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What changed in C.H. Robinson's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of C.H. Robinson's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+297 added−286 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in C.H. Robinson's 2023 10-K

297 paragraphs added · 286 removed · 225 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

91 edited+19 added−15 removed71 unchanged
Biggest changeThese forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience or our present expectations, including, but not limited to, factors such as changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; fuel price increases or decreases, or fuel shortages; competition and growth rates within the global logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; risks associated with significant disruptions in the transportation industry; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; risks associated with reliance on technology to operate our business; cyber-security related risks; risks associated with operations outside of the U.S.; our ability to successfully integrate the operations of acquired companies with our historic operations; risks related to our search for a permanent CEO and retention of key management personnel; climate change related risks; risks associated with our indebtedness; risk associated with interest rates; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with the potential impact of changes in government regulations; risks associated with the changes to income tax regulations; risks associated with the produce industry, including food safety and contamination issues; the impact of war on the economy; changes to our capital structure; changes due to catastrophic events including pandemics such as COVID-19; and other risks and uncertainties, including those described in Item 1A, Risk Factors.
Biggest changeThese forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience or our present expectations, including, but not limited to, factors such as changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; fuel price increases or decreases, or fuel shortages; competition and growth rates within the global logistics industry that could adversely impact our profitability; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; risks associated with seasonal changes or significant disruptions in the transportation industry; risks associated with identifying and completing suitable acquisitions; our dependence upon and changes in relationships with existing contracted truck, rail, ocean, and air carriers; risks associated with the loss of significant customers; risks associated with reliance on technology to operate our business; cyber-security related risks; our ability to staff and retain employees; risks associated with operations outside of the U.S.; our ability to successfully integrate the operations of acquired companies with our historic operations; climate change related risks; risks associated with our indebtedness; risks associated with interest rates; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with the potential impact of changes in government regulations including environmental-related regulations; risks associated with the changes to income tax regulations; risks associated with the produce industry, including food safety and contamination issues; the impact of changes in political and governmental conditions; changes to our capital structure; changes due to catastrophic events; risks associated with the usage of artificial intelligence technologies; and other risks and uncertainties, including those described in Item 1A, Risk Factors.
Navisphere offers sophisticated business analytics, artificial intelligence, and data-driven tools to improve supply chain performance and meet incr easing customer demands, including the following tools: • Navisphere Vision ™ allows our customers to see their freight across all modes and services globally in a single view.
Navisphere offers sophisticated business analytics, artificial intelligence, and data-driven tools to improve supply chain performance and meet incr easing customer demands, including the following: • Navisphere Vision ™ allows our customers to see their freight across all modes and services globally in a single view.
We leverage the diverse perspectives and experiences of our global network of supply chain experts to create innovative solutions and better meet the needs of our customers, contract carriers, and growers. Oversight and Governance Our Board of Directors & Talent and Compensation Committee have oversight of our human capital management and diversity, equity and inclusion ( “ DEI”) efforts.
We leverage the diverse perspectives, skills, and experiences of our global network of supply chain experts to create innovative solutions and better meet the needs of our customers, contract carriers, and growers. Oversight and Governance Our Board of Directors & Talent and Compensation Committee have oversight of our human capital management and diversity, equity and inclusion ( “ DEI”) efforts.
Benefits are reviewed on an annual basis to ensure they stay competitive in the marketplace and to incorporate the voice of our employees to ensure we meet their diverse needs.
Benefits are reviewed on an annual basis to ensure they stay competitive in the marketplace, are clear, and incorporate the voice of our employees to ensure we meet their diverse needs.
We are increasing compensation transparency, which helps drive the connection between pay and performance and supports our goal of providing visibility to our employees about career path opportunities in the organization. 11 Table of contents Lastly, our equity compensation program is an important part of how we stay competitive from a total compensation perspective, as it incentivizes and rewards leadership for sustained enterprise performance.
We are increasing compensation transparency, which helps drive the connection between pay and performance and supports our goal of providing visibility to our employees about career path opportunities in the organization. Lastly, our equity compensation program is an important part of how we stay competitive from a total compensation perspective, as it incentivizes and rewards leadership for sustained enterprise performance.
Navisphere is also integrated into 35 third-party transportation management systems and/or enterprise resource planning systems, allowing our dynamic pricing engine to directly deliver real-time quotes to customers when they have freight to be picked up or delivered. This eliminates the need for our customers to shop around and provides an automated solution.
Navisphere is also integrated into 33 third-party transportation management systems and/or enterprise resource planning systems, allowing our dynamic pricing engine to directly deliver real-time quotes to customers when they have freight to be picked up or delivered. This eliminates the need for our customers to shop around and provides them an automated solution.
Our standard contracts do not include volume commitments, and typically the initial contract rate is modified each time we confirm an individual shipment with a contracted motor carrier. In our NVOCC ocean transportation business, we have contracts with most of the major ocean carriers, which support a variety of service and rate needs for our customers.
Our standard 8 Table of contents contracts do not include volume commitments, and typically, the initial contract rate is modified each time we confirm an individual shipment with a contracted motor carrier. In our NVOCC ocean transportation business, we have contracts with most of the major ocean carriers, which support a variety of service and rate needs for our customers.
Details of shipment contents, shipment status, disruptions to shipments, and resulting adjustments to estimated time of arrival using artifi cial intelligence are provided for the customer to manage their supply chain exceptions.
Details of shipment contents, shipment status, disruptions to shipments, and resulting adjustments to estimated time of 7 Table of contents arrival using artifi cial intelligence are provided for the customer to manage their supply chain exceptions.
Forward-looking statements speak only as of the date they are made. We undertake no obligation to update these statements in light of subsequent events or developments. 14 Table of contents
Forward-looking statements speak only as of the date they are made. We undertake no obligation to update these statements in light of subsequent events or developments. 15 Table of contents
Proprietary Information Technology and Intellectual Property Most of our global network operates on a single global technology platform called Navisphere, which is used to match customer needs with supplier capabilities, to collaborate with other offices, and to utilize centralized support resources to complete all 6 Table of contents facets of the transaction.
Proprietary Information Technology and Intellectual Property Most of our global network operates on a single global technology platform called Navisphere, which is used to match customer needs with supplier capabilities, to collaborate with other offices, and to utilize centralized support resources to complete all facets of the transaction.
Additional information about our human capital management and environmental sustainability initiatives, goals, and achievements is available in the ESG report available on our website; however, the ESG report is not incorporated by reference in, and is not a part of, this Annual Report on Form 10-K. 12 Table of contents Information about our Executive Officers The Board of Directors designates the executive officers annually.
Additional information about our human capital management and environmental sustainability initiatives, goals, and achievements is available in the ESG report available on our website; however, the ESG report is not incorporated by reference in, and is not a part of, this Annual Report on Form 10-K. Information about our Executive Officers The Board of Directors designates the executive officers annually.
Our large number of unique, strong relationships provide global connections and valuable market knowledge; • Global suite of services: A wide selection of services and products help provide our customers with consistent capacity and service levels; • Scale: Our customers leverage our industry-leading capacity, broad procurement options, global data insights, and substantial shipment volumes for better efficiency, service, and marketplace advantages; • Information, products, and technology: Our global suite of services, unparalleled quantity of relationships, and scale combine to provide us with an information advantage.
Our large number of unique, strong relationships provide global connections and valuable market knowledge; • Global suite of services: A wide selection of services and products help provide our customers with consistent capacity and service levels; • Scale: Our customers leverage our industry-leading capacity, broad procurement options, global data insights, and substantial shipment volumes for better efficiency, service, and marketplace advantages; • Information, products, and technology: The combination of our global suite of services, unparalleled quantity of relationships, and scale provide us with an information advantage.
For most of our transportation and logistics services, we are a service provider. By accepting the customer’s order, we accept certain responsibilities for transportation of the shipment from origin to destination. The carrier’s contract is with us, not the customer, and we are responsible for prompt payment of freight charges.
For most of our transportation and logistics services, we are a service provider. By accepting the customer’s order, we accept certain responsibilities for transportation of the shipment from origin to destination. The carrier’s contract is with us, not the 4 Table of contents customer, and we are responsible for prompt payment of freight charges.
As a result of our logistics capabilities, our technology, our global suite of services, and available modes of transportation, some of our customers have us handle all, or a substantial portion, of their freight transportation requirements. Our employees price 4 Table of contents our services to provide a profit to us for the totality of services performed for the customer.
As a result of our logistics capabilities, our technology, our global suite of services, and available modes of transportation, some of our customers have us handle all, or a substantial portion, of their freight transportation requirements. Our employees price our services to provide a profit to us for the totality of services performed for the customer.
Our Leadership Principles are embedded in the recruitment process to help ensure new hires meet our expectations along with having the skills and abilities to perform the job.
Our Leadership Principles are embedded in the recruitment process to help ensure new hires meet our expectations along with having the skills and abilities to excel in the job.
Industry-first tools launched by Robinson Labs include: • Procure IQ ® , which uses algorithms built by our data scientists and the largest freight shipment dataset in the industry to show shippers the optimal way to purchase transportation in each of their shipping lanes; • Emissions IQ ® , which gives shippers instant visibility into their carbon emissions and surfaces opportunities for reduction; and • Market Rate IQ™, which reveals the patterns in a shipper’s spot freight that they could change to increase savings.
For example, some of the industry-first tools we launched include: • Procure IQ ® , which uses algorithms built by our data scientists and the largest freight shipment dataset in the industry to show shippers the optimal way to purchase transportation in each of their shipping lanes; • Emissions IQ ® , which gives shippers instant visibility into their carbon emissions and surfaces opportunities for reduction; and • Market Rate IQ™, which reveals the patterns in a shipper’s spot freight that they could change to increase savings.
Collaboration, intelligent notifications, and performance scorecards allow customers to manage their supply chain and identify inefficiencies. • Navisphere Insight™ takes a customer’s raw data about their freight and uses data science to turn it into valuable insights, surfacing trends in transportation performance and spend that can be used for decision-making in real time or over time.
Collaboration, intelligent notifications, and performance scorecards allow customers to manage their supply chain and identify inefficiencies. • Navisphere Insight™ takes customers’ raw data about their freight and uses data science to turn the raw data into valuable insights, surfacing trends in transportation performance and spend that can be used for decision-making in real time or over time.
On a regular basis, we engage with our internal and external stakeholders to identify our priority ESG topics, including environmental sustainability. Our Chief Human Resources and ESG Officer and Vice President of ESG provide annual updates to the Board of Directors and Governance Committee on our most critical ESG topics.
On a regular basis, we engage with our internal and external stakeholders to identify our priority ESG topics, including environmental sustainability. Our Chief Human Resources and ESG Officer and Vice President of ESG provide annual updates to the Board of Directors and designated committees on our most critical ESG topics.
Transportation services accounted for approximately 97 percent of adjusted gross profits in 2022 and 2021 and 96 percent of adjusted gross profits in 2020. Adjusted gross profits is a non-GAAP financial measure calculated as total revenues less the total of purchased transportation and related services and the cost of purchased products sourced for resale.
Transportation services accounted for approximately 95 percent of adjusted gross profits in 2023 and 97 percent of adjusted gross profits in 2022 and 2021. Adjusted gross profits is a non-GAAP financial measure calculated as total revenues less the total of purchased transportation and related services and the cost of purchased products sourced for resale.
It is imperative to our business and the right thing to do. The unique experiences and backgrounds of our employees create a stronger, more innovative and successful team. We bring our commitment to diversity, equity, and inclusion to life by integrating our DEI strategic pillars (workplace diversity, workforce inclusivity, partnerships, and accountability) across our talent strategies and into our business.
It is imperative to our business and the right thing to do. The unique experiences and backgrounds of our employees create a stronger, more innovative and successful team. Our commitment to DEI is brought to life by integrating our DEI strategic pillars (workplace diversity, workforce inclusivity, partnerships, and accountability) across our talent strategies and into our business.
Cautionary Statement Relevant to Forward-Looking Information This Annual Report on Form 10-K, including our financial statements, Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of Part II of this report, and other documents incorporated by reference, contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Information contained on our website is not part of this report. 14 Table of contents Cautionary Statement Relevant to Forward-Looking Information This Annual Report on Form 10-K, including our financial statements, Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of Part II of this report, and other documents incorporated by reference, contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
ITEM 1. BUSINESS Overview C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the largest global logistics companies in the world, with consolidated total revenues of $24.7 billion in 2022. We bring together customers, carriers, and suppliers to connect and grow supply chains.
ITEM 1. BUSINESS Overview C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the largest global logistics companies in the world, with consolidated total revenues of $17.6 billion in 2023. We bring together customers, carriers, and suppliers to connect and grow supply chains.
We negotiate annual contracts that establish the predetermined rates we agree to pay the ocean carriers. The rates are negotiated based on expected volumes from our customers in specific trade lanes. These contracts are often amended throughout the year to reflect changes in market conditions for our business, such as additional trade lanes.
We negotiate annual contracts that establish the predetermined rates we agree to pay the ocean carriers. The rates are negotiated based on expected volumes from our customers in specific trade lanes. These contracts are often amended throughout the year to reflect changes in market conditions.
Our benefit programs include a broad array of plans, such as healthcare and retirement benefits, and an employee assistance program in Europe and North America, which provides additional no-cost access to behavioral health benefits and counseling.
Our benefit programs include a broad array of plans, such as healthcare and retirement benefits, and an employee assistance program in Europe, North America, South America, as well as some of our other global locations, which provides additional no-cost access to behavioral health benefits and counseling.
Our rewards are constructed to support business strategy and the achievement of business performance goals. We have designed short- and long-term incentives to drive the behaviors necessary to achieve our strategic priorities. This ensures groups and individuals are rewarded for working together toward our most impactful priorities, products, and services.
Our rewards are constructed to incentivize enterprise performance and commercial growth and to support business strategy and the achievement of business performance goals. We have designed short- and long-term incentives to drive the behaviors necessary to achieve our enterprise strategic priorities. These incentives ensure groups and individuals are rewarded for working together toward our most impactful priorities, products, and services.
We often compete with respect to price, scope of services, or a combination thereof, but believe that our most significant competitive advantages are: • People and relationships: Our knowledgeable, dedicated, and empowered people act as an extension of our customers’ teams—logistics experts they can rely on—to innovate and execute their supply chain strategies.
We also buy from and sell produce to companies that compete with us. 6 Table of contents We often compete with respect to price, scope of services, or a combination thereof, but believe that our most significant competitive advantages are: • People and relationships: Our knowledgeable, dedicated, and empowered people act as an extension of our customers’ teams—logistics experts they can rely on—to innovate and execute their supply chain strategies.
Robinson; they reinforce our culture and help drive exceptional results. We attract, retain, and reward exceptional talent by creating an inclusive, high-performing culture and engaging employees with meaningful work at a place where they belong, can grow, and are proud to work.
We attract, retain, and reward exceptional talent by creating an inclusive, high-performing culture and engaging employees with meaningful work at a place where they feel they belong, can grow, and are proud to work.
We have also instituted quality assurance and monitoring programs as part of our branded and preferred grower programs. Sourcing accounted for 5 Table of contents approximately three percent of our adjusted gross profits in 2022 and 2021 and four percent of our adjusted gross profits in 2020.
We have also instituted quality assurance and monitoring programs as part of our branded and preferred grower programs. Sourcing accounted for approximately five percent of our adjusted gross profits in 2023 and three percent of our adjusted gross profits in 2022 and 2021.
Throughout an employee’s career at C.H. Robinson, we develop and recognize employees by setting clear performance expectations and providing development opportunities. All employees have access to a digital learning platform that supports their ongoing development.
