C.H. Robinson Worldwide, Inc. ($CHRW)

All right. We're going to get going with our next session with C. H. Robinson. Really happy to have you guys back at the conference. We've got Dave Bozeman, President and CEO; Damon Lee, CFO. There is so much to talk about both industry-wise, C. H. Robinson-wise. So rather than do anything, we're going to jump right into questions, if that's okay?

I want to just knock out someone like the quick industry things right away. Obviously, like the big news over the last week was the Montgomery ruling, I guess, your initial -- your view of this. What does it mean from -- to your business? What does it mean to your insurance costs? What does it mean to how you change carrier vetting? What does it mean for the industry, large brokers, small broker, industry capacity, very open-ended question, but I think it's obviously like topical right now. We've got to address it. Let's get right into it.

All right. Let's just, hey, happy to be here. So thanks for having us. So let's just jump right in, set the record straight where we are. Montgomery case, we expect it to win that case. And we went in to argue to win that case. It didn't go in our favor, but we had a playbook for both sides. We said that, be it favor or not favor. We had a playbook and we executed that playbook because it didn't go in our favor. So that being said, what does that mean? Number one, we are -- we have one of the safest networks in the industry, this period. For everyone's severe incident, we have -- that could be an incident, we broker 500 million miles. That's just a fact, super safe. Our vetting process, one of the strongest, if not the strongest, in the industry when it comes to our carrier vetting, we're going to continue to do that. We have a strong balance sheet. We have auto liability insurance that is some of the strongest than rivals, even assets, $137 million; and auto liability, $86 million. In general liability coverage, strong when it comes to that. What does this ruling mean? Listen, at the end of the day, we're proud about who we are. We're super safe. We're going to continue to go. We were trying to lead the industry on bringing clarity in the industry. So one way or the other, we have clarity, and now you move on. We do think that this will be somewhat of a headwind to smaller nonscale brokers from an insurance perspective, from a scale perspective, maybe some small carriers as well, that will be an impact. If you think about the ruling, you have shippers that could be impacted as well, and you need a trusted scale broker to be -- to stand up and really drive this. We are the trusted scale broker. So we are squared away in doing this. I don't know if you had anything to add?

Just had one follow-up to what Dave said, which is, look, we do believe this will lead to a consolidation in the industry. For all the reasons that they've mentioned, right, the economics of small and medium brokers, higher insurance costs, just the confidence in shippers to use small and medium-sized brokers because of all the liability connectivity there. So we believe this will lead to a consolidation in the industry. And we believe Robinson will be that consolidator.

So just a couple of quick follow-ups. Like maybe, Dave, like practically speaking, like when and by how much do you think insurance costs for you change?

Yes. So when would be our next renewal cycle? So for 2026, I mean, we're locked in for insurance coverage. We'll start those negotiations in the second half of '26 and certainly that will be -- that impacted that will be felt in 2027. But look, insurance costs today are less than 1/2 of 1% of gross revenue for C.H. Robinson. So it's not going to be a material impact even if we see a demonstrable increase in insurance rates. And certainly, look, our job is to manage challenges. We do it every day, right? And so higher insurance costs would be just another challenge. I would say, though, I view insurance cost as a transitory impact on brokers, meaning it will be an impact on brokers initially, it will ultimately get passed on to shippers and then ultimately get passed on to the consumer, right? So I don't view higher insurance cost as being a structural deficit for brokers forever. I view that as a transitory cost at all to may end up being borne by the consumer.

And Scott, to finish on that, keep in mind the scale here. At the end of the day, we're going to ship over 100,000 shipments today. We do $37 million annually. This is not our first rodeo here. We've been doing it. We'll continue to do it. We set the bar. This is a scale play. We've adjudicated things for years, and this doesn't change that. We were just trying to drive clarity and safety within the industry.

