Loaded and Rolling: C.H. Robinson CEO out; Daimler Truck CEO’s outlook

C.H. Robinson CEO steps down

Bob Biesterfeld, president and CEO of C.H. Robinson Worldwide Inc., stepped down Tuesday. From my corporate experience, this is the nicest way of saying one was about to be fired. FreightWaves’ Mark Solomon wrote that according to a person familiar with the matter, this departure had been planned months in advance and mostly was a matter of timing.

Part of the firing appears to be tied to performance. Solomon wrote: “The third-quarter results and Biesterfeld’s subsequent comments may have been the catalyst for the board to do what it had already begun to plan. The sense among executives, shareholders, analysts and board members was that the company wasn’t moving fast or effectively enough to transform into a digital platform away from traditional brokerage, especially in an increasingly competitive segment. There was also a sense, said one executive intimately involved in the matter, that Biesterfeld was not the best long-term fit to run a nearly $25 billion business.”

Reading between the lines, one would suspect other are brokerages doubling down on their digitalization efforts like the newly minted RXO, Coyote or Arrive Logistics. Freight brokers at this scale live and die by efficiency, and enterprise carriers with robust technology suites might be able to capitalize on this competition among freight brokerages to backfill gaps in their internal truckload network.

Digitalization efforts are hard and John Kotter’s observation from 1995 still holds true — that only 30% of change programs are successful. For C.H. Robinson, time will tell if it beats the odds.

Daimler Truck CEO on Class 8 market for 2023

The challenging environment for new Class 8 truck orders in 2022 is giving way to easing and improving conditions and outlooks for 2023. This comes from a recent interview with FreightWaves and John O’Leary, president and CEO of Daimler Truck North America.

Regarding the outlook into the new year, O’Leary told FreightWaves, “The demand that we saw out there for ’22 that none of us were able to build, that will continue in ’23. They’re very committed to make those buys this year regardless of what the economic headwinds may look like.”

This should be a welcome sign for trucking companies that were forced to keep their trucks beyond the traditional three- to four-year trade-in cycle, which resulted in higher maintenance costs exacerbated by OEM parts shortages.

While conditions are improving, some lingering backlogs remain. “Backlogs are still elevated but not at such a level that they can sustain significant deterioration without impacting production output,” said Jonathan Starks, FTR Transportation Intelligence CEO. “The heavy vehicle market remains strong despite economic and financial uncertainties, and production will still be limited to some extent by supply chains and labor.”

O’Leary believes significant deterioration in backlogs remains unlikely unless there is an economic meltdown or other catastrophic event. “From where we sit right now, the year is going to be just as strong in ’23 as it was in ’22,” O’Leary concluded.

Market update: Consumer confidence December boost

Consumer confidence improved in December following volatile declines for most of 2022. According to a news release, the index rose 6.8% month over month from 101.4 points in November to 108.3 points in December. The report notes this reading is the highest since April 2022.

Interestingly, consumer expectations versus confidence paint a nuanced picture. The report noted, “The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — improved to 82.4 from 76.7. However, Expectations are still lingering around 80 — a level associated with recession.”

Looking further out, inflation and changing consumer behavior remains worth watching. Lynn Franco, senior director of economic indicators at The Conference Board, said, “Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.”

FreightWaves SONAR spotlight: Mild weather should curb reefer demand

Commentary courtesy of the Daily Watch, a newsletter for SONAR subscribers

Summary: After the passing of Winter Storm Elliott, which struck the Midwest and New England during the week of Christmas, January is expected to bring temperate weather to the Lower 48. Per forecasts from the National Oceanic and Atmospheric Administration (NOAA), much of the United States will see above-average temperatures over the next two weeks. This warmer trend will have a few repercussions, one of which is decreased consumption of diesel and natural gas for heating, which should in turn ease prices for those products.

But the other, more direct effect will likely be seen in reefer markets. In February 2021, a severe cold wave led many shippers to switch modes, pushing their freight onto reefers in order to insulate it from extreme temperatures. Meanwhile, carriers struggled against service disruptions caused by power outages across the nation.

At present, the Reefer Outbound Tender Volume Index (ROTVI) is still depressed from the holiday lull, while the Reefer Outbound Tender Reject Index (ROTRI) is boosted by capacity being offline. Both indices should see a return to normalcy in the coming weeks. But if NOAA’s prediction for mild January weather should prove accurate, reefers will not see such an uptick in demand from these cross-modal shippers.