Robinson, we develop and recognize employees by setting clear performance expectations and providing development opportunities. All employees have access to a digital learning platform that supports their ongoing development.
We provide robust and targeted resources for managers to support inclusive leadership behaviors. Our talent acquisition team is focused on recruiting and hiring more women and people of color through partnerships with external organizations and universities, as well as implementing trainings and policies to ensure we have a bias-free hiring process.
Our Talent Acquisition team is focused on recruiting and hiring more women and people of color through partnerships with external organizations and universities, as well as implementing trainings and policies to ensure we have a bias-free hiring process.
The table below shows our adjusted gross profits by transportation mode, for the years ended December 31 (in thousands): 2022 2021 2020 2019 2018 Truckload $ 1,561,310 $ 1,280,629 $ 1,071,873 $ 1,348,878 $ 1,445,916 LTL 632,116 523,365 457,290 477,348 471,275 Ocean 729,839 711,223 350,094 308,367 312,952 Air 198,166 225,286 151,443 106,777 120,540 Customs 107,691 100,539 87,095 91,828 88,515 Other Logistics Services 251,547 210,958 195,159 149,664 154,546 Total $ 3,480,669 $ 3,052,000 $ 2,312,954 $ 2,482,862 $ 2,593,744 Sourcing Since we were founded in 1905, we have been in the business of sourcing fresh produce.
The table below shows our adjusted gross profits by transportation mode, for the years ended December 31 (in thousands): 2023 2022 2021 2020 2019 Truckload $ 1,039,079 $ 1,561,310 $ 1,280,629 $ 1,071,873 $ 1,348,878 LTL 550,373 632,116 523,365 457,290 477,348 Ocean 420,883 729,839 711,223 350,094 308,367 Air 123,470 198,166 225,286 151,443 106,777 Customs 97,096 107,691 100,539 87,095 91,828 Other Logistics Services 255,735 251,547 210,958 195,159 149,664 Total $ 2,486,636 $ 3,480,669 $ 3,052,000 $ 2,312,954 $ 2,482,862 5 Table of contents Sourcing Since we were founded in 1905, we have been in the business of sourcing fresh produce.
We proudly support our industry and our communities around the world by providing philanthropic donations to causes that matter most to our employees. Through our company and the C.H. Robinson Foundation, we contributed more than $4 million to 1,100 charities in 2022.
We proudly support our industry and our communities around the world by providing philanthropic donations to causes that matter most to our employees. Through our company and the C.H. Robinson Foundation, we contributed $3.6 million to approximately 1,000 charities in 2023.
We own very little transportation equipment and do not employ the people directly involved with the delivery of our customers’ freight, so these relationships are critical to our success. In 2022, we worked with approximately 96,000 transportation providers worldwide, the vast majority of which are contracted motor carriers.
We own very little transportation equipment and do not employ the people directly involved with the delivery of our customers’ freight, so these relationships are critical to our success. In 2023, more than 450,000 transportation providers were on our platform, the vast majority of which are contracted motor carriers.
With approximately 1,300 data scientists, engineers, and developers, we are continuing to make smart, talent-focused investments globally in this critical area and building the next generation of tools and processes that will change how supply chains function. C.H. Robinson ® Labs™ (“Robinson Labs”) is part of this commitment.
With approximately 900 data scientists, engineers, and developers, we are continuing to make smart, talent-focused investments globally in this critical area and building the next generation of tools and processes that will change how supply chains function.
The primary services provided by NAST include truckload and less than truckload (“LTL”) transportation brokerage services. Global Forwarding provides transportation and logistics services through an international network of offices in North America, Europe, Asia, Oceania, and South America and also contracts with independent agents worldwide.
Global Forwarding provides transportation and logistics services through an international network of offices in North America, Europe, Asia, Oceania, South America, and the Middle East and also contracts with independent agents worldwide. The primary services provided by Global Forwarding include ocean freight services, air freight services, and customs brokerage.
Robinson, they are provided onboarding that emphasizes the skills necessary to become productive employees, including training on our proprietary technology systems, our customer service philosophy, and our company culture, values, DEI which includes unconscious bias training, and Leadership Principles. Onboarding is followed by on-the-job training and regular performance and development conversations between employees and their managers.
Onboarding emphasizes the skills necessary to become productive employees, including training on our proprietary technology systems, our customer service philosophy and our company culture, values, DEI (which includes unconscious bias training), and Leadership Principles. Onboarding is followed by on-the-job training and regular performance and development conversations between employees and their leaders. Throughout an employee’s career at C.H.
We execute these services by investing in and retaining talented employees, developing innovative proprietary systems and processes, and utilizing a network of contracted transportation providers, including, but not limited to, contracted motor carriers, railroads, and ocean and air carriers.
Our services range from commitments on a specific shipment to much more comprehensive and integrated relationships. We execute these services by investing in and retaining talented employees, developing innovative proprietary systems and processes, and utilizing a network of contracted transportation providers, including, but not limited to, contracted motor carriers, railroads, and ocean and air carriers.
These contracted motor carriers are of all sizes, including owner-operators of a single truck, small and mid-size fleets, private fleets, and the largest national trucking companies. Consequently, we are not dependent on any one contracted motor carrier. Our largest truck transportation provider was less than two percent of our total cost of transportation in 2022.
These contracted motor carriers are of all sizes, including owner-operators of a single truck, small and mid-size fleets, private fleets, and the largest national trucking companies. Consequently, we are not dependent on any one contracted motor carrier.
We are subject to laws and regulations in the U.S. and other countries concerning the handling of personal information, including laws that require us to notify governmental authorities and/or affected individuals of data breaches involving certain personal information. These laws and regulations include, for example, the European General Data Protection Regulation and the California Consumer Privacy Act.
We are subject to laws and regulations in the U.S. and other countries concerning the handling of personal information, including laws that require us to notify governmental authorities and/or affected individuals of data breaches involving certain personal information.
In our sourcing business, we compete with produce brokers, produce growers, produce marketing companies, produce wholesalers, and foodservice buying groups. We also buy from and sell produce to companies that compete with us.
In our sourcing business, we compete with produce brokers, produce growers, produce marketing companies, produce wholesalers, and foodservice buying groups.
Prior to her current role, she served as Vice President of Human Resources from August 2012 to December 2014. Previous positions with C.H. Robinson include Vice President of Investor Relations and Public Affairs from January 2009 to August 2012, Director of Investor Relations, Director of Marketing Communications, and President of the C.H. Robinson Worldwide Foundation.
She additionally serves as the Chair of the Board of the C.H. Robinson Foundation. Prior to her current roles, she served as Vice President of Human Resources from August 2012 to December 2014 and Vice President of Investor Relations and Public Affairs from January 2009 to August 2012. Previous positions at C.H.
As a leader in our industry, we work to advance sustainability efforts through collaborations with non-profit and academic institutions, including sponsorship of research and participation in working groups focused on innovation within the transportation industry.
Robinson Fresh focuses on reducing food waste through innovative technologies and reducing waste by including sustainable packaging options across our product portfolio. As a leader in our industry, we work to advance sustainability efforts through collaborations with non-profit and academic institutions, including sponsorship of research and participation in working groups focused on innovation within the transportation industry.
Additionally, we have identified aspirational goals to be met by 2025 that focus on hiring, retention, engagement, and leadership representation for women (globally) and people of color (U.S. only). We regularly assess our progress on these goals and will set new goals in the future as we achieve our objectives.
Additionally, we have identified aspirational goals to be met by 2025 that focus on hiring, retention, engagement, and leadership representation for women (globally) and people of color (U.S. only).
We are subject to licensing and regulation as a property freight broker and are licensed by the U.S. Department of Transportation (“DOT”) to arrange for the transportation of property by motor vehicle. The DOT prescribes qualifications for acting in this capacity, including certain surety bonding requirements. C.H.
Department of Transportation (“DOT”) to arrange for the transportation of property by motor vehicle. The DOT prescribes qualifications for acting in this capacity, including certain surety bonding requirements. C.H.
We seek additional business from existing customers and pursue new customers based on our knowledge of the marketplace, our unique information advantage, and the range of logistics services we can provide.
In recent years, we have grown by adding new customers and by increasing our volumes with, and providing more services to, our existing customers. We seek additional business from existing customers and pursue new customers based on our knowledge of the marketplace, our unique information advantage, and the range of logistics services we can provide.
Our employees, technology, and product portfolio enable us to provide a differentiated experience, remain flexible, and provide solutions that optimize service for our customers. As an integral part of our transportation services, we also provide a wide range of value-added logistics services, such as freight consolidation, customs brokerage, supply chain consulting and analysis, emission analytics, optimization, and reporting.
As an integral part of our transportation services, we also provide a wide range of value-added logistics services, such as freight consolidation, customs brokerage, supply chain consulting and analysis, emission analytics, optimization, and reporting.
Arun holds a Bachelor of Science degree in Computer Science from Pittsburgh State University and a Master of Science degree in Information Systems Management from the University of Arizona. 13 Table of contents Michael J. Short was named President of Global Freight Forwarding in May 2015. Prior to this role, Mike served as Vice President, Global Forwarding - North America.
Arun holds a Bachelor of Science degree in Computer Science from Pittsburgh State University and a Master of Science degree in Information Systems Management from the University of Arizona. Michael J. Short was named President of Global Freight Forwarding in May 2015. He joined C.H.
Our employee turnover ratio, which is calculated as the number of employees who departed in the 12 months ended December 31, 2022, divided by the average number of employees in the 12 months ended December 31, 2022, was 19 percent. 10 Table of contents Despite tight labor market conditions in 2022, our turnover rate held steady.
Our employee turnover ratio, which is calculated as the number of employees who departed in the 12 months ended December 31, 2023, divided by the average number of employees in the 12 months ended December 31, 2023, was 24 percent.
During 2022, we served approximately 100,000 customers worldwide, ranging from Fortune 100 companies to small businesses in a wide variety of industries. During 2022, our largest customer accounted for approximately two percent of total revenues. In recent years, we have grown by adding new customers and by increasing our volumes with, and providing more services to, our existing customers.
During 2023, we served more than 90,000 customers worldwide, ranging from Fortune 100 companies to small businesses in a wide variety of industries. During 2023, our largest customer accounted for approximately two percent of our consolidated total revenues.
He currently serves as a director on the board of Second Harvest Heartland. Ben holds a Bachelor of Science degree from St. John’s University and a Juris Doctor from William Mitchell College of Law. Angela K. Freeman was named Chief Human Resources Officer in January 2015, and in October 2019, also became ESG Officer.
He currently serves as a director on the board of Second Harvest Heartland. Ben holds a Bachelor of Science degree from St. John’s University and a Juris Doctor from William Mitchell College of Law. Michael Castagnetto was named President of NAST in February 2024.
He holds a Bachelor of Science degree from Mississippi State University. Arun Rajan was named Chief Operating Officer in October 2022 and leads the Product, Technology, Data Science, Analytics and Marketing organizations at C.H. Robinson. Arun joined the company as Chief Product Officer in September 2021.
Arun Rajan was named Chief Operating Officer in October 2022 and leads the Product, Technology, Data Science, Analytics and Marketing organizations at C.H. Robinson. Arun joined C.H. Robinson as Chief Product Officer in September 2021. Prior to joining C.H. Robinson, Arun was the Chief Technology Officer of Whole Foods Market, part of Amazon, from September 2019 to July 2021.
Although seasonal changes in the transportation industry have not had a significant impact on our cash flow or results of operations, we expect this trend to continue, and we cannot guarantee that it will not adversely impact us in the future. 8 Table of contents Government Regulation Our operations may be regulated and licensed by various federal, state, and local transportation agencies in the U.S. and similar governmental agencies in foreign countries in which we operate.
Although seasonal changes in the transportation industry have not had a significant impact on our cash flow or results of operations, we expect this trend to continue, and we cannot guarantee that it will not adversely impact us in the future.
Regulatory actions or litigation seeking to impose significant penalties could be brought against us in the event of a data breach or alleged non-compliance with such laws and regulations. Human Capital At C.H. Robinson, our employees connect the world and are at the core of our success.
These laws and regulations include, for example, the European General Data Protection Regulation and 9 Table of contents the California Consumer Privacy Act. Regulatory actions or litigation seeking to impose significant penalties could be brought against us in the event of a data breach or alleged non-compliance with such laws and regulations. Human Capital At C.H.
Contracted motor carriers that had fewer than 100 trucks transported approximately 80 percent of our truckload shipments in 2022. Every U.S. and Canadian motor carrier we do business with is required to execute a contract that establishes the motor carrier is acting as an independent contractor.
Every U.S. and Canadian motor carrier we do business with is required to execute a contract that establishes the motor carrier is acting as an independent contractor.
Our technology and software platform is essential to serve our customers and contracted carriers and to manage our business. In 2022, we executed approximately 20 million shipments for approximately 100,000 customers with approximately 96,000 contracted carriers.
Our technology and software platform is essential to serve our customers and contracted carriers and to manage our business. In 2023, we executed approximately 19 million shipments for more than 90,000 customers utilizing the more than 450,000 contract carriers on our platform.
The All Other and Corporate segment includes Robinson Fresh, Managed Services, Other Surface Transportation outside of North America, and other miscellaneous revenues and unallocated corporate expenses. See additional disclosure in Note 9, Segment Reporting , to our consolidated financial statements. NAST provides transportation and logistics services across North America through a network of offices in the U.S., Canada, and Mexico.
See additional disclosure in Note 9, Segment Reporting , to our consolidated financial statements. NAST provides transportation and logistics services across North America through a network of offices in the U.S., Canada, and Mexico. The primary services provided by NAST include truckload and less than truckload (“LTL”) transportation brokerage services.
Prior to joining United Natural Foods, Inc., Mike spent 25 years at General Mills, Inc., holding a variety of leadership roles, including Vice President of Finance for the Pillsbury Division, Vice President of Finance for U.S. Retail Sales, and Treasurer.
Prior to joining UNFI, he spent 25 years at General Mills, where he held a variety of finance leadership roles, including Vice President of Finance for the Pillsbury and Yoplait Divisions, Vice President of Finance for U.S. Retail Sales, and Treasurer. Michael currently serves on the Board of Directors of Hormel Foods Corporation.
Managed Services is primarily comprised of our TMC division, which offers Managed TMS ® (“Managed TMS”). Managed TMS combines the use of our global technology platform Navisphere ® (“Navisphere”), logistics process expertise, and consulting services in relation to the use of motor carriers and other transportation providers chosen by our customers.
Managed TMS combines the use of our global technology platform Navisphere ® (“Navisphere”), logistics process expertise, and consulting services in relation to the use of motor carriers and other transportation providers chosen by our customers. Customers can access Navisphere, logistics experts, and supply chain engineers to manage their day-to-day operations and optimize supply chain performance.
Racial and Ethnic Minorities 23 % Leadership Positions Held by U.S. Racial and Ethnic Minorities 11 % External Hires - Women 49 % External Hires - U.S. Racial and Ethnic Minorities 42 % We have shown our commitment to shared accountability by tying progress on our DEI strategy and goals to the annual incentives for our senior leaders.
Racial and Ethnic Minorities 50 % We have shown our commitment to shared accountability by tying progress on our DEI strategy and goals to the annual incentives for our senior leaders. We provide robust and targeted resources for managers to support inclusive leadership behaviors.
They are logistics experts and problem solvers, and they act as an extension of our customers' teams. In fact, our customers and contract carriers consistently cite our people as one of the top reasons they work with C.H. Robinson. Our talent strategy is built on our EDGE values: Evolve Constantly, Deliver Excellence, Grow Together, and Embrace Integrity.
