Good morning, ladies and gentlemen, and welcome to the C.H. Robinson Fourth Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. Following today's presentation, Chuck Ives will facilitate a review of previously submitted questions. As a reminder, this conference is being recorded Wednesday, January 27, 2021. I would now like to turn the conference over to Chuck Ives, Director of Investor Relations.

Thank you, Donna, and good morning, everyone. On the call with me today is Bob Biesterfeld, our Chief Executive Officer; and Mike Zechmeister, our Chief Financial Officer. Bob and Mike will provide a summary of our 2020 fourth quarter results. We will follow their comments with responses to the pre-submitted questions that we received after our earnings release yesterday.

Thank you, Chuck, and good morning everyone. Our fourth quarter was marked by solid performance across our broad service portfolio, continued progress on repricing our truckload business to reflect the changing market conditions and further advancements in our technology and transformation efforts that are providing meaningful improvements to our business results. Our global forwarding business sustained their strong execution in the fourth quarter. In our ocean business, the contracting number of carriers with meaningful size continue to value working with a global freight forwarder, with our scale and reputation and ocean shippers are increasingly coming to Robinson to meet their capacity needs as other providers fail to do so. The air market continues to be impacted by reduced cargo capacity. Air charters have evolved into a sustainable piece of our procurement strategy and we again augmented our capacity in Q4 with charter flights to support demand from both existing and new customers. As a result, our shipment sizes have increased and our air tonnage is up year-over-year, despite the number of air shipments decreasing. Shippers continue to rely on Robinson's global supply chain expertise and our data and scale advantages to ensure critical goods are moved as quickly and as inexpensively as possible.

Thanks, Bob, and good morning, everyone. Our fourth quarter total revenues increased by 19.9% compared to Q4 2019 driven primarily by higher pricing and higher volume across the majority of our transportation service lines. Total company adjusted gross profit increased 10.7% in the fourth quarter, primarily due to our Global Forwarding business delivering a $51 million increase in adjusted gross profit, up 39.6% compared to Q4 of 2019. As Chuck stated at the beginning of the call, we have renamed the term net revenue to adjusted gross profit with no change to the composition for what is included in that metric. Within Global Forwarding in Q4, our ocean business had the largest increase in adjusted gross profit, up $39 million or 53% versus Q4 of 2019, driven by higher pricing and higher volume. On a monthly basis, compared to 2019, our total company adjusted gross profit per business day was up 8% in October, up 7% in November and up 17% in December. Q4 personnel expenses totaled $309.3 million, up 3.4% versus Q4 of 2019. Recall that Q4 last year included a reduction in incentive compensation that aligned with the softer results. Average headcount in Q4 decreased 4.8% compared to Q4 of 2019, including the Prime acquisition which added 2 percentage points. Looking forward, we expect our 2021 personnel expenses to be approximately $1.4 billion based on our expectation of improved adjusted gross profit in 2021 and the higher incentive compensation aligned with those results. 2021 personnel expense also includes the impact of our ongoing long-term and short-term cost savings efforts including the reinstatement of the company match on retirement contributions in the US and Canada as of January 1. Q4 SG&A expenses of $124.5 million were down $18.6 million or 13% compared to Q4 of 2019, primarily due to continued reductions in travel expenses. We expect our 2021 total SG&A expenses will be approximately a $0.5 billion with travel expenses building in the back half of 2021 as the impact of the pandemic subsides. 2021 SG&A is expected to include $85 million to $90 million of depreciation and amortization which is down from $102 million in 2020, primarily due to completing the amortization related to a prior acquisition. In 2020, we delivered approximately two-thirds of $100 million per year of long-term or permanent cost savings. As we indicated on our Q3 earnings call, we expect to deliver the remainder of that $100 million in long-term savings by mid-2021. For 2021 and beyond, we will continue to deliver long-term cost savings primarily through process redesign and automation across the enterprise. One example is the continued optimization of our real estate footprint across the network as we expect flexible work arrangements to become more prominent post pandemic.

