One of the world's largest third party logistics companies,
CH Robinson Worldwide Inc.
) has recently announced that it will launch a new division called
ChemSolutions. The new division will be responsible for providing
logistics solutions to chemical manufacturing and distribution to
Services of ChemSolutions would involve providing multi modal
transport solution to chemical shippers along with ensuring safety
and sustainability of shipments. Further, the division will also
undertake activities related to customs brokerage, global trade
management and vendor and supplier compliance.
The company's ChemSolutions division is also certified under
RC14001 and Responsible Care and ISO 14001. The certification
enables the company to serve the chemical market effectively and
efficiently and follow the logistics standards that are accepted by
global chemical manufacturers.
We believe the demand of 3PL services is rapidly growing as
shippers seek cost effective one stop solutions for their freight
forwarding requirements. Given the vulnerability involved in
chemical shipment, it is important for the shipper to seek
logistics services from companies that have expertise in handling
chemicals shipments. Given CH Robinson's network and service
capabilities in freight services, we believe the company will be
able to tap potential opportunities in the new business and foster
its presence in the global freight market.
The company is offering transportation solutions globally and
has mostly benefited from European Expansions. Developments in
Eastern European manufacturing units have accelerated the demand
for transportation solutions.
Most of the shipping is taking place in countries stretching
from East to West Europe or on a transcontinental basis. However,
given the lack of service capabilities within the European truck
industry, 3PL carriers like C.H. Robinson are benefiting from this
new business opportunity. Additionally, growth in the emerging
markets like China continues to aid C.H. Robinson's global freight
forwarding business, providing long-term growth opportunities.
However, we believe freight forwarding and customs brokerage are
intensively competitive and are expected to remain so in the
foreseeable future. There are a large number of entities competing
in the international logistics industry like
Expeditors International of Washington Inc.
), which could weigh on the company's future growth prospects. In
addition, the current trend of road freight conversion to rail
intermodal is also likely to have a negative impact on the Trucking
We are currently maintaining our long-term Neutral
recommendation on C.H. Robinson. For the short term, the company
holds a Zacks #2 Rank (Buy).
CH ROBINSON WWD (CHRW): Free Stock Analysis
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