Review of CH. Robinson Worldwide Inc (CHRW)
CHRW is among the biggest third party companies that deal with logistics. The company offers transport and fee based logistics’ services. The statements show that in 2012, CHRW accumulated a total of $11.4 billion and a net value of 1.7 million. The company dealt with about 11.5 shipments in 2012.The organization has branches in Europe and other parts of the world. As a 3rd party logistics firm, CHRW has been able to create a reliable network with different transportation and delivery companies like J.B hunt and United Parcel Service. Currently, CHRW serves over 56,000 transport companies and the accrued transport revenue has been as follows: 89% of net revenue in 2012 ($1,528,037), 88% of the net revenue in 2011 ($1,443,916) and 87% of the net revenue in 2010 ($1,273,129).
The company also provides sourcing services that involve the buying and selling of fresh produce through channels of independent producers and suppliers. This study establishes that sourcing has been accorded 8% of net revenue in 2012 and 9% in 2010.
CHRW provides services like truck transport and logistics’ services, (accumulated $1,284,280,000 in 2012), intermodal (accumulated $38,815,000 in 2012), ocean (accumulated $84,924,000 in 2012) and air (accumulated $44,444 in 2012). Payment services registered 3% of the net revenue in 2012 ($52,996,000), 4% in both 2011 and 2010($60,294,000) forming a progressive profit trend for the company.
The company is aided by the centralized and shared service units. 14% of employees offer shared services centrally and about 33% of them are IT specialists responsible for controlling the operating system and network software. By December 31, 2012, CHRW had a total of 10,929 staff and 9,432 of them were stationed in the office branches.
The company has increased its competitiveness in the transport service industry by putting measures to address competition from trucking corporations’ freight forwarders and produce growers and brokers, food service, logistics, produce wholesalers and marketing firms (Lewis & Roehrich, 2009).
These measures include financial stability and provision of door to door services and wide information of telecommunication in risk management and insurance. The company has enforced a policy of handling at least $750,000 (automobile insurance), $25,000 (cargo insurance) and $250,000 for every shipment.
In terms of shares; CHRW has been calculative in the purchasing of shares. During the 4th quarter of 2012; the total number of units purchased was 1,452,903.
This fact oversaw the firm accrue marginal dividends and benefits with a record of $1.34 (dividend per share) registered in the same year. In 2012; the company recorded a stock holder investment of 1,504,372.
This figure was remarkably high as compared to the previous periods whose figures were as follows $1,248,475 in year 2011, $1,204,068 in 2010, $1,079,900 in 2009 and $1,107,221 in 2008. The upward trend has generated confidence in the company’s shareholders and customers.
A similar trend is manifested in the balance sheet because the figures have been rising from 2008 to 2012 as follows:- working capital- $650,218 (2008), $575,462(2009), $710,161(2010), $734,911(2011) and $440,073(2012); total assets- $1,815,721(2008), $1,834,248(2009), $1,995,699(2010), $2,138,041(2011) and $2,804,225(2012).
These rising profit trends are attributed to the increase in total revenue, branch office and employees’ volumes. The rise in total revenue from $8,578,614 in 2008 to $11,359,113 in 2012 has seen the firm employ more employees (10,929 in 2012 as compared to 7,961 in 2008) and expand its branches from 228 in 2008 to 276 in 2012. The rise in profit trend is expected to continue this year. The company has been able to meet its target by making several adjustments. The adjustments from income to operations were put at $45,196,000 in 2012 and the income from operations today stands at $675,320,000 giving an accumulated total of $720,516 operation income after the adjustment.
Similar adjustments have been made on the net income. In 2012, the income was recorded as 146,749.It was further deducted from the $593,804 net income leading to an adjustment figure of $447,007. In terms of percentage, the firm recorded different fractions in transport sourcing and payment services with a total of 15.1% of the trio in 2012, 15.8% in 2011 and 15.8% in 2010.
The company has formulated measures to prevent rises in expenditure especially operational expenses. In 2012; the firm’s operations resulted in personnel expenses that amounted to 44.6% and general and administrator expenses shared a 16.1% increase.
This fact amounted to a 60.7% rise in the total operating expenses. The net income on the hand shared a 34.6% rise with the other expenses going to investments. The total transportation net revenue increased from $1.44 billion in 2011 to $1.54 billion in 2012. This change made CHRW to be a dependent service company worldwide.
The intermodal net revenue dropped from $40.3 million to $37.8 million in 2012. This aspect was stimulated by the high cost of capacity. The ocean transportation net revenues rose from $65.7 million in 2011 to $83.8 million in 2012 and the air transportation net revenue rose with about 12.7% in 2012. This aspect was enhanced by the procurement of phoenix.