Thank you, Mike. By all accounts 2020 was a most unusual and challenging year, but we are emerging stronger. We expect the trends and improving pricing within NAST to continue. We're pleased with the growth in our Global Forwarding business and we believe that we have a sustainable competitive advantage. The digitization of our business will continue and we are enabling more and more of our volume to be transacted in a fully automated manner. As shippers and carriers continue to increase their adoption of these new platform capabilities, we expect to see continued productivity benefits as well as growth with both customers and carriers that prefer to operate in it's truly frictionless environment. Due to several factors including the shortages in the number of drivers and available carrier capacity, freight markets remain tight and we anticipate that this will continue for much of 2021. We're committed to creating better outcomes for our customers and our carriers by delivering industry-leading technology that's built by and for our supply chain experts and by leveraging our global portfolio of services and our unmatched combination of experience, scale and information advantage to meet their ever-changing needs. We're also firmly committed to the key interest of our investors, including profitable market share growth, investing in technology to unlock both growth and efficiency, while being a responsible corporate citizen and driving the transformation of C.H Robinson, so that we can continue to deliver industry-leading margins and enhance shareholder value. I'm incredibly proud of the resiliency, the compassion and the dedication that the Robinson team members around the world have displayed during these unprecedented times and I thank them for continuing to drive our company forward, despite the disruptions caused by COVID-19 and for helping our company to emerge stronger. That concludes our prepared comments. And with that, I'll turn it back to Donna, so we can answer the pre-submitted questions.

Mr. Ives, 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 Bob or Mike for a response. Our first question is for Bob from Todd Fowler with KeyBanc, Chris Wetherbee from Citi, Jack Atkins from Stephens, Tom Wadewitz from UBS and Brandon Oglenski from Barclays, asked similar questions. How should we think about North American truckload volume growth? Is this a focus for Robinson or can productivity improvements offset more segment volumes driving increased profitability? What is the right environment for Robinson to increase North American truckload volumes?

Thanks, Chuck, and thank you gentlemen for the question. So for the year our truckload volumes and NAST were basically flat, but our combined volumes, as I said earlier, between both truckload and LTL outpaced the rate of growth in the Cass Freight Index in each of the past eight quarters. As I've said publicly several times, two of our primary initiatives are focused on taking share across all of our services certainly inclusive of truckload and improving our operating margins across the business. Growing profitable North American truckload volume remains a key focus for our team in NAST, and we feel has confident ever that the strength and our value proposition across the spectrum of our customers that we serve from the largest most complex shippers in the world to thousands of Main Street businesses. We're also going to be thoughtful about how these two goals around growing market share through volume growth and improving operating margin can sometimes be at odds. So with cost increasing in the third quarter at 16% versus last year and then increasing over 32% in the fourth quarter against some contracts that were priced towards the tail end of 2019 in a very different marketplace, we had to make some intentional decision throughout the quarter in how we are going to manage through that environment and evaluate where those critical customers where we needed to honor our commitments and where we're going to seek some pricing relief, based on the marketplace and potentially put some volume at risk. And in some cases where we couldn't reach mutually agreed to plans to move forward, we needed to exit some business if there wasn't a clear path to profitability. I would also say to keep in mind that we had about $300 million in business that we were expecting to reprice during the fourth quarter that was subsequently pushed out to the first quarter of this year. And in cases where we agreed to short-term committed pricing with those customers, the manner in which we calculate spot versus contract actually identify these shipments as spot for the quarter. So we experienced strong growth in the spot market this quarter, but it wasn't enough to offset some of the declines in our contract portfolio. In terms of the conversation about productivity, we continue to see a large profitability unlock there. As we said the shipments per person per day were up 26% in the back half of the year and our capabilities to drive frictionless and automated transactions continue to expand and our cost to execute a shipment in that arena is down significantly on a year-over-year basis. So regardless of where we are in the cycle our focus continues to be on improving our shipments per person per day and lowering our cost basis per transaction through improvements in our process and automation, while still seeking to gain share.

The next question is from Jack Atkins with Stephens, Todd Fowler with KeyBanc, and Allison Landry from Credit Suisse asked similar questions. Bob from a bigger picture perspective, what inning do you think you are in terms of your digital transformation and what are some of the major projects you expect to undertake in 2021?

