Good morning, ladies and gentlemen, and welcome to the C.H. Robinson First Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. Following today's presentation, Bob Houghton will facilitate a review of previously submitted questions. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, May 1st, 2019. I would now like to turn the conference over to Bob Houghton, Vice President of Investor Relations. Thank you, sir. You may begin.

Thank you, Donna, and good morning, everyone. On our call today will be John Wiehoff, Chairman and Chief Executive Officer, Bob Biesterfeld, Chief Operating Officer and Scott Hagen, Corporate Controller and Interim Chief Financial Officer. John, Bob and Scott will provide commentary on our 2019 first quarter results. Presentation Slides that accompany their remarks can be found in the Investor Relations section of our website at chrobinson.com. We will follow that with responses to the pre-submitted questions we received after earnings release yesterday. I would like to remind you that Robinson Fresh transportation results are now included in our North American Surface Transportation segment. The remaining Robinson Fresh results, which primarily include the sourcing and marketing of fresh produce, will be reported under the All Other and Corporate category. To provide a basis for comparison, we have provided certain historical segment information under the new segment organization in our press release issued on April 1st. I would also like to remind you that our remarks today may contain forward-looking statements. Slide two in today's presentation lists factors that could cause our actual results to differ from management's expectations. And with that, I will turn the call over to John.

Thank you, Bob, and good morning, everyone. Thank you for joining our first quarter earnings call. For the quarter, we achieved high single-digit net revenue growth and double-digit growth in both operating income and earnings per share. Operating margin improved 250 basis points in the quarter. Our North American Surface Transportation business generated double-digit net revenue growth and we delivered significant operating margin expansion in both our NAST and Global Forwarding businesses. We also expanded our Global Forwarding presence in Spain and Colombia with the acquisition of The Space Cargo Group. We continued to make improvements in working capital, which combined with increased earnings, allowed us to generate over $250 million in cash flow from operations and increased cash returns to our shareholders. We feel good about our first quarter results and they are in line with our longer-term goals and expectations. I also would like to highlight a couple of the macro themes and how they impact our business. The first theme is around pricing. In the back half of 2017 and into 2018, we had meaningful price increases in all of our services, including unprecedented increases in truckload. So far this year, we are seeing pricing and cost declines in many of our service lines, including truckload. Many public data sources are indicating that we are in a softer market today than we were a year ago or even last quarter, and our view of the market is consistent with that public data. Demand has been softening and that has resulted in cost of hire declines and price declines. Although a growing percentage of our capacity is strategically planned and procured, we purchased the majority of our North American truckload capacity in the spot market. So our pricing is generally reflective of overall market conditions. We are also seeing a modest increase in truckload capacity. With less than 3% market share in each of our transportation service lines, we do not lead the market lower, but with meaningful scale, we are typically a reflection of the market, both in terms of pricing and in our contractual versus transactional mix. When markets are balanced, customers typically engage us in more contractual volume and when markets are tight, more of our volumes move to transactional freight. One of our network's greatest strengths is adapting to changing market conditions. We view it as our primary job to help our customers and carrier partners understand current conditions and manage through cycles with high levels of execution, and we feel good about how we are positioned to continue to do that. Regardless of the freight cycle, we are focused on taking market share, achieving operating leverage and improving cash flow. We are confident in our long-term value creation strategy and in our ability to continue to win in the marketplace. With those introductory comments, I will now turn it over to Scott Hagen, our Corporate Controller and Interim CFO, to review our financial statements.

Thank you, John and good morning, everyone. Slide four shows our financial results for the quarter. First quarter total revenues decreased 4.4% to $3.8 billion, driven by lower pricing across most of our transportation service lines and volume declines in air. Total Company net revenues increased 8.4% in the quarter to $679 million, primarily from margin improvements in our truckload service line. First quarter monthly net revenue per business day was up 9% in both January and February, and up 13% in March. Total operating expenses increased $20 million, a 4.6% increase when compared to the prior year. Personnel expenses increased 3.6%, primarily due to a 1.9% increase in average headcount as performance-based compensation, including equity and bonus were relatively flat compared to last year. The addition of Space Cargo contributed about 0.5 percentage point to the headcount growth. The organic headcount growth rate remained consistent with the growth rate in the fourth quarter. SG&A expenses were up 7.6% in the quarter to $114 million. The primary drivers were increased purchased services, particularly expenses related to the integration of purchased software and from claims and occupancy. These increases were partially offset by a reduction in bad debt expense. Total operating income was $225 million in the first quarter, up 17.2% over last year. Operating margin increased 250 basis points versus last year, representing our fourth consecutive quarter of operating margin expansion. Achieving operating margin leverage remains a top priority for C.H. Robinson. First quarter net income was $162 million, an increase of 13.7% versus last year. Our diluted earnings per share was $1.16 in the first quarter, up 14.9% from $1.01 last year. Slide 5 covers other income statement items. The first quarter effective tax rate was 22%, up from 21.3% last year. We typically experience the lowest quarterly effective…

