C.H. Robinson CEO sees more freight broker consolidation as diesel costs bite
C.H. Robinson CEO sees more freight broker consolidation as diesel costs bite By Apratim Sarkar
Oct 6 (Reuters) - C.H. Robinson Worldwide CHRW.O CEO Dave Bozeman expects more consolidation among US freight brokers as higher diesel prices squeeze smaller players, he told Reuters, a day after the company agreed to buy RXO RXO.N for $5.8 billion.
"We said we would be the consolidator," Bozeman said in an interview on Tuesday, citing the growing importance of scale and leverage.
RXO fits C.H. Robinson's target profile, with strong gross margins and about $6.5 billion in business but weak operating margins. The company plans to lift RXO's margins to its own levels within two years, while adding last-mile and expedited services.
A rise in diesel prices has pushed small carriers to a "stress point," forcing some capacity out of the market, Bozeman said, adding that freight rates should remain elevated into the holiday season.
Asset-light C.H. Robinson is largely insulated, with diesel costs "very, very manageable," he said. Higher fuel and insurance costs will ultimately be passed on to shippers and consumers.
The U.S. Energy Information Administration on Tuesday raised its oil price forecasts for this year and next as global inventories fall rapidly and diesel markets remain tight amid the Iran war.
(Reporting by Apratim Sarkar in Bengaluru; Editing by Anil D'Silva)