So I guess in fairness to sports analogies, I use an innings analogy last quarter when talking about the freight cycle. So maybe this quarter given that the Super Bowl is right around the corner, I'll use a football analogy. When we initially talked of our $1 billion investment in tech, we time boxed that as 2019 to 2023. So if you just think about that, we're couple of years into a five-year plan. So maybe not quite at halftime but midway through the second quarter and push them towards the end zone. Over the past several quarters, we've announced several strategic partnerships with companies like Microsoft and Intel and most recently SAS, with each of these partnerships bringing new capabilities to life in our platform ecosystem. And we've delivered new products like Freight quote by C.H. Robinson and procure IQ and it really extended the reach of our platform capabilities through our commercial connectivity initiatives that connect Navisphere into an industry-leading number of ERP and TMS systems. We've also established and launched our customer R&D incubator, which we call Robinson Labs. We've delivered capabilities enabling automated pricing for our customers across truckload and LTL as well as automated load booking for our customers and carriers and adoption continues to increase. Our Navisphere vision product continues to grow and add users as we add additional industry-leading capabilities to that product that provides global visibility across all modes and all geographies to inventory in motion and at rest. In terms of our Navisphere carrier platform, we're meeting carriers how and where they want to do business. We're developing solutions to improve the business outcomes in the quality of life for owner operators and this is increasingly being executed through our web and mobile platforms and this is a form that's clearly…

Our next question is from Scott Schneeberger with Oppenheimer and Todd Fowler with KeyBanc, Bascome Majors with Susquehanna asked a similar question. Adjusted operating margin inflected positive and was up 870 basis points year-over-year to 32.3% in Q4 of 2020. Do you view the current margin level as sustainable or expandable in coming quarters? With mix of business and productivity enhancements, can you provide an update to what you view as normalized net operating margins for NAST? From a financial standpoint, besides headcount where or how will these surfaces in reported results?

Thanks for the questions. I think it's important to note that our long-term operating margin targets or adjusted operating margin targets as we're now calling them have not changed. For the enterprise our long-term target for adjusted operating margin continues to be 30% or better, continued productivity improvements will be a tailwind to help us offset some of the expected headwinds that we've talked about in 2021, like incentive compensation and the return of some of the short-term cost savings from 2020. For NAST, our long-term adjusted operating margin target continues to be 40% with the ongoing expectation to grow volume faster than headcount. So shipments per person per day is a good way for you to see our productivity initiatives coming through in our results. For Global Forwarding, our long-term target continues to be 30%, while we delivered 32.5% in Q4, which exceeds our long-term target, we would suggest that mid-20s is a better way to think about it as the margin normalizes over the near-term.

The next question for Bob comes from Chris Wetherbee of Citi. Please speak to the strength in ocean given congestions and overall robust demand can this last through more than the peak season?

So from where we sit today, there's nothing showing us that demand for Robinson Services are necessarily slowing down in the ocean space. I think it's well known that historically in the winter months carriers are typically instituting more blank sailings and removing double-digit percentages of capacity in order to adjust to lower demand and we're just not seeing that manifest itself this year, which tells us that demand is there and things really aren't slowing down. Our bookings are really strong as we look out for the next several weeks to comment as we engage with our clients, their forecasts are strong and frankly new customers are coming to us daily for space and that list of new customers is longer today than it's ever been. I think our global scale continues to enable us to provide capacity solutions in the ocean space especially in our core trade lanes where others are not, and again I want to reinforce just the strength of the commercial activity in our forwarding business and the amount of new sales and growth with existing customers is just been really, really strong in the ocean space.

The next question for Bob is from Jack Atkins with Stephens; Scott Schneeberger with Oppenheimer; Chris Wetherbee with Citi; Brian Ossenbeck of JPMorgan; and Brandon Oglenski with Barclays asked similar questions. After such a strong result in Global Forwarding in 2020, how should we think about your ability to hold onto the gains you have seen over the past 12 months in adjusted gross profit per load in your air freight and ocean freight operations?

So eventually that balance of supply and demand will come back into more normal cadences in both air and ocean. And so, as that happens, we do anticipate that our adjusted gross profit per shipment could come down from some of the historical highs that we've experienced in different quarters in 2020. We've evidenced some of that normalization already when we look back at the peaks of air freight in the second quarter and how that's played out through the balance of this year. Again it's critical to reinforce so that we believe that we've taken several structural steps in our forwarding business, including our global procurement strategy, the addition of more charters to our air freight mix which is becoming a more and more important part of our offering there, and the use of more advanced pricing analytics in setting our pricing strategies that we believe are going to continue to improve results over our historical revenue in past quarters, regardless of those market conditions in both air and ocean. So our story in forwarding isn't really just a story of margin expansion. We've had great volume gains in both air and ocean in terms of air tonnage and TEUs on the water driven by that commercial activity that I just mentioned.