Robinson, our employees connect the world and are at the core of our success. They are logistics experts and problem solvers who are driven to win, and they act as an extension of our customers’ teams. In fact, our customers and contract carriers consistently cite our people as one of the top reasons they work with C.H. Robinson.
They receive regular updates from our Chief Human Resources and Environmental, 9 Table of contents Social, and Governance ( “ ESG”) Officer on our key strategic initiatives, success measurements, and other relevant matters pertaining to human resources and DEI.
They receive regular updates from our Chief Human Resources and Environmental, Social, and Governance ( “ ESG”) Officer on our key strategic initiatives, success measurements, and other relevant matters pertaining to human resources and DEI. This includes, but is not limited to, hiring and retention, culture, employee engagement, succession planning, compensation and benefits, and human resources or DEI-related risks.
In addition to her responsibilities at C.H. Robinson, Angie currently serves on the Board of Directors of The Shyft Group, Inc. (Nasdaq: SHYF) and on the Board of the University of North Dakota Alumni Association & Foundation. Prior to joining C.H. Robinson in 1998, Angie was with McDermott/O’Neill & Associates, a Boston-based public affairs firm.
Robinson include Director of Investor Relations and Director of Marketing Communications. In addition to her responsibilities at C.H. Robinson, Angela currently serves on the Board of Directors of The Shyft Group, Inc. and on the Board of the University of North Dakota Alumni Association & Foundation. Prior to joining C.H.
Our EDGE values are brought to life through our Leadership Principles: Adapt and Change, Constantly Innovate and Improve, Deliver Exceptional Results, Compete to Win, Value Differences, Inspire, Coach and Develop our People, and Think Like the Customer. Our Leadership Principles are unique to us and provide a shared understanding of what it means to lead at C.H.
Our talent strategy is built on our EDGE values: Evolve Constantly, Deliver Excellence, Grow Together, and Embrace Integrity. Our EDGE values are brought to life through our Leadership Principles: Adapt and Change, Constantly Innovate and Improve, Deliver Exceptional Results, Compete to Win, Value Differences, Inspire, Coach and Develop our People, and Think Like the Customer.
In addition, we have a sponsorship program to champion the growth of our employees of color and women employees. We also have targeted leadership development programs for women and Black leaders at various stages of their leadership careers.
Throughout their careers, leaders are provided development opportunities via our leadership development programs and stretch assignments, which are in place for our high potential employees, our next generation leaders, and high-performing leaders. In addition, we have a sponsorship program to champion the growth of our employees of color and women employees.
He joined C.H. Robinson through the acquisition of Phoenix International (“Phoenix”) in November 2012, prior to which, he held a number of roles at Phoenix, including Regional Manager, Sales Manager, and General Manager of the St. Louis, Missouri office. Mike holds a Bachelor of Science degree in Business from the University of Missouri. Michael P.
Robinson, he held a number of roles at Phoenix International, including Regional Manager, Sales Manager, and General Manager of the St. Louis office. He holds a Bachelor of Science degree from the University of Missouri. Michael P. Zechmeister was named Chief Financial Officer in September 2019. He has over three decades of finance experience. Before joining C.H.
The primary services provided by Global Forwarding include ocean freight services, air freight services, and customs brokerage. Robinson Fresh provides sourcing services that primarily include the buying, selling, and/or marketing of fresh fruits, vegetables, and other value-added perishable items. Robinson Fresh sources products from around the world.
Robinson Fresh provides sourcing services that primarily include the buying, selling, and/or marketing of fresh fruits, vegetables, and other value-added perishable items. Robinson Fresh sources products from around the world. 3 Table of contents Managed Services is primarily comprised of our TMC division, which offers Managed TMS ® (“Managed TMS”).
Below are the names, ages, and positions of the executive officers as of February 17, 2023: Name Age Position Scott P. Anderson 56 Interim Chief Executive Officer Ben G. Campbell 57 Chief Legal Officer and Secretary Angela K. Freeman 55 Chief Human Resources and ESG Officer Mac Pinkerton 49 President of NAST Arun Rajan 54 Chief Operating Officer Michael J.
Below are the names, ages, and positions of the executive officers as of February 16, 2024: Name Age Position David P. Bozeman 55 President and Chief Executive Officer Ben G. Campbell 58 Chief Legal Officer and Secretary Michael Castagnetto 47 President of NAST Angela K.
Customers can access Navisphere, logistics experts, and supply chain engineers to manage their day-to-day operations and optimize supply chain performance. 3 Table of contents Other Surface Transportation revenues are primarily earned by our Europe Surface Transportation operating segment. Europe Surface Transportation provides transportation and logistics services, including truckload and groupage services, across Europe. Sales Transportation and Logistics Services C.H.
Other Surface Transportation revenues are primarily earned by our Europe Surface Transportation operating segment. Europe Surface Transportation provides transportation and logistics services, including truckload and LTL transportation services, across Europe. Sales Transportation and Logistics Services C.H. Robinson provides freight transportation and related logistics and supply chain services.
The produce for these brands is sourced through a preferred grower network and packed to order through contract packing agreements. We have instituted quality assurance and monitoring procedures with each of these preferred growers. Segment information. We have two reportable segments, North American Surface Transportation (“NAST”) and Global Forwarding, with our remaining operating segments reported as All Other and Corporate.
We have developed proprietary brands of produce and have exclusive licensing agreements to distribute fresh and value-added produce under recognized consumer brand names. The produce for these brands is sourced through a preferred grower network and packed to order through contract packing agreements. We have instituted quality assurance and monitoring procedures with each of these preferred growers. Segment information.
We are grounded in our customer promise to use our technology, which is built by and for supply chain experts and powered by our information advantage, to deliver smarter solutions. These global solutions, combined with the expertise of our people, deliver value–from improved cost reductions and reliability to sustainability and visibility–that our customers and carriers can rely on.
We are grounded in our customer promise to use our technology, which is built by and for supply chain experts and powered by our information advantage, to deliver smarter solutions and help navigate increasingly complex global supply chains.
Investor Information We were reincorporated in Delaware in 1997 as the successor to a business existing, in various legal forms, since 1905. Our corporate office is located at 14701 Charlson Road, Eden Prairie, Minnesota, 55347-5088, and our telephone number is (952) 937-8500.
Our corporate office is located at 14701 Charlson Road, Eden Prairie, Minnesota, 55347-5088, and our telephone number is (952) 937-8500.
The foundation for much of our logistics expertise can be traced to this original business, founded in 1905, which gives us significant experience in handling produce and temperature controlled commodities. We supply fresh produce through a network of independent produce growers and suppliers. Our customers include grocery retailers, restaurants, foodservice distributors, and produce wholesalers.
Our sourcing services consist primarily of the buying, selling, and/or marketing of fresh fruits, vegetables, and other value-added perishable items. The foundation for much of our logistics expertise can be traced to this original business, founded in 1905, which gives us significant experience in handling produce and temperature-controlled commodities.
Angie holds a Bachelor of Arts degree and a Bachelor of Science degree from the University of North Dakota and a Master of Science degree from the London School of Economics. Mac Pinkerton was named President of NAST in January 2019.
Robinson in 1998, Angela was with McDermott/O’Neill & Associates, a Boston-based public affairs firm. Angela holds a Bachelor of Arts degree and a Bachelor of Science degree from the University of North Dakota and a Master of Science degree from the London School of Economics.
Since 2009, he has served as a director on the board of advisors for the Carlson School of Management at the University of Minnesota, from which he holds a Bachelor of Science in Business degree. Mike also holds a Master of Business Administration from the Kellogg School of Management at Northwestern University.
Michael holds a Bachelor of Science degree from the Carlson School of Management at the University of Minnesota and a Masters of Business Administration from the Kellogg School of Management at Northwestern University.
Robinson has increased those scores in 2021 and 2022, which is a driver of engagement for our employees and supports retention. Onboarding and Development We believe a focus on the development of our leaders and employees results in high performing employees who are empowered to accelerate their careers and deliver exceptional results.
Onboarding and Development We believe a focus on the development of our leaders and employees results in high performing employees who are empowered to accelerate their careers and deliver exceptional, customer-centric results. Our talent model is to prioritize growing talent and leaders because we believe their experience, knowledge, relationships, and expertise become increasingly valuable with time.
Many of our contracted motor carriers’ favorite features of Navisphere Carrier are also available through our Navisphere Carrier mobile application for Android ® and iOS ® mobile operating systems. The Navisphere Driver™ mobile application provides contracted motor carriers’ drivers with load status automation capabilities. Drivers can elect to allow the application to automate location services and updates while in transit.
Many of our contracted motor carriers’ favorite features of Navisphere Carrier are also available through our Navisphere Carrier mobile application for Android ® and iOS ® mobile operating systems. Freightquote ® by C.H.
The following table illustrates our employee count by global region: North America Europe Asia Oceania South America Total Network employees 10,357 1,664 1,835 472 350 14,678 Shared services employees 1,919 457 278 32 35 2,721 Total Employees 12,276 2,121 2,113 504 385 17,399 Contingent workers 1,404 19 333 54 216 2,026 Diversity, Equity, and Inclusion (DEI) Fostering a diverse and inclusive workforce is core to our company values.
The following table illustrates our employee count by global region: North America Europe Asia and Middle East Oceania South America Total Network employees 8,902 1,639 1,675 415 323 12,954 Shared services employees 1,546 429 253 26 38 2,292 Total Employees 10,448 2,068 1,928 441 361 15,246 Contingent workers 1,096 14 62 4 40 1,216 Diversity, Equity, and Inclusion (DEI) Fostering a diverse and inclusive workforce is core to our company values.
In many cases, we also arrange the logistics and transportation of the products we sell and provide related supply chain services, such as replenishment, category management, and managed procurement services. We have developed proprietary brands of produce and have exclusive licensing agreements to distribute fresh and value-added produce under recognized consumer brand names.
We supply fresh produce through a network of independent produce growers and suppliers. Our customers include grocery retailers, restaurants, foodservice distributors, and produce wholesalers. In many cases, we also arrange the logistics and transportation of the products we sell and provide related supply chain services, such as replenishment, category management, and managed procurement services.
Our remaining employees support our network teams in Advanced Analytics and Data Science, Communications, Customer Strategy, Finance, Human Resources, Legal, Marketing, Product, and Technology and Engineering.
Our People As of December 31, 2023, we had a total of 15,246 employees in 39 countries, 12,954 of whom are network employees, as presented below. Our remaining employees support our network teams in Advanced Analytics and Data Science, Communications, Customer Strategy, Finance, Human Resources, Legal, Marketing, Product, and Technology and Engineering. Among our employees, 99 percent, work full-time hours.
In 2022 , we continued to provide our customers with solutions to their complex challenges. We utilized approximately 96,000 contracted transportation companies around the world, including contracted motor carriers, railroads (primarily intermodal service providers), and ocean and air carriers in 2022 .
In 2023 , we had more than 450,000 contracted transportation companies around the world on our platform, including contracted motor carriers, railroads (primarily intermodal service providers), and ocean and air carriers. Our employees, technology, and product portfolio enable us to provide a differentiated experience, remain flexible, and provide solutions that optimize service for our customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFurthermore, we may experience unanticipated changes to our income tax liabilities resulting from changes in geographical income mix and changing international tax legislation. We have limited control over these risks, and if we do not correctly anticipate changes in international economic and political conditions, we may not alter our business practices in time to avoid adverse effects.
Biggest changeWe have limited control over these risks, and if we do not correctly anticipate changes in international economic and political conditions, we may not alter our business practices in time to avoid adverse effects. 18 Table of contents Our ability to appropriately staff and retain employees is important to our business model.
Our business outside of the U.S. is subject to various risks, including: • changes in tariffs, trade restrictions, trade agreements, and taxations; • difficulties in managing or overseeing foreign operations and agents; • limitations on the repatriation of funds because of foreign exchange controls; • different liability standards; • intellectual property laws of countries that do not protect our rights in our intellectual property, including but not limited to, our proprietary information systems, to the same extent as the laws of the U.S.; and • issues related to non-compliance with laws, rules, and regulations in the countries in which we operate including the U.S.
Our business outside of the U.S. is subject to various risks, including: • changes in tariffs, trade restrictions, trade agreements, and taxations; • difficulties in managing or overseeing foreign operations and agents; • limitations on the repatriation of funds because of foreign exchange controls; • different liability standards; • intellectual property laws of countries that do not protect our rights in our intellectual property, including but not limited to, our proprietary information systems, to the same extent as the laws of the U.S.; • issues related to non-compliance with laws, rules, and regulations in the countries in which we operate including the U.S.
Any material litigation related to the above types of claims or claims arising from our transportation operations may require significant management time and could cause us to incur substantial legal and related costs, which may include damages that could have a material adverse impact on our financial results. Our business depends upon compliance with numerous government regulations.
Any material litigation related to the above types of claims or claims arising from our transportation operations may require significant time from management and could cause us to incur substantial legal and related costs, which may include damages that could have a material adverse impact on our financial results. Our business depends upon compliance with numerous government regulations.
If we complete a large acquisition or multiple acquisitions within a short period of time, we may experience heightened difficulties in integrating the acquired companies. We are required to integrate these businesses into our internal control environment, which may present challenges that are different than those presented by organic growth and that may be difficult to manage.
If we complete a large acquisition or multiple acquisitions within a short period of time, we may experience heightened difficulties integrating the acquired companies. We are required to integrate these businesses into our internal control environment, which may present challenges that are different than those presented by organic growth and that may be difficult to manage.
While our different pricing arrangements with customers and contracted motor carriers make it very difficult to measure the precise impact, we believe that fuel costs essentially act as a pass-through cost to our truckload business. In times of fluctuating fuel prices, our adjusted gross profit margin may also fluctuate.
While our different pricing arrangements with customers and contracted motor carriers make it very difficult to measure the precise impact, we believe fuel costs essentially act as a pass-through cost to our truckload business. In times of fluctuating fuel prices, our adjusted gross profit margin may also fluctuate.
Previous attacks on our operating systems have not had a material financial impact on our operations, but we cannot guarantee that future attacks will have little to no impact on our business. Furthermore, given the interconnected nature of the supply chain and our significant presence in the industry, we believe that we may be an attractive target for such attacks.
Previous attacks on our operating systems have not had a material financial impact on our operations, but we cannot guarantee future attacks will have little to no impact on our business. Furthermore, given the interconnected nature of the supply chain and our significant presence in the industry, we believe we may be an attractive target for such attacks.
Although seasonal changes in the transportation industry have not had a significant impact on our cash flow or results of operations, we expect this trend to continue and we cannot guarantee that it will not adversely impact us in the future.
Although seasonal changes in the transportation industry have not had a significant impact on our cash flow or results of operations, we expect this trend to continue, and we cannot guarantee it will not adversely impact us in the future.
We may acquire or make investments in complementary businesses, products, services, or technologies. We cannot guarantee that we will be able to identify suitable acquisitions or investment candidates. Even if we identify suitable candidates, we cannot guarantee that we will make acquisitions or investments on commercially acceptable terms, if at all.
We may acquire or make investments in complementary businesses, products, services, or technologies. We cannot guarantee we will be able to identify suitable acquisitions or investment candidates. Even if we identify suitable candidates, we cannot guarantee we will make acquisitions or investments on commercially acceptable terms, if at all.
For additional information, see Item 7 of Part II, Management’s Discussion and Analysis of Financial Condition and Results of Operations. 15 Table of contents Our dependence on third parties to provide equipment and services may impact the delivery and quality of our transportation and logistics services. We do not employ the people directly involved in delivering our customers’ freight.
For additional information, see Item 7 of Part II, Management’s Discussion and Analysis of Financial Condition and Results of Operations. 16 Table of contents Our dependence on third parties to provide equipment and services may impact the delivery and quality of our transportation and logistics services. We do not employ the people directly involved in delivering our customers’ freight.