Okay. And then just maybe last thing on this for me, at least. What changes to like from a carrier procurement standpoint, like we just had a panel with Schneider, and they said, they were using 70,000 carriers at the peak during the '22 and now they're down to 14,000 carriers. And part of that is like being more rigorous with who they're using related to cargo theft and all this sort of stuff. Like do you have to make changes to your carrier, who you're using? Obviously, there was a 60-minute piece about Super ego, Camilion carriers, nondomicile, do you have to -- do you have to make changes in terms of who you're using?

We're going to try to stay on point so that you go all over the place on a lot of that. But the facts are this. We have a vetting process that we think is industry-leading. We do partner with highway and [indiscernible] -- we also have our proprietary technology as well. We're a data company, as you know. And if you look at it, we look at the results. I mean, our process has prevented several people from accessing our network. We've stopped Camelian carriers, hundreds of them. Our fraud has down to a -- we have a 99.9% fraud-free type of network and what we're doing. These are things that people don't know, but that we're driving and that we're leading in the industry. We lead a consortium of companies, including my old farm in Amazon and others. When it comes to fraud, and I would think our technology and our processes that we're doing are helping to lead the way that we'll continue to do that. So strong, strong vetting process. In fact, if you start getting into driver level heuristics, some of that is legal, right, that happens to the FMCSA, but our vetting on carriers is strong. It will continue to be strong and will continue to get better with the data set that we have.

And Scott, just put about what Dave said, like, we feel like we've had an industry-leading carrier vetting process for a very, very long time, right? So are we going to make wholesale changes to that process? No. Are we going to continue to with our continuous improvement mindset like we do on everything else in our business to make it better Absolutely.

Okay. So it sounds like not a whole lot has to change for you, and then it's a question of like, to what extent does this catalyze consolidation within the brokerage industry where large brokers...

Yes. So similar to my small and medium-sized broker comment, I think that same comment applies to small and medium-sized carriers. So I think that's the way we think about. Will there be a consolidation of carriers in the industry?

Yes.

Absolutely, there will be.

And is there -- does that change the gross margin profile for a broker if you're procuring capacity from larger carriers instead of smaller carriers?

We believe our cost to hire model is industry leading. We believe we have the best revenue management capabilities in the industry. We'll continue to procure transportation at industry-leading cost regardless.

I want to now turn to the market, right? One thing that was interesting just listening to Q1 reports, listening to some of the other brokers at our conference, someone said, our spot volumes up 2% and our contract volumes down 18% or 19%. And then talk to another private brokers that are spot volume is -- our contract volume is up 2%, but our spot volume is up 20%, right? So meaning other brokers seeing sort of a big sort of shift more towards spot volume. And you guys were the opposite, right, at least in Q1, right, where your contract for spot mix actually increased 5%, right. Why do you think your sort of seeing something different? And why do you think -- I would have thought spot lines would be growing given the tightness of the market. So it just seems to interesting, notable to me. I don't know, some thoughts here.

Well, I think it's different because you want it to be different, this room because we're winning it both. And you have to break this down. You can't -- if you go into this industry and you just start talking about spot without talking about contract, I think you talk about the wrong things. So we're winning in both spot and we're winning in contract. But make no mistake when it comes to how freight moves, 75%, 80% of that freight is going to move on contract. And you have to have a relationship with that. We're strong about where we are in that relationship, and we're strong about where we are with our processes when it comes to spot. It is a balance, if you want sustainable growth. That's super important that you got to have in this industry, sustainable growth. Spot alone is fleeting, as you know, and you can't just balance just one aspect. You got to have both. We've been consistent in our strategy, operate at both and we win at both.

Yes. I'll only add a few things. So we've outgrown the market in our North American Surface Transportation business for 12 consecutive quarters. You don't take that type of market share by just a singular focus on spot, right? And so as Dave mentioned, we're focused on healthy freight regardless if it's contractual, if it's spot, Robinson is going to win with our cost to serve model, we make very attractive margins and contractual. I can assure you in the spot market, we've set C.H. Robinson records on our file averages and spot. So I'd say we take a little bit different look at it. We're winning in both very profitable in both. As we've said before, we think this will be a tremendous bid season for C.H. Robinson both in volume, so more share gain and in price. We feel good about what we're doing, right? And certainly, physics would say you can also perform better in spot if you're losing share and contractual. So that's another other way to look at it.