Thank you, Scott, and good morning, everyone. I will begin my remarks on our operating segment performance by highlighting the current state of the North America truckload market . On Slide 9, the light and dark blue lines represent the percent change in NAST truckload rate per mile billed to our customers and cost per mile paid to our contract carriers, net of fuel costs over the current decade. As a reminder, this Slide includes the impact of our truckload business previously reported in the Robinson Fresh segment. NAST truckload price per mile and cost per mile both declined in the quarter versus the year ago period, where both price and cost increased over 20%. We benefited from a market-based shift to contractual volume in a falling cost environment, as routing guide performance returned to a more normal depth of tender, resulting in improved truckload net revenue margin in the first quarter. And while changes in cost tend to lead changes in price, over time price and cost generally move together. One of the metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business, which represents roughly $4 billion in freight under management. In the first quarter, average routing guide depth of tender was 1.2, representing that on average the first carrier in a shipper's routing guide was executing the shipment in most cases. As John mentioned, we are seeing evidence of a softening demand and modest increase in capacity, as reflected by the reduction in price and costs shown on this Slide. We continue to set pricing that we feel best reflects the current freight market conditions, while maximizing our ability to drive net revenue growth. So with route guide depth moderating, we are adjusting our prices to reflect the current…

Thank you, Bob. I will wrap up our prepared remarks with a few final comments. Our core go-to-market strategy has always been to help our network of customers and carriers understand and adapt to the cyclical nature of the freight market. We remain focused on working closely with our customers to help them understand the market, to ensure we can both meet our customer commitments and achieve pricing reflective of the marketplace conditions. We will continue to invest in our people, processes and technology to increase the value of the supply chain solutions we deliver to our global legal system of over 200,000 companies . We will also leveraged our digital transformation to provide our customers, carrier partners, and our people with an expanding set of insights and capabilities, and we will remain focused on operating cost efficiency, driving higher levels of service execution for our employees and increasing returns to our shareholders. Our team and our platform are the competitive advantages that will allow us to win in the marketplace and they continue to get stronger. We have a great future ahead of us and I'm highly confident in our ability to continue to create value for all of our stakeholders. As Bob referenced, in February of 2019, I announced my intention to retire as Chief Executive Officer of C.H. Robinson. As part of a long-planned succession process, we also announced that Bob Biesterfeld will become the next Chief Executive Officer of our Company. I will remain on the Board of Directors as Chairman. Both moves are effective next week on May 9th. During his almost two decades as C.H. Robinson, Bob has consistently demonstrated deep industry knowledge, strategic vision and a passion for delivering results. He has been the driving force behind our digital transformation efforts, accelerating the…

Mr. Houghton, the floor is yours for the question and answer session.

Thank you. Donna. First, I would like to thank the many analysts and investors for taking the time to submit questions after our earnings release yesterday. For today's Q&A session, I will frame-up the question and then turn it over to John, Bob or Scott for a response. Similar to earnings calls over the previous years, we have received both secular and cyclical questions regarding our business performance. This morning, we will begin with a few secular questions and then transition to topics that are more cyclical in nature. Our first question comes from several analysts, Bob, regarding the recent announcement by Amazon to enter the truck brokerage space, how does this impact your business in the short term? And longer term, how might the Company react to a competitor willing to do business for no profit?

