Good morning, ladies and gentlemen, and welcome to the C.H. Robinson Second Quarter 2014 Conference Call. [Operator Instructions] Tim Gagnon will facilitate a review of previously submitted questions. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, July 30, 2014. I would now like to turn the conference over to Tim Gagnon, Director of Investor Relations.

Thank you, and good morning, everybody. On our call today will be John Wiehoff, Chief Executive Officer; and Chad Lindbloom, Chief Financial Officer. John and Chad will provide some prepared comments on the highlights of our second quarter, and we'll follow that with a response to pre-submitted questions we received after our earnings release yesterday. Please note there are presentation slides that accompany our call to facilitate our discussion. The slides can be accessed in the Investor Relations section of our website, which is located at chrobinson.com. John and Chad will be referring to these slides in their prepared comments. I'd like to remind you that comments made by John, Chad or others representing C.H. Robinson may contain forward-looking statements, which are subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations. With that, I'll turn it over to John to begin his prepared comments on Slide 3 with a review of our second quarter 2014 results.

Thank you, Tim, and good morning, everybody. Referencing those second quarter results on Page 3, as Tim mentioned, a quick review of our key financial metrics for the quarter. Our total revenues grew 6.5% in the second quarter compared to the previous year. Net revenues grew 10.2% compared to 2013. Income from operations were up 9.8% and net income increased 6%. At the EPS line item, our results were $0.80 earnings per share compared to $0.70 in the prior year, which represents a 14% increase. When you look at our overall results for the quarter, with the higher growth rate in EPS and additional interest expense that came from the capital structure, share repurchase transaction that we described a year ago, you see some of those results impacting our results in the second quarter. In terms of overall reaction to our second quarter results, we were pleased with them. 2014 started out with some pretty challenging weather and an environment that was difficult to execute. But as the year has progressed and getting through the mid-point here, we do feel like we're executing with the goals that we set out for at the beginning of the year, which was really to adapt to those changing market conditions and some significant price adjustments that are occurring. Also, to leverage our existing network and investments that we've made over the last couple of years, both organically and our surface transportation, as well as the investments in acquisitions and global forwarding. So it was a clean quarter representing entirely organic growth. Not a lot of unusual or different items. And I guess our sense, overall, we're proud of our company, we're proud of the execution, and we think the results were pretty good for Q2. Because it's a more straightforward cleaner quarter, we're…

Thanks, John. As John mentioned, I will begin my comments on Slide 11 with our summarized income statement for the second quarter. As John mentioned earlier, our total net revenues grew 10%. Personnel expenses increased 16% in the second quarter compared to the second quarter of 2013. Our bonus, restricted stock and under performance-based compensation expenses drove 10% growth in total personnel expense, and the remainder was due primarily to a 4% increase in average heads compared to last year's second quarter. Although we have kept headcount relatively flat with -- beyond the 2013, we are growing, as I mentioned, over the second quarter of 2013. SG&A expenses decreased 2.9% in Q2, primarily the -- which is primarily the result of $5 million contingent auto liability claim that was in last year's second quarter. Excluding this item, SG&A expenses would have increased 3%. The biggest increase in SG&A was our provision for doubtful accounts. This increased expense was primarily the result of the growth of our total receivable portfolio and a slight deterioration of our aging. We do feel good about the overall quality of our receivables in our current reserve level. Total operating expenses increased 10.5%, which is a blend of those 2 above, and income from operations increased 9.8%. Our operating income, as a percent of net revenue, decreased slightly in the quarter compared to last year's second quarter to 38.5% from 38.6%. As a reminder, we talked about last year the impacts of the Phoenix acquisition. Just slightly over -- just folding in a lower operating margin business impacts our income from operations of about 1%, and the amortization that came with the acquisition is about another 1% impact to our income from operations. Moving on to Slide 13 -- or Slide 12, I'm sorry, the other financial information slide. We had a strong cash flow quarter with income -- or cash flow from operations approximating net income, which is an internal benchmark we use. CapEx was relatively low for the quarter, partially due to timing. We still expect our total CapEx for the year to be around $40 million. Our balance sheet and capital structure remains relatively consistent with previous quarters, and our total debt balance was $900 million, with $400 million drawn on our revolver. During the quarter, we returned a total of approximately $104 million of cash to our shareholders through our ongoing dividend and $51 million worth of share repurchase activity. We repurchased 844,900 shares at an average price of $60.83. With that, I'll turn it back to John to talk about on outlook.

