C. H. Robinson, Inc.

views updated

C. H. Robinson, Inc.

8100 Mitchell Road
Eden Prairie, Minnesota 55344-2248
U.S.A.
(612) 937-8500
Fax: (612) 937-7809

Private Company
Incorporated: 1905 as C. H. Robinson Company
Employees: 1,500
Sales: $1.16 billion
SICs: 4731 Freight Transportation Arrangement; 5148 Fresh
Fruits and Vegetables

C. H. Robinson, Inc. operates the largest fresh fruits and vegetables distribution network in North America and manages a freight transportation system with more than 100 offices worldwide. Privately held by more than half of its employees, C. H. Robinson began as a small brokerage business, functioning as intermediary between buyer and seller. However, with the development of the interstate highway system in the 1950s, the Minnesota company steadily evolved into a full-service transportation management supplier. By the mid-1990s, C. H. Robinson served the wholesale, retail, and foodservice markets in a variety of roles, including packer, shipper, sales agent, exporter/importer, and information provider. C. H. Robinson also carried its own line of produce, which it marketed under the label The Fresh 1.

The company traces its origin to the early 1900s, when Charles H. Robinson established a small brokerage firm in Grand Forks, North Dakota, to ship produce to customers throughout the Red River Valley region of northeastern North Dakota and northwestern Minnesota. In May 1905, Robinson formed a partnership with Grand Forks-based Nash Brothers, the forerunner of the Nash Finch Company and the leading wholesaler in North Dakota. The partnership was incorporated as C. H. Robinson Co., and Robinson was named the company’s first president. According to popular legend, related by Lee Egerstrom in St. Paul’s Pioneer Press, Robinson “sold out a couple of years later and ran off with Annie Oakley, the showgirl shootist of Buffalo Bill Cody’s Wild West Show fame,” dying shortly thereafter in 1909. However, historical evidence has showed that if such a relationship existed, it would have concluded before 1905. Moreover, Robinson did not die in 1909, nor were his shares in the company acquired by the Nash brothers and Harry Finch at that time. Nevertheless, by 1913 the partnership had ended, and the principals of Nash Finch Company were the sole owners of C. H. Robinson Co.

The Robinson subsidiary served primarily as a produce procurement vehicle for Nash Finch and expanded rapidly by establishing branch offices in Minnesota, Iowa, Wisconsin, Illinois, and Texas—virtually everywhere that Nash had established its own warehouses. In 1918, Minneapolis became Robinson’s headquarters, from which the company continued to expand until the war effort intervened some two decades later.

During the early 1940s, Robinson also faced action by the Federal Trade Commission (FTC), which concluded that the subsidiary and Nash Finch were in violation of the Robinson-Patman Act because of the price advantage Nash received over that of other wholesalers. As later explained in the Chronicle (Fall 1988) : “Rather than taking the case to court, C. H. Robinson Co. was split into two separate companies. The first company, C. H. Robinson Co., was formed by all offices selling produce to Nash-Finch warehouses, and the ownership of this company was sold to all Robinson employees. The other company, C. H. Robinson, Inc., was comprised of the remainder of the offices and was still owned by Nash-Finch Co.”

Up until this time, Robinson, like its competitors, was limited to rail transport for the majority of its shipments. However, massive funding of the interstate highway system was about to alter that. The Federal Highway Act of 1956 catapulted Robinson into the trucking business. Initially working through its Omaha branch office, C. H. Robinson began capitalizing on opportunities for truck brokerage, launching what may have been the first such brokerage operation in the country. This involvement in managing the transport of “exempt” commodities (perishables that were exempt from government regulation) spread to ten branches by the 1960s. Around mid-decade C. H. Robinson Co. and C. H. Robinson, Inc. consolidated their operations under the name C. H. Robinson Co. Wholesaler Nash Finch still held a minority stake of approximately 25 percent in the brokerage company, with Robinson employees owning the remainder.

This structural arrangement led to a natural conflict of interests, with Nash requesting more Robinson dividends to invest in its own operations and Robinson wishing to retain more earnings in order to accelerate the company’s growth. Finally, in 1976, both companies were satisfied when all remaining Nash shares were bought out and Robinson Co. became an entirely employee-owned business. A year later, Sid Verdoorn was installed as company president, and Looe Baker was named chairman of the board. “With this new leadership in place,” recorded the Chronicle, “Robinson remained on its successful path—with a new commitment to data processing, and a continued dedication to the expansion of transportation and produce branch offices.”

