In its second diversification move in a week, C.H. Robinson announced Monday that it has formed a division that will specialize in moving chemicals.
The Eden Prairie firm, a third-party logistics company that matches shippers with trucks, railroads, ships or planes, will serve chemical manufacturing and distribution customers around the world though its new ChemSolutions division.
"Chemical logistics is a perfect fit for us as C.H. Robinson has a long history in specialty logistics ranging from time-sensitive products, produce, high-value shipments and project business," said Taylor Nicks, manager of ChemSolutions, in a statement. "Because of the inherent risks in transporting chemicals, it is imperative that chemical manufactures align themselves with logistics providers that have industry expertise in handling chemicals and programs in place."
ChemSolutions will provide chemical bulk shipping, safety and sustainability services, freight forwarding, customs brokerage, vendor and supplier compliance, global trade management, and multiple types of transportation.
Matt Young, a Morningstar analyst in Chicago, called the move into chemicals a logical market for Robinson.
"It isn't unusual for third-party logistics firms to boost their expertise in certain vertical markets that require specialized transportation-related know-how," Young said. "It could simply be that Robinson has opportunities to serve more customers in the chemicals space, and they want to be better positioned."
The bulk chemical initiative is Robinson's second market expansion effort in a week, following last Tuesday's $635 million cash-and-stock acquisition of ocean and air transportation firm Phoenix International. The Phoenix deal was expected to more than double Robinson's ocean and air transportation business, which in 2011 accounted for only 6 percent of its gross profit.
The foray into bulk chemicals also follows two stock upgrades related to Robinson's diversification strategy with the Phoenix acquisition. Last Wednesday, Wolfe Trahan upgraded Robinson shares from "peer perform" to "outperform."
On Monday, brokerage Sterne Agee raised its ''neutral'' rating to a ''buy,'' citing "a realization by management that it must use its balance sheet to break out of the truck brokerage box a little more aggressively. We view the recent Phoenix International acquisition as an important step in that direction." Meanwhile, Robert W. Baird analyst Benjamin Hartford Monday reaffirmed his "neutral'' rating. Among the analysts who cover the company, eight have "buys,'' 22 have "holds'' and there is one ''sell" recommendation, according to Bloomberg News.
Staff writer Adam Belz contributed to this story. • 612-673-4405 Twitter: @adambelz Steve Alexander • 612-673-4553 Twitter: @SteveJAlexander