So on Slide 13, the bullet points are regarding a look ahead, the comments that we would like to share about our forward thinking before we turn it over to the Q&A. The first one, really, over the last 2 or 3 years, when we've interacted with shareholders and analysts, probably the most common topical themes have been trying to understand the cyclical versus secular forces that are impacting our business and how they're changing. I think we've pretty consistently answered that question that there are both types of impacts that are impacting our business. And I think one of the things that we felt in this quarter was that, more so than in a long time, it was very evident that both of those were there. If you look at the fluctuations in our results and the fluctuation in our margins, we've talked a lot in the past about supply and demand and how those margins will fluctuate, have fluctuated, and that we would expect that to continue into the future. If you look at our results, particularly in the truckload arena, there are some very meaningful cyclical fluctuations around capacity, availability and pricing that have been consistent in our business for many decades, and we expect that to continue going forward. At the same time, we've been very open and many of you have observed and agree that it is a different industry today than it was 5 years ago or any time in the past. The competition is alive and well. Technology is making a bigger impact. Maybe as we've said in the past, most importantly, I think shippers' attitudes towards supply chain and the balance around growth efficiency is maybe a little bit different today than it has been at any point in the past. And…

Thanks, John. And as I get into the questions here and John and Chad will provide answers, I'd first like to thank the many analysts, investors for taking the time to submit questions. We really appreciate a lot of good questions. We'll get right into that now. The first question is for John. And the question reads, how realistic is it to experience 10-plus percent net revenue growth and not have to add significant costs? How are you managing that balance right now?

This question goes back in our lens to the balance between growth and efficiency. We talked about, at the beginning of the year, that for several years in a row, we had invested in our North American surface network at a rate of headcount that exceeded our volume growth for probably a 3-year period of time, as we were pretty aggressively going after share in a very balanced market condition. We also talked about in our global forwarding business that when we did our integration strategy and put the 2 businesses together, that our strategy was to retain all people from both organizations, knowing that there were opportunities to grow into that bigger infrastructure. And hopefully, leverage the productivity opportunities in the future after the acquisition. And lastly, with the known transition away of some of the Sourcing business that we felt the resources that we had in place there would be adequate to reassign and to grow that Sourcing business. So when we think about the cyclical evolution and all the changes in our business coming into 2014, we believe that we could leverage our network, continue to go after some of the process improvements and synergies to work together, and really try to harvest some return on those past investments that we made. Our long-term growth strategy has not changed that we do believe that attracting and training and developing talent is one of the most important core competencies that we have. And our longer-term strategy and plan that we laid out last year would have us growing our headcount much more proportionate to our net revenues in the long term. So the results that we had in the second quarter were very much in line with what we were targeting and hoping for at the beginning of the year. That reflects much more of a 2014 strategy and approach to the current market condition and our past investment activity. Coming into 2015 and going forward, we would expect to continue to go after those productivity initiatives and leveraging our network, but that headcount increases would likely correlate much more to our longer-term net revenue expectations.

Thanks, John. Second question is for Chad. Truckload net revenue was up almost 16%. The rest of each of the company's divisions, net revenue grew slower than that rate causing overall company net revenue to be up 10%. Why would personnel expense for the whole company be up 16% if the largest category of net revenue or 16% -- 60% of the company was up the most at just shy of 16%? Even with 4% headcount growth, the remaining 12%, driven by variable compensation exceeds the total company net revenue growth? I would have thought there would have been a higher operating contribution margin on these incremental net revenues.

Thanks, Tim. As I mentioned in my remarks, our average headcount in the second quarter was up 4% compared to last year's second quarter. Our incentive compensation drove an increase of 10% to total compensation expense during the quarter, with the balance made up of salaries and other increases, the 2%. Last year, we discussed that many of our growth-based bonus and equity programs had 0 expense, due to the lack of earnings growth. We mentioned during that time that once earnings started to grow again, these plans could cause our personnel expense to grow faster than our net revenues, but stated that would be a good problem to have. That is indeed happening. Our compensation programs and practices have stayed consistent. Our earnings are growing, and we have experienced personnel expenses growing faster than net revenues. We still feel good about the overall variability of our cost structure. We expect fluctuations to continue and our cost as a percentage in net revenue. As we discussed earlier during the call, we are constantly managing to balance growth and efficiency initiatives.