In 1980, the federal government deregulated the transportation industry through the Motor Carrier Act, which effectively broadened competition in the field. Robinson responded by establishing a contract carrier program and promoting itself not only as a purveyor of food products but as a freight contractor, or middleman sourcing operation, for virtually all shippable goods. In just five years, the company’s average annual growth, measured by truckloads, doubled. The company was now posting more than $700 million in sales, with roughly 40 percent generated by truck brokerage and most of the remainder through produce sales. Commenting on Robinson’s evident edge in the truck contracting industry, John J. Oslund, of the Minneapolis Star Tribune, wrote, “Unlike most of its competitors, who are relative newcomers, Robinson has developed its expertise over more than 50 years in the dicey and competitive world of produce delivery.”

In January 1988, in a concentrated effort to become a full-service, multiple carrier provider, the company launched its Intermodal Division (intermodal denotes truck and rail shipping). As explained in the Chronicle (Winter 1994), “By combining its truck strengths with the recently improved service of rail carriers, Robinson saves customers significant dollars on long-distance shipments.” In a number of moves since that time, Robinson has increasingly solidified its reputation as a well-rounded, globally positioned transportation and logistics company. For example, in addition to systematically opening a number of new branch offices each year, in 1990, the company expanded its international service through the formation of C. H. Robinson de Mexico. And, in 1992, international freight forwarding and air freight operations were added through the acquisition of the oldest and largest freight forwarder, C. S. Green International Inc.

During 1993, a particularly dynamic year for the company, C. H. Robinson made its first foray into the general food and beverage business with the acquisition of New York-based Daystar International Inc., a $40 million distributor of fruit juice concentrates. As vice-president Looe Baker III told Tony Kennedy, in an interview for the Star Tribune: “It’s a big deal for us, and you’ll see us make more moves.... [We’re] searching for ways to expand into diversified segments of the food market.”

During this time, C. H. Robinson continued to rely primarily on a vast network of independent truck operators, who together offered some 730,000 pieces of equipment, from containers on flatcars to refrigerated vans. Nevertheless, the company began to relax its policy of operating as a non-asset-based service firm by acquiring trucking fleets of its own. In early 1993, Robinson bought a trucking operation based in Sioux Falls, South Dakota, in order to service Carlisle Plastics, whose Western Division was also based there. Other fleet purchases, designed “to provide customer-specific service to large, heavy-volume accounts like Frito Lay” and to create greater flexibility for the company, included 100 48-foot refrigerated containers and 90 48-foot insulated containers. During this time, Robinson worked with over 14,000 shippers and moved more than 500,000 separate shipments annually.

Before the end of 1993, the company enhanced its European presence by acquiring a 30 percent stake in Transeco, a French motor carrier; Robinson later acquired the remaining shares for full ownership of Transeco. Other international activity included the opening of offices in Mexico City; Santiago, Chile; and Valencia, Venezuela. In 1994, on the verge of celebrating its ninetieth anniversary, Robinson expanded its intermodal strategy with two purchases, Atlanta-based Commercial Transportation Services Inc. and Boston-based Bay State Shippers Inc., both for undisclosed amounts. The company also had plans to broaden its The Fresh 1 line to include more value-added items. Annual volume for the 28-item line numbered between six and eight million packages. Careful not to underestimate the potential of the brand, Robinson believed it may yet become “as recognizable to the trade and consumers as the likes of Dole, Del Monte and Chiquita.”

Although produce was still “the company’s strong suit,” and transportation—at a healthy 15 percent growth rate—represented another primary source of income, distribution logistics were expected to prove critical to the company’s future development. As company president Sid Verdoorn stated in the company document 3 on C. H. Robinson: “We have been very successful partially because many Fortune 500 companies have been outsourcing their logistics needs to us.... This has been a part of our growth and we look for more of that in the future. My vision is that the produce industry will catch up on that, and that being a trading and information company there is a possibility and potential for Robinson to do outsourcing for various companies in the industry at the retail purchasing, distribution, and warehousing ends of the business.”

Principal Subsidiaries

Action Produce Company; CHR Financial Services, Inc.; CHR Greene International Company; C. H. Robinson Co. Chile International S.A. Ltda.; C. H. Robinson Company (Canada) Ltd.; C. H. Robinson de Mexico, S.A. de C.V.; C. H. Robinson International, Inc.; Cityside Loan & Savings; City side Indirect; Combined Transport Group, Inc.; Day-star-Robinson, Inc.; The Fresh 1 Marketing, Inc.; Hillcrest Sales, Inc.; Payment & Logistics Services, Inc.; Professional Logistics, Inc.; T-Chek Systems, Inc.; Wagonmaster Transportation Company.