While we are insured for up to $155 million for product liability claims subject to a $500,000 per incident deductible, settlement of class action claims is often costly, and we cannot guarantee that our coverage will be adequate or that it will continue to be available.
While we are insured for up to $125 million for product liability claims subject to a $500,000 per incident deductible, settlement of class action claims is often costly, and we cannot guarantee our coverage will be adequate or that it will continue to be available.
These independent third parties may not fulfill their obligations to us, or our relationship with these parties may change, which may prevent us from meeting our commitments to our customers. This reliance also could cause delays in reporting certain events, including recognizing claims.
These independent third parties may not fulfill their obligations to us, or our relationship with these parties may change, which may prevent us from meeting our commitments to our customers. Our reliance on these third parties also could cause delays in reporting certain events, including recognizing claims.
Our operations may be regulated and licensed by various federal, state, and local transportation agencies in the U.S. and similar governmental agencies in foreign countries in which we operate. 19 Table of contents We are subject to licensing and regulation as a property freight broker and are licensed by the DOT to arrange for the transportation of property by motor vehicle.
Our operations may be regulated and licensed by various federal, state, and local transportation agencies in the U.S. and similar governmental agencies in foreign countries in which we operate. We are subject to licensing and regulation as a property freight broker and are licensed by the DOT to arrange for the transportation of property by motor vehicle.
Our international operations subject us to operational and financial risks. We provide services within and between foreign countries on an increasing basis.
Our international operations subject us to operational, financial, and data privacy risks. We provide services within and between foreign countries on an increasing basis.
The supply and price of fresh produce is affected by weather and growing conditions, including but not limited to, flood, drought, freeze, insects, disease, and other conditions over which we have no control. Commodity prices can be affected by shortages or overproduction and are often highly volatile.
Our sourcing business is dependent upon the supply and price of fresh produce. The supply and price of fresh produce is affected by weather and growing conditions, including but not limited to, flood, drought, freeze, insects, disease, and other conditions over which we have no control. Commodity prices can be affected by shortages or overproduction and are often highly volatile.
We also have and maintain other licenses as required by law. We source fresh produce under a license issued by the USDA as required by PACA. We are also subject to various regulations and requirements promulgated by other international, domestic, state, and local agencies and port authorities.
We source fresh produce under a license issued by the USDA as required by PACA. We are also subject to various regulations and requirements promulgated by other international, domestic, state, and local agencies and port authorities.
We are particularly vulnerable to these risks given the broad and global scope of our operations. A catastrophic event that results in the destruction or disruption of any of our critical business or information systems could harm our ability to conduct normal business operations and adversely impact our operating results.
We are particularly vulnerable to these risks given the broad and global scope of our operations. A catastrophic event that results in the destruction or disruption of any of our critical business or information systems could harm our ability to conduct normal business operations and adversely impact our operating results. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The timing and number of acquisitions we pursue may also cause volatility in our financial results. In addition, we may incur debt or be required to issue equity securities to pay for future acquisitions or investments.
The timing and number of acquisitions we pursue may also cause volatility in our financial results. In addition, we may incur debt or be required to issue equity securities to pay for future acquisitions or investments. The issuance of any equity securities could be dilutive to our stockholders.
We operate as a Department of Homeland Security certified IAC, providing air freight services, subject to commercial standards set forth by the IATA and federal regulations issued by the TSA. We provide customs brokerage services as a customs broker under a license issued by U.S. Customs and Border Protection and other authoritative governmental agencies.
We operate as a Department of Homeland Security certified IAC, providing air freight services, subject to commercial standards set forth by the IATA and federal regulations issued by the TSA. We provide customs brokerage services as a customs broker under a license issued by U.S.
A disruption or failure of our systems or operations in the event of a major earthquake, weather event, cyber-attack, heightened security measures, actual or threatened terrorist attack, strike, civil unrest, pandemic, or other catastrophic event could cause delays in providing services or performing other critical functions.
We may be subject to negative impacts of catastrophic events. A disruption or failure of our systems or operations in the event of a major earthquake, weather event, cyber-attack, heightened security measures, actual or threatened terrorist attack, strike, civil unrest, pandemic, or other catastrophic event could cause delays in providing services or performing other critical functions.
During 2022 and continuing in 2023, we have experienced a decline in volumes as shippers struggle with elevated inventory levels and consumer demand has been negatively impacted by inflation and macroeconomic uncertainty.
During 2022 and 2023, we experienced a decline in volumes as shippers struggled with elevated inventory levels and consumer demand was negatively impacted by inflation and macroeconomic uncertainty.
Even without any new legislation or regulation, increased public concern regarding greenhouse gas emissions by transportation carriers could harm the reputations of companies operating in the transportation logistics industries and shift consumer demand toward more locally sourced products and away from our services. General risk factors We are subject to negative impacts of changes in political and governmental conditions.
Even without any new legislation or regulation, increased public concern regarding greenhouse gas emissions by transportation carriers could harm the reputations of companies operating in the transportation and logistics industries and shift consumer demand toward more locally sourced products and away from our services.
The sudden loss of major customers could materially and adversely affect our operating results. We may be subject to the negative impacts of climate change, which could adversely impact our business and financial results.
Our largest customer comprised approximately two percent of our consolidated total revenues. The sudden loss of major customers could materially and adversely affect our operating results. We may be subject to the negative impacts of climate change, which could adversely impact our business and financial results.
We are exposed to changes in interest rates, primarily on our short-term debt that carries floating interest rates. Interest rates are highly sensitive to many factors, including governmental monetary policies, economic conditions, and other factors beyond our control.
We are exposed to changes in interest rates, primarily on our short-term debt that carries floating interest rates. Interest rates are highly sensitive to many factors, including governmental monetary policies, economic conditions, and other factors beyond our control. A significant increase in interest rates could adversely impact our financial position and results of operations.
Our ability to appropriately staff and retain employees is important to our business model. Our continued success depends upon our ability to attract and retain motivated logistics professionals. In order to maintain high variability in our business model, it is necessary to adjust staffing levels to changing market demands.
Our continued success depends upon our ability to attract and retain motivated logistics professionals. In order to maintain high variability in our business model, it is necessary to adjust staffing levels to changing market demands. In periods of rapid change, it may be more difficult to match our staffing level to our business needs.
A significant increase in interest rates could adversely impact our financial position and results of operations. 18 Table of contents Governmental, regulatory, and legal risk factors Changes to income tax regulations in the U.S. and other jurisdictions where we operate may increase our tax liability. We are subject to income taxes in the U.S. and other jurisdictions where we operate.
Governmental, regulatory, and legal risk factors Changes to income tax regulations in the U.S. and other jurisdictions where we operate may increase our tax liability. We are subject to income taxes in the U.S. and other jurisdictions where we operate.
In some instances where we have entered into contract freight rates with customers, in the event market conditions change and those contracted rates are below market rates, we may be required to provide transportation services at a loss. Our sourcing business is dependent upon the supply and price of fresh produce.
In some instances where we have entered into contract freight rates with customers, in the event market conditions change and those contracted rates are below market rates, we may be required to provide transportation services at a loss. Our earnings may be affected by seasonal changes or significant disruptions in the transportation industry.
Our operations are subject to the influences of significant political, governmental, and similar changes and our ability to respond to them, including: • changes in political conditions and in governmental policies; • changes in and compliance with international and domestic laws and regulations; and • wars, civil unrest, acts of terrorism, and other conflicts. 20 Table of contents We may be subject to negative impacts of catastrophic events.
Our operations may be subject to the influences of significant political, governmental, and similar changes and our ability to respond to them, including: • changes in political conditions and in governmental policies; • changes in and compliance with international and domestic laws and regulations; and • wars, civil unrest, acts of terrorism, and other conflicts such as the current conflict in the Red Sea, which is impacting the global freight market.
During 2022, our top 100 customers based on total revenue comprised approximately 35 percent of our consolidated total revenues and our top 100 customers based on adjusted gross profits comprised approximately 29 percent of consolidated adjusted gross profit. Our largest customer comprised approximately two percent of our consolidated total revenues.
We derive a significant portion of our total revenues and adjusted gross profits from our largest customers. During 2023, our top 100 customers based on total revenue comprised approximately 35 percent of our consolidated total revenues and our top 100 customers based on adjusted gross profits comprised approximately 28 percent of our consolidated adjusted gross profits.
We believe this historical pattern has been the result of, or influenced by, numerous factors, including national holidays, weather patterns, consumer demand, economic conditions, and other similar and subtle forces.
Results of operations for our industry generally show a seasonal pattern as customers reduce shipments during and after the winter holiday season. We believe this historical pattern has been the result of, or influenced by, numerous factors, including national holidays, weather patterns, consumer demand, economic conditions, and other similar and subtle forces.
Our contracted transportation providers are subject to increasingly stringent laws protecting the environment, including transitional risks relating to climate change, which could directly or indirectly have a material adverse effect on our business.
Our failure to maintain required permits or licenses, or to comply with applicable regulations, could result in substantial fines or revocation of our operating permits and licenses. 21 Table of contents Our contracted transportation providers are subject to increasingly stringent laws protecting the environment, including transitional risks relating to climate change, which could directly or indirectly have a material adverse effect on our business.
A material increase in the frequency or severity of accidents, liability claims, workers’ compensation claims, or unfavorable resolutions of claims could materially and adversely affect our operating results. In addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could reduce our profitability.
In addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could reduce our profitability.
The issuance of any equity securities could be dilutive to our stockholders. 16 Table of contents Company risk factors We rely on technology to operate our business. We have internally developed the majority of our operating systems and also rely on technology provided by third parties.
Repayment of these advances is dependent upon the growers’ ability to grow and harvest marketable crops. 17 Table of contents Company risk factors We rely on technology to operate our business. We have internally developed the majority of our operating systems and also rely on technology provided by third parties.
In periods of rapid change, it may be more difficult to match our staffing level to our business needs. We cannot guarantee that we will be able to continue to hire and retain a sufficient number of qualified personnel. In addition, macroeconomic factors impacting the labor market may result in higher costs to hire and retain qualified personnel.
We cannot guarantee we will be able to continue to hire and retain a sufficient number of qualified personnel. In addition, macroeconomic factors impacting the labor market may result in higher costs to hire and retain qualified personnel. Because of our comprehensive employee training program, our employees are attractive targets for new and existing competitors.
We also carry various liability insurance policies, including automobile and general liability, with a $155 million umbrella where we carry retentions between $0.5 million and $7.5 million. Buying and reselling fresh produce exposes us to possible product liability.
We also carry various liability insurance policies, including automobile and general liability, with a $125 million umbrella with up to a $10 million retention, an additional $10 million corridor retention, and a $6.5 million retention in various layers throughout the umbrella. 20 Table of contents Buying and reselling fresh produce exposes us to possible product liability.
Changes to income tax laws and regulations in any of the jurisdictions where we operate could significantly increase our effective tax rate and reduce our operating cash flows. We are subject to claims arising from our transportation operations. We use the services of thousands of third party transportation companies in connection with our transportation operations.
Given the numerous proposed tax law changes and the uncertainty regarding such proposed legislative changes, the impact of Pillar Two could adversely impact our effective tax rate, financial position, and results of operations. We are subject to claims arising from our transportation operations. We use the services of thousands of third-party transportation companies in connection with our transportation operations.
We cannot predict the impact that future regulations may have on our business. Our failure to maintain required permits or licenses, or to comply with applicable regulations, could result in substantial fines or revocation of our operating permits and licenses.
We cannot predict the impact that future regulations may have on our business.
Cl aims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all. In addition, we are insured up to $2.5 million per incident within our automobile liability policy.
Cl aims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all. A material increase in the frequency or severity of accidents, liability claims, workers’ compensation claims, or unfavorable resolutions of claims could materially and adversely affect our operating results.
Foreign Corrupt Practices Act and similar regulations. Failure to comply could result in reputational harm, substantial penalties, and operational restrictions. The occurrence or consequences of any of these factors may restrict our ability to operate in the affected region and/or decrease the profitability of our operations in that region.
These requirements continue to evolve and vary by region and regime, which increases the risk of noncompliance and impacts operations, including additional expenses and resources necessary to manage compliant operations. The occurrence or consequences of any of these factors may restrict our ability to operate in the affected region and/or decrease the profitability of our operations in that region.
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Repayment of these advances is dependent upon the growers’ ability to grow and harvest marketable crops. Our earnings may be affected by seasonal changes or significant disruptions in the transportation industry. Results of operations for our industry generally show a seasonal pattern as customers reduce shipments during and after the winter holiday season.
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Foreign Corrupt Practices Act and similar regulations. Failure to comply could result in reputational harm, substantial penalties, and operational restrictions; and • global laws and regulations regarding the collection, use, processing, and transfer of personal information may impact our services by imposing restrictions on processing, increase legal claim liability, and increase regulatory scrutiny and fines.
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Because of our comprehensive employee training program, our employees are attractive targets for new and existing competitors. Continued success depends in large part on our ability to develop successful employees into managers. 17 Table of contents We derive a significant portion of our total revenues and adjusted gross profits from our largest customers.
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Furthermore, we may experience unanticipated changes to our income tax liabilities resulting from changes in geographical income mix and changing international tax legislation.
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Slower or less profitable growth or losses could adversely affect our stock price. We are in the process of searching for a new Chief Executive Officer and need to retain key management personnel. Our Board of Directors is conducting a search for a new Chief Executive Officer.
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Continued success depends in large part on our ability to develop successful employees into managers. We use, and may continue to expand our use of, machine learning and artificial intelligence (“AI”) technologies to deliver our services and operate our business.
Removed
In January 2023, we announced that the Board of Directors was conducting a search for a successor for our Chief Executive Officer whose employment terminated January 1, 2023, and the Board appointed a member of the Board to serve as Interim Chief Executive Officer.
Added
If we fail to successfully integrate AI into our platform and business processes, or if we fail to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented AI developers and programmers and cybersecurity personnel, we may face a competitive disadvantage.
Removed
We must successfully identify and integrate a new Chief Executive Officer to achieve our strategic and operating objectives, and the timeline for completing this process is currently unknown. Transitions in senior executive leadership can adversely affect relationships with our clients, suppliers, and employees; make it difficult to attract and retain talent; and pose challenges in planning for the future.
Added
At the same time, the use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, privacy and compliance issues, ethical concerns, confidentiality, reputational harm, and security risks.
Removed
We must also retain other key management personnel to facilitate a smooth transition. Failure to attract, retain and incentivize key management personnel could materially and adversely affect our operating results. Our indebtedness could adversely impact our financial condition and results of operations.
Added
It is not possible to predict all of the risks related to the use of AI and changes in laws, rules, directives, and regulations governing the use of AI may adversely affect our ability to develop and use AI or subject us to legal liability.
Removed
In addition, the company is continuously monitoring the ongoing impact of the COVID-19 pandemic, which has already caused a significant disruption to global financial markets and supply chains and has resulted in numerous travel restrictions and the shutdown of certain businesses across the globe since its inception.
Added
The cost of complying with laws and regulations governing AI could be significant and would increase our operating expenses, which could adversely affect our business, financial condition, and results of operations. Further, market demand and acceptance of AI technologies are uncertain, and we may be unsuccessful in efforts to further incorporate AI into our processes.
Removed
Since the beginning of the pandemic we have experienced periods of significant changes including volatility in demand, declines in certain industries and regions, volatile pricing, and negative impacts to carrier capacity.
Added
Slower or less profitable growth or losses could adversely affect our stock price. 19 Table of contents Our indebtedness could adversely impact our financial condition and results of operations.
