C.H. Robinson Worldwide (NASDAQ:CHRW) said its second-quarter performance reflected continued market-share gains, productivity improvements and stronger operating leverage despite a freight-demand environment that remained weak and a sharp rise in truckload spot costs.
President and Chief Executive Officer Dave Bozeman said the company reached its mid-cycle operating-margin targets in both its North American Surface Transportation, or NAST, and Global Forwarding segments during the quarter. The Cass Freight Shipment Index declined 3.3% year over year in the second quarter, marking the 15th consecutive quarter of year-over-year declines, according to management.
Revenue, profit and productivity trends
Total revenue rose 19.3% year over year in the second quarter, while adjusted gross profit, or AGP, increased 6.5%, Chief Financial Officer Damon Lee said. Adjusted operating income increased 20% from a year earlier, according to Bozeman.
Lee said AGP per business day increased 9% year over year in April, 7% in May and 3% in June. Absolute AGP per business day increased sequentially in each month of the quarter, primarily because of an improving trend in Global Forwarding.
The company reported a 96% incremental operating margin in the quarter, meaning 96% of the year-over-year increase in AGP flowed through to adjusted operating income. NAST’s operating margin, excluding restructuring charges, expanded 280 basis points from a year earlier to 40.9%. Global Forwarding’s comparable margin rose 470 basis points to 33.4%.
Management attributed the improvement to productivity gains, cost optimization and revenue-management practices. NAST shipments per person per day rose 15% year over year in the second quarter and have increased more than 60% since the end of 2022, the company said. Global Forwarding productivity improved by more than 15% during the quarter.
Personnel expenses totaled $338.5 million, including $8 million of restructuring charges tied to workforce reductions. Excluding those charges, personnel expenses fell 0.3% year over year to $330.5 million. Average headcount declined 10.8% from the prior-year quarter and 2% sequentially.
NAST outgrows market amid higher spot costs
NAST volume increased 1.5% year over year, outperforming the 3.3% decline in the Cass Freight Shipment Index. The quarter represented the 13th consecutive period in which NAST volume growth exceeded the index, Bozeman said.
Truckload volume grew about 0.5%, while less-than-truckload, or LTL, volume rose approximately 2%. Michael Castagnetto, president of North American Surface Transportation, said contractual truckload volume grew as the company won a higher percentage of contractual bids. Contract freight represented about 70% of truckload volume, compared with 65% a year earlier.
The market’s supply-driven tightening pressured the company’s contractual margins. Excluding fuel, DAT spot rates increased approximately 34% year over year in the second quarter, accelerating from an approximately 19% increase in the first quarter. C.H. Robinson’s truckload line-haul cost per mile increased 29% from a year earlier.
Even so, the company held truckload AGP per shipment approximately flat year over year. Castagnetto said the result reflected contractual repricing efforts, improved price and cost discovery, and higher-margin transactional business.
NAST gross margin percentage declined during the quarter, partly because higher fuel costs are passed through to customers in the truckload brokerage model. Higher revenue per load also reduced the gross-margin percentage even as AGP per shipment remained flat.
For the full year, management now expects DAT drive-in spot rates to increase 34% year over year, up from its forecast of a 17% increase three months earlier. Contractual repricing is expected to continue in the third quarter, while spot rates are expected to remain elevated and rise again during the fourth-quarter holiday period.
AI strategy and Global Forwarding
Chief Strategy and Innovation Officer Arun Rajan said the company has more than 450 in-house engineers and data scientists and is deploying hundreds of AI agents for specific functions across the shipment life cycle. The company said human employees remain involved in areas requiring judgment, exception management and customer-specific considerations.
Rajan highlighted the company’s Lean AI Engineer and Lean AI Planner tools in its 4PL Managed Solutions operation. He said Lean AI Engineer can assess a supply chain in 25 to 30 minutes, compared with assessments that can take up to four weeks.
In Global Forwarding, management said it is simplifying and standardizing workflows while rolling out AI-powered automations intended to reduce manual work, improve data quality and identify issues sooner. Lee said the company views Global Forwarding’s 30% mid-cycle margin target as sustainable.
Guidance, capital allocation and legal matter
Management maintained its 2026 operating-income target range of $964 million to $1.04 billion. Lee said the company now expects to achieve the lower end of that range with market conditions reflecting a 3% contraction, rather than the flat market assumption used when the target was established. The Cass Freight Shipment Index was down 4.7% in the first half of 2026.
- 2026 personnel expenses are expected toward the higher end of the company’s $1.25 billion to $1.35 billion range, reflecting higher incentive compensation.
- Expected 2026 SG&A expense was narrowed to $540 million to $580 million from $540 million to $590 million.
- Capital-expenditure expectations were lowered to $65 million to $75 million from $75 million to $85 million.
- The company ended the quarter with about $900 million of liquidity and a net debt-to-EBITDA ratio of 1.64 times.
C.H. Robinson generated $35.9 million in operating cash flow during the quarter, which Lee said was affected by higher freight rates and a resulting increase in receivables and working capital. The company returned $301.3 million to shareholders, including $226 million in share repurchases and $75.3 million in dividends. It also allocated $79 million for acquisitions, including its June acquisition of DeSpir Logistics.
Bozeman also addressed a recent Texas jury advisory verdict related to a trucking accident. He said the company strongly disagrees with the verdict and would appeal if it is entered as final. Bozeman said the carrier involved was an independent motor carrier, that its driver was not employed by C.H. Robinson, and that the carrier held the highest Federal Motor Carrier Safety Administration rating when C.H. Robinson selected it and after a federal review of the accident.
Management said the final outcome remains subject to post-trial motions, appeals and other legal proceedings. Lee said the company is insured through the end of 2026 and expects insurance costs to rise over time, but said the verdict does not alter its capital-allocation approach or M&A strategy.
About C.H. Robinson Worldwide (NASDAQ:CHRW)
C.H. Robinson Worldwide, Inc is a third-party logistics provider founded in 1905 and headquartered in Eden Prairie, Minnesota. Originally established as a produce brokerage firm, the company has since expanded its offerings to become one of the world’s largest freight and logistics intermediaries. C.H. Robinson leverages a global network of transportation providers, technology platforms, and in-house expertise to connect shippers and carriers across multiple modes of transportation.
The company’s primary services include truckload, less-than-truckload (LTL), intermodal, air and ocean freight, and managed transportation solutions.