Okay. Thanks, Chad. The next question is about competition and it reads, some competitors seem to be branching out into other services beyond just freight brokerage. Do you feel the need to add any additional services as you look strategically into the future to complement your already strong service offering?

We do believe that one of the most important strategic decisions that any transportation company, especially a third party one like us, makes is around what the scope of services will be. And it is clear that, especially over the last decade, that as shippers have looked at more of an integrated supply chain and an integrated transportation service, that having the wherewithal and perspective on the various options in the marketplace is an important component of how you go to market. So yes, we do feel some marketplace pressure and opportunity to continue to look at the scope of services and to make sure that we have a broad offering and can interface with our customer in a way that makes sense to them. When you think about the universe of third-party logistics or logistics and supply chain opportunities, if you -- where I like to think of Robinson being on that continuum is that we do focus, and have focused, very heavily on broadening our transportation service offerings. The investments in less-than-truckload and intermodal and freight forwarding and European transportation. And in addition to that, when we go beyond transportation, a lot of our emphasis has been on transportation management services and the technology associated with that kind of bundled transportation offering. So from our standpoint, the way we've been responding to that competitive landscape is by expanding our services and focusing on a more global offering, focusing in on the various modes of transportation that we see as highly interchangeable with each other around consolidations and routing and mode selection and all the rest of that, and all of the different consultative and technology services that would come with that. Obviously, there's a lot of things around procurement and inventory that you can go even broader within the supply chain that we continue to look for opportunities or see what makes sense there. But I think it is important, too, to, at least from our point of view, that probably the most important thing is in that menu of services and scope of offering that you go to the marketplace with, that you do have the ability to actually integrate them and to perform the execution and operations in a world-class manner. Just having a broader menu of services doesn't do much for you. I think you have to be competitive with each of them and really know how they work together in order to be effective with them. So that's probably how we would sum up our strategy around the competitive landscape and the scope of services, and how we continue to look at what makes sense for us in our go-to market and how we think we can best compete.

Thanks, John. Next question is for Chad. How much additional expense is being incurred related to bonus accrual on a year-over-year basis and versus 1Q '14?

Thanks, Tim. I think I'm going to broaden the question slightly to talk about our incentive compensation, which we include our bonuses, commissions, performance-based equity and profit-sharing expenses in our definition of variable or incentive compensation. As I mentioned in the last question I answered and in my prepared remarks, the increases in these expenses drove a 10% increase in overall personnel expense or approximately $21 million of additional expense in the second quarter of 2014 compared to the second quarter of 2013.

Okay. Thanks, Chad. The next question for John, again, around competition. Can you discuss the current competitive environment in the truck brokerage market? And are you concerned about other participants being willing to do the same business for a significantly smaller margin going forward?

So we've discussed in the past that the market, by our perspective, is more competitive today versus 10 years ago, not necessarily in the number of competitors because there always has been 10,000-plus brokerage licenses and third-party competitors. The real difference being that there's many more substantial companies today and many more companies that are aggressively going after share and scale to try to compete in the truck brokerage section. So it is a more competitive market. That's part of how things are changing in our industry. With regards to kind of our perspective or concerns around margins, I think, really, what that sort of speaks to is pricing strategies. I think there's probably a couple of subsets to it. One is to the extent that some competitors appear or seem to be taking the strategy of trying to buy market share or take less margin in order to get scale. That's certainly one element that we have to pay attention to around is that sustainable or what is the right kind of pricing opportunity there. The other thing that I -- that we focus on a lot and the industry has, too, really, is around the pricing sophistication and segmentation. Those contractual customers and the pricing that's appropriate with it versus how the market might be moving and all the discussions we've had over the last couple of quarters around when the market moves significantly like it has, how and when is it appropriate to renegotiate your annual contracts and how do you adapt to a transactional market and balance both of those components. So in this increasing competitive market, I think it really kind of comes down to segmentation strategies and pricing strategies and making certain that we feel good and confident about our returns, our pricing disciplines and our long-term returns on the business that we're going after. And we do spend more time observing and analyzing competitor behavior around pricing to make certain that we're doing the right thing for our shareholders.