Removed
The extent to which the ongoing COVID-19 pandemic impacts our operating results will depend on future developments, which remain highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of outbreaks, the emergence of new COVID-19 variants, and the effectiveness of local, state, federal, and international actions that are being taken to contain and treat COVID-19.
Added
Changes to income tax laws and regulations in any of the jurisdictions where we operate could adversely affect our overall tax liability. The Organization for Economic Cooperation and Development (“OECD”) reached agreement among various countries to implement a minimum 15 percent tax rate on certain multinational enterprises, commonly referred to as Pillar Two.
Removed
There continues to be uncertainty around the duration of the COVID-19 pandemic and its broader impact on the economy, and therefore, the effects it will have on our operations and financial results remain uncertain for 2023.
Added
Many countries continue to announce changes in their tax laws and regulations based on the Pillar Two proposals. We are continuing to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available. Some of these legislative changes could impact our effective tax rate and tax liabilities.
Removed
If economic or market conditions in key global markets deteriorate, it may have a material adverse impact on our business and results of operations, and we may experience material adverse effects on our financial positions. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Added
Customs and Border Protection (“CBP”), and we maintain Customs Trade Partnership Against Terrorism certification with CBP. Some customs entries fall within the jurisdiction of other authoritative governmental agencies (e.g., Food and Drug Administration, Fish and Wildlife Service, etc.). We also have and maintain other licenses as required by law.
Added
General risk factors We may be subject to negative impacts of changes in political and governmental conditions.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed2 unchanged
Biggest changeITEM 2. PROPERTIES Our corporate headquarters is in Eden Prairie, Minnesota. The total square footage of our four buildings, three of which we own, in Eden Prairie is 377,000. This total includes a data center of approximately 18,000 square feet. We lease approximately 250 office locations in 38 countries across North America, Europe, Asia, South America, and Oceania.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters is in Eden Prairie, Minnesota. The total square footage of our four buildings, three of which we own, in Eden Prairie is 377,000. This total includes a data center of approximately 18,000 square feet.
In addition, we lease warehouse space totaling approximately 4.7 million square feet in 26 locations primarily within the U.S. and a data center in Oronoco, Minnesota, of approximately 32,000 square feet. Most of our offices and warehouses are leased from third parties under leases with initial terms ranging from one to fifteen years.
In addition, we lease warehouse space totaling approximately 4.4 million square feet in 23 locations primarily within the U.S. and a data center in Oronoco, Minnesota, of approximately 32,000 square feet. Most of our offices and warehouses are leased from third parties under leases with initial terms ranging from one to 15 years.
Removed
In 2022, we completed a ten-year sale-leaseback of a 201,000 square foot facility in Kansas City, Missouri. In 2018, we completed a fifteen-year lease of a 207,000 square foot facility in Chicago, Illinois.
Added
We lease approximately 250 office locations in 37 countries across North America, Europe, Asia, South America, Oceania, and the Middle East. We lease a 201,000 square foot facility in Kansas City, Missouri with an expiration date of April 2032, and a 207,000 square foot facility in Chicago, Illinois, with an expiration date of August 2033.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeHowever, based upon our historical experience, the resolution of these proceedings is not expected to have a material adverse effect on our consolidated financial position, results of operations, or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 21 Table of contents PART II
Biggest changeHowever, based upon our historical experience, the resolution of these proceedings is not expected to have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed1 unchanged
Biggest changeThe following table provides information about company purchases of common stock during the quarter ended December 31, 2022: Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (2) October 2022 2,673,287 $ 95.94 2,665,000 9,089,110 November 2022 1,572,887 93.55 1,564,812 7,524,298 December 2022 117,903 94.48 115,100 7,409,198 Fourth quarter 2022 4,364,077 $ 95.04 4,344,912 7,409,198 ________________________________ (1) The total number of shares purchased includes: (i) 4,344,912 shares of common stock purchased under the authorization described below; and (ii) 19,165 shares of common stock surrendered to satisfy statutory tax withholding obligations under our stock incentive plans.
Biggest changeThe following table provides information about company purchases of common stock during the quarter ended December 31, 2023: Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (2) October 2023 4,431 $ 85.53 — 6,763,445 November 2023 10,723 82.07 — 6,763,445 December 2023 3,256 86.02 — 6,763,445 Fourth quarter 2023 18,410 $ 83.60 — 6,763,445 ________________________________ (1) The total number of shares purchased includes: (i) no shares of common stock were purchased under the authorization described below; and (ii) 18,410 shares of common stock surrendered to satisfy statutory tax withholding obligations under our stock incentive plans.
Our declaration of dividends is subject to the discretion of the Board of Directors. Any determination as to the payment of dividends will depend upon our results of operations, capital requirements and financial condition, and such other factors as the Board of Directors may deem relevant.
Our declaration of dividends is subject to the discretion of the Board of Directors. Any determination as to the payment of dividends will depend upon our results of operations, capital requirements, financial condition, and such other factors as the Board of Directors may deem relevant.
Accordingly, there can be no assurance that the Board of Directors will declare or continue to pay dividends on the shares of common stock in the future.
Accordingly, there can be no assurance the Board of Directors will declare or continue to pay dividends on the shares of common stock in the future.
Repurchases may be made from time to time at prevailing prices in the open market or in privately negotiated transactions, subject to market conditions and other factors including Rule 10b5-1 plans and accelerated repurchase programs. 22 Table of contents The graph below compares the cumulative 5-year total return of holders of C.H.
Repurchases may be made from time to time at prevailing prices in the open market or in privately negotiated transactions, subject to market conditions and other factors including Rule 10b5-1 plans and accelerated repurchase programs. 25 Table of contents The graph below compares the cumulative 5-year total return of holders of C.H.
Robinson Worldwide, Inc.’s common stock with the cumulative total returns of the S&P 500 index and the Nasdaq Transportation index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2017 to December 31, 2022. December 31, 2017 2018 2019 2020 2021 2022 C.H.
Robinson Worldwide, Inc.’s common stock with the cumulative total returns of the S&P 500 index and the Nasdaq Transportation index. The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2018 to December 31, 2023. December 31, 2018 2019 2020 2021 2022 2023 C.H.
(2) On December 9, 2021, the Board of Directors increased the company’s share repurchase authorization by an additional 20,000,000 shares of common stock. As of December 31, 2022, there were 7,409,198 shares remaining for future repurchases.
(2) On December 9, 2021, the Board of Directors increased the company’s share repurchase authorization by an additional 20,000,000 shares of common stock. As of December 31, 2023, there were 6,763,445 shares remaining for future repurchases.
On February 15, 2023, the closing sales price per share of our common stock as quoted on the Nasdaq Global Select Market was $105.18 per share. On February 10, 2023, there were 129 holders of record. On February 9, 2023, there were 183,730 beneficial owners of our common stock.
On February 14, 2024, the closing sales price per share of our common stock as quoted on the Nasdaq Global Select Market was $73.84 per share. On February 15, 2024, there were 128 holders of record. On February 12, 2024, there were 139,704 beneficial owners of our common stock.
Robinson Worldwide, Inc. $ 100.00 $ 96.39 $ 91.85 $ 112.99 $ 132.40 $ 115.06 S&P 500 100.00 95.62 125.72 148.85 191.58 156.89 Nasdaq Transportation 100.00 84.30 103.87 110.40 125.06 101.32 The stock price performance included in this graph is not necessarily indicative of future stock price performance. ITEM 6. RESERVED 23 Table of contents
Robinson Worldwide, Inc. $ 100.00 $ 95.29 $ 117.22 $ 137.35 $ 119.37 $ 115.66 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 Nasdaq Transportation 100.00 123.21 130.96 148.36 120.19 161.24 The stock price performance included in this graph is not necessarily indicative of future stock price performance. ITEM 6. RESERVED 26 Table of contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

75 edited+39 added−31 removed21 unchanged
Biggest changeDiluted earnings per share increased 17.3 percent to $7.40. • Cash flow from operations increased significantly to $1.7 billion. 26 Table of contents CONSOLIDATED RESULTS OF OPERATIONS The following table summarizes our results of operations (dollars in thousands, except per share data): Twelve Months Ended December 31, 2022 2021 % change 2020 % change Revenues: Transportation $ 23,516,384 $ 22,046,574 6.7 % $ 15,147,562 45.5 % Sourcing 1,180,241 1,055,564 11.8 % 1,059,544 (0.4) % Total revenues 24,696,625 23,102,138 6.9 % 16,207,106 42.5 % Costs and expenses: Purchased transportation and related services $ 20,035,715 $ 18,994,574 5.5 % $ 12,834,608 48.0 % Purchased products sourced for resale 1,067,733 955,475 11.7 % 960,241 (0.5) % Personnel expenses 1,722,980 1,543,610 11.6 % 1,242,867 24.2 % Other selling, general, and administrative expenses 603,415 526,371 14.6 % 496,122 6.1 % Total costs and expenses 23,429,843 22,020,030 6.4 % 15,533,838 41.8 % Income from operations 1,266,782 1,082,108 17.1 % 673,268 60.7 % Interest and other expense (100,017) (59,817) 67.2 % (44,937) 33.1 % Income before provision for income taxes 1,166,765 1,022,291 14.1 % 628,331 62.7 % Provision for income taxes 226,241 178,046 27.1 % 121,910 46.0 % Net income $ 940,524 $ 844,245 11.4 % $ 506,421 66.7 % Diluted net income per share $ 7.40 $ 6.31 17.3 % $ 3.72 69.6 % Average employee headcount 17,601 15,761 11.7 % 15,119 4.2 % Adjusted gross profit margin percentage (1) Transportation 14.8% 13.8% 100 bps 15.3% (150 bps) Sourcing 9.5% 9.5% - bps 9.4% 10 bps Total adjusted gross profit margin 14.5% 13.6% 90 bps 14.9% (130 bps) ________________________________ (1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
Biggest changeDiluted earnings per share decreased 63.2 percent to $2.72. 29 Table of contents CONSOLIDATED RESULTS OF OPERATIONS The following table summarizes our results of operations (dollars in thousands, except per share data): Twelve Months Ended December 31, 2023 2022 % change 2021 % change Revenues: Transportation $ 16,372,660 $ 23,516,384 (30.4) % $ 22,046,574 6.7 % Sourcing 1,223,783 1,180,241 3.7 % 1,055,564 11.8 % Total revenues 17,596,443 24,696,625 (28.7) % 23,102,138 6.9 % Costs and expenses: Purchased transportation and related services $ 13,886,024 $ 20,035,715 (30.7) % $ 18,994,574 5.5 % Purchased products sourced for resale 1,105,811 1,067,733 3.6 % 955,475 11.7 % Personnel expenses 1,465,735 1,722,980 (14.9) % 1,543,610 11.6 % Other selling, general, and administrative expenses 624,266 603,415 3.5 % 526,371 14.6 % Total costs and expenses 17,081,836 23,429,843 (27.1) % 22,020,030 6.4 % Income from operations 514,607 1,266,782 (59.4) % 1,082,108 17.1 % Interest and other expense (105,421) (100,017) 5.4 % (59,817) 67.2 % Income before provision for income taxes 409,186 1,166,765 (64.9) % 1,022,291 14.1 % Provision for income taxes 84,057 226,241 (62.8) % 178,046 27.1 % Net income $ 325,129 $ 940,524 (65.4) % $ 844,245 11.4 % Diluted net income per share $ 2.72 $ 7.40 (63.2) % $ 6.31 17.3 % Average employee headcount 16,041 17,601 (8.9) % 15,761 11.7 % Adjusted gross profit margin percentage (1) Transportation 15.2% 14.8% 40 bps 13.8% 100 bps Sourcing 9.6% 9.5% 10 bps 9.5% - bps Total adjusted gross profit margin 14.8% 14.5% 30 bps 13.6% 90 bps ________________________________ (1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
Our adjusted gross profits and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profits is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. Adjusted gross profit margin is calculated as adjusted gross profits divided by total revenues.
Our adjusted gross profits and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profits is calculated as gross profits excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. Adjusted gross profit margin is calculated as adjusted gross profits divided by total revenues.
We establish reserves when, despite our belief that our tax return positions are fully supportable, we believe that certain positions are likely to be challenged and that we may or may not prevail in full or in part. Under U.S.
We establish reserves when, despite our belief that our tax return positions are fully supportable, we believe that certain positions are likely to be challenged and we may or may not prevail in full or in part. Under U.S.
GAAP, if we determine that a tax position, more likely than not, will be sustained upon audit based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50 percent likely of being realized upon resolution.
GAAP, if we determine a tax position, more likely than not, will be sustained upon audit based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50 percent likely of being realized upon resolution.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures.
CRITICAL ACCOUNTING ESTIMATES Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”). The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures.
Total revenues represent the total dollar value of revenue recognized from contracts with customers for the goods and services we provide. Substantially all of our revenue is attributable to contracts with our customers. Most transactions in our transportation and sourcing businesses are recorded at the gross amount we charge our customers for the service we provide and goods we sell.
Total revenues represent the total dollar value of revenue recognized from contracts with customers for the goods and services we provide. Substantially all of our revenue is attributable to contracts with our customers. Most transactions in our transportation and sourcing businesses are recorded at the gross amount we charge our customers for the services we provide and goods we sell.
We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting units is less than their respective carrying value (“Step Zero Analysis”).
Typically, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting units is less than their respective carrying value (“Step Zero Analysis”).
We presume that all tax positions will be examined by a taxing authority with full knowledge of all relevant information. We regularly monitor our tax positions and tax liabilities.
We presume all tax positions will be examined by a taxing authority with full knowledge of all relevant information. We regularly monitor our tax positions and tax liabilities.
As of December 31, 2022, such obligations primarily include ocean and air freight capacity, telecommunications services, third-party software contracts, maintenance contracts, and information technology related capacity. In some instances our contractual commitments may be usage based or require estimates as to the timing of cash settlement. We have no financing lease obligations.
As of December 31, 2023, such obligations primarily include ocean and air freight capacity, telecommunications services, third-party software contracts, maintenance contracts, and information technology related capacity. In some instances, our contractual commitments may be usage based or require estimates as to the timing of cash settlement. We have no financing lease obligations.
Long-term liabilities consist primarily of noncurrent taxes payable and long-term notes payable. Due to the uncertainty with respect to the amounts or timing of future cash flows associated with our unrecognized tax benefits as of December 31, 2022, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority.
Long-term liabilities consist primarily of noncurrent taxes payable and long-term notes payable. Due to the uncertainty with respect to the amounts or timing of future cash flows associated with our unrecognized tax benefits as of December 31, 2023, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority.
A reconciliation of our reportable segments to our consolidated results can be found in Note 9, Segment Reporting, in Part II, Financial Information of this Annual Report on Form 10-K. Consolidated Results of Operations—Twelve Months Ended December 31, 2022 Compared to Twelve Months Ended December 31, 2021 Total revenues and direct costs.
A reconciliation of our reportable segments to our consolidated results can be found in Note 9, Segment Reporting, in Part II, Financial Information of this Annual Report on Form 10-K. Consolidated Results of Operations—Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 Total revenues and direct costs.
Significant judgment is required in accounting for tax reserves. Although we believe that we have adequately provided for liabilities resulting from tax assessments by taxing authorities, positions taken by these tax authorities could have a material impact on our effective tax rate, consolidated earnings, financial position and/or cash flows.
Significant judgment is required in accounting for income tax reserves. Although we believe we have adequately provided for liabilities resulting from tax assessments by taxing authorities, positions taken by these tax authorities could have a material impact on our effective tax rate, consolidated earnings, financial position, and/or cash flows.