The next question for Mike is from Jack Atkins with Stephens; Chris Wetherbee with Citi; Scott Schneeberger from Oppenheimer; and Allison Landry with Credit Suisse asked similar questions. Given the strong productivity gains you are making in the business, how should we think about headcount in 2021 versus the consolidated Q4 level of approximately 14,900? Can you hold it flat in a robust freight here?

Yes. With the solid momentum on productivity initiatives, we delivered the improvements in the NAST Productivity Index and the shipments per person per day that you saw on the charts in our Q4 presentation. So your question is a good one, because we also expect robust freight in 2021. Taking into account continued progress on productivity initiatives and covering the expected demands of the business, at this point, we would expect average headcount for 2021 to be closer to or slightly higher than our Q4 ending headcount of 14,888. That said, our focus is on driving productivity per person. So, we will manage our staff opportunistically to drive overall value for the enterprise by flexing up or down appropriately to capture opportunities for growth and deliver additional efficiencies.

Allison Poliniak with Wells Fargo asked the next question for Bob. Several other analysts asked similar questions. How are you thinking about managing through the current cost environment, where you note in your slide that cost are up 32.5%. If we remain at this elevated level, can pricing push higher than this quarter's 29.5% increase to help offset this headwind? Or is this a phenomenon we should expect throughout 2021?

Thanks, Allison. I'm going to try to answer this by putting this quarter into the context of what we've seen broadly over the past decade. So if we think about actual customer rate and carrier cost per mile, excluding fuel, so not rate of change, but actual customer rate per mile and actual carrier rate per mile, Q4 represented the highest average rates that we've seen on record over the past decade. Additionally, the year-over-year change in rate and the change in cost were the highest rate of change that we've seen in both metrics over the past decade as well. So if we look back a bit, the previous peak in terms of the rate of change in price and cost occurred back in the first quarter of 2018 around 24% and 25% respectively. And it wasn't until two quarters after that where we had -- at Robinson experienced the peak in terms of actual price and actual cost per mile on a rate per mile basis. So, if we compare the average truckload price in fourth quarter of 2020 to the previous peak in customer pricing in Q3 of 2018, customer pricing has only increased by an absolute value of 7% over that time period peak-to-peak. So when we make that same comparison on cost per mile, costs are up about 13%, again making that peak-to-peak comparison. So in terms of the rate of change, I certainly don't expect costs or customer pricing to continue to increase at such a high rate that we experienced in the fourth quarter as we know contracts are going to continue to reprice, spot market demand will soften because of that and the cycle will play out as it largely normally does. But in terms of actual price and actual cost per…

The next question is for Bob from Jordan Alliger with Goldman Sachs; Matt Young with Morningstar; Bruce Chan with Stifel; and Allison Landry from Credit Suisse asked the similar question. What are your thoughts on the air freight forwarding markets specifically in the capacity situation and how it relates to air cargo rates as we move into the tougher comparisons of Q2 of 2021?

So there is no doubt that the second quarter of 2020 was the peak in terms of air cargo pricing and will definitely represent a tough comparable for us. In the macro freight environment, though, there really hasn't been much indication of adding meaningful capacity outside of charters in the foreseeable future and as we see additional lockdowns occurring in different countries, we're hearing more and more that is becoming difficult to staff some of these flights which could add a constrain as well. We're expecting that space will remain tight and demand will remain strong with the vaccine rollout and with all the supporting products PPE, etcetera, along with continued low inventory levels. So available capacity is likely to continue to be an issue until such a point that passenger flights really start coming back to more normal levels on international air travel.

The next question comes from Jack Atkins with Stephens; Chris Wetherbee from Citi; and Todd Fowler from KeyBanc asked similar questions. Mike, given all the puts and takes around expenses in 2020 and the return of temporary costs and incentive compensation in 2021, could you provide us with some insight into how we should think about personnel cost inflation per employee in 2021 versus a similar point in the last freight cycle in 2018?