Thanks, Bob. So good morning again everybody, I guess to start, I haven't actually seen any announcement directly from Amazon that they are doing anything new. There was an industry trade publication that stated this as something new last week, but we have actually assumed or known Amazon to be in the space for quite some time, as they work to optimize their internal network. So I would look at this as another step in what is been a rapid change in the competitive landscape over the last several years. To the question around competitors being willing to do business for no profit, since we have been public, we have never really seen that play out as a value creating approach and it's certainly not going to be our approach in this market. If I look back over the past 20 years of my tenure here at Robinson, we have really seen several instances of disruption in our competitive landscape. And really with each instance of disruption in our history, the bare case on Robinson has always been that these new entrants, who are going to disintermediate our model and drive margins down or to zero. And so through each of these phases we have stayed true to one of our core values, which is evolving constantly and managing our business for long-term value creation. But in the early 2000s, it was the advent of the Internet. The arrival of the load board that was going to bring price and cost transparency and disintermediate brokerage. In the mid 2000s, we had upstart 3PLs actively pricing freight below market rates in order to take share with large shippers, either in order to sell or to go public. We have seen roll-up strategies launched, fueled by a near zero cost of capital targeted directly at disintermediating Robinson. And recently, we have got numerous of these tech start or tech first brokerages promising low or no margins, reducing friction and improving efficiency. And these have really been high on the hype curve as we have seen, again fueled by what seems to be an endless source of private equity. But through this whole long range cycle what Robinson has done is maintain our margins relatively consistent. We have increased our share of the market. We have diversified our business and we have increased our return to shareholders. So it's not to say that we are ignoring competition or the evolving competitive focus, we have actually got tremendous respect for the competitors that have come into this marketplace and the incredible levels of talent that are entering our industry today. We think that this infusion of talent, and new ways of doing business has really been a positive catalyst for us and for the entire industry. We are just not really conceding at this point that the success that some of these competitors have had across other industries is immediately transferable and assurance of success in our industry.

Thanks, Bob. The next question is for John from Ravi Shanker with Morgan Stanley, Jason Seidl with Cowen and Company, asked a similar question, John, how would you characterize the competitive environment in the space, both among incumbents and with new entrants? Are you running into tech focused brokers more and if so, are they being more aggressive on price than traditional brokers?

So, I will build a little bit on Bob's comments and maybe just by backing up and reminding everybody that from an overall standpoint, when we look at the competitive landscape and how we monitor our position in it and what we are doing across our various segments and geographies, we do have a very diverse list of competitors. In our European business, in our Managed Service business in our fresh business, there is a completely different set of competitors. When you get within North America Surface Trans, even within the different services, the LTL world and a lot of the various services, have different competitors. When you get down to our largest source of revenues, the North American truckload business, there still is somewhere around 20,000 licensed brokers and over 100,000 carriers out there. So when you get into that core source of revenue for us that most of our shareholders, analysts are focused on, it's a very fragmented, highly competitive landscape that we have been a part of for the last several decades. There is also a fair amount of churn within that competitive landscape. In good times and in bad, we see thousands of new entrants and thousands of people leaving in relatively short periods of time. Bob mentioned that throughout the decades, we have seen a variety of ways that people have entered into this space, including relationships, including programs to buy market share, if you will, or come in and being much more price-competitive. If you think about how this broad fragmented marketplace evolves, there is a variety of ways that you can join and try to be competitive. Many of the large asset-based carriers who have gotten into the brokerage business over the year, start by leveraging their available capacity and their dense lanes…

Thanks, John. The next question comes from Jack Atkins with Stephens, Todd Fowler of KeyBanc and Scott Schneeberger with Oppenheimer, ask similar questions. Bob, the adoption of technology in the brokerage market seems to have been accelerated with additional options for digital freight matching now available on the market. For C.H Robinson, where do you guys stand in terms of offering a digital solution for customers? What percentage of your loads is booked through a digital platform and what is your goal for this metric over the next few years?

There is no doubt that technology has been more broadly accepted in the marketplace. And I think the greatest shift in adoption that we have seen more recently is from the small carrier community, which is really great for us as the small carriers are starting to see the use of technology be a win for them versus a burden. And so, as we and others become more tech enabled and provide value creating offerings for carriers via mobile or the web, we are seeing those small carriers really gravitate toward that, both here in North America as well as in Europe and other parts of the world where we do business. Our digital focus on customers has really been about meeting customers how and where they want to engage with us and we are really proud of Navisphere, but we are also somewhat platform agnostic when it comes to customer engagement and connectivity. Our real focus is on automating that customer journey and ensuring that it is frictionless as possible. As, I think, you all know, we have greatly increased our investment in technology in this space. We have spent about $1 billion on tech over the last decade and we would expect that we are going to spend about $1 billion on tech over the next four to five years. And so, we are accelerating the pace in which we develop this digital platform for our customers. In terms of the direct question of kind of where we are at in that journey? Today, about 75% of our load tenders are automated with our customers, so you could say that about 75% of our shipments are fully digital on the front end. About 50% of the shipments that run through our system are fully automated from end to…

Thanks, Bob. We will now transition to topics that are more cyclical in nature. The next question is for John from Dave Vernon of Bernstein. Are the volume declines seen in April in the contract brokerage business or the spot business? How is mix shifting?

