C.H. Robinson Worldwide, Inc.

Good afternoon, ladies and gentlemen, and welcome to the CH Robinson third quarter 2023 conference call. At this time, all participants are on a listen-only mode. Following the company's prepared remarks, we will open the line for a live question and answer session. To ask a question, please press star one on your telephone keypad. If anyone needs assistance at any time during the conference, please press star zero. As a reminder, this conference is being recorded Wednesday, November 1st, 2023. I would now like to turn the conference over to Chuck Ives, Director of Investor Relations. Please go ahead.

Thank you, Donna, and good afternoon, everyone. On the call with me today is Dave Bozeman, our President and Chief Executive Officer, Mike Zuckmeister, our Chief Financial Officer, and Arun Rajan, our Chief Operating Officer. Dave will provide some introductory comments. Arun will provide an update on our initiatives to improve our customer and carrier experience. and our operating leverage. Mike will provide a summary of our 2023 third quarter results and our expense guidance for 2023, and then we will open the call up for questions. Our earnings presentation slides are supplemental to our earnings release and can be found on the investor section of our website at investor.chrobinson.com. Our prepared comments are not intended to follow the slides. If we do refer to specific information on the slides, we will let you know which slide we're referencing. Today's remarks also contain certain non-GAP measures, and reconciliations of those measures to GAP measures are included in the presentation. I'd also like to remind you that our remarks today may contain forward-looking statements. Slide 2 in today's presentation lists factors that could cause our actual results to differ from management's expectations. And with that, I'll turn the call over to Dave. Thank you, Chuck.

Good afternoon, everyone, and thank you for joining us today. As has been well documented by many industry participants and observers, global freight demand continued to be weak in the third quarter. This, combined with ample carrier capacity, continued to result in a loose market with low spot rates. Load to truck ratios remain near the low levels of 2019, and route guide depth in our managed service business of 1.15 in Q3 indicates that primary freight providers are accepting most of the contractual freight tendered to them, resulting in fewer spot market opportunities. In the freight forwarding market, ocean vessel and air freight capacity continues to exceed demand, resulting in suppressed rates for ocean and air freight. We are staying focused on what we can control by providing superior service to our customers and carriers executing on our plans to streamline our processes by removing waste and manual touches, and delivering tools that enable our customers and carrier-facing employees to allocate their time to relationship building and exception management. Our focus on delivering quality and improvements to our customers, such as enhanced visibility and increased automation, has been reflected in very positive feedback from my meetings with customers and validated by net promoter scores this year that are the highest on record for the company, which we believe sets us up well with customers for the eventual positive inflection in the freight market. Our customers value the quality, stability, and reliability that we provide as they work to optimize their transportation needs. This has taken on greater importance to shippers who had exposure to transportation providers whose business models were not financially viable. During my many discussions with customers over the past four months, it's clear that they prefer partners who have financial strength and can invest through cycles in the customer experience. They also want partners who have the expertise to provide innovative solutions enabled by technology and people that they rely on to serve as an extension of their team. CH Robinson is that partner, with a combination of people, technology, and scale to deliver an unmatched customer and carrier experience. As I mentioned earlier, we're executing on our plans to streamline our processes by removing waste and manual touches. The result has been meaningful cost reductions and productivity gains across our business that are ahead of our stated targets. In our North American surface transportation business, our productivity improvements have translated into an 18% year-to-date increase in shipments per person per day. Assuming a typical seasonal volume pullback in Q4, we are on track to meet or exceed our target of 15% year-over-year improvement by Q4 of this year. From a cost reduction perspective, we reduced Q3 operating expenses in NAST by 22% year-over-year versus a volume decline of only 3.5%. In our global forwarding business, Q3 operating expenses, excluding 23.6 million of restructuring charges, declined 12% year-over-year, despite a slight increase in the number of shipments. And for the full enterprise, Q3 operating expenses, excluding $24.5 million of restructuring charges, declined 17% year-over-year compared to a 3% decrease in overall volume. As we continue to improve the customer experience and our cost to serve, I'm focused on ensuring that we'll be ready for the eventual freight market rebound. This means growing volume without adding headcount. We believe our team's continuing efforts to streamline our processes and remove manual touches gets us there. Even though I'm pleased with the progress that the team has made, I've challenged them to increase our clock speed on decision-making and improvement efforts. I started by asking our employees company-wide to share what was impeding their speed and where they saw opportunity to create greater efficiency in their daily processes. The incredible response rate confirmed the desire of our employees to strengthen the company and to speak up culture that exists. The responses validated some of our focus items and also highlighted some new opportunities. We're now driving focus on a handful of concurrent work streams that are addressing the highest leverage areas to eliminate productivity bottlenecks. We're bringing forward past lessons on team structure and on mechanisms to drive adoption in order to deliver an improved customer experience through process optimization. Our 18% year-to-date productivity improvement is an indicator of the progress that we're already making. I'll turn it over to Arun shortly to share more about this and how we're utilizing generative AI. But these focused work streams are an example of how the leadership team and I are making changes and driving focus so that we position ourselves for growth in our core business. Ultimately, our focus on continuously improving the customer and care experience and removing waste from our workflows will result in a company that is quicker, more flexible, and more agile in solving problems for our customers, providing better customer service, and creating operating leverage and profitable growth. I'm excited about the work that we're doing to reinvigorate Robinson's winning culture, and I'm confident that together we will win for our customers, carriers, employees, and shareholders. With that, I'll turn it over to Arun to provide more details on our efforts to strengthen our customer and carrier experience and improve our efficiency and operating leverage.