Right. And so in terms of the market you've said, hey, we're not immune from a squeeze, but we think we'll do better than the market on squeeze better than maybe what we've done in the past on a squeeze. I think last cycle, you guys weren't there. So -- but at the time, I think at the peak, 15% of our volumes were loss making, like how is that doing now, right? We didn't hear you guys talk about loss loads, but like is that something that we're dealing with right now? And do you think we're at the point now where there was a squeeze in Q4, Q1. Are we starting to get unsqueezed because we're repricing business and all that sort of stuff.

I'll start. Dave will jump in here. Look, look, Robinson is a fundamentally different company than it would have been in the last up cycle, right? I mean the company is different. The mindset is different. The culture is different. Our processes are different. We're a much more efficient company, much more focused company. Our strategy is to outgrow the end markets and expand our operating margins. We've demonstrated that now for well over 2 years. I would say the squeeze dynamic that we have gone through on the cost side is a great test for the squeeze dynamic you're going to go through on the demand side. And I think our team has performed exceptionally well. If you think about the very small increases in Q3 that we saw that we managed without any impact to the business, you had a more material impact in Q4 of last year. We managed that extremely well. And then you take Q1, where spot costs were up close to 20% year-over-year, and we had flat margins from an AGP perspective. So we believe we're doing things at C.H. Robinson from a market share gain perspective, a revenue management perspective, that the industries just can't match, right? And we know those capabilities will transfer to an up cycle in the market as well. So I made the statement before I make it again today. We believe our operating leverage for C.H. Robinson will rival the asset players when volume returns to this market, right? Our incremental margins are phenomenal right now because of the systemic way we've changed the company that cost structure is not going to change when volume comes back to the market. So look, we always get questions. Are you guys a little -- have a little anxiety about the market turn around? The answer is no. We're extremely excited about the market turning around because we believe you'll see an even more set of phenomenal results from C.H. Robinson than you've seen the last 2-plus years.

And you made a comment where we think we'll have a really successful business I forgot the exact time, what are you seeing from a pricing standpoint bid seasons?

Yes. So -- and we've mentioned this before, Dave has talked about it a lot, right? Like we believe the industry practice, we call it hatchet versus surgical, right, where you just kind of put out these massive price increases, and it takes months, if not quarters for things to settle down in the marketplace, right? We are very surgical in how we're negotiating with our shippers. And it's a continuous process, right? It goes on every day, every month, every week. With our revenue management capability, we can get very precise on what lanes need to be repriced at what percentage versus other lanes versus just everything gets a 5%, 10% increase, right? And so we believe that approach will allow us to continue to gain market share while expanding margins in an up cycle.

It's discipline is measured. It's part of our lean operating model. Our customers appreciate it. And I think we've demonstrated that. We're not -- this is not aspirational. We just point to the results on here. And when you talk about squeezes, Scott, you can argue that you've had squeezes along the way, be it road checks, storms, I mean there are a lot of things that are pressing companies out here on the squeeze over the last year, that's a prediction of how someone is going to operate, and we feel like we've shown up pretty well on that.

Just a numbers question on the guide, right? So you've said $6 of earnings this year and in an assumption like sort of 0 market growth I know market feels a lot tighter, but we're hearing from everyone like it's supply driven, it's supply-driven. Cash at least to date is still negative. You said like we can -- I can't wait for volume growth, the operating leverage going to be great, but doesn't feel like we're getting a lot of market volume growth yet. If market stays negative on volume at least, can we still do $6 this year?

