s**: What exactly does the company do, Dave?**

Dave Bozeman: Well, C.H. Robinson is really a global logistics platform. In fact, the largest global logistics platform. We serve over 83,000 customers, also 450,000 contract carriers.

So how does the business model work—I mean, do you own the trucks and the ships and the planes so that it’s your brand name on them? It’s a contract sort of business? How does it work?

Yeah Andy, it’s a two-play, two-sided marketplace. So we’re asset-light. What we do is we go out for our customers or shippers, and we get them the best dynamic pricing that they need, and connect them with carriers to move their goods around the globe.

And for carriers, we provide them with the opportunity of shippers. And so it works out both ways. We’re in the middle. We broker that arrangement of moving those goods for the best price, and we do that at the most efficient way possible within the logistics world. And that’s how we operate.

I was reading somewhere you guys are a stealth AI play. How’s that possible?

I like to say we’re an undervalued industrial AI play. And the reason I say that is this: You have your hyperscalers and your chipmakers and infrastructure play. Well, at the end of the day, there are companies like C.H. Robinson, who are benefiting from AI real-time. You can see it in our results. We have 35% [gains in] productivity in the last two years. That’s partly because of our technology that we’re using.

We are growing and reducing expenses and expanding our margins—something in this industry they said can’t be done. Well, this technology is actually helping us do that. Why? Because if you look at our order-to-cash process—very, very manual in this industry to do that. Technology has allowed us to automate a lot of that process, move our people to customer-facing, solve strategic problems like they like to do, and that results in what we think are superior results as compared to the competition.

I was surprised to read about a freight recession. And I’m curious as to what that is, and then why revenue’s been so tough.

Well right now, there is—there has been a freight recession. We’re going on four years right now, and partly because demand, right? It’s just been light demand overall. […] For the most part, when it comes to actual demand at scale like we were used to, there’s a pullback right now on—and it has been for several years. […] It’s those three things—housing, retail and manufacturing—we’re hoping that those really start to pop. […] When it happens, we’ll really see the freight market really go.

But, outside of that, what we’ve been able to do is still grow in a really kind of depressed freight market and expand margins. That, we feel, is related to our transformation to our lean operating model and to using our technology of generative AI and now agentic AI, which we feel excited about.

What about employment—generally speaking, not just at C.H. Robinson—with regard to AI taking away jobs? I mean, you’re hearing about automated truckers—trucks coming down the road, as well. What’s your take on that?

My take is this: We’ve always had technology revolutions within the world. This is another one that’s coming around. I can sit here, and you and I can go back in the time machine and talk about the [personal computer] when it came on and the advent of that. Things shift over time. For us, we don’t look at it as really taking away jobs. We look at it as supercharging our people and augmenting certain jobs.

For us, there is a attrition rate in this industry that’s fairly high, one that I wasn’t used to in the industrials. But, 11 to 14 percent just within the attrition rate. By doing that, we’re able to not backfill certain operational roles—but we’re actually investing and hiring in sales. Small, medium business selling, customer selling, customer facing.

And ultimately those jobs that really people don’t want to do, and bringing efficiency to that. That’s been kind of a balance for us at Robinson. So we don’t look at it as really like slashing jobs. We look at it as really getting the company more technology-focused and driving into the future.

Globally, what are the hottest markets right now, the strongest markets, and what are you sanguine about? And how’s the China business doing?

I would say obviously for the U.S., we’re mainly—a good portion of our business is here in the U.S., and we see that happening and continue to be a strong force as we roll out our transformation. But we’re a global company. […] Our China business is doing well. We divested a bit because we saw the advent of supply chain shifting from China into like Southeast Asia and the India subcontinent. So we’ve diversified a bit into some of those countries. But at the end of the day, China is still the factory to the world, and we still have a pretty strong team there with that business, as well.

What are some things that you’d like to change, maybe in terms of regulation, for instance, that’d you like to see coming out of Washington that could help your business?

First and foremost, we love global trade, and we love a consistent global trade. So the first thing I would love to have happen, because I deal with a lot of customers, and if there’s one word that they’re concerned about is ‘uncertainty.’ And so having a trade deal done with China, having a trade deal done with India, having the trade deal done with Canada, right? Just having these things done where we know what they mean, what’s the time base on ’em.

I can’t tell you how much that is driving customers to then say, ‘I know what I’m dealing with, and now I can go forward and do that.’ We still see people holding back because they just don’t know. So getting trade deals done would be a key, key thing for us as a business in helping our customers.

Can you imagine done trade deals—what that might do to your stock?

Oh, absolutely […] Look, we like to say that we’re going to keep going no matter what, and I think we’re showing that. And I think once—and it will, because supply chain is the economy—it will snap back, and when it snaps back, we’ll be right there in pole position to be there.

There’s a call on quality right now, and Robinson is getting that call, because it’s really hard out there for companies to deal with this, and they’re calling on us to really help them, and we feel good about doing that every day.

Write to Andy Serwer at andy.serwer@barrons.com