Projecting discounted future cash flows requires us to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital, and the appropriate discount rate. Use of the market approach consists of comparisons to comparable publicly-traded companies that are similar in size and industry.
Projecting discounted future cash flows requires the use of significant judgement to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital, and the appropriate discount rate. Use of the market approach consists of comparisons to comparable publicly-traded companies that are similar in size and industry.
We also believe we could obtain funds under lines of credit or other forms of indebtedness on short notice, if needed. As of December 31, 2022, we were in compliance with all of the covenants under our debt agreements.
We also believe we could obtain funds under lines of credit or other forms of indebtedness on short notice, if needed. As of December 31, 2023, we were in compliance with all of the covenants under our debt agreements.
The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of the twelve months ended December 31, 2022, to the twelve months ended December 31, 2021.
The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of the twelve months ended December 31, 2023, to the twelve months ended December 31, 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the largest global logistics companies in the world, with consolidated total revenues of $24.7 billion in 2022. We bring together customers, carriers, and suppliers to connect and grow supply chains.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the largest global logistics companies in the world, with consolidated total revenues of $17.6 billion in 2023. We bring together customers, carriers, and suppliers to connect and grow supply chains.
A similar discussion and analysis that compares the twelve months ended December 31, 2021, to the twelve months ended December 31, 2020, can be found in Item 7, “ Management's Discussion and Analysis of Financial Condition and Results of Operations, ” of our 2021 Annual Report on Form 10-K filed with the SEC on February 23, 2022.
A similar discussion and analysis that compares the twelve months ended December 31, 2022, to the twelve months ended December 31, 2021, can be found in Item 7, “ Management's Discussion and Analysis of Financial Condition and Results of Operations, ” of our 2022 Annual Report on Form 10-K filed with the SEC on February 17, 2023.
We expect to use our current debt facilities and potentially other indebtedness incurred in the future to assist us in continuing to fund working capital, capital expenditures, possible acquisitions, dividends, share repurchases, or other investments. Cash and cash equivalents totaled $217.5 million as of December 31, 2022, and $257.4 million as of December 31, 2021.
We expect to use our current debt facilities and potentially other indebtedness incurred in the future to assist us in continuing to fund working capital, capital expenditures, possible acquisitions, dividends, share repurchases, or other investments. Cash and cash equivalents totaled $145.5 million as of December 31, 2023, and $217.5 million as of December 31, 2022.
Uncertain income tax positions are included in “Accrued income taxes” or “Noncurrent income taxes payable” in the consolidated balance sheet.
Uncertain income tax positions are included in “Accrued income taxes” or “Noncurrent income taxes payable” in the consolidated balance sheets.
Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 4.0 percent during 2022. Our 2022 Global Forwarding results were largely consistent with the trends discussed above in the market trends section.
Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 21.0 percent during 2023. Our 2023 Global Forwarding results were largely consistent with the trends discussed above in the market trends section.
As of December 31, 2022, we recorded revenue of $257.6 million for services we have provided while a shipment was still in-transit but for which we had not yet completed our performance obligation or had not yet invoiced our customer compared to $453.7 million at December 31, 2021.
As of December 31, 2023, we recorded revenue of $189.9 million for services we have provided while a shipment was still in-transit but for which we had not yet completed our performance obligation or had not yet invoiced our customer compared to $257.6 million at December 31, 2022.
Therefore, $43.0 million of unrecognized tax benefits have been excluded from the contractual obligations table above. See Note 5, Income Taxes , to the consolidated financial statements for a discussion on income taxes. As of December 31, 2022, we do not have significant off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. 35 Table of contents
Therefore, $20.1 million of unrecognized tax benefits have been excluded from the contractual obligations table above. See Note 5, Income Taxes , to the consolidated financial statements for a discussion on income taxes. As of December 31, 2023, we do not have significant off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. 38 Table of contents
(2) We maintain operating leases for office space, warehouses, office equipment, and a small number of intermodal containers. See Note 11, Leases , for further information. (3) Purchase obligations include agreements for services that are enforceable and legally binding and that specify all significant terms.
(2) We maintain operating leases for office space, warehouses, office equipment, and trailers. See Note 11, Leases , for further information. (3) Purchase obligations include agreements for services that are enforceable and legally binding and that specify all significant terms.
As of December 31, 2022, there were 7,409,198 shares remaining for future repurchases. The number of shares we repurchase, if any, during future periods will vary based on our cash position, potential alternative uses of our cash, and market conditions. Over the long term, we remain committed to our quarterly dividend and share repurchases to enhance shareholder value.
As of December 31, 2023, there were 6,763,445 shares remaining for future repurchases. The number of shares we repurchase, if any, during future periods will vary based on our cash position, other potential uses of our cash, and market conditions. Over the long term, we remain committed to our quarterly dividend and share repurchases to enhance shareholder value.
The reconciliation of gross profit to adjusted gross profits and gross profit margin to adjusted gross profit margin is presented below (dollars in thousands): Twelve Months Ended December 31, 2022 2021 2020 Revenues: Transportation $ 23,516,384 $ 22,046,574 $ 15,147,562 Sourcing 1,180,241 1,055,564 1,059,544 Total revenues 24,696,625 23,102,138 16,207,106 Costs and expenses: Purchased transportation and related services 20,035,715 18,994,574 12,834,608 Purchased products sourced for resale 1,067,733 955,475 960,241 Direct internally developed software amortization 25,487 20,208 16,634 Total direct costs 21,128,935 19,970,257 13,811,483 Gross profit / Gross profit margin 3,567,690 14.4 % 3,131,881 13.6 % 2,395,623 14.8 % Plus: Direct internally developed software amortization 25,487 20,208 16,634 Adjusted gross profits / Adjusted gross profit margin $ 3,593,177 14.5 % $ 3,152,089 13.6 % $ 2,412,257 14.9 % Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profit.
The reconciliation of gross profits to adjusted gross profits and gross profit margin to adjusted gross profit margin is presented below (dollars in thousands): Twelve Months Ended December 31, 2023 2022 2021 Revenues: Transportation $ 16,372,660 $ 23,516,384 $ 22,046,574 Sourcing 1,223,783 1,180,241 1,055,564 Total revenues 17,596,443 24,696,625 23,102,138 Costs and expenses: Purchased transportation and related services 13,886,024 20,035,715 18,994,574 Purchased products sourced for resale 1,105,811 1,067,733 955,475 Direct internally developed software amortization 33,620 25,487 20,208 Total direct costs 15,025,455 21,128,935 19,970,257 Gross profits / Gross profit margin 2,570,988 14.6 % 3,567,690 14.4 % 3,131,881 13.6 % Plus: Direct internally developed software amortization 33,620 25,487 20,208 Adjusted gross profits / Adjusted gross profit margin $ 2,604,608 14.8 % $ 3,593,177 14.5 % $ 3,152,089 13.6 % Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profit.
Our significant accounting policies are discussed in Note 1, Summary of Significant Accounting Policies , of the Notes to the Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.
Our significant accounting policies are discussed in Note 1, Summary of Significant Accounting Policies , of the Notes to the Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K. We consider the following items in our consolidated financial statements to require significant estimation or judgment. REVENUE RECOGNITION.
In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements (dollars in thousands): Description Carrying Value as of December 31, 2022 Borrowing Capacity Maturity Revolving credit facility $ — $ 1,000,000 November 2027 364-day revolving credit facility 379,000 500,000 May 2023 Senior Notes, Series A 175,000 175,000 August 2023 Senior Notes, Series B 150,000 150,000 August 2028 Senior Notes, Series C 175,000 175,000 August 2033 Receivables Securitization Facility (1) 499,655 500,000 November 2023 Senior Notes (1) 595,049 600,000 April 2028 Total debt $ 1,973,704 $ 3,100,000 ________________________________ (1) Net of unamortized discounts and issuance costs.
In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements (dollars in thousands): Description Carrying Value as of December 31, 2023 Borrowing Capacity Maturity Revolving Credit Facility $ 160,000 $ 1,000,000 November 2027 Senior Notes, Series B 150,000 150,000 August 2028 Senior Notes, Series C 175,000 175,000 August 2033 Receivables Securitization Facility (1) 499,542 500,000 November 2025 Senior Notes (1) 595,945 600,000 April 2028 Total debt $ 1,580,487 $ 2,425,000 ________________________________ (1) Net of unamortized discounts and issuance costs.
Twelve Months Ended December 31, (dollars in thousands) 2022 2021 % change 2020 % change Total revenues $ 2,057,150 $ 1,864,431 10.3 % $ 1,794,028 3.9 % Loss from operations (15,884) (13,999) N/M (10,720) N/M Adjusted gross profits (1) Robinson Fresh 121,639 107,543 13.1 % 105,700 1.7 % Managed Services 115,094 105,064 9.5 % 94,828 10.8 % Other Surface Transportation 76,267 72,988 4.5 % 65,650 11.2 % Total adjusted gross profits $ 313,000 $ 285,595 9.6 % $ 266,178 7.3 % ________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained above.
Twelve Months Ended December 31, (dollars in thousands) 2023 2022 % change 2021 % change Total revenues $ 2,127,664 $ 2,057,150 3.4 % $ 1,864,431 10.3 % Loss from operations (31,183) (15,884) N/M (13,999) N/M Adjusted gross profits (1) Robinson Fresh 131,216 121,639 7.9 % 107,543 13.1 % Managed Services 116,196 115,094 1.0 % 105,064 9.5 % Other Surface Transportation 73,977 76,267 (3.0) % 72,988 4.5 % Total adjusted gross profits $ 321,389 $ 313,000 2.7 % $ 285,595 9.6 % ________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained above.
Cash and cash equivalents held outside the U.S. totaled $204.7 million as of December 31, 2022, and $217.1 million as of December 31, 2021. Working capital decreased from $1.48 billion at December 31, 2021, to $266.4 million at December 31, 2022.
Cash and cash equivalents held outside the U.S. totaled $142.8 million as of December 31, 2023, and $204.7 million as of December 31, 2022. Working capital increased from $266.4 million at December 31, 2022, to $828.7 million at December 31, 2023.
These impacts were partially offset by state income taxes, net of federal benefits. 28 Table of contents NAST Segment Results of Operations Twelve Months Ended December 31, (dollars in thousands) 2022 2021 % change 2020 % change Total revenues $ 15,827,467 $ 14,507,917 9.1 % $ 11,312,553 28.2 % Costs and expenses: Purchased transportation and related services 13,630,763 12,714,964 7.2 % 9,795,462 29.8 % Personnel expenses 844,472 779,435 8.3 % 624,358 24.8 % Other selling, general, and administrative expenses 518,930 428,167 21.2 % 384,258 11.4 % Total costs and expenses 14,994,165 13,922,566 7.7 % 10,804,078 28.9 % Income from operations $ 833,302 $ 585,351 42.4 % $ 508,475 15.1 % Twelve Months Ended December 31, 2022 2021 % change 2020 % change Average employee headcount 7,365 6,764 8.9 % 6,811 (0.7) % Service line volume statistics Truckload 0.5 % 2.5 % LTL (2.0) % 8.0 % Adjusted gross profits (1) Truckload $ 1,463,363 $ 1,192,644 22.7 % $ 981,420 21.5 % LTL 626,744 517,500 21.1 % 452,033 14.5 % Other 106,597 82,809 28.7 % 83,638 (1.0) % Total adjusted gross profits $ 2,196,704 $ 1,792,953 22.5 % $ 1,517,091 18.2 % ________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained above.
These impacts were partially offset by state income taxes, net of federal benefits, which increased the effective tax rate by 2.1 percentage points. 31 Table of contents NAST Segment Results of Operations Twelve Months Ended December 31, (dollars in thousands) 2023 2022 % change 2021 % change Total revenues $ 12,471,075 $ 15,827,467 (21.2) % $ 14,507,917 9.1 % Costs and expenses: Purchased transportation and related services 10,877,221 13,630,763 (20.2) % 12,714,964 7.2 % Personnel expenses 662,037 844,472 (21.6) % 779,435 8.3 % Other selling, general, and administrative expenses 471,857 518,930 (9.1) % 428,167 21.2 % Total costs and expenses 12,011,115 14,994,165 (19.9) % 13,922,566 7.7 % Income from operations $ 459,960 $ 833,302 (44.8) % $ 585,351 42.4 % Twelve Months Ended December 31, 2023 2022 % change 2021 % change Average employee headcount 6,469 7,365 (12.2) % 6,764 8.9 % Service line volume statistics Truckload (4.5) % 0.5 % LTL (2.0) % (2.0) % Adjusted gross profits (1) Truckload $ 943,674 $ 1,463,363 (35.5) % $ 1,192,644 22.7 % LTL 543,657 626,744 (13.3) % 517,500 21.1 % Other 106,523 106,597 (0.1) % 82,809 28.7 % Total adjusted gross profits $ 1,593,854 $ 2,196,704 (27.4) % $ 1,792,953 22.5 % ________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained above.
If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. In the Step One Analysis, the fair value of each reporting unit is determined using a discounted cash flow analysis and market approach.
If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands): Twelve months ended December 31, 2022 2021 % change 2020 % change Sources (uses) of cash: Cash provided by operating activities $ 1,650,171 $ 94,955 1,637.8 % $ 499,191 (81.0) % Capital expenditures (128,497) (70,922) (54,009) Acquisitions, net of cash acquired — (14,750) (223,230) Sale of property and equipment 63,579 — 5,525 Cash used for investing activities (64,918) (85,672) (24.2) % (271,714) (68.5) % Repurchase of common stock (1,459,900) (581,756) (177,514) Cash dividends (285,317) (277,321) (209,956) Net borrowings (repayments) on debt 54,000 822,701 (143,000) Other financing activities 71,671 43,949 89,803 Net cash (used for) provided by financing activities (1,619,546) 7,573 NM (440,667) NM Effect of exchange rates on cash and cash equivalents (5,638) (3,239) 9,128 Net change in cash and cash equivalents $ (39,931) $ 13,617 $ (204,062) 32 Table of contents Cash flow from operating activities.
The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands): Twelve months ended December 31, 2023 2022 % change 2021 % change Sources (uses) of cash: Cash provided by operating activities $ 731,946 $ 1,650,171 (55.6) % $ 94,955 1,637.8 % Capital expenditures (84,111) (128,497) (70,922) Acquisitions, net of cash acquired — — (14,750) Sale of property and equipment 1,324 63,579 — Cash used for investing activities (82,787) (64,918) 27.5 % (85,672) (24.2) % Repurchase of common stock (63,884) (1,459,900) (581,756) Cash dividends (291,569) (285,317) (277,321) Net (repayments) borrowings on debt (394,000) 54,000 822,701 Other financing activities 31,620 71,671 43,949 Net cash (used for) provided by financing activities (717,833) (1,619,546) (55.7) % 7,573 N/M Effect of exchange rates on cash and cash equivalents (3,284) (5,638) (3,239) Net change in cash and cash equivalents $ (71,958) $ (39,931) $ 13,617 35 Table of contents Cash flow from operating activities.
The transit period can vary based upon the method of transport; generally, a number of days for over the road, rail, and air transportation, or several weeks in the case of an ocean shipment.
Revenue is recognized for these performance obligations as they are satisfied over the contract term, which generally represents the transit period. The transit period can vary based upon the method of transport; generally, a number of days for over the road, rail, and air transportation, or several weeks in the case of an ocean shipment.
The effective income tax rate for the twelve months ended December 31, 2022 was lower than the statutory federal income tax rate primarily due to the tax benefit from U.S. tax credits and incentives, foreign tax credits, and the tax impact of share-based payment awards. These impacts were partially offset by state income taxes, net of federal benefits.