Maybe expanding a little bit, we have consistently shared kind of a current month's data points around what we are seeing in terms of overall net revenue growth and volume activity and we shared those for April with net revenue being up 5%, and North America truckload volume being down 4%. The shift in the business, I will refer you back to Slide 9, where we have laid out the last decade in terms of the cyclicality of our truckload business and how we are seeing price and activity changes across the market. No question that we have seen a decline in spot market activity. That is where the volume changes are coming from. Over the last year and a half, we have talked and executed our changes through the pricing dynamics of our committed freight. If you go back to that Slide nine and look at that unprecedented run-up of pricing, during that period of time the spot market activity becomes a much bigger component of the mix. And you see over the last couple of quarters now the kind of steady decline of demand and pricing, where the market will become much more committed. We have shared our route guide metrics that freight will execute along those route guides in a much more compliant way and then the declines that we see now come in the spot market era. Our truck business really through April is functioning and our net revenue growth is fairly similar to the first quarter. We are shedding some volume and we are reoptimizing for a net revenue growth. Our April change really versus the first quarter has more to do with drop-off in growth in some of the other services that we think is part of just being early in April and being a little bit choppy. So it's always a little bit risky like we say to share that mid-month activity. We have Easter comparisons and other things that can make a difference as well, but the overall market environment, I think, the highlights that we shared earlier are that demand is softening, we are seeing high route guide compliance and high execution around committed freight levels and a decline in the spot market due to the price changes.

Thanks, John. The next question is from Ravi Shanker of Morgan Stanley. Bob, why are volumes continuing to decline, is this part of the long-term strategy to prioritize pricing over volume growth?

Thanks, Bob. So the short answer on that is that, at least, for the quarter volumes didn't decline, right. On a per business day basis truckload volumes were up 2% in first quarter and profitable volume growth when you consider - eliminating some of the negative loads, was in the mid single-digit. So I think I have been clear in a lot of different forms about our key areas of focus, around taking share through volume growth, decoupling headcount growth from revenue and volume over time and improving our operating margin. I think the key words there are over time, and so any 30-day period may not represent that result, which is why we don't measure our business in 30-day periods or that short term. If we think about April, and John mentioned it, we had a little bit of a comparison due to Easter, we had a softer-than-expected market. But profitable volume growth is going to be a key component to NAST's success in 2019, as well as in our other services. So we look back our historical volume growth over the past number of years has been about 4% on average and that's really the range that we would expect volume to be in the second half of the year. And so, to answer the question directly, our long-term strategy is not to trade price for volume. We are volume-oriented and volume focused.

Thanks, Bob. The next question comes from Chris Wetherbee of Citi. Scott Schneeberger of Oppenheimer and Brian Ossenbeck of JPMorgan, also asked similar questions. Bob, net operating margins expanded 250 basis points versus last year in the first quarter. Can you talk about the opportunity for further operating margin expansion as the year progresses? And do you see opportunities to optimize the operating expense structure?

Sure. So net operating margins in the second, third and fourth quarter of last year were 32.6%, 35.4%, 35.8% sequentially compared to 33.1% in Q1 of this year. So across each of our business units, if you talk to any one of the Divisional Presidents they would tell you that they have an extreme focus on expanding their operating margins. And that's going to come through, again, growing our market share and associated net revenues, against modest headcount growth. In our largest segments of NAST and Global Forwarding, we are expecting headcount to be flat to down for the year as we implement further technology enabled productivity initiatives, against planned increases in revenue and additional wins in our core services. The offset to that is that we are continuing to add heads ahead of growth in Managed Services, we have talked about our technology investment that's going to come with additional heads in IT, development, engineering and data science. So our investments in technology at the core are really focused in three core areas: it's our customers; it's our carriers; and it's in our employees and our workflow. And much of that technology investment is what is going to drive greater efficiency internally as we refine business processes, eliminate redundancy and non-value added steps within our workflow.