Good question. As I mentioned in the prepared remarks, we expect our 2021 personnel expenses to be approximately $1.4 billion, which is based on our expectation of improved adjusted gross profit in 2021 and higher incentive compensation line with those results. Regarding the return of temporary cost savings from 2020, the most significant within personnel expense would be the return of the company match on retirement contributions for employees in the US and Canada, which came back on January 1. You mentioned 2018. I do think 2018 provides a meaningful point of comparison for personnel expense expectations in 2021. As you recall 2018 was a year of strong performance for Robinson, which led to higher incentive costs including bonuses, equity and commissions. So given where we are in the freight cycle, it would be reasonable to think about 2021 in comparison to 2018. Specifically, if you look at total personnel cost per employee in 2018, we were a little over $88,000 per employee. If you add 2% inflation per year to get from 2018 to 2021, it gives you a decent outlook relative to our expectations for 2021. That outlook combined with the staffing expectations that I talked about earlier, gets you to our overall personnel expense expectations of $1.4 billion for 2021.

The next question for Bob is from Brandon Oglenski with Barclays; Brian Ossenbeck with JPMorgan; and Ravi Shanker with Morgan Stanley asked similar questions. Was the decline in truckload contractual mix to 55% a strategic decision or more of the result of capitalizing in the near term or record spot rates. Understanding that management is expecting a continuation of market tightness for much of the year, when would be a good time in the cycle to seek higher contractual mix exposure?

So, there's a couple of questions there. I'd start with saying that the 55%-45% mix is really a blend of some intentional choices in managing the yield within our portfolio as well as just market-driven factors that simply is more freight more to the spot market is routing guides fall – fail in the industry and repricing occurs with higher frequency, our mix tends to shift in that direction as well as you've seen through time. Our spot and contract mix over the past couple of quarters closely mirrors that of really third quarter of '17 through maybe the third quarter of '18, call it the past peak cycle where our mix ranged from 50%-50% to 60%-40% being more heavily to contract. Looking through the past several years, 50%-50% was really the lowest percentage of contractual freight and that happened in fourth quarter of '17. And then we kind of max out, if you will around 70% contract and more balanced market such as what we saw in the back half of 2019. As we start to implement the pricing changes that occurred during fourth quarter as well as the business that we intend to reprice in the first quarter, I would anticipate that that mix starts to shift back closer to the 60% range meaning heavier towards contract in the next couple of quarters. I think that's kind of the best way that I would think about it right now.

The next question is for Bob from Brian Ossenbeck from JPMorgan. What is the strategy to improve and deliver industry leading margins in a cyclical business with secular concerns regarding new competition? Could Robinson become more multi-modal over time and build out other service lines and geographies?

Thanks, Brian. So in just the past two years, we've experienced both our record high quarterly adjusted gross profit per load and our record low quarterly adjusted gross profit per load that we've seen over the past decade. So to your point, there is definitely some volatility and some cyclicality that we need to control for in our largest service line of truckload, and we're doing this through our efforts to lower our cost to serve, through the digitization and the automation of the business that we've talked about, working on appropriately balancing that portfolio between spot and contractual business and by continuing to redesign and reorganize our network to maximize our commercial effectiveness in order to both take share and drive top line growth. Our investments in technology, our broad global suite of services and our development of innovative new capabilities are going to continue to fuel that top line growth of our diversified business, which as we see is one way to combat that cyclicality. I feel better -- I can say confidently, I feel better today than I have at any point in the past about the focus that we have on cost management within the organization. And we'll deliver on that $100 million cost reduction in half the time we originally planned to and we're going to remain focused on finding additional opportunities to reduce our operating expenses as we move forward. In terms of diversification, clearly this has been part of our strategy over the past several years. You look at our LTL business and the growth of that is taken on, that is a critical part of our overall business mix and the growth in returns have frankly been industry leading. Our investments in diversifying and expanding into our Global Forwarding network, adding talent…

The next question for Mike is from Chris Wetherbee with Citi. How are you going to direct free cash flow in 2021? Where do buybacks fit in the hierarchy? How about M&A, any areas of interest?