The effective income tax rate for the twelve months ended December 31, 2022, was lower than the statutory federal income tax rate primarily due to the tax benefit from U.S. tax credits and incentives, foreign tax credits, and the tax impact of share-based payment awards, which reduced the effective tax rate by 2.0 percentage points, 1.2 percentage points, and 1.1 percentage points, respectively.
Twelve Months Ended December 31, 2022 Compared to Twelve Months Ended December 31, 2021 Total revenues and direct costs. NAST total revenues and direct costs increased driven by higher pricing and freight costs in truckload and LTL services in addition to an increase in volume in truckload services.
Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 Total revenues and direct costs. NAST total revenues and direct costs decreased driven by lower pricing and freight costs in truckload and LTL services compared to the prior year in addition to volume declines in both services.
Dollars, including intercompany balances, in regions where the U.S. Dollar is not the functional currency. The prior year included a $15.1 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses.
The prior year included a $23.5 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses driven primarily by balances denominated in U.S. Dollars, including intercompany balances, in regions where the U.S. Dollar is not the functional currency and a $9.3 million foreign currency loss related to the devaluation of the Argentine Peso.
Global Forwarding Segment Results of Operations Twelve Months Ended December 31, (dollars in thousands) 2022 2021 % change 2020 % change Total revenues $ 6,812,008 $ 6,729,790 1.2 % $ 3,100,525 117.1 % Costs and expenses: Purchased transportation and related services 5,728,535 5,656,249 1.3 % 2,471,537 128.9 % Personnel expenses 414,690 368,563 12.5 % 281,048 31.1 % Other selling, general, and administrative expenses 219,419 194,222 13.0 % 172,427 12.6 % Total costs and expenses 6,362,644 6,219,034 2.3 % 2,925,012 112.6 % Income from operations $ 449,364 $ 510,756 (12.0) % $ 175,513 191.0 % Twelve Months Ended December 31, 2022 2021 % change 2020 % change Average employee headcount 5,712 5,071 12.6 % 4,708 7.7 % Service line volume statistics Ocean (0.5) % 17.0 % Air (9.0) % 45.5 % Customs 3.5 % 13.5 % Adjusted gross profits (1) Ocean $ 729,453 $ 710,845 2.6 % $ 349,868 103.2 % Air 195,191 221,906 (12.0) % 146,056 51.9 % Customs 107,691 100,540 7.1 % 87,092 15.4 % Other 51,138 40,250 27.1 % 45,972 (12.4) % Total adjusted gross profits $ 1,083,473 $ 1,073,541 0.9 % $ 628,988 70.7 % ________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained above.
Global Forwarding Segment Results of Operations Twelve Months Ended December 31, (dollars in thousands) 2023 2022 % change 2021 % change Total revenues $ 2,997,704 $ 6,812,008 (56.0) % $ 6,729,790 1.2 % Costs and expenses: Purchased transportation and related services 2,308,339 5,728,535 (59.7) % 5,656,249 1.3 % Personnel expenses 366,464 414,690 (11.6) % 368,563 12.5 % Other selling, general, and administrative expenses 237,071 219,419 8.0 % 194,222 13.0 % Total costs and expenses 2,911,874 6,362,644 (54.2) % 6,219,034 2.3 % Income from operations $ 85,830 $ 449,364 (80.9) % $ 510,756 (12.0) % Twelve Months Ended December 31, 2023 2022 % change 2021 % change Average employee headcount 5,222 5,712 (8.6) % 5,071 12.6 % Service line volume statistics Ocean (5.0) % (0.5) % Air (6.5) % (9.0) % Customs (8.5) % 3.5 % Adjusted gross profits (1) Ocean $ 420,826 $ 729,453 (42.3) % $ 710,845 2.6 % Air 121,978 195,191 (37.5) % 221,906 (12.0) % Customs 97,095 107,691 (9.8) % 100,540 7.1 % Other 49,466 51,138 (3.3) % 40,250 27.1 % Total adjusted gross profits $ 689,365 $ 1,083,473 (36.4) % $ 1,073,541 0.9 % ________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained above.
See Item 7 of Part II, Management’s Discussion and Analysis of Financial Condition and Results of Operations , for further information. We utilize our historical knowledge of shipping lanes and estimated transit times to determine the transit period in cases where our customers’ freight has not reached its intended destination.
We utilize our historical knowledge of shipping lanes and estimated transit times to determine the transit period in cases where our customers’ freight has not reached its intended destination.
As a result of our Step One Analysis for Europe Surface Transportation we determined that the fair value was greater than the reporting unit's respective carrying value. As such, the goodwill balance of Europe Surface Transportation was not impaired. No impairments have been recorded in any period presented in the financial statements. INCOME TAX RESERVES.
The fair value of our Europe Surface Transportation reporting unit also exceeded its carrying value with greater than 30 percent cushion, and as such, the goodwill balance was not impaired. No impairments have been recorded in any period presented in the financial statements. INCOME TAX RESERVES.
Twelve Months Ended December 31, 2022 Compared to Twelve Months Ended December 31, 2021 Total revenues and direct costs. Total revenues and direct costs increased driven by higher pricing and cost per case across all customer industries in Robinson Fresh. Other Surface Transportation total revenues and direct costs also increased, driven by higher truckload pricing in Europe.
Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 Total revenues and direct costs. Total revenues and direct costs increased driven by an increase in case volume for foodservice and retail customers in Robinson Fresh. Other Surface Transportation total revenues and direct costs also increased, driven by higher truckload volumes in Europe.
In 2021, we used $14.7 million for the acquisition of Combinex. In 2020, we used $222.7 million for the acquisition of Prime. We anticipate capital expenditures in 2023 to be approximately $90 million to $100 million. Cash used for financing activities. We had net borrowings on debt in 2022 and 2021 and net repayments in 2020 .
We anticipate capital expenditures in 2024 to be approximately $85 million to $95 million. Cash used for financing activities. We had net repayments on debt in 2023 and net borrowings on debt in 2022.
The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands) : Twelve Months Ended December 31, 2022 2021 2020 Total revenues $ 24,696,625 $ 23,102,138 $ 16,207,106 Operating income 1,266,782 1,082,108 673,268 Operating margin 5.1 % 4.7 % 4.2 % Adjusted gross profit $ 3,593,177 $ 3,152,089 $ 2,412,257 Operating income 1,266,782 1,082,108 673,268 Adjusted operating margin 35.3 % 34.3 % 27.9 % 24 Table of contents MARKET TRENDS The cost of purchased transportation in the North American surface transportation market declined significantly over the course of 2022 as excess carrier capacity combined with slowing demand led to softening market conditions.
The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands) : Twelve Months Ended December 31, 2023 2022 2021 Total revenues $ 17,596,443 $ 24,696,625 $ 23,102,138 Operating income 514,607 1,266,782 1,082,108 Operating margin 2.9 % 5.1 % 4.7 % Adjusted gross profit $ 2,604,608 $ 3,593,177 $ 3,152,089 Operating income 514,607 1,266,782 1,082,108 Adjusted operating margin 19.8 % 35.3 % 34.3 % 27 Table of contents MARKET TRENDS The North America surface transportation market continues to experience weak freight demand combined with excess carrier capacity, which is resulting in an oversupplied and very competitive market.
Our investing activities consist primarily of capital expenditures and cash paid for acquisitions. Capital expenditures consisted primarily of investments in software, which are intended to deliver scalable solutions to improve our customer and carrier experience and increase our efficiency to help expand our adjusted operating margins and grow the business.
Capital expenditures consisted primarily of investments in software, which are intended to deliver scalable solutions by transforming our processes, accelerating the pace of development, prioritizing data integrity, improving our customer and carrier experience, and increasing our efficiency to help expand our adjusted operating margins and grow the business.
Other SG&A expenses increased primarily due to increases in purchased and contracted services, legal settlements, travel, and warehouse expenses. These increases were partially offset by a $23.5 million gain on the sale-leaseback of a facility in Kansas City and lower credit losses.
Other SG&A expenses increased primarily due to a $23.5 million gain on the sale-leaseback of a facility in Kansas City in the prior year. This increase was partially offset by decreased purchased and contracted services, including temporary labor in 2023.
Adjusted operating margin of 35.3 percent increased 100 basis points. • Interest and other expenses, net totaled $100.0 million, which primarily consisted of $77.1 million of interest expense, which increased $25.0 million versus last year due to a higher average debt balance.
Adjusted operating margin of 19.8 percent decreased 1,550 basis points. • Interest and other expenses, net totaled $105.4 million, which primarily consisted of $90.2 million of interest expense, which increased $13.1 million versus last year due to higher average variable interest rates.
We consider the following items in our consolidated financial statements to require significant estimation or judgment. 33 Table of contents REVENUE RECOGNITION. At contract inception, we assess the goods and services promised in our contracts with customers and identify our performance obligations to provide distinct goods and services to our customers.
At contract inception, we assess the goods and services promised in our contracts with customers and identify our performance obligations to provide distinct goods and services to our customers.
Twelve Months Ended December 31, 2022 Compared to Twelve Months Ended December 31, 2021 Total revenues and direct costs. Total revenues and direct costs increased due to higher pricing and purchased transportation costs in ocean services, partially offset by lower pricing in air freight services, in addition to volume decreases in both ocean and air freight services.
Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022 Total revenues and direct costs. Global Forwarding total revenues and direct costs decreased driven by lower pricing and purchased transportation costs in both ocean and air freight and, to a lesser extent, volume declines in both service lines.
Our truckload services adjusted gross profit per transaction benefited from the declining cost of purchased transportation relative to our contractual rates negotiated in prior quarters. Our average truckload linehaul rate per mile charged to our customers decreased approximately 4.0 percent. Our truckload transportation costs, excluding fuel surcharges, decreased approximately 7.5 percent.
NAST adjusted gross profits per transaction in the twelve months ended December 31, 2022, benefited from market conditions beginning to soften, resulting in the declining cost of purchased transportation relative to our previously negotiated contractual rates. Our average truckload linehaul rate per mile charged to our customers decreased approximately 21.0 percent.
The amount of revenue recognized for contracts where the transit period was partially complete declined significantly at December 31, 2022 compared to December 31, 2021 driven by the macroeconomic and industry factors impacting the cost of purchased transportation, in addition to the supply chain disruptions that caused increased transit times near the end of 2021.
The amount of revenue recognized for contracts where the transit period was partially complete declined significantly at December 31, 2023 compared to December 31, 2022, driven by the macroeconomic and industry factors impacting the cost of purchased transportation. See Item 7 of Part II, Management’s Discussion and Analysis of Financial Condition and Results of Operations , for further information.
Adjusted gross profits increased 14.0 percent to $3.6 billion, primarily driven by higher adjusted gross profit per transaction in truckload and LTL services. • Personnel expenses increased 11.6 percent to $1.7 billion, primarily due to 11.7 percent increase in average employee headcount. • Selling, general, and administrative (“SG&A”) expenses increased 14.6 percent to $603.4 million, primarily due to increases in purchased and contracted services, legal settlements, travel expenses, and an impairment of internally developed software, partially offset by a $25.3 million gain on the sale-leaseback of our Kansas City regional center and a decrease in credit losses. • Income from operations totaled $1.3 billion, up 17.1 percent from last year, primarily due to an increase in adjusted gross profits, partially offset by the increase in operating expenses.
Average employee headcount decreased 8.9 percent. • Other selling, general, and administrative (“SG&A”) expenses increased 3.5 percent to $624.3 million, primarily due to a $25.3 million gain on the sale-leaseback of our Kansas City regional center recorded in the prior year, partially offset by decreased purchased and contracted services in the current year. • Income from operations totaled $514.6 million, down 59.4 percent from last year, due to a decline in adjusted gross profits, partially offset by the decline in operating expenses.
Air freight tonnage decreased 9.0 percent as we experienced more customers willing to accept longer transit times in the ocean freight market, which was also aided by the improved schedule reliability for ocean freight. 25 Table of contents SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS The following summarizes select 2022 year-over-year operating comparisons to 2021: • Total revenues increased 6.9 percent to $24.7 billion, driven primarily by higher pricing in truckload, LTL, and ocean services. • Gross profits increased 13.9 percent to $3.6 billion.
Our total ocean freight volumes decreased 5.0 percent while our air freight tonnage decreased 6.5 percent in 2023. 28 Table of contents SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS The following summarizes select 2023 year-over-year operating comparisons to 2022: • Total revenues decreased 28.7 percent to $17.6 billion, primarily driven by lower pricing in our ocean and truckload services. • Gross profits decreased 27.9 percent to $2.6 billion.
Total transportation revenues and direct costs increased driven by higher pricing and freight costs in nearly all service lines, most notably truckload, LTL, and ocean freight services. These increases were partially offset by volume declines in most of our service lines.
Total transportation revenues and direct costs decreased driven by lower pricing and freight costs in nearly all service lines, most notably ocean and truckload services. In addition, volume declined in nearly all transportation services compared to the prior year.
The effective income tax rate for the twelve months ended December 31, 2021, was lower than the statutory federal income tax rate primarily due to the tax benefit from U.S. tax credits and incentives, and a lower tax rate on foreign earnings.
The effective income tax rate for the twelve months ended December 31, 2023 was lower than the statutory federal income tax rate primarily due to the tax impact of foreign tax credits, U.S. tax credits and incentives, and the tax impact of share-based payment awards, which reduced the effective tax rate by 9.5 percentage points, 3.4 percentage points, and 2.2 percentage points, respectively.
Transportation and Logistics Services - As a global logistics provider, our primary performance obligation under our customer contracts is to utilize our relationships with a wide variety of transportation companies to efficiently and cost-effectively transport our customers’ freight. Revenue is recognized for these performance obligations as they are satisfied over the contract term, which generally represents the transit period.
Our transportation and logistics service arrangements often require management to use judgment and make estimates that impact the amounts and timing of revenue recognition. 36 Table of contents Transportation and Logistics Services - As a global logistics provider, our primary performance obligation under our customer contracts is to utilize our relationships with a wide variety of transportation companies to efficiently and cost-effectively transport our customers’ freight.
Our surface transportation adjusted gross profit per transaction benefited from the declining cost of purchased transportation relative to our contractual rates negotiated in prior quarters. Sourcing adjusted gross profits increased driven by an increase in case volume across the retail and foodservice industries and higher adjusted gross profits per case across all customer industries. Operating expenses.
Our prior year surface transportation adjusted gross profits per transaction benefited from market conditions beginning to soften, resulting in the declining cost of purchased transportation relative to our contractual rates negotiated in prior quarters.
Routing guide depth represents the average number of carriers contacted prior to acceptance when procuring a transportation provider. The average routing guide depth at the end of 2022 declined to 1.2, representing that on average, the first carrier in a shipper's routing guide was executing the shipment in most cases.
Average routing guide depth has remained low throughout 2023 and finished the year at 1.2, representing that on average, the first carrier in a shipper's routing guide was executing the shipment in most cases.
Actual results may differ from those used in our valuations when a Step One Analysis is performed.
Actual results may differ from those used in our valuations when a Step One Analysis is performed. As part of our annual goodwill impairment testing performed in 2023, we elected to bypass the Step Zero Analysis and perform a Step One Analysis on all of our reporting units.
BUSINESS TRENDS Our 2022 surface transportation results benefited from the declining cost of purchased transportation over the course of the year, as periods where the cost of purchased transportation declines often result in improved adjusted gross profits per shipment in our portfolio.
This compared to the prior year where surface transportation rates were declining from historically elevated levels, which benefited our results in 2022 as periods where the cost of transportation declines often results in improved adjusted gross profits per shipment in our portfolio. Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 18.5 percent during 2023.