Thank you, John. The next question for Chad. Can you give us a sense for what the net revenue trend looked like throughout the months of the second quarter, and how you would expect it to play out in the third quarter? Did it pick up or lose momentum as we progress throughout the quarter? How should we think about this against the backdrop of minimal volume growth in July? What's behind that?

Sure. On a per business day basis, our consolidated net revenue growth was stronger in May and June than it was during April. That same trend was true for our North American truckload business. Our North America truckload net revenue margins expanded at an increasing rate as the quarter progressed. That comparison is based on comparing each month of the quarter to 2013 months. Sequentially, month-to-month, our net revenue margins did not expand during the second quarter of 2014 as it is normal for June to have the lowest net revenue margin of any other month during the second quarter due to seasonality. On a per business day basis, our volume growth was slightly lower in June than the quarter as a whole. That trend has continued into July. We are continuing to be selective with the transactional opportunities that we commit to in repricing our contractual business based on current market conditions. As we have mentioned in the past, every time we adjust pricing upward, we risk losing the business. While we have continued to grow volumes with new opportunities and expanded our relationships with many customers, we have lost some business through our pricing disciplines. Overall, we feel very confident that -- about these activities and feel that we're doing what's best for the long-term interest of the company and the shareholders.

Thanks, Chad. And the next question again for you, on negative loads. Can you give us a sense for how your negative loads have been trending relative to the first quarter and last year? You mentioned that they were elevated in the first quarter. Did you see an easing of that in the second quarter? Have you been successful renegotiating more contracts with customers to pass along your higher purchase transportation costs?

Sure. Part of that question is repetitive with the previous question, but I'll answer primarily about the negative loads now. We mentioned on our first quarter call that our negative loads, or loads where we lost money, were extremely high during the first quarter. During the second quarter, our loads -- loser loads fell sequentially, but were up slightly compared to last year's second quarter. In the second quarter of 2014, our loser loads returned to a range that we consider normal compared to other second quarters. Normally, June is the month that we have the greatest frequency of loser loads. June 2014 has the highest ratio of these loser loads compared to any other month, so far, in 2014. On a positive note though, June 2014 had a smaller ratio of loser loads compared to June of 2013. We believe that this is further evidenced that we are being appropriately disciplined in our pricing practices.

Thanks, Chad. Next question for John about the routing guide. Is the route guide still at elevated levels, despite being lower than first quarter, probably?

So this question really ties into the truckload capacity and the comments around the tightness in the marketplace. There's a variety of metrics that we would look at to reach the conclusion around how tight or how difficult it is to source capacity when we assess the marketplace. We look at a number of things and have conversations with carriers to understand that around pricing. Route guide metrics are one of the important metrics, which is for those customers that have automated processes for determining which carrier gets the shipment. In our vocabulary, the higher or elevated those route guides are our reflective of the fact that shippers had to more frequently go to multiple carriers to find capacity and get routed. So those route guide metrics did remain higher in the second quarter of this year compared to a year ago, but did ease some off of the first quarter where the weather was really probably causing some accentuated spikes in the difficulty of sourcing capacity. So the route guide metrics do support the conclusion that I stated earlier around it's still being a relatively tight truckload marketplace, but some easing compared to the first quarter.

Thanks, John. The next question again for you. In the past, you've talked about your long-term growth goal of growing volumes and gaining market share. CHRW has been focusing on margin improvement and efficiencies since late 2013. When do you plan to grow volumes market share again? And would you be willing to allow net revenue margin to move lower in order to grow share?