Yes. So look, I'll just reaffirm, we feel really good about our $6 target that we've committed to. And I will call it a target, not a guide. We don't guide. But good about the $6 target. Now to your point about negative market versus 0 growth, the $6 is predicated on a 0 growth market. Now at the end of the day, Robinson does everything we can to deliver the best result every single day, right? So even if the market is a headwind, it doesn't mean we give up on $6 target, right? I mean we will absolutely fight in the trenches every single day to make up any market headwind we have. But our commitment, and I'll just reiterate that commitment is $6 market growth, but you'll get the best result that Robinson can deliver regardless of market.

Okay. And then similar, you've got a 40% sort of mid-cycle margin target for NASS, right? We just did 37% in what quarter where maybe there was some degree of a squeeze, right? And there still no volume growth, right?

We thought that was pretty good.

Yes, yes. So I guess is there -- shouldn't there then logically be upside to 40%?

Logically, yes, and perhaps that will happen. Well, you need to break that down on the dynamics of that. And so we start talking about mid-market, we feel really good that we could exceed that. What we have told you consistently is that we're building a strategy of operating leverage and that operating leverage is once you have that built in. What do we do at that gross profit level? Do we take some of that moving into growth and continue to do out growth? That is what we look at every day, and that's what we negotiate every day. We think we make the right calls with that, and we'll continue to make the right calls on that, but we feel super strong about where our margins are industry-leading, and they'll continue to be.

I just put a bow on that. So look, 40% is pretty good, industry-leading. We've talked about once we get north of 40% we want the optionality to go after market share that will demonstrably improve our earnings. What we don't want to do is put ourselves in a box or commit to a higher margin target when we don't see any reason to commit to higher margin target, right? I mean at some point, Robinson has not a lot left to improve on quality of earnings, right? And so your answer is, can we do more than 40%? Absolutely, we can. Is the likelihood that we will? Probably. Are we going to commit to it and put ourselves in a margin percentage target box above 40%? No.

Okay. If there are questions, raise your hand. We'll get you in a second. There's sort of 2 things I want to sort of discuss in that sort of context, right, as we maybe dive into like the company-specific things happening inside of C.H. So you guys have done 30%, maybe even more correction.

Correction, 45% enterprise-wide.

45% enterprise wide, Lee?

Okay. 50% NAS, 45% Global.

50% labor productivity, right, in NAST, right? We hear about AI, we hear about lean. What is -- help us understand like what's AI, what's -- like what's like an actual example of here's what lean did. Here's what I did, right? And then -- can we -- how much sort of -- if we've already done 50%, at what point does that sort of tap out?

Let's frame it up for you. Because we get that question I'll start with the short answer. Dave, you're asking me a series question, Lean versus AI. We don't think of it that way. We would say we don't know because there's a symbionic relationship between lean and AI. It's our system, it's our culture and what we're driving. So that 50% productivity improvement for NAS since the end of '22, 45% for Global 40. That's not a period. right for us. It's a comma because it's part of our system and what we do. We have publicly said we are going to commit to single-digit productivity, no matter the market condition. C.H. Robson will do that. It can be a hot market. We're going to do single-digit productivity. There are times where we will go to double-digit productivity like we are doing this year. When we have a technology advance or process advance we'll continue to do that. But it is a continuous improvement culture that is going to continue to advance what we're doing. So we don't break them up and look at it that way. It is symbionic in what it's doing. And a good example would be we talked about quoting, transactional quoting. That was on a gimbawalk. Gimbawalkas go to the work. We're looking and we found out that we were only addressing that 60% of our transactional quotes. Our technology, our agent at scale, our quoting agent launched. That quoting agent now hits 100% of those quotes. It gets it back in now. We cut off a second is 32 seconds and now 31 seconds. Back to the customer in a conversational manner with the details that a human just didn't provide as well. So that has allowed us to get more winning percentage, allowed us to get more revenue and it's really allowed our people to move to the right and do a lot more customer facing. So that's one example of many that we have in our orchestrating agent, but that comes out of that symbiotic relationship of operating reviews, gimbal walks really kind of driving and stressing the system of what's broken, what do we have to fix. That's why we're -- we have to put the context to it.

