Logistics giant C.H. Robinson Worldwide is the latest Fortune 500 company to see signs of a slowing economy.
On Wednesday, Eden Prairie-based C.H. Robinson reported a 4% drop in its overall revenue, driven largely by lower pricing for air and ocean transportation.
Its quarterly profit fell to $225.8 million, or $1.78 a share, failing to meet Wall Street's estimate of $2.17. The company's stock closed down 9.9% for the day.
"Today, we believe that we are entering a time of slower economic growth where freight markets will continue to cool from their peaks," Bob Biesterfeld, CEO of C.H. Robinson, said in a statement.
The company had forecast in July that demand would slow in the second half of the year, Biesterfeld said, on lower demand in retail and housing materials.
"We're now seeing those expectations play out, with slowing freight demand and price declines in the freight forwarding and surface transportation markets," he said.
In response to a softening economy, the company is implementing structural cost reductions, including staff cuts, designed to total $150 million in annual net cost savings.
"The￿quarter was disappointing for C.H. Robinson, as both sales and earnings were below forecast. … In￿the near term,￿we expect pressures on profitability with volatility in shipping volumes due to supply-chain disruptions and variability in global economic growth," Jeff Windau, an analyst with Edward Jones, said in a research note Wednesday.
Revenue for the company's North American surface transportation — which includes trucking and domestic air — increased 4.9% for the quarter, but sales in its global forwarding operations, which arranges international cargo transport for shippers, fell 23.6%.
C.H. Robinson is not alone in forecasting a slowdown for the global logistics industry.
On Wednesday, Denmark-based Maersk — the world's largest shipping container firm — reported its earnings with a sobering economic outlook.
"With the war in Ukraine, an energy crisis in Europe, high inflation, and a looming global recession there are plenty of dark clouds on the horizon," said Soren Skou, Maersk's CEO, in a statement. "This weighs on consumer purchasing power which in turn impacts global transportation and logistics demand."