Thanks, Bob. The next question is for John from Jack Atkins of Stephens. Chris Wetherbee also asked a similar question. Please talk about trends in global forwarding? What did you see in the ocean and air markets during the first quarter, and how are you thinking about the performance of the forwarding business for the balance of the year?

So the big picture on Global Forwarding at Robinson, as you all know, six or seven years ago when we doubled down and made our largest acquisition of Phoenix, since then we have been continuing to invest in the division with follow on acquisitions, and did that again this quarter with Space Cargo. And overall, feel very positive and some really strong momentum around our pipeline and our capabilities as we continue to build out our global network and gain more and more confidence in the competitiveness of our Global Forwarding all around the world. We did see, as we mentioned in our prepared comments, some potential tariff pull forward. It's really hard to quantify that because shippers are all making a lot of subjective decisions. And I did mention earlier that we see some chop in the first part of April around our ocean activity, that we think will normalize as the year goes on. So, little bit of a bumpy start in 2019 in terms of some of the Global Forwarding volumes and activities, but overall, our expectations for the year, and more importantly, the long-term going forward are that we feel great about our offering, our network, our competitiveness and the things that we are doing to continue to take market share and grow Global Forwarding as a more and more relevant part of the C.H. Robinson network.

Thanks, John. The next question also comes from Jack Atkins. Dave Vernon of Bernstein and Fadi Chamoun of BMO, also asked similar questions. John, now that we are in the heart of bid season, how have you seen contractual pricing trend on average this year compared to 2018? Have you noticed anything different about bid season this year compared to prior bid cycles, given the current freight market backdrop?

I would say, nothing too significant. Referring back again to a chart that I think is most helpful on the cyclicality in the year-to-year, that Slide nine that's in our prepared deck that shows the significant ramp up and the significant ramp down. If you really go back the last 20 or 30 years, we have used the term unprecedented, that there hasn't been that kind of 20% price increase year-over-year. And then, the sort of decline that we have seen over the last four or five quarters. So because of that, I would say, if there is anything different that in bid processes there certainly is a fair amount of questioning and concern as to where prices are going and where the bottom is and kind of what the market will look like. We have shared a number of times that it still remains true that over a decade or so these price and cost increases have averaged in the 3% to 4% range and that when you look at it over a longer period of time the cost changes are fairly rational. But in a short period of time, we are seeing an increase in volatility, which probably has something to do with digitalization and the rule changes around ELDs a year ago, that probably put some preventative pricing in place and maybe there is some improvement around that. So the process for bids has gone very similar in terms of high volumes of participation, very competitive, very fragmented, again, processes remained fairly similar and probably just a heightened level of dialog around where prices are headed and how are we going to come out of this greater volatility of price increases and declines over the last couple of years.

Thanks, John. The next question is for Bob from Matt Young with Morningstar. NAST gross profit margin percentage increased a meaningful amount on both a year-over-year and sequential basis. Should we expect truckload margins to normalize as the year progresses and perhaps sell rate declines to begin to catch up to the recent fall in rates paid to carriers?

So, I would go back again the Slide nine in our deck that shows that change in rate and cost over time. And what you see there is that cost is always the leading indicator to price, right, cost leads price. And then, if you take that a step further, the transactional market for price typically leads the contractual market and it will pull it either up or down. The gross margin expanded in Q1 as decrease in price lagged that decrease in cost. If we look at the market indicators it would say that likely the contractual markets would be pulled down by the decreasing or the declines in the spot market. In the past decade, we have seen the change in rate and cost move up about 4% a year on average. Given the markets that we are in, I would expect that the market is going to somewhat fall back to that trend line. It's never linear, but as we think about the Slide nine, I think it would be realistic to expect we are going to get back to that average. Looking at Slide 10, you can see that our spread has been relatively consistent over time, and we still include the gross revenue margin in the appendix in Slide 19, which shows that really they are pretty tightly bound over the last decade. We tend to manage the business, as we have said before, to net revenue dollars per load versus net revenue margin, and we have certainly seen that to be on the high side of average over the course of the first four months of 2019. And we'd expect that as we go through bid season and reprice, that that's going to come back to a more normal range, which is why frankly volume is such an important part of the second half of the year for us.