I started to talk about this a little bit earlier around that tug-of-war between growth and efficiency and how we have in the past, and will continue to, adjust to market conditions by balancing those 2 forces. Obviously, depending upon the marketplace and competition, we'll try to find the optimum balance of growing our business and accepting the right sort of margins that the market will give us around that. So the short answer to the question is yes, if we have to, we will tolerate some margin compression in order to get growth in our services. In the long-term strategy that we laid out in that investor deck and when we look back over the last 3 or 4 decades, the market share gains and the growth in the company are an incredibly important part of the foundation, and what we need to continue to do to succeed. So we will be aggressive going after those market share gains in the long term like we have in the past. Exactly when will we do that? I think that's an ongoing topic that we literally discuss weekly around here, around what's happening in the market condition, how are our productivity levels. While we talk on these calls about top-down guidance and direction around our thoughts for the year, that's certainly true and we do that. And our network supervisors will be working with each of our offices to figure out what makes sense around those decisions. But we do already have offices that are investing more aggressively in growth, depending upon what their opportunities are and how they're adapting. And I think as this year wears on and going into next year, you'll see more aggregate activity around that type of investment.

Thanks, John. The next question is for Chad. CHRW plans to increase the return of cash to shareholders via dividends and stock buybacks. Can you provide the framework you plan to use? What dividend payout ratio are you targeting? How much debt are you comfortable with, either measured by debt to EBITDA or debt to capitalization?

Sure. Our capital management philosophy is consistent with what we outlined at our Investor Day last November. We target returning about 90% of our annual net income to shareholders through a combination of dividends and share repurchases. This is not a commitment to do that every year or every quarter, but is our overall philosophy. If we have other needs for capital generated by our earnings, like increases in working capital or acquisitions, the amount of cash returned to shareholders may be reduced from time to time. Our current targeted dividend payout ratio is 45%. We are managing the ongoing returns of capital to shareholders to maintain a debt-to-EBITDA ratio of approximately 1:1.5. For the right acquisition opportunity, we feel that it would be prudent to go to 2.5x EBITDA for total debt balance. We currently have covenants that limit our debt to capitalization to 0.65.

Thanks, Chad. The next question again for you. What was the amount of bad debt provisions in second quarter of '14 and second quarter of '13?

Our provision for doubtful accounts was $4.9 million in the second quarter of 2014 compared to $3.3 million in last year's second quarter. As I mentioned earlier, this increase was primarily due to the increase in the size of the receivable portfolio. The increase in the size of the receivable portfolio was driven primarily by our growth in gross revenues.

Okay. Thanks, Chad. Next question for John on global forwarding strategy. Given the sluggish international air and ocean freight forwarding trends, how is Phoenix performing relative to expectations and their ability to attract new business? Where also do we stand on the integration?

When we looked at the Phoenix acquisition -- it's coming up on almost 2 years ago now that we closed that deal -- we had a lot of discussion about the industry and the excess capacity, margin compression, where would things go. In terms of our return on investment and valuation assumptions when we made that investment, we felt strongly about the cultural fit and the scale of opportunities and the longer-term synergies that would come from that. A couple of years into it, we are achieving our base case scenarios and we're happy with the return around the investment and we feel like our integration plan is on track, as I mentioned earlier, a couple of years into it. I think at acquisition time, and since then, we've also commented that really the upside and perhaps the most potent synergy around the acquisition would be the cross-selling opportunity and really the revenue synergies of stronger growth that, hopefully, can come from tapping into the domestic and international customer basis and exposing broader transportation services to them. As we talked on the last couple of calls, because of the integration strategy, we really didn't start to push that more aggressively until this year. And we do hope to continue that over the next several years. We've had some early successes, but not enough to really move the needle in terms of our overall net revenue growth rate. But I think our team feels very optimistic about the offering that we have and the go-to-market strategy and the account management practices to execute that in the future. So the overall reaction is we're on track with our integration. We are achieving the base case scenario of the valuation assumptions, and we feel very good about the investment. We did not quantify or attempt to value the revenue synergies and the longer-term real benefit that could come above and beyond that, and we're aggressively going after that today in what is difficult market conditions. So hopefully, at some point in the future, we'll be able to get a little bit more support and tailwind from the market conditions to help achieve that. But despite what we've seen in the last couple of years, we feel very good about the investment.

Okay. Thanks John. The next question is for Chad. Excluding the auto settlement in second quarter of '13, your operating expenses were up 12.5% year-over-year, which is an acceleration versus the growth rate seen in the first quarter and below the 10.2% net revenue growth. Were there any onetime expenses in the quarter that inflated operating expenses? If not, would you expect operating expense growth to mirror net revenue growth for the remainder of the year?