A comparative review of CH. Robinson worldwide Inc (CHRW), J.B. Hunt transport service (JBHT) and united parcel service (UPS)
Product and market shares
CHRW is among the top three largest logistic companies that enjoy freight transportation and logistics’ benefits in Australia, Europe, Asia, North and South America. CHRW enjoys a good market share index. This fact has enabled CHRW to improve its operations by increasing its links and offices worldwide which were 276 in total in 2012. The service industry is currently dealing with 56,000 transport companies making it a notable service company.
JBHT is the one of the largest package delivery and logistics’ company. Its services range from containerized freight package to dedicated services that include freight networks, automotives, building materials, food and beverages, appliances and general merchandise. Unlike CHRW, JBHT majors in surface transport and has over 500 companies and 1,388 independent contractors under its operations. Just like CHRW, it provides transport and sourcing services.
UPS on the other hand happens to be the world’s biggest package delivery firm. Unlike the two, UPS majors in package delivery. As a private service company located in Seattle Washington, UPS facilitates quality logistics and delivery services. It is currently recorded to serve 1.1 million shipping customers.
This fact has seen UPS’ market share index rise to 7.7 million dollars due to the increase in market share index and business links. UPS is today’s the world’s largest industry of its kind.UPS has been able to maintain its reputation of quality provision of services (Fry, 2001).
Revenue and sales’ margins
In 2012, CHRW registered total revenue of $11.4 billion. This figure was higher than the previous one. The rise of revenue is believed to have been stimulated by rises in market share, competition and income.
Transport revenues increased from 2010 to 2012 as follows; 89% of the net revenue in 2012 ($1,528,137), 88% of net revenue in 2011 ($1,443,916) and 87% of total net revenue in 2010 ($1,273,129).
Sourcing revenue decreased in 2012 as compared to 2011 and 2010 due to a decrease in payment services, increase in risk management and insurance covers due to a wide market zone (Aaker & McLoughlin, 2010).
Sourcing recorded an 8% rise in the net revenue in 2012 ($136,438,000) as compared to a 9% in 2010 ($139,377,000). The payment services dropped from 4% of the total revenue in 2010 ($55,472,000) to 3% of the net revenue (52,996,000) in 2012.
CHRW has recorded an increase in customers and the company has overseen the top 100 customers contributing to 34% of the total revenue and 29% of the net revenue. The customers are intrigued by the company’s diversity in producing quality, competitive and convenient services. The ability to produce door to door services has seen CHRW become a global pillar in logistics’ services.
JBHT similarly has recorded different revenue and sales’ margins. Its operations have stretched across North America. JBHT has managed to accumulate a total of $5.1 billion as recorded in 2012. 61% of this amount is achieved by JBI, 21% by DCS, 94% by ICS and 9% by JBT.
The transport revenues are a bit lower compared to CHRW’s due to its limit on surface transport and package delivery with 49.2% of the net revenue in 2012, 46.9% in 2011 and 45.1% in 2010. The payment service also registers a higher margin than CHRW’s due to the increase in expenditure and operation costs.
The services recorded 20.5% of the revenue in 2012, 22.1% in 2011 and 24.0% in 2010. Lower costs of operation and high supply of products have seen the customers’ volumes increase registering 30% of the total revenue in 2012. UPS has been the biggest packaging and delivery firm in the world. It registered 454.1 billion in total revenue in 2012. This margin is linked to the transport sectors especially the purchasing transport link that registered $7,354 million in 2012, $7,232 million in 2011 and $6,640 million in 2010. This fact was due to the firm’s ability to provide an integrated ground in marketing and supplying of its produce. The customers just like in CHRW and JBH contributed to the revenue worthily.
Income, capital, assets and investments
A higher service network, flexible model and financial strength have seen CHRW record different financial margins in its statements and balance sheets. In 2012, the net income of CHRW was $593,804 and other companies registered similar calibrations like working capital- $440,073, stockholders investment- $1,504,372,000 and total assets- $2,804,225,000.
JBHT has been affected by incurring costs in trailing equipment and occasional use of trailer tools. This fact happens to affect the company in the following ways: – operation income- $530 million, working capital rate of 1:10, total assets- $2,465 million and stakeholders equity- $192 million.
Finally, based on its monopolistic nature and business potential not only in Washington but also globally, UPS’ balance sheets and statement are admirable with the following registrations in 2012: net income- $807 million, total assets- $11,089 million and an employee volume of 399,000. The employees and customers have exhibited confidence in the company and this fact has set the firm’s economical goal within reach.
Aaker, D., & McLoughlin, D. (2010). Strategic Market Management – Global Perspectives. West Sussex, USA: John Wiley & Sons Ltd.
Fry, B. (2001). Mastering Public Administration; from Max Weber to Dwight Waldo, Chatham. New Jersey, USA: Chatham House Publishers, Inc.
Lewis, M., & Roehrich, J. (2009). Contracts, Relationships and Integration: Scheduling, and Controlling. New York City, USA: John Wiley &Sons.