Thanks for the question, Chris. In terms of capital allocation, our top priority continues to be the closing investments primarily related to technology and process redesign that fuel growth and efficiency in our core business. We are also committed to continuing our dividend without decline. Next would be M&A, where we continue to maintain a strong pipeline of opportunities to the extent that we have capital available while maintaining an investment grade credit rating, our share repurchase program offers an excellent lever to return value to shareholders. We continue to see M&A as a lever that can potentially help us expand our geographic presence, add or improve services, build scale or enhance our technology platform. We'll continue to look for well run businesses that also fit nicely in the Robinson culture.

The next question is from Brian Ossenbeck with JPMorgan. Bob how have Robinson's recent efforts to connect with multiple TMS and ERP platforms progressed relative to expectations? As it generated an increase in net new business activity? What does further adoption of digital interfaces with customers mean for operating leverage in the future?

Thanks, Brian. Multiple questions there and I'll try to tackle them one at a time. Our progress in connecting with TMS and ERPs has been on pace with our expectations. We've got long-standing relationships in connections with these companies and connecting our real-time pricing engines through modern APIs has been really successful and fast-paced. Some of these connections are faster and smoother than others as you might expect. To the question of has it increased business activity? We are experiencing significant growth in our quoting activity and tendered volume through these digital connections to our pricing services and other functionality like in-transit visibility and other operational and analytical insights. The obvious benefit of these connections is the availability for quoting and committing 24/7, 365. We're also able to respond to opportunities much faster in these forums than relying on older more manual processes. So we've seen significant productivity uplift on our transactional business and we do expect the share of our automated transactional business continue to grow, which will yield positive productivity impacts. To your final question around the competitive landscape. It is quite active in all parts of our business, including this space and I'd say that our win percentage and our adjusted gross profit per shipment in these automated pricing APIs are on par with our traditional transactional margins, but we're capturing those adjusted gross profit dollars with a lower per-unit cost to serve.

The next question for Bob is from Brian Ossenbeck with JPMorgan. How is Robinson becoming more ingrained in supply chains and driving visibility for customers? How many shippers can take advantage of a program similar to the one you just announced with SAS?

Brian, my 22 years with Robinson, our ambition to solve our customers' toughest problems has always been central to our approach. As a result, we've got the opportunity to get involved in really exciting and challenging arenas within the supply chain that extend well beyond just the pickup and drop-off in the transportation of freight. Our investments through these years have taken us deeper into new modes and services, developed deep vertical expertise, expertise in geographies and industries segments with many unique characteristics and supply chain attributes that we can bring to bear for our customers. The SAS relationship is a great example of an opportunity to partner with another industry leader to extend our collective value in new unique and exciting ways to shippers and receivers. We're obviously in the early stages of our work together and the initial engagements are now underway. We believe that this work together with SAS has the potential to unlock values in many areas of our business and across our shared customer base. This collaboration is going to facilitate visibility to the entire inventory lifecycle in a way that no other companies can do from planning the cash settlement and it's going to require the best of each of our company's technology and our expertise in order to ideate and innovate together to bring real value to our customers.

The next question for Mike is from Brian Ossenbeck with JPMorgan. Working capital appears to have moved with revenue growth. Have there been any changes in days sales outstanding or bad debt from any of your customers?

Thanks, Brian. You're correct. In Q4 accounts receivable plus contract assets increased sequentially by 4.4% over Q3 while total revenues increased 7.7% driven by higher pricing and volume. The result in Q4 was a sequential improvement in days sales outstanding of 1.7 days compared to Q3 when using ending AR balances. That said, over the past two quarters, DSO has been running a couple of days higher than last year and I'll talk about the ways we've been addressing that in a minute. Our bad debt expense was notably higher in 2020 compared to 2019, driven primarily by increased reserves as we monitor the impact of the pandemic on certain categories and customers. While our bad debt expense in 2020 was approximately $6 million higher than our prior three-year average, we did see a reduction in bad debt expense of approximately $600,000 in Q4 compared to Q4 of 2019. We continue to closely monitor our receivables by customer, by category and across a variety of key metrics. We utilize internal and external credit risk data to enhance our credit and collections results and we've tightened credit limits, enhanced electronic invoicing and maintained greater focus on higher risk categories with additional safeguards, all of which lead to sequential improvement in the Q4 results.