Thanks, Bob. The next question is for Scott and comes from Chris Wetherbee with Citi. Personnel expense growth decelerated to the lowest level since 2016. Can you talk about the outlook for growth of this expense category in 2019, and what are your expectations for headcount relative to net revenue growth or volume?

Sure. We expect NAST headcount to be flat to down for the year, with a forecast of positive volume growth for the year. Global Forwarding is also expected to be flat to down for the year based on productivity initiatives within that business. Robinson Fresh will likely be down year-over-year basis, with the work done to improve their operating margins. The other business units, IT, and other shared services will likely increase for the year. So, overall, I would expect headcount to be flat to plus or minus 1% for the entire year. The variable components of compensation will be determined on the performance of the business units and the overall enterprise.

Thanks, Scott. The next question comes from Todd Fowler with Keybanc. Bob, how do you think about acquisitions in the current environment? Please provide an update as to what service lines or geographies are attractive? And would C.H. Robinson consider something on the final mile side or more specific to e-Commerce outside of line haul?

So we really like our current approach to M&A. And I mean hopefully it's been a theme that starts to develop here over the course of the last six or seven years or beyond that we really like founder-led businesses that are really healthy, that are a cultural fit, that are profitable, that fit nicely and complement our existing foundational services. We are going to continue to look in the Global Forwarding space as we have for deals that fill in a geographical space for us, with strength and scale or expand our services. Across the entire portfolio, we are looking for really those same characteristics. In terms of the question around final mile and e-Commerce, we are certainly exploring that space. Valuations are extremely high in that space. We really want to be mindful of the short and long-term impact of doing deals in that area, but we are certainly active in looking.

Thanks, Bob. Todd Fowler of KeyBanc and Brian Ossenbeck with JPMorgan asked about market share. Bob, please expand on the outlook comments around increasing market share in 2019 and beyond? Is this primarily North American truckload share and measured by volume growth or is this referencing another segment with a different metric for measurement?

So, I think part of what excites me about being at Robinson today is, while we are the largest in a number of our services, whether that be LTL or truckload or ocean and transpacific eastbound, we are no more than 3% of the overall market in any one of those spaces. So, we have got tremendous upside for growth regardless of the cycle that we are in. Volume growth and taking share is really important to us across each of our modes and services. But as you know, truckload, LTL, and ocean are really the needle movers for us organizationally and we are certainly focused and taking share in that space, whether it be through new bids, RFPs or growth within existing customers. The other thing that we talk about internally at a macro level is that, in this digital era, the concept of freight under management is a really important metric for us to look at. So Jordan certainly looks at freight under management specific to the Managed Services business. We also look at that across the overall enterprise, because of the value that we are able to gain from the data that we can collect across the global supply chain. And it gives us really an advantage to again address the algorithms and the work that we are doing, so that we can take that data advantage that we accumulate and turn it around and use that to help our customers to solve their most complex supply chain issues. At a more micro-grain, as we think about our account managers and our account teams, they are thinking about share of wallet or addressable market within each one of their customers. So they are actively measuring what that opportunity is at a customer level and working to cross sell all of our core and emerging services into those customers and measuring their share of wallet or their market share growth with the customers that they serve.

Thanks, Bob. The next question is for Scott from Dave Vernon of Bernstein. How should we be thinking about net revenue growth for this fiscal year, should we be bracing for a slower second half?

Well, its, obviously, difficult to predict the future and we do not provide guidance. Our overall comparisons do become more challenging in the second half of the year and we believe volume growth across all of our services will be key to growth in the second half of the year for us.

Thanks, Scott. The next question for John is from Scott Schneeberger with Oppenheimer. Please compare your viewpoint of this year's freight brokerage conditions relative to other years of this current cycle?