Okay. We've already spent a lot of time -- that number combines both personnel expense and other SG&A. We've already spent a lot of time answering the personnel expense questions. So excluding the $5 million auto liability claim in the second quarter of 2013, our non-personnel SG&A expenses grew approximately 3%. Our provision for doubtful accounts was the biggest part of that increase, and we also mentioned in the earnings release that we have lower travel and entertainment expenses during the quarter compared to last year's second quarter. As far as what will the expenses do in the future, we believe that they will continue to fluctuate. But adjusting for just the onetime unusual item of last year that this year's second quarter, the comparison isn't directly comparable, but it is a good ongoing run rate and there is no unusual items in the second quarter of this year.

Okay. Thanks, Chad. The next question again for you. On Page 5 of your deck, you mentioned changes in business mix. What more can you say about that?

That is our truckload slide. And the primary change in mix in our truckload business that is impacting the change in our price and cost per mile, which was what the bullet point was about, is that we are hauling more short-haul freight. The shorter the length of haul, the higher the rate is on a per mile basis. Similar to last quarter, our committed rates on long-haul van freight were up in the low- to mid-single digits. The 10% increase in our overall customer rates, excluding the estimate impacts of fuel, is driven by a combination of this increase in short-haul freight and a robust spot freight market. Our spot rates grew in the low-teens.

Thanks, Chad. And one more for you here. What should we expect for tax rate in share count for the remainder of the year? How -- has management's 2014 CapEx guidance changed?

Okay. Thanks, Tim. We expect our tax rate to fluctuate between 38.5% and 39%. Our share count in the future will depend on the amount of cash we generate and the share price. We will continue to follow the capital management practices that we outlined earlier in this call. We still believe that our CapEx, including capitalized and purchased software, will be around $40 million. Previously, we had guided to a range of $40 million to $45 million, but we feel we may be on the low side of that range for 2014.

Thanks, Chad. And the next question is for John related to M&A. With several large M&A deals recently in the domestic asset light logistic space, are you considering some larger scale acquisitions? It would seem to be better use of financial prowess than share repurchases.

With regards to our philosophy or attitude towards mergers and acquisitions, I think, when you look around our industry and other industries, you see some competitors that are focused entirely on organic growth and don't look at acquisitions. And you also see companies that are very aggressively acquiring or rolling off a lot of businesses in the space. For us and our culture, I think you can create value anywhere on that continuum. But what we have always believed in and continue to execute is that we want to be predominantly an organic-growth company that has very tight integrated offerings and very high customer service experience. So we are open to acquisitions of all size, always have been, and we'll continue to explore those. When we acquired Phoenix a couple of years ago, that was a pretty large effort for us. And we said at the time that we were going to focus very heavily on completely integrating that and really making it a seamless component of our offering. As I commented earlier, we're pretty much over with that. There's some clean up to do, but it probably falls more in the range of sort of ongoing things that we have for any of our different service offerings. So at this point, we do feel comfortable that in our exploration of the marketplace, if another opportunity comes along, really, of any size, we're definitely interested. We continue to have what we believe is a higher filter of strategic fit, cultural fit and valuation discipline that drives a more limited selection of the number of deals that we're going to do. But for us, at least on that continuum of choices of how to deploy our capital, we feel we have a good balance of where the right acquisition makes sense. It probably does have the highest ROI for us, but that we don't want to mess with our high service offering and our integrated service offering by doing too many. And so that, from a capital deployment standpoint, share repurchases have, by far, the lowest risk and they're quick and easy to execute. And we'll continue to do those to make sure that we're fair with our capital structure along the way.

Thanks, John. The next question is again for you, on the intermodal strategy. Is intermodal a priority when you think about acquisitions outside of adding more containers or buying an established player? How do you think about increasing your presence in the intermodal market, given its pretty favorable secular growth characteristics?