The next question for Bob is from Brian Ossenbeck from JPMorgan. You are almost at the one-year mark for the Prime acquisition. How has that opportunity developed compared to expectations? And has it driven any synergies across the Robinson portfolio or with customers? What other industrial verticals or logistics capabilities are attractive at this point?

We are really happy with the acquisition of Prime, I mean truly a great team with great leadership. And we're really proud of the work that that team did this year. The Prime team exceeded their full year profitability expectations against some really challenging hurdles throughout the year, driven by costs associated within increased costs and labor, safety protocols that we've undertaken for our frontline workers and the rising cost of purchased transportation. In terms of synergies, part of what really attracted us to Prime at the time of acquisition was the opportunity to bring together their expertise in retail consolidation and warehousing with the Robinson expertise in transportation and distribution. So we've got these several shared customers and the combination of the two companies capabilities made for an even stronger value proposition for our customers and for the industries that we serve. As some retailers over the course of the last year have evolved and tightened their supply chain performance metrics, this has driven a lot of interest in demand from many new shippers that serve these retailers, achieving some of these new on time and fall or supply chain reliability requirements are really difficult without a partner like Robinson that has the capabilities to bring to life between Robinson and Prime, especially if you're not typically shipping in full truckload quantities. So, we're seeing several other retailers now piloting programs with us, with opportunities for large national rollouts and we're seeing great opportunities to cross-sell forwarding and inland transportation services to many of Prime's legacy customers. From a cost perspective, there was some redundancy in several markets where both Robinson and Prime maintained warehouse facilities and we're in the process today of bringing those together under shared facilities in order to capture some costs and efficiency synergies as we move to a common network. We also see opportunities moving forward to leverage that network to augment our large format home delivery network as well as providing other retail services.

The next question is from Brian Ossenbeck from JPMorgan for Bob. What is the strategic rationale behind launching the Robinson Fresh produce offering? Are there any start-up costs you will incur? How have your retail and foodservice customers viewed the announcement?

As our role with our retail partners have evolved in Fresh over the last decade, our integrated supply chain solutions have really expanded and penetrated right into the actual product itself, it's no longer about selling just a product that's really about providing the complex supply chain solutions that go with it. So we felt like this was really the right time to consolidate our brand story and allow us to take advantage of our 115-year history in the produce supply chain and really connect the dots between our services, our products and the consumer growing demand for healthy and high quality fresh produce. In terms of start-up costs, we're rolling the brand out over the first half of 2021 to align with the primary growing seasons of the products that we'll market under the Robinson Fresh label in order to maximize the use of existing packaging disruption, etcetera. So there really won't be any material costs due to the brand launch. Initial feedback in terms of our retail and food customers has been really positive, both from the look and feel of the brand, the quality of the product and the packaging, but they're also supportive of the overall strategic rationale for making the change.

The last question is from Garrett Holland with R.W. Baird. LTL volume was clearly very strong in Q4 of 2020. Talk about the expectations for the drivers of LTL freight demand in your ability to continue gaining market share?

Yes. Thanks, Garrett. Our LTL service continues to deliver strong results as you saw again in fourth quarter and we're really proud of the unique service offering that we have in the marketplace. We really think that we've got probably the most comprehensive offering of LTL services in the industry at scale, including our common carrier programs, our consolidation programs that I just talked about for retail and other industries as well as our temperature control programs that cover the spectrum from fresh products through frozen goods. Our market share gains in 2020 have been fueled by some tailwinds that many companies felt including e-commerce and home delivery, but they've really been across the board. As I mentioned earlier, the combination of Prime and Robinson and retail consol has proved to be a winning formula in the marketplace. We expect to continue to realize growth in LTL as we've built out customized solutions across industry verticals and solutions for customer of all sizes from those Main Street businesses that are engaged with our Freight quote by C.H. Robinson platform to large enterprise shippers that value our ability to consolidate capacity, optimize their network demands and leverage our Navisphere order and planning capabilities to avoid cost and to improve service.

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 chrobinson.com at approximately 11:30 AM Eastern Time today. If you have any additional questions, I can be reached by phone or email. Thank you again for participating in our fourth quarter 2020 conference call. And have a great day.

Ladies and gentleman, thank you for your participation. You may disconnect your lines and log off the webcast at this time and have a wonderful day.