I talked earlier about the unique pricing environment and the changes that we have seen over the last couple of years that kind of may make things different. Maybe a few other data points to touch on that, overall, while demand is softening and declining, we would echo the fact that most of the customer reviews that we have been a part of - we are seeing customers that have a fairly positive outlook and do continue to see normal levels of freight activity. Maybe some of the capacity additions, as well as some of the maturity of the ELD implementations and pricing strategies from a year ago, all that's contributing to a more balanced, or more normalized environment currently. Maybe the other thing that bears mentioning, when you think about sort of the overall freight and brokerage environment is that, as we swing back and forth between secular and cyclical topics is that, there is probably never been greater receptivity to the business model and our presence in the marketplace. Our teams are seeing tremendous amounts of opportunities and bids to participate in, our outsourced solutions and integrated offerings are as popular as ever and growing. When you think about some of the competitive threats in the secular changes, it's always good to remember the positive side of that, that the addressable market for third-party logistics and some of the things that we are doing is as big as ever, and it has as much momentum as ever. So, while there are uniqueness’s around volatility, and pricing and some of the regulatory changes, maybe the biggest call out is that we continue to see an ever expanding universe of opportunities around the types of services that we are providing and the types of opportunities that they would apply to in the marketplace.

Thanks, John. The next question is for Bob from Brian Ossenbeck with JPMorgan. Scott Schneeberger asked a similar question. Could you please provide comments on truck brokerage capacity trends and drivers and provide an updated view point of ELD impacts now that the regulation has been in place for over a year?

Sure. So, we mentioned in our prepared remarks, we had about 5,000 new carriers join network in the first quarter which is about a 20% increase during the quarter. And if it does seem like the industry has added incremental capacity as well, and it's coming mostly in that small carrier space. In terms of the impact of ELDs kind of a year or so post implementation of ELDs. I think I would describe the environment that I think the bad actors have adjusted and by that, I mean, drivers have accepted the electronic logging devices, particular shippers or lanes that were problematic for the use of ELDs have adjusted their behavior or their expectations as well. And so, in general, it feels as though the market has kind of come back to an equilibrium. They've learned how to work within the new constraints of the electronic logging devices. And it's really not a topic of conversation when we talk to carriers or shippers today to any great lengths. I think, again, if anything, the data and location services associated with ELDs are giving us real opportunities to think differently about matching and data aggregation and location services and providing more real-time information to shippers, as well as communicating with carriers. So in general, we have seen the positive impact to the overall business.

Thanks, Scott. The next question is for John from Scott Schneeberger on tariffs. Please share your view of the recent U.S. China tariff dynamic and its influence on C.H Robinson's Global Forwarding business?

The tariffs are driving probably three specific things, one is really an elevated focus on compliance. So these tariffs have to be calculated and applied properly and to the right things and our team has been very busy working with our customers to make sure that all the tariffs are properly applied and that compliance is in place. I mentioned earlier, the potential acceleration to get some product shipped before those tariffs would apply. So that's been an impact as well. And probably the third leg is just really the longer-term supply chain consultation and planning around will the tariff stick and what long-term impact, will they have on sourcing patterns and shipping patterns for the customers that we are working with. We don't believe at this point that there is been a lot of impact to our volumes, or freight forwarding business based on those long-term redesigns. I think most people are holding their breath and waiting for resolution of what those tariffs might look like on a more permanent basis, but there certainly our discussions and planning exercises going on to what if scenario and think about what the future may look like from a supply chain design standpoint, which could have a very material effect on freight flows and kind of where things move to. We are working to make sure that wherever sourcing origins and international freight moves to that we have capabilities there and that we can evolve with our customers through these issues and challenges, but I would say, those are probably the three main impacts that tariffs have had on our Global Forwarding business to-date.

Thanks, John. And our last question is for Bob from Bascome Majors with Susquehanna. Chris Wetherbee asked a similar question. Can you provide an update on your CFO search?

Sure. So briefly on that, as expected, we have engaged a search firm in that space. I think we have shared that before. I would describe our process as in the early innings. I feel great about our finance team today, extremely strong leadership and talent going across the entire organization, they are doing really good things. And Scott's doing a great job in the interim. We are evaluating a really diverse slate of talented candidates across multiple industries today, both internally and externally that we think would each bring unique strengths to the next -- to the role of CFO at C.H Robinson. As you guys know, we have got aggressive growth plans and we are going to continue to accelerate the pace of change. So I'm looking for the right leader to partner with me and the rest of the senior leadership team that can help us to do that most effectively.

Thanks, Bob. That concludes the Q&A portion of today's earnings call. A replay of today's call will be available in the Investor Relations section of our website at chobinson.com at approximately 11:30 AM, Eastern Time today. If you have additional questions, I can be reached by phone or email. Thank you again for participating in our first quarter 2019 conference call. Have a good day.

Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines at this time and have a wonderful day.