Bob Biesterfeld was fired as chief executive of C.H. Robinson Worldwide Inc., the company said Tuesday, sending America’s largest freight broker by revenue into a search for new leadership amid falling freight demand and growing competition from digital upstarts.
C.H. Robinson appointed Scott Anderson, the chair of the company’s board, as interim CEO, effective Sunday, a day after Mr. Biesterfeld was terminated from the business after 3½ years at the helm, the Eden Prairie, Minn.-based company said. Mr. Anderson, 56, stepped down as chair, a position he has held since 2020.
“Mr. Biesterfeld’s departure was an involuntary termination by the company without cause,” according to a company filing with the Securities and Exchange Commission on Tuesday.
The freight brokerage has retained executive search firm Russell Reynolds Associates Inc. to help with the search for a new permanent CEO. Mr. Anderson doesn’t plan to be considered as a candidate for the permanent position, according to the securities filing.
A spokesperson for the company didn’t provide additional comment.
“It has been a privilege to lead C.H. Robinson and this exceptional team,” Mr. Biesterfeld said in a statement released by the company. “I am proud of all that we have achieved together.”
Mr. Biesterfeld, who is 47 years old, held a number of positions over the 24 years he spent with the company, serving as chief operating officer before being named CEO in May 2019.
C.H. Robinson is by far the largest player in the U.S. freight brokerage market, one that matches freight shippers with available trucks. It reported $23.1 billion in gross revenue in 2021, its last full reporting year, and its gross domestic revenue of $15.6 billion that year was nearly twice that of its nearest competitor, Cincinnati-based Total Quality Logistics LLC, according to research firm Armstrong & Associates Inc.
C.H. Robinson’s expansion thanks to strong shipping demand early in the Covid-19 pandemic has waned in recent months, and the company pulled back on hiring after profit growth retreated in the second half of the year as inflationary pressures and the war in Ukraine left global shipping demand sagging.
“We were surprised by CEO Bob Biesterfeld’s termination,” Citigroup Inc. analyst Christian Wetherbee wrote in a note to clients. “We expect challenging near-term results due to sharp weakness in forwarding rates and a slowdown in [truckload] freight, but Robinson under Mr. Biesterfeld’s leadership was moving toward cutting costs and focusing on its digital brokerage platform.”
“Our sense is that the board felt a change in leadership, along with the recent promotion of Arun Rajan to COO, would better catalyze this evolution,” Mr. Wetherbee wrote.
Brian Ossenbeck, an analyst at JPMorgan Chase & Co., wrote in a note to clients that Mr. Biesterfeld’s departure was driven by business results and “there weren’t any personal reasons behind the decision.”
Mr. Biesterfeld led the freight brokerage through the supply-chain upheaval caused by the pandemic as strong demand for goods and tight transportation capacity drove up freight rates, helping fuel a surge in profits.
“Since joining Robinson in 1999, Bob has played an important role in positioning C.H. Robinson for long-term success, most recently leading the company through a challenging period, which included Covid-19 and dealing with supply chain disruptions,” Mr. Anderson said.
Mr. Biesterfeld said in November that the company is looking to find $175 million in gross cost savings by the fourth quarter of 2023. Some of those cost cuts could include “difficult personnel decisions,” he said.
“We got ahead of ourselves in terms of head count,” Mr. Biesterfeld said on Nov. 2. “We certainly didn’t expect that the market was going to come down as rapidly as it did.”
C.H. Robinson also has navigated increased competition from digital freight-booking startups such as Uber Technologies Inc.’s Freight unit, Seattle-based Convoy and New York-based Transfix Inc.
Uber Freight has rapidly expanded its reach in the U.S. shipping sector since it acquired technology-focused logistics services provider Transplace in November 2021 to become the third-largest freight broker in the U.S. by gross domestic revenue, according to Armstrong & Associates.
C.H. Robinson also faces pressure in its international freight forwarding segment as it competes with global heavyweight forwarders such as acquisition-minded DSV A/S of Denmark.
DSV said recently that it is pursuing more business in the U.S. Reuters has reported DSV is considering an acquisition of the global forwarding arm of C.H. Robinson. Neither company has commented on the report.
C.H. Robinson said in the SEC filing that, on taking up the role of interim CEO, Mr. Anderson will be paid a base salary of $1.1 million as well as an annual bonus and stock options.
Mr. Anderson, who also is senior adviser to private-equity firm TPG Inc.’s healthcare team and head of the executive council of investment firm Carlson Private Capital Partners, will have his involvement with both organizations suspended or reduced while he serves as interim CEO, according to the SEC filing.
Board member Jodee Kozlak succeeds Mr. Anderson as chair.
C.H. Robinson Ousts CEO Bob Biesterfeld
Discussion in 'Freight Broker Forum' started by autopaint, Jan 4, 2023.