I'll only add, look, there is no cap on our productivity. As we've mentioned before. We're in the early innings of our journey. If you look at the catalog of our processes, I mean it's thousands of processes, tens of thousands of subprocesses. We've only automated a fraction. Of those processes, right? So we're early in our journey, both lean and AI. And so I would say, look, there's no cap on that productivity number.

And it is important to say, I mean, look, we've both been doing -- I've been doing over 30 years. It is just super early. I mean we're driving when it comes to problem solving all the way down to the desk. Scott, I mean, we've just got a lot to do and a lot more to go. So when people say early innings, why do you guys say early innings, you're doing all these things. It is early innings. It's like second inning when it comes to this stuff. We know what great looks like a lot more to do, and we have a lot more grass cut.

When it comes to -- so there's -- I think there's one -- or at least for me, one important thing I just -- I want to understand better. So you guys said we're going to effectively, I think we're going to do 3 things, right? We're going to get a lot of labor productivity. We're going to get a lot of productivity, right? We're going to -- our model, we're going to have higher gross profit per load. We're going to have demonstrable growth, right?

Check, check and check.

Okay. So well, that's my question, right? So the labor productivity just said 50% undeniable.

Yes.

That is a double check. I'll give you 2 checks for that.

Thank you.

The gross profit per load is up meaningfully from the middle of 2023, rest of the industry is?

One check for that one.

I'll give you a check in half of that right. But here's the real question, though, right? You've said you've gone from responding to 60% of quotes to now you respond to 100% acquire.

Transactional quotes, yes.

Quotes. Like I -- your volume is, I get the industry is down, right? But you're kind of flat on volume. If we're responding to 40% more quotes I don't conceptually understand why volume is not -- maybe it doesn't have to be up 40% for you. Why isn't volume up 10%, 20%, 30% if we are responding to 40%.

Well, let me do this.

And the math over more 60 to 100. More than 4..

It's transactional quotes that we're doing at. Now PAUSE Don't take that as a 100% in-series view. Everything we've always told you from when we met is building a system that's optionality, right? So when we have that ability to quote closer there. We also take the view of negotiating what volume are we going to take, right? It still has to be the right economics for us since we've been sitting here we've probably denied a load at 30% margin, right, because it doesn't fit our economics in doing that. But we have the choice to be able to do that, and we control that. And before, if you have things sitting a box, you don't get back to it for 4 hours, that freight is gone. That attempt to when that freight is gone. We've eliminated that. We've inserted our technology in the order to cash process, and remove that friction. That's what a lot of that productivity comes from. But to your point, when it comes to that volume, we make that choice on what we're going to take. And I would also say, put that relative to the market, we're still taking share within that market, right? That's how you got to look at cash being down, we're still outgrowing the market. So you could argue that we are taking share and getting more volume on.

I'll just add a little bit. So 4-year for recession. -- gas hasn't had a positive reading what I think the second half of '22, and we've outgrown that gas index 12 consecutive quarters. So as Dave said, we take the freight we want. Any given quarter, any given month, we could take demonstrably more volume at margins that probably the industry would say, I take that. right? That's not the standard of C.H. Robinson right. Now going back to the 45% margin question, right? That's why we don't want a constraint on margin. So once we've established that baseline on profitability at 40%, to your question on why can't you take more demonstrable volume? The answer is we will, right? Because then the economics will fit the model we have going forward. Once we've demonstrated and sustain that quality of earnings that we've committed to, but make no mistake any given month, any given quarter, we could take a demonstrable amount more share than we do. We choose not to do it.

And so is it fair that in a world where market is down from volume and price, like even it's harder to just the margin profile of that incremental is harder to justify. But in a market where if the market starts growing and certainly in a market where price starts going up 10%, whatever, we should increasingly see the demonstrable share growth. Is that fair?