Other Surface Transportation adjusted gross profits increased primarily due to higher European truckload adjusted gross profits per transaction, partially offset by a decline in Europe truckload volumes. Operating expenses. The operating expenses for All Other and Corporate included the impact of organizational changes made to support our enterprise strategy of accelerating our digital transformation and productivity initiatives.
Other Surface Transportation adjusted gross profits decreased, primarily due to lower European truckload adjusted gross profits per transaction, partially offset by an increase in Europe truckload volumes. Operating expenses. The operating expenses in the twelve months ended December 31, 2023, for All Other and Corporate included $13.5 million of severance and related expenses from our 2022 Restructuring Program.
In connection with these organizational changes, we recorded $21.5 million of personnel expense, primarily related to severance, and $15.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software projects as a result of these restructuring initiatives. Interest and other income/expense, net.
Operating expenses in 2022 included $21.5 million of severance and related expenses and $15.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software from our 2022 Restructuring Program. Refer to Note 15, Restructuring, in this report for further discussion related to our 2022 Restructuring and South American Restructuring Programs.
In connection with these organizational changes, we recorded $3.8 million of personnel expense, primarily related to severance, and $3.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software projects as a result of these restructuring initiatives.
The twelve months ended December 31, 2022, included $3.8 million of severance and related expenses and $3.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software projects related to our 2022 Restructuring Program. Refer to Note 15, Restructuring, for further discussion related to our 2022 Restructuring and our South American Restructuring Programs.
In connection with these organizational changes, we recorded $11.4 million of personnel expense, primarily related to severance, and $8.8 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software projects as a result of these restructuring initiatives. 31 Table of contents LIQUIDITY AND CAPITAL RESOURCES We have historically generated substantial cash from operations, which has enabled us to fund our organic growth while paying cash dividends and repurchasing stock.
Refer to Note 15, Restructuring, for further discussion related to our 2022 Restructuring Program. 34 Table of contents LIQUIDITY AND CAPITAL RESOURCES We have historically generated substantial cash from operations, which has enabled us to fund our organic growth while paying cash dividends and repurchasing stock.
Industry freight volumes, as measured by the Cass Freight Index, were flat in 2022, compared to a 13 percent increase in 2021. One of the metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business.
One of the metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business. Routing guide depth represents the average number of carriers contacted prior to acceptance when procuring a transportation provider.
Gross profits and adjusted gross profits. Robinson Fresh adjusted gross profits increased, driven by an increase in case volume across the retail and foodservice industries and higher adjusted gross profits per case across all customer industries. Managed Services adjusted gross profits increased, due to an increase in freight under management and growth in adjusted gross profit per transaction.
Managed Services adjusted gross profits increased due to growth in adjusted gross profits per transaction, partially offset by a reduction in freight under management, driven by the weak industry freight demand experienced in 2023.
DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL CONTINGENCIES The following table aggregates all contractual commitments and commercial obligations, due by period, that affect our financial condition and liquidity position as of December 31, 2022 (dollars in thousands): 2023 2024 2025 2026 2027 Thereafter Total Borrowings under credit agreements $ 878,655 $ — $ — $ — $ — $ — $ 878,655 Senior notes (1) 25,200 25,200 25,200 25,200 25,200 607,350 733,350 Long-term notes payable (1) 196,388 14,440 14,440 14,440 14,440 379,690 633,838 Maturity of lease liabilities (2) 85,930 77,868 64,308 53,098 42,757 113,678 437,639 Purchase obligations (3) 167,484 44,799 6,252 3,906 1,251 — 223,692 Total $ 1,353,657 $ 162,307 $ 110,200 $ 96,644 $ 83,648 $ 1,100,718 $ 2,907,174 ________________________________ (1) Amounts payable relate to the semi-annual interest due on the senior and long-term notes and the principal amount at maturity.
DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL CONTINGENCIES The following table aggregates all contractual commitments and commercial obligations, due by period, that affect our financial condition and liquidity position as of December 31, 2023 (dollars in thousands): 2024 2025 2026 2027 2028 Thereafter Total Borrowings under credit agreements $ 160,000 $ 500,000 $ — $ — $ — $ — $ 660,000 Senior notes (1) 25,200 25,200 25,200 25,200 607,350 — 708,150 Long-term notes payable (1) 14,440 14,440 14,440 14,440 164,440 215,250 437,450 Maturity of lease liabilities (2) 87,554 81,556 67,755 51,612 37,297 94,039 419,813 Purchase obligations (3) 129,634 16,061 4,642 2,092 — — 152,429 Total $ 416,828 $ 637,257 $ 112,037 $ 93,344 $ 809,087 $ 309,289 $ 2,377,842 ________________________________ (1) Amounts payable relate to the semi-annual interest due on the senior and long-term notes and the principal amount at maturity.
The lower rate in the year-ago period was due primarily to a favorable mix of foreign earnings and an increased benefit related to U.S. tax credits and incentives. • Net income totaled $940.5 million, up 11.4 percent from a year ago.
The higher rate in 2023 was due primarily due to the higher tax rate on foreign earnings and the impact of the Section 199 domestic production activities settlement, partially offset by the tax impact of foreign tax credits. • Net income totaled $325.1 million, down 65.4 percent from a year ago.
Our sourcing total revenue and direct costs increased, driven by higher pricing and cost per case across all customer industries. 27 Table of contents Gross profits and adjusted gross profits.
Our sourcing total revenue and direct costs increased, driven by an increase in case volume with foodservice and retail customers. 30 Table of contents Gross profits and adjusted gross profits. Our transportation adjusted gross profits decreased due to lower adjusted gross profits per transaction in truckload and ocean services, in addition to decreased volumes in nearly all service lines.
Net borrowings in 2022 were primarily to fund share repurchases and working capital needs in the first half of 2022. The increase in cash used for share repurchases was due to an increase in the number of shares repurchased and a higher average price per share during 2022 .
Net repayments in 2023 were primarily to repay the Senior Notes Series A, which matured in August 2023, and the 364-Day Unsecured Revolving Credit Facility, which matured in May 2023. Net borrowings in 2022 were primarily to fund share repurchases and working capital needs in the first half of 2022 .
In connection with these organizational changes, we 29 Table of contents recorded $6.3 million of personnel expense, primarily related to severance, and $3.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software projects as a result of these restructuring initiatives.
The twelve months ended December 31, 2023, included $1.5 million of other SG&A expenses primarily from our 2022 Restructuring Program. The twelve months ended December 31, 2022, included $11.4 million of severance and related expenses and $8.8 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software projects related to our 2022 Restructuring Program.
Interest and other expense of $100.0 million primarily consisted of $77.1 million of interest expense, which increased $25.0 million compared to the prior year due to a higher average debt balance. The current year also included a $23.5 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses driven primarily by balances denominated in U.S.
The current year also included a $24.4 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses driven by a $16.4 million foreign currency loss related to the devaluation of the Argentine Peso.
These increases were partially offset by a reduction in stock-based compensation expense as the prior year included significant stock-based compensation expense on performance-based equity awards granted prior to 2021. NAST SG&A expenses increased driven by increased investments in technology, legal settlements, warehouse expenses, travel expenses, and increased expenditures for purchased and contracted services, including temporary labor.
Other SG&A expenses increased driven by an increase in restructuring expenses in the current year discussed below, partially offset by lower expenditures for purchased and contracted services, including those for temporary labor.
Dollar is not the functional currency. • The effective tax rate for 2022 was 19.4 percent compared to 17.4 percent in 2021.
Provision for income taxes. Our effective income tax rate was 20.5 percent in 2023 and 19.4 percent in 2022.
Net borrowings in 2021 were primarily to provide cash for operations, as our working capital needs increased throughout 2021 as mentioned above. The net repayments in 2020 were primarily to reduce the outstanding balance on the Receivables Securitization Facility. In December 2021 , the Board of Directors increased the number of shares authorized to be repurchased by 20,000,000 shares.
The decrease in cash used for share repurchases was due to a significant decrease in the number of shares repurchased in 2023 compared to 2022 as minimal shares were repurchased in the second half of 2023. In December 2022 , the Board of Directors increased the number of shares authorized to be repurchased by 20,000,000 shares.
The current year also included a $23.5 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses, which increased $8.4 million versus last year primarily due to foreign currency revaluation on intercompany assets and liabilities denominated in U.S. Dollars in countries where the U.S.
The current year results also included a $24.4 million net loss from foreign currency revaluation and realized foreign currency gains and losses. • The effective tax rate for 2023 was 20.5 percent compared to 19.4 percent in 2022.
As part of our annual Step Zero Analysis performed in 2022, we determined that due to certain qualitative factors and the recent performance of our Europe Surface Transportation reporting unit, the more likely than not criteria had been met, and therefore a Step One Analysis was completed for this reporting unit.
Consistent with our 2022 annual impairment test, certain qualitative factors were present and the performance of our Europe Surface Transportation unit indicated that the fair value may not exceed its carrying value, requiring a Step One Analysis.
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This compared to extremely tight market conditions in 2021 as strong demand combined with challenges due to driver availability and supply chain disruptions drove purchased transportation costs to historic levels. Many of these challenges improved over the course of 2022, allowing routing guides to perform more efficiently, which resulted in a comparatively soft market versus 2021.
Added
These conditions are typically referred to as a soft market and have existed throughout most of 2023 with transportation rates at, or near, the estimated cost to operate a truck. This compared to historically elevated transportation rates in the first half of 2022 before global demand began to slow and market conditions began to soften in the middle of 2022.
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This average routing guide penetration is reflective of a softening freight market compared to the 1.7 average at the end of 2021. The cost of purchased transportation fell significantly in the global forwarding market in the second half of 2022 as global demand slowed in most trade lanes.
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Average routing guide depth started at 1.7 in 2022 before the softening market conditions resulted in a decline to 1.2 at the end of 2022 and holding at those levels throughout 2023. Similar to the North America surface transportation market, the global forwarding market was soft throughout 2023 as ocean vessel capacity has continued to expand relative to demand.
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The peak shipping season historically experienced in the second half of each year, which would typically drive elevated rates and volumes, remained uncharacteristically soft. Shippers in the U.S. and Europe continue to struggle with elevated inventory levels as consumer demand has been negatively impacted by inflation and macroeconomic uncertainty.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThere was $499.7 million outstanding, net of unamortized issuance costs, on the Receivables Securitization Facility as of December 31, 2022. A hypothetical 100-basis-point change in the interest rate would not have a material effect on our earnings. We do not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates.
Biggest changeA hypothetical 100-basis-point change in the interest rate would not have a material effect on our earnings. We do not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates. A rise in interest rates could negatively affect the fair value of our debt facilities.
We are a party to the Note Purchase Agreement, as amended, with various institutional investors with fixed rates consisting of: (i) $175 million of the company’s 3.97 percent Senior Notes, Series A, due August 27, 2023, (ii) $150 million of the company’s 4.26 percent Senior Notes, Series B, due August 27, 2028, and (iii) $175 million of the company’s 4.6 percent Senior Notes, Series C, due August 27, 2033.
We are a party to the Note Purchase Agreement, as amended, with various institutional investors with fixed rates consisting of: (i) $150 million of the company’s 4.26 percent Senior Notes, Series B, due August 27, 2028, and (ii) $175 million of the company’s 4.6 percent Senior Notes, Series C, due August 27, 2033.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We had $217.5 million of cash and cash equivalents on December 31, 2022. Substantially all of the cash equivalents are in demand accounts with financial institutions. The primary market risks associated with these investments are liquidity risks.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We had $145.5 million of cash and cash equivalents on December 31, 2023. Substantially all of the cash equivalents are in demand accounts with financial institutions. The primary market risks associated with these investments are liquidity risks.
Foreign exchange risk can be quantified by performing a sensitivity analysis assuming a hypothetical change in the value of the U.S. Dollar compared to other currencies in which we transact. Our primary foreign exchange risks are associated with balances denominated in U.S.
Foreign exchange risk can be quantified by performing a sensitivity analysis assuming a hypothetical change in the value of the U.S. Dollar compared to other currencies in which we transact. Our primary foreign exchange risks are associated with the U.S. Dollar versus the Euro, Chinese Yuan, and Singapore Dollar.
There was $500 million outstanding on the notes as of December 31, 2022. The fair value of the notes approximated $468.7 million as of December 31, 2022. We issued Senior Notes through a public offering on April 9, 2018.
There was $325 million outstanding on the Senior Notes as of December 31, 2023. The fair value of the Senior Notes approximated $315.7 million as of December 31, 2023. We issued Senior Notes through a public offering on April 9, 2018.
The fair value of the Senior Notes, excluding debt discounts and issuance costs, approximated $569.5 million as of December 31, 2022, based primarily on the market prices quoted from external sources. The carrying value of the Senior Notes was $595.0 million as of December 31, 2022.
The fair value of the Senior Notes, excluding debt discounts and issuance costs, approximated $581.2 million as of December 31, 2023, based primarily on the market prices quoted from external sources. The carrying value of the Senior Notes was $595.9 million as of December 31, 2023.
A rise in interest rates could negatively affect the fair value of our debt facilities. Foreign Exchange Risk We frequently transact using currencies other than the U.S. Dollar, primarily the Chinese Yuan, Euro, Canadian Dollar, and Mexican Peso. We operate through a network of offices in North America, Europe, Asia, Oceania, and South America.
Foreign Exchange Risk We frequently transact using currencies other than the U.S. Dollar, primarily the Chinese Yuan, Euro, Canadian Dollar, Mexican Peso, and Singapore Dollar. We operate through a network of offices in North America, Europe, Asia, Oceania, South America, and the Middle East.
Dollar against these currencies on December 31, 2022 would have decreased our net income by approximately $20.4 million and a hypothetical 10 percent strengthening of the U.S. Dollar against these on December 31, 2022 would have increased our net income by approximately $16.2 million. 36 Table of contents
All other things being equal, a hypothetical 10 percent weakening of the U.S. Dollar against these currencies on December 31, 2023, would have decreased our net income by approximately $30.8 million and a hypothetical 10 percent strengthening of the U.S. Dollar against these on December 31, 2023, would have increased our net income by approximately $25.2 million.
We are a party to a Receivables Securitization Facility with various lenders, that provides a total availability of up to $500 million. Interest accrues on the facility at variable rates based on Bloomberg Short Term Bank Yield Index (“BSBY”) plus a margin.
We are a party to a Receivables Securitization Facility with various lenders that provides an aggregate funding available of $500 million. Interest accrues on the facility at variable rates based on SOFR plus a margin. There was $499.5 million outstanding, net of unamortized issuance costs, on the Receivables Securitization Facility as of December 31, 2023.
There was no outstanding balance on the revolving loan as of December 31, 2022. We are a party to a credit agreement with U.S. Bank consisting of $500 million and a maturity date of May 5, 2023.
There was $160 million outstanding on the revolving credit facility as of December 31, 2023.
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Interest accrues at an alternate base rate plus a margin or a term SOFR-based rate plus a margin of 0.625 percent to 1.25 percent. The alternate base rate is determined by a pricing schedule (which is the highest of: (a) 0 percent, (b) U.S.
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We are also exposed to foreign exchange risk associated with the U.S. Dollar versus the Hong Kong Dollar, although the Hong Kong Dollar is pegged to the U.S. Dollar. 39 Table of contents
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Bank’s prime rate, (c) the federal funds effective rate plus 0.50 percent, or (d) a term SOFR-based rate plus 1.00 percent). At December 31, 2022, there was $379 million outstanding on the revolving loan.
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Dollars held in China where the functional currency is the Chinese Yuan and balances denominated in Euro and Chinese Yuan held in entities where the functional currency is U.S. Dollars. All other things being equal, a hypothetical 10 percent weakening of the U.S.

Other CHRW 10-K year-over-year comparisons