Intermodal is a priority for many of the reasons that I articulated earlier around integrated transportation offerings and really thinking about the scope of what we go to market with. We are a top 5 intermodal provider with all of the railroads in North America, and do feel good about the presence that we have today. We also know that we don't have the same density and scale as some of the largest competitors so that there is an opportunity to continue to improve there. Absent a significant investment or a merger and acquisition opportunity, the core challenge kind of comes down to the account management disciplines with our customers and with the railroads to make sure that we stay relevant and a part of their go-to-market strategy around the freight that they want to go after. So it's really about either using pooled equipment or our own equipment to make sure that we're going after growth opportunities that our rail partners would support. It includes getting better and more dense range [ph] offerings, which are a huge part of the competitive landscape. And maybe most importantly, just making certain that we're interfacing with our customers and exposing intermodal services and intermodal opportunities, where it's most appropriate, to their book of business to make sure that we stay relevant in that and continue to grow. So there are a lot of things that we've done in the past that are under our control that we can continue to do to invest and grow our intermodal business. And our attitude is that it is a priority and that we will make whatever investments we need to in order to grow that service and make sure that it stays an important part of our integrated transportation offering.

Thanks, John. The next question again for you, on sourcing. When can we expect to lap the dedicated customer loss in your sourcing business and see that segment return to growth?

I think we've talked about in the past that in all of our larger customer relationships, there are multiple commodities or categories and the transition of the business that's going away began in the last half of 2013. So it will be the last half of 2014 where we'll see the cycle through of the lost business. In our sourcing business, we've also talked about the drought conditions and some of the other challenges that we've had just because of difficulties in the produce industry that without that lost customer business, that the remainder of our produce business is down slightly the last couple of quarters. So the lost business will cycle through, and we would return to more longer-term growth expectations with sort of that overarching caveat that there are some pretty material weather issues going on. And that, hopefully, those will stabilize and provide a rebound opportunity or some greater growth options going for us. But just from a pure analytical standpoint, the lost business that we know about for sure will cycle out in the second half of 2014. And 2015 would, hopefully, be a year that we go into with more typical long-term growth expectations.

Okay. Thanks, John. The next question is again for you. How is business in Canada, Mexico and Europe shaping up? Are your expectations being met in these foreign countries?

So from the standpoint of our North America surface transportation network, we don't talk a lot about calling out Canada and Mexico because they are an integrated part of that network, but we are very proud of our presence in both of those countries. We have 6 or 7 offices in each of Canada and Mexico, and have grown them significantly over the last 5 to 7 years. I feel very good about our service capabilities and offerings there. And how it is tied into a North America service offering, including the border services that the trucks need access to when they cross. So Canada and Mexico are very much an important part of our growth strategy in an integrated North America surface offering, and we feel very good. We've been at it in both of those locations for more than 30 years and have a pretty strong presence there. With regards to Europe, that's been more of a 20-year investment cycle of the surface transportation and global forwarding businesses that we have over there. Because of the scale and opportunity in Europe, it's a different investment cycle that we're very committed to building out our network and taking market share in both the surface transportation opportunities and global forwarding. We feel very good about our strategic objectives and our presence in the marketplace, our brand, our people. A lot of the things that we're growing on. It has been more of a challenge from an earnings growth standpoint in Europe just because of the scale and the overhead that's required, and the fact that there hasn't been a great economic environment for the last 3 to 4 years to kind of grow into. But we feel very good about the long-term prospects of our investments in Europe as well. I mentioned the globalization of our business and how we're focusing in outside of the United States, Canada, Mexico and Europe, probably our 3 of our top priorities of how we believe we can continue to strengthen that global transportation platform and offering that will be a big part of our future.

Thanks, John. And this will be the last question. This is for Chad. Given the tight capacity, I would have thought truckload volumes might have been a little stronger. What might be constraining the additional volume growth, albeit GDP remains relatively sluggish?

Thanks, Tim. As we mentioned throughout the call today, we have been disciplined in our pricing practices for all freight and selective on transactional business that we commit to. We feel that we have grown many relationships, but called some freight from the portfolio through these disciplined pricing practices.

Okay. Thanks Chad. And thank you, everybody, for participating in our Second Quarter 2014 Conference Call. We know that we couldn't get to all of your questions today. We tried to cover the recurring themes as much as possible. If you have additional questions for John, Chad, or I, please contact me via email or by phone at (952) 683-5007. The call will be available for replay in the Investor Relations section of our website at www.chrobinson.com. It will also be available by dialing (888) 203-1112 and entering the passcode 5181255#. The replay will be available at approximately noon Eastern Time today. Thank you, everybody, for joining us this morning. Have a good day.