Yes. I think when we've talked about optionality, you can equate optionality with demonstrable outgrowth, right? And that's again why we've been very pointed about saying like, look, we won't commit to a higher margin target beyond 40% because of that exact statement. But I think it is just important for this room to hear again. Any given month, any given quarter, we could have a much different volume number, a much different share number if we chose to right.

Yes, so mutation is pretty instantaneous. I mean, we know Damon's point, we can turn a knob. And it is an instantaneous reaction. I mean that is not a problem. But it's about being disciplined, measured, controlled, we own, and we know the freight that we want, it has to match our economics and the model we've built continues to mature we're in a really, really good position to do that.

And so back to where we're starting Montgomery it could help catalyze some of this.

For sure, right? I think certainly.

Yes.

Opportunity. Make no mistake, if the industry consolidates, Robinson will be a winner in that consolidation. And that's the organic side. We haven't got to an M&A question, but we certainly expect to be very active inorganically and be a consolidator on that side as well. So when you think about the industry going forward, Robinson will be the consolidator of this industry.

We're going to come back to that in 1 second. I think there was a question in the back. Sorry.

What do you think is your best estimate of capacity exiting the industry due to the Montgomery rolling?

That's the first question. Second question, you guys have said. Can I clarify that? Just so we're clear. 2 things of capacity. Are you talking about broker capacity? Are you talking about carrier capacity? Both.

Both not in near term than, medium term, whatever. And the second question is you guys have said you're going to have the same operating leverage as asset-based carriers when volume turns up. But what if there's no volume, and it's just price driving a cycle. So kind of what we're seeing now, would you guys still have the similar operating leverage?

Yes. So let's answer that. Well, first of all, higher highs and higher lows. For us, it doesn't matter. We lower for longer or inflection. We love an inflection because we're in a pole position, we're going to win. And if it's lower for longer, I think we've proven will be higher highs and higher lows as well. When it comes to the capacity going out, listen, I can sit up here I know just as much as I'll give you an anticipation, we anticipate maybe 20% to 30% of broker capacity that could come out. But we don't know, right, for sure. The reason we would say that is because of the facts. The facts are, you're going to have more insurance liability that is going to be on these brokers. Shippers are now going to have to start looking because this particular ruling now changes the dynamic and the space of where shippers can be liable on some things. So they're vetting process of brokers is going to go up, and they're going to want a broker that has the strong economics and the strong service schedule to be able to have trust in where they move their goods -- and that means a lot of those kind of smaller, less-scaled brokers will probably be hampered and come out of the system. That could be 20%, 30% of that. And I think you'll see some small carriers as well until there's a roll up. You'll see some impact on carrier capacity as well. That's what I would see that. I'll give you the other the question Look, I would say.

We're highly confident in the scenario you gave. Actually, we're really confident regardless. In the scenario you gave on the operating leverage, as we've said before, we have fundamentally changed the processes of the company, right? And so that quote xample that Dave was going through in the transaction if we're doing 600,000 transaction request for quotes today, and that goes to $6 million. The technology can absorb that without any material increase in head count, right? So that's just 1 example, tenfold increase, no increase in material cost of headcount. The second question is, remember, we don't believe we just have industry-leading productivity. We also believe we have industry-leading revenue management, which means in your scenario around price, we believe we'll optimize price better than anyone else in the industry. We believe we are the gold standard on cost of higher discipline within the industry. So -- and that other example, we believe revenue management capability will allow us to exceed expectations in that environment as well.

Just a quick follow, so would you think like you're already seeing gross profit per load improve, like before, like the cycle really has kicked in at all? Like do you think that means we should have to use your term of higher highs, -- like should we exceed prior peak like gross profit per load this cycle?

