Today’s freight recession is resulting in more layoffs across high-profile freight and transportation companies.
Two separate sides of the trucking coin, century-old freight brokerage and logistics giant C.H. Robinson and autonomous trucking technology provider TuSimple, are cutting staff for the second time since the end of 2022—with the latter also reorganizing. The job cuts came after another trucking company, U.S. Xpress, downsized its staff for the third time over the past year.
According to a company statement, the layoffs at C.H. Robinson impacted roughly 300 employees, or just under 2 percent of its workforce, primarily in shared services and non-engineering technology roles.
“We regularly evaluate our operations to ensure we continue to deliver superior service to our customers and to manage our business for growth, efficiency and velocity,” the statement said.
In November, C.H. Robinson laid off 650 employees, with the company then pointing fingers at a slowing economy and decreasing freight demand.
During a first-quarter earnings call in April, ahead of the recent layoffs, C.H. Robinson’s interim CEO Scott Anderson said that he expects more headcount cuts this year.
In the quarter, average headcount declined 2 percent versus the year-ago period and fell 6 percent compared to the end of the fourth quarter, sequentially dropping by 1,000 to 16,400 employees.
“With shippers continuing to manage through elevated inventories amid slowing economic growth, the balance of supply and demand has shifted from a tight market a year ago to one that is now oversupplied,” Anderson said.
At the time, Anderson said that since spot rates are approaching the break-even cost per mile to operate a truck, the market is likely at or near the bottom of the industry cycle, “which typically results in capacity exiting the market.”
The third-party logistics (3PL) and freight forwarding provider said job cuts would lower the midpoint of its personnel expense guidance for 2023 by $100 million.
“Looking at the long-term cost structure that we need to be competitive going forward, we really felt like we needed to do some things there, and we did,” said Mike Zechmeister, chief financial officer at C.H. Robinson, during the April call. “We’ve had really good work on streamlining our processes and putting automation in to really allow our people to do more value-added tasks, things that they want to do more, getting rid of some of the work that is less desirable and building that toolbox for them so that they can focus on growing our business profitably.”
The job cuts come as C.H. Robinson has seen three straight quarters of revenue and income declines. In the first quarter, the company’s revenue plummeted 32.3 percent to $4.6 billion, primarily driven by lower pricing in its ocean and truckload services. Net income sank 57.5 percent to $114.9 million.
The performance ultimately led to the abrupt termination of CEO Bob Biesterfeld to kick off 2023. In the earnings call, Anderson said the process to find a new permanent CEO is “moving along as expected,” with the board anticipating naming the new chief exec in the second quarter.
TuSimple restructures again, won’t sell Asia business
Eight-year-old TuSimple cuts 30 percent of its employees as part of a bigger restructuring.
Approximately 300 employees in the U.S. will lose their jobs in the face of a delisting warning from the Nasdaq, amid recent news that another self-driving technology company, Nuro, laid off 30 percent of its workforce.
TuSimple was supposed to be delisted on May 15 for failing to report its quarterly earnings on time for three consecutive quarters, but was able to get a temporary reprieve from Nasdaq after appeal. The hearing date has been scheduled for June 22, and TuSimple will continue to trade publicly until then.
This is the second such major restructuring for TuSimple, which had announced a reorganization when it first cut 25 percent of employees in December. This came weeks after the collapse of a deal to co-develop more autonomous semi-trucks with then-partner Navistar.
With the May cuts, TuSimple now has 750 total employees, with approximately 220 left in the U.S.
“As we relaunch TuSimple, we have taken a variety of factors into consideration including further deterioration of global economic growth, significantly reduced capital availability in the self-driving industry and redundant hardware availability,” said Cheng Lu, president and CEO of TuSimple in a statement. “Given these factors, we believe this restructuring, while difficult, aligns our capital spend with the pace of overall industry readiness and improves our long-term competitive position. These decisions are not made lightly as they impact many of our colleagues. Our company would not be where it is today without their contributions. For that, they have our utmost gratitude.”
As part of the reorganization, the company is longer looking to sell its Asia Pacific subsidiaries.
It’s unclear if keeping the Chinese parts of the company will threaten its standing with the Committee on Foreign Investment in the United States (CFIUS), which already had its eye on the company when it first went public due to ties with investors from China. CFIUS had been one of three groups investigating TuSimple for its connections to hydrogen-powered trucking company Hydron.
The investigation led to the termination of Dr. Xiaodi Hou, TuSimple’s then-CEO, president and chief technology officer, over allegations of sharing confidential information with Hydron. While Hydron lists itself as a Canadian company, it is incorporated in Delaware, China and Hong Kong and is backed by Chinese investors.
While C.H. Robinson and TuSimple may have new leadership in common and a needed pivot to profitability, the former largely reacted to external market forces. TuSimple has a much tougher hill to climb.
For one, the company only made $2.7 million in revenue in its third quarter—the last period TuSimple reported. And although the firm touts that its autonomous trucking fleet has clocked more than 10 million testing, research and freight delivery miles, the technology is still undergoing significant regulatory scrutiny.
In line with the regulations, TuSimple was the subject of a federal investigation after a heavily publicized crash of one of its autonomous trucks last year. The investigation was closed in March.
TuSimple isn’t the only business of its kind struggling. Another driverless technology company, Embark Technology, is winding down its operations and still evaluating strategic alternatives like liquidating its assets, restructuring or shutting down completely. Argo AI, another firm that had Ford and Volkswagen as major investors, disbanded in October 2022.