Relative to the market for sure and relative to C.H. Robinson historically, yes, right? Certainly, take Q1, for example, right? Maintaining flat margins versus expanded in Q1 was, I think, quite a feat, right? When you consider some of the other competitors out there that demonstrated I think 1 competitor demonstrated 10% year-over-year volume growth, but margins contracted 300 basis points. Gross profit dollars were actually down. PAUSE Yes, another competitor where they maintained a relatively consistent margin, but volume was down 20%, right? So I think in that scenario, I pick what Robinson did, which was we outgrew the market. We maintained flat margins. We expanded gross profit dollars.

And I want to follow about something you said because it at least listening to it, it felt like a little bit of a change, right? I think the last time we heard you guys talk about M&A, you said there is a really high bar for M&A. And I think you just said we think we're going to be very active in M&A. So maybe that's I don't know that felt like a bit of a change, but...

Yes, I would say it's a different time right? Because if you've listened to us the last 2 years, what we've said, David said many times is we had earned the right to do to do M&A, right? We have a very high bar for M&A. We're not going to make a mistake on M&A. But we had to get the company ready for an acquisition. And I would argue, 6 months ago, 12 months ago, we weren't ready right? We didn't have an industry-leading cost to serve model yet. We didn't have processes to a level of maturity yet. We didn't have a progression on the operating model and our technology to a level that we wanted to have. But now we know we have the industry-leading best cost to serve model. We know we're ready to do M&A, and we're going to do M&A. Now the bar is high. It doesn't mean we're going to do 10, 20 deals, right? But if you think about what kind of M&A would we do, it could run the gamut, right? Specialized small, medium-sized player that gives us capability that we don't have today. You put the Robinson scale behind it. The ROI is incredible. Or it could be the acquisition of a scale broker, right? So a traditional broker that has an attractive book of business, maybe a challenged cost to serve model, we can take that book of business, put it on the Robinson cost-to-serve model. Ultimately have a combined company that has Robinson like margins, right? So yes, we will be active in M&A. And look, we've certainly made the statement, we'll make it again today. We're going to be the consolidator of this industry.

Again, it's not new. Scott. I mean, it's part of what we've always said. We said we're going to be disciplined and measured. Robinson has been around 120 years, have always done M&A. It's just one of those things as Damon said. We are the powder is good, ratios are good. And we feel like we've got the mousetrap that's built, and we think that will serve as well.

And so Dave, can you sort of like rank for us priority between buyback niche acquisition sort of transformational large-scale?

Capital allocation.

ROI-based, right? Now we think we have the capital to do all of the above, right? Now certainly, based on the magnitude of M&A, right? I mean that can always influence pace of buyback for a period of time. Look, we believe we have the capital. We have the balance sheet. We have a fortress balance sheet. We have leverage ratios that are some of the best we've ever had. We think we can allocate capital to all those priorities in the future.

We have -- I've got time for one last question because we're already over. Do you want a forwarding question an Amazon question?

Yes.

Okay. We haven't touched forward it. Okay. There's certainly volatility right now in markets. I think listening to others at our conference, I think the airfreight market feels a little bit structurally tighter, maybe ocean market, notwithstanding some volatility, maybe structurally looser. Just how you think about -- we've had tremendous success at NASS, like what's the opportunity set going forward?

Look, we said consistently that we started with NAS. That was purposeful. We're now moving and being very purposeful in moving our technology stack into Fort. That business alone, we already feel good on. It's improved off the back of just the operating model. And now we're going to continue to improve it by driving our technology stack. So kind of the core things we did with NAS, the order to cash process, removing that friction increase in productivity, driving agility, driving speed, allowing that business to continue to punch above its weight. That's what we're in the process of doing. That's what we will continue to do. The forces that are out there when it comes to ocean, we're not immune to that. Everyone has to deal with that, and we will compete and do with that. You're right about air, we're doing that, and that's a little bit different tack time on doing that, and we're competing really well in that business. So we're pretty excited. And I have always said next 2 years at Robinson I'm telling you, they are much more exciting than the last 2, and the last 2 have been pretty damn exciting. So we feel really good about it.

All right. That's a good place for at. Dave, Damon, thanks so much. That was...

Absolutely. Thanks. Good job.